CR Cement to invest RMB202M in Shanxi JV unit

Byswb

Updated Fri, 31 Dec 2010 00:00:00 GMT

China Resources Cement (HKG:1313) announced that Shanxi Huabao and it have established JV company China Resources Cement (Changzhi) to engage in the business of production and sale of cement products. The total amount of investment of the JV is RMB800 million and the registered capital of the JV is RMB280 million.

The capital contribution to be made by Shanxi Huabao will be by way of land use right in the amount of approximately RMB160.47 million, representing 57.3% of the total registered capital of the JV, whereas China Resources Cement shall invest by way of cash of approximately RMB119.53 million, representing 42.7% of the total registered capital of the JV.

It has been agreed by China Resources Cement and Shanxi Huabao that immediately after the capital contribution by Shanxi Huabao, China Resources Cement will acquire 29.3% equity interest in the JV from Shanxi Huabao at a consideration of RMB82.04 million. After the completion of the equity transfer, China Resources Cement will hold 72% equity interest in the JV and Shanxi Huabao will hold 28% equity interest in the JV. The total amount to be invested by China Resources Cement for ultimately holding 72% equity interest in the JV will be approximately RMB201.57 million.

The JV has entered into an asset acquisition agreement with Shanxi Huabao for acquiring assets relating to a 1,200-ton-per-day NSP clinker production line and two cement grinding lines with total annual production capacity of 600,000 tons which are in operation in Changzhi, Shanxi Province at a consideration of approximately RMB139.53 million.

The JV will build a 4,500-ton-per-day NSP clinker production line and two cement grinding lines with total annual production capacity of 2 million tons on the land, which are expected to commence operation by the end of 2012.

China Resources Cement's board of directors believes that the establishment of the JV will complement the company's long term expansion plan and strengthen its market position in Shanxi Province.