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China restructures cement industry

(Xinhua)
Updated: 2006-04-27 11:50

The country will continue to adjust its cement industry's structure to ease overcapacity and eliminate outdated technologies, said the National Development and Reform Commission (NDRC).

The commission will speed up the elimination of cement production lines with small capacity and outdated technology, according to a relevant report released Monday.

The NDRC, together with another seven governmental departments including the Ministry of Finance and the Ministry of Commerce, recently issued a circular urging local governments to speed up restructuring of the cement industry harassed with overcapacity and pollution problems.

"By 2010 China's cement output is expected to hit 1.25 billion tons, with superfluous production capacity of 250 million tons to be eliminated," the circular said.

According to the circular, the number of cement enterprises is expected to decrease to 3,500 with average annual output rising from 200,000 tons to 400,000 tons by 2010.

China produced 1.06 billion tons of cement last year, 9.3 percent more than the figure of 2004, with profit dropping 38.7 percent to 8.05 billion yuan (US$1 billion), NDRC figures show.

Overcapacity has become a pressing issue due to active investment in China's cement industry over the past few years, and many cement enterprises suffered losses.

Some 35.9 percent of all cement enterprises reported losses last year, 8.9 percentage points higher than that in 2004, the NDRC said.

In order to ease overcapacity, industrial centralization should be heightened, and the overheated output growth should be controlled, the NDRC said.

Figures show in 2004, the output of the four largest cement manufacturers in China amounted to 12.24 percent of the nation's total output, while the 10 biggest international cement companies contribute one-third of the world's output.

Centralization is to be achieved mainly by mergers and acquisitions, the NDRC said.

According to the governmental plan, those unlicensed cement factories with serious pollution problems should be closed down, and large cement makers are encouraged to merge small companies and increase overseas investment.

The fast growth of fixed asset investment in China has been alluring the rapid expansion of local cement production capacity all the time.

China's investment in fixed assets in the first quarter of this year totaled 1,390.8 billion yuan, up 27.7 percent year on year, official figures showed.

Although the increase in the first quarter is a bit fast, China is capable of maintaining moderate growth of its fixed asset investment in 2006, said Zheng Jingping, a spokesman of the National Bureau of Statistics.