MIIT to Launch Policy Supports for Cement Industry Consolidation

BEIJING, Sept. 29 -- China's Ministry of Industry and Information Technology (MIIT) will soon release a file granting land, credit, and project access supports for on-scale Chinese cement producers to conduct M&As, disclosed an official with the Department of Raw Materials under the MIIT at the sidelines of a conference held on Sunday.

    The news was confirmed by Xin Renzhou, vice secretary with Industrial Policy Department of the MIIT, saying that the ministry had drafted guidelines to eliminate backward capacities and conduct corporate M&As. However, the document is still subject to seven ministries opinions and was supposed to go public before the year's end.

    Given that overcapacity and redundancies linger on as persistent problems of China's cement industry, M&As between large cement makers are encouraged, say market analysts.Earlier on September 7, the MIIT posted a similar document aimed at encouraging large cement producers to take over small rivals, but no supportive policies were mentioned in the document.

    "The backward production method by mid- and small cement producers is the major reason behind the repeated construction in domestic cement production", said the raw materials official.

    "By this year's closing, 40 cement production lines now under construction will complete," said the official. "This means 600 million tons of new capacity and lead to one billion tons of capacity excess, pushing up China's production capacity to 2.8 billion tons."

    In view of the current growth of cement investment, overcapacity will become worse three or five years later as cement demands in China's mid- and western regions will be satisfied.

    Further, demand in China's developed eastern region has been well supported, according to Gao Qinghui, a senior economist with China's State Information Center, the government's policy-making think tank.

    (Source: chinamining.org)