West China to cut back on cement output
Railway construction an important driver of growth this year as firm works to reduce debt
Huge infrastructure projects will drive demand for cement in Shaanxi province, but West China Cement will slow its capacity expansion in the next few years to lighten its debt burden. The Hong Kong-listed firm's cement production and sales are mostly in the northern province.
One such project is the resettlement of 2.4 million people in southern Shaanxi. The project aims to move 2.4 million people between 2011 and 2020 at a total cost of 110 billion yuan (HK$136 billion), said Tian Zhenjun, chief executive of West China Cement. It is expected to use 12 million to 14 million tonnes of cement, of which the firm supplied one million tonnes last year, Tian said.
The people living in southern Shaanxi's mountainous areas have inadequate water supplies and health care, and will be resettled in towns by the government, said West China's chairman, Zhang Jimin.
"The government wants to improve the people's living conditions. Premier Li Keqiang is pushing urbanisation in the country," Zhang said.
Another project is the Xian-Chengdu high-speed railway, which will consume 4.5 million tonnes of cement in Shaanxi, Tian said. Tendering and cement supply is expected to begin later this year.
West China supplies cement to several railway projects, including the Datong-Xian high-speed railway, he added. "Railway construction will be an important demand driver in 2013, especially in southern Shaanxi."