Mainland cement makers seek higher prices, technology upgrades

For cement makers, it's all about price and pollution. The mainland is experiencing surging steel and coal prices. But cement industry executives who met in Shanghai last week said the price of the basic raw material for buildings and toll-roads was only half that of international prices.

'A higher price will give investors a fair return,' said Tom Clough, a member of the executive committee of Switzerland's Holcim, one of the world's largest cement producers with a 40 per cent stake in A-share listed Huaxin Cement.

The average price for thermal coal rose 20 per cent last year and analysts said steel prices would increase 25 per cent this year on soaring demand for iron ore. But the average price for cement only rose 7 per cent last year to 600 yuan (HK$667) per tonne.

Industry executives said they needed higher prices, and not just for shareholders.

'Many Chinese cement companies need funds to upgrade their technology and enhance environmental protection,' said Mr Clough.

The cleaner way of making cement is the modern dry process. Limestone and other materials, such as sand, iron ore and clay, are put in a rotary kiln at temperatures as high as 1,450 degrees Celsius to produce black and nodular clinker, the precursor of cement.

The central government is encouraging mainland cement companies to adopt the dry process because it can be upgraded to reduce carbon dioxide emissions, which contribute to global warming.