Tre N D S, C Ha L Lenges, A N D Opportu N It I Es I N C Hin A 'S Cement I Ndustry

∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙
Toward a Sustainable Cement Industry
Trends, Challenges, and Opportunities in

China’s Cement Industry
March 2002
by
Mason H. Soule, Jeffrey S. Logan, and Todd A. Stewart
with contributions from

Florence Ma, Caroline Quinn, and
Anataike Information Development Co.
∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙
An Independent Study Commissioned by:

World Business Council for Sustainable Development
This substudy is one of 13 research investigations conducted as part of a larger
project entitled, "Toward a Sustainable Cement Industry". The project was
commissioned by the World Business Council for Sustainable Development as
one of a series of member-sponsored projects aimed at converting sustainable
development concepts into action. The report represents the independent
research efforts of Battelle Memorial Institute and their subcontractors to identify
critical issues for the cement industry today, and pathways forward toward a more
sustainable future. While there has been considerable interactive effort and
exchange of ideas with many organizations within and outside the cement
industry during this project, the opinions and views expressed here are those of
Battelle and its subcontractors.
Battelle
Battelle endeavors to produce work of the highest quality, consistent with our
contract commitments. However, because of the research nature of this work, the
recipients of this report shall undertake the sole responsibility for the consequence
of their use or misuse of, or inability to use, any information, data or
recommendation contained in this report and understand that Battelle makes no
warranty or guarantee, express or implied, including without limitation warranties
of fitness for a particular purpose or merchantability, for the contents of this report.
Battelle does not engage in research for advertising, sales promotion, or
endorsement of our clients' interests including raising investment capital or
recommending investments decisions, or other publicity purposes, or for any use
in litigation.
The recommendations and actions toward sustainable development contained

herein are based on the results of research regarding the status and future
opportunities for the cement industry as a whole. Battelle has consulted with a
number of organizations and individuals within the cement industry to enhance the
applicability of the results. Nothing in the recommendations or their potential
supportive actions is intended to promote or lead to reduced competition within
the industry.
( TR E N D S , C H A L L E N G E S , A N D O P P O R T U N I T I E S
IN CHINA’S CEMENT INDUSTRY )
Foreword
Many companies around the globe are re-examining their business operations and relationships
in a fundamental way. They are exploring the concept of Sustainable Development, seeking to
integrate their pursuit of profitable growth with the assurance of environmental protection and
quality of life for present and future generations. Based on this new perspective, some
companies are beginning to make significant changes in their policies, commitments and
business strategies.
The study, of which this substudy is a part, represents an effort by ten major cement companies
to explore how the cement industry as a whole can evolve over time to better meet the need for
global sustainable development while enhancing shareholder value. The study findings include
a variety of recommendations for the industry and its stakeholders to improve the sustainability
of cement production. Undertaking this type of open, self-critical effort carries risks. The
participating companies believe that an independent assessment of the cement industry’s
current status and future opportunities will yield long-term benefits that justify the risks. The
intent of the study is to share information that will help any cement company – regardless of its
size, location, or current state of progress – to work constructively toward a sustainable future.
The pursuit of a more sustainable cement industry requires that a number of technical,
managerial, and operational issues be examined in depth. This substudy, one of 13 conducted
as a part of the project, provides the basis for assessing the current status or performance and
identifies areas for progress toward sustainability on a specific topic. The project report entitled
Toward a Sustainable Cement Industry may be found on the project website:
http://www.wbcsdcement.org.
Study Groundrules
This report was developed as part of a study managed by Battelle, and funded primarily by a
group of ten cement companies designated for this collaboration as the Working Group Cement
(WGC). By choice, the study boundaries were limited to activities primarily associated with
cement production. Downstream activities, such as cement distribution, concrete production,
and concrete products, were addressed only in a limited way. Battelle conducted this study as
an independent research effort, drawing upon the knowledge and expertise of a large number of
organizations and individuals both inside and outside the cement industry. The cement industry
provided a large number of case studies to share practical experience. Battelle accepted the
information in these case studies and in public information sources used.
The WGC companies provided supporting information and advice to assure that the report would
be credible with industry audiences. To assure objectivity, a number of additional steps were
taken to obtain external input and feedback.
A series of six dialogues was held with stakeholder groups around the world (see Section 1.5).
The World Business Council for Sustainable Development participated in all meetings and
monitored all communications between Battelle and the WGC.
An Assurance Group, consisting of distinguished independent experts, reviewed both the quality
and objectivity of the study findings.
External experts reviewed advanced drafts of technical substudy reports.
The geographic scope of the study was global, and the future time horizon considered was 20
years. Regional and local implementation of the study recommendations will need to be tailored
to the differing states of socioeconomic and technological development.
i
List of Acronyms
FIE Foreign invested enterprise
GDP Gross domestic product
MOR Ministry of Rail
SABMI State Administration of Building Materials Industry
SETC State Economic and Trade Commission
SOE State-owned enterprise
TSP Total suspended particulates
Glossary
Concrete A material produced by mixing binder, water, and aggregate. The fluid mass undergoes
hydration to produce concrete. (Average cement content in concrete is about 15%.)
9
Gigajoule 1 billion (10 ) joules
Stakeholder A person or group that has an investment, share, or interest in something, as a business or
industry.
Sustainable development Ability to continually meet the needs of the present without compromising the
ability of future generations to meet their own needs.
iii
( TOWARD A SUSTAINABLE CEMENT INDUSTRY )
iv
Executive Summary
Overview
This document describes trends, opportunities and challenges for the cement industry in the
People’s Republic of China. It focuses on the following topics:
Organizational structure and administration,

Production, technology, and ownership,
Cement markets,
Environmental issues, and
Future trends and opportunities.
China is expected to remain the world’s most populous country through 2040. Its gross
domestic product (GDP) has averaged growth of more than 9 percent each year since
liberalization and economic reforms began in the late 1970s. In 1985, China became the
world’s leading producer of cement, and today produces over one-third of total global output.
While China’s cement industry is relatively insulated from a global perspective, changes are
underway to improve product quality, management practices and profitability, including further
opening the sector to participation by international players.
Political Framework and Organization of the Industry
In 2000 and 2001, the Chinese government decentralized its industrial ministries, and the
organizational structure of the cement industry remains in a state of flux. The Ministry of
Building Materials has been changed, first to a State Administration of Building Materials
Industry (SABMI), and earlier in 2001 to a small, quasi-governmental Cement Association.
Changes in top officials have occurred and provincial authorities now exert more control over
the industry.
Ownership
A shrinking number of cement companies (now about 24 percent) remain state-owned, while a
growing number (about 3 percent) are foreign invested enterprises (FIEs). Collective
enterprises account for over 50 percent of companies while 10 percent are privately owned.
There also is a trend toward consolidation, as evidenced by the 1999 formation of China United
Cement Company, a large state-owned holding company.
Production
China has been the world’s leading cement producer since 1985. The United States Geological
Survey estimated that China produced 576 million tonnes in 2000, about 36 percent of the
world’s total. Combined, the next three largest producers—the United States, India, and
Japan—produce less than 20 percent of the world’s cement.
Cement Plants
The estimated number of Chinese cement plants ranges from 8,000 to 9,300, although the
actual number is uncertain due to the fragmented nature of the industry, the small size of many
plants, the fact that some plants exist illegally, and data reliability issues.
About 50 percent of these facilities are rural township enterprises with average annual output of
less than 30,000 tonnes. Only about 570 of the 8,500 cement producers had production
capacities exceeding 275,000 tonnes per year in 1995, and only ten plants produce more than
one million tonnes annually. For comparison, industrialized cement producing countries
average 40 to 50 major producers that manufacture up to four million tonnes annually.
v
China plans to increase the average production capacity at facilities throughout the industry
through plant closures and upgrades. The country plans to raise average plant production to
200,000 tonnes per year by 2005, 300,000–400,000 by 2010, and 400,000–500,000 by 2015.
Plant Closures and the Issue of Unemployment
China announced in 1999 that it would close thousands of small or antiquated cement
operations. As many as 6,000 plants are slated to be closed, with 4,000 closures scheduled by
the end of 2001. Given current progress, this level of closure by year end 2001 seems unlikely.
Initially targeted for closure are 2,000 illegal or improperly licensed cement producers as well as
outdated cement operations. China plans to close (through non-recertification) plants that:
Produce #325 and lower grades (by 2005)

Have vertical kiln diameters smaller than 2.2 meters and/or produce <30,000 tonnes/year,
and
Have wet process kilns (either to be closed or converted to dry processes).
Closures are significant not just for the loss in production (estimated to be about 100 million
tonnes annually, more than 20% of China’s total), but because of the unemployment plant
closures will bring. Barriers to the successful closure of the plants include:
Worker displacement and retraining costs

Potential political instability, and
Opposition from local leaders who have economic interests in the plants.
The key issue is retaining political stability in the face of greater unemployment. The problem is
exacerbated compared to similar issues in other developing countries because Chinese cement
plants employ up to ten times the labor of plants in developed countries, and because China
has a less robust system of protective social security. Many of the closed plants will be in rural
areas and it is hoped that released workers can fall back on their agricultural jobs or be
absorbed in the rapidly growing private sector. Many provincial and local governments are not
enthusiastically implementing these centrally planned plant closures at this time.
Product Output Grades and Technology
In 2000, #325 and lower-grade cements accounted for about 30 percent of Chinese production;
#425 cements made up a little over 60 percent; and about 10 percent represented high-grade
#525 cement. The higher-grade cements will all increase in share in the future as #325
production is reduced. Production of special purpose cement is likely to grow rapidly. In 1995,
China produced 12 million tonnes of special cement, 2.7 percent of total cement production.
For comparison, developed countries produce 6–10 percent special cement.
Today, 138 million tonnes—or one-quarter—of Chinese cement production comes from rotary
kilns; the remaining 433 million tonnes from vertical kilns that will be slowly phased out. Most of
the anticipated 100 million tonne reduction will be of vertical kiln production.
By 1998, China had 86 dry-process cement production lines, accounting for 10 percent of
cement production. The current strategy is to bring new kilns online and to upgrade old
facilities, while older equipment is phased out.
Geography
Cement production generally tracks well against population density, but there are production
concentrations in Shandong and Guangdong provinces and among the coastal provinces
vi
generally. There are 40 enterprises with annual capacities over 1 million tonnes, and 30 of
these are located in coastal provinces.
The central government is emphasizing the future development of the poorer western provinces
to help alleviate regional income differentials that result in migration to the more crowded east.
The western provinces account for comparatively little cement production.
As urban land development rationalizes (where land uses are determined by economic and
environmental considerations), local governments are reclaiming land from urban cement plants
and replacing them with less noxious and more profitable activities. Companies are being
displaced to the urban fringes and also moving closer to limestone deposits, employing
conveyer systems to transport limestone over medium distances.
Cement Markets
China consumes about 35 percent of the world’s cement, a figure expected to rise to about 40
percent by 2010.
Domestic Demand
Growth in Chinese cement production is due to the construction boom accompanying high GDP
growth rates. Only rotary kiln cement can be used legally to build high-rise buildings in China,
and demand for the higher grade #425 and #525 cements was estimated at about 170 million
tonnes in 2000 and projected at 250 million tonnes by 2005. Forty percent of China’s cement is
now used for basic infrastructure construction (an area regularly neglected during the period of
heavy central planning.), with about one-third of that used in rural areas. Twenty-five percent is
used for maintenance activities.
China’s transport sector uses cement in road construction rather than asphalt. As China lacks
an adequate national highway system and its rail network is so overburdened, investment can
be expected in highways over the medium term.
Prices
Low quality cement is oversupplied and cheap, while high quality cement is rarer and more
expensive. Profit margins for most cement producers hover near zero. Despite the growth in
construction, cement prices have fallen 25 percent to US$36 per tonne for high-grade #525 bulk
cement and US$38 per tonne for bagged cement due to a competitive market.
Transportation
Because cement is a bulk commodity, transportation costs are a significant component of the
industry’s cost structure. The main issue, however, is with the transport of coal because it is an
important input into cement production and because it is the primary source of pressure on a
strained transport infrastructure network. Cement industry sources indicate that the availability
of coal has not constrained the cement industry to date. Unless long-term investment is made to
improve the rail network this situation will worsen.
Foreign investment in bulk cement storage and transportation facilities is now strongly
promoted.
Trade
China is the second leading cement exporter in the world, accounting for about 17 percent of
total world cement trade. Exports of cement dramatically exceed imports, about 5 million tonnes
v. 200 thousand tonnes, respectively in 2000. Shaft kiln cements of #425 and #525 comprise
60–70 percent of total exports. A share of this is from foreign owned companies or joint
ventures, which themselves account for about 25 percent of exported cement. Major exporting
regions include Shandong, Jiangsu, Guangdong, Liaoning, Guangxi, and Hebei provinces. The
vii
largest exporting companies include Daewoo Shandong Metal and Minerals Import/Export (with
sales of about 2 million tonnes); and Taiheiyo Cement (with sales of about 1.8 million tonnes).
The United States is the largest market for Chinese cement, accounting for 42 percent of trade
in 1998.
Environmental Issues
Energy
The cement industry is very energy intensive and China relies almost exclusively on coal to
produce cement. Energy accounts for roughly 40 percent of the total manufacturing cost of
cement in China. Unlike some industrialized countries, China has not yet moved to alternative
energy sources in its cement kilns, although that may become an option.
If China were to succeed in replacing output from plants that produce #325 cement with more
efficient plants, it would save approximately 15 million tonnes of coal each year. Improving
energy efficiency is important to a wide range of stakeholders because it cuts energy costs,
improves local environmental quality, and reduces greenhouse gas emissions (see below).
Emissions
China has significant environmental problems. Ambient air levels of total suspended
particulates (TSP) and sulfur dioxide (SO2) in Chinese cities are among the highest in the world.
In turn these heavy pollutant loads are closely associated with significant respiratory illness and
approximately 200,000 premature deaths each year in urban areas. China’s contribution to
global carbon dioxide (CO2) emissions is approximately 14 percent.
Cement plants are responsible for over 40 percent of total industrial particulate (dust) emissions.
Chinese cement plants are also responsible for about 6 to 8 percent of the country’s carbon
dioxide emissions. These emissions are produced in roughly equal parts from fuel combustion
and the liberation of carbon dioxide from limestone at high temperature. Carbon dioxide
emissions from small Chinese plants are two or more times higher than plants in industrialized
nations (because of poor efficiencies requiring more fuel use, etc.). Increasing the efficiency of
cement kilns is one way to reduce carbon dioxide emissions.
Cement production is also associated with a number of other environmental problems including
contamination of local water sources, mercury emissions, excessive noise, erosion surrounding
limestone quarries, and nitrogen oxide emissions. Dry rotary kilns, including precalcinator kilns,
are the most energy efficient technology currently available in China.
The associated reduction in coal combustion accompanying the closure of #325 plants would
reduce carbon dioxide emissions by about 30 million tonnes, sulfur dioxide by 250,000 tonnes,
and solid waste and dust by over 5 million tonnes each year.
Environmental Laws and Regulations
China has developed a range of environmental laws to deal with air pollution, solid waste, water
pollution, etc. Many of these are modeled after US or European legislation. Since 1989,
emission limits for cement production have been set at 150 milligrams of particulates per cubic
meter of exhaust gas. In April of 2000, China announced that emission limits would be reduced
to 100 milligrams per cubic meter of exhaust. For comparison, cement plants in Europe
conform to a limit of 70 milligrams, which is being lowered to 50 milligrams.
Enforcement of laws is not uniform and remains an issue. Provincial level environmental
protection agencies are responsible for enforcing emission limits and can direct capital toward
polluters to upgrade their equipment. However, production and profit often supercede
viii
enforcement. Environmental regulations tend to be strictly enforced when foreign companies

are involved.
Finance and Investment
It is difficult to obtain domestic financing for investment projects within China. Financial needs
are many, and sources limited. Even though China has begun to rein in the growing number of
non-performing loans from its banks, the banking industry remains strapped for funds. Chinese
stock markets have been an important but insufficient source of low-cost capital for listed
enterprises.
The central government encourages foreign investment as an additional source of capital and
because foreign technology is usually superior to that embodied in domestically produced
equipment. Still, foreign investors frequently face special difficulties as a result of an evolving
legal framework gradually replacing transactions based on relationships. Foreign investors
often claim that the Chinese cement market lacks transparency because:
Final decision-making authority is not clear,

Laws and regulations change rapidly and are not uniformly enforced, and
Information is not widely and uniformly available.
In recent years, it has become easier for foreign companies to obtain permits for cement
projects. But the paperwork, time, and dedication necessary to bring an investment to closure
remain daunting, and the sentiment is shared that this situation will only change slowly.
Even with sometimes-vicious competition and difficulties in operating in an opaque market, key
opportunities are open for both domestic and foreign companies. Promising areas include
investment in:
Bulk cement transport and storage infrastructure,

Environmental control equipment,
Precalcinator and dry rotary cement kilns, and
Specialty cements.
As of 1998, there were 287 foreign-invested enterprises in joint ventures, co-ops, or wholly
owned operations. FIEs account for about 3 percent of all cement producers but contribute
about 15 percent to national output. China hopes to make foreign participation account for
about 20 percent of total investment in the industry, but many consider this an ambitious target.
Future Trends And Opportunities
The State Development Planning Commission will increase total investment in all fixed assets
by ten percent in 2001. Most investment will be used in infrastructure construction,
environmental protection, technology upgrading, innovation, and education. Several of these
priorities will positively affect the cement industry.
Following near term (two to three year) adjustments to plant closings, cement output is
projected to increase by about 2.8 percent per year during the Tenth Five-Year Plan (2001–
2005) and by 2.5 percent during the Eleventh Five-Year Plan (2006–2010). From current
production of around 576 million tonnes, China anticipates producing 660 million tonnes by
2005, 750 million tonnes by 2010, and 800 million tonnes by 2015. While slowly increasing
production capacity, improvements in cement quality will occur more rapidly as older, less
efficient facilities are closed or upgraded and newer, more modern facilities are built. Still, the
ix
2005 production target seems high, if thousands of small plants are simultaneously being
closed. Shortages of high-grade cements will remain, regardless.
Vertical kilns currently contribute 75 percent of production, a number expected to decline only to
50 percent by 2015. China is predicted to be the world’s largest market for cement machinery
at least until 2010. Foreign investment will be focused on precalcined production lines with
capacities of 4,000 tonnes or more using new dry processes for cement clinker. China plans to
increase cement production from pre-heater and calciner kilns to 20 percent of total production
by 2005.
Bulk cement is projected to become a larger proportion of Chinese cement output, reaching
182 million tonnes or 29.5 percent of total production by 2005.
China will continue the move away from enterprise-provided housing to a privatized housing
market. This will stimulate housing demand from low and middle income Chinese. Other
reforms aimed at improving the overall efficiency of China’s quasi-market economy will include:
Banning barriers to local protectionism,

Commercializing the residential housing sector,
Providing more discipline to bank lending and cleaning up existing bad loans,
Enforcing existing legislation more thoroughly and enacting new laws,
Allowing state-owned enterprises to reform without interference from local governments, and
Demanding greater transparency and accountability in both government and financial
sectors.
To address regional income disparities, the western provinces have investment priority during
the Tenth Five-Year Plan. These regions include: Xinjiang, Ningxia, Qinghai, Shaanxi (including
Xian), Gansu, Sichuan, Tibet (Xizang), Chongqing City, Guizhou, and Yunnan (including
Kunming). Eastern provinces should not expect new plants, but there will be many
opportunities for technology upgrades in these areas.
China has ambitious plans to prepare for the 2008 Olympic games. There will be much new
construction in Beijing to accommodate the games. Strict environmental measures to improve
air and water quality also will be in force in the capital region.
China’s accession to the World Trade Organization, likely by early 2002, will affect the cement
sector only marginally. The sector faces little real threat from international competition due to
the high transport costs of cement and abundant non-tariff barriers. WTO may have an impact
on the domestic use of cement because China’s construction industry will be gradually opened
to foreign builders starting in 2001. Foreign firms will be permitted to enter every part of the
construction sector except from general planning of cities and high-level real estate projects.
Information Sources
Sources used for this study include interviews with Chinese government officials and cement
company managers, Internet sources, commercial database articles, and statistical compendia.
No Chinese statistical yearbooks on the building materials industry (which includes cement)
have appeared in several years. Therefore, there are some conflicting numbers in the text and
many of the insights drawn herein are based on anecdotal evidence.
x
Table of Contents
1. China’s Cement Sector in a Changing Economic Landscape.............................................. 1
2. Organizational Structure ..................................................................................................... 3
2.1. Political Framework..................................................................................................... 3
2.2. Financing and Investment ........................................................................................... 4
2.3. Foreign Investment and Participation .......................................................................... 5
3. Raw Materials and Reserves .............................................................................................. 6
4. Cement Production ............................................................................................................. 8
4.1. Cement Products and Quality ..................................................................................... 9
4.2. Equipment and Technologies.................................................................................... 10
4.3. Energy Consumption ................................................................................................ 13
4.4. Bulk Cement ............................................................................................................. 14
4.5. Special Cements....................................................................................................... 15
4.6. Ownership................................................................................................................. 15
4.7. Major Producers ....................................................................................................... 16
4.8. Small Producers ....................................................................................................... 19
5. Labor................................................................................................................................. 20
6. The Market for Cement ..................................................................................................... 21
6.1. Domestic Consumption ............................................................................................. 21
6.2. Cement Prices .......................................................................................................... 22
6.3. Imports...................................................................................................................... 22
6.4. Exports ..................................................................................................................... 23
7. Infrastructure and Transportation ...................................................................................... 25
7.1. Railways ................................................................................................................... 25
7.2. Water Transport ........................................................................................................ 25
8. Environmental Considerations .......................................................................................... 26
9. Prospects and Future Developments ................................................................................ 29
10. References ................................................................................................................... 30
Appendix A Chinese Cement Producers with More Than 2000 Employees56 ..........................A-1
Appendix B: Case Studies of Major Cement Producers57 ........................................................B-1
List of Tables
Table 3-1. Average Input Levels for Cement Production by Type of Process in China .............. 6
Table 4-1. Cement Output from Key Chinese Provinces (Million Tonnes) ................................. 8
Table 4-2. Rotary and Shaft Kiln Production, 1985–2000 (million tonnes) .............................. 10
Table 4-3. Kiln Types and Major Technical and Economic Performance in 1999..................... 11
Table 4-4. Major Foreign Cement Equipment Suppliers .......................................................... 11
Table 4-5. Cement Production Goals by Type of Kiln, 2000–2015 (million tonnes)................. 12
Table 4-6. Foreign-Invested Enterprises in China’s Cement Industry ..................................... 16
Table 4-7. Large, Medium, and Small Cement Producers, 1995.............................................. 16
Table 4-8. Key Chinese Cement Producers by Province and Output....................................... 18
Table 6-1. Profitability of the Cement Industry, 1992–1997 (Yuan million) ............................... 21
Table 6-2. Cement Consumption, 1995–2001 (million tonnes) ................................................ 21
Table 6-3. Cement Imports, 1995–1998 (thousand tonnes)..................................................... 23
Table 6-4. Cement Exports, 1998–2001* (million tonnes)........................................................ 23
Table 6-5. Major Cement Customers, 1998 ............................................................................. 24
Table 8-1. Particulate and Sulfur Dioxide Emissions from China’s Cement Sector .................. 26
xi
List of Figures
Figure 4-1. Cement Production, Selected Years, 1980–2001* (million tonnes).......................... 8
Figure 4-2. Projected Chinese Cement Production, 2000-2015 ................................................. 9
Figure 4-3. Chinese Cement Production, by Grade, 2000 and 2005........................................ 10
Figure 4-4. Primary Energy Intensity of Selected Cement Producing Nations.......................... 13
Figure 4-5. Changing Fuel and Electricity Intensity in China’s Cement Industry ...................... 14
Figure 4-6. Ownership of Chinese Cement Enterprises, 1999 ................................................. 15
Figure 4-7. Provincial Shares of Chinese Cement Production, 2000........................................ 17
Figure 4-8. Average Production by Cement Plant, 1995, Selected Countries .......................... 18
xii
1. China’s Cement Sector in a Changing Economic Landscape

Much of China’s remarkable development over the past few decades rests on cement—the
primary ingredient in concrete. The country has constructed millions of new houses and
buildings, paved thousands of kilometers of new highways, and built hundreds of large power
plants, all requiring enormous quantities of cement.
China’s cement industry has grown remarkably since economic reforms began in the late
1970s. At the start of reforms in 1978, China ranked fourth in world cement output and
produced about 65 million tonnes of cement a year. By 1985, China had become the world’s
largest producer. A thriving construction industry promoted continued strong growth for cement
and by 1998 China’s cement output was twice as much as the next three largest producing
countries combined.
While growth in China’s cement industry has been impressive, the sector remains plagued by
structural, institutional, financial, and environmental problems. Two-thirds of China’s cement,
for example, is produced in small, inefficient plants that consume far more fuel and emit far
more pollution than international norms. Further, very low quality cement still accounts for as
much as one-quarter of all production.
China initiated economic reforms in 1978 in an attempt to move away from sluggish central
planning and toward a market-oriented system. Unique to the Chinese transitional experiment
was continuation of the rigid political framework of the Communist Party. Reforms began in the
agricultural sector but quickly moved into industrial sectors. Changes included:
Opening the economy to increased foreign trade and investment

Increasing the authority of plant managers and local officials
Permitting a wide variety of small-scale enterprises in light manufacturing and services.1
These reforms helped unleash a long-dormant mercantile spirit in China and had a significant
impact on economic growth. Average GDP grew by more than 9 percent between 1980 and
2000. (See Figure 1.) Industry posted major gains associated with the reforms, especially in
coastal areas where foreign investment helped spur output of both domestic and export goods.
Over this period, GDP expanded nearly 6-fold, rivaling similar periods of economic development
in Japan and South Korea.1
In 1993, the authorities approved additional long-term reforms aimed at providing still more
freedom to market-oriented institutions and at strengthening central control over the financial
system. State-owned enterprises (SOEs) continued to dominate many key industries in what
was now called “a socialist market economy.” During the mid to late 1990s, inflation dropped
sharply as economic reforms began to bite and the Asian financial crisis restricted certain export
markets.2 Beginning in 1997, many products, including cement and coal were oversupplied,
offering greater justification to close down thousands of small, inefficient factories. In late 2000
and early 2001, domestic demand began to grow again and price indices were positive for the
first time in three years. Despite these fluctuations, a large number of small cement producers
remain as the government has not met goals to close, merge, or consolidate these plants.
The ownership structure of cement plants in China changed significantly through the 1980s and
1990s. Collectively-owned plants, including township and village enterprises, grew fastest and
now account for over half of total output. State-owned plants, which until recently had used the
most modern and efficient equipment, now account for about one-quarter of the country’s
output. Privately owned plants have also grown rapidly and now account for one-tenth of all
1
production. The number of foreign invested enterprises (FIEs) also grew rapidly during the
1990s, although these plants still produce only a small fraction of China’s total output.
16
14
Growth from Previous Year (%)
12
10
0
1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Source: China Statistical Yearbook 2000. Value for 2001 is estimated.
Figure 1-1. Reported Post-Reform GDP Growth Rates in China
Long-term challenges to the continued growth of the economy include:
Imbalanced population structure

Environmental pollution
Water shortages
Political unrest from both growing income disparity and unemployment.2
It is this last issue that seems to drive the pace of reform in China: the fear of political unrest
from too many unemployed workers dictates the degree of discipline imposed on state-owned
enterprises.
China’s labor force stood at 700 million workers in 1998 with half employed in agriculture and
the other half split between industry and services.1 At least 15 million urban workers employed
at state-owned enterprises were laid off between 1998 and 2000. Some progress was made in
training laid-off workers for other jobs, especially in the private sector. Six million laid-off
workers found new jobs in the late 1990s with the help of these reemployment programs.1
2
2. Organizational Structure
China’s cement industry was established during decades of central planning. During the 1950s
and 1960s, Chinese planners promoted policies aimed at local self-sufficiency. Limited
transport capacity and sources of finance existed across many regions of the country,
preventing the strategic development of the cement sector. As a result, China built a huge
number of small cement plants that lacked economies of scale and focused on serving local
markets. More than other Chinese industries, China’s cement sector is fragmented and lacks
strong organizational structure from the center. Over the past several decades, local and
provincial government agencies have played a key role in expanding the cement sector.
2.1. Political Framework
The central government largely controlled production of cement through the 1970s. Much of
this was done by direct or indirect control of key state-owned cement production enterprises.
During the 1980s and 1990s, local and provincial governments asserted much greater influence.
Key government players in China’s cement industry include the State Development and
Planning Commission, the State Economic and Trade Commission, the Ministry of Construction,
the State Environmental Protection Agency, and the Ministry of Finance. Most of these
centralized organizations have offshoots at the local and provincial level.3,4,5
The State Administration of Building Materials Industry (SABMI), affiliated with the State
Economic and Trade Commission (SETC), is the key government body overseeing the cement
industry. SABMI draws up development plans for the industry that include foreign investment
and equipment standards. SABMI’s authority is much weaker in the non-state-owned enterprise
sector. Many of the plants built during the late 1980s and 1990s, therefore, are only nominally
under its jurisdiction. In 2000, much of the SABMI’s regulatory responsibility was absorbed
within the SETC. After these reforms, SABMI and other state administrations were reduced to
association status.4,5
The State Development Planning Commission and local planning agencies are responsible for
approving new cement plant construction. The approval process can be time consuming and
unclear. At the highest levels, China has taken steps to streamline and modernize the
bureaucracy, but change is occurring slowly.
China’s cement industry has also taken steps to reform itself from within. Much of the industry
is moving toward a group or association structure. China’s cement industry is moving more
slowly toward this structure than other industries in China because the cement industry is more
fragmented.5,6
The State Environmental Protection Administration also plays a role in guiding equipment usage
in the cement industry, although its power is limited. Provincial level environmental protection
agencies are responsible for enforcing emission limits and can direct capital toward the most
offensive polluters to upgrade their equipment.7
China is also trying to create world-class state owned enterprises by consolidating key
companies. In 1999, China formed the China United Cement Company—a large state-owned
holding company—by merging China New-Style Building Material Group Company, China
Building Material and Equipment Import and Export Company, and Anhui Hefei Cement
Research and Design Institute.8 China United is 85 percent owned by China New Construction
Materials Group. Its goal is to acquire enough companies to produce 20 million tonnes of
cement becoming one of the world’s ten largest cement enterprises by 2005. By September
1999, it had acquired two large cement plants and was close to acquiring a third. Several of the
firms that the company acquired have debt-asset ratios of more than 100 percent, which throws
into doubt the ultimate success of China United’s strategy.3Error! Bookmark not defined.
3
In the late 1990s, China also began a process to reign in the growing number of non-performing
loans at China’s four large banks. It modeled efforts after a fairly successful effort in the United
States during the late 1980s and created asset management companies to take over bad loans.
China established the Cinda Asset Management Company in April 1999 to manage bad loans
provided to many state-owned enterprises. Cinda began acting as financial advisory to China
United, but so far has had difficulty offloading the bad loans.3, 8
Legal Framework
China does not have a strong legal tradition, but many new laws have been enacted over the
past few years. After the founding of the People’s Republic of China (PRC) in 1949, general
legal development continued slowly until the late 1970s when China enacted legislation to
promote foreign investment. China’s legal system still suffers from inefficiencies and gaping
holes. Enforcement of the law is poor, although this is beginning to change. In modern times,
the structure of China’s law is influenced by the civil law legal system, which also is predominant
in continental Europe.9
Foreign investors face special difficulties due to the weak legal system in China. Rules and
regulations are not well defined or uniformly applied. Foreign investors often claim that the
Chinese cement market lacks legal transparency because:
Final decision-making authority is not clear

Laws and regulations change rapidly and are not uniformly enforced
Information on legal requirements is not widely and uniformly available.10
Furthermore, many laws and regulations are enforced to protect the interest of state-owned
companies. This protectionism deters independent foreign development.
Under Chinese law, land belongs solely to the government. Joint ventures can lease the land
for cement plants for periods of 40–50 years. Lease prices are negotiable and determined by
local conditions. In general, this leasing system functions, but costs are often high and lessees
may not be always be ensured all the legal protections offered in industrialized countries.14
Over 1000 of China’s 8000 plus cement plants are considered to be operating illegally because
they did not receive government approval prior to opening. Procedurally, cement plants must
submit project proposals, complete feasibility studies, and receive approvals from local,
provincial, or state officials depending on the size of the project. The State Development
Planning Commission provides central approval for large-scale cement producers. Some of
these illegal plants may have received only city or district level approval.5 The lack of
enforcement capability has permitted these plants to remain open.
2.2. Financing and Investment
Investment in China’s cement industry has surged over the past twenty years, although much of
it has been poorly directed. New investments between 1980 and 2000 led to an increase in
annual production of over 400 million tonnes. But due to the sector’s heavy fragmentation,
investment has not been conducted strategically. Much of the investment was directed in small
or now outdated vertical kiln technology. Only a small proportion was focused on more
advanced technology such as dry or precalcinator kilns. The small, outdated technology has
lower upfront costs, but consumes more energy and is responsible for more environmental
pollution than newer systems. It also prevents the economies of scale that can result in lower
costs over the long run.7
4
Local producers lack domestic financing for capital improvements. In some cases, companies
are not able to pay their workers or suppliers. However, companies generally do not declare
bankruptcy, presumably because of Chinese finance laws. Even when the investment council in
Guangdong province did declare bankruptcy, for example, the council made no layoffs.10 It
seems likely that “policy” loans to state-owned Chinese cement plants will continue until more
discipline is imposed that requires significant consolidation within the industry.
China’s rigid centrally controlled finance structure has led to inefficient results when investment
strategies fail. For example, beginning in 1985, the China Construction Bank helped create a
surplus in the cement industry by financing several hundred facilities with bank credit. As
conditions worsened because of the lack of equity financing, the Bank made 6.1 billion yuan
(about U.S.$750 million) in loans to 88 cement plants. Roughly 4.68 billion yuan ($560 million)
of the initial investment is now considered non-performing.11
The Chinese government has made some strides in using its investment strategies to promote a
more efficient cement industry. Recently, it shifted its investment in the cement sector away
from Southern provinces in favor of Beijing, Shanghai, and Western provinces where greater
cement production is needed.10
2.3. Foreign Investment and Participation
Domestic financing sources in China’s cement industry are limited. Foreign investment is,
therefore, highly sought. In recent years, it has become easier for foreign companies to obtain
permits for cement projects as Chinese policy and law has evolved. Nevertheless, foreign
investment has not developed as quickly as possible because Chinese policies for foreign
investment are not well defined or uniform.10 There is a significant amount of paperwork for
foreign investment and joint ventures, and as mentioned above, the legal atmosphere of the
industry is uncertain.14 There is hope that some of the regulatory barriers associated with
foreign investment will be alleviated when China finally joins the World Trade Organization.5
On a relative scale, however, many foreign investors see China as a relatively safe investment
despite the deterrents. For example, the Chinese market is considered to be lower risk than
Indonesia. Despite infrastructure shortages that are discussed below, China’s transport,
electricity, and water infrastructure is reliable, especially compared to other developing Asian
countries.5
By 1995, foreign investors from Japan, South Korea, France, and Taiwan were financing nine
joint or wholly owned ventures in China, each with an annual capacity of at least 1 million
tonnes. Companies from the United States and Europe were eager to invest in the sector.
Foreign-backed cement projects were located primarily in coastal areas such as Jiangsu and
Fuijian provinces, Dalian in Liaoning Province, Qinhuangdao in Hebei Province, and Yantai in
Shandong Province.12
China currently is encouraging foreign investment in two areas: dry production technology for
clinker with daily output of 4000 tonnes or more, and bulk cement transportation and storage
facilities.13 China hopes to make foreign participation account for about 20 percent of total
investment in the industry, but many consider this an ambitious target.7
In addition to foreign investment, China has used debt financing to develop the industry. By
1995, China had borrowed more than $1 million from the World Bank and the Asian
Development Bank to import equipment for cement production. The government and individual
enterprises have also borrowed directly from foreign governments including Japan, Canada,
Kuwait, Spain, Denmark, and France.13
5
3. Raw Materials and Reserves

Traditionally, Chinese cement plants were located close to demand centers. Recently, as
transportation services improved, some cement plants have been located closer to resource
deposits. Presumably, these moves will lower shipping costs for raw materials and will help
alleviate the overburdened Chinese transportation sector. One barrier to this development,
however, is the relative scarcity of water resources, necessary to cement production, especially
in northern and western China.10
Until recently, some cement producers bought their raw materials on the basis of spot markets.
Producers are starting to move toward more long-term contracts.10
Mining activities in China are not very advanced. A heavy reliance on non-mechanized labor
and a lack of safety precautions lead to numerous mining accidents and deaths each year.10
Currently, it takes about 1.5 tonnes of limestone and about 200 kilograms of coal to produce
one tonne of cement. But the advanced dry rotary kiln process provides for much for efficient
production of cement.5 (See Table 3-1) About 300-400 kg of cement is needed to produce one
cubic meter of concrete.
Table 3-1. Average Input Levels for Cement Production by Type of Process in
China
Input Wet/Vertical process Dry/Rotary process
Coal 250 kg/tonne cement 130 kg/tonne cement
Total power 100 kwh/tonne cement 90-95 kwh/tonne cement
Limestone 1.35 kg/kg clinker
Clinker 1.2 kg/kg cement
Alumina Same
Silicon Same
Iron Same
14
Source:
China’s cement industry is very energy intensive so changes in the country’s energy sector are
likely to have major impacts on the cement industry. Currently, China relies on coal almost
exclusively to produce cement.10 Unlike some industrialized countries, China has not yet moved
to burning trash and other alternative energy sources in its cement kilns, although that may
become an option if coal prices continue to rise. Chinese coal prices were freed in the early
1990s and, outside of the main producing areas, are now relatively high. In southeastern
coastal China, coal imported from Australia or Indonesia is now competitive with domestic coal
sent from the north.
The Chinese government has demonstrated increasingly serious measures to improve the
country’s negative environmental image, much of which is due to its use of coal. New
regulations are coming into effect that may make coal more expensive. Other fuel sources for
cement production, such as natural gas, will grow in importance, although it seems unlikely that
these relatively expensive, high-quality fuels will gain market share in the cement sector where
energy costs are critical for competition.
Other factors, however, continue to force the cement industry to rely on coal as its primary
energy source. China’s coal sector has been vastly oversupplied since 1997, resulting in falling
prices and efforts to close small, inefficient and dangerous mines. Many of the small mines
6
have continued to operate illegally and sell their labor-intensive coal on the black market for
very low prices. It appeared that the coal glut was coming to an end in early 2001 and coal
prices were beginning to rise again.
Over the long run, economic reforms will help China achieve greater economies of scale in the
coal sector. Consolidation of small mines and permanent closure of the most inefficient mines
will rationalize the coal sector. Even as the coal sector begins to absorb some of the
environmental costs of coal use, the greater economies of scale will likely offset some of these
higher costs.
7
4. Cement Production
China is, by far, the world’s largest cement producer with an estimated production of over 570
million tonnes in 2000.15 (See Figure 4-1.) Per capita cement output has reached 448 kg,
which is about 200 kg higher than the world average.11 At the founding of the People’s Republic
of China in 1949, total national production was only 660,000 tonnes per year.16 By 1985, China
had become the world’s leading producer. It has retained the leading position for sixteen years,
and now produces about 36 percent of the world’s cement. The next three largest producers—
the United States, India, and Japan—produce less than 20 percent of the world’s cement
combined.
700 25
Growth from Previous Year (%)

600
Cement Production (Million
20
500
15
Tonnes)
400
300 10
200
5
100
0 0
1980 1985 1990 1995 2000
Cement Production Growth
Note: 2000 output is estimated, 2001 output is forecast.

Source: China Statistical Yearbook 1999, State Statistical Bureau: Beijing, 2000.
Figure 4-1. Cement Production, Selected Years, 1980–2001* (million tonnes)
Most of the growth in Chinese cement production is due to the booming construction sector.
During the 1980s, there was significant growth in the rural residential construction, where
demand for low-quality cement (#325 grade) was high. During the 1990s, however, growth in
demand was mainly in the higher-grade categories (#425 and #525). Cement output grew by
over 20 percent per year in the early 1990s but has slowed to less than 4 percent since 1997.13
By 1999, China found itself with a cement surplus. The State Development and Planning
Commission had planned to reduce cement production by 100 million tonnes by the end of
2000, but appears not to have met this target.3
Shandong province in eastern China is the country’s largest cement producer with an output of
54 million tonnes in 1998. Other major cement provinces are Guangdong, Hebei, Jiangsu, and
Henan. (See Table 4-1) Interestingly, cement output in the most developed and progressive
provinces has remained stable or declined in recent years.17
Table 4-1. Cement Output from Key Chinese Provinces

(Million Tonnes)
1996 1997 1998
Shandong 56 58 54
Guangdong 53 51 51
8
Table 4-1. Cement Output from Key Chinese Provinces

(Million Tonnes)
Hebei 34 38 39
Jiangsu 40 40 39
Henan 31 34 38
Zhejiang 35 34 34
Sichuan 31 24 25
Anhui 23 23 19
Source: China Statistical Yearbook, various years.
Chinese planners project that cement output will increase by 3.4 percent annually during the
Tenth Five-Year Plan (2001–2005) and by 2.9 percent during the Eleventh Five-Year Plan
(2006–2001).13 They anticipate producing 660 million tonnes by 2005, 750 million tonnes by
2010, and 800 million tonnes by 2015. (See Figure 4-2) Clinker production is to increase by 10
million tonnes per year from 2001 to 2005. Other forecasters suggest that China will hold
production close to 2000 levels while upgrading technology and efficiency throughout the
industry.7 So far, the conservative production estimates seem more likely.
4.1. Cement Products and Quality

China produces several strength grades of cement including #325, #425, #525, and #625.
General types include silicate cement, general silicate cement, slag silicate cement, volcanic
ash silicate cement, powdered coal silicate cement, and compound silicate cement. Special
types include oil well cement, medium-low heat cement (dam cement), fast solid cement, anti-
sulfate cement, white cement, and colored cement. China also produces sulfur aluminum
cements and aluminum cements.13
850
800
800
750
750
Million tons
660
700
650
576
600
550
500
2000 2005 2010 2015
Year
Source: [13]
Figure 4-2. Projected Chinese Cement Production, 2000-2015
Overall, Chinese cement is not of particularly high quality. This can be attributed to the
widespread use of vertical kilns. According to 1997 data, only about 10 percent of production
was high-grade #525 cement. Medium quality #425 cement makes up 62.7 percent of Chinese
production and low-grade #325 cement makes up the remainder.13,15 There are surpluses and
low prices for low-quality cement, and shortages and higher prices for higher-quality cements.10
9
Chinese authorities are making moves to improve the quality of Chinese cement. #325 cement
production is to be eliminated by the end of 2005 in favor of higher-grade cements. Part of this
strategy includes bringing new kilns online and upgrading old facilities, while older, less efficient
equipment, especially shaft kilns, are phased out.15 Also by 2005, high-quality cement is to
make up 40 percent of cement production.13 (See Figure 4-3) SETC had begun to implement
these plans by April 2001.
C ement Production by Grade in 2000 C ement Production by Grade in 2005
(570 million tons) (660 million tons)
Sp ecia l
625#
625# cem en t 52 5 #
Sp ecia l cem en t 2%
1% 6% 2 3%
3% 52 5 #
1 2%
3 25 #
32 5 # 0%
3 2%
42 5 #
5 2%
42 5 #
6 9%
Source: [9]
Figure 4-3. Chinese Cement Production, by Grade, 2000 and 2005
China is also studying whether it should revise its cement production so that it is in accordance
with ISO standards.13 In April 2001, the country announced that strength testing standards
would be based on ISO 32.5 standards.14
4.2. Equipment and Technologies
This is wide variation in equipment used to produce cement in China. As recently as June
2000, China had 13,250 kilns of various type, size, and age still in operation.15
In general, Chinese producers operate a low number of technologically advanced rotary kilns in
favor of older vertical kilns.18 Vertical shaft kilns account for more than 400 million tonnes of
cement production. As production more than tripled from 1985 to 1997, the proportion of shaft
kilns to rotary kilns remained relatively constant; use of both types of kilns tripled during that
period.5 (See Table 4-2)
Table 4-2. Rotary and Shaft Kiln Production, 1985–2000 (million tonnes)
Description 1985 1987 1989 1991 1993 1995 1997 2000
Rotary kilns 33.4 37.7 47.7 50.1 77.4 92.5 97.5 137.5
% of Total 22.9 20.3 22.7 19.9 21.3 19.4 18.6 24.1
Vertical shaft kilns 112.5 148.5 162.7 202.5 295.98 383.2 425.9 432.5
% of Total 77.1 79.7 77.4 80.1 78.7 80.6 81.4 75.9
Source: [7]
Because of recent lulls in demand as a result of economic reforms, Chinese cement officials
have had an opportunity to evaluate and rationalize its obsolete and inefficient cement
production capacity. The government has proposed a strategy of closing older plants and
building newer ones.15
10
China has targeted 100 million tonnes of vertical kiln production capacity for closure because of
their obsolescence. Vertical kilns produce lower strength cement—clinker is usually #100 lower
in strength classification than rotary kilns. Vertical kiln cement has a high percentage of free
calcium in the clinker making it a poor choice for concrete mixtures.5,13
Most new plant construction will be located in development regions, which include central and
western China and it will presumably include newer rotary kiln construction.15
By 1998, China had 86 dry-process cement production lines. This accounted for only 10
percent of cement production. Only eight of these lines were up to world standards; they had
daily capacities of clinker of 4000 tonnes, or 10.40 million tonnes per year, 2 percent of national
totals.18 By 1999, there were 121 dry-process lines with capacities ranging from 700 to 7200
tonnes per day with favorable coal consumption and quality rates. Forty-three of these lines
had capacities of over 2000 tonnes per day. (See Table 4-3) Most of the lines with capacities
over 2000 tonnes per day had foreign equipment and processes. In addition, by 2001, there
were over 400 preheater lines that ranged from 150 to 600 tonnes per day capacity.20
Table 4-3. Kiln Types and Major Technical and Economic Performance in 1999
Coal Power
Clinker Capacity No. of
Kiln type consumption consumption
index Factor (%) kilns
(kgce/t) (kwh/t)
Precalcined kilns 605 70.5 133.1 114.8 121
Suspended preheater kilns 573 76.5 172.3 109.9 348
Preheater shaft kilns 597 78.5 167.1 120.7 140
Exhaust heat generating kilns 581 76.1 230.3 110.0 88
Lieber kilns 590 75.1 160.6 121.1 20
Hollow rotary kilns 577 64.5 220.7 110.5 383
Wet kilns 620 85.8 195.5 103.4 188
Mechanical kiln 550 84.0 144.7 97.1 7593
Ordinary shaft kilns 480 60.5 157.3 94.0 344
Source: [7]
Prior to 1995, China purchased most of its cement-production equipment from prominent
suppliers in Germany, Japan, Denmark, and France. A small, but significant, amount of its
equipment was purchased from the United States. (See Table 4-4) Because of the need to
upgrade and modernize its cement-production equipment, China is predicted to be the world’s
largest market for cement machinery until 2010.19
Table 4-4. Major Foreign Cement Equipment Suppliers

Company Country
FL Smith Cement Machinery Company Ltd. Denmark
Fuller Company United States
KHD Company Germany
Dyckerhoff Aq Company Germany
FCB Company France
Chuan Qi Company Japan
Chichibu Onoda Cement Corporation Japan
Source: [13]
Foreign joint ventures are a considerable source of newer rotary kilns. But, most of the 150
rotary kilns in use are Chinese-owned. The larger kilns use foreign technology, but there are
some lines with capacities of 2000 tonnes per day that use very little foreign equipment.5
11
As priorities for foreign investment were shifted in the late 1990s, China emphasized that foreign
investment in the industry would be focused on production lines using the new dry process for
cement clinker with capacities of 4000 tonnes or more.17 China has set technology-related
goals for the cement industry. These include:
Dry processing technology using out-of-kiln disassemble technology

Power-saving technology for standing grinder, roll, squeezer, powder-selecting and fine
grinding equipment
Co-generation by medium to low temperatures
Low-grade primary fuel and industry waste.13
Included in these goals are renovations of 2.2 meter or larger diameter vertical kilns, cement
flourmills, stations for bulk and commercial cement, additives, and building blocks. Finally,
technology for processing non-metal products including calcite, kaolin, and quartz, are also
included.13
Also under these policies, native kilns, general vertical kilns, and mechanicals kilns smaller than
2.2 m in diameter and dry and wet processing production lines with hollow kilns under 2.5 m in
diameter were to be closed. Lower-capacity furnaces and mills were to be shut down. Finally,
no new construction or expansion of wet processing platforms, dry processing hollow kilns,
vertical lepol kilns, or varied vertical kilns would be permitted, according to a regulation from the
SETC in 2000.13
China is placing a priority in acquiring precalcined lines and other advanced technology and
processes in the future. It plans to increase cement production from pre-heater and calciner kiln
to 20 percent of total production by 2005. This will increase capacity by 60 million tonnes and
cost about 30 billion yuan. There are 50 units currently under construction with capacity of 22
million tonnes. Large pre-heater and precalciner equipment with daily capacities of 5000 tonnes
will be developed.7
China has set target production goals for various types of equipment. (See Table 4-5.)
Achieving such rapid growth in rotary kiln technology will likely require special incentives from
the central and local governments.
Table 4-5. Cement Production Goals by Type of Kiln, 2000–

2015 (million tonnes)
Kiln Type 2000 2005 2010 2015
Rotary kiln 138 245 330 400
Vertical shaft kiln 433 420 420 400
Total 476 660 750 800
Average 100 200 300-400 400-500
Source: [7,20]
The cement industry has reached a point in its technological development that it has begun to
export cement technology to developing countries. China signed deals to construct cement
plants in the Philippines, Egypt, and Iran.21,22,23 The deals have included equipment, staff
training, and installation of turnkey facilities.24
12
4.3. Energy Consumption

Cement production is very energy intensive. In China, energy costs accounted for roughly 40
percent of the total manufacturing cost of cement in the early 1990s.25 China’s cement sector is
considered inefficient due to the large number of small or outdated kilns, but its overall energy
intensity was just above the world average of 4.8 gigajoules of primary energy per tonne of
clinker. (See Figure 4-4)
Primary Energy Intensity (GJ/t)
7
6
5
4
3
2
1
0
a
nd
ia
SA
n
na
a
y
a
yp
an
re
di
pa
si
es
la
hi
us
U
In
Eg
Ko
m
Ja
n
ai
R
do
er
Th
G
In
Source: [26]
Figure 4-4. Primary Energy Intensity of Selected Cement Producing Nations
Coal continues to power kiln production in China but has tended to decrease over the last ten
years. Coal consumption for shaft kilns, however, has had almost no change indicating that the
use of these kilns has peaked.20 (See Table 4-5 above.) Approximately three-quarters of the
coal-fired electricity in the cement industry is used to run motors, fans, and environmental
control equipment. Improving energy efficiency is important to a wide range of stakeholders
because it cuts energy costs, improves local environmental quality, and reduces greenhouse
gas emissions.
China’s cement industry consumes roughly six percent of the nation’s energy, with 80 percent of
that coming from coal and other fossil fuels and the remaining 20 percent from electricity. The
intensity of fuel use has declined over the past two decades while the intensity of electricity use
has risen slowly. (See Figure 4-5)
Energy consumption varies significantly among Chinese cement producers due to the wide
range of technologies in use. Modern precalciner plants in China are as efficient as any in the
world, while some of the waste heat power generation kiln plants use more than twice as much
energy per unit of clinker produced. Dry processes and precalciners will permit China to use the
same amount of coal but increase efficiency and capacity of kiln production.14 Closing the
smallest, most inefficient kilns is the most important step towards improving overall energy
efficiency in China’s cement sector.
Recent reports suggest that about 6000 plants are to be closed in the medium term with about
4000 closures to come in 2001.14 China plans to accomplish this by not re-certifying plants that
13
Produce #325 grade or lower cement, or

Use vertical kiln production lines with kiln diameters of less than two meters and capacity of
less than 30,000 tonnes per year.14
250
200
150
100
50
0
1980 1985 1990 1995
Fuel Intensity (kgce/ton clinker) Electricity Intensity (kWh/ton cement
Source: [27]
Figure 4-5. Changing Fuel and Electricity Intensity in China’s Cement Industry
These closures are expected to reduce total production by about 100 million tonnes, a 20
percent reduction. The schedule for these closures seems ambitious, especially considering
that rural reforms would likely slow due to rising unemployment.14
If China were to shut down all plants that produce #325 grade cement and replace the output
from plants with modern efficiencies, it would save at least 15 million tonnes of coal each year.
This coal combustion is responsible for about 30 million tonnes of carbon dioxide emissions,
250,000 tonnes of sulfur dioxide, and over 5 million tonnes of solid waste and dust each year.
4.4. Bulk Cement
The percentage of Chinese cement shipped in bulk is growing rapidly. Almost all cement was
shipped in bags through the early 1980s, but bulk shipments reached nearly 20 percent in 2000.
In industrialized countries, bulk cement accounts for more than 60 percent of all cement
shipments.28 Bulk cement requires dedicated transportation equipment and storage facilities,
but has environmental benefits associated with using less material for packing.
China produced 111.2 million tonnes of bulk cement in 2000, about 8 percent above projections
and 17.5 million tonnes more than 1999. This was the first time that the figure had exceeded
100 million tonnes. The increase to over 110 million tonnes had been a target of the Ninth Five-
Year Plan (1996–2000). Large and medium-sized cement plants produced 61.9 million tonnes
of bulk cement in 2000, a 21 percent increase over 1999. Small plants produced 49.3 million
tonnes in 2001, a 16.3 percent increase from 1999.29
Bulk cement production was expected to reach 182 million tonnes per year during the Tenth
Five-Year Plan (2001–2005). China plans for bulk cement to make up 29.5 percent of total
cement production by 2005. Four provinces are expected to continue to be major producers:
Jiangsu (22 million tonnes), Shandong (20 million tonnes), Guangdong (18 million tonnes), and
14
Zhejiang (14 million tonnes).30 Foreign investment in bulk cement storage and transportation
facilities is now strongly promoted.
4.5. Special Cements
Production of special purpose cement is likely to grow rapidly in the future. Current output
levels are too low in quality, quantity, and variety to satisfy future demand in China’s rapidly
evolving economy. In 1995, China produced 12 million tonnes of special cement, 2.7 percent of
total cement production. For comparison, developed countries produce 6–10 percent special
cement. Statistics for 1998 showed a decrease in the proportion of special cement to overall
production to 1.4 percent. By 2000, China planned to increase special cement production to 15-
20 million tonnes per year.13
Aluminous cement, used in specialized applications requiring quick bonding or resistance to

high temperatures or as an adhesive in ceramic goods, was only produced in China beginning
in the late 1990s. In fact, in 1999, a prominent cement firm in Europe agreed to provide
assistance to Canada’s SNC-Lavalin in constructing a $25 million, 30,000-tonne capacity
aluminous cement plant in Tainjin.31
4.6. Ownership
Ownership in the industry is currently a mix between state-owned, partially private, and foreign-
owned companies. Collectively owned enterprises, which are generally collaborations between
local government actors and private investors, now account for over half of all cement
companies in China. (See Figure 4-6.) While there are still more state-owned than private
producers, China has allowed some privatization in both domestic and foreign stock exchanges.
China continues to encourage foreign investment in the industry and has seen investment from
major international cement producers since 1995.15
Foreign- Investment from

Invested Hong Kong,
Enterprises Macao, Taiwan
Joint operation
(FIE) 1%
2%
2% Individual and
other
Share company 0%
5%
Private
10%
Collective
56%
State-owned
24%
Source: [13]
Figure 4-6. Ownership of Chinese Cement Enterprises, 1999
15
As of 1998, there were 287 foreign-invested enterprises (FIE) in joint ventures, co-ops, or wholly
owned. FIEs account for 2.8 percent of all cement producers and they produce about 80 million
tonnes, 1.2 percent of national output. Participants from Hong Kong, Macao, or Taiwan make
up about 46.9 percent of all FIEs.13 (See Table 4-6)
Table 4-6. Foreign-Invested Enterprises in China’s Cement Industry

Type Number %
Joint venture (not Hong Kong, Macao, or Japan) 121 42.1
From Hong Kong, Macao, or Taiwan 106 36.9
Co-operative venture (not Hong Kong, Macao, or Japan) 21 7.3
Wholly-owned foreign enterprise (not Hong Kong, Macao, or Japan) 10 3.5
Total FIEs 287 100
Source: [13]
4.7. Major Producers

Cement producers are spread throughout China with medium and large-scale cement
enterprises located in all regions except Tibet. (See Figure 4-7) However, much more cement is
produced in coastal areas, which comprise 71.5 percent of national production. Shandong,
Guangdong, Hebei, Jiangsu, and Henan provinces are the most prominent cement producers
accounting for 44 percent of national output.13
Only about 570 of China’s estimated 8500 cement producers had production capacities above
275,000 tonnes per year in 1995. (See Table 4-7) Figure 4-8 illustrates the small size of
average Chinese cement plants compared to plants in France, the United States, and Germany.
With the industry developing rapidly in the last several years, however, there are now 40
enterprises with annual capacities over 1 million tonnes. Thirty of these producers are located
in coastal areas.13
Table 4-7. Large, Medium, and Small Cement Producers, 1995

Large and Medium Size
Description Total Small Enterprises
Enterprises
Cement production (million tonnes) 476 158 318
Producers 8435 576 7859
% of total 100 6.8 93.2
Average capacity (thousand tonnes) 56.4 274.6 40.4
% of total 100 33.2 66.8
Source: [7]
16
RUSSIA
Lake
Baikal
Heilongjiang
KAZAKHSTAN
Lake
Balkhash
MONGOLIA
Jilin
KYRGYZSTAN
Liaoning
NORTH
Xinjiang Hebei KOREA
AFG. Gansu Nei Mongu Beijing
SOUTH
PAK. KOREA
Shanxi
Ningxia
Yellow
Sea
Qinghai Shandong
Henan
Shaanxi East China

Anhui Jiangsu Sea
Xizang Shanghai
Chongqing Hubei
Sichuan
NEPAL Zhejiang
Jiangxi
Hunan
BHUTAN
Guizhou Fujian
INDIA > 10% total
Yunnan Guangxi TAIWAN
BANGLADESH Guangdong
5-10% MYANMAR Hong

VIETNAM Kong
1-5%
Bay of LAOS
Bengal
Hainan South China
Sea
PHILIPPINES
(<1% not shown)
500 km
0 500 Miles THAILAND

CAMBODIA
Source: [60]
Figure 4-7. Provincial Shares of Chinese Cement Production, 2000
17
900.0
800.0
800.0
663.7
700.0
552.6
600.0
1,000 tons
500.0
Avg Production by Plant
400.0
300.0
200.0
56.4
100.0
0.0
China France United Germany
States
Country
58
Sources: Number of US plants and US and European production
http://minerals.usgs.gov/minerals/pubs/commodity/cement/170396.txt
59 7
Number of European plants ; China plants and production:
Figure 4-8. Average Production by Cement Plant, 1995, Selected Countries
China has just 150 cement producers that can be classified as modern. Example companies
from this category are listed in Table 4-8. These producers have a combined estimated
capacity of about 200 million tonnes, about 36 percent of China’s production.15 Nevertheless,
production is considerably widespread among producers; only ten produce more than one
million tonnes annually. Ninety-seven percent of Chinese cement producers produce an
average of 40,000 tonnes per year. For comparison, other major industrialized cement
producers, such as the United States, Japan, South Korea, Russia, and France average 40 to
50 major producers that produce up to four million tonnes annually.3
Table 4-8. Key Chinese Cement Producers by Province and Output

Name Province Annual Output*
Anhui Conch Cement Anhui 8.0
Hebei Jidong Group Hebei 4.5
Bohai Group Hebei 2.0
Lafarge (foreign) Sichuan, Hebei
Holderbank (foreign) Jiangxi, Anhui
Taiheiyo Cement (Japan) Jiangsu, Liaoning 4.0
Mitsubishi Cement (Japan) Shandong 1.2
Chia Hsin Group (Taiwan) 1.9
Asia Cement Hubei
Daewoo Shandong Cement (South Korea) Shandong 2.5
CBR’s China Century Cement Guangdong
* Million tonnes; Source: [15]
Other large cement producers are outlined in Appendices A and B.
China plans to increase the average production capacity at facilities throughout the industry.
Currently, the overall average capacity is 100,000 tonnes per enterprise. The country plans to
raise this figure to 200,000 by 2005, 300,000–400,000 by 2010, and 400,000–500,000 by 2015.
18
Closing thousands of the smallest producers will make this goal easier to achieve than first
glance would suggest.7
4.8. Small Producers
Several factors contributed to the growth of small cement producers in the 1980s and 1990s.
During this period, there were high prices and a shortage of cement. In addition, China
loosened restraints on the economy. This led to small-scale, unplanned growth, with producers
emerging in small villages and towns.5
In 1995, there were nearly 8000 small cement producers, accounting for well over 90 percent of
the industry in China, with average annual output of less than 60,000 tonnes. Half of these
facilities were rural township enterprises with an average annual output of less than 30,000.32
Also as of 1995, township cement plants with small, labor-intensive kilns produced
approximately 70 percent of the country’s cement.19 This is an improvement over 1993 in which
nearly 88 percent of Chinese cement was produced in local plants and only 12 percent was
produced in key state plants.33
As in other industries, a significant proportion of Chinese cement is produced at the local level
by small, obsolete facilities. China announced in mid-1999 that it would begin closing small
operations. It targeted almost 2000 unlicensed cement producers as well as outdated cement
production lines for closure by 2000. The closures were expected to reduce the country’s
cement production by 100 million tonnes. At the same time, no new cement plants were to be
opened.34 The cuts were to be phased: 40 million tonnes would be cut in 1999 and 60 million
tonnes would be cut in 2000.35 These closures were to shut down 676 small vertical kilns and
490 vertical kiln production lines with diameters smaller than 2 meters in 1999 and 1470 small
mechanic vertical kilns with diameters smaller than 2.2 meters and 395 production lines in
2000.36 Reports suggest, however, that these plants have not all been permanently closed.5
Labor issues remain an import issue behind the failure to close cement plants as planned.
19
5. Labor
Labor productivity in China’s cement industry is lower than in developed countries.7 As a result
of China’s efforts to modernize its cement industry and the resulting plant closures,
unemployment levels in the industry have risen in the last few years. Problems from layoffs
could be acute in areas that depend on local cement facilities. The government is expected to
impose transition periods to lessen the impact.15 Social insurance is determined at the
provincial or municipal level; there will be regional variations on what unemployed workers will
receive.14
Many of employees at plants that are to be closed during the Tenth Five-Year Plan are farmers
that work the rural plants during off-seasons. Rural incomes will therefore be further eroded in
some areas if closures are carried out according to plans.14
Despite reports of recent layoffs, there continues to be a problem with social contract issues.
China is less willing to close plants and lay off workers because of the risk of social instability
that unemployment might create. China hopes to create a more robust social security system
by requiring state-owned companies that list on the stock market to contribute to a nationwide
fund. Clearly, fears of unemployment have slowed plans of closing plants. Even when the state
government orders closures, local governments often ignore such orders to maintain
employment, or to protect their own investments in local plants.5
In general, Chinese workers are technically capable but safety at many plants is poor. Chinese
plants are labor intensive by design; most regions have not placed a priority on capital
investment due to the abundance of labor. Chinese plants may require as much as ten times
the labor of developed countries. Foreign joint ventures and investors are restricted by the
amount of capital used in their plants and are often required to use more labor than would be
optimal. 5
See Appendix A for Chinese cement producers with over 2000 employees.
20
6. The Market for Cement

China now consumes about 35 percent of the world’s cement. This figure is expected to rise to
about 40 percent by 2010. In recent years, though, overcapacity has resulted in extremely low
prices. Profit margins for most cement producers hover near zero.10 Overall, the industry was
profitable in the early 1990s but lost money in the mid 1990s. (See Table 6-1)
Table 6-1. Profitability of the Cement Industry, 1992–1997 (Yuan million)

1992 1993 1994 1995 1996 1997
Total Profit 47.12 110.32 54.42 5.39 -22.95 -35.37
Profit/Output Ratio (%) 10.17 14.20 5.89 0.52 -1.96 2.94
Source: [13]
With an economy relatively insulated from international events, including a refusal to devalue its
currency, China was able to avoid many of the effects of the recent Asian economic crisis. As a
result, domestic demand for cement has been suppressed for the last several years and growth
in consumption has been slower than expected.15
6.1. Domestic Consumption
Since 1995, cement consumption has matched production, but overall growth has slowed
considerably since the early 1990s. (See Table 6-2)
Table 6-2. Cement Consumption, 1995–2001 (million tonnes)

1995 1996 1997 1998 1999 2000* 2001**
Consumption 468 480 501 511 557 560 570
% Increase -- 2.6 4.4 6.0 8.3 0.5 1.8
Note: Sources conflict on actual output levels. *Estimated, **Forecast
Source: [13,15]
Despite the fact that there are medium and large cement enterprises located throughout the
country, the supply and demand of cement varies by region according to differing development
trends. A handful of provinces (Shandong, Hebei, Liaoning, Henan, Anhui, Hunan, Guangxi,
and Gansu) have cement surpluses. Several other provinces (Beijing, Tianjin, Shanghai,
Guangdong, Fujian, Hainan, Heilongjiang, Inner Mongolia, Xinjiang, and Hubei) have cement
deficits. Other provinces have relatively balanced supply and demand.13
Forty percent of China’s cement is used for basic infrastructure construction. Twenty-five
percent is used for maintenance and 33 percent is used in rural areas. 13 Consumption of
cement is clearly linked to economic growth.
One unique characteristic of China’s transportation sector is that it uses cement in road
construction rather than asphalt. The State Development Planning Commission announced that
it would increase total investment in fixed assets to 3.59 billion yuan (US$433 billion) in 2001, a
ten percent increase over 2000. Most of this investment will be used in infrastructure
construction, environmental protection, technology upgrading, innovation, and education.37
Infrastructure development in western China is expected to increase over the next few years.
Construction bonds totaling 150 billion yuan (US$12 billion) will be issued in 2001 to finance
large infrastructure projects in the area.37
China had planned to invest US$750 billion in its infrastructure from 2000–2003. These
improvements were to focus on transportation, irrigation, energy, and water conservation,
requiring strong new growth in cement demand. Cement demand was expected to increase
21
9 percent annually from this spending. It does not appear that the plans have materialized,
though, at least not during 2000.38
China planned to increase living space for urban residents to about nine m2 by 2000. This
meant an increase in cement demand as about 240 million m2 of residential housing was to be
built from 2000–2002.17 China also planned on considerable construction for the China National
Games in 2001 in Guangdong. About 30 billion yuan was to be spent on several major
facilities.39 With the recent announcement that Beijing will host the Olympics in 2008, it is likely
that the city will see increased cement demand as well.
Since only rotary kiln cement can be used legally to build high-rise buildings in China, the
demand for this product was expected to reach about 170 million tonnes by 2000 and 250
million tonnes by 2005.
Brand names are not yet recognized in China but the effects of marketing are expected to
improve as the market changes.
While World Trade Organization conventions may not have a significant effect on the import or
export of cement in China, WTO may have an impact on the domestic use of cement because
China’s construction industry will be opened to foreign builders over 2001–2006. Foreign firms
will be permitted to enter every part of the construction sector aside from general urban planning
and high-level real estate projects. Accompanying this change, China will move away from
enterprise-provided housing to a privatized housing market. This is expected to stimulate
housing demand from low and middle income Chinese.40
6.2. Cement Prices
Cement prices were deregulated by the State Planning Commission and the State
Administration of Building Materials Industry in 1996. This permitted major producers to
compete on a local level with many township enterprises, which offered more flexible pricing.
Prior to this move, 45 state-owned enterprises, which produced a large proportion of cement to
priority infrastructure projects, were permitted “price-setting rights” in 1993. Wholesale high-
grade rotary kiln cement was priced at 235 Yuan (US$28) per tonne by state regulation.
Production costs at the time were 245 Yuan (US$29.50) per tonne. Deregulation, however, did
include measures that prevented producers from “monopolizing the market by cutting prices.”41
Since 1997, deflation and increased competition throughout China have pushed down cement
prices. Prices in Shanghai have dropped more sharply than any other area. Despite the
increase in construction, cement prices have fallen 25 percent to US$36 per tonne for high-
grade #525 bulk cement and US$38 per tonne for bagged cement.15 Cement prices vary
regionally, though. For example, prices in Guangdong rose in late 1997 and early 1998 and
were expected to continue to rise.39 By 2000, export prices were marked down to about US$20
FOB. 15
Until recently, many cement producers sold their products on the basis of spot markets, but
some producers are starting to move toward more long-term contracts.10
6.3. Imports
China imports only a tiny fraction of its total cement and clinker demand. Cement imports
topped 1 million tonnes in 1993 and 1994 due to the extremely rapid growth in domestic
demand, but declined by 1995 due to increased domestic production capacity.13 (See Table 6-
3)
22
Table 6-3. Cement Imports, 1995–1998 (thousand

tonnes)
1995 1996 1997 1998
Cement 313.6 51.7 168.7 179.8
Clinker 26.3 0.09 9.3 123.1
Source: [13]
There are currently tariff and non-tariff barriers that prevent greater imports of cement to China’s
booming coastal cities. First, import tariffs on imported clinker and cements range from 6 to 8,
but this rate is not expected to decline after China joins the WTO. Far more influential are the
non-tariff barriers that include:
A strong belief that China should be self-sufficient in cement due to its enormous production
capability
Limited port and distribution facilities
Limited distribution of import licenses.
Taiwan, Japan, Italy, Canada and the United States are the key import sources for cement.
6.4. Exports
China opened its cement market to international sales in 1978. But export levels remained
sluggish for a decade. China exported only 180,000 tonnes in 1989, to Hong Kong and Macao.
Since 1990, though, exports have been considerably higher but have fluctuated with the
demand in the Chinese market.32 (See Table 6-4)
Table 6-4. Cement Exports, 1998–2001* (million tonnes)

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Cement 6.8 10.7 6.5 2.4 4.5 8.2 11.8 11.7 8.2 7.2 5.5 2.5
Clinker 0.9 0.2 2.4 0.4 0.6 0.2 0.2
* Note: Sources conflict on actual output levels. 2000 Estimated, 2001 Forecast
Source: [13,15, 32]
The ability to export cement is limited, though, as cement calcinations lose CO2 over time. This
leads to relatively low trade rates for the product. As a result, international trade agreements,
such as the World Trade Organization, are expected to have little impact on the cement
industry.5
For the most part, China exports shaft kiln cement of #425 and #525 grade. These cements
comprise 60–70 percent of total exports. Foreign participation and joint ventures accounted for
about 25 percent of the cement that was exported in 1996. Exports of rotary kiln cement are
relatively small. Despite these reports, there have been allegations that exported Chinese
cement is substandard.42 In an effort to increase exports and to be more competitive on the
world market, China sought to increase the quality of cement while decreasing production
costs.13
Major exporting provinces include Shandong, Jiangsu, Guangdong, Liaoning, Guangxi, and
Hebei. An average of 5 percent of production in each of these provinces is exported. Together,
they account for over 90 percent of China’s exports.13
Overseas sales are being coordinated by large international organizations as many large-scale
Chinese producers are reducing export sales. Export prices have been reduced to about
23
US$20 FOB. The main exporters are Daewoo Shandong with 2 million tonnes, and Taiheiyo
with 1.8 million tonnes. The United States was the main customer of both companies.20
As recently as 1998, China was the second leading cement exporter in the world. China
accounted for about 17 percent of the total world cement trade.13 But due to the recent Asian
economic crisis, China’s exports decreased by nearly 30 percent as regional cement prices
dropped. Prior to that, China expected to export 10-15 million tonnes in 2000. 13 China shielded
itself from much of the impact of the Asian financial crisis because of its isolated economy, but
cement exports to some nations declined.
The regional recession caused the closure of several new Chinese cement plants, which were
targeted for foreign markets. Restructuring of price controls was suggested as a potential way
for China to maintain its market share. Prior to the recession, China exported 11.68 million
tonnes of cement to Asian-Pacific countries.43
Daewoo Shandong Metal and Minerals Import/Export was the largest exporter in 2000 with
sales of about 2 million tonnes. Taiheiyo was second with about 1.8 million tonnes. Other
major exporting companies include Chan National Mineral Product Import/Export, China
National Building Materials and Equipment Import/Export, Hebei Jidong Cement Works, and
Liuzhou Cement Works.44 Liuzhou was China’s largest exporter in 1996, exporting 680,000
tonnes in the first ten months of the year earning $29 million.45
The United States is the largest market for Chinese cement. Other customers include the
Taiwan, Hong Kong, the Philippines, South Korea, Brunei, Malaysia, Vietnam, Singapore, and
Macao. (See Table 6-5)
Table 6-5. Major Cement Customers, 1998

Exports Value
Country (million tonnes) ($ million) % of all exports
United States 3.50 130.6 42.01
Taiwan 1.09 31.7 37.64
Hong Kong 1.38 58.0 12.18
Totals 5.97 220.3 91.83
Source: [13]
China was at a comparative disadvantage to Southeast Asian cement producers, though, who
had lower production and transportation costs and better prices and delivery methods.
Competition was expected to heat up as several other countries, including Romania, Russia,
Pakistan, the Middle East, Indonesia and South Korea entered these markets.17
As a means of stimulating the flagging export sector, the state administration of taxation raised
VAT rebates three times in 1998. In June, rebate rates for exports of cement were raised to
eleven percent. The effectiveness of the rebate program has been offset by operational
inefficiencies. Exporters complain that it takes several months to obtain the rebates and
amounts are often miscalculated.46
24
7. Infrastructure and Transportation

Infrastructure development historically has focused on eastern China for the benefit of the
coastal ports, and also on Manchuria, a result of Japanese industrial development during the
1930s. During the centrally planned era, investment in infrastructure has continuously taken a
secondary role to industrial production. The result has been an uneven, poor, and overworked
infrastructure. Recently, however, the historical trends have begun to change.
Traditionally, the Chinese located their cement plants in or near cities. Some were located near
cement markets, regardless of whether there were quarries nearby. Limestone was brought to
these plants by rail. Recently, cement plants are moving closer to resource deposits.
Presumably, these moves will lower shipping costs for raw materials and will help alleviate the
overburdened Chinese transportation sector.10
Transportation costs are very important to the industry since many of the necessary raw
materials are not located close to small-scale production centers. Transport costs for slag and
fly are significant since these can make up 30-60 percent of total weight. Coal also creates
significant transportation costs to the industry because coal is the major source of energy for
cement production. Limestone transportation costs are also significant.5
Facilities and infrastructure for bulk cement is expected to improve over the next few years.
China expects to have 21,600 special vehicles, 10,700 special-purpose railway cars, 1,000
ships, 2,200 cement transshipment centers, 3,000 concrete pumping cars and 15,000 concrete
mixers for bulk cement by 2005.30 China is encouraging future foreign investment in bulk
cement transportation and storage facilities.13
7.1. Railways
China does not have an adequate national highway system so railways continue to remain the
principal carrier for long-haul freight.47 But China’s rail system is overburdened as well. The
country’s rail infrastructure can only handle about 68 percent of the demand for freight
transport.48 The Ministry of Rail (MOR) runs China’s train system and builds railway lines,
locomotives, rolling stock, and railway equipment. As with other infrastructure ministries in
China, MOR is moving into more of a regulatory role and was being reorganized.47 As of 1998,
administration of the rail system shifted from the central ministry to 12 regional
administrations.49
7.2. Water Transport
A growing portion of Chinese freight is shipped via barge. Prices for water transport were freed
in early 2001. Shipping commodities like cement or limestone over barges may now become
cheaper, allowing cement producers to locate were other factors are more advantageous.
One example of increased cement water traffic occurred in the Pearl River area. Port Operator
China Merchants Shekou Port Service Company announced in 1995 that it was building a
US$14 million bulk-cement terminal that would be used to import bulk cement from northern
China to the Pearl River Delta.50
25
8. Environmental Considerations
China has significant environmental problems. Ambient air levels of total suspended
particulates (TSP) and sulfur dioxide (SO2) in Chinese cities are among the highest in the world.
The World Bank believes that these high levels of pollution lead to approximately 200,000
premature deaths each year in urban areas. China’s contribution to global carbon dioxide (CO2)
emissions is approximately 14 percent.48 Emissions reported declined between 1998 and 2000
as a result of the reported drop in coal consumption, although there are concerns that China’s
energy statistics are at least partially flawed due to unreported coal production and use.
In general, Chinese law provides for a system of fines for facilities that exceed pollution
emission limits. These regulations cover several forms of pollution and are scaled according to
the amount of pollution. Proceeds from fines are used for pollution abatement but also for
industrial development. Firms can defer the amount they pay to the government by investing in
abatement technology. In 1995, the last year for which data was available, China collected
Yuan 3.2 billion in fines. Fifty-five percent of the proceeds were used for subsidies and loans to
industry for pollution control. Forty-four percent was used for industrial development.51 In many
cases, however, regulations were not enforced to the full degree. It is commonly asserted
among environmental experts in China that it is cheaper to pay the fines than it is to limit
emissions.5
By 2000, China expected to spend about 1.3 percent of its GDP on pollution control.
Wastewater treatment was to receive the most attention followed by air, solid waste, and noise
pollution. The cement industry spends less on pollution abatement than do other industries in
China including the coking and refining industries.51
The cement industry is a prominent contributor to air pollution in China. In 1998, cement plants
were responsible for over 40 percent of total industrial particulate (e.g. dust) emissions. (See
Table 8-1.) Small particulates—those less than 10 microns in diameter—are especially
damaging to human health because they lodge deep in the lungs resulting in increased mortality
and morbidity. The vast majority of the reported emissions of particulates in China are from
industrial processes not associated with combustion (grinding, sorting, etc.). Of these
emissions, medium and small plants are responsible for the vast majority due to their obsolete
equipment and production methods.
Table 8-1. Particulate and Sulfur Dioxide Emissions from China’s Cement Sector
Particulate
Emissions from Cement Industry SO2 Emissions Cement Industry SO2
Industry Particulate Emissions from Industry Emissions (% of
(Million Tonnes) (% of Total Industry) (Million Tonnes) Total Industry)
1991 14.2 22 11.0 5.0
1992 14.5 17 13.2 3.2
1993 15.0 25 12.9 5.2
1994 13.9 27 13.4 5.5
1995 14.8 29 14.1 5.5
1996 12.4 29 13.1 5.2
1997* 15.8 42 14.7 5.4
1998* 25.0 44 15.9 5.5
1999 21.3 -- 14.6 --
*Note that gathering of emissions statistics changed in 1997 and 1998 to include those from local levels.
Source: [52]
26
In contrast to particulates, sulfur dioxide emissions from Chinese cement plants account for a
much smaller portion of total industrial SO2 emissions. In sensitive regions of China, however,
emissions of sulfur oxides from cement plants can cause extensive damage to agricultural
output and human health. China has taken steps to minimize this damage by banning high
sulfur coal in these sensitive areas and requiring the use of sulfur control technologies. For
small plants, however, the cost of installing this equipment can be prohibitive.
Chinese cement plants are also responsible for about 6 to 8 percent of the country’s carbon
dioxide emissions. These emissions are produced in roughly equal parts from fuel combustion
and the liberation of carbon dioxide from limestone at high temperature. Between 1996 and
1999, total energy consumption in China had reportedly declined by about 15 percent while
cement production increased, although at a slower pace than before. The cement sector is
therefore now responsible for a larger share of the country’s total carbon dioxide emissions, but
there are some concerns that actual energy statistics are higher than reported.
Increasing the energy efficiency of cement kilns is one way to reduce carbon dioxide emissions.
Dry rotary kilns, including precalcinator kilns, are the most energy efficient technology currently
available in China. Given the high fuel inputs required to produce cement, this sector will be a
prime target for investment funds targeted to mitigate greenhouse gas emissions in the future.
However, China’s most inefficient plants are also the ones that operate in the least transparent
economic environment. As a result, high transaction costs will likely prevent the flow of
investments that would otherwise appear wise on paper.
Another way to lower carbon dioxide emissions is to boost product quality so that less clinker is
required to manufacture a given strength of cement. The ratio of clinker to cement has declined
steadily in China from 0.9 in 1980 to 0.82 in 1995, leaving little room for further reduction.
Cement production is also responsible for a host of other environmental problems including
contamination of local water sources, mercury emissions, excessive noise, erosion surrounding
limestone quarries, and nitrogen oxide emissions.
Enforcement continues to be one of the major obstacles to environmental improvement. Most

cement companies do not respect current environmental legislation so the use of tougher
environmental laws could be futile.10 However, in some regions, attitudes are beginning to
change from “economy first, environment second” and “pollute first, clean up later.” The richer
areas of Shanghai, Guangdong, and Beijing seem to be sources for change. There is a
perception among foreign investors that their enterprises and joint ventures are targets for
environmental enforcement. As a result, they tend to meet more of the environmental
regulations than their domestic counterparts.
Since 1989, emission limits for cement production have been set at 150 milligrams of
particulates per cubic meter of exhaust gas. In April of 2000, however, China announced that
emission limits would soon be reduced to 100 milligrams per cubic meter of exhaust. For
comparison, cement plants in Europe must conform to a limit of 70 milligrams.14 Many of the
small cement manufacturers in China will not be able to meet the limit without expensive
upgrading of their equipment.
Production facilities in western China have even fewer pollution controls than plants located in
the east and south. As China is emphasizing western development, the government has
promised that its new cement plants will be cleaner. While there will be some new construction
in the west, most of the development will be improvements to existing plants.
There is some evidence that Chinese citizens and local governments are beginning to respond
to the country’s environmental problems. For example, Heidelberger Zement, recently relocated
27
a cement plant in Guangzhou outside the city. Local political actors requested the move. City
officials were responding to a better-educated population that is beginning to appreciate the
health effects of air pollution. However, there was a suggestion that the move was also made to
free up valuable land in the city.10
In 1999 and 2000, and continuing into 2001, China reportedly closed hundreds of small, illegal
cement plants. In 1999, cement plants with a total production capacity of 42 million tonnes were
closed. The measures where taken to reduce pollution and to remove excessive production
capacity. In June 2000, the Beijing Municipal Environmental Protection Bureau closed several
cement factories in the Beijing area for violating environmental standards.53
28
9. Prospects and Future Developments

China will likely continue to increase its production capacity (slowly) and improve cement quality
(more rapidly). Government spending on infrastructure development and improvement through
2003 is expected to benefit the cement industry. As older, less efficient facilities are closed or
upgraded and newer, more modern facilities are built, the country expects to add about 13
million tonnes of cement production capacity annually. Until recently, China had been expecting
to increase annual production to 650 million tonnes by 2005, but this seems unlikely if
thousands of small plants are simultaneously closed.54
Bulk cement is expected to become a larger proportion of Chinese cement output, reaching 182
million tonnes or 29.5 percent of total production by 2005. The Chinese government has
enacted preferential policies to steer investment into bulk cement transport infrastructure, and
some companies may find promising opportunities here. Use of specialty cements is also
expected to continue growing rapidly, especially in relatively wealthy regions.
Developments in 2001 are expected to continue at recent levels, especially since the
government has designated new development zones in central and western regions. Provinces
and cities given priority investment during the Tenth Five-Year Plan include Xinjiang, Ningxia,
Qinghai, Shaanxi (including Xian), Gansu, Sichuan, Tibet (Xizang), Chongqing, Guizhou, and
Yunnan (including Kunming). Eastern provinces should not expect new plants but will receive
technology upgrades.
China is expected to maintain its moderate growth in cement production and its trade balance is
expected to remain positive. Foreign investment is expected to play a key role in growth in the
cement industry during the 10th Five-Year Plan (2001–2005).16 These financing sources are
expected to be guided toward large cement production lines in central and western China and
other less economically developed areas. Dry process and precalcinator kilns are considered to
be preferred technologies. Chinese authorities are supporting the move in the industry toward
the dry method for cement production. It is expected that the dry method will account for 20
percent of cement production by 2003.55
Environmental issues will become increasingly important as China’s economy continues to

expand. In many relatively wealthy urban areas, public pressure plays an important role in
government planning and environmental enforcement. Enforcement of existing environmental
regulations will become stricter in major urban areas, especially Beijing.
China looks set to continue reforms that will make the economy more transparent and bound by
rule of law. These changes will occur slowly however, especially in undeveloped rural areas.
Even though new areas for growth appear relatively narrow compared to the mid 1990s, the
absolute quantities remain substantial due to the enormous size of the Chinese market.
29
10. References
1. CIA World Factbook. 1999. http://www.odci.gov/cia/publications/factbook/ch.html.
2. “12 Million Workers Expected to Lose Jobs in 2000.” China Economic Times XXI(6),
Series No. 1006. pp. 5-6. February 14, 2000.
3. Mark O’Neill. “Cement Sector Consolidation Gets Under Way.” South China Morning
Post. September 4, 1999.
4. “China: Investments Sought for Building Industry.” China Daily. September 16, 1994.
5. Interview with Mr. Dung Van Anh, Lafarge representative in Beijing. March 3, 2001.
6. “China Took a Big Step.” Xinhua News Agency. February 19, 2001.
7. Li, Y.Q., “The Present Situation and Future Development of Chinese Cement Industry,”
(unpublished report), China Cement Association, 2001.
8. “China Establishes Holding Group for State Cement Enterprises.” AFX (AP).
September 2, 1999.
9. "Energy in the People's Republic of China" in Energy Policy and Structure in the
People's Republic of China. European Commission, Directorate General XVII - Energy.
Final Report Volume 2, Project No. DGXVII/A4/97-06. July 1999, pp. 287-424.
10. Telephone interview with Mr. Bruyere of Heidelberger Zement. Feb. 15, 2001.
11. “China: Cement Output Outpaced World Average.” China Post. October 29, 1995.
12. “Overseas Investors Plant Money, Grow Cement.” China Daily. May 4, 1995.
13. Construction Materials & Equipment in China Market. A/S/L Asian Strategies, Ltd.
2000. p.93.
14. Personal Communication with Li Yeqing , Huaxin Cement Company, Apr. 3, 2001.
15. The Global Cement Report. Tradeship Publications, Ltd. 2001.
16. “China’s Building Materials Sector Grows Rapidly.” Asia Pulse. September 16, 1999.
17. “Profile—China’s Cement Industry (March 1999).” Asia Pulse. March 22, 1999.
18. “Chinese Cement Industry Benefits from Post-Flood Boom.” Asia Pulse. October 8,
1988.
19. “China: China Casted as Lead Buyer of Cement Devices.” China Daily. October 28,
1995.
20. Antiake. A Survey of China Cement Industry. May 2001.
21. “New Cement Plant Eyed in Pangasinan: Philippines: Chinese Firm to Put Up Cement
Plant.” Manila Bulletin. January 31, 1994.
30
22. “Egypt, China to Set up Giant Cement Factory in Sinai.” Xinhua News Agency. July 28,
1997.
23. “More Iranian Oil for Mainland: China: Imports of Iranian Oil Up in 1997–1999.” The
Hong Kong Standard. May 6, 1997.
24. “China Exports Cement Plants to Iran.” Xinhua News Agency. January 23, 1998.
25. Sinton, Jonathan, “Energy Efficiency in Chinese Industry: Positive and Negative
Influences of Economic System Reforms,” University of California: Berkeley, 1996.
26. International Energy Agency, “The Reduction of Greenhouse Gas Emissions from the
Cement Industry,” IEA: Paris, 1999.
27. Sinton, J. “Energy Efficiency in Chinese Industry: Positive and Negative Influences of
Economic System Reforms,” University of California: Berkeley, p. 74.
28. Construction Materials & Equipment in China Market. A/S/L Asian Strategies, Ltd.
2000. p.74.
29. “Bulk cement supply exceeds 100 million tons in '00.” China Online
(www.chinaonline.com). Feb. 15, 2001.
30. “China Makes Good Progress in Production of Bulk Cement.” Asia Pulse. January 15,
2001.
31. “SNC Lavalin to Build Aluminous Cement Plant in China.” Canadian Corporate News.
February 22, 1999.
32. China Economy. “7.2 The Chinese Cement Industry.” http://www.chinaeco.com/

emar/htm/c7n00h02.htm.
33. Barrie Cook, Managing Director Green Island Cement (Holdings). “China: Letter to the
Editor: Cement Facts.” Window. November 3, 1995.
34. “China Closing Small Glass, Cement Producers.” Xinhua. June 11, 1999.
35. “China: Building Materials Industry to Cut Output.” Xinhua News. January 26, 1999.
36. “China to Shut Down Unproductive Glass and Cement Plants.” Asia Pulse. July 6,
1999.
37. China Daily, March 7, 2001, p. 1, 3.
38. Asian Cement News. July 2000. http://www.propubs.com/asian-cement/.
39. Cement Price in Guangdong Up: China: Guangdong Cement Price to Keep on Rising.”
HK Economic Journal. February 25, 1998.
40. China Daily, March 5, 2001, p. 2.
41. “China: State Lifts Price Rein of Cement.” China Daily. April 1, 1996.
42. “China Says its Cement of International Quality.” New Straits Times, p. 2. August, 15,
1995.
31
43. “China: Asian Woes Send China’s Cement Biz Crashing.” China Daily. June 15, 1998.
44. “China’s Cement Industry.” Business Focus. October 16, 1997.
45. “China’s Largest Cement Exporter Increasing Exports.” Xinhua News Agency.
November 22, 1996.
46. U.S. Department of State. Foreign Trade Barriers, People’s Republic of China.
http://usinfo.state.gov/regional/ea/uschina/prcnte99.htm
47. Bradbury, Nicholas. Infrastructure in China Plugging into Powerful Opportunities.

Wanchai, Hong Kong: Economist Intelligence Unit. 1995: 186 pp.
48. Investment Strategies for China's Coal and Electricity Delivery System. Beijing: World
Bank. 1995: 212 pp.
49. Coal in the Energy Supply of China. Paris: Organisation for Economic Cooperation and
Development - International Energy Agency. 1999: 109 pp.
50. “China: Port Operator Builds Bulk-Cement Terminal.” The Asian Wall Street Journal.
July 4, 1995.
51. Hua Wang & Ming Chen. “How the Chinese System of Charges and Subsidies Affects
Pollution Control Efforts by China’s Top Industrial Polluters.” World Bank Working
Series Paper No. 2198. World Bank: Washington, D.C. October 1999.
52. “China Energy Databook,” Lawrence Berkeley National Laboratory and China’s Energy
Research Institute, May 2001.
53. “China: 25 Factories Ordered to Shut Down.” South China Morning Post. June 8, 2000.
54. “China: Cement Demand to Rise 8%.” China Daily, December 10, 1995.
55. “China: Building Materials Sector Improving.” Xinhua. July 17, 2000.
56. The Gale Group. Company Intelligence. Feb. 2001.
57. Subcontractor Report. May 2001.
58. United States Geological Survey, Minerals Information – Cement Statistics and
Information, 1997. http://minerals.usgs.gov/minerals/pubs/commodity/cement/170397.pdf.
59. Cembureau, The European Cement Association, “Best Available Techniques for the
Cement Industry, December, 1999. www.cembureau.be/Documents/Publications/
60. China Statistical Yearbook, 1999, p. 443.
32
Appendix A
Chinese Cement Producers with More Than 2000 Employees 56
Company Location Established Employees

Anhui Chaohu Cement Plant Chaohu 1959 3389
Anhui Donnguan Cement Plant Dongguan Town, Hanshan, Chaohu Prefecture 1950 3147
Anhui Ningguo Cement Plant Ningguo City, Anhui 1985 3454
Bamash Cement Plant Wuhu 1982 3325
Beijing Cement Machinery Factory Beijing
Beijing Liulihe Cement Plant Beijing 1944 5359
Beijing Special Cement Plant Beijing
Beijing Yanshan Cement Plant Shijingshan, Beijing 1959 2345
Benxi Cement Works Benxi 1936 2699
Benxi Gongyuan Cement Works Benxi 1942 3426
Bobai Cement Plant Bobai, Guangxi
Dalian Cement Plant Dalian, Ganjingzi District 1909 3017
Dalian Shijin Cement Co Ltd.* Dalian 1958 2356
Datong Cement Plant Datong 1957 3905
Fujian Cement Ltd-Liability Co (Yong An)* Yongan, Fujian 1958 3306
Fujian Province Shunchang Cement Plant Nanping, Fujian 1991 2143
Guangdong Yingde Cement Plant Qingyuan 1972 2888
Guangxi Zhuang Nationality Autonomous Region Litang Town, Binyang, Nanning Prefecture 1983 2476
Litang Cement Plant
Guangxi Zhuang Nationality Autonomous Region Liuzhou 1964 4353

Liuzhou Cement Plant
Guangzhou Cement Limited Liability Co. Guangzhou City 1932 2435
Guiyang Cement Factory Guiyang, Guizhou
Guizhou Cement Factory Guiyang, Guizhou 1959 2833
Guizhou Shuicheng Cement Plant Guiyang, Zhongshan District 1970 2308
Harbin Cement Plant Haerbin 1935 3735
Harbin Cement Plant No 2 Haerbin 1949 3175
Hebei City Jidong Cement Plant Tangshan City, Hebei 1985 2446
Huaihai Cement Plant Xuzhou 1986 2443
Huaxin Cement Shareholding Co Ltd. Huangshi, Hubei 1949 2584
Hunan Dongjiang Cement Plant Mugenqiao Xian Chenzhou Prefecture 1971 2437
Jiangsu Pizhou Cement Plant Xuzhou 1958 2164
1
2

Jiangxi Cement Plant Chenying Town, Wannian, Shangrao Prefecture 1974 3677
Jiangxi Lushan Cement Plant Jiujiang 1962 2178
Jilin Songjiang Cement Factory Jilin City 1960 5176
Jinan Huanghai Cement Co Ltd.* Jinan 1920 2240
Jining Zhangshan Cement Plant Jining 1976 2356
Jinxi Cement Plant Jinxian 1942 2330
Kunning Cement Plant Kunming, Xishan District 1957 2555
Lianjiang County Cement Plant Zhanjiang, Liancheng Town, Lianjiang County 1958 2470
Lunan Cement Works Tengzhou City, Shandong 1900 3131
Luoyang Cement Plant Xinan City, Henan 1958 2390
Mudanjiang Cement Works Mudanjiang 1953 3486
Nanjing Changjiang Cement (Group) Co. Nanjing City, Jiangsu 1923 5720
Nanjing Qinglongshan Cement Plant Nanjing City, Jiangsu 1974 2990
Qiqihar Cement Product Plant Qiqihaer, Fularji District 1954 2403
Shaanxi Hongqi Cement Products Factory Xian 1956 2195
Shaanxi Xinchuan Cement Factory Tongchuan, Shaanxi 1955 2359
Shaanxi Yanbe Cement Machinery Plant Xian 1969 2734
Shaanxi Yao County Cement Plant Tongchuan, Shaanxi 1959 4296
Shandong Building Cement Joint Stock Co Ltd.* Zibo 1951 2312
Shanghai Baoshan Cement General Factory Shanghai 1990 2500
Shanghai Cement Finished Products Factory Shanghai 1949 6800
Shanghai Cement Plant Shanghai 1949 3000
Shanghai Cement Products Factory Zhabei, Shanghai
Shenyang Cement Machinery Plant Shenyang 1935 2208
Shijing Cement Plant Of Guangzhou Guangzhou, Guangdong 1958 3367
Sichuan Chongqing Cement Plant Chongqing, Sichuan 1937 3852
Sichuan Dukou Cement Plant Panzhihua 1967 2773
Sichuan Guang An Qujiang Cement Plant Huaying, Sichuan 1983 2282
Sichuan Jiangyou Cement Plant Jiangyin 1959 3147
Taierzhuang District Cement Plant Zaozhuang 1971 3550
Taiyuan Cement Plant Taiyuan 1935 2697
Tangshan Cement Machinery Manufactory Tangshan 1910 3706
Tangshan Qixin Cement Plant Tangshan 1989 4335
Tianjin Cement Plant Beichen District 1959 3053
Tonghua Cement Plant No 2 Tonghua 1975 2329
Weifang Cement Plant Weifang 1958 2638
Wushan Cement Plant Tianshui 1981 2424
Xiangxiang Cement Plant Xiangtan 1969 2888
Xinglong Steel Cement General Plant Ping'anpu Town, Xinglong County, Chengde 1970 3389
Prefecture
Xinjiang Army Nongbashi Shihezi Nanshan Cement Shawan County, Tacheng Prefecture 1963 2278
Plant
Xizhouzishan Cement Plant Wuhai City, Inner Mongolia
Yanbian Miaoling Cement Factory Miaoling Daxinggou Town, Wangqing, Yanbian 1952 3037
Yongdeng Cement Plant Lanzhou 1957 3464
Yunnan Kaiyuan Cement Plant Xinan Lu, Kaiyuan, Honghe 1970 2307
* Privately-owned (all others are state-owned)
3
Appendix B:
Case Studies of Major Cement Producers 57
Name Address Production, Processes Assets, Equipment Notes

China Building No.11 Sanlihe Road, Haidian One of 15
Material Industry District comprehensive directly
Association Beijing City managed by SETC;
(CBMIA) 100831 composed of business
Tel: 010-68354293 enterprises and relative
Fax: 010-68332658 social comities
Anhui Conch 209 Renmin Road Annual cement production Total assets of Yuan 5.5 With foreign partner, TCC
Group Co., Ltd. Wuhu City capacity: 9.1 million tons billion; net assets capital is Hong Kong Cement
Anhui Provnce, 241000 Clinker production is to rise to Yuan 2.96 billion Holdings Ltd. Registered
Tel:0553-8399080 20 million tons by 2005 Employees: 7829 on the base of Ningguo
Fax: 0553-8399065 90% of production is by dry 2 4000 t/d, 3 3000 t/d dry Cement Plant.
conch-gp@mail.ahwhttp.net.cn process lines
Products: Portland cement, 10 cement grinding stations
ultra fine and slag cement
Huaxin Cement 897 Huangshi Street, Huangshi Capacity: 10,000 t/d 2 new dry process lines; 3 Foreign Partner:
Co., Ltd. City hydro lines; Holderbank (Switzerland)
Hubei Province Planed expansion includes owns 23.4%
435002 new lines and refurbishing 1999 Revenues: Yuan
Tel: 0714-6224971-471 only kilns 453.3 million;
Fax: 0714-6235204 1999 Net profit: Yuan
hxcc@public.hs.hb.cn 4.236 million

Daewoo- Jining City Capacity: 2.5 million tons China’s largest production Foreign Partner:
Shangdong Shandong Province Products: ASTM types I, II, III, line with the most advanced Daewoo Group (South
Cement Factory 273200 and V cement technology in China’s Korea)
(DSCF) Tel: 86-537-4224700 cement industry
Fax: 86-537-4227774
Suzhou Golden Xikuatang Mudu Town, Suzhou Annual production value: Yuan Well-developed water and Foreign partners:
Cat Cement Co. City 30 billion land transportation Holderbank (Switzerland)
Ltd. (GCC) Jiangsu Province Golden Cat brand cement Dry rotary kilns with surplus and Singapore Yangtze
215101 products heat power generation Cement Holding Co.;
Tel: 86-512-6265287,6262108 Founded on Wuxian
Fax: 86-512-6265155 Mudu Cement Plant
info@goldencatcement.com 1999 sales volume: 1.65
million tons
1
2

Hainan Kunlun Old Town Industrial Exploitation Capacity: 500,000 t/y Enrolled capital: US$11.4 Foreign Partners:
Cement Area, Chenmai City, Hainan Projected production: 40,000 million Mitsubishi Materials
Enterprise Co., Province t/month Final investment: US$19 Corp. (Japan), Japan
Ltd. (HKCE) Tel: 0898-7428754 million Pacific Cement Corp.
Fax: 0898-5357613 Total area: 73,334 m Dadong Investment Co.,
management@cxeec.com unnamed Swiss company
Yantai-Mitsubishi Zhongqiao Town Qixia Country Capacity: clinker: 5000 t/d, New 1 million t/y cement Foreign Partner:
Cement Co., Ltd. Yantai City, cement: 1 million t/y production line is planned Mitsubishi Materials
Shandong Province Products: 525R cement, 425R Corp. (Japan)
Tel: 0086-535-5571172 cement
Fax: 0086-535-5571173
Anqing Cement No.263 Jixian North Road Capacity: 500,000 t/y Employees: 746, including Foreign partner: TPI
Factory Co Anqing City Products #525 and #425 126 technicians Polene PCL (TPIPL)
Anhui Province Portland cement 1 rotary kiln, 2 vertical kilns, (Thailand)
246005 2 open circulates, 2 closed
Tel: 0556-5313769 circulates, 1 milling and 1
Fax: 0556-5314429 open circulate milling
1 10,050 KVA power plant
China National #2 Zizhuyuan Nanlu, Products: cement, glass, liner 8 scientific research and
New Building Haidian District gypsum board, light steel stud, design institutes; 17
Materials (Group) Beijing 100044 rock wool covers subsidiaries
Corp. (CNNBMC) Tel: 010-68415577 Employees: 22,100
01068428350
cnbm@public3.bat.cn
Beijing Dilding JinYu Building Capacity: 3.5 mt/y of which 3.1 Owns 158 production,
Materials Group 129A Xuanwumen Xidajie, million tons are high-quality research, design,
Co., Ltd Xicheng District cement. Products: cement, development and
Beijing 100031 construction enterprises,
concrete, walling materials,
Tel: 010-66416688 80 are foreign joint
Fax: 010-66412086 architectural and sanitary ventures
webmaster@bbmg.com.cn ceramics, insulation, doors and Cement subsidiaries
windows, wood processing include Liulihe Cement
furniture, artistic lamps, Plant, Beijing Cement
construction machinery. Plant, and Yanshan
Cement Plant.
Gezhouba No.21 Quankou Lu, Capacity: 3 million t/y The plant is connected to The plant covers over
2
Holding Co. Jingmen Products: “Three Gorges” the Jiaozhi and Changjing 2.87 million m
Cement Plant Hubei Province brand cement, special cement, railways, Yihuang highway The enterprise is growing
448032 #525 moderate heat Portland 2 wet process production by 25% per year
Tel: 0724-2332305 cement, #425 low heat lines, 3 dry pre-calcining
Fax: 0724-2333189 Portland, and slag, #525 and production lines
gezhouba@jm- #425 high and moderate sulfur- Residual heat power plant
mail.hb.cninfo.net resistant Portland Cement,
#525 and #425 Sluggish
Distention Moderate heat and
low heat Portland Cement,
#525 and #425 Portland
Cement for road, oil well
Cement of Grade A, D and G,
Ultra fine Cement (including
ultra Cement and improved
ultra cement), slag powder of
Grade S105, S95, S75, ultra
slag powder and limestone
powder, etc.
Harbin Cement No.102 Shuini Road Capacity: 1.4 million t/y Employees: 3254 including Largest cement
Factory Taiping District Products: #425 and #525 800 specialized technicians enterprise in Heilongjiang
Harbin City cement, API oil well cement 5 production lines; new dry with 5 production lines
Helongjiang Province line will be added
2
150050 Area: 2.23 million m ,
Tel: 0451-7671910 Total assets: Yuan 532.56
Fax: 0451-7691789 million,
Fixed assets: Yuan 394.01
million,

Sales Income: Yuan 293.68
million
Datong Cement Kouquan Brand name: “Yungang” 1999: 465,959,917 yuan Largest cement producer
Co., Ltd. Datong City cement 2000: 481,670,700 yuan in Shanxi Province.
Shanxi province Products: #525 and #425 Sales decreased in 2000
Tel: 0352-4042623 Portland cement, road cement, because of failing to
Fax:0352-4042623 middle-hot cement update production line
dtsnzqb@public.dt.sx.cn Subsidiary: Beijing East
Chengcheng Industrial
Company
Shanghai 240 Beijing East Road Products: water-proof building One of top 500
Building Shanghai materials, thermal insulation enterprises in China
Materials Group 20002 materials, mechanical 50 wholly-owned
3
4

Corporation Tel: 021-63219822 equipment subsidiaries, 52 holding
(SMB) Fax:021-63290453 companies
Zhenjiang 88# East Wujiang Road Capacity: 1.5 million t/y 1993 enrolled capital: Yuan ZJJF was founded on the
Jianfeng Group Jinghua City Products: #525 and #425 300 million former Jinhua Cement
Co., Ltd (ZJJF) Zhejiang Province Portland cement and ultra fine Equipment: new dry Plant.
321000 cement, concrete, process line and ZJJF earned Yuan 34.08
Tel: 0579-2326868 prefabricated components, precalcining kiln million in 1999 with a net
Fax: 0579-2324666 Brand name: “Jianfeng” About Yuan 100 million was profit of Yuan 34.1 billion,
zjjfo@mial.jhptt.zj.cn invested in updates in headline income of Yuan
1998, which was to 646 million
increase capacity by 1000
t/d
Tangshan Jidong Linying Road New District Capacity: 4.08 million t/y 2 dry process lines: line 1 1999 income: Yuan 550
Cement Co., Ltd. Tangshan City Brand names: “Dunshi,” produces 4000 t/d, 1.5 million; 1999 profit: Yuan
Hebei Province “Jianfeng”. million t/y; line 2 produces 218 million
Tel: 0315-3244005 Products: P-II #525 cement, 2.58 million t/y. Upgrading
Fax: 0315-3244005 concrete, pre-fabriacte and a new dry-powder
Public@jidongshuini.com component, common machine producing line were
planned for late 2001
Liuzhou Cement Taiyancun Capacity: 1.8 million t/y Factory occupies 3.7 million One of China’s 500
2
Corporation Liuzhou City Guanxi Province Brand: “Yufeng” m largest enterprises.
(LCC) 545008 Products: #525 Portland and Employees: 3800 Founded on the Liuzhou
Tel: 86-772-3757267 #425 cement 4 production lines: 3 wet Cement Plan
Fax: 86-772-3883458 lines from Czech Republic, LCC includes 3
1 dry line from Denmark branches: the plant,
Dachang New-type
Building Materials Co.,
and Liuzhou Yufeng PVC
Products Factory
Zhejiang Sanshi No.422 Fengqi Road Hangzhou Capacity: 2.5 million t/y. 1 dry process line; 3 wet
Cement Co., Ltd City Products: #525 Portland process lines.
(ZSCC) Zhejiang Province cement, #425 CaCO3 Portland Total assets: Yuan 1.2 B.
310001 cement, PII Portland cement Currently updating from wet
Tel: 0571-5173966 to 2 dry processes with
Fax: 0571-5173966 2000 t/d capacity by 2003
and 5 million t/y.

Tre N D S, C Ha L Lenges, A N D Opportu N It I Es I N C Hin A 'S Cement I Ndustry

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tre N D S, C Ha L Lenges, A N D Opportu N It I Es I N C Hin A 'S Cement I Ndustry

Uploaded by

Copyright:

Available Formats

∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙

Toward a Sustainable Cement Industry

Trends, Challenges, and Opportunities in

with contributions from

An Independent Study Commissioned by:

The recommendations and actions toward sustainable development contained

Organizational structure and administration,

Produce #325 and lower grades (by 2005)

Worker displacement and retraining costs

enforcement. Environmental regulations tend to be strictly enforced when foreign companies

Final decision-making authority is not clear,

Bulk cement transport and storage infrastructure,

Banning barriers to local protectionism,

1. China’s Cement Sector in a Changing Economic Landscape

Opening the economy to increased foreign trade and investment

Source: China Statistical Yearbook 2000. Value for 2001 is estimated.

Figure 1-1. Reported Post-Reform GDP Growth Rates in China

Long-term challenges to the continued growth of the economy include:

Imbalanced population structure

Final decision-making authority is not clear

3. Raw Materials and Reserves

Growth from Previous Year (%)

Note: 2000 output is estimated, 2001 output is forecast.

Table 4-1. Cement Output from Key Chinese Provinces

Table 4-1. Cement Output from Key Chinese Provinces

4.1. Cement Products and Quality

Table 4-4. Major Foreign Cement Equipment Suppliers

Dry processing technology using out-of-kiln disassemble technology

Table 4-5. Cement Production Goals by Type of Kiln, 2000–

4.3. Energy Consumption

Figure 4-4. Primary Energy Intensity of Selected Cement Producing Nations

Produce #325 grade or lower cement, or

Fuel Intensity (kgce/ton clinker) Electricity Intensity (kWh/ton cement

Aluminous cement, used in specialized applications requiring quick bonding or resistance to

Foreign- Investment from

Table 4-6. Foreign-Invested Enterprises in China’s Cement Industry

4.7. Major Producers

Table 4-7. Large, Medium, and Small Cement Producers, 1995

Xinjiang Hebei KOREA

AFG. Gansu Nei Mongu Beijing

Shaanxi East China

5-10% MYANMAR Hong

0 500 Miles THAILAND

Table 4-8. Key Chinese Cement Producers by Province and Output

Other large cement producers are outlined in Appendices A and B.

6. The Market for Cement

Table 6-1. Profitability of the Cement Industry, 1992–1997 (Yuan million)

Table 6-2. Cement Consumption, 1995–2001 (million tonnes)

Table 6-3. Cement Imports, 1995–1998 (thousand

Table 6-4. Cement Exports, 1998–2001* (million tonnes)

Table 6-5. Major Cement Customers, 1998

7. Infrastructure and Transportation

Enforcement continues to be one of the major obstacles to environmental improvement. Most

9. Prospects and Future Developments

Environmental issues will become increasingly important as China’s economy continues to

15. The Global Cement Report. Tradeship Publications, Ltd. 2001.

20. Antiake. A Survey of China Cement Industry. May 2001.

32. China Economy. “7.2 The Chinese Cement Industry.” http://www.chinaeco.com/

37. China Daily, March 7, 2001, p. 1, 3.

38. Asian Cement News. July 2000. http://www.propubs.com/asian-cement/.

40. China Daily, March 5, 2001, p. 2.

44. “China’s Cement Industry.” Business Focus. October 16, 1997.

47. Bradbury, Nicholas. Infrastructure in China Plugging into Powerful Opportunities.