RNS Number : 7594P
West China Cement Limited
31 March 2009
West China Cement Limited ('WCC')
Approval of Two New Plants
The directors of West China Cement (the 'Board'), the AIM listed cement production and sales company located in Shaanxi province, China, are pleased to announce that they have approved the building of two new cement plants, each with a capacity of 1 million tonnes per annum in the South West of Shaanxi province.
The Yangxian and Mianxian projects are expected to have a combined cost of RMB 763 million. Completion of the Yangxian and Mianxian plants is provisionally scheduled for Q2 2010 and Q3 2010 respectively, following which, WCC's total capacity is expected to be approximately 7.3 million tonnes, a 38% increase from the current annual capacity of 5.3 million tonnes.
The company's 1.8 million tonne Ankang project in the southeast of the province started producing clinker earlier this year and producing and selling cement in March. It is expected to achieve full capacity in the second half of 2009.
Commenting on the approval to build the plants, Robbie Robertson, WCC's Chairman said:
'The completion of the Ankang project, together with the solid 2008 results announced today, and a continuing robust market, all give us the confidence to proceed with these two projects, which have been in preparation for several months. They will take us significantly forward in becoming a regional champion in Shaanxi province. The Company has long recognised the opportunity to grow in this province, based on the expected massive government spending on infrastructure. We believe the announcement by the PRC Government of its RMB 4 trillion fiscal stimulus package clearly underlines that developing the infrastructure in the province and rebuilding in the wake of the earthquake are key to the government's strategy. There are few opportunities in the world to grow a business, comparable to those related to infrastructure, in the middle of China.'
The two new plants, located either side of the city of Hanzhong, are strategically placed to supply the rail and road projects and the rebuilding programme not only in southwest Shaanxi, but also in neighbouring Sichuan and Gansu. It is the Board's current intention to finance the projects through a combination of internal cash flow and local bank borrowings.
Also commenting on the projects, WCC's Chief Executive Officer Jimin Zhang said:
'These projects come on the back of robust demand. After seasonal slowdown in the cold winter and Chinese New Year break in January, construction has resumed and we have seen an increase in sales volume since mid February 2009. The demand is driven by high cement consumption firstly in the region after the May 2008 earthquake in Sichuan and secondly, from the robust public funding projects. In addition, our selling price remains high compared to the average in 2008.
We believe this opportunity in Shaanxi province is exceptional, particularly in today's world, and we are excited to be in a position to grow our business at this time and benefit from the government's spending on infrastructure.'
For further information, please contact:
West China Cement Limited
Robert Robertson Tel: + 44 118 974 4636
NCB Stockbrokers Ltd
Christopher Caldwell / Emma Brewer Tel: + 44 20 7071 5200
Citigate Dewe Rogerson
Pui Shan Lee Tel: + 86 21 6340 4186 / Mob: + 86 138 1712 5781
Susanna Gale Tel: + 852 2533 4607 / Mob: + 852 9457 4356
Notes to Editors:
West China Cement listed on the AIM market of the London Stock Exchange on 4 December 2006, raising approximately £20.1 million net of expenses.
Prior to the listing, the Company, which is headquartered in Xi'an the provincial capital of Shaanxi Province, had operated three cement production plants in Pucheng with a combined production capacity of 1.5 million tonnes per annum since 2003.
In order to service the growing demand for cement in the region, a new plant running two cement production lines, funded by money raised at the IPO, opened in Lantian in 2007 and has a production capacity of 2 million tonnes.
The company's 1.8 million tonne third plant at Ankang started producing and selling cement in March 2009 and is expected to reach full capacity in the second half of 2009.
Approval for the building of two new cement plants, Yangxian and Mianxian, each with a capacity of 1 million tonnes per annum, was announced today. With the massive government spend on infrastructure as part of the RMB 4 trillion fiscal stimulus package and the need to rebuild in the wake of the Sichuan earthquake which occurred in this area, the Company has chosen the appropriate location to build these latest projects.
This information is provided by RNS
The company news service from the London Stock Exchange