West China Cement Limited (AIM: WCC) has acquired Shaanxi Xiushan Cement Limited Company for Rmb 180 million (£16.5 million), comprising the Xiushan cement plant in the Shaanxi province in proximity to its Ankang and Lantian plants and the Xunyang Xiushanlong cement milling facility.
The target company posted a pre-tax profit of Rmb 23.8 million (£2.18 illion) in 2008. In terms of the agreement, profits from Xiushan accrue to WCC with effect from August 2009.
The Xiushan cement plant has a capacity of 600,000 tonnes per annum and limestone reserves to support this operation for at least 30 years. WCC expects to modify the plant to improve operating efficiency, environmental performance and output through using modern technology.
The Xiushanlong milling plant has the capacity to mill approximately 100,000 tonnes of clinker or slag, which can then be blended with Ankang's production.
“Xuishan offers an excellent opportunity to improve our service to the cement market in the South-East of the province...the milling plant also gives us the capacity to produce slag cement, allowing us to offer a range of blended cements which has technical benefits and should be useful in several of the large hydro-electric and railway projects in the area,” said Chief Executive of WCC Jimin Zhang.
WCC’s capacity will reach 8 Mt (million tonnes) during the course of next year, which is the bottom of the declared 8-10 Mt target for 2010, WCC added.
Disclosure: I do not hold a position