This week the Taiwanese cement giants operating on the Chinese Mainland disclosed they expect a profitable year ahead with pickings envisaged to be richer than in their domestic market. While it had not increased cement capacity in China,Taiwan Cement Corp (TCC) became the sixth-largest cement manufacturer in China before the end of 2017. This followed an 8Mta cut in production capacity to 51.5Mta by China Shanshui Cement Group. In addition, Asia Cement Corp (ACC), part of Taiwan conglomerate Far Eastern Group, moved up to the No 10 spot in terms of cement capacity.
TCC's integrated capacity in China is installed in 16 plants in Guangdong, Guangxi, Jiangsu, Laioning, Sichuan, Chongqing, Yunnan while in Anhui, Guangzi and Fujian the company also operates three grinding units.
ACC operates some 33Mta of cement capacity in China, which includes four strategically located plants along the banks of the Yangtze River. Around 14Mta of its capacity is installed in Jiangxi, with a further 11Mta in Sichuan and 8Mta in Hubei provinces.
Mainland China more attractive than Taiwan
Although TCC and ACC dominate the Taiwanese cement market with a joint 75 per cent share of the market, cement demand has been falling since 2014, slumping to 10.3Mt in 2016.
Furthermore, cement prices have been rebounding in China. In December TCC seized the opportunity of rising demand and the cement peak season to raise its prices by CNY20/t (US$3/t) to CNY360/t (US$56/t) for shipments to Guangdong and Guangxi. The implementation of stricter environmental regulations on Beijng cement producers has also supported the sales of Taiwan-based cement companies, providing further good news for TCC and others.
Improved focus on the environment
In addition, cement production has come under fire in Taiwan and in June 2017 the government announced plans to reduce the cap on Taiwan’s cement export from over 20 to 15 per cent to help protect the environment. Vice Minister of Economic Affairs, Yang Wei-fuu said the ministry would amend the country’s Mining Act to implement an environmental impact assessment (EIA) policy in the development of the cement industry.
Taiwan’s Cabinet has been reviewing mining rights, addressing public concerns on the deforestation of National Parks on the island. ACC had wanted to extend its mining rights in Taroko, Hualien, eastern Taiwan and the Ministry of Economic Affairs had granted the company a 20-year extension but without public knowledge. Following a film documentary showing images of the deforestation of Taroko National Park due to mining activity, environmental activists gathered a petition with 130,000 signatures by June against the practice and called for reduced cement exports to protect the environment. However, in November ACC was allowed to continue its existing mining practices subject to submitting an EIA within three years of the ratification of the Mining Act amendment.
Meanwhile, TCC has increased its efforts to raise its thermal substitution rate. The company has signed a strategic alliance with Beijing Orient Landscape & Environment Co for the supply of alternative fuels. Beijing Orient is capable of processing 200tpd of hazardous household waste and TCC subsidiary TCC International Holdings (TCCIH) will select one of its cement plants as a pilot project for alternative fuels.
Moreover, TCC continues to fund a carbon capture project at Hoping power plant. The pilot study is using calcium looping technology to capture CO2. In 2016 TCC signed an agreement with the Industrial Technology Research Institute to extend the project and begin commercial operations in 2022. The programme’s budget currently stands at US$2.3m, but a further US$330,000 annually will be allocated.