The Yunnan province of China has signed a strategic cooperation agreement with France’s Lafarge and Hong Kong’s Shui On Construction and Materials Limited (SOCAM) to develop the building materials industry in Yunnan.

The agreement states that Lafarge will invest more than US$600 million to speed up modernization of equipments to produce cement, ready-mix concrete, construction aggregates and plasterboard. By 2010, Lafarge will produce at least an additional 10 million tons of new cement and build a new plant for plasterboard and ready-mix concrete.

Lafarge and Shui On pledged to adopt modern cement production technologies in Yunnan. All operations will have controls on exhaust gas and dust pollutions, and will be energy-saving and emission reduction.
Frankie Wong Yuetleung, CEO of SOCAM, says that SOCAM, Lafarge and Yunnan will have more discussions on future cooperation. He expects Yunnan’s energy, transportation and water supply sectors will see great developments in the future.

Lafarge plans to double its investment in China over the next five years on the expectation that rapid growth in construction spending will continue, the Financial Times reported. Citing Lafarge chairman Bruno Lafont, the newspaper said the company’s China operations will invest US$1.5bn in new facilities which would take production to 50Mt in 2012 from 23Mt now.

"For the time being there is still high growth. There are still considerable unmet needs, especially in the parts of the country where we operate," Lafont told the newspaper. The newspaper added that the investment accounts for about one-third of the capacity Lafarge will build in the next few years. As part of the expansion, Lafarge last week announced a 600 mln usd investment in southwest China’s Yunnan province that would boost annual capacity by 10Mta. Lafarge operates in China through a partnership with Hong Kong’s Shui On Group.

The business is concentrated in four southwestern provinces – Yunnan, Sichuan, Chongqing and Guizhou, the newspaper noted. Lafont told the paper that cement consumption in these four provinces was greater than in the whole of the US. The cement industry accounts for about 9 pct of China’s carbon emissions, the newspaper added. It added that Lafont said Beijing was keen to support investment by foreign companies such as Lafarge because they would bring cleaner technologies with them.