China will designate ten major domestic cement enterprises and give them  preferential policy support in project examination and approval, land use and loan use. Some industry experts say that the move indicates that China will speed up  reshuffle of cement industry and raise production concentration of the industry. An additional 30 smaller units will enjoy priority support of local
governments.

The proposals have set objectives of the restructuring: 1. Production scale  of top ten cement enterprises will reach more than 30Mt by 2010,  and production concentration will increase to 30 per cent. 2. Production  concentration of the top 50 will rise to more than 50 per cent.

Liu Zuoyi, director of the Information Department of the China Cement Association, said that in the past when the state tightened financial control over cement industry, the banks didn’t know which plants they should  give the loans. The fixing of the list of the ten cement enterprises will help the banks have better understanding of the state macro control policy,  thus promoting restructuring of cement industry.

The list of the ten key cement groups will be made on the basis of the  standards such as performance index, development potentials, integration capacity of regional market and proportion of new dry-process production lines. ’Output will be an important factor in deciding the list’, said a source.

However, the new policy will bring about alarming side effects on enterprises which fail to enter the list, and their new projects which have started construction may become uncompleted projects as banks will not continue to issue loans to them.