Holcim to employ more co-processing in China

Holcim will focus on co-processing technology to get ahead in China’s competitive market. The Swiss major views China as a valuable market where its profits improve in future years.

"The current market is flat. As the market continues to flatten, the nature of competition will change. The values of sustainability and environmental performance will play a much bigger role for a company's further development," said Ian Thackwray, Holcim's president for Asia-Pacific and South Africa.

Holcim is clearly confident in its Chinese partner and its strategy in the country. Despite a rather sluggish market with an acute oversupply in cement production capacity, Holcim reinvested in Huaxin in December to raise its shares to 42 per cent of the total.

"We've already seen the slowing down of the Chinese economy is affecting the construction business. So maintaining 30 per cent growth in sales this year is difficult but may be achievable," said Ian Riley, who is vice-president of Huaxin Cement in Wuhan, the capital of Hubei province.

"The top priority is to continue to support Huaxin's growth, particularly to support the direction Huaxin is taking to become an environmentally-friendly business," he said, adding there are a lot of opportunities in co-processing. It can pre-treat waste to use it as fuel to replace coal, gas or oil for the production of cement.

Riley said the cost of adding a co-processing facility to cement production and building a refuse pretreatment platform is about one third of the cost of constructing a waste incinerator. He believes that using co-processing in the cement industry is a better solution than building incinerators to tackle China's garbage problems, especially for the treatment of municipal waste.

Out of the nearly 40 cement plants Huaxin has, six have already become co-processing plants. "There will be around 10 to 12 co-processing plants by this time next year," said Riley.

According to the 12th Five-Year Development Plan of China's Cement Industry (2011-15), the country, which currently has hardly any co-processing production lines that burn waste in the making of cement, will see around 10 per cent of its cement production lines equipped with this technology by 2015.

The slowdown in China's economy, which is predicted to grow at an average annual rate of 7.5 per cent between 2011-15, is likely to result in shrinking investment in housing and infrastructure, therefore oversupply of cement is becoming increasingly serious.

"With the rebalancing of the economy, it is crystal clear that the golden era for the cement industry is gone. But the tough times will reshape it into a more sustainable and quality-focused industry in China," said Lei Qianzhi, president of the China Cement Association.

The number of cement producers in China has decreased to 3800 over the past two to three years due to mergers and acquisitions. The top 10 cement makers in China have a 25 per cent lock on production capacity in the nation, up from 15 per cent in 2005. The top makers are expected to have a 35 per cent market share by 2015, the 12th Five-Year Plan said.