This week the South China Morning Post pointed out that Chinese cement companies are keen to explore further market opportunities for expansion in Africa's growing cement markets.

The lack of cement demand and falling cement prices in China is putting pressure on Chinese cement producers to look for higher margins abroad. Cement prices declined to CNY292/t (US$41/t) in 2023 in China, well below the CNY813/t produced by many African cement plants, claims the South China Morning Post. It is no wonder that Africa is seen as a land of golden opportunities by Chinese cement producers.

Chinese cement investment is expanding

As well as moving into Tunisia's market last week, Sinoma International Engineering was the general contractor for West China Cement’s (WCC) 4.5Mta Lemi National Cement plant that recently opened in Amhara, Ethiopia. WCC also has subsidiaries and shareholding in cement companies in Namibia, Zimbabwe, Mozambique, Republic of Congo, Democratic Republic of Congo, Rwanda, Uganda.

The pace of Chinese investment in Africa is stepping up and these are not small cement plants. Only this month, West International Holdings Ltd announced that it was constructing a new UGX730m (US$196.180m) cement plant in Njeru, Buikwe, Uganda. Hengya Cement (Tanzania) Co Ltd is similarly building a 2.5Mta cement plant in Tanzania as part of the ‘Belt and Road’ initiative. This plant cost US$530m and will be situated 330km away from Dar es Salaam.

Moreover, Chinese investors have not only focussed their efforts on greenfield plant construction. Huaxin Cement Co Ltd of China was quick to grasp the South African and Mozambique assets of InterCement Participações SA when they came up for sale at the end of 2023. Huaxin Cement is also the major shareholder of Chilanga Cement in Zambia and it owns Portland Cement Malawi in Malawi as well as Maweni Limestone Ltd, ARM Cement Plc’s former Tanzanian unit. 

Smaller markets are also attracting the attention of the Chinese. In Rwanda the 0.95Mta AnJia Cement Factory in Muhanga Industrial Park is owned by AnJia Prefabricated Construction Rwanda Co Ltd, a subsidiary of West International Holdings.

African mega projects spur Chinese cement plant growth

There are several African mega projects that have encouraged Chinese participation in Africa which seems to be China's playground for cement plant expansion. This year South Africa will see the construction of the Msikaba bridge, Africa's longest cable-stay bridge, and the Mtentu bridge, Africa's highest bridge. These Chinese built bridges are part of the N2 Wild Coast Road project. South Africa is also the home of the Modderfontein Mega City in Johannesburg, which is being built as a hub for Chinese firms investing in Africa at a cost of US$8bn.

Kenya will see China's Sinohydro Corp and Engineering Co commence work on the US$135m Mwache Multipurpose Dam in Kwale County, Kenya. Kenya’s Standard Guage Railway line is also being constructed by the China Road and Bridge Corp.

Ethiopia has attracted Chinese construction of the Ethiopian-Kenyan Electricity Highway project, the Abay River Bridge, which is the longest road bridge with the largest span in the country, as well as the biggest stadium in Ethiopia. Meanwhile, the Ethiopia-Djibouti railway construction costing GBP3.2bn (US$4.16bn) offers a 472-mile train journey and connects Ethiopia to the coast.

Furthermore, the Democratic Republic of Congo has tied its infrastructure projects to China's Sinohydro Corp and China Railway Group in February 2024, signing a US$7bn deal for roads and hospital projects over the next two decades.

Chinese cement producers well positioned for supply contracts

With Chinese construction companies playing such a key role in Africa's infrastructure development, it is likely that Chinese cement producers will be at the front of the queue for supplying many of these projects. With the growing network of cement plants from WCC and Huaxin Cement, in particular, local cement producers have a fight on their hands to slow the wave of Chinese investment coming into their industry.

For a full report on Chinese expansion in Africa, subscribe to ICR and read ICR July 2024 – 'China leads cement revolution in Africa', by Tony Hadley African Advisory Ltd.

Published under Cement News