Taiwan Cement Corp (台泥) said yesterday it has agreed to acquire a cement firm in Guizhou Province to tap into the growing demand in China.
Taiwan Cement said it would buy Kaili Shui On Co (凱里瑞安建材) from Shui On Construction and Materials Ltd (瑞安建業) for HK$218 million (US$28 million).
The deal is subject to approval by the Investment Commission, which has the final say on applications for local and overseas investments, Taiwan Cement said.
Taiwan Cement said Kaili Shui On, which operates a production line with an annual capacity of 1 million tonnes, is located near Guiyang, the capital of Guizhou, and enjoys convenient transportation links to neighboring cities in the province.
According to Taiwan Cement, there is great potential for growth in cement demand in Guizhou as the province is just embarking on improving its infrastructure.
Taiwan Cement currently operates a plant in Guizhou with an annual production capacity of 2 million tonnes and is building two more production lines there with a total capacity of 3 million tonnes.
With the acquisition of Kaili Shui On, Taiwan Cement is expected to boost its annual production capacity in Guizhou to 6 million tonnes by the end of the year.
The firm said it was looking to acquire other interests in China, with annual production capacity in China expected to rise from 50 million tonnes to 55 million tonnes by the end of the year.
Last month, TCC International Holdings Co (台泥國際集團), a unit of Taiwan Cement, announced a plan to invest 1.85 billion yuan (US$286 million) to set up a production base with an annual production capacity of 10 million tonnes in Shaoguan, Guangdong Province.
The firm is planning to raise its production capacity in China to 100 million tonnes by the end of 2014 by investing a total of US$3 billion.
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