China's cement industry has long been expected to move beyond East Asia. Last week, it was reported that Taiwan Cement was negotiating with Turkish cement producer OYAK Cement to set up a joint venture there. Taiwan Cement said it plans to invest up to US $1.1 billion in a subsidiary operating in Turkey with OYAK Cement. At the press conference, Taiwan Cement said bluntly that the Chinese government's off-peak production restrictions and market saturation forced it to expand in the international market.
In fact, this is not the first time that Taiwanese cement companies have flirted with Turkish cement producers. In June this year, local media reported that Taiwan Cement had signed a memorandum and confidentiality clause with Sangke Holdings on potential investment. However, the timing is odd, as Brazil's InterCement announced the sale of its operations in Portugal and Cape Verde to OYAK Cement at about the same time. This deal alone deserves more attention, considering that it is the third such deal for Brazilian producers since September 2018, but it needs to be discussed again. While nothing is certain at this stage, getting a $1.1 billion investment commitment from a single foreign investor will certainly help OYAK Cement raise funds. < br/> < br/> 
No matter who TCC ends up with, this level of investment means multiple plant relocations. The transaction involves a 40% interest in OYAK Cement and 13 cement plants with a capacity of about 12 million tons per year, accounting for 16% of the local cement market. This is not far from the usual international price of $200 per ton of cement production capacity.
For a Chinese company, the choice to locate in Turkey echoes history, as Turkey is located at the western end of the Silk Road. The modern version of the Silk Road, the "the Belt and Road", is China's attempt to evoke this ancient road in its international route. China and Turkey are both major exporters in the cement industry. In 2017, both China and Turkey entered the top five in exports to the United States, with China exporting 2 tons to the United States and Turkey exporting 1.4 tons. It is widely believed that China's cement industry faces major obstacles in exporting excess capacity. China's cement production capacity is 15 times that of Turkey, but the export of cement clinker is still important. Interestingly, as the Chinese cement producer tries to overcome structural and market barriers to its domestic expansion, its target is also a major cement exporter. Typically , when a foreign cement producer acquires a local company, one strategy is to use the local plant to convert its clinker "imports" into a "local" product. Given that Turkey already has a large export market, this seems unlikely.
Taiwan Cement's high-profile attempt to buy Turkey seems to have boosted investor confidence and is intended to facilitate the smooth completion of the deal. Usually, everything is agreed before it is announced, unless it is prohibited by the regulatory authorities. But the deal will benefit both sides. It is no joke that Taiwan Cement has invested a lot of money, and OYAK Cement will also gain a foothold in the European Union by acquiring assets in Portugal and Cape Verde.
浙公网安备33010802003254号