Cement Net Exclusive: What is the situation that the production capacity index can be halved?

2024-09-14 11:13:11

The production capacity index of white cement for the transfer project (across cities within the province) shall be subject to the capacity replacement ratio specified in the Replacement Measures, i.e. 1.5: 1, that is, 330 t/d shall be reduced to 220 t/d, not to 440 t/d.

There is a slight difference in specific policies between the capacity replacement of

white cement project and the capacity replacement of general cement clinker . As early as January 2020, the official website of the Ministry of Industry and Information Technology published the administrative explanation of "Questions and Answers on the Implementation Measures of Capacity Replacement in Cement and Glass Industry". When answering how to determine the replacement ratio, the third situation is that the new white Portland cement clinker project, in view of its strict requirements for raw materials and fuels, firing, cooling, bleaching and grinding processes, rotary kiln equipment also needs technical transformation, and the clinker production capacity of the same specification kiln type is only about 50% of the general cement clinker production capacity. Its capacity index can be halved. White Portland cement clinker can not be replaced by general cement and other special cement clinker.

Later, in Article 13 of the Measures for the Implementation of Capacity Replacement in the Cement and Glass Industry (2021 edition), it is clear that the capacity index of new white Portland cement clinker projects can be halved, but the capacity of new white Portland cement clinker projects can no longer be replaced by general cement and other special cement clinker.

In addition to the above, other provisions shall apply as for general purpose cement. For example, it is not necessary to formulate the situation of capacity replacement scheme, the use of capacity indicators, the proportion of capacity replacement, the publicity and announcement requirements of capacity replacement scheme, etc.

Recently, the competent department of a large cement province in the south announced the information of "Capacity Replacement Scheme for White Portland Cement Relocation and Technical Renovation Project".

The plan shows that the proposed production line is located in S city of the province, a Φ3.3 × 54m new dry kiln white cement production line, with a design capacity of 770 t/d, a replacement index capacity of 440 t/d, and a replacement ratio of 0.75: 1;

The transferred production capacity is located in L city of this province, with a Φ2.8/2.5 × 46m dry preheater kiln white cement production line, the designed production capacity is 330 t/d, the approved production capacity is 330 t/d, and the replacement production capacity for this project is 330 t/d. The transferred production capacity of

330 t/d is converted into 440 t/d by the replacement ratio of 0.75: 1 for the proposed project with a production capacity of 770 t/d.

Curious how the 0.75: 1 replacement ratio came about?

According to the provisions of the Replacement Measures, the ratio of capacity replacement for cement clinker construction projects located in non-key areas of air pollution prevention and control is not less than 1.5: 1. Can production capacity index of the new white Portland cement clinker project be halved from 1.5 to 0.75? At the beginning of

the Replacement Measures, it is clearly stipulated that it is applicable to the new cement clinker projects of all kinds of ownership cement enterprises in the People's Republic of China, and it is strictly forbidden to put on record and build new cement clinker projects to expand production capacity. How can production capacity be expanded after the replacement of production capacity? The

capacity index can be halved means that the ratio of white cement capacity to general cement capacity under the same kiln diameter can be halved, and it should not mean that the capacity index of new white cement projects can be halved.

Back to the transfer capacity of the project, the kiln specification is Φ2.8/2.5 × 46m, and the design capacity and (public) actual capacity of the project are 330 t/d (consistent with the provincial cement clinker production line list in 2023). The actual capacity is calculated to be 500t/d according to the regulation of "the capacity of variable diameter kiln shall be verified according to its maximum diameter". Now the actual production capacity of white cement is 66% of the actual production capacity of general cement, which is reduced by one third. The kiln specification of

the proposed project is Φ3.3 × 54m, and the actual capacity is 1166 t/d calculated by the interpolation method according to the (general) cement clinker capacity conversion table. The proposed design capacity of the current project is 770 t/d. The design capacity of white cement project is 66% of the actual capacity of general cement, which is reduced by one third. The production capacity index of white cement for the transfer project

(across cities within the province) shall be subject to the capacity replacement ratio specified in the Replacement Measures, i.e. 1.5: 1, that is, 330 t/d shall be reduced to 220 t/d, not to 440 t/d.

Looking at the proposed project, its nature is defined as the relocation and technical transformation project of white Portland cement. If the relocation takes place in the same city, the project may not formulate a capacity replacement plan except for the replacement of capacity indicators from other cities. However, the Replacement Measures also stipulate that no new production capacity should be promised, and the relocation of the project should be announced and supervised on its own initiative.

Where did you move from? According to the list, there is no white cement project with a scale of 330 t/d in S city. How to announce the relocation of the project? According to the provisions of the Replacement Measures, the cement projects for the relocation of production facilities are strictly limited to the same city or state. If they move from other cities, they should formulate a capacity replacement plan and implement a reduction replacement with a replacement ratio of 1.5: 1.

For the mixed project of relocation + replacement, the regulations that should be followed must be implemented, and the reduction replacement must be strictly implemented.

If there is any ambiguity in the implementation of the Replacement Measures, the competent authorities shall also make timely explanations.

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Correlation

On November 21, the Western Construction (002302) issued a prospectus for issuing stocks to specific targets in 2021. The company plans to introduce Conch Cement as a strategic investor through this issue, and Conch Cement will subscribe for 183 million shares, accounting for 12.48% of the total equity after the issue, becoming the second largest shareholder. The purpose of this issue is to optimize the capital structure, supplement liquidity and repay bank loans, which is expected to bring the company an annual increase of 8.85 billion yuan in operating income and a total profit of 708 million yuan, up 38.71% and 78.23% respectively from 2023.