2025, Pangu Cement went to Papua New Guinea to conduct a field assessment on the possibility of building a large-scale cement processing plant in the Finshhafen region of Morobe Province. In recent years, affected by the decline in domestic market demand, Chinese cement enterprises began to speed up production capacity to go to sea. Up to now, Chinese cement enterprises have put into operation 90 clinker production lines overseas, with a total clinker production capacity of more than 100 million tons. However, from the perspective of geographical distribution, the investment of Chinese cement enterprises is mainly concentrated in Asian and African countries at this stage, and there is no investment case in Oceania. Therefore, it is an interesting question why Chinese cement enterprises go to Papua New Guinea in Oceania for investment research.
Through the study of Papua New Guinea, we found that the country is in the stage of rapid growth of cement demand, with high import dependence, and the local government intends to reduce import dependence by building cement production capacity.
1. Papua New Guinea is highly
dependent on cement imports. Papua New Guinea is located in the southwest of the Pacific Ocean, bordering Papua Province of Indonesia in the west and facing Australia across the Torres Strait in the south. It is the largest island country in the South Pacific region with the largest area, population and total economic output. The total area is about 462,800 square kilometers. According to World Bank data, in 2024, the total population of Papua New Guinea will reach 11.8 million, with a population growth rate of about 1.8% and an urbanization rate of less than 14%.
At present, no clinker production line has been put into operation in Papua New Guinea, and there is only a cement grinding station with an annual capacity of 200,000 tons in Lai City, Morobe Province. The country mainly imports clinker to supply domestic cement demand. By 2020, the consumption of cement in Papua New Guinea will be maintained at about 200,000 tons, basically maintaining a balance between supply and demand.
However, since 2020, with the implementation of the policy of "Connecting Papua New Guinea 2020-2040" by the Papua New Guinea government, a large number of highway construction projects have been carried out, and the overall consumption of cement in the country has shown an increasing trend. In 2024, the domestic cement consumption of Papua New Guinea has reached about 310,000 tons, with a year-on-year increase of about 31.9%.
Therefore, during the period from 2020 to 2024, Papua New Guinea largely needs to import cement to meet domestic consumption demand, and the dependence on cement imports has been maintained at about 3-4% for a long time.
According to the clinker import data, the domestic cement production in Papua New Guinea has reached the upper limit of 200,000 tons in 2024. With the further increase of infrastructure investment in the future, there is a possibility that the country's dependence on cement imports will continue to rise. Therefore, there are certain investment opportunities in the cement industry in Papua New Guinea.
Figure 1: Cement Consumption and Import Proportion of Papua New Guinea in 2020-2024 (Unit: 10,000 tons, %)
Data source: Cement Big Data (https://data.ccement.com/)
II. The government promotes the improvement of domestic cement and clinker supply capacity
. In the Medium and Long-term Development Plan 2023-2027 issued by the Papua New Guinea government, it is clearly stated that 25 million kina (about 5.82 million US dollars) will be invested annually in cement production and limestone development projects to reduce cement imports.
The Papua New Guinea government plans to establish a comprehensive special economic zone in Finchhafen Port by the end of 2025, and build deep-water ports, hydropower stations, cement and limestone projects to achieve import substitution and create employment opportunities, making Finchhafen Port a major industrial center. In February this year, the Finchhafen Port Development Bureau of Morobe Province allocated 3.5 million kina to carry out the evaluation, design and planning of tourism and industrial projects in the Finchhafen Port Comprehensive Special Economic Zone. At present, local construction contractors have begun to promote the design evaluation and landing of cement plant and wharf construction projects.
According to the policy documents issued by the Papua New Guinea government, incentives such as tax incentives, simplified management, infrastructure and land resources support are usually included in the special economic zones. For example, the export of newly manufactured goods such as cement and concrete products can get tax relief; the import of special capital equipment needed for production can get tariff exemption; and enterprises can get general incentives such as wage subsidies and accelerated depreciation of equipment in the course of operation.
Clear investment planning and preferential policies are important reasons for attracting Chinese cement enterprises to invest in Papua New Guinea. The attempt of
Chinese cement enterprises to go to sea from traditional Asian and African regions to emerging markets such as Papua New Guinea is partly due to the increasing competitive pressure in the traditional sea market, but it also means that the international operation ability and investment vision of Chinese cement enterprises have been greatly improved, which is also the reason why the Chinese cement enterprises have made great efforts to go to sea. It proves that China's cement industry and enterprises are gradually experiencing the transformation from "regional leader" to "global leader".
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