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June 10, 2015
Huaxin Cement Co. Ltd, China’s leading domestic cement producer, prepares for intense competition and slowing national economic growth.
Huaxin Cement Co. Ltd, founded in 1907 as one of the first Chinese cement enterprises, leads the domestic cement market. But Chen Zhi, manager of the Process Department and Technical Director, sees dark clouds hanging over the business.
“China’s cement industry has had a problem of excess capacity since 2010,” says Chen, who has worked at Huaxin for more than 20 years. “There is little market share or room to make a profit. For example, Huaxin, along with other large cement companies, has made far less profit in 2012 due to intensified competition, although we are implementing good cost control measures. Poor management has caused many medium-sized and small cement companies to run at a loss.”
The cement industry is heavily dependent on the speed of economic development. “Even when the national economy picks up, it will still be quite difficult for the cement industry to generate profit as a result of excess capacity,” Chen says. That’s why Huaxin has turned its focus toward two other business areas. “On the one hand, we have started to extend the industrial chain and engage in the concrete business,” says Chen. “On the other hand, drawing lessons from Europe and America, we have entered the field of environmental protection, with a focus on urban waste and sludge treatment.”
Huaxin expects to invest about SEK 10.6 billion (RMB 10 billion) in the environmental protection business in the next 5–10 years. For Chen, the transition is a natural one. He says the attaches great importance to environmental protection and sustainable development. “In terms of mining, we usually adopt standardized methods, such as benching, and prioritize land reclamation and re-greening by planting trees and grass,” he says. “As a large company with social responsibilities, we must take mining plans, resource utilization and water and soil conservation into consideration. I believe only large corporations with strong financial and technological strengths can deal with the environmental protection business.”
In 2001, Chen had to solve an air supply shortage when he was responsible for the renovation project of a cement grinding station in Huangshi, Hubei. Although screw compressors were relatively new to China’s cement industry at that time, technicians at Huaxin saw that Atlas Copco’s 10-cubic-meter miniature compressor units (GA55-7) produced less noise and consumed energy more efficiently. Placing a high value on the stability and quality of its air supply, Huaxin purchased the Atlas Copco screw compressors.
During 2003-2005, many Chinese-made screw compressors became available, and Huaxin also bought some of them. However, Huaxin sets a high requirement on the reliability of compressors, in particular the lubrication of bearings and the reliability of the control system. “We found that Atlas Copco’s compressors were most trustworthy in terms of technology, quality and service,” says Chen. “Working at the center of a cement plant, compressors have a huge impact on the reliable operation of the plant.”
Since then, Huaxin has purchased many more machines from Atlas Copco to meet the needs of its business expansion. More than 80% of the machines used by Huaxin – including drilling rigs and stationary and portable compressors – are from Atlas Copco. For drilling applications, Huaxin mainly uses XAMS850 and XAVS900 compressors. “They always take first place in the annual assessment of our suppliers,” Chen says.
After working on several projects, Huaxin has built up a relationship with Atlas Copco, which also provides technical support and training regarding daily maintenance of the machinery. “Few domestic manufacturers offer a pre-sales service, which Atlas Copco does well,” says Chen. “When we talk about compressors, the maintenance staff at our plants prefer using those manufactured by Atlas Copco. I think this is an important recognition.”
In the near future, Huaxin will broaden its focus away from the cement business. “The concrete business includes the aggregates sector which is closely related to portable compressors used in almost all the mines in Huaxin,” says Chen. “Also, a few miniature compressor units may be used in our green business.”
Huaxin Cement Co. Ltd is one of China’s first cement companies, founded in 1907. Its cement has been used in many key national projects, including the Three Gorges Dam and the Wuhan Yangtze River Bridge. Huaxin also engages in the fields of premixed concrete, cement equipment, cement packaging and waste treatment.
The first decade of the 21st century saw Huaxin’s rapid expansion from the Hubei market (where its headquarters are located, in Wuhan) across China. The company’s annual production capacity has increased from 1 million metric tons in the early 1990s to about 60 million today. Since 2011, Huaxin has expanded its business overseas with an ongoing project in Tajikistan and a Cambodian project in negotiation. At present, Huaxin has more than 40 branches or subsidiaries across China and more than 11 000 employees. With total assets worth more than SEK 19 billion (RMB 18 billion), the company is ranked at the top of the domestic cement industry.