West China Cement Limited (the “Company”) and its subsidiaries (collectively, the “Group”) is one of the leading cement producers in Shaanxi Province, with a leading market position in eastern and southern Shaanxi and a presence in Xinjiang and Guizhou Provinces, as well as Mozambique, Democratic Republic of the Congo (“D.R. Congo”) and Ethiopia, Africa. As at 31 December 2023, the Group had a total production capacity of 31.8 million tons, comprising 20 cement production lines, with 21.7 million tons in Shaanxi Province, 3.5 million tons in Xinjiang Province, 1.8 million tons in Guizhou Province, 2.0 million tons in Mozambique, 1.5 million tons in D.R. Congo and 1.3 million tons in Ethiopia, Africa. Moreover, the Group had total production capacities of 15.0 million tons in aggregates and 12.4 million cubic meters of commercial concrete.

The Group’s cement production is geared towards the economic development of Western China, Mozambique, D.R. Congo and Ethiopia, Africa, driven by the Chinese Government’s “Western Development Policy” and the “Silk Road Economic Development Plan”. The Group aims to serve the development needs of Shaanxi, Xinjiang, Guizhou, Mozambique, D.R. Congo and Ethiopia, Africa supplying cement products to the infrastructure, urban and rural construction markets. The Group’s cement products are used in a variety of infrastructure projects such as highways, railways, bridges, hydroelectric power stations, water conservancy and water transfer projects. The Group also focuses on serving both the urban and rural development needs of western China, an area which is experiencing rapid urbanisation and population resettlement, accompanied by housing and social infrastructure development.

In 2023, as a result of the weak global economy recovery, high inflation as well as a complex and severe external international environment, the PRC economy recovery has been relatively slow as compared with that of 2022. The performance of the infrastructure investment was slowing down, while the property investment was deteriorating, leading to a decline in the demand of cement in PRC. On the other hand, in order to control the air pollution and preserve the blue sky, the environmental management of atmospheric pollution and the local environmental control remained stringent. As a result, the effect of various policies such as peak-shifting production halts and mine comprehensive regulations are more favorable to balance the supply and demand of the cement industry. Both Fixed Asset Investment and Real Estate Development Investment growth rates deteriorated, which overall led to a decline in the demand for cement products in Shaanxi Province. Fortunately, intense competition from the supply side is still a strong factor affecting the ASPs in Shaanxi Province, which continued to be balanced through the occasional peak-shifting production halts during low season periods under the stringent environmental policy. As a result of the greater margins contributed from the plants in Africa, the Group was able to maintain overall stable margins in 2023 even though under the abovementioned impact of low ASPs in PRC. Another important factor contributing to the Group’s stable margins was the maintenance of the costs at a stable level, which resulted from the Group’s successful implementation of efficiency enhancements and cost-cutting measures during the year.

Energy conservation and emission controls are increasingly important factors in the cement industry and the Group continues to work towards the highest industry standards in these areas. All of the Group’s production facilities are NSP lines, mostly situated in close proximity to limestone quarries and the Group uses conveyor belts at many of its plants in order to minimise transportation related emissions. The Group has constructed heat-recycling plants at over 80% of its production capacity, reducing approximately 30% of electricity consumption and decreasing CO2 emissions by approximately 22,000 tons per year per million tons of production.

All of the Group’s plants in China have been installed with denitration (De-NOx) equipment, reducing nitrous oxide emissions by approximately 60% per ton of clinker produced, as well as Particulate Matter (PM) reduction equipment. The Group is also involved in hazardous and municipal waste incineration.