Cement producer Jidong Development Group and the China-Africa Development (CAD) Fund will set up a more than $200 million cement plant in South Africa's Limpopo province, China's largest investment in the African country for two years.
The two Chinese entities have set up a joint venture, in which Jidong holds a controlling 60 percent stake. The joint venture signed the deal with its South African partner Women Investment Portfolio Holdings (WIPH) on Thursday, sources close to the matter told China Daily.
The plant, spread over a total area of over 667 hectares including mines, is expected to be completed within 18 months. It will have the capacity to manufacture 1 million tons of cement annually and will cater to the growing needs for the product in South Africa, sources said.
The CAD Fund and Jidong, the Johannesburg-based WIPH and South African limestone mining company Continental Cement are jointly developing the project.
Jidong has close ties with WIPH, a leading investment company owned by female entrepreneurs.
"The CAD Fund will mainly be a financial investor in the project," the State-backed fund said in a statement on Thursday.
The CAD Fund was set up in March 2007 with an initial capital of $1 billion, provided by the China Development Bank Corp, to support Chinese companies investing in Africa.
"It is expected to touch $5 billion in due course," the fund said in the statement.
It has already invested about $800 million in more than 30 projects in Africa that would lead to $3 billion investment from Chinese companies, CAD Fund said.
South Africa's under-developed infrastructure is expected to require huge quantities of cement amid a property boom.
But cement prices are relatively higher in South Africa due to the shortage of sophisticated equipment and the poor logistics system, said the sources.
"Jidong will export its home-grown equipment to South Africa for setting up the project, and all the cement made in the plant will be sold within the country," they said.
Tangshan-based Jidong Development Group is China's second-largest cement producer with a production capacity of 100 million tons.
Its investment in South Africa was the company's first overseas expansion.
China was South Africa's largest trading partner in 2009, with bilateral trade amounting to $16 billion.
According to figures from South Africa's Department of Minerals and Energy, the country holds a vast amount of minerals, including nearly 90 percent of platinum, 80 percent of manganese, 70 percent of chrome, 45 percent of vanadium and 41 percent of gold.
