Lao and Chinese entrepreneurs expect to spend more than US$100 million to develop the cement industry in Laos in response to the growing needs of the construction industry.
Dr Duan Wenquan ( left ) signs an agreement with Dr Khamlien Pholsena ( second left ) in Vientiane on Friday in the presence of Deputy Prime Minister Somsavat Lengsavad.
An agreement on the prospecting and exploration of raw materials for a cement plant in Ban Khoun Ngeun in Khounkham district, Khammuan province, was signed in Vientiane on Friday between representatives of the government and the joint venture company.
If the project goes ahead, the plant would be the largest cement factory in Laos with a production capacity of 1 million tonnes annually. While this output would go some way to addressing the cement shortage in Laos, production and distribution would not get underway until 2015.
Khounkham district borders on Hinboun district, which is about 260km from Vientiane.
Friday's signing ceremony was attended by high-ranking government officials from Laos and China as well as business leaders from both sides.
Those present included Deputy Prime Minister Somsavat Lengsavad, Vientiane Mayor Soukanh Mahalath, Governor of Yunnan province Li Jiheng and Chinese ambassador to Laos Ms Bujinguo.
Deputy Minister of Planning and Investment Dr Khamlien Pholsena represented the Lao government in signing the agreement with YPIC International Energy Cooperation and Development Co., Ltd. Chairman Dr Duan Wenquan.
The project will begin with prospecting and exploration for raw materials, which is expected to take six months. Then the joint venture company will ask the government to set up the factory for the processing of cement.
The project concession covers an area of 73.8 square kilometres.
The Saythirath Group will be involved in prospecting and exploration. Group Chairman Mr Souksakhone Saythirath is optimistic that the construction sector in Laos will continue to grow, meaning the demand for cement will continue to rise.
Laos currently has seven cement factories with a total production capacity of about 1.55 million tonnes a year. However, this is only enough to meet 80 percent of domestic demand.
The shortage is particularly acute in the dry season each year, when construction booms around the country. In addition, the inflow of foreign investment and the burgeoning real estate sector are further driving up demand, especially in large-scale developments such as hydropower plants.
Cooperative relations between Laos and China are expanding in all areas, in politics, economics, foreign affairs and social and cultural spheres.
Also on Friday the Lao and Chinese sides signed 10 documents relating to the information sector, trade, investment, urban development, foreign affairs, and science and technology.
China is ranked the second largest foreign investor among 53 nations doing business in Laos. To date China has invested US$3.3 billion in 742 projects. These are mainly in the areas of mining, industry and handicrafts, agriculture, hydropower, industrial farms, garments and services (education, health, hotels, consulting, telecommunications and construction).
