French Lafarge company said Thursday that it agreed to merge its cement operations in China to create a joint venture with the largest cement producer in southwest China, Shui On Construction And Materials Limited (SOCAM).

Lafarge will own 55 percent of the new joint venture, Lafarge Shui On Cement, and will name the chief executive.

"The southwest region in China has a high growth potential with a population of more than 200 million people, a rapid pace of development and extensive infrastructure development plans," Lafarge said, estimating that 900 million tons of cement was consumed in China last year.

The joint venture, with its total capacity estimated at 17.4 million tons per year by the end of 2005, will be the largest producer in the region and one of the top three cement companies in China.

The deal is expected to be closed in October and still needs approval from Chinese authorities, said Lafarge.

"After ten years of presence in the Chinese mainland, we have built the knowledge and the resources that drive us to move a step ahead, in order to benefit from market growth opportunities and to extend our leading positions in several provinces," said Lafarge chief executive Bernard Kasriel.

Source: Xinhua