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ATIF MUNIR, CEMENT PAKISTAN COMPANY, OUTLINES THE CURRENT STATUS OF PAKISTAN’S CEMENT INDUSTRY, ITS CHALLENGES AND EXPECTATIONS. cement is one ofthe mont advances and wel exablihed industries of Pakistan, genera hasinvegrated lates bases on oly. materials sony Is techno om ani on ane Has enquired modern ry pees techn pea suppliers History nly nal 0.5 lion By 1 ne of maepenidence in 1947, shere were ar eremt plants with a etal production capacity of A COMPREHENSIVE REPORT ON increase wo he prodsion expiry aka ine 25 malin bat evelopment ould vot keep poe wil the public and i Aste vate sectots took the mikative dscies. the the “Stare Cement stashed and give Pakivant” (SCCM) 9 for the production of eemene i the wl to supply ad continued il change it poiey of tae contol over mle ne-anened cement plants were pat up fo privatisation SCOP sly it ones oly ss market iE ei been eed dors efficiency foe ph i an prosiabality grounds. In view of the hig wer demi ing her af ye and liberalisation, Te | North zone Sno. | Name of unit Production capacity to July 2009 ner nition) in Pakistan | Cement (mition ) 1 | AskariCementLimited-wan | 1050 | 1.1025 2 | Askari Cement-Nzampur | 15 1575 3 | Bestway Cement Limited -Hattar | 1.17 12285, 4 | Bestway Cement Limited 3s | 359082 ~Chakwal 5 Cherat Cement Company 10 10s Limited-Nowshera 6 __Dandot Cement Limited Jehlum | 048 | 0.504 7 DewanHattarcementLimited | 1.08 | 1.134 36 workdcement.com [Oct 09] fattar 8 | DGKhan Cement Limited 201 2.1105 -DG.Khan 9 | DGKhan Cement Limited 201 2.1105 -Chakwal 10 | FaujiCement Company Limited | 1.11 11655, Fateh Jang 11__|FectoCementLimited-Sangjani | 078 | 0819 12 | Fying Cement Limited Lila | 1.2 126 13 | Gharibwal Cement Limited 255 26775 ee | 14 Kehat Cement Company Limited 255, 26775 Kohat 15 | Lucky CementLimited-Pemu 3.725714 | 3912 16 | Maple Leaf Cement Factory 351 3.6855, Limited - Daud 17 |Mustehkum cement Limited | 0.465 | 0.48825 jee 18 | Lafarge Pakistan Cement 195 20875 Company Limited -Chakwal 19 | Ploncer Cement Limited 1933571 | 203025, | = Khushab ‘Sub total (North) 33.502686 | 35.1782 ‘South zone 1 | AC RohriCement Limited 023 02415 Rohe - __ 2 | AbAbbas Cement Limited 04s 472s Nooriabad, Dad 3 | Attock Cement Pakistan Limited | 1.71 17955, Hub Chowk Lasbela jh [4 |Dadabhoy Cement Industries | 0.504762 | 03, Limited - Nooriabad, — 5 | Dewan cement Limited - Dhabgi | 075 07875 [Javedan Cement Limited 06 063 Lucky Cement Limited,-Indus | 3428571 | 36 Highway, Karachi [8 Pakistan Slag Cement Limited ~ | ors7s | 9 | Thatta Cement Limited-Thatta | 03 0315 10 | Zeal Pak Cement Limited 0342857 | 036 Hyderabad ‘Sub total (South) ast619 | 3.8995 Grand total (North+South) 1.818876 | 44.06732 unis were set up and many others invested heavily wo increase their exiing production capaci. Afier 2002-03, moa of the cement manufacturers expanded theif operations, and increase prediction, This sector as invested about USSI.5 billion in ‘capacity expansion over the last six years, “The cement industry in Pakistanis divided into two broad regions, the Northern and Southern regions ‘There are 29 cement production nts registered in the counay with an inal producion capacity of 44.07 milion t. OF these, 19 units are loadin the nonh with an insalled production capacity of 35.18 milion (80 while 10 units are located in the south with an installed production capacity of 8.89 million t (20%). There are four foreign companies, three armed force companies and 16 private companies listed in the stock exchanges. ‘Due to politcal instability and lack of allocation of fans for the Public Seaor Development Program (PSDP, the cement inrustry, which was inthe recession phase, registred an average growth rate of 2.9% forthe 190 10 2002 period. The period from 2008 to 2009 has been a golden age forthe Pakitan cement str. During this period the industry has shown tremendous growth, The boos in the cme scctor wasnitally dc to vsing construction activin the country, reconsracton activity in neighbouring Afghanistan and, ler, tremenelos increase in exports of cement from Pukisan. “Tata cement production in Pakistan has inercaee Aramaic since 2001, Dung EVO809, the otal cement redhcion was 1.76 milion t which s 12.4% higher than in the previous yer Tata cement dispatches, including local sles and exports showed 47,02 increas in F089 as compare 0 the previous yer: However: its interesting to noe that during the sme period, oa dispatches decreased by 14.07%. Currently ofthe tal prochicion capacity of wppronimately 4 milion t, domestic demand aocnns for 10:39 milion , whe the indy has exported about 11.8 milion tower the lst yar: By 2010, alter expansion and insallation of new plants, the total annual cement capaci is expected to be around 31 millon t Local sales “The main factors behind local cement dispatches are Public Sector Development Projets (PSDP) allocation, GDP growth, real estate levelopment projects for commercial and residential ‘use, and the anticipated construction of mega dams. Tal local sales of cement in FYOG/07 anel FY 07/08 were 21 milion ancl 225 million t respectively, which declined to 19.4 milion t during Fyox09, “The 14.07% decrease in domestic cement consumption during F¥O8/09 ean be atrbuted to the fact that big private projects are not currently uneler implementation and neither isthe government ally utilising its budgetary alloction for the Public Sector Development Program (PSDI), Economie recession, political instability and the downfall of the eal estate industry abo contributed towards this negative growth, According to experts, local cement dispatches ar likely {to improve in 2009 - 2010 due to an increase in Public Secor Development Prog allocation (Rs.621bilin) in the budget FYO9/10 and areeluction in excise duty by Rs.10 per bag as well as decining interest rates. Local deamand for cement is also expected to be on the high side due wo the reconstruction activities of devastated homes and buildings in the Northern region after the recent military operation. The grovth in cement dlispatches is solely attributable to rising export volumes, as ‘domestic demand remained! depressed in every comparable time period, Overall, cement plants of Pakistan operated at 73.60% “Table 2. Historical ota trom 2000-2009: Pakistanis cement ndsty | [amytosone [Producion m6 local | Expors eis) [Total] Winerense Capocty | Suplus capacity increase | despatches incrildec) | (mitiion ) (decd despatches | igotaiy | utilisation capacity Bale ition ‘rion 3 tnion 9 1554 | 51089988 oom | 993 -oom ooo | Senn | “1g73 120% 9833 e107 10000% | 9940 ano 63.22% ce 3783 | 16321 3a | 10960 [ano |soaeow | 1iat0 | iaanw easy ast 16936374) 12545) 9705 pont anos 323 Vso (575% 14788 16353 1933% | onzaw | 1855 | 2o9ss | r701w | 16907 vaaz Tasew [evar | ses 2006-2007 | 30251 440m | 21034 4231566 coor | 6028 [2007-2008 7.157 22asw | 22596 30286 | 250% esi 6a [2008-2009 41.760 | 12.30% «19.394 | 30775 | 161% [73.00% 10986 | Zion in 2008 ~ 09 as compared to 81.5 capacity is inereasing to eater to rising domestic dustry has started! fain for Pakistan cement nent exports, Many time, with a fallin prices after the second q ‘prices anel higher to increased supplies, singin cexpumsion, which led to mounting finance and depreciation costs, produet approval by BUREAU OF INDIAN STANDARDS, a lier reaching R130 per bag atthe retail level in 2006, cement requirement for exporting cement to prices fell sharply over the next few years to reach R225 per bag Pakistan achieved improved access to India ater the Export sales « ted the trade relation between Is Unlike focal sis, ve make nd New Delhi, and the re-impesition of 12% eounterval 20410 despite the gle eeononie (CVD) by Indian Government on import of cement to support recession, Accorlng ta statistics fem the All Pakistan Ces its indigenous industry alo alloted imports from Pais Manufacturers Asseiation (APEMA), cement export in Hovwever in re Pakistan to Talia 3G duty on Portkind cement kets. compl Forces. whieh stabilise prices balance in demand 1d supply of cemen exports duving the lat fiscal year According to the Currenaly cement is being exported to India by lanel Cement Report, lion 4 through the Wagal Borde exports while Japan got second position by exporting sea transportation are Nhava Sheva, Tticorin, Cochin and 126 millon tof eement. ‘The third largest cement exporter ia a tne major challenges to cement exports to the world is Thailand, wits around 12 milion t, followed by the diplomatic retains ewe nusies, the 1 urkey, which exported 11.6 million ¢of cement, Pakistan, now mports, and the Ih poston as ft Germany behind! by exporting mone ion. Allthe hina maintained fist positon lack of proper infrastructure for cement transpor 1 million cof cement curing the bast fiscal ve cement being transported by lands fist offloaded by Pakistan ands at sith position wid 9 rillion exports. trucks and then reloacled on Inlian tracks on the other side of Cement market experts have suid that Pakistan secured this the border, which considerably inereases costs. According 10 a position because of high demand of cement in nearby countries trale understanding, for land transportation, both the countries and by capauring new markets such as Aftian countries, Qatar re 1o provide train Exlites on the busi of interchange, whicly and Iraq, Pakistan could achieve 13 to 11 million tesportsby the means that one engine would go from Pakistan and the other ced of the fiscal year; keeping in view tae Indian market, which ‘would come frome India to Jhas once again started importing cement horn Pakistan. (T export of cement fiom Pakistan to India showed! sharp deetine either side as put bar ter the Mumbai aticks) That being sii, Paki The weight of sea-based cement exports from Pakistan nel other commetiies across the Waal boreler: However shart of railwagons on et for Indi the short delivery per porters. Keepin (65% of overall cement exports, nl Jow freight chang n pons, the impor. of as compared with 2008. It is important 19 note ‘cement from Paki ein the coming months. th during June 2009 were recorded Coment exporters are e markets of Africa, w13cin the Middle East and Ge 700085 1, which lent export June 2008, The lature growth of Pakistan's cement industry Hes in the Data for FYOR09 shows that Mghanitan is Pakistan's largest Afvican markets. Africa's cement demand exceeds supply by sxport market. Cement exports to Afghanistan increased much as 7 million tpa. ‘The construction industry there is ss compared ith ate of 25%. ‘The demand for 107 -O8, Pakistan isthe prime supplier for ery strong in the wake of low when compared with 9% 38 worldcement.com [Oct 09) Table 3. Local cement sales during July 2008 ~ June 2009 Month [rata = July 2008 1.791 200, — August 2008 1545 642 - | ‘September. 4497 468 = 7 abe 208 ry =| Nore 2008 10395 December 2008 [sts270 ‘aoay2008 1596559 Fenny 209 (seme ‘March 2009 1810245, 7 ‘prt 2009 — 1665098 = 1648 088 June 2009 1836471 —| Taal Tae Askari Cement, ovined by the Army Wielfare rust, has a production capacity of 3000 ipd. for example, the UAE will lion t by 2011, Similarly, South Afviea ‘oF cement for the coming football requires requires a large a skistan fa ly exempted cement ‘exports from general sales tx (GST) and federal excise duty (FED) and now is expected to grant an inland fie subs re cement exports, Pakistan's cement industry is set to achieve the USS! billion cement export level due to the growth in demand on the international mark Cement exporters are expected! to get inland freight subsily From Rs.40 billion export investment find announced in 2009 - 10 budget. Since the majority of cement producti pacity isin the north zone, the factories py high inane freight costs for nt by sea: therefore, the ilustry needs order to encoun exporting com apport in the shape of freight subsidies in exports The cement manufacturers have added 8 million tof new ‘capacity and total production is expected to be 45 million t by the end ofthis year: Despite an excess supply of IL milion 2008, itis estimated that prices will increase in lamest aswell as kets, which would surely boost profitability and provide velie to the industy om it westment, 40 worldcement.com [Oct 09] Lucky Cement Limited ‘Vier nc iam sani igi neces ta highligh the role of Lacy Cement Lite which inti r posto exporter. The Licky Cement Lint by (0) Yarns Brhers Group sae apa iv 196 with prc pci 0 12 plot in Fem NFR wich was abecqucely ogra vo ion pin 1989, tacky Cement Lit emerge asthe curr of cement in Pakistan 2004-05 when the iy mien aie ian ToT ARE ia iia lee secre projet of 25 mon pain Kevachi The prj n arate port cement the regional comes by x. Inmet ge a god reponse fom thc export mark the emp sed tlio ist the Kara pla oak the Wis» pa atts mother re of Pakisan’s overseas cement sales, exported tion to the Middle Es in te nine months en 57% ofits prox inl Afghanis to Inelia, Sti Lanka From the Midlle East some foal rivals to expand capacity at homme. Lucky Cement has given a new dimension tothe local cement industry by expat he bole decisions by sat the right ti maintained te compa pettiveness, It decided to set up its own export-relsted infrastructure on a sell purchased 75 buatkersanl a ship loale: throu sshich it started Jose cement export for the fist time February 2007. The encouraging perfor “exports farther motivated the manag facility atthe port as buffer stock, together with the nd wo awvid waiting ane! Todi going vessels The Lareky Ce snl ols istani cement exponters and al ostlenecks. ts proce despite se the country’s history i seanthen its presnice beyond n's biggest producer plist st overseas factory in Affi by 2011, Mahan Habba, the Chie! Executive Officer Lacky Cement stid interview that Lucky. which exports South Affe, its to use the African factory 10 export to Europe, AB combined stie product of USS2.68 tll anda population of compared with is forecast to expand 2.8% in 2000, Challenges Fnure challenges fice by the industry are ua nel cericy cheng nd freight changes, which also eomprze a lange porn ofthe dered ons Majo pacar of sue Sd Arabi and fran are expected come online by 10 inh Gare hich ng Ry to cen ae eos

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