KARACHI, Oct 17: Cement producers have speeded up the process of bringing additional capacity on line, so as to meet the upcoming huge demand. The earliest to come on stream would be Lucky Cement, which according to a senior company executive, had started trial production of its third line of expansion project of 4,200 tons per day and commercial production would likely begin early November, though the exact timeframe may be announced at the shareholders’ meeting on Thursday (Oct 20).
These expansions would multiply Lucky’s annual production capacity by over four times — from the current 1.5 million tons to 6.5 million tons annually — making the company the largest cement producer in the country.
Expansions and optimizations are already underway across the sector. Next to bring on line its additional production would be Pioneer Cement, which has the capacity to produce 2,100 tons per day — optimized to 2,450 tons per day and now expansion of 7,000 tons per day is underway, said a company executive.
The company would start pushing the product in the market by the end of this year. Currently, ‘cold runs’ are being conducted and ‘test runs’ would start by December.
According to one producer, in the aggregate four to five million tons of additional cement could reach the market later this year.
Next year there would be several companies in line with their optimization and expansions in various stages of completion. These would include those of Pakistan Cement (formerly Chakwal Cement), DG Khan Cement, Maple Leaf Cement, Cherat Cement, Bestway Cement, Dewan Cement (formerly Pakland), Dewan Hattar Cement (formerly Saadi) and others.
But the question is: Would that be sufficient to meet the new demand? A cement producer contended that the domestic demand during FY05 stood at 18 million tons, while including the new additions, capacity this year would increase to 23 million tons, leaving surplus of five million tons. Industry watchers say that during 1Q06, cement plants had operated at average of 92.20 per cent capacity utilization.
But some observers have misgivings about supply side. Given that the earthquake has shattered 70 per cent of the buildings in major towns and razed to the ground 2.5 million houses, there is an enormous rebuilding work ahead. After the period of grief, rescue and relief, rehabilitation and reconstruction would have to begin.
The government has already announced that a comprehensive initiative to be known as President’s rehabilitation initiative is being launched to rebuild damaged infrastructure, including roads, bridges, houses, government buildings, schools and private buildings.
A cement producer admitted that the current capacity was not sufficient to meet those demands, but he pointed out that all of the government’s plan would have to go through the usual process of planning, costing, tenders and mobilization of resources, which could take at least six months, by which time the industry would have brought cement from expansions in the market, hopefully, putting off the need for imports.
