KARACHI: Lucky Cement, the leading cement maker, plans to build a new cement plant in the north region of the country to meet growing demand, a senior company official said on Friday.
"Yes, we have planned to setup a plant in the north (of the country),” said Muhammad Ali Tabba, chief executive officer. “Our next board of directors meeting is scheduled at end of October and we would take up the plan there for approval."
Lucky Cement has a combined production capacity of 7.75 million tons/annum, the panned plant will be its third production facility in the country. "We will also announce our future plans for expansion of Iraq and Congo plants in October," Tabba said.
Lucky Cement, listed at all the three stock exchanges in the country, would release all relevant financial and other information of the planned project and the company’s future strategy through bourse filing, he added.
Tabba said domestic demand for cement has increased 18 percent in the last two months -- August and September -- and "the major growth is recorded in northern region."
“The Punjab government is doing a lot of development works and the next mega project of metro train is expected to start there soon,” Lucky CEO said. "Also, major demand for the $46 billion worth of China Pakistan Economic Corridor (CPEC) would come from the northern region."
He hopes development work at the Gwadar port, under CPEC project, would generate huge demand for cement. “Demand (cement) for Gwadar project would become visible from January onwards, as the government is right now working on security and law and order situation," Tabba said.
He said better law and order situation in Khyber Pakhtunkhwa could also create cement demand as the provincial government has announced a number of development projects and work on many of them has already started.
Lucky Cement is already operating one production plant at Pezu, Karachi and the other one at Khyber Pakhtunkhwa to furnish the Northern region.
Tabba said South African market still has potential for Pakistan cement. Exporters, before the imposition of anti-dumping duty of 77 percent, annually shipped cargoes to 2 million tons/annum to South Africa.
However, anti-dumping duty and devaluation of South African currencies in the last six months had stopped cement export to the African country.
Cement exporters also blamed multiple taxes by the government that has increased production cost manifold. They demanded the government to review its taxation policies to revive cement exports.
All Pakistan Cement Manufacturers Association mulls to suggest the government to remove five percent tax on import of coal, withdraw Gas Infrastructure Development Cess of Rs200/ton, and award 3-4 percent incentives on exports via sea. Those measures would give $4-5/ton relief and help revive exports.
"If we want to recapture the lost market, we have to cut the cost and the government should give some incentives," Tabba said.
Cement exports has dropped 36 percent to 467,000 tons in September as compared to 730,000 tons in September 2014, the Association reported.