Displaying items by tag: Bestway Cement

Cement producers in the north of Pakistan have started to increase their use of coal from Afghanistan in response to the ongoing volatility in energy markets. Research from a report by Darson Securities found that companies were already using up to 70% Afghan coal in their fuel mix with a further 20% being considered. Most of the northern producers are reported to have secured the cheaper Afghan coal for about two months of inventory, although Maple Leaf Cement was said to have four to five months of inventory. Meanwhile in the south of the country, producers were reported to be facing a tougher situation as Afghan coal costs more for them due to higher logistics charges and export orders were being reduced due to the low cost of clinker internationally. So they are focusing on the domestic market instead.

Graph 1: Cement despatches in Pakistan, 2015 – 2021. Source: All Pakistan Cement Manufacturers Association.

Data from the All Pakistan Cement Manufacturers Association (APCMA) shows that cement despatches have been steadily growing since the mid-2010s with a blip in 2020 caused by the start of the Covid-19 pandemic. The upward trend has been driven by local sales. Exports have generally grown at the same time, with more variance, but they are yet to regain the high of nearly 11Mt reported in 2009. On a rolling annual basis, local sales have remained steady since mid-2021 but exports have been slowly falling. In April 2021 they were 9.17Mt but by February 2022 they were 7.33Mt. For the February 2022 figures APCMA blamed this on the growing cost of production, rising international freight rates, mounting coal prices and a trade ban with India. On that last point for example, Pakistan-based producers exported 1.21Mt of cement to India in the 2017 – 2018 financial year before exports stopped after February 2019. Despite a brief respite in the spring of 2021 talks are still ongoing to resume trade with India.

On the corporate side the country’s largest cement producer by capacity, Lucky Cement, drew the same conclusion as the APCMA with its half-year results to 31 December 2021. Its local sales volumes were down a little but its exports were down a lot. It noted that the reason its local sales were falling but national industry local sales were up slightly was due to some competitor plants being non-operational in the previous year. However, the company managed to keep sales revenue and earnings increasing year-on-year by successfully combating growing input costs with price rises. Bestway Cement, the country’s other large producer, reported a tougher situation in the second half of 2021, with both local sales and export volumes down. This was attributed to a boom in construction activity in the second half of 2020 as Covid-19 lockdowns were eased. Demand for cement since then was said to be ‘sluggish’ due to inflation and high commodity prices. It also pinned its marked fall in exports on political and economic instability in Afghanistan. However, turnover and operating profit were both up due to higher selling prices.

Elsewhere in the sector news since the start of 2021, Pakistan’s exports to South Africa remained stymied in early 2020 due to a review of ongoing tariffs and the government decision to restrict infrastructure projects to only using locally produced cement. On the sustainability front the APCMA started to set out its decarbonisation strategy in November 2021. It may have a long way to go given that a think tank reported earlier in the year that the cement sector was the largest emitter of coal-related CO₂ emissions in the country, even more than power generation. Alongside this plenty of capacity additions have been announced. Lucky Cement started commercial cement production at its 1.2Mt/yr integrated Samawah cement plant in March 2021. Various new cement plants and upgrades to existing plants have been proposed by Bestway Cement, Cherat Cement, Fauji Cement, Kohat Cement Company, Lucky Cement and Maple Leaf Cement. Finally of note to a sector troubled by energy prices, in September 2021 the Pakistan International Bulk Terminal said it was going to upgrade its coal handling capacity to around 17Mt/yr by 2024.

Last week’s Global Cement Weekly covered Turkey. The contrasts are interesting because both of these countries have high cement exports and have raised energy concerns recently. This leads to the question of whether other cement exporters may be vulnerable to the current situation. Pakistan isn’t the only country where the cement industry is facing the negative effects of growing energy costs. This week in the sector news, Spain-based Tudela Veguín has shut down the kiln at its La Robla plant down for 10 days due to high electricity prices, Thailand-based Siam Cement Group (SCG) announced it was reviewing its investment plans and the UK-based Mineral Products Association lobbied the government on the issue.

The shift to Afghan coal by Pakistan’s cement producers is rational given the current situation. No doubt fuel buyers all over the world are doing similar things. In January 2022 the International Monetary Fund (IMF) forecast that Pakistan’s gross domestic product would grow by around 4% for 2021, 2022 and 2023 but current geopolitical events may test these estimates. Over the last year domestic cement demand has remained strong but inflation, growing input costs and the impetus to further rise prices may change this. Meanwhile, lots of new production capacity is in the pipeline and, if or when it is built, it may add additional competition pressure. This may present a problem in Pakistan if capacity utilisation levels drop but input costs keep on going up.

Pakistan: Fauji Cement says that two planned cement plant projects will increase its total cement production capacity by 64% to 10.5Mt/yr by mid-2023, from 6.4Mt/yr at present. The producer plans to establish a 2.05Mt/yr cement plant at Dera Ghazi Khan. After its commissioning before mid-2023, the plant’s capacity will more than double to 5.65Mt/yr. Subsidiary Askari Cement is expanding its 2.8Mt/yr Nizampur cement plant’s capacity by 73% to 4.85Mt/yr. The group estimates that the total 4.1Mt/yr-worth of new capacity will increase its national cement market share to 13% from 6.7%. It says that this will make it the second largest cement company active in Northern Pakistan, after Bestway Cement.

Fauji Cement said that it is well positioned for growth. It generated 70% of the power consumed in its operations in 2020 itself.

Pakistan: Bestway Cement and Reon Energy have commissioned a 14.3MW captive solar power unit at the former’s integrated cement plant at Farooqia, Khyber Pakhtunkhwa. The unit is part of a 50MW project deal that is planned to install solar units at the cement producer’s plant at Farooqia, Chakwal, Kallar Kahar and Hattar, according to the Pakistan Observer newspaper. Energy generated at the new solar plant at Farooqia is expected to reduce energy costs and reduce reliance on the national electricity grid.

Pakistan: Bestway Cement has provided details of its upcoming 7200t/day-capacity Paikhel cement plant in Mianwali district, Punjab province. China-based Sinoma International Engineering Company will supply engineering, procurement and construction for the plant. The plant will have a 9MW waste heat recovery (WHR) plant.

Pakistan: Bestway Cement claimed three awards at the Corporate Social Responsibility Awards 2021. The company won the Corporate Social Responsibility in Times of Covid-19 Pandemic award, the Education and Scholarships award and the Green Energy Initiatives award.

It said, “Bestway appreciates its responsibility towards local communities, thus playing a vital role in their socio-economic development such as improving access to health services and education, taking part in the urban development and environmental conservation programs and helping generate employment.

Pakistan: The Punjab provincial minister for industries and trade Mian Aslam Iqbal says that the government will soon issue new no objection certificates (NOC) to Bestway Cement for three of its new plant projects in the region. The Nation newspaper has reported that a delegation from the cement producer met the minister in late February 2021 to discuss its plans to establish new plants in Attock, Khushab and Mainwali. The company does not currently have NOCs for the planned projects.

Pakistan: Bestway Cement has recorded a loss of US$157,000 in the 2020 financial year, which ended on 30 June 2020, compared to a US$80.3m profit in the 2019 financial year. Its net turnover declined by 31% year-on-year to US$224m form US$324m.

Group chair Sir Mohammed Pervez said, “Despite various challenges, it is a matter of great satisfaction that management’s proactive approach and preparedness meant that the company demonstrated resilience and remains in good financial health.”

Pakistan: Bestway Cement has donated US$3.75m to charity causes between 31 December 2019 and 24 April 2020, including a US$1.25m donation to the state coronavirus relief fund on 23 April 2020. Bestway Group CEO Zameer Choudrey said, “We are conscious of our responsibility as Pakistan’s largest overseas investor. More resources will be devoted as and when necessary.” Bestway Group is based in the UK.

Pakistan: DG Khan Cement has asked the government of Punjab province if it can expand the production capacity at one of its cement plants by 12,000t/day. Bloomberg said that it had seen a letter sent to the local government and that Javed Iqbal Malik, a senior economic adviser at Punjab province's industries department, had confirmed receiving it. The approval process could take up to 12 months. If accepted the upgrade could see DG Khan Cement surpass Bestway Cement to become the country’s largest cement producer with a production capacity of 10.7Mt/yr.

Pakistan: Bestway Cement’s turnover grew slightly to US$421m in the nine months to 31 March 2019 from US$414m in the same period in 2018. Its profit rose by 9.5% to US$67.4m from US$61.5m.