Displaying items by tag: CG Cement

The news from Sri Lanka this week is that Lanwa Sanstha Cement is preparing to commission a new 3Mt/yr grinding plant in January 2022. The timing is apposite given the current shortages in the country.

Some inkling of local problems can be seen in the cement news over the last few months. In August 2021 Insee Cement said that it was operating at full capacity utilisation across its network. Later, at the end of October 2021, the government intervened in the import market by opening up the use of Trincomalee Harbour. This was followed by the nation’s other main producer, Tokyo Cement, announcing that it too was operating its grinding plant at Trincomalee at full capacity. It also said that, at the government’s behest, it was going to increase its import rate.

The new Lanwa Sanstha Cement unit originally came to international attention when Germany-based Gebr. Pfeiffer revealed details in 2019 of an order of two MVR 5000 C-4 type roller mills from Onyx Group. Lanwa Sanstha Cement has since said that the plant will cost US$80m. Once operational the unit at the Mirijjawila export processing zone of the Hambantota International Port will manufacture ordinary Portland cement, Portland slag cement, Portland limestone cement and blended hydraulic cement. A further equipment order for the project was announced this week when the Chinese-run Hambantota International Port Group signed an agreement with Lanwa Sanstha Cement to build a conveyor from the port to the plant. The deal also includes two ship unloaders.

Other new cement units on the horizon include an integrated plant project from Nepalese businessman Binod Chaudhary that was announced in mid-2019. The US$150m plant was planned for Mannar in the north of the island. However, not much more has been heard since then. Chaudhary’s company CG Cement operates a grinding plant in Nepal. More recently, in October 2021, local press reported that the government had tentative plans to build a new plant at the old state-owned Kankesanthurai site, also in the north. The plant was originally built in the 1950s and production ran until 1990 when the military took over the unit amid the then on-going civil war. Earlier in 2021 the government agreed to sell off the machinery at the site. However, much of it has gone missing in the intervening period! Proposals to revive the plant have circulated since the mid-2010s.

Graph 1: Cement production and imports in Sri Lanka, 2015 – 2021. Estimate for 2021 based on January to August data. Source: Central Bank of Sri Lanka.

The Sri Lankan cement market has faced a tough time over the last two years. First, total local production and imports fell by 11% year-on-year to 7.2Mt in 2020 from 8.1Mt in 2019. Then, imports fell by 18% year-on-year to 1.83Mt from January to August 2021 from 2.24Mt in the same period in 2020. Local production has more than compensated though, leading to growth in the total so far in 2021. There have been general economic reasons for why the ratio of imports to local production has fallen in 2020 and 2019 and this is explained in more detail below. Yet, imports hit a high of 5.68Mt in 2017 and have been declining since then both in real terms and proportionately.

Insee Cement summed up the local situation in its third quarter results by blaming cement shortages on input cost rises, supply chain disruption and negative exchange rates effects. The first two problems are issues everywhere around the world as economies speed up again following the coronavirus lockdowns but the last one is more specific to Sri Lanka. The country has faced a recession in its economy because the pandemic shut down tourism. The government initially introduced import limits to try and control foreign currency reserves. It then imposed price controls on essential foods and commodities, including cement, in September 2021 to try and stop shortages but this plan was abandoned a month later. Focusing on cement, some idea of the input cost inflation facing the sector can be seen in Tokyo Cement’s latest quarterly financial results. Its cost of sales rose by 72% year-on-year to US$59.5m in the six months to end of September 2021 from US$34.5m in the same period in 2020.

Lasantha Alagiyawanna, the State Minister of Consumer Protection, said at the end of October 2021 that it would take three weeks to import the required cement into the country. Whether this is enough to end the shortage remains to be seen. Yet, whatever does happen, it is likely that more production capacity from the likes of Lanwa Sanstha Cement and others will be welcome in 2022 and beyond.

Nepal: A large number of cement plants are reported to have violated standard manufacturing practices and are selling products that are not up to international standards, according to the Nepal Bureau of Standards and Metrology.

The national standards body said that 25% of factories were producing sub-standard products, based on the tests of samples and market inspections conducted in the last fiscal year that ended in mid-July 2019. Some of the larger manufacturers included in the 25% were Hongshi Shivam Cement, CG Cement and Arghakhanchi Cement. A further 14 smaller suppliers were also included.

Sri Lanka: Binod Chaudhary, the owner of CG Cement, says his company plans to invest US$150m towards building a new integrated cement plant. He said that he had approval from the government and had identified several potential limestone deposits to support the project, according to the Daily News newspaper. The company intends to export cement and clinker.

CG Cement operates a grinding plant at Dumbikas, Nawalparasi district. It says it has a 10% market share.

Nepal: CG Cement Industry, a subsidiary of the Chaudhary Group, plans to enter the domestic cement market with the launch of its CG Ordinary Portland Cement (OPC) at the end of December 2013. Trial production runs are already underway at the plant in Dumbikas, Nawalparasi district. The plant has an OPC production capacity of 1500t/day.

"We will ship our products to the market after completing some government procedures," said Varun Chaudhary, executive director of the Chaudhary Group. He added that the cement will arrive in stores after receiving certification from the government. CG also plans to establish a mine and cement plant in Palpa with a US$137m investment. The Palpa unit will produce clinker destined for cement production at the Dumbikas plant. Currently the Dumbikas plant sources its clinker from local producers and Indian imports.

Since 2010, Nepal's cement imports have declined due to increased domestic production. According to Chaudhary, there are now 50 grinding units and 70 cement brands in the country. Cement demand in Nepal is estimated at 4Mt/yr, 70% of which is fulfilled by domestic supply.

Nepal: The Nepalese Ministry of Industry (MoI) has allocated US$3.3m towards providing electricity connections to nine cement factories under its infrastructural development programme for manufacturing industries.

According to the Kathmandu Post, the cement plants chosen for the grant are Shivan Cement, Dang Cement, Laxmi Cement, Rolpa Cement, Ghorahi Cement, United Cement, Maruti Cement, Sarbottam Cement and CG Cement.

"A total of 23 cement factories have been selected for the infrastructure development programme for the current fiscal year, out of which nine will receive funds for electricity connectivity while another 14, including the nine, also will get incentives to construct access roads," said Industry Secretary Krishna Gyanwali.

The allocation follows the announcement in July 2013 of government plans to spend US$4m on building access roads to 14 cement plants as part of a wider US$11.3m infrastructure development scheme for the local cement industry. Cement plants that produce clinker using local limestone are eligible for the scheme.

Nepal: The Nepal Bureau of Standards & Metrology (NBSM) has closed two cement plants, Butwal Cement Mills and Shubha Shree Jagadamba, for manufacturing and selling substandard products. It has also threatened to remove 16 other cement plants from the market for not acquiring the Nepal Standard (NS) mark.

"We initiated action against these factories after their products failed to meet the standard," said NBSM Director General Ram Aadhar Sah. The NBSM standard requires that cement should have a strength of 16MPa within three days of setting, 22MPa within seven days and 33MPa within 28 days. Products from Butwal Cement Mills and Shubha Shree Jagadamba were found to have strengths below these levels.

The 16 factories facing the threat of a ban include CG Cement, Rolpa Cement, Arniko Cement, Ghorahi Cement, MJP Cement, Maruti Cement, Kailash Cement, Star Cement, Krishna Cement, KP Cement, Shree Cement, Om Cement, Eastern Cosmos Cement, International Cement and others.