Displaying items by tag: Tokyo 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.

Sri Lanka: Harsha Cabral, the chairman of Tokyo Cement Company (Lanka), says that the company has taken several immediate measures to address a local cement shortage. He said in a statement that it is operating its grinding plant at Trincomalee at its full capacity of around 170,000t/month, according to the Daily Mirror newspaper. He added that the company had been importing 30,000t/month of bulk cement through the Tokyo Cement Colombo Terminal. It had also, following a request by the government, made arrangements to import an additional 12,000t /month of cement as a contingency measure. However, Cabral, noted that the cement shortage was due to a variety of reasons beyond the control of the company. These included a lack of bulk cargo ships and delays in opening credit letters with local banks.

Sri Lanka: Tokyo Cement has opened the first of six new 10,000l/day water purification plants under its Fountain of Life programme in Anuradhapura District, North Central Province. The Colomba Gazette newspaper has reported that the area has been affected by a high rate of chronic kidney disease.

Group chairman Harsha Cabral said, "We initiated our far-reaching Fountain of Life programme in support of the government's Water for All programme which aims to provide drinking water facilities to every household by 2025.”

Sri Lanka: Tokyo Cement has supported its partner the Sri Lanka Navy in completing an underwater statue park. The Sunday Observer newspaper has reported that the 1200m² park in Trincomalee Bay, Eastern Province, lies at a depth of 18m and unfolds a historical storyline. Tokyo Cement supplied its Tokyo Super blended hydraulic fly ash cement to the project.

Project leader Piyal De Silva said, “Our Coral Conservation Programme (CCP) partner Tokyo Cement will carry out monitoring and maintenance activities and will provide material and technical support to set up a coral nursery for replanting corals within the Underwater Marine Sanctuary (UMS). The marine park will gradually become the home to coral colonies native to the Trincomalee Bay area. With the corals, it will attract young fish, which will ultimately lead to the formation of fish communities.” Tokyo Cement has been involved in coral reef restoration around Sri Lanka since 2010.

Sri Lanka: Tokyo Cement has agreed to amalgamate its subsidiary Tokyo Super Cement into the main company. The amalgamation of its wholly-owned subsidiary will take place around the end of May 2019.

Sri Lanka: Tokyo Cement has opened an upgrade to its research centre in Colombo. The centre will test and certify cement, concrete and dry mortar products, according to the Daily News newspaper. It is also intended to be an innovation hub for the cement producer to develop new products. Facilities at the site include a wet concrete lab and mini plants to test different blends of cement.

Sri Lanka: Tokyo Cement plc, which operates grinding plants and bulk cement terminals in Sri Lanka, lost US$3.78m in the three months to 30 June 2018 due to falling revenues, as well as a one-off loss of US$2.37m on the sale of a ship. The group had reported a profit of US$5.04m in the same period of 2017.

In the three months to 30 June 2018 Tokyo Cement’s gross profit fell by 27% year-on-year to US$9.36m, with revenues falling by 4% to US$48m and costs rising by 4% to US$39m.

Tokyo reported to its shareholders that delayed local government polls had halted small projects country-wide, leading to a slowdown in the construction sector.

Sri Lanka: Tokyo Cement has launched resource-planning software across its business. The software was developed by Abas and implemented by Providence Global, according to the Daily News newspaper. The software is being deployed across all of Tokyo Cement’s operations, including its cement plant at Trincomalee, its ready-mix concrete plants, and its bulk cement import terminal and biomass power generation units. The new software is intended to fully integrate supply chain management and warehouse operations.

Sri Lanka: The Sri Lanka Consumer Affairs Authority (CAA) has allowed Insee Cement and Tokyo Cement to increase the prices of a 50kg bag of cement. The Ministry of Industry and Commerce gave its approval subject to the ratification of the CAA as it is a price-controlled commodity, according to the Times of Sri Lanka newspaper. The cement producers made the request to raise their prices due to increasing costs of raw materials. However, the country’s three other producers have not made any request to the CAA to raise their prices and the cost of imported cement is reported unchanged.

Sri Lanka: Tokyo Cement has started testing a new mill at its cement grinding plant in Trincomalee. It held a ‘soft’ opening ceremony to mark the event on 8 December 2016. The new mill is the company’s fourth. It will start commercial operation in February 2017, according to Lanka Business. Once operational it will add 1Mt/yr to the company’s production total capacity taking it to 2.8Mt/yr.

The ceremony was inaugurated by Tadashi Matsunami, Director & Senior Managing Executive Officer of Ube Industries Limited, Japan, the technology services partner of Tokyo Cement. Harsha Cabral PC, chairman and SR Gnanam, managing director of Tokyo Cement also presided at the event.

An additional US$50m expansion drive at the site will see the commissioning of an 8MW captive biomass power unit for the plant. Tokyo Cement will also develop the shipping facilities at the site to accommodate larger vessels and it plans to build cement storage silos.