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Khalid Chohan, company secretary of DG Khan Cement Co Ltd (Nishat Group), informed the Pakistan Stock Exchange (PSX) on 27 March 2023 that the company has completed the construction and installation of an on-grid solar power plant of 6.952MW at its site in Khairpur, Chakwal district in the Punjab province of Pakistan.

The plant has a capacity of 2.11Mt and uses mixed power generation. It has a dual fuel power production capacity of 33MW and 12MW of WHR.

The project has successfully started power generation. It will decrease the company’s power cost mix, reduce the carbon footprint and curtail reliance on expensive fossil fuels.

In March 2023, Pakistan’s cement mills dispatched a total of 3.795 million tonnes of cement, down by 24.2% from 5.01 million tonnes in the previous fiscal year. According to a spokesperson from the All Pakistan Cement Manufacturers Association (APCMA), the decline is due to decreased construction activity in both northern and southern regions of the country. This situation is negatively affecting the cement industry, as well as skilled and unskilled labor employed in the construction sector. Other factors contributing to the decline include political instability, currency devaluation, and poor economic conditions.

Local cement dispatches in March 2023 were 3.356 million tonnes, a decrease of 28.8% compared to 4.71 million tonnes in March 2022, while export dispatches increased by 48.5% to 438,433 tonnes from 295,321 tonnes in March 2022. Northern cement mills dispatched 2.82 million tonnes of cement in March 2023, down by 28.2% from 3.929 million tonnes in March 2022, while mills in the south dispatched 974,467 tonnes, a decrease of 9.5% from 1.076 million tonnes in March 2022.

In terms of domestic dispatches, northern cement mills delivered 2.72 million tonnes of cement in March 2023, a decline of 29.3% compared to 3.849 million tonnes in March 2022. Southern mills supplied 636,465 tonnes of cement in local markets in March 2023, down by 26.1% from 861,742 tonnes in March 2022. However, exports from northern mills increased by 24.6% to 100,431 tonnes in March 2023 from 80,584 tonnes in March 2022, while exports from the south increased by 57.4% to 338,002 tonnes from 214,737 tonnes during the same period.

During the first 9 months of the fiscal year 2022-23 (9MFY22-23), total cement dispatches (domestic and exports) were 33.6 million tonnes, which is 17.6% lower than the 40.77 million tonnes dispatched in the same period of the previous fiscal year (9MFY21-22). Domestic dispatches in 9MFY22-23 were 30.56 million tonnes, down by 15.4% from 36.13 million tonnes during the same period the previous year, while export volumes fell by 34.6% to 3.036 million tonnes from 4.643 million tonnes in the previous fiscal year.

Mills in the northern region of Pakistan dispatched 25.047 million tonnes of cement domestically during the 9MFY22-23, a reduction of 16.3% compared to 29.937 million tonnes in 9MFY21-22. Exports from the north increased by 14.56% year on year to 778,437 tonnes in 9MFY22-23 from 679,481 tonnes. Total dispatches by north-based mills declined by 15.7% to 25.826 million tonnes in 9MFY22-23 from 30.617 million tonnes in the previous fiscal year.

Domestic dispatches by south-based mills during 9MFY22-23 were 5.517 million tonnes, a reduction of 10.9% over the 6.189 million tonnes dispatched during the previous fiscal year. Exports from the south declined by 43.1% to 2.257 million tonnes in 9MFY22-23 compared with 3.964 million

Dandot Cement Co Ltd in Punjab, Pakistan is expected to resume commercial production in the first quarter of the next financial year after completing Balancing the Modernisation of Replacements (BMR) at its Jehlum cement plant. The BMR project aims to meet legal standards and avoid adverse action from the Environmental Department. Progress has been made on mechanical and civil works, steel structure fabrication, and refractory work. The administration has invested PKR2.972bn to date for BMR, including PKR555m during the last quarter. A 5MW solar power plant has been constructed, and electricity load enhancement has been approved. The company is expected to attain production efficiencies for long-term financial viability with environmental compliance after the BMR project.

The Federal Board of Revenue (FBR) in Pakistan will start monitoring sales, production, and stock positions of big beverage and cement companies, including Coca Cola, Pepsi Cola, and Lucky Cement. The FBR has written to the Chief Commissioners Inland Revenue regarding monitoring of the cement and beverages sector. The FBR will post Inland Revenue officials in the mentioned companies’ premises to monitor production, sales, and stock positions. The FBR has already been monitoring tobacco factories and sugar mills, leading to an increase in revenue. The full potential of federal tax revenue in tobacco, cement, sugar, beverages, and fertilizer segments is yet to be realized. The FBR recently installed the Track and Trace system at the production line of each cement manufacturer, and officials are posted for 30 days to conduct initial stock-taking. The FBR has also formed IR Enforcement Units in different jurisdictions to examine and authenticate tax stamps and verify reports of unauthorized stoppage of production.

Japan’s reliance on Russian coal has significantly reduced as power companies and other buyers sought alternative sources such as Indonesia and South Africa. According to the Ministry of Finance trade data, Japan imported 73% less thermal coal from Russia in February than a year earlier, and Russian coal accounted for just 2% of total imports, down from 9% the previous year. Japan has made progress toward the G7 leaders’ 2022 pledge to phase out or ban this trade, which has been a source of revenue for Moscow’s war on Ukraine.

Japan’s imports of thermal coal from Russia for April 2022 to February 2023 totaled about 6.5 million tonnes, down 45% from the previous year, while imports of Indonesian coal grew 28% and those from South Africa grew about sixfold. By contrast, imports of Russian liquefied natural gas were only down about 20% on the year in February, reflecting the greater difficulty of finding alternative sources of LNG.

Power companies have played a major role in Japan’s effort to reduce dependence on Russian coal, which was the country’s second-largest supplier in fiscal 2021. Some utilities, such as JERA and J-Power, have stopped procuring Russian coal or plan to gradually reduce their procurement to zero by promoting alternative sources. While the cement industry, another energy-hungry sector, has been slower to embrace change, industrywide, Russian coal accounted for nearly half of total imports in fiscal 2021. Japan faces challenges in procuring high-grade thermal coal because of the limited number of countries that export it.

Despite easing international prices for thermal coal this year, Australian coal was hovering at $200 a tonne in late February, nearly double the level of the first half of 2021. The International Energy Agency estimates that global coal demand reached a record high of about 8 billion tonnes in 2022, up 1% from the previous year. However, in the longer term, global production is expected to slow as mine investment languishes in the transition to renewable energy and alternative fuels like hydrogen and ammonia, both areas in which Japan is making supply chain investments.

ICR, an international news publisher, has reported on the cement sector in Pakistan, where cement producers are vying for increased market share in the north of the country, while dealing with rising costs of raw materials and fuel. As new capacity comes online, cement prices have increased, and many producers have turned to export markets due to stagnant domestic demand.

The article notes that protecting market share in northern Pakistan is becoming increasingly challenging due to recent new capacity projects by cement producers. Maple Leaf Cement has become the fourth-largest cement producer in Pakistan, with a 2.1Mta capacity increase at its Iskanderabad plant and an increased share ownership in Pioneer Cement. Fauji Cement is also expanding its capacity at its Nizampur and Wah plants, while Bestway Cement has opened a new 7200tpd clinker line at its Hattar plant, and Lucky Cement has added 3.15Mt of cement capacity at its Pezu plant.

Despite the need for house building following recent floods, rising construction costs have impacted domestic cement demand in Pakistan. Cement prices have risen by 67%, and there has been an 18% fall in cement dispatches for the 7MFY22-23. Cement producers have passed on raw material and energy costs to consumers by increasing cement prices, and hopes for exports to be a saviour have faded due to Pakistan cement exporters being more expensive than their Iranian and Vietnamese counterparts.

Despite these challenges, Pakistan’s leading cement producers are implementing long-term strategies to ride out the current economic storms and weak demand for their products. They are hoping for an uptick in the domestic construction sector backed by higher government support, while lower production costs should help restore profitability and international competitiveness. Producers have also been cutting energy costs with renewables and completing WHR projects while adding further cement capacity.