Pakistan plans new cement capacities for its northern zone

Pakistan’s five big cement manufacturers are in the process of raising total production capacity in the northern zone, targeting 73.6Mta by 2024 from 54.1Mta of 2021, expanding at an average annual growth of 12 per cent to meet the expected robust demands in Punjab and NPK provinces. In addition, the extra capacity will benefit land export opportunities to Afghanistan and India.

The north zones expansion plan includes Lucky Cement raising capacity at its Pezu facility to 9.8Mta from 6.64Mta, Maple Leaf Cement rising to 8.30Mta from 5.87Mta, DG Khan Cement moving to 7.40Mta from 4.20Mta, Kohat Cement climbing to 11.60Mt from 5.30Mt, and Fauji Cement Co expanding to 5.60Mt from 3.60Mt in 2021.

Lucky Cement has announced a 3.15Mta brownfield expansion at its Pezu Plant in Khyber Pakhtunkhwa, which will increase company production capacity at a national level to 15Mta and maintain its position as the largest cement producer in Pakistan. The project has broken ground and the completion date is December 2022.

Maple Leaf Cement (MLCF) has also announced a brownfield expansion that will help it increase its future market share by 2.43Mta.

DG Khan Cement Co (DGKC) announced in a financial briefing that it would place its expansion plan on hold for now, and the priority will be to pay off debt by PKR6bn (US$ 33.9m) during FY22.

Kohat Cement Co (KOHC) is planning to build a 8000-10,000tpd greenfield project, which is estimated to cost PKR25bn (US$141.8m), of which PKR10bn will be financed through internally generated equity while the remaining PKR15bn will be funded through debt. The plant is expected to reach its commercial operation date (COD) in FY24. The company is also working on optimising the pyro process of Line-3, which will reduce fuel and power costs. The total cost of the project is PKR1.2bn and will be financed through a combination of debt and equity.

Fauji Cement Co (FCCL) has announced a greenfield expansion of 2.05Mt at DG Khan (Punjab). FCCL may potentially become the third largest cement player in the country with over 8Mta after the COD of the new plant.

Attock Cement Pakistan (ACPL) announced a cement expansion of 4250tpd, which is expected to come online by 1QFY23. The total cost of development is estimated to be PKR15bn and will be financed with a combination of debt and equity. The solar plant of 20MW is expected to come online by 2QFY22, reducing power costs.

Gharibwal Cement Ltd (GWCL) has announced a 3Mta expansion. A contract has been signed with FLSmidth for the supply of the new pyro line. The PKR2bn contract with FLSmidth is for design and engineering, while the equipment cost has not been finalised but could cost in the range of PKR8-10bn. Equity debt has not been completed yet. Civil works for the project will commence soon, and the project timeline is two years. Equipment will start arriving at the end of FY22.

Pioneer Cement Ltd (PIOC) is evaluating a further plant expansion and location, but debt reduction is the primary focus at present, with the company set to retire PKR4.5bn long-term debt in the FY22. PIOC has already received approval for the plant in DG Khan.

The Punjab government is pressurising companies to proceed swiftly with their expansion plans and has warned cement manufacturers that ‘No Objection Certificates’ (NOCs) granted for the installation of the new cement plants in the province could be cancelled if they fail to initiate the projects at the earliest opportunity.