cement industries in pakistan (2)

8/3/2019 Cement Industries in Pakistan (2)

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The history of cement industry in Pakistan

The history of cement industry in Pakistan dates back to 1921 when the first plant wasestablished at Wah. At the time of independence in 1947 there were four cementfactories with an installed capacity of 470,000 tons per annum. These units werelocated at Karachi, Rohri, Dandot and Wah. In 1956 Pakistan Industrial DevelopmentCorporation (PIDC) established two plants at Daudkel and Hyderabad and subsequentlymore plants were established in the private sector

The industry was nationalized in 1972 and the State Cement Corporation of Pakistan(SCCP) was established following the Economic Reforms Order, 1972. As a result ofnationalization, a total of 10 cement units with an installed capacity of 2.8 million tonsper annum were transferred to the SCCP. Effective price control was also vested with

the SCCP and for a long time the industry operated under a regime of strict regulationand price control. While the cement industry was working under state control, the SCCPestablished five new units with an installed capacity of 1.8 million tons per annum.

In 1985-86 the cement industry was deregulated and private sector was allowed toestablish cement plants. But bulk of the capacity was controlled by the SCCP which hadeffective control in the fixation of prices. Severe shortage of cement and pricederegulation prompted the private sector to establish more plants. Seven units wereestablished in the private sector before commencement of the process of privatization in1991.

During the regime of Nawaz Sharif the industry went through major transformation. Thegovernment embarked upon an ambitious privatization programme and eight units havebeen privatized so far. The SCCP at present controls less than 25% of the total installedcapacity in the country which is shrinking with the establishment of more plants in theprivate sector and expansion in the privatized units. The units working under the SCCPcontrol are old and inefficient using 'wet process' whereas the units established in theprivate sector are new, efficient and use 'dry process'.

Cement manufacturing is a high capital- and energy-intensive industry. The capital costof a 2000 tons per day (TPD) plant ranges between Rs. 3.5 billion to Rs. 4 billionwhereas the capital cost of a 3000 TPD plant is estimated at more than Rs. 5.5 billion.

Energy consumption by cement manufacturing units based on 'wet process' is higherthan 'dry process'. The 'dry process' is estimated to be economical by 40% to 50%compared to 'wet process'.


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Cement Industries in Pakistan

The cement industry in Pakistan has come a long way since independence when thecountry had less than half a million tons per annum production capacity. By now it hasexceeded 10 million tons per annum as a result of establishment of new manufacturingfacilities and expansion by the existing units. Privatization and effective price decontrolin 1991-92 heralded a new era in which the industry has reached a level where surplusproduction after meeting local demand is expected in 1997.

The cement industry in Pakistan faces two serious threats: closure of units based onwet process, and poor cash flow rendering the units incapable of debt servicing due to

increasing cost of electricity, furnace oil and imported craft paper used for cementpacking. The cost of furnace oil alone has increased by nearly 100% in the last 15months alone. With the increase in furnace oil the increase in electricity tariff has alsobecome inevitable.

Pakistan has remained a net importer of cement but due to the privatization of unitsoperating under state control and subsequent expansion programmes by the newowners supported by financial has pushed the industry to a point where the country isbound to reach an oversupply situation. However, the recent increase in energy cost

provides opportunity for the efficient units based on dry process to sustain the situationfor a relatively longer period. It would also be possible because the expansion by theexisting units and establishment of new units are being delayed.

Pakistan's cement market is divided into two distinct regions, North and South. Thenorthern region comprises the Punjab, NWFP, Azad Kashmir and upper parts ofBalochistan, whereas the southern region comprises the entire province of Sindh andlower parts of Balochistan. Traditionally, the southern region has always been surplus incement production but with the establishment of more plants in the northern parts of the

country the region has become almost self-sufficient in supply of cement.


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Cement Plants in Northern Region (000 tonnes) per annum

1) Associated (Wah) 9002) D.G. Khan 1,710

3) Cherat 7204) Pioneer 6605) Mustehkam 6606) Fecto 6007) Kohat 3308) Gharibwal 5409) Maple Leaf 1,46010) Dundot 48011) Lucky Cement 1,200

Sub-Total 7,580

Cement Plants in Southern Region

12) Zeal Pak 88013) Attock 66014) Javedan 50015) Pakland 54016) Dadabhoy 45017) Thatta 28018) Associated (Rohri) 23019) Essa 150

Sub Total 3,690

Cement Plants Under Construction

20) Saadi 96021) Lucky 120022) Army welfare 66023) Fauji 90024) Chakwal 1,650

Sub-Total 5,370Grand Total 16,640


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Demand vs supply

The demand-supply gap which for the last decade was in favour of manufacturers isnow set to switch the other way with supply outpacing demand by the end of 1997.

Historically, demand has grown at an average rate of 7%, with the Northern regionaveraging 8% and Southern region lagging behind at 4%. There is much pessimismabout the industry's future due to a tremendous increase in supply expected by the endof next year.

The way new plants are being established and existing plants are undertakingexpansion, the demand-supply equation is bound to create surpluses. However, it hasbeen observed that actual progress is slower than planned to avoid a possible glutsituation. This will effectively narrow down the gap between demand and supply andthereby ease the pressure on prices.

Factors which can possibly change the surplus position into a near-equilibrium betweendemand and supply are:-

1. Formation of manufacturers' cartel to avoid price decline; 2. Delay in implementation of planned additions and expansions;3. Efforts to export cement; and4. Increase in demand if construction of some of the mega-sized infrastructure

projects starts


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DG Cement


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D.G. Khan CementD.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largest

cement-manufacturing unit in Pakistan with a production capacity of 5,500 tons clinker

per day. It has a countrywide distribution network and its products are preferred onprojects of national repute both locally and internationally due to the unparallel and

consistent quality. It is list on all the Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement Corporation

of Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in April

1986 with 2000 tons per day (TPD) clinker based on dry process technology. Plant &

Machinery was supplied by UBE Industries of Japan.

Acquisition of DGKCC by Nishat Group:

Nishat Group acquired DGKCC in 1992 under the privatization initiative of the

government. Starting from the privatization, the focus of the management has been on

increasing capacity as well as utilization level of the plant. The company undertook the

optimization by raising the capacity immediately after the privatization by 200tpd to

2200tpd in 1993.

Capacity Addition:

To meet the increasing demand and to capitalize on its geographic location, the

management further expanded the capacity by adding another production line with a

capacity of 3,300 tons per day in year 1998. Design of the new plant is based on latest

dry process technology, energy efficient and environmental protection from particulate

pollution according to the international standards. The plant and machinery was

supplied by M/s F.L. Smidth of Denmark. As a result, DGKCC emerged as the largest

cement production plant in Pakistan with annual production capacity of 1,650,000 Mtons of clinker (1,732,000 M.Tons Cement) constituting about 10% share of the total

cement production capacity of the country. The optimization plan is still underway to

increase the total capacity of the two units to 6700 TPD by mid of 2005 from 5500 TPD

at present.


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Cement Manufacturing Process:

1. The cement manufacturing process begins when limestone, the basic raw materialused to make cement, is transported by rail to the Edmonton plant from the Cadominlimestone quarry 220 kilometres west of Edmonton.

2. The limestone is combined with clay, ground in a crusher and fed into the additivesilos. Sand, iron and bottom ash are then combined with the limestone and clay in acarefully controlled mixture which is ground into a fine powder in a 2000 hp roller mill.


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3. Next, the fine powder is heated as it passes through the Pre-Heater Tower into alarge kiln, which is over half the length of a football field and 4.2 metres in diameter. Inthe kiln, the powder is heated to 1500 degrees Celsius. This creates a new product,called clinker, which resembles pellets about the size of marbles.

4. The clinker is combined with small amounts of gypsum and limestone and finelyground in a finishing mill. The mill is a large revolving cylinder containing 250 tonnes ofsteel balls that is driven by a 4000 hp motor. The finished cement is ground so fine thatit can pass through a sieve that will hold water.

5. The cement manufacturing process consists of many simultaneous and continuousoperations using some of the largest moving machinery in manufacturing. Over 5000sensors and 50 computers allow the entire operation to be controlled by a singleoperator from a central control room.


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DG Cement Manufacturing Process

1) Quarrying:


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2) Raw material Crushing & Storage:


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3) Raw Meal Grinding & Storage:


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4) Pre-Heater:


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5) Kiln:


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6) Fuel Storage:


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7) Clinker Cooler:


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.

8) Cement Milling:


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9) Cement Dispatch:


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Export of DG Cement from Pakistan:

We are exporting Ordinary Portland Cement (OPC 42.5 N/R), Sulphate ResistantCement (SRC) and Slag Cement from Pakistan at very competitive prices to diferent

destinations like UAE (Dubai), Kuwait, Iraq, Qatar, Djibouti, Afghanistan, South

Africa India, Srilanka and other South Asian destinations. We also provide Clinker in

large quantities to milling units.

The growth in demand of cement in Asia, India, Middle East and Africa whereas

particularly supply deficit in India and China has geared up export opportunities for

Cement Industry of Pakistan. The demand of Pakistan origin cement will also be

supported by closing down of some cement units in Europe due to their strict laws

governing pollution control and other environment hazards. Pakistan having many bigcement units and due to big reserves of raw material, the import of Cement from

Pakistan is the prime of choice of the International buyers all over the world.


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Cement Specifications and Standards:

We export Ordinary Portland Grey Cement, Grade 42.5 conforming to followingstandards:

EUROPEAN Specification: DIN EN 197-1, BRITISH Specification: BSS 12/1996

AMERICAN Specification: ASTM C-150.

Pakistan Specification: PS-232-2008 (R) Grade 43

In addition to above we have also attained approval certifications from many countriesincluding India, South Africa & Srilanka for our cement. We export cement from ourstate of theart plants who maintain Uniformity, Strict Quality Control, ISO 14001 & ISO9001 certified and rely on SGS reports.

Packing & Transportation:

We offer top quality cement in 50Kg Polypropylene woven bags or 1 Tonne Jumbo

Bags for sea-worthy transportation with sufficient safeguard against moisture. We have

our own logistics support for transportation of containerized shipments from factory to

loading port in Karachi. Our years of experience in sea transportation and freight ensure

safe and on time delivery of shipments at destination ports. Special requirements for

Bulk shipment and Self Discharge Pneumatic Vessel is also available.

Payment Terms:

Depending upon ordered quantity we accept payment by multiple methods preferably

Irrevocable Letter of Credit by first class non-African bank. Revolving L/C is advised for

big order with weekly shipments. We prefer advance payment for small trial orders of 20containers.

cement industries in pakistan (2)

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