CEMENT INDUSTRY

PRESENTED BY
 NAVEED MUHAMMAD

 MUHAMMED LARAIB
 AGENDA
 WHAT IS CEMENT
 HISTORICAL DEVELOPMENT
 PRODUCTION PROCESS
 TWO MAJOR CEMENT USED IN PAKISTAN
 PRICE & TAX ANALYSIS
 INPORT & EXPORT ANALYSIS
 DEMAND & SUPPLY ANALYSIS
 GOVT. & BUDGET POLICY
 CURRENT ISSUES & NEWS
 RECOMMENDATIONS
 OVERVIEW OF CEMENT
INDUSTRY
 Cement industry is correlation with
aggregate economic activity.
 It is used as major ingredient of physical
infra-structure of the country.
 There are 29 cement companies up to
May 2007.
 In which 19 are situated in north zone
and 10 are situated in south zone.
 CONTD…
 Out of 29 companies 21 companies are listed
in Karachi stock exchange.

 Around 20 types of cement produced

worldwide.

 Pakistan produces only five types of cement

i.e. ordinary Portland cement, slag
cement, super sulphate resisting
cement, sulphate resistant cement and
white cement.

 The total installed cement production

capacity is 36.841 million tons.
 WHAT IS CEMENT?
 A Cement is a binder.
 It also binds other material
together.
 These are generally combination of
lime stone, shells or chalk and
shale, clay, sand or iron ore.
 The word “cement” comes from the
term “opus caementitium” i.e.
“masonry which resembeled
concrete and was made from
crushed rock which burnt lime as
binder”.
 HISTORICAL DEVELOPMENT OF
CEMENT INDUSTRY
 1947(Bad era): Only one or two units were producing grey
cement in the country.
 1948-58: The number of cement units increased to six.
 1958-68(Boom era/Ayub era): The cement units increased
from 6-9.
 1971-77(Nationalization/Bhutto era): No new units were
setup.
 1977-78(Denationalization): Cement units increased from 9
to 23.
 90’s(Dark era/Cement sector had to bear massive losses):
24 units
 Current scenario: 29 players are operating.
 REVIVAL IN CEMENT
SECTOR

• Increase in cement demand.

• Projects started by federal & city
district government.
• Export doubled to Afghanistan.
 PRODUTION PROCESS

• DRY PROCESS

• WET PROCESS

• SEMI WET PROCESS

 DRY PROCESS
The dry process was formerly
used where water and the raw
materials were scarce. But now it
is the most popular process in the
cement industry. The advantages
are: (1) the fuel requirement is
about 800 Kcal per kg of clinker
(which is about 40 percent less as
compared to the wet process).
 WET PROCESS
This process has become obsolete
due to:
2. Constraints of kiln dimension
3. Large water requirements
4. Extremely poor heat efficiency
 SEMI-WET PROCESS
 This process is situated for materials with
sufficiently high plasticity.

• The process has become outdated due to

high fuel/energy consumption.

 Main utilities for cement production are:

f. Fuel oil
g. Natural gas and coal
h. Electricity
i. Water
 KEY STAGES IN CEMENT
PRODUCTION

2. Raw materials
3. Pre-heater
4. Kiln
5. Cooling/finish grinding
 TYPES OF CEMENT

There are two types of cement:

• Hydraulic
• Non-hydraulic cement
CONTRIBUTION TO NATIONAL ECONOMY
BY CEMENT SECTOR

Direct and Indirect Taxes Rs. 23.50 Billion

Value of Fixed Assets Deployed Rs. 85.21 Billion

Loans from Financial Rs. 79.53 Billion

Institutions
Shareholders Equity Rs. 80.00 Billion

Employment (Direct & Indirect) 3%

TWO MAJOR CEMENT USE
IN PAKISTAN
 ORDINARY PORTLAND CEMENT
 SULPHATE RESISTANT CEMENT
 ORDIANARY PORTLAND
CEMENT
 It is made by heating a mixture of
limestone and clay, to a temperature of
1450 degrees centigrade.
 These results in partial fusion and
formation of nodules called clinker. This
clinker when ground with a certain
percentage of gypsum results in cement.
 Ordinary Port Land Cement is suitable for
all modern types of construction,
including all kinds of masonry, concrete
works, pre-stressed concrete, repair
works etc.
 SULPHATE RESISTANT
CEMENT
 It is also used wherever there are
constructions that are in direct contact with
clay soil, which contains a large amount of
sulfate salt, such as foundations and pillars.

 This special cement is very resistant to

attack from sodium and magnesium
sulphates found in ground water.
World’s Cement Production (Qty = 000 tones)
Countries 2001 2002 2003 2004 2005
United States 90,450 91,300 92,600 99,000 99,100
Brazil 39,500 39,500 40,000 38,000 39,000
China 626,500 705,000 750,000 934,000 1,000,000
Egypt 24,500 23,000 26000 28,000 27,000
France 19,839 20,000 20000 21,000 20,000
Germany 28,034 30,000 28000 32,000 32,000
India 100,000 100,000 110,000 125,000 130,000
Indonesia 31,100 33,000 34,0000 36,000 37,000
Iran 26,650 30,000 31,000 30,000 32,000
Italy 39,804 40,000 40,000 38,000 38,000
Japan 76,550 71,800 72,000 67,400 66,000
Korea 52,012 55,500 56,000 53,900 50,000
Mexico 29,966 31,100 31,500 35,000 36,000
Pakistan 9,876 9,985 11,410 13,344 17,112
Russia 35,100 37,700 40,000 43,000 45,000
Saudi Arabia 20,608 21,000 23,000 23,000 24,000
Spain 40,512 42,500 40,000 46,800 48,000
Thailand 27,913 31,700 35,000 35,600 40,000
Turkey 30,120 32,600 33,000 38,000 38,000
Others 351,014 350,015 348,590 367,656 374,888
World total 1,700,000 1800,000 1,860,000 2,130,000 2,220,000
 PAKISTAN CEMENT
PRODUCTION
Year Cement Production
1991 (June) 7.649
1992 (June) 8.115
1993 (June) 8.348
1994 (June) 8.158
1995 (June) 8.159
1996 (June) 9.458
1997 (June) 9.539
1998 (June) 9.29
1999 (June) 9.546
2000 (June) 9.969
2001 (June) 9.876
2002 (June) 9.988
2003 (June) 11.410
2004 (June)6yr 13.344
2005 (June) 17.112
2006 (June) 19.512
2007 (June) 36.841
 PRICE & TAX ANALYSIS
 The current price of cement in Pakistan is
290 per bag.

 Presently, the cement industry of Pakistan is

heavily burdened due to levy of federal
exercise duty @ RS 750 per ton

 General sales tax @ 15% on duty paid value

 IMPORT & EXPORT
ANALYSIS
IMPORTS & EXPORTS
Cement Imports
Nil (Custom Duty @ 25%)
Cement Exports
The export may reach to $ 500 million increase during 2008.Because Afghanistan
is Pakistan’s largest cement export market.

INVESTMENT
Presently the cost of a new project is around Rs 6 billion (Chinese Plant of 3300
tones per day)
CAPACITY UTILIZATION
Overall capacity utilization of the industry has increased to 88%, in 2006, as
compared to 91%, in 2005.
 DEMAND ANALYSIS
 LOCAL MARKET DEMAND:
• Sustainable growth in allocation of
budget for PSDP.
• Profitability of cement sector
2003……..2
2004…..…4
2005……..6(in PKR billions)
3. High sales
 DEMAND & SUPPLY
ANALYSIS
 Continued improvement in macro
economic climate of the country.
 Up surge in real state sector.
 GOVERNMENT & BUDGET
POLICY 2008-09
 By the end of June 2011, the installed
cement production capacity will touch to
the level of 49.579 million tones.
 A specialized coal, clinker & cement
terminal is planned to be setup in PORT
QASIM KARACHI.
 Record increase in PSDP
 Central exercise duty remain at preceding
level
 CURRENT ISSUES
 BUDGET (2008-09)-IMPACT ON CEMENT
SECTOR.
 IMPACT OF GDP GROWTH ON CEMENT
CONSUMPTION.

 INCREASED PER CAPITA CONSUMPTION.

 CONSTRUCTION & IMPACT BIG DAMS ON

CEMENT SECTOR
 EXPORT POTENTIAL.
 CEMENT DISPATCHES
 CURRENT NEWS
 Cement Dispatches Cross 2.25m Mt In
March
 Now Govt. Should Improve Law &
Order To Support Export
 Cement Industry Contribution To Gdp
Under-reported
 Ban Likely To Be Place On Cement
Import
 CONT…
 NO CHANGE IN CEMENT IMPORT
AND EXPORT POLICY.

 CRISIS: COUNTRY FACES ENERGY

CRISIS, ANOTHER WEEKLY HOLIDAY
UNDER-STUDY.
COMPARATIVE ANALYSIS
OF ALL UNITS
 RECOMMENDATIONS

 Short term measures

 Duty drawback
 Port charges

 Medium term measures

 Abolishing of /reduction in central excise
duty
 Long term measures
 Infrastructure at ports