CEMENT INDUSTRY

PRESENTED BY
• MAHAMMAD LARAIB
• NAVEED MUHAMMED
 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, a substance
which sets and harden independently.
• 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”.
 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 Institutions Rs. 79.53 Billion

Shareholders Equity Rs. 80.00 Billion

Employment (Direct & Indirect) 150,000 (Approx.)

Direct and Indirect Taxes Rs. 23.50 Billion

Value of Fixed Assets Deployed Rs. 85.21 Billion

Loans from Financial Institutions Rs. 79.53 Billion

Shareholders Equity Rs. 80.00 Billion

Employment (Direct & Indirect) 7% (Approx.)

 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.
• 1977-88(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.
• Conversion in cement industry (from
wet to dry plant).
RAW MATERIALS
• Main raw materials of cement
include:

1. Lime
2. Alumina
3. Iron
4. Laterite

• Preparation of raw material

includes following steps:

1. Raw Mill
2. Fuels
3. Burning
4. Cooler units
5. Filters
 PRODUCTION PROCESS
There are three types of process:

• Dry process:
1. It is the most popular process in the Pakistan
cement industry.
2. The fuel requirement is about 800 Kcal per kg
of clinker.
3. The raw material is preheated and partially
calcined resulting in higher kiln efficiency.
4. The kiln being shorter in length requires less
space in erection and easier to maintain.
 CONTD….
• WET PROCESS
This process has become obsolete
due to:
1. Constraints of kiln dimension
2. Large water requirements
3. Extremely poor heat efficiency
 SEMI-WET PROCESS
1. This process is situated for materials with sufficiently
high plasticity.

2. The process has become outdated due to high

fuel/energy consumption.

3. Main utilities for cement production are:

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

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

There are two types of cement:

• Hydraulic
• Non-hydraulic cement
TWO MAJOR CEMENT USE IN
PAKISTAN
• ORDINARY PORTLAND CEMENT
• SULPHATE RESISTANT CEMENT
 ORDIANARY PORTLAND
CEMENT
1. It is made by heating a mixture of
limestone and clay, to a temperature of
1450 degrees centigrade.
2. These results in partial fusion and
formation of nodules called clinker. This
clinker when ground with a certain
percentage of gypsum results in cement.
3. 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
 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:
1. Sustainable growth in allocation of budget for
PSDP.

2. 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

– Freight subsidy
– Duty drawback
– Port charges
• Medium term measures
– Abolishing of /reduction in central excise duty
• Long term measures
– Infrastructure at ports