The management of Lucky Cement Limited has decided to continue expanding its cement production at its Pezu Plant by tapping into the increasing demand for the company’s product in the construction sector.
The construction activities in the country have sped up various development projects under the China-Pakistan Economic Corridor (CPEC) and other planned and announced housing projects in different cities.
Lucky Cement revealed in the stock filing that while keeping up with the increasing demand in the domestic cement industry, and on the back of the revival of economic activity and an uptick in construction projects – including both retail level projects and mega infrastructure development projects – the company has decided to enhance its cement production capacity at its Pezu Plant by 3.15 million tons per annum.
Lucky Cement’s latest expansion will be finalized after the conclusion of its negotiations with its suppliers and contractors. “The construction work on the project is expected to commence within the current financial year and is expected to have a completion period of 1.5 to 2 years,” the notification said.
During the first six months of the current fiscal year, the total cement sales of the industry grew by 15.66 percent from 24.751 million tons in July-Dec 2019 to 28.628 million tons in July-Dec 2020.
Lucky Cement is the biggest producer of cement in Pakistan, with a production capacity of over 10 million tons of cement and clinker per annum through its nine plants. It is followed by Bestway Cement which has an annual production of 9.84 million tons, and DG Khan Cement which has a production capacity of 7.11 million tons per annum.
According to the All Pakistan Cement Manufacturers Association, the total installed production capacity of cement in Pakistan stood at 69.164 million tons in June 2020.
The cement industry is important for the economy in more ways than one. Besides making a direct contribution of 7.5 percent to large-scale manufacturing, it also influences growth in the allied segments (steel, chemicals, wood, etc.).
It has been undergoing a major transformation over the last two years as a number of players are planning capacity expansions. Specifically, almost half the players in the industry have announced capacity expansion, while a capacity of more than 3 million tons had already been added during 2018-19.
In cumulative terms, this will add 23.4 million tons to the production facility – a staggering increase of about 50 percent – in the next few years to reach around 72.8 million tons.