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White cement.

White Cement is mostly used for mosaic flooring in houses, commercial buildings including offices, hotels and exterior and interior decoration of buildings with white cement spray. At present there are two white cement plants one in public sector and one in private sector. Public sector project, White Cement is located at Iskendarabad Daudkhel. This plant is based on wet process and it was lime sludge which is a waste by product of Pak American Fertilizer Plant.

Approval was recently given for the establishment of a modern white cement manufacturing plant under the name and style of Snow White Cement at Jam Shoro, District Dadu, Sindh which is known to possess extensive deposits of good quality lime stone, a basic raw material for the project. According to geological survey report, lime stone reserves in the area have been estimated at around 154 million tons which can last for over 800 years. Another important raw material is white clay, the deposits of which are available at Lakhra near the proposed site of the project.

The new plant will have a design capacity to produce 90,000 tons of white cement per annum, about 20 per cent of which, will be the special type of white cement for use in oil wells. At present, there is no production of special white cement for oil wells, and it is imported to the extent of 15,000 tons per annum. In view of the rapid expansion in drilling of oil wells in Pakistan, the demand for oil well white cement has increased. The proposed project would thus contribute significantly to import substitution in addition to introduction of new technology for the production of oil well white cement.

The company got a reputed engineering firm of France to conduct a survey to determine the quality of the available lime stone deposits in the area near the site. The French firm is reported to have confirmed the suitability of the quality of raw material for the production of white cement. The Consultancy firm of France was paid a fee out of a French Protocol Credit which was allocated by the Pakistan Government for this purpose. The company has also completed site development and obtained mining leases

Viability

The project involves a total cost of about Rs. 629.00 million with a foreign exchange component of Rs. 262.244 million for financing the foreign consultancy machinery, payment of foreign consultancy fee, training and installation charges. A foreign currency loan of about 7.8 million dollars was reportedly sanctioned by the NDFC out of a credit line from the World Bank. Additional loans have also been sanctioned while an equity participation to the extent of Rs. 7.70 million is arranged from the IFC Washington and Asian Development Bank. The initial Paid-up Capital of the company was placed at Rs. 251.60 million out of which, Pakistani sponsors would invest Rs. 94.350 million and foreign institutional participation would be to the extent of Rs. 7.720 million while shares of Rs. 125.800 million would be offered to general investing public for subscription. The debt capital of Rs. 377.400 million will consist of Rs. 254.524 million in foreign currency and Rs. 254.524 million in foreign currency and Rs. 122.816 million in local currency.

Demand

The domestic production of white cement has proved to be inadequate to meet the rising demand in the wake of building construction boom in big cities and small towns throughout country. The use of white cement also got a fillip from the construction of multi-storey buildings and sky scrapers for both residential and office purposes in Karachi and other big cities. This led to a steady increase in the import of white cement during the past five to six years despite the fact that the local plant improved its capacity utilisation from roughly 30 per cent about 10 years back to about 93 per cent recently. The trend of local production and import of white cement production and import of white cement presented in the Table would indicate the total demand or consumption of this item.

Demand of White Cement

(In Metric Tons)
 Local Total
Year Production Imports Demand
1981-82 16,800 13,000 29,800
1982-83 17,800 21,000 38,800
1983-84 20,000 22,000 42,200
1984-85 24,300 24,000 48,300
1985-86 30,038 28,300 58,338
1986-87 30,000 29,000 59,000
1987-88 33,000 25,864 58,864
1988-89 70,000 11,309 81,309
Source: Foreign Trade Statistics & SCC.


The statistics indicate a historical growth in consumption and demand for white cement, rising from 16,800 tonnes in 1978-79 to 58,000 tonnes in 1985-86. This worked out to an annual growth rate of 20 per cent. A survey by a financing institution, assuming a conservative growth rate of 15 per cent per annum, has projected the future demand of white cement as noted below.

Projected Demand of White Cement
Year Metric tons
1988-89 60,000
1989-90 69,000
1990-91 79,350
1991-92 91,252
1992-93 104,939
1993-94 120,680
1994-95 138,792
E.R. Estimates


The project Snow White Cement's is expected to commence production by 1990-91 with 60 per cent efficiency in the first year, 70 per cent in the second year and 80 per cent in the third year. At 80 per cent efficiency the three plants in 1992-93 will be able to produce 136,000 white cement against the demand of 104,939 tonnes giving a nominal surplus of about 21,000 tonnes. The surplus would narrow down to 3,000 tonnes in 1194-95 if no new plants come on stream.
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Title Annotation:Industry Profile
Publication:Economic Review
Date:Mar 1, 1990
Words:947
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