Displaying items by tag: Sri Lanka

Sri Lanka: Insee Cement plans to spend US$56m on an upgrade to its Galle grinding plant in Southern Province. The project will add an additional 1Mt/yr of production capacity to the 1.4Mt/yr unit, according to the Daily News newspaper. Commissioning is scheduled by the end of 2023. The company’s integrated plant at Puttalam and its grinding plant at Galle have reportedly been running at full utilisation since mid-2020 to meet high local demand.

Sri Lanka: Tokyo Cement says it took delivery of a shipment of 12,000t of bagged cement in addition to its regular 30,000t/month at its Colombo cement terminal in early December 2021. The Daily FT newspaper has reported that the company took the measure to help ease a shortage in the Sri Lankan cement market. Its Trincomalee grinding plant continues to operate at full capacity.

The company said “Through these concerted efforts that focus on enhancing local value creation, Tokyo Cement continues to fulfil its national duty by ensuring an uninterrupted supply of cement to meet the requirements of customers across the island, and to firmly establish the company's position as the leading partner in nation-building.”

In November 2021 Tokyo Cement laid the foundations for its upcoming 1Mt/yr Trincomalee cement plant in Eastern Province. The producer now plans to commission the plant in early 2023.

Sri Lanka: Insee Cement says it has eased a local cement shortage by operating at maximum production capacity and optimising its distribution channels. It reported a record output of 0.7Mt for the third quarter of 2021, according to the Colombo Post newspaper. The company also introduced two new import ships to help the situation.

Gustavo Navarro, the chief executive officer of Insee Cement Sri Lanka said, “We continued to fully support government regulations and industrial policies to first stabilise the market, and were able to deploy our island-wide distribution and dealership network to ensure an uninterrupted supply across the island. The loyalty and patience of our customers gave us that extra encouragement we needed to overcome the challenge.”

Sri Lanka: Insee Cement has signed a memorandum of understanding with the Hambantota International Port Group (HIPG) to ensure the efficient transfer of raw materials to the Galle cement plant via the Hambantota Port. The agreement was signed between Gustavo Navarro, chief executive officer (CEO) of Insee Cement, and Johnson Liu, the CEO of HIPG.

“Insee Cement was Hambantota International Port’s first customer for dry bulk cargo and we greatly appreciate the trust they placed in us. We have worked with them from 2018 and have been able to greatly increase our productivity in handling dry bulk volumes,” said Liu. Navarro added, ““Due to the limitations we have experienced in our previous operations, we couldn’t bring bigger vessels with larger volumes. HIP has been a great business partner for us and the port came up with some creative solutions to get our raw materials delivered efficiently and in a timely manner which made a positive impact on our operation.”

The news from Sri Lanka this week is that Lanwa Sanstha Cement is preparing to commission a new 3Mt/yr grinding plant in January 2022. The timing is apposite given the current shortages in the country.

Some inkling of local problems can be seen in the cement news over the last few months. In August 2021 Insee Cement said that it was operating at full capacity utilisation across its network. Later, at the end of October 2021, the government intervened in the import market by opening up the use of Trincomalee Harbour. This was followed by the nation’s other main producer, Tokyo Cement, announcing that it too was operating its grinding plant at Trincomalee at full capacity. It also said that, at the government’s behest, it was going to increase its import rate.

The new Lanwa Sanstha Cement unit originally came to international attention when Germany-based Gebr. Pfeiffer revealed details in 2019 of an order of two MVR 5000 C-4 type roller mills from Onyx Group. Lanwa Sanstha Cement has since said that the plant will cost US$80m. Once operational the unit at the Mirijjawila export processing zone of the Hambantota International Port will manufacture ordinary Portland cement, Portland slag cement, Portland limestone cement and blended hydraulic cement. A further equipment order for the project was announced this week when the Chinese-run Hambantota International Port Group signed an agreement with Lanwa Sanstha Cement to build a conveyor from the port to the plant. The deal also includes two ship unloaders.

Other new cement units on the horizon include an integrated plant project from Nepalese businessman Binod Chaudhary that was announced in mid-2019. The US$150m plant was planned for Mannar in the north of the island. However, not much more has been heard since then. Chaudhary’s company CG Cement operates a grinding plant in Nepal. More recently, in October 2021, local press reported that the government had tentative plans to build a new plant at the old state-owned Kankesanthurai site, also in the north. The plant was originally built in the 1950s and production ran until 1990 when the military took over the unit amid the then on-going civil war. Earlier in 2021 the government agreed to sell off the machinery at the site. However, much of it has gone missing in the intervening period! Proposals to revive the plant have circulated since the mid-2010s.

Graph 1: Cement production and imports in Sri Lanka, 2015 – 2021. Estimate for 2021 based on January to August data. Source: Central Bank of Sri Lanka.

The Sri Lankan cement market has faced a tough time over the last two years. First, total local production and imports fell by 11% year-on-year to 7.2Mt in 2020 from 8.1Mt in 2019. Then, imports fell by 18% year-on-year to 1.83Mt from January to August 2021 from 2.24Mt in the same period in 2020. Local production has more than compensated though, leading to growth in the total so far in 2021. There have been general economic reasons for why the ratio of imports to local production has fallen in 2020 and 2019 and this is explained in more detail below. Yet, imports hit a high of 5.68Mt in 2017 and have been declining since then both in real terms and proportionately.

Insee Cement summed up the local situation in its third quarter results by blaming cement shortages on input cost rises, supply chain disruption and negative exchange rates effects. The first two problems are issues everywhere around the world as economies speed up again following the coronavirus lockdowns but the last one is more specific to Sri Lanka. The country has faced a recession in its economy because the pandemic shut down tourism. The government initially introduced import limits to try and control foreign currency reserves. It then imposed price controls on essential foods and commodities, including cement, in September 2021 to try and stop shortages but this plan was abandoned a month later. Focusing on cement, some idea of the input cost inflation facing the sector can be seen in Tokyo Cement’s latest quarterly financial results. Its cost of sales rose by 72% year-on-year to US$59.5m in the six months to end of September 2021 from US$34.5m in the same period in 2020.

Lasantha Alagiyawanna, the State Minister of Consumer Protection, said at the end of October 2021 that it would take three weeks to import the required cement into the country. Whether this is enough to end the shortage remains to be seen. Yet, whatever does happen, it is likely that more production capacity from the likes of Lanwa Sanstha Cement and others will be welcome in 2022 and beyond.

Sri Lanka: Lanwa Sanstha Cement says that it will commission its Hambantota grinding plant in the Mirijjawila export processing zone of Hambantota International Port in January 2022. The company says that the plant will have a capacity of 3Mt/yr and cost US$80m. The Daily News newspaper has reported that the owner aims to help to counteract the domestic cement shortage.

Chair Nandana Lokuwithana said "One of the highlights of this first-of-its-kind facility in Sri Lanka will be the emphasis on new technology, with all mixing carried out using the latest European technology, while much of the other equipment used throughout the production process has been customised by world-renowned pioneers in innovation with environmental friendliness in mind." He added "Packaging is done using state-of-the-art technology for improved efficiency and minimal wastage."

Once commissioned, the Hambantona plant will produce ordinary Portland cement (OPC), Portland slag cement (PSC), Portland limestone cement (PLC) and blended hydraulic cement (BHC), according to Lanwa Sanstha Cement.

Sri Lanka: Harsha Cabral, the chairman of Tokyo Cement Company (Lanka), says that the company has taken several immediate measures to address a local cement shortage. He said in a statement that it is operating its grinding plant at Trincomalee at its full capacity of around 170,000t/month, according to the Daily Mirror newspaper. He added that the company had been importing 30,000t/month of bulk cement through the Tokyo Cement Colombo Terminal. It had also, following a request by the government, made arrangements to import an additional 12,000t /month of cement as a contingency measure. However, Cabral, noted that the cement shortage was due to a variety of reasons beyond the control of the company. These included a lack of bulk cargo ships and delays in opening credit letters with local banks.

Sri Lanka: The government has adjusted the monopoly situation at Trincomalee Harbour to allow multiple industries to freely make use of land at the port. The policy aims to further boost the development of Indian Ocean trade.

Tokyo Cement (Lanka) operates a 2.4Mt/yr grinding plant at Tincomalee Harbour, and is in the process of establishing a new 1Mt/yr integrated cement plant at the port’s China Bay dock.

Sri Lanka: Siam City Cement subsidiary Insee Cement says that it is operating at full capacity utilisation across its network, which includes a 3.6Mt/yr-integrated cement plant. The Daily News (Sri Lanka) newspaper has reported that the producer is responding to a shortage in the country due to the partial suspension of imports. It said that it has been able to do this thanks to the uninterrupted supply of raw materials by its parent company.

Chief executive officer Gustavo Navarro said, "Our consumers can be assured as always of full-capacity production and supply of Insee Cement to the market. We trust that we can curtail any unnecessary pressure on the Consumer Affairs Authority and government regulators who have been pressed for price hikes and hope to quell any disruptions to market supply across Sri Lanka."

Thailand: Siam City Cement says that coronavirus-related public health measures reduced demand for cement towards the end of the second quarter of 2021. The group noted that the domestic market for cement ‘softened’ despite strong sales overseas in Vietnam, Sri Lanka and Bangladesh. Its overall net sales fell by 3.6% year-on-year to US$616m in the first half of 2021 from US$639m in the same period in 2020. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 4.4% to US$142m from US$149m. It also reported reduced sales from its ready-mixed concrete and aggregate business lines due to the pandemic’s effects on construction markets and the related closures of construction worker camps.