Pakistan: Cherat plans third production line

Pakistan cement producer Cherat Cement Company has disclosed that it will undertake another expansion of some 2.34Mta (7100tpd) at its existing site of Nowshera, Khyber-Pakhtunkhwa, in north of the country.

Azam Faruque, Cherat Cement's CEO has informed Pakistan Stock Exchange (PSX) that it would take its total cement capacity to  around 4.64Mta.

The Board of Directors has authorised the company's management to finalise terms and conditions for the procurement and supply of equipment and conclude all necessary agreements for execution of project.

Last week Cherat Cement completed its second kiln line, including a waste heat recovery plant (WHRP), to take capacity to 2.4Mta.

As both existing plants have ~6MW WHRPs, it is likely that the announced expansion will also see the construction of a WHRP, according to a local research house, JS Research.

Cherat Cement’s latest expansion plan will be entirely financed by debt, costing close to PKR13bn, according to JS Research. The financial close is expected in the next couple of weeks and the production line may become operational by the second half of 2016-17.

In broader picture, it believes that production from the newly commissioned production line would be the major price trigger, since the announced expansion would at least take 38 months from now to come online where other players would also be adding to the country’s capacity.

Industry officials say the Pakistani cement industry is currently investing at least US$700m to US$1bn in expansions. Now including the recent two announcements, the level of investment in the cement industry goes up from US$1.05bn to US$1.35bn in the last two years alone.