Lucky Cement has provided an update on operations in the Democratic Republic of Congo, as well as capacity expansion plans in Iraq and Pakistan, during a corporate briefing organised by Elixir Securities (Pakistan) earlier this week.
Stabilising market dynamics in the DR of Congo have resulted in Lucky Cement witnessing healthy growth from its operations in the central African country. As a result, the utilisation rate is expected to improve. However cement prices (currently hovering around the US$128-130/t mark) remain a concern owing to the alleged smuggling of bagged cement from neighbouring Zambia and Angola. Along with its local peer, PPC, Lucky Cement are lobbying relevant authorities to take strict action to increase duties on imported cement and implement measures to tackle the issue, Irfan Chawala, director Finance and CFO of Lucky Cement Ltd, said during the meeting.
Iraq expansion on track
Separately, the company has said the installation of another grinding mill in Iraq is currently on track and the first phase (0.435Mta) is expected to begin operations by October 2017. The remaining 50 per cent of the project (0.435Mta) is expected to come online the following month.
Pakistan projects
Amidst delays in acquiring a lease for its proposed 2.3Mta greenfield plant in Punjab province, Lucky Cement said it remains hopeful that the local government will revisit its policy on leasing new licenses to manufacturers in the province.
While Lucky Cement's first priority is to expand via a greenfield capacity addition, it is also exploring other options with a relatively lower gestation period. As such, the brownfield expansion of its existing Pezu site cannot be ruled out.
The CFO also highlighted that post-connectivity of major highways in the province of Khyber Pakhtunkhwa, as part of the western route of the China-Pakistan Economic Corridor, will result in a significant reduction in transportation time (of ~50 per cent), allowing the company to improve retention prices in Pezu.
The company is yet to finalise its decision regarding capacity enhancement in the North and is expected to convey its plans along with its 2QFY18 results.
