Onyx Group in Sri Lanka has announced that it expects to start operations of its new grinding plant in Mirijjawaila, Hambantota. The commissioning of the plant, which is an affiliate of Ceylon Steel Ltd, is an indication that Sri Lanka is looking to close the gap between its cement demand and domestic cement production. In recent years domestic demand has been met partly by high levels of cement and clinker imports in recent years.
The new Onyx facility will operate as Lanwa Santha Cement Corp (Pvt) Ltd. Representing an investment of nearly US$100m, the plant will have an initial cement capacity of 2.4Mta when it starts commercial production. The second phase will see a further 1.2Mta of cement production added to the plant. The whole operation is being set up on a 63-acre plot of land in the Mirijjawaila Export Processing zone.
Grinding will be carried out by two Gebr Pfeiffer MVR-5000 C-4 type VRMs. They have a capacity of 180tph each to produce ordinary Portland cement (OPC) to a fineness of 4000cm2/g according to Blaine. Siemens process control technology and packaging equipment from FLSmidth will also ensure the plant operates to high standards. In addition, the plant features a stacker/reclaimer yard and two bridge-type ship unloaders. Raw materials are being transported along a 2.4km covered conveyor. The cement types to be produced include OPC, Portland slag cement and Portland Limestone cement.
The Onyx Group has been trying to enter the cement market for several years, having bid on the Holcim Lanka operations in 2017. The new plant opening will make a significant increase in domestic production, which currently totals around 2.8Mta. Local estimates suggest domestic grinding capacity is expected to rise by 14 per cent in 2021. The gap between production and demand remains wide as Sri Lankan cement consumption totals approximately 8Mta.
Industry development
Tokyo Cement Co (Lanka) PLC is the market leader, but it only has the one cement plant at Trincomalee. INSEE Cement (Lanka) Ltd (Siam City group) is close behind with an installed capacity of 2.7Mta. It has an integrated 1.3Mta plant at Puttalam and two grinding plants at Ruhunu (1Mta) and at Galle (0.4Mta).
Meanwhile, the Sri Lankan cement industry continues to develop and Taiheiyo Cement (Lanka) announced an upgrade project in November 2020. It is expanding its Trincomalee grinding plant from 2.8 to 3.8Mta. The upgrade is expected to be completed in mid-2022.
A new entrant will be Hambantota EZ, which is a Chinese project for an integrated 1.5Mta cement plant in the southern coastal town of Hambantota.
Chaudhary Cement Industries Pvt Ltd is also planning a 1.5Mta integrated plant in Mannar, northwest Sri Lanka. The CG Cement plant, as it will be known, has an investment of US$150m. CG Cement already has a 10 per cent share of Nepal’s market through imports.
High volumes of imports
Most of Sri Lanka's imports are sourced from India, Vietnam, Pakistan, Malaysia, Indonesia and Thailand. This has made Sri Lanka into the fourth-largest cement importer in the world. Import duties have been removed for some raw materials that cannot be produced domestically to help build mega-housing schemes, highways and small and medium-build projects.
Infrastructure to boost cement demand
Sri Lanka announced its 75th National Budget for 2021 in November 2020. It featured a substantial LKR20bn (US$101.9m) rural road construction programme for 10,000km of roads and the provision of LKR7000m to build 10,000 rural bridges. A central Expressway Section I, III and IV and phase I of the Ruwanpura Expressway is scheduled for completion by 2024. A three-year road development programme will cover all 25 districts and the railway is being expanded in Colombo and surrounding suburban areas. House construction will see complexes amounting to 50,000 new houses for low- and middle-income earners. Approximately LKR5000m will also be provided for piped water connections to 450,000 houses.
Summary
Sri Lankan cement production's latest figures saw a rise of 28.7 per cent YoY to 375,000t in September 2020. Overall, cement production rose by 8.5 per cent to 2.82Mt in the 9M20, compared to 2.6Mt in 2019. It indicates that Sri Lanka’s cement producers have been able to sustain volumes during the pandemic, but domestic cement consumption fell by 16.2 per cent to 5.37Mt for the 9M20.