Pakistan cement producers looking at Afghanistan for coal

Due to a spike in the price of coal imported from overseas countries, cement companies in Pakistan are considering the import of coal from Afghanistan.

“Afghan coal is cheaper compared to the coal imported through sea links from other countries including South Africa,” said Taurus Securities analyst Mustajab Ali Kazmi. “Although the quality of Afghan coal is a bit inferior than the one imported from other countries, the companies resort to buying cheaper coal to increase margins.”

However, some cement producers said that Afghan coal would not be able to cater for Pakistan’s requirements. All Pakistan Cement Manufacturers Association Secretary, General Shahzad Ahmed, said Afghan could not meet the needs of Pakistani cement producers and urged the government to develop coal import facilities and improve port capacity.

“Current average capacity utilisation by cement players in the north hovers around 85 per cent,” said Mr Kazmi. “We expect demand to remain upbeat in the north and capacity utilisation to maximise.’” He highlighted that higher international coal prices could impact industry margins in the near future. Coal prices tend to impact fuel and power costs, which are a major part of cement production. Coal prices have risen from US$70/t at the beginning of FY20-21 to US$137/t currently.