Punjab increases limestone royalty rate

To increase revenue from the mining sector, the government of Punjab, Pakistan, has announced an increase in the royalty rate on limestone to six per cent of the ex-factory sales price of cement or clinker. This represents a change from the previous fixed rate of PKR250 (US$0.90)/t.

As a result, the cost of limestone per bag of cement is expected to increase to PKR55 from PKR19/bag currently.

Research house AKD Securities anticipates that the cost increase will be passed onto consumers, leading to regional cement prices advancing from PKR1510/bag to ~PKR1560/bag.

Moreover, companies outside Punjab are expected to benefit if they do not face similar cost increases and maintain competitive prices. Alternatively, they could also raise their prices, capitalising on the price hikes and improving their financial performance, according to AKD Securities.