Karachi, September 09, 2022: Afghan coal reserves are enough to fulfil the demand of Pakistan’s cement industry despite power plants in the Northern region shifting to Afghan coal.
This was projected by the management of Cherat Cement Company Limited (CHCC) during its Corporate Briefing session on Thursday.
At present, more than 90% of the coal mix comprises of Afghan coal which has a Gross Calorific Value (GCV) of 6,500, similar to South African coal.
Coal from Mozambique has a lower GCV of 5,800. The company also uses some local coal (<10%). Although, Thar coal has also been tested by some of the industry players but no material results have been achieved so far.
Energy costs may remain in check
CHCC currently estimates average coal inventory cost to be Rs55-57k/ton, where the company holds inventory for two to three months at any given point in time.
For power generation purposes, CHCC is using WHR (35% of the power mix), Solar (7-10%), PESCO grid (10%) and PEDO (3-4%). Rest of the requirement is met by a mix of Gas and FO where the expensive furnace oil is only used when the company faces Gas load shedding, a common sight in winter season.
CHCC hopeful for volumes to get back on track
The management has apprised regarding expected pick-up in demand from 2QFY23 as rehabilitation process kicks in with flood affected areas returning to normal.
Management shared that cement demand was not impacted in the Peshawar and Mardan regions however, Swat saw contraction due to the recent flash flooding.
Exports have remained on the lower side of late and the company believes that the industry might see a 20% decline in FY23 export sales.
Management believes local dispatches might shrink by 3-4% on a YoY basis though there might be pressure due to the addition of new capacities.
Some delay in the planned greenfield expansion
The management expects the greenfield plant to commence commercial operations within 2-2.25 years from the date of LC as and when approved by SBP.
At present, there are some delays in the process but the company has already started initial ground work whereas a mining contract has also been obtained.
The initial capex estimate was Rs 36-40bn but due to significant rupee devaluation in recent months, the project cost may be revised. Once the rupee stabilises, a final estimate will be worked out.