Self-sufficiency in cement
Sarwar A Chowdhury
It is hard to pinpoint where and when the uses of cement were first discovered, or who invented it. Some say it was in ancient Rome, where engineers first used concrete made from volcanic rock and ground brick or pottery. Now, in modern times, concrete is a composite construction material composed of cement and other materials.
Regardless of when the use of cement began, cement has become the major construction material for many centuries in the world. From housing to infrastructure, cement is a must.
Cement is a binder, a substance that sets and hardens independently, and can bind other materials together.
Many countries cannot produce enough cement to meet their internal demand, and they depend on imports. However, Bangladesh is self-sufficient in fulfilling local demand for cement. Even so, the installed production capacity is higher than local demand.
In Bangladesh, there are around 55 cement-manufacturing companies, most of which are in operations either on a large or small scale. A total of 34, including multinational cement manufacturers, are in commercial production.
The installed production capacity of the 34 cement factories is 1.85 crore tonnes a year, according to Bangladesh Cement Manufacturers Association (BCMA) data.
Cement consumption was 1.3 crore tonnes in 2009 and 1 crore tonnes in 2008. Consumption for 2010 has been estimated at 1.45 crore tonnes, the cement association data shows.
Dhaka and Chittagong account for nearly 65 percent of total consumption.
“We are self sufficient in cement production and meeting local demand. We don’t need to import cement, not even a single bag,” says Amirul Haque, managing director of Premier Cement.
“Bangladesh is over capacity. The entire industry and local demand is controlled and fulfilled by the Bangladeshi cement companies,” he says.
Some factors can manipulate the demand or consumption of cement to go up or down, as was seen in cement consumption in the last few years.
The cement sector experienced a downward trend, particularly in sales, in 2007-08 when the army-backed caretaker government was in power. The real estate sector was at a low ebb and no infrastructure development project was undertaken, leaving a negative impact on demand for cement.
But the cement industry regained momentum soon after an elected government took power in January 2009.
“Infrastructure, industrialisation, urbanisation and housing are the major factors that can have an impact on demand for cement,” says Mostafa Kamal, president of BCMA.
“We are seeing an ever-increasing growth in the cement sector, as the government looks seriously on some big infrastructure projects, such as flyover, airport, bridge and monorail, where cement will be a basic raw material,” he said.
There will be no problem in meeting the cement requirements to implement the infrastructure projects. “We are not only self sufficient in cement production, we also export to our neighbouring country, India,” says Kamal, also the owner of Fresh Cement.
In view of a bright future, many entrepreneurs are expanding their production capacities. “Currently, we have the capacity to produce 4,000 tonnes of cement a day, and we plan to add 4,000 tonnes of capacity this year and another 4,000 tonnes next year,” says Kamal.
As it is a heavy industry, huge investment is needed to set up a unit with backward and forward linkage facilities. It will cost around Tk 1,000 crore, if a unit has the capacity to produce 10,000 tonnes of cement a day with adequate backward and forward linkages.
The backward and forward linkages refer to the transportation of raw materials and shipment of finished products by a company’s own transportation chain, in which, ocean going vessels are included.
Haque of Premier Cement says cement is almost a seasonal product. Winter is the best season for construction. “Cement consumption rises to a peak in winter,” he says.
In the rainy season, construction works, especially on housing projects in rural and urban areas, go slow. “Every company cuts production in the rainy season,” Haque says.
With high demand for cement comes greater competition. It is a market for ‘maximum volume but minimum profit’, he says.
“Otherwise, one will be thrown out by competition.”
Although Bangladesh is self sufficient in cement production, it needs to import all the raw materials used in cement manufacturing. The main ingredients for cement include clinker, gypsum and fly ash, which are mainly imported from Thailand, Malaysia, Vietnam and China.
Bangladesh has surplus production capacity of cement, and with existing growth domestic demand can be met by local production in next 4 to 5 year, said Jasim Uddin Khandaker, vice-president of sales and marketing of Holcim.
“However, many companies are now going for expansion. Bangladesh will not face any problem meeting its local demand up to 2020,” he added.
Among local brands, Shah Cement, Meghna Cement, Crown Cement, Fresh Cement, Premier Cement and Seven Circle Cement are famous across the country.
The five multinational cement companies in operation are: Holcim, Heidelberg, Lafarge Surma, Cemex and Emirates.