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Cement consumption still low

MD of Lafarge Surma, Bangladesh talks about potentials of the country

Sajjadur Rahman
CEMENT production in Bangladesh almost doubled in the past five years, but the country's per capita consumption is still one of the lowest in the world.
Even under-developed West Bengal of India consumes cement one and a half times higher than Bangladesh does.
“Per capita cement consumption in Bangladesh is less than 100 kilograms (kg), which is 150kg in West Bengal and more than 1,000kg in China," said Mike Cowell, managing director of Lafarge Surma Cement, Bangladesh.
Cowell was talking to The Daily Star recently at his office in Gulshan. He has been heading the cement company in Bangladesh for the past five years.
The $280 million Lafarge Surma Cement is the only cross-border project involving Bangladesh and India. It has a production capacity of 1.5 million tonnes ayear.
The company is already meeting about 8 percent Of the total market need for cement and 10 percent of total clinker requirements of Bangladesh market with strong growth rates.
By supplying clinker to other cement producers in the market, it contributes some $50-60 million per annum worth of foreign currency savings for Bangladesh.
The venture is financed by Lafarge of France, Cementos Molins of Spain, International Finance Corporation, the Asian Development Bank, German Development Bank, European Investment Bank, and the Netherlands Development Finance Company.
Though there are dozens of cement factories across the country, Cowell said only 30 are active in supply. These factories' combined production capacity has increased to 15 million tonnes a year now from 8.5 million tonnes five years ago.
“That's not a bad growth,” Cowell said. “Still there is a huge gap when you look at other developing countries in Asia."
“We are very hopeful and that's why we are here,” he said.
He said Lafarge, which is the world's largest cement manufacturer, is working to bring its knowledge and products to Bangladesh.
Global cement consumption increased at a CAGR (compounded annual growth rate) of 6.8 percent
to reach 3,120 million tonnes during 2000-2010, according to Davy Research, an Ireland-based firm.
The growth was fuelled by the strong demand in developing countries, particularly in China and India, Davy said.
Production capacity has also grown in tandem with the consumption. Global cement supply increased at a CAGR of 5.8 percent in 2000-2010. China has the world's largest cement capacity and accounts for almost 50 percent of the world capacity.
On Bangladesh's cement supply, Cowell said around 15 percent is consumed by the government and the rest by the private sector. But he said, this 15 percent is very influential as the government buys it to build infrastructures on which the country's development relies.
Besides cement production and consumption, Lafarge's Bangladesh boss talked on the country's economic potentials, raw materials and cement prices.
Cowell also shed lights on India's apex court's judgement relating to limestone mining from Meghalaya to Lafarge's Chatak plant in Sunamganj in Bangladesh through a 17-kilometre cross-border conveyer belt. In February 2010, Indian Supreme Court had halted limestone mining by Lafarge on environmental grounds.
“We have a strong feeling of consolation. We are very happy and
things are operating very well,” he said on the Indian court's judgement that goes in favour of Lafarge.
After the judgment Lafarge has no problem in transporting
mined limestone from Meghalaya to its plant in Chatak.
After a few years of slow production, the factory is now running at a full capacity. “We hope to sell more than a million tonnes of cement this year,” he said.
Other cement factories in Bangladesh also buy clinker from
Lafarge. Clinker, which is made mainly from limestone and was totally import-dependent before, is a must ingredient for cement manufacturing.
On the price volatility of cement, Cowell said 25 factories out of 30 import 100 percent of their raw materials. So the price is directly linked to the international market and the exchange rate, he said.
Replying to a query on why Lafarge cannot sell cement at lower price as it does not need to import raw materials like other companies, he said no shareholders want that his product is sold at lower prices.
He said Lafarge will continue to grow with the market in Bangladesh.
Cowell said his factory distributes cementmostly by barge, acost effective carrier in Bangladesh.
Cowell, who is a civil engineering graduate, is married and has two daughters living with him in Dhaka.
Lafarge Surma Cement that was incorporated in November 1997 employs 5,000 Bangladeshis directly and indirectly. Four experts work in the plant and all of them are Bangladeshis.
On January 20, 2003, Lafarge was made into a public limited company. The company is listed on Dhaka and Chittagong bourses. Now the company has more than 10,000 shareholders.
sajjad@thedailystar.net