A majority of domestic cement manufacturers are planning to switch to clinker production in the wake of numerous hassles they have to face while importing the raw material and high customs duty levied on the import.

Clinker alone accounts for the 75 percent of the raw material required to produce cement.

In order to meet the annual demand of 5.42 million tonnes of cement, domestic cement industry requires about 4 million tonnes of clinker annually. However, the country has just 10 clinker producing factories with a joint production capacity of 800,000 tonnes annually—20 percent of the total demand.

In order to meet the growing demand as well as support their own production, grinding-based factories are sooner or later switching to clinker production.

Ajay Jatia, executive director at Jagadamba Cement, said they are going into backward integration soon for both of their factories. Brij Cement Industries has ventured with Argakhachi Cement for clinker production, while Bishal Cement, which is yet to bring its product in the market, also plans clinker production within two years. “We have already registered a mine in Surkhet,” said Jayendra Chudal, managing director at Bishal.

Almost all upcoming cement factories have acquired limestone quarry for clinker production. Golchha Organization has a limestone quarry in Katari, through which it aims to produce around 2000 tonnes of clinker annually. United Cement, owned by KL Dugar Group, has acquired a limestone quarry in Lele, Lalitpur.

However, completing a limestone-based project takes a long time, demands a huge investment and the payback period is as long as 10-15 years. Industrialists also complain the cost of compensation to residents near mines is very high. “Locals near mining sites always put forth unfair demands,” said Suresh Jaisawal, sales manager at Brij Cement Industries.

Lack of road connectivity is another hindrance for industrialist to go for mining. “Without proper road, we can’t install mining plants and transport raw materials to factories to produce cement,” said Jaisawal.

source: The Kathmandu Post, 1 may 2012