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Sri Lanka: expansions planned as shortage continues

World Cement,

As reported last week, Sri Lanka is currently experiencing a huge cement shortage, currently estimated at 1 million bags per month. This is due to a shortage of local production facilities, price controls affecting imports, and a huge construction boom led by infrastructure projects. Additionally, concrete rather than asphalt is being used for all rural roads. This being the case, Sri Lanka’s Tokyo Cement group (a JV between Nippon Coke & Engineering Company of Japan, and the local St. Anthony’s Consolidated Group) is considering establishing a number of ready-mix concrete plants on the island. The company currently has seven ready-mix plants in the country, including a new one in northern Jaffna, a region that particularly suffered during the island’s 30-year war.

Tokyo Cement is also looking into expanding its power generation capacity with a view to making it a separate business. In its 2010/2011 financial report, the company stated: "A most immediate strategy being pursued by the company is in using the advantage we currently possess as a technology leader in biomass power generation. We are now exploring the further possibility of expanding our power generation capabilities using dendro power. We are critically evaluating the possibility of creating a separate line of business in power generation to add value to the activities of the group." The company has recently signed a deal with the state to sell dendro power back to the grid.

Meanwhile, Sri Lanka Cement Corporation (SLCC) has sought Port Authority approval to establish a cement packaging plant in the Ruhunu Magampura port. Currently, SLCC and Lanka Cement Ltd (LCL)’s KKS cement plant in Kankesanthurai is producing pavement blocks, cement blocks and telecom/electricity posts to cater to demand. The two firms are set to invest Rs.10 million in the coming months to increase capacity. Employment opportunities are set to double at the plant, and selected students at schools in the region will be provided training to manufacture and market cement-based products under the guidance of SLCC.

A related problem has been the import of cement that has not been certified by the Sri Lanka Standards Institute (SLSI). The concern is that substandard cement will be let into the country. This week, discussions are being held between the SLSI, Consumer Affairs Authority and cement industry representatives in order to solve this problem. The Chairman of the SLSI has said that the Institute was prepared to accept a quality certificate from an accredited internationally accepted laboratory, but that consumers would be purchasing the product at their own risk without an SLS certificate. Recently, the National Coopertation Council ordered 100 000 x 50 kg bags of cement to ease the shortage on the local market, but only 14 000 bags were released. The cement, imported from Pakistan, had had an SLS certificate, but this was later withdrawn due to quality concerns.


The Ministry of Cooperatives and Internal Trade has confirmed that the SLSI, which earlier refused SLS certification to Lucky Cement from Pakistan on the basis that the cement was of substandard quality, has now lifted the ban on the cement after sample tests conducted in the UK showed that the cement was not of inferior quality.

According to sources, the ban was immediately lifted after a UK-based company confirmed the cement was not of inferior quality.

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