Cementing the US ties

KARACHI: Pakistan exported cement to the sophisticated US market on January 18, 2023, after the country secured an order from a group to supply 600,000 tonnes of low alkali cement. This figure could double if all goes well, said Farid Fazal, executive director of the DG Khan Cement.

“We dispatched our second consignment of 37,500 tonnes at the rate of $60/tonne,” he added.

DG Khan Cement (DGKC) of the Nishat Group is one of the largest and most diversified business groups in Southeast Asia. Nishat has now become a multidimensional corporation and is playing an important role in the industrial and economic development of the country.

DGKC is among the largest cement manufacturers in Pakistan with a production capacity of 25,000 tonnes/day (7.5 million tonnes/annum). DGKC has three cement plants located at Dera Ghazi Khan, Kalar Kahar and Hub. The plants and equipment are supplied by the renowned European suppliers and are based on the latest Dry Process Technology. It is the first company to use innovative technologies in the cement industry.

Fazal has vast experience of around 46 years in marketing, selling, logistics and administration.

He started his career in 1967 with the Fancy Group of Companies and later moved to the Middle East in 1976. He remained associated with the cement and steel sectors in the Middle East for more than a decade.

He later moved to Houston, US in 1987, where he successfully managed his entrepreneurial venture for the next 11 years before returning to Pakistan and joining DGKC in 1998.

Following are the excerpts of a talk with Farid Fazal, who explains the journey towards becoming the first local cement producer to export to the United States.

Tell us about the cement market in the US and how did you land the export order?

In June last year, we celebrated and announced to secure an order from the US market. Getting to this stage has been no piece of cake. It was in August, 2021 when we were visiting the US and secured this order. After that the customer’s representatives visited our plant and asked us to supply a special cement called low alkali, which we produced for them and after they were fully satisfied they confirmed our order subject to the statutory approvals.

Later, it was a testing time for us and it took us six months to get the technical certifications for the supply of cement to the markets in the US from TXDOT, NCDOT, SCDOT and LODOT. Finally, we got all the approvals and now it has opened the floodgates for all of us to enter the US market.

It is for the first time-ever that a Pakistani cement manufacturer, DG Khan Cement Company, has entered the US market, as the demand for the construction materials in the US has increased manifold with the buyers looking for new sources of supply; following President Biden’s $6 trillion infrastructure package.

Under this package, all mega infrastructure projects, including freeways, bridges and roads will be rebuilt or given facelifts, as some of these were constructed almost a century ago.

What challenges did you face in shipping your first consignment?

When our first ship Tomini Felicity reached Houston, they did have some problems unloading such a huge vessel and it took them time to secure a berth at a terminal of their choice. Uur customers were so happy with the quality that they gave us a repeat order.

The US is a huge market and due to strict environmental laws it is very difficult to put up a cement factory and their requirements of cement are met by imports from Mexico, Canada, Vietnam and Turkey.

When the customer sent us a letter of credit (LC) and we were told to ask for a confirmed LC to which the customer in typical Texan style said: “Forget it man. I will have sent you cash in form of a TT.”

Which plant are you exporting to the US?

DGKC’s latest state-of-the-art plant located at Hub is the first-of-its-kind to have largest production line with six stage preheater tower, largest vertical gridding mill based on COPE drive system and multiple chamber cement storage silos to store different products, at the same time.

It is from this plant that we are exporting low alkali cement to the US. DGKC has an order to export 600,000 tonnes of low alkali cement to the United States/annum, which will fetch approximately $360 million for the country.

The third consignment will leave for the US next month and considering the good quality of Pakistani cement the country can achieve up to 15 per cent share in the US market.

Are you exploring to tap the European market?

We have lots of surplus cement and as the supply is much greater than the demand, the manufacturers are not utilising their full capacity; hence, we need to explore new markets.

The company is in talks with the buyers from London, France and Germany and soon it will be entering the European market after getting a CE certification.

Pakistan usually exports to Africa and Asian destinations but the demand in these markets is declining, which is reflected in the recent cement off-take numbers. The local cement industry has the capacity of 65 million tonnes and domestic consumption is just 40 million tonnes, while exports are just four to five million tonnes.

How do you minimise the environmental impacts?

Our focus is on maintaining an ecofriendly environment by making a significant contribution to reduce carbon footprints by using renewable energy, waste heat recovery and alternative fuels. We started switching to alternative and environment-friendly sources for our energy needs, since cement manufacturing is a high-energy consumption business. Today, we meet 30 per cent of the energy requirements through alternative resources, including solar and biogas.

What are your expansion plans?

The industry already had a surplus capacity. Besides, any kind of expansion needs political and economic certainties. As far as export infrastructure is concerned, DGKC plans to provide cement silos at the Karachi Port and Port Qasim, which would facilitate exports and reduce costs.