Sri Lanka sees rich cement export potential from Jaffna plant

Sri Lanka sees rich cement export potential from Jaffna plant
Published: 13 April 2007

Sri Lanka has the potential to ship cement to South Indian markets across the Palk Straits if peace comes and a defunct plant in the northern Jaffna peninsular sitting on a rich limestone deposit is rebuilt, a top cement maker said.

Manilal Fernando, chairman of Swiss cement giant Holcim’s Sri Lanka unit, said any future revival of Jaffna’s Kankesanturai cement plant depends on peace but offers huge potential economic benefits.

Shipping cement to Tamil Nadu from Jaffna would be cheaper than trucking it from plants in India itself as distances would be shorter.

“We can win on the transport distance,” Fernando told reporters at the launch Holcim Lanka’s first Sustainability Report and annual financial review on Wednesday.

“It’s only 23 miles to Chennai from Kankesanturai but about 800 miles on the Indian side.”

Holcim Lanka has a limestone quarry and the island’s only fully integrated cement factory in Puttalam in the north west, and a grinding plant near the southern port city of Galle.

It plans to set up a new clinker terminal and grinding station in the eastern port of Trincomalee. New investments at its Puttalam plant will raise output to over 1.3Mta  from 1Mt today.

Fernando said the limestone in the Jaffna peninsula is said to have 95 percent purity and the deposit can last some 50 years.

“We can dig up the entire peninsula. It’s pure good limestone – better than in Puttalam.”

However, he warned that precautions would have to be taken when mining the limestone to avoid damage to Jaffna’s water supply.

Unlike in the sparsely-populated Puttalam region, the Jaffna peninsula is densely populated and people have a water problem, having to get water through the limestone.

Fernando said there were concerns that mining might disrupt the water course but added that there were technological solutions.

Water supply in the Jaffna peninsula comes from shallow aquifers that occur in the channels and cavities of limestone. The shallow groundwater forms mounds or lenses overlying saline water and is used most intensively for agriculture and domestic purposes.

Proven reserves of limestone in Sri Lanka is in the region of 100Mt.

Only the deposits in the Puttalam district are accessible right now with other areas not considered feasible because they occur in areas of fighting between government forces and Tamil Tiger rebels.

Big manufacturers like multinational Holcim and also Tokyo Cement, the Colombo-listed firm connected to Japan’s Mistui Cement, have long been interested in reviving the Kankesanturai cement plant but been deterred by the war.

Lanka Cement, another Colombo-listed state-owned firm that now survives on trading cement also ran a plant in Jaffna before hostilities forced its closure in the 1980s.

Holcim now own plants that were originally built by state-owned Sri Lanka Cement Corporation.

Investing in Jaffna is considered risky and also no insurance cover would likely be available.

Fernando said Holcim had been investing in modernizing its plants in Sri Lanka since its entry in 1996.

“We will continue to invest. We’re interested in Kankesanturai along with others.”

One of the plants in Kankesanturai was now outdated. The other kiln, built at a time when Sri Lanka’s cement market was half that of today’s, can still be used but its capacity is now too small to be economical.

“So we would need to build a modern, state-of-the-art plant in Jaffna,” declared Fernando. “A million tonner.”

The harbour at Kankesanturai would enable convenient shipments of cement, once it is modernized.

The railway would have to be re-laid to bring in raw materials and a reliable power supply provided.

“From Jaffna we can even ship cement to Bangladesh which has no cement manufacturing capacity, only grinding plants,” Fernando explained.

He also said Holcim would like to build cement plants where there are harbours in the island because transporting the product by ship was more economical than road transport.

“Wherever the government sets up new harbours, we’ll like to go there. Transporting cement by ship will save our roads. However, ports must be efficient and speedily discharge ships.”