The Penden Cement Authority Limited in Gomtu, Bhutan and a Bangladeshi company have agreed on a joint venture to produce cement, which is described as a sure ’win win situation’. Bangladesh levies high import taxes on cement and a cheaper alternative is to import clinker and then convert it to cement on their home soil. Producing clinker in Bhutan had the advantage of easier availability of raw materials and cheap energy.
“Bangladesh has a annual deficit of about 4 to 5 million metric tonnes depending on the supply and demand gap in the market,” said Penden officials. On June 3, after two years of negotiations, Penden and Nitol Cement Industries (Nitol) of Bangladesh signed a memorandum of understanding to invest in a clinker plant in Bhutan and Penden agreeing to invest in grinding plants in Bangladesh.
The managing director of Penden, Tshering Phuntsho, explained that clinker would be produced at the plant in Bhutan and then transported to Bangladesh to the grinding unit set up by Penden. The potential market bracket has not yet been finalised and it could be sold within Bangladesh or exported.
While the MoU does not have dates as to when the venture would start in the absence of a formal agreement, Nitol is expected to invest about Nu. 2.5 billion for the clinker plant in Bhutan, which will have an annual production capacity of about 1Mta.
In collaboration with the department of geology and mines, Penden is conducting a preliminary investigation survey at the moment on the limestone reserve in Gelephu where the clinker plant would be set up if the survey yielded good reserve of limestone. “It might take a minimum of 32 months to complete,” Tshering Phuntsho said.
Penden is looking at investing between Nu1 to 1.5 billion in a grinding plant in Bangladesh. As of now, it has not been confirmed how the investment would be made. It could be by setting up a new grinding plant or working in collaboration with existing grinding units in Bangladesh.
The move towards a joint venture was also in tune of Penden’s effort to diversify its market, Tshering Phuntsho told Kuensel. With the Dungsam Cement project to come up in Nganglam in eastern Bhutan in the next few years Penden’s foothold in the north-east Indian market would shrink.