MLCF targets higher cement output, shifts to biomass fuel

Maple Leaf Cement forecasts 52–55% capacity utilization this year, driven by stronger demand and lower energy costs through biomass expansion.

ISLAMABAD: Maple Leaf Cement Factory Limited (MLCF) expects to improve its domestic capacity utilization from the current 48% to between 52% and 55% in the ongoing fiscal year, supported by rising cement demand and strategic changes to its fuel mix. The company’s management disclosed these projections during a recent investor briefing, outlining operational performance, energy costs, and future plans.

MLCF, which operates under a board composed of three members each from Maple Leaf, Fauji Fertilizer Company (FFC), and independent directors, has been working to optimize its production efficiency amid fluctuating input costs and power tariffs. The company reported that its current energy mix comprises 26% from waste heat recovery (WHR), 60% from coal, 8% from solar, and 6% from the national grid, with an average power cost of Rs15.82 per unit.

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The company’s weighted average fuel cost currently stands at Rs31,000 per ton. MLCF’s distinctive position in Pakistan’s cement sector stems from being the only local producer using petroleum coke (pet coke) as part of its fuel mix. Pet coke, which contributes 36% of the company’s fuel share, offers higher BTU efficiency than coal and helps lower per-ton production costs. The rest of the mix is divided among biomass (30%), local coal (15%), Afghan coal (11%), and imported coal (8%).

Looking ahead, management announced plans to substantially increase biomass utilization to 40% of its fuel mix. According to company estimates, this transition could cut fuel costs by 20–25% in the current year, offering a significant cost advantage in a sector grappling with energy price volatility. The shift is also expected to enhance sustainability credentials, as biomass is a cleaner alternative to fossil fuels and aligns with broader industry trends towards greener energy solutions.

Despite rising demand, MLCF management confirmed that there are no plans to expand cement production capacity or to enter Pakistan’s southern market through acquisitions or greenfield projects. However, the group maintains a strategic presence in the sector through its 20% stake in Pioneer Cement Limited (PIOC). Pioneer, listed on the Pakistan Stock Exchange, ranks as the seventh-largest cement producer in the country, giving MLCF exposure to another major player without direct expansion.

The update on capacity utilization and cost efficiency comes at a time when Pakistan’s cement industry is experiencing cyclical growth, driven by infrastructure development, housing projects, and seasonal construction activity. Industry analysts note that energy and fuel costs remain the most critical variables for profitability in the sector, making MLCF’s focus on pet coke efficiency and biomass expansion particularly noteworthy.

Cement producers across Pakistan have been grappling with high coal import bills, exchange rate pressures, and power tariffs in recent years. Some companies have accelerated the shift toward alternative fuels, including refuse-derived fuel (RDF), solar energy, and biomass, to cushion themselves from external shocks. MLCF’s reliance on pet coke sets it apart, as most local producers rely more heavily on imported or Afghan coal.

By maintaining stable capacity while optimizing fuel use, MLCF is positioning itself as a cost-efficient player rather than pursuing aggressive capacity growth. Analysts suggest this approach may safeguard margins in a competitive market where overcapacity has historically pressured prices. The company’s focus on operational efficiency, rather than expansion, reflects a cautious but strategic response to current economic conditions.

Industry observers will be watching closely to see if MLCF’s projected gains in capacity utilization and cost savings materialize. If successful, the biomass expansion could set a precedent for other local players seeking to balance profitability with sustainability.

MLCF’s management concluded the briefing by reaffirming its commitment to cost efficiency, responsible energy use, and stable operations, while leveraging its minority stake in Pioneer Cement to maintain broader exposure to industry growth.