ISLAMABAD: The Supreme Court granted relief to the Punjab-based cement manufacturers by halting enforcement of the Lahore High Court (LHC) verdict that directed them to pay royalties on limestone at six percent of the ex-factory price of cement.
A three-judge bench, headed by Justice Naeem Akhtar Afghan on Wednesday heard case regarding change in rate of royalty of Limestone and Argillaceous Clay for mineral title holders having mining lease under Large Scale Mining for the purpose of cement manufacturing.
The bench directed the Punjab government to file a comprehensive reply within two weeks.
KP govt, cement industry agree to increase cement royalty
The LHC upheld the Punjab government’s revised royalty structure on limestone. The royalty is kept at 6.0 per cent of the ex-factory sale price of cement, replacing the earlier fixed rate of Rs250/ton on mineral in financial year 2024 for the Punjab-based manufacturers.
Punjab-based manufacturers, including Bestway Cement Ltd (BWCL), Maple Leaf Cement Factory Ltd (MLCF), Fauji Cement Company Ltd (FCCL), Pioneer Cement Ltd (PIOC), and DG Khan Cement Company Ltd (DGKC) had contested this change in court.
Khalid Jawed Khan, representing the cement factories, contended that the Punjab government unilaterally increased the royalty enormously, which will enhance the cement price in the Punjab, adding if cement sale from is halted then it would damage the industry.
Industry analysts estimate that the six per cent royalty—based on net-of-tax “retention prices”—translates to Rs1,350–1,400 per tonne, nearly Rs1,000 higher than the fixed-rate royalty of Rs350 per tonne recently adopted by Khyber Pakhtunkhwa.
The issue has broader implications for the 79-million-tonne cement industry, which is already divided into northern and southern blocs with different cost dynamics.
With Punjab’s policy now legally endorsed by the LHC, analysts fear a breakdown of price coordination between provinces—historically a key feature of the industry’s informal price stability.
This disparity has effectively handed Khyber Pakhtunkhwa-based producers a structural cost advantage in Punjab’s cement market, enabling them to undercut local players by Rs25–30 per bag in competitive urban centres such as Lahore and Rawalpindi.
Copyright Business Recorder, 2025
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