KARACHI: Lucky Cement Limited (LUCK) has announced a 3.2 million-tonne-per-annum brownfield expansion at its Karachi plant, with commercial operations targeted to commence by December 2027, taking its total cement production capacity in Pakistan to 18.8 million tonnes per annum.
The expansion and additional renewable energy projects are expected to involve capital expenditure of at least Rs50 billion, according to takeaways from the company’s analyst briefing for the first quarter of FY27, conducted on Thursday.
Management said the company would prioritise domestic demand before directing production towards export markets offering profitable returns. It also indicated that no capacity expansion was envisaged in the northern region in the foreseeable future, citing capacity utilisation of around 50 percent at its Pezu plant.
The new Karachi production line will combine Chinese and European technology, with most components expected to be sourced from China and specialised equipment based on European technology.
Management said cement demand in the southern region was improving, supported by both retail sales and infrastructure-related demand. The region is expected to record growth of 5 to 6 percent, according to the briefing.
Alongside the capacity expansion, Lucky Cement plans to add 22.5 megawatts (MW) of wind power capacity at its Karachi plant. The additional capacity will increase its installed wind power capacity from 28.5MW to 51.3MW.
Renewable energy accounted for 51 percent of the company’s power mix in the first quarter of FY27. Management expects the share to rise to 61 percent following the wind power expansion at the southern plant. The effective grid tariff for both plants remains around Rs30 per unit, it said.
Fuel costs and packaging expenses remained important cost considerations for the company. Average coal costs stood at around Rs40,000 per tonnes during the quarter. The southern plant relies entirely on imported coal, while the northern plant’s fuel mix comprises approximately 30 percent imported coal and 70 percent local coal.
Average coal consumption currently stands at around 135 kilogrammes per tonnes of cement at both plants. Management expects this to decline to approximately 125 kilogrammes per tonnes following the commissioning of the new Karachi plant.
Packaging costs have also increased, with the price per bag rising from around Rs35 to an average of Rs50, according to the briefing.
The company’s average domestic retention price currently stands at approximately Rs17,000 per tonnes, while average retention prices for cement and clinker exports are around USD 48 and USD 38 per tonnes, respectively.
On exports, management identified the United States and African markets as potential destinations for Pakistani cement. It noted that the US remains a significant cement-importing market despite high freight costs.
The briefing also highlighted developments at LECPL (Lucky Electric Power Company Limited), which shifted entirely to locally sourced Thar coal from October 1, 2026. The transition moved the plant to seventh position in the merit order and resulted in record-high dispatches. Management acknowledged some operational heating issues following the fuel transition but expects to resolve them.
Beyond cement, management discussed profitability pressures in the automobile segment, attributing them to intense competition from Chinese players. However, it expressed optimism about a potential improvement, supported by Lucky Motor Company’s partnership with GAC and plans to introduce locally assembled models.
The planned expansion, renewable energy investment and shift towards local Thar coal form key elements of the company’s current operational strategy, while management’s outlook remains linked to domestic cement demand, export opportunities, fuel efficiency and competition in the automobile segment.
Copyright Business Recorder, 2026