Aditya Birla Group to expand cement plant in Lanka

Colombo: India's Aditya Birla group has suggested expanding a defunct cement plant in Sri Lanka's northern Jaffna peninsula to exploit the region's rich deposits of limestone, government officials said. A team from the Birla group is in the island for talks with government officials on several investments.

Sri Lankan officials said Monday the initial proposal submitted by the Birla group suggested raising capacity at the Kankesanturai plant to 3.6 million tonnes a year depending on the availability of reserves of limestone, the basic raw material for cement manufacture.

The proposal did not have any details of financial investment and the Sri Lankan authorities are trying to make arrangements for Birla group experts to visit the site in Jaffna, which is cut off from the mainland as Tamil Tigers control the road to the peninsula.

Government officials said Birla was considering selling in the local market and exporting the surplus cement from Jaffna to southern India where construction activity is expanding owing to India's economic boom.

Sri Lanka's construction minister Rajitha Senaratne has said that the plant would be leased to Birla to run on a build, operate and transfer (BOT) basis.
The KKS plant, which has been defunct for more than 10 years owing to the fighting between Tamil Tigers and government forces, has a designed capacity of 500,000 tonnes.
The plant is now part of a sprawling military complex.

Jaffna has high purity limestone deposits but cement production ceased with the flare up in hostilities.

The deposit has been eyed by other cement players including Holcim, a Swiss firm that operates a 500 million tonnes per annum plant in north-western Puttalam, and Tokyo Cement, a unit of Japan's Mitsui, with a factory in the eastern port of Trincomalee.

Holcim had also toyed with the idea of setting up a one million tonnes a year factory in Kankesanthurai, to cater to India.

But the risks of the war and high insurance costs had so far deterred plans to revive the KKS plant.
'Birla has indicated interest in reactivating the cement plant at KKS,' said a construction ministry official. 'We're negotiating with them to come to some finality.'

The plant needs extensive repairs as it has not been functioning for over 10 years and there's a lot of damage to machinery.'

The Aditya Birla Group is the 11th largest cement producer in the world and the seventh largest in Asia.

A subsidiary, UltraTech Cement Limited, with an annual capacity of 17 million tonnes, has five integrated cement making plants, five grinding units and three terminals — two in India and one in Colmbo, Sri Lanka