Thursday, May 02, 2024
The construction sector's hunger for stone has reached unprecedented levels in recent times, driving a surge in imports and draining the country’s foreign currency reserves. Paradoxically, amidst this boom in demand, state-owned mine Maddhapara Granite Mining Company Limited (MGMCL) is still struggling to sell its stockpiles.
Located in Dinajpur’s Parbatipur Upazila, MGMCL has failed to capitalise on the thriving market. On top of that, it is grappling to sell a mounting heap of stone stored within its premises, highlighting operational inefficiencies and missed opportunities, experts said.
MGMCL authorities have blamed traders' disinterest in buying stones from them for their subpar sales figures. Businesses’ narrative says the same, but it argues that while MGMCL’s stones come at a premium, their quality pales in comparison to the imported ones.
Additionally, logistical challenges further impede the mine's ability to meet the market’s demands effectively, they said.
MGMCL, which has been operational since 2007 and is one of the 13 companies operating under Petrobangla, has a discoloured past riddled with allegations of operational failures and corruption that reportedly led to significant losses in the past.
While the mine saw a small profit in recent years, the core problem of failing to sell the stones persists.
Operational failures
The annual report of MGMCL shows that the mine produced a substantial 10.63 lakh tonnes of stones in FY2022-23, but it only managed to sell 5.71 lakh tonnes. Moreover, officials said that one-third of the stones produced in the previous year remained unsold.
Talking to The Business Post, MGMCL Deputy General Manager (Marketing and Sales) Md Razeeun Nabi attributed the low sales to a lack of interest from local traders. However, he acknowledged that MGMCL's stones are priced higher than the imported ones.
But Nabi justified the high price by citing the deep extraction depth (1,200 feet), which increases production costs. The mine's operating contractor is the private firm Germania Trest Consortium (GTC).
Experts believe that the production costs increased due to the operational failure of MGMCL officials and that is reflected in the price.
A senior official of Petrobangla, requesting anonymity, told The Business Post that the mining was supposed to be carried out entirely by MGMCL officials. However, MGMCL failed and the government hired GTC in 2013 to extract the stones, which is raising production costs.
According to GTC data, 5,500 tonnes of stone are being extracted from the mine daily. But the failure to sell as expected has led accumulation of a massive amount of stones in several yards of the mine.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid, however, recently expressed hope that the company’s sales will improve through various initiatives.
Increased imports
Bangladesh's booming construction industry — with a market value of $1 billion — is devouring stones at an estimated rate of 20 million tonnes every year, according to the estimated data from stone importers. A staggering 90 per cent of this demand is fulfilled through imports.
India, United Arab Emirates, Vietnam and Bhutan are the primary sources of these imported stones, which have found their way into major infrastructure projects like Padma Bridge and Bangabandhu tunnel under Karnaphuli River, as well as highways, economic zones and modern buildings.
According to the authorities, there are four main domestic sources of stones— igneous rocks from MGMCL in Dinajpur, and sedimentary rocks from Sylhet, Panchagarh and Lalmonirhat.
Importers said the root of the problem is the price and quality disparities. MGMCL offers stones at a price range of Tk 1,250 to Tk 3,800 per tonne, depending on size.
However, they claimed that they can get much better quality stones, particularly the highly sought-after black stones from Bhutan, at a similar price point (around Tk 4,600 per tonne for premium black and Tk 3,300 per tonne for regular).
Even Indian stones, considered comparable in quality to MGMCL's offerings, are significantly cheaper, ranging from Tk 2,200 to Tk 2500 per tonne.
Idris Ali, an importer, highlighted the superior quality of Bhutanese stones and the high demand that outstrips supply, even at a similar price to MGMCL's offerings. Another importer, Alamgir Hossain, simply stated that MGMCL's prices are too high and they leave no room for profit.
Hussain Md Zakaria, a distributor for MGMCL, revealed a crucial aspect – while MGMCL claims its stones are top-tier, buyers disagree. The perceived lower quality, coupled with a similar price tag compared to better-rated imports, discourages the traders from purchasing from the domestic mine.
Another major obstacle
MGMCL authorities have claimed that the transportation crisis is also affecting the sales of the stones extracted from the mine.
In 2003, rail connectivity was established between MGMCL and Parbatipur Junction Railway Station for improved transportation of stone. It was supposed to easily supply stones to the development projects by train. But even after two decades, that has not been possible.
Regarding this, MGMCL official Nabi said the stone-carrying trains are not allowed to cross the Bangabandhu Bridge over the Jamuna River. “That’s why it’s impossible to take MGMCL stones to Dhaka or Chittagong. However, most of the development work is done in those areas."
After the railway bridge over the Jamuna is complete, demand for MGMCL stones will increase, he said expressing hope.
