Lucky Cement, Pakistan's biggest cement maker and exporter, said on Wednesday it had won a major long-term deal to sell clinker to a Kuwaiti investment firm.
Lucky said in a statement it had signed a memorandum of understanding with Noor Financial Investment Co to supply 500,000 tonnes clinker per year for a period of five years, with the option for an additional 150,000 tonnes annually.
It did not specify how much the deal was worth.
News of the deal pushed up Lucky's share price to Rs127.90 by early afternon, up Rs1.10 from Tuesday's close and off the day's low of Rs125.10.
"This would enable Lucky to park 10 per cent of its current capacity and 8.3 per cent of its post expansion capacity towards exports," said Atif Malik, a dealer of international institutional sales at Js Global Capital Ltd.
Lucky has about an 18 per cent share of the Pakistani cement market and production capacity of 6.55 million tonnes a year, which is expected to increase to 7.8 million tonnes by fiscal year 2009/2010.
Lucky Cement has a plant near the port in the city of Karachi, which analysts said gave it an edge to export to the Middle East.
Clinker is the second last phase in the process of making loose cement. It has to be further grinded and crushed to become loose cement.
"The logic behind exporting clinker and not loose cement is that there will be no moisture content and therefore quality will increase," Malik said.
Pakistani cement manufacturers have capitalised on a shortage in the region and export to India, Afghanistan, Sri Lanka, Africa and the Middle East.
During the July-April period, cement exports jumped 142 per cent to a record 5.95 million tonnes, according to official data.
Lucky said last week it raised $109.3 million through a global depositary receipts (GDRs) issue to be listed on the London Stock Exchange.