… as a result of stiff competition from Oman and Thailand
Mining: Despite a decline in operations, the Druk Satair Corporation Ltd in Samdrupjongkhar is not going to shut down, officials of the mining company said.
The company which mines and exports gypsum has witnessed a significant drop in its sales for the first time. The company’s sales dropped by almost 26 percent. Production has also slowed down by 18 percent at its Khothakpa gypsum mine in Pemagatshel.
The company’s officials said this “worrying trend” began in the fourth quarter of last year and sales have kept declining.
This has become a matter of concern that will have an impact on financial performance, which in turn, could decrease the company’s contribution to the government.
Records show that there is still about 50,000 metric tonnes (MT) of unsold gypsum at the company’s yard in Samdrupjongkhar, which has been accumulating since the fourth quarter of last year.
Records also show that the company had extracted about 200,000MT of gypsum from January to June in 2015. In the same period in 2016, the company extracted only about 180,000MT.
The sales record for the same period shows 248,000MT in 2015 while this year sales were recorded at 185,000MT.
Druk Satair’s CEO, Letho, said the company is facing strong competition in the market.
While there have been fluctuations in gypsum sales and production in the past, the CEO said it has never happened to the current extent.
“We’ve been doing everything possible to increase the sales and are still negotiating with the customers,” Letho said. “We were told that they were getting gypsum at a cheaper cost from Oman and the only option was to reduce the rate.”
The major markets for gypsum are the North Eastern parts of India, West Bengal, eastern Bihar, the south east of Nepal and the western parts of Bangladesh.
Letho said the market for gypsum from Bhutan has declined as many preferred gypsum from Oman because of its quality. Gypsum from Oman has the highest purity level of calcium sulphate and low moisture content.
The market for gypsum in Bangladesh has turned to Thailand for the mineral.
Gypsum is mainly used by cement plants.
“When it comes to boulders used for plaster of Paris, Bhutan has above 95 percent purity while crushed gypsum has only about 87 percent purity. We’re trying to increase the purity level and putting in every effort.”
Letho said almost 65 percent of the total sales of gypsum from Bhutan is exported by rail and the transportation rate keeps increasing while sea freight costs have dropped as a result of the international oil rate declining. As a result, acquiring gypsum by sea is cheaper.
To address the changing market, the company has reduced its selling rate yet its product is still not competitive in the Indian market, Letho said.
“We’ve also put in different cost cutting measures to maintain the profitability margin,” he said.
However, the CEO pointed out that the company has not reached a stage to retrench employees. But if the current scenario continues the company may have to resort to such a move, he said.
Letho added that the company has also not reduced the transportation cost, which involves truckers transporting gypsum from Pemagatshel to Samdrupjongkhar even when 50 percent of the company’s cost is for transportation.
Apart from the competitive market, space constraints at the Khothakpa gypsum mine has also become a major concern for the company.
If not addressed, it may become difficult to mine gypsum post-2018 after the lease term expires, even when the area will still have potential gypsum deposits.
Letho explained that the road to Denchi, which passes right through the mining area, semi-structure settlements and a school has made it difficult to extract gymsum.
“Unless we realign the road and remove all the structures we cannot extract at the optimum level and we’re worried if it will even last until 2016,” the CEO said. “We’re able to extract only about 1,000MT in a day on an average compared to 1,500MT before.”
However, there CEO said the company is working to address the problem and exploring ways to increase sales.
Yangchen C Rinzin | Samdrupjongkhar