Pakistan Marble and Granite Strategic Working Group Strategic Plan
2006

Contents
Acronyms 1. Executive Summary 2. Profile and Assessment of Industry Competitiveness 3. Vision and Strategy for the Marble and Granite Industry 4. Description of Strategic Initiatives 4.1. Raise Value Chain Productivity 4.2. Improve Industry and Market Information 4.3. Strengthening Policies for Increased Productivity and Competitiveness 4.4. Invest in Workforce Development 4.5. Strengthen Industry Organization and Supporting Institutions 4.6. Special Initiative: Assist in Rehabilitation of Earthquake affected Areas 5. Prioritization and Sequencing of Initiatives 6. Expected Impact and Conclusion Appendix 1. Overall Summary of Industry Competitiveness: Porter Diamond 2. Industry Definition and Market Segmentation 3. Industry Statistics 4. Social Value and Role in Poverty Reduction 5. Market Analysis 6. Competitive Position of Domestic and Regional Competitors 7. Cluster Maps 26 28 33 35 36 38 40 4 6 10 14 16 16 19 22 23 24 25

PISDAC – USAID Pakistan JE Austin Associates, Inc.

2

Pakistan Marble and Granite Strategic Working Group Strategic Plan
2006

Acronyms
CFTC: FANA: FATA: GOP: ML: NWFP: PL: PCSIR: PISDAC: PSDC: SRO: SWOG: TUSDEC: UET: Common Facility Training Centers Federally Administered Northern Areas Federally Administered Tribal Areas Government of Pakistan Mining License North West Frontier Province Prospecting License Pakistan Council Scientific and Industrial Research Pakistan Initiative for Strategic Development and Competitiveness Pakistan Stone Development Company Statutory Regulatory Order Strategic Working Group Technology Up-gradation and Skill Development Company University of Engineering & Technology

PISDAC – USAID Pakistan JE Austin Associates, Inc.

3

Pakistan Marble and Granite Strategic Working Group Strategic Plan
2006

1. Executive Summary
Pakistan has enormous reserves of marble and granite. Currently over 40 types of natural color marble are known to be mined, and initial estimates indicate 160 million tons of marble reserves across Pakistan and 414 million tons of granite reserves in the Northern Areas alone, with more reserves spread over NWFP, Balochistan, and Sindh. In 2004, nearly 2000 quarries and 1500 processors produced an estimated 100 million square feet of marble and granite, of which 97% was sold domestically earning a total of Rs. 1.7 billion. Exports were just 3% of total sales but earned Rs. 1.34billion, over 25 times the unit value of domestic sales. The Marble and Granite Industry in Pakistan is severely underdeveloped. At the quarrying level, productivity suffers from indiscriminate blasting, poor quarrying techniques and lack of infrastructure for handling and transportation. The processing industry suffers from low capacity utilization, lack of modern technology and skills and limited value addition. Even in the domestic market, the final product is uncompetitive compared to lower priced, higher quality imports. There is significant wastage at every step of the value chain. Although the industry currently represents a small fraction of the GDP and less than 1% of current exports, the potential to raise exports and foreign exchange, and deliver value to rural areas is immediate and significant. It is in this context that the Pakistan Initiative for Strategic Development and Competitiveness Project was launched by the United States Agency for International Development. The project is implemented by J.E. Austin, a U.S. management consulting company working in partnership with Pakistan’s Small and Medium Enterprise Development Authority. As part of the initiative, a group of committed industry stakeholders agreed to form a Strategy Working Group (SWOG) to address how the industry could reposition itself through a better strategy. The SWOG has developed a strategy shared and agreed to by the private sector and the Government of Pakistan. The SWOG itself has become a recognized private sector led platform on which all the key players in the value chain, including the public sector have come together. The Strategy focuses on upgrading the entire value chain through the following initiatives: Raise Value Chain Productivity Establish 10 model quarries to increase the supply and improve the quality of stone; Identify gaps in supporting services (transportation, financing) and facilitate cluster development and co-investment in shared facilities and services through model quarries. Improve Industry and Market Information Compile comprehensive marketing database on types and specification of stone supply to develop product information for international buyers. Strengthen Policies for Increased Productivity and Competitiveness Strengthen security of land leasing contracts: work with high-value mining sectors (gems, rare earth metals) to develop regulation and enforcement framework for structuring long-term leasing contracts; Gain the highest industry status for the marble and granite industry;
PISDAC – USAID Pakistan JE Austin Associates, Inc. 4

allied industries will grow leading to greater employment and income opportunities. Establish Common Facility Training Centers (CFTC) for model processing and training to serve as a platform for upgrading skills and technology across the supply chain and support the development of value-added activities. The main body of this document outlines the strategy and specific initiatives in more detail. Improve quality of supply across the value chain. As marble and granite clusters develop.44 billion to 161. supported by an industry profile and key supporting data.44 billion. leading to higher income levels. FATA and Balochistan are the main marble and granite producing areas of Pakistan. Develop mining specific financial services.6 billion and exports will increase from USD 23 million to USD 2. Processing clusters will move closer to quarrying which will lead to rural development.Balakot regions to rehabilitate the local population. With the implementation of the strategy. Skill up-gradation will also create better quality jobs in rural areas reducing the trend of urbanization. These are also some of least developed regions. Strengthen Industry Organization and Supporting Institutions Establish Pakistan Stone Development Company to co-ordinate implementation of strategic initiatives and provide support to the sector. A more detailed industry analysis is appended to this document for reference. wastage will reduce from the current level of 85 percent to 57 percent. NWFP. Assist in Rehabilitation of earthquake affected areas Establish 10 mechanized “model” quarries for the Mansehra . 5 . Develop world-class valuation (prospecting and planning) expertise in Pakistan to support future investment in the sector. Development of the Marble and Granite sector will lead to higher income opportunities in these areas. Work with government to increase level of local stone usage in government buildings. total revenue will increase form PKR 2. PISDAC – USAID Pakistan JE Austin Associates.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Phase in ban on indiscriminate blasting. Training of labor will increase labor productivity. the SWOG expects that by 2015. Inc. Invest in Workforce Development Deliver on-site practical training in modern quarrying practices and technology through model quarry training program.

com remaining half is exported. A value chain analysis recently conducted by the industry shows that 73 percent of the Tons/Quarry /Mnth potential volume is wasted at the extraction 2. productivity suffers from indiscriminate blasting. Balochistan.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 2.7 billion. there is little doubt that Pakistan contains enormous reserves of marble and granite. Marble and granite is a young industry for Pakistan. so only the Source: www. and deliver value to rural areas is immediate and significant.04 billion in value sold in 2004 2. Pakistan Marble & Granite Sector 100 million sq ft produced in 2004 Rs. The processing industry suffers from low capacity utilization and limited value addition. Stone that is extracted 1.000 people employed Over 40 types of natural color Marble 85% wastage across the value chain In 2004.stoneworld.250 and transportation stage due to 2. representing a small fraction of GDP and less than 1% of current exports. Three percent of the slabs are exported and the remaining slabs are consumed by the local market. the process of cutting square blocks Spain Italy Pakistan still leads to 50 percent wastage. Inc.000 and in irregular shapes.500 through indiscriminate blasting is inconsistent 1. Out of the 97 percent that is locally processed. 1. of which 97% was sold domestically earning a total of Rs. whereas 2 percent of the tiles are exported and Quarry Productivity: Average Monthly Production per Quarry PISDAC – USAID Pakistan JE Austin Associates.500 2. Of this. 6 . 44% of value) 2000+ quarries concentrated in western and northern rural areas 70. Profile and Assessment of Industry Competitiveness The marble and granite industry is poised to catalyze economic growth in remote areas of Pakistan not yet benefiting from the country’s current economic growth cycle. However. and initial estimates indicate 160 million tons of marble reserves across Pakistan and 414 million tons of granite reserves in the Northern Areas alone. 1. 0 However. Yet. the final product is uncompetitive compared to lower priced. the Marble and Granite Industry in Pakistan is severely underdeveloped. Currently over 40 types of natural color marble are known to be mined. Exports were just 3% of total sales but earned Rs.000 underdeveloped quarrying methods and 2. nearly 2000 quarries and 1500 processors produced an estimated 100 million square feet of marble and granite. 1. higher quality imports.1m (Rs. poor quarrying techniques and lack of infrastructure for handling and transportation. Even on the domestic market. At the quarrying level. with more reserves spread over NWFP.5% of tonnage exported earning $23. 3 percent is cut 425 500 into square blocks for the purpose of exporting. there is an additional wastage of 45 percent. the potential to raise exports and foreign exchange. While a comprehensive survey of reserves has not yet occurred. 5 percent is converted into slabs and the remaining 50 percent into tiles. There is significant wastage at every step of the value chain.34billion. over 25 times the unit value of domestic sales.34 bn. and Sindh. 3.000 antiquated technology.

The current value chain is illustrated in the diagram below.01 Million 5% Local Processing Slabs 3% Local $5. 7 PISDAC – USAID Pakistan JE Austin Associates. . Center of Excellence in Geology (2004).Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 the remaining 98 percent is consumed by the local market.9 Million 50% 45% 50% 73% Waste 85 % Net Source: Federal Bureau of Statistics.19 Million 2% 3% Square Blocks Export $16.6 Million 97% 97% 50% 27% Tiles Blocks (irregular) Local $23. Export $1.7 Million 98% Net Extracted Export $5. The cumulative wastage is 85 %1. Director General Mines & Minerals. Inc. Industry 1 Study: University of Peshawar.

processors produce irregular slabs and transport them to a second set of processors in Peshawar. For example. Utilization of these units is barely half of their installed capacity due to inappropriate raw material and lack of technical skill. The risk of having the institutional rug pulled out from underneath them means that investors and quarry managers currently have no incentive to invest in the long-term productivity of their businesses and are forced to adopt a short-run mindset. quarrying techniques in Pakistani quarries are primitive. as illustrated above. and are unable to capture the total value of the products they produce. Initially. low quality. cross cutting. In the majority of the mines basic machinery and equipment like compressors. All quarries are then leased by the provincial government to investors and quarry managers. leases can and do get canceled without notice and passed to a new investor. but undermining the long run value of the quarry for both the business and the economy. Uncontrolled blasting is a common practice. but also to low production at mines. The FATA marble and granite clusters provide a useful illustration of the structure of the industry. Across the value chain. there are still very few processing units with a complete range of machinery and equipment capable of processing stone in accordance with international standards. These blocks then need to be cut into square blocks or into useable pieces for processing. This not only leads to colossal wastage. The mid-seventies brought imported plants from Italy. Processing Industry The processing industry for dimensional stones in Pakistan started to develop in the late sixties with the housing construction boom. much of the demand was for low cost. adding additional cost and wastage to the chain. there is no guarantee or predictable conditions under which an investor can be assured that they will be able to generate expected returns on an investment. geological surveys. However. Lahore. They are then sold either in the market or to processors that use them to make cut-to-size tiles. Inc. due to lack of up-to-date equipment and the skills to use such equipment they have no facility or ability to: PISDAC – USAID Pakistan JE Austin Associates. and Islamabad at low prices/sq ft. At the time.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Quarrying Industry As mentioned above. The 27% of stone that is transferred to processors is all in the form of irregular blocks. There are only about 25-30 units which all have appropriate machinery to do one of the sequential activities: cutting slabs. locally processed stone produced by local processing equipment. About 2% of the processing sites are using gang saws to produce irregular slabs because the blocks extracted themselves are irregular. 8 . There is also a lack of education towards the importance of good prospecting and practices such as topographical mapping. Proper quarry management and investment is constrained across much of the country due to lack of formal property rights and contract enforcement. Land is owned and regulated by the provincial governments. Most quarries operate under a “blast and run” strategy. environmental management and physical testing of the stone. maximizing the short-term value of the quarry under the risk that their lease could be canceled at any point. processors lacks advanced stone working skills. Karachi. At present. the plants were second generation machines that were barely capable of cutting slabs and tiles at high speed and were operated by inexperienced technicians with limited quality consideration. Uncontrolled blasting destroys value throughout the value chain. polishing. Today. As a result. drill sets and lifters are not available.

2 Chamfering a tile is smoothing its corners and all its sides. and Chamfer 2 the polished cut to size tile. Inc. Quarry managers and processors alike lack knowledge of the properties of locally available stone that would enable them to decide the best and most appropriate uses of the stone. . Appropriately size tiles into 12x12x1 inch tiles to 12x12x1/2 inch tiles as demanded by the market.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Carry out quality polishing of stone slabs or other products they produce. there no are training opportunities and/or facilities for people to learn modern dimensional stone processing techniques. The absence of the above-mentioned capacity and the requisite equipment prevents quality processing and results in a lower market value for the stone produced. 9 PISDAC – USAID Pakistan JE Austin Associates. Furthermore. As a result. processors at FATA lose 30% additional income that could be earned through proper processing of the stone.

By 2015 it has been estimated that the industry can achieve benchmarked wastage levels resulting in higher capacity utilization and improved quality. Pakistan. a mere $23 million in exports. 10 PISDAC – USAID Pakistan JE Austin Associates.” and then investing in the more advanced processing capabilities to build on the upgraded raw materials. but for now Pakistan is only able to capture a very small fraction of the market and its growth. The marble and granite industry has great potential in the export market which has grown to a massive $22 billion3 in 2003 and is still growing further at over 8% annually.” The trickle down effects throughout the value chain of this one achievement will be transformational. to date has only managed to capture a very small fraction. weak supply chain and nonexistent marketing of the local stone.stoneworld. of the total international market. handicrafts. the industry’s vision is to count itself among the socially responsible and globally competitive dimensional stone industries of the world. According to Industry estimates. The Industry is aligned with low end markets and has failed to capitalize on the unique and high quality dimensional stone of the country. the Pakistan Marble and Granite industry is focused on achieving one goal: extraction of “Square Blocks. mainly comprising of slabs. Vision and Strategy for the Marble and Granite Industry In the short-run. Currently the industry is unable to compete in high end international markets due to poor quality raw material. The industry expects a major increase in productivity and profitability throughout the value chain. Inc.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 3. In the long run. mosaics and other value added products. .44 billion. 3 www. Transforming the industry into a globally competitive and socially responsible player will require an overhaul of the value chain starting “at square one. the implementation of the strategy would result in a primarily export oriented Industry focusing on high end markets.com. The domestic and international markets are both growing. “World Stone Industry Data”. The projected exports by 2015 are estimated at $2. poor processing capacity.

Inc.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Minimum Minimum Technology Technology Standards Standards 68% Local Processing Slabs Export $1. Industry data regarding stone properties and appropriate applications is non-existent. financing) and facilitate cluster development and co-investment in shared facilities and services through model quarries. Improve Industry and Market Information Investments in productivity enhancement must be supported by concerted efforts in collecting reliable industry and market information.4 Million Export $66 Million 55% Blocks Squared 4% Handicrafts & Finished Products 30% 30% 70% Net Extracted 10% Export $586 Million 90% Local 10% $8. The demand is currently not driven by the consumer. o Setting a precedent for a secure leasing and regulatory environment. Supply is PISDAC – USAID Pakistan JE Austin Associates.20 Million Export $100 Million Blocks Exported 5% 20% Waste 70% 45% 30% 57% Net Source: SWOG projections The following strategic initiatives have been identified to achieve this vision: Raise Value Chain Productivity The first step in transforming the marble and granite industry is to upgrade the supply of stone through better quarrying practices and improved support infrastructure. o Catalyzing the development of higher value supporting services. Identify gaps in supporting services (transportation.68 Billion 70% Local $240 Million 90% 8% Tiles Local $9. o Serving as a training hub for the quarrying industry. 11 . This will involve introducing new technologies and techniques and facilitating the development of supporting facilities and services. The core initiatives identified to raise productivity are as follows: Establish 10 model quarries to increase the supply and improve the quality of stone by: o Demonstrating international best practice quarrying technology and processes.

There are currently inadequate training opportunities for both quarrying and processing and limited knowledge of modern practices and technology. Quarry leases are often revoked due to inconsistent political conditions and frequent reshuffling of the bureaucracy.). There is also a lack of prospecting and planning expertise in Pakistan. CE. UET Peshawar. the industry recommends the following reforms: Strengthen security of land leasing contracts: work with high-value mining sectors (gems. Surface rent agreements between the lease owner and the local inhabitants are loosely defined and are not regulated by the mineral departments. In order to ensure a more enabling policy environment. Engineering University Khuzdar and NED Karachi) to develop 10 week certificate courses in quarrying and prospecting. o Developing quality control processes at all stages of quarrying and processing. Invest in Workforce Development A skilled. the industry plans to undertake the following initiative: Compile a comprehensive marketing database on types and specification of stone supply to develop product information for international buyers by: o Contracting geological institutes to conduct testing on stone specifications.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 dependent entirely on what is extracted. etc. Gain the highest industry status for the granite and marble industry. Improve quality of supply across the value chain by: o Establishing quarry and equipment collateralization framework to facilitate upgrading of quarrying technology to meet standards. Establish Common Facility Training Centers (CFTC) for model processing and training to be a platform for upgrading skills and technology across the supply chain and support the development of value-added activities by: PISDAC – USAID Pakistan JE Austin Associates. Strengthen Policies for Increased Productivity and Competitiveness The current regulatory mineral policy is not implemented properly. o Collaborating for funding of pool of experts for model quarry training program (EPB. o Developing region specific product database/marketing materials on stone specifications. specialized workforce is essential for raising the productivity and competitiveness of the marble and granite sector in the long run. Peshawar University. In an effort to improve alignment between stone supply and market demand. Establish minimum quarrying standards by phasing in a ban on indiscriminate blasting.g. EU. The industry has identified the following initiatives to support workforce development: Deliver on-site practical training in modern quarrying practices and technology through model quarry training program by: o “Training trainers” by integrating team of experts with local institutions & experts for onsite practical training. There is lack of market research on international demand trends and different appropriate usage of stones. 12 . o Working with training institutions (e. Inc. rare earth metals) to develop regulation and enforcement framework for structuring long-term leasing contracts. Work with government to increase level of local stone usage in government buildings. rather than what the market demands.

inclusive platform would ensure implementation and continued up-dation of the Marble and Granite strategy. Inc. In order to revitalize these quarries and provide support to the government’s rehabilitation program. To strengthen industry organization and supporting infrastructure. Develop mining specific financial services. most of the quarries in Mansehra and Balakot have closed down. o Conducting crafts training in handicrafts and mosaics for small-scale artisans. o Providing shared facility for processors to learn and use value-add technologies.Balakot regions to rehabilitate the local population. research and technical support to the sector. 2005. Develop world-class valuation (prospecting and planning) expertise in Pakistan to support future investment in the sector.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 o Training the workforce in value added activities. PISDAC – USAID Pakistan JE Austin Associates. provide marketing. the industry plans to: Establish Pakistan Stone Development Company to co-ordinate implementation of strategic initiatives and provide support to the sector. 13 . Assist in Rehabilitation of earthquake affected areas Due to the earthquake on October 8. the following initiative has been proposed: Establish 10 mechanized “model” quarries for the Mansehra . and continue the private-public sector dialogue to ensure policy reforms. Strengthen Industry Organization and Supporting Institutions A formal.

PISDAC – USAID Pakistan JE Austin Associates. Description of Strategic Initiatives 4. Ability to execute. Catalyzing the development of higher value supporting services. The SWOG. in collaboration with the government will establish 10 model quarries4 to increase the supply and improve the quality of stone by: Demonstrating international best practice quarrying technology and processes. value . At most one quarry in each cluster and at least two quarries in each province. Punjab (1).Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 4. Balochistan (3). Reserve estimation through core drilling and contour mapping. Marketability of the Stone locally and Internationally (Material Testing). Technical Credibility of the party (Financial. Structure of the deposit (Structural/Geological Mapping). and catalyze the supply and quality of stone. Sindh (2). square blocks that can then be cut and processed with minimum wastage. 14 . International best practice processes and technology extract stone in sized. Credit worthiness. maximizing value across the value chain. NWFP (2). Infrastructure availability.1 Raise Value Chain Productivity Establish Model Quarries The economic and social value in the stone industry hinges on the efficiency of extraction. quarries in Pakistan are still using older indiscriminate blasting processes that result in abnormal shapes and over 85% wastage. Skills). Despite clear profit potential that is present with the application of modern technology and quarrying techniques. These “square blocks” reduce wastage across the entire value chain by over 50%. Quality and application of material. Inc. Willingness to commit own funds. led by a selection committee will solicit proposals from current quarries outlining why their quarry should be considered along with stone samples that have already been tested by an independent testing authority. The initial short-listing will involve: Importance of cluster: jobs. Title Deed / Contract. Candidates will then be short-listed based on transparent criteria forwarded to the Government of Pakistan as part of a co-funding proposal. Setting a precedent for a secure leasing and regulatory environment. Northern Areas (1). volume. The industry. 4 Expected location of quarries: FATA (1). Status of the present quarrying operation. Serving as a training hub for the quarrying industry. In order to demonstrate the wasted value of current quarry practices. 10 Model quarries will be established in the main quarrying regions according to internationally benchmarked standards and technology.

Quarry development will be based on this cultivation plan. Quarry investment is expected to be co-financed by the government and private financing. Exports will go up considerably due to more consistent supply and quality of stone. each quarry will be assessed on the investment needed for upgrading quarrying. the model quarries will become a center for training and workforce development. The cluster will upgrade itself over time with the upgraded mechanized quarries controlling wastage considerably. All the physical and material testing (in accordance with internationally recognized standards) will be paid for by the quarries themselves and can be carried out by institutions such as National Center of Excellence. the projected value of square blocks. The SWOG members will meet with representatives of key related and supporting industries including transportation and financial services to communicate the needs of the marble and granite 5 6 World benchmarked value. Once initial staff is trained and the quarry is operational. The waste generated from new quarrying practices will be utilized in value added handicrafts.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Once the quarries are short-listed. handling. Inc. rough boulders fetch an average of Rs. The detrimental impact on the environment due to indiscriminate blasting will be mitigated. and transportation technology. a quarry cultivation plan will be developed by an expert using geological and topographical mapping data for each selected quarry. The 10 Model quarries will train 12 master trainers in the first year and at least 100 skilled quarry masters. The catalytic effect of the model quarry within a cluster will encourage more investment in machinery and better prospecting.4000/ton6. Greater value per metric ton of stone will be achieved in the local market. Currently. 2005. Materials Testing Lab. The skill level of the workforce will be upgraded and the average income of a quarry worker will increase by almost a 100%. implemented by a quarry master. 15 PISDAC – USAID Pakistan JE Austin Associates. Industry estimates. Model quarries will engage in extracting square blocks through minimum wastage of stone which will in turn result in lower wastage at the processing stage (less than half). the SWOG will identify gaps in supporting services and facilitate cluster development and co-investment in shared facilities and services. Pakistan Center for Scientific and Industrial Research and the Geological Survey of Pakistan. quarry technicians and other skilled workforce by the end of second year. The Model Quarries are going to be set up within major quarrying clusters to demonstrate best practices. and financial services are significantly lacking across Pakistan for a modern quarry industry. Once the model quarries are selected. Facilitate Cluster Development Supporting services in transportation. In coordination with the selected model quarries. handling. . bringing it down from a staggering 73% due to indiscriminate blasting to 45%5. Quarries co-located in specific regions that could be working together and sharing overhead costs are not currently doing so. Quarries are not operationally well-aligned or integrated with downstream processors and exporters and do not understand their needs in raising the value of their products.1200/ton as opposed to Rs.

Expanding export-driven quarrying and processing will require detailed. verified knowledge of the types and specifications of stones. The international market demands detailed and tested specifications. 16 . This database can then be used to compile product information to attract foreign investors and international buyers. A heightened understanding of processors’ needs by the quarrying sector will lead to higher value products. photographs and samples of stone of which there is no systematic database in Pakistan. leading to an increase in domestic and international sales. Through the selection requirement for model quarry stone testing. 4. machinery spare parts shops. Inc. quarry managers lease the quarry from local officials with little security that the lease will not be canceled without justification.3 Strengthen Policies for Increased Productivity and Competitiveness Strengthen Leasing Contract and Site Security For most quarries in Pakistan. the SWOG will begin to compile a comprehensive marketing database on types and specification of stone available in Pakistan. tyre shops. providing employment opportunities to the local rural population. Since the industry is a weight losing one. Cluster development will also result in higher productivity through better management of the supply chain and stronger linkages and alignment within the value chain. The initiative will lead to an increase in exports and local sales as the industry will have greater knowledge of the market. the local government can cancel leases or transfer leases from one party to another PISDAC – USAID Pakistan JE Austin Associates. weighing stations. it is not uncommon for limestone to be mistaken for marble. Geological institutes will be contracted to expand the database to include quarries outside the models. Knowledge of product applications will allow the industry to market their products more effectively and enable them to get higher value. The SWOG team will work with the supporting industries to understand the constraints to their ability to offer services to marble and granite and work with the government to ease such constraints.2 Improve Industry and Market Information Introduce Stone Testing and Specification Due to lack of knowledge of stone properties in Pakistan. Under the fragile contractual relationships. 4. there is limited quarry or industry-wide knowledge of the types and specifications of stones mined and processed in Pakistan. There is also limited expertise to carry out the necessary tests. Across quarries and processing plants. The result will be greater employment and income generation leading to overall rural development. This knowledge will also encourage investment in developing value added products that are demanded by international buyers. emergence of supporting infrastructure and businesses will encourage processing facilities to move closer to the quarries.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 industry and outline how these industries can expand and target services to marble and granite. fuel pumps and road side hotels will act as an incentive for investment and growth. Overall capacity building in terms of basic infrastructure. roads. utilities and supporting services such as mechanics.

30 million per quarry in added investment is expected. Industry status type ‘A’ is necessary for interfacing with the government and raising and resolving regulatory barriers and business environment constraints. 7 Such consultative bodies already exist in NWFP and have proven to be successful. This ownership structure undermines the incentives for the landowner and lease owner to seek the most profitable use of the quarry over time. This incentive structure results in low value blasting where the quarry manager does not face significant risk of lost investment if his lease is canceled. In addition. 17 PISDAC – USAID Pakistan JE Austin Associates. The model quarry contracts. in Balochistan lease security is still a major constraint to investment. Due to secure leasing contracts. An average of Rs.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 at any given time. This again creates a disincentive for profit-maximizing investments. However. Any concerns must be addressed prior to investment. Incentives under status “A” include export rebates and fiscal incentives. The SWOG plans to review the Mining Concession Rules and propose regulatory reforms and an enforcement framework for structuring long-term leasing contracts. quarry owners will invest in quarry machinery. Inc. These security issues are affecting all sectors of the mining industry and will require collaboration and coordination across the entire mining sector for complete resolution. marble and granite cannot wait for the institutional environment to be resolved. Once a quarry is known to be valuable and profitable. Each model quarry in conjunction with the local authority will be required to submit an agreed contract and security plan. without prior notification. FANA. This will eventually result in a more defined lease regulatory framework. informal and formal rent-seeking activity and site sabotage becomes a risk. . Leasing and site security are cross-sector constraints that affect all businesses operating in FATA. However. security plans and their implementation will set a precedent for future quarry investments. The SWOG also recommends forming community consultative bodies to resolve lease agreement disputes and surface rent issues7. and will in turn lead to greater security and increased local and foreign investment and joint ventures. Resolution of these fundamental issues must happen before large scale economic development can occur in these regions. Propose Formal Industry Status The marble and granite cluster is currently recognized by the government as a type ‘C’ industry. NA) this issue has been resolved by installing an independent governing body to ensure that leasing contracts are upheld. The SWOG will lobby with the Government of Pakistan and the concerned regulatory departments. The establishment of the model quarries offers a unique opportunity to reset ownership structures and incentives to ensure the full value of the quarry is extracted with as little wastage as possible. Secure investments will also encourage greater investment in infrastructure by the private and public sector. These plans will then be reviewed by the government and financing agents for enforceability. Secure model quarry leasing contracts and their implementation will encourage strengthening of lease regulations. Sindh and Balochistan. In some areas (NWFP. Leasing and site security are necessary prerequisites for the establishment of model quarries and any additional foreign investment that is promised. site security and law enforcement in some key areas is weak for profitable quarries using modern technology.

It will also lead to an increase in exports. The SWOG will liaise with relevant government authorities to introduce minimum quarrying standards. higher value raw material leading to an increase in productivity and consequently in exports and local sales. The use of controlled blasting techniques will reduce stone wastage. the industry must adopt and enforce internationally acceptable quality and environmental standards.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 The SWOG will liaise with the government of Pakistan to attain industry status “A”. and mitigate environmental damage. Quality control across the value chain will lead to better quality products. International competitors already have in place stringent standards that are effectively regulated by both the industry and government. The phasing out of hazardous dynamite blasting will improve the overall working conditions and safety of quarry workers. Inc. Damaged remaining deposits. Phase in Ban on Indiscriminate Blasting Indiscriminate blasting is literally shattering the value of the marble and granite industry. thereby encouraging more investment in the industry. PISDAC – USAID Pakistan JE Austin Associates. there are no environmental standards to regulate and limit the negative impact of quarrying and processing on the environment. Currently. but an enforceable ban is needed as well. 18 . In addition to 73 percent wastage. The SWOG proposes to work with the government to phase in a ban on indiscriminate blasting in parallel with training and technology transfer activities for upgrading the industry. there is no law against this practice. Introduce Standards to Increase Quality Currently no industry standards exist to ensure the quality of exports. fractured and poor quality raw material. it results in the following: Damaged extracted stone resulting in irregular. Shortened quarry life due to build-up of waste. with eventually a complete ban on the practice. The SWOG recommends that the government should initially discourage indiscriminate blasting through incentives. This will facilitate bank financing. To integrate operations into world markets. In addition. It is proposed that a quality control organization will be established consisting of private and public sector representatives with the capacity to verify product quality and issue quality certificates. The board will be affiliated with an internationally accredited body to ensure that certification is internationally recognized. The model quarries will provide the incentive for quarries to change their operations. The SWOG also plans to develop quality control standards for processing. Controlled blasting techniques through certified individuals and companies will eventually replace the indiscriminate use of dynamite coupled with a minimum level of investment in quarry machinery. increase quarry life. It will provide the industry with access to high-end market segments. and result in better quality. and consequently higher domestic sales and exports.

An integrated team of international experts and local institutions and experts will provide on-site practical training. The social impact is going to be reflected in employment generation. Establish Common Facility Training Centers Across the value chain. Karachi) to develop 10 week certificate courses in quarrying and prospecting. For example. Engineering University. Appropriately size tiles into 12x12x1 inch tiles to 12x12x1/2 inch tiles as demanded by the market. the Centre of Excellence at the University of Peshawar. UET Peshawar. PISDAC – USAID Pakistan JE Austin Associates. The SWOG will collaborate with institutions such as EPB/TDA. each model quarry will serve as an onsite training facility. due to lack of up-to-date equipment and the skills to use to such equipment they have no facility or ability to: Carry out quality polishing of stone slabs or other products they produce.4 Invest in Workforce Development Provide Technical Assistance and On-site Quarrying Training There is currently no skilled expertise available in Pakistan that is fully trained to operate the modern machinery proposed for use in the model quarries. 19 . Inc. Planned productivity and quality enhancements will position the marble and granite industry to increase the level of local stone usage in government buildings. As part of the initiative. processors lack advanced stone working skills and are unable to capture the total value of the products they produce. and Chamfer the polished cut to size tile. EU etc. better paying jobs and overall improved standard of living for the local workforce. to provide funding for the model quarry development and training program. the industry will lobby with the government to introduce a policy which encourages use of local products in government buildings. As a result. Once the supply chain is developed enough to produce quality products. The model quarries will work with training institutions (Peshawar University. and in some cases using imported materials. CE. Average monthly income will increase by over a 100% while the initiative will directly train batches of 40-50 skilled individuals twice a year. This will be an important first step in repositioning the industry with local construction companies and preparing processors for future exports. Khuzdar and NED Engineering University.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Increase Use of Local Stone in Government Buildings Government construction represents an important share of the domestic construction market. UET Peshawar. Current construction is using only small supplies of local marble and granite. The initiative will result in higher skill level and workforce development essential for sustainable productivity growth. International experts will also build the capacity of local trainers. Engineering University Khuzdar and NED Karachi will develop ten week certificate courses in quarrying and prospecting. 4.

the CFTC will seek local Government funding for its training operations to be phased out with three to five years as the CFTC production and sales operations grow and are formed into a separate “business profit center” to help finance the CFTC’s operations. These will include: Checking for the overall quality of the products and improve packaging for the market. Once operational. The training aspect of the CFTC will have two major components: Training in processing of stone to produce better quality products for all the current product lines such as tiles. processors lose 30% additional income that could be earned through proper processing of the stone. and introduce new products based on new skills development and market demand. In that case. Training in manufacturing of household handicrafts and mosaics. Developing improved sales. the CFTCs will provide skills based/vocational training that will train processors. and the additional CFTCs to be established once the FATA CFTC is operational. their workers. and improving skills so that the local industry can effectively use upgraded technologies that enable an expansion of product lines. Inc. mosaics and other products developed by the CFTC. PISDAC – USAID Pakistan JE Austin Associates.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 The absence of the above-mentioned capacity and the requisite equipment prevents quality processing and results in a lower market value for the stone produced. The CFTC will be designed to be partially selfsufficient in its second year of operation and almost if not fully self-sufficient by year three based on profit sharing with producers resulting from the production and sales of products. The prioritized FATA CFTC. are intended to overcome the current deficit in training and processing skills. 20 . Selecting and purchasing stone waste and blocks for processing into handicrafts. In addition to the above-mentioned components. The CFTC will have a demonstration department which will sell the products manufactured at the CFTC and by those processors using its facilities. and new entrants to improve the processing of stone. there no are training opportunities and/or facilities for people to learn modern dimensional stone processing techniques. the income generated from sales and fees may not reach a level that enables the CFTC to be 100% self reliant with respect to its costs. Quarry managers and processors alike lack knowledge of the properties of locally available stone that would enable them to decide the best and most appropriate uses of the stone. The CFTC will provide common manufacturing facilities with the latest equipment to be availed by processors. The CFTCs will assist the local industry to capture the value that the area loses due to unavailability of a properly equipped and managed model processing and training facility. This will allow them to produce higher quality product without substantial investments. improving the quality of current products. purchase and services skills. the CFTC will also train processors and workers on basic management and business development skills. The CFTC will demonstrate use of upgraded and new equipment and train the local industry to use up to date stone processing techniques and practices. Realistically. As a result. Furthermore. fees from use of its equipment and from its training courses. increase their sales and thereby encourage them to invest in up-grading their units.

Use of stone waste to produce high value products like handicrafts will engage more people in the sector. Training of labor to use different processing machines will increase labor productivity. Environmental Impact The CFTC by using benchmarked technology and skill will result in better capacity utilization and lower levels of wastage at the processing site. Part of the waste stone will be utilized in handicrafts and mosaics. Workers would learn about the stone properties found in FATA and thus they will have a better idea of how to mine it. which will mitigate the harmful effect to the environment. Higher traffic of trucks on roads will lead to establishment of small businesses like restaurants for truck drivers and utility shops providing more employment opportunities. FATA can also increase the production of decorative tiles by engaging more women in the sector that specializes in making mosaics. production and higher wages as a result of higher demand and improved quality products. for the first CFTC planned in FATA targeted results are outlined below: Skill development. CFTC will also practice and demonstrate proper handling of the slurry produced during processing. Proper quarrying and increased processing at FATA will also have an expansionary effect on the income of local processors and quarry owners. Establishment of the CFTC would lead to an increase in the skill and income levels of workers.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 The CFTC will result in the following: Better quality jobs in terms of working conditions and income resulting from improved skills imparted by the training. thereby increasing employment in the region. These women use small cubical pieces of waste stones to join them to make decorative tiles. reducing overall wastage levels. Inc. the project will also help women to contribute to the productivity of the sector and to their household income. PISDAC – USAID Pakistan JE Austin Associates. Infrastructure Development Higher income and increased investment will have a positive impact on infrastructure development of the quarrying areas. The mosaic tiles have a high demand both locally and internationally. Reduction in quarrying waste through its utilization in making of better quality and better designed handicrafts and mosaics. Increased direct and secondary job creation supporting poverty alleviation in the FATA. Increased production of processed stone will result in a greater need of transporting the mined & processed stone to the local markets. Therefore. Specifically. the investors and government would invest in roads for smooth transportation of stone. Job creation. 21 . Poverty alleviation. As such. Increased investment.000 people. The Mohmand Agency and Khyber Agency have about 650 processing sites employing approximately 13. and Development of FATA rural economy Presence of a CFTC in FATA will produce a skilled workforce and provide an incentive for investors to move to FATA. Infrastructure development. which will lead to a wide range of quality products and higher income.

strengthen linkages within the value chain. Until such time that a company is formed. The regional SWOG offices will diffuse the SWOG related activity information to a broader audience from the sector. the need may arise for a formal platform or company that would manage the implementation and development stage of all the identified initiatives. the industry will bring in international expertise to work with local geologists and industry experts to train local technicians on how to value a quarry. 22 . PSDC will be a private-sector led company that will develop and implement the Marble and Granite SWOG strategy. Inc. A dialogue will be initiated between the SWOG and the representatives of the banking industry to develop mining specific financial services. 4. Implement training and research support initiatives. The SWOG proposes establishing the Pakistan Stone Development Company (PSDC). This will in turn increase overall investment in the quarrying sector. Develop Mining Specific Financial Services Currently the financial sector does not address the financing needs of the quarrying industry. the Sector Management Company will provide the industry with an institutional platform to carry out strategy formulation and implementation. The SWOG will liaise with the State Bank of Pakistan to facilitate extension of financial services to the mining industry. the SWOG will operate as an informal platform. It will enable the industry to continue its dialogue with the public sector. PISDAC – USAID Pakistan JE Austin Associates. Regional SWOG activity will also be critical when the process of advertising and short listing for model quarries will take place. The SWOG will continue to have a chairman at the top and regional offices in each province with a nominated regional SWOG member responsible for that region. Develop clusters by providing models for quarrying and processing oriented to the best markets and applications. Over time. and help the industry as well as individual companies to develop and implement growth strategies.5 Strengthen Industry Organization and Supporting Institutions Establish Pakistan Stone Development Company Once the industry enters the implementation stage. PSDC will: Propose policy and quality regulations. Initially. The initiative will help quantify industry assets and thus facilitate investment through joint ventures and bank financing. Once established. Valuation expertise in the country is nearly non-existent at the present time. the industry will work with local universities to develop programs that train scientists on the techniques of evaluating a quarry.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Develop World-Class Valuation Expertise The full value potential of the marble and granite sector will only be unlocked when the industry has the capabilities to conduct world-class valuation (prospecting and planning) to support future investment.

accompanied by a qualified geologist to assess the potential of the region possesses in terms of dimensional stone quarrying. 4.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 This will allow the mining industry to invest in up gradation of technology and will further encourage new investors to enter the industry. At present there are 5 quarries in the Balakot region and another 15 in Mansehra (most of them currently closed down) extracting black. Reloading stations will be setup at major junctions in the region to facilitate transportation. which would act as models and will catalyze the development of a quarry cluster. It was assessed in the tour report that the Balakot region alone has a potential for over 170 Quarries providing income for as many as 12.000 people. providing more direct and indirect employment through new quarries and allied industries. 23 . The value potential of unique blue granite has already been realized at Balakot where an Italian joint venture progressive quarry was set up a few years back. The SWOG has proposed 10 mechanized quarries to be set up at high potential sites in the Mansehra and Balakot region based on upgraded quarrying practices.6 Special Initiative: Assist in Rehabilitation of Earthquake Affected Areas In the aftermath of the earthquake. the SWOG conducted a tour of Mansehra and Balakot. Each Model Quarry will host a cobblestone manufacturing setup for the utilization of waste and providing further employment to the local people. blue and green granite which fetches a high value in the domestic and international market. Model Quarries would be equipped to extract square blocks of marble/granite through best quarrying practices. PISDAC – USAID Pakistan JE Austin Associates. Model Quarries will provide better quality jobs and enhance productivity of the stone deposits. with minimum stone wastage and damage to the environment. Inc.

The sector productivity is largely dependent on the quarrying sector. Pakistan Stone Development Company (PSDC). World Class Valuation: Prospecting & Planning.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 5. The strategy requires an immediate response to primitive quarrying and better utilization of the nation’s nonrenewable wealth. Prioritization and Sequencing of Initiatives The SWOG through benchmarking themselves against industry leaders have realized the unacceptable amount of stone wastage at the quarrying level which in turn results in poor quality raw material and low capacity utilization further down the value chain. Workforce development will be critical towards sustaining the model quarry initiative and facilitating cluster growth. 24 . Initiatives addressing bottle necks lower down the value chain will only be addressed once improved quality raw material is readily available. Workforce development and technical training will again be of high importance to execute the initiatives. at the quarrying level. Introduction of stone testing standards. resulting in low capacity utilization. Inc. Minimum Quarrying Standards: Ban on indiscriminate blasting. Workforce Development: Onsite training. The need for facilitating and upgrading the processing industry will take center stage with the introduction of improved quality raw material. Priority policy initiatives will include a phased in ban on indiscriminate blasting and creation of quarry lease and equipment collateralization framework for valuation. which in turn justifies its high priority followed by workforce development. The major dent to sector productivity is made right at the source. The SWOG has prioritized initiatives in the following order: Model Quarries. Cluster Development (supporting infrastructure development). Policy initiatives (ongoing). PISDAC – USAID Pakistan JE Austin Associates. Common Facility & Training Center (CFTC). The initiatives will support a complete overhaul of the quarrying sector through encouragement of improved and modern quarrying practices. Poor quality raw material and high wastages during extraction triggers a chain reaction all through the value chain.

70% of the total stone exported at international market rates.18% 2. Inc. NWFP.3 trillion) Source: Industry sources and SWOG analysis 2015 57%8 380 million sq ft PKR 161. 8 9 International Industry benchmark value Assumption: 90% raw material locally processed.31% 85% 100 million sq ft PKR 2. 25 PISDAC – USAID Pakistan JE Austin Associates.44 billion USD 23 million . The projected exports by 2015 are estimated at $2. mosaics and other value added products. Development of the Marble and Granite sector will lead to higher income opportunities in these areas. Projected exports are assumed to be 70% of the total production while 70% of the finished product is high end slabs and handicrafts priced at international prices. These are also some of least developed regions. Balochistan and Sindh are the main marble and granite producing areas of Pakistan.70% higher value slabs produced.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 6. As marble and granite clusters develop.038% According to Industry estimates.44 billion 4. Expected Impact and Conclusion 2004 Wastage Total sellable (in sq feet) Total revenue Exports Percentage share of total exports Share of GDP (PKR: 4. allied industries will grow leading to greater employment and income opportunities. Training of labor will increase labor productivity. leading to higher income levels. FATA.16% .6 billion9 USD 2. handicrafts. Processing clusters will move closer to quarrying which will lead to rural development.44 billion. This assumes that the international market continues to grow at 8 percent (it is currently at USD 22 billion) and that the global market will absorb all of Pakistan exports. mainly comprising of slabs. the implementation of the strategy would result in a primarily export oriented industry with predominantly high-end products. Skill up-gradation will also create better quality jobs in rural areas reducing the trend of urbanization. .

Demand conditions: size and type of accessible demand. infrastructure. low levels of technology and skills.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Appendix 1. assets and resources. The economic theory of the Competitiveness Diamond has been validated by numerous analytical and case studies and is now used by industries and governments worldwide to assess industry competitiveness and to develop strategies for improving competitiveness. Overall Summary of Industry Competitiveness: Porter Diamond To understand the current state of the competitiveness of Pakistan’s marble and granite industry. The Porter Diamond framework demonstrates that the current weaknesses in Pakistan’s factor conditions and related and supporting industries are weighing down productivity. often referred to as the Porter Diamond. Related / supporting Industries: presence of supplier and supporting industries. limited innovation. this study uses the Competitiveness Diamond. PISDAC – USAID Pakistan JE Austin Associates. It is structured around four pillars: Factor (input) conditions: skilled labor. Inc. and poor marketing inhibit the industry from developing. Although strong local and international demand offer tremendous opportunities for growth. Context for firm strategy and rivalry: conditions for conducting business. 26 .

Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Context for Firm Strategy and Rivalry + + - Good industry relations with workers Improving public-private sector dialogue Limited cooperation amongst firms Limited marketing strategies for international markets Price-based competition resulting in poor quality and limited value added Access to quarries granted and controlled based on personal relations with local leaders Factor (Input) Conditions Demand Conditions + + - Abundance of good quality stone Low cost labor Rudimentary quarrying practices Low capacity utilization and limited value addition during processing Poor regulatory infrastructure/mining laws + + + Related and Supporting Industries - Strong and growing international demand Demand driven by the booming construction industry in Asia Inability to meet large local commercial construction projects due to poor quality of processed stone and weak supply chain hence quality stones are imported Limited knowledge of international customer trends and preferences + + - Linkages between academia and industry developing Presence of indigenous processing machinery manufactures Low quality suppliers Lack of financing schemes Lack of training institutions for quarrying and processing Underdeveloped distribution networks Limited quarrying equipment manufacturers PISDAC – USAID Pakistan JE Austin Associates. 27 . Inc.

Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 2. merely cut into Blocks. The marble and granite industry is made up of two stages of production: Quarrying (extraction) industry Processing industry The international market for marble and granite is segmented by stone into crude/roughly trimmed and blocks. Granite reserves. geological surveys. so actual reserves are unknown and may be significantly higher.2 million tons of marble reserves in the country out of which 98% are in Balochistan and NWFP10. etc. 2002. 28 PISDAC – USAID Pakistan JE Austin Associates. Small and Medium Enterprise Authority. This not only leads to colossal wastage but also to low production at mines. drill sets and lifters are not available. There have been no recent studies. 10 11 Marble and Granite Sector Brief. There is also a lack of education regarding the importance of good prospecting and practices such as topographical mapping. Currently physical testing of the stone is non-existent. crude or roughly trimmed Granite. Granite. etc. Industry Definition and Market Segmentation According to estimates. only at one place in Northern areas show a total of 414 million tons while other reserves of granite are spread all over NWFP.1 Quarrying Industry Quarrying is done in the country through primitive techniques such as uncontrolled blasting which is wasting the marble and granite reserves of Pakistan. crude or roughly trimmed Marble and travertine in MARBLE AND GRANITE Blocks. Balochistan and Sindh11. there are 160. 2. Inc. In majority of the mines basic machinery and equipment like compressors. Marble and travertine. .

A N. the plants were second generation machines that were barely good enough to cut slabs and tiles at high speed and were operated with no quality consideration.A 4.9 2. Latest estimate represented in Table 3.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Table 1: Reserves in the Country.A N.438 Total 115.A ML 80. 29 . 2002 2.A N. Initially.620 86.A N.789 PL 34.227 104.976 38. There are only about 25-30 units which have the appropriate machinery to do one of the sequential activities: cutting slabs or cross cutting and finally polishing.596 22.409 3.2 Processing Industry Processing industry for dimensional stones in Pakistan using local processing equipment started to develop in the late sixties with housing construction and industrial activity picking up most of the locally processed stone without quality consideration.A Granite N.A N. Inc.A Reserves in Mill. of Leases ML NWFP Balochistan Sindh Punjab N.140 PL 156 124 FATA Total 4 128 4 160 8 491 5. A study conducted by SMEDA in 1999 is summarized in the following table: 12 13 Northern Areas Low estimates of reserves are only due to absence of surveys rather than lack of reserves.8962 7000 160.2 N. PISDAC – USAID Pakistan JE Austin Associates. The mid seventies brought imported plants from Italy. 1999 No.A N. Small and Medium Enterprise Authority.139 N.414 9.A 12 Leased Area Total 280 203 N.2 13 Source: Marble and Granite Sector Brief. Tons Marble 157. Very few units with a complete range of machinery and equipment capable of processing stone in accordance with international standards were established in the last decade. Utilization of these units is nearly half of their installed capacity due to inappropriate raw material and lack of skill.

Inc. These units came under the unorganized sector (i. and Processors that own both the gang saw and the H/V and its supporting machinery.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Table 2: Significant Industry and Installed Machinery in Pakistan. and Islamabad at low prices/sq ft. 1999 Name of Total Gang Saws Cutters Auto Manual city no.V 48” 12” to 36” Karachi 180 14 16 1 20 630 3 300 Hyderabad 6 10 2 Quetta 3 1 9 Multan 35 49 5 Faisalabad 28 2 53 2 Sargodha 6 10 Lahore 93 2 2 3 200 19 Gujranwala 11 1 1 20 2 2 Sialkot 6 8 Gujrat 6 1 11 Rawalpindi 112 15 4 1 10 165 4 Islamabad 51 2 23 4 3 5 200 18 NWFP & 148 3 46 21 70 850 7 33 FATA Total 685 22 103 9 45 92 2215 12 385 Source: Marble and Granite Sector Brief. They are sold either in the market or to processors that use them to make cut to size tiles. Three kinds of processing facilities are present in FATA. Processors using a Horizontal & Vertical Machine (more commonly known as H/V machine or block cutter) to produce 12 inch strips. informal sector) and specific information about them was not available at that time. Karachi. Approximately 50% of the processors owning an H/V block cutter PISDAC – USAID Pakistan JE Austin Associates. one of the main marble and granite producing areas of Pakistan: Processors using Gang Saws to produce irregular slabs. 30 . 80% of the processors in the area have H/V block cutters that cut the blocks horizontally and vertically to produce 12 inch strips and tiles. 2002 Chip Tiles 36 2 1 4 2 45 The total population also included a further 1000 units with over 2000 cutters of 12 . reflecting upon the tremendous growth of the sector. Polishers Polishers of units Imported Local Mini H.e. Small and Medium Enterprise Authority. At present.36 inches. About 2% of the processing sites are using Gang saws to produce irregular slabs because the blocks extracted are irregular. Lahore. processors produce irregular slabs and transport them to a second set of processors in Peshawar. A more recent estimate by the Industry (See Table 4) places the number of units as being much higher.

Appropriately size tiles into 12x12x1 inch tiles to 12x12x1/2 inch tiles as demanded by the market.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 produce 12x48x1 inch slabs and sell them to the market. The remaining 50% resize the rectangular strip using a Section Machine and “18 Inch cutter14 that divides 48x12x1 inch strips into 4 equally sized 12x12x1 inch tiles. The number of processors able to produce a completely processed. cut-to-size product is low. . there are no training opportunities and/or facilities for people to learn modern dimensional stone processing techniques. due to lack of up-todate equipment and the skills to use to such equipment they have no facility or ability to: Carry out quality polishing of stone slabs or other products they produce. 31 PISDAC – USAID Pakistan JE Austin Associates. The stone produced has a lower market value and thus processors at FATA lose 30% additional income that could be earned through proper processing of the stone. Furthermore. 2. The absence of the above-mentioned capacity and the requisite equipment prevents quality processing. However. The market consists of the following segments: Quarrying & Processing Industry Export Blocks Slabs Tiles Other value added / Handicrafts Slabs Local Tiles Other value added / Handicrafts 14 15 18 Inch cutter cuts the 48x12x1 inch strips to 12x12x1 inch strip Chamfering a tile is smoothing its corners and all its sides. Inc. For example. and FATA loses the potential income could be earned through improved skills and onsite equipment for appropriately processing the local marble and granite. and Chamfer 15 the polished cut to size tile. Processors also lack knowledge of the properties of locally available stone that would enable them to decide the best and most appropriate uses of the stone they work with.3 Market Segmentation The local market has the major share in processed dimensional stone while a small percentage is exported. the processors do not work the stone well and are unable to capture the total value of the products they produce.

Mardan. over 97 percent are marble quarries. Diir. 2.2 Processing: Table 4: Processing units in major clusters. Peshawar Mohmand Agency Khyber Agency Bajaur Agency Total 400 Gang-Saw H/V Cutter Single Cutter FATA 250 350 50 14 25 35 500 15 0 1 1 335 15 7 22 0 0 6 0 Balochistan Quetta Loralai Lasbela Sindh Karachi 100 200 100 Total Source: SWOG analysis. 32 .4. 2005 Province Punjab NWFP FATA Balochistan Chaghai (Onyx) Sindh Total Source: SWOG analysis.4 Geographic Spread 2. Inc.4. 2005 1624 117 564 106 PISDAC – USAID Pakistan JE Austin Associates. 2005 Province N. Quarry: Table 3: Quarry Clusters in major areas.F.1.P Area Mansehra. 2005 Area Khushab/Mianwali Buner. Jhang Shahi 20 1225 Note: Of the total operational quarries.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 2. Kohat Mohmand/ Bajaur Loralai/Khuzdar/Lasbela Operational Quarries 5 400 300 500 Thatta.W.

Industry Estimates Pakistan Economic Survey.6% 10.2% -6. 2.000 7. 2004-05 18 This includes employment for the entire mining industry.62 0. Employment figures for marble and granite quarrying alone are not available. daily employed 14033 15240 16780 18458 20303 % growth 8. 3.685 1.0% 3.4 Regional and International Trade Pakistan’s total exports in the marble and granite sector are estimated at USD 23 million for 2004.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 3. 2003-2004 19 Avg.2 Employment in mining and quarrying18 Table 5: Employment Year 1999-00 2000-01 2001-02 2002-03 2003-04 Source: Labor force Survey.5% 56.3 Growth Table 6: Growth of Extracted Stone Year Extracted/Million Tons % Growth 1999-00 2000-01 2001-02 2002-03 2003-04 Source: Federal Bureau of Statistics 0. India and China have been included because they are regional competitors. China and Pakistan. Inc.44 billion16.1 Contribution to GDP Revenue in 2004 was estimated at Rs.1% 10. Total contribution to GDP in 2004 is estimated at .579 0.3 trillion) 17.038 percent (GDP at market price: 4. The following tables provide exports of the top five exporters of marble as well as India. Industry Statistics 3.5% 3.070 1.1% 10. 17 16 PISDAC – USAID Pakistan JE Austin Associates. 19 The data represents employment in surface mining and is projected year 2001 onwards. 33 . SWOG feels that these are understated.0% 10.

3 4.5 3.0 1.0 Source: International Trade Map Table 8: Export of Processed Marble Country Italy Turkey China Spain Portugal India Pakistan Total Source: International Trade Map Exports in ‘000’ $ 2004 823550 459194 177182 149400 99518 39594 6000 3319120 Percentage share % 2004 24. 34 . There are less than 10 granite processing facilities in Pakistan. PISDAC – USAID Pakistan JE Austin Associates.2 *Pakistan has large deposits of granite which is mostly untapped and its exports are negligible.8 13.8 5.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 Country Italy Turkey Egypt Spain Portugal India China Pakistan World Total Table 7: Export of Unprocessed Marble Exports in ‘000’ $ Percentage share % 2004 2004 193992 127628 106968 80677 30774 26195 8733 5000 833602 23 15 12 9 3 3 1.2 0.0 1. Inc.

FATA and Balochistan are the main marble and granite producing areas of Pakistan. Training of labor will increase labor productivity. allied industries will grow leading to greater employment and income opportunities. The employment rate will increase. more productive workers. leading to higher income levels. FATA can also increase the production of decorative tiles by engaging more women in the sector that specializes in making mosaics. These are also some of least developed regions. The livelihood of more than 95% of the population in FATA is dependent on the operation of dimension stone mines in FATA. The mosaic tiles have a high demand both locally and internationally. the project will also help women to contribute to the productivity of the sector and to their household income. Higher income will lead to more business opportunities and thus a higher rate of job creation. Use of stone waste to produce high value products like handicrafts will engage more people in the sector. Inc. leading to poverty alleviation. Presence of a CFTC in FATA will produce a skilled workforce and provide an incentive for investors to move to FATA. More demand would push for higher production and increased investment by the processors and quarry owners. As marble and granite clusters develop. Processing clusters will move closer to quarrying which will lead to rural development. Proper quarrying and increased processing at FATA implies higher income for the local processors and quarry owners. Skill up-gradation will also create better quality jobs in rural areas reducing the trend of urbanization. 35 . processors will engage their workers in training opportunities and would be willing to pay higher wages to trained. The Mohmand Agency and Khyber Agency have about 650 processing sites employing approximately 13. Establishment of the CFTC would provide an opportunity for these workers to get trained thereby raising their skill level and income earning opportunities. These women use small cubical pieces of waste stones to join them to make decorative tiles.000 people.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 4. Social Value and Role in Poverty Reduction NWFP. the quarry owners and processors are likely to get more business and thus more earning opportunities. PISDAC – USAID Pakistan JE Austin Associates. Development of the sector will invariably lead to higher income opportunities. Therefore. thereby increasing employment in the region. As such. Increased business opportunities will force higher production and a need for productive workers. Availability of processed stone will attract more customers to the regions than before. Therefore.

44 billion minus exports.1 billion20. A growing trend of upgraded quarrying technology has been observed.3 Supply Drivers The primary supply drivers would be better quarrying and processing techniques so as to reduce wastage and improve productivity (currently net wastage is estimated at 85 percent).Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 5. In volume. Market Analysis 5. Based on industry sources. Rs. However the quality of the processing is compromised with locally improvised machines. In the international market.2 Demand Drivers Growth in the housing sector. 20 21 Total Revenue for 2004.000 tons21. A number of quarry owners have contracted professionals for implementation of controlled blasting extraction methods. Local demand is mainly for tiles whereas international demand is for slabs and square blocks. exports of marble have grown at 12% per year on average since 2001. 2005 PISDAC – USAID Pakistan JE Austin Associates. Improved infrastructure. Total exports were 23 million in 2004.4 Technological Advances Following the Italy study tour by the SWOG there has been greater awareness amongst a relatively large group of quarry owners.22 5. both local and international. 5.1 Market Growth The domestic market in 2004 was estimated at Rs 1. Most Gang saws and Horizontal / Vertical cutters are also manufactured locally by a few individuals experienced in the field. the total local demand is 600. 36 .38 billion. Majority of SWOG members have either already installed upgraded machinery or are in the process of importing it. Quarry owners have also realized the importance of pneumatic tools and some have imported inline stitch drilling equipment which is essential for pre-splitting (controlled blasting) procedure. SMEDA 22 UN COMTRADE Database. Rs 2. 1. Consulting services of local geological experts and mining engineers are also being employed by a few progressive quarry owners for quality prospecting. is the primary driver of demand for marble and granite. 5. Granite exports have grown even faster at 18% per year. On the processing side a few local companies are actively engaged in reverse engineering of processing machinery. better financing opportunities and a more enabling policy environment will also result in more investment and consequently greater output. Inc.

4000/Ton (Square blocks)23 Rs.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 5.1200/Ton (Boulders) Rs. 2005 25 Rs. due to raw material being in square block form. 17000/Ton (Slabs)24 Square Blocks Unpolished tiles/slabs Source: SWOG analysis. 25 Based on higher per ton yield and international market price 24 23 PISDAC – USAID Pakistan JE Austin Associates. 2100/Ton (1’x1’ tiles) Better quality and higher yield per ton raw material Greater per ton yield. Inc. 120 square feet/ton slabs ( high value) as compared to current 60 square feet/ton of lower value 1’x1’ tiles.5 Profitability Table 9: Profitability of the Industry Current Projected Rs. 37 .

Competitive Position of Domestic and Regional Competitors 6.1 SWOT Analysis Strengths + + + + + Abundance of good quality marketable stone Exclusive colors and types of stone Low operational and labor cost Low environmental regulatory limitations Access to regional markets such as Dubai and other middle eastern countries - Weaknesses Lack of quarrying tradition Low capacity utilization both at the quarry and processing stage Primitive quarrying technology in use Proper prospecting methods not used No credible valuation of deposits Low technology and skill at quarrying and processing stage Lack of security for quarry lease owners Weak or no infrastructure Inaccessible deposits Minimal value additions Factor (Input) Conditions Factor (Input) Conditions Opportunities ↑ ↑ ↑ Improve quality and production through better capacity utilization Focus on high end value added products through better market understanding Promote joint venture projects and foreign investors through better deposit valuation - Threats Regional competitors such as china have low processing cost due to energy subsidies Lack of environmental concerns in quarrying can discourage investors and potential markets PISDAC – USAID Pakistan JE Austin Associates. Inc.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 6. 38 .

01 Million 3% 97% 50% 27% Tiles Blocks (irregular) Local $23. 3 percent is cut as square blocks for the purpose of exporting. whereas 2 percent of the tiles are exported and the remaining 98 percent is consumed by the local market. PISDAC – USAID Pakistan JE Austin Associates. so only the remaining half is exported.7 Million 98% Net Extracted Export $5. Inc.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 6.2 Value Chain Analysis 5% Local Processing Slabs Local $5. the process of cutting square blocks leads to 50 percent wastage. there is an additional wastage of 45 percent. 39 . From the output that is extracted.6 Million 97% Export $1. However.9 Million 50% 45% 50% 73% Waste 85 % Net The value chain analysis shows that 73 percent of the wastage occurs at the extraction stage due to underdeveloped quarrying methods. 5 percent is converted into slabs and the remaining 50 percent into tiles.19 Million 2% 3% Square Blocks Export $16. Three percent of the slabs are exported and the remaining are consumed by the local market. Out of the 97 percent that is locally processes. The cumulative wastage is 85 percent.

1 Pakistan Probable Model Quarry Sites Probable CFTC Sites Bajaur Agency Mohmand Agency Khyber Agency Dir Gilgit FATA Peshawar NWFP Mianwali/Khushab Loralai Quetta PUNJAB BALOCHISTAN Khuzdar SINDH Bela Jhang shahi Thatta Karachi PISDAC – USAID Pakistan JE Austin Associates. Inc. 40 . Cluster Maps 7.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 7.

41 . Inc.2 NWFP Chitral 1 Processing Cluster Quarrying Cluster 1 Dir FATA 15 Malakan 300 10 d Buner Mansehra Charsadah Peshawa Abbotaba r Nowshera 300 d Kohat 20 NWFP 50 30 Swat PISDAC – USAID Pakistan JE Austin Associates.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 7.

3 FATA PISDAC – USAID Pakistan JE Austin Associates.Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 7. Inc. 42 .

Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 7. 43 .4 Balochistan Processing Quarries Ziarat 45 QUETTA Mastun LORALAI 5 20 CHAGHAI Nok Kundi 10 Dalbadin 150 10 100 Wadh KHUZDAR LASBELA 90 Uthal Dureji 110 Hab KARACHI PISDAC – USAID Pakistan JE Austin Associates. Inc.

44 .Pakistan Marble and Granite Strategic Working Group Strategic Plan 2006 7.5 Sindh Processing Cluster Quarry Cluster Roads DADU Kotri Jheruck THAR PARKAR Karachi Nagar Parkar Mangho Pir THATTA PISDAC – USAID Pakistan JE Austin Associates. Inc.

Sign up to vote on this title
UsefulNot useful