Mumbai: Ambuja Cements, under the stewardship of the Adani Group, has effectively rivalled UltraTech Cement’s dominance in limestone reserves through strategic acquisitions and auction wins, establishing a critical supply foundation for long-term operations. By June, Ambuja Cements had built eight billion tonnes of limestone reserves, positioning it closely behind UltraTech’s ten billion tonnes, a significant shift that could impact India’s cement market dynamics. While UltraTech has taken a conservative stance in recent limestone auctions, Ambuja’s aggressive bidding strategy secured nearly one billion tonnes of limestone reserves through various state auctions over the past year, showcasing its commitment to robust expansion in India’s competitive cement sector.
Ambuja Cements has used acquisitions as an additional lever to reinforce its resource base. The recent takeover of Sanghi Industries in 2023 brought one billion tonnes of limestone into Ambuja’s portfolio, while the acquisition of Orient Cement added reserves in Rajasthan. This focus on resource acquisition aligns with the Adani Group’s deep-pocketed strategy to ensure Ambuja’s competitive edge in the race to secure this essential raw material. The Indian cement sector faces a critical need for limestone as all major players ramp up capacity expansions. Limestone availability is particularly crucial since cement plants are generally located near these deposits to control transportation costs and environmental impact.
Beyond expansion, cement companies are also prioritising limestone reserves to anticipate lease expiries and rising premium costs linked to the Mines and Minerals (Development and Regulation) Act (MMDR). Some leases are set to expire from 2030 onwards, which could drive up operating costs if companies must bid at higher premiums or even risk losing critical resources. An estimated 25% of existing limestone leases could expire across the industry. Analysts warn that failing to retain these leases could expose companies to rising freight costs or, in extreme cases, disrupt operations if alternative reserves aren’t secured promptly. Ambuja’s significant auction wins in FY24 underscore its proactive approach to securing reserves, a move that industry insiders suggest could be essential for business continuity.
This competition for reserves raises questions about sustainability and environmental responsibility in the cement industry. Although limestone is abundant, mining activities carry an environmental impact. Companies like Ambuja and UltraTech must weigh the implications of resource extraction and incorporate sustainable mining practices to mitigate ecosystem disruption. Efforts to integrate sustainable mining practices into resource extraction could benefit the industry’s long-term resilience, ensuring raw material availability without undermining environmental stability. As Ambuja and UltraTech bolster their limestone reserves, the broader challenge will be to balance aggressive acquisition with commitments to sustainable development, maintaining industry growth without compromising on ecological stewardship.
