Maddhapara's hard-to-sell hard rocks

The country's lone stone quarry at Dinajpur's Maddhapara has all the logistics – its own operator capable of daily extracting 5,500 tonnes of construction grade quality granite from the 1.2-square-kilometer mine, own distributors, assured market, and even a 13km rail track to connect the mining area with the national rail network.

But the state-owned mine cannot sell its stone as it cannot compete with imported stones in price. While the country's Tk6,000-crore domestic granite market grows at 25%-30% annually on the back of construction boom, Maddhapara hard rock stockpile keeps growing as its sales keep plummeting.

Though the quarry has the capacity to meet 6% of the country's stone demand, it could not sell a third of its output last fiscal year.

Maddhapara mine is sitting on an unsold granite stock of around 10 lakh tonnes valued at Tk300 crore as private buyers are opting for cheaper Indian stones readily available in the market.

Several company officials reported that due to the unsold stock, they have had to borrow money to pay the mining contractor and cover salaries and allowances. Last month, Tk30 crore was borrowed to settle dues with the contracting company.

Reasons for failure

Complex marketing system, higher transportation cost and losing major clients in the government sector to private stone suppliers have been cited as reasons for the declines in Maddhapara stone sales.

Though government construction projects slowed amid the recent political turmoil in the country, Maddhapara's poor sales have been persisting for the past two years.

Mine officials say if the sales stagnation persists, mining operations will have to be halted potentially leaving around 800 workers with no jobs.

Infograph: TBS

Why Maddhapara stone costs higher

Quarry officials and stone traders find Maddhapara's complex marketing guideline discouraging for individual buyers, who are required to book stones in advance and pay cash at banks and have to arrange transports on their own to carry stones from the mine.

The 2006 marketing guideline, revised in 2017, favours designated distributors and government agencies over others. As the rail track exclusively built to carry stones from the mine was left unused, a cartel of truckers made transportation of Maddhapara rock to any part of the country expensive.

Traders say 5-20mm size stones imported from India are priced at Tk120-Tk130 per cubic foot, while the same size stone from Maddhapara costs Tk140 per cubic foot.

Stones extracted from Maddhapara were typically used in major government physical infrastructure works by rail, road, port, electricity and public works authorities when those agencies were entitled to procuring stones and other materials all by themselves. But things changed when the government agencies started engaging private contractors who were free to procure stones from the market and import sources.

Thus, Maddhapara gradually lost its captive market in the government sector with a few still remaining such as Bangladesh Railway, Bangladesh Water Development Board, and river management. Work in all of these infrastructure projects have slowed down since the regime change, significantly impacting demand for local stone.

Can't buy stone without a dealer

Maddhapara stones are not sold directly to buyers but through 150 designated dealers but their sales figures are not encouraging.

Abu Siddique, a stone dealer and owner of Saba Traders, says, "Locally sold stones can't compete because the price of imported stone from India is currently low."

Energy and Mineral Resources Division Secretary Mohammad Saiful Islam told TBS over the phone on 28 October that the primary customers for stone extracted from the Maddhapara mine are the railway and the Water Development Board.

"Currently, the railway is not purchasing any stone, and private sector customers are unavailable due to transportation issues," he said.

He added that to address this, it has been decided to renovate the 65km railway line for transporting stone from the mining area. The adviser to the Ministry of Railways is taking both matters seriously. Additionally, a letter has been sent to the railways ministry, requesting the use of stone from the Maddhapara mine.

Secretary Saiful Islam further noted that the Water Development Board is currently using stones from the mine.

The Maddhapara Granite Mining Company Limited, operated under Petrobangla, is responsible for selling the extracted stone from the mine.

Its Managing Director Fazlur Rahman said, "Our stones are primarily used for railway and Water Development Board projects, but recently local stone has not been utilised in these areas. We are actively communicating this issue, as using stone from this mine would revitalise the country's only stone mine."

Mine discovered in 1973-74

The Geological Survey of Bangladesh discovered the 1.2-square-kilometre Maddhapara stone mine in 1973-74, and commercial production began in 2007 after development work. Since then, the country's only stone mine has faced numerous challenges.

Initially, Petrobangla extracted only 700 to 800 tonnes of stone in a single shift – far below the target of 5,000 tonnes across three shifts a day. As a result, the company incurred losses amounting to hundreds of crores of taka by 2013.

In 2014, Germania Trust Consortium (GTC) was entrusted with the production, maintenance, and management of the Maddhapara stone mine for six years, successfully increasing stone extraction. The mine has been profitable since the fiscal 2018-19.

The first phase of GTC's contract expired on 2 September 2021. A second six-year contract was then signed on 3 September 2021, under which 5,500 tonnes of stone are now being extracted daily across three shifts, as per the agreement.

Truckers take over transport

Officials also cite transportation challenges in moving the stone from the mine to various parts of the country.

Contractors and traders claim that topography contributes to higher transportation costs from this mine. To address this issue, mining authorities have consistently advocated for the establishment of a railway line to improve connectivity.

However, it is alleged that these plans have been hindered by vested interests, namely trucking businesses.

Several officials associated with the mine stated that a 13km dual-gauge railway line once connected the mine to Bhabanipur station in Dinajpur's Parbatipur upazila. The line was constructed during the early days of quarrying operations. However, truck transportation became dominant in stone transportation instead of rail.

As a result, the railway was shut down within six months of its operation. To further compound the issue, 8.8 kilometres of the railway track was stolen at the beginning of 2023.

Currently, transporting stone from Maddhapara to Dhaka and its surrounding areas by road costs between Tk1,200 and Tk1,300 per tonne. The cost for transportation to Chattogram ranges from Tk2,100 to Tk2,200 per tonne.

Md Obaidullah, managing engineer of Maddhapara Granite Mining Company, emphasised that the closure of the railway has significantly impacted the mining stone business.

He explained that by renovating the railway and resuming transportation via rail wagons, the cost of transporting stone to Dhaka could be reduced to Tk400-500 per tonne. Similarly, the cost of transporting stone to Chattogram could be lowered to Tk900-1,000.

Stone demand grows, but Maddhapara sales drop

According to a 2007 estimate by the mining company, the country's stone requirement then ranged from 45 lakh to 65 lakh tonnes per year – 15 lakh tonnes coming from greater Sylhet and greater Dinajpur regions. The rest was imported from India and Bhutan. Maddhapara Mining Company hoped to supply 16.5 lakh tonnes every year.

Mine officials now estimate that the country's annual stone demand shot up to around 2.16 crore tonnes. About 10.63 lakh tonnes of stones were extracted from the Maddhapara mine in FY23, but only 5.72 lakh tonnes were sold.

In FY24, production increased to around 13.16 lakh tonnes, with 9.07 lakh tonnes sold.

Mine authorities report that multiple sizes of stones are being produced at the facility, including 0-5mm (stone dust) priced at Tk1,150 per tonne, 5 to 20mm stone at Tk3,250 per tonne, 20-40mm stone at Tk3,600 per tonne, 40-60mm stone at Tk3,650 per tonne, and 60-80mm stone at Tk2,600 per tonne. Additionally, boulder stone is sold at Tk3,200 per tonne, while fine dust is priced at Tk740 per tonne.