Establishing A Marble City Near Chinese Border
1.
Introduction
This investment project envisages creation of a marble city upstream of Atta Abad Lake, in Hunza-Nagar
District, Gilgit-Baltsitan (GB), closer to Pak-China border for export. The
project is designed to capture value from proven marble resources and low cost
hydropower potential, by exporting processed and semi-processed marble to
China.
2.
Project location and justification
Gojal or Upper
Hunza forms Pakistan’s northern most borders with Afghanistan and China. Until
Attabad disaster[1],
Gojal had been developing at a rapid pace and was known as a role model
community for its social and economic progress and environmental awareness. The
local economy was driven by the Dry Port at Sost, border trade with China,
international trophy hunting, community share in the entrance fees to Khunjarab
National Park, and tourism and transportation services on KKH. People in Gojal,
with the highest education rates in the country, were also the early adopters
of new agricultural technologies and the largest suppliers of high quality seed
potatoes in Pakistan.
The economic
basis of this area has suddenly failed, due to a single natural occurrence, the
Attabad landslide and the formation of the Lake. The new costs and risks
associated with trans-shipping and handling of bulky goods like potatoes and
heavy consignments of consumer goods imported from China over the lake, have
reduced incentives for border and local trade. As a result, all economic
activities have come to a standstill. According to a recent survey, many people
are leaving the area, and the remaining reverting back to their traditional
pastoral way of life. Access to Gojal is difficult from the downstream of the
lake, especially during winters when sub zero temperatures meet notoriously
chilly winds, and the lake freezes in different degrees and densities, making
travel and trade even more costly and risky.
The Chinese
government is providing food and fuel aid to the entire population of 25,000
for the last three years at the request of GoP. The Chinese government is more
likely to invest in the area and ease trade restrictions, rather than continue
these subsidies. The Chinese Government has offered to realign the KKH above
the lake water level, estimated to cost around PKR 3 billion. Under a previous
agreement between the two governments, the Chinese are upgrading the KKH from
the Khunjarab border to Raikot Bridge, near Chilas in the first phase of a full
KKH up-gradation plan.
The Chinese
Government is taking active steps to develop its remote western border areas.
It has established a free trade zone at Taxghorghan, near the Khunjarab border
and has opened a new trade route with Tajikistan close to Pakistan border.
|
Strengths:
- Proximity with large market in China
- Availability of good quality marble and
water for hydropower
|
Opportunities:
- Literate workforce and social capital
- Potential for energy- intensive
productive uses
- Accessing hi-end technology and export
markets
|
|
Weaknesses:
- Lack of energy, skills and technology
- Lack of investment capital
|
Threats
(under current scenario):
- Unemployment
- Outmigration
|
In the long-term, these border areas of Pakistan,
China and Tajikistan are expected to be important staging and transiting posts
for trade and commerce at the cross roads of Asia along the ancient Silk Route,
needing services in trade, travel and commerce. The Chinese government is
investing heavily in developing infrastructure on its side of the border
region. However, Pakistan has been slow to develop the potential of its border
areas, despite having rich mineral resources, including dimension stone, which
have a huge demand in China.
Border trade
through Khujrab Pass is currently only a fraction of the total trade between
China and Pakistan, and it is one-sided. Pakistan hardly exports anything to
China, and local fruit such as fresh cherries which have good demand in China
are difficult to export to China, because Pakistan does not have quarantine and
certification facilities on its side of the border. Despite many complexities
involved in exporting anything to China, there are some good opportunities. For
instance, marble, onyx and granite are potential value added export products
for middle class consumers in China.
A recent
survey conducted by an NGO in Gojal has identified the following inventory of
resources that can be developed through a combination of community engagement,
technology transfer, and public and private sector investments.
|
Resource
|
Location
|
Area/
Capcity
|
|
Soft stone:
Marble, (white, back, grey)
|
Passu, Khyber and Murkhun.
|
400 sq km
|
|
Soft Stone: Granite and
soap stone
|
Gulmit, Hussaini, Ghulkin
|
200 sq km
|
|
Gold zone
|
Shimshal
|
1000 sq km
|
|
Rare earth materials
|
Chiporsan
|
800 sq km
|
|
Hydropower
|
Murkhun Ghalpan, Khyber)
|
250 kva
|
|
Misgar source
(Misgar, Chiporsan, khudabad)
|
2 MW
1 MW
|
|
|
Passu Hussaini, Ghulkin, gulmit
|
10 MW
|
|
|
|
Shishkat Source: Shishkat, sarat,
|
300 KVA
|
|
Business parks/
Growth pools
|
Murkhun Business park
|
200 kanal land
|
|
Passu Business parks
|
300 kanal land
|
Source:
AKRSP Survey, 2012
3.
Establishing
a model marble quarry
Around the
world the natural stone industry is growing rapidly. Since the beginning of the
1990s, production has risen annually by an average 7.3% and international trade
has even increased by an average 8.7%. Worldwide natural stone extraction is
meanwhile estimated at 150 million tons gross per year. Annual production after
deduction of waste and cutting losses amounts to about 820 million
square-meters. The total production value is estimated at USD 40 billion.
The
majority of world consumption comes from material that is quarried in different
countries than those where it is eventually installed. The leading
producers—China, India, Italy, Spain and Portugal account for 53% of world
quarrying production.
Dimensional
stone is one of the key raw resources of Pakistan. According to national
estimates Pakistan has over 297 billion tons of marble and granite reserves and
more than 100 types of colors and verities of marble and granite are available.
However, rising cost of energy, low quality of skills and technology are key
barriers on development. As a result, this sector contributes less than half a
percent to Pakistan’s GNP.
Marble industry in Pakistan is seeing a renaissance in recent years,
thanks to a number of donor-funded projects aimed at technology transfer and
skill development. Marble
exports reached a record level in 2011 with an export value of USD 60.620
million. The annual average exports of marble and granite mostly in the form of
blocks and boulders was around USD 22 million during 2005-06 to 2007-08. Since
2008-09, square blocks have constituted the bulk of exports, resulting in an
increase of USD 35 million. The continuing improvement in export value has been
the result of investments in new technology by many small companies,
facilitated by Pakistan Stone Development Corporation (PASDEC), a state and
donor supported company specialized in technology and skill development.
Although
detailed surveys are not available, a significant part of marble and granite
deposits are believed to be located in the mountain areas of northern Pakistan,
including, FATA, KPK and GB. Estimates
of deposits in these areas include 87% marble, 1% Granite and 12% slate. There
are wide varieties of dimensional stone with huge reserves.
While
little formal research exists on the quantum, quality and value of this
resource in GBC, private Pakistani and Chinese companies, already scouring the
area for mineral resources, have reportedly found some high quality deposits at
various locations in GBC. Private
sector estimates have indicated the availability of 414 million ton of
marketable granite reserves in GB alone[2].
Actual deposits of marble, onyx and granite with multiple shades can be
manifold. GB’s
marble has been used in the refurbishing of Lahore Marriott, and experts have
rated its quality to be high.
In
lower Chitral, which is closer to main markets in Pakistan, marble quarrying is
an established industry. However, the low-tech operations result in high quarry wastage ranging from
60-80% in addition to poor quality, mainly due to unwieldy blasting techniques,
and production of lumps rather than blocks. For instance, raw marble supplied from Chitral
fetches USD 40/t, while finished marble slabs exported by processing industry
to USA get USD 466/t. Value is also lost by non-transparent practices, such as
black marketing of lease permits, which are then sold to genuine investors for
higher prices.
In
GB, small quarrying operations have sprouted in recent years and some already
failed. This is consistent with global and national experience, which suggests
that dimensional stone as a commodity faces tough competition, especially
because of high transportation costs over long distances. Raw material is
available in huge quantities in most countries. The winners are those who
employ new technology and go for value added production.
3.1 Opportunity
rationale
The basic rationale is availability, variety and good
quality of deposits, and potential availability of low cost renewable energy in
GBC, especially in the long-term. However, these reasons alone may not be
enough to justify investment. Other attributes must be added to make a value
proposition. Value addition will be the key, and GBC can further refine its
business model by specializing in fair and environmentally sensitive production
and trade practices, and branding.
Proximity to China gives potential access to a large
and growing market. China has a soft corner for GBC for historical and
strategic reasons, and is likely to provide market access for semi-processed
goods, such as marble and granite. Pakistan already has a captive market in
China and it is currently negotiating with the Chinese government to include
semi-processed marble and granite in the zero tariff list of their bilateral
trade agreement.
The neighbouring Xinjiang Region of China is
developing rapidly with rising demand for good quality marble. Overland
transportation to China is also cheap, as containers bringing goods to Sost Dry
Port, mostly go back empty[3].
The overland distance between Sost and Kashghar is just 450 km, and KKH is
upgraded on both side of the border, while the sea route between Karachi and
Chinese ports is 10,000 nautical miles. The energy advantage of GBC is further
boosted by chronic shortages and rising cost of energy in the mainland
Pakistan.
3.2 Business
description and marketing strategy
The proposal is to create a model quarry for marble at
a suitable and accessible location in Gojal, The product mix includes marble
cubes and slabs in the initial phase, with more refine products being included
after detailed market research. Waste material and coloured stones abundantly
available in the area, will be used to make attractive mosaic products as a
home-based cottage industry for women.
Wastage is the main efficiency factor in marble
industry. Blasting results in 50% of the waste at source and another 30% during
subsequent processing. Blasting also kills the entire quarry after a few years,
by causing micro fractures. The business will follow best industry practices
and employ high-end technology imported from China, and skilled workers also
from China, who will train educated local youth, both men and women. PASDEC
would be approached for technical support, training and certification. A professional
firm would be hired for brand development.
The marketing strategy is to establish an auction
market at Sost, near the Dry Port, which is frequented by Chinese business
people. An open bidding method for both the product and transportation will
keep the market fair and transparent. Other suppliers from different parts of
GBC will also use the auction market, thus contributing to the bottom-line.
Eventually, the auction market can also include other commodities, such as iron
ore, copper, antimony, etc, in upgraded form.
Local communities, represented by their LSOs will be
included as equity partners. However, the business would be professionally
managed as a private company, not as a cooperative. Other potential investors
may include PASDEC and the Government of GB.
3.3 Cost-benefit
analysis
Energy
input
Developing
hydropower in isolated and off-grid areas is challenging on at least two
accounts. Firstly, the upfront investment cost is high and the level of
utilization or Plant Load Factor is substantially lower in an off-grid
environment. Still, the cost of hydropower for productive uses is much cheaper,
compared to diesel, which the other option, and provides the overall
justification for investment.
Tables
3 A & B provide comparison of energy input and cost of hydroelectricity and
diesel for marble quarrying and processing.
|
Energy Type
|
Quarrying (per ton)
|
Processing (per ton)
|
|
Diesel
|
2.8 liters
|
10 liters
|
|
Electricity
|
5.71 kWh
|
100 kWh
|
Source: http://www.historic-scotland.gov.uk/embodied-carbon-in-natural-building-stone-in-scotland-2.pdf
|
Energy Type
|
Quarrying (PKR/ ton)
|
Processing (PKR/ ton)
|
|
Diesel @110/ltr
|
308
|
1,100
|
|
Electricity @ 7.2 kWh
|
41
|
720
|
Source:
Ibid. Cost of diesel and hydroelectricity
changed to local prices from the original model.
Energy production
|
Start Year
|
2013
|
|
Capacity (MW)
|
1.00
|
|
Max Annual Energy (GWh)
|
8.76
|
|
Actual Annual Energy (GWh)
|
3.50
|
|
Plant Life (years)
|
30
|
|
Plant Load Factor
|
40%
|
The capital cost of building a 1 MW plant in the Gojal
cluster is PKR 192 m. With a plant load factor of 40%, the total energy
available will be an estimated 3.5 GWh per year. Energy consumption for
targeted marble extraction and processing will be 280,000 kWh or about 8% in
year one, and stabilize at 945,000 kWh, or 27% from year five. Other commercial
uses are expected to account for an average of 50% over the plant life, and the
leftover will be used for domestic purposes.
Tariff rates are assumed as PKR 7.2 per kWh for
commercial users and PKR 3.5 for domestic consumption, respectively, with a 5%
annual inflation from year two.
Marble production and processing unit
The main productive use renewable energy investment
proposal is creating a model quarry and processing unit in Gojal area, close to
the border, targeting production at export market in China. The quarry will
employ state of the art technology, and produce 5,000 ton of blocks in year
one, double this capacity in year two, and increase production by 20% every
year until year five.
Fifty per cent of the blocks will be directly sold in
the proposed auction market at Sost, the border town, while the other 50% will
be further processed into slabs. The price for one ton of block is assumed at
PKR 7,680 (US$80), while the price per meter square of 3 cm slab is taken as
PKR 2,400 (US$ 25), with 7% increase per annum. Depreciation is taken as 10%
per annual.
Technical support in establishing the model quarry,
including selection of technology for extraction and processing, will have to
be arranged from PASDEC, either as an equity partner, or as public sector
support, which is part of its mandate.
Capital Expenditure
The total capital investment required for quarry and
processing unit is PKR 193 m, or slightly above USD 2 m, as detailed in Annexes
1-2
Profit and loss (income statement)
Gross revenue from the sale of blocks is PKR 19.2 m,
and slabs PKR 58.8 m, or a total of PKR 78 m, in year one. Gross revenue
reaches PKR 353.35 m, by year five, and PKR 496 m in year ten. Operating
expenses for both products amount to PKR 29.52 in year one and PKR 75.2 m in
year five.
Earning before interest and taxes (EBIT) is PKR 31.2 m
and PKR 206.7, for year 1 and five, respectively. Net income is PKR 17.2 in
year one, and PKR 159.69 in year five.
Profit margin is 22% in year one and 45% in year five.
Details on income and expenses for five years are detailed in Table 25. Profit
margin is expected to reach 50% and taper off from year 10. Internal rate of
return (IRR) is 6% in year 3, and reaches 70% in year ten.
Calculations on profit and loss and IRR for the full
ten-year life of the investment are provided in Annexes.
4
Next steps
· Undertake detailed survey of identified
sites, estimate reserves, test quality and variety, and send samples to
potential buyers
· Select model quarry location, and design
appropriate infrastructure, office and processing facilities
· Develop a PC1 and a detailed business plan,
explore financing options, and explore export market in China
ANNEXURES
|
Quantities
|
UoM
|
Unit
Cost /Price
|
Year
1
|
Year
2
|
Year
3
|
Year
4
|
Year
5
|
||
|
Blocks
|
Ton
|
2,500
|
5,000
|
6,000
|
7,200
|
8,640
|
|||
|
Slabs
|
Sq.
meter
|
24,500
|
49,000
|
58,800
|
70,560
|
84,672
|
|||
|
Revenues
|
|||||||||
|
Blocks
|
Ton
|
7,680.00
|
19,200,000
|
41,088,000
|
52,756,992
|
67,739,978
|
86,978,131
|
||
|
Slabs
|
Sq. meter
|
2,400.00
|
58,800,000
|
125,832,000
|
161,568,288
|
207,453,682
|
266,370,527
|
||
|
Gross
Revenues
|
78,000,000
|
166,920,000
|
214,325,280
|
275,193,660
|
353,348,659
|
||||
|
Costs
– Quarry
|
|||||||||
|
Labour
|
Per
ton
|
960.00
|
2,400,000
|
5,040,000
|
6,350,400
|
8,001,504
|
10,081,895
|
||
|
Royalty
|
Per ton
|
768.00
|
3,840,000
|
8,064,000
|
10,160,640
|
12,802,406
|
16,131,032
|
||
|
Energy
Cost
|
Per
ton
|
41.11
|
205,560
|
431,676
|
543,912
|
685,329
|
863,514
|
||
|
Spare
parts & maintenance
|
Per ton
|
576.00
|
1,440,000
|
3,024,000
|
3,810,240
|
4,800,902
|
6,049,137
|
||
|
Depreciation
|
Capital
Cost
|
10%
|
7,393,728
|
7,393,728
|
7,393,728
|
7,393,728
|
7,393,728
|
||
|
Costs
- Slab Processing
|
|||||||||
|
Labour
|
Per
sq. meter
|
92.16
|
2,257,920
|
4,741,632
|
5,974,456
|
7,527,815
|
9,485,047
|
||
|
Energy
Cost
|
Per sq. meter
|
58.78
|
1,800,000
|
3,780,000
|
4,762,800
|
6,001,128
|
7,561,421
|
||
|
Maintenance
& Spares
|
Per
sq. meter
|
50.88
|
1,246,560
|
2,617,776
|
3,298,398
|
4,155,981
|
5,236,536
|
||
|
Abrasives
(for polishing)
|
Per sq. meter
|
28.80
|
705,600
|
1,481,760
|
1,867,018
|
2,352,442
|
2,964,077
|
||
|
Packaging
|
Per
sq. meter
|
19.20
|
470,400
|
987,840
|
1,244,678
|
1,568,295
|
1,976,051
|
||
|
Depreciation
|
Capital Cost
|
10%
|
7,756,800
|
7,756,800
|
7,756,800
|
7,756,800
|
7,756,800
|
||
|
Operating Expenses
|
29,516,568
|
45,319,212
|
53,163,070
|
63,046,331
|
75,499,239
|
||||
|
Transportation
– Quarry
|
Per ton
|
384.00
|
1,920,000
|
3,840,000
|
4,608,000
|
5,529,600
|
6,635,520
|
||
|
Transportation
- Slab Processing
|
Per
sq. meter
|
626.94
|
15,360,000
|
32,256,000
|
40,642,560
|
51,209,626
|
64,524,128
|
||
|
EBIT
|
31,203,432
|
85,504,788
|
115,911,650
|
155,408,103
|
206,689,771
|
||||
|
Interest
Expense – Quarry
|
4,824,864
|
4,556,496
|
4,254,583
|
3,914,930
|
3,532,821
|
||||
|
Interest
Expense - Slab Processing
|
|
|
4,838,400
|
4,569,280
|
4,266,519
|
3,925,914
|
3,542,732
|
||
|
EBT
|
21,540,168
|
76,379,012
|
107,390,548
|
147,567,259
|
199,614,218
|
||||
|
Taxes (20%
|
|
20%
|
4,308,034
|
15,275,802
|
21,478,110
|
29,513,452
|
39,922,844
|
||
|
Net Income
|
17,232,134
|
61,103,210
|
85,912,438
|
118,053,807
|
159,691,374
|
||||
|
Profit Margin
|
22%
|
37%
|
40%
|
43%
|
45%
|
||||
Prices are taken from prevailing market rates.
|
COSTS – QUARRY
|
UoM
|
$
|
PKR
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
|
Labor
|
Per ton
|
10
|
960
|
960
|
1,008
|
1,058
|
1,111
|
1,166
|
|
Royalty
|
Per ton
|
8
|
768.00
|
768
|
806.40
|
846.72
|
889.06
|
933.51
|
|
Energy Cost
|
Per ton
|
0.43
|
41.11
|
41
|
43.17
|
45.33
|
47.59
|
49.97
|
|
Spare parts & maintenance
|
Per ton
|
6
|
576
|
576
|
605
|
635
|
667
|
700
|
|
Depreciation
|
Capital Cost
|
10%
|
||||||
|
Transportation
|
Per ton
|
4
|
384
|
384
|
384
|
384
|
384
|
384
|
|
Taxes
|
EBT
|
20%
|
||||||
|
Inflation per annum
|
5%
|
|||||||
|
COSTS – PROCESSING
|
||||||||
|
Labor
|
Per sq. meter
|
0.96
|
92
|
92
|
97
|
102
|
107
|
112
|
|
Royalty
|
||||||||
|
Energy Cost
|
Per sq. meter
|
0.61
|
59
|
59
|
62
|
65
|
68
|
71
|
|
Spare parts & maintenance
|
Per sq. meter
|
0.53
|
51
|
51
|
53
|
56
|
59
|
62
|
|
Depreciation
|
Capital Cost
|
10%
|
||||||
|
Transportation
|
Per sq. meter
|
6.53
|
623
|
627
|
658
|
691
|
726
|
762
|
|
Abrasives (for polishing)
|
Per sq. meter
|
0.30
|
29
|
29
|
30
|
32
|
33
|
35
|
|
Packaging
|
Per sq. meter
|
0.20
|
19
|
19
|
20
|
21
|
22
|
23
|
|
Taxes
|
EBT
|
20%
|
||||||
|
Inflation per year
|
5%
|
|||||||
|
Quantities
|
||||||||
|
Blocks
|
Ton
|
5000
|
10,000
|
12,000
|
14,400
|
17,280
|
||
|
Increase per annum
|
20%
|
20%
|
20%
|
20%
|
0%
|
|||
|
Block Sale
|
50%
|
2,500
|
5,000
|
6,000
|
7,200
|
8,640
|
||
|
Transferred to Slab Processing
|
50%
|
2,500
|
5,000
|
6,000.00
|
7,200
|
8,640
|
||
|
Price
|
80
|
7,680
|
7,680
|
8,218
|
8,793
|
9,408
|
10,067
|
|
|
Increase per annum
|
7%
|
|||||||
|
Slab (Sq. meter) Calculation
|
Per ton
|
12.25
|
30,625
|
61,250
|
73,500
|
88,200
|
105,840
|
|
|
Processing Loss
|
20%
|
20%
|
20%
|
0.20
|
20%
|
20%
|
||
|
Net Output
|
24,500
|
49,000
|
58,800
|
70,560
|
84,672
|
|||
|
Price / sq. meter
|
25
|
2,400
|
2,400
|
2,568
|
2,748
|
2,940
|
3,146
|
|
|
Increase per annum
|
7%
|
|||||||
|
Exchange Rate
|
96
|
|||||||
|
ENERGY REQUIREMENTS
|
||||||||
|
Quarry
|
kWh
|
28,550
|
57,100
|
68,520
|
82,224
|
98,669
|
||
|
Processing
|
kWh
|
250,000
|
500,000
|
600,000
|
720,000
|
864,000
|
||
|
Total Energy Requirement (kWh)
|
kWh
|
278,550
|
557,100
|
668,520
|
802,224
|
962,669
|
||
|
Description
|
Unit/#
|
USD
|
PKR
|
|
Electric Air compressor 750cfm @135psi
|
1
|
23,000
|
2,208,000
|
|
Drilling and cutting set
|
2
|
320,000
|
30,720,000
|
|
6" high pressure water pump
|
2
|
32,000
|
3,072,000
|
|
3" high pressure water pump
|
2
|
15,000
|
1,440,000
|
|
50000 liter steel water tank
|
1
|
9,000
|
864,000
|
|
6" steel pipes with fittings
|
2500 meters
|
79,680
|
7,649,280
|
|
3" steel pipes with fittings
|
1500 meters
|
31,500
|
3,024,000
|
|
60 ton crawler crane w/ 60' boom
|
1
|
160,000
|
15,360,000
|
|
Cat 977 pay loader
|
1
|
98,000
|
9,408,000
|
|
Flood lights
|
6
|
2,000
|
192,000
|
|
Total equipment cost – Quarry
|
|
770,180
|
73,937,280
|
|
Land (m2) 5000
|
5000
|
10000
|
960,000
|
|
Building (m2) 750
|
750
|
100,000
|
9,600,000
|
|
Carts for stone 10
|
10
|
10000
|
960,000
|
|
Tracks (meters) 100
|
100
|
10,000
|
960,000
|
|
Wheeled crane 40 tons 1
|
1
|
40,000
|
3,840,000
|
|
Total Infrastructure cost - Slab Processing Plant
|
|
170,000
|
16,320,000
|
|
Gang saw (70-80 blades) 1
|
1
|
300,000
|
28,800,000
|
|
Slab Polishing line 1
|
1
|
150,000
|
14,400,000
|
|
Multiblade disc cutter 1
|
1
|
40,000
|
3,840,000
|
|
Mono blade block cutting machine 1
|
1
|
40,000
|
3,840,000
|
|
250 KVA generator 1
|
1
|
50,000
|
4,800,000
|
|
Equipment installation (10% of cost)
|
|
58,000
|
5,568,000
|
|
Total equipment cost – Processing
|
|
638,000
|
61,248,000
|
|
Road improvements – Quarry
|
|
35,000
|
3,360,000
|
|
Working Capital- Quarry
|
|
200,000
|
19,200,000
|
|
Working Capital- Processing
|
|
200,000
|
19,200,000
|
|
Working Capital
|
|
400,000
|
38,400,000
|
|
Total cost
|
|
2,013,180
|
193,265,280
|
Source: Pakistan Stone Development Company (PASDEC).
[1] On January 4, 2010, a landslide destroyed several
villages, blocked the Hunza River and formed a 22-km Lake, submerging many more
villages and sections of KKH, this cutting off Gojal from the rest of Hunza.
The disaster remains unmitigated despite many attempts and many hundred
millions of rupees to unblock the river and drain the lake. It will take
several years and billions of rupees to realign the KKH.
