Displaying items by tag: Fuel
Arabian Cement Company asks Egyptian government to help producers switch to coal and alternative fuels
30 May 2013Egypt: Jose Maria Magrina, chief executive officer of Arabian Cement Company (ACC), has asked the Egyptian government to help cement producers move to using coal and alternative fuels. In an announcement Magrina explained that ACC is ready to substitute all the natural gas used at its 5Mt/yr cement plant in Ain Sokhna to coal and refuse derived fuel (RDF) and had applied for the necessary government permits to do so on 14 March 2013. However until late May 2013 no answer had been received from the government.
"The investment needed to substitute natural gas or mazot (heavy duty fuel oil) with coal ranges from US$6-8m/Mt, while converting to RDF costs around US$8-12m/Mt. However for private companies to be encouraged to commit to such a huge investment, the government should look into incentivising this initiative by putting together a solid policy that includes governmental support," commented Magrina.
Magrina added that the government should remove the operating license fee imposed on new companies, as this was intended to cover the cost of subsidised natural gas, and that it should be granted an environmental permit. ACC is still waiting for the permit to use coal, which will replace 70% of its gas supply. Once the company is granted the permit, it will be ready to make the conversion by the fourth quarter of 2013.
Since February 2013, energy shortages have caused the cement industry in Egypt a loss of 20% (3.7Mt) in production capacity, while ACC has lost 25% (350,000t) of its cement production capacity in the same period. Losses of over 50% are expected during the summer of 2013. Until late 2010, the Egyptian government encouraged cement producers to switch to using natural gas. However, the current energy crisis has seen the government promote the use of coal and alternative fuels instead.
Suez says fuel shortages are harming production
10 April 2013Egypt: Suez Cement, Egypt's biggest cement maker by market value, has said that a lack of fuel supplies had forced it to cut production by as much as 30% so far in 2013. Two years of political upheaval have brought chaos to Egypt's economy and a lack of state funds and foreign currency is now disrupting imports of vital energy supplies.
"A lack of fuel supplies has cut our annual production of 12Mt/yr by 20-30% since the start of the year," said Mohamed Shanan, director of business development at Suez Cement, a subsidiary of Italy's Italcementi. "Any increase in (fuel) prices must be matched by an increase in cement prices," he told local press. He highlighted that fuel costs had doubled in the past three year while cement prices have grown by just 30%.
Long queues at petrol stations, protests at cooking gas shortages and ever more frequent power cuts point to a gathering fuel crisis in the North African country. Energy accounts for around half the cost of producing cement in Egypt.
Suez Cement production threatened by fuel price hike
19 December 2012Egypt: Suez Cement has announced that it may have to halt production at two of its production lines due to an increase in the price of mazut, a heavy, low-quality fuel oil. The Egyptian government has raised the price of the fuel by 130% to US$372/t, effective 15 December 2012. Both of the threatened lines use mazut as their main energy source. The group has a domestic market share of around 20%.
Misr Beni Suef writes to President over fuel
12 December 2012Egypt: Production at Misr Beni Suef's cement plants was stopped for the second time in two months on 6 December 2012 due to shortage in natural gas supply. The company has reported that the lack of fuel has led to a loss of approximately US$16.5m and that it may lead to the dismissal of some of its workforce if continued.
Misr Beni Suef's managing director Farouk Moustafa said that the company had sent a letter to the Egyptian President Mohamed Mursi seeking a solution to the gas supply cut but that no response had yet been received.
Indian producers react to diesel price increase
14 September 2012India: Cement producers have suggested that the industry will be unable to 'absorb' increased freight charges caused by a rise in the price of diesel.
Following a US$0.10/l increase in the price of diesel, the All India Motor Transport Congress (AIMTC) increased freight charges across the country by 15%. The truck drivers' organisation claims to have around 8 million vehicles under its control.
"The increased freight charge is not going only to impact on the distribution of finished goods. Generally, it takes 2t of inputs to produce 1t of cement. So, the impact will be on a total of 3t freight. I don't think the industry is now in a position to absorb this," said, JK Lakshmi Cement whole-time director , Shailendra Chouksey.
Commenting on the impact of the rise in diesel prices, a major cement producer, which preferred not to be quoted, said the rise was high and that this would certainly push up the distribution cost for producers.
Currently, the Indian cement industry faces over-capacity with a utilisation of 76% of the total capacity of 330Mt/yr. According to UltraTech in its annual report the situation is unlikely to improve before 2015.
Cement company using pine needles as secondary fuel
11 July 2012India: Pine needles, a major cause of forest fires in Himachal Pradesh, are now helping villagers earn money. The needles are being used as biofuel by a cement plant, with locals supplying production on a per-kilo basis. "Gujarat Ambuja Cements is using pine needles along with charcoal in its kiln," said the Divisional Forest Office, Pradeep Thakur. The substitution rate varies from 25-30%. "The needles have good calorific value and it's a good source of additional income for the villagers. In the Hamirpur forest division alone, more than 200 families are involved in the job. According to an official, an average a family can earn US$270/month through pine needles.
Manju Devi, a villager, said, "Since pine needles are not used in homes (due to the presence of various nitrogen oxides), they lie unused in the forests. The demand picked up after the company started procuring them and we are now earning up to US$750 in a season (from May to June)."
China aims at bold fuel-substitution rate
29 February 2012China: The Chinese Ministry of Information and Technology has announced that China's cement industry will source 65% of its electricity needs from waste materials by 2015, as part of the country's wide-ranging 12th Five-Year Plan period (2011-2015). It said that this would help China's building materials industry to see its energy consumption per unit of industrial value-added output reduced by 20% by 2015 compared to 2010.
Vietnamese fuel subsidies threatened
08 December 2011Vietnam: Vietnamese cement producers are facing calls to end subsidies on buying electricity. According to Minister of Finance Vuong Dinh Hue, cement and steel producers enjoyed subsidies of US$120m in 2010, with foreign investors netting US$24m of this total.
Hue raised the issue at the latest National Assembly whilst explaining the loss incurred by Vietnam Electricity (EVN). Citing the auditing results in 2010, Hue said that the cement and steel industries consumed 11% of the total commercial electricity output (982Mkwh). The problem was that the producers only had to pay US$0.04/kwh used, while the electricity production cost was
US$0.06/kwh in 2010, according to the Ministry of Industry and Trade. Naturally foreign investment has flocked to Vietnam, turning the country into a production base for export.
"We need to settle the problem when regulating the pricing mechanisms," Hue said before the National Assembly.
Member of the National Assembly's Finance & Budget Committee Nguyen Huu Quang, who once worked for the Vietnam Cement Corporation, said that EVN now has to pay US$0.06/kwh for electricity it buys from China, but that it has to sell at less than US$0.05/kwh to cement producers.
"I asked many times to restrict the export of cement and clinker, because the export prices are lower than the domestic prices. In exporting, enterprises can earn profits, but the State cannot, while the subjects for subsidisation in the society, also cannot enjoy any benefits from this," Quang said.
Saudi fuel row heats up
01 November 2011Saudi Arabia: Saudi Aramco has said that it continues to supply all of the fuel contracted by Saudi Yanbu Cement Co, to accusations from the cement producer about a lack of fuel.
As reported in Global Cement Weekly #16 Yanbu Cement was forced to delay the launch of a production line that was scheduled to open by the end of September 2011. Yanbu Cement has now announced in a stock market statement that Aramco had not responded to its requests for additional fuel.
"Saudi Aramco confirms it is currently supplying Yanbu Cement with all the allocated volumes of fuel oil as per the signed agreement," Aramco said in a statement. "Yanbu Cement Co should have secured the needed fuel ahead of a commitment to expand and build the fifth production line. The fact that no agreement was concluded in advance absolves Aramco from responsibility that may result from any fuel shortage," Aramco added.
However other cement companies have also reported that shortages of subsidised fuel is threatening growth. Safar Dhufayer, the chief executive of Southern Province Cement Co (SPCC), raised the issue at the Reuters Middle East Investment Summit in Riyadh. He said that his firm, the Gulf country's biggest cement producer by market value, may delay the launch of a new line that is expected to raise its production capacity due to the fuel shortage.
"Our new line under construction should be commissioned by the end of 2011, but if there is not enough fuel we will not run it and that will create more pressure from rising demand which we cannot meet," Dhufayer said. "We only receive 80% of the fuel we need."
Demand for cement in the largest Arab economy is seen at 48Mt in 2011, increasing to up to 52Mt by 2013, while supply is 55Mt/yr in 2011 and plans for growth are uncertain, Dhufayer said. Cement companies in Saudi Arabia have a competitive advantage over global rivals as they benefit from subsidised fuel, supplied by government-owned Saudi Aramco.
Cement firms in Saudi Arabia, which is spending over USD400bn on infrastructure projects and is planning to build 500,000 new homes, faced a cement shortage in the market in 2008 that led to a ban on exports. The ban is still in effect.