Displaying items by tag: Coal

Mexico: Germany’s Loesche has sold two coal or petcoke grinding mills to Cruz Azul. Both will be used on new production lines at cement plants in Hidalgo and Oaxaca respectively. No value for the deal has been disclosed.

Each mill will have a capacity of 65t/hr. Loesche will be supplying complete plant equipment, including process gas filters, mill fans, inerting units, explosion protection valves, kiln gas cyclone separators, feed screw and drag chain conveyors as well as the complete electrotechnical equipment. The scope of supply also includes engineering for steel and concrete construction.

Loesche previously delivered a LM 46.2+2 CS type mill to Cruz Azul’s Tepezalá cement plant, operated under the Cycna subsidiary, at the end of 2016.

India/Indonesia: India Cements has purchased an 100% share of Raasi Minerals through its subsidiary Coromandel Minerals. The Singapore-based company owns a controlling stake in several coal mines in Indonesia. No value for the transaction has been disclosed.

India: The Ministry of Coal has cancelled Jaypee Cement’s coal block at Mandla in Madhya Pradesh citing breach of agreement. In a letter the ministry said that the cement producer was ‘not serious about the development of the coal mine,’ according to the Business Standard newspaper. The ministry has accused Jaypee Cement of switching the plant using coal from the mine without permission and of exceeding the agreed output.

The Mandla coal mine was allocated to Jaypee Cement in March 2015 after a bidding process. At first it supplied Jaypee’s Balaji cement plant in Andhra Pradesh. However, production from the mine switched to the Shahabad cement plant in June 2017 following the acquisition of the Balaji plant by UltraTech Cement.

Vietnam: Tata International Singapore has signed a memorandum of understanding with Vissai Cement Group to form a joint venture company in to use the port of Vinh. The deal is expected to create a distribution network for coal, according to the Press Trust of India. The company will also be responsible for Vissai Cement’s coal imports. The joint-venture is expected to benefit from the port’s location as a key gateway for trade into and out of Laos.

Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has expressed its concern over a ‘sharp’ rise in coal and fuel prices have increased the production cost of cement. Sources quoted by the association have blamed the implementation of supply side measures in China to limit its coal mining capacity, according to the Nation newspaper. A recent surge in coal prices has also followed stricter local rules on coal transportation. The association has called on the government to avoid ‘disruptive policies’ that impact construction growth.

India: The credit agency ICRA forecasts that rising energy and freight costs due to higher pet coke, coal and diesel prices during the first half of 2017 – 2018 financial year may hit the profits of cement producers. Petcoke prices grew by 32% year-on-year in the first half of the year and coal prices rose by 44%, according to the Press Trust of India. Sabyasachi Majumdar, an analyst at ICRA, said that higher power, fuel and freight costs were likely to continue. He added that the ability of cement companies to raise their prices was crucial to maintaining profit levels.

This week Beijing announced that it would close the last of its four largest coal-fired power plants, the China Huaneng Group Corp's 845MW power plant, in 2016. The four coal-fired plants will be replaced by four gas-fired plants with 2.6 times more electricity capacity than the former coal plants. China's policy makers are also encouraging increased use of hydroelectric power, solar and wind and is trying to restart its nuclear power programme.

In the same week, the Independent reported that Costa Rica had achieved a renewable energy milestone, having used 100% renewable energy for the preceding 75 days. The achievement was reportedly made possible by heavy rainfall, which powered four hydroelectric plants. Costa Rica has an impressive track record when it comes to energy sources. In 2014, 80% of its energy came from hydropower and 10% came from geothermal energy. In total, 94% of its energy requirements were met by renewable energy.

However, this week we also heard that Dangote is building the world's biggest oil refinery, which will process 650,000b/day. It will also be Nigeria's first oil refinery. Aliko Dangote, owner of Dangote Group, decided to up the initial design from 450,000b/day because he believes that Nigeria, as a leading producer of crude oil, should also be credited with local refining capacity. Currently, Nigeria produces crude oil, but has to buy refined products from abroad. The refinery is expected to be fully operational by 2017.

Efforts to increase renewable energy should be strongly encouraged - the benefits to the planet and its population are undeniable. However, renewable energy technology has a way to go (if ever) before it can entirely replace fossil fuel-derived energy, which makes Dangote's investment a safe bet. As renewable energy like solar and wind power is entirely reliant on nature, supplies can never be assured.

While sporadic supplies to houses and small businesses may be part of the price we eventually have to pay for a greener world, larger businesses like supermarkets and cement plants, which could lose millions (or billions) from power outages, will surely have something to say, and a lot of sway, when it comes to relying completely on renewable energy. In addition, power outages to essential services like hospitals are unthinkable when it comes to the health of our loved ones. Ultimately, the argument for relying on renewable energy may well be won by utilitarians' 'greater good' argument, but how would it feel to know that your sick child could have been saved by fossil fuel-derived energy?

Valentines Day 2015 (14 February 2015) saw the kick-off of India's first round of coal mine auctions - who said that the commercialisation of Valentines Day is a bad thing? For those not following the story, here's a brief summary of the key events that have led to the auctions:

Coal, the main fuel used for cement and power production in India, has been in short supply in recent years due to the shortcomings of state-owned Coal India Ltd (CIL), which produces around 80% of India's coal and owns 90% of its coal mines. In 2013-2014, CIL produced 462Mt of coal, missing a target of 482Mt. Demand is expected to reach 950Mt/yr by 2016 - 2017. Numerous cement plants have had to temporarily cease production due to inadequate coal supplies. This is in spite of India's estimated 302Bnt of coal reserves, more than enough to supply both the power and cement industries. Coalgate indeed!

On 24 September 2014, India's Supreme Court cancelled 214 of the 218 coal blocks that had been allocated since 1993. The blocks were for captive use by the cement, steel and power industries, but the allocation process had been accused of lacking transparency. Of the cancelled blocks, 12 belonged to cement companies. The re-allocation of the cancelled blocks commenced in December 2014, when 36 of the 98 viable coal blocks were allocated. A transparent auction process for 21 of the cancelled blocks for end-usage in power, cement and iron production started on 14 February 2015. In March 2015, a further 23 blocks will be auctioned. CIL was requested to steer clear of the bidding by the Indian government.

Reliance Cement and Jaiprakash Associates, as well as Aditya Birla Group's Hindalco Industries, have all won coal mines during the first three days of bidding. Prices ranged from US$22.5/t to US$45.9/t. UltraTech Cement and JSW Cement both placed bids, but have so far been beaten by rivals. There are still many opportunities for cement producers to win coal mines, although whether the locations are suitable is another matter.

With captive coal mines in hand for India's luckiest cement producers, fuel shortages should become a problem of the past. As India's coal-fired power companies are also bidding fiercely in the auctions, power supplies throughout the country should become more reliable. However, one only needs to look at Afghanistan's Ghori I cement plant to see that having a captive coal mine is not always the answer to fuel shortages; due to internal disputes and poor mining equipment, its coal mine production is poor and the plant operates only intermittently. Hopefully, any cement companies new to coal mining will invest in equipment wisely and ensure an efficient supply chain. As with any large purchase, or indeed Valentines Day, India's coal mine auctions are very much a case of caveat emptor...

The 'revelation' this week that South Korean cement producers have been paid US$127m to use/dispose of Japanese coal that is thought to be radioactive certainly sounds scary. If it is true that cement made with contaminated coal has led to the construction of radioactive buildings and roads, this may have prised open a 'can of worms' for coal producers, exporters and cement players alike. According to local media, four South Korean firms - Ssangyong Cement, Tongyang Cement, Lafarge Halla Cement and Hanil Cement - received the money to use the coal between March 2011, when the Fukashima nuclear power plant started to leak radiation, until 2013. A total of 3.7Mt of cement is 'under suspicion.'

Caesium-137 is formed by fission reactions that start with uranium-235 in nuclear reactors. The Fukushima reactor that started leaking in 2011 used this type of fuel. Once it leaked, caesium-137 was deposited into the sea and onto the land, presumably also making its way into nearby coal deposits.

As it is a metal with a melting point of just 28.5°C and a boiling point of 671°C, the caesium-137 would vaporise if it were to enter a cement production line operating at 1450°C as a metal. However, caesium will not enter the cement-making process as a metal due to its rapid and explosive reaction with water. An interesting slow-motion of this reaction can be seen here.

Instead, caesium will enter the cement-making process either as its oxide or a simple salt (e.g.: caesium chloride) in the coal. The salt will be ionized in the heat of the flame, sending caesium ions into the kiln and thus direct contact with the clinker as it is being formed. Here it will become part of the matrix of the clinker and hence the final cement product. All the time the caesium-137 is radioactive.

And it stays radioactive once it is in the finished product, for example in a building or road surface. Its half-life, the time that it takes for half of the caesium-137 to decay to meta-stable barium-137 (emitting radiation as it decays), is unfortunately very well matched to the life-span of concrete buildings at 30.7 years. This means that after about 100 years of building life the building would still be around 10% as radioactive as it was when it was built.

This would certainly be a problem if the coal was highly contaminated. However, a few questions come to mind. Firstly, if the coal contains 20-73 becquerels per kilogramme (Bq/kg) of caesium-137, as has been claimed by Lee In-young, an opposition spokesman for the New Politics Alliance for Democracy party and member of the National Assembly's Environment Labour Committee, why is this a problem when the Japanese legal limit for eating caesium-137 in contaminated vegetables is all the way up at 500Bq/kg? When the most dangerous mechanisms of caesium-137 poisoning relate to accumulation in soft tissue, how can driving along a caesium-137-containing highway constitute a health risk?

Also, the coal may well start the cement making process with 25-73Bq/kg of caesium-137 but the clinker will have a lower level. This is because for every 1t of clinker the plant will typically consume just 100-200kg of coal. The caseium-137 and hence the radiation will therefore be spread out over a larger mass. A level of 50Bq/kg in the coal would translate to a clinker level of 5-10Bq/kg. This is around 100 times lower than the Japanese vegetable limit. After this, the clinker is extended with additives to make cement. This is then added to aggregates and / or sand when concrete or mortars are made, further diluting the caesium-137, perhaps to as low as 1-5Bq/kg. It is arguable that South Korea has received a higher caesium-137 dose from Japan via air and sea than via coal imports.

In light of all this, it appears that those calling for investigations on scientific grounds, like Lee, may be misguided. However, there may be political gain. The histories of Japan and South Korea are long, violent and distrustful. Indeed, according to a BBC World Service poll conducted earlier in 2014, South Korea and China jointly have the most negative perceptions of Japan of all world nations. In this environment stories about radioactive coal become much easier to believe in.

In reality the Japanese vegetable limit is well above the likely levels that might be found in any cement products resulting from the use of this coal. It is consistent with EU limits set more than 20 years earlier (600Bq/kg). A search on the US Environmental Protection Agency's website fails to bring up any formal limit. Instead it states that everyone is exposed to caesium-137 from atmospheric fallout to a low level and that the most dangerous cases are where waste metal processors unwittingly come across sources.

So on the surface then, the South Korean reaction seems like a storm in a teacup. One question remains though. If the caesium-137 levels in the coal are so much lower than the Japanese vegetable limit, why are Korean firms being paid to take it out of Japan?

Energy costs for cement producers in India are set for volatility following the Supreme Court's decision this week to cancel the vast majority of allocated coal blocks. After ruling that the allocation process by the Indian government was illegal and arbitrary the court stopped 214 out of 218 coal blocks. The affected operators working on the blocks have six months until 31 March 2015 to wind down production. At this point the government intends to auction off the blocks.

The background to this decision lies in the so-called coal allocation scam or 'Coalgate.' Over 80% of coal in India is produced by the state owned company Coal India. Since 1993 though the Indian government has been allocating coal blocks or leases to mine coal for captive use by industries such as cement, steel and power generation.

However, the allocation process was accused of lacking transparency compared to an open bidding process. The Comptroller and Auditor General of India estimated the loss to the government was an incredible US$30bn. The allocation process received further scrutiny as Indian coal imports rose leading to accusations of inefficiency on the Coal India side and corruption on the coal block side. Meanwhile, major power cuts such as those in the summer of 2012 focused both domestic and industrial users' minds on the state of the country's coal industry.

Following the power cuts in 2012, an inter-ministerial panel recommended the de-allocation of two coal blocks held by five companies, including Gujarat Ambuja Cement, Grasim Industries and Lafarge India.

India's coal imports started to increase rapidly around 2009 with an annual growth rate of around 5% and a demand growth of 25% from 2009 – 2014. The majority of its imported coal comes from Indonesia, Australia and South Africa. In 2012 its coal imports were over 150Mt.

With Indian cement producers facing production overcapacity and falling profit margins in recent years, any disruption to input costs such as power is bad news. The growing import rates point to an increasing supply-demand mismatch. A more open process for the allocation of India's vast coal reserves should be good news for industrial users in the medium to long term. However, in the meantime they may face a jolt.