Displaying items by tag: Egypt
Egypt: South Valley Cement (SVCC) has said that the investments needed to use coal as an energy source will accost US$19.8m. Subsequently, the company is preparing other energy options.
SVCC said that it would be 'indifferent' if the government decided not to follow through with the coal usage plan, as it could rely on mazut, a low quality fuel oil, in addition to gas, in order to produce cement. The company added that the availability and sustainability of energy sources remains the biggest challenge it faces.
SVCC company officials said that the application of alternative energy sources suggested by the government will take at least 12 months. "The use of coal will allow the company to reach 100% of its production capacity," SVCC's Samar Abd Al-Gawad said. She added that despite the fact that the use of agricultural wastes is 'great,' its percentage in the energy mixture cannot exceed 15 - 20%. "The challenge that the company faces in the use of agricultural wastes is that the market is not consistent and the products that are used as wastes, such as the linen seeds and corn cobs, are seasonal."
SVCC has applied for licences for coal usage and agriculture waste and is awaiting approval from the Ministry of Environmental Affairs. Investing in the usage of agricultural wastes could cost around US$283,000.
The company is seeking to double its production capacity and is currently constructing two new cement plants, which are expected to be complete within 17 months. "The first plant will increase the production capacity by 1.5Mt/yr," said SVCC's consultant Ashraf Salman. "When the company receives its coal license it will increase its production to reach 3Mt/yr."
The company plans to increase its production capacity to reach 3.75Mt/yr by 2017. "The expansion will not only be in increasing the production lines but in looking for acquisition deals of parts or full shares of other cement companies," Salman added. SVCC operated at 70% of its full production capacity in 2013 'due to the energy shortages and the applied curfew.' The company exported around 80,000t of cement during the year.
Egyptian cement producers fight for ‘king’ coal
07 May 2014Egypt's cement producers have taken their fight to use coal to the opposition in recent weeks. Producers like Suez Cement and Titan have started pushing the benefits of using coal including its place as an international mainstay and highlighting the potential savings for the state.
In March 2014 the Minister of Trade and Industry Mounir Abdel Nour announced that cement companies could start using coal from September 2014. However, with pressure from environmental activists and even the Minister of Environment voicing disapproval for coal this seems to be a long way off. Fuel issues continue to bedevil Egyptian cement producers as reports emerged this week that gas supplies to 10 cement plants were cut. The plants, which represent 70% of the country's production base, have been forced to close temporarily. Egypt is one of the largest non-OPEC (Organisation of the Petroleum Exporting Countries) oil producers in Africa and the second largest dry natural gas producer on the continent.
The Egyptian government has been planning a reduction in the use of natural gas by industry. Yet the scale of the reduction has shifted. At first the Ministry of Petroleum intended to reduce supplies to cement plants by 35% in January and February 2014. Reportedly the price of cement then shot up by 30% in March 2014 to offset the rise in energy prices. Then the gas was cut completely, leading to the shutdowns.
In response Egyptian cement producers are investing in converting to using coal. This week Suez Cement announced a planned investment of US$40m to convert two of its four plants to use coal instead of natural gas subject to approval from the Ministry of Environment. Back in November 2013 Suez Cement announced similar plans to spend US$72.5m on converting its plants for coal. Similarly, Lafarge's preparations to use petcoke were also delayed by the ministry in February 2014.
Users of Egypt's gas supplies are caught between the reform of energy subsidies, a shortage in gas supplies and an increase in local demand. Industrial users like cement plants are stuck in a queue behind export markets and power plants. In addition international events such as the political instability in Ukraine might potentially rock the Egyptian gas market if Russian supplies were affected. The European markets would then start scrambling to secure their gas from other places such as Egypt.
In this situation, moving to the use of imported coal makes sense for cement producers. Yet groups like the 'Egyptians Against Coal' campaign argue that the issue is also about Egypt's sovereignty over its energy sources, not just pollution. Despite the optimism of the activists it seems unlikely that they can resist market pressures for long, especially with producers such as Suez Cement and the Arabian Cement Company announcing plans for increased alternative fuels substitution rates alongside their bigger plans for coal. Whether this is more than a sop remains to be seen.
Once dubbed 'King Coal' for its leading place in British industry before the second half of the 20th Century, coal is looking likely to take the crown as the fuel of choice in the Egyptian cement industry. How long it retains its crown though depends on the on-going competition between coal and gas use around the world.
Egypt: Suez Cement Company has announced plans to invest US$42.8m to convert two out of its four plants to use coal instead of natural gas following a controversial government decision to import coal as a means of addressing power shortages.
The conversion process for each plant will cost around US$21.4m, according to Mohammed Shanan, Suez Cement's business development director. Another company source estimated the overhaul will take between 6 - 8 months. The company is still waiting for final approval from the Ministry of Environment to use coal in the production of cement.
Suez Cement's production fell by 50% during the first quarter of 2014 as a result of fuel shortages, which has led to a 50% decline in sales.
The Egyptian Cabinet approved the use of coal for power generation in April 2014, despite the disapproval of Minister of Environment Laila Iskandar. The Egyptian government had cut natural gas supply to plants in an attempt to conserve energy resources.
A number of non-governmental organisations, including the Egyptian Initiative for Personal Rights, condemned the decision to use coal in a statement in April 2014, forecasting that it will have 'devastating consequences on health and the economy.' The Egyptian Centre for Economic and Social Rights, with support from the Doctor's Syndicate, has filed a lawsuit against interim Prime Minister Ibrahim Mehleb, President Adly Mansour and the ministers of trade, petroleum, electricity and environmental affairs in an attempt to block the use of coal in Egypt.
Gas shortage forces cement plant shutdowns
02 May 2014Egypt: Ten cement plants, accounting for 70% of Egypt's capacity, have been forced to temporarily halt production after state-run Egyptian Natural Gas Holding Company (EGAS) stopped providing them with natural gas.
"These plants have not yet officially announced that they are shutting down. They initially gave employees 15 days off and have extended the leave by another week, because the agreed-upon daily supply of natural gas was stopped," said an official from the Federation of Egyptian Industries (FEI). He said that the plant owners are holding discussions with the prime minister to review gas prices to ensure that the cement sector can continue to operate. The shutdowns are costing each plant around US$2.14m/day on average.
EGAS supplies nearly 800Mft3/day of gas to the industrial sector at subsidised prices, of which 150Mft3/day is allocated for the cement sector. However, frequent power outages have forced the government to redirect gas supplies from some cement plants to meet the needs of power plants.
The Ministry of Petroleum had initially reduced gas supplies to cement plants by 35% in the first two months of 2014. "The government, represented by the petroleum sector, bears a cost of US$1.4bn from selling natural gas at subsidised prices to cement plants, whereas those plants export their production or offer it in the local market at international prices," said Petroleum minister Sherif Ismail.
Ismail said that the government is considering a new price mechanism for the industrial sector, however, any changes would be implemented gradually because of the difficult economic situation in Egypt 'which cannot withstand a sudden spike in prices.'
Egypt: Omar A Mohanna, Chairman of Suez Cement, has announced that the company intends to alter its energy mix to use 20% of its energy from waste recycling and 80% from coal during 2014. He added that the Ministry of Environmental affairs has not announced its position on the use of coal, according to AlAhram News. Previous energy supply shortages have reduced production at Suez Cement to 50%.
In related news, the CEO of the Misr Beni Suef Cement Company revealed that his company has received an official letter from the Egyptian government informing the company that the natural gas supply to their facilities will be completely cut in May 2014. The letter added that the government will supply enough Mazut to the company to operate one production line.
IPO and alternative fuel news from Arabian Cement
16 April 2014Egypt: Arabian Cement Company has announced that its initial public offering (IPO) is expected to take place before the end of the second quarter of 2014, with trading on the Egyptian Stock Exchange to start around 21 May 2014. The company plans to sell a 22.5% stake.
Arabian Cement Company has also invested US$35m to shift from using 100% natural gas to 70% coal and 30% alternative fuels. It expects to use coal within the next three to four months once the government issues the company with the necessary license. The company produced 4Mt of cement in the 2013 fiscal year from a capacity of 5Mt/yr. It expects no growth in the 2014 fiscal year on the back of energy shortages.
Italy/Egypt: Italcementi celebrated its 150th anniversary and 10 years of 'successful operations in Egypt' in March 2014. Director general of Italcementi, Giovanni Ferrario, said that the group's mission focused on 'product innovation, quality and opportunities for the future.' The new branding system, i.Nova, was presented at the event, a system that he said was, "The result of 15 years of research that rejuvenates the group's marketing strategy."
The company says that the i.Nova approach focuses on the client in a strategy that is no longer based on supplying a single product, but on the ability to offer solutions that can meet several different needs at the same time 'fast and efficiently.' ''Our industrial strategy centres around research, innovation and sustainability, values that are necessary for competitiveness,'' said Ferrario.
Egypt: Minister of Trade and Industry Mounir Abdel Nour has announced that cement companies can start using coal from September 2014. He added that using coal will save 12.7Mm3/day of natural gas.
In a separate announcement, an official source at the Petroleum Ministry said that the amount of natural gas supplied to cement factories during January and February 2014 dropped by 35% from contracted levels. Total natural gas and mazut (heavy duty fuel oil) levels fell by 23% during the same period. During the second half of 2013 the amount of natural gas supplied fell by 17% from contracted levels with compensation from the use of mazut.
Can the Egyptian cement industry secure its fuel supplies?
19 February 2014Suez Cement and Italcementi's first waste treatment plant in Egypt was inaugurated this week. The project uses 45,000t of household waste to produce 35,000t of alternative fuel annually. Given Egypt's on-going fuel concerns the project will be watched closely.
Italcementi has much riding on the success of the project. It has five integrated cement plants in the country. As reported in early February 2014, the cement producer suffered reduced production capacity in Egypt despite 'potential' domestic demand due to limited energy availability. Cement sales volumes in Egypt for Italcementi have continually fallen since 2011, accelerating from a 5.4% year-on-year reduction in 2011 to a 17.6% year-on-year reduction in 2013. Yet, despite this, rebounding domestic demand was reported in 2012 and 2013.
It must be extremely frustrating for Italcementi. It has the production capacity, it has demand but it doesn't have the fuel to power its lines. Any additional fuel will be welcome. At a rough and conservative rate of 200kg of fuel per tonne of cement produced, Italcementi and Suez Cement's new alternative fuel stream could help to produce 175,000t of cement or about 1.5% of the cement producer's clinker production capacity of 12Mt/yr.
Lafarge, with its mega 10.6Mt/yr cement plant outside of Cairo, hadn't suffered (publicly) as much as Italcementi from fuel shortages until the publication of its financial results for 2013. Although sales had decreased year-on-year since 2009, this has been blamed on competition. Now it has been announced that cement volumes decreased by 30% in the first half of 2013 due to shortages of gas. This was mitigated through fuel substitution to a 19% drop in the third quarter and a 7% drop in the fourth quarter.
However, Lafarge's strategy for fuel security may be threatened as the Ministry of State for Environmental Affairs ordered the producer to stop preparations to build storage units for petcoke in February 2014 citing environmental and economic reasons. What happening here is unclear given that the Egyptian government has been encouraging cement producers to move away from using natural gas.
The examples above show the reactions two multinational cement producers, Italcementi and Lafarge, have made to secure their fuel supplies. The outcomes remain uncertain.
In other news, Shijiazhuang in Hebei province in China has started the demolition of 17 (!) more cement plants. This follows 18 plants that were demolished in December 2013. In total, 18.5Mt/yr of cement production capacity has been torn down.
This is more than the cement production output of most European countries or any single US state! Where was this cement going previously? What were the effects on the price of cement in China? Who is taking the loss for the destruction of this industrial production capacity? BBC News Business Editor Robert Peston has some ideas.
Egypt’s first waste treatment plant is inaugurated
17 February 2014Egypt: Suez Cement and Italcementi inaugurated the first waste treatment plant in Egypt on 16 February 2014 with a Euro5m investment.
The project is part of the Suez Cement strategy to increase the amount of energy that it gets from fuel derived from waste. The project uses 45,000t of household waste to produce 35,000t of alternative fuel annually. "The project will use the latest equipment and technologies available in this area," said Egypt's minister of Environment, Laila Eskander.
Egypt's Ministry of Environmental Affairs opposes the import of coal due to its negative effects on the environment and public health. Coal is not among the alternatives for solving the energy crisis in Egypt, according to Eskander. "Suez Cement has been suffering from an energy crisis, yet it decided to respect the Egyptian laws and to contribute to solving the problem of waste as well," said Eskander.