Displaying items by tag: Gas

Iran: The National Iranian Gas Company has stopped supplying gas to a number of cement plants due to a wave of cold sweeping the country.

As gas consumption has peaked in the recent cold days, some cement plants, including those in the west of the country, have stopped receiving gas, according to Abdolreza Sheikhan, Secretary of Iran's Cement Association. He complained that with the shortage of gas, the plants cannot use the heavy fuel oil mazut either because a government law to provide the factories with mazut at the same price as gas has not been implemented. Despite the fact that the cement plants store enough mazut to run for 7 - 10 days, they are not using their reserves because they are not sure if they will receive mazut as the law has stipulated. Sheikhan said that, when the plants stopped working for 20 days under similar circumstances in 2014, the Oil Ministry refused to pay them from the income it had made by economising on gas.

Argentina: Cement producers are reportedly facing difficulty with gas supplies that are causing cement shortages, according to iProfessional. Local media reports a 70% fall in cement supply in some locations. Shortages are being recorded in Jujuy, Formosa, Misiones, Santa Fe and Chaco.

Belarus: Belarusian manufacturers are expected to export 1.8Mt of cement in 2015, including 1.3Mt to be supplied to Russia's Eurocement, according to Construction minister Anatol Chorny. Belarus sold 980,000t of cement to Eurocement in 2014. Belarus' cement output is expected to total 6.1Mt in 2015, up from 5.8Mt in 2014.

"This year we have signed an exclusive contract for the supply of 1.3Mt," said Chorny. "The contract is advantageous to Belarus because 50% of the total amount shall be paid in advance and the rest shall be paid within 10 days of the delivery date. If the price of cement in the Russian market is lower than in Belarus, the Russian company will cover the losses. If the price will be higher, the difference will be equally divided." Belarus will also export cement to Russia's Kaliningrad exclave, Poland and Lithuania in 2015.

Belarus' AAT Krychawtsementnashyfer in Krychaw, Mahilyow, operated at a loss in 2013. This was caused by its old production plant, which still uses natural gas to manufacture cement. In contrast, the company's new production facility generated a profit of about Euro676,000 in 2014. To reduce the cost of cement production, Krychawtsementnashyfer installed a cement kiln fuelled by waste tyres in 2014 and plans to start using coal dust as a fuel in 2015, according to Chorny.

Egypt: Suez Cement plans to spend US$84m in 2015 to convert its Helwan and Tora 2 cement plants to use coal. The move is a response to Egypt's on-going energy crisis.

The company reported a 40.5% rise year-on-year in third-quarter profit in November 2014 after it managed to pass on higher production costs to consumers. However, its nine month profit fell by 14.6% year-on-year due to severe energy shortages that forced the company to cut output by 40% so far in 2014. Suez Cement was one of the companies affected when the government cut natural gas supplies to factories in January 2014 and has had to import clinker at higher cost.

Oman: The Ministry of Oil and Gas (MOG) plans to increase the price of natural gas for Raysut Cement Oman Cement from 1 January 2015. Raysut Cement said that the decision would impact its production by 3% in 2015. The company plans to mitigate the financial impact by implementing cost-reduction enhancement initiatives and restructuring prices. Oman Cement said that it plans to minimise the impact by improved productivity cost-controls and restructured pricing.

Egypt: The Egyptian Natural Gas Holding Company (EGAS) has cut the amount of gas it supplies to cement plants due to natural decreases in well productivity. Egyptian gas production dropped to 133Mm³/day from 166Mm³/day in May 2014, according to Mohammed Hassan, Assistant Deputy Chairman of EGAS. Subsequently EGAS has cut the volume of has it supplies to cement plants from 11.6Mm³/day by 7.08Mm³/day, a drop of 61%.

Egypt'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: 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.

Nigeria: BUA Cement has signed a gas sales and purchase agreement with the Nigerian Gas Company for its subsidiary, the Edo Cement Company. The agreement is for the supply of about 0.9Mm3/day to the Edo cement plant in Okpella, according to managing director Saidu Mohammed.

BUA Group entered the cement industry in 2008 when the Federal Government of Nigeria issued cement import licenses to 13 companies, including BUA, in an effort to bring down its price locally. BUA Cement subsequently purchased a floating cement terminal in 2008 for processing and bagging bulk cement. In 2009 BUA acquired controlling stakes in the Cement Company of Northern Nigeria (Sokoto Cement) and the Edo Cement Company.

Three news stories this week cover the gamut of fuels used by the cement industry in North America.

First we had an example of the changing trends in fossil fuel usage when TruStar Energy announced a deal to supply compressed gas to Argos USA. Then we moved to an example of recycled fuels used in co-processing when chemical waste firm ChemCare trumpeted its 100 million gallon milestone (that's 379,000m³ to the rest of the world) in supplying fuel-quality waste to the Lafarge co-processing subsidiary Systech Environmental. Finally, Cemex rounded off the main fuels groups with renewables, when it released pans to build a US$600m wind farm project in north-east Mexico.

Obviously fossil fuels still dominate in kilns north of the Darian Gap, as they do almost everywhere else, and fuel buyers wouldn't be doing their job properly if they weren't searching for the next best deal. Yet the range here shows a dynamic industry.

Jan Theulen from HeidelbergCement pointed out one example in the US at the recent Global CemFuels Conference held in Vienna. Here, rising landfill prices are increasing opportunities for alternative fuels use alongside changing US Environmental Protection Agency (EPA) permitting for solid recovered fuel. Alternative fuels consultant Dirk Lechtenberg, in an interview with Global Cement Magazine in February 2014, singled out the US as one country that is developing its alternative fuels use. As he explained, "Even though the fossil fuel prices are quite low in the US, the industry is developing supply chains for alternative fuels to be more independent with their fuels sourcing."

This race between cheaper fossil fuels in the US (via shale gas) and increasing development in alternative fuels is fascinating. Specifically: why is it happening now? Gas prices have fallen and demand for cement is returning in the US. The annual mean Henry Hub natural gas spot price in the US fell from US$8.86/million BTU in 2008 to a low of US$2.75/million BTU in 2012. This compares to up to US$15/million BTU in Japan and US$9/million BTU in Europe.

Public environmental pressure made manifest by the policies of the EPA and general increased knowledge about co-processing may be factors for the surge in alternative fuels investment. Long lead times for alternative fuels schemes may be another. Planners making a decision about what fuels mix to pursue in 2008 at the start of the recession might well have bet on alternatives to spread their risk. Yet the cause could be something else, as shale gas takes over higher paying industries, such as electrical generation, and the cement industry continues to be priced out of the leftovers.

Ultimately what burns in a cement kiln comes down to price. Depending on how the shale gas market plays out in North America it would be ironic if 'frackers', the bogeymen of current environmentalists, inadvertently cleaned up the cement industry.