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December 2017
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Volume 48: Number 12
December 2017
ISSN 02636050
THIS MONTH’S COVER
December 2017
CONTENTS03 Comment
05 News
13 Industry View: Bernard Mathieu, LafargeHolcim
80 Regional Report Infographic
REGIONAL REPORT: SOUTH ASIA
15 Sunny, But with a Chance of RainJonathan Rowland, World Cement Editor, reports on the cement industry in Pakistan.
20 Playing its PartWorld Cement talked with Alok Sanghi, Director of Sanghi Industries Ltd, India, about the potential of India’s cement industry.
WORLD CEMENT PLANT TOUR
25 Opening Up OmanBernard Maiter, Carmeuse, Belgium, reports on the company’s latest joint venture in Oman.
28 Breaking New GroundAbdel-ileh Chouar, LafargeHolcim Africa, introduces the Mfamosing cement plant in Nigeria.
ALTERNATIVE FUELS
34 From Local to GlobalLars Jennissen, N+P International, The Netherlands, looks at how the market for the production, import, and export of alternative fuels is changing.
PYROPROCESSING
39 Unlocking Productivity PotentialDavid Campain, FLSmidth, USA, demonstrates how automated fan systems can improve business productivity.
42 Adapting to the ConditionsMakoto Ohno, Hitoshi Toda, Hitoshi Chiba, and Fumihito Ozeki, Mino Ceramic Co. Ltd, Japan, examine the development of magnesia-spinal bricks to cope with the changing atmosphere in rotary kilns.
HEALTH and SAFETY
47 Prevention Through DesignBill Allen, Blastcrete Equipment Co., USA, explains how to lower costs with equipment designed for safety.
WEAR PROTECTION and MAINTENANCE
51 Around the BendCharles Williston, HammerTek, describes how pneumatic defl ection elbows cut wear, dust, and offl oad time for a bulk project contractor.
STORAGE FACILITIES
54 The Right ChoiceIngmar Holst, Claudius Peters Projects GmbH, Germany, analyses the delivery of a 10 000 t expansion chamber cement storage silo to Mawlamyine cement plant in Myanmar.
59 All Mixed UpPeter Paone and Lauren Daitzman, Bridge Gap Engineering, USA, discuss blending issues encountered in cement plants.
AUTOMATION
62 A Roadtrip to AIThomas Bergmans and Dirk Schlemper, Inform GmbH, Germany, look at the role of artifi cial intelligence in optimising cement logistics.
ENVIRONMENTAL COMPLIANCE
67 Implementing CEMS Best PracticesEric Wiley, Trinity Consultants, USA, explains best practices for CEMS at cement plants.
70 Does Your Baghouse Have What It Takes?Matt Devitt, BWF Envirotec, considers how to heighten the cleaning effi ciency of the baghouse.
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Earlier this year, an environmental group called Beyond Zero Emissions presented a pathway to achieving an Australian cement industry with zero carbon emissions. The pathway is based on fi ve key strategies and claims to be able to achieve a carbon-neutral cement industry within a decade. The strategies include: supplying 50% of cement demand with geopolymer cement; supplying 50% of cement demand with high-blend cements; mineral carbonation; using less cement; and the use of carbon negative cements.
It is an interesting thought exercise, but raises some questions. According to Mark Mutter, Managing Director of JAMCEM Consulting, the fundamental issue is who will pay for the pathway: “For solutions such as mineral capture, I think the cost would be huge. Who is going to pay for that investment? When suggesting geopolymer cements, this would result in the equipment that is currently being used to make portland cement being made redundant.” That implies large-scale write offs by current cement makers, in addition to investment in the new geopolymer cement plants.
Another question around geopolymer plants centres on the ability to scale them up to the same level as clinker production lines – something Mutter questioned. If large-scale production is not possible, it would presumably require investment in lots of smaller units, pushing up production costs.
The pathway tries to get around the issue of cost by noting that “geopolymer cement production does not require a kiln and therefore the set-up cost is relatively low.” But this is not really an answer: they still cost something. It also ignores the fi nancial impact that writing off existing plants would have on cement companies (perhaps negating their ability to invest in new geopolymer plants).
The pathway also suggests that companies could be pushed to invest in geopolymer facilities through the introduction of a national carbon price. Indeed, this appears to be viewed as something of a panacea: “requiring cement companies to pay for their carbon emissions would be a powerful stimulus to widespread uptake of geopolymer and high-blend cements. Paying for cement carbon emissions would also support the use of timber, commercialisation of mineral carbonation, and incentivise the use of less concrete.”
Experience in regions with existing high carbon prices – e.g. the UK – does not suggest this to be so, however, although the UK’s carbon price did not come with legal requirements on the use of low-emission cements, for which Beyond Zero Emissions argues.
Another question centres around energy: “the mineral capture appears to be quite a complex process, which almost seems to add as much equipment to a plant as there is for making cement,” explained Mutter. Beside the issue of where the investment will come from for this new equipment, “preparing the materials for the process also requires energy inputs – so how much is really being saved?”
This question raises a bigger issue: the pathway assumes a 100% renewable energy system to provide power for the new-look cement industry. But renewables provided only 14% of Australia’s electricity in 2016, according to government fi gures; coal, meanwhile, provided 63% of electricity.
Even within Australia, the pathway would face signifi cant challenges to its implementation. On a global scale (something Beyond Zero Emissions does not claim to address), the challenges identifi ed would be magnifi ed. How then should we view it? It would be too easy to dismiss it as environmentalist idealism. Or a very localised answer to cement’s sustainability challenge. A better approach may be to view its solutions as part of a broad range of strategies that bring a zero-emission cement industry closer. After all, creating a zero-emission cement industry is likely to require as many strategies as possible. For that reason, Beyond Zero Emissions’ contribution to the debate should be welcomed.
December 2017 / 5World Cement
WORLD NEWSGeorgia HeidelbergCement sells stake in Georgian business
HeidelbergCement has sold a 50% stake in its Georgian business to Cement Invest for h115 million. Cement Invest is an investment company jointly managed and owned by the Georgian Co-Investment Fund (GCF) and Hunnewell Partners.
“The partnership will enable our new Georgian joint venture to benefi t from GCF’s and Hunnewell’s project experience in Georgia,” said Dr Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement.
HeidelbergCement’s Georgian business includes the Kaspi cement plant, which is currently undergoing modernisation with the installation of a new dry kiln. The project began in 2016 and is
expected to be completed in 2018.In addition to the Kaspi plant, the new joint
venture will operate another two integrated cement plants, a cement grinding terminal, and a cement terminal on the Black Sea coast. Annual cement production capacity is more than 2 million tpy.
The company also owns 13 ready-mixed concrete plants and two aggregates operations.
“Ths disposal is part of our portfolio review and optimisation with the goal to generate additional cash fl ow in order to support our disciplined growth and increase shareholder returns,” concluded Dr Scheifele. The h115 million generate from the sale will be used to reduce HeidelbergCement’s debt.
USA Cemex opens Denver cement terminal
Cemex USA has begun operations at a new rail-linked distribution terminal in Commerce City, Colorado. The new terminal strengthens the company’s position in the state and the Denver Metro area.
“Our customers in Denver have been requesting a more convenient way to pick up our products,” said Juan Castillo, Vice President Commercial – South Central Region at Cemex. “The new distribution terminal in Commerce City delivers on that.”
The new terminal is serviced by an existing rail line out of the company’s Lyons cement plant. It has a silo capacity of 5000 short t and houses type II portland cement.
“Denver and the surrounding Front Range communities have seen incredible construction growth over the past several years, and we’re seeing increased demand for building products,” said Frank Craddock, Executive Vice President – Commercial and Public Affairs at Cemex.
“The addition of this terminal allows us to address the construction needs of our customers for years to come,” Craddock continued.
Operations at the terminal began on 21 September. With the addition of the Denver terminal, the company now operates three cement sites in Colorado, including the Lyons cement plant in Longmont, north of Denver, and the Florence cement terminal to the south.
USA CRH picks up cement assets in Florida for US$0.75 billion
CRH has agreed to purchase a Floridian cement plant from Votorantim Cimentos North America Inc. and Anderson Columbia Co. The deal brings CRH’s spending on US heavy building materials assets to US$4.25 billion this year.
The assets are thought to be those of Suwannee American Cement, a joint venture between Votorantim and Anderson Columbia, that operates a cement plant, 18 ready-mixed concrete plants, an aggregates quarry, two block plants, and nine gunite facilities.
The 1 million tpy cement plant in Branford, Florida, has manufactured cement for the Floridian and
southern Georgian construction market since 2003. CRH will spend US$0.75 billion on the acquisition, which will make the company the largest building materials company in Florida.
The Suwannee deal comes on the back of CRH’s successful US$3.5 billion takeover bid of Ash Grove Cement, the largest independent cement production in the US. Ash Grove operates eight cement plants in the Northeast, Midwest and Texas, with estimated sales of 8.3 million tpy this year.
The Ash Grove acquisition is expected to close in 2018, while the Suwannee deal is expected to close in late 2017.
IN BRIEFEVENTS
December 20176 \ World Cement
WORLD NEWSPhilippines Holcim remains committed to Davao project
Despite challenging market conditions, Holcim Philippines is continuing its capacity expansion in the southeast Asian country. According to its latest quarterly report, groundbreaking at the company’s Davao plant expansion project occurred in October, attended by key government and company offi cials.
The PHP2.7 billion project will expand cement production capacity at the Davao plant to 2.7 million tpy. The Davao plant is located in Davao, the largest city on the island of Mindanao in the south of the Philippines. When complete, the project will raise the company’s capacity to 12 million tpy from the current 10 million tpy.
“We remain steadfast in our support for Philippine growth and in the many opportunities in the market,” said Holcim Philippines President and CEO, Sapna Sood.
In addition to the Davao project, the company also said it was taking measures to adapt the business to the current challenging market environment in the Philippines. Cement demand has been weaker than expected in the country, while rising competition has had a negative impact on prices.
In response, Holcim Philippines was “further strengthening its cost management efforts through logistics excellence, renegotiation of energy and procurement contracts to improve variable costs, and fi xed cost management,” the company said in a press release.
The company’s continuing commitment to the Davao expansion project refl ects its belief that government infrastructure spending will underpin growth in demand for building materials in the country.
“Holcim Philippines fi rmly believes in the government’s commitment on infrastructure growth that would spur the economy and improve the lives of the people,” Sood said at the Davao project groundbreaking ceremony. “The government needs the support to make that happen and that is where we come in.”
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04 – 06 April 2018The 25th AFCM Symposium and ExhibitionBandung, Indonesiawww.afcm2018indonesia.com
22 – 24 February 2018Slag & AshTrade Americas Conference & Exhibition 2018Cancun, Mexicowww.gmiforum.com
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South Africa PPC rejects Fairfax offer as CRH enters the ring
PPC has rejected a partial bid for the company by Fairfax Africa Investments, a deal that would also have seen the company merge with its rival, Afrisam. The rejection of the Fairfax offer leaves two bidders in the running for control of PPC.
Fairfax had offered ZAR2 billion for a 22% stake in PPC, on the condition that the company combines with Afrisam. The bid had faced signifi cant opposition from some major shareholders in PPC, however, and in the end was deemed insuffi cient by the independent board convened by PPC to evaluate the offer.
Meanwhile, Ireland-based building materials major, CRH, entered the bidding for PPC, joining fellow major, LafargeHolcim. According to a PPC announcement to the Johannesburg Stock Exchange, CRH is “considering submitting an all-cash proposal to acquire a controlling stake in PPC.”
PPC’s independent board gave CRH until the week of 20 November to submit an updated expression of interest, including a value per share for PPC. LafargeHolcim has until the same date to submit its fi rm offer.
If successful in its bid for PPC, it would be the fi rst foray into the African building materials market for CRH, a company that traditionally focuses on markets in Europe and North America.
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December 20178 \ World Cement
WORLD NEWSFLSmidth has confi rmed a contract to construct a new cement plant in North Africa, after the Danish engineering company received the down payment from the customer. The contract had been previously been announced in May of this year but had been conditional upon receipt of payment, among a number of other conditions.
The confi rmation of the deal “marks the culmination of a close collaboration between the customer and FLSmidth and demonstrates our ability to work with contractors from anywhere in the world,” said Per Mejnert Kristensen.
The order includes engineering, equipment supply, construction supervision, commissioning,
and training, and is valued at more than h100 million.
The Danish company said it had received the order “in part as a result of the partnership between FLSmidth and Beijing Triumph International Engineering Co”. Beijing Triumph International Engineering is part of China-based CNBM Group, which is responsible for the construction of the cement plant.
When complete, the cement plant will have a capacity of 12 000 tpd and supply mainly into the North African market.
FLSmidth provided no further details on the location or the scope of supply.
North Africa Order for North African cement plant becomes effective
USA Roanoke Cement terminals recertifi ed by the Wildlife Habitat Council
Four Roanoke Cement Co. cement terminals have been recertifi ed by the Wildlife Habitat Council. The four sites include the Front Royal, Richmond, and Bristol terminals in Virginia, as well as the Winston-Salem cement terminal in North Carolina.
“Having the Wildlife Habitat Council’s recertifi cation for each [of the four terminals] is a distinguished recognition, confi rming that all of Roanoke Cement’s sites are on the right track, ecologically,” said David Brinkley, Director of Distribution & Customer Resources at Roanoke Cement Co.
Wildlife Habitat Council certifi cation recognises habitat management and conservation education programmes. The Front Royal, Richmond, and Winston-Salem terminals were originally certifi ed in 2013, while Bristol terminal followed in 2015. Certifi cation lasts for two years.
Roanoke Cement Co. is a subsidiary of Titan America LLC, a supplier of heavy building materials to the eastern US. Titan America is headquartered in Norfolk, Virginia, and is part of Greek multinational building materials supplier, Titan Cement Co.
USA Two Argos plants receive ENERGY STAR certifi cation
Argos’ Newberry and Roberta cement plants, located in Florida and Alabama, have received ENERGY STAR® certification from the US Environmental Protection Agency (EPA), in recognition of their efficient use of energy resources and environmental care.
To receive the certifi cation, the two plants had to perform in the top 25% of similar facilities nationwide for energy effi ciency, and meet strict energy effi ciency performance levels set by the EPA. ENERGY STAR recognises industrial plants that offer products and services with low energy consumption and that develop strategies that lead to substantial energy savings. By improving its energy performance, which includes the burning of alternative fuels,
managing energy strategically across the plant, and making other cost-effective improvements, the Argos Newbury and Roberta cement plants were again able to score in the top quartile of all cement plants in the US.
“At Argos, we have ambitious goals to lessen our impact on the planet by reducing our energy and water consumption, increasing the use of alternative fuels in our production process, and decreasing our CO2 emissions. We are excited to receive this distinction because it is just one more way that we can showcase how hard our employees work in support of the sustainable development of our company,” said Eric Flesch, Argos President – USA Region.
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December 201710 \ World Cement
IN BRIEFWORLD NEWS
Tokyo Cement Co. has signed a contract with Claudius Peters Projects for the supply of a rotary packer PACPAL Roto Fill for a plant in Sri Lanka. The scope of supply includes the packing plant, with a 12 spout rotary packer and integrated weighing system, delivering 3600 bags/hr packed in 50 kg bags, the bag applicator with cassette magazine, and rear loader. Claudius Peters will also carry out the supervision and erection. The facilities are expected to be commissioned at the end of 2017.
A fi re a Lafarge Malaysia’s Rawang cement plant has left three workers dead, according to a company statement. The fi re on 3 November broke out in a fuel tank at the plant. According to the company, the fi re broke out between 16:15 and 16:20 local time. The fi re and rescue department responded within ten minutes and the fi re was extinguished shortly afterwards. An investigation into the cause of the accident is ongoing.
“We are deeply saddened by this tragedy and our immediate priority if our employees and their families,” said Lafarge Malaysia CAO, Thierry Legrand.
The Italian Antitrust Authority has given approval to the sale of Cementir Italia to Italcementi, a subsidiary of HeidelbergCement. The sale includes Cementir Italia’s subsidiaries, Cementir Sacci and Betontir. The transaction is expected to close in early January 2018. After closing, Italcementi will be required to divest some plants from among a list identifi ed by the antitrust authority. Cementir Italia’s assets include fi ve integrated cement plants and two cement grinding stations, as well as a network of cement terminals and concrete plants.
Germany Liebherr crane used to install rotary kiln
The HeidelbergCement cement plant in Schelklingen, Baden-Württemberg, has invested in a new, 68 m rotary kiln system, replacing its two existing rotary kilns to meet more stringent EU emissions regulations. The kiln’s fi ve components needed to be hoisted up to a height of 11 m in a restricted space, a task that was carried out using a Liebherr LR 1350/1 crawler crane, from Belgian crane and heavy haulage contractor, Sarens.
Due to the restricted space and storage capacity at the plant, it was only possible to use a 350 t class crane. Sarens received the order to hoist the various rings using its LR 1350/1 crane.
Sarens set up the 350 t crane, which has a 42 m main boom, a 27 m derrick boom, 85 t of superstructure ballast, and 75 t of suspended ballast. After hoisting the components, which weighed up to 144 t, the crane had to move around 20 m on a specially prepared track so that the load could be precisely positioned for the installation work.
As soon as all fi ve pipe sections of the rotary kiln had been positioned, they were aligned and welded together by fi tters from thyssenkrupp. The fi nished rotary kiln ultimately had a net weight of 452 t and was fi nished with refractory cladding so that, in the future, it will be capable of producing around 4500 t of clinker every day.
Oman Oman Cement to upgrade power plant
Oman Cement is to upgrade the power plant that supplies its cement plant, as part of its programme of investment to reduce costs and raise productivity. The company has been under pressure from cheap imports, as well as rising costs.
“In order to improve the performance of [the] power plant and achieve higher effi ciency and cost reductions in its operations, a decision has been taken to upgrade the power plant with the latest technology turbine,” the company said in its latest quarterly report.
The upgrade to the power plant follows the installation of a new cement mill, which has allowed Oman Cement to increase production levels. The company also has ongoing work to improve the pollution control equipment and install new packing and truck loading equipment.
Oman Cement is one of two cement producers in the Middle Eastern country. It recently announced an 8% increase in cement production in the fi rst nine months of the year. Sales volumes were also up 9.59%, although pre-tax profi ts were down, on the back of lower prices.
Three Buzzi Unicem plant’s have received ENERGY STAR® certifi cation from the US Environmental Protection Agency (EPA), marking the ninth consecutive year that the plants have achieved the recognition.
The Chattanooga plant in Tennessee, Festus plant in Missouri, and Maryneal plant in Texas all retained the certifi cation, which marks them out as part of the top 25% of similar plants in terms of energy performance.
USA Buzzi Unicem plants retain ENERGY STAR rating
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December 2017 / 13World Cement
Challenging and interesting times lie ahead for all players in the construction sector. The global international commitment of the Paris Agreement to keep the global temperature increase below 2˚C is a tall order. Under the Paris plan, each country put forward a proposal to curtail its greenhouse gas emissions between now and 2030.
Today, the magnitude of industry change required to adapt to a 2˚C scenario is just starting to emerge. And not only the magnitude. The required pace of change needed within the next few decades is often overlooked and is critical in a sector that is both resource and carbon intensive. This is the case despite recent remarkable efforts by forward-looking players to deploy transformational innovations.
LafargeHolcim, as a leading global building materials company, is focusing efforts to reach its 2030 ambition to reduce CO2 emissions per tonne of cement by 40% vs 1990 levels. The efforts needed to achieve this goal are considerable and require a holistic and far-reaching approach.
2˚C business modelsGlobal warming is already damaging the environment and the health of millions – and yet reluctance to change remains high. “After the last No, there will be a Yes,” as strongly expressed by Al Gore at COP21, “and it is on this Yes that we will build the future”. In other words: the sector will have no other choice than to align efforts to deliver on the objective of carbon neutrality by the mid-century. The early movers – those who are able to develop meaningful “2˚C business models” – will be the winners of the race. It also makes business sense.
This year’s COP23 in Bonn, Germany, highlighted the remaining gap between individual countries’ commitments and the 2˚C objective. Businesses could help bridge the gap, if robust business models are enabled by targeted regulations.
For those willing to drive the change, these are exciting times. Construction is a fi eld of action that can deliver a massive greenhouse gas emission reduction and create real low-carbon business opportunities, while fulfi lling – with pride! – the infrastructure and housing needs of the increasingly urbanised world population.
A science-based approach: the new paradigm?A rational strategy to address climate change in a business sector is today increasingly reliant on a
so-called science-based approach, meaning a strategy that aims at reaching mitigation targets in line with the level of decarbonisation required to stay below the 2˚C global temperature increase.
The application of this concept to the very fragmented construction sector appears to be rather complex and raises fundamental questions on how to measure and deliver actual greenhouse gas emission mitigation over the entire lifecycle of buildings and infrastructure – at the best economical cost. Complex or not, political and civil society stakeholders will be increasingly assessing companies on their ability to align to this science-based approach.
Forward-looking companies – including LafargeHolcim – are exploring these questions. This thinking process, however, remains mostly within the boundaries of each of the segments of the value chain.
For a building materials company, the achievement of CO2 targets is meant to be delivered through action plans on energy-effi ciency improvement or through the substitution of high-carbon raw materials, fuels, or electricity supply by low-carbon alternatives. The substitution of clinker – the carbon intensive component of cements – remains the main lever for upcoming years. Let’s be clear: these actions must collectively be taken by these industries. But this will not be suffi cient.
Transformational innovations in the product portfolio, which often require adaptation of downstream techniques and/or a more holistic
Towards a 2˚C Strategy for the Construction Sector Bernard Mathieu, LafargeHolcim
About the authorBernard Mathieu is Senior Vice President Sustainable Development at LafargeHolcim. He has 22 years of experience in cement, concrete, and aggregates businesses in various positions – technical marketing, environmental coordination, mergers and acquisitions, and sustainable development – within HeidelbergCement, Holcim, and LafargeHolcim.
Mathieu has also been Chair of the Belgian Business Climate Group (FEB-VBO), President of the European Waste Co-Processing Association (EUCOPRO), a Green Business Expert for a Belgian Foreign Investment Agency (AWEX), and is a lecturer for universities in Brussels and Liege, Belgium.
monitoring (and accounting) of carbon mitigation impacts, are today insuffi ciently (and much too slowly) deployed and rewarded.
Innovation at all levels!Practice shows that building materials or components with a higher initial footprint per reference unit (in our sector: per tonne of cement) can deliver large emissions savings over their entire lifecycle. Thinner structures from stronger materials – high-performance concrete is the best example – can also make a real difference in total embodied emissions. Smarter designs of structures, enabled by the most innovative and high-performance materials, can unlock a CO2 mitigation potential that can only be addressed by collaboration between every player of the construction chain.
In some cases, carbon sink effects can be created and/or enhanced through appropriate practices during the life or end-of-life of materials, which is, for example, the case through the huge potential of concrete to re-carbonate and to chemically bind CO2 from the air.
And let’s not forget the urgent need to advance the sector in emerging countries, where the majority of construction activities will continue to take place over the next few decades. The entire sector has a clear and direct responsibility to rapidly increase the quality of construction and to help train and educate the workforce so that materials are used in the most effi cient way, so that wastage of materials and resources are drastically reduced, and so that buildings and infrastructure are designed and constructed in a way that ensures long lifetimes, resilience to climate events, and cost-effective future refurbishments, as well as affordable deconstruction and recycling solutions.
The next steps on the path towards carbon neutralityBeyond continuous improvement of our own emissions, building material companies are essential drivers for innovation. LafargeHolcim is making ground: from low CO2 clinkers, cements, and concrete types (such as Solidia, gaining strength through chemical reaction with CO2) to energy-effi ciency solutions for buildings (such as the newly launched insulating cement-based foam, Airium). The portfolio of sustainable solutions – our so-called 2030 Solutions – for the construction sector is expanding year on year.
The construction sector should be at the centre of regulatory efforts to mitigate CO2 emissions. Collaborative thinking across the construction industry on common metrics and consistent targets, plus a shared vision and action plan to achieve carbon neutrality and resilience to climate disasters in the built environment, is no longer just a nice-to-have. The Cement Sustainability Initiative (WBCSD-CSI) and the Global Alliance for Buildings and Construction (GABC) took interesting steps to initiate that dialogue. With the extent of the challenge we are facing, it is indeed a must for all those who want to construct a safe and resilient built environment for generations to come.
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/ 15
With a slew of new plants under construction to meet booming demand, the Pakistan cement industry is looking pretty positive at the moment. There may be challenges ahead, however, as Jonathan Rowland, World Cement Editor, reports.
IntroductionThere are a number of reasons to be positive about Pakistan at the moment. According to the World Bank, economic growth will be 5.5% in this fi nancial year (FY2017/18), rising to 5.8% in FY2018/19. The country also has huge demographic potential – the country’s population reached almost 208 million this year, 35% of which are under 15 years old – while cash from China has fi nanced an infrastructure boom.
China’s involvement has seen billions of dollars (US$62 billion according to one recent count) poured into the country under the China-Pakistan Economic Corridor (CPEC) – an offshoot of Beijing’s One-Belt One-Road policy of investing to improve connectivity throughout Eurasia.
December 201716 \ World Cement
The country is not without its challenges, however. On the political stage, the country has been rocked by a Supreme Court ruling to remove the then prime minister, Nawaz Sharif, from office, after ruling him unfit for public office. The court found that Sharif and his family had wealth beyond their known means, after leaked documents from Panama-based law firm, Mossack Fonseca, provided extensive details of the Sharif family’s offshore wealth.
Meanwhile, on the economic front, there has been some concern over the country’s widening current account deficit on the back of surging imports and a marginal decline in exports. The country’s official reserves also fell to US$16.2 billion at the end of FY2017. This is enough to cover imports for just 3.1 months – a potential concern given Pakistan imports much of its energy requirements.
“Growing fiscal and external imbalances […] have eroded the hard-earned gains in restoring macroeconomic stability in the last three years and they could affect the country’s growth prospects, if not addressed,” the World Bank said in its November 2017 Pakistan Development Update.
The construction and cement sectorsDespite these challenges, the outlook for Pakistan’s construction sector is positive – not least because of CPEC investment. For FY2017, Pakistan’s construction industry grew by 9% year-on-year, according to CW Group. Although less than the 15% growth seen in 2016, “the construction sector continues to make for a steady 2 – 3% of GDP,” according to Raluca Cercel, Senior Analyst at CW Group.
As a result, domestic cement demand grew by 21.9% in 3Q17 (1QFY17/18) to 9.06 million t, according to Lucky Cement – one of Pakistan’s largest cement producers – in its latest quarterly results statement. Overall, CW Group expects 37 – 39 million t of consumption in 2017, rising to 50 million t in 2022.
Cement industry capacity utilisation is also high: 87.11% this year according to a presentation given by Faris Fazal of D.G. Khan Cement Co Ltd at the recent Asia CemenTrade in Vietnam, although CW Group would put this higher at 90 – 92%.
“This is good – if not exceptional – for any cement market in the world,” said CW Group’s Cercel.
Current installed cement production capacity stands at around 46 million t – a long way from the 0.5 million t capacity across four plants that the country inherited following the Partition of British India in 1947. There are now 24 cement plants operating in Pakistan, spread over a relatively large number of producers.
Only three producers boast above a 10% share of cement production in Pakistan: Lucky Cement,
Bestway Cement, and D.G. Khan. But even combined, these three producers only account for less than half of the market. The remaining capacity is split between around 15 other smaller producers.
Capacity is also expected to grow significantly over the next few years: according to D.G. Khan’s Fazal, there are 18.1 million t worth of planned cement capacity underway with an additional 11.76 million t in the pipeline. This additional 29.76 million t of capacity would bring Pakistan’s total to around 76 million t.
“And it’s interesting to see that everybody is adding something,” said CW Group’s Cercel. “But the scenario is quite different to what’s happening, for instance, in Egypt. It is not artificial growth; they are anticipating a lot of domestic demand – and they have the grounds to believe that, given that in the last year and half they switched from being very strong on exports to pushing most of their production to the domestic market.”
Exports will be around 4 – 5 million t this year, according to CW Group. “That’s quite small for Pakistan, which counts Afghanistan and a number of markets in East Africa as its main export markets,” said Cercel.
Pakistan’s capacity additions: an overview
Two new projects in Hub Choki, BaluchistanOf the projects underway, D.G. Khan’s 9000 tpd project in Hub Choki in the state of Baluchistan is the largest. Baluchistan is Pakistan’s largest province by area and is located in the southwest of the country. The D.G. Khan project is expected to start commercial production by the end of the current fi nancial year, according to the company’s latest quarterly report.
Danish engineering company, FLSmidth, is supplying most of the major equipment at the plant, including raw material crushing, conveyors, stackers/reclaimers, storage, pyroprocessing system, fi lters, and control and electrical systems for the complete plant.
Raw material processing will consist of three crushers (two TST 1900 jaw crushers and one Raptor XL1100Ce cone crusher), as well as two EH 150x120 crushers for clay and additives, FLSmidth said.
FLSmidth is also supplying raw material storage equipment for limestone, clay, and coal, as well as a CF silo with a capacity of 26 400 t. The pyroprocessing line consists of a six-stage two-string preheater, two-base kiln, and a Cross-Bar cooler. At 69 m × 5.75 m dia., the kiln was the largest two-base kiln ever sold by FLSmidth at the time the contract was signed.
The project also boasts the largest raw material mill in the world, according to Loesche, which is supplying it and two other vertical roller mills (VRMs) for cement and coal grinding. The 1050 tph LM72.5
raw mill comes with a 7200 kW COPE gearbox, which has been developed by Augsberg-based Renk AG in cooperation with Loesche.
The 445 tph LM72.4+4 cement mill also includes a 9600 kW COPE gearbox. The coal mill has a capacity of 66 tph.
In addition to the D.G. Khan project, Hub Choki is host to a 4000 tpd plant being developed by Attock Cement Pakistan Ltd. The Attock plant will also include a Loesche VRM: a LM 56.3+3 CS for grinding cement to a fi neness of 3300 Blaine with a capacity of 200 tph or to a fi neness of 2800 at a capacity of 240 tph.
In addition, Loesche’s mandate includes the monitoring and assembly of the mills, as well as commissioning. Chinese engineering company, Hefei Cement Reseach and Design Institute acted as contractor to the project with overall responsibility for the new cement line.
“The work on the new production line is processing as per schedule, and it is anticipated that the commercial production will commence by December 2017,” Attock Cement said in its 2017 Annual Report.
Punjabi projectsMeanwhile, Pakistan’s most populous province, Punjab, also boasts a number of ongoing cement projects. Pioneer Cement Ltd is developing the
largest of these (at about 8000 tpd) at its existing plant in Khushab. Maple Leaf Cement is developing a 7300 tpd plant in Daudkhel, and Flying Cement is upgrading its production line from 2000 tpd to 4000 tpd.
The new Pioneer Cement line will also include a 12 MW waste heat recovery power plant and a 24 MW captive coal-fi red power plant. Sinoma-Chengdu Design and Research Institute of Building Materials Industry was awarded the engineering contract for the plant, which will include four Loesche VRMs and a Claudius Peters ETA clinker cooler.
The VRMs will be used to grind raw meal, clinker, and coal, Loesche said in a press release. The raw meal mill will have a throughput of 630 tph and be supplied with HURRICLON cyclone technology from Loesche’s subsidiary, A TEC. The two cement mills will have a processing capacity of 235 tph each, while the coal mill will have a capacity of 60 tph.
The 1086/85 S ETA cooler from Claudius Peters is designed as a stage cooler with RB 488-4 EM integrated roller crusher. It will be equipped with ten rows of HE modules for increased effi ciency, the German engineering company said in a press release.
Meanwhile, the new Maple Leaf production line is being supplied by FLSmidth at an order value of more than E75 million. The order includes the following equipment:
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ATOX 52.5 vertical mill for raw grinding. ATOX 27.5 vertical mill for coal grinding. EV 200x300 hammer impact crusher. Stacker and reclaimer systems for storage. ROTAX-2 rotary kiln with low NOX ILC calciner. FLSmidth Cross-Bar cooler. JETFLEX burner. Two OK 39-4 vertical mills for cement grinding.
The plant will also include planetary gear units from FLSmidth MAAG Gear, air pollution control equipment from FLSmidth Airtech, a packing plant from FLSmidth Ventomatic, a control system and plant automation from FLSmidth Automation, and weighing and metering systems from FLSmidth Pfi ster.
The upgrade of the Flying Cement plant will be undertaken by unnamed “Chinese companies”, the company said in its latest annual report.
A number of other companies have also expressed interest in the development of cement capacity in Punjab, including Lucky Cement, which is “in the process of seeking necessary approvals” for a 2.3 million tpy greenfi eld cement plant in the province.
Elsewhere in PakistanIn addition to its Punjabi ambitions, Lucky Cement is adding an additional 1.25 million t production line to its Karachi plant in Sindh province: “construction work at project site is running satisfactorily to achieve commercial operations during the month of December 2017,” the company said in its latest quarterly report.
Power Cement is also building a new cement production line in Sindh with FLSmidth again receiving the contract to build the plant. The project will add 7700 tpd of capacity and comprises two projects: clinker production, as well as cement production and dispatch. The order is valued at more than E90 million and includes the following equipment:
ATOX 55 vertical mill for raw grinding. ATOX 25 vertical mill for coal grinding. EV 250x250 hammer impact crusher. Stacker and reclaimer systems for storage. ROTAX-2 rotary kiln with low NOX ILC calciner. JETFLEX burner prepared for future RDF
alternative fuel. FLSmidth Cross-Bar cooler. Two OK 39-4 vertical mills for cement grinding.
In addition, the project will include planetary gear units from FLSmidth MAAG Gear, fabric fi lters from FLSmidth Airtech, a control system and plant automation from FLSmidth Automation, weighing and metering systems from FLSmidth Pfi ster, and a fully-automated packing plant with GIROMAT packers from FLSmidth Ventomatic.
The order will be complete by the end of 2018, FLSmidth said in a press release.
Moving from Sindh to Khyber-Pakhkunkhwa province, Cherat Cement is building a 7100 tpd plant in the province, appointing Tianjin Cement Industry Design and Research Institute as the engineering contractor for the plant. Gebr. Pfeiffer are to supply a Pfi effer MVR 6300 C-6 roller mill and MultiDrive to the plant to grind ordinary portland cement to a fi neness of 3200 cm²/g acc. to Blaine. The MultiDrive will consist of four independent drive units for total drive power of 7800 kW.
In addition, Wärtsilä announced in September that it would supply generating equipment to provide power to the Cherat plant. The contract includes three Wärtsilä 34DF dual-fuel engines capable of operating on both natural gas and heavy fuel oil. The total electrical output will be approximately 29 MW and the engines are set for delivery in March 2018.
Meanwhile, Bestway Cement is to build a new 6000 tpd brownfi eld cement plant at Farooqia in Khyber-Pakhkunkhwa, appointing Sinoma International Engineering to build the plant. Interest has also been shown by Gharibwal Cement in establishing cement production in the province, as well as UK-based company Asian Precious Minerals (APML), which announced a US$400 million investment in February of this year.
Pakistan International Bulk TerminalAmid the fl urry of cement plant developments in Pakistan, the country also saw the inauguration of a new dry bulk terminal at Port Qasim. The Pakistan International Bulk Terminal was inaugurated by Prime Minister Shahid Khaqan Abbasi in October and allows for the export of cement and clinker, as well as the import of coal.
Constructed at a cost of US$285 million, the terminal is equipped with a cement/clinker shiploader and has the capacity to handle up to 12 million tpy of cargo with a storage area of 62 acres. The terminal is also reported to be equipped with state-of-the-art mechanisation and full automation to reduce loading/unloading times for bulk cargoes at Qasim.
Challenges: a more complex pictureThe picture for the cement industry in Pakistan thus far looks pretty positive; it is not without its complexities and challenges, however. Take the country’s cement exports: it is not simply the case that increased domestic demand has pulled tonnes from the export market. In some key export markets, Pakistan is facing signifi cant competition from other regional actors, such as Iran.
“Their export markets have really dried up – and it’s going to get worse,” explained Robert Madeira, Managing Director and Head of Research at CW Group. “They’ve been saved by the bell by the domestic markets, but what happens next for Pakistani producers [when domestic consumption
stops growing]? Are we going to see a recovery [in exports]? Unlikely. In all the markets in the traditional destinations, there are new supplies coming online everywhere you look.”
“Cement is a cyclical business at the end of the day,” continued Madeira. “It looks good now, but now is the time for Pakistani producers to prepare for what happens next. The ones that prepare for the turn strategically are the ones that will come out on top later on.”
Pakistani producers are also “not entirely safe from imports” from Iran – albeit illicitly – added Cercel. “It’s a peril that may escalate in the not-too-distant future.”
An additional question exists around who will supply cement for the CPEC projects. “There’s a lot of fear that the Chinese manufacturers might come in partnerships with the Chinese government and actually provide the cement,” Cercel continued. “There has been no statement on the Chinese side, so it’s still speculation at this point – but quite grounded.”
A fi nal challenge may be around cement prices. According to Nabeel Khursheed, Analyst at Topline Securities, the era of high profi tability for cement producers is over, as price pressures kick in on the back of growing capacity and rising input costs. This would become more severe should the Pakistani government be forced to devalue the rupee in
response to the widening current account defi cit, raising the cost of imports, which include the coal and gas used to fuel Pakistan’s cement plants.
ConclusionDespite these challenges, Pakistan’s cement producers are in a pretty positive place – particularly compared to other cement markets in the region. This should not breed complacency, however. There are a number of potential storm clouds on the horizon that could spell rain – if not immediately, then in the medium term – for the industry. It may be time to buy an umbrella.
AcknowledgementsThe author wishes to thank Raluca Cercel, Senior Analyst, and Robert Maderia, Managing Director and Head of Research at CW Group, for sharing their insight into the Pakistani cement industry.
SourcesFAZAL, F., “Rising Cement Demand In Pakistan”, presentation given at 19th Asia CemenTrade Summit in Hanoi, Vietnam (24 – 25 October 2017).
“Pakistan Development Update: Managing Risks For Sustained Growth” (World Bank; November 2017).
Additional material was gathered from company press releases, local media reports, corporate results, and analyst reports.
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