Use of Coal as a main fuel in the Industry Egyptian Cement

 

October 29, 2013

 

The cement industry represents 2% of the Egyptian GDP (5% of the manufacturing GDP) being the main driver of the construction industry that accounts to 40% of the national economy. The industry comprises 21 Egyptian companies with 24 plants all over Egypt, employing directly and indirectly about 50,000 and 200,000 workers respectively.

 

Arabian Cement is a cement producer, with a 5 MM MT/year plant located in Sokhna, Suez Governorate and holds 9 % of the market share, employing around 2,000 personnel.

 

Over the past couple of years the country has been affected by a severe energy crisis.  This crisis was caused by a depletion of foreign currency from the country treasury, along with a decrease in local production of gas and other petroleum products. Due to the need of the government to supply electricity to the population in order to overcome recent power shortages and blackouts, the government directed a portion of the NG allocated to the industry (especially to the cement industry which suffers as well from the Mazot shortages) to the power generation plants which in turn affected cement production, not being able to keep up with demand. This led to a 30% decrease in cement production in July and August 2013. This represents a loss of 3 million tons of cement over 20 days which represents a loss of 1.5 billion EGP to the national economy.

 

However, the cement industry has a solution for this current crisis: Use coal as primary fuel instead of gas. The cement companies have started proposing the use of coal as a main fuel to overcome the problem.  If the proper permits are released before the year end, it’s quite possible that part, if not all of the blackouts that we will face next summer will be avoided.  The cement industry consumed 3.7 billion m3 of NG as well as 1.4 million tons of Mazot during 2012 which are solely supplied by the Ministry of Petroleum. If all this energy is directed to electricity production, it will produce 2 -3 GW, which is the extra amount the country needs during peak times in summer. In short, allowing use of coal will stop electricity blackouts in the short term.

It will also provide other advantages:

 

Investment: It will cost the companies themselves about $600 million for the entire process of switching to coal.

 

Better use of subsidies: The government will free up subsidies that are currently being used to purchase mazut/fuel oil outside Egypt.  Now companies will be responsible for supplying their own energy needs.

 

Foreign Currency: Not only will carry away the subsidy burden from the State shoulders but it will relieve it from providing the hard currency to import fuel from abroad. Companies will be fully responsible to do so.

 

The use of coal in the cement industry is not a new idea, as it is a common practice all over the world in developed and developing countries, petrol producing and not. Countries like Canada, US, UK, Spain, Germany, and France, with outstanding environmental credentials, use coal in their cement industry.  Even Gas rich countries like UAE fuel their industry with coal and use their gas for more value added activities. For example the European cement industry uses 81% coal, 10% waste, 7% petrol and only 2% gas to fuel the production.

 

Coal is safe in transporting, storing, and firing especially if following the most advanced international standards. Also it does not cause any additional harmful emissions both inside the plant and into the surrounding environment.

 

After a complete switch to coal, which would take place over a period of 2-3 years, the expected amount of imported coal will be 6 million tons annually, equal to only half the clinker quantity needed (for import) to compensate a fuel shortage of 25%, which is the current situation. This would not cause any extra load on the existing ports and highway facilities with regards to capacity or pollution when compared to petroleum products or imported clinker.

 

The cement manufacturers have no other choice than to migrate to using coal in order to avoid the collapse of the industry which has the potential to flourish to the same levels of the industry in neighboring countries like Turkey and UAE, which currently use coal to export cement to Egypt.

 

If the concern for using coal is the increase of CO2 emissions, we have to remember that the Egyptian CO2 per capita emitted, currently stands as one of the lowest (if not the lowest) in the world, with only 2.7 MT per year per person compared to 7.7 for Spain, 10.7 for Germany, 19.2 for USA, 32.8 for UAE and 56.2 for Qatar.

 

If the cement industry adopts the use of coal, it will only increase the CO2 emissions by 3%, to be around 2.8 MT/year. Moreover, other countries like China do not put limits on their emissions, practicing their right to develop their industries as necessary. The more logical choice would then be that developing countries like Egypt, whose industries are still evolving, would not put limitation on their CO2 emissions; otherwise, they will not be able to achieve the development of the economy needed to meet the growth of their population. Why should we put restrictions on our capacity of meeting demands which will benefit the Egyptian people and the economy?

The cement industry initiative to switch to coal is a positive alternative and solution, for all the reasons previously mentioned.  It deserves sincere support from all stakeholders. We encourage the EEAA to speed up their efforts to issue the needed licenses before the yearend so that the Egyptian people can enjoy the expected benefits as early as next summer.