world class in all spheres indian cement industry
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By
N.A. Viswanathan Secretary General
CEMENT MANUFACTURERS’ ASSOCIATION
Overview on
The Indian Cement Sector
and its Changing Coal Requirements
India in Globe
Second Largest Cement Producer in the
World, after China.
State-of-Art Cement Technology.
Low Energy Consumption.
Produces Cement comparable to World
Standards.
Green and Environment-Friendly Industry.
Contributes significantly to CO2 emission
reduction and thereby taking care of issues
concerning Global Warming.
Per Capita Cement Consumption at 202 kg is
very low against World Average of 513 kg.
FROM MODERATE TO WORLD CLASS INDIAN CEMENT INDUSTRY
Industry’s Initiatives and Achievements acknowledged and appreciated world over - although, a lot still remains to be done with the help and support from Government
1
1982 – A ‘Watershed’ in the
history of Indian Cement
Industry when ‘Partial
Decontrol’ was introduced
culminated to Decontrol in
1989.
Drastically compressed
time for adding additional
100 Mt. cement capacity
mark to 11 and 3 years
respectively from 83 years
taken for the First.
2
BURGEONING GROWTH
INDIAN CEMENT INDUSTRY
0
200
400
600
800
1000
1200
1400
1600
14-15 82-83 96-97 07-08 10-11 2016(Tar.)
2022(Est.)
0.0
1
23
.30
76
.22
17
4.3
1
22
8.3
0
40
7.4 7
10
0.0
1 33
.51
10
5.6
8 20
9.2
0
32
3.2
0
47
9.3
81
1.4
Mt.
Capacity
Production
19
India Produces 7% of Global Cement Production.
Of late, subdued cement demand has significantly lowered capacity
utilization – A major cause of concern.
GREEN AND ENVIRONMENT-FRIENDLY INDIAN CEMENT INDUSTRY
Adopts Latest Technologies to keep it globally competitive in respect of :
Production Cost (However, high taxation and import of inputs negate it).
Protection of Environment in and around cement plants.
Strives significantly for maintaining our Ecological balance being disturbed through Global Warming.
Takes notable initiatives and measures for Clean Development Mechanism through increased clinker substitution and Alternative Fuels use.
3
Still a Lot of Scope for Further Improvement
Proactive Cement Industry constantly improves Energy Consumption.
Some plants have become global benchmarks in energy consumption, next to Japan.
4
TOWARDS TECHNOLOGY & ENERGY EFFICIENCY
INDIAN CEMENT INDUSTRY
99% Energy Efficient Dry
Process plants.
Year
1950-60 1970 1980 1990 Post 2010
Kiln Capacity
(Tonnes/Day) 300 - 600 600 – 1200 2400 – 3000 3300 – 6000 4500 – 12000
Heat Consumption
(Kwh/Tonne Clinker) 1300 - 1600 900 – 1000 800 – 900 650 – 750 650 – 750
Power Consumption
(Kwh/Tonne Cement) 115 - 130 110 - 125 105 - 115 95 - 106 70 - 90
Perform, Achieve and Trade (PAT) Scheme of BEE @
Alternate Fuel and Raw Material (AFR)
Waste Heat Recovery (WHR) through Co-generation
5
NEW INITIATIVES FOR ENERGY EFFICIENCY
INDIAN CEMENT INDUSTRY
Energy consumption likely to be reduced further by 4.8% in first cycle of PAT
Scheme, ending in 2015
@ Outlined under the National Action Plan on Climate Change released by
Hon’ble Prime Minister of India in June 2008.
By adopting best available Technologies and Environmental practices in the plants viz. Waste Heat Recovery Power Projects and Uses of Alternate Fuels - Pet coke, Lignite, Husk, Municipal Wastes, Biomass, etc.
CO2 emission level reduced from 1.12 tonne of per tonne cement produced in 1996 to 0.719 tonne CO2 emission for one tonne of cement in 2010.
Is on the top in Certified Emission Reductions Projects registered with the Clean Development Mechanism (CDM) of Kyoto Protocol.
Indian roadmap now outlines a low-carbon growth pathway for the Indian cement industry that could lead to carbon intensity reductions of 45 per cent by 2050.
6
APPRECIABLE REDUCTION IN CARBON FOOTPRINT
INDIAN CEMENT INDUSTRY
These reductions could come
from increased clinker
substitution and alternative fuel
use; Improvements to energy
efficiency, and the development
and widespread implementation
of newer technologies.
CONSCIOUS OF ENVIRONMENTAL HEALTH AND SAFETY
INDIAN CEMENT INDUSTRY
Consumes around 27% of Fly Ash generated from
Thermal Power Plants.
Consumes almost 100% Slag generated by Steel Plants.
Eco-friendly use of hazardous industrial wastes
by focusing and producing Green Cement.
7
OPC, 31.62
PPC, 61.19
PBFS, 6.87
Others, 0.25
2010-11
OPC
PPC
OPC, 62.02
PPC, 26.18
PBFS, 11.05
Others, 0.75
2000-01
PPCOPC
OPC, 69.68PPC, 19.4
1
PBFS, 10.4 Others, 0.59
1990-91
PPC
OPC
Promotes Environment-Friendly Cement
Concrete Roads and White Topping in place
of Bitumen Roads, in which significant
emission of particulate matter, sulphur
dioxide are emitted through
Hot-Mix plants while preparing bitumen mixes
at construction sites.
TAKES MEASURES FOR ENVIRONMENT PROTECTION BEYOND ITS
SURROUNDINGS
INDIAN CEMENT INDUSTRY
Cement Road
Prolongs life of quarries and mines as
Cement Roads consume less
aggregates.
Protects ambient temperature from
increasing due to reduced absorption
of heat .
Bitumen Road
8
Utilizes fly ash upto 35%, disposal of which is a nuisance and health hazard.
Conserves 10% electricity used for street light
Conserves 14% Diesel and Petrol for Trucks plying on Cement Concrete Roads.
Developed green belts around
cement plants through social
forestry
Quarried mines converted into
water bodies, reservoirs, etc.
9
CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES INDIAN CEMENT INDUSTRY
Provide clean environment, health
care and education facilities to
workers and surrounding populace.
Adopted more than 700
neighbourhood villages surrounding
plants.
– Basic education, Primary Healthcare, Water
supply ensured.
– 225 Primary and Secondary Schools
established.
25 Colleges financed. Water Conservation
10
CLEAN ENVIRONMENT AND SOCIAL COMMITMENT INDIAN CEMENT INDUSTRY
Greenery Around Cement Plant
Thick rows of trees at a cement plant’s
perimeter Bulwark against GHG Rain water harvesting in Limestone Mining pits
Mined out areas converted into lakes by cement plants. SIBERIAN Birds certify Our
eco-friendliness
MAJOR CONCERNS
Updation of Database a casualty
Logistics, Despatches, etc. plans severely impacted after CCI’s
Order of 20th June 2012
Dropping Capacity Utilisation (from 90% to 70% now)
– Sluggish Demand
Coal Conundrum
Increasing Input Costs – Coal, Slag, Pet Coke, etc.
High Taxes and Levies
High interest rates making difficult for manufacturers to put up
new capacities as well as construction industries to fund their
new projects
11
TODAY FOCUSING ONLY ON COAL SCENARIO
Status of Indian Coal
India is the third largest coal producer.
It has fifth largest coal reserves Total reserves - 293 billion tonnes
(as on 01.04.2012) - Including Proved reserves up to the depth of 1200 m - 118.14 billion tonnes (as per Geological survey of India)
it is not able to meet domestic demand.
India is likely to become the second largest importer of coal next to Japan.
China USA
12
Breakup of Coal Demand by the User Industries
It is ironical, cement which is equally as important as power for growth of country’s economy gets only 1.75% of its 5% requirement of coal production
72% 7%
5%
16%
Power Utilities &Captive Power Utilities
Steel and Sponge
Cement
Chemical, Textiles,Fertilizer and E-auction& others
Power
13
(Fig in MT)
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2016-17
CIL 379.46 403.74 431.26 431.32 435.84 452.0 615
SCCL 40.60 44.54 50.43 51.33 52.21 56.00 57.00
Captive 21.17 29.87 35.03 34.60 36.24 32.00 100.00
Others 15.77 14.61 16.28 14.82 15.50 18.00 23.00
Total
Production
457.00 492.76 533.00 532.07 539.79 558.00 795.00
Demand 504.29 549.03 582.25 624.78 649.87 772.84 980.50
Gap 47.29 56.27 49.25 92.71 110.08 198.44 185.55
Domestic Coal Production and Demand
Mammoth mismatch – coal imports increasing significantly
14
Cement Sector - Third Largest
Consumer of Coal /Fuel
Coal is used as the main fuel in the industry.
Coal is supplied to cement companies on the basis of
Fuel Supply Agreement (FSA) between Coal
Companies and Cement Companies, at a 35% higher
price than the Regulated Sector (G6 to G17 – The
grades preferred by Cement Industry) of power grade
coal, consisting of Power, Fertilizer and Defence.
Coal availability to the industry dropped to 35% in
2012 from 75% in 2003.
15
16
Steep Declining Trends in Coal Supply to
Cement Industry
Source: CMA Data of Member Companies
Shrinking Coal Availability
Usage of AFR and WHR by cement industry become inevitable to meet Growing
Cement Production Target
0
10
20
30
40
50
60
70
80
FY 03 FY04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10 FY11 FY12
Linkage coal imported coal pet coke
35%
32%
16%
Coal supply through linkages steeply dropped to 35% in FY13, compared to 75% in FY03.
No coal linkage to new capacities/expansions.
Open market./import of coal enhances its cost by 60 to 80%.
0
10
20
30
40
50
60
70
80
FY 03 FY04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10 FY11 FY12 FY13
Linkage coal imported coal pet coke
Data based on CMA member companies
35%
31%
17%
75%
Procurement of Fuel by Members of CMA
Year
Linked
Coal
Imported
coal
Coal
procured
from
open
market
Pet
coke
Lignite
&
Other
Fuel
Total Fuel
procurem
ent
% of linked
coal against
Total
procurement
2002-03 13.34 3.66 0.77 1.04 0.05 17.87 75
2003-04 13.35 3.18 1.03 1.41 0.11 19.08 70
2004-05 14.84 3.63 1.27 1.87 0.76 22.37 66
2005-06 14.81 3.40 1.55 2.16 0.82 22.74 65
2006-07 14.43 4.96 2.94 2.09 0.83 25.25 57
2007-08 14.56 6.08 5.00 2.27 0.93 28.84 50
2008-09 14.29 6.97 6.17 2.41 0.36 30.20 47
2009-10 10.79 6.95 4.36 3.92 0.23 26.25 41
2010-11 11.90 8.48 4.92 3.18 0.36 28.84 41
2011-12 10.45 9.39 4.51 4.70 0.75 29.80 35
2012-13 10.38 9.27 3.93 5.18 1.06 29.82 35
Fig. in MT
17
Year Cement
Capacity
Cement
Production
2011-12 336.1 246.7
2012-13 349.6 272.0
2013-14 374.9 299.9
2014-15 405.1 332.1
2015-16 440.6 367.8
2016-17 479.3 407.4
2021-22 811.4 710.0
2026-27 1379.9 1237.4
ESTIMATED CEMENT DEMAND PROJECTIONS
FOR THE 12TH PLAN
BY WORKING GROUP OF PLANNING COMMISSION
(Mn.t.) High Scenario
18
Cement
Production *
CPP Total
2011-12 246.7 41.8 16.2 58.0
2012-13 272.0 46.2 17.8 64.0
2013-14 299.9 51.2 19.6 70.8
2014-15 332.2 56.5 21.7 78.2
2015-16 367.9 62.5 24.0 86.5
2016-17 407.4 69.3 26.6 95.9
Coal RequirementYear Cement
Production
(Mn.t.)
Source: Working Group Report for XII Plan
COAL REQUIREMENT TO MEET
CEMENT DEMAND PROJECTIONS
* 17% Coal is consumed to produce one tonne of cement
(Progressively reduced from 25% in 1990s because of efficiency improvement)
19
Coal - Key Issues
Substantial new capacities have been waiting for
sanction of Long-Term Linkages for more than six
years. This needs to be expedited.
CIL has switched over from Useful Heat Value (UHV)
to Gross Calorific Value (GCV). Wide variations
between declared GCV to actual GCV in cement
plants causing huge financial losses to coal
consumers.
Facility of joint sampling at both loading and
unloading points being extended to the power
utilities may also be extended to the cement sector
without embargo of 4 lakh tones subject to their
consent.
20
Coal - Key Issues
As per The New Coal Distribution Policy (NCDP) FSAs
have been signed only for 75% of normative requirement,
thus there is ab-initio 25% less programmed for each
unit.
Threshold for penalty for short supply being 60% only,
actual supplies could come to around 45% of normative
requirement.
Substantial cement production capacities have been
added during the last few years, but the FSAs are yet to
be signed for these capacities. Matter is pending with
Coal Cos and MOC.
Contd...
21
Under E auction any entity (irrespective of actual user, trader
etc) can participate. It is experienced that the traders are able to
get substantial quantities of coal under E auction which is then
sold to actual consumers.
This unnecessarily increases cost of coal for actual
consumers.
Only actual consumers be allowed to participate under
E-auction with some mechanism for monitoring which may
include self declaration & stringent action on diversion of
coal etc.
Coal companies are deducting FSA quantity (deemed supply)
based on fixed weight per wagon(66MTX59 Boxes) whereas
actual loading is up to 5%to 7% lower.
This results into loss of linkage quantity.
Contd... Coal - Key Issues
FSA quantity supplied is to be considered based on actual
loading & shortfall be supplied at the end of the year by
allotting rake or by road if quantity is less than a rake.
22
Joint inspection for re-verification of the calibration of
the rail/road weighbridges be undertaken at a fixed
interval with prior notification to the consumers.
Weighbridges of C.I.L. or railway are not always kept in
calibrated condition, erratic weights are part of the
deal.
Railways are charging freight on the basis of declared
carrying capacity of wagons (which has been periodically
increased in last few years), whereas actual quantity
loaded is lesser than carrying capacity declared.
Contd... Coal - Key Issues
Railways to Charge freight for 66 M.T./Box - whereas Qty. possible
to load – 63 M.T. Consumer has to pay idle freight of 3 M.T.
23
Steep Penalty on overloading of coal by Rail is charged
from consumers despite their not having any role in the
loading of coal which is done by coal companies &
Railways.
Penalties are worked out based on in motion weigh
bridge of Railways which do not measure correct
quantity of coal loaded in the wagons.
During monsoon season, weight of coal get increased
due to rains in transit with higher moisture over which
cement plants have no control.
Contd... Coal - Key Issues
Need to eliminate this penalty. Joint inspection for re-verification of
the calibration of the rail/road weighbridges be undertaken at a fixed
interval with prior notification to the consumers.
24
Cement Sector is already paying 35% higher
price for coal compared to the regulated coal
price of the power grade coal falling between
G6 to G17 grades.
This compulsory imposition of 25% of higher
grade of coal falling between G1 to G5 together
with the coal produced from the ‘Cost plus
Mines’ whose price is much higher than the
notified price of coal as pre condition for
signing of FSA should be dispensed with.
Contd... Coal - Key Issues
25
Provides a link between the Industry and
Govt. and also serves the cement
industry and its consumers.
Plays a pivotal role in formulation of
Government policies for cement
industry through continuous dialogues
and interactions.
Apprises industry of latest Technological
Developments and Cutting Edge
Technologies.
Educates on rational use of cement
including choice of the right type of
Cements for various applications.
Creates awareness on the industry’s
efforts on Quality Assurance,
Environmental improvements, Consumer
protection and other related issues.
26
ABOUT CEMENT MANUFACTURERS’
ASSOCIATION (CMA)
Thank you
27
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