indigenization of spare parts and consumables used in the cement industries

Indigenization of Spare Parts and Consumables used in the

Cement Industries

Present by: Chanchal RoyConsultant – Alpha International Management Consultants

28th December 2009

CEMENT INDUSTRY – SAUDI ARABIAA Prefeasibility study on the Supply of Capital Equipment, Spare Parts

and Consumables for this core sector industry

This study covers…

An overview of the Cement Industry

Consumption Patterns, Rise in demand for Cement

Capital Equipment & Process Flows

Spare Parts and Consumables

Brief Study on 3 important Consumables..

- Grinding Media

- Liners

- Refractory

Observation and Inferences

Cement Industry – Highlights

The Cement Industry in KSA is a primary building block for the largest Construction Industry in the GCC.

The Saudi Cement Industry accounts for more than 50% of the cement produced in the GCC and it supports the burgeoning Construction Industry which accounts for 8% of the country’s GDP!

Starting out with a 0.4 MTPA plant in 1956, the total installed capacity for cement stands at 48 million tons (2009) although the national per-capita consumption of cement is lower than that of the GCC average.

Almost all capital equipment, spare parts and consumables that go into this Industry is procured from overseas and this is where an opportunity lies for local Investment.

Cement Industry in Saudi Arabia: A Snapshot

Total Installed Capacity : 48 million metric tons

Total Cement Production Capacity (2009

Yamama Cement Co.

Saudi Cement C

o.

Eastern

Province

Cement Co.

Qassim Cement C

o.

Yanbu Cement Co.

Arabian Cement Co.

Southern

Cement Co.

Tabuk Cement Co.

Riyadh Cement Co.

City Cement C

o.

Najran Cement C

o.

Gulf Cement C

o.

Northern

Cement Co.

Al Jouf C

ement

Safwa Cement

0

2

4

6

8

10

12

Cement Industry in the GCC & MENA Region

SaudiArabia

48 MTPA

Egypt45.3 MTPA

Libya5 MTPA

SudanO.7 MTPA

Algeria15.5 MTPA

Yemen4.3 MTPA

Morocco16 MTPA

Oman5.1 MTPA

UAE29.7 MTPA

Qatar4.3 MTPA

Iran52 MTPA

Bahrain0.5 MTPA

Iraq25 MTPA(90% idle) Kuwait

2.6 MTPA

Syria7 MTPA

Lebanon5 MTPA

Jordan4.8 MTPA

Tunisia7.3 MTPA

Total Installed Capacity for Cement – GCC : 91 Million Tons/YearTotal Installed Capacity for Cement – MENA Region : 254 Million Tons/Year (without Iraq)

Cement Industry – Consumption GCC wide

Types of Cement produced : Ordinary Portland Cement Sulphate Resistant Cement

Pozzolan Cement Oil Cement

Cement Consumption Pattern incl. Per-capita and Total in Metric Tons (est. 2009)

CountryPer

Capita/year(MT/year)

Population2009

(million)

NationalConsumption

(MT)

TotalInstalledCap (MT)

Bahrain 0.30 0.73 0.22 0.50

Kuwait 0.66 2.69 1.78 2.60

Oman 1.68 3.42 5.75 5.10

Qatar 4.71 0.83 3.91 4.30

Saudi Arabia 1.63 28.69 46.76 48.0

UAE 5.10 4.80 24.48 29.7

GCC average 2.36 41.16 97.14 90.2

Cement Industry – Demand Supply scenario

Increase in Demand

The demand for cement is all set to increase in Saudi Arabia and the GCC as a whole and a whole lot of factors are driving this increase namely:

The per-capita consumption of Cement in KSA is lower than the GCC average and

much lower when compared to UAE and Qatar… but this scenario is changing with the Saudi Govt. announcing a large number of Housing projects. Even a 10% increase in per-capita consumption would mean a 5 Million TPA addition in either production capacities or Imports.

Lifting of Export ban: Saudi Arabia has one of the cheapest “cost of manufacture” of OP Cement and export of cement is aa highly viable business idea.

Launching of major Industrial and Economic cities like in Jizan, Rabigh etc.,

The Installed capacity for production of Cement is expected to increase from 90.2 MTPA in 2009 to 115 MTPA by 2011.

Cement Industry – Capital Equipment

What does this mean in terms CAPEX investment

We foresee an increase of 15 – 25 MTPA in the installed capacity for OPC during the next 5 years which would generate a heavy demand for capital equipment… approx budgets for such CAPEX given below.

Heads For 1 MTPACement lineMillion SR

Averaging for 20 MTPA Million SR

Remarks

Cost of Mechanical Equipment & Structural Steel Works

350 – 400 8,000 These are for European sourced

equipment and you can expect a 30% reduction

on same if sourced from China

Cost of Electrical, Automation and Instrumentation Systems

125 – 175 3,000

The above figures are for Supply of equipment only and does not include Civil works, Site Installation and Commissioning Services

Cement Industry – Main Capital Equipment

What are these Capital Equipment

The Rotary Kiln Process of producing Cement both Dry and Semi Dry process need the following main capital equipment: Primary Crushers – Hammer or Gyro Crushers for crushing Lime stones Feeding and Blending Equipment – for preparation of Raw Meal Cyclones, Pre – heater and Pre Calciners Rotary Kiln Coolers – Planetary, Grate etc. Grinding mills – for Cement Conveying and Bagging units ESP and Gas Cleaning equipment Buildings including EOT Cranes with Clinker crab buckets Belt Conveyors including Galleries and Trestles Utility Systems including Water, Compressed Air, Gas and Fuel Oil Material Handling equipment like Trucks and Dozers Laboratory and Testing equipment Other Auxuliiaries

Typical OPC Manufacturing Process – Rotary Kiln Process

Cement Industry – Main Spare Parts and Consumables

The following are the main Spare parts / Consumables that are needed along with an approx consumption norm and total consumption values if proportioned for installed capacities within GCC and the MENA region

Part / Consumable

- Grinding Media

- Liners

- Refractory

- Other Castings and Forgings

- Drives, Gear boxes incl couplings

- Other Mechanical Spares

- Electrical and Instrumentation parts

We will take up and analyze the manufacturing facilities for first 3 consumables which are typical to the cement industry.

The remaining 4 are extremely generic and are Industry Verticals by themselves.

Cement Industry – Consumption Norms and Market Size

We give below the average consumption rates for 3 main consumables in terms of SR/Million Tons of Cement Produced.

Item Average Consumption

Value Unit

Grinding Media 1,675,000 SR/MTPA of Cement produced

Liners 458,000 SR/MTPA of Cement produced

Refractory – castable 245,000 SR/MTPA of Cement produced

Refractory – bricks 2,573,000 SR/MTPA of Cement produced

Converting the above to approx tonnages using avg. market rates

Item Average consumption

Rate SR/TonRate SR/Pc

Tons/MTPA of Cement CapPieces/MTPA of Cement Cap

Grinding Media 1,675,000 4,800/= 349

Liners 458,000 7,200/= 64

Refractory – castable 245,000 3,700/= 66

Refractory – bricks 2,573,000 31/= 83,000

Cement Industry – Consumption Norms and Market Size

Based on the average consumption figures, we can extrapolate and work out the demand for these 3 items in Saudi Arabia, within the GCC and in the MENA region.

Item Tons / Pieces per MTPA of Cement Cap

Demand in Metric Tons for

KSA In GCC MENA

48* 91* 254*

Grinding Media (Tons) 349 16,800 31,850 88,900

Liners (Tons) 64 3,080 5,830 16,260

Refractory - Castable (Tons)

66 3,168 6,006 16,764

Refractory - Bricks (pcs) 83,000 3,984,000 7,553,000 21,082,000

The above figures are yearly consumption values as spares and consumables only and does not include first fill or demand from new installations.

- *Installed Capacity for Cement in Million Tons / Annum

Cement Industry – What does it take to manufacture parts

Grinding Media

Made from Hi Carbon or Alloy Steels, these are usually round balls or cylinders ranging from sizes of 1.5 mm up to 120 mm.

Grinding Media also finds uses in other industrial applications which involves crushing, grinding or polishing.

Manufacturing Process and Facilities needed for Grinding Media

There are various manufacturing routes for Grinding Media namely: Casting – used for larger sizes and Forging – used for media that needs specific physical properties at the core Boll Rolling – very popular technology - used for smaller sizes Sintering – for non ferrous media

Manufacture of Grinding Media needs a Steel Melt Shop, A Forging unit or a Ball Rolling facility. Additionally you need a Heat Treatment shop and a Grinding unit.


Grinding Media


Grinding Media

Hi Chrome Cast Steel Media

Typical Hardness : Surface HRC 58-65 Core HRC 55-60

Chemical Composition : C: 2.15-3.2; Mn: 0.80-1.20; Cr10-26; Mo: 0.4-0.6 ;

Cast Steel Roller Type Media

Usual Sizes (mm): Ø16x16, Ø18x18, Ø18x22, Ø20x25, Ø20x30, Ø20x35, Ø22x30, Ø25x25, Ø25x30, Ø25x35, Ø30x35, Ø30x40, Ø35x40, Ø35x45 Chemical Composition for Low Chromium Alloy Steel Castings

C: 2.2-3.6 Si: 0.4-1.2 Mn: 0.3-0.8 Cr: 0.5-1.5 Mo: 0-1 Cu: 0-0.6 S: ≤0.1 P: ≤0.1Microstructure: Pearlite + Carbide 45-50 Chemical Composition for High Chromium Alloy Steel Castings C: 2.0-3.2 Si: 0.3-1.2 Mn: 1.3-2.6 Cr: 11-16 Mo: ≤2 Cu: ≤1 S: ≤0.8 P: ≤0.1

Microstructure: Martensite + Carbide 56-62


Grinding Media

Facility Required

Considering the Market Potential, we would recommend a setting up of a Rolling and Forge based plant for the GCC Market with an annual capacity of around 30,000 Metric Tons of ball and cylinder media.

A few important parameters would be as below

The project must be setup as a JV with any of the top OEM’s with a buyback agreement for at least 30% – 50% of the annual production.

Additionally “Off-Take Agreements” with 2 or 3 end users must be secured to cover the balance installed capacity

Typical Product Mix must include multiple sizes so that a wider spectrum of Industries could be served.

The project must be built on a “scalable model” with an eye on future expansions in capacity, considering the projected increase in cement manufacturing capacity


Grinding Media

Key Financial and Resources Data for a new Project

Heads Units Value Remarks

Annual Capacity M Tons 30,000 Planned

Estimated Project Cost Million SR 140 – 170 Excludes land and IDC, depending technology used

Estimated Turnover Million SR 144 @ 100% capacity

Land for Project Sq Mtrs. 75,000 – 100,000

Depends on production process and stocking needs.

Gross Margins % 18% – 22% Excludes Taxes

Approx Power Consumption

MW 6 – 9 Depends on the plant and equipment

Approx Manpower Nos. 100 – 120 Depends on the level of automation


Liners

Also made from wear and impact resistant Alloy Steels, liners are made from cast steel plates and are shaped as per the Mill designers requirements. The chemistry, physical properties and shapes all vary from Mill to Mill

Facility Required

Manufacture of Liners need an Alloy Steel Foundry (with an Induction Furnace), a Heat Treatment shop and an automated machine shop.

Liners are usually produced as a part of a wider range of similar Alloy Steel castings and therefore a decision on the capacity of such plants must be taken based on a detailed market survey within other industries like Mining, Mineral Processing, Steel, Food, Glass etc.

An alloy steel foundry could produce a multitude of products and as such would be a very good investment in the GCC.


Liners

A viable Alloy Steel Foundry could be based on the following configuration: 2 nos. Induction furnaces (cap 2 Tons each, with 4 crucibles i.e. 2 standby) Automatic Mould making machines + Manual Mould Shop for larger castings Fettling, Cleaning and Storage areas Machine Shop – tailored for the end products Stress Relieving and Heat Treatment area

The above plant will have an annual capacity of around 30,000 tons of Alloy Steel castings and will cater to a number of industries.

Typical product mix will include Liners for Grinding Mills, Crushers and other Rotary Equipment, Valve castings and other jobbing works

Considering the GCC market for liners to be around 6,000 tons for Liners alone, we would recommend that a plant capacity of 20,000 TPA


Liners

Traditionally liners used to be made of Manganese Steel Casting, but lately, Chrom-Moly alloys have made their presence and self fixing liners and diaphragms are being used in the industry

Liners inside a Ball Mill Various Shapes of Cast Steel liners

Cast Steel Diaphragm


Liners



Annual Capacity M Tons 20,000 Based on 90% cap utilization


Estimated Turnover Million SR 144 At full capacity.








Refractory

A very important part of any Pyro based industry, Refractories are materials that provide linings for high-temperature furnaces and other processing units. Refractories must be able to withstand physical wear, high temperatures (above 538°C [1000°F]), and corrosion by chemical agents. There are two general classifications of refractories, clay and nonclay. The six-digit source classification code (SCC) for refractory manufacturing is 3-05-005. Clay refractories are produced from fireclay (hydrous silicates of aluminum) and alumina (57 to 87.5 percent).

Refractories are produced in two basic forms, formed objects, and unformed granulated or plastic compositions. The preformed products are called bricks and shapes. These products are used to form the walls, arches, and floor tiles of various high-temperature process equipment.

Unformed compositions include mortars, gunning mixes, castables (refractory concretes), ramming mixes, and plastics. These products are cured in place to form a monolithic, internal structure after application.


Refractory

A very important part of any Pyro based industry, these are essentially non metallic lining materials within a shell, vessel, pipe or equipment, within which there is heat generated and refractory materials are used to shield the outer casing from the heat.

Facility Required

Refractory manufacture essentially involves Raw Material Grinding and Blending, Forming, Heating or Firing Final Processing.

A highly versatile product, Refractory Material is used across different industry verticals like Cement, Steel, Petrochemicals, Pharmaceuticals, Glass etc.

The final processing for bricks and castables differ due to the nature of the end product and hence the packaging, storage and logistics need to be well coordinated for a comprehensive manufacturing unit.


Refractory


Refractory

Fire Clay Bricks Fused Magnesia Bricks

Magnesia Chrome Bricks

High Alumina Anchor Brick

Alumina Clay Fire Brick

Castable Refractory


Refractory

Typical Project Capacity

There are several factors that need to be considered for a Refractory Manufacturing Project… Most important ones include

Steel Plants, Petrochem Plants have a sizable consumption when it comes to Castable refractory and this must be factored into the capacity.

Refractory Bricks are best sold within a 300 Kms radius as freight then plays an important factor in the cost.

The location of the plant must consider the individual capacities for each type of refractory

Based on the above, we would recommend setting up of mid size Refractory Manufacturing companies with capacities as below:

200,000 pieces – Brick type clay based refractory + 20,000 – Tons of castable refractory mix


Refractory



Annual Capacity M Tons 200,00020,000 Tons

BricksCastable Refractory mix


Turnover – Bricks– Castables

Million SRMillion SR

6.274.0

i.e. SR. 80.2 million







Cement Industry – Benefits of local manufacture

Why produce locally?

Self Reliance – Cement is a core sector industry and self reliance on important inputs is of strategic importance.

Value Addition – Localizing inputs increase value addition in the final product

Localizing manufacture of various products adds to the GDP of the country and is a major source of employment generation for the youth of this country.

Most of the input items listed are used by a multitude of industries and investment in such facilities would help in bringing down the input costs in various sectors.

Most Importantly… why buy from overseas when you CAN PRODUCE!

Cement Industry – Summary

Observation and Inferences

1) The Cement Industry in KSA and the MENA region at large is poised for a definite growth within the next 2 – 5 years, driven by increasing population, urbanization and investments in the infrastructure sector.

2) It is amply clear that even with an installed annual production capacity of over 90 million metric tons, the GCC region does not have a single core sector industry that manufacturers equipment for this sector.

3) Almost all spare parts and consumables are imported from Europe, SE Asia, China and India.

4) Our study reveals that the almost all Cement Producers in the region still depend on the Original Plant Supplier for the necessary spare parts and services and very little effort has been made to localize their source.

5) There is a huge investment potential in the GCC for various support industries, but it would need a lot of support from the Cement Producers, who would have to support such initiatives.

6) Localizing manufacture of spares and consumables is the way forward for the Cement Industry

Thank You!

31

indigenization of spare parts and consumables used in the cement industries

Documents

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export of cement

cement industriespresent

op cement

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capita consumption of

saudi cement industry