46211 JUNE 2014 Waste Heat Recovery for the Cement Sector: Market and Supplier Analysis Disclaimer and Copyright: This report was commissioned by IFC, a member of the World Bank Group. The conclusions and judgments contained in this report should not be attributed to, and do not necessarily represent the views of, IFC or its Board of Directors or the World Bank or its Executive Directors, or the countries they represent. IFC and the World Bank do not guarantee the accuracy of the data in this publication and accept no responsibility for any consequences of their use. Waste Heat Recovery for the Cement Sector: Market and Supplier Analysis JUNE 2014 iv Waste Heat Recovery for the Cement Sector Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii Report abstract Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 World Cement Consumption and Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cement Manufacturing Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Waste Heat Recovery in the Cement Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Waste Heat Recovery Power Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Application of Waste Heat Recovery Power Systems in the Cement Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Recoverable Waste Heat and the Potential for Power Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Project Economics of Waste Heat Recovery Power Generation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Capital and Installation Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Project Payback. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Market Status of WHR in the Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Global summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 The China Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Overview of China’s Cement Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 WHR Development in China’s Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Key Regulatory Drivers for WHR Development In China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Business Models for WHR Deployment in the Chinese Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 WHR System suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Steam Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Organic Rankine Cycle Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Kalina Cycle Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Target Market Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Brazil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Egypt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Current Status Of Cement Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Waste Heat Recovery for the Cement Sector v Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Philippines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Turkey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Current Status of Cement Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Current Status of WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Sub-Saharan Africa. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Angola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Ethiopia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Kenya. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Tanzania. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Sudan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 WHR Market Prioritization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 vi Waste Heat Recovery for the Cement Sector List of Figures Figure ES-1. Current Installations of Cement Industry WHR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Figure ES-2. Chinese-manufactured WHR Equipment Installation Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Figure ES-3. Estimated Realized and Remaining Technical Potential and Investment in WHR Deployment . . . . . . . . . . . . . . . . . . 2 Figure 1. Global Cement Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Figure 2. Rotary Cement Kiln . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Figure 3. Clinker Volumes by Kiln Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 4. Waste Heat Recovery on NSP Cement Kiln. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 5. Preheater Waste Heat Boiler. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 6. Air Cooler Waste Heat Boiler.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 7. Power Generation Potential as a Function of Preheater Exhaust Temperature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 8. Waste Heat Power Generation Capacities as a Function of Kiln Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 9. WHR System Installed Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 10. Installed Costs for Chinese WHR Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 11. Potential Annual Operating Savings from WHR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 12. Potential Simple Paybacks for a 10 MW WHR System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 13. Current Installations of Cement Industry WHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 14. Installations of Cement Industry WHR in China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 15. Consequences of Power Disruptions on Production in Turkey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Waste Heat Recovery for the Cement Sector vii List of Tables Table ES-1 – WHR Market Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Table 1. Top Cement Consuming Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Table 2. World Cement Production and Clinker Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Table 3. Top Global Cement Companies – 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Table 4. Specific Thermal Energy Consumption by Rotary Kiln Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table 5. Typical Available Heat for Dry Process NSP Kilns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 6. Typical Available Heat for Grate Clinker Coolers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 7. Typical Available Heat and Power Generation from Preheater/Grate Clinker Cooler.. . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table 8. Heat Required for Raw Material Drying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Table 9. WHR Steam System Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Table 10. Typical Payback Calculation for Chinese WHR System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 11. Annual Chinese Cement Production by Kiln Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Table 12. NSP Production Line Capacity Distribution in China – 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 13. Top Cement Producers in China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 14. Target Market Prioritization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 viii Waste Heat Recovery for the Cement Sector Report Abstract This report analyzes the current status of Waste Heat Recovery (WHR) technology deployment in developing countries and investigates the success factors in countries where WHR has become widely spread. The report then focuses on the in-depth analysis of WHR potential and enabling factors in eleven country markets in Africa (Nigeria, South Africa), South Asia (India, Pakistan), Middle East (Egypt, Turkey), Latin America (Brazil, Mexico) and East Asia (Philippines, Thailand, Vietnam). The report maps out major WHR equipment suppliers. In addition, the report includes a brief analysis of business and project models used internationally to support WHR deployment. Acknowledgments This report was produced in partnership between International Finance Corporation (IFC) and Institute for Industrial Productivity (IIP). The IFC team was led by Yana Gorbatenko and Alexander Sharabaroff. The IIP team was led by Bruce Hedman and Jigar Shah. The team would like to thank Takuro Kimura, Michel Folliet, Sanjay Puri, Henri Rachid Sfeir, Bryanne Tait, Dalia Sakr, Sivaram Krishnamoorthy, Luis Alberto Salomon and Jeremy Levin for their recognized expertise, valuable advice and useful contributions to this report. Waste Heat Recovery for the Cement Sector 1 Executive Summary Waste Heat Recovery (WHR) is a proven technology, shows average installation costs for Chinese-manufactured but until now WHR uptake has been limited except in WHR installations in China, Asia and Europe/Middle East and China. As early as the 1980s, Japanese companies spear- North Africa.1 headed the introduction of WHR power systems in the cement industry. Currently, there are a range of commercially- proven and mature WHR power systems ranging from classic Chinese-manufactured WHR Equipment Figure ES-2.  Installation Costs Rankine-cycle steam-based installations to Organic Rankine Cycle (ORC) and Kalina cycle WHR power systems. There are Typical Range: 3.0 over 850 WHR power installations in the world. China leads 2,000 – 3,000 $/kW in the number of WHR installations—739, followed by India Installation Costs, US$/ MWe 2.5 Typical Range: (26 WHR installations) and Japan (24 installations). (See figure 1,600 – 2,200 $/kW 2.0 ES-1). 1.5 Typical Range: 1,100 – 1,400 $/kW 1.0  urrent Installations of Cement Industry Figure ES-1. C WHR 0.5 739 0.0 China China Asia Europe India 26 Local Scope China Equip. Japan 24 Thailand 12 Pakistan 9 Based on 5000 tpd, 4-5 stage preheater, 3-4% moisture content Other Asia 24 Source: Based on Holcim 2013; OneStoneResearch 2013; IFC Mid East 15 Europe 7 Waste Heat Recovery (WHR) can reduce the operating Americas 5 Rest of World 4 costs and improve EBITDA margins of cement factories 0 100 200 300 400 500 600 700 800 by about 10 to 15 percent. On average, electric power ex- penses account for up to 25 percent of total operating costs Source: “Latest Waste Heat Utilization Trends,” OneStone Research; CemPower 2013 of a cement factory. WHR technology utilizes residual heat in the exhaust gases generated in the cement manufacturing Regulatory measures and lower capital costs have been process and can provide low-temperature heating or generate key factors behind China’s success in mainstreaming up to 30 percent of overall plant electricity needs. WHR-based WHR technology. Initially, WHR development in China was electric power generation offers several advantages: driven by incentives such as tax breaks and Clean Develop- • Reduces purchased power consumption (or reduces ment Mechanism (CDM) revenues for emissions reductions reliance on fossil-fuel-based captive power plants) from clean energy projects. In 2011, a national energy- • Mitigates the impact of future electric price increases efficiency regulation mandated WHR on all new clinker lines constructed after January 2011. These drivers were reinforced 1 The above CAPEX estimates are based on Chinese WHR equipment. when multiple Chinese WHR suppliers entered the market, Experience from WHR project in various regions suggest that often lowering WHR capital and installation costs by adopting times installation costs are higher, and in certain cases reach up to US$5,000 per kWe depending upon WHR power technology type and domestic components and design capability, which developed installed capacity. For instance European-manufactured WHR power the technology for the Chinese market. The figure below systems could cost up to US$3,800 per kW­ e . 2 Waste Heat Recovery for the Cement Sector • Enhances plant power reliability Structured financing is key to realize the untapped • Improves plant competitive position in the market WHR potential. A number of commercially-viable WHR opportunities are not implemented due to financing issues. Business opportunity revealed by the study: investment Cement manufacturers are frequently reluctant to put WHR of ~US$5 billion to introduce ~2GWe of WHR power ca- investments on their balance sheets, especially when project pacity in eleven countries. Rising grid-based electric power payback is over two years. While experience with off-balance prices and fuel costs for captive power plants, as well as sheet financing has been limited to date, it offers great op- concerns over power supply reliability from the grid provide portunities for further uptake of WHR. Market participants, solid incentives for WHR deployment. The remaining technical such as cement companies, project financiers, equipment potential for WHR power systems is estimated between 1,615 suppliers, and operators of WHR systems, can reach an bal- and 2,930 MW­e (please see figure below). anced and fair distribution of project risks. There is a strong potential for WHR in Asia and Latin Figure ES-3. Estimated Realized and Remaining Technical Potential and Investment in WHR Deployment America. Opportunities in selected countries in Africa and Middle East are also profound. While WHR viability Investment need will vary in each specific cement plant, the general enabling estimate, USD M factors are favorable in East and South Asian countries and India 1,400 in Latin America. In Africa and Middle East there is a mixed Turkey 400 combination of enabling factors, most of all political stability Vietnam 480 and industrial electricity tariffs. Mexico 490 Egypt 490 This report provides a comprehensive framework and Thailand 90 necessary market information for the analysis of WHR Brazil 430 opportunities in eleven country markets in Africa, South Pakistan 160 Philippines and East Asia, Middle East and Latin America. A review of 170 Nigeria 200 the status of the cement industry and prospects for WHR South Africa 170 development in a select group of countries was undertaken 0 100 200 300 400 500 600 700 800 900 1000 to identify emerging markets where WHR power generation MWe may have significant growth potential and strong market Installed WHR Capacity drivers. The countries were selected based on the robustness Average Remaining WHR Capacity Potential of their respective cement industries and cement markets, relative prospects for near and mid-term growth in their economies and cement consumption, and market factors that would drive consideration of WHR such as power reliability concerns, industrial electricity tariffs and/or environmental Five major factors influence project economics: and sustainability initiatives. Table ES-1 provides a summary • Size of a plant: WHR steam cycle installations are typically of the market review of eleven countries in terms of WHR more attractive for larger plants potential and critical market drivers. • Capital cost of equipment and installation works • Moisture content in raw material and design of pre-heating stages • Industrial electricity tariffs • Reliability of power supply Waste Heat Recovery for the Cement Sector 3 Table ES-1 – WHR Market Opportunities Concerns Political Regulatory / Remaining Growth in Over Power Industrial Stability and Sustainability Existing WHR WHR Potential, Cement Market, Reliability, Electricity Prices, Absence of Drivers, Installed Country MW 2012- 2014 Y/N US$/MWh Violence (2012) a Y/N Capacity Brazil 190 - 340 4.7% No 120 - 170 47.9 Yes None Egypt 175 - 300 2.6% Yes 50 - 70 7.58 No None India 500 - 900 12.4% Yes 80 11.85 Yes >200 MW Mexico 170 - 300 -1.7% No 117 24.17 No None Nigeria 70 - 130 21.1% Yes 50 - 100 3.32 No None Pakistan 50 - 100 -0.4% Yes 130 - 170 0.95 No >100 MW Philippines 60 - 110 13.6% Yes 80 - 145 14.69 No >18 MW South Africa 55 - 100 9.5% Yes 80 - 150 44.08 Yes None Thailand 30 - 60 14.4% No 50 - 100 12.80 No >172 MW Turkey 150 - 280 17.5% Yes 100 - 150 13.27 No >80 MW Vietnam 165 - 310 5.8% No 60 - 70 55.92 No >11 MW Note: Color coding - Green signifies a strong positive driver or factor for WHR development, yellow represents a weaker positive driver or marginal conditions for WHR development, and red represents very weak drivers or conditions that could hinder WHR market development. a Worldwide Governance Indicators, http://info.worldbank.org/governance/wgi/index.aspx#reports. For comparison, the index for USA was 68.3. 4 Waste Heat Recovery for the Cement Sector Introduction Cement is the world’s most widely used construction material. and since limestone is the most abundant and lowest-cost Cement is the binding material that is mixed with an aggre- source of CaO, clinker plants are often built alongside or close gate such as sand or gravel and water to form concrete. Over to limestone quarries. Clinker is ground into a fine powder three tons of concrete are produced each year per person for with small quantities of gypsum and other components to the entire global population, making it the most widely used become cement. Ordinary Portland Cement (OPC) generally manufactured product in the world. Twice as much concrete contains at least 90 percent clinker. By modifying the raw is used around the globe than the total of all other building material mix, slight compositional variations can be achieved materials combined, including wood, steel, plastic and alumi- to produce cements with different properties.3 num, and for most purposes, none of these other materials The cement industry has a significant environmental footprint can replace concrete in terms of effectiveness, price or per- due to the extensive amounts of energy and raw materials formance. The preference for concrete as a building material used in the process. Cement manufacturing is energy stems from low manufacturing cost, and the fact that it can intensive—the WBCSD Cement Sustainability Initiative (CSI) be produced locally from widely available raw materials; it is indicates that in 2011 the average thermal energy and moldable; it has high compressive strength. Cement provides electricity consumed to produce one tonne of clinker among cohesion and strength to the concrete mix as well as low its reporting companies was 3,610 MJ (3.42 MMBtu) and permeability and high durability.2 106 kWh respectively, although these values can vary greatly Clinker is an intermediate product in the cement manufactur- depending on the age and configuration of clinker kilns (GNR ing process, which is produced by sintering finely ground raw Database 2013, CSI). Consequently, cement manufacture materials (mainly limestone and clay or shale). Raw materials releases a great deal of carbon dioxide (CO2). In fact, cement are selected in proportions that create the right combination production is responsible for about five percent of total global of oxides—CaO, SiO2, Al2O3 and Fe2O3. These minerals are CO2 emissions (IEA 2009). The CO2 emissions result from fuel fused into new mineralogical phases when heated to around consumption in the kiln and the de-carbonation of limestone 1450° C (2640° F) in a rotary kiln. This fused product is called to produce CaO (CaCO3 + Heat => CaO + CO2). Typically, clinker. Calcium oxide (CaO) is the primary oxide in clinker 40 percent of direct CO2 emissions for OPC comes from combusting fuel required to drive the reactions necessary to make clinker; 60 percent comes from the de-carbonation 2 Ordinary Portland Cement is a basic ingredient in concrete, mortar, reaction itself. Cement plants can be flexible in the fuel used, stucco, and most non-specialty grout. It consists of ground Portland cement clinker (more than 90 percent), a limited amount of calcium however today in most countries the primary fuel in use is sulfate (which controls the set time) and up to five percent minor coal because it is relatively low cost and the coal ash can add constituents as allowed by various standards such as the European necessary minerals to the cement product. Indirect emissions Standard EN 197-1. Blended cements are similar to Portland cement with one or more supplemental cementitious materials (SCMs) such as from electric power consumption and internal transport blastfurnace slag from iron production, pulverized fly ash from coal-fired contribute another 10 percent to overall CO2 emissions electricity power stations, and volcanic ash or pozzolana added at the cement grinding stage. The production of blended cements is growing (WBCSD/IEA 2009). worldwide because of their lower clinker content and cost, and the fact that they can improve concrete performance in terms of permeability, strength and workability depending on the type and proportion of SCM included in the blend. For this report, unless otherwise noted, the broad term “cement” includes all hydraulic binders, including all types of 3 In the U.S.A., different cement varieties are denoted by the American Portland and blended cements. Society for Testing and Materials (ASTM) Specification C-150. Waste Heat Recovery for the Cement Sector 5 Cement industry CO2 reduction strategies are focused on reducing the emissions intensity of cement production (emissions per ton of cement product). Approaches include installing more fuel-efficient kilns, using less carbon-intensive fuels in the kiln, partial substitution of noncarbonated sources of CaO in the kiln raw materials, and partial substitution of supplementary cementitious materials (SCM) such as blast furnace slag, fly ash and limestone for OPC in finished cement products. Because SCMs do not require the energy-intensive clinker production (kiln) phase of cement production, their use, or the use of inert additive or extenders, reduces CO2 intensity of the final product. The use of SCM and other materials for blended cement is growing worldwide (Crow 2008). For example, in the United States, the ASTM C-595 standard for blended cement was amended in 2012 to allow the addition of up to 15 percent limestone in certain blends. Research continues on developing cements that require less energy to manufacture than OPC and/or to use more benign raw materials. 6 Waste Heat Recovery for the Cement Sector World Cement Consumption and Production Consumption zones, and the relative cost of alternative building materials. In 2012, cement consumption per capita ranged from less Total worldwide cement consumption reached 3,312 Mt than 100 kg in Sub-Saharan African countries to over 1,500 in 2010, up 10.4 percent over the previous year (Figure 1). kg in China (ICR 2013). Global consumption continued to climb, rising to 3,585 Mt in 2011 and an estimated 3,738 Mt in 2012 (increases of 8.3 percent and 4.2 percent respectively) (ICR 2013). Estimated Table 1: Top Cement Consuming Countries consumption for 2013 is over 3,900 Mt. Cement Consumption, Mta Country 2006 2007 2008 2010 2012E China 1,200.0 1,320.0 1,372.0 1,850.0 2,160.0 Figure 1: Global Cement Demand India 152.1 165.7 174.0 221.0 241.8 United States 122.0 110.6 93.5 71.2 80.9 4,000 Brazil 40.7 45.1 51.6 60.0 69.2 3,500 Russia 52.0 61.0 60.8 49.4 63.0 Cement Demand, MT per year 3,000 Iran 35.6 41.2 44.5 54.8 58.5 Turkey 41.7 42.5 42.6 50.0 57.8 2,500 Indonesia 32.1 34.2 38.1 40.8 55.0 2,000 Egypt 30.0 34.5 38.4 49.5 51.1 1,500 Vietnam 31.7 35.9 40.2 50.2 45.5 1,000 Republic of Korea 48.4 50.8 53.6 45.5 44.3 500 Japan 58.6 55.9 51.0 41.8 43.0 0 Saudi Arabia 24.7 26.8 29.9 41.3 42.7 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E Mexico 35.9 36.6 35.1 33.9 35.6 E = Estimated Germany 28.9 27.2 27.6 24.7 27.4 Source: ARMSTRONG 2012; ICR 2013 Thailand 26.6 24.9 25.8 24.5 26.8 Italy 46.9 46.3 41.8 33.9 26.0 Pakistan 16.9 21.0 21.1 22.6 24.8 As shown in Table 1, the increase in global cement demand Algeria 15.2 16.1 17.5 19.0 20.6 has been driven by economic expansion in emerging econo- France 24.1 24.8 24.2 19.8 20.0 mies, where demand has risen sharply as these countries Note: China consumption includes all recorded cement types, not all to international undergo urbanization and industrialization. Emerging econo- standards mies now consume 90 percent of the world’s cement output. E = Estimated Source: ICR 2013; USGS 2013 China has been the primary engine for global demand growth; it is estimated to account for 58 percent of global demand in 2012. However, annual growth rates for China, which reached 16 percent in 2010, have softened somewhat, slowing to 5.0 to 6.0 percent over 2011 and 2012 as China’s Production economy approaches a more sustainable growth rate. Exclud- At year-end 2012, the global cement industry comprised ing China, worldwide consumption climbed by 4.4 percent to 5,673 cement production facilities, including both integrated 1,462 Mt in 2010, 5.0 percent to 1,535 Mt in 2011, and 2.7 and grinding capacity, of which 3,700 were in China. Esti- percent to 1,576 Mt in 2012. National cement consumption is mated total cement capacity for 2012 is 5,245 Mt—2,950 Mt influenced by socio-economic development level, demograph- in China (ICR 2013). Estimated global cement production for ic characteristics, building material preferences, earthquake 2012 is between 3,700 Mt (USGS 2013) and 3,831 Mt (ICR Waste Heat Recovery for the Cement Sector 7 Table 2: World Cement Production and Clinker Capacity Barriers to entry are high—a new cement works producing 1 Mt per year, typically the smallest economically viable Cement Production, Clinker Capacity, Mt Mt capacity, can cost US$200 million4—so it is often more Country 2012 2013E 2012E 2013E feasible for an incumbent cement manufacturer to expand. China 2,210.0 2,300.0 1,800.0 1,900.0 Many of the world’s largest cement companies are facing India 270.0 280.0 280.0 280.0 declining markets at home and as a result have been United States 74.9 77.8 106.0 105.0 acquiring companies and capacity in developing countries. Iran 70.0 75.0 75.0 80.0 However, since cement is such a local business, scale offers Brazil 68.8 70.0 57.0 60.0 global companies few cost advantages over domestic firms. Turkey 63.9 70.0 66.9 70.0 Vietnam 60.0 65.0 68.0 70.0 —2013 Table 3: Top Global Cement Companies­ Russia 61.5 65.0 80.0 80.0 Japan 51.3 53.0 55.0 55.0 Cement Capacity, Number of Saudi Arabia 50.0 50.0 55.0 55.0 Company/Group Country Mt/yr Plants Republic of Korea 48.0 49.0 50.0 50.0 Lafarge France 224 161 Egypt 46.1 46.0 46.0 46.0 CNBM China 221 - Mexico 35.4 36.0 42.0 42.0 Holcim Switzerland 218 147 Indonesia 32.0 35.0 47.5 50.0 Anhui Conch China 209 - Thailand 37.0 35.0 50.0 50.0 Jidong Development China 130 43 Germany 32.4 34.0 31.0 31.0 Heidelberg Cement Germany 122 103 Pakistan 32.0 32.0 42.5 42.5 Sinoma China 100 - Italy 33.0 29.0 46.0 46.0 Cemex Mexico 95 57 Other Countries 524.0 597.0 312.0 291.0 Shanshui (SUNNSY) China 93 - (rounded) China Resources China 74 17 Total (rounded) 3,800 4,000 3,300.0 3,400.0 Taiwan Cement (TCC) Taiwan 71 - E = Estimated Source: USGS 2014 Italcementi Italy 68 53 Votorantim Brazil 57 22 2013), corresponding to an average utilization rate of 70 to UltraTech India 51 22 73 percent. Buzzi-Unicem Italy 45 39 Taiheiyo Japan 47 19 Cement is bulky and has a low cost-to-weight ratio; typically Tianrui China 43 42 it costs less than US$100/ton in developing countries (Barcelo Eurocement Russia 40 16 2012). Transportation costs can quickly approach or surpass Intercement Brazil 38 39 manufacturing costs; cement is rarely transported more than Jaypee India 33 12 300 km by road. In addition, since raw materials for cement Source: Saunders 2013; IFC manufacture are widely available throughout the world, local manufacturing capabilities are common. However, despite high transportation, some 3.0 percent of global cement pro- duction was traded by sea across borders in 2012 (ICR 2013). Recently, the cement industry has changed significantly through transnational consolidations and cooperation. 4 The range of capital costs for a 1 MT/ year plant is US$150-200 million, except for China, at US$60 million. 8 Waste Heat Recovery for the Cement Sector Cement Manufacturing Process Figure 2: Rotary Cement Kiln (dry process with cyclonic preheaters) Source:  BREF for Cement, Lime and Magnesium Oxide, European Commission, 20125 Cement production is a resource-intensive practice involving The heart of state-of-the-art clinker production is the rotary large amounts of raw materials, energy, labor and capital. kiln. In the rotary kiln process (Figure 2), raw material mixture is Cement is produced from raw materials such as limestone, fed into the upper end of large cylindrical, refractory-lined steel chalk, shale, clay, and sand. These raw materials are quarried, kiln that range from 60 to 300 meters long7 and from over 3.0 crushed, finely ground, and blended to the correct chemical to 8.0 meters in diameter. The blended mixture is fed into the composition. Small quantities of iron ore, alumina, and tilted kiln at a rate controlled by the slope and rotational speed other minerals may be added to adjust the raw material of the kiln. Coal, pet coke, natural gas and more increasingly, composition. Typically, the fine raw material is fed into a alternative fuels such as plastic, solvents, waste oil or meat and large rotary kiln6 (cylindrical furnace) where it is heated to bone meal are fed into the lower end of the kiln and burned to about 1450° C (2640° F). The high temperature causes raw feed the flame, which can reach as high as 1800 to 2000° C. materials to react and form a hard nodular material called As the kiln slowly rotates (1 to 5 revolutions per minute), the “clinker.” Clinker is cooled and ground with gypsum and raw material tumbles through progressively hotter zones toward other minor additives to produce cement. the flame at the lower end of the kiln. Inside the kiln’s burning zone, raw materials reach temperatures of 1430° C to 1650° C (2600° F to 3000° F). At 1480° C (2695° F), a series of chemical 5 The ”cooler air,” usually called tertiary air is depicted as coming from the burner hood and not from the clinker cooler exhaust. The clinker reactions causes the materials to break down, become partially cooler exhaust is vented outside and is the second point of exhaust gas molten, and fuse into nodules called “clinker” – grayish-black where a WHR boiler/heat exchanger is installed. pellets, often the size of marbles (LBNL 2008, DOE 2003). Hot 6 Clinker can be produced in many different kiln types. There are two basic kiln configurations—vertical (or shaft) kilns and rotary kilns—many variations of each type are in use around the world. Generally, shaft kilns are an older, smaller, less-efficient technology. Modern cement 7 Modern dry-process kilns with preheaters and calciners tend to be on plants use variations on the dry rotary kiln technology, incorporating the shorter edge of the range; most kilns over 100 meters tend to be various stages of preheating and pre-calcining. wet process kilns. Waste Heat Recovery for the Cement Sector 9 exhaust gases exiting through the kiln are used to preheat and Specific Thermal Energy Consumption by Rotary Table 4:  calcine the raw material feed before it enters the kiln’s burning Kiln Type zone.Clinker is discharged red-hot from the lower end of the Heat Input, Heat Input, kiln into air coolers to lower it to handling temperatures. Cooled MJ/tonne of MMBtu/tonne Kiln Type clinker of clinker clinker is combined with gypsum and other additives and ground Wet 5,860 – 6,280 5.55 – 5.95 into a fine gray powder called cement. Many cement plants Long Dry (LD) 4,600 4.36 include the final cement grinding and mixing operation at the 1 Stage Cyclone Preheater (SP) 4,180 3.96 site. Others ship some or all of their clinker production to stand- 2 Stage Cyclone Preheater (SP) 3,770 3.57 alone cement-grinding plants situated close to markets. 4 Stage Cyclone Preheater (SP) 3,550 3.36 4 Stage Cyclone Preheater plus Calciner 3,140 2.97 Rotary kilns are either dry-process or wet-process, depending (NSP) on how the raw materials are prepared. In wet-process kilns, 5 Stage Cyclone Preheater plus Calciner 3,010 2.85 raw materials are fed into the kiln as slurry with a moisture (NSP) plus high efficiency cooler content of 30 to 40 percent. Wet process has much higher 6 Stage Cyclone Preheater plus Calciner <2,930 2.78 (NSP) plus high efficiency cooler energy requirements due to the amount of water that must Source: Based on Madlool 2011; 1055.87 MJ = 1 MMBtu be evaporated before calcination can take place. To evaporate the water contained in the slurry, a wet-process kiln requires While the energy performance of specific kiln types has additional length and nearly 100 percent more kiln thermal remained relatively consistent since 2000, overall energy intensity energy compared to an efficient dry kiln. Three major varia- and CO2 emissions intensity of cement production worldwide tions of dry-process kilns are in operation: long dry kilns have declined as wet-process and inefficient long dry-process without preheaters (LD), suspension preheater (SP) kilns, and kilns are being phased out and new capacity additions are based preheater/precalciner or new suspension preheater (NSP) on more efficient SP and NSP kilns. A global database, “Getting kilns. In SP and NSP kilns, the early stages of pyro-processing the Numbers Right” (GNR), tracks historical CO2 emissions and occur in the preheater sections before materials enter the energy consumption from cement production facilities collected rotary kiln. A preheater is a series of vertical cyclones. As the through the CSI CO2 Protocol; it includes aggregate data that raw material is passed down through these cyclones it comes provide a sound analytical base for cement manufacturers into contact with hot kiln exhaust gases moving in the oppo- and policymakers. The most recent data —2011—cover 967 site direction and as a result, heat is transferred from the gas facilities producing over 665 million tonnes of clinker (877 to material. This preheats and partially calcines the material million tonnes cement). Figure 3 shows a progressive shift before it enters the kiln so that the necessary chemical reac- between 1990 and 2011 by GNR participants towards more tions occur more quickly and efficiently. Depending on the efficient dry process technologies with pre-heater and pre- moisture content of the raw material, a kiln may have three calciner systems. NSP technology represented 64 percent of to six stages of cyclones with increasing heat recovery with clinker produced by GNR participants in 2011 compared to 35 each extra stage. As a result, SP and NSP kilns tend to have percent in 1990. Over the same period, the proportion of clinker higher production capacities and greater fuel efficiency com- produced with wet-process technology decreased from 14 pared to other types of cement kilns. Table 4 shows typical percent to 3.0 percent. Note that this change in the GNR data is thermal energy consumption by wet and dry rotary kiln types. primarily due to the increasing share of clinker production in Asia where most companies invest in efficient dry-kiln technologies— 10 Waste Heat Recovery for the Cement Sector Figure 3: C  linker Volumes by Kiln Type (GNR Database After the clinker is formed in the rotary kiln, it is cooled rap- Participants8) idly to minimize glass phase formation and ensure maximum yield of alite (tricalcium silicate) formation, an important 700 component for cement hardening properties. The main cool- 600 ing technologies are a grate cooler or a tube, or planetary cooler. In the grate cooler, the clinker is transported over a Million Tonnes Clinker 500 reciprocating grate through which air flows perpendicular to 400 the clinker flow. In the planetary cooler (a series of tubes sur- 300 rounding the discharge end of the rotary kiln), the clinker is 200 cooled in a counter-current air stream. The cooling air is used as secondary combustion air for the kiln. 100 0 After cooling, clinker can be stored in domes, silos or bins. 1990 2000 2005 2010 2011 The material-handling equipment used to transport clinker Wet LD Kiln from the coolers to storage and then to the finish mill is simi- Semi-Wet/Dry SP Kiln lar to equipment used to transport raw materials (e.g., belt Mixed NSP Kiln conveyors, deep bucket conveyors, and bucket elevators). To produce powdered cement, clinker nodules are ground to the Source: GNR 2013 consistency of powder. Clinker grinding, together with addi- rather than asset renewal in countries with mature cement tions of approximately 5.0 percent gypsum to control cement industries (GNR Database 2013). setting properties can be done in ball mills combined with roller presses, vertical roller mills, or roller presses. Coarse During pyro-processing, three important processes occur material is separated in a classifier, recirculated and returned with the raw material mixture. First, all moisture is driven to the mill for additional grinding to ensure the final product off; second, the calcium carbonate in limestone dissociates has uniform surface area (LBNL 2008). into carbon dioxide and calcium oxide (free lime) in a process called calcination; third, the lime and other minerals in the raw materials react to form calcium silicates and calcium aluminates, which are the main components of clinker in a process known as clinkering or sintering. 8 GNR data are collected annually and now cover 1990, 2000 and 2005- 2011. In 2011 the database included information from 967 cement installations worldwide, producing 877 million tonnes of cement. Some 79 percent of the GNR-data are assured by independent third parties. Data for 2011 are available from the CSI website, directly accessible via www.wbcsdcement.org/gnr. GNR participants represent approximately 25 percent of global cement production. Coverage across world regions ranges from over 95 percent in Europe, over 70 percent in the Americas, to less than 20 percent in the Middle East, Commonwealth of Independent States (CIS or former Soviet Union countries), and China. The CSI is working to increase coverage in these regions. Waste Heat Recovery for the Cement Sector 11 Waste Heat Recovery in the Cement Process State-of-the-art new suspension process (NSP) kilns include Waste Heat Recovery Power Systems multi-stage preheaters and pre-calciners to preprocess raw Waste heat recovery power systems used for cement kilns materials before they enter the kiln, and an air-quench system operate on the Rankine Cycle.9 This thermodynamic cycle is the to cool the clinker product. Kiln exhaust streams, from the basis for conventional thermal power generating stations and clinker cooler and the kiln preheater system, contain useful consists of a heat source (boiler) that converts a liquid working thermal energy that can be converted into power. Typically, fluid to high-pressure vapor (steam, in a power station) that is the clinker coolers release large amounts of heated air at 250 then expanded through a turbogenerator producing power. to 340° C (480 to 645° F) directly into the atmosphere. At the Low-pressure vapor exhausted from the turbogenerator is con- kiln charging side, the 300 to 400° C (570 to 750° F) kiln gas densed back to a liquid state, with condensate from the con- coming off the preheaters is typically used to dry material in denser returned to the boiler feedwater pump to continue the the raw mill and/or the coal mill and then sent to electrostatic cycle. Waste heat recovery systems consist of heat exchangers precipitators or bag filter houses to remove dust before finally or heat recovery steam generators (HRSGs) that transfer heat being vented to the atmosphere. If the raw mill is down, the from the exhaust gases to the working fluid inside, turbines, exhaust gas would be cooled with a water spray or cold air electric generators, condensers, and a working fluid cooling before it entered the dust collectors. Maximizing overall kiln system. Three primary waste heat recovery power generation process efficiency is paramount for efficient plant operation, systems are available, differentiated by the type of working but remaining waste heat from the preheater exhausts and fluid (Gibbon 2013, EPA 2012, CII 2009), as follows: clinker coolers can be recovered and used to provide low tem- perature heating needs in the plant, or used to generate power Steam Rankine Cycle (SRC) – The most commonly used to offset a portion of power purchased from the grid, or cap- Rankine cycle system for waste heat recovery power genera- tive power generated by fuel consumption at the site. Typically, tion uses water as the working fluid and involves generating cement plants do not have significant low-temperature heating steam in a waste heat boiler, which then drives a steam tur- requirements, so most waste heat recovery projects have been bine. Steam turbines are one of the oldest and most versatile for power generation. The amount of waste heat available for power generation technologies in use. As shown in Figure 4, recovery depends on kiln system design and production, the in the steam waste heat recovery steam cycle, the working moisture content of the raw materials, and the amount of heat fluid—water—is first pumped to elevated pressure before required for drying in the raw mill system, solid fuel system and entering a waste heat recovery boiler. The water is vaporized cement mill. Waste heat recovery can provide up to 30 percent into high-pressure steam by the hot exhaust from the process of a cement plant’s overall electricity needs and offers the fol- and then expanded to lower temperature and pressure in a lowing advantages (LBNL 2008, EPA 2010): turbine, generating mechanical power that drives an electric generator. The low-pressure steam is then exhausted to a • Reduces purchased power consumption (or reduces condenser at vacuum conditions, where the expanded vapor reliance on captive power plants), which in turn reduces is condensed to low-pressure liquid and returned to the feed- operating costs water pump and boiler. • Mitigates the impact of future electric price increases • Enhances plant power reliability Steam cycles are by far the most common waste heat re- • Improves plant competitive position in the market covery systems in operation in cement plants, and generally reflect the following: • Lowers plant specific energy consumption, reducing greenhouse gas emissions (based on credit for reduced 9 The Rankine cycle is a thermodynamic cycle that converts heat into central station power generation or reduced fossil-fired work. Central station power plants that generate electricity through a captive power generation at the cement plant) high-pressure steam turbine are based on the Rankine cycle. 12 Waste Heat Recovery for the Cement Sector Figure 4: Waste Heat Recovery System on NSP Cement Kiln Steam Turbine Generator High Pressure Steam Condenser Feedwater Kiln Exhaust Cooling Tower PH Boiler Clinker Cooler Air Kiln Exhaust AQC Boiler NSP - Preheater AQC Rotary Kiln Clinker Source: Adapted from Holcim 2012, 2013 • Most familiar to the cement industry and are generally • Generally require a water-cooled condenser; air cooled economically preferable where source heat temperature condensers can be used but create a performance penalty exceeds 300° C (570° F). due to higher condenser vacuum pressures • Based on proven technologies and generally simple to • In general, match well with large kilns and systems with operate low raw material water content (resulting in higher waste • Widely available from a variety of suppliers gas temperatures) • Generally have lower installation costs than other Rankine Organic Rankine Cycles (ORC) – Other types of working cycle systems on a specific cost basis (US$/kW) fluids with better generation efficiencies at lower heat source • Need higher-temperature waste heat to operate optimally (minimum >260° C (500° F))—generation efficiencies fall temperatures are used in organic Rankine cycle (ORC) systems. significantly at lower temperatures, and lower pressure and The ORCs typically use a high molecular mass organic working temperature steam conditions can result in partially con- fluid such as butane or pentane that has a lower boiling point, densed steam exiting the turbine, causing blade erosion higher vapor pressure, higher molecular mass, and higher mass • Often recover heat from the middle of the air cooler flow compared to water. Together, these features enable higher exhaust flow to increase waste gas temperatures to an turbine efficiencies than those offered by a steam system. acceptable level for the system, but at the expense of not The ORC systems can be utilized for waste heat sources as recovering a portion of cooler waste heat low as 150° C (300° F), whereas steam systems are limited to • Often require a full-time operator, depending on local heat sources greater than 260° C (500° F). The ORC systems regulations are typically designed with two heat transfer stages. The first • Require feedwater conditioning systems stage transfers heat from the waste gases to an intermediate heat transfer fluid (e.g., thermal transfer oil). The second stage transfers heat from the intermediate heat transfer fluid to the Waste Heat Recovery for the Cement Sector 13 organic working fluid. The ORCs have commonly been used • Although ORCs can provide generation efficiencies to generate power in geothermal power plants, and more comparable to a steam Rankine system, ORCs are typically recently, in pipeline compressor heat recovery applications in applied to lower temperature exhaust streams, and the United States. The ORC systems have been widely used limited in sizing and scalability, and generally are smaller to generate power from biomass systems in Europe. A few in capacity that steam systems. ORC systems have been installed on cement kilns.10 The ORC’s • Depending on the application, ORC systems often have a specific features include the following (Turboden 2012, Holcim higher specific cost (US$/kW) than steam systems 2011, Ormat 2012, Gibbon 2013): • The two-stage heat transfer process creates some system • Can recover heat from gases at lower temperatures than inefficiencies is possible with conventional steam systems, enabling • The heat transfer fluids and organic fluids normally used ORCs to utilize all recoverable heat from the air cooler in ORCs are combustible, requiring fire protection mea- • Operate with condensing systems above atmospheric sures and periodic replacement over time. Also, there may pressure, reducing risk of air leakage into the system and be environmental concerns over potential system leaks. eliminating the need for a de-aerator • In general, ORC systems are well-matched with small- to • Not susceptible to freezing medium-size, high-efficiency kilns or kilns with elevated raw material moisture content • Because ORCs operate at relatively low pressure, they can operate unattended and fully automated in many The Kalina Cycle is another Rankine cycle that uses a locations depending on local regulations binary mixture of water and ammonia as the working fluid, • The organic fluid properties result in the working fluid which allows for a more efficient energy extraction from remaining dry (no partial condensation) throughout the the heat source. The Kalina cycle takes advantage of the turbine, avoiding blade erosion ability of ammonia-water mixtures to utilize variable and • Can utilize air-cooled condensers without negatively lower temperature heat sources. The Kalina cycle has an impacting performance operating temperature range that can accept waste heat at • Lower-speed (rpm) ORC turbine allows generator direct temperatures of 95° C (200° F) to 535° C (1,000° F) and is drive without the need for and inefficiency of a reduction claimed to be 15 to 25 percent more efficient than ORCs gear at the same temperature level. The Kalina cycle is in market • ORC equipment (turbines, piping, condensers, heat introduction, with a total of nine operating systems in diverse exchanger surface) is typically smaller than that required industries such as steel and refining, and in geothermal power for steam systems, and the turbine generally consists of plants where the hot fluid is very often a liquid below 150 °C fewer stages (300 °F).11 Kalina cycle systems are now being piloted in the cement industry.12 Key features of the Kalina cycle include the 10 Ormat Incorporated, a leading ORC supplier for geothermal following (Gibbon 2013, Mirolli 2012): applications, has two ORC systems operating in cement plants: a 1.2 MW system installed in 1999 at the Heidelberg Cement plant • Can be used in lower temperature applications than at Lengfurt, Germany, recovers heat from the clinker cooler vent conventional steam Rankine cycle systems air; the second ORC system is a 4.8 MW unit located at AP Cement (now Ultra Tech Cement), Tadipatri, Andhra Pradesh, India. Turboden (acquired by Mitsubishi in 2012) installed its first cement industry ORC 11 An ORC or Kalina cycle operating with a liquid waste heat source can system (2 MW) at Italcementi’s Ait Baha plant in Morocco in 2010 be designed around lower temperatures than one based on a gaseous (5,000 tpd clinker line). In 2012,Turboden installed a 4 MW unit at a heat source, such as industrial process flue gases. The minimum liquid Holcim Romani plant in Alesd (4,000 tpd clinker line); Turboden also waste temperature for economically feasible operation is 95o C (200o F). has systems under construction at Holcim Slovakia (5 MW at 3,600 tpd line at the Rohoznik plant) and an undisclosed North American 12 FLSmidth has an exclusive global license for the Kalina cycle in the plant (7 MW). Holcim is installing another 4.7 MW ORC system at cement and lime industries (excluding China) and has two installations its Mississauga, Canada, plant from an undisclosed provider. ABB completed or under construction in cement plants: a 4.75 MW unit on installed a 1.9 MW ORC system at Holcim’s Untervaz, Switzerland, plant a 7,500 tpd clinker line at Star Cement’s Ras Al-Khaimah plant in UAE utilizing heat from the preheater, and ABB and Jura cement signed an (utilizing air cooler vent only) that was commissioned in 2013, and a agreement in October 2012 to install a 2.0 MW ORC system at the 8.5 MW unit on a 7,000 tpd clinker line at D.G. Khan Cement’s Khaipur Wildegg AG plant in Switzerland. plant in Pakistan (utilizing preheater and air cooler exhaust). 14 Waste Heat Recovery for the Cement Sector • Highly flexible; the system has a high turn-down ratio and Depending on the number of preheater stages (two to six), fast response to changes in heat source temperature and the exhaust temperatures from an NSP kiln system typically flow range from 280 to 450° C (540 to 840° F), while the waste • The ammonia-water mixture can be controlled to achieve air temperatures from the clinker cooler are typically 250 improved heat transfer and higher efficiency by matching to 330° C (480 to 625° F), depending on the cooling air waste heat temperatures and flows volume and recuperation efficiency. In the case of a 3,000 tpd • The binary working fluid is non-flammable clinker production line, approximately 170,000 Nm3/h of kiln • The technology is in the early stage of market introduc- produced (CII exhaust and 150,000 Nm3/h of cooler air are ­ tion with limited suppliers and experience 2009). Figure 5 shows the position of a preheater boiler at the Anhui Digang Conch cement facility in China (an 18 MW waste heat system on two 5000 t/d clinker lines) in relation to the preheater stages and the existing quench tower. Application of Waste Heat Figure 6 shows one of two air quench cooler (AQC) boilers Recovery Power Systems in the at the Digang facility. Many cement plants have pairs or mul- Cement Process tiples of rotary kiln production lines. Often in these cases, the Japanese companies spearheaded the introduction of steam waste heat recovery system includes a combination of mul- cycle waste heat recovery power systems in the cement tiple boilers, two at each end of the rotating kilns (preheater industry. In 1980, Kawasaki Heavy Industries (KHI) put the and air cooler ends), and a single steam turbine generator first waste heat recovery system into operation at Sumitomo housed in a separate building near the production lines. Osaka Cement. The first major commercial system, with a Application of waste heat recovery power systems to cement capacity of 15 MW, has been in operation since 1982 at kilns can be challenging. The exhaust gases from the kiln Taiheiyo Cement’s Kumagaya plant. China installed its first preheaters and clinker cooler typically contain relatively high system in 1998 in partnership with a Japanese supplier. Gov- dust concentrations that sometimes exceed 50 g/N3m and the ernment policies and Clean Development Mechanism (CDM) incentives began to drive the market in China, and by 2012 waste gas temperatures can fluctuate widely during kiln op- over 700 units were operating in that country (OneStone eration. Furthermore, many plants utilize some of the exhaust Research 2013). The bulk of market activity today is in Asia; gas to dry raw materials, and the amount available for heat Chinese companies or joint ventures are the primary suppliers. recovery can vary widely depending on the moisture content The leading manufacturers of waste heat recovery systems of the raw feed (LBNL 2008, CII 2009). using conventional steam circuit technology are now market- ing second generation systems with higher supercritical steam parameters and improved efficiencies that reach output levels as high as 45 kWh/t of clinker. Recoverable Waste Heat and the In a typical waste heat recovery system installation on an NSP Potential for Power Generation kiln (Figure 4), waste heat boilers are installed on the hot The amount of recoverable waste heat from an NSP kiln exhaust streams exiting the preheaters (NSP-Preheater) and air depends on several factors including the following: quench clinker cooler (AQC) to produce medium/low pressure • Moisture content of the raw material feed (i.e., steam. The steam is fed into a condensing steam turbine determines heat requirement for the kiln and the amount that drives a generator to produce power. Hot condensate of preheater exhaust needed for drying) from the condenser is fed back to the waste heat boilers. The • Amount of excess air in the kiln entire system consists of the PH and AQC waste heat boilers, the steam turbine generator, and ancillary equipment such • Amount of air infiltration as condenser, water treatment system, boiler feed pump and • Number and efficiency of preheater/precalciner stages recooling system. • Configuration of the clinker cooler system Waste Heat Recovery for the Cement Sector 15 Figure 5: Preheater Waste Heat Boiler Figure 6: Air Cooler Waste Heat Boiler 16 Waste Heat Recovery for the Cement Sector The number of preheater stages in a cement plant has sig- Figure 7: Power Generation Potential as a Function of nificant bearing on the overall thermal energy consumption Preheater Exhaust Temperature and waste heat recovery potential. The higher the number 12 of stages, the higher the overall thermal energy efficiency of Assumptions: the kiln and the lower the potential for waste heat recovery. · 5,000 tpd clinker line Power Generation Potential, MW 10 · Typical gas volumes Selection of the number of preheater stages is based several · All preheater gas used for WHR · Gases cooled to 150° C factors such as cooler efficiency, restrictions on preheater 8 at boiler outlet tower height, or heat requirements for the mill itself. Table 5 summarizes the quantity of waste heat recoverable from 6 state-of-the-art NSP kilns. Preheater exhaust temperatures range from 390° C (735° F) for small kilns with four pre- 4 heater stages, to below 300° C (570° F) for large kilns with 2 six preheater stages. 300 350 400 450 Preheater Exhaust Temperature, ºC Table 5: Typical Available Heat for Dry Process NSP Kilns Source: PENTA Engineering 2013 Preheater Preheater with precalciner Parameter Unit kilns (Number of Stages) Number of The clinker cooler design also impacts waste heat availability. 4 4 5 6 cyclone stages The basic cooler function is to remove heat from hot clinker Kiln capacity TPD 1000 - 2500 2000 – 8000 discharged from the kiln so the clinker can be handled by range Top stage exit subsequent equipment. Rapid cooling also improves clinker Deg C 390 360 316 282 temperature quality and grindability. Typically, state-of-the-art coolers are Heat available GJ / tonne 0.904 0.754 0.649 0.586 grate coolers, which have various stages of development. in preheater clinker (kcal/ (216) (180) (155) (140) Table 6 summarizes the heat available in different generations exhaust kg) Heat available GJ / hr for of grate coolers. Exhaust air temperatures from the clinker 113.0 94.3 81.1 73.3 in preheater 1 MTPA* cooler range from 250 to 330° C (480 to 625° F) depending (27.0) (22.5) (19.4) (17.5) exhaust (Mkcal/hr) on cooler configuration and recuperation efficiency. GJ / tonne Specific heat 3.14 3.01 2.93 clinker (kcal/ 3.55 (850) consumption (750) (720) (700) kg) *MTPA – Million Metric Tonnes per Annum Table 6: Typical Available Heat for Grate Clinker Coolers Source: Based on “Desk Study on Waste Heat Recovery in the Indian Cement Industry,” 1st 2nd 3rd Confederation of Indian Industry, Final Report, April 2009 (CII 2009) Parameter Unit Generation Generation Generation Vertical Grate Plate aeration Horizontal Horizontal Type with holes aeration aeration Figure 7 shows the power generation potential for a steam in plate waste heat recovery system applied exhaust to a typical 5,000 Cooling Air Nm3/kg 2.0 – 2.5 1.8-2.0 1.4- 1.5 tpd clinker line for exhaust temperatures ranging from 300 to Input clinker Exhaust Air Nm3/kg 450° C (570 to 840° F). 1.0 – 1.5 0.9 – 1.2 0.7 – 0.9 Volume clinker GJ / Tonne Heat Available 0.419-0.502 0.335-0.419 0.293-0.335 clinker in Exhaust (100 – 120) (80 – 100) (70 – 80) (kcal/kg) GJ / hr for 1 Heat Available 52.3-62.8 41.9-52.3 36.6-41.9 MTPA* in Exhaust (12.5 – 15.0) (10.0 – 12.5) (8.8 – 10.0) (Mkcal/hr) Recuperation % <65 <70 >73 Efficiency *MTPA – Million Metric Tonnes per Annum Source: “Desk Study on Waste Heat Recovery in the Indian Cement Industry,” Confederation of Indian Industry, Final Report, April 2009 (CII 2009) Waste Heat Recovery for the Cement Sector 17 Table 7: Typical Available Heat and Power Generation moisture present in the feed material entering the kiln preheater from Preheater/Grate Clinker Cooler influences specific heat consumption in the kiln and the kiln pro- 5000 tpd clinker line, 100% utilization of available waste heat duction rate. Typical practice is to limit moisture content entering Input Heat to PH and AQC Boilers 0.963 GJ / Tonne clinker (230 kcal/kg) the kiln to less than 1.0 percent (CII 2009). To achieve this level, Output Heat in Boiler Exhaust Gas 0.379 GJ / Tonne clinker (90 kcal/kg) raw feed material is normally dried during grinding by utilizing Heat Available for Power (Input – 0.583 GJ / Tonne clinker (1400 kcal/kg) preheater hot gas and/or cooler hot gas as the heat source. Output) Power Conversion Efficiency 18 – 25% Theoretically about 2.26 GJ is required to evaporate or Potential Power Generation 6 – 9 MW remove one tonne of moisture from raw feed or limestone Source: Adapted from PENTA Engineering, 2013 (540 kcal/kg water). However, in practice, vertical roller Table 7 shows the total heat available from both the preheat- mills require 3.77 to 4.61 GJ of heat per tonne of moisture removed (900 to 1100 kcal/kg water), and ball mills require er exhaust and clinker cooler air for a typical 5,000 tpd clinker about 3.14 to 3.56 GJ of heat per tonne of moisture due to plant. Power conversion efficiencies range from 18 to 25 losses in mill outlet gas, radiation losses, and air infiltration percent resulting in potential power capacities of 6 to 9 MW. (750 to 850 kcal/kg water). To illustrate the impact of Typically, the potential electrical power generation, depending on moisture on drying requirements, Table 8 gives the raw waste heat losses and the number of preheater cyclone stages, material flows and heat required in Mkcal / hr for various kiln ranges from 25‑45 kWh/t of clinker. Assuming an average plant production rates at different moisture levels based on the electrical drive power requirement of 106 kWh/t of cement and following assumptions: a clinker factor of 0.75, approximately 20 to 30 percent of the • Raw meal to clinker factor of 1.55 required electricity for the cement production process can be • Heat requirement of 3.98 GJ / tonne of water for raw mill generated from the waste heat. Figure 8 shows the band of (950 kcal/kg) expected power generation for a range of kiln capacities. • Raw mill running hours per day – 22 An additional limiting factor in the heat available for effective As shown in Table 8, significant heat can be required to dry recovery is the moisture content of the raw material entering the the raw material with high moisture levels. For example, Table kiln. Limestone deposits moisture content can range from 2 to 5 indicated that the heat available in a typical 1 Mta 4 stage 15 percent depending on the limestone origin. The amount of preheater kiln (without precalciner) is about 113 GJ/hr; 1 Mta is roughly equivalent to a 3000 tpd line, which, as shown in Table Figure 8: W  aste Heat Power Generation Capacities as a 8, would require just over 114 GJ/hr to reduce raw feed with Function of Kiln Capacity 12 percent moisture down to the required 1.0 percent level. 25 High moisture content in the raw feed can significantly reduce the heat available for WHR in the preheater exhaust; raw feeds 20 with very high moisture rates essentially eliminate the potential Power Capacity, MW for effective heat recovery. Normally, raw feed moisture content 15 below 4.0 to 6.0 percent would have minimal impact on WHR 45 kWh/t clinker potential. At higher moisture levels, WHR viability depends on 10 kiln size, operating conditions and raw material properties. 25 kWh/t clinker 5 As discussed earlier, heat can be recovered from both the 0 preheater and clinker cooler exhausts. Three types of steam 2,500 3,500 4,500 5,500 6,500 7,500 8,500 9,500 10,500 cycle systems exist and each has advantages and disadvan- Clinker Capacity, tpd tages that are specific to installation requirements, the relative amounts of heat available, and the exhaust temperatures of Source: Based on OneStone Research, 2013 the preheaters and coolers (Dalian East 2009, RES/NTK 2010). 18 Waste Heat Recovery for the Cement Sector Table 8: Heat Required for Raw Material Drying Kiln Capacity, TPD 2000 3000 4000 5000 6000 7000 8000 Raw Material Flow, TPD 3382 5073 6774 8455 10,145 11,836 13,527 Raw Moisture Content Drying Heat Required, GJ/hr 2 percent 6.7 10.0 13.4 16.7 20.1 23.9 27.2 4 percent 23.4 35.2 46.9 58.2 69.9 81.6 93.4 6 percent 32.7 49.0 64.9 81.2 97.6 113.9 130.2 8 percent 48.6 73.3 97.6 121.8 146.1 170.4 195.1 10 percent 59.9 91.7 122.3 152.8 183.4 213.9 257.5 12 percent 76.6 114.7 152.8 190.9 229.4 267.5 305.6 Source: “Desk Study on Waste Heat Recovery in the Indian Cement Industry,” Confederation of Indian Industry, Final Report, April 2009 (CII 2009) • Single Pressure System – This is the simplest system • Dual Pressure System – This system incorporates two and is based on using the same steam pressure in both drums at different pressures in the AQC boiler. The feed- the PH and AQC boilers. Generally, feedwater from the water exiting the economizer is split into three parts. One is boiler feedwater pump is preheated by the economizer sent to the high-pressure AQC drum and one is sent to the section of the AQC boiler and then split into two flows. PH boiler (at the same pressure). The third part is sent to the One flow goes to the AQC boiler drum and the other low-pressure AQC boiler drum, still producing superheated to the PH boiler drum. Superheated steam from both steam. This low-pressure steam is sent to the midpoint of the boilers (generally 1.15 MPa, 310 to 340° C) is combined dual-pressure steam turbine. Similar to the flash evapora- in a single header and sent to the turbine generator. The tion system, this allows system flexibility for fluctuations in exhaust temperatures are reduced to between 90 to 110° exhaust temperatures and flows, but the superheated steam C with a single pressure system. System design is simple reduces erosion of the last-stage blades in the steam turbine. and generally lower-cost, but fluctuations in exhaust gas The tradeoff is increased system complexity and cost. temperature and flows are not handled well, leading to inefficiencies in heat recovery under off-design conditions. Table 9: WHR Steam System Options • Flash Evaporator System –This system differs from Single Flash the simpler single-pressure system primarily in that the Pressure Evaporator Dual Pressure feedwater leaving the AQC economizer is split into three Flexibility for Changes in Limited Flexible Flexible Exhaust Conditions flows. The first two flows are identical to the single- Capital Cost Lowest Higher Highest pressure system—one goes to the PH boiler and one to Net increase Net increase Generation Potential Lowest the AQC boiler—at the same pressure. The third flow 2-3% 3-5% is sent to a flash evaporator to generate low-pressure Internal Power Lowest Higher Highest Consumption (0.1 to 0.2 MPa) saturated steam. This low-pressure More steam is sent to the midpoint in a dual-pressure steam Piping and Ducting Simple Complex Complex turbine. Feedwater that is not flashed into steam is sent Steam Turbine Life Better Worse Better back as boiler feedwater. The flash evaporator allows Operation and Control Convenient Complex Convenient additional system flexibility for fluctuations in the flows Source: RES/NTK 2010 or temperatures of the hot gas streams. Exit temperatures of the exhaust gases can be controlled at 90° C, ensuring that waste heat resources are fully utilized. The water content of the steam entering the turbine midpoint is higher, so the last stage of the turbine blade is subject to increased erosion. Waste Heat Recovery for the Cement Sector 19 Project Economics of Waste Heat CAPITAL AND INSTALLATION COSTS Recovery Power Generation A WHR installation is a relatively complex system with multiple interrelated subsystems. The basic package for a The project economics of waste heat power generation steam-based system13 consists of heat recovery boilers or depend on several site-specific and project-specific factors, heat exchangers, steam turbine, gearbox, electric generator, including the following considerations: condenser, steam and condensate piping, lubrication and • The amount of heat available in (exhaust gas volume and cooling systems, water-treatment system, electrical intercon- temperature) and conditions of the waste gases deter- nection equipment and controls. Total installed costs, which mine the size, potentially the technology (e.g., ORCs are includes design, engineering, construction and commission- more applicable for lower-temperature exhaust streams ing can vary significantly depending on the scope of plant and lower gas volumes), and overall generation efficiency equipment, country, geographical area within a country, (e.g., amount of power that can be produced) of the competitive market conditions, special site requirements, and WHR system. The amount of heat available and at what availability of a trained labor force and prevailing labor rates. temperature is a function of the size and configuration As mentioned, total capital cost (equipment and installation) of the kiln (i.e., tpd and number of preheater/precalciner is a strong function of size—smaller WHR systems will have a stages) and the raw material moisture level (determines higher dollar cost per kW of generation capacity. Engineering, the percentage of hot exhaust gases need for drying). civil work and construction costs can represent as much as • Capital cost of the heat recovery system is generally a 34 to 45 percent of the total project cost. Costs in Western function of size, technology and, as discussed below, countries are at the high end of the range (Holcim 2013). supplier. Figure 9 shows industry estimates of total installed costs • System installation costs (design, engineering, construc- for cement WHR projects on a US$/kWe basis and illustrates tion, commissioning and training) are functions of the how costs depend heavily on project size (MW), local cost installation size, technology, complexity, supplier and variations (region of the installation), and type of technology degree of local content. (systems lower than 2 to 3 MW tend to be ORC systems). • System operating and maintenance costs are a function Hence, total installed costs for WHR systems are a function of of size, technology, site-specific operational constraints or all of the factors mentioned above, but costs can range from requirements; costs are influenced by staffing—will the US$7,000/kWe for 2 MW systems (ORC) to US$2,000/kWe for system be handled by existing operating staff, new staff 25 MW systems (steam). that require training, or outsourcing? • Operating hours of the kiln and availability of the heat recovery system • Displaced power prices based on grid electricity no longer purchased, or reduced dependence on captive power plants and associated costs • Net power output of the WHR system. Net output is more important in determining project economics than gross power output. The impact of auxiliary power consumption and process/booster fans must be included in efficiency and economic calculations. 13 The discussion of system costs and project economics focuses primarily on steam systems, which represent the vast majority of installed technology and potential market. Conventional steam systems account for 99 percent of existing WHR installations in the cement industry worldwide. References to ORC system costs are noted in this section where relevant information is available. 20 Waste Heat Recovery for the Cement Sector Figure 9: WHR System Installed Costs, US$/kW made in the global cement market, Chinese WHR suppliers and developers are now actively marketing WHR systems in 8000 Asia and branching out into Africa and other regions. Initially, 7000 Chinese suppliers faced concerns about the reliability and quality of some of their WHR systems, and their ability to 6000 Installed Costs, $/kW WHR projects in Europe and North America provide adequate start-up and training support. Neverthe- 5000 less, Chinese suppliers are succeeding in Thailand, India and 4000 Pakistan, where they are establishing partnerships and alli- WHR projects 3000 in Asia ances with national resources for marketing and local project 2000 scope. Key to the Chinese success is their commanding price 1000 advantage over Western suppliers, as noted above. Figure 10 0 provides an estimate of total project costs for Chinese WHR 0 5 10 15 20 25 30 systems installed in China, other parts of Asia, and Europe. Power System Size, MW Although Figure 10 accurately depicts relative cost differences for Chinese WHR systems across these three regions, total Source: Holcim 2013; OneStone Research 2012, 2013 costs are 20 to 30 percent lower than estimates from other industry sources for a comparable system.14 In addition to factors discussed above, the supplier is a key determinant in total capital cost for steam WHR systems for Figure 10: Installed Costs for Chinese WHR Systems the cement sector. As described later in this report, China is (Steam Cycle)15 by far the major player in WHR for the cement industry in terms of installations, equipment supply, and developer expe- 3.0 Typical Range: 2,000 – 3,000 $/kW rience. The initial WHR systems installed in China in the late 2.5 Installation Costs, US$/ MWe 1990s were based on Japanese technology and engineering. Typical Range: 1,600 – 2,200 $/kW Soon after introduction, a few Japanese/Chinese joint ven- 2.0 tures were formed that marketed a combination of Japanese and Chinese technology. For example, Anhui Conch Cement/ 1.5 Typical Range: 1,100 – 1,400 $/kW Kawasaki Engineering installed systems that used a Kawasaki 1.0 duel-pressure heat recovery boiler and Chinese steam turbine 0.5 and generator. As the market picked up in China in response to regulatory requirements, other large cement companies 0.0 China Asia Europe actively marketed domestic WHR technology. Independent Local Scope China Equip. Chinese suppliers to the cement industry also entered the market with domestic technologies. As a result, Chinese sup- pliers now have greater experience in engineering, construct- Source: Holcim 2013; OneStone Research 2013; IFC ing and commissioning steam-based WHR projects, and have substantially reduced the cost of WHR systems within China, where project costs for WHR systems are now three to four times lower than costs of systems installed in Western coun- tries using Western suppliers (Holcim 2013). 14 For example, Sinoma Energy Conservation Ltd. estimates the costs of a 9 MW system installed on a 5,000 tpd kiln in Asia (outside China) to be The developments in Chinese WHR equipment, design and US$18 to US$19 million, or about US$2000/kW (Sinoma 2013). construction experience coincided with the entry into the 15 The above CAPEX estimates are based on Chinese WHR equipment. global cement market of Chinese cement process equipment Experience from WHR project in various regions suggest that often suppliers and engineering. Faced with near market saturation times installation costs are higher, and in certain cases reach up to US$5,000 per kWe depending upon WHR power technology type and at home and building on the advances Chinese firms have installed capacity. For instance European-manufactured WHR power systems could cost up to US$3,800 per kWe. Waste Heat Recovery for the Cement Sector 21 PROJECT PAYBACK size), 7,500 annual operating hours, and auxiliary power requirements of 7.0 percent of gross power generation. Typi- As discussed above, the kiln size, configuration and available cally, annual savings of US$0.5 to US$5 million can be achieved heat (e.g., moisture content of raw feed) determine the ap- at an electricity price of US$80/MWh for 1 to 10 MW WHR plicable WHR technology and size. Project financial results are systems. Project payback and financial return vary depending then driven by a few key factors: on the required investment and prevailing electricity prices, but • WHR system costs, as discussed above simple paybacks for WHR systems typically range from 3 to 4 • Operating and maintenance costs (O&M) which are years in China to 10 years and more in Western countries. typically 2.5 percent of capital costs per year for steam systems, and about half of that for ORCs. Figure 12 illustrates that project paybacks are a strong • Operating hours, more hours are better for project econom- function of the price of electricity that is displaced by WHR ics. Typical values range from 7,200 to 7,800 hours per year. system outputs. Figure 11 payback calculations are based on operating characteristics and costs of the 10 MW system in • Value of displaced electricity, either purchased from the Figure 12, and a total installed cost of US$2000/kW. grid or avoided costs from a captive power plant. Pur- chased power prices vary widely—50 US$/MWh to over 150 US$/MWh depending on country and/or supplier. Figure 11: Potential Annual Operating Savings from WHR Table 10 provides a sample project payback calculation for 20 a Chinese WHR system and reflects the typical 3 to 4 year 20 MW simple payback for such a system installed in China. Annual Annual Savings, million US$ 15 savings depends on the hours of operation, the net annual output of the WHR system, the annual operating and mainte- nance cost of the system, and the price of the power that the 10 10 MW WHR system is displacing. 5 5 MW Table 10: Typical WHR Payback Calculation for Chinese 2.5 MW 1 MW System 0 40 60 80 100 120 140 Item Value Electricity Price, US$/MWh Clinker Production 5,000 tpd Installed WHR Capacity 9,000 kW Source: OneStone Research 2013 Annual Average Generation Capacity 8,250 kW Auxiliary Power Requirements 7.0% Annual Operating Hours 7,200 hours Figure 12: Potential Simple Paybacks for a 10 MW WHR System Gross Annual Power Generation 59,400 MWh Net Annual Power Generation 55,242 MWh 8 Displaced Electricity Price 36 RMB / 60 US$/kWh Assumptions: 7 · 10 MW WHR system Annual Electricity Savings US$3,315,000 · 7,500 annual operating hours 6 · $2,000 / kW installed cost Annual O&M Costs US$270,000 · Annual O&M costs 2.5 % of capital cost Simple Payback, Years Net Annual Savings US$3,045,000 · Auxiliary power requirements of 7% 5 Total Investment US$12,000,000 4 Simple Payback 3.9 years 3 Source: Adapted from Holcim 2013; OneStone Research 2013 2 1 Figure 11 shows anticipated annual savings for a range of WHR 0 40 60 80 100 120 140 system sizes (1 to 20 MW). The calculations are based on an- Electricity Price, US$/MWh nual operating and maintenance costs equal to 2.5 percent of total capital costs (50 to 75 US$/kW depending on system Source: Holcim 2013; OneStone Research 2012, 2013 22 Waste Heat Recovery for the Cement Sector Market Status of WHR in the Cement Industry Global Summary Figure 13. Current Installations of Cement Industry WHR As described earlier, Japanese companies spearheaded the introduction of waste heat recovery power systems in the China 739 India 26 cement industry, and introduced the technology to China in Japan 24 1998. Since then, China has become the market leader in Thailand 12 WHR installations in terms of number of systems installed Pakistan 9 domestically (Figure 13) and in number of systems installed 24 Other Asia internationally by Chinese companies (particularly in Asia). Mid East 15 As discussed in the next section, drivers for Chinese WHR Europe 7 development included incentives such as supportive tax Americas 5 breaks, Clean Development Mechanism (CDM) revenues for Rest of World 4 0 100 200 300 400 500 600 700 800 emissions reductions from clean energy projects, and national energy efficiency regulations that mandated WHR on all new Source: “Latest Waste Heat Utilization Trends,” OneStone Research; CemPower 2013 clinker lines constructed after January 2011. The effect of these incentives was reinforced by market entry of multiple Chinese WHR suppliers, which developed the technology and Conventional steam system technology accounts for 99 lowered WHR capital and installation costs by using domestic percent of existing WHR installations (among an estimated components and design capacity. 865 WHR systems installed in the cement industry worldwide in 2012, only nine were Organic Rankine Cycle and only two In part due to market experience in China, interest in cement were Kalina Cycle systems). Primary interest in non-steam industry WHR is expanding among countries and global com- systems has been in Europe and the United States where panies driven by the following: kiln efficiencies tend to be higher and clinker line capacities • Rising prices for power and fuel, particularly where smaller (OneStone Research 2013). Organic Rankine Cycles captive power plants prevail and Kalina Cycle units offer higher power efficiencies as kiln • Concerns about grid power reliability, particularly in efficiencies increase and exhaust temperatures decrease. developing countries because electricity supply is often Packaged ORC turbo generators are available in less than controlled by local, state-owned monopolies and the cost 1 MW size. of power can represent up to 25 percent of the cost of Most large global cement firms are utilizing waste heat cement manufacture to power systems in some of their facilities. For example, • Industry commitment to and government support for Holcim experimented early with WHR, commissioning units sustainable development in 1982 and 1994. Holcim began installing commercial units Many early systems installed in China, India, Pakistan and in 2006, and now has 271 MW of WHR power capacity—53 Thailand received revenues from the Clean Development MW outside of China. Over the last five years, Holcim has Mechanism program. However, certified emissions reduc- initiated nine WHR projects in Canada, Switzerland, Slovakia, tion certificates under CDM have now fallen to almost zero, Romania, Lebanon, India, Thailand, China and Vietnam. eliminating this program as a WHR driver. Most Holcim projects in Asia are steam-cycle systems; most projects outside of Asia are ORC systems (Holcim 2013). As of end-2013, Lafarge, Heidelberg Cement and Cemex have all installed or are in the process of installing a limited number of waste heat recovery power generation systems. Waste Heat Recovery for the Cement Sector 23 The China Experience restructuring of the cement industry, and during that period 696 NSP clinker lines were put into operation, representing 777 million tons per year of capacity. By 2010, China had OVERVIEW OF CHINA’S CEMENT INDUSTRY 1,273 NSP lines with an annual clinker capacity of 1.26 billion China has become the leader in applying waste heat recovery tons. Over that same period, 434 million tons of outdated power generation to clinker kilns, and WHR development vertical shaft kilns were shut down—some 55 percent of the in China has mirrored the explosive growth of the Chinese total shaft kiln capacity that was in place in 2006 (Hefei Fung cement industry, which is the largest in the world and has Tak Technology 2012). In 2011, 171 new cement production changed dramatically over the past 50 years. In 1949, at the lines were installed, with 325 Mta clinker capacity (Societe start of the modern People’s Republic of China, the cement Generale Securities 2012). industry was small, informal and local due to poor infra- structure that made transport difficult, particularly in remote Table 11. Annual Chinese Cement Production by Kiln Type areas. Towns and villages would have small kilns to produce Annual Annual NSP enough cement for their own needs. Larger communities Cement Cement NSP Kiln Other Kiln YEAR Output, Mta Output, Mta Share, % share, % and counties would have larger vertical-shaft kilns to produce 2000 595 65.5 11.0 89.0 and distribute over a wider area. Through the 1970s, the 2001 661 93.7 14.2 85.8 number of small-scale county and commune kilns multiplied 2002 725 123.4 17.0 83.0 and by 1980 there were over 4,500 such kilns—responsible 2003 862 189.7 22.0 78.0 for 65 percent of national cement production. The number of 2004 967 316.3 32.7 67.3 large-scale integrated cement plants increased during the late 2005 1,069 472.7 44.2 55 .8 1970s due to market reforms and private capital availability. 2006 1,237 602.1 48.7 51.3 By 1980, the China National Building Materials (CNBM) was 2007 1,361 714.9 52.5 47.5 incorporated to help develop the cement industry, advance 2008 1,424 858.1 60.3 39.7 construction materials, and expand capacity, which led to 2009 1,644 1,252.1 76.2 23.8 developing many similar firms. In 1983, China produced 108 2010 1,882 1,513.0 80.4 19.6 million tons of cement, second only to the USSR, but much 2011 2,099 1,881.6 89.6 10.4 of the new integrated capacity used less-efficient wet-kiln 2012 2,210 2,037.0 92.2 7.8 technology. At end-2000, China produced 595 million tons Source: CCA 2013- http://www.cement114.com/hybg_view.asp?id=38023&utype=91 of cement, primarily using vertical shaft and wet rotary kilns; NSP kilns represented only 11 percent of total output, and the At end-2011, more than 4,000 cement enterprises in China Chinese cement industry was well below the global average were producing some 2.099 billion tonnes, accounting for 57 in all technical and economic indices (Edwards 2013d). percent of world production. The 1,513 NSP lines in operation During the 2000s, the Chinese government considered the at the end of that year accounted for almost 90 percent of cement industry a key industry and issued a series of policies total cement output. Table 12 shows the capacity distribution and regulations to promote industry growth, improve efficien- of the NSP lines at the end of 2011. China had an estimated cy and support rapid economic development. Table 11 shows 1,637 NSP lines at end-2012. The top 21 cement companies the enormous growth in cement production since 2000 and account for just over one billion tonnes per year of clinker the rapid industry evolution—from inefficient vertical and wet capacity, representing about 58 percent of total Chinese process kilns to state-of-the-art NSP kilns (CCA 2013). The clinker capacity (Table 13). Eleventh Five Year Plan period (2006 – 2011) called for rapid 24 Waste Heat Recovery for the Cement Sector Table 12. NSP Production Line Capacity Distribution, 2011 was installed by Kawasaki Heavy Industries (KHI) with funding support from Japan’s New Energy and Industrial NSP Line Capacity, tpd 1000- 2000- 4000- 5000- Development Organization (NEDO) on a 7,200 tpd clinker < 1000 2000 4000 4500 10,000 > 10,000 Total line, and recovered heat from the preheaters and clinker Number 30 309 649 66 452 7 1,513 cooler. Kawasaki installed several additional systems in of Lines collaboration with Anhui Conch, but momentum in the Source: http://www.ccement.com/zhuanti/2012paihang/#esq market picked up in the early 2000s when several factors converged, including climate change issues, rising energy prices and the market entry of new Chinese vendors.17 KHI Table 13. Top Twenty-One Cement Producers in China in 2012 formed a joint venture with Anhui Conch (Anhui Conch/ Annual Kawasaki Engineering) which marketed a combination of Clinker Japanese technology (waste heat boilers) and domestic Production Number Number Clinker Capacity, of Clinker of Clinker Capacity, technology (steam turbines and generators), and the Company Mta Plants Lines 1,000 tpd engineering arms of other large cement companies such as 1. CNBM 296.0 16 199 259 955 CNBM and Sinoma actively marketed domestic technology. 2. Anhui Conch 151.0 45 90 487 Independent Chinese suppliers to the cement industry such 3. Sinoma 72.8 58 72 235 as CITIC Heavy Industries, Dalian East and Nanjing Kesen 4. Jidong 67.5 35 51 218 Kenen Environment and Energy also entered the market with 5. China Resources 54.2 24 36 175 domestic technologies. Taiwan Cement 6. 49.6 20 33 160 (TCC) As shown in Figure 14, development of waste heat power 7. Huaxin 38.3 27 34 124 generation in China leaped forward during the Eleventh 8. Sunssy 37.9 23 35 122 Five-Year Plan period in step with rapid cement industry 9. Red Lion 33.8 16 25 109 development. As of 2008, 263 NSP clinker production lines 10. Beijing Jinyo 32.3 24 34 104 were equipped with waste heat utilization power plants 11. Tianrui Group 29.0 11 18 94 (193 WHR units), with installed capacity of over 1,600 MW 12. Lafarge 22.3 19 23 72 (China Cement Net 2009). By end-2010, over 700 produc- 13. Asia Cement 21.6 7 15 70 14. Yatai Group 19.8 9 19 64 tion lines were equipped with approximately 650 waste heat 15. Yaobai Cement 14.6 14 16 47 power plants, representing 55 percent of the dry-process 16. Henan Tongli 12.4 6 9 40 kiln capacity in China. Total installed capacity was about 17. Jiangxi Evergreen 11.5 5 12 37 4,800 MW, and the annual generating capacity was 36.8 18. Gexhouba 10.7 9 9 35 billion kWh, equivalent to saving more than 9.0 million tons 19. Mengxi Cement 10.7 6 9 35 of standard coal (China Cement Net 2011). By end-2012, 20. Gold Circle 10.5 6 8 34 739 waste heat power systems were operating, with a total 21. On the Peak 10.5 4 8 34 installed capacity of 6,575 MW (OneStone Research 2013). 1,006.8 567 815 3,248 The Twelfth Five-Year Plan for the cement industry has Source: http://www.ccement.com/zhuanti/2012paihang/#esq targeted a WHR penetration of 65 percent for dry-process NSP production lines by 2015. Installations in China peaked in 2009—new units decreased due to a declining number WHR DEVELOPMENT IN CHINA’S CEMENT of new cement plants, a nearly fully retrofitted fleet of exist- INDUSTRY ing plants, and a reduction in CDM credits. Many Chinese The first waste heat recovery power generation system in the Chinese cement industry was installed in 1998 at an Anhui Conch cement plant in Ningguo. The 4 MW system 17 The first domestic WHR system was a 3 MW unit installed in 1999 by Shanghai Triumph Kaineng and Nanjing Cement Design Institute on a 2,000 tpd line at Jiangxi Wannian Cement; it utilized 100 percent domestic equipment and at the time had lower efficiency and reliability 16 Needs to be confirmed than the Japanese system. Waste Heat Recovery for the Cement Sector 25 suppliers are now seeking opportunities in overseas markets • Ministry of Industry and Information Technology (MIIT) issued (primarily Asia), and other industries. an order in 2010 requiring all newly constructed (after Janu- ary 2011) cement (clinker) production lines to be equipped with low-temperature waste heat power generation. Figure 14. Installation of Cement Industry WHR in China • The Twelfth Five-Year Development Planning of Cement 200 800 Industry (2012 – 2016 period) 180 700 ·· China will continuously promote energy efficiency Cumulative Number of WHR Units 160 technologies such as waste heat power generation, bag 600 New WHR Units per Year 140 filter, high-efficiency grate cooler, vertical mill, rolling 120 500 press, low-resistance and high-efficiency preheater 100 400 and calciner system, real-time quality control system, 80 300 variable-frequency speed control, etc.; and develop and 60 200 promote high-efficiency NOx and SO2 emission reduc- 40 20 100 tion devices. 0 0 ·· Focus on researching and developing high-efficiency 2005 2006 2007 2008 2009 2010 2011 2012 energy-saving process technology and equipment of ce- WHR Units Accum. Units ment kiln furnace; cascade waste heat utilization tech- nology and equipment; new energy-saving grinding Source: “Latest Waste Heat Utilization Trends,” OneStone Research; CemPower 2013 technology and equipment; low-cost comprehensive emission reduction technology and equipment of dust and NOx; and the separation, capture and transforma- KEY REGULATORY DRIVERS FOR WHR tion and utilization technology of CO2. DEVELOPMENT IN CHINA ·· The proportion of low-temperature waste heat power Regulations have been the primary driver for WHR in China’s generation line will be increased to 65 percent by 2015. cement industry, including requirements that new NSP clinker lines install waste heat recovery power generation systems, BUSINESS MODELS FOR WHR and that grid enterprises facilitate interconnection. DEPLOYMENT IN THE CHINESE • Energy Conservation Law of the People’s Republic of CEMENT INDUSTRY China There are three current business models for WHR develop- ·· Item 31 - The government encourages industrial en- ment in China: terprises to adopt efficient and energy-saving motors, • Design – Bid – Build (DBB) is the traditional approach to boilers, kilns, fans, pumps and other equipment and industrial projects. The plant owner contracts an engineering technologies of cogeneration of heat and power, waste firm or WHR supplier to design the project, solicit bids for heat and pressure generating, clean coal and advanced equipment and installation, and assume full responsibility as energy consumption monitoring and control, etc. project integrator for construction and management. This ·· Item 78 - If a grid enterprise fails to arrange for the very linear approach often leads to long development cycles. incorporation of outputs of cogeneration of heat and Coordination among builders, engineers, and contractors power and the outputs of waste heat and pressure can be difficult and time-consuming, and the pre-investment generating into the grid according to this Law, or fails resource requirements can be high. The adoption of this ap- to follow state provisions on grid power price, the proach to waste heat recovery projects is steadily declining. state power supervision department shall order it to • Engineering- Procurement-Construction (EPC) make correction; and if it causes economic losses to the is a general contracting approach often referred to power generation enterprise, it shall assume the liability as “turnkey.” The WHR supplier, the EPC contractor, of compensation. assumes responsibility for design, engineering services, procurement of equipment and materials, construction, 26 Waste Heat Recovery for the Cement Sector commissioning, and trial operation. “Turnkey” means that performance gas turbines. Kawasaki develops and builds a the system is delivered to the client ready for operations vast array of industrial plants and equipment, including large and the key feature of EPC is that project price and cement, chemical and nonferrous metal plants, prime movers, schedule have a high degree of certainty. The project is and compact precision machinery. Also, it offers industrial largely contractor-managed and the cost risk and control plant engineering from design to sales and the company is are weighted towards the contractor and away from involved in developing new energy sources as an alternative the owner. Because the EPC contractor assumes greater to fossil fuels, such as wind power generation, biomass responsibility, it is critical to award the contract to a firm power generation, photovoltaic systems and rechargeable with the right qualifications and management skills. Today batteries. Kawasaki was an early developer of WHR technology the EPC business model is common in waste heat power for cement, including a dual-pressure heat recovery steam generation in the China cement industry, accounting for boiler system. The company has over 110 WHR projects in more than 60 percent of market share. Japan, Brazil, Taiwan, China,* Vietnam,* India,* Korea, and • Build Operate Transfer (BOT) has extensive application Thailand.* in infrastructure projects and in public–private partnerships. *Systems installed by Anhui Conch/Kawasaki joint venture. In the BOT framework for WHR projects, the plant owner delegates responsibility to the WHR supplier or a group of China investors with ties to the supplier of the design, construc- tion, operation and maintenance of the WHR facility for a Anhui Conch/Kawasaki Engineering Co., Ltd. (CHN/JPN) specified period. During this period, the WHR supplier or (Dual Pressure Steam System) investor group must raise project financing, and is entitled This joint venture was established in December 2006 with to retain all or a portion of project-generated revenues (a investments from Anhui Conch Venture Investment Co., Ltd. range of revenue-sharing arrangements exist) and owns (subsidiary of Anhui Conch Cement) and Japanese Kawasaki the project facilities. At the end of the concession agree- Plant Systems Ltd. (developer of dual-phase steam systems). ment the WHR facility is transferred to the plant owner. The venture designs, packages, and services cement waste This model allows the WHR system to be installed without heat power generation projects; designs, develops, packages, up-front investment by the plant. The plant gains immedi- and sells key equipment; and installs and operates equipment. ate benefit during the concession period through some Anhui Conch/Kawasaki is a primary WHR developer in China, form of payment for the heat driving the WHR power and as of February 2012, had 159 engineering/procurement production or by purchase of reduced-cost power from the (EP) or EPC waste heat power generation projects which system. Eventually, the plant retains all the savings benefits were under construction or completed domestically and from the system when it is transferred after the concession abroad, including systems at Anhui Conch Cement Group; period. This model accounts for about 10 percent of WHR Tianrui Group; Jidong Group; Bestway, Maple Leaf and D.G. systems, but interest in it is growing. Khan cement companies in Pakistan; Siam Cement Group in Thailand; Turkey CIMSA Cement, Burma MEC and Vietnam Congthanh Cement (VICEM). These projects total 1,930 MW, WHR System Suppliers and involve 45 domestic and overseas cement groups. Sinoma Energy Conservation Ltd. (CHN) (Single Pressure STEAM SYSTEMS Steam System) Japan The company has registered capital of RMB 327 million and specializes in the utilization of waste heat and residual pressure Kawasaki Plant Systems Ltd. (JPN) (Dual Pressure Steam under China National Materials Group Corporation Limited System) (Sinoma), and is a leading provider of overall waste heat power generation services in China. China National Materials Kawasaki Plant Systems is a division of Kawasaki Heavy Group Corporation Ltd. is a central government administered Industries, and Kawasaki Plant Systems’ key offering is high- Waste Heat Recovery for the Cement Sector 27 enterprise directly under the State-owned Assets Supervision percent market share), and has undertaken construction of and Administration Commission of the State Council (SASAC). more than 10 foreign projects (India, Turkey, Saudi Arabia, Sinoma focuses on three major industries: non-metallic material and Madagascar). NTK uses EPC and BOT business models for manufacturing industry (Sinoma Cement); non-metallic materi- WHR development. NTK entered into a collaborative agree- als technological equipment and engineering industry; non- ment in February 2011 with Tecpro Systems Limited, an Indian metallic mining industry. Sinoma holds both directly controlled engineering, procurement and construction (EPC) contractor and proprietarily controlled equities in 69 enterprises; including in the power sector. The joint venture is developing projects 1 H-Share and 5 A-Share listed companies, and 13 national re- in the Indian market, based on the NTK technology (PH waste search and design institutes. Branches are sited all over China, heat boiler and steam turbine) and has announced five WHR and in the United States, Europe, Japan, Middle-eastern and projects since forming the partnership. African countries. Sinoma uses waste heat boilers from its own Dalian East New Energy Development Co., Ltd. (CHN) Nantong Wanda Boiler Company subsidiary. (Dual pressure steam system) Sinoma Energy Conservation Ltd. supports technological Established in 2005, Dalian East provides engineering design, development, comprehensive utilization and industrializa- equipment supply and procurement, project management, tion of industrial waste heat and residual pressure, and has technical services and commissioning services for WHR projects various qualifications for design, foreign trade operation, and in the iron and steel, coking, chemicals and cement industries. foreign engineering and general contracting in WHR. Sinoma The company was listed as “EAST” on the Shenzhen stock EC favours BOT business models as their investment mode; exchange in 2010. As of March 2013, the company has Sinoma is evaluating various multi-form and multi-channel installed 165 WHR systems on 192 NSP clinker lines (1,500 investment models with energy-consuming enterprises and to 7,200 tpd) representing 1,319 MW. The company offers a has installed about 200 WHR systems, primarily in China. In range of project approaches from EP to BOT; of the installed addition to engineering, design and equipment procurement, WHR systems, 89 were EPC projects and 24 were EP projects. by end-June 2011, the company completed 43 EPC instal- Dalian East has also installed 24 WHR projects in the steel and lations in China with total generating capacity of 314 MW, coking industries. While primarily focused on China to-date, and 14 BOT projects with total generating capacity of 120 the company has installed WHR on cement plants in the MW. Sinoma has installed 17 systems abroad using EP and Philippines and India. Polysius A.G., a division of Thyssen Krupp EPC models with a total generating capacity of 228 MW in (GER), and a global engineering supply firm for the cement Angola, Thailand, Philippines, Vietnam, Pakistan, United Arab industry entered into an exclusive cooperative agreement with Emirates, Turkey and India. Dalian East for cement kiln WHR technology in 2010. Dalian East offers a proprietary preheater bypass system WHR boiler Nanjing Triumph Kenen Environment & Energy Co., Ltd. that has been installed on nine plants. (CHN) Nanjing Triumph (Kesen) CITIC Heavy Industries Co., Ltd. (CHN) (Dual-pressure Kenen Environment & Energy Co. (NTK), or Nanjing Kesen steam system) Kenen Environment & Energy Co., started relatively early in WHR, and specializes in energy conservation and environ- A leading domestic and international heavy machinery manu- mental protection; new energy technology development; facturer, a national innovation and high-tech enterprise, and engineering consulting; design and contracting; and waste a leading enterprise in domestic cement equipment manufac- heat power plant investment, operation and management. turing. The company was listed in the A-share market of the The company was listed as “East” in the startup board market Shanghai Stock Exchange in 2012 (stock code: CITIC Heavy of Shenzhen Stock Exchange in 2010. By April 2012, the Industries 601608). It supplies mainframe equipment for company had undertaken the construction of more than 180 cement lines, including large-scale rotary kiln, raw material medium- and low-temperature waste heat power generation vertical mill, high-efficiency cement mill, rolling machine, and projects in cement, iron and steel, and chemicals, accounting powder selecting machines; has dealt with general contract- for 1,720 MW. NTK has over 150 systems in cement facili- ing of complete projects for long term; and offers full-process ties representing 1,500 MW of capacity in China (about a 30 services for both cement line and complete-set waste heat 28 Waste Heat Recovery for the Cement Sector power generation projects, including project consulting, in more than ten countries or areas as Pakistan, Vietnam, engineering design, equipment supply and purchasing, civil Ethiopia, Chile, Saudi Arabia, Sudan and Russia with a total construction, installation and commissioning and personnel contract value exceeding RMB ten billion. training. Company does EPC, BOT and energy management • Shanghai Triumph (Kesen) Energy Conservation / shared savings contracts (EMC) contracts for the design, (STEC) – Joint venture between China Triumph Inter- manufacture and installation of low-temperature waste heat national Eng. (CTIEC) and Mitsubishi (CHN/JPN) systems for the iron and steel industry, cement industry, and petroleum and chemical industry. As of end-2012, CITIC Shanghai Triumph is a high-tech enterprise established Heavy Industries had constructed more than 130 waste heat with the joint investments of China Triumph International power projects with large-scale cement groups like China Engineering Co., Ltd. (CTIEC) and Mitsubishi Corporation. United Cement Corporation, Tianrui Group, Tapai Group, CTIEC is a national Class-A scientific research and design Sunnsy Group, and Tongli Group, as well as companies in entity and international engineering group, and one of India, Thailand, Turkey and Vietnam. the engineering platforms of CNBM. Shanghai Triumph specializes in medium- and low-temperature flue gas waste China National Building Materials Group (CNBM) (CHN) heat recovery for power generation from glass and cement (Single-pressure steam system) kilns. As of May 2013, the Company had 28 EPC projects China National Building Materials Group Corporation (CNBM) in production, primarily in China; the company has three was established in 1984 with approval from the Chinese State active WHR cement projects in Turkey. Council; it became a Central Enterprise under direct supervi- India sion of the State-owned Assets Supervision and Administration Commission of the State Council in 2003. CNBM is the largest Transparent Energy Systems Private Limited (IND) comprehensive building materials industry group in China; it integrates scientific research, manufacturing and logistics, Transparent Energy Systems Private Limited (TESPL) is an and comprises four business platforms focused on domestic Indian engineering and construction firm that has developed and international building materials and businesses—industry and patented an in-house technology for waste heat recovery (cement, glass and glass fiber, light-weight building materi- systems for the cement industry. TESPL also installs other als, refractory materials and composite materials), technology WHR technologies such as the Ormat organic Rankine cycle development and testing, engineering design and construc- system. It has WHR systems installed with KCP Limited and tion, and trading/logistics. As of end-2009, CNBM’s total assets Ultratech Cement in India. exceeded RMB 110 billion, with 100,000 employees, and 20 Tecpro Systems Limited/NTK (IND/CHN) companies under direct management with 100 percent share control or majority control, among which six were listed com- Tecpro Systems Limited (Tecpro) is an Indian engineering, panies, including two listed overseas. CNBM is active in WHR procurement and construction (EPC) contractor active in the applications through two engineering subsidiaries: power sector including captive power plants for the Indian cement industry. In February 2011 Tecpro entered into a • Hefei Cement Research Design Institute (HCRDI) (CHN) collaborative agreement with Nanjing Triumph Kaineng Established in 2006 as a subsidiary of CNBM, HCRDI Environment and Energy Company (NTK) to develop waste provides engineering design and construction of cement heat power projects based on the NTK technology (waste industry plants and plant systems. HCRDI has various op- heat boiler and steam turbine) for the Indian market. The erating certificates including Certificate of Turnkey Project joint venture has announced five WHR projects in India since Contracting, Certificate of Overseas Project Contracting, forming the partnership. and Certificate of Import and Export. The company has Thermax/Taiheyo Engineering (IND/JPN) installed over 25 WHR systems on cements plants in China with a total capacity of approximately 165 MW, and two Thermax is an Indian supplier and engineering/constructor of systems in Pakistan (22 MW). HCRDI has undertaken over energy systems including boilers and steam systems. Thermax twenty EP, EC and EPC cement plants and other projects entered into an agreement with Taiheiyo Engineering Corp of Waste Heat Recovery for the Cement Sector 29 Japan (a subsidiary of Taiheiyo Cement) to offer waste heat Turboden / Mitsubishi (JPN) recovery power generation systems in India. The collaborative Turboden (acquired by Mitsubishi in 2012) manufactures and has two systems at JK Cement, Nimbahera and at JK Lakshmi. sells a broad range of ORC units ranging in size from 500 kW Thermax offers both EPC and build, own and transfer (BOT) to 2+ MW. They have over 30 years of experience with over contracts for WHR systems. 100 systems in operation primarily in biomass recovery systems, and mainly in Europe. In 2012, Turboden installed a 4 MW unit Other at a Holcim Romani cement plant in Alesd (4,000 tpd clinker FLSmidth (DEN) line); Turboden also has systems under construction at Holcim Slovakia (5 MW at 3,600 tpd line at the Rohoznik plant) and an FLSmidth is a global engineering company from Denmark undisclosed North American plant (7 MW). with cement industry engineering, equipment, and construc- tion expertise. FLSmidth has an exclusive global license from ABB (CHE) Wasabi Energy for the Kalina cycle in the cement and lime ABB, a global power and automation technologies and industries (with the exclusion of China) and has two installa- engineering/construction company, offers an ORC system tions under construction in cement plants: a 8.5 MW unit on for cement kilns. ABB has installed a 1.9 MW ORC system at a 7,000 tpd clinker line at D.G. Khan Cement’s Khaipur plant Holcim’s Untervaz, Switzerland plant utilizing heat from the in Pakistan (utilizing preheater and air cooler exhaust) and a preheater, and ABB and Jura cement signed an agreement in 4.75 MW unit on a 7,500 tpd clinker line at Star Cement’s 2012 to install a 2.0 MW ORC system at Jua’s Wildegg AG Ras Al-Khaimah plant in UAE (utilizing air cooler vent only). It plant in Switzerland. has also installed a conventional steam cycle system at a Vicat Sagar Cement plant in India in 2012 and is actively bidding on projects in India. KALINA CYCLE SYSTEMS Wasabi Energy (Australia) ORGANIC RANKINE CYCLE SYSTEMS Wasabi Energy and its subsidiaries, Global Geothermal Lim- ORMAT (USA) ited and Recurrent Engineering LLC, are the current develop- ers and suppliers of Kalina cycle technology. Wasabi has given Ormat has over 3,500 MW of ORC generation assets, FLSmidth an exclusive global license for the Kalina cycle in primarily in geothermal power applications, and increasingly the cement and lime industries (with the exclusion of China). in natural gas pipeline compressor stations. Ormat oper- FLSmidth has two installations under construction or installed ates as an equipment supplier, turnkey EPC, and third-party in cement plants: a 4.75 MW unit on a 7,500 tpd clinker build/own/operate developer. There are two Ormat ORCs line at Star Cement’s Ras Al-Khaimah plant in UAE (utilizing in cement plants—1.2 MW system installed in 1999 at the air cooler vent only) that was commissioned in 2013, and a Heidelberg Cement plant at Lengfurt, Germany, recovers heat 8.5 MW unit under construction on a 7,000 tpd clinker line from the clinker cooler vent air; the second ORC system is a at D.G. Khan Cement’s Khaipur plant in Pakistan (utilizing 4.8 MW unit located at AP Cement (now Ultra Tech Cement), preheater and air cooler exhaust). FLSmidth is responsible for Tadipatri, Andhra Pradesh, India. The Ultratech unit was overall project engineering and management in both projects, installed by TESPL. and has subcontracted the Kalina system design and procure- ment to Wasabi. 30 Waste Heat Recovery for the Cement Sector Target Market Analysis The following sections highlight the status of the cement The country-specific profiles are followed by higher-level sum- industry and prospects for WHR development in a select maries of cement market demographics for selected countries group of countries and regions where waste heat recov- in Sub-Saharan Africa that have expanding cement industries ery power generation may have strong market drivers. and potential market drivers conducive to WHR development. The countries were selected based on their robust cement The summaries of cement industry status and the energy industries and markets, prospects for near- and mid-term and environmental landscape affecting the cement industry economic growth and expanding cement consumption, in the country-specific profiles are based on multiple sources and market factors that encourage WHR adoption, such including U.S. DOE’s International Energy Outlook Country as power reliability concerns, rising electricity prices and/or Profiles (DOE 2013a), International Cement Research’s Global environmental and sustainability initiatives. Cement Review 10th Edition (ICR 2013), CW Research Global Each country summary in this section includes the following: Cement Volume Forecast Report (GCVFR) (CW Research • Relevant demographics that drive cement demand such 2014), the Central Intelligence Agency’s World Factbook (CIA as current per capita cement consumption and degree of 2013), the World Bank Country Data (World Bank 2014) and urbanization articles from Global Cement Magazine (Edwards, etc.). In- formation on current electricity and fuel prices was gathered • Status profile of national cement industry and markets from international energy agency databases (DOE 2013b, IEA • Listing of major cement manufacturers operating in the 2012) and country-specific tariffs and other public sources. country and information on the number of integrated cement plants and annual capacities of cement and clinker production • Summary of industrial electric prices/ thermal fuel prices based on publically available data • Discussion of key energy or environmental factors that could drive WHR development • Detailed listing of existing WHR systems and major WHR suppliers • Estimates of remaining WHR potential are provided as a range and estimated by applying the potential WHR power generation output of 25 to 45 kWh/t of clinker production on the annual clinker capacity for kilns greater than 1 Mta and assuming 320 days of operation/year. It should be noted that there could be WHR recovery potential in older, less-efficient kilns below 1 Mta. Waste Heat Recovery for the Cement Sector 31 BRAZIL for construction: extending payroll tax exemptions, low-cost working capital credit lines, and extended payments. Demographics Brazilian cement companies are ramping up production Area: 8,514,877 km2 capacity. The industry is dominated by Votorantim Cimentos, Population: 194.3 M which has 25 out of 82 total cement plants in the country. Urbanization: 84 percent Major multinationals are represented to a moderate extent, Per Capita Cement Use: 352 kg with Lafarge (six integrated plants) and Holcim (five plants) Cement Industry (2012) present throughout the country. The remainder of the indus- Number of Plants: 82 try is represented by local players—multi-sector construction Cement Production Capacity: 86.5 Mta giant Camargo Corrêa under the brand InterCement, and Clinker Production Capacity: 69.2 Mta* smaller producers such as Cimento Tupi, Mizu and the steel Average Cement Price: US$110.00 / ton producer CSN, a recent cement market entrant (ICR 2013). 2012 Consumption: 69.8 Mt Votorantim Cimentos recently commissioned six new plants 2012 Production: 68.8 Mt and is adding capacity at four others. This increase is seen * Based on a clinker / cement capacity factor of 0.80 (average as a response to the Camargo Carrea buyout of Portuguese for major companies in Brazil) Cement giant Cimpor. Recently, Camargo Correa disclosed that it expects to invest US$1.5 billion domestically over a CURRENT STATUS OF CEMENT INDUSTRY four-year period. Likewise, Lafarge plans to invest US$500 million in Brazil through 2018, with plans for a new plant Brazil is the largest country in South America, and as of 2012, and production increases in existing plants. Cimento is the sixth largest economy in the world. Much of Brazil’s Mizu has three 1 Mta plants approved, this subsidiary wealth is based on natural minerals and oil, but the country of Votorantim is also planning a 6,500 Tpd clinker unit, also has vibrant industrial and technological sectors, a highly making it one of the larger clinker sites in South America developed infrastructure, and a large and growing cement (Edwards 2012a). Most small plants also have expansion industry. However, Brazilian GDP grew by just 0.9 percent plans—either adding new smaller-scale plants, or new lines in 2012, and inflation has been persistent after the govern- at existing plants. It is anticipated that more than 10 Mta ment raised public spending and the minimum wage in 2011. of capacity will be added by 2015. As a result, interest rates are high, and investment, on the whole, has been curtailed. In contrast, the cement industry Brazil’s cement industry is among the most advanced in the has experienced big investment, driven in part by projected world. It had average CO2 emissions as low as 580 kg per demand increases for major infrastructure projects: the 2014 tonne of cement in 2009, similar to the South American World Cup and 2016 Olympics. Demand growth for cement average and ahead of Europe, the USA, Japan, Australia has fallen in recent years but remained a healthy 8.0 percent and New Zealand (Sindicato Nacional da Indústrial do during 2012 (CW Research 2014). Cimento 2011). In 2010 it was noted that the industry also had the lowest potential for energy savings compared to In addition to the Olympics and the World Cup, the Brazilian best-available equipment in 2006 of any domestic cement government recently announced a US$66 billion investment industry, due to the large expansion of the industry since the in infrastructure for ports, airports, roads, railways, and 1970s. Brazil’s cement consumption has increased six-fold power plants. Beyond large infrastructure projects, the since 1970. It tripled from 9 Mt/yr in 1970 to 27 Mt/yr by cement industry has also been helped by a persistent housing 1979, but did not expand much during the 1980s. deficit, and several growth-stimulating measures initiated 32 Waste Heat Recovery for the Cement Sector This pause enabled consolidation of older capacity before a Cement Associations set of newer and more efficient plants were installed in the 1990s (and the remaining inefficient wet process plants were Associacao Brasiliera de Cemento Portland (ABCP) closed). Consumption increased by 1.6 Mt/yr from 1990 http://www.abcp.org.br/index.php to 1998, when it hit a high of 43 Mt/yr. The early 2000s financial crises reduced cement demand in Brazil to 35 Mt/ Major Cement Companies – Integrated Facilities (2012) yr by 2003, but since then another wave of new capacity has Number of Cement Clinker come online to satisfy 60 Mt/yr of consumption reached by Company Plants Capacity, Mta Capacity,* Mta the end of 2010. The new plants installed in the 1990s and Votorantim Cimentos† 25 29.00 23.20 2000s, most of which are highly efficient, now form most of Camargo Correa 13 15.00 12.00 the Brazilian cement industry (Edwards 2012a, ICR 2013). Lafarge (FRA)† 6 5.00 4.00 Nassau Cement† 12 6.40 5.12 Demand growth was driven by growth among lower-income Holcim (CHE) 5 5.70 4.56 socio-economic classes, increasing access to credit, infrastruc- Cimentos Mizu 5 3.80 3.04 ture works and housing programs. Domestic demand has CSN Cimentos 2 3.50 2.80 led to large increases in clinker imports—2012 imports were Cia de Cimento Itambe† 2 2.80 2.24 2.0 Mt—74 percent over 2010 levels. Meanwhile, exports Cimento Tupi 3 2.40 1.92 from Brazil decreased from 1.2 Mt in 2007 to just below 0.4 Ciplan Cimento† 1 2.00 1.60 Mt in 2011. Since installed capacity is expected to increase Cimentos Liz 1 1.50 1.20 significantly by 2015, exports are likely to return to the higher Brennand Cimentos 1 1.00 0.80 levels of pre-2007. Historically, Brazilian cement exports have Cimentos La Union 1 0.50 0.40 Supremo Cimento 1 0.40 0.32 been destined primarily for Angola, South Africa, Bolivia and *Clinker values estimated based on a clinker / cement capacity factor of 0.80 Paraguay (ICR 2013). † ABCP Member Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 Cement Outlook, Mta Brazil 2010A 2011A 2012A 2013F 2014F Market Outlook Consumption 59.9 64.9 69.8 71.0 73.1 % Change +15.1 +8.3 +7.6 +1.7 +3.0 The Brazilian cement industry appears to be continuing on an Production 59.1 64.1 68.8 70.0 72.2 upward trend. Demand has risen dramatically since 2003, and Net Trade is expected to continue to grow as construction continues for Exports/ - (0.1) (0.2) (0.2) (0.2) Brazil’s World Cup and Olympic hosting duties in 2014 and (Imports) 2016. The huge planned increases in cement production Source: CW Research GCVFR 2014 capacity will satisfy the short-term demand spike from infrastructure development and the housing deficit. Recent cement consumption per capita is low indicating potential long-term demand growth. Strong ongoing demand and efficient production methods are expected to ensure that Brazilian producers remain profitable for the foreseeable future. Medium and large electricity consumers in Brazil saw their bills increase by 40 percent during 2003-2011. In Septem- ber 2012, the government announced rate relief for these consumers, predicting a 28 percent rate reduction (Edwards 2012a); the average price of electricity in Brazil was US$165/MWh. The primary fuel used for thermal energy in clinker kilns is domestic coal. Waste Heat Recovery for the Cement Sector 33 Key Environmental / Energy Issues Brazil had 114 GW of installed electricity generation capacity in 2010. In 2011, the country generated 531 billion kWhs of Brazil’s National Climate Change Policy (PNMC) became power—80 percent from hydropower, 17 percent from fossil Brazilian Law 12.187 in 2008. The legislation sets a GHG fuels (primarily natural gas), and the remaining from nuclear reduction goal between 36.1 and 38.9 percent by 2020 and renewables. Much of Brazil’s hydropower generation relative to projected emissions under a business-as-usual capacity is located far away from the main demand centers, scenario. The legislation further aims to do the following: resulting in high transmission and demand losses. Brazil has • Increase energy efficiency and decrease electricity announced plans to move away from hydropower to natural consumption by 10 percent by 2030, compared to gas and renewables to mitigate the risk of supply shortages current levels; brought about by dry weather, but depleted reservoirs at • Maintain a high proportion of Brazil’s electricity supply the country’s hydroelectric facilities have caused recent from renewable sources (Brazil sourced about 77 percent shortages in electricity, and Brazil’s hydro-intensive energy of its electricity from renewable sources, mainly hydro- portfolio is coming under additional scrutiny (DOE 2013a, power, in 2007). Overall, about 45 percent of its energy World Bank 2013). comes from renewable sources; • Encourage increased use of biofuels in the transport CURRENT STATUS OF WHR sector (the proportion of biofuel use is already high) and work towards a sustainable international market There are no waste heat recovery power generation systems for biofuels; in Brazil and no evidence of active marketing by the major • Sustain reduction in deforestation rates, particularly in WHR suppliers. Based on estimated clinker capacity for major the Amazon region. The aim is to gradually reduce the cement companies and eliminating known plants with capac- rate of deforestation in stages by a total of 70 percent ity less than 1 Mta, the potential for WHR in Brazil ranges by 2017, which would avoid 4.8 billion tons of green- from 190 to 340 MW. house gas emissions; • Increase research and development to precisely identify en- vironmental impacts and minimize the costs of adaptation; • Eliminate net loss of forest coverage by 2015 through reforestation and establishing forest plantations. Energy Prices for Industry Brazil 2005 2006 2007 2008 2009 2010 2011 Electricity, US$/MWh - - - - 159.0 175.1 - Steam Coal,* US$/GJ 2.41 2.75 - - - - - Natural gas, US$/GJ - - - - 15.77 - - Source: U.S. DOE Energy Information Administration 2013b; “Energy Prices and Taxes,” IEA 2012; DNPM (Brazil National Department of Mineral Production) 2007 34 Waste Heat Recovery for the Cement Sector EGYPT produced 0.3 Mta of cement from 1960 onwards. In the 1980s, new companies commissioned further plants but in Demographics the 1990s, the Mubarak regime opted to privatize the sector. Area: 1,001,449 km2 Sales and partial sales were carried out during 1995-2000 of Population: 82.3 M Helwan Cement, Assiut Cement, Beni Suef Cement, Ameriya Urbanization: 72 percent Cement and Torah Cement (Edwards 2012c). Per Capita Cement Use: 570 kg Today, multinationals with interests in Egypt include Mexico’s Cement Industry (2012) Cemex, which owns Assiut Cement; Portugal’s Cimpor, which Number of Plants: 25 operates Ameriya Cement; Italcementi which owns Suez 2012 Cement Production Capacity: 59.4 Mta Cement, and Greece’s Titan, which has interests in Alexandria Clinker Production Capacity: 50.5 Mta* Portland Cement and Beni Suef Cement. France’s Lafarge Average Cement Price: US$80.00 / ton acquired the entire cement portfolio of the Egyptian group (highly variable) Orascom in December 2007 and is known as Lafarge Cement 2012 Consumption: 47.0 Mt Egypt (LCE). The 10.6 Mta El Ain El Sokhna plant operated 2012 Production: 48.8 Mt by LCE is one of the largest in the world and has undergone * Based on a clinker / cement capacity factor of 0.85 (average major expansion in its short production life. It was established for major companies in Egypt) in 1998 as the first Egyptian-owned private cement plant (Edwards 2012c). CURRENT STATUS OF CEMENT INDUSTRY Recently, Italcementi and Lafarge alluded to financial prob- lems in their Egyptian operations. Italcementi reported a Egypt’s political climate provides an unstable backdrop for loss in sales in its first half results for 2012 partly due to the a number of industries following three decades of heavily Egyptian market; Lafarge saw volumes fall by 11 percent in enforced stability under Mubarak. After the 2011 revolution, its second quarter in Egypt due to limited gas supplies. Such the Egyptian economy plummeted and real GDP has been concerns are cited by many in the cement industry after slow to rebound. The value of the Egyptian pound declined fuel subsidies were cut in January 2012 (ICR). In 2013 Titan, and an unclear future and fiscal policy dampened confidence Italcementi and Lafarge insisted that their situations have in the financial system; foreign investment contracted (IMF). marginally improved in Egypt, whereas Cemex has reported Many construction projects are delayed, suspended, or can- a 10 percent decline in sales for the first half of the year celled outright as funding dried up or as businesses wait for (Edwards 2013e). stability. But conditions remain volatile. In December 2012, Ezzeldin Abu Awad, head of the Cement Traders Society, Cemex is also in a state of flux in Egypt when it learned in indicated that strikes and protests had cut production by 50 September 2012 that its 1999 purchase of Assiut Cement percent (Edwards 2012c). Residential building accounts for was invalid and would be annulled. This was due to the 90 most cement sales; only 20 percent of cement output goes to percent stake in the state-owned company being sold for less infrastructure projects (ICR 2013). The 2011 consumption was than its “fair value” at US$580 million. Cemex plans to ap- 1.1 percent below 2010, and demand slipped again in 2012 peal the decision, which would make Cemex responsible for by 2.9 percent over 2011 (CW Research 2014). A growing all of the financial obligations that its Egyptian business has population suggests future growth in housing construction incurred since 1999 (ICR 2013). and infrastructure, yet continual political unrest dampens During 2013, a series of negative events plagued the Egyptian investment and development. cement industry: fuel shortages occurred at Suez Cement, a Egypt has long history of cement manufacture; the first plants hostage was taken at Alexandria Cement; Arabian Cement were commissioned in the early 20th century and plants at called for the government to assist with the switch to non- Alexandria, Torah and Helwan were established under British traditional fuel sources; production was disrupted at Misr Beni colonial rule. In 1956, the National Company for Cement Suef Cement, and in Sinai three cement plant workers were was formed to consolidate Egyptian cement assets and it kidnapped and murdered. Waste Heat Recovery for the Cement Sector 35 Despite the uncertainty, several greenfield and upgrade Cement Associations projects were completed during the past three years, often with foreign involvement. Wadi El Nile (Beni Suef Cement) Cement Egypt Society began production in June 2011 with FLSmidth responsible http://cementegypt.com/ for operation and maintenance. Arabian Cement doubled its capacity in 2012 at its single Ain Sokhna plant. The company Major Cement Companies – Integrated Facilities (2012) is 68 percent owned by Spain’s Cementos La Union. Several Number of Cement Clinker Company Plants Capacity, Mta Capacity,* Mta new plants and expansions are expected to come on line in Arabian Cement Co. 1 5.00 2.2 2013/2014. ASEC Minya commissioned its 2 Mta plant at Assiut - Cemex (MEX) 1 4.90 4.2 Minya in May 2013, which produced cement in September Amirya - Cimpor (POR) 1 4.45 4.0 2013. Arabian Cement intends to increase its Egyptian capac- El Sewedy 2 3.00 2.8 ity through a contract to operate and maintain two plants for Suez Cement Group - 5 13.32 12.0 Italcementi (ITA) Egyptian National Cement. Published capacity was greater Lafarge Cement Egypt than 60 Mta at end-2012, and is expected to exceed 70 Mta 1 10.60 8.62 (FRA) by early 2014. This total includes several outdated kilns that Misr-Beni Suef 1 3.00 2.8 were scheduled to be shut down between 2011 and 2015. Misr-Qena (ASEC) 1 1.90 1.5 The current political environment has made these plans un- ANC Minya (ASEC) 1 2.30 1.7 National Cement 4 3.75 3.4 certain (Edwards 2013e, ICR 2013). Sinai White Portland 1 1.81 1.3 The political unrest deeply affected the energy sector; fuel South –Valley Cement 2 2.50 2.5 and electric power are unreliable in many areas. Industry Titan Cement Co. 2 5.00 4.4 Wadi El Nile Cement 1 1.80 1.7 fuel subsidies available under Mubarak have disappeared El Arish Military 2 3.00 2.8 and many cement manufacturers must now acquire energy * Clinker values estimated based on clinker/cement capacity factor of 0.85 autonomously. As a result, there have been numerous Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 efficiency and captive power plant upgrades since 2011, focusing on integrating alternative fuel systems to burn agricultural, municipal and other refuse-derived waste. For Market Outlook example, the Suez Cement Group has begun switching to Egypt’s current social and political upheaval creates large-scale integrated alternative fuel systems to burn agricultural and uncertainty. The International Monetary Fund (IMF) indicated municipal waste, and Arabian Cement Company added an that after the 2011 revolution Egypt experienced capital alternative fuel equipped line in June of 2012 to burn refuse- outflows and a sharp drop in tourism revenue and foreign derived fuel instead of gas (Edwards 2012c). Italcementi is investment. Annual GDP growth dropped to 1.8 percent in planning a 120 MW wind farm installation in the El Zeit Gulf 2011 from 5.1 percent in 2010, disrupting the construction through its subsidiary Italgen (Italcementi). sector and lowering cement demand. The post-Mubarak realities are that cement producers will pay far more for fuel Cement Outlook, Mta amid uncertain demand, resulting in squeezed margins. Egypt 2010A 2011A 2012A 2013F 2014F Consumption 48.9 48.4 51.3 50.1 52.1 Consequently the outlook is mixed for the Egyptian cement % Change +6.5 -1.1 +6.0 -2.3 +4.0 industry. Little near-term growth is expected in the face of Production 48.3 48.7 51.9 51.1 53.1 continuing political unrest, but the fundamental indicators for Net Trade Exports/ (0.6) 0.3 0.6 1.0 1.0 long-term growth remain—population expansion, increased (Imports) urbanization, and pressing needs for infrastructure develop- Source: CW Research GCVFR 2014; Egypt Ministry of Industry and Trade; IFC ment. 36 Waste Heat Recovery for the Cement Sector Uncertainty has not prevented new projects being an- amount of produced natural gas in Egypt, in third place after nounced. Arabian Cement aims to expand its capacity in the electricity and fertilizer sectors. Before 2012, natural Egypt through a contract to operate and maintain two plants gas was heavily subsidized by the Egyptian government. As for Egyptian National Cement; ASEC Cement’s Minya plant of mid-2013, the price of gas for the cement industry had entered full production in 2013; a Turkish consortium is increased from US$3.80/GJ to US$5.70/GJ since 2012, and reportedly investigating construction of a cement plant in was scheduled to increase again in December 2013, but post- the Sinai region, where Chinese cement plant workers were poned until June 2014 due to events in Egypt (Hassan 2013). kidnapped in January 2012 (Edwards 2013e). The price of mazut, commonly used in the pre-revolution days, increased by a factor of 2.5 in the first half of 2013. These developments suggest that Egypt’s cement industry has considerable potential for producers who are more Environmental / Energy Issues comfortable with risk, or producers able to mitigate risks. If stability returns, the outlook is bright and Egypt will According to the Law 4/1994 for the Protection of the remain a leading cement producer. Although the current Environment, the Egyptian Environmental Affairs Agency government continues to talk about offering new cement (EEAA) was restructured with the new mandate to substitute licenses, the strategic locations for desired new capacity the institution initially established by Presidential Decree No. lack an established local market, therefore unattractive to 631 of the year 1982. EEAA represents the executive arm developers—particularly given the need for self-sufficiency of the Ministry. The Ministry of State Environmental Affairs in assuring essential services such as electric power, water, and EEAA are the highest authorities in Egypt responsible roads, and worker housing. for promoting and protecting the environment, and coor- dinating adequate responses to these issues. Recent EEAA measures include the second phase of the Egyptian Pollution Energy Prices for Industry Abatement Project, which seeks to reduce pollution loads Egypt 2013 originating from industrial facilities, improve air quality, and Electricity, US$/MWh 66 peak/ 38 off-peak put an end to severe pollution episodes; develop sustain- Natural gas, US$/GJ 5.70 able mechanisms to effectuate pollution abatement projects, Coal, US$/GJ 3.80 increase environmental compliance capability, and encourage Source: Abo Sena 2013; Hassan 2013 Egyptian industry to ensure that production conforms with export and international market requirements; enhance CP Cement is included in the first level of government tar- projects, these environmental projects contribute to de- iffs—energy-intensive industries including cement, fertilizer, creasing raw material use and reducing wastes, to enhance aluminum, copper and petrochemicals. Peak and off-peak production. The EEAA had essentially banned the use of coal prices vary by interconnection voltage but generally range in the Egyptian cement industry until the ban was overturned from US$40 to US$70/MWh. In addition to price, energy in the second quarter of 2014. availability and reliability is a growing concern for Egyptian Egypt’s total primary energy consumption grew by an annual cement makers. Power outages are common during peak- average of 5.0 percent during 2000-2010, most of which was demand periods (summer evenings 6-10 pm), and natural natural gas and oil. Rapid consumption growth was driven by gas shortages are occurring during summer months (June increased industrial output, economic growth, energy inten- –August) forcing some plants to operate at partial capacity sive gas and oil extraction development, population growth, due to low supply pressures. and increased private and commercial vehicle sales. Egyptian Until very recently, the Egyptian cement industry used natural electricity consumption is outstripping capacity expansion. gas as the primary fuel for thermal energy in clinker kilns, Electricity consumption has grown by an average of 7.0 with heavy fuel oil (mazot) as back-up (coal was essentially percent annually during 2000-2010. Egypt’s total power gen- banned by the Egyptian Environmental Affairs Agency). The eration in 2010 was 138.7 billion kWh; 124.7 billion kWh (90 cement industry typically consumed 9.0 percent of the total percent) from fossil fuels, 12.9 billion kWh from hydropower, Waste Heat Recovery for the Cement Sector 37 and 1.5 billion kWh from wind. An aging power structure CURRENT STATUS OF WHR and rising demand have led to intermittent blackouts (DOE No waste heat recovery power generation systems exist in 2013a). the Egyptian cement industry. Cemex registered a proposed Power outages and natural gas shortages have been particu- system for the Assiut plant under the CDM program in larly troublesome for the cement industry. A history of subsi- 2012, but the current uncertainty with Cemex’s continued dies for oil and gas, and the recent political uncertainty have ownership of the plant has apparently put this project on constrained investment in oil and gas production; Egypt was hold. Sinoma International, a global supplier of engineering, a natural gas exporter, now a net importer. At the same time, construction and equipment for cement production, is growing demand for power is consuming more gas, limiting active in the Egyptian cement market. Its sister company, the supplies available for industry. Some cement plants shut Sinoma Energy Conservation, is a major global developer of down this past summer due to an inability to get adequate waste heat recovery projects in the cement industry and has gas supplies while others operated at reduced capacity. After been actively marketing the concept in Egypt. The potential years of heavily subsidizing industry’s natural gas consump- for WHR in Egypt ranges from 175 to 300 MW, based on tion, the government is now encouraging industry to switch estimated clinker capacity for major cement companies at to alternative fuels, but would not permit the use of coal due plants with capacity greater than 1 Mta. The moisture content to environmental concerns. The cement industry successfully of raw materials is typically in the 2.0 to 5.0 percent range pushed for restrictions on coal use to be lifted, and many of (Abo Sena 2013), which should not negatively impact WHR the larger companies will be retrofitting their kilns to co-fire potential. or completely fire with coal (Hassan 2013). Political instability, declining natural gas production and a foreign currency crisis have led to widespread energy short- ages in Egypt that are expected to continue in the foreseeable future. Increasing concerns about power reliability and rising prices may provide a strong driver for WHR in the Egyptian cement industry. 38 Waste Heat Recovery for the Cement Sector INDIA Ambuja (50 percent-owned by Holcim) have 11 percent and 9.0 percent shares respectively. Many of the remaining dozen Demographics top players are Indian and are (in order of diminishing market Area: 3,287,263 km2 share); Jaiprakash Associates (7.0 percent), India Cements Ltd Population: 1259.7 M (5.0 percent), Shree Cements (4.0 percent), Century Textiles Urbanization: 31 percent and Industries (3.5 percent), Madras Cements (3.5 percent), Per Capita Cement Use: 191 kg Lafarge (3.5 percent), Birla Cement (2.8 percent), Kesoram In- Cement Industry (2012) dustries (2.8 percent) and Binani Cement (2.8 percent). Among these companies, the top 12 cement firms have around 70 Number of Plants: 146 percent of the domestic market. Around 100 smaller play- Cement Production Capacity: 346.2 Mta ers produce and grind cement on a wide range of scales but Clinker Production Capacity: 252.7 Mta* are often confined to small areas. As of the end of 2012, the Average Cement Price: US$80.00 / ton Indian cement industry consisted of 146 integrated plants and 2012 Consumption: 234.7 Mt 55 grinding plants (Edwards 2013a, ICR 2013). 2012 Production: 235.9 Mt * Based on assumed clinker / cement factor of 0.73 (GNR The Indian cement industry is inherently prone to low compe- Database 2013) tition because it has relatively high barriers to entry, a captive clientele, relatively little product differentiation and no other materials that can substitute for cement. These conditions CURRENT STATUS OF CEMENT INDUSTRY can lead to cartel-like practices or full-blown collusion among India’s economy is the third largest by GDP in terms of purchas- so-called competitors. Ernst and Young noted that, “though ing power parity but, with a very large population, it ranks only the demand growth remained subdued, the cement manu- 165th in GDP per capita terms. India is the second most popu- facturers have observed supply discipline involving curtailment lous country in the world after China, and also second to China of production by companies in order to narrow the demand- in cement production. Gradual economic decentralization since supply gap”. In June 2012, the Competition Commission of the early 1990s has allowed a more diverse market economy India (CCI) fined 11 cement companies and implicated the to develop, one that is increasingly driven by an educated and Cement Manufacturers Association (CMA) for participation business-minded middle class. Increased variation has reduced in a cartel. The commission found that the 11 major produc- India’s dependency on agriculture, now about 50 percent of na- ers did not utilize their available capacity, reducing supplies tional income. Manufacturing represents more than 25 percent and raising prices in times of higher demand. The CCI stated of output. that the companies’ actions, limiting supplies to the market through an ‘anti-competitive agreement’, was detrimental Housing accounts for 64 percent of Indian cement consumption; not only to consumers but also to the economy, as the build- infrastructure, 17 percent; commercial, 13 percent; and industrial ing material is a critical input for infrastructure projects. 6.0 percent (ICR 2013). Today, the Indian cement industry is enormous, second only to China in terms of installed capacity; Despite the recent economic slowdown and evidence of exist- the industry has grown rapidly over the past 20 years—cement ing overcapacity, many Indian cement companies have recently production has more than quadrupled from around 50 Mt per increased production capacity creating an even greater over- year in 1992 to over 240 Mt per year in 2012. capacity relative to demand; it is forecast to persist in the near term. The CCI ruling did not deter cement companies from Although the Indian cement industry includes some multi- continuing to announce development plans for new capacity national cement giants like Holcim, Heidelberg and Lafarge, in India, because cement company boards want to maintain which have interests in Indian companies, the industry is broad- market share in a market with increasing demand. This overca- ly indigenous. In 2011, Ultratech Cement, the country’s largest pacity contributed to recent drops in cement prices. Exports to firm in terms of cement capacity, held around 16 percent of Africa and neighboring countries in the northeast are expected the domestic market; ACC (50 percent-owned by Holcim) and to increase as demand rises in these markets. Waste Heat Recovery for the Cement Sector 39 In April 2012, the Indian Union Budget was announced for Major Cement Companies – Integrated Facilities (2012) 2012-2013, seen as many as a ‘mixed bag’ for cement produc- Number of Cement Clinker ers because it promised increased infrastructure spending, but Company Plants Capacity, Mta Capacity,* Mta also, increased taxes and tariffs on cement that would raise con- Ultratech Cement 11** 48.75 35.59 sumer prices. These changes were accompanied by increases in ACC Ltd. (Holcim) (CHE) 9** 28.50 20.80 rail freight costs in March 2012, creating a budget that was seen Ambuja Cements 5** 27.35 19.97 as broadly neutral from the perspective of the cement industry. Jaypee Group 17 27.05 19.75 Shree Cement 3** 13.39 9.77 Cement Outlook, Mta India Cements 10 15.85 11.57 India 2010A 2011A 2012A 2013F 2014F Madras Cements 7 12.75 9.31 Consumption 207.9 216.2 234.7 248.3 263.2 Chettinad Cement 3 10.50 7.65 % Change +5.7 +4.0 +8.6 +5.8 +6.0 Dalmia Cement 3 9.00 6.57 Production 208.4 218.1 235.9 249.8 264.8 Century Textile 3 7.80 5.69 Net Trade Exports/ 0.5 1.8 1.2 1.5 1.5 Lafarge (FRA) 4 7.75 4.5# (Imports) JK Cement 2 7.52 5.49 Source: CW Research GCVFR 2014 Kesoram Industries 2 7.25 5.29 Penna Cement 4 6.50 4.75 Cement Associations Binani Cement 2 6.25 4.56 Cement Manufacturer’s Association (CMA); Birla Corp 5 5.78 4.22 http://www.cmaindia.org/ Prism Cement 2 5.60 4.09 OCL India Ltd. 2 5.35 2.5# Orient Paper Industries 2 5.00 3.65 Rain Cements 3 4.00 2.94 JK Lakshmi 2 4.75 3.47 Heidelberg (DEU) 2** 3.20 2.34 My Home Industries 1 3.20 2.34 Zuari Cement 2 3.40 2.48 Sanghi Industries 1 2.60 1.90 KCP 2 2.35 1.72 CCI 10 3.85 2.81 Vicat (FRA) 1 2.80 2.04 KJS Cement 1 2.27 1.66 Andhra Cements 2 1.42 1.04 Cement Manufacturing 2 1.28 0.93 Anjani Portland Cement 1 1.16 O.85 Malabar Cement 2 0.62 0.45 Mangalam Cement 1 2.00 1.46 Mehta Group 2 2.70 1.97 Sree Digvijay-Sikka 1 1.08 0.79 *Values estimated based on cement / clinker production factor of 0.73 (GNR Database 2013) ** Integrated plants # These plants use significant amounts of slag and therefore have higher cement to clinker ratios Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 (Continued) 40 Waste Heat Recovery for the Cement Sector (Continued) Major Cement Companies – Integrated Facilities (2012) Meanwhile, the Indian Government’s Twelfth Five-Year Plan, Number of Cement Clinker 2013 to 2017, notes a requirement for national cement capac- Company Plants Capacity, Mta Capacity,* Mta ity of about 480 Mt/yr by end-2017, which will require 150 Kalyanpur Cement 1 1.00 0.73 Mt/yr more capacity. Separately, ACC expects India to have a Tamil Nadu Cement 2 0.90 0.66 capacity of 500 Mt/yr by 2020. However, this represents more Meghalaya Cements 1 0.65 0.47 than twice the cement that India currently consumes, still Panyam Cements 1 0.53 O.39 relatively low-capacity utilization. Many believe that future ca- Shriram Cements 1 0.40 0.29 pacity additions will be less aggressive than in the past and that Bagalkot Cement 1 0.30 0.22 expansion will be slower than demand growth. It is possible Khyber Industries 1 0.33 O.24 that producers under pressure to meet the expectations placed J&K Ltd 1 0.20 0.15 on them by the Five-Year Plan will see increased pressure on Mawmluh Cherra 1 0.20 0.15 margins, especially if fuel prices continue to rise and prices *Values estimated based on cement / clinker production factor of 0.73 (GNR Database 2013) remain low due to current overcapacity and weak demand. ** Integrated plants # These plants use significant amounts of slag and therefore have higher cement to clinker Smaller companies are likely to suffer more and may become ratios Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 acquisition targets for better-equipped firms. A 2013 CCI study Minerals Yearbook; Global Cement Plant Database, CemNet 2013 found that producers with the smallest market share experi- enced the worst reduction, even though capacity utilization fell Market Outlook across all cement producers during 2006-2011, (CCI 2013a). The Indian cement industry is large, growing and has suf- Binani Cement, for example, recorded utilization rates of only ficient long-term capacity to meet significant increases in around 55-60 percent. Conversely mega-players like Ultratech cement demand. Per capita consumption is well below the have been more stable, with rates of 80-95 percent. global average of 520 kg per person. However since 2010, India’s economic growth has slowed due a large fiscal deficit, Energy Prices for Industry high inflation, and elevated interest rates. The government aims to increase growth by encouraging private investment The primary fuel used for thermal energy in the clinker kilns is in infrastructure, significantly changing the tax system, and coal (80 to 85 percent), supplemented by about 14 percent pet continuing to reduce the deficit. Construction has mirrored coke and minimal amounts of lignite. Alternative fuel usage is the general economy—slowing in the face of restrained very low in the Indian cement industry, but is expected to grow government spending on infrastructure, and reducing private over time. Alternative fuels used include agricultural waste, tire development due to high interest rates. Construction levels chips, plastic and polythene wastes, municipal solid waste and also slowed because projects associated with the 2010 Com- textile waste. Rising energy prices strongly affect plant profit- monwealth Games were completed. ability. As an example, in 2012 Birla cement stated that higher However, most analysts expect the government’s overall coal and freight prices caused a 24 percent drop in profitability business-friendly measures to help investment increase and over 2011. At the same time, Ultratech was threatened with a the economy to recover. In November 2012 the India Brand loss of coal supplies by Coal India. The fuel situation worsened Equity Foundation (IBEF) said that it expected double-digit in late 2012 as rising diesel prices contributed to a sudden 15 growth in the cement industry for the 2013 and 2014 fiscal percent freight cost increase by the All India Motor Transport years. IBEF reported that the cement industry would increase Congress, which affected raw material movement and coal production by around 70 Mt/yr over the same timeframe to supplies and product distribution (Edwards 2013a). reach 300 Mt/yr in 2014 (ICR 2013). Other analysts predict somewhat slower, but still healthy, growth of 6.0 to 7.0 Demand for power in India is growing rapidly, and domestic percent annually through 2015 (CW Research 2014) Exports fuels are increasingly dedicated to power generation. Industrial to Africa and closer neighbors to India are expected to raise companies have been forced to import costly imported fuel cement demand over time. and have it delivered to the plant with increasingly expensive Waste Heat Recovery for the Cement Sector 41 internal transportation. Concerns about rising power prices and would be awarded Energy Saving Certificates (ESCerts) which power reliability have led many Indian cement plants to install would be traded in an open market. Similarly, DCs not meet- on-site captive power plants, and more recently, WHR systems. ing SEC reduction targets may buy ESCerts to avoid penalties. Energy Prices for Industry India 2005 2006 2007 2008 2009 2010 2011 2012 Electricity, US$/MWh - - - 68.0 71.0 74.0 78.0 82.0 Thermal Coal*, US$/GJ 1.92 1.89 2.09 2.17 - - - - Source: Indian Planning Commission – Electricity; U.S. DOE Energy Information Administration 2013b - Coal Waste heat recovery was identified as an important energy Key Environmental / Energy Issues efficiency measure in the report of the working group on The Indian cement industry’s estimated weighted average the cement industry for the Twelfth Five Year Plan (2012-17) energy consumption is 3.04 GJ/t clinker thermal energy and (IMIC 2011). However, according to the report, the main 80 kWh/t cement electrical energy. For years, the industry has barrier to wider adoption is the high investment cost of WHR focused on improving energy efficiency in plant operations, (about Rs. 10 crore per MW, or 2,300 US$/kW) compared an ongoing process. It is expected that industry’s average to conventional captive power options (Rs. 4 to 5 crore/MW, thermal energy consumption by the end of the Twelfth Five or 920 to 1,150 US$/kW for thermal CPP and less for diesel Year Plan (during 2016-17) will drop to about 2.97 GJ/t clin- CPP). The working group noted that if WHR was recognized ker and the average electrical energy consumption will drop as a renewable energy resource, the overall cost could be to 78 kWh/t cement. To date, the best thermal and electrical reduced through the following measures: energy consumption by the Indian cement industry is about • The Ministry of New and Renewable Energy (MNRE) 2.79 GJ/t clinker and 67 kWh/t cement, comparable to the allows accelerated depreciation benefits, tax benefits, best reported figures of 2.76 GJ/t clinker and 65 kWh/t ce- generation-based incentives and capital subsidies to ment in a developed country such as Japan (Edwards 2013a). renewable energy projects The Indian Ministry of Power and Bureau of Energy Efficiency • Financial gains through Renewable Energy Certificates (BEE) are implementing the National Mission on Enhanced (RECs) Energy Efficiency (NMEEE) under the National Action Plan Presently, MNRE does not consider WHR a renewable energy on Climate Change (NAPCC). This mission has a component resource, but the cement working group and other stake- which deals with market-based mechanisms to improve the holders are pressing to get WHR recognized as a qualified energy efficiency in large energy-intensive industries and renewable resource. In addition, WHR should qualify for facilities by certifying energy savings, which could be traded. ESCerts regardless of its status as a renewable energy. This scheme known as Perform, Achieve and Trade (PAT) is expected to save about 10 million tonnes of oil equivalent (mMtoe) by 2013-14. Eight industrial sectors namely Power, CURRENT STATUS OF WHR Iron & Steel, Fertilizer, Cement, Aluminum, Pulp & Paper, Tex- The first waste heat recovery power generation system was tile and Chlor-alkali have been included in this scheme where installed by Kawasaki Plant Systems (the engineering arm in about 700 industries (known as designated consumers of Kawasaki Heavy Industries) at an India Cement Ltd plant (DCs)) are covered. In the ensuing PAT scheme, all the DCs in 2004 and partially funded by the Japanese New Energy are required to achieve a reduction of Specific Energy Con- and Industrial Development Organization (NEDO). Develop- sumption (SEC) from their baseline SEC within 3 years’ time ment activity picked up substantially during 2010-2011 (2011-12 to 2013-14). BEE is establishing the baseline SEC time frame as Chinese suppliers became active in the Indian of each DC as per the reported industry data from manda- market. There are now over 20 units installed representing tory reporting. DCs reducing SEC more than their obligation, 42 Waste Heat Recovery for the Cement Sector > 200 MW of capacity.18 The remaining potential for WHR Sinoma Energy Conservation Co. (Sinoma EC) is a leading in India ranges from 500 to 900 MW19 based on estimated Chinese supplier and recently entered the Indian market clinker capacity at plants with capacity greater than 1 Mta. through WHR projects with ACC/Holcim. The Cement Manufacturers’ Association has been pressing Kawasaki Plant Systems (Kawasaki) is a Japanese company the government to give renewable energy status to waste that pioneered the development of waste heat recovery heat recovery in India. systems for cement plants in the 1980s. Although Kawasaki The waste heat recovery power generation market for the installed the initial WHR system in the Indian cement industry Indian cement industry is served by domestic and foreign in 2004 with support from NEDO, it does not appear to be suppliers, and joint ventures between domestic and foreign active in the Indian market either as Kawasaki Plant Systems suppliers: or through its Chinese joint venture with Anhui Conch Ce- ment, Anhui Conch Kawasaki Engineering. Transparent Energy Systems Private Limited (TESPL) is a do- mestic engineering and construction firm that has developed FLSmidth is a global engineering company from Denmark and patented an in-house technology for waste heat recovery with cement industry engineering, equipment, and construc- systems for the cement industry. TESPL also installs other tion expertise. It installed a single unit at Vicat Sagar Cement’s technologies such as the Ormat organic Rankine cycle system Gulbargo plant in 2012 and is actively bidding on projects in it constructed at the Ultratech Tadipatri plant (at the time an India. The Gulbargo unit is a conventional steam Rankine Andhra Pradesh Cement Works facility). cycle system, but FLSmidth holds an exclusive global license (excluding China) for the Kalina cycle system in the cement Tecpro Systems Limited (Tecpro) is a domestic engineering, and lime industries. procurement and construction (EPC) contractor in the power sector. In February 2011, Tecpro entered into a collaborative TESPL filed a complaint against the Tecpro/NTK joint venture agreement with Nanjing Triumph Kaineng Environment and in May 2013 alleging the Chinese company NTK was indulg- Energy Company (NTK) to develop waste heat power projects ing in predatory pricing to buy entry into the market by quot- based on the NTK technology (waste heat boiler and steam ing bid prices that were far below market rates. TESPL noted turbine) for the Indian market. The joint venture has an- that the Tecpro/NTK joint venture had won five of six bids nounced five WHR projects since forming the joint venture. since the joint venture became active. The CCI ruled against the complaint in June 2013, finding that the pricing was not Thermax is a domestic supplier and engineering/constructor a case of predatory pricing but seemed instead to be a case of energy systems including boilers and steam systems. Ther- of reasonable competitive bidding. The CCI ruling included in- max entered into an agreement with Taiheiyo Engineering formation on five recent bids; repeat bidders included Tecpro/ Corp of Japan to offer waste heat recovery power genera- NTK, TESPL, Sinoma EC, Dalian, Thermax and FLSmidth. tion systems in India. The collaborative has two systems at JK Two additional bidders were also evident—Thyssen Krupp, Cement, Nimbahera and at JK Lakshmi. Thermax offers both a German company with a division, Polysius, that is one of EPC and build, own, operate and transfer (BOOT) contracts the leading engineering companies equipping the cement for WHR systems. and minerals industries on a global basis; and Cethar Vessels, Dalian East New Energy Development Co. (Dalian) is a lead- a domestic company that supplies boilers and engineering ing Chinese developer and supplier of waste heat recovery services to the power sector (CCI 2013b). power generation systems. Dalian entered the Indian market in 2008/2009 and has at least five systems installed and/or under construction. 18 OneStone Research states that there are 26 WHR systems installed at Indian cement plants. 19 Shakti estimated the overall market potential in the Indian cement industry to be in the 500 to 600 MW range (Shakti 2013). Waste Heat Recovery for the Cement Sector 43 Installed WHR Projects Kiln Type/Capacity/ WHR Plant Number of Lines Year Started Technology Provider Capacity Total Installed Cost Comments 1 ACC/Holcim - Gagal 2013 Sinoma EC 4.3 2 ACC/Holcim - Rabriyawas 2013 Sinoma EC 6.0 3 Ambuja Cement - Rabriyawas dry / 6560 tpd 2013 NTK/Tecpro 6.5 EPC Contract dry / 2x 2000, 4400 tpd 4 Birla - Chanderia Cement Works 2010 Dalian East 9.0 Also 27 MW CPP / 3 lines 5 Birla - Vikas Cement 1, Satna dry / 4500 tpd 2010 Dalian East 7.5 Also 30 MW CPP 6 Birla - Vikas Cement 2, Satna dry / 4500 tpd 2011 Dalian East 7.5 7 Birla - New Chanderia CW dry / 6000 tpd In Constr Dalian East 8 Dalmia Cement - Bharat In Tender 2/2013 solicitation 9 Heidelberg – Narsingarh Dahmo dry / 5000+ tpd / 3 lines 2015 12.5 US$27.8 million 12.15 MW net Kawasaki Plant 10 India Cement Ltd dry / 4000 tpd 2004 7.7 NEDO funding Systems Thermax / Taiheiyo 12.1 MW Net; 3 11 JK Cement - Nimbahera plant dry / 100, 1800, 4800 tpd 2007 13.2 US$17.25 million (JPN) year payback Thermax / Taiheiyo 12 JK Lakshmi - Sirohi plant 12.0 (JPN) KCP Limited - Andhra Pradesh Transparent Energy CDM project; 2.25 13 dry / 1600 tpd 2007 2.5 US$1.9 million Plant Systems MW net Multiple units 14 Shree Cement - Ras dry / 5 lines < 2012 43.0 since 2009; > 200 MW CPP 15 Shree Cement - Beawar < 2012 2.5 16 Shree Cement - Ras dry / 3300 tpd 2012 NTK/Tecpro 4.6 EPC contract 17 Siddhi Vinayak dry / 4500 tpd NTK/Tecpro 4.7 EPC contract 25 MW CCP; only 18 Sri Lalita dry / 6000 tpd Dalian East 11.5 PH boiler Ultratech - Rawan Cement EPC contract; 19 dry / 6000, 11000 tpd 2013 NTK/Tecpro 15.2 Works, Chhattisgarh 13.85 MW net Ultratech - Rajashree Cement EPC contract; 9.8 20 dry / 11500 tpd / 3 lines 2013 NTK/Tecpro 10.8 US$15.6 million Works, Karnatika MW net Organic Rankine Transparent Energy 21 Ultratech - Tadipatri dry / 8000 tpd 2007 4.8 Cycle (Ormat); 4.5 Systems MW net 22 Vicat Sagar - Gulbarga plant 2012 FLSmidth 8.4 Steam cycle Source: Indian Planning Commission – Electricity; U.S. DOE Energy Information Administration 2013b - Coal 44 Waste Heat Recovery for the Cement Sector MEXICO Cemex, the largest producer in Mexico with a market share of 49 percent, is one of the largest cement companies in the Demographics world. It has 13 plants in Mexico, including two new lines Area: 1,972,375 km2 added in 2008 and 2013. Cemex acquired numerous hold- Population: 116.1 M ings internationally prior to 2008 and undertook significant Urbanization: 77 percent measures to reduce debt levels in 2012 (ICR 2013). The Mexi- Per Capita Cement Use: 298 kg can cement industry includes five other companies, including Cement Industry (2012) two foreign firms – Holcim and Buzzi-Unicem. Number of Plants: 32 Cement Production Capacity: 57.5 Mta Cement Outlook, Mta Clinker Production Capacity: 50.0 Mta* Mexico 2010A 2011A 2012A 2013F 2014F Average Cement Price: US$120.00 / ton Consumption 33.8 34.5 34.8 33.0 34.2 2012 Consumption: 34.8 Mt % Change -1.7 +2.0 +0.8 -5.3 +3.6 2012 Production: 36.2 Mt Production 34.5 35.4 36.2 34.4 35.6 Net Trade * Based on an assumed cement / clinker production factor of Exports/ 0.7 0.9 1.4 1.4 1.5 0.87 (GNR Database 2013) (Imports) Source: CW Research GCVFR 2014 CURRENT STATUS OF CEMENT INDUSTRY Cement Associations In the wake of the economic recession, the Mexican economy Camara Nacional Del Cemento is growing again at an above-average rate for the past http://www.canacem.org.mx/canacem.htm decade, despite the 6.3 percent decline in 2009 during the depths of the financial crises. Mexican GDP at constant prices rebounded 5.5 percent in 2010, 4.0 percent in 2011 and 3.6 Major Cement Companies – Integrated Facilities (2012) percent in 2012. Inflation and unemployment are now low, Number of Cement Clinker although government-reported statistics historically under- Company Plants Capacity, Mta Capacity,* Mta represent full-time employment. Pemex, the state-owned Cemex 13 29.30 25.49 Holcim Apasco (CHE) 7 12.60 10.96 energy monopoly, is in the sights of policymakers who intend Cooperativa LaCruz Azul 3 8.30 7.22 to dissolve the unions and bureaucracies that contributed Cementos Moctezuma to inefficiency. Residential building and repairs are now the (ITA) 3 6.30 5.48 primary Mexican construction market. Residential work ac- Grupo Cementos de 3 2.25 1.96 counts for 80 percent of cement sales, mostly via 50 kg bags Chihuahua delivered by truck. All Mexican cement companies are verti- Lafarge (FRA) 2 1.00 0.87 cally integrated, with their own ready-mix and other concrete * Based on an assumed cement / clinker production factor of 0.87 (GNR Database 2013) Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 and aggregates operations. Mexico exports cement mainly to Minerals Yearbook; Global Cement Plant Database, CemNet 2013 the Caribbean and in Latin America; imports are minor, and strongly resisted (ICR 2013). Mexico did not anticipate the economic downturn, and many Market Outlook cement companies overleveraged themselves to increase capacity in the years before 2008. Economists predict that it Domestic consumption of cement is predicted to remain will take many years before Mexican cement plants return to stable; industry players hope that government reform and normal operating levels. Mexico’s cement output has increased changes in policy will lead to growth. Mexican cement manu- from 34.5 Mt in 2010 to 36.2 Mt in 2012, implying kiln utiliza- facturers are expected to continue debt-reduction strategies, tion rates of 63 to 64 percent, but this is below the level (75 to and try to increase exports to offset the large gap between 80 percent) for healthy profitability (CW Research 2014). capacity and demand. Waste Heat Recovery for the Cement Sector 45 Key Environmental / Energy Issues CURRENT STATUS OF WHR There are no waste heat recovery power generation systems In 2012, Mexico passed a General Law on Climate Change. installed in Mexico and no evidence of active marketing by The law created a Commission on Climate Change which the major players. Cemex has commissioned a 6 MW WHR oversees set requirements for emissions reductions (a system in its Solid plant in the Philippines using Sinoma En- decrease in C02 emissions by 51 million tons in 2012, a 30 ergy Conservation, a major Chinese supplier. In November of percent reduction in GHG emissions by 2030, a 50 percent 2011 Cemex was recognized by the Carbon Disclosure Project reduction in GHG emissions by 2050, and 35 percent of (CDP) as the leader in data disclosure for the Latin American electricity produced by renewable resources before 2024), region. The potential for WHR in Mexico ranges from 170 to reporting, and verification, provides the authority to establish 300 MW based on estimated clinker capacity at plants with an emissions market and create a national climate fund. capacity greater than 1 Mta. Mexico had 59.3 GW of installed electricity generation capac- ity in 2009. Preliminary Mexican government statistics indicate that electricity generation increased by at least 3.0 percent per year in 2010 and 2011. Conventional thermal plants pro- vide most of Mexico’s electricity capacity and generation, and industry accounts for 60 percent of power sales. The state-owned Comisión Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling over three-fourths of installed generating capacity. CFE has a mo- nopoly on electricity transmission and distribution. In 2009, CFE absorbed the operations of Luz y Fuerza del Centro, a state-owned company that managed electricity distribution in Mexico City. The Comisión Reguladora de Energía (CRE) has principal regulatory oversight of the electricity sector. The Public Electricity Service Act of 1975 established exclusive Federal responsibility over the electricity industry through CFE, but amendments to Mexican law in 1992 partially opened electricity generation to the private sector. Private participation in electricity generation is now permitted in certain catego- ries, including for construction, and self-supply, cogeneration, Independent Power Producer (IPP), small production (under 30 MW), and import/export. Companies seeking to establish private electricity generating capacity or begin importing and/or exporting electric power must obtain a permit from CRE. Energy Prices for Industry Mexico 2005 2006 2007 2008 2009 2010 2011 Electricity, US$/MWh 87.8 99.0 102.1 126.0 85.6 104.2 117.1 Steam Coal*, US$/GJ 2.01 2.08 2.26 2.57 2.51 2.69 2.76 Natural gas, US$/GJ 8.53 8.19 8.28 10.33 - - - *Sub-bituminous steam coal prices for electricity generation Source: U.S. DOE Energy Information Administration 2103b; “Energy Prices and Taxes” IEA 2012 46 Waste Heat Recovery for the Cement Sector NIGERIA Obajana, 6 Mta at Ibese, and 3 Mta at Gboko, a total of almost 20 Mta or about 70 percent of total Nigerian capacity. Dangote Demographics has another 3 Mta line at Obajana, due to take its capacity to Area: 923,768 km2 13 Mta by end-2014. The Ibese plant is to double in size, from 6 Population: 170.1 M Mta to 12 Mta over the same timeframe, and a 1 Mta extension Urbanization: 51 percent to the Gboko facility is ongoing (Edwards 2012d). Per Capita Cement Use: 109 kg WAPCO Lafarge (Lafarge has a 60 percent share) operates two Cement Industry (2012) plants at Ewekoro (a total of 4 Mta) and one at Sagamu (0.6 Number of Plants: 10 Mta). Ashaka Cement (59 percent interest from Lafarge) is at Cement Production Capacity: 21.3 Mta 0.85 Mta, but is increasing to 1.2 Mta with kiln improvements. Clinker Production Capacity: 18.1 Mta* United Cement of Nigeria (Unicem) is operated by Holcim and Average Cement Price: US$190 / ton Lafarge and has a capacity of 2.5 Mta at its plant in the east 2012 Consumption: 18.0 Mt of the country. It is now undergoing expansion to 5 Mta. The 2012 Production: 16.5 Mt Cement Company of Northern Nigeria (CCNN) has a plant at * Based on an assumed overall cement / clinker production Sokoto in the far north of the country, near the border with factor of 0.85 Niger. A new entrant, Edo Cement, has a 3 Mta plant under construction in Edo State in the central south of the country (Edwards 2012d). CURRENT STATUS OF CEMENT INDUSTRY Effective capacity can be significantly lower than stated nomi- Cement consumption in Nigeria grew by 21.6 percent from nal capacity due to fuel and power issues in Nigeria. Many 14.8 Mta in 2009 to 18.0 Mta in 2012. Considerable unfilled plants operate on high-priced low-pour fuel oil (LPFO) or less demand exists due to extremely high cement prices, lack of costly natural gas (Ashaka cement owns coal mines and uses funding for construction, and until 2013, an overall shortage that for the clinker fuel), and both fuels have been unreli- of cement. Nigeria suffers from extreme income inequality— able due to lack of capacity and intermittent production from most people are poor despite massive oil revenues. In addi- refineries. Electricity supply is also unreliable and most plants tion, local states lack ready access to sufficient tax revenues have on-site generating capacity sufficient for full production. to undertake much-needed infrastructure development. Per Much of recent new capacity has had start-up issues. capita cement consumption in Nigeria at 109 kg is below that of neighboring West African countries that have oil no Despite the capacity increase in 2012, cement prices have not revenues (ICR 2013, CW Research 2014). fallen as predicted because capacity has been slow to become effective, and prices remain high for most of the country due Nigeria has abundant and widespread limestone deposits; the to transportation costs and difficulties. Transport costs average government took steps to protect the industry from imports, 30 percent of total delivered cost due to lack of infrastructure. creating a major increase in cement production capacity from 8.0 Mta in 2009 to 16.5 Mta in 2012 (CW Research). Planned expansion and announced new plants could increase stated Cement Outlook, Mta nominal capacity to over 30 Mta in 2015 (ICR 2103). Nigeria 2010A 2011A 2012A 2013F 2014F Consumption 15.9 17.8 18.8 21.2 23.3 The dominant domestic producer is Dangote Cement (part of % Change +7.4 +11.9 +5.6 +12.8 +9.9 the wider Dangote Group), which has changed the Nigerian ce- Production 10.1 11.9 16.5 20.0 22.3 ment landscape beyond recognition. Encouraged by the Nigerian Net Trade government and assisted by privatization of the cement sector, Exports/ (5.8) (5.9) (2.3) (1.2) (1.0) (Imports) Dangote has two large cement plants in Nigeria that give it an Source: CW Research GCVFR 2014; IFC unrivalled position in West Africa. It has 10.25 Mta of capacity at Waste Heat Recovery for the Cement Sector 47 Cement Associations Energy Prices for Industry Cement Manufacturers Association of Nigeria (CMAN) Nigeria’s cement plants face unreliable power and fuel sup- http://www.cman.com.ng/ plies. Fuel for clinker kilns is typically natural gas or fuel oil or both, and costs can vary widely. Early 2013 costs for low-pour fuel oil was US$17/GJ. At the other end of the spectrum, Dan- Major Cement Companies – Integrated Facilities (2012) gote Cement funded natural gas pipeline construction to its Number of Cement Clinker Company Plants Capacity, Mta Capacity,* Mta Ibese and Obajana plants and secured a long-term gas supply Dangote Cement 3 19.25 16.32 agreement at US$3 to US$4/GJ (Edwards 2012d). Some plants WAPCO - Lafarge 3 4.60 3.83 are considering switching partially to coal, some small low United Cement 1 2.50 2.00 grade deposits being available in the North of the country. Ashaka Cement - Lafarge 1 0.85 0.70 As mentioned previously, electricity supply is unreliable and Cement Co of N. Nigeria 1 0.55 0.41 Purechem 1 0.10 0.09 most cement plants have installed on-site generating capacity * Based on an assumed cement / clinker production factor of 0.85 sufficient for full production. Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 Key Environmental / Energy Issues Market Outlook Nigeria is the largest oil producer in Africa and was the world’s fourth leading exporter of LNG in 2012. Despite the The net result of recent and planned capacity growth is relatively large volumes it produces, Nigeria’s oil production that Nigeria is becoming a cement exporter rather than an is hampered by instability and supply disruptions; the natural importer. In 2011, it produced almost as much as it con- gas sector is restricted by lack of infrastructure to move gas sumed; imports are projected to drop significantly in the next to market (instead of flaring). Instability in the Niger delta has few years. Dangote has begun exporting to countries along created significant shut-in production, frequently forcing oil the West Africa coast. Dangote holds six cement terminals in companies to declare force majeure on oil shipments. Nigeria Nigeria, which it has used for imports; these are now retrofit- flares the second largest amount of natural gas in the world, ted for export. Dangote has an import terminal in Ghana following Russia. Nigerian gas flaring represents 10 percent of and grinding plants projects under implementation in Cote the total amount flared globally. d’Ivoire, Liberia and Sierra Leone, and has joint ownership in an integrated plant in Benin (Edwards 2012d). EIA estimates that in 2011, total primary energy consumption was about 4.3 quadrillion British thermal unit (Btu). Of this, Domestically, Nigeria has the population and pent-up traditional biomass and waste (typically consisting of wood, demand to drive a steady, sustained growth in the cement in- charcoal, manure, and crop residues) accounted for 83 percent dustry. Recently developed capacity is now in place to address (DOE 2013a) This high share is due to using biomass to meet this market requirement, but the extent and pace of market off-grid heating and cooking needs, mainly in rural areas. growth ultimately depends on improved revenue flows to individual states for infrastructure development, and more Nigeria has one of the lowest net electricity generation per equitable wealth distribution throughout the country. capita rates in the world. World Bank data for 2010 indicate that national electrification rates for Nigeria were 50 per- cent—about 80 million people lack access to electricity. Power generation cannot meet demand, resulting in load shedding, blackouts, and a reliance on private generators. Nigeria is privatizing the state-owned Power Holding Company in hopes that it will lead to greater investment and increased generation. 48 Waste Heat Recovery for the Cement Sector According to Nigeria’s August 2013 Roadmap for Power Sector CURRENT STATUS OF WHR Reform, Nigeria’s generation capacity was around 6,000 Mega- There are no waste heat recovery power generation systems watts (MW) in 2012, of which 4,730 MW (79 percent) was from installed in Nigeria and no evidence of active marketing by the fossil fuel sources and 1,270 MW (21 percent) was from hydro major players. Based on estimated clinker capacity for major sources. Generation capacity is projected to have increased to cement companies and eliminating known plants with capacity 6,579 MW by the end of 2013, according to the August 2013 less than 1 Mta, the potential for WHR in Nigeria ranges from Roadmap. Net electricity generation was almost 26 billion kWh 70 to 130 MW. This number could be lower as raw materials in 2011, according to EIA’s latest estimates (DOE 2013a). are very wet in the cement plants near the coast. The chronic electricity shortages are attributed to lack of invest- ment in new power infrastructure and gas supply infrastructure to capture the natural gas that is being flared. According to a World Bank report, Nigeria experienced power outages on average for 46 days per year from 2007-2008, and outages lasted almost six hours on average. Population growth and un- derinvestment in the electricity sector has increased power de- mand without any significant increases in capacity. Inadequate maintenance, insufficient fuel, and an inadequate transmission network also contribute to electricity sector problems. Waste Heat Recovery for the Cement Sector 49 PAKISTAN of funding. Larger Pakistani cement manufacturers continue to expand exports into growing regional markets, specifically Demographics Iraq, Afghanistan, and the UAE. Area: 796.095 km2 Energy distribution and prices are unpredictable so cement Population: 190.3 M manufacturers are focusing on energy efficiency, and the Urbanization: 36 percent use of alternative fuels is growing. Also, waste heat recov- Per Capita Cement Use: 145 kg ery power generation is significant at some of Pakistan’s Cement Industry (2012) largest plants. Number of Plants: 24 Although Pakistan’s cement industry contains over 20 produc- Cement Production Capacity: 44.8 Mta ers, it is dominated by four major players—Lucky Cement, Clinker Production Capacity: 39.0 Mta* Best Way Cement, D.G. Khan and Maple Leaf—which hold Average Cement Price: US$70 / ton nearly half of national cement production capacity. In 2009 2012 Consumption: 25.9 Mt the Competition Commission of Pakistan issued fines to 20 2012 Production: 34.2 Mt cement producers found guilty of acting as a cartel and coor- *Based on an assumed cement / clinker production factor dinating rises in cement prices. Following the action, cement of 0.87 prices fell by 30 percent. But since then prices have steadily risen again and as recently as April 2013, the industry publicly CURRENT STATUS OF CEMENT INDUSTRY denies the existence of a cartel. Pakistan has been experiencing slow yet steady GDP growth In September 2013, reacting to a growing dispute over en- since 2010, yet economists caution that comprehensive eco- ergy prices for cement producers in Pakistan, Lucky Cement nomic reforms will need to be implemented in the very near reportedly resigned from the All Pakistan Cement Manu- future to sustain this growth. Semi-industrialized Pakistan’s facturers Association. The government increased electricity key economic sectors are textiles, chemicals, agriculture and taxes for industrial consumers by 55 percent but increased food processing. The budget deficit forecast for 2012-2013 gas prices only by 17.5 percent, creating an uneven rise was an alarming 8.8 percent of GDP and inflation is a concern production costs between smaller cement producers who (IMF). The status of the energy sector is also problematic be- access the national electricity grid and larger cement pro- cause energy production and distribution are insufficient and ducers using captive power plants. Smaller cement produc- supported by costly government subsidies. The entire PKR185 ers now find it much more expensive to make cement than billion allocation for power subsidies during 2012-2013 fiscal their larger competitors. period was used in six months, and an IMF bailout package to Cement Outlook, Mta help address the energy crisis was discussed (IMF). Pakistan 2010A 2011A 2012A 2013F 2014F A housing backlog and a growing population have been a Consumption 22.8 22.8 25.9 25.3 25.8 boon for the construction industry. Although recent govern- % Change +3.2 +0.0 +23.6 -2.3 +2.0 ment spending on development and infrastructure has waned Production 32.3 31.9 34.2 33.6 34.3 under fiscal constraints, the per capita expenditure on cement Net Trade Exports/ 9.6 9.1 8.3 8.3 7.8 is very low, signaling long-term growth potential. Pakistan is (Imports) rapidly urbanizing and urban demand for cement is predicted Source: CW Research GCVFR 2014 to rise as new residences are built. Reconstruction in the wake of the 2011 floods also continues to provide demand for cement, although many projects are stalled due to lack 50 Waste Heat Recovery for the Cement Sector Cement Associations capacity combined, will be in a better position to respond to Saudi Arabia’s supply gap. Recent trends suggest that Africa All Pakistan Cement Manufacturer’s Association (APCMA) will be a growing hub for future Pakistan exports. http://www.apcma.com/ Overall, the outlook for the Pakistani cement industry is relatively good. Pakistan’s domestic consumption is projected Major Cement Companies – Integrated Facilities (2012): to continue its steady rate of growth over the next five years, Number of Cement Clinker Company Plants Capacity, Mta Capacity,* Mta bolstered by infrastructure, flood reconstruction projects, Askari Cement 2 2.67 2.55 and increased growth in housing construction. Exports are Al-Abbas Cement 1 0.94 0.90 expected to remain largely stable, with some potential for Attock Cement 1 1.79 1.71 growth. Total cement capacity in Pakistan is expected to Bestway Cement 3 5.90 5.63 remain constant over the next few years following ongoing Cherat 1 1.10 1.05 expansion investments at two existing plants. Dandot 1 0.50 0.48 Dewan 2 1.91 1.83 Energy Prices for Industry D.G. Khan 2 2.22 2.02 Pakistan’s cement industry consumes about 720 MW of Fauji 1 3.43 3.27 Fecto 1 0.82 0.78 power annually, or about 11 percent of total industrial Flying Cement 1 1.20 1.14 energy use in Pakistan. Average electricity consumption in GharibWal 1 2.11 2.01 the cement industry ranges between 90 to 130 kWh per Kohat 1 2.68 2.55 tonne depending on the technology and age of the plant. Lafarge (FRA) 1 2.05 1.95 Accordingly, power represents up to 50 percent of a cement Lucky Cement 2 7.38 7.01 company’s direct production cost. Most cement plants have Maple Leaf 1 3.37 3.21 switched to coal as the primary fuel for the kiln. Total fuel Pioneer Cement 1 2.03 1.93 and electricity constitute about 74 percent of cement produc- Thatta Cement 1 0.49 0.46 tion cost in Pakistan. * Based on an assumed cement / clinker production factor of 0.87 Source: APCMA Installation Database, 2013; ICR Global Cement Report, 10th Edition; Rising demand coupled with insufficient power infrastructure US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 creates severe power shortages and rising electricity prices throughout the country. Accordingly, many cement plants have Market Outlook installed captive power plants (CPP). Among the larger compa- nies, Lucky Cement reportedly uses 100 percent captive power Among Pakistan’s key growth drivers for cement demand is a generation, DG Khan Cement uses 40 percent and Maple Leaf serious housing backlog, which is estimated to be around 7.0 Cement uses 45 percent. Specific units include Lucky Cement’s million housing units. The average residential occupancy rate per 175 MW captive power plant at its Karachi and Pezu plants, unit is seven people, with a density per room of three to four oc- a 100 MW oil plant at Attock Cement, a 27 MW heavy fuel cupants. The international average is 1.3 persons (ICR 2013). oil and diesel system at Cherat Cement, a 16.3 MW natural gas and oil fueled unit and a 6 MW gas unit at Fauji Cement, Pakistan exports cement to neighboring countries, mainly and D.G. Khan’s 82 MW gas and oil fueled system at its Ghazi north to Afghanistan during 2010-2011, a trend that con- Khan plant and a 33 MW CPP at its Khaipur plant. Most ce- tinues. Demand in Afghanistan is so high that export cement ment plants in Pakistan are looking into expanding their CPP prices from Pakistan have risen 30 percent since the end of capacity with coal-based units, given their experience with 2011, which has benefitted producers in north Pakistan that using coal as the primary fuel for the kilns (ICR 2013). had significant overcapacity. Pakistan also exports to Iraq, South Africa, Tanzania, and Mozambique. There is specula- Energy prices are rising for the Pakistani cement industry. In tion in Pakistan that the removal of Saudi Arabia’s cement spring 2013, the government announced a steep 55 percent import ban will benefit exports, but many analysts believe increase in electricity tariffs for cement plants using electricity that the UAE and Turkey, with an estimated 50 Mta of excess from the grid. Announced natural gas price hikes affecting Waste Heat Recovery for the Cement Sector 51 captive power plants were much lower at just 17.5 percent, CURRENT STATUS OF WHR advantaging those cement plants with capacity to produce Nine of the 24 existing cement plants in Pakistan have installed or their own power using gas (World Cement 2013, Express Tri- are installing waste heat recovery systems representing 100 MW bune 2013a, b). Under an agreement with the International of capacity. Two major players are active, both Chinese suppliers, Monetary Fund, the federal government announced it will or Chinese joint ventures. All of the existing WHR systems were gradually phase out power sector subsidies. To achieve this developed under the Clean Development Mechanism (CDM) target, a four-phase plan was introduced in October 2013 to program. Sinoma Energy Conservation was first to enter the reduce subsidies from about 1.8 percent of GDP to 0.3-0.4 market and has installed four systems since 2008. Anhui Conch percent of GDP within the next three years. The government Kawasaki Engineering, a joint venture between Anhui Conch announced the first of a number of broad prices increases in Cement in China and a major Japanese WHR supplier, Kawasaki August 2013 that increased industrial and commercial rates Plant Systems, has installed three units. Fecto Cement contracted by up to 115 percent and put the price of electricity for indus- with Hefei Cement Research and Design Institute, a subsidiary trial users in the Rs 14 to Rs 18/kWh range (130 to 170 US$/ of the China National Building Materials Group Corporation kWh) (Express Tribune 2013b, The Nation 2013). (CNBM). Eight of nine systems are based on conventional steam technology; FLSmidth, which has an exclusive global license for Key Environmental / Energy Issues the Kalina cycle in the cement and lime industries (excluding In 1997, Pakistan signed the Pakistan Environmental China), is installing an 8.5 MW Kalina unit on a 7,000 tpd clinker Protection Act creating the Pakistan Environmental Protection line at D.G. Khan Cement’s Khaipur plant. FLSmidth is the overall Agency, or Pak-EPA, to oversee environmental protection and engineering, procurement and construction (EPC) provider to D.G. regulation. In 2010 the Pakistan National Energy Policy was Khan Cement for the project. Wasabi Energy, the Kalina technol- drafted in response to growing concerns about a possible ogy licensee, will provide front-end engineering, procurement and power crisis. Electricity consumption has increased from 47 commissioning services for the Kalina system specifically. billion kWh in 2000 to 74 billion kWh in 2010. Rising demand In November 2012, The U.S. Trade and Development Agency so- coupled with insufficient power infrastructure has created licited companies for a feasibility study to assess the technical and severe power shortages throughout the country—a key economic viability of incorporating a 35 to 50 MW biomass power political and economic issue. The electric industry faces power plant and a 5 to 7 MW waste heat recovery power generation generation theft, low collection rates, line losses, and the unit to mitigate or reduce dependence on unreliable power for poor financial position of generating companies, issues that the Pioneer Cement plant located at Chenki in Punjab province. have led to load-shedding and the temporary shutdown of electric lines when demand exceeded supply. According to The remaining potential for WHR in Pakistan ranges from 50 reports in the Wall Street Journal, the power situation costs to 150 MW, based on estimated clinker capacity at plants the economy an estimated US$13 billion per year. Required with capacity greater than 1 Mta. measures in the legislation were largely focused around power consumption in the commercial and municipal sectors. Because the agricultural sector is a main economic driver, and the sector most affected by climate change, Pakistan exhibits a strong commitment to including carbon mitigation in the developmental plans of the country. 52 Waste Heat Recovery for the Cement Sector Installed WHR Projects Power CO2 Kiln Type/Capacity/ Year Technology WHR Total Installed Generation Savings Plant Number of Lines Started Provider Capacity Cost MWh/y t/y Comments Dry / 9,000 tpd / US$12.54 CDM; project IRR: 7.39% 1 Lucky Cement 2008 Sinoma EC 15 MW 87,437 42,992 3 lines million (pre CER); EPC contract Rotary/ 6,600 tpd/ US$9.1 CDM; Project IRR 7.95% 2 Karachi Plant 2009 Sinoma EC 10 MW 58,291 33,820 2 lines million (pre CER); EPC contract Anhui Conch/ US$12.6 CDM; pre-heater and air 3 Lucky Cement Dry/3.6Mta / 2009 Kawasaki 15 MW 108,000 48,060 million coolers Engineering Anhui Conch/ CDM; IRR: 11.47% (pre Rotary /1,600 tpd 16.5 US$19.56 4 Pezu Plant (Unit II) 2010 Kawasaki 101,851 49,785 CER); annual savings / 2 lines MW million Engineering US$3.9 m CDM; IRR 9.1% (pre CER); 4 x 64 M Attock Cement Hub US$18.6 Avg gross 8.7 MW, avg net 5 rotary/5,200 tpd/2 2011 Sinoma EC 12 MW 58,320 37,908 Chowki Plant million 8.1 MW, annual savings lines US$3.6 m CDM; 2 HRSGs (3.7 TPH Rotary /3,200 tpd US$9.3 each) on pre-heater end 6 Cherat Cement 2011 Sinoma EC 7 MW 41,730 25,761 / 1 line million and one HRSG (19.7 TPH) on AQC D.G. Khan Cement Rotax 2/6,700 tpd FLSmidth/ 7 2012 8.5 MW 61,301 28,542 CDM; Kalina cycle system Khaipur Plant / 1 line Wasabi Energy D.G. Khan Cement 4/5 stage pre- Anhui Conch/ CDM; 2 HRSGs installed on 10.4 US$15 8 Dera Ghazi Khan heater /6,700tpd 2012 Kawasaki 70,088 40,332 each kiln, one at pre-heater MW million Plant /2 lines Engineering and one on cooler. Fecto Cement Dry/2,600tpd/1 US$7.2 CDM; Project IRR: 11.76%; 9 2010 CNBM 6 MW 38,400 19,584 Sangjani Plant line million EPC contract Source: UNFCCC CDM; industry sources Waste Heat Recovery for the Cement Sector 53 PHILIPPINES already greatly increased over 2012 and 2013, and Cemex, Lafarge, and Holcim have all increased their production ca- Demographics pacity in the last year to meet demand. Exports are negligible Area: 300,000 km2 and continue to fall as domestic consumption increases. The Population: 96.2 M 2012 utilization rate was a respectable 84 percent. Cement Urbanization: 63 percent prices increased markedly in 2012, with the cement compa- Per Capita Cement Use: 192 kg nies attributing the rise to a surge in their input costs, particu- Cement Industry (2012) larly electricity and coal (ICR 2013). The Filipino government is investigating the sudden rise in prices. Number of Plants: 17 Cement Production Capacity: 26.9 Mta* Cement Outlook, Mta Clinker Production Capacity: 21.0 Mta* Philippines 2010A 2011A 2012A 2013F 2014F Average Cement Price: US$100.00 / ton Consumption 15.9 16.1 18.4 19.7 20.9 2012 Consumption: 18.4 Mt % Change +8.2 +1.3 +14.3 +7.1 +6.1 2012 Production: 18.4 Mt Production 15.9 16.1 18.4 19.7 20.9 * Cement Manufacturers Association of the Philippines, 2012 Net Trade Exports/ 0.0 0.0 0.0 0.0 0.0 Annual Report (Imports) Source: CW Research GCVFR 2014 CURRENT STATUS OF CEMENT INDUSTRY Cement Associations The Philippines has been one of the world’s best economic performers over the last decade. GDP growth in constant Cement Manufacturers Association of the Philippines (CeMAP) prices was in the 4.0 to 6.0 percent range through 2009 http://cemap.org.ph/ when it slowed to 1.15 percent. The Philippines continued to grow, albeit with a slowdown, throughout the global Major Cement Companies – Integrated Facilities (2012) economic recession. Monetary and fiscal policies are well Number of Cement Clinker managed, and inflation and interest rates are low. Construc- Company Plants Capacity, Mta Capacity,* Mta tion increased at 20 percent throughout 2012 (IMF). The Holcim (CHE) 4 7.6 5.73 Filipino economy is more diversified than most Asian econo- Lafarge (FRA) 6 6.5 3.32 mies and derives its more of its strength from domestic Cemex (MEX) 2 4.3 3.35* consumption than from exports. Eagle Cement 1 1.5 1.17* Northern Cement 1 1.15 0.96 The major international cement companies took advantage of Taiheiyo (JAP) 1 1.01 0.84 the 1997 Asian financial crisis and aggressively acquired as- Pacific Cement 1 0.43 0.27 sets during the late 1990s when Holcim, Lafarge and Cemex Goodfound Cement 1 0.35 0.27* all purchased cement assets. Holcim Philippines is the largest * Values estimated based on an overall clinker / cement factor of 78 percent. Source: CeMAP Annual Report 2012; ICR Global Cement Report, 10th Edition; cement company in the country with 6.66 Mta of cement US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, capacity at four plants. Lafarge is a close second with 6.5 Mta CemNet 2013 and six plants. Third-ranked is Cemex Philippines with two plants and 3.78 Mta (ICR 2103). Market Outlook During 2012 cement consumption increased 14 percent over Outlook for the Filipino cement industry is very positive. Infla- consumption in 2011 and continued through 2013 (CW Re- tion and interest rates are forecast to remain relatively low, and search 2014). Although cement production is focused on the construction is expected to grow faster than GDP with positive domestic market, per capita cement consumption is low, in- contributions from residential, non-residential, and public con- dicating potential for strong growth as infrastructure projects struction. Cement consumption and production are forecast to and overall prosperity increase. Infrastructure projects have increase conservatively by seven percent in 2013 and six per- 54 Waste Heat Recovery for the Cement Sector cent in 2014. The only apparent risks faced by the Philippines Electricity generation capacity is 16.2 GW; geothermal rep- are external. Barriers to entry in the Filipino cement industry are resents about 15 percent; hydropower, 14 percent; and the small as evidenced by the near immediate production increases remainder comprises primarily coal and natural gas thermal of foreign companies. Therefore, if domestic markets slow and plants. In 2012, the Philippines consumed over 17 million develop excess capacity in China or India, Philippine companies tonnes of coal, half of which was produced domestically and could become vulnerable to rising imports. half was imported The Philippines is in the midst of a growing energy crisis Energy Prices for Industry driven by power shortages, rolling blackouts and rising The Philippine cement industry is affected by a growing en- prices. The country has around 30 million more people ergy crisis driven by rising demand for power and inadequate than Thailand, but has less generating capacity. In terms of power supplies and infrastructure. Power shortages, rolling geothermal-power capacity, the Philippines is second only to blackouts and rising prices have become the norm. During the U.S., but transmission and distribution failures, the lack 2013, power prices rose steeply and people demanded that of domestic energy production and a challenging geography the government provide a solution. Main grid generation have meant a perennial power problem. The dependence on prices from the National Power Grid in 2014 range from 2.97 imported fuel exacerbates the situation. Although many of its Peso/kWh (65 US$/MWh) in Mindanao to 5.71 Peso/kWh neighboring countries provide fuel subsidies, the Philippines (126 US$/MWh) in Luzon (National Power Corporation 2014). does not, which means that electricity tariffs are set by the Transmission and distribution costs for large 34.5 kV indus- market and are now among the highest in the region. Include trial users (>10,000 kW) appear to be in the range of 0.8 to aging power plants and debt-ridden cooperatives into the mix 0.9 Peso/kWh (17.6 to 19.8 US$/MWh) (MeralCo 2014). Total and the near-term outlook is concerning. electricity prices for Philippine cement facilities could range The Electric Power Industry Reform Act (EPIRA) of 2001 was from 83 to 145 US$/kWh. meant to provide relief and stabilize the Philippines power Coal is the primary fuel used for clinker thermal needs. The sector but its effect has been negligible. The law mandated country imports 50 percent of its coal supplies, creating privatizing state-owned power enterprises to ensure access additional uncertainty for the cement industry energy costs to affordable electricity and allow “a regime of free and fair (DOE 2013). competition,” among other things. However, an inadequate legal framework—including weak competition laws—and an Key Environmental / Energy Issues ineffective regulatory body has hindered effectiveness. The country is deeply affected by the impacts of climate The current urgency stems from the country’s high rates of change; risks are pervasive in the agricultural sector, fishing, growth (the Philippines’ GDP growth rate of 7.8 percent water supply, food security, human health, forest and coastal for the first quarter of 2013 was the highest in Asia), which ecosystems and resources, biodiversity, and infrastructure. has driven up energy demand. The situation is expected to The Climate Change Act of 2009 provides a comprehensive improve in 2015 when a series of larger power plants come legal foundation through which to address climate change, online. The country initiated short-term restorative measures, and supports several pre-existing laws and programs. The which were targeted to address supply shortages for the next country has aggressively developed hydropower and geo- few months—in July 2013, for instance, US$100 million was thermal power resources and is continuing to promote the earmarked to subsidize modular electric generator sets for development of biomass and other renewable resources. regional cooperatives. And despite its pro-market stance, the government may amend EPIRA to allow it to intervene in the The Philippines is a net importer of energy despite low sector as need arises (DOE 2013a). consumption levels relative to its South Asian neighbors. The country produces small volumes of oil, natural gas and coal. Waste Heat Recovery for the Cement Sector 55 However, many stakeholders are concerned more about Dalian East New Energy Development Co. (Dalian) is a leading longer-term, rather than near-term, problems. According to a Chinese developer and supplier of waste heat recovery power recent Goldman Sachs report, the investment needed to set generation systems. Dalian has installed WHR systems outside up modern power generation in the Philippines over the next of China in India. few years totals some US$46 billion. Yet investors are shy The remaining potential for WHR in the Philippines ranges because politically connected domestic conglomerates control from 50 to 90 MW, based on estimated clinker capacity at the sector, and foreign investment is capped at 40 percent. plants with capacity greater than 1 Mta. The ongoing power reliability issues and increasing electricity prices should be CURRENT STATUS OF WHR a strong driver for WHR in this market. However, moisture content of the clinker raw materials may be a limiting factor The Philippine cement industry has installed three waste heat on WHR potential in Thailand. recovery power generation systems with a total capacity of 17.5 MW using two Chinese suppliers: Sinoma Energy Conservation (Sinoma EC) is a leading Chinese supplier of waste heat recovery power generation systems. Si- noma EC has also installed over twenty WHR systems in other countries including Vietnam, India, Pakistan, Turkey, Thailand, Angola, UAE and Saudi Arabia. Installed WHR Projects Power CO2 Kiln Type/Capacity/ Number Year WHR Generation Savings Plant of Lines Built Technology Provider Capacity Total Installed Cost MWh/y t/y 1 Cemex Antipolo Plant Dry / 8000 tpd / 1 line 2012 Sinoma EC 6 MW US$18.6m 2 Lafarge Teresa Plant Dry / 3,300tpd / 1 line 2010 Sinoma EC 4.5 MW 29,103 11,811 3 Eagle Cement Corporation Dry / 4000 tpd / 1 line 2014 Dalian East 7 MW 56 Waste Heat Recovery for the Cement Sector SOUTH AFRICA South African cement companies are focused on expanding business beyond their borders, tapping into growing inland Demographics markets largely unreachable by importers. PPC has set a goal Area: 1,219,090 km2 Population: 51.1 M of achieving 40 percent of their revenue outside South Africa. Urbanization: 62 percent South Africa will be the site of increased competition as new Per Capita Cement Use: 222 kg companies plan to build plants in the coming years to exploit the Cement Industry (2012) growing demand for cement inland. Dangote (Nigeria), Wiphold Number of Plants: 15 (Jidong, China) and ARM Cement (Kenya) are all exploring Cement Production Capacity: 17.7 Mta Clinker Production Capacity: 16.0 Mta* the possibility of expansion into South Africa (ICR 2013). The Average Cement Price: US$120.00 / ton Dangote plant (Sephaku) will be commissioned in 2014, with 2012 Consumption: 11.6 Mt Wiphold now in the process of constructing its facility. 2012 Production: 10.9 Mt The growing demand for “green” products in the South * Based on reported cement / clinker ratios in Global Cement Database African market has spurred upgrades. PPC has been using alternative fuels and has commissioned a 60 MW wind en- ergy system on its Eastern Cape property that will sell power CURRENT STATUS OF CEMENT INDUSTRY exclusively to PPC. AfriSam has also established numerous South Africa has experienced slow economic growth since 2009. Strikes and labor unrest have dampened foreign invest- energy-saving systems in its plants, and was the first construc- ment, and Europe—South Africa’s primary trading partner—is tion materials company to sign the 49 Million Pledge, a joint also experiencing a period of economic stress, decreasing government and industry initiative to establish energy savings demand. In October 2012, South Africa announced plans as a national culture. to offset stagnant growth with US$462 billion worth of infrastructure projects over the next 15 years, including ports, Cement Outlook, Mta roads, utility access and mining; US$100 billion is due to be South Africa 2010A 2011A 2012A 2013F 2014F spent in the next three years. Consumption 10.9 11.2 11.6 12.3 12.7 % Change -7.6 +2.8 +3.6 +6.0 +3.3 Pretoria Portland Cement (PPC), the largest cement producer Production 11.0 11.0 10.9 11.6 12.1 in South Africa (49 percent market share) reported that its Net Trade gross profit rose by 9.0 percent to US$289 million in 2012. Exports/ 0.1 (0.3) (0.7) (0.7) (0.6) Earnings before interest, tax, depreciation and amortization (Imports) (EBITDA) rose by 8.0 percent to US$249 million. However, Source: CW Research GCVFR 2014 net profit decreased by 2.0 percent to US$96.1 million from US$98.5 million. PPC attributed this to an increase in taxes Cement Associations during the year (ICR 2013). Other South African cement countries have experienced similar profit patterns. Association of Cementitious Materials Producers (ACMP) http://www.acmp.co.za/ Despite a stagnant domestic construction market and a slow- ing economy, South Africa is still importing cement, primarily “The ACMP acts as an umbrella body for six South African cheaper cement from Nigeria and Pakistan. South African ce- clinker and cementitious material producer companies, spe- ment companies have tried repeatedly to ban imports of for- cifically guiding and representing these company’s interests eign cement, citing low quality. However in 2011, four major South African cement producers were found to have been in the fields of environmental stewardship, health and safety participating in a cement cartel and were fined. Increasingly, practices and community and stakeholder interaction” Waste Heat Recovery for the Cement Sector 57 Major Cement Companies – Integrated Facilities (2012) were confronted by average power-price increases of 25 per- cent in each of the past six years to help Eskom finance about Number of Cement Clinker Company Plants Capacity, Mta Capacity,* Mta 500 billion rand of spending through 2017 to overcome PPC 6 8.25 7.65 pending electricity shortages. NUS Consulting reported that AfriSam 3 4.95 4.67 the average price for electricity across all customer classes Lafarge I(FRA) 3 3.60 3.00 was 91 US$/MWh in 2013 (NUS 2013), a 12 percent rise over Natal - Cimpor 3 2.10 1.20 the previous year. They noted that the short-and long-term * Based on reported cement / clinker ratios in Global Cement Database outlook is for electricity prices to increase as Eskom continues Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 to deal with power generation and infrastructure costs. A review of large industrial user tariffs for 2013/2014 Market Outlook released by the National Energy Regulator of South Africa (NERSA) shows a wide variation around the country, with By 2015 the cement sector is expected to see a radical shakeup energy charges ranging from 0.36 to 0.138 Rand/kWh (32 to as new players arrive to market. The volume of additional 124 US$/MWh) and demand charges ranging from 55 to 200 new capacity entering the market is estimated at 5.2 Mta by Rand/kVa (0.05 to 0.20 US$/kVa) (NERSA 2014). Based on 2016, which could mean that South Africa could experience an these tariffs, the current price for electricity for large industri- oversupply of cement in the coming years. Current utilization als could range from US$80 to over US$150 /MWh depend- rates between 63 and 85 percent could drop significantly un- ing on location and plant operating profiles. The 2013/2014 less demand rises. The coastal regions of South Africa remain tariffs represent a 7.0 to 15 percent increase over the previ- vulnerable to imports, but inland there strong demand exists ous year, depending on location. Average electricity prices are in the neighboring countries of Botswana, Mozambique and expected to increase by 25 percent over the next two years. Namibia. Annual energy costs are forecast to increase by more than 10 percent in the coming years, and energy efficiency Domestic bituminous coal (5,800 kcal/kg) is the primary fuel could play a major role in future upgrades (ICR 2013). for cement kilns in South Africa, with delivered prices in the US$100/tonne range. Energy Prices for Industry Key Environmental / Energy Issues South Africa is emerging from a severe electricity crisis that threatened to mirror the situation in 2008, which subjected The South African National Climate Change Response White the country to rolling blackouts. Rising power demand driven Paper was published by the Department of Environmental Af- by economic growth and electrification of the townships, fairs in 2011, marking the first comprehensive attempt to set combined with inadequate investment in the power infra- clear GHG emissions goals, and set up the policy framework structure by Eskom, the national electricity supplier, resulted to achieve these goals. Much of the white paper focuses on in peak demand reserve margins of only 3.0 to 4.0 percent ecological and water conservation, but attention is also given to (system peak demand is winter) in 2013. Delays in completion industry: “the DoE will continue to develop and facilitate an ag- of new power plants and the need to perform long-deferred gressive energy efficiency programs in industry, building on the maintenance on existing generation facilities raised the spec- experience of Eskom’s Demand Side Management program and ter of rolling blackouts in 2013 and into 2014. In response, the DTI’s National Cleaner Production Centre, and covering non- the government is promoting energy efficiency and demand- electricity energy efficiency as well. A structured program will be side management programs with key industries. established with appropriate initiatives, incentives and regula- tion, and a well-resourced information collection and dissemina- Eskom Holdings SOC Ltd. supplies 95 percent of South Af- tion process.”(Gov’t of South Africa 2011). South Africa has a rica’s electricity; it plans to raise prices by an average 8.0 per- Renewable Energy Finance Subsidy Office (REFSO) to promote cent per year for the next five years, half the annual increase renewable energy through government subsidies, however, the it originally requested. Power tariffs climbed to 65.51 South combined capacity of all installed projects has been less than 50 African cents (US$0.07) a kilowatt hour in April 2013 and MW and none has been energy-efficiency projects. are expected to hit 89.13 local cents by 2018. South Africans 58 Waste Heat Recovery for the Cement Sector South Africa has only small deposits of conventional oil and dent power producers. Considerable investment has emerged natural gas and uses its large coal deposits for most of its in new power projects with targeted capacity additions of over energy needs, particularly in the electricity sector. Most oil 40,000 MW by 2030; these will include mostly coal, and some consumed in the country, mainly in the transportation sector, renewable and nuclear generating capacity. In the short term, is imported from large producers in the Middle East and West the 1,430 MW Camden coal-fired power station was recently Africa and is refined locally. South Africa has a highly devel- returned to service and two other coal-fired power stations oped synthetic fuels industry, producing gasoline and diesel (Grootvlei, 950 MW and Komati, 284 MW) were also re-com- fuels from coal and natural gas. The synthetic fuels industry missioned and will soon return to service, alleviating some of accounts for nearly all domestically produced petroleum. the most recent concerns about power adequacy. In 2010, almost 70 percent of South Africa’s total energy supply To meet generation targets, and as a demand-side measure, came from coal, followed by oil (19 percent) and solid biomass and electricity rates have been gradually increasing for all sectors, waste (10 percent) (DOE 2013a). South Africa’s energy balance also causing concern among the more energy-intensive industries includes relatively small shares of natural gas, nuclear, and hydro- as well as poorer households. South Africa has traditionally electricity. South Africa’s dependence on hydrocarbons, particularly had low electricity costs; however, Eskom requested a 60 per- coal, has led the country to become the leading carbon dioxide cent tariff increase in 2008 to help finance new projects and emitter in Africa and the 12th largest in the world (DOE 2013a). meet rising equipment costs. NERSA approved a total tariff About 70 percent of domestic coal consumption (excluding exports) increase of 27.5percent for 2008/2009 and then approved is used for electricity generation, while the remainder is used to sup- Eskom’s request to increase tariffs by 20-25 percent annually ply Sasol’s synthetic fuels plant (20 percent), metallurgical industries for the subsequent three years. However, the tariff increase (3.0 percent), small merchants and residential areas (2.0 percent), was later revised down to 16 percent (EIA Country Update, and other industries (5.0 percent), including cement (DOE 2013a). 2013). South Africa has numerous government agencies and com- panies involved in the coal, natural gas, and oil industry, but CURRENT STATUS OF WHR the National Energy Regulator of South Africa (NERSA) is the There are currently no waste heat recovery power generation industry regulator and is responsible for implementing South systems installed in South Africa, but there appears to be some Africa’s energy plan, which is centered on diversifying energy activity by a limited number of WHR suppliers. As an example, sources, securing energy supplies, and advancing new energy in November 2013, the South African Wiphold Mamba Ce- projects across sectors. ment project was announced. Jointly funded by China’s Jidong The electricity sector falls under NERSA regulation. Eskom, Development Group, and the China-Africa Development Fund (the state electricity company) is responsible for electricity with an investment of US$220 million, will be situated in Limpopo transmission and generates 95 percent of South Africa’s elec- Province. The project includes a new cement clinker production tricity. NERSA regulates electricity prices and promotes private line with an output of 1Mt/yr, and a waste heat recovery (WHR) sector participation by encouraging independent power pro- system. ducers (IPPs) to invest; it also promotes off-grid technologies Rapidly rising energy costs, continuing concerns about power to meet rural energy needs. availability and a cultural emphasis on sustainability and ef- EIA estimates show that South Africa’s total electricity con- ficiency signal a promising environment for additional WHR sumption grew by 20 percent during 2000-2010; installed development. In addition, in their desire to limit imports, capacity grew at only 7.0 percent during the same time period South African cement domestic companies are pushing for (DOE 2013a). In late 2007 and early 2008, the country experi- policies that require specific efficiency standards that only enced a power crisis that resulted in blackouts and threatened they can meet, opening potential opportunities for waste the power supply to many businesses, including the mining heat recovery power generation if enacted. industry as a result of high rates of economic growth, rising Based on estimated clinker capacity at plants with capacity electricity demand, combined with a lack of new power plants. greater than 1 Mta, the potential for WHR at existing cement Nigeria’s 2010 electricity strategy plans to strengthen the elec- plants in South Africa ranges from 55 to 100 MW. tricity distribution structure and fast-track projects by indepen- Waste Heat Recovery for the Cement Sector 59 THAILAND Cement Associations Demographics Thai Cement Manufacturers Association (TCMA) Area: 513,120 km 2 http://www.thaicma.or.th/cms/ Population: 69.9 M Urbanization: 34 percent Major Cement Companies – Integrated Facilities (2012) Per Capita Cement Use: 460 kg Number of Cement Clinker Company Plants Capacity, Mta Capacity.* Mta Cement Industry (2012) Siam Cement Co. 5 23.23 19.35 Number of Plants: 13 Siam City Cement Co. 1 14.78 12.31 (Holcim/Ratanark) Number of Kilns: 31 TPI Polene 1 9.07 7.56 Cement Production Capacity: 57.5 Mta Asia Cement Public Co. . Clinker Production Capacity: 47.8 Mta* (Italcementi) 1 4.99 4.16 Average Cement Price: US$82 / ton Jalaprathan Cement 2 2.40 2.00 2012 Consumption: 31.2 Mt (Italcementi) 2012 Production: 38.2 Mt Thai Pride Cement 1 0.96 0.80 Saraburi -Cemex (MEX) 1 0.85 0.71 * Based on an assumed cement / clinker production factor Samukkee Cement 1 0.12 0.10 of 0.83 *Values estimated based on overall domestic clinker / cement production of 83.3 percent Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 CURRENT STATUS OF CEMENT INDUSTRY Thailand’s economy is strong, and was only minimally af- Market Outlook fected by the global economic recession. The government is Outlook for the Thai cement industry is optimistic over the fiscally sound with reasonable debt levels, and unemployment longer term. The economy is in good shape; inflation and and interest rates are both low (IMF). Historically, the cement unemployment rates are low. Growing populations in major industry has relied heavily on exports to balance capac- export destinations such as Myanmar, Bangladesh, Cam- ity; however, in the wake of serious flooding throughout bodia, Laos and Indonesia signal a sustained need for Thai the region, major rebuilding and infrastructure projects are cement. In the near term, the industry will continue to rely forecast to increase domestic consumption (ICR). Homebuild- heavily on exports to support capacity utilization rates which ing now accounts for 50 percent of Thai cement demand, were at 66 percent in 2012. infrastructure 30 percent and non-residential buildings 18 to 19 percent. Energy Prices for Industry In 2012, exports accounted for 30 percent of Thai cement pro- 2005 2006 2007 2008 2009 2010 2011 duction, and many Thai cement companies are expanding their Electricity, US$/ 65.6 77.9 73.1 75.5 76.4 71.8 - holdings within the Southeast region, as they look to capitalize MWh on growing markets of less-industrialized neighbors such as Steam Coal*, 3.68 3.66 4.52 5.70 5.46 5.98 - US$/GJ Myanmar, Laos, Indonesia, and Cambodia. Many are looking to Natural gas, build plants in these countries. 4.07 5.15 5.44 7.26 6.85 7.92 - US$/GJ *Sub-bituminous steam coal Cement Outlook, Mta Source: U.S. DOE Energy Information Administration 2013b; “Energy Prices and Taxes” IEA 2012 Thailand 2010A 2011A 2012A 2013F 2014F Consumption 26.8 28.1 31.2 34.0 35.7 % Change +8.5 +4.9 +11.0 +9.0 +5.0 Production 34.0 33.9 38.2 41.2 42.8 Net Trade Exports/ 7.1 5.8 6.9 7.2 7.1 (Imports) Source: CW Research GCVFR 2014 60 Waste Heat Recovery for the Cement Sector Key Environmental / Energy Issues private companies to promote competition and attract more investment in renewable energy generation and advanced Over 80 percent of Thailand’s total energy consumption is technology of fossil fuel plants. Independent power producers from fossil fuels. Thailand is a net importer of oil and natural (IPPs) make up over 35 percent of the generation mix, with gas, and a growing producer of natural gas. In 2010, oil GDF Suez as one of the main investors. Other small Thai state represented 39 percent of total energy consumption, down power producers or manufacturers that generate less than from nearly half in 2000. As the economy expanded and 300 megawatts account for the remaining portion. EGAT sells industrialized, Thailand consumed more oil for transportation and transmits wholesale electricity to Thailand’s two distribu- and industrial uses. Natural gas has replaced some oil de- tion authorities, the Metropolitan Electricity Authority and the mand and is the next largest fuel, growing to nearly one-third Provincial Electricity Authority. of total consumption. Solid biomass and waste are energy sources in Thailand—roughly 16 percent of energy consump- Thailand’s net electricity generation increased from around tion. Most biomass feedstock is from sugarcane, rice husk, 90 terawatt-hours (TWh) in 2000 to over 152 TWh in 2011. bagasse, wood waste, and oil palm residue and is used in the The industrial sector is the primary consumer of electricity and residential and manufacturing sectors. Thailand has promoted accounts for 46 percent of the market. Thailand projects that biomass for heat and electricity; growth has been gradual electricity generation will double, reaching 346 TWh by 2030. due to industry inefficiencies and environmental concerns. The anticipated growth is prompting the government to en- Thailand’s new Alternative Energy Development Plan calls sure electricity supply by expanding capacity and maintaining for renewable energy to increase its share to 25 percent of reserve margins to be no less than 15 percent of the system total energy consumption by 2022 to reduce dependence capacity. Conventional thermal fuels, particularly natural gas, on fossil fuels. However, this is an ambitious target requiring meet nearly all of Thailand’s power requirements. Natural significant resource development and subsidies. As Thailand gas-fired generation consisted of 108 TWh or 71 percent of continues to expand economically, it is expected to place the total electricity supply in 2011, followed by imported coal and lignite as the second largest feedstock with a 21 percent greater emphasis on energy supply security by diversifying its share. Thailand plans to reduce dependence on natural gas fuel slate and promoting upstream development of hydrocar- for generation in favor of renewable sources and nuclear bons including alternatives to conventional fuels. power. However, the outlook for ramping up these sources Over the past two decades, Thailand’s rapidly expanding is uncertain. Following the Fukushima incident in 2011, Thai- economy has spurred the need to build power generation land’s first proposed nuclear facility has been delayed to at capacity to keep pace with rising electricity demand. So far, least 2026 and was scaled back from an originally proposed Thailand’s installed capacity growth has exceeded its rate 5 GW to 2 GW (DOE 2013a). Also, the existing infrastructure of power consumption growth, which averaged about 5.0 and domestic resources make natural gas the most economi- percent a year over the past decade. Thailand now has one of cal power source. As Thailand ramps up its LNG imports, the highest electrification rates in Southeast Asia and delivers older gas-fired stations likely will be replaced by newer com- electricity to nearly all of its population. Concern for electric- bined cycle and cogeneration facilities. ity supply security and grid reliability has prompted the Thai Natural gas production and consumption were on par until government to create policies that promote planned capacity consumption began to outstrip production in 1999. Thailand expansion, diversification of fuel sources and increase of alter- produced 1,306 billion cubic feet (Bcf) and consumed 1,645 native fuel use, demand-side management, and management Bcf of natural gas in 2011, resulting in net imports of nearly of electricity import dependence. Thailand issues 20-year 340 Bcf. These imports came from offshore fields in Myan- power plans to map out the capacity additions and goals to mar (formerly Burma) sent via pipeline. Both production and match the long-term power projections. consumption have doubled since 2000, and each grew more The Electricity Generating Authority of Thailand (EGAT), than 15 percent between 2009 and 2010. Thailand produced the state-owned electricity generating company and sole and consumed natural gas at a slower rate in 2011 following electricity transmission provider, accounts for nearly half of disruptions from an offshore gas pipeline leak and massive the country’s power generation. Thailand awards licenses to flooding that began in mid-2011. These disruptions affected Waste Heat Recovery for the Cement Sector 61 primarily the power sector and manufacturing activities, and CURRENT STATUS OF WHR annual growth slowed to 2.0 percent for gas production and Thailand has a fairly developed waste heat recovery power around 3.0 percent for consumption in 2011 (DOE 2013a). generation market. Eleven systems are installed on at least 16 As production declines in older fields, Thailand may depend clinker lines at seven cement plants (out of a total of 31 kiln more heavily on imports if no significant discoveries are made lines at 13 plants).20 The eleven existing WHR systems repre- over the next decade. Consequently, Thailand is seeking ways sent more than 172 MW of electric capacity. The remaining to secure gas supplies through greater domestic production, potential for WHR in Thailand ranges from 30 to 60 MW, imports via pipeline and new liquefied natural gas (LNG), and based on estimated clinker capacity at plants with capacity overseas upstream investments. greater than 1 Mta. Moisture content of the clinker raw ma- The power sector now accounts for about 60 percent of terials may be a limiting factor on WHR potential in Thailand. overall natural gas demand, though its share has gradually The waste heat recovery power generation market for the declined from above 80 percent before 2000 as other sec- Thai cement industry is currently served primarily by foreign tors have grown rapidly. The power sector is dependent on suppliers: gas as a fuel, with gas-fired stations supplying 71 percent of Thailand’s domestic generation in 2011, down from 76 • Anhui Conch / Kawasaki Engineering is a joint venture percent in 2010. As the power sector’s share of natural gas of the Chinese cement company Anhui Conch and the has declined, other industries have picked up market shares. Japanese equipment and engineering company Kawasaki Gas separation facilities are the second largest gas consumer Plant Systems. Anhui Conch / Kawasaki is a leading WHR group rising to about 21 percent of the gas market in 2011. supplier in China and has installed a number of systems in These facilities process gas for petrochemical consumers. The other countries including India, Pakistan, and Vietnam. industrial sector, holding about 14 percent of the natural • Sinoma Energy Conservation (Sinoma EC) is a leading gas market, has increasingly used gas for its operations (DOE Chinese supplier of waste heat recovery power generation 2013a). systems. Sinoma EC has also installed over twenty WHR systems in other countries including Vietnam. Philippines, In early 2008, the Thai Cabinet acknowledged the National India, Pakistan, Turkey, Angola, UAE and Saudi Arabia. Strategic Plan on Climate Change B.E.2551-2555 (2008- 2012) formulated by the National Committee on Climate Change Policy, in which they agreed that the plan be used by relevant agencies as guidelines to develop plans to address climate change. A goal of 15 percent reduction of GHG emis- sions by 2012 was established. 20 OneStone Research states that there are 12 WHR systems installed at Thai cement plants 62 Waste Heat Recovery for the Cement Sector Installed WHR Projects Power CO2 Kiln Type/Capacity/ Year Technology WHR Total Installed Generation Savings Plant Number of Lines Started Provider Capacity Cost MWh/y t/y Comments Anhui Conch/ CDM; 11.7% 1 Siam Cement Khaeng Koi Plant Dry /5,500 Mta/ US$15.16 2008 Kawasaki 9.1 MW 56,516 29,355 IRR; Debt / KK6 1 line million Engineering Equity 1:2 Anhui Conch/ 2 Siam Cement Khaeng Koi Plant Dry /13,500/ 3 22.6 2009 Kawasaki KK3-5 lines MW Engineering Anhui Conch/ 16.5 3 Siam Cement Khao Wong Plant Dry /10,000/ 1 line 2009 Kawasaki MW Engineering CDM; 9.5% Dry / 8,000 tpd / IRR ; Debt / 4 Siam Cement Ta Luang 2010 Sinoma EC 18 MW US$26.32 89,421 46,414 2 lines Equity 1:2; 16.5 MW net 5 Siam Cement Thung Song I Sinoma EC 9 MW 6 Siam Cement Thung Song II Sinoma EC 22 MW 7 Siam Cement Lampang Sinoma EC 9 MW Dry / 20,000 tpd / 2x 16 US$57.77 CDM; 10.99% 8 Siam City Cement - Kiln 3 2010 Sinoma EC 156,920 79,354 2 lines MW million IRR 2x 13 9 Siam City Cement - Kilns 5 and 6 Dry / / 2 lines 1992 MW 10 Siam City Cement - Kiln 4 Dry / / 1 line 2011 7.5 MW 11 TPI Polene 2008 89,517 Waste Heat Recovery for the Cement Sector 63 TURKEY By the end of the privatization process, Turkey had 40 cement plants producing a total of 33.3 Mta of cement; eight plants Demographics were wet process and the rest were dry kilns. Since then, Area: 783,562 km2 market forces have allowed the Turkish cement industry to Population: 74.9 M double in size in just 15 years; 33 percent of all Turkish capac- Urbanization: 77 percent ity in 2010 was less than six years old (ICR 2013). Per Capita Cement Use: 723 kg In 2012 the Turkish cement industry had a total of 48 inte- Cement Industry (2012) grated cement plants and 20 additional cement grinding facili- Number of Plants: 48 ties, according to the TCMA. At end-2013, the industry had Cement Production Capacity: 108.4 Mta a total capacity of 109.6Mt/yr (including grinding plants) and Clinker Production Capacity: 66.9 Mta produced an estimated 69.7 Mt of cement during the year at a Average Cement Price: US$65.00 / ton capacity utilization rate of 64 percent (CW Research 2014). 2012 Consumption: 54.2 Mt The larger Turkish companies have maintained focus on in- 2012 Production: 63.9 Mt ternational expansion, for example, a plant in Uzbekistan was initiated in July 2012 when Almalyk Mining and Metallurgical CURRENT STATUS OF CEMENT INDUSTRY Complex (AMMC) and Turkey’s Dal Teknik Makina signed Turkey enjoys a reasonably stable economy with well-regulat- a contract worth US$114 million. Consolidations are also ed financial markets, and is the largest producer of cement in occurring—Hacı Ömer Sabancı Holding is discussing potential the European region. The economy has slowed through 2012, takeovers with several cement producers in countries near and a general drop in domestic demand has been mirrored in Turkey, according to the industrial group’s president, Mehmet the cement industry. Severe and extended weather patterns Göçmen (Edwards 2013b). Much of this focus abroad can affecting the Balkans, Turkey and Greece have additionally be attributed to the Turkish regulation disallowing a single affected building activity. The Turkish government disclosed company to control more than 25 percent of the domestic that new hydroelectric and urban development projects are market. on the horizon, adding some optimism about future domestic This restriction has affected energy efficiency. While still growth (ICR 2013). relatively low, use of alternate fuels is on the rise, and Turkey The cement industry saw large development starting in 1953, boasts nine waste heat recovery power generation systems when the Turkish Cement Industry Company (ÇISAN), a installed or under construction. public enterprise, was set up to commission 15 new cement Cement Outlook, Mta plants throughout Turkey. A total of 17 more were added Turkey 2010A 2011A 2012A 2013F 2014F between 1963 and 1980 by the national and regional govern- Consumption 47.7 52.3 54.2 60.4 63.7 ments to help regional development. The Turkish Manufac- % Change +19.5 +9.6 +3.6 +11.4 +5.5 turer’s association (TCMA) was formed in 1957 to represent Production 62.7 63.4 63.9 69.7 73.2 the interests of the growing industry. Net Trade Exports/ 15.1 11.1 9.7 9.3 9.5 In 1989, cement industry privatization began in the west of (Imports) Turkey, where greater demand and higher efficiency meant Source: CW Research GCVFR 2014 plants were more likely to be attractive acquisition targets. Plants in the east were restructured and consolidated prior to privatization, which occurred rapidly 1997. By this time Turkey was the third-largest cement producer in Europe after Germany and Italy. 64 Waste Heat Recovery for the Cement Sector Cement Associations Domestic consumption is forecast to rise with the under- taking of new infrastructure projects. In October 2012 the Turkish Cement Manufacturers Association (TCMA) Turkish government began the first stage of a huge urban http://www.tcma.org.tr/ENG/ regeneration project across all of the country’s major popula- tion centers. It aims to replace around five to six million Major Cement Companies – Integrated Facilities (2012) homes over a 10-20 year horizon. Many of these buildings lie Number of Cement Clinker in earthquake zones and are in poor states of repair. In addi- Company Plants Capacity, Mta Capacity,* Mta tion, Turkey planned to expand the Bosporus Bridge / Tunnel OYAK 8 17.50 10.69 and build a new suspension bridge over the Marmara Sea, Limak Holdings 10 11.60 7.09 creating an immediate need for cement and opening new Akçansa 4 9.70 5.93 regions to development. Changing socio-political climates in Sabanci 6 9.70 5.93 North African and Arab countries have raised questions about AS Cimento 1 6.50 3.97 future business there, but emerging markets in West Africa Nuh Cimento 1 5.82 3.56 and Russia could help to offset this decline. Çimentas 4 5.40 3.29 Çimko Cement 2 4.65 2.84 Energy Prices for Industry Vicat (FRA) 2 4.60 2.81 Cimpor (PRT) 6 4.20 2.57 The following table provides average electricity, domestic coal Batiçim Bati Anadolu 2 3.18 1.94 (lignite), and natural gas prices for industrial users in Turkey Askale 4 3.00 1.83 from 2005 to 2011 from the U.S. Energy Information Admin- Göltas Göller Bölgesi 1 2.92 1.78 istration and the International Energy Agency. Bursa 1 2.85 1.74 Traçim Cimento 1 2.25 1.37 Denizli 1 2.50 1.53 Energy Prices for Industry Ado Group 3 2.30 1.41 Turkey 2005 2006 2007 2008 2009 2010 2011 KÇS 1 2.00 1.22 Electricity, 106.4 99.8 108.7 138.8 137.6 150.9 138.6 US$/MWh Sançim Bilecik 1 1.40 0.85 Steam Coal*, Bartin Cimento 1 1.02 0.64 47.8 48.6 69.8 92.6 84.4 83.7 86.6 US$/tonne Yurt Cimento 1 0.24 0.15 Steam Coal*, 4.89 4.98 7.15 9.49 8.65 8.58 8.87 *Values estimated based on overall domestic clinker / cement production of 84 percent US$/GJ Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), Natural Gas, 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013; 7.28 8.42 10.52 13.69 11.17 9.72 9.38 TCMA Capacity 2012 US$/GJ *Lignite Source: U.S. DOE Energy Information Administration 2013b; IEA “Energy Prices and Taxes,” 2012 Market Outlook Electricity prices for the cement industry are about 102.0 US$/ The strong fundamentals of the Turkish economy provide a MWh (208.58 kr/kWh). During the two years, electricity prices generally favorable outlook for the Turkish cement industry. for the cement industry have increased by around 14 percent In 2011, the Turkish economy grew by 8.5 percent in terms of annually. Although there are infrastructure investments GDP and is estimated to have grown by 3.3 percent in 2012. underway that will increase power supply, similar annual In 2013 this rate was expected to be marginally increased increases are expected to continue. to 3.9 percent. In the 2015-2019 period it is estimated that Turkish GDP will grow by 5.3 percent/yr. Profits are down Imported coal, pet-coke and domestic lignite are commonly due to unfavorable exchange rates but the Turkish economy used fuels in Turkish clinker kilns. The table below shows the is viewed as stable. The TCMA estimates that Turkish cement share of different fuels other than domestic coal used by the capacity will expand by another 25 Mt/yr before the end of industry. 2015, a growth rate of about 8.5 percent/yr (TCMA 2103). Waste Heat Recovery for the Cement Sector 65 Other Fuels Used in the Turkish Cement Industry (values use in Turkey is expected to double over the next decade, in million tonnes) and electricity demand growth is expected to increase at an 2008 2009 2010 2011 2012 even faster pace. Meeting this level of growth will require sig- Pet-coke 2.9 2.2 2.1 2.3 1.9 nificant investment in the energy sector, much of which will Imported Coal 2.2 2.7 2.7 2.3 2.5 come from the private sector. Large investments in natural Domestic Lignite 1.8 2.1 1.7 1.5 2.2 gas and electricity infrastructure will be essential. Source: Turkish Cement Manufacturers Association (TCMA) After Turkey restructured the electricity sector, both con- Domestic lignite is relatively inexpensive but prices are expect- sumption and generation expanded. Most of the electricity is ed to increase. Prices for domestic lignite are given below. generated with conventional thermal sources, although the government plans to displace at least some of this generation with nuclear power. Turkey’s electricity demand has increased Domestic Lignite Prices 70 percent between 2001 and 2010; much of the growth oc- FOB Prices excluding VAT (US$/tonne) curred between 2002 and 2008. Due to the economic slow- Coal Type 2013 2014 down, demand fell in 2009 compared to 2008, but rose by Tunçbilek 68.0 ~ 20% increase is expected about 10 percent in 2010. The largest generation company is Soma 59.4 > 20% increase is expected state-owned Electricity Generation Company (EUAS), which Source: Turkish Cement Manufacturers Association (TCMA) controls about half of all generation in Turkey. The remainder Prices for imported fuels in the last two years (on a CIF basis) is distributed among independent power producers, build- are given below. operate-transfer, and build-own-operate producers. Turkish Electricity Transmission Company (TEIAS) is the publicly- owned enterprise that owns and operates the transmission Imported Fuel Prices system and is legally unbundled (DOE 2013a). Approximate Price (US$/tonne on CIF basis*) Conventional thermal and hydroelectricity generation ac- Coal Type 2012 2013 counts for nearly all of Turkey’s electricity. Although Turkey Pet-coke (min 7500 kcal/kg 87 99 does not now generate electricity from nuclear power, the (31.4 GJ/t)) Steam coal (min 6400 kcal/kg government has been advocating construction of nuclear 103 86 (26.8 GJ/t)) power plants to diversify Turkey’s electricity supply portfolio. * ­­ Prices are for delivery at the port and do not include on-land transport costs. Historically, conventional thermal sources have been Turkey’s Source: Turkish Cement Manufacturers Association (TCMA) largest power source. Natural gas-fired power plants have Prices for imported fuels are now reported to be around increased substantially in the last decade and now comprise US$90 and US$120 per tonne at the plant gate. Prices have more than half of the country’s conventional thermal genera- recently leveled, however TCMA predicts an increase in tion. There are plans to build additional gas-fired generators, imported fuel prices in 2014. TCMA also reports that the however plant construction will depend on the availability of shipping prices have increased by around 30-35 percent in natural gas supply and government policy. the last three months, due to a preference to carry grain from Coal-fired power stations remain an important energy the U.S. to Russia. source for Turkey, and there is renewed interest in exploiting domestic coal resources. In particular, domestically produced Key Environmental / Energy Issues lignite is important to Turkey’s energy sector and power mix. During 2011 and 2012, Turkey experienced the fastest Turkey also produces hard coal, although it imports about 90 growth in energy demand in the OECD, and unlike some percent of the hard coal that it consumes, mainly from Russia, other OECD countries in Europe, has managed to avoid Australia, and the United States. In 2008, Turkey had total the prolonged stagnation that characterized much of the recoverable coal reserves of 2.6 billion short tons, of which continent. The country’s energy use is still relatively low but only 583 million short tons (MMst), or about 23 percent, was according to the International Energy Agency (IEA), energy hard coal (anthracite and bituminous). The remainder, around 66 Waste Heat Recovery for the Cement Sector 2,000 MMst, consists of lignite coal reserves. In 2010, Turkey Short Term: produced 79 MMst of total coal and consumed about 109 • Intensive climate change awareness-raising activities will MMst of total primary coal (DOE 2013a). be carried out for industrialists and consumers and hand- Frequent voltage fluctuations and relatively frequent power books/guidelines will be published. cuts are common in Turkey. The figures below summarize the • The process of hiring energy managers in all industrial average number of disruptive voltage fluctuations and power facilities with annual energy consumption of more than cuts experienced by cement plants, and their consequences 1,000 TEP shall be finalized and efficient operation of this for productivity losses. system shall be ensured. Medium Term: Figure 15: Consequences of Power Disruption • All industrial facilities with annual energy consumption of more than 5,000 TEP will conduct annual energy studies. 2.5 • Heat recovery options in industry, engine speed control 2.049 systems, and industrial cogeneration systems shall be 2.0 1.690 stimulated and encouraged. Minutes per year 1.469 • Replacement of resources used in industry with cleaner 1.5 1.365 production resources and use of alternative materials will 1.128 1.0 0.919 be encouraged. 0.786 0.717 Long Term: 0.5 • Incentive mechanisms will be introduced to promote 0.0 cleaner production, climate-friendly and innovative tech- '2008 '2009 '2010 '2011 nologies; effective operation of inspection and enforce- Average duration of power cuts ment mechanisms will be ensured. Average duration of voltage fluctuations • Turkey signed the Kyoto protocol at a late stage, and is therefore not listed as an Annex B country, missing the 250 opportunity to take advantage of CDM or JI mechanisms. However, selected Turkish cement companies have been 203.98 200 188.58 185.71 able to sell carbon credits in voluntary carbon markets. 144.66 149.92 Tons per year 150 134.27 114.61 CURRENT STATUS OF WHR 100 Unlike many major cement industries in the EU and the 76.46 Americas, Turkey’s cement industry has installed several 50 waste heat recovery power generation systems since 2010. All systems were installed by Chinese firms, primarily Sinoma 0 2008 2009 2010 2011 Energy Conservation and Shanghai Triumph Energy Conserva- Total clinker production loss due to power cuts tion. One system was installed by the Chinese/Japanese joint Total clinker production loss due to voltage fluctuations venture, Anhui Conch Kawasaki Engineering, in cooperation with its Japanese partner, Marubeni Corporation. Conserva- Source: Presentation by Hayrettin Sener, Nuh Cimento tive industry estimates report the WHR market potential in Turkey to be around 270 MW.21 Current installed capacity is around 80 MW, so remaining market potential is approxi- In May 2010, the Turkish Ministry of Environment and mately 190 MW. The calculated remaining potential for WHR Forestry published its National Climate Change Strategy in Turkey ranges from 150 to 280 MW, based on estimated (2010-2020). It outlined multiple, non-binding, provisions for industry including the following: 21 https://anahtar.sanayi.gov.tr/tr/news/cimento-sektorunde-surdurulebilir- uretim/459 Waste Heat Recovery for the Cement Sector 67 Installed WHR Projects: Power CO2 Kiln Type/Capacity/ Year Technology WHR Total Installed Generation Savings Plant Number of Lines Started Provider Capacity Cost MWh/y t/y Comments Dry kiln with pre- 1 Akcansa Canakkale Plant heaters / 11,500 2012 Sinoma EC 15 MW US$24m 10,500 60,000 tpd / 2 lines Shanghai Tri- 2 Bursa Cimento Kestel Plant 2013 umph Energy 9 MW 5,000 28,000 7 MW net Conservation Anhui Conch Cimsa Cimento Sanayi Mersin Rotary/ 2 lines / / Kawasaki Also listed as 3 2012 8.7 MW 1 billion JPY Plant 1,845 + 1,470 tpd Engineering + 15 MW 22 Marubeni Also listed as 4 Baticim Bati Anadolu Cimento Haluk guner 2011 Sinoma EC 9 MW 47,802 25,180 12 MW EPC contract Also listed as Rotary / 2,100 tpd 5 Baticim Batisoke Soke Cimento 2011 Sinoma EC 5.5 MW 32,620 16,993 9 MW EPC / 2 lines contract 6 Nuh Cimento 2013 Sinoma EC 18 MW23 Shanghai Tri- Oyak Instanbul (Aslan Cimento, Announced 7 2014 umph Energy 7.5 MW Darica) March 2013 Conservation Shanghai Tri- Announced 8 Oyak Bolu 2014 umph Energy 7.0 MW March 2013 Conservation 9 Erzurum A kale Cement 7.5 MW24 29,00025 Source: VCS Database; industry sources. It is also mentioned that Limak group, which owns 10 plants in Turkey are currently looking into adopting WHR in its plants. clinker capacity at plants with capacity greater than 1 Mta. As • Sinoma Energy Conservation (Sinoma EC) is a leading mentioned earlier, moisture content of the clinker raw Chinese supplier of waste heat recovery power generation materials may be a limiting factor on WHR potential in some systems. Sinoma EC has also installed over twenty WHR applications in Turkey.26 systems in other countries including Vietnam, Philippines, India, Pakistan, Thailand, Angola, UAE and Saudi Arabia— Major WHR Players and four systems in Turkey. • Shanghai Triumph Energy Conservation (STEC) is a joint The waste heat recovery power generation market for the venture of China Triumph International Engineering Turkish cement industry is served primarily by three foreign Co., Ltd. (CTIEC) and Mitsubishi Corporation. Shanghai suppliers: Triumph specializes in medium- and low-temperature flue gas waste heat recovery for power generation from glass 22 http://www.hisse.net/forum/archive/index.php/t-83056-p-2.html and cement kilns. As of May 2013, the Company had 28 23 http://www.globalcement.com/magazine/articles/765-nuh-cimento- EPC projects in production, primarily in China—and three looking-ahead-with-alternative-fuels-and-waste-heat-recovery existing systems in Turkey. 24 http://www.prizmaendustri.com/COMPLETED.htm • Anhui Conch / Kawasaki Engineering is a joint venture 25 http://ekatalog.co/yayinlar/tcmb/cvbd_ekatalog/cvbd_97/files/assets/ of the Chinese cement company Anhui Conch and the basic-html/page62.html Japanese equipment and engineering company Kawasaki 26 Although some believe that Turkey’s raw material moisture content is Plant Systems. Anhui Conch / Kawasaki is a leading WHR generally high, limiting the potential of WHR, domestic experts believe supplier in China and has installed a number of systems in this is not a condition unique to Turkey, nor does it eliminate WHR potential in all cases. They note that most plants use vertical mills for other countries including India, Pakistan, and Vietnam— material grinding, which also effectively dries raw materials. These and one system in Turkey. systems alleviate the need to use extra heat for drying, leaving sufficient waste heat for WHR systems (Aydınç 2013). 68 Waste Heat Recovery for the Cement Sector VIETNAM The drop in domestic demand led many companies to focus on exports but these have failed to fully compensate as many Demographics of Vietnam’s principal trade partners were also experiencing Area: 331,210 km2 slowed economic growth. High costs for production and input Population: 91.5 M materials additionally weaken cement manufacturers. Urbanization: 30 percent A significant share of the cement industry is controlled by the Per Capita Cement Use: 507 kg VICEM, the state-run Vietnamese Cement Industry Corporation. Cement Industry (2012) VICEM operates 12 plants, the oldest plant built in 1964 and the Number of Plants: 69 newest in 2000. The only major foreign player is Holcim, with Cement Production Capacity: 89.8 Mta a cement plant under a joint venture with VICEM, and some Clinker Production Capacity: 76.3 Mta* grinding facilities in the south of the country (ICR 2013). Average Cement Price: US$55 - US$70 / ton The cement industry is slowly adapting to a market-based 2012 Consumption: 48.6 Mt structure. The government has kept older, low-efficiency 2012 Production: 57.4 Mt capacity open, and new capacity has come online resulting in * Based on a clinker / cement capacity factor of 0.85 significant overcapacity. After calls to overhaul the industry were sent to the Prime Minister in early 2011, the situation CURRENT STATUS OF CEMENT INDUSTRY came to a head in mid-2011 when the Vietnamese finance minister announced that the national government would have Immediately before the collapse of the USSR, Vietnam com- to provide capital to help four cement projects deal with their mitted to increased economic liberalization and enacted foreign debts. The four projects were among 16 in the cement structural reforms needed to modernize the economy and to sector that had government-guaranteed loans from foreign produce more competitive, export-driven industries. This cre- creditors worth a total of US$1.36 billion (Edwards 2012b). ated a shift towards exports such as crude oil and rice, manu- factured goods such as clothes, shoes, electronics, machinery The situation worsened in February 2012, when Vietnam’s and wood products. Export customers are primarily the U.S. Ministry of Construction announced temporary delays on (18 percent), China (11 percent), Japan (11 percent) and several approved cement projects. The director of the ministry’s Germany (4.0 percent). Vietnam imports processed petroleum Construction Materials Department noted that many cement products, vehicles, steel products, raw materials for clothing producers faced losses due to declining consumption and high and shoe manufacture, plastics, and electronic items. interest rates and plant closings began. For example, Thanh Liem Cement Plant in northern Ha Nam Province had to close Despite Vietnam’s exports being up by 33 percent year-on- due to significant losses, although the plant had not declared year in 2011, the country imports more than it exports. This bankruptcy. Many other plants have cut capacity sharply. has brought about a trade deficit that is adversely affecting Cement producers were urged to boost trade promotion and other parts of the economy. Due to an estimated average in- increase exports to deal with the surplus. National consumption flation rate of 18 percent in 2011, the Vietnamese Dong was is in the 50 Mta range; government reports a 20 Mt/yr mis- on a downward trend, gradually devalued by 20 percent since match between supply and demand, with production capacity 2008. Real GDP growth has experienced substantial fluctua- exceeding 70 Mta in 2012 (ICR 2013, Edwards 2012b). tions since 1980 and high inflation led to a trade imbalance (IMF). Vietnam’s heavily export-oriented economy slowed Cement producers in Vietnam lost at least US$80 million beginning in 2011 as the government sought to implement in 2012 in a series of bids to undercut each other, accord- significant economic reforms in restructuring banking, state- ing to the Chairman of Vietnam Building Material Associa- owned enterprises, and public investment. tion (Edwards 2102b). Local cement producers were asked to cooperate to keep export prices above domestic prices. Vietnam is one of the principal cement consumers in Southeast Prime Minister Nguyen Tan Dung approved a proposal by the Asia, yet demand has fallen well below production capacity Vietnam Building Material Association to cancel nine cement as high interest rates and inflation have slowed construction. plant projects to keep production capacity in line with market Waste Heat Recovery for the Cement Sector 69 demand. The Vietnamese Minister of Construction claimed that the master development plan for the country’s cement Major Cement Companies – Integrated Facilities (2012) industry from 2011 to 2020 and approved by the Prime Number of Cement Clinker Minister is still in line with market movements and that there Company Plants Capacity, Mta Capacity,* Mta is no ‘cement crisis’ in the country (Edwards 2102b). Lanbang Cement 1 1.50 1.28* Morning Star 1 1.40 1.20* Cement Outlook, Mta Vicem Hai Phong 1 1.40 1.06 Turkey 2010A 2011A 2012A 2013F 2014F Vicem Tam Diep 1 1.40 1.2* Consumption 51.0 50.0 48.6 49.9 51.4 Vicem Hoang Mai 1 1.40 1.28 % Change +13.3 -2.0 -2.8 +2.3 +3.0 Son Gianh 1 1.40 1.28* Production 56.4 58.6 57.4 60.4 60.9 Song Thao Cement 1 1.40 1.28* Net Trade Binh Phuoc Cement 1 1.30 1.11* Exports/ 5.4 8.6 8.9 10.5 9.5 Luong Son 1 1.20 1.02* (Imports) Mai Son 1 1.20 1.02* Source: CW Research GCVFR 2014 Quang Ninh 1 1.20 1.02* Thua Thien Hue 1 1.20 1.02* Dong Binh 1 1.00 0.85* Cement Associations Vicem Cong Thanh 1 0.90 0.77* VME Do Luong 1 0.90 0.77* Vietnam National Cement Association (VNCA) Quan Trieu 1 0.82 0.70* www.vnca.org.vn/en/ Vicem Lam Thach 1 0.70 0.60* Dong Song 1 0.60 0.51* Major Cement Companies – Integrated Facilities (2012) La Hein Cement 1 0.60 0.51* Number of Cement Clinker Cao Ngam 1 0.60 0.51* Company Plants Capacity, Mta Capacity,* Mta Hoang Long 1 0.35 0.30* Nghi Son 1 4.30 3.74 *Values estimated based on overall clinker / cement factor of 85 percent Vicem Hoang Thach 1 3.60 2.94 Source: ICR Global Cement Report, 10th Edition; US Geological Survey (USGS), 2011 Minerals Yearbook; Global Cement Plant Database, CemNet 2013 Phuc Son 1 3.60 1.60 Vicem Bim Son 1 3.20 3.26 Vicem But Son 1 3.00 2.56 Market Outlook Chinfon 1 2.80 2.56 Vicem Vinakansia 1 2.80 2.38* Challenges in the Vietnamese cement industry are likely to The Visai 1 2.70 2.30* persist as they work to address overproduction and as the Vicem Lucksvasi 1 2.65 2.25* economy restructures into a more market-based system. Vicem Ha Tien 2 2.50 3.84 Growth levels will be modest, and companies will likely Vicem Duyen Ha 1 2.40 2.04* continue to look to expand exports to shed excess inventory. Vicem Binh Phuoc 1 2.30 1.96* Exports may provide some short-term respite but a longer Cam Pha Vinaconex 1 2.30 1.96* term cure will require more decisive action. Thang Long 1 2.30 1.90 Fico Tay Ninh 1 2.00 1.70* In addition to overcapacity, another looming threat is the Ha Long 1 2.00 1.70* prospect that cement manufacturers (among others) may lose Huong Duong 1 1.82 1.55* government fuel subsidies. The Minister of Finance noted that He Duong 1 1.80 1.53* during 2010 cement and steel producers enjoyed total fuel Nam Dong Cement 1 1.80 1.53* subsidies of US$120 million (the most recent year for which Holcim (CHE) 2 1.76 1.28 results were available). Cement producers paid only US$0.04/ VCM Quang Phuc 1 1.60 1.36* kWh, but electricity cost US$0.06/kWh to produce, resulting Quang Son 1 1.50 1.28* in massive losses for the state power company. Tay Ninh 1 1.50 1.28* (Continued) 70 Waste Heat Recovery for the Cement Sector Energy Prices for Industry The government approved a National Target Program to address climate change (NTP) in December of 2008. Strate- Overall energy prices rose 10 percent during the last year. gic objectives of the NTP included assessing climate change Current industrial prices for electricity are estimated to be impacts, developing feasible short-term and long-term action US$68/MWh (Enerdata 2013). plans, and developing a low-carbon economy. Key Environmental / Energy Issues CURRENT STATUS OF WHR Over decades, Vietnam has emerged as an important oil and There are two waste heat recovery power generation systems natural gas producer in Southeast Asia. Vietnam has boosted installed in the Vietnamese cement industry. The first system exploration activities, allowed for greater foreign company was installed in 2002 in a VICEM plant by the Japanese investment and cooperation in the oil and gas sectors, and WHR supplier, Kawasaki Plant Systems. The second unit was introduced market reforms to support the energy industry. installed in 2012 in the Holcim joint venture plant by the These measures have helped to increase oil and gas produc- Chinese supplier, Sinoma Energy Conservation. Waste heat tion. Also, the country’s rapid economic growth, industrializa- recovery power generation could be an attractive option tion, and export market expansion have spurred domestic for some plants to address high production costs and input energy consumption. Vietnam produced about 49,079 prices. The remaining potential for WHR in Vietnam ranges thousand short tons of coal in 2011, of which almost half from 165 to 310 MW. Based on estimated clinker capacity (23,739 thousand short tons) was domestically consumed. at plants with capacity greater than 1 Mta. Moisture content Vietnam exports a large portion of its coal and imports a of the clinker raw materials may be a limiting factor on WHR small amount. In 2013, the Vietnamese government in- potential in Vietnam. creased the coal export tax to 13 percent from 10 percent to reduce exports and satisfy growing energy demand with domestic production, particularly in the power sector. Electric- ity consumption nearly quadrupled from 22 billion kilowat- thours (KWh) in 2000 to 86 billion KWh in 2010 and was generated almost entirely by hydropower, natural gas, and coal. Vietnam anticipates power demand to more than triple to 330 billion KWh by 2020 (DOE 2013b). Energy consump- tion already outweighs production in Vietnam, and increased imports of electricity from China will be needed to satisfy the forecasted rise in Vietnamese electricity demand. Installed WHR Projects Power CO2 Kiln Type/Capacity/ Year WHR Total Installed Generation Savings Plant Number of Lines Started Technology Provider Capacity Cost MWh/y t/y Comments VICEM Ha Tien Anhui Conch / 1 Rotary/ 3000tpd /1 2002 3 MW 15,000 Cement Plant Kawasaki Engineering Holcim Hon Chang 2 2012 Sinoma EC 7.5 MW 6.2 MW net Plant Waste Heat Recovery for the Cement Sector 71 Sub-Saharan Africa Economic growth and huge infrastructure needs for per year over the last decade. Most imports will be clinker, underdeveloped countries are stimulating construction targeting West Africa. activity and demand for cement in Sub-Saharan Africa. High-level summaries of cement market demographics for GDP compound annual growth rates (CAGR) in Africa have select countries in Sub-Saharan Africa with growing cement increased from about 4.2 percent in 2001-2005 to 4.9 industries and potential market drivers conducive to WHR percent in 2006-2012 despite a dip to 2.6 percent in 2009. development follow: GDP growth is expected to continue at about 5.5 percent through 2013-2016. Housing shortages will continue to drive construction and cement demand to respond to a youthful population of over 920 million people in 2013 (2.3 percent growth per year), and urbanization of the subcontinent ANGOLA progressing steadily, although now at only 43 percent. Fifteen Demographics more cities are forecast to reach populations of over three Area: 1,246,700 km2 million inhabitants by 2015 (now only five). Population: 20.9 M Urbanization: 59 percent Cement production capacity in the region increased by 33 Per Capita Cement Use: 240 kg Mt over the last four years and now consists of 84 Mta from integrated cement plants and 25.9 Mta from clinker grinding Cement Industry (2012) plants. Most clinker grinding units are located on the West Number of Plants: 4 African coast (13.9 Mta capacity) due to lack of limestone Cement Production Capacity: 4.7 Mta deposits in this area, and are importing clinker from mostly Clinker Production Capacity: 4.0 Mta* Asia, Europe, and Turkey. About 20 percent of the plants are Average Cement Price: US$155 / ton old, inefficient, and operating at less than 80 percent capacity 2012 Consumption: 5.01 Mt utilization. Sub-Saharan Africa is the largest import region in 2012 Production: 3.15 Mt the world; in 2013 it imported about 6 Mt of cement plus 13 * Based on an assumed overall cement / clinker production Mt of clinker to feed the coastal grinding plants. factor of 0.85 An estimated 42 Mta of new integrated cement production Cement Outlook, Mta capacity is planned for installation within the next three Angola 2010A 2011A 2012E 2013F 2014F years, with the largest build-ups expected in Nigeria (12 Mt), Consumption 3.81 4.09 5.01 5.56 6.37 Ethiopia (4.3 Mt), Angola (4 Mt), DRC (2.5 Mt), South Africa % Change -24.1 +7.3 +22.5 +11.0 +14.6 (2.5 Mt), and Kenya (2.4 Mt). Another 10 Mta of new cement Production 0.99 2.46 3.15 4.56 5.67 grinding production capacity is planned for installation by Exports 0 0 0 0 0 2016, most of it in West Africa (Ghana 3 Mt, Cameroon 1.5 Imports 3.39 2.16 2.58 2.22 1.44 Mt, Ivory Coast 1.5 Mt, Burkina Faso 1.2 Mt., among others). Source: ICR Global Cement Report, 10th Edition Despite these new capacities, the Sub-Saharan Africa region Angola has one WHR system installed at Sonangol Cement. is still expected to import about 2 Mt of cement and 10 Mt The 18 MW system was installed by Sinoma Energy of clinker in 2016, with total cement consumption expected Conservation. to reach 115 Mt, assuming an annual growth rate of 7.6 per- cent between 2013 and 2016, compared to over 9.0 percent 72 Waste Heat Recovery for the Cement Sector ETHIOPIA KENYA Demographics Demographics Area: 1,104,300 km 2 Area: 580,737 km2 Population: 87.0 M Population: 43.0 M Urbanization: 17 percent Urbanization: 32 percent Per Capita Cement Use: 62 kg Per Capita Cement Use: 80 kg Cement Industry (2012) Cement Industry (2012) Number of Plants: 20 Number of Plants: 9 Cement Production Capacity: 12.6 Mta Cement Production Capacity: 7.4 Mta Clinker Production Capacity: 10.7 Mta* Clinker Production Capacity: 3.0 Mta Average Cement Price: US$150 / ton Average Cement Price: US$140 / ton 2012 Consumption: 6.45 Mt 2012 Consumption: 3.71 Mt 2012 Production: 7.30 Mt 2012 Production: 4.33 Mt * Based on an assumed overall cement / clinker production factor of 0.85 Cement Outlook, Mta Cement Outlook, Mta Kenya 2010A 2011A 2012E 2013F 2014F Ethiopia 2010A 2011A 2012E 2013F 2014F Consumption 3.06 3.33 3.71 4.12 4.59 Consumption 4.30 5.38 6.45 7.40 8.53 % Change +14.4 +9.0 +11.4 +11.1 +11.4 % Change +19.4 +25.1 +19.9 +14.7 +15.3 Production 3.71 4.00 4.33 4.85 5.43 Production 2.90 3.30 7.30 8.45 10.00 Exports 0.65 0.70 0.65 0.75 0.85 Exports 0 0 1.00 1.20 1.40 Imports 0.68 0.73 0.73 0.72 0.51 Imports 1.00 1.00 0.20 0 0 Source: ICR Global Cement Report, 10th Edition Source: ICR Global Cement Report, 10th Edition Waste Heat Recovery for the Cement Sector 73 TANZANIA SUDAN Demographics Demographics Area: 947,300 km 2 Area: 1,861,484 km2 Population: 47.7 M Population: 33.5 M Urbanization: 26 percent Urbanization: 41 percent Per Capita Cement Use: 46 kg Per Capita Cement Use: 117 kg Cement Industry (2012) Cement Industry (2012) Number of Plants: 4 Number of Plants: 8 Cement Production Capacity: 3.7 Mta Cement Production Capacity: 10.3 Mta Clinker Production Capacity: 2.8 Mta* Clinker Production Capacity: 7.7 Mta* Average Cement Price: US$120 / ton Average Cement Price: US$130 / ton 2012 Consumption: 2.65 Mt 2012 Consumption: 4.03 Mt 2012 Production: 2.78 Mt 2012 Production: 5.98 Mt * Based on an assumed overall cement / clinker production * Based on an assumed overall cement / clinker production factor of 0.75 factor of 0.75 Cement Outlook, Mta Cement Outlook, Mta Tanzania 2010A 2011A 2012E 2013F 2014F Sudan 2010A 2011A 2012E 2013F 2014F Consumption 2.17 2.23 2.65 2.92 3.22 Consumption 3.01 3.81 4.03 4.11 4.33 % Change +16.0 +2.8 +18.8 +10.2 +10.3 % Change +30.9 +26.6 +5.8 +2.0 +5.4 Production 2.27 2.33 2.78 3.22 3.62 Production 2.11 5.78 5.98 6.01 6.40 Exports 0.32 0.35 0.35 0.45 0.50 Exports 0 1.01 2.33 1.99 2.22 Imports 0.22 0.25 0.22 0.15 0.10 Imports 1.11 0.21 0.05 0.04 0.05 Source: ICR Global Cement Report, 10th Edition Source: ICR Global Cement Report, 10th Edition 74 Waste Heat Recovery for the Cement Sector WHR Market Prioritization in several emerging markets. WHR can provide up to 30 percent of a cement plant’s electricity needs, reducing Specific country market opportunities for WHR can be dependence on unreliable grid supply, and reducing prioritized according to key parameters including size of capacity needs for captive power: WHR potential in MW capacity, electricity prices, or concerns ·· Green – History of unreliable grid power; dependence over power reliability. Table 14 provides a color-coded priori- on captive power, or emerging national power supply tization of the 11 target countries based on eight key market issue parameters. Green signifies a strong positive driver or factor ·· Yellow – No concerns about grid-supplied power, or for WHR development, yellow represents a weaker positive such concerns are minor driver or marginal conditions for WHR development, and red ·· Red – Not Applicable represents very weak drivers or conditions that could hinder • Electricity Prices – A major driver for WHR is the WHR market development. displacement of high-priced grid power (or high-cost • Remaining WHR Potential – the potential market captive power) with lower cost electricity generated for WHR was estimated for each of the eleven target onsite. Project economics are based on many project- countries and ranges from 30 to 60 MW in Thailand to specific factors — size of system, total installed cost of the 500 to 900 MW in India. Estimated WHR potential is an project, and local construction and labor rates, however, obvious parameter in gauging relative market priorities for high-priced grid power is a strong driver for WHR: resource allocation: ·· Green – Electricity prices greater than 100 US$/MWh ·· Green – Lower range of potential estimate is greater ·· Yellow – Electricity prices in the ranger of 70 to 100 than 100 MW US$/MWh ·· Yellow – Upper range of potential estimate is greater ·· Red – Electricity prices less than 70 US$/MWh than 100 MW • Political Stability or Security Concerns – An unstable ·· Red –Potential estimate is far below 100 MW political climate or potential risk of security concerns and/ • Projected Near-term Growth Rates of Cement or unrest limits willingness to invest by WHR equipment Consumption – projections of growth in internal cement suppliers and financial institutions: consumption 2012-2014 were identified for each country ·· Green – Stable political climate and relatively low over- from industry sources. Markets with higher growth all security concerns projections and healthy cement producers are assumed ·· Yellow – Relatively stable political climate but some risk to have stronger motivation to invest in WHR and to have of major political changes or higher security risks the resources to make that investment: ·· Red – Very unstable political climate or elevated security ·· Green – Projected 2012-2014 growth rate greater than concerns 5 percent • Regulatory Requirements or Sustainability Goals ·· Yellow – Projected 2012-2014 growth rate between 0 – Some countries have energy efficiency or environmen- and 5 percent tal regulations that would promote WHR development ·· Red – Projected 2012-2014 growth rate below 0 (China, for example), or may have climate change or percent sustainability goals that would promote the development • Electricity Reliability Concerns – Concerns about of a WHR market: unreliable power supplies have been a strong driver for WHR Waste Heat Recovery for the Cement Sector 75 ·· Green – Strong regulatory drivers or sustainability goals ·· Green – Active market development and/or experience that would promote WHR development with WHR/CHP ·· Yellow – Marginal or no regulatory drivers or sustain- ·· Yellow – No existing WHR activity and no extensive ability goals that would actively promote WHR develop- experience with industrial CHPRed – Not Applicable ment • Feedstock Moisture Suitable for WHR – High moisture ·· Red – Not applicable content of raw materials limits WHR potential by reducing • Existing WHR Activity or Experience with Traditional the amount and temperature of exhaust gases available Combined Heat and Power (CHP or Cogeneration) for heat recovery: Projects – Several of the eleven target countries have • Green – Raw material moisture content likely to be suit- some WHR development and WHR developers actively able for WHR applications pursuing projects. Others countries such as Brazil may • Yellow – No information have no existing WHR activity but do have extensive expe- • Red – Not Applicable rience with industrial cogeneration, which relies on similar supply chains and engineering support: Table ES-1 – WHR Market Opportunities Feedstock Growth in Concerns Industrial Political Regulatory / Moisture Remaining Cement Over Power Electricity Stability and Sustainability Existing WHR Suitable for WHR Potential, Market, 2012- Reliability, Prices, US$/ Absence of Drivers, Installed WHR, Yes/ Country MW 2014 Y/N MWh Violence (2012) a Y/N Capacity Average Brazil 190 - 340 4.7% No 120 - 170 47.9 Yes None Yes Egypt 175 - 300 2.6% Yes 50-70 7.58 No None Yes India 500 - 900 12.4% Yes 80 11.85 Yes >200 MW Yes Mexico 170 - 300 -1.7% No 117 24.17 No None Yes Nigeria 70 - 130 21.1% Yes 50-100 3.32 No None Average Pakistan 50 - 100 -0.4% Yes 130 - 170 0.95 No >100 MW Yes Philippines 60 - 110 13.6% Yes 80 - 145 14.69 No >18 MW Yes South Africa 55 - 100 9.5% Yes 80 - 150 44.08 Yes None Yes Thailand 30 - 60 14.4% No 50-100 12.80 No >172 MW Yes Turkey 150 - 280 17.5% Yes 100 - 150 13.27 No >80 MW Yes Vietnam 165 - 310 5.8% No 60 - 70 55.92 No >11 MW Average Note: Color coding - Green signifies a strong positive driver or factor for WHR development, yellow represents a weaker positive driver or marginal conditions for WHR development, and red represents very weak drivers or conditions that could hinder WHR market development. a Worldwide Governance Indicators, http://info.worldbank.org/governance/wgi/index.aspx#reports. 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