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The growing demand of AFR in cement industry

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Many cement plants have started co-processing waste as alternative fuels by setting up co-processing facilities.

The growing demand for fuel and raw material in the cement industry can be partly satisfied by using different alternative fuels and raw (AFR) materials. Many cement plants across the country have already started using AFR and a few are in the process of setting up systems to use AFR. The Government of India has also come up with initiatives through Central and State Pollution Control Boards (CPCB and SPCBs) that aim to increase AFR use in the cement industry.

Details on fuels used in 2010 were not available during the year of preparation of the LCTR. Over the years, petcoke consumption has increased steadily in the Indian cement industry. Coal use (Indian and imported) has been declining over the years and petcoke and alternative fuels are gradually replacing it. In 2017 the share of coal was 41 per cent while that of petcoke was 56 per cent and alternative fuels was 3 per cent. Changes in the fuel mix have lowered carbon intensity by 2 kgCO2/t cement. The overall emissions factor (for coal and petcoke) decreased to 94.1 kgCO2/GJ in 2017 from 94.7 kgCO2 /GJ in 2010.

Alternative fuel use (thermal substitution rate – TSR) increased from 0.6 per cent in 2010 to 3.7 per cent in 2015 and then dropped to 2.7 per cent in 2017. The upward trend in alternative fuel use tapered off in 2016 and 2017 due to the comparative increase in prices of certain alternative fuels, making them uncompetitive to use instead of conventional fuels. This trend is expected to reverse and climb in the years to come due to improved economics. More than 60 cement plants in India have reported continual use of alternative fuels. The sector consumed more than 1.5 million tonnes of alternative fuels in 2015. Biomass is 24 per cent of the total alternative fuel consumed.

The increased use of petcoke can be attributed to its higher calorific value (around 8,000 kcal/kg) as compared to Indian coal (3,500-4,500 kcal/kg) and the economic advantages derived from affordable pricing models. For the same amount of heat, the quantity of petcoke required is less than that of coal, which leads to savings in transport costs, considering the quantities of fuel transported. Petcoke use also increases the overall life-span of mines as the industry can use marginal grade (quality) limestone with a low lime saturation factor (LSF) (due to less ash content). In about 10 cement plants, petcoke consumption is more than 95 per cent.

Market changes and improvements observed
Many plants have started co-processing waste as alternative fuels by setting up co-processing facilities. Seven cement plants have set up pre-processing facilities to convert non-homogeneous wastes into alternative fuels with the desired quality parameters. The total investment by these seven plants is more than Rs 2.5 billion. Regulatory drivers have also accelerated the co-processing of waste by cement companies. The Ministry of Environment Forests and Climate Change (MoEFCC) issued its Solid Waste Management Rules in 2016. These rules give preferential status to the co-processing of waste as a management option. Some SPCBs have approved inter-state transportation of hazardous waste to encourage co-processing. Together, these have resulted in increasing alternative fuel use.

Indian cement plants have used different types of waste as alternative fuels. Solid waste is 73 per cent of total alternative fuel use. The major types of solid waste used are carbon black, tire chips, refuse-derived fuel (RDF), captive power plant (CPP) bed ash and dolachar.

There is significant potential for higher rates of RDF use generated from municipal solid waste (MSW). About 80 per cent of the estimated 62 million tonnes of MSW generated in India is indiscriminately disposed of in dump sites.ix In a business-as-usual (BAU) scenario, India will require a landfill area of 8,800 hectares by 2050. This is equivalent to the size of the city of New Delhi. By using 25 per cent AFR by 2050 (as per the objectives of the LCTR), the cement industry can contribute to a 26 per cent reduction in the space required for landfilling.

Policy driver: Solid Waste Management Rules 2016
The MoEFCC recently notified its new Solid Waste Management (SWM) Rules 2016. These replace the Municipal Solid Wastes (Management and Handling) Rules 2000. One of the major highlights of the new rules is the promotion of waste-to-energy in cement plants using co-processing systems. The rules mandate that all industrial units using fuel and located within 100 kilometers of a solid waste-based RDF plant must make arrangements within six months from the date of notification of these rules to replace at least 5 per cent of their fuel requirement by RDF.

The rules also direct that non-recyclable wastes having a calorific value of 1,500 kcal/kg or more need to be used to generate energy at waste-to-energy plants or giving it away as feed stock for the preparation of refuse-derived fuel for cement kilns. High-calorific wastes shall be used for co-processing in cement or thermal power plants.

The CPCB has released a comprehensive set of guidelines on ?Pre-processing and co-processing of hazardous and other wastes in cement plants? as per the Hazardous and Other Waste (Management and Transboundary Movement) Rules 2016, via a notification dated 7 July 2017. The proposed guidelines are in line with the recently notified Hazardous Waste Management Rules (HWM) 2016 wherein companies must consider prevention, reuse, recycling, recovery and use, including pre-processing and co-processing, prior to considering disposal through incineration or secured landfilling. The objective behind this measure is to ensure millions of tonnes of hazardous, municipal and agricultural waste is either properly recycled or disposed sensibly in order to reduce India’s overall environmental footprint. It is preferable to use cement kilns to dispose of hazardous wastes due to longer retention times, high temperatures and the absence of residual ash or byproducts.

Although various industrial processes allow for the use of wastes as a resource or for energy recovery, co-processing in cement kilns is considered an effective and sustainable option because of its dual benefits ? as a supplementary fuel source and as an alternative raw material. Furthermore, the biomass content of alternative fuels is considered carbon neutral.

As per the proposed guidelines, such use would help in recovering the energy and material values present in them by reducing the consumption of primary fossil fuels and raw materials.

The following attributes of the recently released guidelines have been a major driver for Indian cement companies to increase the use of AFR in their plants:

Authorisation for pre-processing and/or co-processing: Under the proposed guidelines, SPCBs)/Pollution Control Committees (PCCs) may grant authorisation to cement plants to co-process different kind of wastes listed in the Hazardous and Other Wastes (Management and Transboundary Movement) Rules 2016.

Trial runs: Fresh trial runs for the co-processing of hazardous wastes already tested and in the system, would not be necessary as per the proposed guidelines, except for a few specific wastes, such as persistent organic pollutants (PoPs), polychlorinated biphenyls (PCBs), obsolete and date-expired pesticides, ozone depleting substances (ODS), etc.

HWM Rules 2016, streamline the approval process for the co-processing of hazardous waste to recover energy and put it on an emission norms basis rather than on a trial basis.

The Guidelines adopt a waste management hierarchy and resource recovery principles and include recommendations on the use of RDF in cement plants. They also include suitable standards for RDF along with guidance for different stakeholders.

The estimated quantity of MSW-based RDF and mapped cement plants within 100 and 200 kilometers of urban areas highlight the use potential of RDF in cement plants. The Guidelines map MSW processing facilities across the country to facilitate faster implementation between Urban Local Bodies (ULBs) and the cement industry. To create a viable business model, they define the financial needs, gaps and instruments for fiscal incentives. These Guidelines should enhance the use of MSW-based RDF in the cement industry in the future.

Challenges to implementation
Although cement kilns could technically completely replace conventional fuels with alternative fuels, there are some practical limitations. The physical and chemical properties of most alternative fuels differ significantly from those of conventional fuels. It may not be directly used because of low calorific value, high moisture content, or high concentrations of chlorine or other trace substances. This means pre-treatment is often needed to ensure a more uniform composition and optimum combustion. For Indian cement plants to increase TSR by 25 per cent (in 2050), a major barrier is cost of material sourcing and acquisition. The cost of sourcing the material should be regulated by applying polluter pays principle. Higher fuel substitution will take place if waste legislation restricts landfilling and dedicated incineration and allows controlled collection and treatment of alternative fuels.

The main technical barrier is the adverse impact created on kiln production and specific energy consumption. The companies are in the process of developing a complete understanding of the impacts of minor constituents and what effects they might have on long-term cement performance. The government must provide incentives for the use of RDF derived from municipal solid waste and biomass to promote high-volume use of these AFRs to meet the 25 per cent TSR target by 2050.

One of the key policy barriers that existed at the time of the launch of the LCTR in 2013 was the absence of a legislative framework that encourages co-processing in the cement industry. With the SWM Rules 2016 and their clear objective to promote co-processing and pre-processing of waste, this barrier has ceased to exist. However, other major policy barriers for increased use of AFR include the non-existence of structured industrial ecosystems for waste co-processing and inconsistent legislative requirements for cement kilns and their dedicated waste processing facilities.

The industry requires a future-forward approach to promote waste co-processing. Some of the desired interventions include:
The implementation of proper segregation and collection of dry and wet waste from households and commercial and industrial establishments.
User fees for waste generators (including households) and their use for managing MSW and cement-grade RDF generation.
Government support of ULBs in implementing integrated waste management systems.
Government permission to freely move wastes from state to state.
Government efforts to create awareness and promote high levels of waste use through waste management awards and recognition through avenues including print media, school programmes, etc.
Detailed waste generation inventory at the industry/ULB level (including contact persons) with yearly updates.
Capacity building for all stakeholders (cement plants, policy-makers, waste generators, government officials, local communities, etc.) about waste co-processing.
The development of environmental professionals in waste management.
Long-term partnerships between cement manufacturers and ULBs to use RDF from MSW, including pre-processing platforms in public-private partnership (PPP) models in all cement clusters.

Alternative fuel feeding platform and processing
Many cement plants are installing co-processing and pre-processing platforms to increase alternative fuel use. One plant in Madhya Pradesh has installed a pre-processing platform consisting of a shredder, belt conveyors, pay loaders, separators and screens, and increased TSR from 0.64 per cent to 8.8 per cent. The total investment was around Rs 620 million. The plant uses various wastes, such as agricultural waste (rice husks, soya husks), saw dust, plastic waste, RDF, effluent treatment plant (ETP) sludge, spent carbon, carbon black, etc. Plants in the states of Karnataka, Chhattisgarh, Rajasthan, Gujarat, Maharashtra and Tamil Nadu have also installed co-processing and pre-processing platforms.

SOURCE: Excerpts from the Low Carbon Technology Roadmap for the Indian Cement Sector: Status Review 2018, published by World Business Council for Sustainable Development (WBCSD).

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Price hikes, drop in input costs help cement industry to post positive margins: Care Ratings

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Region-wise,the southern region comprises 35% of the total cement capacity, followed by thenorthern, eastern, western and central region comprising 20%, 18%, 14% and 13%of the capacity, respectively.

The cement industry is expected to post positive margins on decent price hikes over the months, falling raw material prices and marked drop in overall production costs, said an analysis of Care Ratings.

Wholesale and retail prices of cement have increased 11.9% and 12.4%, respectively, in the current financial year. As whole prices have remained elevated in most of the markets in the months of FY20, against the corresponding period of the previous year.

Similarly, electricity and fuel cost have declined 11.9% during 9M FY20 due to drop in crude oil prices. Logistics costs, the biggest cost for cement industry, has also dropped 7.7% (selling and distribution) as the Railways extended the benefit of exemption from busy season surcharge. Moreover, the cost of raw materials, too, declined 5.1% given the price of limestone had fallen 11.3% in the same aforementioned period, the analysis said.

According to Care Ratings, though the overall sales revenue has increased only 1.3%, against 16% growth in the year-ago period, the overall expenditure has declined 3.2% which has benefited the industry largely given the moderation in sales.

Even though FY20 has been subdued in terms of production and demand, the fall in cost of production has still supported the cement industry by clocking in positive margins, the rating agency said.

Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. The cement sector will be seeing a sharp growth in volumes mainly due to increasing demand from affordable housing and other government infrastructure projects like roads, metros, airports, irrigation.

The government’s newly introduced National Infrastructure Pipeline (NIP), with its target of becoming a $5-trillion economy by 2025, is a detailed road map focused on economic revival through infrastructure development.

The NIP covers a gamut of sectors; rural and urban infrastructure and entails investments of Rs.102 lakh crore to be undertaken by the central government, state governments and the private sector. Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified.

The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together account for 79% of the proposed investments in six years to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.

Similarly, the Pradhan Mantri Awaas Yojana, aimed at providing affordable housing, will be a strong driver to lift cement demand. Prices have started correcting Q4 FY20 onwards due to revival in demand of the commodity, the agency said in its analysis.

Industry’s sales revenue has grown at a CAGR of 7.3% during FY15-19 but has grown only 1.3% in the current financial year. Tepid demand throughout the country in the first half of the year has led to the contraction of sales revenue. Fall in the total expenditure of cement firms had aided in improving the operating profit and net profit margins of the industry (OPM was 15.2 during 9M FY19 and NPM was 3.1 during 9M FY19). Interest coverage ratio, too, has improved on an overall basis (ICR was 3.3 during 9M FY19).

According to Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region-wise, the southern region comprises 35% of the total cement capacity, followed by the northern, eastern, western and central region comprising 20%, 18%, 14% and 13% of the capacity, respectively.

Installed capacity of domestic cement makers has increased at a CAGR of 4.9% during FY16-20. Manufacturers have been able to maintain a capacity utilisation rate above 65% in the past quinquennium. In the current financial year due to the prolonged rains in many parts of the country, the capacity utilisation rate has fallen from 70% during FY19 to 66% currently (YTD).

Source:moneycontrol.com

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Wonder Cement shows journey of cement with new campaign

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The campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV…

ETBrandEquity

Cement manufacturing company Wonder Cement, has announced the launch of a digital campaign ‘Har Raah Mein Wonder Hai’. The campaign has been designed specifically to run on platforms such as Instagram, Facebook and YouTube.

#HarRaahMeinWonderHai is a one-minute video, designed and conceptualised by its digital media partner Triature Digital Marketing and Technologies Pvt Ltd. The entire journey of the cement brand from leaving the factory, going through various weather conditions and witnessing the beauty of nature and wonders through the way until it reaches the destination i.e., to the consumer is very intriguing and the brand has tried to showcase the same with the film.

Sanjay Joshi, executive director, Wonder Cement, said, "Cement as a product poses a unique marketing challenge. Most consumers will build their homes once and therefore buy cement once in a lifetime. It is critical for a cement company to connect with their consumers emotionally. As a part of our communication strategy, it is our endeavor to reach out to a large audience of this country through digital. Wonder Cement always a pioneer in digital, with the launch of our IGTV campaign #HarRahMeinWonderHai, is the first brand in the cement category to venture into this space. Through this campaign, we have captured the emotional journey of a cement bag through its own perspective and depicted what it takes to lay the foundation of one’s dreams and turn them into reality."

The story begins with a family performing the bhoomi poojan of their new plot. It is the place where they are investing their life-long earnings; and planning to build a dream house for the family and children. The family believes in the tradition of having a ‘perfect shuruaat’ (perfect beginning) for their future dream house. The video later highlights the process of construction and in sequence it is emphasising the value of ‘Perfect Shuruaat’ through the eyes of a cement bag.

Tarun Singh Chauhan, management advisor and brand consultant, Wonder Cement, said, "Our objective with this campaign was to show that the cement produced at the Wonder Cement plant speaks for itself, its quality, trust and most of all perfection. The only way this was possible was to take the perspective of a cement bag and showing its journey of perfection from beginning till the end."

According to the company, the campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV. No other brand in this category has created content specific to the platform.

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In spite of company’s optimism, demand weakness in cement is seen in the 4% y-o-y drop in sales volume. (Reuters)

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Cost cuts and better realizations save? the ?day ?for ?UltraTech Cement, Updated: 27 Jan 2020, Vatsala Kamat from Live Mint

Lower cost of energy and logistics helped Ebitda per tonne rise by about 29% in Q3
Premiumization of acquired brands, synergistic?operations hold promise for future profit growth Topics

UltraTech Cement
India’s largest cement producer UltraTech Cement Ltd turned out a bittersweet show in the December quarter. A sharp drop in fuel costs and higher realizations helped drive profit growth. But the inherent demand weakness was evident in the sales volumes drop during the quarter.

Better realizations during the December quarter, in spite of the 4% year-on-year volume decline, minimized the pain. Net stand-alone revenue fell by 2.6% to ?9,981.8 crore.

But as pointed out earlier, lower costs on most fronts helped profitability. The chart alongside shows the sharp drop in energy costs led by lower petcoke prices, lower fuel consumption and higher use of green power. Logistics costs, too, fell due to lower railway freight charges and synergies from the acquired assets. These savings helped offset the increase in raw material costs.

The upshot: Q3 Ebitda (earnings before interest, tax, depreciation and amortization) of about ?990 per tonne was 29% higher from a year ago. The jump in profit on a per tonne basis was more or less along expected lines, given the increase in realizations. "Besides, the reduction in net debt by about ?2,000 crore is a key positive," said Binod Modi, analyst at Reliance Securities Ltd.

Graphic by Santosh Sharma/Mint
What also impressed analysts is the nimble-footed integration of the recently merged cement assets of Nathdwara and Century, which was a concern on the Street.

Kunal Shah, analyst (institutional equities) at Yes Securities (India) Ltd, said: "The company has proved its ability of asset integration. Century’s cement assets were ramped up to 79% capacity utilization in December, even as they operated Nathdwara generating an Ebitda of ?1,500 per tonne."

Looks like the demand weakness mirrored in weak sales during the quarter was masked by the deft integration and synergies derived from these acquired assets. This drove UltraTech’s stock up by 2.6% to ?4,643 after the Q3 results were declared on Friday.

Brand transition from Century to UltraTech, which is 55% complete, is likely to touch 80% by September 2020. A report by Jefferies India Pvt. Ltd highlights that the Ebitda per tonne for premium brands is about ?5-10 higher per bag than the average (A cement bag weighs 50kg). Of course, with competition increasing in the arena, it remains to be seen how brand premiumization in the cement industry will pan out. UltraTech Cement scores well among peers here.

However, there are road bumps ahead for the cement sector and for UltraTech. Falling gross domestic product growth, fiscal slippages and lower budgetary allocation to infrastructure sector are making industry houses jittery on growth. Although UltraTech’s management is confident that cement demand is looking up, sustainability and pricing power remains a worry for the near term.

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