Jose Maria Magrina, Chief Executive Officer of Arabian Cement Company (ACC) announced that the company has taken all the steps needed to substitute natural gas with coal and refused derived fuel (RDF) as energy sources in its plant.
He explained, "ACC is ready to substitute 100% of the amounts of gas required to operate its plant and has applied for the necessary government permits to do so on 14 March 2013. However until now no answer has been received from the government, even though this is something that will positively impact the national economy."
Over the course of the last 4 months, shortage of energy sources has caused the cement industry in Egypt a loss of 20% (MT3.7m /EGP1.3bn) in production capacity in 2013, while ACC has lost 25% (MT350,000 /EGP175m) of its production capacity in the same period. More losses are expected during the summer months of the year, reaching 50 % or more, when the hot weather will push electricity consumption to its peak.
Until late 2010, the government was encouraging producers to use natural gas, causing the players of the industry to invest hundreds of millions to make the switch to natural gas as the main energy source. However, due to the current energy crisis the government has changed its approach and is asking the producers to change their energy dependency to coal and other sources of alternative fuel.
Substituting natural gas with coal and RDF is a widely used practice by cement producers across the world, especially in countries facing issues with the supply of energy sources. These different alternative fuel sources offer many advantages to the country; whether environmentally or financially.
Commenting on ACC s conversion to alternative fuels, Jose Maria Magrina, ACC CEO, stated, "Converting to alternative fuel on a national level will undoubtedly have a positive effect on the economy as a whole, although it poses many challenges to the industry. The investment needed to substitute natural gas or mazot with coal ranges from $6-8m/million tons, while converting to RDF costs around $8-12m/million tons. However for private companies to be encouraged to commit to such a huge investment, the government should look into incentivizing this initiative by putting together a solid policy that includes governmental support. It should also speed the approval process to optimize the results of the investment, as well as to remove the financial burden it imposed on new companies through the operating licenses fee. This fee was supposed to cover the subsidized natural gas quantities needed to operate the plant, which is now neither subsidized nor fully received."
ACC is still pending the permit to use coal, which will replace 70% of the gas supply, as alternative fuel. Once the company is granted the permit, it will be ready to make the conversion by Q4 of 2013.
"As a leading player in the Egyptian market, we are constantly looking for ways to develop our business and make it more efficient. Although using coal and AF is not a step in that direction, we believe it is positive for the country and for the community. As such, we believe this investment is a crucial step towards enhancing our operations locally, and allowing ACC to once again raise the bar in competition in the market by being the first cement producer to install a coal mill in Egypt," said Magrina.
"Substituting natural gas with other energy sources will reflect positively on the government, which is currently required to supply other cement plants with 70% of the natural gas supply. By making this huge investment, ACC is alleviating this burden from the government s shoulder. In return, ACC believes that it deserves a swift issuance of its environmental permit and the removal of the operation license fees, which were originally imposed for the use of natural gas and now it will not be the case," he added.
Currently, ACC needs 378 million m3 of natural gas a year, which will be saved when the company applies its alternative fuel system. Moreover, a recent Environmental Impact Assessment study shows that using coal and RDF as alternative fuels does not result in additional pollution, neither from chimneys nor on the surrounding area. Coal handling does not emit more dust compared to handling clinker, phosphate or iron ore, while transportation of coal is safer than petroleum products.
ACC produces five million tons of first quality cement, approximately 10% of Egypt s production.
