By N.A. Viswanathan Secretary General CEMENT MANUFACTURERS’ ASSOCIATION Overview on The Indian Cement Sector and its Changing Coal Requirements

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By N.A. Viswanathan Secretary General CEMENT MANUFACTURERS ASSOCIATION Overview on The Indian Cement Sector and its Changing Coal Requirements Slide 2 India in Globe Second Largest Cement Producer in the World, after China. State-of-Art Cement Technology. Low Energy Consumption. Produces Cement comparable to World Standards. Green and Environment-Friendly Industry. Contributes significantly to CO 2 emission reduction and thereby taking care of issues concerning Global Warming. Per Capita Cement Consumption at 202 kg is very low against World Average of 513 kg. FROM MODERATE TO WORLD CLASS INDIAN CEMENT INDUSTRY Industrys Initiatives and Achievements acknowledged and appreciated world over - although, a lot still remains to be done with the help and support from Government 1 Slide 3 1982 A Watershed in the history of Indian Cement Industry when Partial Decontrol was introduced culminated to Decontrol in 1989. Drastically compressed time for adding additional 100 Mt. cement capacity mark to 11 and 3 years respectively from 83 years taken for the First. 2 BURGEONING GROWTH INDIAN CEMENT INDUSTRY India Produces 7% of Global Cement Production. Of late, subdued cement demand has significantly lowered capacity utilization A major cause of concern. Slide 4 GREEN AND ENVIRONMENT-FRIENDLY INDIAN CEMENT INDUSTRY Adopts Latest Technologies to keep it globally competitive in respect of : Production Cost (However, high taxation and import of inputs negate it). Protection of Environment in and around cement plants. Strives significantly for maintaining our Ecological balance being disturbed through Global Warming. Takes notable initiatives and measures for Clean Development Mechanism through increased clinker substitution and Alternative Fuels use. 3 Still a Lot of Scope for Further Improvement Slide 5 Proactive Cement Industry constantly improves Energy Consumption. Some plants have become global benchmarks in energy consumption, next to Japan. 4 TOWARDS TECHNOLOGY & ENERGY EFFICIENCY INDIAN CEMENT INDUSTRY 99% Energy Efficient Dry Process plants. Year 1950-60197019801990Post 2010 Kiln Capacity (Tonnes/Day) 300 - 600600 12002400 30003300 60004500 12000 Heat Consumption (Kwh/Tonne Clinker) 1300 - 1600900 1000800 900650 750 Power Consumption (Kwh/Tonne Cement) 115 - 130110 - 125105 - 11595 - 10670 - 90 Slide 6 Perform, Achieve and Trade (PAT) Scheme of BEE @ Alternate Fuel and Raw Material (AFR) Waste Heat Recovery (WHR) through Co- generation 5 NEW INITIATIVES FOR ENERGY EFFICIENCY INDIAN CEMENT INDUSTRY Energy consumption likely to be reduced further by 4.8% in first cycle of PAT Scheme, ending in 2015 @ Outlined under the National Action Plan on Climate Change released by Honble Prime Minister of India in June 2008. Slide 7 By adopting best available Technologies and Environmental practices in the plants viz. Waste Heat Recovery Power Projects and Uses of Alternate Fuels - Pet coke, Lignite, Husk, Municipal Wastes, Biomass, etc. CO 2 emission level reduced from 1.12 tonne of per tonne cement produced in 1996 to 0.719 tonne CO 2 emission for one tonne of cement in 2010. Is on the top in Certified Emission Reductions Projects registered with the Clean Development Mechanism (CDM) of Kyoto Protocol. Indian roadmap now outlines a low-carbon growth pathway for the Indian cement industry that could lead to carbon intensity reductions of 45 per cent by 2050. 6 APPRECIABLE REDUCTION IN CARBON FOOTPRINT INDIAN CEMENT INDUSTRY These reductions could come from increased clinker substitution and alternative fuel use; Improvements to energy efficiency, and the development and widespread implementation of newer technologies. Slide 8 CONSCIOUS OF ENVIRONMENTAL HEALTH AND SAFETY INDIAN CEMENT INDUSTRY Consumes around 27% of Fly Ash generated from Thermal Power Plants. Consumes almost 100% Slag generated by Steel Plants. Eco-friendly use of hazardous industrial wastes by focusing and producing Green Cement. 7 Slide 9 Promotes Environment-Friendly Cement Concrete Roads and White Topping in place of Bitumen Roads, in which significant emission of particulate matter, sulphur dioxide are emitted through Hot-Mix plants while preparing bitumen mixes at construction sites. TAKES MEASURES FOR ENVIRONMENT PROTECTION BEYOND ITS SURROUNDINGS INDIAN CEMENT INDUSTRY Cement Road Prolongs life of quarries and mines as Cement Roads consume less aggregates. Protects ambient temperature from increasing due to reduced absorption of heat. Bitumen Road 8 Utilizes fly ash upto 35%, disposal of which is a nuisance and health hazard. Conserves 10% electricity used for street light Conserves 14% Diesel and Petrol for Trucks plying on Cement Concrete Roads. Slide 10 Developed green belts around cement plants through social forestry Quarried mines converted into water bodies, reservoirs, etc. 9 CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES INDIAN CEMENT INDUSTRY Provide clean environment, health care and education facilities to workers and surrounding populace. Adopted more than 700 neighbourhood villages surrounding plants. Basic education, Primary Healthcare, Water supply ensured. 225 Primary and Secondary Schools established. 25 Colleges financed. Water Conservation Slide 11 10 CLEAN ENVIRONMENT AND SOCIAL COMMITMENT INDIAN CEMENT INDUSTRY Greenery Around Cement Plant Thick rows of trees at a cement plants perimeter Bulwark against GHG Rain water harvesting in Limestone Mining pits Mined out areas converted into lakes by cement plants. SIBERIAN Birds certify Our eco-friendliness Slide 12 MAJOR CONCERNS Updation of Database a casualty Logistics, Despatches, etc. plans severely impacted after CCIs Order of 20 th June 2012 Dropping Capacity Utilisation (from 90% to 70% now) Sluggish Demand Coal Conundrum Increasing Input Costs Coal, Slag, Pet Coke, etc. High Taxes and Levies High interest rates making difficult for manufacturers to put up new capacities as well as construction industries to fund their new projects 11 TODAY FOCUSING ONLY ON COAL SCENARIO Slide 13 Status of Indian Coal India is the third largest coal producer. It has fifth largest coal reserves Total reserves - 293 billion tonnes (as on 01.04.2012) - Including Proved reserves up to the depth of 1200 m - 118.14 billion tonnes (as per Geological survey of India) it is not able to meet domestic demand. India is likely to become the second largest importer of coal next to Japan. China USA India 12 Slide 14 Breakup of Coal Demand by the User Industries It is ironical, cement which is equally as important as power for growth of countrys economy gets only 1.75% of its 5% requirement of coal production 13 Slide 15 (Fig in MT) 2007-082008-092009-102010-112011-122012-132016-17 CIL379.46403.74431.26431.32435.84452.0615 SCCL40.6044.5450.4351.3352.2156.0057.00 Captive21.1729.8735.0334.6036.2432.00100.00 Others15.7714.6116.2814.8215.5018.0023.00 Total Production 457.00492.76533.00532.07539.79558.00795.00 Demand504.29549.03582.25624.78649.87772.84980.50 Gap47.2956.2749.2592.71110.08198.44185.55 Domestic Coal Production and Demand Mammoth mismatch coal imports increasing significantly 14 Slide 16 Cement Sector - Third Largest Consumer of Coal /Fuel Coal is used as the main fuel in the industry. Coal is supplied to cement companies on the basis of Fuel Supply Agreement (FSA) between Coal Companies and Cement Companies, at a 35% higher price than the Regulated Sector (G6 to G17 The grades preferred by Cement Industry) of power grade coal, consisting of Power, Fertilizer and Defence. Coal availability to the industry dropped to 35% in 2012 from 75% in 2003. 15 Slide 17 16 Steep Declining Trends in Coal Supply to Cement Industry Source: CMA Data of Member Companies Shrinking Coal Availability Usage of AFR and WHR by cement industry become inevitable to meet Growing Cement Production Target Coal supply through linkages steeply dropped to 35% in FY13, compared to 75% in FY03. No coal linkage to new capacities/expansions. Open market./import of coal enhances its cost by 60 to 80%. Slide 18 Procurement of Fuel by Members of CMA Year Linked Coal Imported coal Coal procured from open market Pet coke Lignite & Other Fuel Total Fuel procurem ent % of linked coal against Total procurement 2002-03 13.34 3.66 0.771.040.05 17.8775 2003-04 13.353.18 1.031.410.11 19.0870 2004-05 14.843.63 1.271.870.76 22.3766 2005-06 14.813.40 1.552.160.82 22.7465 2006-07 14.434.96 2.942.090.83 25.2557 2007-08 14.566.08 5.002.270.93 28.8450 2008-09 14.296.97 6.172.410.36 30.2047 2009-10 10.796.95 4.363.920.23 26.2541 2010-11 11.908.48 4.923.180.36 28.8441 2011-12 10.459.39 4.514.700.75 29.8035 2012-13 10.38 9.27 3.935.181.06 29.8235 Fig. in MT 17 Slide 19 YearCement Capacity Cement Production 2011-12336.1246.7 2012-13349.6272.0 2013-14374.9299.9 2014-15405.1332.1 2015-16440.6367.8 2016-17479.3407.4 2021-22811.4710.0 2026-271379.91237.4 ESTIMATED CEMENT DEMAND PROJECTIONS FOR THE 12TH PLAN BY WORKING GROUP OF PLANNING COMMISSION (Mn.t.) High Scenario 18 Slide 20 (Mn.t.) Source: Working Group Report for XII Plan COAL REQUIREMENT TO MEET CEMENT DEMAND PROJECTIONS * 17% Coal is consumed to produce one tonne of cement (Progressively reduced from 25% in 1990s because of efficiency improvement) 19 Slide 21 Coal - Key Issues Substantial new capacities have been waiting for sanction of Long-Term Linkages for more than six years. This needs to be expedited. CIL has switched over from Useful Heat Value (UHV) to Gross Calorific Value (GCV). Wide variations between declared GCV to actual GCV in cement plants causing huge financial losses to coal consumers. Facility of joint sampling at both loading and unloading points being extended to the power utilities may also be extended to the cement sector without embargo of 4 lakh tones subject to their consent. 20 Slide 22 Coal - Key Issues As per The New Coal Distribution Policy (NCD