Arabian Cement Company Ready to Switch from Gas to Coal and Alternative Fuel Feed

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Since the beginning of 2013, energy shortages have cost the Egyptian cement industry 20% in production capacity, which is equivalent to 3.7 million tons valued at $186 million. Arabian Cement Company (ACC) has lost 25% of its production capacity, which equates to 350,000 tons valued at $25 million. Losses in the industry could reach 50% during the summer, when electricity consumption peaks.

In the period up until late 2010, the government actively encouraged producers to use natural gas as a fuel feed. In response, the industry invested many millions to make the switch to gas. Now the government has switched and asked the industry to make coal and alternative fuels its main energy feed.

ACC is now prepared to substitute 100% of its gas requirements for operations, and it has applied for the necessary permits for the switch in March, but it has not yet received a government response. It is ready to replace 70% of its gas supply with coal by the last quarter of the year. Moving to coal and refuse-derived fuel (RFD) is an accepted practice in the global industry.

"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," said Jose Maria Magrina, ACC's CEO. "The investment needed to substitute natural gas or mazot (low-grade fuel oil) with coal ranges from $6 million to $8 million per million tons, and converting to RDF costs around $8 million to $12 million per million tons." He added that when considering the size of the investment needed, the government should offer incentives for existing companies in the industry and for new entrants.

ACC, the first cement producer in Egypt to introduce a coal mill, will enhance its competitiveness and efficiency and assist in developing new business with a $40 million investment.

ACC produces 5 million tons of high-quality cement annually, which is about 10% of the country's total production. Currently, it requires 378 million cubic meters of natural gas per year.

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