Cement sector needs alternate fuels

With cement demand plunging world-wide due to slowdown in construction activities and higher costs that are almost double in the region, local cement manufactures are rightly shifting the focus to cost-centric measures. With local and international prices falling by 18 percent and 12 percent against last year, margins for most cement manufacturers have trimmed. This may compel some manufacturers to stop their operations.
With the rebound in global economy, the commodity prices might move northward again. Thus, there is case of surge in fuel oil and coal prices, in anticipation of this, cement makers are emphasising on the use of alternative fuels. It is pertinent to note that most of the local manufactures have old low efficient plants, thus the pressure of any upward movement in coal and fuel oil prices would add to the woes. But the worse can be mitigated by cost saving techniques.
The most popular coal replacement fuels in the developed countries are Tire Derived Fuel (TDF) and Petrochemical Coke (Petcoke). The use of TDF and Petcoke in place of coal can result in substantial reduction in fuel cost for cement plants. Apart from being cost saving in natures, these are more environment friendly than coal. This will not only provide better environment for neighbours but may also help companies to generate some cash by selling the redundant carbon units which are used to for storage and disposal of green house gasses.
According to industry experts, the difference in C&F prices (if coal is above $80 per ton, currently it is hovering around $60 per ton) between coal and TDF could slash the fuel cost by more than half. As with higher heating value and lower moisture content, TDF and Petcoke both are more efficient than coal. Furthermore, these alternatives typically have higher energy content than steam coal, often 7,500 kilocalories per kilogramme (kc/kg) compared with around 5,700-6,000 kc/kg for steam coal. This makes it even cheaper to ship and to burn relative to coal.
Eying this opportunity, cement makers in Pakistan have indicated their willingness to replace 30 to 35 percent of coal with alternate fuels at times of high operating costs. But as they say, substitutes come with problems; TDF is no exception to the rule in this case. There is no import classification for TDF and is subject to higher tax rates as compared to coal. Coal is under zero percent import duty scheme, whereas TDF and Petcoke are levied 20 percent and 5 percent respectively.
There is an urgent need to take supportive measures such as relaxation in duty structure. This will not only help the ailing cement industry but also reduce fuel import burden.
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