PetroCem 2012

Following a welcome address from conference organiser Mila German, presentations began with an assessment of the Russian cement market by Mikhail Skorokhod, president of the Eurocement Group – Russia’s leading cement producer and also general sponsor of PetroCem 2012. Here, Mr Skorokhod provided an overview of the current market landscape which comprises 53 cement plants with a total capacity of 91Mta. Speaking of the continued growth being experienced at present and the potential outlook, he said: “The average annual growth of cement consumption in Russia over the past 10 years has been 7-10 per cent, even given the fall due to the [global economic] crisis. These figures correspond to world standards. On average, annual growth of more than eight per cent is expected by 2020.”

Mikhail Skorokhod's Eurocement Group will

account for 20% of new capacity additions in Russia

Mr Skorokhod noted that capacity additions fully corresponds to growth in market demand. “The active construction and commissioning of new cement plants began in 2005 and by 2012, all capacities which were withdrawn over the last 15 years, have been compensated for. The total increase in capacity has amounted to more than 22Mta. In addition, construction of an additional 30Mta is expected by 2020,” he highlighted. Of that amount, Eurocement is planning to introduce 20 per cent, totalling some 6Mta. By 2020, Mr Skorokhod sees Russia’s domestic capacity exceeding 120Mt.

In terms of Eurocement’s expansion, the group currently has a capacity of 37.5Mt. During the 2012-17 period, the company plans the start-up of new facilities in the domestic regions of Ryazan, Samara, Lipetsk, Voronezh and most recently has signed a contract with KHD to construct a new 1.3Mta cement works in Stavropol. It also intends to build on capacity in Ukraine and Uzbekistan, taking overall group capacity to 45.4Mta.

Casting a wider look at the status of global cement markets, Yassine Touahri of Exane BNP Paribas provided analysis of worldwide trends and forecasts. According to the investment bank, 2012 is expected to be “another transitional year” with mature markets remaining subdued well into 2013. Limited volume growth is forecast for the US and declines are expected in Europe. Slightly lower growth is envisaged in some emerging markets, including China. However, the Indian market – which has experienced various challenges including slowing demand against a backdrop of increased capacity – is expected to see some recovery.

Returning to regional markets, Georg Kleger, president of Sibcem, shone a spotlight on the Siberian cement market which has nine active cement plants and a capacity of around 12Mta. The residential sector is traditionally the main driver of local construction but has been experiencing relatively low growth rates of late. In 2011, housing activity in Novosibirsk Oblast and Krasnoyarsk Krai rose by only 8.5 and 8.6 per cent, respectively. This year, Mr Kleger sees growth in cement consumption of around 8-10 per cent. He pointed out that the Siberian cement industry’s prospects are associated with the developments of mineral deposits and the electric power industry as well as infrastructure projects. Key projects currently under construction in the Siberian region are the Krasnoyarsk and Boguchanskaya hydropower stations, an aluminium plant in Boguchansk plus the development of oil reserves in Vankorsk and other deposits. Due to these, the consumption of special cements consumption is rising.

The meeting attracted some 520 participants from 34 countries

Turning the attention of delegates to Ukrainian market developments, Miguel Machado, chairman of the UkrCement Association, provided an overview of the domestic activity. Last year, cement production reached 10.5Mt, up 13.9 per cent YoY. Some 7.5Mt of clinker was manufactured, representing a rise of 34.4 per cent above 2010 figures. Domestic sales, meanwhile, were 10.33Mt of cement, a staggering 112 per cent up on 2010 levels. Mr Machado highlighted that the domestic industry is now paying special attention to increasing cement production and upgrading to new technologies. The main aims for local producers going forward are the “improvement of power efficiency, migration to European standards and combatting sales of adulterated cement,” he pointed out.

Substantial new cement volumes are now currently being built in Uzbekistan which has an existing capacity base of 6.6Mta. As Erkin M Akromov of AK Uzstroymaterialy explained during his presentation on the local market: “Existing facilities cannot meet demand and new capacities have to be created. By 2020, cement production in Uzbekistan will be double.” Key projects, as outlined by Mr Akromov, include:
• Bekabad Cement’s 850,000tpa dry-process line scheduled to go into operation in July 2013
• preparations are underway for the upgrading of Akhangaran Cement, scheduled to be completed before 2013
• construction of a 1Mta cement works currently being undertaken in Karakalpakstan by joint venture Rakhnamo-nur
• another joint project, this time by Almalyk MMC and AK Uzstroymaterialy, will see the construction of a 600,000tpa cement plant, including 100,000tpa of white cement in the Jizzakh region
• a 1.7Mta cement plant in Surkhandarya  is being built by NCC Uzbekneftegaz, the Oman Investment Fund and AK Uzstroymaterialy.

With many Russian industrial corporates requiring access to significant funding sources to modernise and expand, Export Credit Agency (ECA)-backed financing has witnessed a substantial boost during the post-2008 crisis years. Indeed, such financing has remained practically the only source of long-term financing available to Russian borrowers, as highlighted by Sergei Karmalito of HSBC. In 2011, the country became the largest ECA-backed loan market in the world in 2011. Mr Karmalito explained that HSBC became the leading arranger of such loans in Russia last year. One deal that represents the bank’s ability to provide long-term Russian rouble ECA-covered financing is the Vnesheconombank Kaluga Cement plant where HSBC acted as the sole arranger for a RUB6.7bn transaction to finance delivery, installation and commissioning of equipment for a cement plant by FLSmidth A/S, supported by EKF, the Danish ECA.

Technical advances  and sustainability

From a technical perspective, conference proceedings covered the whole spectrum of cement production from the design of new cement plants in Russia depending on raw material properties, as well as technical developments in terms of alternative fuels usage, sustainable production technologies, grinding advances, refractory solutions, energy efficiency improvements and CO2 abatement. 

Turning the attention of delegates to alternative fuel usage Dr Jean Marie Chandelle, chief executive of  CEMBUREAU, provided an in-depth look at waste co-processing in cement kilns as a sound waste management policy. The use of waste and biomass instead of fossil fuels in the cement industry reduced European absolute emissions by 15.6Mta (2010) with a substitution rate of 31 per cent (compared to 15 per cent in 2005). Europe accounts for 61 per cent of fossil waste and 46 per cent biomass recovered in the global cement industry. Dr Chandelle argues that there is still a great deal of potential in the supply side of waste-derived fuels in Europe but a number of barriers exist.

Sustainability initiatives also came to the forefront with a presentation by Alex de Valukhoff, president of Lafarge group of companies in Russia, who discussed development trends and problems in sustainable construction.

New plant case studies

A number of recently-completed regional cement plant projects were highlighted, giving the audience a chance to hear equipment engineers and producers  share implementation and start-up experiences.
Yarolsav Stoupa, general manager of the LSR Cement plant, Russia, gave an overview of the commissioning experiences for the group’s 5000tpd dry-process cement plant. Located in the Slantsy, Leningrad region, Russia, process start-up commenced in November, 2010 with raw material storages commissioning and further moving on to the raw mill and the kiln line. First clinker was produced on 5 August 2011 and the first batch of cement was manufactured in September, 2011. At the time of writing, all plant process sections have been commissioned including packing and palletising sections. However, with raw mix preparation proving to be a key problem, Mr Stoupa stressed the importance of considering specific local conditions (ie physical and chemical properties of raw materials and fuel, climatic conditions) during a cement plant’s concept and design to prevent delays and additional expenditure.

EV Schegolyayev, KHD Humboldt Engineering, spoke of the contract at YuGPK in Novotroizk which included two lines with a planned capacity of 3000tpd of clinker. The first line was launched in 2010 and the second is scheduled for completion in 3Q12.

Last year saw Podilsky Cement (a member of the Irish CRH Group) successfully bringing on-stream the largest  cement line in Ukraine, representing one of the most significant investments in the country since its independence. Ronald Burkhardt of Polysius AG and Semen I Dartschuk, general director of Podilsky Cement, were on hand to share details of their collaboration on the 7500tpd line which was built with state-of-the-art Polysius components from the raw material preparation to the clinker production system. At present, the mechanical equipment of the factory is installed and construction and installation works are completed.

Networking and hospitality

Delegates develop commercial relationships

in the bustling exhibition area

PetroCem also included a sizeable exhibition featuring many leading equipment suppliers who were able to present the latest technologies and services available to the global cement sector. Together with a number of social events including a sightseeing tour and evening receptions, delegates had ample opportunity to network and create new commercial relationships in relaxed surroundings. Indeed, superb hospitality prevailed throughout, the highlight of which was a Gala Dinner held within the splendour of the 18th century Taurida Palace, featuring fine dining, music and entertainment.

Proceedings were concluded with a visit to the LSR cement factory, which gave delegates an opportunity to witness a prime example of Russia’s new generation of modern facilities first-hand.