With the Baku skyline ever-changing, Azerbaijan’s capital played host to BusinessCem’s 24th International Conference and Exhibition this autumn, with discussions focussing on the cement sectors of Azerbaijan, Russia, Belarus, Ukraine and Turkey.

 

BusinessCem’s conference and exhibition highlighted the fast pace of growth in Azerbaijan’s cement sector

 

The 24th Eurasian Cement Forum, hosted by BusinessCem, was held in Baku, over 20-23 October 2013, at the Marriott Hotel, one of a collection of top-end international hotel chains including the Sheraton, Hilton, Four Seasons and Hyatt which have come to the Azerbaijani capital in the last couple of years, substantiating the view that the country’s economy is set to boom for some time to come. As one local said: “The city is growing fast, very fast.”

Baku’s skyline is dominated by the three 190m Flame Towers which symbolise how the hydrocarbon industry has underpinned the country’s economic growth, and standing near those towers one can see across the city competing skyscrapers on their way up. Be it renovations to the city’s old quarter, or the erection of new billboards, for countless 20- and 30-storey apartment developments dotted everywhere, these are bread-and- butter projects compared with the major industrial, leisure and infrastructure works both planned and underway.

Azerbaijan is fast developing 

The very positive picture for Azerbaijan’s prospects was highlighted to the 130 delegates from Azerbaijan, the Caucasus, Russia, Europe and China who attended the conference. The opening session was presided over by Niyazi Safarov, Deputy Economic Development Minister, who talked about Azerbaijan’s “outstanding success” in moving towards a market economy with a growth rate still 2.6 times the global average, and a near four-fold rise in GDP in the last decade. Huge infrastructure and industrial developments, many with state support, had led the construction industry to become Azerbaijan’s third-largest sector, employing 10 per cent of its labour. Over the past decade, firms producing construction materials had expanded nearly 12-fold and cement production by 2.3 times. Whereas in 2012 domestic cement output had met 44 per cent of demand, the modernisation of Holcim’s works and startup of the NORM and Akkord plants should make Azerbaijan self-sufficient in cement production by 2015.

Indeed, Azerbaijan’s construction boom will benefit from an increased supply of high quality to counter poor-quality imports currently entering the market, stated Rufat Mammadov, president of Azerbaijan Export & Investment Promotion Foundation (AZPROMO).

Omar Effendiyev, senior project manager of AZPROMO’s investment promotion department, supplied further positive news of Azerbaijan’s economic expansion. The country’s GDP is still growing at 2.2 per cent for 2013, with non-oil sector GDP at US$36.6bn, or 52.9 per cent of economy. The country is also considered a ‘top business reformer’ by the World Bank, with favourable ratings from Standard & Poor’s, Fitch and Moody’s. From 1995-2012 US$144.4bn had been invested, US$73.2bn from abroad and 62 per cent into the non-oil sector.

The construction segment accounted for 9.2 per cent of Azerbaijan’s GDP in 2012, with 72 per cent of the US$9.6bn invested going on newbuilds.

More than half of the construction firms are involved in residential developments while large-scale projects include a 20km extension of the Baku Boulevard, the TANAP oil pipeline, a new airport terminal, the Iron Silk Road or the Baku-Tbilisi rail line and the 400ha Baku international Sea Trade port. Baku is also building a 68,000-seat stadium, plus car parks and hotels ahead of the inaugural 2015 European Games, all part of the vision to make Baku a ‘mega event’ destination for tourism, business and sports. The massive US$100bn, manmade 41-island Khasar Islands archipelago in the Caspian Sea, 25km south of Baku, will begin construction in 2016 for completion by 2025.

Growth had indeed been “amazing”, concurred Hasan Yalcinkaya, CEO of NORM, citing construction as a “barometer of economic growth” and “pivotal to socio-economic development”.

Akkord, a company heavily engaged in the construction sector, was represented by deputy chairman, Suat Calbiyik, who presented the company’s cement production activities. Akkord plans to increase its current 2500tpd clinker line and 1Mta cement capacity by 200 per cent by 2016, “...as we estimate by that time the cement demand is going to grow up to 5.5-6Mt,” Mr Calbiyik said, with plans to export too.

Roig Terres, marketing, sales and logistics director of Holcim (Azerbaijan), also participated in the speaker programme. He discussed his firm’s mission to become the “world’s most attractive and respected” cement business and plans to place quality at the heart of the company agenda.

Regional market trends

 

NORM Cement’s 2Mta Qizildas plant, one of two plant tours

available to BusinessCem delegates, commenced

grinding operations in October 2013 and

clinker output is set to commence by year-end

Turning to Russia, two major goals facing the domestic cement industry are the relatively low utilisation of alternative fuels (AF) and the Customs Union, according to Vladimir Boltenko, committee chair of the Russian Union of Cement Producers. Domestic cement demand is increasing, as are utilisation levels and domestic capacity. Imports are also climbing, and are expected to reach 5.5Mt in 2013. This imbalance was partly explained by the uneven distribution of cement producers in Russia and neighbouring countries supplying attractively-priced imports. However, plants are being modernised, with 15Mta of new and upgraded capacity now employing dry-process technology.

 

Following on, Gerasymova Olena, head of marketing at the Ukrainian Association of Cement Industry Manufacturers, talked of how the country’s cement industry was moving to adopt European standards and taking up alternative fuels. Problems, however, included the need to update rail stock and the association was also keenly monitoring the problem of counterfeit products in the market.

Russian producers are also seeking to take up European standards, said Anatoly Sedov, deputy head of Russia’s National Association of Builders, despite a lack of support from the country’s Ministry of Economic Development. The industry hoped the government would address the bureaucratic problem of requiring 130 signatures to build a house, a situation that appears to be reflected in Azerbaijan. By contrast, the near-four years of self-regulation enjoyed by Russia’s construction industry was proving so successful that  there had been no payouts from the RUB70bn paid by firms into the joint compensation fund. Sedov asked: could that money be used as credits for the industry, or to support a mortgage system?
With 48 integrated plants making Turkey Europe’s top cement producer, Hakan Gurdal, general director of domestic producer Akçansa, gave an overview of this important industry and cement market. Turkey’s domestic demand for 2013 is on course to be up eight per cent on the 58Mt consumed in 2012 – in contrast to the continued weak performance experienced in the rest of Western and Eastern Europe.
Earthquake risks demand Turkey replaces many of its low-quality buildings and US$4bn will be spent annually over the next decade, providing a further driver for demand.

While Turkey has no current constraints on CO2 emission levels, this situation will change going forward. More importantly, the country has the worrying lack of indigenous energy supplies, especially compared with neighbour and fellow export competitor, Iran.

Vladimir Gouz, managing partner of CMPro, gave a dispiriting outlook for Russia but a good one for producers in the Caucasus. Total Russian capacity in 2013 will reach 91.2Mta, but at 73 per cent capacity utilisation, only 66.5Mt would be produced against demand of 70.2Mt. Given an export level of 1.8Mt, imports amounting to 5.5Mta from Iran, Turkey and China, will therefore be necessary to satisfy demand.
The competitive situation for cement producers in Russia is increasing, according to Mr Gouz. Costs for gas, electricity, rail and raw materials have consistently risen since 1995, while cement prices were still recovering from the severe dip suffered in 2008. High input prices arose from regional monopolies. Furthermore, Belarus’ three new 1.8Mta lines have led to a doubling of production in this neighbouring market, and will create “quite a headache” for the industry, as the excess is likely to be channelled to the Moscow market. A further 26.8Mta of capacity is planned by 2016 in Russia, Mr Gouz said, but by 2020 total capacity should still remain under 110Mta, as ageing assets are retired and cheaper foreign suppliers are lured in by higher margins in Russia.

Technical presentations

Iskender Kerimov, general director of logistics company, Etalon Service (Azerbaijan), gave a presentation on effective cement distribution. The “irrational” use of cement trucks costs time and money, he argued. For example, when construction sites lack cement storage facilities, trucks cannot unload in bad weather. Etalon, which has invested in modern trucks and tracking technology, plans to expand into Georgia, Russia and Kazakhstan by 2019.

Svetlana Tarasova, general director of Incontrade (Russia), then discussed the efficiency improvements that can be achieved with Gebr Pfeiffer’s grinding mills for cement, clinker, raw material and coal grinding, and which have been installed by NORM at its new plant. Nikolai Velten, sales director of Aumund (Germany) offered an overview of the company’s transport and storage products.

Nemli Osman, general plant manager at NORM LLC, gave a precis of the south Caucasus’ newest and Azerbaijan’s fourth producer, the US$400m Qizildas plant outside Baku. Construction of the 2Mta dry-process facility is still ongoing (as at October 2013), but cement production using Turkish clinker began on 21 October, and clinker production (capacity 5000tpd) is planned to start before the end of 2013. Cement output will serve the Azeri market and ultimately the Azeri hydrocarbon industry with API-standard cements not produced in the region.

 

Standard Cement LLC, one of the many exhibitors at this

year’s event, has a cement capacity of 1Mta and

started its Azerbaijan operations in 2011

Then came FLSmidth senior project coordinator, Mikhail Vorontsov, who discussed the company’s methods for getting to the “root of problems” at Russian and CIS cement plants by way of diagnostics and troubleshooting. Following the afternoon’s contact break, Gedaly Medvedev, general director of Möllers’ representative office, talked about the firm’s palleting and shrink wrap systems, while the technology of Thermo Fisher Scientific spectrometers in analysing raw materials and chemical components in laboratory and flash analyses was presented by Dimitiry Sharkov, sales manager for Thermo Techno.

 

How demolition robots working in high-temperature, highly-polluted environments such as kilns could deliver faster and less costly turnarounds were explained by Brokk NW Co Ltd’s sales manager, Denis Rezyapov, (Russia). Igor Parhomovskiy of Feldbinder GmbH (Ukraine) then talked about the advantages of weight savings for aluminium cement carriers compared with steel ones, allowing more cement to be carried on fewer trips. This saves time, fuel and truck rental cost, he explained, and also allows for thicker-skinned carriers that would not suffer explosions and could take higher compressor rates for unloading cargoes. While Brokk’s projected production of 2600 units for 2013 was still way below the 2007 peak of 3000 units, delivery lead times had now come down from nine months in 2008 to under five months.

Day two

Tuesday’s presentations continued the technical orientation. Igor Zlobin, sales director of Loesche, noted how vertical roller mills had supplanted ball mills, with the latter having fallen from 95 per cent share of mills in 2000 to 49 per cent in 2013. Nearly nine-tenths of coal grinding mills are VRMs and no plants use ball mills for raw meal.

Nijat Orujov, engineer for VDZ which has trained over 900 plant personnel since the 1950s, asserted how “theory is good, but you need to apply the knowledge”, as he extolled the importance of having well-trained staff to lower costs and raise product quality, productivity and safety.

After the break, Vitaly Beresovsky, sales manager of ATEC Austria, explained the ways in which innovative process technologies could improve kiln output while lowering energy consumption, and CO2 and NOX emissions. Anna Boltenko of Bauman University discussed themes relating to human resources such as the need to keep workers motivated during low production swings. Then followed a brief talk by Dr Malik Mirzayev from Azerbaijan’s Ministry of Emergency Situations about high-endurance and high-strength concrete, all in ever-greater demand in cities like Baku, as its buildings soar skywards.

After a lunch sponsored by Gebr Pfeiffer, Bahadir Avci of ABB talked about the company’s experiences in Turkey, where the firm’s advanced process control systems are helping to produce 65,000tpd of clinker and 30Mta of cement in over 20 plants. Finally, Elvin Mamedov of CEMEQ Minerals, which produces cement manufacturing equipment for the Russian market, presented the company’s calcining and grinding equipment capabilities.

Thanks were then given to all attendees by Evgeny Valyukov, who had chaired the conference throughout, with Irina Valyukova organising all. The exhibition hall included stands from Möllers (Germany), Gebr Pfeiffer (Germany), International Cement Review (UK), Mathios Refactories (Greece), Tandem (Russia), Grace (Turkey), Feldbinder (Turkey), NORM (Azerbaijan), Akkord Industry Construction Investment Corporation (Azerbaijian), Standard Cement (Azerbaijan) and CNBM (China).

After the traditional planting of a tree and a sightseeing trip to Baku’s old city came a gala dinner with traditional Azeri dancing. The following morning delegates were given the opportunity to visits Holcim’s modernised Garadagh plant or the brand-new Norm LLC facility.

Article first published in International Cement Review, December 2013.