Alternative Fuel Options for Saudi Cement Manufacturers

February 2010
Confidential not to be copied or distributed

Who We Are
Targeting regional integrated cement producers in identifying and capitalising on opportunities to monetise emissions reductions projects Projects we are currently working on include:
Raw material substitution analysis CDM opportunity identification GHG inventory and data analysis

Specialised carbon asset management firm based in and committed to the Middle East and North Africa region. 7 professionals in Dubai, London and Moscow Partnership with ICF International, a global professional services firm with expertise in technology solutions in for climate change, environment, transportation, social programs, health, defense, and emergency management. Experience includes:
raw material feasibility for Lafarge cement CDM opportunity appraisal for a Portuguese cement company operating two plants in Brazil including development of Project Design Documents (PDD) and CDM methodology development. GHG data analysis for Blue Circle Cement as well as a national cement industry assessment for the United States Environmental Protection Agency (on going since early 1990s).

Partnership with The CarbonNeutral Company and Edinburgh Center for Carbon Management for carbon credit markets

What are alternative fuels?

Wide range of agricultural and industrial waste materials can be co-processed into an engineered fuel, due to the high temperatures, alkaline environment, high turbulence and long residence times that characterize cement manufacturing operation. Consumer/Office/Household wastes Used lubricants Spent oils and chemicals Non-recyclable, non-biodegradable packaging Non-recyclable manufacturing by-products Non-recyclable junk appliance components Non-recyclable off-spec products Expired finished products Used and non-recyclable packaging Oil-contaminated soil Purification or filtration by-products Brine from desalination Oil tank bottoms Agricultural by-products Automotive Rice husks Used oil Sugar cane bagasse Used tires Banana tree bags Spent solvents and paint sludges Packaging materials for pesticides/fertilizers Non-recyclable junk car parts Industrial by-products Sewage sludge

Are there alternative fuels in Saudi?

Plastics (PET, ABS, etc.)

Shredded Post-industrial Pre-sorted post-consumer Non-fire retardant

Sewage sludge + animal waste

Waste wood + agricultural

Municipal collections Large farms Furniture / not highend (e.g. with studs, etc.)

Hazardous
Tires Tank solids / slops Brine from desal

Can we throw alt fuels right into the kiln?

Short answer: no Longer answer: a number of obstacles
Permitting / test programs unfamiliar to authorities Collection / qualification Guarantees of volume on timescale of interest to Board Processing Complex cost / benefit equation Material handling challenges Control issues in the burner (not so much in preheater) Risks

Specific objections to alternative fuels

Higher emissions of dealing with plastic waste Liability associated with hazardous waste Consistent energy value, moisture, and cost of waste stream relative to current fuel Calorific value of fuel 6,500 kcal /kg Specific reactive properties of fuel, due to ash absorption incl. metals Concern about impact of waste on burner characteristics and product quality Cost / benefit of material handling solution No tipping fees

Some cement customers want to use waste themselves but dont know how
Advanced fuel substitution processes and technology Shown: basic diagram of mixing process and mid-kiln introduction of whole tires. Not shown: material handling and power system; monitoring system ! Mixing air system ROI is as low as 6 months due to cost savings of using alternatives to conventional fuels. ! Patented pre-calciner SNCR system reduces costs and increases capacity of system to use alternative fuel, by reducing emissions and improving combustion ! Suspension burner combines mixing air with pre-calciner technology when also using a preheater. ! Material handling system to maximize control over alternative fuel processes.

Benefits of working with us for advanced fuel substitution

! We can offer cement clients a comprehensive solution including:
Sourcing the necessary waste streams to be used as the alternative fuel, typically single type (e.g. whole tires) and high-energy, Implement all the required material handling systems (at right) and control systems to utilize the alternative fuel.

! !

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Can be used with the newest cement kilns or the oldest Continuous monitoring and reporting to show positive benefits and no negative effect on operating parameters including burner quality and characteristics Improved emissions (example at right) Improved stratification concerns and better combustion

Benefits of alternative fuels

Product & Process Benefits: Tested and proven technology being used extensively in the US and Europe Easily integrated with existing fossil fuel handling systems with minimal downtime and no effect on long-term machinery lifespan; Little or no capex investment required; can be used with the newest or oldest kilns Diversification of energy inputs Possible direct spray into flame Produced safely and responsibly Provides improved stratification concerns and better combustion in kiln Proven safe to burn Environmental Benefits: Burning produces less dioxins and carbon emissions than coal Reduced volume of wastes being land-filled Recover value from waste streams previously deemed suitable only for land-filling Produces no residue Financial Benefits: Less expensive than coal Predictable long-term cost Reduced chemical costs Reduced operating costs Reduced trucking costs with regional facility Avoid capital cost of digesters, dewatering, and/or dryers

Energy Benefits: Lower energy consumption Energy value equal to coal High burning efficiency

UAE Fuel Costs 2 Examples

Gulf Cement (RAK) National Cement (Dubai)

AED (000s) Revenue Raw Materials Fuel + Utilities Other COGS SG&A Other Net Profit 1078140 168981 417957 161760 13041 3142 81 2119

% 100% 16% 39% 15% 1% 29% 0%

AED (000s) 152451 63092 15207 9083 8894 -19340 75515

% 100% 41% 10% 6% 6% -13% 50%

Todays fuel options (1/2)

Fuel kJ/kg Anthracite Bituminous coal Coal Coke Diesel Natural gas Methane CH4 Propane C3H8 Gas oil Heavy fuel oil 32,500 34,000 17,000 23,250 15,000 27,000 28,000 31,000 44,800 kJ/m 3 43,000 39,820 101,000 kJ/L 38,000 41,200 Higher Calorific Value (Gross Calorific Value - GCV) kcal/kg 7,762 - 8,120 4,060 - 5,553 3,582 - 6,448 6,687 - 7,404 10,700 kcal/m3 10,270 9,510 24,122 kcal/L 9,075 9,840 Btu/gal 164,000 177,000 Btu/lb 14,000 - 14,500 7,300 - 10,000 8,000 - 14,000 12,000 - 13,500 19,300 Btu/ft3

Source:http://www.engineerin gtoo lb ox.com/fu els-higher-calorific-va lu es-d _169.h tml

Todays fuel options (2/2)

Figure ?: Fossil Fuel Energy Value and Cost Fuel Consumption Fuel Energy Value Coal 6,000 kcal/kg
3

Price $90 / ton

Consumption/ ton clinker 162 kg 3.71 MMBtu/ 104 m 3 109 L / 0.7 barrel

Cost / ton clinker $14.62

Natural Gas Heavy fuel oil

Source: ICF, EcoVentures research

43,000 kJ/m

$5/MMBtu $91 / barrel

$18.58 $62.52

41,200 kJ/L

Alternative fuel solution basic idea

Plastics Separation Waste wood + agricultural Shredding Shredding Grinding Drying

EVEF differentiation:
Focused waste qualification and generator compliance plan Software-based waste management system Technical know-how for grinding equipment design.

Software-based tracking and blending system

Focus on a solution rather than technology

Analysis of samples of waste material for presence of substances and precursors to substances whose emissions are regulated or can cause liability Assessment of the impact of waste streams on cement product quality Assessment together with the waste generator of the risks associated with the material to health, safety, and the environment Assessment of the economic costs and benefits of utilizing the waste material

Example fuel design

Saudi Example
Revenue Raw materials Fuel costs Gross profit SG&A Other Net profit Fuel costs Cost barrel HFO barrels per t T HFO used Replacement rate Discount to current price New base fuel cost Alt fuel cost per T cement (SAR) 250 57 68 125 34 34 57 68 90 0.76 10 0.33 40% 50% 41 14 Annualized (M SAR) 1,100 250 300 550 150 150 250 per T cement per T HFO per T clinker M tons 444 T alt. fuel needed per day per T cement per T cement % 100% 23% 27% 50% 14% 14% 23% Increase in profit New net profit % increase 14 264 5%

Questions / comments welcome

EcoVentures FZ LLC Office 332 Building 10 Dubai Media City Dubai, UAE Armen Vartanian Tel: +971 (4) 390 1691 Fax: +971 (4) 390 4557 Email: armen.vartanian@ecoventures.ae