Pet Coke | Advantage or Adventure?
Pet Coke | Advantage or Adventure?

Pet Coke | Advantage or Adventure?

At present, the cement industry is not exactly chugging along, but just about limping along. This is only to be expected, when the economy is not looking good. Growth in capital formation has fallen from 6.1 per cent in 2015/16 to a mere 0.6 per cent in 2016/17; the IIP has grown by a miniscule 1.1 per cent between January 2015 and January 2017; the non-food credit to industry has risen by a pittance of 0.3 per cent during the same two years; and perhaps the most disappointing feature of the state of our economy has been the fact that manufacturing has managed to generate an inconsequential 12,000 jobs only (increase of 0.1 per cent) during the period April to September 2016, according to the newly instituted Quarterly Employment Survey released by the Labour Bureau. Given these economic indices, it is not a surprise then, that the cement industry may have recorded its first annual decline in 15 years, in FY17, and let me tell you that the year FY18 does not look any brighter.
In bad times, all industries explore ways to cut costs, and commodity players in the cement industry are particularly keen to be more competitive than others, to be able to weather the down cycles. oFuel and Powero has always been a large chunk of cement manufacturing costs, and over the last 20 years, many cement companies have been looking at using petroleum coke (which is a by-product/residue of the petroleum-refining process) as a low-cost fuel. Of course, Shree Cement has been the leader in using pet coke, having comfortably and quite radically used this fuel for many years now, to the extent of 100 per cent in both cement kilns and captive power plants.
Many other cement plants, particularly the ones located far away from coalfields, or the ones located near seaports, have shown higher propensity to replace coal as a fuel, by pet coke at least in part, if not in full. No doubt, there have been daunting challenges in doing so, - what with the relative difficulty in grinding pet coke vis-a-vis coal, the complexity of dealing with the higher sulphur content in pet coke vis-a-vis coal, and what with managing the chemical/process issues of raw mix design and kiln operability caused by lower silica/mineral content in pet coke as against Indian coal. However, the industry has demonstrated the willingness and the capability to successfully overcome these challenges, driven by the incentive of cost advantages. So, over these years, consumption of pet coke has spiked in India, driven particularly by the cement industry, and also by the power generating stations, and imports have sharply increased as well. Currently, India is importing around 12 million tonnes (MT) of this fossil fuel, in addition to using up our own domestic production of around 12 MT. But is pet coke all about advantages and gains, and no downsides at all? Of late, we can observe some cracks appearing in the confidence of people pursuing pet coke usage in cement plants.
Firstly, the cost advantage has turned volatile, given the inherent fluctuations in international coal prices, pet coke prices, shipping costs, and currency rate changes, all of which induce a lot of uncertainties in the cost savings between landed cost of coal and pet coke on the basis of rupees per unit of calorific value. Secondly, and more significantly, various stakeholders like environmental activists, regulators, green courts, and civil society members have started looking down upon pet coke to be an utterly unwise fuel choice from the environmental perspective. Looking into the future, we are left wondering if pet coke is really a sustainable cost advantage, or an environmental adventure that can backfire.
Sumit Banerjee Chairman,
Editorial Advisory Board

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