The projects will be cleared fast if the government comes up with a single window policy
Has the economic slowdown impacted production capacity augmentation or the setting up of new cement plants?
The economic slowdown has definitely had its effect on cement production. Capacity utilisation has dropped and the industry is running at approximately 65 - 70 per cent of its installed capacity. This is also due to an increase in the use of blended cement and the rapid growth of cement industry, which led to this gap between demand and supply. However, keeping in mind the potential for growth due to much lower per capita cement consumption, which is about 156 kgs / year in India against world average of about 260 kgs/year, the industry is continuing to boost its capacity by augmentation by adding new cement plants. The growth is in line with targeted capacity of 550 million tonnes per annum (MTPA) by the year 2020.
In the past, it has been observed that during such low demand periods, the plant owners could afford to shut the plant down for longer periods. During this time, they would go ahead with small to medium size investment in increase existing plant capacity and reducing specific energy consumption and buying state- of- the- art technology. The trend is still continuing.
Are we in the state of cement production overcapacity?
Indian cement production capacity has increased from 336.1million tonnes in 2012 to 349.6 million tonnes in 2013, an increase of 4 per cent. To reach a production capacity of 550 MTPA by 2020, the cement industry has to grow by a CAGR of approximately 6.5 per cent. However, capacity utilisation has always been lagging behind, from about 85 per cent in FY 09-10 to around 75 per cent in FY 11-12. In FY 12-13, it was around 65 û70 per cent.
To bridge the gap, the construction growth has to take place in all sectors, viz; housing, infrastructure, commercial and industrial and especially infrastructure where potential is so high that India has the capacity to become world´s third largest construction market by 2025. There is also a considerable scope for a country like India to improve per capita cement consumption to match the world average. If construction projects are not undertaken in spite of their being necessary, India´s cement production capacity will always be an overcapacity.
What policy changes can help the cement industry regain momentum?
Many favourable policies have been already undertaken by the Indian government for the growth of the cement industry. However, a few problems remain.
One big hurdle at the moment is the acquisition of land for setting up a greenfield project. Many projects are delayed and some are even abandoned due to land issues. The new land acquisition law will worsen the situation. There has to be a fair pricing policy in place, to acquire land that will benefit the mass population and not just the interests of a few. We can only hope that the problem is temporary and that Indian cement plant owners will not invest in other countries to set up new plants.
Another major issue the industry is facing is from several statutory clearances required at various stages of the plant being set up. If the government comes up with a single window policy, the projects would be cleared fast and unnecessary delays and cost overruns could be avoided.
The government´s support to shorten the unnecessary lengthy procedures will help the industry grow not only in 2014 but also in the future.
What are the major challenges in retrofitting / setting up new cement plants?
Some of the older cement plants will need considerable revamping to match the current performance parameters and regulations in terms of environmental emissions, energy efficiency and resource conservation. As a result, a major overhaul will be necessary to bring these plants at par. However, these challenging projects will test the mettle of engineering consultants and technology providers. In the future, only those who can provide tailor- made and smart solutions will survive.
In one instance, a sick unit which was shut down for quite a few years, is currently being revamped, while an airport has come up recently near the plant location. Now the major restriction in the new pre-heater tower design is the maximum height allowed by the airport authority. Hence, the entire retrofit project has to be designed around this constraint.
While setting up new plants, land acquisition is a big challenge. Penta India is working on an optimised layout for green field plants so that land requirement can be reduced by 15-20 per cent.
What is the scope for greenfield projects?
We are talking about addition of close to 200 million tonnes in the next seven years, and both greenfield as well as brownfield projects have an important role to play here. However, for greenfield projects, the land acquisition problem has to be addressed as it is becoming the deciding factor.
Ageing plants with obsolete technologies have a higher energy consumption factor and hence, higher carbon dioxide generation. They also contribute to higher dust pollution levels in the atmosphere. High running costs, in many cases, are making the plants unviable as against relatively newer, higher capacity plants. The old, low capacity plants, running at 500-700 tpd, need to be upgraded or discarded. This opens up the avenue for either brownfield upgradation or new projects.
What are the new trends emerging in the design of cement plans and other supporting systems?
In India specifically, there is an increasing trend in planning and designing cement equipment / plant with a focus on reduction in energy consumption and pollution. The electrical energy consumption which is very prominent in a cement plant has been reduced drastically recently, by the introduction of the vertical pre -grinder and roller press technology. The design of pre-calciner / burners in the pyro section is developed to conform to NOX emission levels. Coolers are also becoming more efficient.
Waste heat recovery system and alternate fuel use have almost become regular features in all plant design. To save on natural resources, the focus is now on consuming less or zero water in the process. These concepts are implemented at the plant conceptualisation stage itself.
There is also a move towards increased automation in material handling, use of improved heavy machinery in mining, material analysis instruments, robotics in laboratory with the aim of reducing manpower requirement and assuring quality. From the logistics viewpoint, the adoption of efficient wagon loading and unloading technology and reduction of inventory, will also work well. Conditioning monitoring of equipment is necessary to reduce breakdown related maintenance and improve the run factor in the plant.
Was 2013 a good year for you?
Service providers found 2013 to be extremely challenging. A lesser number of projects and a higher number of service providers have made the Indian market a buyers´ market. Orders from overseas market became vital for survival. On the domestic front, up-gradation and feasibility study projects kept Penta busy; Penta has also been working in the Middle East and on African projects and expects to cater to the market picking up in North America, too.
India has the capacity to become world´s third largest construction market by 2025.
One big hurdle at the moment is the acquisition of land for setting up a greenfield project. Many projects are delayed and some are even abandoned due to land issues.