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1Indigenization of Spare Parts and Consumables used in the Cement Industries Present by: Chanchal RoyConsultant – Alpha International Management Consultants28th December 2009
2CEMENT INDUSTRY – SAUDI ARABIA A Prefeasibility study on the Supply of Capital Equipment, Spare Parts and Consumables for this core sector industryThis study covers…An overview of the Cement IndustryConsumption Patterns, Rise in demand for CementCapital Equipment & Process FlowsSpare Parts and ConsumablesBrief Study on 3 important Consumables..- Grinding Media- Liners- RefractoryObservation and Inferences
3Cement Industry – Highlights The Cement Industry in KSA is a primary building block for the largest Construction Industry in the GCC.The Saudi Cement Industry accounts for more than 50% of the cement produced in the GCC and it supports the burgeoning Construction Industry which accounts for 8% of the country’s GDP!Starting out with a 0.4 MTPA plant in 1956, the total installed capacity for cement stands at 48 million tons (2009) although the national per-capita consumption of cement is lower than that of the GCC average.Almost all capital equipment, spare parts and consumables that go into this Industry is procured from overseas and this is where an opportunity lies for local Investment.
4Total Cement Production Capacity (2009 Cement Industry in Saudi Arabia: A SnapshotTotal Installed Capacity : 48 million metric tonsTotal Cement Production Capacity (2009
5Cement Industry in the GCC & MENA Region SaudiArabia48 MTPAEgypt45.3 MTPALibya5 MTPASudanO.7 MTPAAlgeria15.5 MTPAYemen4.3 MTPAMorocco16 MTPAOman5.1 MTPAUAE29.7 MTPAQatarIran52 MTPABahrain0.5 MTPAIraq25 MTPA(90% idle)Kuwait2.6 MTPASyria7 MTPALebanonJordan4.8 MTPATunisia7.3 MTPATotal Installed Capacity for Cement – GCC : Million Tons/YearTotal Installed Capacity for Cement – MENA Region : Million Tons/Year(without Iraq)
6Cement Industry – Consumption GCC wide Types of Cement produced : Ordinary Portland CementSulphate Resistant CementPozzolan CementOil CementCement Consumption Pattern incl. Per-capita and Total in Metric Tons (est. 2009)CountryPerCapita/year(MT/year)Population2009(million)NationalConsumption (MT)TotalInstalledCap (MT)Bahrain0.300.730.220.50Kuwait0.662.691.782.60Oman1.683.425.755.10Qatar4.710.833.914.30Saudi Arabia1.6328.6946.7648.0UAE4.8024.4829.7GCC average2.3641.1697.1490.2
7Cement Industry – Demand Supply scenario Increase in DemandThe demand for cement is all set to increase in Saudi Arabia and the GCC as a whole and a whole lot of factors are driving this increase namely:The per-capita consumption of Cement in KSA is lower than the GCC average andmuch lower when compared to UAE and Qatar… but this scenario is changingwith the Saudi Govt. announcing a large number of Housing projects. Even a 10%increase in per-capita consumption would mean a 5 Million TPA addition in eitherproduction capacities or Imports.Lifting of Export ban: Saudi Arabia has one of the cheapest “cost of manufacture”of OP Cement and export of cement is aa highly viable business idea.Launching of major Industrial and Economic cities like in Jizan, Rabigh etc.,The Installed capacity for production of Cement is expected to increase from90.2 MTPA in 2009 to 115 MTPA by 2011.
8Cement Industry – Capital Equipment What does this mean in terms CAPEX investmentWe foresee an increase of 15 – 25 MTPA in the installed capacity for OPC during the next 5 years which would generate a heavy demand for capital equipment… approx budgets for such CAPEX given below.HeadsFor 1 MTPACement lineMillion SRAveraging for 20 MTPARemarksCost of Mechanical Equipment & Structural Steel Works350 – 4008,000These are for European sourced equipment and you can expect a 30% reduction on same if sourced from ChinaCost of Electrical, Automation and Instrumentation Systems125 – 1753,000The above figures are for Supply of equipment only and does not include Civil works, Site Installation and Commissioning Services
9Cement Industry – Main Capital Equipment What are these Capital EquipmentThe Rotary Kiln Process of producing Cement both Dry and Semi Dry process need the following main capital equipment:Primary Crushers – Hammer or Gyro Crushers for crushing Lime stonesFeeding and Blending Equipment – for preparation of Raw MealCyclones, Pre – heater and Pre CalcinersRotary KilnCoolers – Planetary, Grate etc.Grinding mills – for CementConveying and Bagging unitsESP and Gas Cleaning equipmentBuildings including EOT Cranes with Clinker crab bucketsBelt Conveyors including Galleries and TrestlesUtility Systems including Water, Compressed Air, Gas and Fuel OilMaterial Handling equipment like Trucks and DozersLaboratory and Testing equipmentOther Auxuliiaries
10Typical OPC Manufacturing Process – Rotary Kiln Process
11Cement Industry – Main Spare Parts and Consumables The following are the main Spare parts / Consumables that are needed along with an approx consumption norm and total consumption values if proportioned for installed capacities within GCC and the MENA regionPart / Consumable- Grinding Media- Liners- Refractory- Other Castings and Forgings- Drives, Gear boxes incl couplings- Other Mechanical Spares- Electrical and Instrumentation partsWe will take up and analyze the manufacturing facilities for first 3 consumables which are typical to the cement industry.The remaining 4 are extremely generic and are Industry Verticals by themselves.
12Tons/MTPA of Cement Cap Pieces/MTPA of Cement Cap Cement Industry – Consumption Norms and Market SizeWe give below the average consumption rates for 3 main consumables in terms of SR/Million Tons of Cement Produced.ItemAverage ConsumptionValueUnitGrinding Media1,675,000SR/MTPA of Cement producedLiners458,000Refractory – castable245,000Refractory – bricks2,573,000Converting the above to approx tonnages using avg. market ratesItemAverage consumptionRate SR/TonRate SR/PcTons/MTPA of Cement CapPieces/MTPA of Cement CapGrinding Media1,675,0004,800/=349Liners458,0007,200/=64Refractory – castable245,0003,700/=66Refractory – bricks2,573,00031/=83,000
13Tons / Pieces per MTPA of Cement Cap Demand in Metric Tons for Cement Industry – Consumption Norms and Market SizeBased on the average consumption figures, we can extrapolate and work out the demand for these 3 items in Saudi Arabia, within the GCC and in the MENA region.ItemTons / Pieces per MTPA of Cement CapDemand in Metric Tons forKSAIn GCCMENA48*91*254*Grinding Media (Tons)34916,80031,85088,900Liners (Tons)643,0805,83016,260Refractory - Castable (Tons)663,1686,00616,764Refractory - Bricks (pcs)83,0003,984,0007,553,00021,082,000* - Installed Capacity for Cement in Million Tons / AnnumThe above figures are yearly consumption values as spares and consumables only and does not include first fill or demand from new installations.
14Cement Industry – What does it take to manufacture parts Grinding MediaMade from Hi Carbon or Alloy Steels, these are usually round balls or cylinders ranging from sizes of 1.5 mm up to 120 mm.Grinding Media also finds uses in other industrial applications which involves crushing, grinding or polishing.Manufacturing Process and Facilities needed for Grinding MediaThere are various manufacturing routes for Grinding Media namely:Casting – used for larger sizes andForging – used for media that needs specific physical properties at the coreBoll Rolling – very popular technology - used for smaller sizesSintering – for non ferrous mediaManufacture of Grinding Media needs a Steel Melt Shop, A Forging unit or a Ball Rolling facility. Additionally you need a Heat Treatment shop and a Grinding unit.
15Cement Industry – What does it take to manufacture parts Grinding Media
16Cement Industry – What does it take to manufacture parts Grinding MediaHi Chrome Cast Steel MediaTypical Hardness : Surface HRC Core HRC 55-60Chemical Composition : C: ; Mn: ; Cr10-26; Mo: ;Cast Steel Roller Type MediaUsual Sizes (mm): Ø16x16, Ø18x18, Ø18x22, Ø20x25, Ø20x30, Ø20x35, Ø22x30, Ø25x25, Ø25x30, Ø25x35, Ø30x35, Ø30x40, Ø35x40, Ø35x45Chemical Composition for Low Chromium Alloy Steel CastingsC: Si: Mn: Cr: Mo: 0-1 Cu: S: ≤0.1 P: ≤0.1Microstructure: Pearlite + Carbide 45-50Chemical Composition for High Chromium Alloy Steel CastingsC: Si: Mn: Cr: Mo: ≤2 Cu: ≤1 S: ≤0.8 P: ≤0.1Microstructure: Martensite + Carbide 56-62
17Cement Industry – What does it take to manufacture parts Grinding MediaFacility RequiredConsidering the Market Potential, we would recommend a setting up of a Rolling and Forge based plant for the GCC Market with an annual capacity of around 30,000 Metric Tons of ball and cylinder media.A few important parameters would be as belowThe project must be setup as a JV with any of the top OEM’s with a buyback agreement for at least 30% – 50% of the annual production.Additionally “Off-Take Agreements” with 2 or 3 end users must be secured to cover the balance installed capacityTypical Product Mix must include multiple sizes so that a wider spectrum of Industries could be served.The project must be built on a “scalable model” with an eye on future expansions in capacity, considering the projected increase in cement manufacturing capacity
18Cement Industry – What does it take to manufacture parts Grinding MediaKey Financial and Resources Data for a new ProjectHeadsUnitsValueRemarksAnnual CapacityM Tons30,000PlannedEstimated Project CostMillion SR140 – 170Excludes land and IDC, depending technology usedEstimated Turnover144@ 100% capacityLand for ProjectSq Mtrs.75,000 – 100,000Depends on production process and stocking needs.Gross Margins%18% – 22%Excludes TaxesApprox Power ConsumptionMW6 – 9Depends on the plant and equipmentApprox ManpowerNos.100 – 120Depends on the level of automation
19Cement Industry – What does it take to manufacture parts LinersAlso made from wear and impact resistant Alloy Steels, liners are made from cast steel plates and are shaped as per the Mill designers requirements. The chemistry, physical properties and shapes all vary from Mill to MillFacility RequiredManufacture of Liners need an Alloy Steel Foundry (with an Induction Furnace), a Heat Treatment shop and an automated machine shop.Liners are usually produced as a part of a wider range of similar Alloy Steel castings and therefore a decision on the capacity of such plants must be taken based on a detailed market survey within other industries like Mining, Mineral Processing, Steel, Food, Glass etc.An alloy steel foundry could produce a multitude of products and as such would be a very good investment in the GCC.
20Cement Industry – What does it take to manufacture parts LinersA viable Alloy Steel Foundry could be based on the following configuration:2 nos. Induction furnaces (cap 2 Tons each, with 4 crucibles i.e. 2 standby)Automatic Mould making machines + Manual Mould Shop for larger castingsFettling, Cleaning and Storage areasMachine Shop – tailored for the end productsStress Relieving and Heat Treatment areaThe above plant will have an annual capacity of around 30,000 tons of Alloy Steel castings and will cater to a number of industries.Typical product mix will include Liners for Grinding Mills, Crushers and other Rotary Equipment, Valve castings and other jobbing worksConsidering the GCC market for liners to be around 6,000 tons for Liners alone, we would recommend that a plant capacity of 20,000 TPA
21Cement Industry – What does it take to manufacture parts LinersTraditionally liners used to be made of Manganese Steel Casting, but lately, Chrom-Moly alloys have made their presence and self fixing liners and diaphragms are being used in the industryLiners inside a Ball MillVarious Shapes of Cast Steel linersCast Steel Diaphragm
22Cement Industry – What does it take to manufacture parts LinersKey Financial and Resources Data for a new ProjectHeadsUnitsValueRemarksAnnual CapacityM Tons20,000Based on 90% cap utilizationEstimated Project CostMillion SR80 – 110Excludes land and IDC, depending technology usedEstimated Turnover144At full capacity.Land for ProjectSq Mtrs.70,000 – 85,000Depends on production process and stocking needs.Gross Margins%15% – 20%Excludes TaxesApprox Power ConsumptionMW5 – 8Depends on the plant and equipmentApprox ManpowerNos.100 – 120Depends on the level of automation
23Cement Industry – What does it take to manufacture parts RefractoryA very important part of any Pyro based industry, Refractories are materials that provide linings for high-temperature furnaces and other processing units. Refractories must be able to withstand physical wear, high temperatures (above 538°C [1000°F]), and corrosion by chemical agents.There are two general classifications of refractories, clay and nonclay. The six-digit source classification code (SCC) for refractory manufacturing is Clay refractories are produced from fireclay (hydrous silicates of aluminum) and alumina (57 to 87.5 percent).Refractories are produced in two basic forms, formed objects, and unformed granulated or plastic compositions. The preformed products are called bricks and shapes. These products are used to form the walls, arches, and floor tiles of various high-temperature process equipment.Unformed compositions include mortars, gunning mixes, castables (refractory concretes), ramming mixes, and plastics. These products are cured in place to form a monolithic, internal structure after application.
24Cement Industry – What does it take to manufacture parts RefractoryA very important part of any Pyro based industry, these are essentially non metallic lining materials within a shell, vessel, pipe or equipment, within which there is heat generated and refractory materials are used to shield the outer casing from the heat.Facility RequiredRefractory manufacture essentially involvesRaw Material Grinding and Blending,Forming,Heating or FiringFinal Processing.A highly versatile product, Refractory Material is used across different industry verticals like Cement, Steel, Petrochemicals, Pharmaceuticals, Glass etc.The final processing for bricks and castables differ due to the nature of the end product and hence the packaging, storage and logistics need to be well coordinated for a comprehensive manufacturing unit.
25Cement Industry – What does it take to manufacture parts Refractory
26Cement Industry – What does it take to manufacture parts RefractoryFire Clay BricksFused Magnesia BricksMagnesia Chrome BricksHigh Alumina Anchor BrickAlumina Clay Fire BrickCastable Refractory
27Cement Industry – What does it take to manufacture parts RefractoryTypical Project CapacityThere are several factors that need to be considered for a Refractory Manufacturing Project… Most important ones includeSteel Plants, Petrochem Plants have a sizable consumption when it comes to Castable refractory and this must be factored into the capacity.Refractory Bricks are best sold within a 300 Kms radius as freight then plays an important factor in the cost.The location of the plant must consider the individual capacities for each type of refractoryBased on the above, we would recommend setting up of mid size Refractory Manufacturing companies with capacities as below:200,000 pieces – Brick type clay based refractory +20,000 – Tons of castable refractory mix
28Cement Industry – What does it take to manufacture parts RefractoryKey Financial and Resources Data for a new ProjectHeadsUnitsValueRemarksAnnual CapacityM Tons200,00020,000 TonsBricksCastable Refractory mixEstimated Project CostMillion SR90 – 120Excludes land and IDC, depending technology usedTurnover – Bricks– Castables6.274.0i.e. SR millionLand for ProjectSq Mtrs.80,000 – 100,000Depends on production process and stocking needs.Gross Margins%15% – 18%Excludes TaxesApprox Power ConsumptionMW3 – 4Depends on the plant and equipmentApprox ManpowerNos.120 – 150Depends on the level of automation
29Cement Industry – Benefits of local manufacture Why produce locally?Self Reliance – Cement is a core sector industry and self reliance on important inputs is of strategic importance.Value Addition – Localizing inputs increase value addition in the final productLocalizing manufacture of various products adds to the GDP of the country and is a major source of employment generation for the youth of this country.Most of the input items listed are used by a multitude of industries and investment in such facilities would help in bringing down the input costs in various sectors.Most Importantly… why buy from overseas when you CAN PRODUCE!
30Cement Industry – Summary Observation and InferencesThe Cement Industry in KSA and the MENA region at large is poised for a definite growth within the next 2 – 5 years, driven by increasing population, urbanization and investments in the infrastructure sector.It is amply clear that even with an installed annual production capacity of over 90 million metric tons, the GCC region does not have a single core sector industry that manufacturers equipment for this sector.Almost all spare parts and consumables are imported from Europe, SE Asia, China and India.Our study reveals that the almost all Cement Producers in the region still depend on the Original Plant Supplier for the necessary spare parts and services and very little effort has been made to localize their source.There is a huge investment potential in the GCC for various support industries, but it would need a lot of support from the Cement Producers, who would have to support such initiatives.Localizing manufacture of spares and consumables is the way forward for the Cement Industry