Transcript Slide 1

Indigenization of Spare Parts and
Consumables used in the
Cement Industries
Present by: Chanchal Roy
Consultant – Alpha International Management Consultants
28th December 2009
CEMENT INDUSTRY – SAUDI ARABIA
A Prefeasibility study on the Supply of Capital Equipment, Spare Parts
and Consumables for this core sector industry
This study covers…
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An overview of the Cement Industry
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Consumption Patterns, Rise in demand for Cement
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Capital Equipment & Process Flows
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Spare Parts and Consumables
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Brief Study on 3 important Consumables..
- Grinding Media
- Liners
- Refractory
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Observation and Inferences
Cement 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.
Cement Industry in Saudi Arabia: A Snapshot
Total Installed Capacity
: 48 million metric tons
Total Cement Production Capacity (2009
12
10
8
6
4
2
0
Cement Industry in the GCC & MENA Region
Syria
7 MTPA
Tunisia
7.3 MTPA
Iraq
25 MTPA
(90% idle)
Kuwait
2.6 MTPA
Lebanon
5 MTPA
Morocco
16 MTPA
Jordan
4.8 MTPA
Iran
52 MTPA
Algeria
15.5 MTPA
Libya
5 MTPA
Egypt
45.3 MTPA
Bahrain
0.5 MTPA
Saudi
Arabia
48 MTPA
Qatar
4.3 MTPA
UAE
29.7 MTPA
Sudan
O.7 MTPA
Total Installed Capacity for Cement – GCC
Total Installed Capacity for Cement – MENA Region
(without Iraq)
Yemen
4.3 MTPA
: 91 Million Tons/Year
: 254 Million Tons/Year
Oman
5.1 MTPA
Cement Industry – Consumption GCC wide
Types of Cement produced
: Ordinary Portland Cement
Sulphate Resistant Cement
Pozzolan Cement
Oil Cement
Cement Consumption Pattern incl. Per-capita and Total in Metric Tons (est. 2009)
Per
Capita/year
(MT/year)
Population
2009
(million)
National
Consumption
(MT)
Total
Installed
Cap (MT)
Bahrain
0.30
0.73
0.22
0.50
Kuwait
0.66
2.69
1.78
2.60
Oman
1.68
3.42
5.75
5.10
Qatar
4.71
0.83
3.91
4.30
Saudi Arabia
1.63
28.69
46.76
48.0
UAE
5.10
4.80
24.48
29.7
GCC average
2.36
41.16
97.14
90.2
Country
Cement Industry – Demand Supply scenario
Increase in Demand
The 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 and
much lower when compared to UAE and Qatar… but this scenario is changing
with 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 either
production 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 from
90.2 MTPA in 2009 to 115 MTPA by 2011.
Cement Industry – Capital Equipment
What does this mean in terms CAPEX investment
We 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.
Heads
For 1 MTPA
Cement line
Million SR
Averaging for
20 MTPA
Million SR
Remarks
Cost of Mechanical Equipment &
Structural Steel Works
350 – 400
8,000
Cost of Electrical, Automation and
Instrumentation Systems
125 – 175
3,000
These are for European
sourced equipment and
you can expect a 30%
reduction on same if
sourced from China
The above figures are for Supply of equipment only and does not include Civil
works, Site Installation and Commissioning Services
Cement Industry – Main Capital Equipment
What are these Capital Equipment
The Rotary Kiln Process of producing Cement both Dry and Semi Dry process need
the following main capital equipment:
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Primary Crushers – Hammer or Gyro Crushers for crushing Lime stones
Feeding and Blending Equipment – for preparation of Raw Meal
Cyclones, Pre – heater and Pre Calciners
Rotary Kiln
Coolers – Planetary, Grate etc.
Grinding mills – for Cement
Conveying and Bagging units
ESP and Gas Cleaning equipment
Buildings including EOT Cranes with Clinker crab buckets
Belt Conveyors including Galleries and Trestles
Utility Systems including Water, Compressed Air, Gas and Fuel Oil
Material Handling equipment like Trucks and Dozers
Laboratory and Testing equipment
Other Auxuliiaries
Typical OPC Manufacturing Process – Rotary Kiln Process
Cement 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 region
Part / Consumable
- Grinding Media
- Liners
- Refractory
- Other Castings and Forgings
- Drives, Gear boxes incl couplings
- Other Mechanical Spares
- Electrical and Instrumentation parts
We 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.
Cement Industry – Consumption Norms and Market Size
We give below the average consumption rates for 3 main consumables in terms of
SR/Million Tons of Cement Produced.
Item
Average Consumption
Value
Unit
1,675,000
SR/MTPA of Cement produced
Liners
458,000
SR/MTPA of Cement produced
Refractory – castable
245,000
SR/MTPA of Cement produced
2,573,000
SR/MTPA of Cement produced
Grinding Media
Refractory – bricks
Converting the above to approx tonnages using avg. market rates
Item
Average
consumption
Rate SR/Ton
Rate SR/Pc
Tons/MTPA of Cement Cap
Pieces/MTPA of Cement Cap
1,675,000
4,800/=
349
Liners
458,000
7,200/=
64
Refractory – castable
245,000
3,700/=
66
2,573,000
31/=
83,000
Grinding Media
Refractory – bricks
Cement Industry – Consumption Norms and Market Size
Based 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.
Item
Tons / Pieces
per MTPA of
Cement Cap
KSA
In GCC
MENA
48*
91*
254*
Grinding Media (Tons)
349
16,800
31,850
88,900
Liners (Tons)
64
3,080
5,830
16,260
Refractory - Castable
(Tons)
66
3,168
6,006
16,764
83,000
3,984,000
7,553,000
21,082,000
Refractory - Bricks (pcs)
Demand in Metric Tons for
* - Installed Capacity for Cement in Million Tons / Annum
The above figures are yearly consumption values as spares and consumables
only and does not include first fill or demand from new installations.
Cement Industry – What does it take to manufacture parts
Grinding Media
Made 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 Media
There are various manufacturing routes for Grinding Media namely:
 Casting – used for larger sizes and
 Forging – used for media that needs specific physical properties at the core
 Boll Rolling – very popular technology - used for smaller sizes
 Sintering – for non ferrous media
Manufacture 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.
Cement Industry – What does it take to manufacture parts
Grinding Media
Cement Industry – What does it take to manufacture parts
Grinding Media
Hi Chrome Cast Steel Media
Typical Hardness
: Surface HRC 58-65 Core HRC 55-60
Chemical Composition : C: 2.15-3.2; Mn: 0.80-1.20; Cr10-26; Mo: 0.40.6;
Cast Steel Roller Type Media
Usual Sizes (mm): Ø16x16, Ø18x18, Ø18x22, Ø20x25, Ø20x30, Ø20x35,
Ø22x30, Ø25x25, Ø25x30, Ø25x35, Ø30x35, Ø30x40, Ø35x40, Ø35x45
Chemical Composition for Low Chromium Alloy Steel Castings
C: 2.2-3.6 Si: 0.4-1.2 Mn: 0.3-0.8 Cr: 0.5-1.5 Mo: 0-1 Cu: 0-0.6 S: ≤0.1 P: ≤0.1
Microstructure: Pearlite + Carbide 45-50
Chemical Composition for High Chromium Alloy Steel Castings
C: 2.0-3.2 Si: 0.3-1.2 Mn: 1.3-2.6 Cr: 11-16 Mo: ≤2 Cu: ≤1 S: ≤0.8 P: ≤0.1
Microstructure: Martensite + Carbide 56-62
Cement Industry – What does it take to manufacture parts
Grinding Media
Facility Required
Considering 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 below
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The 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.
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Additionally “Off-Take Agreements” with 2 or 3 end users must be secured to
cover the balance installed capacity
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Typical Product Mix must include multiple sizes so that a wider spectrum of
Industries could be served.
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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
Cement Industry – What does it take to manufacture parts
Grinding Media
Key Financial and Resources Data for a new Project
Heads
Units
Value
M Tons
30,000
Estimated Project Cost
Million SR
140 – 170
Estimated Turnover
Million SR
144
Land for Project
Sq Mtrs.
75,000 –
100,000
Gross Margins
%
18% – 22%
Approx Power
Consumption
MW
6–9
Approx Manpower
Nos.
100 – 120
Annual Capacity
Remarks
Planned
Excludes land and IDC,
depending technology used
@ 100% capacity
Depends on production process
and stocking needs.
Excludes Taxes
Depends on the plant and
equipment
Depends on the level of
automation
Cement Industry – What does it take to manufacture parts
Liners
Also 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 Mill
Facility Required
Manufacture 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.
Cement Industry – What does it take to manufacture parts
Liners
A viable Alloy Steel Foundry could be based on the following configuration:
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2 nos. Induction furnaces (cap 2 Tons each, with 4 crucibles i.e. 2 standby)
Automatic Mould making machines + Manual Mould Shop for larger castings
Fettling, Cleaning and Storage areas
Machine Shop – tailored for the end products
Stress Relieving and Heat Treatment area
The 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 works
Considering 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
Cement Industry – What does it take to manufacture parts
Liners
Traditionally liners used to be made of Manganese Steel Casting, but lately, ChromMoly alloys have made their presence and self fixing liners and diaphragms are being
used in the industry
Liners inside a Ball Mill
Various Shapes of Cast Steel liners
Cast Steel Diaphragm
Cement Industry – What does it take to manufacture parts
Liners
Key Financial and Resources Data for a new Project
Heads
Units
Value
M Tons
20,000
Estimated Project Cost
Million SR
80 – 110
Estimated Turnover
Million SR
144
Land for Project
Sq Mtrs.
70,000 –
85,000
Gross Margins
%
15% – 20%
Approx Power
Consumption
MW
5–8
Approx Manpower
Nos.
100 – 120
Annual Capacity
Remarks
Based on 90% cap utilization
Excludes land and IDC,
depending technology used
At full capacity.
Depends on production process
and stocking needs.
Excludes Taxes
Depends on the plant and
equipment
Depends on the level of
automation
Cement Industry – What does it take to manufacture parts
Refractory
A 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 3-05-005. 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.
Cement Industry – What does it take to manufacture parts
Refractory
A 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 Required
Refractory manufacture essentially involves
 Raw Material Grinding and Blending,
 Forming,
 Heating or Firing
 Final 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.
Cement Industry – What does it take to manufacture parts
Refractory
Cement Industry – What does it take to manufacture parts
Refractory
Fire Clay Bricks
High Alumina
Anchor Brick
Fused Magnesia
Bricks
Alumina Clay
Fire Brick
Magnesia Chrome
Bricks
Castable
Refractory
Cement Industry – What does it take to manufacture parts
Refractory
Typical Project Capacity
There are several factors that need to be considered for a Refractory Manufacturing
Project… Most important ones include
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Steel Plants, Petrochem Plants have a sizable consumption when it comes to
Castable refractory and this must be factored into the capacity.
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Refractory Bricks are best sold within a 300 Kms radius as freight then plays an
important factor in the cost.
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The location of the plant must consider the individual capacities for each type of
refractory
Based 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
Cement Industry – What does it take to manufacture parts
Refractory
Key Financial and Resources Data for a new Project
Heads
Units
Value
M Tons
200,000
20,000 Tons
Estimated Project Cost
Million SR
90 – 120
– Bricks
– Castables
Million SR
Million SR
6.2
74.0
Land for Project
Sq Mtrs.
80,000 –
100,000
Gross Margins
%
15% – 18%
Approx Power
Consumption
MW
3–4
Approx Manpower
Nos.
120 – 150
Annual Capacity
Turnover
Remarks
Bricks
Castable Refractory mix
Excludes land and IDC,
depending technology used
i.e. SR. 80.2 million
Depends on production process
and stocking needs.
Excludes Taxes
Depends on the plant and
equipment
Depends on the level of
automation
Cement 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 product
Localizing 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!
Cement Industry – Summary
Observation and Inferences
1) The 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.
2) 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.
3) Almost all spare parts and consumables are imported from Europe, SE Asia,
China and India.
4) 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.
5) 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.
6) Localizing manufacture of spares and consumables is the way forward for
the Cement Industry
Thank You!
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