During the last couple of years, the Sokhna plant in Egypt developed and implemented an innovation change to drastically lower its energy costs. The experience prepared the team to weather future shifts in fuel costs, inevitable as they are. “We have increased our resilience and our immunity to cost shifts,” says Khaled Ghareib, Industrial Director of Lafarge Cement Egypt.
A first-of-its-kind conversion
Fuel is an essential cost driver in the energy-intensive cement industry, representing about 14 percent of total costs. To stay competitive, managing costs is critical.
Since the Arab Spring in 2011, natural gas has been in short supply and, as such, much more expensive. Because of this, the plant began looking at alternate fuel sources. The prices of lower quality solid fuel were attractive. But how best to utilize them? In 2014, the team in Egypt launched a project to switch a significant percentage of the fuel mix to petcoke, a byproduct of the oil refining process.
Applying “asset light” thinking, they decided to take one of the eight cement mills and convert it to a mill for processing petcoke. By modifying this existing asset, they would be able to save about CHF 30 million compared to building a new mill. But this was challenging – there was no blueprint for such a conversion as it was the first of its kind in the industry.
“The Group empowered us, trusted us, to develop a solution through collaboration,” says Ghareib. “When people believe in a dream, they’ll make it happen. Working with the regional Cement Industrial Performance project management and engineering teams, we found a way to do it.” By May 2014 the mill was converted.
When people believe in a dream, they’ll make it happen.
- Significant cost saving potential has been uncovered through the process of realizing synergies.
- Cost excellence is in the DNA of our organization and is essential to success in our industry.
- Driven by our performance organization, we will use all the available levers to control and reduce our costs.
- We will deliver the total run rate synergies of more than CHF 1 billion by the end of 2017, ahead of schedule.
- We will leverage expertise, best practice and scale benefits throughout the countries in which we operate.
- We will target all cost levers, including fuel mix optimization and energy efficiency to address rising energy prices.
Getting the optimal performance
In 2016, the team faced its second challenge: improving productivity of the converted mill. Again relying on their expansive expertise and the power of collaboration, the team succeeded in fully optimizing the plant, doubling productivity from under 40 tons per hour to above 80 tons per hour. This allowed them to significantly increase the percentage of petcoke used in the mix, taking advantage of the low cost of this new fuel.
“The day we had commissioned the inaugural run of the fully optimized mill, I was there with the plant management team. We were in the control room for the launch, but things didn’t go as expected,” said Ghareib. At night, it was suggested that the team sleep in shifts, as the plant staff worked around the clock to get it started. “But no one did,” Ghareib remembers. “When we got the mill started for the first time 36 hours later, we were all there, thrilled to see the dream become reality.”
We were all there, thrilled to see the dream become reality.
The Sokhna plant, LafargeHolcim’s biggest cement plant
Petcoke, a byproduct of the oil refining process, is used as fuel in cement production
Staying flexible and agile
The impact on plant costs was significant. “In two years we’ve gone from zero to 80 percent petcoke. Our agility allowed us to shift from one fuel to another, capitalizing on the lower costs,” notes Ghareib. As a result, the fuel bill for the plant was reduced by CHF 60 million in 2016 compared with 2015.
The experience of shifting fuel sources in the past couple of years has prepared the team for similar exercises in the future. “The market is characterized by movement,” says Ghareib. “It’s a question of being ready when the opportunity comes.”
As for the next move? Ghareib says, “The name of the game next year is to shift to 20 percent alternative fuel, using processed waste. The team is ready.”
An initiative to decrease energy costs
The Egypt project was part of the global Fuel Mix Optimization Initiative, FMOI, started in early 2016. The initiative embodies the Group’s priorities of fostering innovation, making “asset light” decisions and promoting sustainability. The objective is to optimize the fuel mix used by not only reducing costs, but also improving product quality and lowering emissions. Fuel mix optimization will vary, of course, by location and external circumstances.
FMOI is a collaborative initiative, involving know-how from Sustainable Development, Geocycle, CIP (Cement Industrial Performance) and Procurement. By using inter disciplinary expert know-how, a global library of knowledge about optimized fuel mixes is being built to be used by plants as needed.