Cement, Energy and Environment

Holcim already owns production facilities in India through agreements with ACC and Ambuja Cement, two of the country's largest cement producers, and holds interests totalling about 46 per cent of equity in each company. In 2008/2009 ACC Ltd produced 20.9 million t of cement and 14.3 million to of clinker, while Ambuja Cements produced 18 million t of cement and 11.8 million t of clinker the same year. Ireland's CRH Pic is also looking to expand its presence in India. CRH owns a 50 per cent stake in My Home Industries Ltd, a 50:50 joint venture company with Hyderabad-based My Home Group. The two partners plan to invest around US$ 1 billion to expand their cement production capacity from 5 million tpa at present to 15 million tpa by 2016. New investment Among other new investment schemes recently announced, Madras Cements Ltd is planning to invest US$ 178 million to increase the production capacity of its Ariyalur plant in southern Tamil Nadu by 2.5 million tpa to boost the plant'!'> capacity to 4.5 million tpa by April 2011 from 2 million t previously. In western India, the Surya Group has announced plans to invest US$873 million in constructing a new 5 million tpa capacity cement plant in Gujarat state, while Jaiprakash Associates has disclosed plans to invest US$ 640 million to expand the firm's cement production capacity. Other planned investments include the Shree Group's announcement of plans to invest a total of US$414 million in two cement plant projects. In the northwest, Shree Cement is investing US$ 97 million this year, setting up a 1.5 million tpa clinker and grinding unit in Rajasthan. Recently, in June, the group announced plans to invest US$ 317.7 million in southern Karnataka state to build a 3 million tpa cement plant, as well as an additional US$ 106 million constructing an associated 100 MW power plant. The buoyant outlook for India's cement industry also continues to encourage mergers and acquisitions. French cement producer Vicat has recently acquired a controlling 51 per cent stake in Bharathi Cement Co Ltd , in a move designed to develop cement sales in southern India, which accounts for about 40 per cent of the total Indian cement market. In May, private equity firm Kohiberg Kravis Roberts (KKR) signed an agreement to buy a 15% - 20% stake in Dalmia Cement (Bharat) Ltd's unlisted business unit for up to Rs. 7.5 billion . The unlisted unit holds Dalmia's 9 million tpa cement production capacity, the firm's 45.4 per cent stake in cement producer OCL and 10 million t of proposed new cement manufacturing capacity. On target Meanwhile, with the cement industry on track to achieve the government's target of 298 million t installed production capacity in 2012, the government is beginning preparations to launch the next planning programme due to begin in 2011 to set development targets for the cement industry and other sectors for the 1 ih India Plan (2012- 2017). "The government will start on the next five year planning preparations in 2011 . There will be a big increase in production capacity as demand will grow for infrastructure", Joshi remarked. "Double digit growth will occur, though it depends on government plans for the future. The plan could be for the same increase in production capacity as in this current plan, which is an additional 130 million t." Fuel supplies for the cement industry are among the topics to be considered in drawing up the 1 i h India Plan cement targets . Coal is the main fuel used for cement production with annual consumption growing in line with increased cement production. Joshi noted that coal imports for cement production have risen sharply in recent years, as cement producers have been unable to procure sufficient local supplies due to strong competition from Indian power stations, which are expanding coal-fired electricity production to meet increased domestic power demand. ''There is some problems with coal supplies as the power sector needs thermal coal for electricity generation. The cement industry here is looking for other fuel sources," Joshi noted. "We already are using petcoke as fuel but not natural gas as sufficient gas is not available. Also waste fuel sources could be used but this depends on government clearance for environmental reasons." Meanwhile, research by the CMA has revealed the cement industry's increasing reliance on rail transport to dispatch cement orders to ~or markets. The volume of cement being dispatched to customers by rail has grown at a compound rate of 11 .7 per cent over the past five years, reaching 68.3 million t 90 -~