Cement, Energy and Environment

Background Cement is a cyclical commodity bearing a direct correlation with GDP - rising with a growing economy while declining with a shrinking one. It plays an influential role in an economy due to its strong linkages with other sectors such as construction, transportation, coal and power. An installed production capacity of over 455 million tonnes, places the Indian cement industry as the second largest producer in the world, second to China (Cement Sector Anaysis Report: Equity Master, 2019). This capacity is projected to increase further by 20 million tonnes per annum from 2019-21 (Cement Industry in India: India Brand Equity Foundation, 2019), reaching around 600 million tonnes by 2025 (WBCSD, 2018). Actual production in 2018 was recorded at 305 million tonnes resulting in an average capacity utilization of 67% (Cement Sector Anaysis Report: Equity Master, 2019). Demand fueling such supply can be attributed to factors including government initiatives on infrastructure such as ports, railway corridors, smart cities, affordable housing; incentives (tax benefits, low interest rates); and income boost (Cement Manufacturers Association, 2018). While housing and real estate sector contribute to 65% of the market, public infrastructure and industrial development follow at 20% and 15% respectively. By 2025, demand for cement in India is expected to reach 550-600 million tonnes per annum, driven primarily by the housing and infrastructure sectors. However, per capita consumption of cement in India still stands at 200 kg compared to 500 kg world average and 1,000 kg that of China. These figures indicate a scope for significant growth in the Indian cement industry in the long term (Cement Sector Anaysis Report: Equity Master, 2019). With a total of 210 large cement plants (1 million tonnes capacity per annum or more) and 350 small cement plants sprawled across the country, the cement industry provides employment to more than a million people, directly or indirectly (Cement Industry in India: India Brand Equity Foundation, 2019). Resource intensity of cement industry Cement manufacturing involves a robust production process. The steps entailed in producing cement include management of 5 major components – water, energy, emission, raw materials and waste. Analysis of these in the subsequent paragraphs emphasizes the resource intensity of this sector. While cement production is projected to rise in future with the increase in population and rapid industrialization, the burden on the existing resources will increase significantly. This section highlights the stress on essential resources demanded by the cement industry. Out of 70% of water present on Earth, only 3% is available as fresh water, with about 1% fit for human consumption. Major Indian cement plants are in dry and arid regions of India including Rajasthan and Andhra Pradesh, thereby further adding pressure on managing water for business and social obligations. The water requirement for Indian cement sector is projected to reach around 346.64 million m 3 and 782.77 million m by 2025 3 and 2050 respectively (Selvarajan, 2017). In the same time, an estimated 52% of the world would live in water-stressed regions. 1 Lead Author : Dipankar Ghosh , Partner & Lead-Think through Consulting (TTC) With contributions from: Arpit Kumar & Geet Karan Sohal CEMENTING RESPONSIBILITY THROUGH CIRCULARITY 6