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DEMAND FOR COAL IN

MIDDLE EAST

Prepared by: Eng. Waleed AbourayaPresident of RGS Egypt Ltd.

INTRODUCTION

From buildings to tennis racquets and refrigerators to shampoo, coal is

used in the manufacture of products that touch every part of our

lives.

Coal is one of the most economic and

most important sources of energy, a

quarter of the global energy production,

41% of the Electricity Production and

more than 60% for Steel Making.

We will go through a list of the major uses

of Coal:

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Coal Main Usages

Other Coal Usages

Coal is also used in thousands of other applications and products like soap,fiber making, rayon, cooking fuel etc.

Since 2000, global coal consumption has grown faster than any other fuel. The five largest coal users - China, USA, India, Russia and Japan - account for 76% of total global coal use.

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Steam Coal Demand in The Middle East

It is a coal grade between Bituminous coal and Anthracite coal,

and was once widely used as a fuel for steam locomotives

Also known as Thermal Coal, is mainly used in power

generation. It’s called steaming, because it is used to fire

power plants that produce steam for electricity and

industrial uses.

It’s mainly used because of its calorific value, which

is usually in range of 4000-6500 Kcal/KG

The main competitor of Steam Coal is Petcoke; where its fuel grade

represents nearly 80% of worldwide Petcoke production and is a source of

fuel for cement kilns and electric power generation.

Although Middle East is known to be rich in Oil resources, Steam Coal

represents the main fuel source for cement production; which will be further

discussed later on.

Coal-Fired Power Generation in Egypt

Currently, there’s no power generation from steam coal yet. However, 1st

MOU has been signed between the Egyptian Government and Al Nowais

Group (U.A.E.) to build the 1st coal-fired power generation plant in Sinai,

Egypt to produce 1300 Mega Watt annually.

Egypt has plans to add 17,000 MW of coal-fired

power generation till year 2017.

Important to mention that total power production

in Egypt is 28,000 MW. So this represent about 60%

increase in power capacity fully relying on Coal and solid fuels generation.

The Middle East doesn’t have any coal production or reserve except in

Egypt; which has some steam Coal reserves.

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Egypt Coal Reserve

Egypt has one small coal mine, the

Maghara underground mine in the Sinai

Peninsula. Production was designed to

be around 600,000 t/year, with

confirmed reserve of about 60 million

tons.

The Maghara Mine halted production

due to some financial difficulties. However,

currently there are some negotiations that these debts could be turned into shares

owned by a company running the mine.

If this mine is back to operation, it can help to cover a portion of the increasing

demand for steam coal in Egypt.

Coal Specifications of Al Maghara Mine

Although it

doesn’t look

like a great

quality coal,

it still has a

descent

calorific

value; more

than many

other steam

coal

produced

around the

world.

Test Item Results

Moisture % 2-4

Volatile Matter % 48-55

Ash % 6-10

Fixed Carbon % 38-41

Gross Calorific

Value

6500-

7100

Net Calorific Value 6200-

6900

Carbon 67-72

Hydrogen 3-6.2

Nitrogen 1.2-1.3

Test Item Results

Sulphur 2-3

Oxygen 11-12.1

Hard groove Index 44-57

Ash Fusibility

Initial Deformation

Temp.

1258-

1380C

Softening Temp. 1317-

1418C

Hemispherical

Temp.

1400-

1428C

Fluid Temp 1424-

1434C

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Metallurgical Coal

Also known as Coking Coal; which is used in

producing Metallurgical coke necessary for

production of iron & steel making in blast

furnaces.

It is used as a fuel and as a reducing agent in

smelting iron ore in a blast furnace. The result

is pig iron, and is too rich in dissolved carbon,

so it must be treated further to make steel. The

coking coal should be low in sulfur and

phosphorus, so they do not migrate to the metal

A high quality coke should be able to support a smooth descent of the blast

furnace burden with as little degradation as possible, while providing the lowest

amount of impurities, highest thermal energy, highest metal reduction, and optimum

permeability for the flow of gaseous and molten products.

The only blast furnace operators in the whole Middle East is in

Egypt; in the Egyptian Iron & Steel Co. (EISCO).

Coke & Steel Industry in The

Middle East

Consequently, the Egyptian company ‘Al Nasr Co. for Coke &Chemicals (Chemicoke)’ was established to serve EISCO; as itsmain & sole supplier of blast furnace coke.

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Al Nasr Co. for Coke & Chemicals

The company started with 4 batteries. Their annual capacity was

1.6-1.8 MT of Met. Coke. Currently one battery is fully

demolished & is being re-constructed.

Another battery is being revamped by changing its refractory &

coke oven doors. The other 2 coke batteries are working with less

efficiency. Consequently, their total annual production currently is

only 600-700 MT.

When they had full production, they used to export almost

500,000 MT coke every year. But right now their entire production

is utilized by the EISCO; which is the only steel plant operating by

blast furnace in Egypt.

A Closer Look to Middle East

COAL BUYING IN THE CONTEXT OF

CEMENT

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Cement Industry in Middle

East

The main fuel used for firing pre-heater cyclone and rotary kiln is coal.

Therefore, coal plays an important role in the manufacturing process of

cement. Based on the composition of raw feed, a wide range of coal is used. In

a cement plant; two systems of coal firing are used, namely, Direct Firing and

Indirect firing.

In direct firing system, coal is

milled on line and is directly

fed to the kiln. High moisture

coal is not suitable for direct

firing, as this has the effect of

lowering the flame

temperature and therefore the

process efficiency.

In indirect firing system, coal is

milled off line and stored in a

bunker from where it is fed to

the kiln as per the

requirement.

Cement capacity and demand continues to

accelerate in the GCC and Middle East countries as

the construction sector is boosted by high volume of

government projects. Countries like Turkey and

Saudi Arabia continues to consolidate and increase

capacity to meet domestic consumption.

Saudi Arabia's King has issued a directive to fund more

cement plants and import around 10 million MT of

cement in order to offset a shortage in the country.

Iran has moved to be the 3rd largest exporter of cement

globally after China and India, exporting to as many as

twenty-four countries including Afghanistan, Azerbaijan, Russia

and Africa.

The cement landscape in Iraq is also changing

as new green-field cement plants sprouts out in

the country, making it more self-sufficient.

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The UAE has about 10 cement plants, but its capacity way outstretches

consumption. Today, it is forced to export the commodity to countries,

both near and far.

1. Union Cement Co. 7. Jebel Ali Cement Co.

2. Binani Cement Co. 8. National Cement Co.

3. Emirates Cement Company (Lafarge)

4. Fujairah Cement Co. 9. Rak White Cement Co.

5. Gulf Cement Co. 10. Sharjah Cement Factory

6. Star Cement Co, L.L.C

Kuwait Cement Company is the main Cement

producer in Kuwait; which has a licensed design

production capacity of 3.8 million tons annually of

cement, whereas the operating capacity has reached

more than 5 million tons.

Jordan Cement Factories (Lafarge) is the leading

cement company in Jordan. It owns two cement plants,

one in Fuheis and another in Rashadiyah, and has an

export terminal in Aqaba. Currently the company

produces 4.6 million tons Cement annually.

Cement Industry Egypt

In 2004 the number of the cement's companies has reached 14 companies

and their production capacities has reached more than 35 million tons of

normal grey cement and 700 thousand tons of white cement. Now Egypt has

28 cement plants and considered one of the top list of cement producers

worldwide, with an annual production of more than 60 million tons.

The Egyptian government is encouraging a more diverse energy mix, calling

for plants to switch to coal and solid fuel. The government has cut the volume

of Gas it supplies to cement plants from 11.6Mm3/day by 7.08Mm3/day, a

drop of 61%. Now it has been announced that cement volumes decreased by

30% in the first half of 2013 due to shortages of gas.

The first factory in Egypt was built in the prime of 20th century with a 60

thousand ton production capacity that was in a region "Al-Maasra" one of the

Egyptian suburbs.

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Cement Industry Egypt

In response, Egyptian cement producers are investing in

converting to using coal. Producers like

(Italcementi Group) and have started pushing

the benefits of using coal including its place as an

international mainstay and highlighting the potential

savings for the state.

Arabian Cement; which is owned by Spanish company, Cementos

La Union, has applied to switch to 70% coal and 30% RDF-

based production. This would reduce its gas requirements by 378 million m3 pa.

Important to mention that gas prices are increasing rapidly in Egypt. Currently

price is $8/MBTU compared instead of $3/MBTU short time ago.

You need 3.5 MBTU to produce one ton of cement, so It means that one ton of

cement will cost $28 compared to about $12 when using coal/petcoke

Cement Industry Egypt

Suez Cement also recently announced plans to invest US$14.9 m to convert two of

its four cement plants to use coal. Last update is that one of its factories is ready

to use coal and others are only months away. All are just waiting on a permit.

Sinai Cement Company (SCC) has contracted Danish engineering

company FLSmidth to provide the equipment for it to start using coal.

SCC added that it would also partner with local contractors and

suppliers to equip the factory to use coal as an alternative fuel source

to natural gas and Mazut fuel oil.

Lafarge Egypt is now ready to switch 100% to officially using Pet

Coke in cement production in Egypt after its several battles with

the Egyptian Government.

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Questions? Comments?