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Managing energy risk in africa presentation
- 1. Managing Energy Risk in Africa Egmont Ottermann CemEnergy Conference, Moscow, 3 December 2014
- 2. 2 Company overview • Established over 120 years ago • Listed on the JSE for 104 years • Largest cement manufacturer with leading market positions in SA, Zimbabwe, Botswana and Rwanda • Leading burnt lime and dolomite producer in southern Africa • Strong presence in the aggregates industry in Gauteng and Botswana. • Cement is also exported to other African countries • For the 2013 financial year: • Revenue R 8.3 bn • EBITDA R 2.5 bn • Operating profit R 1.9 bn
- 3. 3 DRC Population (m) 74.7 Urbanisation (%) 34% GDP per capita ($) 241 Cement consumption/capita (kg) 26 Real GDP growth 13 - 18E 9.8% Capacity (mtpa) 0.68 Cement price per tonne ($) 400 Botswana Population (m) 2.1 Urbanisation (%) 24% GDP per capita ($) 7,471 Cement consumption/capita (kg) 302 Real GDP growth 13 - 18E 4.9% Capacity (mtpa) - Cement price per tonne ($) 120-170 South Africa Population (m) 51.1 Urbanisation (%) 62% GDP per capita ($) 6,847 Cement consumption/capita (kg) 226 Real GDP growth 13 - 18E 3.7% Capacity (mtpa) 16 Cement price per tonne ($) 110-150 Mozambique Population (m) 22.5 Urbanisation (%) 31% GDP per capita ($) 640 Cement consumption/capita (kg) 68 Real GDP growth 13 - 18E 9.7% Capacity (mtpa) 1 Cement price per tonne ($) 130-240 Zimbabwe Population (m) 13.0 Urbanisation (%) 29% GDP per capita ($) 799 Cement consumption/capita (kg) 76 Real GDP growth 13 - 18E 4.9% Capacity (mtpa) 1.5 Cement price per tonne ($) 180 Rwanda Population (m) 10.4 Urbanisation (%) 17% GDP per capita ($) 724 Cement consumption/capita (kg) 37 Real GDP growth 13 - 18E 8.6% Capacity (mtpa) 0.2 Cement price per tonne ($) 250-350 Ethiopia Population (m) 86.8 Urbanisation (%) 17% GDP per capita ($) 533 Cement consumption/capita (kg) 74 Real GDP growth 13 - 18E 8.7% Capacity (mtpa) 9 Cement price per tonne ($) 130 Source: Cemnet 2012, IMF data Algeria Population (m) 37.5 Urbanisation (%) 72% GDP per capita ($) 5,668 Cement consumption/capita (kg) 549 Real GDP growth 13 - 18E 4.3% Capacity (mtpa) 22 Cement price per tonne ($) 80-120 PPC’s expansion strategy
- 4. 4 Richards Bay Coal Price Index
- 5. 5 South African Coal Market
- 6. 6 PPC Strategy • Operational Efficiency • Reducing our energy usage though improved efficiency and technology upgrades • Alternative Energy • Alternative Fuels • Captive Electrical Energy • Strategic Procurement • Improving the flexibility of plants for use of fuels Operational Efficiency Alternative Energy Strategic Procurement
- 7. 7 Volatility
- 8. 8 Energy Management Systems (ISO 50001) • Sets Management Focus • Overall Management • Operations • Procurement • Design • Training • Reviews • Captive Energy Options • Awareness • Must have for effective energy risk mitigation
- 9. 9 Pre-Calciner Main Burner Liquids and Fine Solids Via Raw Mill Non-Carbon Materials • Foundry Sand • Slag • Ash • Mine Sand • Gas Cleaning Waste Liquid Waste < 3000 cP •Impregnated Sawdust •Filter Cakes •Fine Plastics •Paint Powders •Carbon Black •Dried Sewage Sludge •Bulk Solids <50 mm / Sludge •Paper Waste •Mixed Shredded Waste •Plastics •Dog Food and Maize Seed •Spent Pot Liner Kiln Back End - Lump Fuels •Tyres •Controlled Substances •Pharmaceutical Waste •Packaged Sludges Alternative Fuels
- 11. 11 Carbon Tax - SA • Current and Proposed Instruments • Carbon Tax Budget Discussion Paper R 0 R 50 R 100 R 150 R 200 R 250 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CarbonPrice BasicFreeAllocation Basic Price Tax Design Basic Trade Process Off Set Cement 60% <10% <10% <5% Basic Allocation Adjustment Ajd = Basic*(Eff/Bench)-Basic 1 10 100 1 000 10 000 100 000 Agric Waste Cement Lime Oil Energy Manfg Mining Benefic BasicFreeAllocation (,000tons)
- 12. 12 Renewable Energy • Wind • Innowind, subsidiary of EDF EN (www.edf-energies-nouvelles.com) • Two Linked Wind Projects (60 MW for RDF Round 2 and 21 MW for PPC) • PPC purchases 50 000 MWh at positive NPV vs ESKOM over 20 years • Achieves target of 10% Renewable Energy • Solar PV • Solar PV project prices have fallen to between R15 Mio and R20 Mio per MW • Structured Rollout
- 13. 13
- 14. 14
- 15. 15 Women sort coffee beans in Addis Ababa, Ethiopia
- 16. 16 Chitungwisa Market, Harare, Zimbabwe
- 17. 17 Skyline of Kinshasa, Democratic Republic of the Congo
- 18. 18 PPC Zimbabwe • Fifth consecutive year of rising cement demand • Slower domestic volume growth due to on-going liquidity challenges and high external debt levels • Good export volume growth and selling prices achieved • Improving margins as costs well maintained • Modernisation programme • Bulawayo plant –commissioned country’s first cement bag palletiser and a new bulk loading facility • Colleen Bawn plant – successful crusher and kiln upgrades led to improved reliability and output • United Nations Development Programme estimates the need for investment of some $18 billion to rehabilitate and modernise infrastructure • We are optimistic about growth in infrastructure investment
- 19. 19 New CIMERWA plant in Rwanda to be commissioned in 2015
- 20. 20 Summary • Know and understand the power an fuel requirements of the plant. • When developing solutions, starting from a blank sheet is critical. • Understand the limits to the bankability of the project.
- 21. 21 Energy and Climate Change A Tale of Winners and Losers What will you be? Lord AN Onymous looks back from 2050 Conclusion
- 22. 22 Questions?