Procurement Strategies for Alternative Fuels

Mark Mutter

Cement Performance International, UK

Procurement Strategies for Alternative Fuels

• Introduction

• Alternative Fuels History

• Defining the relationship

• Pricing and relationship

• Longer term supply

• Supply chain developments

Alternative Fuels History

• Price driven development from both cement and waste industry

• Developments in the emissions trading schemes

• One-off incidents – e.g. animal meal

• Global reduction in CO2 emissions

Defining the relationship

• Cement industry and waste industry vastly different

♦ Cement – high margin, protected prices, stable

♦ Waste – lower margin, ever increasing legislation, unstable

• Cement industry : Waste = Profit

♦ Failed to understand waste industry

♦ Wanted all the gain

♦ Progressively lost out on volumes of waste

Defining the relationship

• Cement industry failed to consider the relationship

♦ Supplier or customer?

♦ Other outlets for waste industry

♦ Balance of power

♦ Availability to take waste

Defining the relationship

• From both parties require

♦ Credibility

♦ Reliability

♦ Understanding

♦ Commitment

Pricing and Relationship

• Treat the waste supplier as a customer

• Understand the economics

• Be up front with the costs of use

♦ Trials, plant, extra cleaning, laboratory testing

• What are the give aways?

• Build long term relationships

Long term strategies

• Production line of fuels

♦ 1 new fuel per year

♦ Replaces fuel or maintains revenue stream

• Awareness of fuel impact required

• Need to adapt to each new fuel

• Very resource intensive

Long term strategies

GRATE

KILN

PETCOKE

TDI

ANIMAL MEAL

SOLVENT

WASTE WATER

CARFRAG

SOLVENT

WASTE WATER

Long term strategies

Fuel Process Cost Handling Management

Animal meal Variable phosphate

Good NOx reduction

Negative but decreasing

Competition

Proven technology but fats in summer

Resource required to ensure supply

Solvent Good CV

Stabilized flame

Multiple points of injection

Negative but stable

Management of tank farm – safety and environment

In house supplier

Dependent upon chemical industry

Car frag CO creation good for NOx

Not good for build-up

Very negative Unsuitable feeding system from supplier

Good delivery schedule in place

Long term strategies

Fuel Process Cost Handling Management

Waste water Good NOx reduction

Higher fuel consumption

Slightly negative Same as solvent Simple – take what available

Refinery coke Caused high NOx

Highly negative but low volume

Simple – as per petcoke

Availability dependent upon refinery

Supply Chain Developments

• Strategic alliances

♦ Stabilisation of market

♦ Ties up availability

• Waste Processing companies

♦ Designer fuel using many waste sources

• Provides flexibility to all

• Reduces resource requirements

• Maintains revenue streams

• Waste Processing Model

PRODUCER PROCESSING CEMENT PLANT

• Waste Processing Model

WASTE PRODUCER PROCESSING CEMENT PLANT

Conclusions

• Need to overcome history

• Need to understand

♦ Business dynamics

♦ Economics

• Need to build portfolio of fuels

• Latest developments are for blended fuels through waste treatment companies