Cemex Egypt

Translated version of this PSD: Arabic

Project description and objectives

The EBRD is considering financing a programme of fuel conversion and environmental upgrade at Assiut Cement Company (a subsidiary of Cemex S.A.B de C.V.), in Assiut, Egypt. The programme follows on a cabinet directive allowing the use of coal and pet coke in cement plants, while mitigating the results of such change. The EBRD financing will require increasing the use of alternative fuels (biomass, refuse-derived fuel, and/or tire-derived fuel) alongside the introduction of pet coke and/or coal as a fuel source, sufficiently enough to neutralize increases in CO2 emissions. The programme also includes installation of a bag filter to significantly reduce dust emissions at the plant. The programme will be implemented throughout 2015-16 and in accordance with Best Available Technique (BAT) under the Industrial Emissions Directive (IED) of the European Commission.

Transition impact

The project will demonstrate to the local market that introduction of pet coke and/or coal can be successfully achieved in Egypt without increasing CO2 emissions, through the introduction of higher substitution rates of alternative fuel, and other abatement measures.

The project will additionally demonstrate that full compliance with Best Available Technique (BAT) under the Industrial Emissions Directive (IED) of the European Commission is achievable in Egypt.

Successful project completion will require continuous skills and knowledge transfer from the Cemex group to CEMEX Egypt or Assiut Cement Company S.A.E., particularly in relation to increasing use of alternative fuels. These skills will benefit management, procurement, and production functions within Assiut Cement Company. They are likely to spread to also benefit non-project entities (such as alternative fuel suppliers), leading to development of a well-functioning alternative fuel market.

The client

Assiut Cement Company S.A.E. was established in 1984 as a public sector company and was acquired by the Cemex group in 1999. Production capacity is 5.7 million tons of cement per annum, making it one of the largest cement producers in Egypt, and the largest in Upper Egypt.

Assiut Cement Company S.A.E. is an indirect subsidiary of CEMEX, S.A.B. de C.V. (“CEMEX”), one of the largest cement and aggregates companies in the world, and the largest ready-mix company in the world. As of December 31, 2013, CEMEX had a cement installed capacity of approximately 94 million metric tons, had around 43,000 employees and operated in more than 50 countries. CEMEX’ shares are listed in both the Mexican Stock Exchange and in the New York Stock Exchange.

EBRD finance

EBRD is considering providing a long-term senior loan of up to EUR 50 million.

Total project cost

EUR 54 million.

Environmental and social categorisation, impact, and mitigation

Categorised B. Independent environmental and social due diligence (ESDD) has shown that the environmental and social impacts associated with the switch from heavy fuel oil (HFO) to petcoke and/or coal, an increase in the use of alternative fuels as well as environmental improvements can be readily identified and addressed through standard mitigation and management measures.  The Project has been subject to local permitting inclusive of a local EIA.

The ESDD confirmed that the Project is structured to comply with the Bank’s Performance Requirements (PRs) and that the Company has a robust environmental and health and safety management system (EHSMS) in line with good international practice. The Company can effectively implement and operate the Project and the existing plant in line with the PRs, mitigate the associated E&S impacts and also enhance the Project’s environmental benefits.  The EHSMS is ISO 14001 certified and the Company has committed to obtaining OHSAS 18001 by 2015.

The Company’s operations are structured to comply with PR 2 with respect to labour and robust procedures are in place to ensure the health and safety of its employees and contractors.  Some areas for improvement have been identified for instance managing occupational noise levels and implementing personal dust exposure monitoring.  The Company has undertaken assessments in line with the EU ATEX Directive and implemented various design changes to avoid the risks associated with the storage and processing of petcoke or coal on site.  This will be complemented with a petcoke transportation risk assessment.  With the increase in the use of alternative fuels the Company will be required to develop and implement a supplier assessment review system to avoid and manage potential environmental and labour risks, as well as potential impacts to waste pickers (if present). The Company has in place a code of ethics to ensure equal opportunities and non-discrimination.  There is currently a gender imbalance due to the industrial nature of the Company’s activities. Despite this, the Company has implemented informal initiatives to support female employees and make the work conditions more favourable.  Promotion of equal opportunities is included in the ESAP.  Female employees are currently employed in management, administrative and specialist roles.

The ESDD confirmed that the Company and Project are generally in line with EU Best Available Techniques (BAT) for the production of cement.  Nevertheless, the ESDD identified a number of additional improvements to fully attain BAT and EU standards, for instance the optimisation of the combustion process to ensure an appropriate NOx/CO emission balance, combustion controls as well as additional emissions monitoring.  In addition, the Company will upgrade its existing dust abatement systems with state-of-the-art bag filters to ensure that dust levels are within EU BAT limits and Continuous Emissions Monitoring System equipment will be installed on the petcoke mill. An independent assessment has shown that the Project will not have an impact on local air quality and will comply with Egyptian and EU ambient air quality standards. An increase in the use of alternative fuels in the fuel mix will ensure no net increase in CO2 emissions. The nearest formal communities are located 10 km from the plant. No expansion of the site is expected and measures will be implemented to further reduce dust emissions.  The Company will continue to investigate options for the re-use of bypass dust.

The ESDD confirmed that the Company has a well-developed CSR function and engages with Company employees and their families, various stakeholders, as well as the wider local community.   A Project specific Stakeholder Engagement Plan (SEP) has been developed as part of the due diligence and will be implemented prior to and during construction and operation.  The SEP will be supported with the disclosure of a Non-Technical Summary in English and Arabic.

An Environmental and Social Action Plan has been developed to align the Project with the PRs and has been agreed with the Company.  Key actions are described above.  The Company will be required to submit annual environmental and social reports to the EBRD. 

Technical cooperation

None.

 

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