Cement is a kind of powdery water-hardening inorganic cementitious material, which can be stirred with water to form the slurry and harden in the air, so that sand and stone can be firmly cemented together. It is widely applied to civil construction, water conservancy, national defense, and other projects home and aboard. With the continuous development of countries, the cement industry has become an important basic industry for the development of the national economy.
Over the past 2018, the cement industry had shown encouraging growth worldwide. In North America, the US increased its investment in infrastructure. In 2017, its cement totally output reached 86.3 million tons and the consumption reached up to 96.8 million tons. By this year, the whole cement industry in the US was still on an upward trend. China is the cement production leading power in Asia. Just in the first three quarters of 2018, the cement industry generated revenue of 172 billion yuan, increased 42 percent year-on-year.
Under the good development prospect of the cement industry, there are more than 650 cement enterprises around the world. For every cement plant, production cost and profit are the two most important things for business operators. So next, we will talk about the cost influencing elements of the cement plant and how to optimize the production structure to increase the profits.
Power & Fuel
Power and fuel are the primary cost of cement production (about 30% of the total cost). Among them, electricity and coal as the main energy consumption have a direct impact on the running of the cement plant. The electricity is used in many stages from raw material crushing to clinker grinding. It supports the operating of the whole cement production processes, so any shortage of electricity will interrupt the cement production and cause certain damage to cement equipment. In addition, Coal is the fuel to provide heat and temperature for clinker calcination in the rotary kiln. The quality of coal affects the efficiency of cement production. Low-quality coal not only increases the consumption but also reduces the output of the coal mill. Therefore, we should not only consider the price of coal but also pay attention to its quality.
In view of this element, we need to optimize the production structure, such as adding preheater. Raw materials are decomposed before entering the rotary kiln, so as to low the consumption of fuel. Secondly, we can replace burning fossil fuels by burning some kinds of waste fuels.
The second element is the cost of raw materials which accounts for 40% of the total cost. The common raw materials include coal, clay, gypsum, limestone, iron ore, etc. They usually mix in a certain proportion and then react chemically in the rotary kiln to form clinker. In this process, a large amount of cement raw materials will be consumed, so the raw material cost is one of the important cost influencing elements of the cement plant.
Generally, we can replace some raw materials with blast furnace slag, volcanic ash, or fly ash to reduce the raw material cost. Blast furnace slag is a by-product of steel production, and fly ash is a product of burning coal. Whether and how they are used depends on the physical and chemical properties required by the cement. Their application not only brings profits to the enterprise but also reuses waste materials.
Transportation & Location
As cement is a mass commodity, the cost of transporting to the sales terminal accounts for a large proportion of the cement manufacturing cost, accounting for more than 10% of the total cost. Cement is mainly transported by road, railway and sea, among which road and railway occupy more than 90%. In order to control transportation costs, most cement plants are located closer to limestone reserves or other raw materials reserves. While, to some extent, long-distance transportation expands the competition radius of cement plants. Therefore, the location of the cement plant and the cost of cement transportation directly affect its competitiveness and profitability.
Other expenses relate to employee wages, maintenance charges, taxation expenses, and other costs, accounting for about 10% of the total cost. These costs depend on the regulation of government policy and the average consumption level of the market, which are the elements of force majeure.
The areas discussed above are the cost influencing elements of the cement plant. Hope this article will bring you some useful information.
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