Wednesday, January 18, 2023
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BusinessLocal coal supply drops as conflict disrupts production

Local coal supply drops as conflict disrupts production

Cement Industries face severe supply shortage, lack of quality 

Local coal supply sharply dropped since May 2020 following waves of conflict that continue to break out in Kamashi, a major coal mining belt in Benishangul Gumuz regional state.

Though coal deposits are also found in Chilga in Gondar, central part of Shewa, western Oromia and Dawro in southern Ethiopia, Kamashi is the most excavated coal site by large scale investors.

Local coal miners supplied 503,019 tons of coal to cement industries during the 2020/21 fiscal year. According to Simegn Degu, Director of cement at the Chemical and Construction Inputs Industry Development Institute (CCIDI), this constituted 56 percent of the total coal demand by the industry.

“Truck drivers refused to go to Kamashi and bring the coal. There are also security problems around the coal quarry sites at Kamashi,” said Simegn.

CCIDI has been working on substituting coal import, which has been costing the country USD 220 million annually.

Currently, cement industries are facing a severe coal supply shortage. Simegn said that the government is trying to kick start operation of coal belts in Jima as replacements for Kamashi.

The coal mine at Kamashi is preferred because it generates up to 5,500 kilo calories per kilogram while others mines in Jima and Arjo-Dedessa are said to generate only 3,000 kilo calories per kilogram. 

In addition, the Oromia Mining Bureau also issued 40 coal mining licenses for large scale investors and local youth cooperatives to bridge the national coal shortage.

Furthermore, cement industries have been complaining about the local coal affecting their machines and cement output due to the poor quality of the coal.

Attributed to impurities like Sulphur, soil and other contents, local coal generates 4,000 kilo calorie per kilogram, significantly lower than the 6,000 kilo calories per kilogram of imported coal, which largely comes from South Africa.

Price of imported coal currently stands at Birr 19,000 (CIF, including logistics cost) per ton. The price shot up from Birr 12,000 per ton just three months back. In contrast, the price of local coal stands at 5,000 birr per ton.

Cement industries need coal to generate high heat, which they cannot afford if they use electricity. According to Simegn, using local coal can reduce cement productivity by 50 tons per hour, apart from damaging machinery.

Two recommendations have been tabled to solve the local quality problem. The first is to blend the local coal with imported ones to improve the energy output. To this end, the cement industries need to modify their burner technology, which are initially designed for imported coal or fuel. Currently, two coal washing plant investments, one in Wolkite and another in Benishangul, are materializing to purify the local coal and improve its heat value.

The second is replacing coal with biomass and municipal wastes, which also require shifting their burner technology. Plastic waste generates 7,000 kilo calories per ton, higher than even the imported coal.

Currently, Dangote generates 15 percent of its burning energy from plastic and old tyres and is also undertaking a biomass project.

Messebo Cement had started using sesame by-products before the factory stopped production due to the war in Tigray. Messebo, seizing its production of 2.5 million quintals annually, has contributed to the widening of the demand-supply gap to five million quintals, apart from raising cement price from 500 to 800 birr. Total cement supply stands at seven million tons per year while demand exceeds 11 million tons.

CCIDI recently merged with the Ministry of Industry, along with eight similar sectoral institutions.

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