1. Procurement Strategies for Alternative Fuels Mark Mutter Cement Performance International, UK

2. Procurement Strategies for Alternative Fuels Introduction Alternative Fuels History Defining the relationship Pricing and relationship Longer term supply Supply chain developments

3. 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 CO 2 emissions

4. 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

5. 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

6. Defining the relationship From both parties require ♦ Credibility ♦ Reliability ♦ Understanding ♦ Commitment

7. 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

8. 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

9. Long term strategies GRATE KILN PETCOKE TDI ANIMAL MEAL SOLVENT WASTE WATER CARFRAG SOLVENT WASTE WATER

10. Long term strategies FuelProcessCostHandlingManagement Animal mealVariable phosphate Good NOx reduction Negative but decreasing Competition Proven technology but fats in summer Resource required to ensure supply SolventGood 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 fragCO creation good for NOx Not good for build-up Very negativeUnsuitable feeding system from supplier Good delivery schedule in place

11. Long term strategies FuelProcessCostHandlingManagement Waste waterGood NOx reduction Higher fuel consumption Slightly negativeSame as solventSimple – take what available Refinery cokeCaused high NOx Highly negative but low volume Simple – as per petcoke Availability dependent upon refinery

12. 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

13. Waste Processing Model PRODUCERPROCESSINGCEMENT PLANT

14. Waste Processing Model WASTE PRODUCERPROCESSINGCEMENT PLANT

15. 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