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Cemex Sees Cost Savings As It Goes Green

Date: 26-Nov-10
Country: MEXICO
Author: Robin Emmott and Gabriela Lopez

Mexico's Cemex, the world's No. 3 cement maker, expects $100 million in savings this year as it cuts its reliance on fossil fuels and develops projects that could allow it to sell more carbon credits, a Cemex executive said on Wednesday.

Cement production generates 5 percent of global carbon dioxide emissions, the main gas scientists blame for heating the atmosphere.

Cement output is expected to double by 2030 as more of the world's population lives in cities.

Cemex is looking at climate change initiatives as a way of cutting costs and returning to profitability as it endeavors to pull out of one of the worst downturns in its century-long history.

"It gives our costs a certain predictability. If coal prices rise or double, well that doesn't affect us," said Luis Farias, the company's senior vice president for energy and sustainability.

"In Mexico, in Germany and Panama we're protected from price increases," he told Reuters, referring to wind, waste and hydroelectric power plants that generate electricity for the company in those countries.

Every dollar counts for Cemex. The company is depending on a comeback in the U.S. market to pay back $9.7 billion it owes banks after buying Australia's Rinker in 2007.

Speaking at Cemex headquarters in the northern Mexican city of Monterrey, Farias said the $100 million the company would save this year in fuel costs could be repeated and even improved on annually as its environmental efforts increase, particularly at its plants in the developing world.

While Germany and Poland lead the charge by substituting biomass for 70 percent of the fossil fuels used to fire Cemex plants, the company's overall substitution rate is 20 percent. Cemex aims to take that to 33 percent in 2013.

Cement is made by heating limestone with clay minerals to 2,700 degrees Fahrenheit (1480 degrees Celsius) to produce an intermediate product called clinker. There is also potential for cutting CO2 by using ash from steel production and coal-fired power stations instead of clinker.

Cemex aims to cut its CO2 emissions by a quarter to 602 kgs of CO2 per ton of cement by 2015 compared with 1990 levels, Farias said.

CARBON TRADING

Cemex's move to alternative fuels allowed it to sell $158 million in carbon credits in the European Union's Emission Trading Scheme in the fourth quarter of 2008. Cemex has major operations across Europe, including the United Kingdom.

Farias declined to say when Cemex would sell more credits won for cutting CO2 emissions. But he said that outside Europe, the company had three projects in Mexico, Colombia and Costa Rica that were registered to sell carbon credits under United Nations-backed efforts to fight global warming.

Those three projects are generating credits that have yet to be sold. Another 12 projects in other countries are in the process of winning approval to sell credits.

"We like this mechanism, and we're making the most of it," Farias said.

California's carbon trading market, due to open in 2012, could also prove an opportunity for Cemex because the company operates a plant there, Farias said.

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