Cement Project From AZ

Execution of a cement project from A-Z
Per Mejnert Kristensen

VP, Head of Project Division EMEA/APAC, Cement
Capital Market Day 2009
Agenda
Introduction
Long term trends in the global
cement industry
FLSmidths role in a cement
project from A-Z
Uncertainties and risks in
execution of cement projects
Outlook in Cement
Per Mejnert Kristensen
VP, Head of Project Division EMEA/APAC, Cement
Joined FLSmidth in 1992
Positions in FLSmidth:
VP, Head of Project Division EMEA/APAC
VP, Head of Project Division 1

General Manger, FLSmidth China
Chief Representative Thailand
Ass. Site manager, 10,000 tpd project, Thailand
Project Sales
FLSmidth Cement Project Divisions
Agenda
Introduction
cement industry
project from A-Z
Outlook in Cement
Long term trends

Growing need for cement remains
despite current global crisis !
New global contracted cement kiln capacity

(excl. of China)
mty
160
140
Contracted kiln capacity is an indicator of total cement

capital investments. However, the kiln system only
accounts for around 25% of the value of a cement
production line and additionally, the lifetime of a kiln is
generally longer than the other equipment
2009E:
25-50 mty
120
Expected
future
average:
100
80
~ 60-75 mty
60
40
20
2009E
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Long term trends

Emerging markets will continue to
be the driver - now also Africa
Geographical distribution of
new global contracted cement kiln capacity
(excl. China)
mty
160
140
Asia (excl. China & India)

India
Russia
Europe
North America
South America
Middle East
Africa
120
100
80
60
40
20
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Long term trends

Cement kiln sizes growing
10
History of kiln capacity development
Wet kilns
1892: 1.8x18 m
35 tpd
1967: 7.6x232 m
3500 tpd
Preheater kilns
1970: 6.0x96 m
4000 tpd
Precalciner kilns
1984: 5.0x80 m
5500 tpd
1990: 6.0x96 m
10,000 tpd
2006 : 6.6x93 m
12,000 tpd
11
Cement kiln sizes continue to grow
12
Cement kiln sizes continue to grow
Average plant clinker capacity (t/d)
6000
5000
4000
3000
2000
1000
1970
1980
1990
2000
2010
Year
13
Long term trends

Cement kiln sizes growing
Increased environmental focus
14
Half of the fuel used in German

cement plants is alternative fuel
Alternative fuel energy coverage in %
Rapid increase in
alternative fuel
usage during the
past 5 years
60
50
40
- due to focus
on lowering
production costs in
a cement market
with excess
production
capacity
30
20
10
0
1999
2000
2001
2002
2003
2004
2005
15
Increased focus on emissions

Going from here
The trends
To there
16
Agenda
Introduction
cement industry
project from A-Z
Outlook in Cement
17
A cement plant from A to Z

Customer
Customer
requirements
requirements
FLSmidth
FLSmidth strengths
strengths
and
and capabilities
capabilities
Feasibility study
Proposal stage and signing of contract
Design and order handling stage
Civil design and construction
Erection, start-up,
Commissioning, handover, guarantees
Production, operation and maintenance of the
plant
18
Feasibility stage
Market
Market size,
size, cement
cement prices,
prices,
investment
investment costs
costs ??
Budget
Budget proposals
proposals
for
for various
various sizes
sizes
19

Tender
Tender requirements
requirements
on
on main
main features
features
or
or technical
technical specialities
specialities
Contract
Leadtime
Leadtime as
as aa conseconsequence
quence of
of requirements
requirements
24 mth
Basic
plant
Adapted
plant
Taylor
made
20

Raw
Raw material
material
samples
samples to
to FLSmidth
FLSmidth
FLSmidth
FLSmidth tests
tests the
the
raw
raw materials
materials
R&D and test centre in
Denmark and India
21

Optimal
Optimal process
process and
and
low
low production
production cost
cost
Advanced
Advanced process
process design
design
FLSmidth has in house laboratory with all

modern testing facilities.
FLSmidth is constantly increasing

investments in research and
development
FLSmidth process designers are carrying

a heritage of more than 100 years of
experience and know how.
22

Can
Can we
we get
get the
the complete
complete
package
package from
from FLSmidth
FLSmidth ??
FLSmidth
FLSmidth has
has equipment
equipment
for
for the
the entire
entire proces
proces
Main machines & auxuilary equipment of FLSmidth design
Electrical equipment
Vendor equipment
23

Local
Local supply
supply and
and
manufacturing
manufacturing
FLSmidth
FLSmidth offers
offers split-supply
split-supply
3
4
18
7
6
1
40% imported
60% local manufactured
12
24

What
What are
are the
the total
total cost?
cost?
Typical
Typical cost
cost composition
composition
Buildings
30%
Erection
15%
Transport
5%
Machinery
40%
Supervision
5%
Others
5%
25

Equipment,
Equipment, civil
civil design
design
or
or turnkey?
turnkey?
Equipment
Different
Different options
options are
are
possible
possible
Construction
Civil design
Erection
26

Finding
Finding the
the right
right
site
site information?
information?
All
All information
information sources
sources
are
are used
used such
such as
as
Google
Google Earth
Earth etc.
etc.
27

Visualisation
Visualisation to
to
customer
customer
3D
3D layouts
layouts and
and models
models
28

Visualisation
Visualisation to
to authorities
authorities
3D
3D layouts
layouts incorporated
incorporated
in
in actual
actual landscape
landscape
29

Signing
Signing the
the contract
contract
Quick
Quick order
order start
start
30
Design and order execution

Safe
Safe order
order handling
handling
AA strong
strong project
project team
team
Experience + skills + tools
31

Security
Security in
in aa
changing
changing world
world
Company
Company size
size and
and
strengths
strengths in
in market
market
Buying
power
Supply chain
Customer
FLSmidth
Long track record

Global presence
Vendor
relations
32

Close
Close contact
contact to
to the
the
supplier
supplier
World
World wide
wide design
design
Global design centres

design 24 hours a day
33

Fast
Fast civil
civil design
design
Integrated
Integrated technical
technical
and
and civil
civil design
design
34
Manufacturing, inspection and expediting

High
High quality
quality equipment
equipment
Close
Close co-operation
co-operation with
with
large
large workshops
workshops
35
Shipping
Safe
Safe transport
transport
Odd-size
Odd-size equipment
equipment
or
or in
in containers
containers
36
Construction and installation

Swift
Swift and
and trouble
trouble free
free conconstruction
struction and
and installation
installation
Experienced
Experienced and
and
skilled
skilled supervisors
supervisors
37
Training of clients staff

Training
Training of
of staff
staff
FLSmidth
FLSmidth Institute
Institute
-- good
good training
training programme
programme
38
Commissioning, handover and guarantees

AA swift
swift start
start of
of the
the plant
plant
FLSmidth
FLSmidth has
has aa good
good record
record
for
for reaching
reaching all
all guarantees
guarantees
Vi har en god track rekord mht at opfylde

garantierne. Har vi evt nogle kurver eller
lignende?
FLSmidth
39
Operation of the plant

AA safe
safe and
and economical
economical
operation
operation of
of the
the plant
plant
FLSmidth
FLSmidth offers
offers full
full
operation
operation and
and maintenance
maintenance
40
Agenda
Introduction
cement industry
project from A-Z
Outlook in Cement
41
Factors contributing to uncertainty about

project income
Progress of ongoing projects
(to be addressed in following slides)
When will signed LoIs and non-effective contracts

materialise?
General market outlook very uncertain these days !
Even though our customers wants to move ahead with
projects, they are met by financing constraints,
- i.e. not even our customers can tell when they will
be able to go ahead !
42
Typical project progress

income recognition
Project Incomeand
Flow
Installation
100%
Shipping
90%
Manufacture
80%
70%
Procurement
Engineering
50%
40%
Letter of Credit
30%
Down payment
20%
10%
0%
10
th
11
th
12
th
13
th
14
th
15
th
16
th
17
th
18
th
19
th
20
th
21
st
22
nd
23
rd
24
th
25
th
26
th
27
th
28
th
30 29
th
th
(P
AC
)
9t
h
8t
h
7t
h
6t
h
5t
h
4t
h
3r
d
2n
d
-10%
1s
t
Contract
60%
Period of execution
POC
Net Sales
CM
SG&A
EBIT
43
Typical project progress

income recognition
Project Income and
Flow
Installation
100%
Shipping
90%
Manufacture
80%
70%
Procurement
Engineering
50%
40%
Letter of Credit
30%
Down payment
20%
10%
0%
10
th
11
th
12
th
13
th
14
th
15
th
16
th
17
th
18
th
19
th
20
th
21
st
22
nd
23
rd
24
th
25
th
26
th
27
th
28
th
30 29
th
th
(P
AC
)
9t
h
8t
h
7t
h
6t
h
5t
h
4t
h
3r
d
2n
d
-10%
1s
t
Contract
60%
Period of execution
POC
Net Sales
CM
SG&A
EBIT
44
Risks in execution of a cement project

Delayed supplies from vendors
Client not ready to receive goods or formalities not in place
(e.g. BTI)
Client wants to postpone project
Suspension of project due to temporary problems with
financing
Termination of project due to clients inability to continue
All of the above creates uncertainty about timing of income
recognition
.and just a few months delay around New Year can
impact the annual result significantly !
45
Cash Flow cash flow

TypicalProject
project
100%
90%
80%
70%
60%
40%
30%
20%
10%
9t
h
10
th
11
th
12
th
13
th
14
th
15
th
16
th
17
th
18
th
19
th
20
th
21
st
22
nd
23
rd
24
th
25
th
26
th
27
th
28
th
30 2 9
th
th
(P
AC
)
31
st
8t
h
7t
h
6t
h
5t
h
4t
h
3r
d
-10%
2n
d
0%
1s
t
Contract
50%
-20%
Period of Execution
Client payments
Total Project Cost Payments
SG&A payments
Net Cash
46
What happens when orders are cancelled or put on hold?

Cancelled
Initiated work and issue of purchase orders stop
Legal department gets involved
We stick to our contractual rights - no matter
which client
We have the right to be compensated for
incurred and committed costs and as well as a
pro-rata contribution margin
Cancellation fee to be claimed
Put on hold
Initiated work and issue of purchase orders stop
Contract and time schedule is amended
We preserve the right to be compensated for
any additional costs
Some clients are constrained on cash, others are
adjusting priorities
47
Status of our existing cement project portfolio

Overall approx. 10 % of order backlog currently on hold.
3 - 4 major projects are partly suspended
no major cement projects cancelled so far (but some minor)
We are in very close contact with the customers and they are
all determined to carry on but limited by financing
Recent events on (partly) suspended contracts:
Receipt of progress payment strong indicator of commitment
Agreement on prolonged delivery schedule
Agreement on finalising engineering but procurement on hold for a
specified period
At this stage we thus feel relatively confident about our

existing cement project portfolio but timing still uncertain
48
Agenda
Introduction
cement industry
project from A-Z
Outlook in Cement
49
Strong belief in future prospects, because:

We have the strongest brand in the market !
We have a global reach present in every corner of the world !
50
Global undertaking with a local presence
Project centres
Production
Rep. offices
51

We have a complete product portfolio !
52
Cement plant flow sheet
Filter
Crusher
Filter
Analyzer
Limestone
Sand
Clay
1
Iron
3
Raw meal
silo
4
Storage
Coal mill
4 3
Grate
cooler
Raw mill
Clinker
Silo
Separator
2
Packers
3
Cement
silo
Cement
silo
Cement
silo
Cement mill
Gear unit
Ship unloading
Roller press
Ship loading
53
Holcim
Ste.continue
Genevieve
Cement
kiln sizes
to grow
The worlds first 12,000 tpd single kiln line
ILC preheater
DUOFLEX burner
ATOX mills
OK mills
3-support kiln
MMC Cooler
54

We have an unsurpassed reference list !
55
Projects the last 4 - 5 years !
Platin
Ash Grove, Moapa
4350Grove
tpd Essroc,
Martinsburg
Ash
foreman
4200 tpd 5000 tpd
Keystone, Bath
Ste. Genevieve3000 tpd
12000 tpdLafarge Joppa
7200 tpd
Rio Grande Pueblo
1800 tpd
Cem. Andorra
2350 tpd
Ozarow 2
7000 tpdHolcim
Ivano-Frankivsk
KarcementKursk Hoang Thach 3
2300
5500
tpdtpd
LSR
Slantsy
Jovein
Akbulak
4100 tpd
3200 Podgorensky
tpd 3500 tpd3300 tpd
Cimsa Eskisehir
5000tpd
tpd
3900
6000
tpd
Madras
Cement
6000
tpd
JP Kutch
CIBA (Orascom)
Aleppo
2100 tpd
Ait Baha
7600
tpd
Abyek
Cement
Kokshe
Cement Ha Long
10000 tpd
1500
tpd Grey 7500Khuzestan,
tpd Gulf Cement
Ramhormoz
CIBA
5500 tpd
5000 tpd
tpd
5500 tpd
Sinai White
2 24500
Arabian
CC,5500
Ramliya
AUCC
tpd
6250
tpd
5000
tpd
ABG
Kutch
Volyn
1300
tpd6000
Sanghi, Kutch
Sinai,
Gabal
tpd
Rabigh
Star
Cement
5000
tpdLebni 2ACC,
ACC
Chanda
10000
tpd
6000
tpd
10000
tpd Adilabad
4200 tpd
7000
6500 tpd
Orient,
7000
tpd
Dalmia
Ain Soukna
EMCC (Orascom) 4000 tpd
Marquesado
3300 tpdMolins
3000 tpd
Tepeaca
10000 tpd
Lappeenranta
4000 tpd
Carribean Cement
50007500
tpd tpd
3250 tpd
Al Takamol
Unicem, Calabar
Argos
4500 tpd
6250 tpd
4500 tpd
3x4500 tpd
Binani 2
6500 tpd
Indocement
700 tpd
Fancesa
750 tpd
CSN
Natal Simuma
2 x OK 39
1500 tpd
Dwaalboom
3300 tpd
> 100 new production lines

VKu/15.03.2007
> 150
mtpy capacity !
Golden Bay
350 tpd
56
FLSmidth has built ~
2000 cement kilns worldwide since 1898
North America
>356
Central America
>94
South America
>162
Europe
>674
CIS
>45
Middle East
>55
India
>141
Rest of Asia
Africa
>269
>96
Australia
>25
57

We are investing most in R&D !
58
The cement industrys largest R&D centre
59

We are investing most in R&D !
We are the strongest Group Cement & Minerals
We are very well positioned for the future !

60
Questions
61

Cement Project From AZ

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Cement Project From AZ

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Execution of a cement project from A-Z

Per Mejnert Kristensen

Capital Market Day 2009

Capital Market Day 2009

Per Mejnert Kristensen

VP, Head of Project Division EMEA/APAC, Cement

Joined FLSmidth in 1992

VP, Head of Project Division 1

Capital Market Day 2009

FLSmidth Cement Project Divisions

Capital Market Day 2009

Capital Market Day 2009

Long term trends

Capital Market Day 2009

New global contracted cement kiln capacity

Contracted kiln capacity is an indicator of total cement

Capital Market Day 2009

Long term trends

Capital Market Day 2009

Asia (excl. China & India)

Capital Market Day 2009

Long term trends

Capital Market Day 2009

History of kiln capacity development

Capital Market Day 2009

Cement kiln sizes continue to grow

Capital Market Day 2009

Cement kiln sizes continue to grow

Average plant clinker capacity (t/d)

Long term trends

Capital Market Day 2009

Half of the fuel used in German

Capital Market Day 2009

Increased focus on emissions

Capital Market Day 2009

Capital Market Day 2009

A cement plant from A to Z

Capital Market Day 2009

Capital Market Day 2009

Proposal stage and signing of contract

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

FLSmidth has in house laboratory with all

FLSmidth is constantly increasing

FLSmidth process designers are carrying

Capital Market Day 2009

Proposal stage and signing of contract

Main machines & auxuilary equipment of FLSmidth design

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009

Proposal stage and signing of contract

Capital Market Day 2009