May 2007 Financial News

Carib Cement seeks tax credit to burn used tyres

May 09, 2007

Caribbean Cement Company (CCL) has proposed that it be granted a tax credit as quid pro quo for using its kiln to rid the country of used tyres, a move that the firm says will shave six per cent off its annual fuel bill.

But even as CCL Energy Manager Earl Barrett admitted that the proposal is driven by self-interest and a sense of corporate responsibility, he insisted that the payback on the kiln modification would be at least 20 years.

"We want to do this for our own standing, but it is not that good a return on investment because it will cost close to US$2 million to retrofit the kiln, and the return from that is a repayment of maybe 20 years," Barrett told the Business Observer in a recent interview.

Each year, CCL spends close to US$8 million for petcoke, coal and bunker c - the three types of fuel used to operate the kiln - as well as US$14.5 million on electricity.

However, like other cement companies worldwide, Barrett said CCL wants to maximise the use of waste fuel to replace fossil fuel and save on Jamaica's energy bill which topped US$1 billion last year.

He explained that under CCL's proposal the Government could charge an upfront tax of $200 on each tyre, while extending this as a tax credit to the company when the tyre is disposed of.

"A private contractor would collect the tyres islandwide and when he brings them to us we give him say $140," said Barrett. "At the end of the period, when we are making tax returns, we submit that receipt to the finance minister."

"Government won't have to worry about giving us back any of the money collected because we will do the paper work and all they have to do is make it a tax credit for us," he added.
Barrett said the Government's input would be needed in the collection process to prevent the cost of acquiring the used tyres from spiralling out of control once persons believe they now have value.

As such, CCL has recommended that the Government implement legislation to support structured collection of the tyres.

"Government is running into the problem of people throwing tyres into gullies and with them going to the landfill where when there is a fire it takes up to 14 days to put out, so we are saying let us help you get rid of them," said Barrett.

Clive McDonald, landfill manager at the National Solid Waste Management Authority (NSWMA) said there are close to three million tyres at the landfills across the islanden. These tyres, he explained, need to be kept in bales as the waste management agency has no other means of disposing of them.

In 2004, the Statistical Institute of Jamaica (STATIN) estimated that 800,000 tyres were being imported into the island annually. However, with the increased number of cars imported to the island in the past three years, that figure is now believed to be closer to a million tyres.

"We are saying that even if we can collect 85 per cent of that 800,000, that is just a quarter of what we can consume annually," explained Barrett, who estimated that with the proper kiln modification CCL can burn close to two million tyres each year.

Barrett told the Business Observer that CCL is awaiting a response to the proposal, which was submitted to the NSWMA last year.

Trinidad Cement Limited (TCL), parent company of CCL, is also awaiting approval for a similar programme from the governments of Trinidad and Barbados where the company also operates cement manufacturing plants.

According to Barrett, the Trinidadian Government has offered to pay the company US$2 from its environmental fund for each tyre disposed of, while in Barbados the proposal is to go to the Cabinet.

He explained that in Barbados the Government already has a structured collection drive and has assured TCL that 85 per cent of what is collected will go directly to the cement plant.
The company hopes to kick off the project within a year at the Arawak Cement Company in Barbados and within 16 months in Trinidad.

"In Jamaica, I would not attempt to put a time to it because we are still waiting on Government," Barrett said.

The process of burning tyres in cement kilns is novel to Jamaica, said Barrett, who described the CCL kiln as one of the best incinerators with temperature in excess of 2,800 degrees Fahrenheit.

Tyres are burnt in kilns in North Wales, England, and at least 85 plants in America.

When tyres are burnt via this method, Barrett said there is complete combustion of all the fuel material in them.
"There is no residue that will come out of the kiln when you burn a tyre and there is none of that black soot that you see, which is fuel going up, like when you burn it in the open," he added.

According to Barrett, there are kilns in Europe where cement is a by-product because they charge other entities to dispose of their waste in this manner.

"They do hazardous waste and some of them even do sewerage pellets where, once the water is removed and treated, the solid that is left behind is used in the kiln and they charge the municipality for it," he explained.
Once the project gets off the ground, Barrett said the TCL group will explore the possibility of taking used tyres into Trinidad and Barbados from the 10 other territories in the Eastern Caribbean to which they export cement.

"Maybe down the road Jamaica could start taking tyres from the Eastern Seaboard because we have a lot of vessels coming down here empty for bauxite, but that would be in the long term," he explained.

Carib Cement, Trinidad Cement and Arawak have, since 2004, embarked on a project of recouping energy from used petroleum. Barrett explained that in 2005 the CCL plant may have burned up to 2.5 million litres. This, however, declined to 1.5 million litres last year because the collection process was not as efficient.

He said based on STATIN figures there may be approximately 5.6 million litres of oil which must be changed out.

"There is much more to be collected and so we are looking at working with private collectors to see how we can double that in 2007," he told the Business Observer, adding that a good portion of what is not being collected could be ending up in the ground.

Some small business, such as ice cream producers, use this recycled oil to operate steam-generating boilers, while one company in Ocho Rios uses it in a furnace for drying fruits.

Source:
Ingrid Brown,
Jamaica Business Observer
Wednesday, May 09, 2007

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