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Cunningham Lindsey QATAR LLC International Loss Adjusters P.O. Box 19462 Office 12, 3rd Floor Al Reem Tower West Bay, Doha State of Qatar Mob: (+974) 6686 7671 Tel: (+974) 4006 8949 Email: [email protected]
Report No. 241203101395
Date: 14 December 2015
PRIVATE AND CONFIDENTIAL
RISK SURVEY REPORT
QATAR NATIONAL CEMENT
COMPANY
UM BAB
QATAR
ISSUED TO:
Al Khaleej Takaful Insurance and Reinsurance
Company QSC
P.O. Box 455, Doha, Qatar
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INTRODUCTION
The subject of this report is the Qatar National Cement Company (QNCC), a
publicly listed company on the Qatar Stock Exchange, who are a major
producer of Ordinary Portland Cement, Sulphate Resistant Cement, Hydrated
Lime, Calcined lime and Washed Sand in State of Qatar.
Over the past three years the Insured have expanded their facilities and this
report deals with both the existing facilities as well to outline the implications
of the future expansion plans.
1 – 2 – The proposer’s two main sites on the outskirts of Um Bab.
Further to your instructions we proceeded to the proposer’s offices in Um Bab
on the West Coast of Qatar where we initially met with their Finance
Manager, Mr Ashwin Kumar, in order to get an overview of this risk. We also
subsequently met with the organisation’s Production Manager, Mohammed
El-Shafeey Yousief and Head of Maintenance, Mohammed Fowzy, on three
separate occasions at their main plant to discuss the new expansion as well as
any issues that have been encountered in the recent past. Our enquiries are
now concluded and we trust will allow insurers to take a view with regards the
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risk profile of the premises for insurance purposes in respect of the following
major perils :
- Fire / explosion
- Elemental Perils
- Impact
- Burglary
- Catastrophic Perils
- Machinery Breakdown
- Business Interruption
COMPANY PROFILE
The Insured are one of 43 public companies listed on the Qatar Stock
exchange with a 43% share of their stock held by the Qatar Government.
The company was established per the Emiri Decree No.07 in 1965 to produce
Ordinary Portland Cement in sufficient quantity to meet the growing demand
for cement in the State of Qatar.
The cement manufacturing units of company are situated on two large
separate sites at Umm Bab, approximately 82km from Doha, in close proximity
to a limestone which has been mined since 1969. They also operate their
admin offices out of Um Bab and own and manage a residential housing
estate for their staff nearby. A third plant in Al-Boaadiat is operated by them
and produces washed sand for the local construction industry.
In total six cement production lines have been commissioned on their sites
with a present total cement production capacity of 15,500 tons per day and
clinker production capacity of 11,900 tons per day.
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The Insured are in the process of erecting a new production line on their site
outside Um Babb which will provide an additional capacity of 5,000 tons of
klinker and 5,500 tons of cement per day. This turnkey project started is
expected to come online with full klinker production by October 2016.
The Insured have also commissioned a Calcium Carbonate Production Unit
which essentially comprises two large scale crushers producing 180 tons of
1.4mm – 4mm sized calcium carbonate particles over a 10 hour daily
operating cycle.
The washed sand plant, purchased in January 2003 from the Ministry of
Municipality and Agriculture Affairs, has been upgraded to a present capacity
of 20,000 tons per day.
The company presently employs approximately 1,350 staff, 1,200 of whom are
resident in the company housing in Um Bab and work at the Cement Plants
and 131 at the sand processing plant.
According to their 2014 financial statements the annual turnover of the
company was declared at QR 1,050,653,859 generating a bottom line profit of
QR420 million.
For more information please refer to their website at
http://www.qatarcement.com/ .
DESCRIPTION OF PREMISES
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The Insured operate their cement production from two large independent
sites located 3km from each other at Um Bab on the West Coast of Qatar
approximately 80 km from Doha.
The sites are independent and surrounded by perimeter fencing separating
them from the neighbouring properties.
The site closest to Um Bab houses the oldest plant which was established in
1969 with a 100 tons per day production line using a semi dry production
process. A further two similar lines were added in 1974 and 1976 bringing the
capacity up to 300 tons per day.
The production lines can be used to produce either Portland or Sulphate
Resistant Cement and the process which is followed is regarded as old
technology.
The site also has a Calcined Lime production line which was originally
commissioned in 1982.
The buildings on site include their administrative building/head office, raw
material storage sheds, raw material hoppers, workshop/store, cement plant
facilities including raw material mills and 3 gas fired kilns, as well as a
laboratory to test the quality of their products.
The second site houses 3 production lines which were commissioned in 1998,
2007 and 2009. These lines are totally automated and follow a dry process
with capacities of 2,000, 4,000 and 5,000 tons per day respectively.
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The new klinker production line is located on this site and is being erected in
parallel with the existing lines. In addition the Calcium Carbonate Production
crusher is also housed next to the existing production lines.
Facilities on this site include the administrative buildings, control centre, full
workshop facilities, raw material storage sheds, hoppers and cement plant
facilities including raw material mills, cyclone towers, gas fired kilns, clinker
grinders, cement and clinker silos.
Approximately halfway between the two cement production sites is the
limestone quarry where the Insured source raw limestone as part of their
production process. The limestone is blast mined although we are informed
that the entire process is controlled by the Ministry of Explosives under strict
police supervision with the Insured having no responsibility or control over the
process. The Insured use a fleet of diggers and dumper trucks to extract the
limestone to be fed into their production process.
3 – 4 – Views of the limestone quarry
As advised the Insured own and maintain a housing estate for their staff which
includes facilities on site including a mess hall, club house and medical centre.
In addition they also operate a desalination plant which provides water for
both the estate as well as their production processes.
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We understand that the Insured also operate a Gypsum Quarry close to the
border of Saudi Arabia. During the course of our enquiry we did not get the
opportunity to visit this site although we were informed that this facility is
relatively minor using manual diggers only to extract the raw material.
The final site is the sand washing facility which is located approximately 30km
inland of Um Bab. There are two plants on the site which uses recycled water
that is pumped in from a lagoon approximately 6km away. Only one plant is
used at present although the second plant can be commissioned if the need
arises. Facilities on site include the administration offices, washing plant,
water recycling plant, store, heavy equipment generator and weighbridges.
5 – 6 – Views of the sand processing plant
PREVIOUS LOSSES
We were informed of an incident in 2009 where a gas explosion occurred in a
preheater. We are informed that the kiln was switched off at the time of the
explosion and a gas leak resulted in a build-up of gas which ignited. The
production line was out of action for 3 months and resulted in losses of QAR
25 million although the resulting claim was settled for approximately QAR 3
million.
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Following this event a new gas monitoring system was introduce although the
technical details of this have not been made available.
We understand that since 2013 the following claims have been initiated under
the Insured's policies and remain outstanding:
1) Property All Risks
a) Claim No.: PAR/CL/100259/2014 Date of Loss: 01/05/2014 Damage to 2 Nos. Sand Conveyor Lines (Line No.1 & Line No. 3) at Old Sand Processing Plant at Al Rakia (Baid Al Gaa) due to high wind which caused collapse of both conveyor lines (Present Position : Further reports/supporting documents in this respect are awaited)
b) Claim No.: PAR/CL/100462/2015 Date of Loss: 22/03/2015 Leakage of water into Cement Silo 1 – Line 4 - Due to rain the water had accumulated on the roof of Silo 1 and 2, wetting the silo wall due to crack in drain pipe which caused the water falling on to silo and wet it (Present Position : Further reports/supporting documents in this respect are awaited)
c) Claim No.: PAR/CL/100566/2015 Date of Loss: 18/06/2015 Customer Truck caused accident to Sand Plant (Unit# 3 & 4) damaging water pipeline and electrical cable (Present Position : Supporting documents/reports are awaited)
2) Machinery Breakdown
a) Claim No.: MB/CL/10011/2013 Date of Loss: 04/11/2013 Without any apparent external forces and without any warning, heavy vibration and sounds occurred from within cement mill at Plant 2. Extensive damage was noticed to Gear Box (Present Position : Further reports/supporting documents in this respect are awaited)
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b) Claim No.: MB/CL/10018/2015 Date of Loss: 13/01/2015 Crack on base columns of Central Cone of the Silo which blocked the gate of the feed bin of Line 4 Raw Meal Silo as pieces of concrete got stuck in the gate opening (Present Position : Awaiting supporting documents/reports)
c) Claim No.: MB/CL/10019/2015 Date of Loss: 26/02/2015 Detachment of concrete in Clinker Silo of Line 4 (Present Position : Supporting documents/reports are awaited)
d) Claim No.: MB/CL/10020/2015 Date of Intimation: 08/03/2015 External Crack in Cement Silo 1 of Line 4 (Present Position : Supporting documents/reports are awaited)
e) Claim no : MB/1181/2014 Date of Loss : 15 November 2015 A further claim has arisen following the collapse of a SILO on 15 November 2015, being part of the calcined lime process with apparently no external operating mechanism. This claim is currently under investigations although preliminary findings would indicate that the corrosion due to the operating environment is not a key factor in the collapse.
BRIEF DESCRIPTION OF THE PRODUCTION PROCESSES
Site 1
The semi-dry process that is employed for all 3 production lines on the original
site is employed to produce either standard Portland or sulphate resistant
cement. The different variations depend on slightly different ratios in the pre-
mix. The basic ratios to manufacture clinker (the cement base) being
Limestone (75 – 80%), Clay (20 – 25%) and Iron Ore.
The process followed is an FLS process with plant supplied by Franco Tosi of
Italy and Bohlar in Germany.
The ingredients are ground together in the correct ratios until a fine powder is
created. The powder is then fed into a Nodulizer where it is mixed with water
to create granules of the constituent mix.
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7 – The storage hoppers and mill for the raw materials
The granules in turn are fed into a gravity fed gas fired rotary kiln more than
100m in length where they are heated to 1,450 degrees centigrade, the
temperature required for clinker crystals to form.
8 – 9 – Views of the rotary kiln
The crystals are then fed into a cooler where they are quenched with cool air
to 800degrees centigrade before being fed into a clinker store.
The clinker is then ground in one of two mills together with Gypsum to form
the Portland cement which is the either bagged into 50kg bags or bulk loaded
for their customers.
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There are numerous samples taken throughout the production process to
ensure consistency of product. These are taken at the limestone quarry, at the
raw materials mill, after the cooler, after the mill and as well as at the
dispatch.
10 – The laboratory on the old site where the sample quality is tested
The calcined lime production process is also a heat process where lime is
heated in a rotary kiln, crushed and fed into a bulk load silo for bulk loading
into trucks.
Site 2
The newer plant follows a dry process using the 3 kilns and cyclone towers.
Limestone, clay, and iron ore are loaded from the sheds into a grinder in the
correct ratios and then the ensuing mixture is fed into a raw mill store.
The milled product is then fed into a 5 stage pre-heater (cyclone) tower where
it is preheated to 850 degrees centigrade before being fed into a shorter gas
fired rotating kiln to be heated to 1,450 degrees centigrade .
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11 – 12 – The Raw Material Hoppers and Mill Surface
13 – View of the cyclone towers
At the end of the kiln the same air cooling process is followed to reduce the
temperature of the clinker to 800 degrees centigrade before being stored in a
clinker silo. The clinker is then ground with Gypsum to create the finished
cement product.
14 – 15 – View of the shorter rotary kiln and cooler
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We understand that the plant has a storage capacity of 80,000 tons of cement
in their silos while up to 1,000,000 tons of clinker can be stock piled.
The finished product is the bagged or bulkloaded for distribution.
16 – Bulk loading point at the base of the storage silos
The processes are entirely automated and controlled from a dedicated control
room on site.
The new calcium carbonate line is a relatively simple process where limestone
is crushed in two crushers before storage and distribution.
Sand Processing Plant
The sand process is more simplified and starts with the delivery of sand which
is supplied by a third-party firm under a pre-negotiated contract.
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The sand is the sifted to remove any oversized particles larger than 5mm. The
sand is then washed with water to remove silt and powder to finish the sand
which is then stockpiled to be loaded onto customer’s trucks and weighed on
a weighbridge for dispatch.
The process water is then recycled and fed back into the process.
ASSETS
We have received the attached financial statements which have summarised
the assets at cost as follows :
Description Total
Plant & Equipment QAR 2,437,149,147
Building QAR 546,429,339
Vehicles QAR 118,945,988
Furniture QAR 24,594,334
QAR 3,127,118,808
We have noted that the policy has a reinstatement value condition and
therefore care should be taken when fixing the Sum Insured to reflect price
increase from the original cost of the plant which lines were initially built a
considerable time ago.
MAINTENANCE
The plant operations are co-ordinated by Head of Production, Muhammed
Salim Choudery, who has more than 35 years experience with plants in
Pakistan and Saudi Arabia. He is assisted by Production Manager, Mohammed
El-Shafeey Yousief, who has been working at the plant for 8 months although
has 28 years experience with cement plants.
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The maintenance of the Insured’s plant is undertaken by their own in-house
technical team in consultation with the guidelines of the suppliers of the
equipment and at recommended intervals.
Although the plant operates on a 24 hr basis the scheduled downtime for the
plant to undertake maintenance works was 505 days in 2015 including the
following major maintenance jobs :
- Plant 2 - Line 2 – Twin Cyclone Complete Erection and Refractory Lining
- Plant 2 – Line 2 - Pre-Calciner – All Refractory Work
- Plant 2 – Line 2- Tertiary Air Duct Refractory work
- Plant 2 – Line 3 – Pre-Calciner – All Refractory Work
- Plant 2 – Line 3 – Rising Duct Refractory Works
Further to the above the Insured have submitted the attached logs of
scheduled and unscheduled breakdowns for the various lines over the periods
2012 – 2014. The logs show the following total days shutdown against
planned maintenance :
2012 – Total 251 days – Planned 119 days
2013 – Total 262 days – Planned 121 days
2014 – Total 331 days – Planned 139 days
CRITICAL POINTS
As indicated the core business of the Insured is the production of klinker and
cement from basic raw materials with the key input components being
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limestone, iron ore, gypsum and limestone fueled by gas and supported by
electrical systems.
The production process is fully integrated with raw material grinding, heating
of the klinker mix cooling and grinding of the end product in an automated
system. The system legs are interconnected through a network of conveyors
and bucket elevators which is centrally controlled and monitored by complex
IT systems. While the majority of the machinery, including the conveyors, fans
and other rotating machinery including the mills and kilns is driven by
electrically powered motors we consider that the most sensitive spares are
the computer system and large capacity motors.
The plants operate 24 hrs per day at approximately 85% capacity. There is
therefore some excess capacity that can be taken up in the event of the failure
of one of the lines.
Most of the key inputs for the klinker mix including gypsum, limestone and
clay are sourced locally so a shortage should not be an issue. The Iron ore
however is imported from sources in India and China although at any one time
a 6 month supply is stockpiled.
A 12 month supply of consumable spares is kept in the stores while a supply of
strategic key spares is also kept to minimize downtime in the event of failure.
The Insured acknowledges that some of the larger key components including
the reducer and main kiln drive can take up to 18 months to replace.
PHYSICAL HAZARDS
A) Site operations
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A number of the Insured’s processes carry inherent loss exposures which we
highlight for your consideration.
The Integration of the Insured‘s cement production processes is facilitated by
large scale motors which are powered through independent substations.
These have an inherent risk of malfunction and electrical burnout. Each line
has 4 substations powering the major functions while there are 3 substations
for the cement mills.
The management and monitoring of the systems is co-ordinated by
sophisticated computer systems in a central command centre. The systems
are protected by UPS while 2 persons monitor each line at any one time.
17 – 18 – View inside the control room
The Kilns are heated by a piped gas supply that comes with Inherrent risks of
explosion, an occurrence that has previously taken place. As mentioned we
understand that state of the art monitoring systems have been installed to
prevent a recurrence of the previous explosion.
The Insured operate a laboratory on site with stored chemical products which
has been duly licensed by the Qatar Civil Defence as aprt of the nature of their
business.
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The administrative offices house the non-critical administration functions and
are subject to the normal risks associated with offices while the housing
estate properties would be subject to the standard domestic risks.
Turning to the sandprocessing plant the motorized feeder buckets would be
subject to possible damage to the motors. Only one of the two plant lines is
active at present so in the event of a failure the second production line could
be promptly commissioned.
B) Services
1. Electrical load – The electrical supply to the building sections is
supplied by Karahmaa. There are two feeds to the main plant so
that in the event of a failure of one feed the power supply will be
uninterrupted. The power to the control centre also has two feeds
through two 15kva UPS connected in parallel. The main power
source is 415V 3 phase with generator backup as well as a further 6
hours by battery.
2. Steam – There is no steam requirement in this process.
3. Gas – The gas is piped in directly from Qatar Petroleum thorugh a
1m diameter pipe. The gas is fed through a special gas station which
regulates the feed to the kilns.
4. Air Conditioning – There are number of wall units and chiller banks
providing cooling for the office and control centre of the facility.
5. Personnel – The Insured’s personnel on the plant are well drilled in
the event of emergency.
6. Security – The site security is contracted to an independent security
firm sand at the time of meeting with the Insured they were inviting
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tenders. The perimeter protections of the sites comprise 8 ft wire
mesh fences with gated access regulated by two security guards.
7. Maintenance - The maintenance of the premises is under the span
of control of the Insured’s engineering team although external
parties are contracted in as required
FIRE PROTECTION MEASURES
The fire protection system in the offices and control centre comprises smoke
alarms, hose reels and portable fire extinguishers which were apparent at the
time of our initial attendance.
19 – Fire Fighting Equipment inside the administration offices
There is a strict non-smoking policy across the facility with a designated
smoking zone outside the premises away from the buildings
The Insured have a maintenance contract with M/s Chubb to maintain the fire
protection systems.
The Insured are in discussions with the Civil Defence authority with a view to
upgrading their current systems and we have not been advised of any timeline
in this regard.
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The nearest Civil Defence fire station is located approximately 1km from their
main offices and their reaction time in the event of an incident at the cement
plant would not be expected to exceed 5 to 10 minutes.
We understand that the water pressure to the site is boosted by fire
suppression pumps with a capacity of 100 cubic meters per hour with 90m of
head operating at 8 bar.
HOUSEKEEPING
The housekeeping arrangements are managed internally by the Insured and
we did not notice any obvious cause for concern at the time of our inspection.
The plants are located in the open desert however and is therefore a
naturally dusty environment.
SECURITY MEASURES
The sites are encircled with 8 ft wire mesh fencing with the entry points
having guard stations which are manned by two security guards on a 24hr
basis.
20 – 21 – Guard station and wire mesh perimeter fencing
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The Insured also have a cashier’s desk in their offices who looks after wages
and makes substantial cash payments to the workers weekly. No extra
protection measures are adopted although the plant is remote and the
likelihood of a robbery is considered remote.
RISK EXPOSURES
Fire
Fire and/or explosion is the most likely threat of damage to the premises due
to the nature of the processes, plant as well as the control systems.
The design and implementation of the fire protection and extinguishment
systems should be of a high calibre although as we have not seen the full fire
plan we cannot provide comment on the knock on effect of a conflagration in,
say, the command centre. It is however possible that a localized fire within
the centre could have a knock on effect and result in smoke damage affecting
the equipment within.
The electrical distribution system is protected by a UPS and circuit breakers
and this should result in the detection and isolation of any electronic
equipment that is faulty before a malfunction occurs.
Explosion
The gas fired kilns pose significant risk of explosion due to possible build-up of
explosive gases in the event of a leak or malfunction.
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In addition the presence of Carbon Monoxide which can build up and combine
with oxygen to form a potentially spontaneous explosion by the exothermic
reaction produced by hot gases from the kiln mixing with air. Such an
explosion can cause serious damage to the plant lines.
Although we are not aware of the specific controls in place these should
include monitors which measure the levels of Carbon Monoxide, Oxygen and
Oxides of Nitrogen to shut down the fire kiln in the event of a build-up of
Carbon Monoxide.
Storm
Qatar is located on a peninsula projecting into the Arabian Gulf and serviced
by sub-tropical weather systems. Rainfall is low with an annual average of
approximately 75mm mostly falling in the Winter when sudden electrical
storms are known to develop.
We would expect the plant design to be able to respond to any challenges
posed by the normal and seasonal peak weather conditions.
Earthquake / Volcanism
Doha is located within a seismically stable zone with no major events recorded
over the last century and the risk of damage caused by this peril is regarded as
low.
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Theft / Robbery
The 24 hour security measures should ensure that security is maintained at a
high level while the current climate in Qatar in secure and the crime statistics
are very low in comparison to other countries.
Impact with motor vehicles
The plant is set back far away from the main Um Bab Road and poses no
discernable risk.
There are however trucks and other vehicles moving on the site although any
related damage caused by an impact would be minimal.
Impact with falling debris
The building has been erected off the direct flight path of the existing Doha
International Airport and the likelihood of related damage should be remote.
Machinery Breakdown
The plant equipment has been sourced through reputable Cement plant
suppliers and requires minimal workers to operate the systems. We are
informed that critical component spares are readily available and trained
technicians are employed to minimize downtime.
In case of a breakdown of a component where spares are not to hand these
should be able to be sourced from the suppliers.
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The proposer has a well trained maintenance team which carries out
comprehensive preventative maintenance as well as a breakdown system
which properly logs breakdowns.
It is a known factor that an element of corrosion risk is present due to the
nature of the plant being exposed to the elements for a considerable time.
Business Interruption / Loss of Profit
There are several factors which should ensure that even after a major event,
the consequential profit losses suffered by the organization should be
manageable.
The plant has been supplied by reputable suppliers and spares components
should be available.
The plant has multiple lines which are not run at 100% capacity and if a line is
lost the other lines would be able to increase their output in the short term.
Materials have been stockpiled and the primary output component, clinker,
can be imported separately and ground with gypsum to make cement and
maintain the Insured’s customers in the short term.
We have requested that the proposer forward a copy of their Business
Continuity Plan so that we can gauge their preparedness in the event of an
incident. This has however not been presented.
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VALUE AT RISK
The proposer presently have two policies in force for the year ending 31
December 2015.
Under their Property All Risks Policy the plant is insured for a total of QAR
3,370,600,000 against a 12 month Gross Profit Sum Insured of QR
693,000,000.
The second Machinery Breakdown policy on the other hand QAR
2,043,400,000 against a 12 month Gross Profit Sum Insured of QAR
685,000,000.
We have not received a breakdown as to what asset falls under which policy
to date.
When comparing the above combined totals to the asset register summary
total of QAR 3,127,118,808 there would appear to be an allowance for
increased cost of the plant from cost although, considering the age of the
plant without a detailed line by line costs analysis we care not in a position to
provide further comment.
The Gross Profit Sum Insured would appear to be in line with the financial
performance based on the 2014 financial statements.
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MAXIMUM PROBABLE LOSS (MPL)
We suggest that the following Maximum Probable Loss amounts against the
related sums insured should be allocated:
Fire : 10%
Water Damage : 5%
Explosion : 10%
Flood / Weather : 5%
Earthquake : 50% (very low risk)
Impact with vehicle : 1%
Theft : 1%
Impact with aircraft : 50% (very low risk)
Business Interruption
Machinery Breakdown
Business Interruption
: 20% over a 12 month
period
: 10%
: 40%
CONCLUSION
The above mentioned is submitted for your consideration and should allow
your considered opinion as to the degree and acceptance of the proposed
risk.
If any further detail is required please let us know and we will gladly
accommodate.
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DISCLAIMER:
This report is issued without prejudice and is based on the physical
inspection carried out in the subject premises and the material information
provided by the Proposer. Our company or attending surveyors are not
responsible for any error or discrepancy in the report due to
misrepresentation by the Proposer at the time of our inspection.
Carl Roberts Senior Adjuster
BCOM, FILA(SA), FIFAA, MIRMSA, M.Inst.D
Regional Head of Business Interruption
Claims
Major & Complex Loss - Middle East
Office 12, Third Floor, Al Reem Tower, P.O.Box 19462
West Bay – State of Qatar
T +974 4006 8949| M +974 6686 7671 E [email protected] W cl-mcl.com
Cunningham Lindsey International | cunninghamlindsey.com
