Ivan Ergović: No one is as close to a potential CO2 storage location as Nexe

Nexe Group achieved consolidated business revenues of 208 million euros last year, representing a 20 percent increase compared to 2021. The result is even better considering the year was challenging due to still poorly connected supply chains and soaring prices, which caused expenses to rise by almost 18 percent. With the investments realized as defined in the Nexe Strategy 2022 – 2030, the Group achieved a profit of 27.2 million euros.

The Group consists of 15 companies operating in Croatia, Serbia, and Bosnia and Herzegovina, employing just over 1,800 workers. Recently, representatives of Nexe (the parent company in the Group) and the Croatian Construction Union signed a new Collective Agreement (CA) a year before the expiration of the old one, increasing the salary calculation base by 10 percent while retaining all previous material rights of workers in the maximum non-taxable amount. In addition to Nexe, other members of the Group also initiated salary corrections aimed at increasing them.

The CEO and owner of Nexe Group Ivan Ergović believes that the signing of the CA and the business results are a significant success as the company, he says, has focused at all levels to find balance, especially due to rising energy prices. Investments in energy by Nexe Group were the reason for the interview with Ergović. Two years ago, when we spoke, he announced energy-saving projects and green policies (some of which had already been realized), and recently one such project was completed in Dilj.

In recent years, you have invested a lot in energy projects.

– The circumstances and business challenges we have witnessed over the last three years have brought new questions to companies, primarily how to ensure business sustainability in such an environment. We believe that companies must transform their operations into digital and green, and I would add – as energy-independent as possible.

Our goal is energy transition. We are investing in digitalization and electricity production to ensure security regarding supply and prices. In our business, our biggest problem is energy as a cost and CO₂ emissions. That is why we adopted a new Group Strategy for the period 2022 – 2030 last year, in which we defined four strategic pillars through which we will create added value.

What are they?

– Market orientation, implementation of new technologies, operational excellence, and development of people and organization. The main goals of the Strategy are to increase the level of readiness for new market conditions, as well as to ensure long-term development and sustainability of the business, and energy and green transition are an important part of it, I would say the most important.

In it, energy transition implies a series of investments in energy production from renewable sources to reduce the energy dependence of our factories, while green transition implies reducing CO₂ emissions by more than 50 percent by 2030 through operational excellence and investment in new technological solutions.

How?

– Last year, we started the project ‘CO₂NTESSA’ at Nexe, which involves modifying the clinker production process based on second-generation Oxyfuel technology, the most economical long-term solution for completely eliminating CO₂ emissions.

Can you explain what it specifically involves?

– Today, there are solutions that allow you to purify gases at the output of the production process in existing plants because the share of CO₂ in emission gases must be greater than 90 percent for it to be transported and disposed of. However, this technology is expensive because we would need to consume more energy than we currently do for production, and cement would cost twice as much as it does now. Nevertheless, there is a technology developed by the German ThyssenKrupp that cleans CO₂ during the process, not at the end.

Instead of air, only oxygen is used, which is 21 percent in the air, and it supports combustion, while other gases are filtered. Such a plant is smaller in size, requires less heat to warm the entire mass, and saves 25 percent of energy in the process because it does not need such a large volume to obtain enough oxygen to support combustion. In addition, it implies almost complete replacement of fossil fuel. Thus, it is the most innovative and economical solution for sustainable cement production, and we will apply it among the first in the world.

What stage is it at?

– The ‘CO₂NTESSA’ project is a very extensive and complex project for CO₂ neutral and cost-effective cement production, and despite the challenging deadlines for its application to the EU Innovation Fund, we succeeded. The project was positively evaluated with the EIB’s recommendation for technical support. We are pleased because we have achieved our goal at this stage – the enormous potential of the project has been recognized, so that it can receive the green light and funding for realization in the next phase with the offered technical assistance.

In the next step, the European Commission sends a proposal for technical support to the European Investment Bank, which considers that proposal. Our relevant ministries are also involved in this process, aiming to further support the project. According to that procedure, we believe in further support from all involved in that process, which will result in signing a contract for technical support with the EIB, expected in October this year. At the same time, Nexe continues intensive activities to realize this project, and accordingly, we plan to produce cement without CO₂ emissions into the atmosphere from 2029.

How much CO₂ do you emit annually?

– Seven hundred thousand tons. Now the price of CO₂ is between 80 and 100 euros, which means we should pay 70 million euros a year. However, according to EU rules, we receive part of the free allocations, and we have to pay for part, and for last year, that cost was 15 million euros.

But by 2032, there will be no more free allocations, which is why we are focused on realizing the ‘CO₂NTESSA’ project. This is our largest project, valued at 400 million euros. We have also reported it to the Ministry of Economy and Sustainable Development for it to be declared a project of strategic state interest.

Why is it strategically important for the state?

– In addition to modifying the clinker production process in our factory, the project also involves transportation to a defined location for underground CO₂ storage, which means it is compatible with the ‘GT CCS Croatia’ project developed by the Hydrocarbon Agency. Namely, no one is as close to a potential CO₂ storage location as Nexe in Slavonia.

Ina has been successfully disposing of CO₂ in wells for years. In addition, the Hydrocarbon Agency has submitted its project for inclusion on the list of strategic EU projects, the so-called PCI list. Thus, its project is linked to ours. ‘CO₂NTESSA’ is one of the few projects in the EU that has an efficient solution for CO₂ disposal, through a transport pipeline to the Bockovci-1 location, where it will be injected into a saline aquifer.

Will others also be able to dispose of CO₂ in the underground storage?

– The project is not just the future of our company, but of the entire industry. The capacities of the CO₂ injection reservoirs are sufficient not only for us but also for emitting factories from the wider region. With the great opportunities that the realization of ‘CO₂NTESSA’ would open for our company and the entire industry, due to the natural possibilities for CO₂ storage, Croatia has an excellent opportunity to become a future hub for managing this gas from the wider region and thus influence an important segment in achieving the EU’s green transition plan.

Read the entire interview in the digital and printed edition of Lider.