263.

PROFILE ON THE PRODUCTION OF

CALCIUM CHLORIDE

263-2
TABLE OF CONTENTS

PAGE

I.

SUMMARY

263-3

II.

PRODUCT DESCRIPTION & APPLICATION

263-3

III.

MARKET STUDY AND PLANT CAPACITY

263-4

A. MARKET STUDY

263-4

B. PLANT CAPACITY & PRODUCTION PROGRAMME

263-6

RAW MATERIALS AND INPUTS

263-7

A. RAW & AUXILIARY MATERIALS

263-7

B. UTILITIES

263-7

TECHNOLOGY & ENGINEERING

263-8

A. TECHNOLOGY

263-8

B. ENGINEERING

263-9

MANPOWER & TRAINING REQUIREMENT

263-10

A. MANPOWER REQUIREMENT

263-10

B. TRAINING REQUIREMENT

263-11

FINANCIAL ANLYSIS

263-11

A. TOTAL INITIAL INVESTMENT COST

263-11

B. PRODUCTION COST

263-12

C. FINANCIAL EVALUATION

263-13

D. ECONOMIC BENEFITS

263-14

IV.

V.

VI.

VII.

263-3
I.

SUMMARY

This profile envisages the establishment of a plant for the production of calcium carbide
with a capacity of 30 tonnes per annum.

The present demand for the proposed product is estimated at 46 tonnes per annum. The
demand is expected to reach 96 tonnes by the year 2017.

The plant will create employment opportunities for 20 persons.

The total investment requirement is estimated at Birr 3.65 million, out of which Birr 2.55
million is required for plant and machinery.

The project is financially viable with an internal rate of return (IRR) of 17 % and a net
present value (NPV) of Birr 1.4 million, discounted at 8.5%.

II.

PRODUCTION DESCRIPTION AND APPLICATION

In this project the principal product is calcium chloride and calcium silicate. The former
is soluble in water and alcohol. It is an important desicant (hygroscopic substance) used
in different industries including petroleum refinery, concrete conditioning, paper & pulp
industry,

fungicides,

refrigeration

brines,

firming

agent

in

tomato

canning,

pharmaceuticals, electrolytic cells, etc.

The by-product, calcium silicate hydrates are also used for decolourasing and purifying
sugar solution, fermented beverages and mineral oil.

There are a variety of calcium

silicates. Calcium silicate that has an approximate composition Ca. It should be O, not
zero 0.5 Si O2. 8H2O is used in bulk quantity in the rubber industry as filler as its particle
size is not suitable for rubber compounding.

263-4
Calcium silicate is also used as anticaking agent in dust formulations (mainly DDT
wettable formulations), as filler in rubber industry and also as an insulation material.

III.

MARKET STUDY AND PLANT CAPACITY

A.

MARKET STUDY

1.

Past Supply and Present Demand

Calcium chloride has various applications in the manufacturing sector. It is used in

glycerole production, in the conditioning of concrete, in metallic pigments, in
refrigeration, paper and pulp industry, fungicide production, food processing, fire
weighting, pharmaceutical and the like.

Currently there is no plant in the country that manufactures calcium chloride. As a result
the entire requirement of calcium chloride is met through import. Import of the product
for the past eight years is shown in Table 3.1.

Table 3.1
IMPORT OF CALCIUM CHLORIDE (TONNES)

Year

Import

1999

13.4

2000

4.4

2001

19.3

2002

27.9

2003

17.1

2004

18.2

2005

24.9

2006

66.6

Source : Customs Authority

263-5
As could be observed from Table 3.1 the imported quantity of calcium chloride during
the period 1999-2002- was very erratic showing a big jump in one year and a decline in
another year. For instance, the imported quantity during 1999 was 13.4 tonnes while it
sharply declined to 4.4 tonnes by the year 2000. Again, a big increase has been shown
during the two consecutive years, i.e. 2001 and 2002, which was 19.3 tonnes and 27.9
tonnes respectively. Similarly import has declined to a level of 17.1 tonnes in the year
2003. But after year 2003 the amount imported has shown a consistent increase. The
amount of import which was 17.1 tonnes in the year 2003 has increased to 18.2 tonnes,
24.9 tonnes and 66.6 tonnes by the year 2004, 2005 and 2006 respectively.

In order to estimate the current effective demand the recent two years average has been
considered. Accordingly current effective demand is estimated at about 46 tonnes.

2.

Projected Demand

The demand for calcium chloride is highly influenced with the expansion and
development of the user industries. Considering the past growth of the manufacturing
sector an annual average growth rate of 7% is applied to forecast the demand (see Table
3.2.).
Table 3.2
FORECASTED DEMAND FOR CALCIUM CHLORIDE (TONNES)
Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

Forecasted Demand
49
53
60
64
68
73
78
84
89
96

263-6
Demand for calcium chloride will increase from 49 tonnes in the year 2008 to 68 tonnes
and 96 tonnes during year 2012 and year 2017, respectively.

3.

Pricing and Distribution

Based on the average CIF price and other charges Birr 12,000 per tonne is recommended
as a factory gate price. The product can be sold directly to the user industries without
involving other channels.

B.

PLANT CAPACITY & PRODUCTION PROGRAMME

1.

Plant Capacity

The annual production capacity of the proposed project is 30 tonnes of calcium chloride
and 60 tonnes of calcium silicate, based on three shifts per day and 300 working days per
annum.
2.

Production Programme

Table 3.3 indicates the production program of the project. At the initial stages of the
production period, the plant requires some years to penetrate the market. Therefore, in
the first and second year of production, the capacity utilization rate will be 70% and 90%,
respectively. In the third year and thenafter, full capacity production shall be attained.

Table 3.3
PRODUCTION PROGRAM
Sr.

Product

No.

Production Programme
1

3-10

Calcium chloride (tonnes)

21

27

30

Calcium silicate (tonnes)

42

54

60

Capacity utilization rate (%)

70

90

100

263-7
IV.

MATERIALS AND INPUTS

A.

RAW MATERIALS

The major raw materials of the project are hydrochloric acid, sodium silicate, lime and
other miscellaneous chemicals.

The annual raw materials requirement and cost of

chemicals are indicated in Table 4.1.

Table 4.1
RAW MATERIAL REQUIREMENT & COST

Sr.

Raw Material

Qty
(Tonnes)

No.

Cost (000 Birr)

FC

LC

Total

Hydrochloric acid

3.5

63.00

12.60

75.6

Sodium silicate

2.4

77.54

15.5

93.04

Lime and other miscellaneous

10.5

40

50.5

151.04

68.1

219.14

chemicals
Total

B.

UTILITIES

The utilities of the project are electricity, furnace oil and water. The annual utilities
requirement and cost are indicated in Table 4.2.

263-8
Table 4.2
ANNUAL UTILITY REQUIREMENT & COST

Sr.

Utility

Unit

Qty

Cost (000 Birr)

No.
1

Electricity

kWh

60,000

28.44

Furnace oil

Kg

10,000

54.1

Water

m3

3,000

30.0

Total

V.

TECHNOLOGY AND ENGINEERING

A.

TECHNOLOGY

1.

Process Description

112.54

Burnt lime is treated with hydrochloric acid to produce calcium chloride. The addition of
the acid should be so calculated and adjusted that almost a neutral solution is obtained.
The clear solution of calcium chloride is decanted from the top. A portion of calcium
chloride solution is taken to the evaporator and crystallized in suitable crystallizers. The
remaining part of calcium chloride solution is then treated with a clear sodium silicate
solution and then calcium silicate is precipitated out. The precipitate is centrifuged,
washed, dried, pulverized and packed.

2.

Source of Technology

Several plant machinery suppliers can be requested for their offer.

company could be one of the candidate.
Ravi Kiran Industries
Tel. +91-22-28506569
Fax. +91-22-28506135

The following

263-9
B.

ENGINEERING

1.

Machinery and Equipment

The list of machinery and equipment is indicated in Table 5.1.

The total cost of

machinery is estimated at Birr 2,550,000 of which Birr 2,125,000 is required in foreign

currency.

Table 5.1
LIST OF MACHINERY & EQUIPMENT REQUIRED

Sr.

Description

No.

(Qty.)
No.

Polyethylene buckets

25

Evaporator (lead linned )

Hydro-exractor (basket type 22dia, 5 HP)

Crystallizer (enameled)

Tray dryer (24 frays)

Pulveriser

Furnace (oil tired)

Miscellaneous equipment such as tanks. Weighing Lumpsum

scales, thermometers, etc.

2.

Electrical installations

lumpsum

Land, Building & Civil Works

The total area of the project is 600 m2 of which the built-up area is 200 m2. The cost of
building is estimated at Birr 300,000. The lease value of land is about Birr 48,000 at a
rate of 1 Birr/year/m2 for 80 years.

263-10

3.

Proposed Location

Butajira town is selected as the best location of the project for its proximity to
infrastructure.

VI.

MANPOWER AND TRAINING REQUIREMENT

A.

MANPOWER REQUIREMENT

The list of manpower and annual labour cost are indicated in Table 6.1. The total annual
cost of labour is about Birr 258,000.

Table 6.1
MANPOWER REQUIREMENT & LABOURCOST

Sr.

Manpower

No.

Req.

Monthly

Annual Salary

No.

Salary (Birr)

(Birr)

General manager

3,000

36,000

Sales officer

1,500

18,000

Production head

2,000

24,000

Accountant

2,000

24,000

Operators

2,800

33,600

Labourers

3,200

38,400

Chemist

1,500

18,000

General service

1,200

14,400

Sub-total

20

17,200

206,400

4,300

51,600

21,500

258,000

Benefit (25% BS)

Total

20

263-11

B.

TRAINING REQUIREMENT

On-the-job training shall be carried out during plant erection by the experts of machinery
suppliers at cost of Birr 20,000.

VII.

FINANCIAL ANALYSIS

The financial analysis of the calcium carbide project is based on the data presented in the
previous chapters and the following assumptions:-

Construction period

1 year

Source of finance

30 % equity
70 % loan

Tax holidays
Bank interest

3 years
8%

Discount cash flow

8.5%

Accounts receivable

30 days

Raw material local

30days

Raw material, import

90days

Work in progress

5 days

Finished products

30 days

Cash in hand

5 days

Accounts payable

30 days

A.

TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at Birr
3.65 million, of which 17 per cent will be required in foreign currency.

The major breakdown of the total initial investment cost is shown in Table 7.1.

263-12

Table 7.1
INITIAL INVESTMENT COST

Sr.

Total Cost

No.

Cost Items

(000 Birr)

Land lease value

Building and Civil Work

Plant Machinery and Equipment

2,550.00

Office Furniture and Equipment

100

Vehicle

250

Pre-production Expenditure*

346.64

Working Capital

62.97

Total Investment cost

48
300.00

3,657.6

Foreign Share

17

* N.B Pre-production expenditure includes interest during construction ( Birr 196.64

thousand ) training (Birr 20 thousand ) and Birr 130 thousand costs of registration,
licensing and formation of the company including legal fees, commissioning expenses,
etc.

B.

PRODUCTION COST

The annual production cost at full operation capacity is estimated at Birr 1.30
million (see Table 7.2). The material and utility cost accounts for 25.44 per cent, while
repair and maintenance take 8.82 per cent of the production cost.

263-13
Table 7.2
ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)

Items
Raw Material and Inputs
Utilities
Maintenance and repair
Labour direct
Factory overheads
Administration Costs
Total Operating Costs
Depreciation
Cost of Finance
Total Production Cost

C.

FINANCIAL EVALUATION

1.

Profitability

Cost

219.14

16.81

112.54

8.63

115

8.82

154.8

11.87

51.6

3.96

103.2

7.92

756.28

58.01

362.4

27.80

184.96
1,303.64

14.19
100

According to the projected income statement, the project will start generating profit in the
first year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the life-time of the project.

The income statement and the other indicators of profitability show that the project is
viable.

263-14
2.

Break-even Analysis

The break-even point of the project including cost of finance when it starts to operate at
full capacity ( year 3) is estimated by using income statement projection.

BE =

Fixed Cost

51 %

Sales Variable Cost

3.

Payback Period

The investment cost and income statement projection are used to project the pay-back
period. The projects initial investment will be fully recovered within 5 years.

4.

Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 17 % and the net
present value at 8.5% discount rate is Birr 1.45 million.

D.

ECONOMIC BENEFITS

The project can create employment for 20 persons. In addition to supply of the domestic
needs, the project will generate Birr 800,820 in terms of tax revenue. The establishment
of such factory will have a foreign exchange saving effect to the country by substituting
the current imports.