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Profile On The Production of Calcium Chloride
Profile On The Production of Calcium Chloride
263-2
TABLE OF CONTENTS
PAGE
I.
SUMMARY
263-3
II.
263-3
III.
263-4
A. MARKET STUDY
263-4
263-6
263-7
263-7
B. UTILITIES
263-7
263-8
A. TECHNOLOGY
263-8
B. ENGINEERING
263-9
263-10
A. MANPOWER REQUIREMENT
263-10
B. TRAINING REQUIREMENT
263-11
FINANCIAL ANLYSIS
263-11
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 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.
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,
The by-product, calcium silicate hydrates are also used for decolourasing and purifying
sugar solution, fermented beverages and mineral oil.
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.
A.
MARKET STUDY
1.
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
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.
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.
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
21
27
30
42
54
60
70
90
100
263-7
IV.
A.
RAW MATERIALS
The major raw materials of the project are hydrochloric acid, sodium silicate, lime and
other miscellaneous chemicals.
Table 4.1
RAW MATERIAL REQUIREMENT & COST
Sr.
Raw Material
Qty
(Tonnes)
No.
LC
Total
Hydrochloric acid
3.5
63.00
12.60
75.6
Sodium silicate
2.4
77.54
15.5
93.04
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
No.
1
Electricity
kWh
60,000
28.44
Furnace oil
Kg
10,000
54.1
Water
m3
3,000
30.0
Total
V.
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
The following
263-9
B.
ENGINEERING
1.
Table 5.1
LIST OF MACHINERY & EQUIPMENT REQUIRED
Sr.
Description
No.
(Qty.)
No.
Polyethylene buckets
25
Crystallizer (enameled)
Pulveriser
2.
Electrical installations
lumpsum
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.
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
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%
8.5%
Accounts receivable
30 days
30days
90days
Work in progress
5 days
Finished products
30 days
Cash in hand
5 days
Accounts payable
30 days
A.
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)
2,550.00
100
Vehicle
250
Pre-production Expenditure*
346.64
Working Capital
62.97
48
300.00
3,657.6
Foreign Share
17
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 %
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.
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.