Design Project I: Production of 50,000 Metric Tonnes of Ethanol per Year

EH2207R
DESIGN PROJECT I (JANUARY 2018)
PRODUCTION OF 50,000 METRIC TONNES OF ETHANOL PER YEAR
CHAPTER 1: PROCESS BACKGROUND & SELECTION

GROUP MEMBERS
TIFFANY ANAK TONY 2015875416
FAZLEIN BINTI SARIP 2015835006
MUHAMMAD ADIB BIN ZAABA 2015636606
NURUL HAZIRAH AINA BINTI HASNAN 2014261176
MAIZATUL AKMA BINTI MOHD BASIR 2013584743
MOHAMAD SALMI BIN MOHD FUDZI 2015673968
SUPERVISOR:
MADAM NOR HAZELAH BINTI KASMURI
FACULTY OF CHEMICAL ENGINEERING

UNIVERSITI TEKNOLOGI MARA
SHAH ALAM
TABLE OF CONTENT
Page
LIST OF TABLES v
LIST OF FIGURES vi
CHAPTER 1: PROCESS BACKGROUND AND SELECTION

1.1 Introduction 1-2
1.2 Ethanol 3–7

1.2.1 Physical and Chemical Properties
1.2.2 Application
1.2.3 Advantages and Disadvantages
1.3 Process Selection 8 – 19

1.3.1 Overview and Comparison of Process Selection
1.3.2 Fermentation Process
1.3.2.1 Using Corn as Raw Material
1.3.2.2 Using Sugarcane as Raw Material
1.3.3 Catalytic Hydration using Ethylene
1.3.4 Conclusion for Process Selection
1.4 Process Background of Catalytic Hydration 20 – 27

1.4.1 Introduction of Process Background
1.4.1.1 Production of Pure Ethanol
1.4.1.1.1 Distillation
1.4.1.1.2 Pressure Swing Adsorption
1.4.2 Detailed Process of Catalytic Hydration
1.4.2.1 Process Block Diagram
1.4.2.2 Process Flow Diagram
ii
1.5 Market Analysis 28 – 51
1.5.1 Introduction
1.5.2 Main Product
1.5.2.1 Ethanol
1.5.2.1.1 World Demand and Consumption
1.5.2.1.2 World Production
1.5.2.1.3 Market Price
1.5.2.1.4 Leading Manufacturer
1.5.3 Raw Materials
1.5.3.1 Ethylene
1.5.3.1.1 World Demand
1.5.3.1.4 Supplier Analysis
1.5.3.2 Ethylene Glycol
1.5.3.3 Sodium Hydroxide
1.5.4 By-product
1.5.4.1 Acetaldehyde
1.5.4.2 Diethyl Ether
1.5.5 Catalyst
1.5.5.1 Phosphoric Acid
1.5.5.1.1 Supplier
1.5.5.1.2 Price
1.5.5.2 Silicon Dioxide
1.5.5.2.1 Supplier
1.5.5.2.2 Price
iii
1.6 Economic Analysis 52 – 70
1.6.1 Production Rate
1.6.2 Total Fixed Capital Investment
1.6.3 Operating Labour Cost
1.6.4 Cost of Raw Material
1.6.4.1 Total Annual Sales
1.6.5 Cost of Manufacturing
1.6.6 Total Variable Cost
1.6.7 Break-even Analysis
1.6.7.1 Break-even Point (Using Interpolation Method)
1.6.7.1.1 Break-even Point
1.6.7.1.2 Break-even Sales
1.6.8 Conclusion
REFERENCE 71 – 77
iv
LIST OF TABLES
TABLE TITLE PAGES

1.2.3.1 Advantages and Disadvantages of ethanol 7
Comparison of corn and other raw materials for ethanol
1.3.1.1 9
production
1.3.1.2 Comparison between first generation and second generation 10
Comparison between different uses of raw materials in
1.3.3.1 15
ethanol production
1.3.3.2 Comparison of ethanol production process 15
1.3.3.3 Weightage determination 17
1.3.3.4 Evaluation rate 17
1.3.3.5 Weighted scoring method 18
1.4.1.1 Annual production of ethanol in 2016 20
1.5.2.1.1.1
Quality of ethanol imported for Malaysia in 2016 32
(a)
1.5.2.1.1.1
Quantity of ethanol imported for Malaysia in 2016 33
(b)
1.5.5.1.1.1 Malaysian phosphoric acid suppliers 49
1.5.5.2.1.1 Malaysian silicon dioxide suppliers 50
1.6.2.1 Type of equipment and estimation of cost 53
1.6.2.2 Calculation for the Fixed Capital Investment (FCI) 54
1.6.3.1 Type and number of equipment 55
Average minimum and maximum salary in the executive
1.6.3.2 57
position
Average minimum and maximum salary in the non-executive
1.6.3.3 58
position
1.6.3.4 Labour operating cost 59
Estimation cost of raw material in the ethanol via catalytic
1.6.4.1 60
hydration process
1.6.4.1.1 Total annual sales 60
1.6.5.1 Estimation of total cost of manufacturing 62
1.6.5.2 The cost of manufacturing without depreciation (COM) 63
1.6.7.1 Break-even analysis 64
1.6.7.2 Break-even point 66
1.6.7.3 Cumulative cash flow 68
v
LIST OF FIGURES
FIGURE TITLE PAGES

1.1.1 Structural formula for ethanol 1
1.2.2.1 Type of ethanol produced in European Union 4
1.2.2.2 Non potable end uses of ethanol in Europe 5
1.2.2.3 Uses of ethanol in domestic sector 6
1.2.2.4 Uses of ethanol in industrial sector 6
1.3.1.1 Production of corn in Malaysia 9
1.3.2.1 Block diagram for the production of ethanol using corn 12
1.3.2.2 Process flow diagram for the production of ethanol using corn 13
Block flow diagram for the production of ethanol using
1.3.2.2.1 14
sugarcane
Process flow diagram for the production of ethanol using
1.3.2.2.2 14
sugarcane
Purification of ethanol by pressure swing adsorption using a
1.4.1.1.2.1 22
zeolite
1.4.2.1 Ethanol synthesis by direct hydration 25
Process block diagram for catalytic hydration of ethylene
1.4.2.1.1 26
process
1.4.2.2.1 Process flow diagram 27
1.5.2.1.1.1
Global ethanol supply and demand forecast 28
(a)
1.5.2.1.1.1
World consumption of ethanol – 2014 29
(b)
1.5.2.1.1.1
Import statistics of ethanol by year in Malaysia 30
(c)
1.5.2.1.1.1
Export statistics of ethanol by year in Malaysia 31
(d)
1.5.2.1.1.1
Import statistics of ethanol in Malaysia by country 32
(e)
1.5.2.1.1.1
Export statistics of ethanol in Malaysia by country 33
(f)
1.5.2.1.2.1 Global ethanol production by feedstock, projected until 2019 34
Average monthly ethanol and unleaded gasoline rack process
1.5.2.1.3.1 35
F.O.B Omaha, NE
1.5.2.1.4.1 US ethanol production from 2010 until 2017 36
1.5.3.1.1.1
World ethylene demand, capacity and operating rate 38
(a)
1.5.3.1.1.1
Malaysia import statistics for ethylene by year 39
(b)
1.5.3.1.2.1 Cylindrical nature of ethylene industry 40
1.5.3.1.2.2 Top 10 owners of ethylene capacity worldwide 40
Trend for plats global ethylene price index from 2016 until
1.5.3.1.3.1 41
2017
1.5.3.2.1.1 Pie chart of world consumption of ethylene glycol in 2016 42
1.5.3.2.2.1 Growth since 2007 43
1.5.3.3.1.1 Price of sodium hydroxide in Asian markets in dollars per ton 44
1.5.3.3.1.2 Pie chart for world consumption of caustic soda in 2016 45
1.5.3.3.2.1 Global caustic soda productions in 2005 – 2013 in tonnes 45
vi
1.5.4.1 World consumption of acetaldehyde in 2016 47
1.5.4.2.1 Global diethyl ether market by region in the year 2016 48
1.5.5.1.2.1 Price trend of phosphoric acid from May 2016 to March 2016 50
1.5.5.2.2.1 Metal oxide market by product projected until 2025 51
1.6.7.1 Break-even analysis graph 67
1.6.7.2 Cumulative cash flow diagram 69
vii
CHAPTER ONE
PROCESS BACKGROUND AND SELECTION
1.1 Introduction
Ethanol is an alcohol having the molecular formula, C2H5OH. The structural formula
for ethanol is shown below where the ethyl group, C2H5 is linked to the hydroxyl
group, OH.
Figure 1.1.1: Structural formula for ethanol.
Often abbreviated as EtOH, ethanol is a clear, colourless liquid with a strong

odor that is flammable and volatile. Ethanol is best known to be used in the
automotive industry. However, the second most common industry is the drinks
industry where ethanol is found mostly in the alcoholic beverages. In the chemical
industry, ethanol is widely used as a solvent for lacquers and in polishes for industrial
purposes after adding denaturant such as ethyl acetate, gasoline methyl isobutyl
ketone. Besides that, ethanol was also used as an important chemical intermediates in
the production of polymers and plastics (Industrial Ethanol Association, 2007). Other
downstream industries depend upon industrial ethanol to ensure safety, comfort, and
convenience to consumers’ everyday lives.
In general, ethanol can be produced in two ways. The traditional process which
is the hydration of ethylene and the fermentation of sugar has been widely used for the
production of ethanol. In the hydration of ethylene, water is added to ethylene which
is obtained from the petrochemical refining activities as shown in the chemical
equation below:
C2H4 + H2O ↔ C2H5OH Equation 1.1.1
1
Meanwhile, the fermentation method is one of the oldest processes known in
the world. Fermentation method is widely used in the production of ethanol since
ancient times and is used mostly in United States and Brazil, two of the major
producers of ethanol. A biocatalyst called S. cerevisiae for instance is used in the
production of ethanol. By fermentation of sugars, the reaction releases carbon dioxide,
CO2 gas to the atmosphere as shown in the reaction below.
C6H12O6 → 2 C2H5OH + 2 CO2 Equation 1.1.2
2
1.2 Ethanol
1.2.1 Physical and Chemical Properties
Ethanol also called as ethyl alcohol or grain alcohol is a clear, colorless liquid with a
characteristic, agreeable odor. In dilute aqueous solution, it has a bit sweet flavor, but
in more concentrated solutions it has a burning taste. It is the second number of the
aliphatic alcohol series. Ethanol, CH3CH2OH, is an alcohol, a group of chemical
compounds whose molecules contain a hydroxyl group, –OH, bonded to a carbon
atom. The word alcohol derives from Arabic al-kuhul, which denotes a fine powder of
antimony used as an eye makeup. Alcohol originally referred to any fine powder, but
medieval alchemists later applied the term to the refined products of distillation, and
this led to the current usage.
Ethanol is a flammable and also volatile chemical compound. In solution form,
ethanol-water contains with 40% alcohol by weight resulting it easy to catch fire if
heated to about 260C (790F) as well as an ignition source is applied to it. Flash point
for pure ethanol is 16.600C (61.880F), it is lower than room temperature.
Based on Bajpai (2013), the melting point for ethanol is -1150C and boiling
point is 780C and the density is 0.79 (O'Leary, 2000). Its low freezing point has made
it useful as the fluid in thermometers for temperatures below –40°C, the freezing point
of mercury, and for other low-temperature purposes, such as for antifreeze in
automobile radiators. Most of the world's ethanol is produced by fermentation of crops
(93%) with synthetic ethanol (7%) being produced by direct hydration of ethylene. It
is highly soluble in water and organic solvents, but poorly soluble in oils and fats.
1.2.2 Application
Apart from being used as a clean liquid fuel and fuel additives, ethanol is also found
in the alcoholic beverages such as in wine, beers and ciders. As one of the important
industrial chemicals, ethanol is widely used in many areas. Other than being an
intermediate in the production of liquid detergent and as a solvent for chemicals, the
applications of ethanol can be further classified into four main types which are in the
home or business purposes, personal, transportation and electronics. In the home and
business areas, ethanol are used in the air fresheners, garden fertilizers, paint and
plastic bottles. The paint is obtained from the usage of ethanol as one of the starting
materials for the production of a co-monomer for polymers used in emulsion paints.
3
For personal usage, ethanol is also used to make the perfumes, deodorants,
pharmaceuticals and cosmetics. According to Mcketta (1987), as ethanol is a poor
narcoticum due to its solubility in water, a high amount of it must be present in blood
before distributing to lipoids which lead to the ethanol no longer applied for narcosis.
Its medical use is now limited to raw material for ester syntheses, for instance, the
manufacture of barbiturates. Furthermore, high quality perfumes are usually dissolved
in ethanol because the characteristic odor of ethanol is one of the most pleasant to the
human nose. In terms of transportation, ethanol is widely known to be used as
biodiesel and fuel additive. In electronics, ethanol is used as battery, fuel cells,
printers and microwaves.
Research shows that the three major market for ethanol in Europe are
identified to be the beverage industry, fuel and as an industrial solvents. Figure 1.2.2.1
shows the type of ethanol produced in European Union.
Figure 1.2.2.1: Type of ethanol produced in European Union (EU)

(http://www.inchem.org/).
Based on Figure 1.2.2.1, 46% of the ethanol production is used in the

agricultural industry. About 29% of the ethanol production is as a synthetic ethanol
followed by wine and fuel alcohol with 14% and 11% respectively.
Synthetic ethanol is used in non – potable applications where the non-potable
end uses include solvent use, intermediate manufacturing and fuel applications. Figure
1.2.2.2 shows the non-potable end uses of ethanol in Europe.
4
Figure 1.2.2.2: Non potable end uses of ethanol in Europe
(http://www.inchem.org/).
Besides that, the use of ethanol as a solvent in Europe includes both domestic
and industrial usage. Industrially, ethanol is used as a carrier solvent in inks and
coatings. Consumer applications include the use of ethanol in professional cosmetic
formulations such as hair setting sprays and colorants, as well as in consumer cleaning
and detergent preparations for example spray cleaners that are used in the kitchen and
bathrooms. As mentioned before, most perfumes also consist of blends of
predominantly natural essences in an ethanol base. The essences themselves are often
extracted from flowers and barks using ethanol as the process solvent. Ethanol is also
used in pharmaceutical and personal care products. Moreover, the preparations for
mouthwashes, and cough and cold medicines, are formulated with up to 30% ethanol.
Figure 1.2.2.3 and Figure 1.2.2.4 show the uses of ethanol as solvent in both domestic
and industrial sector in Europe.
5
Figure 1.2.2.3: Uses of ethanol in domestic sector (CEFIC, 2003).
Based on Figure 1.2.2.3, in domestic uses of ethanol, cosmetic application has

the highest percentage of ethanol uses at 62% followed by deicing, detergent, cleaning
and other uses at 17%, 11%, 6% and 4% respectively. Figure 1.2.2.4 on the other hand
represent the uses of ethanol in industrial sector where 43% of the applications is in
the ink manufacturing followed by pharmaceutical, paint, explosives, food and flavour
and 21%, 15% and 3% each respectively. Other uses took 12% of the uses of ethanol
in the industrial sector.
Figure 1.2.2.4: Uses of ethanol in industrial sector (CEFIC, 2003).
6
1.2.3 Advantages and Disadvantages
Table 1.2.3.1 shows the advantages and disadvantages of ethanol.
Table 1.2.3.1: Advantages and disadvantages of ethanol.

Advantages Disadvantages
Safer and greener approach for fuel Emits few greenhouse emissions when
application. compared with other fuels.
Good cleaning agent. Very corrosive.
Burning of fuel produces fewer pollutants Engines that are created to operate on it
to the atmosphere. are going to fail sooner which leads to an
advanced modification on the current
engines thus means more expenses and
modification costs are involved for these
engines to operate on the highly
concentrated ethanol.
7
1.3 Process Selection
1.3.1 Overview and Comparison of Process Selection
Raw materials of ethanol production come from wide variety materials, both
renewable and unrenewable sources. Most of the companies in the world are used
renewable sources as a raw materials, which are essentially sources of carbohydrates
as sugar (sugarcane, beet, sweet sorghum, Jerusalem artichoke, fruits), starch like as
corn, wheat, cassava, sweet potato and lignocellulosic materials (Leal et al. 2014).
Ethanol is naturally formed by the fermentation of sugars using yeasts or by
petrochemical processes, and is most often considered as a popular recreational drug.
Raw materials for current commercial fossil or called as un-renewable sources for
ethanol can be found from petroleum, natural gas and coal.
Basically, raw materials rich with sugar and starches are known as first
generation, while the others raw materials such as lignocellulosic materials are termed
as second generation. However, the first generation technologies are in an advanced
degree of commercial maturity, while using second generation as a raw material, it is
need for several years, and maybe decade to become competitive (Leal et al. 2014).
The probability is that when this occurs, they will adjust and replace the first
generation processes, for using abundant, varied and low-cost raw materials than those
used now. It is significant to mention that this possibility is not sure and maybe there
is a chance to introduce for both technologies to coexist and get pooled together,
rendering the production of renewable ethanol even more competitive in comparison
to fuels derived from petroleum. Today, over 90 % of the world ethanol manufactures
based on sugar cane and corn as a raw material even the first generation is more
competitive.
First generation biofuels are produced directly from food crops. The biofuel is
ultimately derived from the starch, sugar, animal fats, and vegetable oil that these
crops provide. It is important to note that the structure of the biofuel itself does not
change between generations, but rather the source from which the fuel is derived
changes. Corn, wheat, and sugar cane are the most commonly used first generation
biofuel feed stock.
Second generation biofuels are produced from biomass in a more sustainable
fashion, which is truly carbon neutral or even carbon negative in terms of its impact
on CO2 concentrations. In the context of biofuel production, the term ‘plant biomass’
8
refers largely to lignocellulosic material as this makes up the majority of the cheap
and abundant non-food materials available from plants (S.N. Naik, 2010). At present,
the production of such fuels is not cost-effective because there are a number of
technical barriers that need to be overcome before their potential can be realized.
Table 1.3.1.1 below shows the comparison between corn with other raw materials
selection for ethanol production in industries in US and the key indexes are presented.
Table 1.3.1.1: Comparison of corn and other raw materials for ethanol
production (Lear et al. 2014; DOSON 2001).
Raw Material Ethanol Yield (l/t)
Wheat 356
Corn 348
Beet 92
Sugarcane 63
Sweet potato 129
Potato 94
Jerusalem artichoke 82
Pure sugar 577
Based on Table 1.3.1.1, the use of corn as feedstock to produce ethanol is

second after wheat. Based on grain and feed annual that was reported for the year
2016/17, the total overall imports of corn into Malaysia dropped to almost 3.8 million
tons. For 2017/18, the demand could rebound to 4.0 million tons in hopes that the
Malaysian currency will strengthen by the end of 2017 onwards. In addition, improved
profit margins via cost savings by the poultry industry through mergers and
consolidation compounded by increased overall domestic demand for poultry meat
strengthen demand for corn in 2017/18 onwards. (Abdul Ghani Wahab, 2017).
Figure 1.3.1.1: Production of corn in Malaysia (Mazlan, 2017).
9
The production of corn in 2015 was 62459.85 million tonnes. The corn is the
most material had been used in many large industries due to high yield production,
however, its expansion does not seem like to be sustainable because of unattractive
energy balance be present, mediocre productivity and high production costs. There are
some problems when corn is used as a raw material such as:
 Relatively high requirement for pesticide and fertilizer. Not only is this
expensive, but it leads to soil and water contamination.
 It is a food staple and use in biofuel has increased food prices worldwide,
leading to hunger.
 The production rate is low at an average of just 350 gallons of fuel per acre.
Table 1.3.1.2: Comparison between first generation and second generation.

First Generation Comparison Second Generation
Agricultural and
Corn, sugarcane Feedstock forest residue, grass,
and aquatic biomass
Limited feedstock
(food versus fuels)
Problems Not cost effective
and blended partly
with conventional fuel
No competing with
food, advance
technology still under
development to
Environmental
reduce the cost of
friendly, economic Benefits
conversion,
and social security
environmental
friendly and
promising sources of
materials.
On the other hand, sugarcane has two fractions which are bagasse and straw.
The solid residue that remains after the sugarcane crushing to extract the juice is
known as bagasse, it is used for sugar or ethanol production. The sugarcane bagasse is
currently used as the main source of the energy required in sugar mills and ethanol
distilleries and also for generating electricity to be sold to grids. There are some
disadvantages to growing biofuel crops, such as sugar cane to be used as bioethanol:
10
 The demand for biofuel crops means greater demand on rainforest land.
 Crops grow slowly in parts of the world that have lower light levels and
temperatures, so growing biofuels crops in these countries would not satisfy
the demand for fuel.
 For bioethanol to be burnt in car engine, some engine modification is needed.
Modern petrol engines can use petrol containing up to 10 per cent ethanol
without needing any modifications, and most petrol sold in the United
Kingdom, UK contains ethanol.
 Although biofuels are in theory carbon neutral, this does not take into account
that carbon dioxide emissions associated with growing, harvesting and
transporting the crops, or producing the ethanol from them. Therefore, overall,
more carbon dioxide is emitted than absorbed – which means that it
contributes to global warming.
 Some people morally object to use food crops in producing fuels. For example,
it could cause food shortages or increasing in food prices.
1.3.2 Fermentation Process

1.3.2.1 Using Corn as Raw Material
Direct and efficient production of ethanol by fermentation from raw corn starch was
achieved by using the yeast Saccharomyces cerevisiae
codisplaying Rhizopusoryzae glucoamylase and Streptococcus bovis α-amylase by
using the C-terminal-half region of α-agglutinin and the flocculation functional
domain of Flo1p as the respective anchor proteins. In 72-hours fermentation, this
strain produced 61.8 g of ethanol/litre, with 86.5% of theoretical yield from raw corn
starch.
The important step in producing ethanol from the starch is fermentation. The
chemical reaction of fermentation is where 1 mole of glucose yields 2 moles of
ethanol and 2 moles of carbon dioxide. To cause fermentation to take place, yeast is
added. The common yeast to use is saccharomyces cerevisiae, which is a unicellular
fungus. The reaction takes place at 30-32°C for 2-3 days in a batch process.
Supplemental nitrogen is added as ammonium sulfate ((NH4)2SO4) or urea. A protease
can be used to convert proteins to amino acids to add as an additional yeast nutrient.
Virginiamycin and penicillin are often used to prevent bacterial contamination. The
11
carbon dioxide produced also lowers pH, which can reduce the contamination risk.
Close to 90 - 95% of the glucose is converted to ethanol.
According to Ashikari, T., 1989 it is possible to do saccharification and
fermentation in one step. It is called Simultaneous Saccharification and Fermentation
(SSF), and both glucoamylase and yeast are added together. It is done at a lower
temperature than saccharification (32-35°C), which slows the hydrolysis into glucose.
As the glucose is formed, it is fermented, which reduces enzyme product
inhibition. It lowers initial glucose concentrations, lowers contamination risk, lowers
energy requirements, and produces higher yields of ethanol. Because SSF is done in
one unit, it can improve capital costs and save residence time.
Downstream from the fermenters, the ethanol concentration is 12-15% ethanol
which means it have 85-88% water in the solution. Distillation is a process to separate
components using heat and specially designed towers to keep the liquid flowing
downward and the vapours being generated to flow upwards. Water boils at 100°C,
while ethanol boils at 78°C. However, water and ethanol evaporate at a lower
temperature than their boiling points because they both have OH functional groups
that are attracted to each other and because of that, ethanol and water molecules are
strongly bound to each other and form an azeotrope together. That just means that
ethanol cannot completely separated from water – the ethanol fraction will contain
about 5% of water and 95% ethanol at the end of the distillation process. The block
diagram and the process flow diagram of the ethanol production from corn are shown
in figures below.
Figure 1.3.2.1: Block diagram for the production of ethanol using corn.
12
Figure 1.3.2.2: Process flow diagram for the production of ethanol using corn.
1.3.2.2 Using Sugarcane as Raw Material
Sugarcane contains the following: water (73-76%), soluble solids (10-16%), and dry
fibre or bagasse (11-16%). The sugars extracted from sugarcane can be easily
fermented to produce ethanol. It takes a series of physical and chemical processes to
make the two main products, ethanol and sugar.
The crucial step for ethanol production is the fermentation step, where juice
and molasses are mixed so that a 10-20% sucrose solution is obtained. During the
subsequent fermentation with yeast (Saccharomyces cerevisiae), it will be pre-
cultivated overnight in YPD broth (2% glucose, 1% yeast extract and 2% peptone) and
inoculated into energy cane juice medium without nutrient supplementation and pH
adjusted to 5.0 with 0.1 N NaOH. The initial cell concentration was adjusted to a cell
density of 5× 105 cells/mL. Fermentation was performed on a rotary shaker at 100 rpm
and 37 °C for 72 hours. The fermentation is exothermic; therefore, cooling is needed
to keep the reaction under fermentation conditions.
An ethanol concentration of 10% (w/v) is obtained at the end of the
fermentation. The fermented liquid is then distilled to separate and purify the ethanol,
which is then dehydrated to concentrations above 99.7% applicable for fuel (NSAI
2014). At the bottom of the distillation column, the silage consist about 10% total
solids (which includes residual substrate, yeast, and by-products).
The previous study by Kim and Day (2011), reported that the theoretical
ethanol yield of energy cane is superior to that of sugar cane. It is possible to achieve
ethanol production of 12,938.00 kg/ha from sugar cane, respectively, under conditions
where all of the cellulose and hemicellulose are converted into monomeric sugars, all
13
of the fermentable sugars from the juice and lignocellulose are also completely
fermented to ethanol and there is no loss of sugar substrates or ethanol product
throughout the entire process. The block diagram and process flow diagram for the
production of ethanol from sugarcane are shown in figures below.
Figure 1.3.2.2.1: Block flow diagram for the production of ethanol from
sugarcane.
Figure 1.3.2.2.2: Process flow diagram for the production of ethanol from
sugarcane.
14
1.3.3 Catalytic Hydration using Ethylene
Ethanol made by the hydration of ethylene is a non-renewable fuel. This is because

ethylene is produced by cracking crude oil fractions, and crude oil itself is a non-
renewable resource. Table 1.3.3.1 shows the comparison of different raw material that
beneficial to observe which one more suitable and profit.
Table 1.3.3.1: Comparison between different uses of raw material in ethanol

production (Bitesize, 2014).
Feature of Process Fermentation Hydration of Ethylene
Conditions Used Warm, normal pressure High temperature, high
pressure
Type of Process Batch (stop – start) Continuous (runs all the
time)
Sustainability Uses renewable Uses non-renewable
resources (glucose from resources (ethylene
plants from crude oil)
Purification Low purity – need High purity – no by-
fractional distillation products are made
Percentage Yield Low – about 15% High – almost 100%
Atom Economy Medium – 51% Maximum – 100%
The process selection of ethanol production using scoring method is shown in Table
1.3.3.2.
Table 1.3.3.2: Comparison of ethanol production process.

Production of
Production of Ethanol
Ethanol from Ethylene
Method from Corn via
Sugarcane via Hydration
Fermentation
Fermentation
Availability of Seasonal Crops Seasonal Crops Ethylene
Raw Material
Cost of Low Low High
Equipment
Catalyst Glycoamylase Alpha-amylase Phosphoric Acid
Silicon Dioxide
Reaction 30-35℃ 35-40℃ 300℃
Temperature
Rate of Low Low High
Production
Shut Down Often; batch reactor Often; batch reactor Seldom; because
Times have to be cleaned each have to be cleaned continuous
time after used each time after used operation requires
less maintenance
15
Advantages Corn ethanol is a Sugar cane yields Faster reaction.
renewable fuel; it takes more ethanol per
only six months to grow acre than corn. High product
and harvest a crop of purity.
corn to convert into Requires less
ethanol. energy to produce; Continuous
hence, it is process.
It reduces the carbon regarded as greener
impact on the than corn ethanol. Does not use crops
environment. that could be used
Sugarcane ethanol as food.
Corn-based ethanol fuel cuts carbon dioxide
creates a truly positive emissions by 90 Extracting is fast
energy balance. percent on average. and reliable
In places such as
Brazil, sugar cane
is used in this
process as it is a
starchy material
and it is beneficial
to the economy as
it means that there
is more
employment.
Disadvantages Crops grown to produce Growing sugar High energy
ethanol destroy habitats cane requires a requirement.
and valuable food warm, rainy
sources. climate, which Ethylene is non-
limits its potential renewable resource.
It drives up the price of as a global fuel
food products. source. High capital
investment needed.
Growing corn for Carbon dioxide is
ethanol involves the use produced.
of large amounts of
synthetic fertilizer and It raises ethical
herbicide, and corn questions as to
production, in general, whether we should
is a frequent source use crops for
of nutrient and sediment ethanol when there
pollution. are third world
countries with no
food.
16
Table 1.3.3.3: Weightage determination.
Weightage,
Criteria
A B C D E F %
Availability A 3A 1.5A AD 3E 2A A= 21.74
of Raw 7.5
Material
Cost of B 2B 3D 2E BF B= 8.70
Equipment 3
Cost of C 3D 1.5E 1.5C C= 4.35
Labour 1.5
Rate of D 2D 3D D= 34.78
Production 12
Process E 3E E= 27.54
Safety 9.5
Shut Down F F= 2.90
Times 1
Total 34.5 100
Table 1.3.3.4: Evaluation rate.

Category Value
Low 0 – 0.6
Moderate 0.7 – 1.2
Medium 1.3 – 1.8
Slightly Important 1.9 – 2.4
Important 2.5 – 3.0
17
Table 1.3.3.5: Weighted scoring method.
Scores (out of 100) Weighted Score
Criteria Weightage, % Fermentation Fermentation Ethylene Fermentation Fermentation Ethylene
of Corn of Sugarcane Hydration of Corn of Sugarcane Hydration
Availability of
21.74 70 60 80 15.22 13.04 17.39
Raw Material
Cost of
8.70 62 70 50 5.39 6.09 4.35
Equipment
Cost of Labour 4.35 55 55 90 2.39 2.39 3.92
Rate of
34.78 75 60 85 26.09 20.87 29.56
Production
Plant Risk 27.54 55 55 70 15.15 15.15 19.26
Shut Down
2.90 75 75 85 2.18 2.18 2.47
Times
Total 100 66.42 59.72 76.98
18
1.3.4 Conclusion for Process Selection
Based on the criteria evaluation on table 1.3.3.2, it is clear that every process has its
own advantages and disadvantages. To decide for the most suitable process, we must
consider several factor such as the availability of raw material, the safety of plant,
fixed capital investment required, cost of operating labour, shutdown times and the
rate of production.
Direct catalytic hydration of ethylene has been selected as our process. This
decision was made based on the factors stated earlier. Regarding the availability of
raw material, ethylene can be easily found due to the many petrochemical companies
around the globe while for the fermentation process, the crops to be use as feedstock is
only available based on seasons. The cost of equipment of the process selected,
however, requires major investment as much equipment is needed and the size of
plants are much bigger.
Consequently, by implementing direct hydration of ethylene, the plant can cut
down on the operating labour. Rate of production for this process route is a major
factor considering it is a continuous process and can guarantee a lot more production
compared to fermentation process. Due to this process being a continuous process, the
plant requires less maintenance as oppose to the fermentation process, whose
equipment (i.e., reactor) need to be clean every time after it has been used.
19
1.4 Process Background of Catalytic Hydration
1.4.1 Introduction of Process Background
Ethanol manufacturing has begun on 1970’s when petroleum-based fuel became

expensive and environmental concerns involving leaded gasoline made a need for
octane (Gustafan). The annual production of ethanol in 2016 is shown in Table
1.4.1.1.
Table 1.4.1.1: Annual production of ethanol in 2016.
Countries Amount (tons)
World 850 000 tons
Europe 470 000 tons
In 2015, 25.7 billion gallons (80 million tons) of ethanol were produced in the
world. Out of these, 14.6 billion gallons (44 million tons) were produced in the United
States, mainly from corn, 7.1 billion gallons (21 million tons) in Brazil, mainly from
sugar. Europe manufactured expressively less, 1.4 billion gallons (1 million tons).
Ethanol was manufactured by the direct catalytic hydration of ethylene in the
occurrence of steam, via phosphoric acid adsorbed on the surface of a solid (silica) as
a catalyst in a fixed bed reactor. The reaction is reversible and exothermic as stated in
Equation 1.1.1 and from the equilibrium equation; the conversion of the feedstock to
ethanol is favored by low temperature, high pressure and high steam concentration. To
reach suitable reaction rates, a temperature of 226.85℃ is used in the presence of the
catalyst. Increasing the pressure pushes the reaction to the product side but also causes
polymerization of the ethylene. Higher pressures also mean increased capital and
operating costs. In practice, the process is usually run under a pressure of 60 - 70 atm
for normal condition.
Greater ethylene conversion can be obtained using an excess of water (steam).
However, at high pressures the catalyst takes up water, its activity drops and it
becomes diluted, draining away from the catalyst support. A mole ratio of water:
ethylene around 0.6: 1 is frequently used.
Great care is work out to minimize the emissions of ethanol from the plant,
collected with the small amounts of by-products that are produced, principally ethanal
(acetaldehyde) and diethyl ether. Significant work is being done to increase the
catalyst capability so that the temperature of the furnace can be decreased. This means
that less fuel will be used to heat the furnace, and the position of equilibrium will be
20
'moved' to favor the product. With the above conditions, around 5% conversion per
pass is achieved. To obtain the 95% yield achieved, unreacted ethylene is separated
from the liquid products and recycled.
1.4.1.1.1 Production of Pure Ethanol

1.4.1.1.1 Distillation
Further distillation of the 95% solution of ethanol in water does not increase the purity
as an azeotrope (constant boiling mixture) is resulted. Several entrainers can be used
for this specific process such as benzene, pentane, cyclohexane, hexane, heptane,
isooctane, acetone, and diethyl ether are all options as the mixture. Out of these,
benzene and cyclohexane have been used the most extensively in ethanol production.
However, because benzene has been discovered to be a carcinogenic compound, its
use has declined. Theoretically, by adding a compound such as benzene, it will 'breaks
up' the azeotrope but this involves more distillations and consequently more energy.
While this method was the standard for dehydrating ethanol in the past, it has lost
favor due to the high capital and energy costs associated with it. Treatment of 96%
ethanol with molecular sieves gives the anhydrous alcohol, the sieves having adsorbed
water from the mixture (Wikipedia, 2017). The sieves can be subsequently
regenerated by dehydration using a vacuum oven.
1.4.1.1.2 Pressure Swing Adsorption
A zeolite molecular sieve is being increasingly employed to remove the water to

produce pure ethanol via a process known as pressure swing adsorption. The mixture
of ethanol and water is passed through a column having pellets of a molecular sieve of
3 A (i.e. the pores have diameters of 3 angstroms, 3x10-10m or 0.3 nm).
21
Figure 1.4.1.1.2.1: Purification of ethanol by pressure swing adsorption using a
zeolite.
Even though both ethanol and water are polar, only water molecules (diameter
0.28 nm) are capable to pass through the pores as the diameter of ethanol molecules is
also large (0.44 nm). Thus the water molecules go in through the pores and are
trapped in the cages of the zeolite. The ethanol passes through the column and is
collected.
In a method, which is commonly applied, the ethanol-water mixture is passed
through the column in the gas phase at about 146.85℃, under pressure (4 atm). The
water vapour passes through the pores and is adsorbed, as a liquid, in the cages.
The term 'swing' is used because two columns are used in parallel. In the
second method, the liquid solution of ethanol and water is passed through a column of
the zeolite and the pure ethanol is collected. After several hours, the bed is drained
and heated to over 500K using a stream of heated nitrogen. The water is expelled.
This technique is named as “thermal (or temperature) swing adsorption.”
22
1.4.2 Detailed Process of Catalytic Hydration
Ethanol can be produce synthetically via direct hydration of ethylene. This process
route utilizes ethylene as a chemical feedstock (Clugston and Flemming, 2013).
Ethylene is acquired from the cracking of crude oil. This means that ethylene, the raw
material for this process, is easily available in today’s market due to the large number
of petrochemical plants in operation. However, it is a non-renewable resource, thus
concerns are growing should the oil reserves run out.
The process of catalytic hydration of ethylene was first made commercialized
by Shell in 1947 (Arpe and Weissermel, 2012). Gerhartz (1987) found many technical
and patent literatures that described numerous catalysts for ethylene hydration,
however, only phosphoric acid catalysts supported by diatomaceous earth, bentonite,
and silica gel are of industrial importance.
Similar to other chemical processes, the first step is pre-treatment of feedstock.
This stage’s aim is to prepare the raw materials to its desired condition to optimize the
chemical reaction. This catalytic hydration of ethylene is carried out in gas phase.
Considering pure ethylene supply is already available at standard condition, there is
no need to pre-treat ethylene. Water, on the other hand is a liquid at standard
condition. Therefore, it needs to be heated to 100°C and change its phase to gas. Next,
these two raw materials will mix prior to entering the reactor. Note that after mixing,
some of the H2O might revert to being a liquid hence a heater is needed to heat the
mixture to ensure they are all in gaseous form. The mixture is then subjected into the
reactor.
The molar ratio of water to ethylene reactor feed is 0.6. Arpe and Weissermel
(2012) said the molar ratio is limited to only 0.6 because a limit on partial pressure of
steam is essential because it lowers the catalyst activity and shortens catalyst lifetime
through loss of phosphoric acid. This catalytic hydration reaction of ethylene has a
conversion of 25%, and a yield of 97%. The 25% ethylene reacted does not
necessarily produces only ethanol; a byproduct is also produced in this reaction known
as diethyl ether. The selectivity to ethanol is 97% Arpe and Weissermel (2012). Since
this process is an exothermic reaction, the reactor effluent leaves at a temperature of
20°C higher than when they entered. Some of the catalyst exits the reactor too and into
the product stream but is neutralized by injecting a small amount of sodium
hydroxide.
23
The overall reaction is represented by the following chemical equation:
C2H4 (g) + H2O (g) ↔ C2H5OH (g) ∆H = -43.4 kJ Equation 1.4.2.1
C2H4 (g) + C2H5OH (g) ↔ (C2H5)2O (g) Equation 1.4.2.2
Since the reactor effluent’s temperature increases, the stream has to be cooled
before it can go into the next unit operation. After cooling, the stream goes through a
separator where unreacted ethylene can be recycle back to the front end of the process.
The remaining condensate will proceed to the next stage of process – purification
process.
For purification process, we employ the method of extractive distillation,
where a solvent is introduced to help disintegrate azeotrope mixture. This unit is
capable to produce a high-purity product. A separating agent is necessary to ensure the
distillation column can operate without any setback and the solvent can prevent
azeotrope formation. The solvent that is used is ethylene glycol (EG). Gil et al., (2008)
reported that the solvent to feed molar ratio for this distillation column is 0.3 and is
assumed that 100% of ethanol will leave as top product with a 98 wt% purity. The
remaining substances (water, diethyl ether, and EG) leaves as bottom product and
enter a second distillation column where it is desired to separate the EG from the
byproducts. This action enables us to recycle the EG solvent, thus lowering the
operating cost.
24
Figure 1.4.2.1: Ethanol synthesis by direct hydration.
a: Recycle gas compressor, b: heat exchanger, c: heater, d: reactor, e: scrubber, f: crude ethanol storage tank,
g: extractive distillation, h: concentration column, i: dehydration column, k: recovery column
25
1.4.2.1 Process Block Diagram
Figure 1.4.2.1.1: Process block diagram for catalytic hydration of ethylene process.
26
1.4.2.2 Process Flow Diagram
Figure 1.4.2.2.1: Process flow diagram.
27
1.5 Market Analysis
1.5.1 Introduction
Market analysis is defined as a study of the dynamics of a certain market within the
industry. Market analysis is a part of the industry analysis and is also known as a
documented investigation of a market that was used before any company or product
making can be done. A market analysis contains the quantitative and qualitative
assessment of a market. The market analysis looks into the size of a market in terms of
the volume and value, target customer, competition with the other established
company and the economic environment. The primary objective of conducting the
market analysis of a business plan is to show to the future investors that the market
demand acquired is large enough to build a sustainable business.
1.5.2 Main Product

1.5.2.1 Ethanol
1.5.2.1.1 World Demand and Consumption
Global ethanol demand is expected to surpass the supply in the year 2017 which
indicates that the ethanol supply and demand has increased steadily from 2012. Figure
1.5.2.1.1.1 (a) shows the global ethanol supply and demand forecast in billion gallons
per year.
Figure 1.5.2.1.1.1 (a): Global ethanol supply and demand forecast.

According to IHS Chemical (2015), the consumption of ethanol as a fuel now
accounts for more than 85% of the total global consumption where ethanol are
blended with gasoline as anhydrous ethanol depending on local mandates. The
increase in Ethanol consumption as a fuel are driven by the political support and
28
economic that are aimed to reduce the greenhouse gases emission, dependencies on
fossil fuels and increase the employment rate and economies especially in rural areas.
Various incentives, subsidies and legislative polices have been provided by the
governments to encourage the demand of ethanol. Figure 1.5.2.1.1.1 (b) shows the
World Consumption of Ethanol for the year 2014.
Figure 1.5.2.1.1.1 (b): World consumption of ethanol – 2014 (IHS Chemical,

2015).
Based on Figure 1.5.2.1.1.1 (b), ethanol consumption in the United States is
the highest followed by Brazil and China. As the three major market industries for
Ethanol are in the fuel applications, alcoholic beverages and as a solvent in the
manufacture of chemicals, the region, cultures and standards of living are taken into
account in the fractions of the world consumption of ethanol shown above.
Furthermore, the global ethanol market is forecast to grow at a rate of 2.4% per
year over the next five years. Commitments from the governments, industries and
consumers are required to obtain a higher growth rates. In the longer term, advanced
fuels provides alternative to conventional ethanol production.
Data from Malaysia External Trade Development Corporation (MATRADE)
showing the import and export statistics on the ethanol product in Malaysia from the
year 2014 to 2016 is shown in Figure 1.5.2.1.1.1 (c) and Figure 1.5.2.1.1.1 (d).
29
Figure 1.5.2.1.1.1 (c): Import statistics of ethanol by year in Malaysia (Source:
MATRADE).
Referring to the chart shown in Figure 1.5.2.1.1.1 (c), there have been an up
and down trend for the ethanol import activity in Malaysia. Looking into the quantity
of ethanol imported in the year 2016, an increased in the demand for ethanol in
Malaysia was seen as the quantity of ethanol imported increased from 992,103 L to
1,674,630 L.
30
Figure 1.5.2.1.1.1 (d): Export statistics of ethanol by year in Malaysia (Source:
MATRADE).
As for the export statistics, the quantity of ethanol exported out of the country
keep on increasing from the year 2014 to 2016 with 133,548 L, 142,700 L and
195,488 L which means there has been a demand for ethanol from other countries.
With both statistics on the import and export for ethanol in Malaysia, the future of the
proposed ethanol plant is secured with the justification of a high demand of ethanol is
required in Malaysia itself from the import statistics shown by year in Figure
1.5.2.1.1.1 (c) and demand from other countries which explain the increasing quantity
of ethanol exported out of the country as shown in Figure 1.5.2.1.1.1 (d).
Malaysia has imported a total of 1,674,630 L of ethanol in the year 2016 and
992,103 L and 1,344,072 L for the year 2015 and 2016 respectively. Looking into the
latest import statistic for Malaysia which is in the year 2016, Malaysia have imported
ethanol from many countries such as Singapore, Pakistan, India, New Zealand,
Netherlands, Vietnam, Germany, Japan, Indonesia, South Africa, United Arab
Emirates and United Kingdom. About 1,054,183 L of ethanol was imported from
Singapore which represents 62.95% of the import activity. Figure 1.5.2.1.1.1 (e)
shows the import statistics of ethanol in Malaysia by country and Table 1.5.2.1.1.1 (a)
shows the quantity of the import ethanol in Malaysia for the year 2016.
31
Figure 1.5.2.1.1.1 (e): Import statistics of ethanol in Malaysia by country (Source:
MATRADE).
Table 1.5.2.1.1.1 (a): Quantity of ethanol imported for Malaysia in 2016 (Source:
MATRADE).
Country Quantity (L) %
Singapore 1 054 183 62.95
Pakistan 315 460 18.84
India 138 000 8.24
New Zealand 77 000 4.60
Netherlands 50 854 3.04
Vietnam 16 800 1.00
Germany 14 058 0.84
Japan 8 276 0.49
Others
[Not shown in Figure 1.5.2.1.1.1 (e)]
Indonesia 0 0
South Africa 0 0
United Arab Emirates 0 0
United Kingdom 0 0
Total 1 674 630 100
Based on Figure 1.5.2.1.1.1 (e), the biggest supplier of ethanol is Singapore

followed by Pakistan and India with 1,054,183 L, 315,460 L and 138,000 L
respectively. Figure 1.5.2.1.1.1 (f) on the other hand shows the export statistics of
32
ethanol in Malaysia by country. Table 1.5.2.1.1.1 (b) represents the quantity for the
ethanol export by Malaysia to other countries.
Figure 1.5.2.1.1.1 (f): Export statistics of ethanol in Malaysia by country (Source:

MATRADE).
Table 1.5.2.1.1.1 (b): Quantity of ethanol imported for Malaysia in 2016 (Source:
MATRADE).
Country Quantity (L) %
Singapore 111 630 57
Taiwan 34 470 18
Philippines 18 200 9
Indonesia 12 000 6
South Korea 11 088 6
Thailand 8 100 4
Others
[Not shown in Figure 1.5.2.1.1.1 (f)]
Indonesia 0 0
Total 1 674 630 100
33
Based on Figure 1.5.2.1.1.1 (f), Malaysia exports about 111,630 L out of
195,488 L of ethanol to Singapore. With this, the ethanol exported to Singapore is the
highest at 57%. Taiwan is next with 34,470 L at 18% followed by Philippines at 9%
importing about 18,200 from Malaysia.
In short, by comparing both data of import and export trend for ethanol in
Malaysia, it can be conclude that Singapore is the current buyer and supplier of
ethanol for Malaysia. With a total of 1,674,630 L of ethanol being imported from
other countries against 195,488 L of ethanol exported out of the countries, the
proposed ethanol can reduce the import activity and increase the export activity
instead and hence will bring much more profit to the country.
Research shows that the world ethanol production is dominated by the United States
and Brazil. In the year 2006, the worldwide production totalled to 13,489 million
gallons, with the US producing 36% and Brazil producing about 33% of the quantity.
However, the current largest producer of ethanol in the world is Brazil. Brazil had
long been the world's number one fuel alcohol producer. Brazil is regarded as the
lowest cost producer of ethanol in the world but since mid-2009 to mid-2012, Brazil’s
market price of ethanol was higher than the U.S. price and Brazil became a major
importer of U.S. ethanol. The reasons for high ethanol prices in Brazil at this time
period is due to strong domestic demand for transportation fuels.
Figure 1.5.2.1.2.1: Global ethanol production by feedstock, projected until 2019

(OECD-FAO Agricultural Outlook, 2017).
34
The U.S. ethanol industry will face several notable challenges in 2016, mainly low
ethanol prices, high stocks, and a low production margin. The blending value of
ethanol is largely correlated to the price of gasoline. As shown in Figure 1, the
average rack price of ethanol in February 2016 was $1.46 per gallon and the average
rack price of gasoline was $1.02 per gallon.
Figure 1.5.2.1.3.1: Average monthly ethanol and unleaded gasoline rack prices
F.O.B Omaha, NE (Nebraska Ethanol Board, 2016).
The average price of gasoline fell 17% from December 2015 to January 2016.
From January to February, the average price of gasoline again dropped by 11%. For
the same time period, the average price of ethanol dropped by 6% from December
2015 to January 2016 and increased by a slight 2% from January to February 2016.
There is a 44¢-per-gallon difference between the rack price of ethanol and that of
gasoline in February 2016. This is the highest premium we have seen recently.
Ethanol in general trades at a discount to regular gasoline, and this discount has been
approximately 36¢ over the 2010-2014 periods.
1.5.2.1.4 Leading Manufacturer
The United States is producing nearly 15.2 billion gallons a year of ethanol a year at
214 plants, with a current capacity of 15.6 billion gallons a year, as of October 6,
2016.
35
Figure 1.5.2.1.4.1: US ethanol production from 2010 until 2017 (U.S. Weekly
Petroleum Status Report, 2017).
Through the first six months of 2017, U.S. weekly ethanol production
averaged 1.02 million barrels per day (b/d), an increase of 5% over the same period in
2016. On a weekly basis, U.S. ethanol production set a record of 1.06 million b/d in
the week of January 27, 2017, and it has averaged near or above 1 million b/d in every
week of 2017 except for a few weeks in April, when ethanol plants typically undergo
seasonal maintenance.
1.5.3 Raw Materials

1.5.3.1 Ethylene
In Malaysia, it have only three companies that produce petrochemical feedstock such
as Titan Petchem (M) Sdn Bhd, Ethylene Malaysia Sdn Bhd and Optimal Olenfis (M)
Sdn Bhd where the capacity production is 1.63 million (mtpa) (MIDA 2016).
Manufacturing of ethene generally produced from cracking of fractions obtained from
distillation of natural gas and oil. This chemical compound can be produce by three
processes which are steam cracking of ethane and propane, the steam cracking of
naphtha from crude oil and catalytic cracking of gas oil from crude oil.
Most of the ethene produced in the Middle East comes from Saudi Arabia, 17
million tonnes a year, with one refinery producing over 2 million tonnes a year, the
4th largest ethene production plant in the world (Collaboration, 2016). The US
produces about 25 million tonnes of ethene a year. In 2010, about 9 million tonnes
came from ethane and another 4 million from propane. By 2015 the amount from
ethane had increased to 10 million tonnes and by 2020 it is expected to rise to about
140 million tonnes from ethane and 50 from propane, a direct result of the growth in
36
cracking. In 2016 the first shipments of ethene from fracking fields in the US were
being processed in refineries in Europe.
In region Europe and Asia, ethylene is gained mainly based on cracking
naphtha, gasoil and condensates with the coproduction of propylene, C4 olefins and
aromatics (pyrolysis gasoline). The cracking of ethane and propane, principally it was
carried out in the US, Canada and the Middle East, and it also has the benefit that it
only yields ethylene and propylene, making the plants low-cost to construct and less
problematical to operate (ICIS, 2007).
The steam cracking technology has no major advances in the near term with
efforts being heading for improving performance through process optimization,
computer control and furnace design. However, ceramic-based furnaces could be
industrialized in the future proposing much higher conversion rates and efficiency
reached by very high temperature cracking without coke creation.
Major changes in the global ethylene markets are projected to take place over the next
several years primarily driven by feedstock cost trends and sharply diverging
consumption growth between geographic regions. China will continue to play a
dominant role for both supply and demand growth as the country strives to achieve
self-sufficiency at the ethylene derivative level. Investments in coal-based ethylene
are in the take-off stage and will contribute about half of all announced capacity
additions in China.
37
Figure 1.5.3.1.1.1 (a): World ethylene demand, capacity and operating rate
(Global Data Petrochemical, 2017).
Abundant, low cost ethane supplies from shale gas in the US are supporting a
revival of investments in large integrated cracker projects, while the capacity wave in
the Middle East has been abating with sharply reduced availability of new ethane
supplies. Producers in the Middle East and Asia will be focusing increasingly on
integrated steam cracker and refinery projects as well as higher value-added products
often through diversification of product slates. In contrast, producers in Europe and
developed Asian countries, such as Japan, will not only be exposed to the growing
international competition, but also weak demand environment at home which may
necessitate further rationalizations.
The import statistics for ethylene in Malaysia is obtained from the Malaysia
External Trade Development Corporation (MATRADE). Figure 1.5.3.1.1.1 (b) shows
the trend in Malaysia import statistics for ethylene from the year 2014 to 2016.
38
Figure 1.5.3.1.1.1 (b): Malaysia import statistics for ethylene by year (Source:
MATRADE).
Based on Figure 1.5.3.1.1.1 (b), only 9 T of ethylene is imported in 2016. At
that year, 9 T of ethylene is imported solely from Singapore. Furthermore, the
increasing in the number of ethylene plant in Malaysia also makes it favourable to use
ethylene as the raw material as it have enough capacities to run the proposed plant for
daily production.
Global ethylene production was 107 million tonnes in 2005, 109 million tonnes in
2006,138 million tonnes in 2010 and 141 million tonnes in 2011. By 2013 ethylene
was produced by at least 117 companies in 32 countries. To meet the ever increasing
demand for ethylene, sharp increases in production facilities are added globally,
particularly in the Mideast and China.
39
Figure 1.5.3.1.2.1: Cylindrical nature of the ethylene industry (Warren R. True,
2010).
Figure 1.5.3.1.2.2: Top 10 owners of ethylene capacity worldwide.

There was considerable shifting of positions 2009 – 2010. The first column of
capacities presents capacities as if a company owned 100% of each plant; the second
column reflects the total for actual percentages for each company.
Global ethylene prices is surged 19.2% month-on-month to $1,032.51/metric ton in

August, according to the just-released PGPI data expressed as a monthly average.
40
Figure 1.5.3.1.3.1: Trend for plats global ethylene price index from 2016 until
2017 (S&P Global Platts Petrochemical, 2017).
However, the issue with exporting ethylene is that it is expensive. There is
currently one terminal exporting US ethylene on the US Gulf Coast, with a capacity of
200,000-300,000 metric ton/year, which presents a major challenge.
Asian ethylene producers are expected to continue to enjoy healthy margins in

2016 even as the deceleration in China’s economic growth casts a pall over the
region’s broader petrochemicals market.
However, the limited regional ethylene supply will be somewhat moderated
by higher exports from the US Gulf and Europe next year, as well as the uncertain
downstream market performance.
Naphtha-based ethylene margins in northeast Asia were generally robust this
year. In the second quarter, margins were at above $600/tonne with the late-June level
hitting a multi-year high of $805/tonne, on low feedstock costs and tight ethylene
supply.Japan’s exports are tipped to see a decline from the 2015 levels as the impact
of a series of ongoing consolidation in the country’s petrochemical industry deepens.
The country exported 630,816 tonnes in the first eight months of the year, a
20.9% increase from the same period a year ago when shipments were constrained by
a large number of cracker turnarounds. But the trend is expected to reverse in 2016 as
several producers turn into net buyers or have smaller surpluses to ship out to their
regional customers.
41
1.5.3.2 Ethylene Glycol
The global market for ethylene glycol is expected to reach USD 33.36 billion by
2020, according to a new study by Grand View Research, Inc. Growing demand for
polyethylene terephthalate (PET) for packaging applications, primarily in Asia
Pacific and Latin America is expected to remain a key driving factor for the market.
Overall, consumption of Ethylene Glycols is broadly tied to the general economy and
has been increasingly linked to emerging economies, where the improvement in living
standards is driving an increasing use of packaging, films and textile fibres, as well as
an increasing number of vehicles (antifreeze).
Figure 1.5.3.2.1.1: Pie chart of world consumption of ethylene glycol in 2016 (IHS
Markit, 2016).
Like all other petrochemical markets, the Ethylene Glycols market is cyclical,
with the equilibrium between supply and demand driving the state of the industry. In
times of large concomitant new capacity commissioning, operating rates generally
decline and margins shrink because of increased competition among producers. As
margins remain under pressure, no new capacity construction is undertaken (trough
conditions). As demand gradually catches up with production, operating rates firm up
and margins expand (peak conditions).
42
Global ethylene producers last year added more than 8.6 million tonnes/year of
capacity. That level sets a record for 1-year additions. New capacities at three Middle
East plants reached 3.95 million tonnes/year, while start-ups at five plants in Asia-
Pacific made up the rest with 4.7 million tonnes/year.
The figure for 2010 exceeded capacity added in 2009 (OGJ, July 26, 2010, p.
34) and the record addition in 2008 of 7 million tonnes/year (OGJ, July 27, 2009, p.
49). Including estimates for 2011, these 4 years evince the recent rapid growth of
Asian and Middle Eastern ethylene capacity. By contrast, capacity growth in 2007 was
2 million tonnes/year and only 245,000 tonnes/year in 2006.
Global ethylene production capacity at Jan. 1, 2011, net of additions and
closings, was more than 138 million tonnes/year, compared with nearly 130 million
tonnes/year for 2009, 126.7 million tonnes/year in 2008, and 119.6 million
tonnes/year in the survey for 2007 (OGJ, July 28, 2008, p. 46). The additional
capacity in 2010 represents a net increase of 6%.
Figure 1.5.3.2.2.1: Growth since 2007 (Warren R. True, 2016).

From the Figure 1.5.3.2.2.1 shows that the capacities continued the trend set in
2008 of capacity additions racing ahead since the lowest capacity addition rate in at
least 20 years in 2006.
43
Shell chemicals companies are among the leading global producers of ethylene
glycols – monoethylene glycol (MEG), diethylene glycol (DEG) and triethylene
glycol (TEG) - with world scale plants, leading process technology and global
logistics.
For international market analysis, the report analyses Ethylene Glycol markets
in China and other countries or regions (such as US, Europe, Japan, China etc) by
presenting research on global products of different types and applications,
developments and trends of market, technology, and competitive landscape, and
leading suppliers and countries’ 2009-2015 capacity, production, cost, price, Gross,
production value, and gross margin.
1.5.3.3 Sodium Hydroxide

Sodium hydroxide, commonly referred to as caustic soda, in Asia as of early

November have hovered between $370 and $380 per ton in solid-state equivalent on a
free on board basis 30% higher than the most recent low marked in early December
2015. Figure 1.5.3.3.1.1 as shown below shows the highest level in three years and 10
months.
Figure 1.5.3.3.1.1: Price of sodium hydroxide in Asian markets in dollars per ton
(Nikkei, 2016).
44
Caustic soda is produced along with chlorine through the electrolysis of salt
water. The chemical has a wide range of applications, such as in wastewater treatment.
Global demand for caustic soda is estimated at 70 million tons a year.
Economic growth in emerging economies and resource-rich countries boost demand
by around 2% to 3% annually.
Figure 1.5.3.3.1.2: Pie chart for world consumption of caustic soda in 2016 (IHS
Markit, 2014).
Brief analysis of the caustic soda production dynamics during pre-crisis, crisis and
post-crisis years confirms that the global market for caustic soda is quite stable. The
output drop of 2009 was not significant and was promptly alleviated. This is
determined by the balanced structure of the market, steady and healthy demand from
multiple applications, and anti-oligopolistic nature of the market devoid of
monopolies, reasonable technological trajectories and some other factors.
Figure 1.5.3.3.2.1: Global caustic soda production in 2005 – 2013 in tonnes

(World Market Outlook, 2015).
45
The level of stability of the caustic market may vary from region to region,
when some regions may demonstrate dwindling infrastructure, immature policies and
unreasonable logistics, thus bringing these local markets to the period of flux and
uncertainty. However, despite regional fluctuations it is evident that the global caustic
soda market will fare well in the short-term and middle-term perspective. The global
production of caustic soda is forecast to grow at 3% per annum in 2015-2018, with
new chlor-alkali projects being planned in India, Indonesia, UAE, South Korea,
Germany, France, China, Japan, Portugal, etc. The process of technological renovation
and innovation will definitely continue. Thus, the use of membrane cell technologies
will be growing due to lower capital and energy costs and mitigated environmental
problems.
Malay-Sino Chemical Industries Sdn. Bhd. is the largest sodium hydroxide

manufacturer in Malaysia. With 40 years of business development in the chemical
industry, MSCI has continued to strive leadership in chemical industry by producing
the best quality product. Another one in Malaysia is CCM Chemicals. CCM
Chemicals is an established chlor-alkali producer in Malaysia, located in Pasir
Gudang, Johor Darul Takzim. It has the capacity to produce approximately 200,000
MT of chlor-alkali products per annum while, Brenntag North America is the
company to contact for sodium hydroxide wholesale in the United States. With a long-
standing reputation for quality and safety and a philosophy of connecting the best
suppliers with the most responsible and motivated customers, Brenntag is unmatched
as a distributor of caustic soda wholesale in the United States and a wide range of
other chemicals and ingredients.
46
1.5.4 By-product
1.5.4.1 Acetaldehyde
Acetaldehyde is an important chemical intermediate. Removing a water molecule

from the ethanol with the help of oxygen on a catalyst like silver can generate one
acetaldehyde molecule. The reaction is exothermic and generates 242 kJ of energy per
mole of acetaldehyde formation.
Figure 1.5.4.1: World consumption of acetaldehyde in 2016 (IHS Markit, 2016).

China is the world’s largest consumer of acetaldehyde. In 2016, the country
accounted for almost half (45%) of global consumption for acetaldehyde. India is the
second-largest consumer of acetaldehyde worldwide. The region accounted for about
14% of world consumption in 2016. Western Europe is the third-largest consumer of
acetaldehyde worldwide, accounting for about 13% of world consumption in 2016.
Acetaldehyde consumption in Japan should exhibit about 2.5% per year growth
through 2021, depending primarily upon growth in the consumption of ethyl acetate.
South America, the CIS and Baltic States, the Middle East, and the rest of Asia are all
expected to grow at rates of less than 1% per year through 2021 because of reductions
in downstream uses or no production. Overall, global consumption of acetaldehyde is
forecast to grow at an average annual rate of 3.0%.
47
1.5.4.2 Diethyl Ether
The global diethyl ether market is expected to grow at a moderate rate, during 2017-
2022 (the forecast period). The global market is expected to be driven by the growing
demand for industrial and laboratory solvents. Diethyl ether is a volatile organic
compound, produced from dehydration of ethanol. Owing to its inertness, it is used as
an extraction medium in fragrance and pharmaceutical industries.
Figure 1.5.4.2.1: Global diethyl ether market by region in the year 2016
(Merchant Research & Consulting Ltd, 2016).
In 2016, North America was the leading consumer of the global diethyl ether
market. The United States continues to be a major market in the region, owing to the
use of diethyl ether in fuel starting fluids and smokeless gun powder. Asia-Pacific is
the second-largest market for diethyl ether. In developing economies, like China,
India, industrialization and the transportation sector are growing. This factor is
fuelling the need for diethyl ether in Asia-Pacific, for diverse applications, like in
solvents, automotive starting fluids, pharmaceutical extractives, and ‘others’.
48
1.5.5 Catalyst
1.5.5.1 Phosphoric Acid
1.5.5.1.1 Supplier
Table 1.5.5.1.1.1 shows the list of phosphoric acid suppliers in Malaysia.
Table 1.5.5.1.1.1: Malaysian phosphoric acid suppliers.

Name Address About
Nylex’s subsidiaries
involved in trading,
manufacture and sale of
petrochemicals and
Persiaran Selangor,
industrial chemical products
Nylex (Malaysia) Berhad Section 15, 40200 Shah
which are widely sold to
Alam, Selangor.
Europe, the Middle East,
more than 15 countries in
Asia and to Australia and
New Zealand.
CCM is a public listed
company on the main
Pasir Gudang Works, market of Bursa Malaysia.
Plot 411, Kawasan 4, CCM plays a key role in the
CCM Chemicals Sdn. Jalan Perak 1, Pasir development of the
Bhd. Gudang Industrial Estate, pharmaceutical and
81700 Johor Bharu, chemical industries whilst
Johor. actively championing and
developing Halal initiatives
in Malaysia.
The company is known as
one of the eminent
Jalan Tabuan, Ktld manufacturer, exporter and
Chemical Distributor Taman Westwood, supplier of premium quality
Limited Rn93100, 93100 Industrial Chemicals, Humic
Kuching, Sarawak. Acid Fertilizer, Praffin Wax
and Plastic Granules in
Malaysia.
Eltee International is
Office No 108 & 109, counted in the list of
Ganga Collidium, (Dhan noteworthy phosphoric acid
Eltee International Ganga Business Centre), manufacturers, wholesale
Near Ganga Dham, suppliers and exporters,
Market, India. distributors and importers in
Malaysia.
49
1.5.5.1.2 Price
Global phosphate operating rates were lower in 2012 and 2013 largely due to a decline
in Indian and Chinese fertilizer consumption. We expect some improvement in rates
during 2014 with the extent of the rebound partially dependent on demand from India.
Over the medium term, we anticipate relatively balanced phosphate markets as
demand growth is expected to approximate capacity additions.
Figure 1.5.5.1.2.1: Price trend of phosphoric acid from May 2016 to March 2017
(CRU, IFA, Potash Corp, 2014).
1.5.5.2 Silicon Dioxide

1.5.5.2.1 Supplier
Table 1.5.5.2.1.1 shows the list of silicon dioxide suppliers in Malaysia.
Table 1.5.5.2.1.1: Malaysian silicon dioxide suppliers.

Name Address About
Lot 78, Jalan Perusahaan Harimic manufatures a
Harimic (Malaysia) Sdn.
1, Prai Industrial Area, range of spherical silica
Bhd.
13600 Prai, Penang. products.
Tatsumori Malaysia is
specializing in the
development and
Lot 5 & 6, Batu 6, Jalan
manufacturing of inorganic
Bukit Kemuning, Seksyen
Tatsumori (M) Sdn. Bhd. (SiO2) filler. It has 3 major
34, 40470 Shah Alam,
plants in Japan (30,000 M/T
Selangor.
annual scale production) and
the Malaysia Plant with
10,000 M/T annual scale.
50
1.5.5.2.2 Price
The global nano metal oxide (NMO) market size was estimated at USD 4.2 billion in
2016. Advancement in life sciences and extensive research conducted in the
biomedical sector is expected to drive demand. Rising consumption of personal and
skin care products is also projected to impact demand positively.
Figure 1.5.5.2.2.1: Metal oxide market by product projected until 2025 (Grand
View Research, 2017).
51
1.6 Economic Analysis
1.6.1 Production Rate
The global ethanol demand is expected to reach up to 35 billion gallons

(132,489,412.44 L) per year in 2022. It can be approximated that the worldwide
production rate of ethanol in 2022 is expected to be 1,046,666.36 metric tonnes
annually.
Looking onto the market of ethanol in Europe, the three major industries for
ethanol applications are in alcoholic beverages, fuel or the automotive industry and
also as a solvent in the chemical industry where ethanol is considered as a very
important chemical intermediate in the manufacturing of chemical products.
Furthermore, countries in Asia such as Japan and Korea which are the major leaders in
the automotive industries are also in need of a high demand for ethanol as another
alternative for fuel in the future. Moreover, as one of the major chemical intermediate
in the manufacturing of chemical products, the future of ethanol in the market is bright
where high demand and supply of ethanol is needed in the chemical plants to be used
as a feedstock.
Therefore, taking into account the forecasted value of ethanol production in the
next 5 years and the future plan on ethanol involvement in the automotive industry,
we have decided to settled with a production rate of 50,000 metric tonnes. This is
greatly influenced by the current export of Malaysia and the future projection. Thus,
we aim to fulfil both the local and global demand. The targeted market is the countries
within this continent. This amount of production is consider suitable as our plant is
still a new developed plant, and appropriate expansion will be made in the future to
increase the production rate where necessary.
52
1.6.2 Total Fixed Capital Investment
Table 1.6.2.1 shows the total number of equipment needed by the plant to operate and
its respective cost estimation.
Table 1.6.2.1: Type of equipment and estimation of cost (Source:
http://matche.com and https://www.alibaba.com).
Cost per Unit Total Price
Types of Equipment Unit
(USD/unit) (USD)
Heater 3 20 800 62 400
Pump 1 3 900 3 900
Reactor 1 313 200 313 200
Cooler 2 97 600 195 200
Distillation Tower 2 1 000 000 2 000 000
Storage Tank 3 49 300 147 900
Valve 1 40 40
Mixer 1 11 800 11 800
Separator 1 27 300 27 300
Compressor 1 521 900 521 900
Total Purchased
3 283 640
Equipment Cost, Cp
From Table 1.6.2.1, the total estimation for purchased equipment cost is
estimated to be 3,283,640 USD. Based on the total estimation of the equipment cost
above, the value of total purchased equipment cost, Cp is
3 283 640 USD. Table 1.6.2.2 shows the calculation for the total fixed capital
investment. The calculation for the total fixed capital investment was done based on
the value of total purchased equipment cost, Cp = 3,283,640 USD.
53
Table 1.6.2.2: Calculation for the Fixed Capital Investment (FCI).
Component Estimation Cost (USD) Total (USD)
Direct Cost
Total Purchased
Equipment Cp 3 283 640
Cost, Cp
Equipment
Installation
(includes 0.40 Cp 1 313 456
installation and
painting)
Piping System
0.70 Cp 2 298 548
Installation
Instrumentation
and Control 0.20 Cp 656 728
System
Electrical
System 0.10 Cp 328 364
Installation
Utilities 0.50 Cp 1 641 820
Storages 0.15 Cp 492 546
Building,
Process and 0.15 Cp 492 546
Auxiliary
Land USD 90.6369/m2
3 667 894
(40,468 m2)
Ancillary
0.15 Cp 492 546
Buildings
Site
0.15 Cp 492 546
Development
Total Direct Cost 15 160 634
Indirect Cost
Design and
0.30 Cp 985 092
Engineering
Contractors' Fee 0.05 Cp 164 182
Contingencies
0.10 Cp 328 364
Allowance
Total Indirect Cost 1 477 638
Fixed Capital
Investment Direct Cost + Indirect Cost 16 638 272
(FCI)
Working capital
Working
Capital 0.15 FCI 2 495 740.80
Investment
Total Fixed Capital Investment 19 134 012.80
54
1.6.3 Operating Labour Cost
Equation 1.6.3.1 below is shown to calculate the number of operators per shift, NOL
required in the ethanol plant.
NOL = (6.29 + 31.7P2 + 0.23 NNP)0.5 Equation 1.6.3.1
Where,
NOL : Number of operator shifts
P : Number of processing steps involving particulate solids
NNP : Number of non-particulate processing steps & includes
compression, heating and cooling, mixing and reaction
Table 1.6.3.1: Type and number of equipment.

Types of equipment Unit NNP
Heater 3 3
Pump 1 -
Reactor 1 1
Cooler 2 2
Distillation Tower 2 2
Storage Tank 3 -
Valve 1 -
Mixer 1 1
Separator 1 1
Compressor 1 -
Total Equipment 16 -
Total NNP 10
Based on Table 1.6.3.1,

NOL = (6.29 + 31.7P2 + 0.23 NNP) 0.5 = 2.93
Assumptions:
a. 24 hours per day production:
𝑠ℎ𝑖𝑓𝑡𝑠 358 𝑑𝑎𝑦𝑠 𝑠ℎ𝑖𝑓𝑡𝑠
× = 1074
𝑑𝑎𝑦 𝑦𝑒𝑎𝑟 𝑦𝑒𝑎𝑟
b. Operator works on average of 48 weeks a year. Another 3 weeks of time-off
for vacation and sick leave:
𝑠ℎ𝑖𝑓𝑡 𝑑𝑎𝑦𝑠 𝑤𝑒𝑒𝑘 𝑠ℎ𝑖𝑓𝑡𝑠
× 7 × 48 = 336
𝑑𝑎𝑦 𝑤𝑒𝑒𝑘 𝑦𝑒𝑎𝑟 𝑦𝑒𝑎𝑟. 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟
c. Operators needed:
𝑠ℎ𝑖𝑓𝑡𝑠 𝑦𝑒𝑎𝑟 . 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟
1074 × = 3.19 𝑜𝑝𝑒𝑟𝑎𝑡𝑜𝑟𝑠
𝑦𝑒𝑎𝑟 336 𝑠ℎ𝑖𝑓𝑡𝑠
55
Thus, the total number of operating labour needed is:
= 3.19 operators × 2.93
= 9.35 operators
≈ 10 operators
To determine the cost of operating labour, the annual salary of the labours
need to be calculated. Based on the Minimum Wages Order 2012 (Source:
http://www.mida.gov.my/home/human-resource/posts/), wages in Malaysia are not
regulated and it depends on the demand and the supply of the market. However,
under the First Schedule of the Employment Act 1955, the Minimum Wages Order
2012 had laid down the minimum wages to be paid to all the employees at RM 900 in
the Peninsular Malaysia and RM 800 for Sabah, Sarawak and Labuan. Minimum
wages is defined as “basic wages, excluding any allowances or other payments”.
(National Human Resource Centre, 2016). Employers shall not pay their employees
below the abovementioned amount. Moreover, both local and foreigner are entitled to
receive the minimum wages as stated in the Order.
Referring to the official website of the Malaysian Investment Development
Authority (2017), the manufacturing sector has an average basic salary of the
executives’ ranges from US$1,178 for Executive position to US$4,581 for the Senior
Managers position and US$7,655 for the Top Executive position.
Table 1.6.3.2 shows the average minimum and maximum salary in the
executive position whereas Table 1.6.3.3 shows the average minimum and maximum
salaries for the non-executive position.
56
Table 1.6.3.2: Average minimum and maximum salary in the executive position
(Source: MEF Salary Survey for Executives 2015 – www.mef.org.my).
USD
Executive position Minimum Maximum
salary salary
General Manager 4 747 7 657
General Manager – Sales & Marketing/
4 238 6 862
Business Development
Senior Production/ Manufacturing Manager 3 440 6 312
Financial Controller/ Director 5 092 9 218
Finance/ Accounts Manager 2 053 3 823
Finance/ Accounts Executive 810 1 580
Company Secretary 1 784 3 180
Admin/HR/Finance Manager 2 150 3 940
Human Resource Manager 2 057 4 114
Training Manager 1 697 3 666
Quality Assurance Manager 1 967 3 898
Business Development Manager 2 357 4 498
Logistics Manager 1 947 3 480
Technical Manager 1 910 4 051
Marketing Manager 1 891 4 364
Operations Manager 2 068 4 065
Mechanical Manager 1 021 2 081
Electrical/ Electronics Engineer 1 009 2 075
IT/ System Support Executive/ Engineer 765 1 743
IT Executive 853 1 569
Marketing Executive 840 1 713
Quality Assurance Executive 862 1 525
Executive Secretary/ Personal Assistant 1 018 1 997
Table 1.6.3.3 on the other hand shows the average monthly basic salary which
ranged from US$352 to US$563 to US$735 for unskilled employees, semi-skilled
employees and skilled employees or craftsmen respectively.
57
Table 1.6.3.3: Average minimum and maximum salary in the non-executive
position (Source: MEF Salary Survey for executives 2015 – www.mef.org.my).
USD
Non-Executive position Minimum Maximum
salary salary
Secretary 514 1 326
Account Clerk 416 823
General Clerk 347 858
Receptionist/ Telephone Operator 360 726
IT Supervisor 662 1 274
IT Assistant 663 1 319
Chargeman (Medium Pressure) 682 1 090
Production Supervisor 662 1 208
Machinist 384 847
Line Leader 398 798
Services Technician 392 938
Technician (General) 430 950
Electrician 458 853
Wireman/ Welder 487 915
Operator (Semi Skilled) 305 685
Operator (Unskilled) 287 525
Storekeeper/ Warehousemen 442 858
Quality Control/ Quality Supervisor 736 1 265
Lorry/ Truck/ Van Driver 418 815
Security Guard 305 633
Therefore, in reference to Table 1.6.3.2 and Table 1.6.3.3, the labour operating
cost for the proposed ethanol plant will be made as in Table 1.6.3.4. The position and
salary chosen are on a basis of a new build plant.
58
Table 1.6.3.4: Labour Operating Cost.
Salary Annual Salary
Position Quantity
(USD/month) (USD/year)
Production Department
i. Production Manager 1 4 876 58 512
ii. Production Engineer 1 1 254 15 048
iii. Quality Assurance/Quality 1 1 000 12 000
Control Executive
iv. Plant Operators 10 4 950 59 400
v. Technician 6 4 140 24 840
Sales & Marketing Department
i. Marketing Executive 1 1 276 15 312
ii. Marketing Clerk 1 602 7 224
Finance Department
i. Finance Executive 1 1 195 14 340
ii. Finance Clerk 1 602 7 224
Human Resource Department
i. HR Executive 1 3 085 37 020
ii. HR Clerk 1 602 7 224
Security Guard 2 1 220 14 640
Total 30 24 802 272 784
Therefore, the cost of operating labour, COL is,

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐿𝑎𝑏𝑜𝑟 𝐶𝑜𝑠𝑡, 𝐶𝑂𝐿 = 𝟐𝟕𝟐 𝟕𝟖𝟒 𝑼𝑺𝑫/𝒚𝒆𝒂𝒓
1.6.4 Cost of Raw Material
The production rate of this ethanol plant is 50,000 metric tonne per year. Based on the
selected process which is the catalytic hydration of ethylene to produce ethanol, the
required raw material is ethylene, ethylene glycol and sodium hydroxide. Meanwhile,
the catalyst used is phosphoric acid and silicon dioxide. The plant is assumed to
operate for 358 days/year. Table 1.6.4 shows the estimation cost of raw material in
ethanol production.
59
Table 1.6.4.1: Estimation cost of raw material in the ethanol via catalytic
hydration process (Source: MATRADE and https://www.icis.com).
Mass Flowrate Price per tonne Price per year
Reactant
(tonne/year) (USD/tonne) (USD/year)
Ethylene 31 250 996.44 31 138 750.00
Ethylene
18 750 1002.09 18 789 187.50
Glycol
Sodium
5 340.00 1 700.00
hydroxide
Total Cost of Reactants 49 929 637.50
Mass Flowrate Price per tonne Price per year
Catalyst
(tonne/year) (USD/tonne) (USD/year)
Phosphoric
245 984.98 241 320.10
Acid
Silicon
15 1062.68 15 940.20
Dioxide
Total Cost of Catalysts 257 260.30
Total Cost of Raw Materials (CRM) 50 186 897.80
Based on Table 1.6.4.1, the total cost of raw materials is 50 186 897.80 USD/year.
1.6.4.1 Total Annual Sales
Production rate = 50 000 metric tonnes/year (MTPA)

Table 1.6.4.1.1: Total annual sales.
Selling Price Production Rate Income
Product
(USD/tonne) (tonne/year) (USD/year)
Ethanol 1 840.22 50 000 92 011 000.00
Total annual sales 92 011 000.00
Referring to the MATRADE data on Malaysia’s Ethanol Export Statistics to the

world, the price of ethanol can be summarised as below:
Quantity = 195 488L (Total sales = USD 360 663). Therefore,
360,663 𝑈𝑆𝐷 1000 𝐿 𝑚3 1 𝑘𝑔
Ethanol price = × 0.787 × × ×
195,488 𝐿 1 𝑚3 789 𝑘𝑔 0.001 𝑡𝑜𝑛𝑛𝑒
= 1 840.22 USD/tonne
Diethyl Ether, from the data on Malaysia’s Diethyl Ether Import Statistics obtained
from MATRADE, the price of Diethyl Ether is
3 718.97 USD/tonne.
60
1.6.5 Cost of Manufacturing
According to Turton et. al. (2012), the total cost of manufacturing is given by
Equation 1.6.5.1 below:
Total Cost of Manufacturing (TCOM) = Direct Manufacturing Costs (DMC) +
Fixed Manufacturing Costs (FMC) +
General Expenses (GE)
TCOM = DMC + FMC +GE Equation 1.6.5.1
On the other hand, the cost of manufacturing (COM) can be calculated by using
Equation 1.6.5.2 below:
COM = 0.280FCI + 2.73COL + 1.23(CUT + CWT + CRM) Equation 1.6.5.2
Where,
COM : Cost of Manufacturing
FCI : Fixed Capital Investment
COL : Cost of Labour
CUT : Cost of Utilities
CWT : Cost of Waste Treatment
CRM : Cost of Raw Material
The estimation of the total cost of manufacturing is calculated and tabulated as shown
in Table 1.6.5.1 below:
61
Table 1.6.5.1: Estimation of total cost of manufacturing.
Factor Multiplying Factor Cost (USD)
Direct Manufacturing Costs (DMC)
a. Raw Materials, CRM CRM 50 186 897.80
b. Waste Treatment, CWT 0.09 FCI 1 497 444.48
c. Utilities, CUT CUT 1 641 820
d. Operating Labour, COL COL 272 784

e. Direct Supervisory and
Clerical Labour 0.18 COL 49 101.12
f. Maintenance and Repairs 0.06 FCI 998 296.32
g. Operating Supplies 0.009 FCI 149 744.45
h. Laboratory Charges 0.15 COL 40 917.60
i. Patents and Royalties 0.03 COM 2 129 837.88
Total Direct Manufacturing Costs 56 966 843.65

Fixed Manufacturing Cost (FMC)
a. Depreciation 0.1 FCI 1 663 827.20

b. Local Taxes and
0.032 FCI 532 424.70
Insurance
0.078 COL + 0.036
c. Plant Overhead Costs 620 254.94
FCI
Total Fixed Manufacturing Cost 2 816 506.84
General Manufacturing Expenses
0.177 COL + 0.009

a. Administration Costs 198 027.22
FCI
b. Distribution and Selling
0.11 COM 7 809 405.57
Costs
c. Research and
0.05 COM 3 549 729.80
Development
Total General Manufacturing Cost 11 557 162.59
Total Cost of Manufacturing 71 340 513.08
62
Table 1.6.5.2: The cost of manufacturing without depreciation (COM).
Types of Costs Symbol Value (USD)
Fixed Capital Investment FCI 16 638 272
Cost of Operating Labor COL 272 784
Cost of Utilities CUT 1 641 820
Cost of Waste Treatment CWT 1 497 444.48
Cost of Raw Materials CRM 50 186 897.80
Total Cost of Manufacturing (COM) 70 237 218.28
COM = 0.280FCI + 2.73COL + 1.23(CUT + CWT + CRM)

COMd = 0.28(16 638 272) + 2.73(272 784) + 1.23(1 641 820 + 1 497 444.48 +
+ 50 186 897.80)
Thus, COMd = 70 994 596.08 USD
1.6.6 Total Variable Cost
TVC = CRM+ CWT + CUT + COL Equation 1.6.6.1

= 50 186 897.80 + 1 497 444.48 + 1 641 820 +
272 784
= 53 598 946.28 USD
Thus,
Operating Cost = Fixed Capital + Variable Cost
= 16 638 272 USD + 53 598 946.28 USD
= 70 237 218.28 USD
1.6.7 Break-even Analysis
According to Wikipedia (2017), break-even point (BEP) is defined as the sales

amount in either unit (quantity) or revenue (sales) terms that is required to cover the
total costs consisting of both fixed and variable costs to the company. At the break-
even point, the total profit is zero.
63
Table 1.6.7.1: Break-even analysis.
Start – up = 0.1 (16 638 272 USD)
0.1 FCI
Cost = 1 663 827.20 USD
Total
= 1 663 827.20 + 16 638 272
Investment Start – up Cost + FCI
= 18 302 099.20 USD
Cost
50 186 897.80 + 1 497 444.48 + 1 641 820.00 + 272 784.00

=
Variable 𝐶𝑅𝑀 + 𝐶𝑊𝑇 + 𝐶𝑈𝑇 + 𝐶𝑂𝐿 50 000
53 598 946.28
Cost Unit 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 = 50 000
1 071.98 𝑈𝑆𝐷
= 𝑡𝑜𝑛𝑛𝑒/𝑦𝑒𝑎𝑟
Estimation
of Selling
Price Total annual sales 𝑈𝑆𝐷
= 92 011 000
(Total 𝑦𝑒𝑎𝑟
Sales)
𝑈𝑆𝐷
Selling 𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 92 011 000
𝑦𝑒𝑎𝑟
=50 000 𝑡𝑜𝑛𝑛𝑒/𝑦𝑒𝑎𝑟
Price 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 𝑈𝑆𝐷
= 1840.22 𝑡𝑜𝑛𝑛𝑒
𝑈𝑆𝐷 𝑡𝑜𝑛𝑛𝑒
Total Unit selling price x = 1840.22 𝑡𝑜𝑛𝑛𝑒 x 50 000 𝑦𝑒𝑎𝑟
Revenue Production rate 𝑈𝑆𝐷
= 92 011 000 𝑦𝑒𝑎𝑟
Therefore the profit margin is:

= Cost of product – Cost of raw material
= 92 011 000 USD – 50 186 897.80 USD
= 41,824,102.20 USD/year
1.6.7.1 Break-even Point (Using Interpolation Method)

1.6.7.1.1 Break-even Point
𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡 =
𝑆𝑎𝑙𝑒𝑠−𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
16 638 272
=
(1840.22−1 071.98)
≈ 21 657.65 tonnes of ethanol
64
1.6.7.1.2 Break-even Sales
𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡 = 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
1−( 𝑆𝑎𝑙𝑒𝑠
)
16 638 272
= 1071.98
1−( )
1840.22
≈ 39 854 838.20 million USD
To conclude, the plant has to produce at least 21 657.65 tonnes of ethanol per year and
the sales have to exceed 39 854 838.20 million USD for the plant to gain profit. Table
1.6.7.3 is used to determine the payback period of the plant. Figure 1.6.7.2 shows the
cumulative cash flow diagram.
65
Table 1.6.7.2: Break-even point.
Profit (USD)
Ethanol production (Metric Fixed Cost Variable Cost Total Cost Total Revenue
(Total Revenue –
tonnes) (USD) (USD) (USD) (USD)
Variable Cost) (USD)
0 16 638 272 0 18 302 099.20 0 0
5 000 16 638 272 53 598 946.28 71 901 045.48 92 011 000 38 412 053.72
10 000 16 638 272 107 197 892.60 125 499 991.80 184 022 000 76 824 107.44
15 000 16 638 272 160 796 838.80 179 098 938.00 276 033 000 115 236 161.20
20 000 16 638 272 214 395 785.10 232 697 884.30 368 044 000 153 648 214.90
25 000 16 638 272 267 994 731.40 286 296 830.60 460 055 000 192 060 268.60
30 000 16 638 272 321 593 677.70 339 895 776.90 552 066 000 230 472 322.30
35 000 16 638 272 375 192 624.00 393 494 723.20 644 077 000 268 884 376.00
40 000 16 638 272 428 791 570.20 447 093 669.40 736 088 000 307 296 429.80
45 000 16 638 272 482 390 516.50 500 692 615.70 828 099 000 345 708 483.50
45 000 16 638 272 535 989 462.80 554 291 562.00 920 110 000 384 120 537.20
50 000 16 638 272 589 588 409.10 607 890 508.30 1 012 121 000 422 532 590.90
55 000 16 638 272 643 187 355.40 661 489 454.60 1 104 132 000 460 944 644.60
60 000 16 638 272 696 786 301.60 715 088 400.80 1 196 143 000 499 356 698.40
66
Break even point
1,400,000,000.00
1,200,000,000.00
1,000,000,000.00
800,000,000.00
Cost (USD)
Total Cost (USD)

600,000,000.00 Total Revenue (USD)
400,000,000.00
200,000,000.00
0.00
0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 45 000 50 000 55 000 60 000
Production of ethanol (MT)
Figure 1.6.7.1: Break-even analysis graph.
67
Table 1.6.7.3: Cumulative Cash Flow.
End
Cumulative
of Revenue (R-COM-dk)* Cash Flow
Investment dk FCI – dk COMd (USD) Cash Flow
year (USD) (1-t) + dk (USD)
(USD)
(k)
0 -3 667 894 - 19 134 012.80 - - - -3 667 894 -3 667 894
1 -16 638 272 - 19 134 012.80 - - - -16 638 272 -20 306 166
2 -16 638 272 - 19 134 012.80 - - - -16 638 272 -36 944 438
3 - 3 826 802.56 15 307 210.24 92 011 000 53 598 946.28 22 848 690.70 22 848 690.70 -14 095 747.30
4 - 6 122 884.10 9 184 326.14 92 011 000 53 598 946.28 23 881 927.39 23 881 927.39 9 786 180.09
5 - 3 673 730.46 5 510 595.68 92 011 000 53 598 946.28 22 779 808.25 22 779 808.25 32 565 988.34
6 - 2 204 238.27 3 306 357.41 92 011 000 53 598 946.28 22 118 536.77 22 118 536.77 54 684 525.11
7 - 2 204 238.27 1 102 119.14 92 011 000 53 598 946.28 22 118 536.77 22 118 536.77 76 803 061.88
8 - 1 102 119.14 0 92 011 000 53 598 946.28 21 622 583.16 21 622 583.16 98 425 645.04
9 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 119 552 274.60
10 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 140 678 904.10
11 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 161 805 533.70
12 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 182 932 163.20
13 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 204 058 792.80
14 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 225 185 422.30
15 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 246 312 051.90
16 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 267 438 681.40
17 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 288 565 311
18 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 309 691 940.50
19 - - 0 92 011 000 53 598 946.28 21126 629.55 21 126 629.55 330 818 570
20 - - 0 92 011 000 53 598 946.28 21 126629.55 21 126 629.55 351 945 199.60
21 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 373 071 829.10
22 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 394 198 458.70
23 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 415 325 088.20
24 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 436 451 717.80
25 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 457 578 347.30
26 - - 0 92 011 000 53 598 946.28 21 126 629.55 21 126 629.55 478 704 976.90
27 6 163 634.80 - 0 92 011 000 53 598 946.28 21 126 629.55 27 290 264.35 505 995 241.20
68
Payback period
600,000,000.00
500,000,000.00
400,000,000.00
Cumulative Cash Flow (USD)
300,000,000.00
200,000,000.00
100,000,000.00
0.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
-100,000,000.00
Year
Figure 1.6.7.2: Cumulative cash flow diagram.
Payback period (PBP) = 3 + [(- 14,095,747.30 + 6,163,634.80) / (- 14,095,747.30 – 9,786,180.09)]

= 3.33 years
≈ 4 years
69
1.6.8 Conclusion
In conclusion, based on the findings obtained from the market analysis, a high demand
of ethanol is expected in Asia countries. Therefore, a new ethanol production plant is
proposed to be built somewhere in the Asia countries to meet with the high demand.
Referring to the global ethanol demand that is expected to reach up to 35 billion
gallons (132,489,412.44 L) per year in 2022 and the importance of ethanol as an
important intermediate in the manufacturing of chemical products as well as the
automotive industry especially in Japan and South Korea, the plant is aimed to fulfil
these demand and also increase the export business for Malaysia. Hence, taking into
account the forecasted value of ethanol production in the next 5 years and the future
plan on ethanol involvement in the automotive industry, we have decided to settled
with a production rate of 50 000 metric tonnes to fulfil both the local and global
demand. Based on the calculated Break-Even Analysis, in order to gain profit, the
ethanol plant has to produce at least 21,657.65 tonnes of ethanol per year and the sales
have to exceed 39,854,838.20 million USD. Furthermore, based on the Cumulative
Cash Flow diagram shown, the payback period of the plant is calculated to be about 4
years.
70
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Design Project I: Production of 50,000 Metric Tonnes of Ethanol per Year

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EH2207R

DESIGN PROJECT I (JANUARY 2018)

PRODUCTION OF 50,000 METRIC TONNES OF ETHANOL PER YEAR

CHAPTER 1: PROCESS BACKGROUND & SELECTION

TIFFANY ANAK TONY 2015875416

FAZLEIN BINTI SARIP 2015835006

MUHAMMAD ADIB BIN ZAABA 2015636606

NURUL HAZIRAH AINA BINTI HASNAN 2014261176

MAIZATUL AKMA BINTI MOHD BASIR 2013584743

MOHAMAD SALMI BIN MOHD FUDZI 2015673968

MADAM NOR HAZELAH BINTI KASMURI

FACULTY OF CHEMICAL ENGINEERING

CHAPTER 1: PROCESS BACKGROUND AND SELECTION

1.2 Ethanol 3–7

1.3 Process Selection 8 – 19

1.4 Process Background of Catalytic Hydration 20 – 27

TABLE TITLE PAGES

FIGURE TITLE PAGES

Figure 1.1.1: Structural formula for ethanol.

Often abbreviated as EtOH, ethanol is a clear, colourless liquid with a strong

C2H4 + H2O ↔ C2H5OH Equation 1.1.1

C6H12O6 → 2 C2H5OH + 2 CO2 Equation 1.1.2

Figure 1.2.2.1: Type of ethanol produced in European Union (EU)

Based on Figure 1.2.2.1, 46% of the ethanol production is used in the

Based on Figure 1.2.2.3, in domestic uses of ethanol, cosmetic application has

Figure 1.2.2.4: Uses of ethanol in industrial sector (CEFIC, 2003).

Table 1.2.3.1 shows the advantages and disadvantages of ethanol.

Table 1.2.3.1: Advantages and disadvantages of ethanol.

Based on Table 1.3.1.1, the use of corn as feedstock to produce ethanol is

Figure 1.3.1.1: Production of corn in Malaysia (Mazlan, 2017).

Table 1.3.1.2: Comparison between first generation and second generation.

1.3.2 Fermentation Process

1.3.2.2 Using Sugarcane as Raw Material

Ethanol made by the hydration of ethylene is a non-renewable fuel. This is because

Table 1.3.3.1: Comparison between different uses of raw material in ethanol

Table 1.3.3.2: Comparison of ethanol production process.

Table 1.3.3.4: Evaluation rate.

Ethanol manufacturing has begun on 1970’s when petroleum-based fuel became

1.4.1.1.1 Production of Pure Ethanol

1.4.1.1.2 Pressure Swing Adsorption

A zeolite molecular sieve is being increasingly employed to remove the water to

Figure 1.4.2.2.1: Process flow diagram.

1.5.2 Main Product

Figure 1.5.2.1.1.1 (a): Global ethanol supply and demand forecast.

Figure 1.5.2.1.1.1 (b): World consumption of ethanol – 2014 (IHS Chemical,

Based on Figure 1.5.2.1.1.1 (e), the biggest supplier of ethanol is Singapore

Figure 1.5.2.1.1.1 (f): Export statistics of ethanol in Malaysia by country (Source:

1.5.2.1.2 World Production

Figure 1.5.2.1.2.1: Global ethanol production by feedstock, projected until 2019

1.5.2.1.4 Leading Manufacturer

1.5.3 Raw Materials

1.5.3.1.1 World Demand

1.5.3.1.2 World Production

Figure 1.5.3.1.2.2: Top 10 owners of ethylene capacity worldwide.

1.5.3.1.3 Market Price

Global ethylene prices is surged 19.2% month-on-month to $1,032.51/metric ton in

1.5.3.1.4 Supplier Analysis

Asian ethylene producers are expected to continue to enjoy healthy margins in

Figure 1.5.3.2.2.1: Growth since 2007 (Warren R. True, 2016).

1.5.3.3 Sodium Hydroxide

Sodium hydroxide, commonly referred to as caustic soda, in Asia as of early

1.5.3.3.2 World Production

Figure 1.5.3.3.2.1: Global caustic soda production in 2005 – 2013 in tonnes