Pöyry Forest Industry Consulting Oy

P.O. Box 4 (Jaakonkatu 3)

FI-01621 Vantaa
Finland
Domicile Vantaa, Finland
Business ID. 1571995-8
Tel. +358 10 3311
Fax +358 10 33 22482
http://www.forestindustry.poyry.com

Date February 06, 2009

Ref. No 52P11456
Project Proposal Page 1 (7)
Contact: Tuomo Utriainen
Mob: +358 50 578 0746
Fax: +358 10 33 21031
Email: Tuomo.Utriainen@poyry.com

Briquetting plant feasibility study in Guatemala

Contents 1 Background ......................................................................................

2 Presentation of the consultants.........................................................
3 Scope of services..............................................................................
4 Time Schedule..................................................................................
5 Project organization .........................................................................
6 Financial proposal ............................................................................
7 Validity.............................................................................................
8 Acceptance .......................................................................................

Appendices Rates for Management Consultancy

Distribution Recogua S.A.: Mr Arnoldo Melgar

Energia y ambiente S.A.: Peter Hörmander
Energy and Environmental Partnership with Central America
Pöyry Forest Industry Consulting Oy: Tuomo Utriainen
 52P11456

1 BACKGROUND
This Project presented to the Energy and Environment Partnership with Central
America includes the elaboration of a feasibility Study for demonstrating the
economic and technical viability of a briquetizing plant with the intended location in
the outskirts of Esquintla, Guatemala.

The projected plant located in the municipality of Esquintla would use coffee husk as
feedstock. However, there are plans to multiply the briquetizing concept to other
locations to utilize also other type of biomasses like sawdust and wood chips.

The availability of coffee husk for briquetizing purposes in Esquintla is very obvious
as several coffee processing mills have their production facilities in this area. The
Guatemalan coffee mills produce around 50 000 MT of coffee per year and production
is planned to increase. Total amount of coffee husk accumulating from coffee
production is about 18% (weight) of the total coffee production volume resulting to an
annual availability of 10 000 MT husk . Today the coffee mills are not utilizing husks,
or are selling them as bulk material, and are willing to sell husks for briquette
manufacturing.

Moisture content of coffee husk is low (10-12 %, as received) as well as ash content
(< 1%, weight). Net calorific value of coffee husk is high ~4,6 MWh/t, as received
meaning that husk briquettes are excellent fuel in suitable appliances.

The project has an important social and economic impact for the people in the area in
question as the briquetting plant creates job opportunities and coffee mill will increase
their sales income. Briquettes can be consumed in Guatemala and/or exported to e.g.
USA.

The project beneficiary RECOGUA, “RECiclajes Orgánicos de GUAtemala”, has

been actively working with coffee husk recollection and distribution for almost a
decade. RECOGUA was established in 1999 as an answer to the need of the
Guatemalan industry to find an energy source that, among other advantages, could be
more economical and environmentally friendly as compared to fossil fuel. The focus
of the business has been to provide renewable bio fuel based on organic residues,
biomass, to various industries in Guatemala, mainly ceramic brick plants, detergent
plants and food industries. In order to minimize costs for transportation and storage of
the bio fuel RECOGUA is looking for new ways to increase the density of the bio fuel
and also improve the manageability of the fuel. Briquetizing of the coffee husks is
seen as the best option to obtain these advantages.

The Guatemalan government is strongly supporting the use of renewable energy. The
main driver for this development is the willingness to reduce the dependency from the
crude oil derived products. This Project at issue supports well the energy strategy of
the Guatemalan Government as well as the Guatemalan Industry.
 52P11456

2 PRESENTATION OF THE CONSULTANTS

2.1 Pöyry Forest Industry Consulting Oy

Pöyry Forest Industry Consulting Oy is part of the Pöyry Group Oy, a listed
international consulting and engineering company with head office in Vantaa, Finland.
Pöyry Group is publicly listed in the Helsinki and Stockholm stock exchanges. With
net sales of 720 million EURO and a staff of above 7,300 in offices over 45 countries
(2007), the group is ranked among the World’s largest consultant engineering
companies. The group has three core areas of expertise; forest industry, energy and
infrastructure & environment.

2.2 Energia y Ambiente, S.A.

Energía y Ambiente, S.A. is a Consulting and Engineering company based in
Gustemala, Central America. The main activities are process and environmental
consulting in the industry of Guatemala, Central America and the Carribbean. Cleaner
production and improvement of environmental performance is the main activity, but
activities concerning renewable energy is increasing since this is a very viable sector
for tropical areas as Central America.

3 SCOPE OF SERVICES
The objective of the feasibility study is to demonstrate the technical and economic
viability of a briquette production plant to be located in Esquintla Guatemala.

Furthermore, different biomass types will be shipped to Europe e.g. to Finland,

Austria or Germany for test production. The tests will be made with different raw
material mixtures and with at least two different briquetizing equipment (both piston
machines but with different pressure and capacity levels). The study will identify the
most suitable technologies for briquetting the selected feedstock.

Scope of work

The issues that are covered in the feasibility study are presented in the following list
that will act as a draft table of contents for the final report.
1. Executive Summary

2. Introduction
• objective of the project

3. Raw material (coffee husk, sawdust and wood chips) markets in Guatemala
• Estimation of total production volumes by production plant in
Guatemala
• Current utilization patterns (own use, sales outside processing mill,
landfill)
• Willingness of processing plants to sell by-products and expected sales
prices

4. Test briquetting of different raw materials / mixtures

• Identification of suitable plant willing to perform test runs
 52P11456

• Shipping of feedstock
• Briquetting tests
• Conclusions

5. Location of the intended briquette production plant

• Description of the site
• Existing infrastructure (roads, buildings, warehouse, electricity, water,)

6. Briquette production plant

• Description of intended briquette press and other machinery
• Intended production of briquettes and production capacity
• Preliminary lay-out including feedstock handling at the plant
• Personnel; number of staff, related costs

7. Environmental and Social Aspects

• Feedstock procurement
• Emissions
• Employment opportunities

8. Organizations and contracts

• Organization of feedstock procurement
• Draft document for the feedstock supply contract

9. Market for ready products

• Demand and supply of briquettes (volumes, prices, end-use purposes)
1. Domestic markets in Guatemala
- Customers: households, industry
- Current consumption and estimated consumption in the
future
- Sales / marketing of briquettes
- Current production and estimated production in the
future in Guatemala
• Export markets
1. Identification of potential export markets for briquettes
2. Business practices applied (sales channels)
3. Volumes, qualities and sales prices

10. Feasibility Analysis

• Investment costs
• Raw material costs
• Operation and maintenance costs
• Production & marketing costs
• Sales and Cash flow analysis
• Estimation of the feasibility

11. Recommendations
 52P11456

Deliverables

The Consultants will provide Recogua and EEP with the final report (three hardcopies
and soft copy in electronic (pdf) format).

Next steps

Should the feasibility study conclude that the project in consideration is economically
and technically viable, it is recommended to proceed to implementation of the plant.
Feedstock supply agreements and briquette marketing plan would be made, and a new
or used briquette press would be purchased preferably from Finland or Austria and
shipped to Guatemala. Briquette plant would be installed to a site agreed in advance.

4 TIME SCHEDULE
Total duration of the project is 3.5 months from the Energy and Environment
Partnership with Central America´s (EEP) official approval of the project.

The following table describes the time schedules for the professional personnel, the
activity (work) schedule and completion and submission of report.
1 2 3 4
ID Task name 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
1 Project approval
2 Kick-off meeting
3 Test briquetting
4 Data collection
5 Elaboration of preliminary report
6 Discussions with all parties involved
7 Elaboration of final report
8 Delivery of Final Report

5 PROJECT ORGANIZATION
Project will be implemented by two companies: Pöyry Forest Industry Consulting Oy
of Finland (project leading partner) and Energia Y Ambiente S.A. of Guatemala (sub-
consultant in the project).

The core project team will consist of following experts:

Pöyry Forest Industry Consulting Oy:

- Tuomo Utriainen; Biomass fuel availability and quality expert (project manager)
- Tommy Ström; Briquette production economy
- Other experts will be used if needed
Energia Y Ambiente S.A.

- Peter Hörmander: Briquette markets and local knowledge about investment projects
(permitting etc.)
- Other local experts will be used if needed
 52P11456

Responsibilities of parties involved

The project will be implemented in close cooperation with all parties involved. As a
project leader Pöyry Forest Industry Consulting Oy will be responsible for the report
generation.

Project beneficiary (Recogua S.A.) will be responsible to coordinate and assist in

arranging field visits

Project sub-consultant (Energia Y Ambiente S.A.) will be responsible to:

• compile information related to feedstock and briquette markets
• describe feedstock procurement operations from plants of origin
• help in designing and implementing test briquetting etc.
• local coordination of the project

6 FINANCIAL PROPOSAL
Sources of Energia Y
financing: Parnership Ambiente S.A.
Use of Pöyry Recogua TOTAL
(EEP)
budget:
Pöyry Forest Industry
27 000 2 000 29 000
consulting Oy
Energia Y Ambiente S.A. 13 000 1 000 14 000
40 000 2 000 1 000 43 000

Pöyry Energy Oy would be allocated EUR 27,000 of the total project budget and
Energia Y Ambiente S.A. EUR 13,000.

The financial proposal presented is based on approximately 3 man-months work and 2

expatriate field trips.

Man-hour categories applied for the expatriate project team is presented in the
following table. Man-hour rates for Pöyry Energy Oy´s services are presented in
annex 1.
Normal Partnership
Category Category
Tuomo Utriainen 1 2
Tommy Stöm 2 3
Pöyry offers the proposed assignment, as described in this proposal, at a fixed fee of
EUR 40 000 (excl.VAT). The fixed fee will be net and free of any and all direct or
indirect taxes, duties, bank charges or other similar charges or withholdings at source
of payment, which may be imposed on Pöyry.

Terms of payment

The Partnership (EEP) will make the payment as follows:

100% when the final report has been approved by the Technical Evaluation
Committee of the Partnership Programme.

As soon as the Partnership program has delivered the total payment to Pöyry Energy
Oy, it shall pay the agreed fees to Energia Y Ambiente S.A. without delay.
 52P11456

7 VALIDITY
This proposal is valid until 31st March 2009.

8 ACCEPTANCE
Please, signify your acceptance of this proposal by separate confirmation with
reference to our proposal number 52P11456.

By: Recogua By: Energia Y Ambiente S.A.

(Project beneficiary) (Project sub-consultant)
Name: Arnoldo Melgar Name: Peter Hörmander

Signature: Signature:

Title: Managing Director Title: Managing Director

Date: Date: February 18, 2009

By: Pöyry Forest Industry Consulting Oy

(Project leader)
Name: Hannu Hytönen Ernest Dochnal

Signature:

Title: Associate Principal Associate Principal

Date: February 19, 2009 February 19, 2009