Financial Analysis of Dicalcium Phosphate Production

Production of Dicalcium Phosphate by Digestion
of Phosphate Rock with HCl
DCP Manufacturing Co., Inc.
Financial Analysis
A Detailed Calculation of the Cost Estimation

295

of Phosphate rock with HCl
FINANCIAL ANALYSIS
This is an outline of the economic considerations, which are necessary when preparing an estimate
of the capital investment or total product cost for a new venture or project. Methods for obtaining
predesign cost estimates has purposely been emphasized because the latter are extremely
important for determining the feasibility of proposed investment and to compare alternative
designs. The predesign estimates are based partially on approximate percentages or factor that
are applicable to a particular plant or process under consideration.
USE OF COST INDEXES
A cost index is merely an index value for a given period point in time showing the cost at that time
relative to a certain base time. If the cost at some time in the past is known, the equivale nt co st at
the present time can be determined by multiplying the orig inal cost by the ratio of the present index
value to the index value applicable when the original cost was obtained.
For the Production of Dicalcium Phosphate by Digestion of Phosphate Rock with HCl, we used the
Marshall and Swift Equipment Cost Indexes projected to 2013. We used the projections cost index
,
( ) ( )
=
[
]
( )
( )
Marshall and Swift Installed Equipment Indexes (Reference: Chemical Engineering Plant Cost
Index)
YEAR
ALL INDUSTRY
2005
468.2
2006
499.6
2007
525.4
2008
575.4
2009
521.9
2010
550.8
2011
585.7
2012
584.6

296

By plotting the data above, we could get the cost index for the year 2015,
COST INDEX 2015

700
600
CEPCI
500
400
y = -0.1211x6 + 2.051x5 - 11.509x4 + 22.461x3 - 6.5617x2 + 20.605x + 468.76
R = 0.9159
300
200
100
0
0
No. of Years since 2005
For the cost index of 2015 let x = 3;

y = -0.1211x 6 + 2.051x 5 - 11.509x 4 + 22.461x 3 - 6.5617x 2 + 20.605x + 468.76
y = -0.1211(3)6 + 2.051(3)5 - 11.509(3)4 + 22.461(3)3 - 6.5617(3)2 + 20.605(3) + 468.76
y = 555.85 (Cost index for year 2015)
Cost index at 2002 = 395.6
Exchange Rate (Source: www.bsp.gov.ph)

Unite States Dollar (USD)
Philippine Peso (Php)
$1
Php 46.831
As of October 1, 2015

297

Cost Estimation
Estimation of Capital Investment
Plant Capacity: 3467.5 MT/year
Plant Operation: 8322 hours/year
Table 1 Total Purchased Equipment Cost
Equipment
Jaw Crusher
Ball Mill1
Denver 24 Flotation Cell
Vibrating screen
Mixing tank
Digester
Cooler (S&T)
Clarifier
Precipitator
Decanter Centrifuge
Vacuum Filter
Rotary Dryer
Plate Cooler
Ball Mill 2
Vibrating Screen 2
Total Purchase Equipment Cost w/
Delivery Cost
No.of Equipment
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1
Total Cost
70340
11854
113025
64940
5778
42393
44504
466382
139336
186335
12871
71325
2341
8375
17945
1,257,744
Unit
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
58,901,409.26
Php

298

Cost of Equipment:
1. Jaw Crusher
Using the McGraw Hill Online Cost Estimator, cost of crushe rs (jaw crusher) is calculated.
Capacity: 10 kg/s
Materials of Construction:PE-250x400 Blake Type Jaw Crusher
Cost2002: $70340
Solving for Cost2015 ,
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $70340(
)
395.6
= $98,833.39
2. Ball Mill 1
Using the McGraw Hill Online Cost Estimator, cost of ball mill is calculated.
Capacity:0.30kg/s
Materials of Construction: BM-2115
Cost2002:$ 11854
2015
(2015 = 2002 (
)
2002
555.85
2015 = $11854(
)
395.6
= $16655.83
3. Vibrating Screen 1
Using the McGraw Hill Online Cost Estimator, cost of vibrating screen is calculated.
Screen area: 4.85 m2
Materials of Construction: Stainless Steel
Cost2002: $64940
2015
(2015 = 2002 (
)
2002
555.85
2015 = $64940(
)
395.6
= $91,245.95

299

4. Denver 24 Froth Flotation Cell

Using the McGraw Hill Online Cost Estimator, cost for the 3- is cell flotation system is
calculated.
Capacity:9.14 m3
Materials of Construction: Stainless Steel
Cost2002:$ 113025
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $113025(
)
395.6
= $158,809.27
5. Mixing Tank
Using the McGraw Hill Online Cost Estimator, cost of the mixing tank is calculated.
Capacity: 0.78 m3
Materials of Construction: Carbon Steel
Cost2002: $5778
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $5778(
)
395.6
= $8,118.56
6. Digester
Using the McGraw Hill Online Cost Estimator, cost of the digester is calculated.
Capacity: 3. 70 m3
Materials of Construction: Molybdenum Stainless steel
Cost2002:$ 42393
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $42393(
)
395.6
= $, .

300

7. Cooler (Shell and Tube)

Using the McGraw Hill Online Cost Estimator, cost of the cooler is calculated.
Heat Transfer area: 268.27 m 2
Materials of Construction: Molybdenum Stainless steel 18/8
Cost2002: $44504
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $44504(
)
395.6
= $62531.72
8. Clarifier
Using the McGraw Hill Online Cost Estimator, cost of the clarifier is calculated.
Total solids capacity:10 kg/s
Materials of Construction: Carbon Steel (SA 516, Grade 60)
Cost2002: $ 466382
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $466382(
)
395.6
= $655,304.44
9. Precipitator
Using the McGraw Hill Online Cost Estimator, cost of the precipitator is calculated.
Capacity: 1.9 m3
Materials of Construction: Carbon Steel Grade C
Cost2002: $139336
2015
(2015 = 2002 (
)
2002
555.85
2015 = $139336(
)
395.6
= $, .

301

10. Decanter Centrifuge

Using the McGraw Hill Online Cost Estimator, cost of the decanter centrifuge is calculated.
Solids Product Capacity: 1.26 kg/s
Cost2002: $ 186335.00
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $186335(
)
395.6
= $, .
11. Vacuum Filter
Using the McGraw Hill Online Cost Estimator, cost of the vacuum filter is calculated.
Filter area: 9.3 m2
Cost2002: $12871
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $12871(
)
395.6
= $. .
12. Rotary Dryer
Using the McGraw Hill Online Cost Estimator, cost of the rotary dryer is calculated.
Peripheral surface area:33.42 m 2
Materials of Construction: Carbon Steel (Sa 285, Grade C)
Cost2002: $ 71325
2015
(2015 = 2002 ( 2002 )

555.85
2015 = $71325(
)
395.6
= $, .

302

13. Indirect Plate Cooler

Using the McGraw Hill Online Cost Estimator, cost of the plate cooler is calculated.
Heat transfer area: 14.87 m 2
Cost2002:$ 2341
Solving for Cost2015
2015
2015 = 2002 (
)
2002
555.85
2015 = $2341(
)
395.6
= $.
14. Ball Mill 2
Capacity: 0.16 kg/s
Cost2002:$ 8375
2015
2015 = 2002 (
)
2002
555.85
2015 = $8375(
)
395.6
= $, .
15. Vibrating Screen 2
Screen area: 1.11 m2
Cost2002:$ 17945
2015
2015 = 2002 (
)
2002
555.85
2015 = $17945(
)
395.6

303

= $, .
It is assumed that delivery charges are 5% of the purchased price.
Total Purchased Cost = $1767232.06
Total Purchased Cost with delivery Cost = $1767232.06+ (0.05 x $1767232.06)
Total Purchased Cost with Delivery Cost (PROCESSING EQUIPMENT) = $1,855,593.66
Php. 86899306.69
PUMPS AND CONVEYORS

Equipment
Pump 1
Pump 2
Screw Conveyor
Belt Conveyor
Pneumatic Conveyor
Bucket Elevator
Total Purchase Equipment Cost
Delivery Cost (25% Purchase Cost)
Total Purchase Equipment Cost with
Delivery Cost
No.of
Equipment
1
1
6
2
8
1
Total Cost
(2002)
1087
1308
31,818
18,908
90,248
11,594
154963
38740.75
Total Cost
(2015)
1527.32
1837.85
44706.86
26567.27
126805.74
16290.51
217735.55
54433.89
193,703.75
9,071,340.32
272169.44
12,745,966.93
Unit
$
$
$
$
$
$
$
$
$
Php
Pump 1
Using the McGraw Hill Online Cost Estimator, cost of the pump 1 is calculated.
Volumetric flowrate: 0.00022 m3/s
Type: Centrifugal single-stage pump
Cost2002:$ 1087
2015
2015 = 2002 (
)
2002
555.85
2015 = $1087(
)
395.6
= $.

304

Pump 2
Using the McGraw Hill Online Cost Estimator, cost of the pump 2 is calculated.
Volumetric flowrate: 0.00094 m 3/s
Type: Centrifugal single-stage pump
Cost2002:$ 1308
2015
2015 = 2002 (
)
2002
555.85
2015 = $1308(
)
395.6
= $.
Screw Conveyor
Using the McGraw Hill Online Cost Estimator, cost of the screw conveyor is calculated.
Cost2002:$ 31,818
2015
2015 = 2002 (
)
2002
555.85
2015 = $31,818(
)
395.6
= $.
Belt Conveyor
Using the McGraw Hill Online Cost Estimator, cost of the belt conveyor is calculated.
Cost2002:$ 18,908
2015
2015 = 2002 (
)
2002
555.85
2015 = $18,908(
)
395.6
= $.

305

Pneumatic Conveyor
Using the McGraw Hill Online Cost Estimator, cost of the pneumatic conveyor is
calculated.
Cost2002:$ 90,248
2015
2015 = 2002 (
)
2002
555.85
2015 = $90,248(
)
395.6
= $.
Bucket Elevator
Using the McGraw Hill Online Cost Estimator, cost of the bucket elevator is calculated.
Cost2002:$ 11,594
2015
2015 = 2002 (
)
2002
555.85
2015 = $11,594(
)
395.6
= $.
Total Purchase Cost of Equipment Delivered = Processing Equipments + Pumps and Comp.
= 86899306.69+ 12,745,966.93= Php
99,645,273.62

306

I.DIRECT COSTS
Installation Cost
The cost of installation of process equipment includes cost of labor, cost of foundation support
platforms, constructions related expenses, and other costs related to the installation of the
purchased equipment.
Basis: Cost of installation is estimated as 39% of Purchased Equipment Delivered
Installation Cost = 0.39 (PhP 99,645,273.62)
= PhP 38861656.71
Instrumentation and Control Cost
The instrumentation and control cost includes the installation labor cost and cost of auxiliary
machines used for the control of each equipment. Auxiliary equipment involves pressure,
temperature, and flow controllers of the plant.
Basis: Instrumentation and Control Cost is estimated as 26% of Purchase Equipment Delivered
Instrumentation and Control Cost = 0.26 (PhP 99,645,273.62)
= Php 10104030.75
Piping & Conveyor Installation
The piping & conveyor cost includes the labor cost of installation, cost of pipes, valves, fitting s and
all other piping and conveyor requirements.
Basis: The piping and conveyor installation cost is estimated as 31% of the cost of Purchased
Equipment Delivered
Piping, Installed = 0.31 (PhP 99,645,273.62)
= PhP 30890034.82
Buildings
The buildings cost includes the cost of installation for the construction of administrative offices, the
cost of plumbing, heating, lighting ventilation, and other similar services, and land cost.
Basis: Buidlings Cost is estimated as 29% of the Purchase Equipment Delivered
Chemical Engineers: Solid-Fluid Processing Plant. (Table 6-9, p. 251).
Buildings and Services = 0.29 (PhP 99,645,273.62)
= PhP 28897129.35
Land Cost = (50,000 sqm) (PHP 3700 /sqm)
= PhP 185,000,000

307

Electrical Systems
The cost of electrical system consists of four major components namely, power wiring, lighting,
transformation, service and instrument & control wiring.
Basis: Electrical Systems Cost is estimated as 10% of Purchase Equipment Delivered
Electrical Systems (Installed) = 0.10 (PhP 99,645,273.62)
= PhP 9964527.36
Yard Improvement
The yard improvement includes the costs for fencing, grading, roads, sidewalks, railro ad sid ing s,
landscaping and any other similar items related to yard improvements.
Basis: Cost of yard improvement is estimated as 12% of Purchase Equipment Delivered
Yard Improvement = 0.12 (PhP 99,645,273.62)
= PhP 11957432.83
Service Facilities
The cost of service facilities includes the utilities for supplying steam, water, power, and fuel for the
chemical processes and operations. Waste disposal, fire protection and miscellaneous service
items such as shops, clinics or first aid quarters and cafeterias require capital investment that are
included under general heading of service facilities.
Basis: Cost of service facilities is estimated as 55% of Purchase Equipment Delivered
Service Facilities = 0.55 (PhP 99,645,273.62)
= PhP 54804900.49
Total Direct Capital Cost = Php 335,504,212.3

308

II.INDIRECT COSTS
Engineering and Supervision
The cost for construction design and engineering including internal or licensed software, computeraided drafts, purchasing, accounting, travel, and the plant supervisory services must be considered
as part of the capital investment.
Basis: Engineering and supervision cost is estimated as 32% (Purchase Equipment Delivered)
Engineering and Supervision = 0.32 (PhP 99,645,273.62)
= PhP 31886487.56
Construction Expenses
Construction expenses include construction labor and other construction related expenses,
construction tools and rentals, construction payroll, construction tariffs, insurance and permits,
miscellaneous equipment installation and other fees related to the construction process.
Basis: Construction expenses are estimated as 34% of the Purchase Equipment Delivered
Construction Expenses = 0.34 (PhP 99,645,273.62)
= PhP 33879393.03
Legal Expenses
Legal costs cover the processing of land purchase, equipment purchase and construction
contracts. Understanding and proving compliance with the government, environmental and safety
requirements constitute major sources of legal cost.
Basis: Legal Expenses are estimated as 4 % (Purchase Equipment Delivered)
Legal Expenses = 0.04 (PhP 99,645,273.62)
= PhP 3985810.95
Contractors Fee
The contractors fee is the payment involved in the construction contract and other related charges.
Basis: Contractors Fee is estimated as 19% (Purchase Equipment Delivered)
Contractors Fee = 0.19 (PhP 99,645,273.62)
= PhP 18932601.99
Contingency
A contingency amount is incorporated in the estimation of the project cost which takes account the
occurrences in the unexpected events and charges which inevitably increase the cos t of the
project. Inevitable events such as storms, flood, transportation accidents, strikes, price changes,
errors of the estimation and unforeseen expenses may occur; hence each should have its own
appropriation.
Basis: Contingency is estimated as 37% (Purchase Equipment Delivered)
Contingency = 0.37 (PhP 99,645,273.62)
= PhP 36868751.24
Total Indirect Cost = Php 125,553,044

309

Raw Materials
The raw materials used in the process is one of the major costs in a production operation. Raw
materials, in general, refer to the materials that are consumed in making the final product.
A. Phosphate Rock
= (21772.59
kg
hr
4448 .95 PhP
) (8322 )(
)(1000 )
Cost of Phosphate Rock = 806,111,897.1
PhP
year
B. HCl (37% Purity)

= (2208.73
liters
hr
) (8322 )(
2926.94 PhP
3.8
Cost of HCl = 14,157,956,210
PhP
year
Total Raw Material Cost: PhP 14,964,068,110/year

Working Capital Costs = Php 14,964,068,110
Fixed Capital Costs = Direct Cost + Indirect Cost
= 335,504,212.3 + 125,553,044.8 = Php 461,057,257.1
Total Capital Cost = Fixed Capital + Working Capital

= 461,057,257.1+ 14,964,068,110 = Php 15,425,125,370.00

310

DEPRECIATION
Depreciation is the decrease in value of most property with use and time. Law permits a deductio n
of a reasonable allowance for the exhaustion and wear and tear of property used in trade or
business or of property held for the production of income. This amount depends on several factors,
such as: cost basis or investment in the property, property class or estimated useful life, method o f
depreciation used. Depreciable property meets the following requirements: It must be used in
business or held for production of income, it must have a useful life that can be determined and its
useful life must be longer than 1 year, And It must be something that wears out, decays, gets use d
up, becomes obsolete, or loses value from natural causes.
Using Straight Line method:
=

()
For all Equipments that used:

= 11
= 10%
(Source: Plant Design and Economics for ChE By: Peters and Timmerhaus)
Equipment:
Jaw Crusher
=
Ball Mill 1
=
$16655.83 $1665.58
= $1362.75/
11
Vibrating Screen 1
=
$98,833.39 $9883.34
= $8086.37/
11
$91,245.95 $9124.59
= $7465.58/
11
Denver 24 Froth Flotation System

$158,809.27 $15880.93
=
= $12993.49/
11

311

Mixing Tank
=
Digester
=
$59,565.59 $5956.56
= $458,505.90/
11
Cooler (Shell and Tube)

=
$195,778.35 $19577.84
= $16018.23/
11
Decanter Centrifuge
=
$655304.44 $65530.44
= $53615.82/
11
Precipitator
=
$ 62531.72 $ 6253.17
= $5116.23/
11
Clarifier
=
$261,815.75 $26181.58
= $21421.29/
11
Vacuum Filter
=
$18,084.80 $1808.48
= $1479.67/
11
Rotary Dryer
=
$100,217.39 $10021.74
= $8199.60/
11
Plate Cooler
=
$8,118.56 $811.86
= $664.25/
11
$3289.29 $328.93
= $269.12/
11
Ball Mill 2
=
$11,767.55 $1176.76
= $962.80/
11

312

Vibrating screen 2
=
$25,214.18 $2521.42
= $2062.98/
11
$598224.08
= 28015431.89/
WORLD MARKET PRICE

(http://www.researchandmarkets.com/)
1. Dicalcium Phosphate = $1000/Ton
= 3467.5 (
$1000
)(
46.831
$1
) = , , .
Total sales = , , .

313

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Production of Dicalcium Phosphate by Digestion

of Phosphate Rock with HCl

DCP Manufacturing Co., Inc.

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

COST INDEX 2015

No. of Years since 2005

For the cost index of 2015 let x = 3;

Exchange Rate (Source: www.bsp.gov.ph)

Philippine Peso (Php)

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

(2015 = 2002 ( 2002 )

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

4. Denver 24 Froth Flotation Cell

(2015 = 2002 ( 2002 )

(2015 = 2002 ( 2002 )

(2015 = 2002 ( 2002 )

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

7. Cooler (Shell and Tube)

(2015 = 2002 ( 2002 )

(2015 = 2002 ( 2002 )

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

10. Decanter Centrifuge

(2015 = 2002 ( 2002 )

(2015 = 2002 ( 2002 )

(2015 = 2002 ( 2002 )

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

13. Indirect Plate Cooler

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

PUMPS AND CONVEYORS

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

4448 .95 PhP

Cost of Phosphate Rock = 806,111,897.1

B. HCl (37% Purity)

Cost of HCl = 14,157,956,210

Total Raw Material Cost: PhP 14,964,068,110/year

Total Capital Cost = Fixed Capital + Working Capital

DCP Manufacturing Co., Inc.

Production of Dicalcium Phosphate by Digestion

For all Equipments that used:

Denver 24 Froth Flotation System

DCP Manufacturing Co., Inc.