FEASIBLTY STUDY

ON

Erection of A Plant
For
The Production Of Lime

PREPARED BY:
ENG. BABIKER MUSTAFA
ENG. KHIDIR OSMAN BESHIR

September 2010
 LIST OF CONTENTS
 

Introduction  2

Executive Summary  3

Marketing  4

Location & Site  6

Technical Review  7

Financial analysis  9

Appendix I  Land and buildings  19

Appendix II  Machinery and equipment  20

Appendix III  Transport Facilities  20

Appendix IV  Furniture  21

Appendix V  Spare parts and consumables  21

Appendix VI  Administrative expenses  21

Appendix VII  Fuel and lubricants  22

Appendix VIII  Electricity and water  23

Appendix IX  Manpower  24

Appendix X  Raw and packaging materials  25
 

  1
 Chapter I

Introduction
A number of industries in the Sudan such as the sugar, textile, leather
and other industries use quick lime or slacked lime as an auxiliary material
in their processes. The majority of these industries secure their needs of
these materials by importation. The local production is very small and of
such quality that it can only be used as a building material. The quality of
lime required by the sugar can only be met by using almost pure calcium
carbonate and properly designed and operated plants based on sound
scientific knowledge of the process.
The proposed project is intended to supply partially the existing
industries with lime (quick or slacked). Further plans for expansion and
diversification of calcium products are also foreseen.
The raw material is the naturally available calcium carbonate. Other
inputs needed by the project such as energy and packaging materials are
also available in the local market.
With all this in mind, the project looks very attractive and useful to the
national economy and balance of payment, since it is largely an import
substituting one.
This project is one of three projects which constitute a combine due to
certain similarities between some of their equipments that can be utilized
by ant of them in certain cases. The other two projects are:
a) The foundry with a machine shop and steel shop,
b) The secondary lead production plant, i.e. lead produced from
spent batteries.
However it can be erected independent of the other two plants at any
time, and in any suitable site.

  2
 Chapter II

Executive Summary

The main objective of this study is to determine the technical and

financial worthiness of establishing a plant to produce lime - quick or
slacked - and crushed limestone from calcium carbonate, which is
available in huge quantities all over the country. The lime is needed by the
number of industries, such as the leather, textile industries, road
construction, water treatment, buildings, agriculture and many others.
Summary:
Location ……………………… Al Gabalain.
Capacity (annual) ……………. 6,000 tons
Capital investment …………… 1,300,000 SDG.
Working days ………………... 300 days per year.
Manpower ……………………. 20 + 12 daily workers
Gross profitability (average) … 41.5%
Nett profitability …………….. 35.3 %
Pay-back period ……………… 2 years & 4 months.

  3
 Chapter III

Marketing
The proposed plant can be used to produce lime (quick or slacked) and
magnesium oxide depending on the raw material supplied. The lime is
produced to supply the leather, textile and building industries which
consume more than 3,000 tons annually. The sugar industry imports all it
needs of lime from aboard, since it is difficult to secure the quantity and
quality required. Kinana Sugar Factory alone imports more than 6,000 tons
per year. This figure is expected to be only one third of the annual quantity
needed by the sugar industry in the very near future especially after the
completion of the White Nile Sugar Factory at Al Kawa. Technically,
however, it is possible to build more kilns with suitable capacities to meet
the demand of the sugar industry, but the problem lies in meeting the
specifications required, which depend largely on the quality of raw
material.
Since sugar is a food material and lime (slacked) comes in direct
contact with it during the purification process, lime must be a food grade
and must comply with the regulations imposed on such materials. Bearing
this in mind, further efforts and investigations need to be made to locate
areas where pure calcium carbonate in big quantities is available (or at
least, the least contaminated calcium carbonate).
It is also important that the right technological conditions be
established which lead to the best product quality.
At present part of the market demand of lime is covered by the pit-
production method which gives lime of very inferior quality and can
hardly be used except for building purposes.
Recently a plant for lime production has been established by military
corporation for building materials, with the main aim to meet the needs of
the staff of the armed forces.
A few other kilns are found in Medani and elsewhere, but they are
either out of operation or working with a very low capacity.
A pit-production plant is located in Dongola, but it is a batch
operating one. However, due to the good quality of raw material there, the
product is of fairy good quality.
Recently a big demand of magnesium oxide has emerged, a product
which is used as an ingredient in manufacturing slabs of very good
characteristics needed by the building industry. A local company is now

  4
working hard in this field and has some contracts to build thousands of
Such built houses are claimed to be very cheap, quickly built, resistant
to fire and water, etc... The company gets a small portion of its needs from
Madani and form the kiln recently built at the Industrial Research and
Consultancy Center. It is planning to establish its own kilns in different
parts of the country.
The process of magnesium oxide production is typical to that of the
lime production, with only slight difference.
It is worth mentioning here that the lime constitute a basic material for
other products needed in the local market such as medicinal gypsum,
bleaching powder and others.
Some experimental work and studies have to be made to investigate
the possibility of producing such products and thus improve the financial
performance of the project. In addition it is also relevant to mention that
the plant is in a position to produce crushed lime stone (calcium carbonate)
for animal feed making use of the already available jaw crusher and
hammar mill, in addition to the small size particles which cannot be fed to
the kiln, that are produced by the jaw crusher and hammar mill.

  5
 Chapter IV

Location & Site

The choice of the factory location play an important role in its
economics, and determines to a great degree its success or failure. It is
usually chosen either on the basis of raw materials availability around the
site, or on the basis of consumer concentration. A number of other factors
are also given due consideration in determining the factory location, e.g.
transportation, availability of trained manpower, electricity, housing
facilities, public policies, etc.
In the case of the project under consideration, it may be stated that
the raw material is available in different regions of the Sudan with
varying quantities and qualities. Some of those regions, if not all, suffer a
great deal from the lack of important factors needed for continuous work
of the factory , such as electricity, paved roads, trained manpower,
housing facilities, etc. However, this matter needs to be investigated and
subjected to detailed study for each region individually, to determine its
suitability as a factory location.
Bearing this in mind, it is reasonable to state that the project is
market-oriented. The consumers are concentrated in and around big town
and cities of the Khartoum and the Gezira. Khartoum is chosen for the
project location, since it enjoys easy access to different parts of the
country and potential clients.
For the road construction which consumes huge quantities of lime,
the plant site should be as close as possible to location of the road and the
volume of the work need to construct those roads. Current and future
plans to construct roads in the southern states and between the north and
south will make it imperative to consider such sites as Rabak and Al
Gabalain, provided good qualities of raw material are available there .

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 Chapter V

Technical Review
The project under consideration is well suited to produce lime which
may be used for different purposes, e.g. building, leather, textile and
sugar industries, provided the suitable type of raw material is obtained.
Building lime is produced by burning calcium rocks, such a chalk,
limestone, etc. to eliminate carbon dioxide. It is used for preparing
building materials, concretes and binders, and also for manufacturing
artificial stones, slabs and various other building parts.
The lime needed for the sugar industry should meet some strict
requirements and should be a food grade. Its production depends greatly
on the purity of the raw material, and on the maximum allowed levels of
the contamination with harmful elements.
The main stage in lime manufacturing is burning in which limestone
decarbonizes and turns into lime according to the reaction:
  CaCO3  CaO+CO2
This dissociation of carbonate rock is accompanied by absorption of
heat, and it is a reversible reaction, which is governed by temperature and
partial pressure of carbon dioxide. It is appreciable at temperatures above
600o C. Theoretically the normal dissociation temperatures is 900o C, in
practice the temperature is set generally between 1000o C and 1200oc
with due regard for limestone density, content of impurities, type of
burning kiln and several other factors.
Carbon dioxide which is removed during the burning process,
account of up to 44% of the lime stone mass, and the volume of the
product is diminished by approximately 10% and consequently the lumps
acquired a porous structure.
Limestone is burned in various types of kilns, such as shaft, rotary
kilns fluidized bed reactors, flash burning furnaces and others. Most
widely used is the shaft kiln, which is economical in fuel consumption,
but yields lime contaminated with fuel ash.
The shaft furnace consists of a shaft lined with fire bricks from the
inside, charging and discharging arrangements; air blast supply and gas
exhaust system. Limestone is charged in the shaft in batches or
continuously from the top. As lime is discharged, the column of material
descends, while the exhaust gases move in opposite direction.
  7
 By the character of processing occurring in the shaft furnace, three
zones are distinguished, the heating, burning and cooling zones. In the
heating zone at the upper part of the shaft, where the temperature is less
than 900oC, the limestone is dried; preheated and organic impurities are
burned out. In the burning zone, where the temperature lies between
900oC and 1200oC, calcium carbonate dissociates with the evolution of
the carbon dioxide. In the bottom part of the furnace, lime is cooled down
by the air coming from below to 50oC - 100oC.
Gas fired furnaces yield good quality lime. They are simple to
operate and are amenable to mechanization and automation.
Highly efficient fluidized bed reactors have been lately gaining
ground in limestone burning. This is essentially a multi-zone shaft lined
internally with fire bricks, and divided along its height by grate-type roofs
into 3 to 5 horizontal zones. The material is kept suspended in air coming
from below, and heated by means of gas or fuel oil burners.
The material is transferred from zone to zone through pipes fitted
with a limiter. The multi-zone design of the reactor enables the
production of high quality lime against a reasonable consumption of fuel.
For the project under consideration, the shaft furnace is
recommended, because it is simple, economical and amenable to
mechanization, and at the same time it yields good quality lime,
especially when using gas fuel.

  8
 Chapter VI

Financial analysis
The financing of the project will be secured by a bank loan and
equity capital, the loan being 75% of the capital investment, i.e. 660,000
SDG, and equity 220,000 SDG. The loan will be paid in 5 semiannual
installments with 6 months as a grace period, which is estimated to be the
period needed for erection. The rate of interest is taken @ 15% per
annual.
6.1 Capital investment:
SDG
Land………………………….............................. 120,000
Buildings ……………………………………...… 120,000
Machinery and equipment……………………….. 500,000
Transport facilities……………………………..... 160,000
Furniture ……………………………………..…. 10,000
Pre-investment cost ………………………..….... 15,000
Working capital …………………………………. 345,000
Contingencies ………………………………..…. 30,000
Total capital investment ………………. 1,300,000
Capitalized interest ……………...………………. 73,125
Total capital…………………………..…… 1,373,125

Table 6.1: Interest during repayment period

Year Loan Installm Interest Note

(SDG) ent (SDG)
(SDG)
0-½ 975,000 - 73,125 To be capitalized
½ -1 1,048,125 209,625 78,609.4
1-1½ 838,500 209,625 62,887.5
1½ -2 628,875 209,625 47,165.6
2-2½ 419,250 209,625 31,443.8
2½ -3 209,625 209,625 15,721.9

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Table 6.2: Salvage Value (SDG)
Item 6th year
Transport facilities 40,000
Furniture 2,000
Machinery & equipment -
Total 42,000
 

Assumptions
1. The salvage value of transport facilities is 25% of the original value
after 5 years.
2. The salvage value of furniture is 20% of the original value after 5
years.
3. The salvage value of machinery and equipment is 20% of the original
value after 10 years.

Table 6.2: Replacement cost (SDG)

Item 6 th year (SDG)
Transport facilities 240,000
Furniture 15,000
Total 255,000

It is assumed that the replacement cost will increase by 50% of the

original value after 5 years, for both transport facilities and furniture.

  10
 6.2 Production cost
6.2.1: Variable cost
SDG
Raw and packing materials ………..…... 1,424,700

Direct labour …………………………… 242,190

Fuel and lubricants ……………………... 95,000

Electricity and water ………………........ 124,800

Spare parts and consumable ……………. 25,000

Total variable cost …………………....... 1,911,690

6.2.2: Fixed cost

Indirect labour ………………………… 60,372

Fuel and lubricants ……………………. 11,000

Electricity and water ……………..…… 2,500

Spare parts and consumables ………..... 8,000

Administrative expenditure …………… 40,000

Total fixed cost ………………………... 121,872

  11
 Table No 6.4: Depreciation and amortization

Depreciation
Capital and
Item No. of years
invested (SDG) amortization
(SDG)
Buildings 120,000 D10 12,000
Machinery & equipment 500,000 D10 50,000
Transport facilities 160,000 D5 8,000
Furniture 10,000 D5 500
Pre-investment cost 15,000 A5 750
Contingencies 30,000 A5 1,500
Capitalization interest 73,125 A5 3,650
Total 76,400
From year 6 depreciation will be...……………………...… 74,750 SDG

  12
Table No 6.5: Production cost per year (Thousand SDG)

Year 1 2 3 4 5 6 -10
Production program 65% 80% 100% 100% 100% 100%
1) variable cost
Raw & pack material 926.1 1,139.8 1,424.7 1,424.7 1,424.7 1,424.7
Labour 157.4 193.8 242.2 242.2 242.2 242.2
Electricity & water 81.1 99.8 124.8 124.8 124.8 124.8
Fuel & lubricants 61.8 76.0 95.0 95.0 95.0 95.0
Spare parts 16.3 20.0 25.0 25.0 25.0 25.0
Factory cost 1,242.7 1,529.4 1,911.7 1,911.7 1,911.7 1,911.7
Fixed cost 121.9 121.9 121.9 121.9 121.9 121.9
Total operating cost. 1,364.6 1,651.3 2,033.6 2,033.6 2,033.6 2,033.6
Depreciation 76.4 76.4 76.4 76.4 76.4 74.8
Interest 78.6 110.5 47.2 - - -
Total production cost 1,519.6 1,838.2 2,157.2 2,110.0 2,110.0 2,108.4

  13
Table No 6.6 : Sales per year (thousand SDG)
Year 1 2 3-10
Production program 65% 80% 100%
Product
a) Lime (t) 3,900 4,800 6,000
b) Limestone (powder) 418 515 644
Sales
a) Lime 1,755.0 2,160.0 2,700.0
b) Limestone (powder) 62.7 77.2 96.6
Total annual sales 1,817.7 2,237.2 2,796.6

Note:
Lime is sold @ 450 SDG ex-factory.
Limestone powder is sold @150 SDG ex-factory.

  14
Table No 6.7: Cash flow (thousand SDG)
year 1 2 3 4 5
Production program 65% 80% 100% 100% 100%
A) cash inflow
Sales 1,817.7 2,237.2 2,796.6 2,796.6 2,796.6
Salvage value _____ _____ _____ _____ _____

Total 1,817.7 2,237.2 2,796.6 2,796.6 2,796.6

B) cash outflow
Investment cost 1,300.0 _____ _____ _____ _____

Production cost 1,519.6 1,838.2 2,157.2 2,110.0 2,110.0

Replacement cost _____ _____ _____ _____ _____

Total 2,819.6 1,838.2 2,157.2 2,110.0 2,110.0

Taxable profit(A-B) (1,001.9) 399.0 639.4 686.6 686.6
Tax (25%) _____ _____ _____ _____ _____

Nett profit (1,001.9) 399.0 639.4 686.6 686.6

Depreciation 76.4 76.4 76.4 76.4 76.4
Interest 78.6 110.5 47.2 _____ _____

(846.9) 585.9 763.0 763.0 763.0

  15
Table No 6.7 (cont.): Cash flow (thousand SDG)
year 6 7 8 9 10
Production program 100% 100% 100% 100% 100%
A) cash inflow
Sales 2,796.6 2,796.6 2,796.6 2,796.6 2,796.6
Salvage value 42.0 _____ _____ _____ _____

Total 2,838.6 2,796.6 2,796.6 2,796.6 2,796.6

B) cash outflow
Investment cost _____ _____ _____ _____ _____

Production cost 2,108.4 2,108.4 2,108.4 2,108.4 2,108.4

Replacement cost 255.0 _____ _____ _____ _____

Total 2,363.4 2,108.4 2,108.4 2,108.4 2,108.4

Taxable profit(A-B) 475.2 688.2 688.2 688.2 688.2
Tax (25%) 118.8 172.0 172.0 172.0 172.0
Nett profit 356.4 516.2 516.2 516.2 516.2
Depreciation 74.8 74.8 74.8 74.8 74.8
Interest _____ _____ _____ _____ _____

431.2 591.0 591.0 591.0 591.0

  16
Table No. 6.8 Pay-back period

year Amount paid back (SDG) Balance (SDG)

1 _____ (846.9)
2 585.9 261.0
3 763.0 _____

The pay-back period is less than 2½ years.

  17
Table no 6.9: Profitability

year Gross profit Nett profit Depreciation

1 (1,001.9) (1,001.9) 76.4
2 399.0 399.0 76.4
3 639.4 639.4 76.4
4 686.6 686.6 76.4
5 686.6 686.6 76.4
6 475.2 356.4 74.8
7 688.2 516.2 74.8
8 688.2 516.2 74.8
9 688.2 516.2 74.8
10 688.2 516.2 74.8
Total 4,637.7 3,830.9 7,560.0
Average annual 463.8 383.1 75.6

%average gross profit = (463.8+75.6)×100 = 41.5%

1300

%average nett profit = = 35.3%

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 Appendix I

Land and buildings

1. Land
This project is one of three plants which constitute a combine, i.e.

a) A foundry with a machine shop and a steel shop,

b) A lime production plant,
c) A lead production plant from scrap batteries.
The area needed for this project is estimated at 4000 m², due to the
fact that big open area is required for the storage of raw material, erection
of the kiln and crushers. At the current price of 30 SDG per m²,
Land cost will be ……………………………………. 120,000 SDG
2. Buildings
Slaking halls 8×4×250 8,000
Office (1) 4×4×500 8,000
Store 18×6×500 54,000
Others (latrines) 5,000
Fencing 45,000
Total cost of buildings 120,000
Note:
a) At this stage one office is built for the supervisor and the accountant;
it is built of brick and cement mortar + Zink roofing.
b) The store is built of bricks and cement, mortar with Zink roofing.
c) The slaking hall is a combination of bricks with mud mortar to about
half height, then Zink, and Zink roofing.
d) Fencing is bricks + cement mortar.
e) Latrines are of bricks with mud mortar.

  19
 Appendix II

Machinery and equipment

1) A vertical shaft, outer diameter 2m, lined from the inside with fire
prick layer 225 cm thick, height 16 m. daily capacity is 20 tons. The
kiln is equipped with 6 burning nozzles, fan with 30 hp motor, skip
hoist charging, and discharging doors, ladder, control panel, piping
and wiring. It is mounted on concrete foundation with metallic stand,
fuel tank 10 m3.
Total price…………………………………… 280,000 SDG
2) Jaw crusher, 10 t/h, 60 hp motor…………... 75,000
3) Hammar mill, 3 t/h, 12 hp motor ………….. 25,000
4) Material handling facilities (conveyors)…... 15,000
5) 2 fork- lifts (2t)…………………………….. 40,000
6) Stand-by generator, 100 KVA, with fuel tank 65,000
Total cost of machinery and equipment 500,000
 

Appendix III

Transport Facilities

SDG

Saloon car ………………………………….… 80,000

Minibus (Dafar) …………..…………………. 75,000

Tau cars (5) ………………………………….. 5,000

Total ………………………..………………... 160,000

  20
 Appendix IV

Furniture

SDG
Office furniture 6,000
Frig 1,400
Safe 300
2 Air coolers 2,000
Others 300
Total 10,000

Appendix V

Spare parts and consumables

It is estimated that cost of spare parts is 5% of the total cost of

machinery and equipment, and 5% of the cost of transport facilities, i.e.
a) Spare parts for machinery and equipment…… 25,000 SDG
b) Spare parts for Transports facilities ………….. 8,000 SDG
Total …………………....………… 33,000 SDG

Appendix VI

Administrative expenses

SDG
Stationary ………………………………………….. 4,500
Fax, telephones, postage …………………………... 5,000
Audit fees ………………………………………….. 8,000
Legal advisor ………………………………………. 8,000
Insurance …………………………………………... 6,500
Local tax …………………………………………… 5,000
Others………………………………………………. 3,000
Total............................... 40,000

  21
 Appendix VII

Fuel and lubricants

It is assumed that the project will use petroleum coke as fuel
because it is cheaper than liquid fuels and available in the Sudan.
However it is expected to cause some contamination of the product with
ashes, but never the less, the product could be used in road construction
and tanneries. For other purposes, liquid fuel is recommended.
A ratio of 1:8 i.e. ratio of fuel to product, is adopted here. The cost
of coke is 140 SDG per ton.
5,000 ×140 
Coke of fuel. …………….. 87,500 SDG
8
Estimated cost of lubricants (direct cost) ……. 7, 500

Total direct cost of fuel and lubricants ………. 95,000

For transport facilities (indirect):

Benzene (700 × 5) ………………………………. 3,500
Gas oil (1200×5)……………………………… 6,000
Lub oil …………………………………………… 1,500
Total indirect cost………………………………... 11,000 SDG

  22
 Appendix VIII

Electricity and water

1) Electricity:
Direct 1100 kw × 300× 0.36 ___________ 118,800
Indirect 360×15×0.36 ________________ 2,500 SDG
2) Water
The cost of water is estimated at 500 SDG per month, and is
considered as direct cost.
Annual cost of water___________________ 6,000 SDG
Total direct cost of electricity and water ___ 124,800 SDG
And indirect _________________________ 2,500 SDG

  23
 Appendix IX

Manpower
The operation of the plant does not required highly qualified
personal. A supervisor technically oriented and having reasonable
managerial experience is suggested to manage the overall activities. An
accountant with good experiences in financial matters and marketing is
recommended. Three well- trained kiln attendants are needed for the kiln
on shift basis. The daily workers duty is mainly to feed the kiln with the
materials and remove the product to the slaking shed or store. They
should be trained to operate the crusher and hammar mill. Some of them
are also trained to operate the lime slaking.

Post Number Salary (SDG)

thereof
Monthly Annually
Supervisor 2 2 × 1000 24,000

Kiln attendant 5 5×30 per day 45,000

Daily worker 12 12×25 per day 90,000

Slaking labourers 8 8×30 per day 72,000

Accountant 1 700 8,400

Drivers 2 2×500 12,000

Guard 2 2×300 7,200

Total 20 +12 daily 258,600

 

To the above add 17% being the contribution of the employer to the
pension and social security funds. The
Total direct labour cost __________ 242,190 SDG  
Total indirect labour cost _________ 60,372 SDG
 

  24
 Appendix X

Raw and packaging materials

Raw material
The kiln has a daily capacity of 20t, and in 300 working days it will
produce 5000t considering the purity of limestone as 95% and the
burning efficiency is 93%, and taking an overall loss of 1% and
undersize, which cannot be fed to the kiln @ as 5%, the total raw material
required will be 10760 t. the under size can be ground further and sold as
animal feed, i.e. 537 t/ year.
The cost raw material at site is about 100 SDG per ton, then
Cost of raw material is 10,760¯100………………..1,076,000 SDG
Packaging material:
The product will be packed in 50 kg plastic bags with polyethylene
liner from the inside, and considering a total loss of 2% the
Total number of bags will be:

For lime ………………………………………………  102,000 Bags

For animals feed ……………………………………... 8,800
Total………………………………………………….. 110,800
Cost @ 1SDG/bag …...………………………………. 110,800 SDG
Total cost of raw and packaging materials ………….. 1,186,800 SDG

  25