Financial Analysis of Dicalcium Phosphate Production

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Production of Dicalcium Phosphate by Digestionof Phosphate Rock with HCl

DCP Manufacturing Co., Inc.

2

DCP Manufacturing Co., Inc.

Financial Analysis

A Detailed Calculation of the Cost Estimation



Production of Dicalcium Phosphate by Digestion

of Phosphate rock with HCl

DCP Manufacturing Co. Inc.

2

FINANCIAL ANALYSIS

This is an outline of the economic considerations, which are necessary when preparing an estimateof 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 equivalen t c ost atthe 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 theMarshall and Swift Equipment Cost Indexes projected to 2013. We used the projections cost index

ℎ ,

= ( )( ) [( )

( ) ]

Marshall and Swift Installed Equipment Indexes (Reference: Chemical Engineering Plant CostIndex )

YEAR ALL INDUSTRY

2005 468.2

2006 499.6

2007 525.4

2008 575.4

2009 521.92010 550.8

2011 585.7

2012 584.6






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

For the cost index of 2015 let x = 3;

y = -0.1211x6

+ 2.051x5

- 11.509x4

+ 22.461x3

- 6.5617x2

+ 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)

y = -0.1211x6

+ 2.051x5

- 11.509x4

+ 22.461x3

- 6.5617x2

+ 20.605x + 468.76R² = 0.9159

0

100

200

300

400

500

600

700

0 1 2 3 4 5 6 7 8

C

E P C I

No. of Years since 2005

COST INDEX 2015

Unite States Dollar (USD) Philippine Peso (Php)

$1 Php 46.831

As of October 1, 2015






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Cost Estimation

Estimation of Capital InvestmentPlant Capacity: 3467.5 MT/yearPlant Operation: 8322 hours/year

Table 1 Total Purchased Equipment Cost

Equipment No.of Equipment Total Cost Unit

Jaw Crusher 1 70340 $

Ball Mill1 1 11854 $

Denver 24 Flotation Cell 3 113025 $

Vibrating screen 1 64940 $

Mixing tank 1 5778 $

Digester 1 42393 $

Cooler (S&T) 1 44504 $

Clarifier 1 466382 $

Precipitator 1 139336 $

Decanter Centrifuge 1 186335 $

Vacuum Filter 1 12871 $Rotary Dryer 1 71325 $

Plate Cooler 1 2341 $

Ball Mill 2 1 8375 $

Vibrating Screen 2 1 17945 $

Total Purchase Equipment Cost w/Delivery Cost

1,257,744$

58,901,409.26 Php






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Cost of Equipment:

1. Jaw Crusher

Using the McGraw Hill Online Cost Estimator, cost of crushers (jaw crusher) is calculated.

Capacity: 10 kg/s

Materials of Construction:PE-250x400 Blake Type Jaw CrusherCost2002: $70340

Solving for Cost2015 ,

( = ( )

= $70340(555.85395.6 )

= $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


( = (

)

= $11854(555.85395.6 )

= $16655.83

3. Vibrating Screen 1

Using the McGraw Hill Online Cost Estimator, cost of v ibrating screen is calculated.

Screen area: 4.85 m2

Materials of Construction: Stainless Steel

Cost2002: $64940

Solving for Cost2015 ,( = (

)

= $64940(555.85395.6 )

= $91,245.95






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4. Denver 24 Froth Flotation CellUsing 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


( = ( )

= $113025(555.85395.6 ) = $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: $5778Solving for Cost2015 ,

( = ( )

= $5778(555.85395.6 )

= $8,118.56

6. Digester

Using the McGraw Hill Online Cost Estimator, cost of the digester is calculated.

Capacity: 3. 70 m3

Materials o f Construction: Molybdenum Stainless steel

Cost2002:$ 42393Solving for Cost2015 ,

( = ( )

= $42393(555.85395.6 )

= $,.






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7.

Cooler (Shell and Tube)Using the McGraw Hill Online Cost Estimator, cost of the coo ler is calculated.Heat Transfer area: 268.27 m2

Materials o f Construction: Molybdenum Stainless steel 18/8

Cost2002: $44504


( = ( )

= $44504(555.85395.6 )

= $62531.72

8. Clarifier

Using the McGraw Hill Online Cost Estimator, cost of the clarifier is calculated.

Total solids capacity:10 kg/sMaterials of Construction: Carbon Steel (SA 516, Grade 60)

Cost2002: $ 466382


( = ( )

= $466382(555.85395.6 )

= $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


( = ( )

= $139336(555.85395.6 )

= $,.






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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


( = ( )

= $186335(555.85395.6 ) = $,.

11. Vacuum Filter

Using the McGraw Hill Online Cost Estimator, cost of the vacuum filter is calculated.

Filter area: 9.3 m2


Cost2002: $12871Solving for Cost2015 ,

( = ( )

= $12871(555.85395.6 )

= $..

12. Rotary Dryer

Using the McGraw Hill Online Cost Estimator, cost of the rotary dryer is calculated.

Peripheral surface area:33.42 m2

Materials of Construction: Carbon Steel (Sa 285, Grade C)

Cost2002: $ 71325Solving for Cost2015 ,

( = ( )

= $71325(555.85395.6 )

= $,.






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13. Indirect Plate Cooler

Using the McGraw Hill Online Cost Estimator, cost of the plate cooler is calculated.Heat transfer area: 14.87 m2


Cost2002:$ 2341

Solving for Cost2015

= ( 2015 2002)

= $2341(555.85395.6 )

= $.

14. Ball Mill 2

Using the McGraw Hill Online Cost Estimator, cost of the plate cooler is calculated.

Capacity: 0.16 kg/s

Materials of Construction: Carbon SteelCost2002:$ 8375


= ( 2015 2002)

= $8375(555.85395.6 )

= $,.

15. Vibrating Screen 2

Using the McGraw Hill Online Cost Estimator, cost of the plate cooler is calculated.

Screen area: 1.11 m2



= ( 2015 2002)

= $17945(555.85395.6 )






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= $,. It is assumed that delivery charges are 5% of the purchased price.

Total Purchased Cost = $1767232.06

Total Purchased Cost with de livery 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 No.ofEquipment

Total Cost(2002)

Total Cost(2015)

Unit

Pump 1 1 1087 1527.32 $

Pump 2 1 1308 1837.85 $

Screw Conveyor 6 31,818 44706.86 $

Belt Conveyor 2 18,908 26567.27 $

Pneumatic Conveyor 8 90,248 126805.74 $

Bucket Elevator 1 11,594 16290.51 $

Total Purchase Equipment Cost 154963 217735.55 $

Delivery Cost (25% Purchase Cost) 38740.75 54433.89 $

Total Purchase Equipment Cost withDelivery Cost 193,703.75 272169.44

$

9,071,340.32 12,745,966.93 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



= ( 2015 2002)

= $1087(555.85395.6 )

= $.






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Pump 2

Using the McGraw Hill Online Cost Estimator, cost of the pump 2 is calculated.Volumetric flowrate: 0.00094 m3/s

Type: Centrifugal single-stage pump


Cost2002:$ 1308


= ( 2015 2002)

= $1308(555.85395.6 )

= $.

Screw Conveyor

Using the McGraw Hill Online Cost Estimator, cost of the screw conveyor is calculated.

Cost2002:$ 31,818


= ( 2015 2002)

= $31,818(555.85395.6 )

= $.

Belt Conveyor

Using the McGraw Hill Online Cost Estimator, cost of the belt conveyor is calculated.

Cost2002:$ 18,908


= ( 2015 2002)

= $18,908(555.85

395.6)

= $.






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Pneumatic ConveyorUsing the McGraw Hill Online Cost Estimator, cost of the pneumatic conveyor is

calculated.

Cost2002:$ 90,248


= ( 2015 2002)

= $90,248(555.85395.6 )

= $.

Bucket Elevator

Using the McGraw Hill Online Cost Estimator, cost of the bucket elevator is calculated.

Cost2002:$ 11,594Solving for Cost2015 ,

= ( 2015 2002)

= $11,594(555.85395.6 )

= $.

Total Purchase Cost of Equipment Delivered = Processing Equipments + Pumps and Comp.

= 86899306.69+ 12,745,966.93= Php

99,645,273.62






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I.DIRECT COSTS Installation Cost

The cost of installation of process equipment includes cost of labor, cost of foundation supportplatforms, constructions related expenses, and other costs related to the installation of thepurchased 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 CostThe instrumentation and control cost includes the installation labor cost and cost of auxiliarymachines 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 DeliveredInstrumentation and Control Cost = 0.26 (PhP 99,645,273.62)

= Php 10104030.75

Piping & Conveyor InstallationThe p iping & conveyor cost includes the labor cost of installation, cost of pipes, valves, fittings andall other piping and conveyor requirements.Basis: The piping and conveyor installation cost is estimated as 31% of the cost of PurchasedEquipment 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 , thecost of plumbing, heating, lighting ventilation, and o ther similar services, and land cost.Basis: Buidlings Cost is estimated as 29% of the Purchase Equipment DeliveredChemical 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






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Electrical SystemsThe 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 DeliveredElectrical Systems (Installed) = 0.10 (PhP 99,645,273.62)

= PhP 9964527.36 Yard ImprovementThe yard improvement includes the costs for fencing, grading, roads, sidewalks, railro ad s id ings,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 supply ing steam, water, power, and fuel for thechemical processes and operations. Waste disposal, fire protection and miscellaneous serviceitems such as shops, clinics or first aid quarters and cafeterias require capital investment that areincluded 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






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II. INDIRECT COSTS

Engineering and SupervisionThe cost for construction design and engineering including internal or licensed software, computer -aided drafts, purchasing, accounting, travel, and the plant supervisory services must be consideredas 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 ExpensesConstruction expenses include construction labor and other construction related expenses,construction tools and rentals, construction payroll, construction tariffs, insurance and permits,

miscellaneous equipment installation and o ther 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 ExpensesLegal costs cover the processing of land purchase, equipment purchase and constructioncontracts. Understanding and proving compliance with the government, environmental and safetyrequirements 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

Contractor’s Fee

The contractor’s fee is the payment involved in the construction contract and other related charges.

Basis: Contractor’s Fee is estimated as 19% (Purchase Equipment Delivered)Contractor’s Fee = 0.19 (PhP 99,645,273.62)

= PhP 18932601.99 Contingency A contingency amount is incorporated in the estimation o f the project cost which takes account theoccurrences in the unexpected events and charges which inevitably increase the cost of theproject. 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






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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

= (21772.59k ) (8322 ℎ)(.

)( )

Cost o f Phosphate Rock = 806,111,897.1

B.

HCl (37% Purity)

= (2208.73

) (8322 ℎ)(. . )

Cost of HCl = 14,157,956,210

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






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DEPRECIATION

Depreciation is the decrease in value of most property with use and time. Law permits a deducti onof a reasonable allowance for the exhaustion and wear and tear of property used in trade orbusiness 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 fdepreciation used. Depreciable property meets the following requirements: It must be used inbusiness or held for production of income, it must have a useful life that can be determined and itsuseful life must be longer than 1 year, And It must be something that wears out, decays, gets usedup, becomes obsolete, or loses value from natural causes.

Using Straight Line method:

= − ()

For all Equipment’s that used:

= 11 = 10%

(Source:Plant Design and Economics for ChE By:Peters and Timmerhaus)

Equipment:

Jaw Crusher

= $98,833.39 − $9883.3411 = $8086.37/

Ball Mill 1

= $16655.83 − $1665.5811 = $1362.75/

Vibrating Screen 1

= $91,245.95 − $9124.5911 = $7465.58/

Denver 24 Froth Flotation System

= $158,809.27−$15880.9311 = $12993.49/






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Mixing Tank

=

$8,118.56 − $811.86

11 = $664.25/

Digester

= $59,565.59 − $5956.5611 = $458,505.90/

Cooler (Shell and Tube)

= $ 62531.72 − $ 6253.1711 = $5116.23/

Clarifier

= $655304.44 − $65530.4411 = $53615.82/

Precipitator = $195,778.35−$19577.84

11 = $16018.23/

Decanter Centrifuge

= $261,815.75−$26181.5811 = $21421.29/

Vacuum Filter

= $18,084.80 − $1808.48

11

= $1479.67/

Rotary Dryer

= $100,217.39 − $10021.7411 = $8199.60/

Plate Cooler

= $3289.29−$328.9311 = $269.12/

Ball Mill 2

= $11,767.55 − $1176.7611 = $962.80/






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Vibrating screen 2

=

$25,214.18 − $2521.42

11 = $2062.98/

= $598224.08

= ℎ 28015431.89/

WORLD MARKET PRICE

(http://www.researchandmarkets.com/)

1. Dicalcium Phosphate = $1000/Ton

= 3467.5 ($ ) .

$ = ,,.

Total sales = ,, .

Financial Analysis of Dicalcium Phosphate Production

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