KUK2142

ENGINEERING ECONOMICS
SECTION 02

SEMESTER II 2021/2022

MINI PROJECT REPORT

GROUP 2

PRODUCTION OF 10,000 METRIC TONNES PER YEAR OF

AMMONIUM NITRATE FROM AMMONIA AND NITRIC ACID

LECTURER : DR MOHD BIJARIMI BIN MAT PIAH

NO GROUP MEMBERS ID NO
1 MUHAMMAD SAIFUL AZWAR BIN AZIZ AA18325
2 KAMALESWARY A/P RAJASEKARAN KA20026
3 NORSUHADA BINTI ARIFFIN KA20047
4 SITI LIYANA BINTI ABDUL GHANI KA20098
5 AISYAH RADHIYAH BINTI YAAKOB KA20115
6 UMMI HUSNA BINTI AHMAD JAAIS KA20132
TABLE OF CONTENTS

CHAPTER PAGE
1. INTRODUCTION 2 - 14
1.1 Project Background
1.2 Objectives
1.3 Process Description

2. ESTIMATING FIXED CAPITAL INVESTMENT (FCI) 14 - 16

2.1 Estimating Purchased Equipment Cost
2.2 Estimating Total Capital Cost of a Plant

3. ESTIMATING COST OF MANUFACTURING 16 - 25

3.1 Estimating Labor Cost
3.2 Estimating Raw Material Cost
3.3 Estimating Utility Cost
3.3.1 Electricity
3.3.2 Cooling Water
3.3.3. Steam
3.4 Direct Manufacturing Cost
3.5 Fixed Manufacturing Cost
3.6 General Expenses

4. CASH FLOW ANALYSIS 26 - 37

4.1 Cash Flow Analysis
4.1-1 Cumulative Non-Discounted Cash Flow Analysis
4.1-2 Cumulative Discounted Cash Flow Analysis
4.2 Payback Period
4.3 Financial Ratios
4.3-1 Operating Margin Ratio
4.3-2 Gross Profit Margin
4.3-3 Net Profit Margin
4.3-4 Rate On Investment (ROI)
4.4 Feasibility Study

5. APPENDIX 38 - 56

6. REFERENCES 57

1
1. INTRODUCTION

1.1 Project background

Ammonia is a key ingredient in fertilizer production and is one of the world's most
widely used man made compounds. This article examines the history of ammonia production and
covers contemporary production methods.Cleaners or smelling salts can mask the noxious odor
of ammonia (NH3). However, ammonia is used in just a small portion of total global ammonia
output, which was roughly 176 million metric tonnes in 2014. (1). Let's take a look at how we
got to where we are now in terms of industry and technology. Ammonia has been known for
more than 200 years. Joseph Priestley, an English chemist, first isolated gaseous ammonia in
1774. Its composition was ascertained by French chemist Claude Louis Berthollet in 1785. In
1898, Adolph Frank and Nikodem Caro found that N2 could be fixed by calcium carbide to form
calcium cyanamide, which could then be hydrolyzed with water to form ammonia (2):

CaO + 3C ↔ CaC2 + CO

CaC2 + N2 ↔ CaCN2 + C

CaCN2 + 3H2O ↔ CaCO3 + 2NH3

The cyanamide method was not used to produce considerable amounts of ammonia until
the early twentieth century. Scientists concentrated their efforts on minimizing energy
requirements because this procedure required a lot of it. BASF established the first commercial
ammonia plant using the Haber-Bosch process in Oppau, Germany. The plant began operations
on September 9, 1913, with a production capacity of 30 metric tonnes per day.

2
 Figure 1. This is a simplified flowsheet of the first commercial ammonia plant by BASF

The first commercial ammonia plant's flowsheet is shown in Figure 1. In addition to the
heat exchangers depicted on the diagram, the reactor had an internal heat exchanger.

Figure 2. Worldwide ammonia production has steadily increased from 1946 to 2014.

3
 Ammonia production has grown to be one of the world's most important industries.
Without the crop yields enabled by ammonia-based fertilizers and pesticides, the world's
population would be reduced by at least two to three billion people. Since 1946, ammonia output
has risen significantly as shown in figure 2, with some plants producing more than 3,000 mt/day
of NH3. A blue ribbon panel of prominent chemical engineers named what they felt to be the
world's 10 greatest chemical engineering achievements in 1983, on the 75th anniversary of
AIChE's inception. The citation featured the discovery that allowed the synthesis of enormous
quantities of ammonia in tiny, single-unit factories, among other achievements such as wonder
medications, synthetic fibers, and atomic energy. Chemical engineers have succeeded in
developing systems that produce large amounts of ammonia at low costs in recent decades. The
total annual production of synthetic ammonia was slightly over 300,000 m.t. just 80 years ago.
One modern ammonia plant can produce more than 750,000 mt/yr thanks to chemical
engineering advancements. The production of fertilizer consumes about 88 percent of the
ammonia produced each year. The majority of the rest is used to make formaldehyde. In 2014,
China accounted for 32.6 percent of global output, with Russia, India, and the United States
producing 8.1 percent, 7.6 percent, and 6.4 percent, respectively (1). While natural gas steam
reforming accounts for the majority of global ammonia production, coal gasification accounts for
a considerable portion of the total; most of the gasification plants are in China.

In the modern production processes, the massive increase in ammonia demand between
1950 and 1980 demanded the construction of larger, more energy-efficient factories. During
those decades, there was also a shift in design philosophy. An ammonia plant had previously
been thought of as a collection of unrelated units, such as gas preparation, gas purification, gas
compression, and ammonia synthesis. The most effective and efficient way to connect process
units was through new innovations and an integrative design.

4
 Figure 3. KBR designed one of the first single-train, large-capacity ammonia plants.

The American Oil Co. erected a single-converter ammonia plant with a capacity of 544
m.t./day in Texas City, TX, in the mid-1960s, designed by M.W. Kellogg (MWK). In 1967, the
Kirkpatrick Chemical Engineering Achievement Award was given to the single-train design
concept, as depicted in Figure 3.
The syngas was compressed to a pressure of 152 bar in a four-case centrifugal compressor, with
final compression to a pressure of 324 bar in a reciprocating compressor. Centrifugal
compressors were installed for the synthesis loop and refrigeration services, resulting in
significant cost savings.

The key differences between the MWK process and the processes used in previous
ammonia plants included:

● As part of the synthesis gas compression, a centrifugal compressor is used.

● Optimizing waste heat recovery from the process
● Using waste heat to generate steam for steam turbine drivers.
● For rundown and atmospheric refrigeration, the refrigeration compressor is used.

5
 Throughout the factory, an integrated strategy that harmonized energy consumption,
energy production, equipment size, and catalyst volumes was implemented. Most plants built
between 1963 and 1993 were massive single-train types that produced synthesis gas at 25–35
pressure and ammonia at 150–200 bar. Braun (now KBR) created another variant with minor
changes to the basic design. To lower the size and cost of the reformer, the Braun Purifier
process facilities used a primary or tubular reformer with a low outlet temperature and
substantial methane leakage. To reduce the methane percentage of the primary reformer output
stream to 1–2%, more air was introduced to the secondary reformer. Downstream of the
methanator, excess nitrogen and other pollutants were eliminated. Two axial-flow ammonia
converters were employed to achieve a high ammonia conversion because the synthesis gas was
essentially impurity-free.

The operating pressure of the synthesis loop was greatly lowered during this time, in
addition to design, mechanical, and metallurgical advancements. A high-pressure synthesis loop
was included in the first single-train facility built in the 1960s. Imperial Chemical Industries
(ICI) approached MWK in 1962 with a request for a proposal to develop a 544-m.t./day plant at
their Severnside site. Instead of a 324-bar synthesis loop, MWK offered a 152-bar loop. Because
developing kinetic data for the ammonia reaction at 152 bar would take longer than MWK had to
answer to the ICI inquiry, they enlisted the help of Haldor Topsoe. Topse had data for the entire
pressure range that MWK was interested in. They also developed a computer programme that
could calculate the amount of catalyst needed at the reduced operating pressure. Despite the fact
that ICI hired Bechtel to build the plant, MWK was able to create a flowsheet for a 544-m.t./day
design with centrifugal compressors and a low-pressure synthesis loop, which some consider to
be the single most important event in the development of the single-train ammonia plant. At 152
bar, approximately twice as much catalyst was needed as at 324 bar, an increase that appeared to
be economically viable. Despite the fact that the converter would require twice the capacity, the
lower working pressure would result in a thinner pressure shell. As a result, the total amount of
metal required for the converter and catalyst remained relatively constant. Because of the
decreased pressure, centrifugal compressors were used instead of reciprocating compressors in
the synthesis loop. Recovering heat to generate high-pressure steam for steam turbine drives was
another development.

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 In the 21st Century, ammonia plant technology has advanced to the point that existing
plants can increase output rates and new plants can be developed with greater and larger
capacity. The competition among technology providers is strong. The market is currently
dominated by three technology licensors: KBR (Kellogg Brown and Root), Haldor Topse, and
ThyssenKrupp Industrial Solutions (TKIS). Ammonia Casale is a global leader in revamping old
plants, with an axial-radial catalyst bed architecture.

Figure 4. Modern ammonia plants designed by KBR employ its proprietary Purifier design

Energy usage can be as low as 28 GJ/m.t depending on the plant setup. The first reformer
can be smaller than in traditional designs since the secondary reformer consumes extra air. The
cryogenic purifier, which consists of an expander, condenser, feed/effluent exchanger, and
rectifier column, removes impurities such as CO, CH4, and argon from the synthesis gas while
adjusting the H2:N2 ratio of the makeup gas in the ammonia loop to the optimal level (shown in
Figure 4 in light green with a light orange background). The ammonia concentration exiting the
low-pressure-drop horizontal converter is 20–21%, lowering the recycle compressor's energy
needs. KBR also offers a low-pressure ammonia loop that uses a magnetite and unique ruthenium
catalyst combination.

7
 Figure 5. Haldor Topsøe offers an ammonia plant design that has a proprietary side-fired reformer in
which radiant burners supply heat for the reforming reaction.

With the exception of its proprietary side-fired reformer, which uses radiant burners to
generate heat for the reforming reaction, the syngas generation section (or front end) of a Haldor
Topsoe-designed plant (Figure 5) is very standard. A proprietary iron-based synthesis catalyst,
radial-flow converters with one, two, or three beds, and a proprietary bayonet-tube waste-heat
boiler are also available from Haldor Topsoe. The S-300 and S-350 converter designs are more
recent innovations. To maximize ammonia conversion, the S-350 design combines an S-300
converter with an S-50 single-bed design with waste-heat recovery between converters.

Figure 6. The Linde Ammonia Concept (LAC) features a pressure-swing adsorption unit for high-purity
hydrogen production and an air separation unit for high-purity nitrogen production.

8
 The Linde Ammonia Concept (LAC) is a proven technology process scheme that has
been used in facilities with capacities ranging from 200 mt/day to over 1,750 mt/day for over 25
years. The LAC process architecture (Figure 6) substitutes a conventional ammonia plant's costly
and complex front end with two well-proven, dependable process units:

● Production of ultra-high-purity hydrogen from a steam-methane reformer with PSA

purification.
● Production of ultra-high-purity nitrogen by a cryogenic nitrogen generation unit, also known
as an air separation unit (ASU).

Figure 7. Casale's process employs a catalyst bed that harnesses axial-radial technology, which has a
lower pressure drop and higher efficiency than standard catalyst beds.

Casale's plant design produces 2,000 metric tonnes per day. Axial-radial technology in
the catalyst bed is one of the design's primary elements (Figure 7). The majority of the synthesis
gas travels through an axial-radial catalyst bed in a radial direction, resulting in a very minimal
pressure drop. The remaining gas travels axially through a top layer of catalyst, removing the
need for a top cover on the catalyst bed. The axial-radial catalyst bed technique developed by
Casale is used in both high- and low-temperature shift converters, as well as the synthesis
converter.

Some technology providers have proposed gas-heated reformers (GHRs) for ammonia
production in small plants or to expand capacity. Unlike traditional plants, which use a primary
and secondary reformer in series, GHR plants use the hot process gas from the secondary

9
reformer to heat the primary reformer. The primary reformer's size is reduced, and CO2
emissions from the primary reformer stack are eliminated, making the process more
environmentally friendly.

Despite the fact that some ammonia manufacturers push for distributed ammonia
production in small ammonia plants, most corporations prefer to build huge facilities near cheap
raw material sources and deliver the product to consumers via ship, rail, or pipeline.

Figure 8. China produces most of its ammonia from coal.

Based on Figure 8, China generates more ammonia than any other country, with coal
providing the majority of it. The ASU, which separates O2 and N2 from air, the gasifier, the sour
gas shift (SGS) unit, the acid gas removal unit (AGRU), and the ammonia synthesis unit are the
basic processing units in a coal-based ammonia factory. The gasifier uses oxygen from the ASU
to convert coal to synthesis gas (H2, CO, CO2) and CH4. Although there are many alternative
gasifier designs, the majority of current gasifiers are based on fluidized beds that work above
atmospheric pressure and can use a variety of coal feeds. CO levels of 30–60% by volume may
be produced depending on the design.

After lowering the CO content in the synthesis gas to less than 1%, the syngas is fed into
an AGRU, where CO2 and sulfur are removed using a chilled methanol scrubbing solution (e.g.,

10
Rectisol). CO2 from the ceiling is either evacuated or supplied to a urea plant. A sulfur recovery
unit receives the sulfur outflow stream (SRU).

Syngas that passes through the AGRU is typically purified by one of two methods:

1. A nitrogen wash unit to remove any remaining CO and CH4 from syngas before it is fed into
the synthesis loop.

2. A CO and CH4 removal PSA system.

Ammonia process technology has advanced dramatically during the last 60 years. Plant
layouts moved from multi-train designs to single-train designs, with various numbers of trains in
the front end and synthesis loop. The pressure of synthesis gas preparation in the front end of the
plant was increased from atmospheric to 30–50 barg. In a single train, capacity increased from
100 m.t./day to 3,300 m.t./day.

Energy efficiencies have also improved, from coke-based plants consuming well over 60
GJ/mt of ammonia to 40–50 GJ/mt in the first natural-gas-based plants to 30–40 GJ/mt in the
first single-train facilities. In both the syngas preparation segment and the synthesis loop, modern
facilities have added heat recovery by producing steam at pressures as high as 125 barg.
There has been a change in process equipment from reciprocating compressors to centrifugal
compressors. The synthesis converter now features an internal heat exchanger to improve the
conversion of H2 and N2 to NH3. Hydrogen recovery from purge gas (in units such as PSA
systems) has been used by designers to boost production or lower plant energy usage.
Desulfurization systems for hot feed gas have also been implemented by designers. The catalysts
employed in reforming, shift conversion, methanation, and ammonia synthesis have all improved
significantly.

Distributed control systems (DCSs) for sophisticated process control, as well as

safety-instrumented systems (SISs), are now standard in ammonia facilities to increase process
control and safety. Hazard and operability (HAZOP) studies and layer of protection analyses

11
(LOPAs) are undertaken before any process goes live. Operators and engineers may perform
their responsibilities safely and successfully thanks to advances in training simulators and
education procedures.

These are just a few of the thousands of technological and safety advances that have gone
into making the ammonia industry one of the most productive and safe in the world.

1.2 Objectives

The objective of this project are as follow:

1. Estimate the fixed capital investment
2. Estimate the cost of manufacturing
3. Cash flow analysis can help to strength the findings

1.3 Process Description

The manufacture of ammonium nitrate involves several major unit operations including
solution formation and concentration; solids formation, finishing, screening, and coating; and
product bagging and/or bulk shipping. In some cases, solutions may be blended for marketing as
liquid fertilizers.The number of operating steps employed depends on the product desired. For
example, plants producing ammonium nitrate solutions alone use only the solution formation,
solution blending, and bulk shipping operations. Plants producing a solid ammonium nitrate
product may employ all the operations. All ammonium nitrate plants produce an aqueous
ammonium nitrate solution through the reaction of ammonia and nitric acid in a neutralizer as
follows:

NH3+ HNO3 → NH4NO3

Approximately 60 percent of the ammonium nitrate produced in the U. S. is sold as a

solid product. To produce a solid product, the ammonium nitrate solution is concentrated in an
evaporator or concentrator. The resulting "melt" contains about 95 to 99.8 percent ammonium
nitrate at approximately 149°C (300°F). This melt is then used to make solid ammonium nitrate
products.

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Prilling and granulation are the most common processes used to produce solid ammonium
nitrate. To produce prills, concentrated melt is sprayed into the top of a prill tower. In the tower,
ammonium nitrate droplets fall counter current to a rising air stream that cools and solidifies the
falling droplets into spherical prills. Prill density can be varied by using different concentrations
of ammonium nitrate melt. Low density prills, in the range of 1.29 specific gravity, are formed
from a 95 to 97.5 percent ammonium nitrate melt, and high density prills, in the range of 1.65
specific gravity, are formed from a 99.5 to 99.8 percent melt. Low density prills are more porous
than high density prills. Therefore, low density prills are used for making blasting agents because
they will absorb oil. Most high density prills are used as fertilizers.

Rotary drum granulators produce granules by spraying a concentrated ammonium nitrate

melt onto small seed particles of ammonium nitrate in a long rotating cylindrical drum. As the
seed particles rotate in the drum, successive layers of ammonium nitrate are added to the
particles, forming granules. Granules are removed from the granulator and screened. Off size
granules are crushed and recycled to the granulator to supply additional seed particles or are
dissolved and returned to the solution process. Pan granulators operate on the same principle as
drum granulators, except the solids are formed in a large, rotating circular pan. Pan granulators
produce a solid product with physical characteristics like those of drum granules.

Although not widely used, an additive such as magnesium nitrate or magnesium oxide
may be injected directly into the melt stream. This additive serves three purposes which is to
raise the crystalline transition temperature of the final solid product; to act as a desiccant,
drawing water into the final product to reduce caking; and to allow solidification to occur at a
low temperature by reducing the freezing point of molten ammonium nitrate. The temperature of
the ammonium nitrate product exiting the solids formation process is approximately 66 to 124°C
(150 to 255°F). Rotary drum or fluidized bed cooling prevents deterioration and agglomeration
of solids before storage and shipping. Low density prills have a high moisture content because of
the lower melt concentration, and therefore require drying in rotary drums or fluidized beds
before cooling.

13
 Since the solids are produced in a wide variety of sizes, they must be screened for
consistently sized prills or granules. Cooled prills are screened and offsize prills are dissolved
and recycled to the solution concentration process. Granules are screened before cooling.
Undersize particles are returned directly to the granulator and oversize granules may be either
crushed and returned to the granulator or sent to the solution concentration process. Following
screening, products can be coated in a rotary drum to prevent agglomeration during storage and
shipment. The most common coating materials are clays and diatomaceous earth. However, the
use of additives in the ammonium nitrate melt before solidification, as described above, may
preclude the use of coatings. Solid ammonium nitrate is stored and shipped in either bulk or
bags.

2. ESTIMATING FIXED CAPITAL INVESTMENT (FCI)

2.1 Estimating Purchased Equipment Cost

The objective of cost estimating is to describe the current and future cost implications of
engineering designs, to offer information for contract evaluation, and to provide benchmarks for
productivity development. In order to evaluate the equipment cost of a chemical plant, the
expenses associated with significant plant equipment must be known. The cost of acquired
equipment and the cost of bare modules are calculated using the calculations below.The
Chemical Engineering Plant Cost Index (CEPCI) for 2019 is 607.5.

(i) Using Equation A.1 (Turton et al., 2012)

Cp˚= Purchased Cost of Equipment

A = Capacity (Area, m² / Volume, m3)
K = Equipment Cost Data - Refer Table A.1 (Turton et al., 2012)

(ii) Using Equation A.4 (Turton et al., 2012)

CBM = Cp˚FBM / CpN˚FBM Fq / Cp˚(B1 + B2FmFp)

CBM = Bare Module Cost
14
 FBM = Bare Module Factor - Refer Table A.6 & Figure A.19 (Turton et al., 2012)
(iii) Effect of Time on Purchased Equipment Cost (Turton et al., 2012)

C = Purchase Cost
I = Cost Index
1 = The base time when cost is known
2 = The current time when cost is desired

EQUIPMENT Cp˚ ($) CBM(2019) ($)

Ammonia Storage Tank (T-101) 38284.82 101058.06

Nitric Acid Storage Tank (T-102) 47842.23 244877.25

Calcium Carbonate Storage Tank (T-103) 39551.80 202443.24

Ammonium Nitrate Storage Tank (T-104) 61246.12 313484.16

Dryer (D-101) 1951.84 1582.36

Granulator (G-101) 2127.50 5615.84

Heater (HX-101) 19193.32 78479.64

Heater (HX-102) 19193.32 78479.64

Cooler (HX-103) 19381.62 79249.58

Reactor (R-101) 57808.84 149969.93

Splitter (M-101) 2685.78 2403.81

Flash Column (V-101) 4077.84 20872.15

Flash Column (V-102) 4581.75 12094.16

TOTAL $317926.78 $1290609.82

Table 1 : List of Equipment Cost

15
2.2 Estimating Total Capital Cost of a Plant

(i) Total cost of the module (CTM)

CTM = 1.18 ∑ CBM
= 1.18 ( $1290609.82 )
CTM = $1522919.59 x 𝑅𝑀 4.11/ $1 = RM 6259199.52

(ii) Grass-root capital cost (CGR)

CGR = CTM + 0.5 ∑ CBM
= $1522919.59 + 0.5 ( $1290609.82 )
CGR = $2168224.50 x 𝑅𝑀 4.11/ $1 = RM 8911402.70

3. ESTIMATING COST OF MANUFACTURING

Manufacturing is the sum of cost of all resources consumed in the process of making a
product. Cost of manufacturing includes labor cost, raw material cost, utility cost, and waste
treatment cost. Cost of manufacturing is the total cost of all resources used to make a product
which is ammonium nitrate. There are three effects that can affect the cost of manufacturing
which is Direct Manufacturing Cost (DMC), Fixed Manufacturing Cost (FMC) and General
Expenses. Generally, cost of manufacturing can be determined using:

CCM = DMC + FMC + GC

3.1 Estimating Labor Cost

Labor cost is the total amount of salaries given to the employees, as well as the cost of
employee benefit and payroll taxes charged by the employer. Table 3.1 shows the number of
process steps not involving handling solids, including compression, heating, cooling, mixing,
separation and reaction, but not including pumps and vessels. Storage tanks (T-101, T-102,
T-103, T-104) which are considered as vessel, splitter (not considered as equipment) and flash

16
column (V-101, V-102) are excluded to calculate labor cost. The operational labor cost is shown
below.

No of equipment (excluded pump and vessel)

Equipment Type Quantity

Reactor 1

Heat Exchanger 2

Total 3

Table 3.1 No of equipment

Since granulator, dryer and heat exchange (HX-103) handling with solid, P = 3

Total, Nnp = 3

NOL = (6.29 + 31.7P2 + 0.23Nnp)0.5

= [6.29 + 31.7(3)2 + 0.23(3)]0.5

= 17.1

The average salary for an operator is estimated to be RM 30,000/year. Therefore, the calculation
for the expected labor cost is as below:

Since 4.5 operators are hired for each operator needed in the plant at a given time,

Operating Labor = 4.5(17.1)

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 = 76.95 ~ 77 operators

Labor cost, COL = 77 × RM 30,000

= RM 2,310,000/year

3.2 Estimating Raw Material Cost

Raw materials are resources that a company uses to manufacture its finished products. The raw
materials used for the production of ammonium nitrate include ammonia and nitric acid. The cost
of raw material is estimated according to the most current price data as shown in the tabel 3.2.
The yearly cost of raw materials is determined using the equation below and the calculations are
shown in the appendix. Annual average Us Dollar (USD) conversion rates to Malaysia Ringgit
(MYR) in 2022 is approximately 4.40 (19 May 2022). In this mini project, the plant operated 345
days per year.

Stream Factor (SF) = ­Number of Days plants Operates per year / 365

Yearly Cost = Yearly Flow Rate × Stream Factor × Cost of Materials

Raw Material Cost Flow Rate Stream Yearly Cost (RM/year)

Factor
($/MT) (kg/h)

Ammonia (NH3) 801.8 268.9401 0.95 1,794,524.23

Nitric Acid 1154 813.5331 7,812,836.72

(HNO3)

Total Raw Material Cost RM 9,607,360.95

TABLE 3.2
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3.3 Estimating Utility Cost

Utility cost is important in estimating the manufacturing cost of a plant. It is defined as the cost
consumed in a reporting period related to electricity, heat, sewer and water expenditures. The
expenses are incurred throughout the reporting period, calculated, and accrued for, or payment is
made. The annual cost of utilities is shown in table 4.3 below. The calculations are shown in the
appendix.

Utilities Cost (RM/year)

Electricity 3,274,859.47

Cooling Water 36,685.85

Steam 1,552,836.10

Total 4,864,381.42

Table 3.3 Utility Cost

Total manufacturing cost can be estimated:

Since there is no waste treatment, CWT = RM 0.0/year

Estimated COMd in RM/yr without depreciation

= 0.180FCI + 2.73COL + 1.23(CUT + CWT + CRM)

= 0.180(106,798,848.80) + 2.73(2310,000) +1.23(4864381.42 + 0 + 9607360.95)

= RM43,330,335.90/year

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Estimated COMd in RM/tonne

= RM 43330335.90/ year x year of AN/ 10,000 Tonne

= RM 4,333.03/Tonne

3.3.1 ELECTRICITY

Electricity is mainly used for heating and cooling in the chemical plant. Equipment that used
electricity to operate is shown in table 3.3.1. Refer to the PEE handbook, the cost of electricity is
$0.06/kWh. The yearly cost of electricity is determined using the equation below and the
calculations are shown in appendix.

Electric Power, Pdr = Shaft Power/ Efficiency

Yearly Cost = Pdr × Cost of Electric × Stream Factor

Equipment Power (kW) Stream Factor Yearly Cost (RM/year)

HX-101 13.684 30,063.86

HX-102 52.4107 115,146.73

HX-103 66.56 146,232.85

R-101 333.008 0.95 731,621.24

V-101 455.685 1,001,143.59

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 V-102 261.041 573,509.17

G-101 173.254 380,640.42

D-101 134.957 296,501.61

Total 3,274,859.47

3.3.2 COOLING WATER

Cooling water is commonly used in the plant to remove heat from components and industrial
equipment. Refer to the PEE handbook, the cost of cooling water is $ 14.80/1000m3. The yearly
cost of cooling water is determined using the equation below and the calculations are shown in
appendix.

Yearly Cost = Yearly Flow Rate × Stream Factor × Cost cooling water per unit mass

Equipment Cooling Water Flow Stream Factor Yearly Cost

Rate (kg/h) (RM/year)

HX-103 1094.97 0.95 593.40

R-101 66600 36,092.45

Total 36,685.85

Table 3.3.2

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3.3.3 STEAM

Steam is commonly used in the chemical process industries for process heating and other uses. It
can be used to drive pumps and heat exchangers. Chemical plants generally have a network of
pipelines exclusively for providing systems. These networks generally have steam at a low
pressure, a medium pressure and a high pressure. In our plant, steam at a low pressure is used as
it is the same as atmospheric pressure (1 atm) and the pricing rates for low pressure is according
to the PEE handbook. The yearly cost of steam is determined using the equation below and the
calculations are shown in appendix.

Yearly Cost = Yearly Flow Rate × Stream Factor × Cost steam per unit mass

Equipment Mass flow rate Stream Factor Yearly Cost

(kg/h) (RM/year)

HX-101 265.751 0.95 26,9547.35

HX-102 1265.2147 1,283,288.75

Total 1,552,836.10

Table 3.3.3

3.4 DIRECT MANUFACTURING COST, DMC

Direct manufacturing cost is the cost that is directly attributable to manufacturing products. It is a
cost whose expenses vary with production rate. When demand for a product drops, the
production rate is reduced, hence lowering the direct manufacturing cost. This reduction may
affect the raw material, utilities, operating labor as well as maintenance.

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Direct manufacturing cost can be estimated:

DMC = CRM + CWT + CUT + 1.33COL + 0.03COM + 0.069FCI

Direct Manufacturing Cost Multiplying Factor Yearly Cost (RM/year)

Labor Cost, COL 2,310,000

Raw Material Cost, CRM 9,607,360.95

Utility Cost, CUT 4,864,381.42

Waste Treatment Cost, CWT 0

Direct Supervisory and Electrical 0.18COL 415,800

Labor

Maintenance and Repairs 0.06FCI 6,407,930.93

Operating Supplies 0.009FCI 961,189.64

Laboratory Charges 0.15COL 346,500

Patents and Royalties 0.03COM 1,299,910.08

Total 26,213,073.02

23
3.5 FIXED MANUFACTURING COST, FMC

Fixed manufacturing costs are costs which are independent of changes in production rate.
Depreciation, local taxes and insurance are charged at constant rates even when the plant is not in
operation.

Fixed manufacturing cost can be estimated:

FMC = 0.708COL + 0.168FCI

Fixed Manufacturing Cost Multiplying Factor Yearly Cost (RM/year)

Depreciation 0.1FCI 10,679,884.88

Local Taxes and Insurance 0.032FCI 3,417,563.16

Plant Overhead Cost 0.708COL + 0.036FCI 5,480,238.56

Total 19,577,686.60

3.6 GENERAL EXPENSES, GM

General expenses are costs that represent an overhead burden which is required to administer a
business. Expenses seldom change with production rate. However, expenditures such as
distribution and selling cost and research and development may decrease if extended periods of
low output occur.

General expenses can be estimated:

GM = 0.177COL + 0.009FCI + 0.16COM

24
 General Expenses Multiplying Factor Yearly Cost (RM/year)

Administration Cost 0.177COL + 0.009FCI 1,370,059.64

Distribution and Selling cost 0.11COM 4,766,336.95

Research and Development 0.05COM 2,166,516.80

Total 8,302,913.38

Total manufacturing cost can be estimated:

COM = DMC + FMC +GM

Total Manufacturing Cost Yearly Cost (RM/year)

Direct Manufacturing Cost 26,213,073.02

Fixed Manufacturing Cost 19,577,686.60

General Expenses 8,302,913.38

Total 54,093,673.00

25
4. CASH FLOW ANALYSIS
4.1 Cash Flow Analysis

The method of cash flow analysis is a reliable method to assess the company’s health and to
determine whether the process is able to generate income. Flow in and out of funds during the
runtime of a plant is presented in the cash flow analysis. This enables the company to track the
previous transactions easily. As for the calculations, several assumptions were made:
➢ Total capital investment at the start of the project which cost RM20,000,000.
➢ The lifetime of the plant is 20 years where the initial 2 years are reserved
for the startup of the plant.
➢ As the constructions are finished at the end of the second year,
additional spending for working capital is required to float the first few
months of operation.
➢ For the revenue of the first year, it is around 50% of the following years.
➢ The income tax imposed is 20% of the net profit for the first 5 years and it increases to
30% for the succeeding years.
➢ The depreciation value follows the straight-line depreciation model for 10 years after the
commissioning of the plant
➢ The manufacturing cost without depreciation (COMd) can be calculated using the
equation:

COMd = 0.180FCI + 2.73COL + 1.23(CUT + CWT + CRM)

Components Summarized Formula Formula

Expenses Manufacturing Cost + Depreciation COMd + d

Income Tax (Revenue-Expenses) * (Tax Rate) (R - COMd + d) * (t)

After Tax Net Profit Revenue-Expenses-Income Tax (R - COMd + d) * (1-t)

After Tax Cash Net Profit + Depreciation (R - COMd + d) * (1-t) + d

Profit

Table 4.1: Calculation of Cash Flow Analysis Components

26
4.1-1 Cumulative Non-Discounted Cash Flow Analysis
The production of 10,000 MT/Year of Ammonium Nitrate from Ammonia and Nitric Acid has acquired us RM80,383,400 of sales
revenue

Product Amount (MT/Year) Price per Unit (RM/MT) Revenue (RM)

10000 3,295.40 32,954,000

Ammonia (NH3)

4,742.94 47,429,400
Nitric Acid (HNO3)

Total 80,383,400

Table 4.2 Table of Cumulative Undiscounted Cash Flow

Economic Capital Depreciation FCI (RM) Revenue COMd (RM) Expenses Tax (%) Income Tax Net Profit After Tax Cumulative
Life Investment (RM) (RM) (RM) (RM) (RM) Cash Flow Cash Flow
(Year) (RM) (RM) (RM)

0 0.00 0.00 0.00 0.00 0 0.00 0.00 - -

20,000,000.0 106,798,848. 20,000,000.00 20,000,000.00
0 80

1 0.00 0.00 0.00 0.00 0 0.00 0.00 - -

54,093,673.0 106,798,848. 54,093,673.00 74,093,673.00
0 80

2 0.00 0.00 0.00 0.00 0 0.00 0.00 - -

8,114,050.95 106,798,848. 8,114,050.95 82,207,723.95

27
 80

3 0.00 32,345,052.8 20 -
10,679,884.8 106,798,848. 40,191,700.0 21,665,167.9 3 1,569,329.43 6,277,317.74 16,957,202.62 65,250,521.33
8 80 0 5

4 0.00 54,010,220.7 20 -
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 5,274,635.84 21,098,543.38 31,778,428.26 33,472,093.08
8 80 0 0

5 0.00 54,010,220.7 20 -
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 5,274,635.84 21,098,543.38 31,778,428.26 1,693,664.82
8 80 0 0

6 0.00 54,010,220.7 20
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 5,274,635.84 21,098,543.38 31,778,428.26 30,084,763.43
8 80 0 0

7 0.00 54,010,220.7 20
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 5,274,635.84 21,098,543.38 31,778,428.26 61,863,191.69
8 80 0 0

8 0.00 54,010,220.7 30
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 7,911,953.77 18,461,225.45 29,141,110.33 91,004,302.02
8 80 0 0

9 0.00 54,010,220.7 30
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 7,911,953.77 18,461,225.45 29,141,110.33 120,145,412.3
8 80 0 0 6

10 0.00 54,010,220.7 30
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 7,911,953.77 18,461,225.45 29,141,110.33 149,286,522.6
8 80 0 0 9

11 0.00 54,010,220.7 30
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 7,911,953.77 18,461,225.45 29,141,110.33 178,427,633.0
8 80 0 0 3

12 0.00 54,010,220.7 30
10,679,884.8 106,798,848. 80,383,400.0 43,330,335.9 8 7,911,953.77 18,461,225.45 29,141,110.33 207,568,743.3
8 80 0 0 6

28
13 0.00 0.00 43,330,335.9 30
106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 233,505,888.2
80 0 0 3 3

14 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 259,443,033.1
80 0 0 3 0

15 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 285,380,177.9
80 0 0 3 7

16 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 311,317,322.8
80 0 0 3 4

17 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 337,254,467.7
80 0 0 3 1

18 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 363,191,612.5
80 0 0 3 8

19 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 389,128,757.4
80 0 0 3 5

20 0.00 0.00 43,330,335.9 30

106,798,848. 80,383,400.0 43,330,335.9 0 11,115,919.2 25,937,144.87 25,937,144.87 415,065,902.3
80 0 0 3 2

29
 Table 4.2 & Figure 4.1: Cumulative Undiscounted Cash Flow Throughout 20 Year

4.1-2 Cumulative Discounted Cash Flow Analysis

Discounted cash flow (DCF) analysis is a dependable approach for estimating the
project's worth based on expected cash flows. Discounted and undiscounted cash flows vary in
that the former is adjusted to account for the time value of money, whilst the latter is not. The
discount factor (P/F, I n) multiplies each cash flow by the discount factor (P/F, I n), where n is
the number of years after the project begins and I is the discount rate. The discounted cumulative
cash flow collected will then be used to assess profitability. In the table below, the cumulative
discounted cash flow (CDCF) is computed and tabulated at 5%, 10%, and 15%.

Figure 4.2: Cumulative discounted cash flow along the project life

30
 Table 4.3 Table of Cumulative Discounted Cash Flow with Various Rate

Economic Net Cash 0% CDCF 5% DCF 5% CDCF 6% DCF 6% CDCF 10% DCF 10% CDCF 15% DCF 15% CDCF
Life (Year) Income (RM) (RM) (RM) (RM) (RM) (RM) (RM) (RM) (RM) (RM)

0 -20,000,000.00 -20,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00 -10,000,000.00

1 -54,093,673.00 -74,093,673.00 -51,517,783.81 -61,517,783.81 -51,031,766.98 -61,031,766.98 -49,176,066.36 -59,176,066.36 -47,037,976.52 -57,037,976.52

2 -8,114,050.95 -82,207,723.95 -7,359,683.40 -68,877,467.21 -7,221,476.46 -68,253,243.44 -6,705,827.23 -65,881,893.60 -6,135,388.24 -63,173,364.76

3 16,957,202.62 -65,250,521.33 14,648,269.19 -54,229,198.03 14,237,594.30 -54,015,649.14 12,740,197.31 -53,141,696.29 11,149,635.98 -52,023,728.79

4 31,778,428.26 -33,472,093.08 26,144,191.57 -28,085,006.45 25,171,491.65 -28,844,157.49 21,705,094.09 -31,436,602.20 18,169,419.50 -33,854,309.29

5 31,778,428.26 -1,693,664.82 24,899,230.07 -3,185,776.39 23,746,690.24 -5,097,467.25 19,731,903.72 -11,704,698.48 15,799,495.21 -18,054,814.08

6 31,778,428.26 30,084,763.43 23,713,552.45 20,527,776.06 22,402,537.96 17,305,070.70 17,938,094.29 6,233,395.81 13,738,691.49 -4,316,122.59

7 31,778,428.26 61,863,191.69 22,584,335.66 43,112,111.72 21,134,469.77 38,439,540.48 16,307,358.44 22,540,754.25 11,946,688.25 7,630,565.66

8 29,141,110.33 91,004,302.02 19,723,850.53 62,835,962.25 18,283,493.14 56,723,033.61 13,594,543.04 36,135,297.29 9,526,280.66 17,156,846.32

9 29,141,110.33 120,145,412.36 18,784,619.55 81,620,581.80 17,248,578.43 73,971,612.05 12,358,675.49 48,493,972.78 8,283,722.31 25,440,568.64

10 29,141,110.33 149,286,522.69 17,890,113.86 99,510,695.66 16,272,243.80 90,243,855.85 11,235,159.54 59,729,132.32 7,203,236.79 32,643,805.43

11 29,141,110.33 178,427,633.03 17,038,203.67 116,548,899.33 15,351,173.40 105,595,029.25 10,213,781.40 69,942,913.71 6,263,684.17 38,907,489.60

12 29,141,110.33 207,568,743.36 16,226,860.64 132,775,759.97 14,482,239.06 120,077,268.31 9,285,255.81 79,228,169.53 5,446,681.89 44,354,171.48

13 25,937,144.87 233,505,888.23 13,755,021.70 146,530,781.67 12,160,345.64 132,237,613.95 7,513,066.98 86,741,236.51 4,215,511.16 48,569,682.64

14 25,937,144.87 259,443,033.10 13,100,020.67 159,630,802.34 11,472,024.19 143,709,638.14 6,830,060.89 93,571,297.40 3,665,661.88 52,235,344.52

31
15 25,937,144.87 285,380,177.97 12,476,210.16 172,107,012.49 10,822,664.33 154,532,302.47 6,209,146.27 99,780,443.66 3,187,532.07 55,422,876.59

16 25,937,144.87 311,317,322.84 11,882,104.91 183,989,117.41 10,210,060.69 164,742,363.15 5,644,678.42 105,425,122.09 2,771,767.01 58,194,643.60

17 25,937,144.87 337,254,467.71 11,316,290.39 195,305,407.80 9,632,132.72 174,374,495.88 5,131,525.84 110,556,647.93 2,410,232.19 60,604,875.79

18 25,937,144.87 363,191,612.58 10,777,419.42 206,082,827.22 9,086,917.66 183,461,413.54 4,665,023.49 115,221,671.42 2,095,854.08 62,700,729.86

19 25,937,144.87 389,128,757.45 10,264,208.97 216,347,036.19 8,572,563.83 192,033,977.38 4,240,930.45 119,462,601.86 1,822,481.80 64,523,211.67

20 25,937,144.87 415,065,902.32 9,775,437.12 226,122,473.31 8,087,324.37 200,121,301.75 3,855,391.31 123,317,993.18 1,584,766.79 66,107,978.45

Figure 4.3: Net present value at different discount rate

32
 From the results obtained in Table 4.3, the Net Present Value at Different Discount
Rate can be made. This graph highlights the Rate of Return value, which is obtained on
the x-intercept of the graph. The rate of return of this chemical plant is taken as 29.9 %,
as shown in Figure 4.3.

4.2 Payback Period

The payback period is the amount of time it takes to recoup the project's fixed capital
investment. The payback period is the amount of time it takes for an investment to reach
break-even point. The payback period is calculated by dividing the investment cost by the annual
cash flow. The investment is more appealing if the payback period is short. The longer the
payback period, on the other hand, the less appealing the investment becomes.

33
Economics analysis is listed in Table 4.4.

Economic Parameter Value

Grass Root Cost RM8,911,402.70

Plant Lifetime 20 years

Start-up Operations 2 years

Total Capital Investment RM20,000,000.00

Total Manufacturing Cost RM54,093,673.00

Annual Sales Income after Taxes RM25,937,144.87

Payback Period 5.1 years

Rate of Return 29.9 %

4.3 Financial Ratios

We utilize financial ratios as an indicator for a company's performance and financial status. The
ratio may be determined using the information supplied by the financial statement. The financial
ratios can be categorized based on the data available. Ratios like the ones below are commonly
used:
➢ Financial leverage ratios
➢ Profitability ratios
➢ Dividend policy ratios
➢ Liquidity ratios
➢ Asset turnover ratios
In the current financial situation, operating margin ratio, gross profit margin, net profit margin
and rate on investment (ROI) are calculated.

34
4.3-1 Operating Margin Ratio

Operating margin is a profitability ratio measuring revenue after covering operating and
non-operating expenses of a business. Also referred to as return on sales, the operating income
indicates how much of the generated sales is left when all operating expenses are paid off.

Operating Margin Ratio = ((Revenue − Direct Manufacturing Cost) / Revenue) * 100%

= ((80,383,400 - 26,213,073.02) / 80,383,400) * 100%
= 67.39%

4.3-2 Gross Profit Margin

Analysts use gross profit margin to measure a company's financial health by estimating the
amount of money left over from product sales after deducting the cost of products sold (COGS).
Gross profit margin, also known as the gross margin ratio, is typically represented as a
percentage of sales.If a company's gross profit margin varies drastically, it may indicate bad
management methods and/or inadequate products. Such swings, on the other hand, may be
acceptable when a firm makes significant operational changes to its business model, in which
case transitory volatility should not be a reason for concern.

= ((80,383,400 - 26,213,073.02 - 19,577,686.60) / 80,383,400) * 100%

= 43.03%

35
4.3-3 Net Profit Margin

The net profit margin is a measurement of how much of a company's revenue is

converted into profit. A small profit margin means a little margin of safety. The bigger
the margin, the better the company's ability to transform revenue into profit. The net
profit margin is calculated as follows:

Net Profit Margin= (Revenue-Net Profit After Tax)/Revenue ×100%

= (80,383,400 - 25,937,144.87) / 80,383,400 × 100%
= 67.7%

4.3-4 Rate On Investment (ROI)

Return on investment (ROI) is a performance indicator that can be used to evaluate the efficiency
or profitability of a particular investment, as well as to compare the efficiency of several other
investments. The return on investment (ROI) is a metric that measures how much profit a given
investment generates in relation to its cost. A commonly used profitability standard is the
minimum acceptable rate of return and also known as the minimum attractive rate of return or
MARR. The minimum acceptable rate of return is a rate of earnings that must be achieved by an
investment in order for it to be acceptable by the investor. There are several methods of
calculating rate of return. The most common method is return on investment (ROI). This
profitability measure is defined as the ratio of profit to investment cost. This can be expressed by
the formulae of

36
ROI = (25,937,144.87 / (8,911,402.70 + 20,000,000.00 + 54,093,673.00) * 100%

= 31.25%

4.4 Feasibility Study

As a conclusion, the grass root cost of RM 8,911,402.70 is needed for the Ammonium Nitrate
production plant. It is expected that there is as much as 29.9% of rate of return with 5.1 years of
payback period. The project life is assumed to be 20 years with 2 years of start-up duration with
feasible yearly revenue of RM 25,937,144.87

37
APPENDIX

38
 Appendix Calculation on Equipment Cost

1. Storage Tank

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Ammonia Storage Tank Fixed roof 4.8509 -0.3973 0.1445

(T-101) (Assumption)

Nitric Acid Storage Tank Fixed roof 4.8509 -0.3973 0.1445

(T-102) (Assumption)

Calcium Carbonate Storage Tank Fixed roof 4.8509 -0.3973 0.1445

(T-103)

Ammonium Nitrate Storage Tank Fixed roof 4.8509 -0.3973 0.1445

(T-104)

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

(i) Ammonia Storage Tank (T-101)

Material Carbon Steel

Volume (m³) 36.71

Diameter (m) 4.62

Height (m) 2.31

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8509 - 0.3973 𝒍𝒐𝒈₁₀(36.71) + (0.1445)(𝒍𝒐𝒈₁₀ 36.71)²

𝑪𝒑° = $38284.82

For value B, the storage tank is assumed as a vertical vessel in Table A.4.
B1 = 2.25 B2 = 1.82

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

From Table A.2, P < 0.07 𝑏𝑎𝑟𝑔,
C1 = 0 , C2 = 0, C3 = 0

𝒍𝒐𝒈₁₀𝐹𝑝 = 0
𝐹𝑝 = 1

39
From Table A.3, identification number for carbon steel vertical vessel = 18
From Figure A.18, identification number =18, 𝐹𝑚 = 1

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)

CBM = ($38284.82)[2.25 + 1.82(1)(1)]

CBM = $155819.22

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($155819.22)(394/607.5)
CBM(2019) = $101058.06

(ii) Nitric Acid Storage Tank (T-102)

Material 304 Stainless Steel

Volume (m³) 164.03

Diameter (m) 6.94

Height (m) 3.47

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8509 - 0.3973 𝒍𝒐𝒈₁₀(164.03) + (0.1445)(𝒍𝒐𝒈₁₀ 164.03)²

𝑪𝒑° = $47842.23

For value B, storage tank is assumed as a vertical vessel in Table A.4.

B1 = 2.25 B2 = 1.82

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

From Table A.2, P < 0.07 𝑏𝑎𝑟𝑔,
C1 = 0 , C2 = 0, C3 = 0

𝒍𝒐𝒈₁₀𝐹𝑝 = 0
𝐹𝑝 = 1

From Table A.3, identification number for stainless steel vertical vessel = 20
From Figure A.18, identification number =20, 𝐹𝑚 = 3.1

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)

40
CBM = ($47842.23)[2.25 + 1.82(3.1)(1)]
CBM = $377570.88

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($377570.88)(394/607.5)
CBM(2019) = $244877.25

(iii) Calcium Carbonate Storage Tank (T-103)

Material Stainless Steel

Volume (m³) 55.05

Diameter (m) 2.79

Height (m) 1.994

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8509 - 0.3973 𝒍𝒐𝒈₁₀(55.05) + (0.1445)(𝒍𝒐𝒈₁₀ 55.05)²

𝑪𝒑° = $39551.80

For value B, the storage tank is assumed as a vertical vessel in Table A.4.
B1 = 2.25 B2 = 1.82

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

From Table A.2, P < 0.07 𝑏𝑎𝑟𝑔,
C1 = 0 , C2 = 0, C3 = 0

𝒍𝒐𝒈₁₀𝐹𝑝 = 0
𝐹𝑝 = 1
From Table A.3, identification number for stainless steel vertical vessel = 20
From Figure A.18, identification number =20, 𝐹𝑚 = 3.1

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)

CBM = ($39551.80)[2.25 + 1.82(3.1)(1)]

CBM = $312142.81

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

41
 = ($312142.81)(394/607.5)
CBM(2019) = $202443.24

(iv) Ammonium Nitrate Storage Tank (T-104)

Material Stainless Steel

Volume (m³) 378.59

Diameter (m) 5.31

Height (m) 3.789

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8509 - 0.3973 𝒍𝒐𝒈₁₀(378.59) + (0.1445)(𝒍𝒐𝒈₁₀ 378.59)²

𝑪𝒑° = $61246.12

For value B, storage tank is assumed as a vertical vessel in Table A.4.

B1 = 2.25 B2 = 1.82

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

From Table A.2, P < 0.07 𝑏𝑎𝑟𝑔,
C1 = 0 , C2 = 0, C3 = 0

𝒍𝒐𝒈₁₀𝐹𝑝 = 0
𝐹𝑝 = 1

From Table A.3, identification number for stainless steel vertical vessel = 20
From Figure A.18, identification number =20, 𝐹𝑚 = 3.1

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)

CBM = ($61246.12)[2.25 + 1.82(3.1)(1)]

CBM = $483354.38

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($483354.38)(394/607.5)
CBM(2019) = $313484.16

2. Dryer (D-101)

42
From Table A.1:
EQUIPMENT DESCRIPTION K1 K2 K3

Dryer (D-101) Rotary Dryer 3.5645 0.1118 -0.0777

Diameter = 4.6256 m
Height = 9.2512 m

A = 2𝜋rh
= 2𝜋(4.6256+4.6256)(9.2512)
A = 537.7445 m²

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 3.5645 + 0.1118 𝒍𝒐𝒈₁₀(537.7445) - (0.0777)(𝒍𝒐𝒈₁₀ 537.7445)²
𝑪𝒑° = $1951.84

From Figure A.7

FBM = 1.25

CBM = Cp˚FBM
= ($1951.84)(1.25)
CBM = $2439.80

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($2439.80)(394/607.5)
CBM(2019) = $1582.36

3. Granulator (G-101)

Equipment Characteristics:
1. Design type : Rotary Blender
2. Material construction : Carbon Steel
3. Capacity unit, A : 48 m²
4. Stream pressure : 1 barg

Capacity unit, A = 4 x 12 =48 m²

From Table A.1:

43
 EQUIPMENT DESCRIPTION K1 K2 K3

Granulator Rotary Blender 4.1366 -0.4928 0.0070

(HX-101)

Calculating Purchase Equipment Cost, 𝑪𝒑°

𝒍𝒐𝒈₁₀𝑪𝒑° = K1 + K2𝒍𝒐𝒈₁₀ (A) + K3[𝒍𝒐𝒈₁₀ (A)]²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.1366 - 0.4928 𝒍𝒐𝒈₁₀(48) + (0.0070)(𝒍𝒐𝒈₁₀ 48)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 3.32787
𝑪𝒑° = $2127.50

Vertical vessel, thus from Table A.4, the value B are,

B1 = 2.25 B2 = 1.82

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

P= 1 barg
From Table A.2,

C1 = 0, C2 = 0, C3 = 0

𝒍𝒐𝒈₁₀𝐹𝑝 = 0
𝐹𝑝 = 1

From Table A.3, the Material of Construction is CS

Identification Number = 18
From Figure A.18, identification number = 18, 𝐹𝑚 = 1

CBM = 𝑪𝒑° FBM

= 𝑪𝒑° (B1 + B2FmFp)

CBM = (2127.5)[2.25 + 1.82(1)(1)]

CBM = $8658.94

𝑰1 = CEPCI 2001 = 394.3

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($8658.94)(394/607.5)
CBM(2019) = $5615.84

4. Heater (HX-101)

44
Equipment Characteristics:
1. Design type : Split ring floating head
2. Material construction : Cadmium
3. Capacity unit, A : 38.783 m² (Heat transfer area)
4. Stream pressure : 14.5 barg (assumed because not given)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Heater (HX-101) Split ring floating 4.8306 -0.8509 0.3187

head

Calculating Purchase Equipment Cost, 𝑪𝒑°

𝒍𝒐𝒈₁₀𝑪𝒑° = K1 + K2𝒍𝒐𝒈₁₀ (A) + K3[𝒍𝒐𝒈₁₀ (A)]²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8306 - 0.8509 𝒍𝒐𝒈₁₀(38.783) + (0.3187)(𝒍𝒐𝒈₁₀ 38.783)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.28315
𝑪𝒑° = $19193.32

From Table A.4, the value B are,

B1 = 1.63 B2 = 1.66

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

P= 14.5 barg
From Table A.2, 5< P <140 𝑏𝑎𝑟𝑔,

C1 = 0.03881 , C2 = -0.11272, C3 = 0.08183

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.03881 - 0.11272(𝒍𝒐𝒈₁₀ 14.5) + 0.08183(𝒍𝒐𝒈₁₀14.5)²

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.01827
𝐹𝑝 = 1.04297

From Table A.3, identification number for cadmium material is not available, hence assume
Material of Construction as SS-shell/SS-tube
Identification Number = 5
From Figure A.18, identification number = 5, 𝐹𝑚 = 2.7

CBM = 𝑪𝒑° FBM

= 𝑪𝒑° (B1 + B2FmFp)

CBM = (19193.32)[1.63 + 1.66(2.7)(1.04297)]

CBM = $121006.04

45
𝑰1 = CEPCI 2001 = 394.3
𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($121006.04)(394/607.5)
CBM(2019) = $78479.64

5. Heater (HX-102)

Equipment Characteristics:
1. Design type : Split ring floating head
2. Material construction : Cadmium
3. Capacity unit, A : 38.783 m² (Heat transfer area)
4. Stream pressure : 14.5 barg (assumed because not given)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Heater (HX-101) Split ring floating 4.8306 -0.8509 0.3187

head

Calculating Purchase Equipment Cost, 𝑪𝒑°

𝒍𝒐𝒈₁₀𝑪𝒑° = K1 + K2𝒍𝒐𝒈₁₀ (A) + K3[𝒍𝒐𝒈₁₀ (A)]²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8306 - 0.8509 𝒍𝒐𝒈₁₀(38.783) + (0.3187)(𝒍𝒐𝒈₁₀ 38.783)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.28315
𝑪𝒑° = $19193.32

From Table A.4, the value B are,

B1 = 1.63 B2 = 1.66

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

P= 14.5 barg
From Table A.2, 5< P <140 𝑏𝑎𝑟𝑔,

C1 = 0.03881 , C2 = -0.11272, C3 = 0.08183

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.03881 - 0.11272(𝒍𝒐𝒈₁₀ 14.5) + 0.08183(𝒍𝒐𝒈₁₀14.5)²

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.01827
𝐹𝑝 = 1.04297

From Table A.3, identification number for cadmium material is not available, hence assume
Material of Construction as SS-shell/SS-tube
46
Identification Number = 5
From Figure A.18, identification number = 5, 𝐹𝑚 = 2.7

CBM = 𝑪𝒑° FBM

= 𝑪𝒑° (B1 + B2FmFp)

CBM = (19193.32)[1.63 + 1.66(2.7)(1.04297)]

CBM = $121006.04

𝑰1 = CEPCI 2001 = 394.3

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($121006.04)(394/607.5)
CBM(2019) = $78479.64

6. Cooler (HX-103)

Equipment Characteristics:
1. Design type : Split ring floating head
2. Material construction : Stainless Steel
3. Capacity unit, A : 41.08 m² (Heat transfer area)
4. Stream pressure : 14.5 barg (assumed because not given)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Heater (HX-101) Split ring floating 4.8306 -0.8509 0.3187

head

Calculating Purchase Equipment Cost, 𝑪𝒑°

𝒍𝒐𝒈₁₀𝑪𝒑° = K1 + K2𝒍𝒐𝒈₁₀ (A) + K3[𝒍𝒐𝒈₁₀ (A)]²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.8306 - 0.8509 𝒍𝒐𝒈₁₀( 41.08) + (0.3187)(𝒍𝒐𝒈₁₀ 41.08)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.28739
𝑪𝒑° = $19381.62

From Table A.4, the value B are,

B1 = 1.63 B2 = 1.66

𝒍𝒐𝒈₁₀𝐹𝑝 = 𝐶1 + 𝐶2𝒍𝒐𝒈₁₀P + 𝐶3(𝒍𝒐𝒈₁₀P)²

P= 14.5 barg
47
From Table A.2, 5< P <140 𝑏𝑎𝑟𝑔,

C1 = 0.03881 , C2 = -0.11272, C3 = 0.08183

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.03881 - 0.11272(𝒍𝒐𝒈₁₀ 14.5) + 0.08183(𝒍𝒐𝒈₁₀ 14.5)²

𝒍𝒐𝒈₁₀𝐹𝑝 = 0.01827
𝐹𝑝 = 1.04297

From Table A.3, the Material of Construction is SS-shell/SS-tube

Identification Number = 5
From Figure A.18, identification number = 5, 𝐹𝑚 = 2.7

CBM = 𝑪𝒑° FBM

= 𝑪𝒑° (B1 + B2FmFp)

CBM = (19381.62)[1.63 + 1.66(2.7)(1.04297)]

CBM = $122193.20

𝑰1 = CEPCI 2001 = 394.3

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($122193.20)(394/607.5)
CBM(2019) = $79249.58

7. Reactor (R-101)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Reactor (R-101) Jacketed Agitated 4.1052 0.4680 0.0005

Diameter = 2.124 m
Height = 4.894 m
Volume = 25.44 m³

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 4.1052 + 0.4680 𝒍𝒐𝒈₁₀(25.44) - (0.0005)(𝒍𝒐𝒈₁₀25.44)²
𝑪𝒑° = $57808.84

From Figure A.7,

FBM = 4.0

48
CBM = Cp˚FBM
= ($57808.84)(4.0)
CBM = $231235.36

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($231235.36)(394/607.5)
CBM(2019) = $149969.93

8. Splitter (M-101)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Splitter/Mixer (M-101) Impeller 3.8511 - 0.2991 -0.0003

Assume,
Diameter = 0.8285 m
Height = 2.486 m

A = 2𝜋rh
= 2𝜋(0.8285+0.8285)(2.486)
A = 25.8823 m²

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 3.8511 - 0.2991 𝒍𝒐𝒈₁₀(25.8823) - (-0.0003)(𝒍𝒐𝒈₁₀ 25.8823)²
𝑪𝒑° = $2685.78

From Figure A.7

FBM = 1.38

CBM = Cp˚FBM
= ($2685.78)(1.38)
CBM = $3706.38

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($3706.38)(394/607.5)

49
CBM(2019) = $2403.81

9. Flash Column (V-101)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Flash Drum (V-102) Vertical vessel 3.4974 0.4485 0.1074

Diameter = 0.4906 m
Height = 4.6489 m
Volume = 1.8595 m³

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 3.4974 + 0.4485 𝒍𝒐𝒈₁₀(1.8595 ) - (0.1074)(𝒍𝒐𝒈₁₀ 1.8595 )²
𝑪𝒑° = $4077.84

Since it is using carbon steel as the material for the vessel,

Fm= 3.1,
Fp=1,
B1=2.25
B2=1.82.

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)
= ($4077.84)[2.25 + 1.82(3.1)(1)]
CBM = $32182.31

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($32182.31)(394/607.5)
CBM(2019) = $20872.15

10. Flash Column (V-102)

From Table A.1:

EQUIPMENT DESCRIPTION K1 K2 K3

Flash Drum (V-102) Vertical vessel 3.4974 0.4485 0.1074

50
Diameter = 1.006 m
Height = 2.6 m
Volume = 2.5346 m³

𝒍𝒐𝒈₁₀𝑪𝒑° = 𝑲𝟏 + 𝑲𝟐 𝒍𝒐𝒈₁₀ (𝑨) + 𝑲𝟑(𝒍𝒐𝒈₁₀ 𝑨)²

𝒍𝒐𝒈₁₀𝑪𝒑° = 3.4974 + 0.4485 𝒍𝒐𝒈₁₀(2.5346) - (0.1074)(𝒍𝒐𝒈₁₀ 2.5346)²
𝑪𝒑° = $4581.75

Since it is using carbon steel as the material for the vessel,

Fm= 1,
Fp=1,
B1=2.25
B2=1.82.

CBM = Cp˚FBM
= Cp˚(B1 + B2FmFp)
= ($4581.75)[2.25 + 1.82(1)(1)]
CBM = $18647.72

𝑰1 = CEPCI 2001 = 394

𝑰2 = CEPCI 2019 = 607.5

CBM(2019) = CBM(2001)( 𝑰2/𝑰1 )

= ($18647.72)(394/607.5)
CBM(2019) = $12094.16

51
APPENDIX: MANUFACTURING COST CALCULATIONS

RAW MATERIAL COST (CRM)

The plants operated 345 days per year

Raw Material Cost Flow Rate Stream Factor

(RM/MT) (kg/h)

Ammonia (NH3) 801.8 268.9401 SF =345/365

= 0.95
Nitric Acid (HNO3) 1154 813.5331

Table: Cost of Material

Ammonia

Yearly Cost = 268.9401kg/ h x 0.95 x RM 801.8/MT x 1MT/ 1000kg x 24h/d x 365d/year

= RM 1,794,524.23/year

Nitric Acid

Yearly Cost = 813.5331kg/h x 0.95 x RM 1154/MT x 1MT/ 1000kg x 24h/d x 365d/year

= RM 7,812,836.72/year

52
UTILITY COST (CUT)

Electricity

Refer to the PEE handbook, the cost of electric is $ 0.06/kWh

Equipment Power (kW) Stream Factor

HX-101 13.684

HX-102 52.4107

HX-103 66.56
SF = 345/365

R-101 333.008 = 0.95

V-101 455.685

V-102 261.041

G-101 173.254

D-101 134.957

HX-101

Yearly Cost = 13.684 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 30,063.86 /year

53
HX-102

Yearly Cost = 52.4107 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 115,146.73 /year

HX-103

Yearly Cost = 66.56 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 146,232.85/year

R-101

Yearly Cost = 333.008 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 731,621.24 /year

V-101

Yearly Cost = 455.685 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 1,001,143.59 /year

V-102

Yearly Cost = 261.041 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 573,509.17 /year

G-101

Yearly Cost = 173.254 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 380,640.42 /year

54
D-101

Yearly Cost = 134.957 kW×$0.06/kWh×(RM 4.40)/$×0.95×24h/d×365d/year

= RM 296,501.61/year

Cooling Water

Refer to the PEE handbook, the cost of cooling water is $ 14.80/1000m3

Equipment Cooling Water Flow Rate Stream Factor

(kg/h)

HX-103 1094.97 SF = 345/365

= 0.95
R-101 66600

HX-101

Yearly Flow Rate = 1094.97kg/h x m^3/1000 kg x 24h/d x 365d/year

= 9591.94 m3/year

Yearly Cost = 9591.94 m^3/yr x 0.95 x $14.80/1000m^3 x Rm4.40/$

= RM 593.40/year

R-101

Cooling Water Flow Rate = 18.5 kg/s

Cooling Water Flow Rate = 18.5kg/s x 60 min/ h x 60s/min

55
 = 66600 kg/h

Yearly Flowrate = 66600 kg/h x m^3/1000kg x 24h/d x 365d/year

= 583416 m3/year

Yearly Cost = 583416 m^3/ yr x 0.95 x $14.80/1000m^3 x RM 4.40/$

= RM 36,092.45 /year

Steam

Refer to the PEE handbook, the cost of steam is $ 27.70/1000 kg

Equipment Type of Steam Mass flow rate (kg/h) Stream Factor

HX-101 Low Pressure 265.751 SF = 345/365

= 0.95
HX-102 Low Pressure 1265.2147

HX-101

Yearly Cost = 265.751kg/h x 0.95 x $27.70/1000kg x RM 4.40/$ x 24h/d x 365d/year

= RM 269,547.35/year

HX-102

Yearly Cost = 1265.2147 kg/ hr x 0.95 x $27.70/1000kg x RM4.40/$ x 24h/d x 365d/year

= RM 1,283,288.75/year

56
REFERENCES

1. Ammonia Price. (2022). Retrieved from https://exportv.ru/price-index/ammonia

2. Nitric Acid Price. (2022) Retrieved from https://exportv.ru/price-index/nitric-acid

3. Cost Indices. (2022). Retrieved from

https://www.toweringskills.com/financial-analysis/cost-indices/

4. US Dollar to Malaysian Ringgit Exchange Rate History. (2022). Retrieved from

https://www.exchangerates.org.uk/USD-MYR-18_05_2022-exchange-rate-history.html

57