Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

TESFAY ASSEFA SILICA SAND FACTORY

INVESTMENT PROPOSAL FOR THE
PRODUCTION OF SILICA SAND USING SAND
WASH PROCESSING PLANT MACHINE

NATIONAL REGIONAL STATE OF TIGRAY

MEKELLE

DECEBER/2016 EC

1|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Contents
1. ROJECT SUMMARY ..................................................................................................................................5

2. EXCUTIVE SUMMARY...............................................................................................................................9

2.1Overview.............................................................................................................................................9
2.2 Strategic Location and Resource Potential .................................................................................10
2.3 Operational Approach ..................................................................................................................10

2.4 Economic Impact and Community Engagement......................................................................10

2.5 Financial Viability and Investment Potential ...............................................................................10

3. Market and Demand Analysis ............................................................................................................12

3.1 Market Overview ............................................................................................................................12
3.1.1 Domestic Demand .........................................................................................................................12
3.1.2 Industrial Applications ...................................................................................................................12
3.1.3 Regional and Global Demand .........................................................................................................13
3.1.4 Growth Drivers..............................................................................................................................13
3.1.5 Competitive Landscape ..................................................................................................................13
3.2 Silica Sand Markets ........................................................................................................................14
3.2.1 Glassmaking..................................................................................................................................14
3.2.2 Metallurgical Uses .........................................................................................................................15
3.2.3 Chemical Production ......................................................................................................................15
3.2.4 Paint and Coatings .........................................................................................................................15

3.2.5 Ceramics .......................................................................................................................................15

3.2.6 Filtration and Water Production ......................................................................................................16
3.2.7 Fibreglass including optical fibres ...................................................................................................16
3.3 Silica Sand Demand in Ethiopia .........................................................................................................16

4. Raw materials and supplies ................................................................................................................18

4.1 Raw material requirement per annum (Quartz Sand) ...............................................................................18

4.1 Silica Sand (Quartz Sand ...............................................................................................................19

4.2. Water: (5-10%) .................................................................................................................................19

4.3 Production Program .......................................................................................................................19

4.4 Main and Auxiliary Equipment .....................................................................................................20

4.5 Supplies ............................................................................................................................................20

2|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

4.5.1. Energy Sources (Electricity/Natural Gas)........................................................................................20

4.5.2. Chemicals (Flotation Reagents) .....................................................................................................20
4.5.3. Packaging Materials (if applicable) ................................................................................................20

5. Location, site and environment ..........................................................................................................20

5.1Location ............................................................................................................................................21

5.2 Site ....................................................................................................................................................21

6. Engineering and technology ..............................................................................................................22

6.1. Production Machinery Area .........................................................................................................23

6.2.2 Plant Layout ..................................................................................................................................24
6.2.2.1 Elements of the plant layout .........................................................................................................26
6.2.2.2 Building, Equipment and Processes ..............................................................................................27
6.2.2.3 Layout of Equipment ...................................................................................................................28

7. Organization and Human Resource ..................................................................................................37

7.1 Organizational Structure ................................................................................................................37

7.1 Management and Leadership ......................................................................................................37

1. Executive Manager: Responsible for strategic planning, financial oversight, and overall
operational direction. ..........................................................................................................................37
7.1 Technical and Engineering Teams ......................................................................................................38

7.3. Environmental and Regulatory Compliance .............................................................................38

7.4. Logistics and Supply Chain ...............................................................................................................38

7.5. Administrative and Support Functions ........................................................................................38

7.6 Professional Descriptions ...............................................................................................................39

7.6.1. Mining Operations ........................................................................................................................39
7.6.2 Processing and Refinement .............................................................................................................39
7.6.3. Maintenance and Safety ................................................................................................................39
7.6.4. Logistics and Distribution..............................................................................................................39

8. Financial analysis and investment appraisal ...................................................................................40

8.1 Cost Analysis ......................................................................................................................................40

8.2. Operating Requirement and Costs .............................................................................................43

Operating costs are defined as the sum of the costs of all inputs for production operation. They are salary,
material, fuel, utilities, maintenance, spare part costs, etc. The estimation of the production costs is based on the
proposed production plan in accordance. .....................................................................................................43

3|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

8.2.1 Salary and wage ......................................................................................................................43

8.2.2 HUMAN RESOURCE REQUIREMENT AND ANNUAL SALARY ...............................................44

8.2.3 Consumables.........................................................................................................................46

a) Fuel, oil, lubricants etc costs .........................................................................................................46

Fuel oil and lubricants consumption is estimated for quarry equipment/machinery. Accordingly, the required
annual quantity of fuel oil and lubricants is provided in the following table. ...............................................46
Table 11: Estimated Annual cost of Fuel Oil and Lubricant Consumption ..................................................46
8.2.4 Utilities ....................................................................................................................................47
8.2.5. Spare part, Repair and maintenance .................................................................................47

8.3. Labor Overhead Costs/ Employee Benefits ...............................................................................48

8.4. Costs of Raw Material ...................................................................................................................48

8.5. Royalty fee .....................................................................................................................................48

8.6. Pre - production expenditures .....................................................................................................49

8.7 Working capital ..............................................................................................................................50

8.8 Initial investment costs of the project ..........................................................................................50

8.9 Summary of initial investment costs .............................................................................................51

9. Economic Analysis ...............................................................................................................................52

9.1 Economic Benefit............................................................................................................................52

9.2. Environmental Impact Assessment (EIA)....................................................................................53

9.2.1 Project Positive Impacts and its Significances..............................................................................53
9.2.2 Possible Negative Impacts ......................................................................................................54
9.2.3 Mitigation of Measures ..............................................................................................................55
9. 3 Social Responsibility ......................................................................................................................56
10. Project implementation Schedule ...................................................................................................58
11. FINANCIAL EVALUATION ..............................................................................................................59

11.1 Financial Ratios ..............................................................................................................................59

11.2 Break-even Analysis .......................................................................................................................59

11.4 Pay-back Period ..............................................................................................................................60

11.5 Internal Rate of Return ..................................................................................................................60

11.6 Net Present Value .........................................................................................................................60

11.7. ECONOMIC AND SOCIAL BENEFITS ..........................................................................................61

4|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Appendix 11.A FINANCIAL ANALYSES SUPPORTING TABLES ..........................................................61

Appendix 11.1: NET WORKING CAPITAL (in Birr) .................................................................................61

Appendix 11.2 INCOME STATEMENT (Birr)..............................................................................................62

Appendix 11.3: DISCOUNTED CASH FLOW (in Birr)..............................................................................63

List of tables:
Table 1: Et5hiopian silica sand markets-------------------------------------------------------------------------------17

Table 2: Silica sand estimated demand in selected region of Ethiopia------------------------------------18

Table 3: raw material requirement per annum----------------------------------------------------------------------19

Table 4: annual production program----------------------------------------------------------------------------------20

Table 5: boundary coordinates of the quary site-----------------------------------------------------------------22

Table6: Land utilization----------------------------------------------------------------------------------------------------- 25

Table 7: List of machinery and equipment’s selected for raw material------------------------------------41

Table 8: List of building and civil construction works--------------------------------------------------------------42

Table 9: office furniture and equipment-----------------------------------------------------------------------------42

Table 10: summary of fixed investment----------------------------------------------------------------------------------43

Table 11: salary and wedge------------------------------------------------------------------------------------------------ 45

Table 12: estimated annual cost of fuel, oil and lubricant consumption------------------------------------46

Table 13: summary of utility expenses----------------------------------------------------------------------------------47

Table 14: cost of material---------------------------------------------------------------------------------------------------- 48

Table 15: royalty fee---------------------------------------------------------------------------------------------------------49

Table 16:Pre-production expenditure---------------------------------------------------------------------------------49

Table 17: Networking capital--------------------------------------------------------------------------------------------- 50

Table 18: Summary of fixed investment----------------------------------------------------------------------------51

5|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

List of Figures

Fig 1: Location map of Tesfay assefa silica sand project------------------------------------------------------21

Fig 2: silica sand quary site location map--------------------------------------------------------------------------22

Fig 3: silica sand processing plant flow diagram----------------------------------------------------------------24

Fig 4: schematic diagram of sand wash processing plant machine-------------------------------------25

Fig 5: Machine lay out (all components) ------------------------------------------------------------------------29

Fig 6: Raw material store----------------------------------------------------------------------------------------------- 30

Fig 7: Main office Area------------------------------------------------------------------------------------------------30

Fig 8: Feeding hopper--------------------------------------------------------------------------------------------------31

Fig 9: high frequency vibrating screen-----------------------------------------------------------------------------31

Fig 10: Feeding hopper---------------------------------------------------------------------------------------------------32

Fig 11: hydraulic classifier-----------------------------------------------------------------------------------------------32

Fig 12: belt conveyor-1--------------------------------------------------------------------------------------------------- 33

Fig 13: slurry pump------------------------------------------------------------------------------------------------------------ 33

Fig 14: Dewatering components-----------------------------------------------------------------------------------------34

Fig 15: Attrition scrubber--------------------------------------------------------------------------------------------------- 34

Fig 16: spiral washing machine------------------------------------------------------------------------------------------- 35

Fig 17: belt conveyor-2------------------------------------------------------------------------------------------------------36

Fig 18: finished material store --------------------------------------------------------------------------------------------- 36

6|Page
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

1. ROJECT SUMMARY

Project /company TESFAY ASSEFA SILICA SAND

Name:
Date of 01/15/2013 Ec.
establishment
Deal Manager Tesfay Assefa
Registration Tigray National regional state mines and Energy Agency

Business sector Mining

Address/Project Tigray, Wukro.

Location: Tel: 0914150119
E-mail: ________________________

Project The project is being promoted with view to serve Ethiopian (Tigray’s)
Description: construction industries, water treatment plants, dams, glass and ceramic
industries in particular and chemicals, paints and refractory industry in
general, with supply of high grade processed silica sand. Silica sand is the
main raw material for construction, water treatment plants, dams, glass
industry and one of the major raw materials For ceramic, chemicals, paints
and refractory industry. Silica Sand is found in abundance in Tigray. Silica
sand in its original form contains impurities like clay, iron, small quantities of
lime etc. Particularly for glass industries, silica purity must not be less than
99.0%. However, for specialty glasses Silica purity is required to be as high
as 99.8%.
Unfortunately in Tigray, there is no industry in the organized sector to
process the sand with means of sophisticated water washing equipment, leave
aside chemically treated silica. Therefore, the consumer industry has to rely
on existing supplies which contain above impurities and therefore the quality
of end product leaves much to be desired. The mineral property selected
belongs to Tesfay Assefa silica sand.

7|Page
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

This project will have its own contribution in remaining foreign currencies
in importing silica sand. Employment will be generated to the local
Villagers and neighboring Villages, Most of the Employes will be Tribal
labours Being Trained to Do Plant operation. There will be direct and indirect
employment at the first instance. 100% of the total employment will be given
to locals. Finally, the after-use of the site will be the development of
Green Belt around the periphery of the plant and retained water will be
used by surrounding people.

Investment • CAPITAL INVESTMENT -Birr 43,632,000 (the silica sand processing

Required: plant machine (sand wash machine) at this time is stored in Mekelle
ready for installation)
• TOTAL INVESTMENT -Birr 54,779,383.18
Job opportunity • The project will employ 201 permanent and more than 500 temporary
employees during Full scale production

Contribution in • The project will substitute 100% of imported materials (Till now the
Material import demand of our country Ethiopia for Silica sand is mainly met through
substitution (Foreign import).
currency) • It will save annually 2 million Dollar foreign currency.
Skilled Mon power • The management, Design and production process Experts are all
Ethiopians.

Source of Capital • The proposed capital is Totally Covered by the Owner.

Sources of raw • 100% of materials used for production are Local materials
materials for
production
Social contribution • We will contribute in social infrastructure of 7% of our profit.

8|Page
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Required Plant and • Raw material store

Equipment and • Finished material store
Infrastructure: • Office and Cafeteria building
• Production unit

Proposed factory Wukro

site(if prioritized)
Proposed use of For the above specified factory site 5000.0m2 land is required. (66% of the
land: land is utilized by the building and machinery placement)
Decision Criteria for IRR , NPV (Financial and Economic analysis with financial and Foreign
overall project currency saving )
evaluation
.
Major Conclusion It was observed that an investing of the proposed project can be well justified
under financial in both financial and terms.
analysis
Major Conclusion All these decision criteria presented and discussed in this study, indicate that
under overall investing of this Silica sand production Project would be well justified
Economic analysis economic terms. Besides, on social point of view, the project is highly viable.

2. EXCUTIVE SUMMARY
2.1Overview
our proposed project aims to establish a state-of-the-art silica sand production facility
in the resource-rich region of Wukro, Tigray, Ethiopia. Wukro is known for its vast
potential in silica sand reserves, making it an ideal location for sustainable and
responsible silica sand production. The project will leverage modern technology and
best practices to meet the growing demand for high-quality silica sand across domestic
and international markets.

9|Page
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

2.2 Strategic Location and Resource Potential

Wukro, situated in the mineral-rich Tigray region, offers abundant silica sand deposits
characterized by their high purity and quality. The site's accessibility to transportation
networks and its proximity to key markets make it an advantageous location for
establishing a silica sand production facility. Leveraging the potential of these
resources, the project seeks to contribute to the economic development and job creation
in the region.

2.3 Operational Approach

The production facility will focus on sustainable and environmentally responsible silica
sand extraction and processing. By utilizing advanced mining and processing
techniques, the project aims to optimize operational efficiency while minimizing
environmental impact through adherence to stringent environmental standards and
comprehensive Environmental Impact Assessment (EIA).

2.4 Economic Impact and Community Engagement

The project is designed to generate significant economic benefits through employment
opportunities, revenue generation, and supply chain expansion. It will also
prioritize community engagement and social responsibility, fostering mutually
beneficial Relationships with local stakeholders and ensuring health, safety, and
environmental stewardship.

2.5 Financial Viability and Investment Potential

A thorough financial analysis reveals the promising returns and potential for value
creation. Supported by a robust investment appraisal, the project demonstrates attractive

10 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

financial metrics including Net present value (NPV), internal rate of return (IRR),
and a competitive payback period, making it an appealing investment opportunity
with favorable risk-return profiles.

2.6 Commitment to Sustainability and Responsibility

Environmental protection, resource conservation, and social responsibility are integral

to the project's ethos. The initiative will focus on sustainable practices, community
development, and stakeholder collaboration, establishing a benchmark for
responsible silica sand production operations.

The proposed silica sand production project in Wukro, Tigray, Ethiopia presents a
compelling opportunity, harnessing the region's abundant resources to meet the demand
for high-quality silica sand. With a commitment to technological innovation,
sustainable practices, and positive socio-economic impact, the project stands as a
catalyst for regional development, industry growth, and responsible resource utilization.

Silica sand is the main raw material for construction, water treatment plants, dam’s
glass industry and one of the major raw materials for ceramic, chemicals, paints
and refractory industry. Silica Sand is found in abundance in the regional States of
Tigray. Silica sand in its original form contains impurities like clay, iron, small
quantities of lime etc. Particularly for glass industries, silica purity must not be less than
99.0%. However, for specialty glasses Silica purity is required to be as high as 99.8%.
Similarly for rest of industries using Silica Sand as one of the Raw materials, presence
of clay, calcium and iron is most detrimental for usage. Of these Iron content is the most
un-desirable element for glass and ceramic industry. Any quantity above 0.1% makes
the raw material unusable.
11 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

The total investment cost of the project including working capital is estimated
approximately at Birr 55 million (54,779,383.18). From the total investment cost the
highest share (Birr 43,632,000.0 or 80%) is accounted by fixed investment cost
followed by initial working capital (Birr 11,147,383.18or 20%).The project is
financially viable with an internal rate of return (IRR) of 25.51% and a net present value
(NPV) of Birr 50.63 million. The project /factory when the factory starts work at full
capacity it will create a job for 201permanent and more than 500 temporary workers.
The establishment of such factory will have a foreign exchange saving effect to the
country by substituting the current imports and also generates income for the
Government in terms of tax revenue and payroll tax .It will save foreign currencies of
2 million Dollar annually during the 1st three years and scaled up to 5 million dollar at
the end of tenth year production period).

3. MARKET AND DEMAND ANALYSIS

3.1 Market Overview
3.1.1 Domestic Demand
Ethiopia's growing Construction sector is a significant consumer of silica sand, using
it in concrete production, masonry, and other structural applications. The country's
infrastructure development, urbanization, and industrial expansion create a consistent
demand for high-quality silica sand as a fundamental construction material.
3.1.2 Industrial Applications
Silica sand is widely utilized in various industries, including glass manufacturing,
foundry casting, ceramics, and chemical production. The project will target these
industries, aligning its production with the stringent quality standards required for
specific industrial applications.

12 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

3.1.3 Regional and Global Demand

Regional Opportunity: Ethiopia's proximity to emerging markets in East Africa
presents an advantageous position for exporting silica sand to neighboring countries
with growing construction and industrial sectors. The project can capitalize on nearby
regions experiencing infrastructure development and industrial growth.
International Markets: Given the high purity and quality of silica sand in the Wukro
area, the project can explore export opportunities to global markets, especially for
specialized applications such as high-purity silica for electronics, solar panels, and
specialty glass manufacturing.
3.1.4 Growth Drivers
Construction Sector Expansion: Ethiopia's burgeoning construction activities,
including residential, commercial, and infrastructure development, are key drivers for
silica sand demand, offering a consistent and growing market.
Industrial Advancements: The expanding industrial and manufacturing base in
Ethiopia and neighboring regions, aligned with regional economic growth, underscores
the increasing need for silica sand in industrial processes.
3.1.5 Competitive Landscape
Quality Differentiation: The project's focus on maintaining high-quality silica sand,
free from impurities, positions it as a key player in a competitive market, catering to
industries requiring precise specifications.
Environmental and Compliance Standards: Emphasizing sustainable production
practices and compliance with international quality standards will provide a competitive
edge, especially in export markets where adherence to environmental and ethical
sourcing standards is paramount.

13 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

The market and demand analysis for the silica sand production project around Wukro,
Tigray, Ethiopia reveals promising prospects. Fueled by domestic construction
demand, regional industrial growth, and potential export opportunities, the project is
strategically positioned to capitalize on the expanding silica sand market. With a focus
on product differentiation, quality adherence, and sustainable practices, the project is
poised to address the evolving needs of both local and international consumers,
establishing itself as a significant contributor to the silica sand supply chain.

3.2 Silica Sand Markets

High-grade silica sand is a key raw material in the industrial development of the world,
especially in the glass, metal casting, and ceramics industries. High-grade silica sand
contains a high portion of silica (over 99% SiO2) and is used for applications other than
construction aggregates. Unlike construction sands, which are used for their physical
properties alone, high-grade silica sands are valued for a combination of chemical and
physical properties. Ethiopian consumption of industrial silica sand is expected to climb
7-10% per year through 2024.
3.2.1 Glassmaking
Silica sand is the primary component of all types of standard and specialty glass. It
provides the essential SiO2 component of glass formulation; its chemical purity is the
primary determinant of colour, clarity and strength in glass. Industrial sand is used to
produce flat glass for building and automotive use, container glass for foods and
beverages, and tableware. In its pulverized form, ground silica is required in the
production of fibreglass insulation and for reinforcing glass fibres. Specialty glass
applications include test tubes and other scientific tools, incandescent and fluorescent
lamps. Over the past 20 years, growth in glass demand has exceeded growth and
continues to grow at 5% per annum.
14 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

3.2.2 Metallurgical Uses

In metal production, silica sand operates as a flux to lower the melting point and
viscosity of slag to make them more reactive and efficient. Lump silica is used either
alone or in conjunction with lime to achieve the desired base/acid ratio required for
purification of final metals. These base metals can be further refined and modified with
other ingredients to achieve specific properties such as greater strength, corrosion
resistance or electrical conductivity. Ferroalloys are essential in specialty steel
production. Industrial sand is used by the steel and foundry industries for de-oxidation
and grain refinement.

3.2.3 Chemical Production

Silicon-based chemicals are found in thousands of everyday applications ranging from
food processing to soap and dye production. In this case, SiO2 is reduced to silicon
metal by coke in an arc furnace, to produce the Si precursor of other chemical processes.
Industrial sand is the main component in chemicals such as sodium silicate, precipitated
silica, silicon tetrachloride and silicon gels. These chemicals are used in products such
as household and industrial cleaners, in the manufacture of fibre optics and to remove
impurities from cooking oil and brewed beverages.

3.2.4 Paint and Coatings

Paint formulators select micron-sized industrial sands to improve the appearance and
durability of architectural and industrial paint and coatings. High purity silica produces
critical performance properties such as brightness and reflectance and colour
consistency. In architectural paints, silica fillers improve tint retention, durability, and
resistance to dirt, mildew, cracking and weathering. Low oil absorption allows
increased pigment loading for improved finish colour. In marine and maintenance
coatings, the durability of silica imparts excellent abrasion and corrosion resistance.

3.2.5 Ceramics
Ground silica is an essential component of the glaze and body formulations of all types
of ceramic products, including tableware, sanitary ware and floor and wall tile. In the
ceramic body, silica is the skeletal structure onto which clays and flux components
attach. The SiO2 contribution is used to modify thermal expansion, regulate drying,
contain shrinkage and improve structural integrity and appearance. Silica products are
15 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

also used as the primary aggregate to provide high temperature resistance to acidic
attack in industrial furnaces.

3.2.6 Filtration and Water Production

Industrial sand is used to filter water to become drinkable. It is also necessary in the
processing of wastewater and the production of clean water from wells. Uniform grain
shapes and grain size distributions produce efficient filtration bed operations (including
multimedia) for the removal of contaminants from wastewater to provide potable water.
As silica is chemically inert, it will not degrade or react when it comes in contact with
acids, contaminants, volatile organics or solvents. Silica is used as packing material in
deep-water wells to increase yield from the aquifer by expanding the permeable zone
around the well screen and by preventing the infiltration of fine particles from the
formation.

3.2.7 Fibreglass including optical fibres

Washed, correctly sized and dry sorted, the silica sand from the Projects can potentially
be targeted for high-grade applications in the glass industry. The main export
destination countries for these types of products are China, Japan, Taiwan and Korea.
Suppliers need to work with the customers and or distributors in each key market to
provide the required tonnages of suitably specified high grade sand delivered in
container loads, or bulker bag sand that the sand would be delivered from the site to a
port facility. Final delivery is often in pneumatic tanker or bulker bags. Some large
producers have on-site grinding facilities using flint pebbles as media.

3.3 Silica Sand Demand in Ethiopia

Reason for demand

 Rebound in building construction industry

 Increase in automobile assembly and production
 Rising demand for energy efficient windows
 Strong demand for fabricated flat glass products
 Use of glass in solar thermal panels and photo voltaic modules

16 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

 Expanding application of glass in health care and electronic sectors

 Demand for glass products with solar control and impact resistance featur

No use spec Market in Growth in

Ethiopia Ethiopia (%)
1 Float (plate) glass 99.5% SiO2 5-10 Mt 5%-6%
2 Container glass 99.5% SiO2 7-7.5 Mt 5%-6%
3 Cover glass 99.5% 5-6Mt +30%
SiO2&low Fe
4 Smart Glass 99.5% 1-2Mt 5%-6%
SiO2&low Fe
5 Specialist Glass 99.7% SiO2 50-60kt +10%
(thin screen)
Table:1 Ethiopian silica sand markets

Product requirements will be based on SiO2 content, other impurities and particle
size distribution. There are many and varied requirements generally dependent on
the final product.

17 | P a g e
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Projected Ethiopian estimated silca sand per region (Mt to 2032)

No Year/country 2024 2025 2026 2027 2028 2029 2030 2031

1 Tigray 0.89 0.94 1.2 1.3 1.3 1.4 1.5 1.5

2 Amhara 1.05 1.18 1.2 1.5 1.4 1.5 1.6 1.7
3 Oromia 1.16 1.9 2.4 2.8 3.4 3.6 4.4 5.6
4 Afar 1.42 1.47 1.5 1.3 1.6 1.6 1.7 1.7
5 Southern 0.35 0.49 0.51 0.53 0.6 0.6 0.7 0.8
Ethiopia
6 Somalia 0.19 0.15 0.17 0.2 0.3 0.3 0.4 0.5
Total 5.6 6.13 6.9 7.6 8.6 9 10.3 11.8
Table: 2 silica sand estimated demand in selected regions of Ethiopia Mt to 2032

4. Raw materials and supplies

Establishment of mining capacity that enables to provide all the raw materials needed
by the Silica sand processing plant is one of the integral plans of Metewae silica sand
factory. Such capacity is dependent on the requirement of the processing capacity of the
plant, the overall working time plan and design criteria. Tesfay Assefa silica sand
factory has projected the following raw material requirement and supply per annum.

4.1 Raw material requirement per annum (Quartz Sand)

Production Efficiency
60% 80% 100%
Year-1 Year-2 Year-3
18,000 ton 24,000 ton 30,000 ton

18 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Table 3: Raw Material Requirement per Annum

4.1 Silica Sand (Quartz Sand)

(Approximately 90-95%) - Naturally occurring quartz-rich sand deposits are the

primary raw material for silica sand production. The high silica content is critical for
meeting the purity and quality standards required for various industrial applications.

4.2. Water: (5-10%)

Water is an essential component in the silica sand production process, primarily for
washing, screening, and processing operations. The exact percentage may vary based
on the washing and processing techniques employed, as well as the moisture content of
the raw silica sand.

4.3 Production Program

The production program expresses an over view of the amount of Quartz sand that have
to be supplied to the processing plant. At full capacity utilization of the quarry, the
annual required amount of each raw material is proposed based on plant annual
production demand. However, full capacity is unlikely to be attained instantly. Capacity
will be built gradually and there is an avoidable learning curve that everyone has to pass
through.
Production plan estimate is prepared based on the assumption that there will be a year
for preparation and build-up of stocks and provide material for commissioning. The
implementation process will start at 60% capacity utilization level while capacity is
assumed to reach 80% in the second year and full capacity utilization will be attained
during the third year of operation. Moreover, in planning of production program the
possible expansion of the production as well as raw material will be well thought-out.
In consideration of this concept, the production program was prepared on the basis of a
10 years raw material supply to the silica sand processing plant as shown in the
following table.
19 | P a g e
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Raw
Year- Year- Year- Year- Year- Year-
material Unit Year-2 Year-3 Year-5 Year-9
1 4 6 7 8 10
description
18,00 30,00 30,00 30,00 30,00
Quartz sand Ton 24,000 30,000 30,000 30,000 30,000
0 0 0 0 0

Table 4: Annual Production Program Over 10 Years

4.4 Main and Auxiliary Equipment

Equipment like excavator, loader and Sino-trucks will be vitally required breaking of
rock, loading, and piling up of end product and transportation of the raw material in to
the processing plant.
4.5 Supplies

4.5.1. Energy Sources (Electricity/Natural Gas)

Energy sources are essential for powering the processing machinery, driers, and other
equipment used in the production process.

4.5.2. Chemicals (Flotation Reagents)

Depending on the processing techniques employed, certain chemicals may be used for
purification, flotation, acid leaching, or other specialized treatments aimed at removing
impurities and enhancing the quality of the silica sand.

4.5.3. Packaging Materials (if applicable)

If the silica sand is packaged for transport or distribution, packaging materials such as
bags, containers, or bulk storage facilities may be a supplementary supply component,
depending on the market and delivery logistics

5. Location, site and environment

Wukro, located in the Tigray region of Ethiopia, is known for its significant silica sand
deposits, making it an important location for silica sand production. The site's

20 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

geography and environment play a crucial role in the extraction and processing of silica
sand.

5.1Location
Fig 1: location map of Tesfay Assefa silica sand project

Wukro is situated in the northern part of Ethiopia, within the Tigray region. This area
is characterized by its geologically diverse landscape, with significant mineral deposits
including silica sand. The region's proximity to transportation routes and infrastructure
networks is also critical for the logistical aspects of silica sand production.

5.2 Site
The quarry sites for silica sand production is within 1.2KM from Wukro town, these
sites are typically located near silica-rich geological formations, such as sandstone and
quartzite, which serve as the primary sources of silica sand.

Table 5: boundary coordinates of the quarry site

21 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

No X-Coordinate Y-Coordinate Remark

1 0563925 1526590
2 0563827 1526602
3 0563709 1526622
4 0563700 1526704
5 0563743 1526805
6 0563795 1526871
7 0563917 1526893
8 0563989 1526707
9 0563990 1526637

Fig 2: Silica sand quary site location map

6. Engineering and technology

When it comes to establishing a silica sand production facility, engineering and
technology play a pivotal role in ensuring efficient operations and high-quality output.
22 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Implementing the right machinery, layout, and capacity planning is essential for a
successful project.

6.1. Production Machinery Area

The production machinery area for silica sand production encompasses various
equipment and facilities involved in the extraction, processing, and refinement of
silica sand. This includes machinery for mining and excavation, crushing, screening,
washing, drying, and packaging. The machinery area is designed with a focus on
optimizing workflow, ensuring worker safety, and accommodating future expansion.
Additionally, the machinery area is adhered to industry standards and regulatory
requirements to ensure operational efficiency and compliance.

Fig 3: silica sand processing plant flow diagram

23 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

6.2.1 Land, Building and Civil Works

The envisaged plant and infrastructure requires a total land area of 5000.0m2.

Table 6: Land utilization

No Machine name Area (m2)

1 Feeding hopper 150
2 Trommel 150
3 High frequency vibrating screen 150
4 Hydraulic classifier 100
5 Belt conveyer-1 200
6 Attrition scrubber 150
7 Spiral washing machine 150
8 Slurry pump 100
9 Spiral chute separator 150
10 Dewatering components 200
11 Belt conveyor-2 200
12 Drying machine 100
13 Raw material store area 500
Office, Cafeteria & meeting hall building unit
14 500
area
15 Finished material store area 500
Total 3300
For green area, car sheds and Access roads 1700
Total proposed Area 5000
Percent Utilized land (%) 66.00%

6.2.2 Plant Layout

Working Principles
the sand wash processing plant machine functions as a multi-stage system, beginning
with the feeding and pre-screening of raw silica sand. It then undergoes a series of
processing steps including scrubbing, classification, and dewatering. Here's a
simplified overview of the typical working principles of the key components:
Trommel: The raw silica sand is fed into the trommel, where it undergoes rotational
screening, segregating oversize particles and debris from the desired sand fraction.
Hydraulic Classifiers: Utilizing the principles of centrifugal force, the hydro
24 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

cyclones separate fine particles and slimes from the silica sand, effectively removing
impurities and improving the sand's quality.
Attrition Cells or Scrubbers: These devices employ mechanical agitation and
chemical treatment, if required, to disintegrate and disperse contaminants, enhancing
the purity and cleanliness of the silica sand.
Dewatering Components: The final stage involves extracting excess moisture from
the processed silica sand, typically accomplished through dewatering screens or
centrifuges, resulting in a dry, refined product ready for storage or further processing.
The sand wash processing plant machine's seamless integration of these components
and its meticulous adherence to effective washing, classification, and dewatering
processes ensure the production of high-quality silica sand meeting industry
specifications and customer requirements.

Size, shape, location, construction, and layout of buildings and other facilities

should permit the most efficient utilization of materials, processes, and

methods. Some materials and processes may favor gravity How and the

construction of a multi-storied building, for example, in the case of mills for one

treatment. In processes, where material charging is to be done through trolleys

or drums, which are required to be carried from one floor to other, elevators

may be provided, to avoid accidents in lifting them.

Description and Overall Design
The sand wash processing plant machine is typically designed as a modular system
comprising various interconnected components housed within a robust steel framework.
Its design prioritizes efficiency, durability, and ease of maintenance. The modular
design allows for scalability and flexibility, catering to varied production capacities and
operational requirements.
Dimensions and Footprint: The physical dimensions of the sand wash processing
plant machine are tailored to accommodate the specific throughput capacity and
25 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

processing parameters of the production facility. The overall footprint is optimized for
space efficiency while enabling seamless integration with material feed systems and
downstream processing units.
Specialized Features and Components
1. Trommel (Rotating Drum Screen): A key component for initial screening and size
classification of the raw silica sand. It ensures efficient removal of oversized particles
and debris, contributing to the overall purity of the final product.
2. Hydraulic Classifiers (Hydro cyclones): These specialized components are
employed for desliming, removing fine particles, and achieving the desired particle size
distribution of the processed silica sand.
3. Attrition Cells or Scrubbers: These components facilitate the physical and chemical
breakdown of contaminants and agglomerated materials, improving the cleanliness and
quality of the silica sand.
4. Dewatering Screens or Centrifuges: Essential for moisture removal from the
washed sand, ensuring optimal moisture levels for downstream processing and storage.
6.2.2.1 Elements of the plant layout
 Building, Machines, Equipment and Processes
 Layout of Equipment
 Raw materials unit
 Production unit
 Store House

26 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 4: Schematic diagram of Sand wash processing plant machine

6.2.2.2 Building, Equipment and Processes

The process layout and building design for a silica sand production facility are critical
elements of the overall project. The layout needs to optimize the flow of raw materials,
machinery, and personnel to ensure smooth operations. Streamlining the layout can lead
to reduced production times, minimized material handling, and enhanced safety
protocols. Furthermore, the building design should accommodate the various stages of
production, including storage, processing, quality control, and packaging. Factors such
as ventilation, environmental controls, and energy efficiency should also be integrated
into the building design to ensure sustainable and responsible production practices.

27 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Major factors determining the size, shape and type of buildings and structures are the
nature of the processes and materials, maintenance, mechanical handling equipment,
requirement for gravity flow, equipment needing specially strong foundations; access
for construction; commissioning, operation; space for future expansion, escape and
firefighting, containment of accidents; environmental impact, and working conditions.
These can vary greatly. High hazard processes should be located in small isolated
buildings of limited occupancy, or in areas cut off by fire-resistant materials appropriate
to the hazard involved. Buildings will be designed so that internal explosions will
produce minimum damage and minimum broken glass. Lower hazard operations can
justify larger units.

6.2.2.3 Layout of Equipment

Various methods are used to determine the safest and most efficient layout of production
machines and equipment. The two-dimensional method consists of templates made to
scale and fitted into a plan of the site or floor area. In this particular context computer
aided design (CAD) method is used.

Fig 5: Machine lay out (all components)

28 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 6: Raw material store

Fig7: Main office area

29 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 8: Feeding hopper

Fig 9: Trommel
30 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 10: Feeding hopper

Fig 11: hydraulic classifier

31 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 12: Belt conveyor-1

Fig 13: Slurry pump

32 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 14: Dewatering components

Fig 15: Attrition scrubber

33 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 16: spiral washing machine

34 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 17: Belt conveyor-2

35 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

36 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Fig 18: finished material store

7. Organization and Human Resource

In the context of silica sand production, the human resource requirements and
organizational structure play a crucial role in ensuring the effectiveness, safety, and
efficiency of operations. Here's a breakdown of the professional descriptions and
organizational aspects pertinent to silica sand production:

7.1 Organizational Structure

7.1 Management and Leadership
1. Executive Manager: Responsible for strategic planning, financial oversight,
and overall operational direction.
2. Operations Manager: Oversees day-to-day production activities, resource
allocation, and adherence to safety and environmental standards.
37 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

3. Quality Control Manager: Ensures the quality of silica sand meets industry
standards and customer specifications.

7.1 Technical and Engineering Teams

1. Mining Engineers: Engaged in mine planning, extraction methodologies, and safety
protocols for silica sand mining.

2. Process Engineers: Responsible for optimizing the production process, from

washing and refining to packaging and distribution.

3. Maintenance Engineers: Ensure the upkeep of machinery and equipment to

minimize downtime and maintain production efficiency.

7.3. Environmental and Regulatory Compliance

1. Environmental Engineers: Address environmental impact assessments,
sustainability practices, and compliance with regulations.

2. Health and Safety Managers: Implement safety protocols, employee training, and
occupational health standards.

7.4. Logistics and Supply Chain

1. Supply Chain Managers: Oversee the procurement of raw materials, transportation,
and inventory management.

2. Distribution Managers: Coordinate the shipping and delivery of finished silica

sand products to domestic and international markets.

7.5. Administrative and Support Functions

1. Human Resources: Recruitment, training, and retention of skilled personnel, as well
as maintaining labor law compliance.

2. Finance and Accounting: Manage budgeting, financial reporting, and compliance

with taxation and auditing requirements.

3. Information Technology: Support for production system management, data

analysis, and technology infrastructure.

38 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

7.6 Professional Descriptions

7.6.1. Mining Operations
Mine Geologists: Assess geological formations and optimize mining locations for
silica sand extraction.

Drillers and Blasters: Conduct drilling and blasting operations to excavate silica sand
deposits.

Heavy Equipment Operators: Operate machinery for material handling, loading,

and transportation within the mining site.

7.6.2 Processing and Refinement

Plant Operators: Run processing equipment for washing, screening, and drying
silica sand.

Quality Assurance Technicians: Perform quality checks and ensure the product
meets specifications.

Laboratory Technicians: Conduct mineral analysis and quality testing for silica sand
products.

7.6.3. Maintenance and Safety

Maintenance Technicians: Maintain and repair processing machinery and
equipment.

Occupational Health Specialists: Monitor workplace safety, health hazards, and

emergency response procedures.

7.6.4. Logistics and Distribution

Truck Drivers: Transport raw materials and finished products to and from the
production facility.

Warehouse Personnel: Manage inventory, storage, and loading/unloading of silica

sand products.

Recruitment for these roles should prioritize individuals with expertise in mining,
mineral processing, industrial engineering, quality control, environmental management,

39 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

logistics, and occupational health. Relevant industry experience and knowledge of silica
sand production processes are highly valued. Additionally, candidates should
demonstrate a commitment to safety, environmental stewardship, and continuous
improvement in production efficiency.

8. Financial analysis and investment appraisal

When considering the financial aspects and investment appraisal of a silica sand
production project, it's essential to evaluate the potential costs, revenue streams, and
investment returns associated with the endeavor. Here's a breakdown of the key
components involved in the financial analysis and investment appraisal for silica sand
production:

8.1 Cost Analysis

Capital Expenditure (CAPEX): This includes the initial investment in land
acquisition, infrastructure development, machinery and equipment, and the
establishment of processing facilities.

Operating Expenses (OPEX): These encompass ongoing costs such as labor, energy,
maintenance, raw material procurement, transportation, and administrative expenses.

Capital Resource Requirements

To achieve the production target set out above, the investment for ten years period
would be considered. The project capital requirement includes land rent/ lease, site
preparation & land development, plant machinery & equipment, building & civil works,
furniture & fixture required for production activity of the project is detailed in respective
sections.

Equipment and Machinery

The Major equipment and machinery required for silica sand operation and mining are:

Excavator

Loader

40 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

Dump truck

Table 7: Lists of Machinery and Equipment Selected for Raw Material

S.N Description Qty Unit price Total price

1 Sand wash machine 1 13,000,000.00 13,000,000.00
Hydraulic excavator with jack
2 1 5,000,000.00 5,000,000.00
hammer

Wheel loader, bucket capacity 3m3 ,

3 2 2,000,000.00 4,000,000.00
160HP

4 Sino truck 3 3,000,000.00 9,000,000.00

5 Fuel depot (5,000m3) 1 300,000.00 300,000.00

6 Water tank (Roto 5,000m3) 1 20,000.00 20,000.00

Total 31,320,000.00
Note : The required quantity of quarry machineries is calculated based on the above demonstrated
plant annual production capacity(30,000ton)

8.2 Building and Civil Construction Works

Table 8. List of Building and Civil Construction Works
S.N Description unit qty Unit price(Birr) Total cost (Birr)

2 Mining staff Office Room pcs 16 500,000.00 8,000,000.00

3 Store multi-purpose pcs 3 1,200,000.00 3,600,000.00

4 Guard room pcs 4 3000 12,000.00

Total 11,612,000.00

41 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

a) Office furniture and equipment

Table 9: Office Furniture and Equipment, Birr

S.N Description unit qty Unit price(Birr) Total cost (Birr)

1 Swivel chair pcs 5 2,000.00 10,000.00

2 Single pedestal desk pcs 10 3,500.00 35,000.00

Desk top computer with

3 pcs 10 30,000.00 300,000.00
accessories

4 Shelf pcs 10 25,000.00 250,000.00

5 Gust chairs pcs 30 3000 90,000.00
Total 685,000.00

a) Summary of fixed capital investment

Table 10: Summary of Fixed Investment, (Birr)

No. Investment Break dawn Total

1 Fixed investment
1.1 Machinery and equipment 31,320,000.00
1.2 Civil construction works 11,612,000.00
1.3 Office equipment and furniture 685,000.00
1.4 Environmental protection 15,000.00
Total fixed capital 43,632,000.00

42 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

8.2. Operating Requirement and Costs

Operating costs are defined as the sum of the costs of all inputs for production operation.
They are salary, material, fuel, utilities, maintenance, spare part costs, etc. The
estimation of the production costs is based on the proposed production plan in
accordance.

8.2.1 Salary and wage

The proposed project by its nature is a labor intensive and expected to create job
opportunity for about 201 citizens in the mining area and other in processing factory.
The table below indicates the job description, required number and monthly salary. The
organization and manpower will logically follow from the equipment selection. The
experience of similar industries and personal practices has been taken into
consideration.

43 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

8.2.2 HUMAN RESOURCE REQUIREMENT AND ANNUAL SALARY

Sr.No Description No Salary/month Monthly Annual

A. Management and leadership Birr Birr Birr

1 Executive manager 1 50,000.00 50,000.00 600,000.00

2 Operation manager 1 40,000.00 40,000.00 480,000.00
3 Quality control manager 1 35,000.00 35,000.00 420,000.00
Subtotal 3 1,500,000.00
B. Technical and Engineering team

4 Mining Engineer 2 30000 60000

720,000.00
5 Process Engineer 2 25000 50000
600,000.00
Subtotal 4
1,320,000.00
C. Environmental and Regulatory Compliance
6 Environmental engineer 1 20,000.00 20,000.00 240,000.00
7 Health and safety manager 1 18,000.00 18,000.00 216,000.00
Subtotal 2 456,000.00
D. Logistics and supply chain
9 Supply chain manager 1 20,000.00 20,000.00 240,000.00
10 Distribution manager 1 15,000.00 15,000.00 180,000.00
Subtotal 2 420,000.00
E. Administrative and support function
11 Human resource manager 1 25,000.00 25,000.00 300,000.00
12 Finance manager 1 25,000.00 25,000.00 300,000.00
Subtotal 2 600,000.00
F. Professionals

13 Mine Geologist 2 25,000.00

50,000.00 600,000.00
14 Driller and blasters 4 25,000.00
100,000.00 1,200,000.00
15 Heavy equipment operators 6 15,000.00
90,000.00 1,080,000.00
16 Plant operators 15 8,000.00
120,000.00 1,440,000.00
17 Quality assurance technicians 1 10,000.00
10,000.00 120,000.00

44 | P a g e
Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

18 Laboratory technicians 1 7,000.00

7,000.00 84,000.00
19 Maintenance technicians 10 7,000.00
70,000.00 840,000.00
20 Truck drivers 10 10,000.00
100,000.00 1,200,000.00
21 Ware house personnel 1 8,000.00
8,000.00 96,000.00
22 Secretary 1 5,000.00
5,000.00 60,000.00
23 Accountant 1 10,000.00
10,000.00 120,000.00
24 sales man/purchaser 1 10,000.00
10,000.00 120,000.00
25 clerk 1 5,000.00
5,000.00 60,000.00
26 cashier 1 5,000.00
5,000.00 60,000.00
27 foremen 10 3,000.00
30,000.00 360,000.00
28 general service 1 5,000.00
5,000.00 60,000.00
29 laborers 122 9,000.00
1,098,000.00 13,176,000.00
Sub total 188 20,676,000.00

Total 201 0 0
24,972,000.00

Employees basic benefit 25% of basic

6,243,000.00
salary

Grand Total 201 31,215,000.00

Table 11: Salary and wage, (Birr)

45 | P a g e
 Tesfay Assefa Silica sand Factory Investment proposal for the production of silica sand

8.2.3 Consumables

a) Fuel, oil, lubricants etc costs

Fuel oil and lubricants consumption is estimated for quarry equipment/machinery. Accordingly, the required annual
quantity of fuel oil and lubricants is provided in the following table.

Table 11: Estimated Annual cost of Fuel Oil and Lubricant Consumption

Annual Annual fuel

Consumption Unit price in Birr Total Annual fuel cost
No. Description Qty Working consumption
(lit/hour) /liter (Birr)
hours/ year (liter)

Hydraulic excavators,
1 300HP with rock 1 25 1890 47,250.00 54 2,551,500.00
breaker
Wheel loader, bucket
2 capacity 3m3 , 2 20 1890 37,800.00 54 2,041,200.00
160HP
3 Sino-Trucks 2 15 1890 28,350.00 54 1,530,900.00
Total 6,123,600.00
Total oil and lubricant cost( 10% of total Fuel cost) 612,360.00
Total Fuel , oil and lubricant cost 6,735,960.00

46 | P a g e
T
8.2.4 Utilities
Utility expense composes of electricity, water, telephone, etc and
their respective costs are similarly given in the summary in the table
below.

a) Water
The annual water consumption for silica sand quarry area, crusher plant
and camp site including auxiliary consumptions is approximately 10m3
per day and water consumption is 30,000m3. Hence, the annual cost of
drinking water consumption at the rate of 8 Birr/ m3 will be Birr 240,
00.00.

Table 13: Summary of Utility Expenses, (Birr) for silica sand site

Unit
No Description Unit Qty
Price Total Cost

1 Water m3 30,000.00 8 240,000.00

2 Telephone pcs 270.00 50 13,500.00

Total 253,500.00

8.2.5. Spare part, Repair and maintenance

Quarry equipment should have a significant cost from repair and spare
parts at least for the initial production years. Only the annual costs for
spare parts, repair and maintenance items are calculated as costs, however,
the workshop and labor costs of personnel are entered in the factory
personnel costs. Moreover, for the earth moving machinery and
equipment 3% of the total acquisition value of machinery and equipment
costs of recommended spare parts has been expensed for the 1 Year.
Accordingly, the cost of spare parts is computed and equals Birr
106,652.70 per year.

47 | P a g e
T
8.3. Labor Overhead Costs/ Employee Benefits
This cost includes cash indemnity, overtime and holly days, food and
allowance, perdium and traveling, medical expenses, insurance, bonus,
training, etc. This cost is estimated as 15% of salary and will be Birr
4,682,250.

8.4. Costs of Raw Material

Cost estimate for material inputs are expressed at a full capacity
utilization of the Silica sand processing factory assuming for the first
three years sufficient reserves of materials are available and the cost of
the material is not fixed over the production period. Projected cost of
raw material for production time for the first three years is presented as
follows.

Table 14 Cost of raw material

year Raw material Annual production Unit cost Total cost birr
capacity (tone) raw material
( birr/ton)

2024 Quartz sand 18,000 119.00 2,142,000.00

20205 " 24,000 119.00 2,856,000.00

2026 " 30,000 119.00 3,570,000.00

Total 8,568,000.00

8.5. Royalty fee

In order to produce the required silica sand, the project needs its own
quarry area. During the full production capacity of the project, the annual
royalty fee is estimated for the first three years as follows.

48 | P a g e
T

Table 15. Royalty fee

Annual Unit price

Annual sales Royalty Royalty fee
Year production (
( birr ) rate % ( birr )
ton) ( birr/ton)

2023 18,000 1,100.00 19,800,000.00 3 594,000.00

2024 24,000 1,100.00 26,400,000.00 3 792,000.00
2025 30,000 1,200.00 36,000,000.00 3 1,080,000.00
Total 2,466,000.00

8.6. Pre - production expenditures

It consisting of all expenditure occurring prior to the beginning of the
production. This expenditure includes geological exploration, consultancy
fee, land acquisition, feasibility and environmental impact assessment
studies, crusher plant erection, etc. where the details are given below.
Table 16: Pre - production expenditures
No. Area of cost cost(Birr)

1 Exploration expenditure 80,000.00

2 Consultancy for feasibility study 95,000.00

3 Land acquisition (Compensation) for mining area 900,000.00

4 Site development 100,000.00

Total 1,175,000.00

49 | P a g e
T

8.7 Working capital

It is the necessary capital to purchase goods and services, which are used
for initial production activities of the project. The following parameters
are used in estimating the net working capital requirements of the project
and recommended to be done along with other financial cost during the
overall feasibility financial analysis.

Table 17: Net Working Capital

Days of
No. Area of cost Cost, Birr
coverage
1 Salary & wages 90 7,803,750.00

Raw materials
2 90 2,142,000.00
consumed

Maintenance
3 90 26,633.18
expenses

Total 90 9,972,383.18

8.8 Initial investment costs of the project

The two categories of initial investment cost include:

 Fixed investment costs : This comprises the costs to be incurred for

the purchase of all technical resources (machinery, building,
equipment’s etc) that are required for the production activity of the
project; and,
 Pre-operating costs: Which are the expenditures needed to run the
project for 3monthes before it commences its commercial production,
i.e. the costs for feasibility study, land lease cost and licensing fees,

50 | P a g e
T

8.9 Summary of initial investment costs

Table 18: Summary of Fixed Investment, Pre- Production
Expenditure and Working Capital

No Investment breakdown Total value

Fixed Investment:
1.1 Machinery and
31,320,000.00
equipment
1.2 Civil Construction
11,612,000.00
1 works
1.3 Office equipment
685,000.00
and furniture
1.4 Environmental
15,000.00
protection
Sub-total-1 43,632,000.00
Pre - production
2 1,175,000.00
expenditures

3 Working Capital 9,972,383.18

Sub-total-2 11,147,383.18
Total Investment
54,779,383.18
cost(subtotal 1&2)

51 | P a g e
T
2. Revenue Streams

Sales of Silica Sand Products: Analyze the potential revenue from

selling silica sand products to various industries such as glass
manufacturing, construction, foundries, and chemicals.

Export Opportunities: Explore the potential for exporting silica sand

to international markets based on demand, quality, and competitive
pricing.

Value-added Products: Assess the possibility of diversifying revenue

streams through the production of value-added silica-based products
tailored to specific industrial applications.

9. Economic Analysis
Economic analysis is critical in evaluating the impact and benefits of silica
sand production, taking into account economic benefits, environmental
considerations (EIA - Environmental Impact Assessment), and social
responsibility.

9.1 Economic Benefit

Job Creation: Silica sand production can contribute to employment
opportunities, including jobs in mining, processing, logistics, and support
services. This can stimulate local economies and enhance livelihoods in
the surrounding communities.

Revenue Generation: The sale of silica sand products generates revenue

for the producers, and through taxation and royalties, it can contribute to
government revenues, funding public services, and infrastructure
development.

Supply Chain Effects: The production of silica sand creates a ripple

effect, impacting suppliers of machinery, equipment, transportation
services, and other related industries, further contributing to economic
growth.

52 | P a g e
T
9.2. Environmental Impact Assessment (EIA)
The development of mining projects is primarily controlled by mining
legislation, the mining proclamations and regulations. The silica sand
processing plant study is prepared in accordance to the guidelines laid in
the following Laws and Regulations endorsed by the Federal Democratic
Republic of Ethiopia relevant to the subject:

1. Environmental Impact Assessment, Proclamation No 299/2002;

2. Mining Proclamation No. 52 of 1993;
3. Mining Operations, Council of Minister ’s Regulation No.
182/1994;
4. Environmental Pollution Control, Proclamation No 300/2002.
The procedures/ requirements stated in the above respective mining
proclamations and regulations were reviewed. Mining Proclamation No.
52/1993 and Mining Regulation No. 182/1994 issued. The law requires
that the licenses shall “Conduct mining operations in such a manner as to
ensure the health and safety of his agents, employees and other persons
and minimize damage or pollution to the environment.

9.2.1 Project Positive Impacts and its Significances

The significance of the project positive impacts/ benefits includes:

 The project will contribute to satisfying the demands of the ever

increasing construction sector.
 Employment opportunity for skilled and unskilled members of
the local community/ nationals;
 Proper utilization and conservation of the mineral resources
eventually restore the natural morphology and reforestation of
the disturbed area;
 Communities’ way of living and thinking will be improved.

53 | P a g e
T
The project employees will acquire skills and experiences in
technology of mining and cement processing industry;
The revenue to be generated from the project implementation will
benefit the Company and Government, in the form of income tax
from salaries & wages; profit tax & royalty payment, savings of
hard currency, etc.
9.2.2 Possible Negative Impacts
The major expected negative environmental impacts during quarry
development and crushing operation will be on the physical and socio-
economics of the surrounding population of the wukro silica sand mining
sites and processing area located in wukro.

The crushed material can emit substantial quantities of dust from process
plant, raw material breakup, excavation, loading and transportation; the
dust is not toxic, but it can be a nuisance/ irritant and pollutes the quality
of air.

 Frequent soil creeps and degradation of surface waters by soil

erosion from disturbed areas waste/ rock piles, etc;
 The visual and landscape impact of the quarrying operation;
 Water pollution due to silting and sedimentation can increase
salinity of soil;
 Spread of HIV/AIDS and related diseases.
 Land use conflicts with native cultures, traditions and lifestyles.
In summary, the expected and significant negative environmental impacts
of the physical activity are dust pollution produced during quarrying,
crushing & hauling of raw, land use change, deforestation, noise pollution
from equipment.

54 | P a g e
T
9.2.3 Mitigation of Measures
The study has foreseen the following pre-mitigation or preventive
recommendations including:

 The primary pollutant of concern that is emitted from the processing

is particulate matter (PM). Particulate matter is emitted by several
processing operations, including crushing, grinding, screening,
drying, and materials handling and transfer operations. Hence,
Emissions from dryers typically are controlled by a combination of
a cyclone or a multi-cyclone and a Scrubber system. Particulate
matter emissions from crushing and grinding generally are
controlled by fabric filters.
 The potential dusts from crusher plant intakes, loading, hauling,
unloading and transportation should be controlled through dust
suppression control operation techniques such as frequent and
adequate wetting of haul roads, plantation of trees for windbreak
and so on; to realize the spray system together with water
transportation, either truck water sprinkler or a farm tractor with a
trailer is recommended for such local services. Plant machinery &
equipment will be maintained in good conditions to minimize
emissions.
 To further sustain and minimize the mechanical impacts on the eco
system, the study has foreseen the importance of leaving the buffer
zone with a minimum of 100 meters distance from the existing
nearby settlement.
 Refilling and leveling of the exploited blocks and erection of gentle
slopes before abandoning the used quarry.
 Implement of physical soil conservation/ plantation and greening i.e
the topsoil which is stripped should be stockpiled and reused for

55 | P a g e
T
future rehabilitation and re-vegetate. Trees with different species
and grass will be planted annually on the refilled area and along the
river embankment adjacent to the quarry site.
 To minimize the access road deterioration effect from big trucks &
vehicles in the cement plant vicinity, speed of the traffic movement
in the area starting from the main asphalt road to the site should be
reduced by introducing speed breakers to be laid down at regular
space intervals. This situation is believed to serve not only in
reducing dust generation but also minimizing sound pollution and
possible accident.
 HIV/AIDS awareness and presentation program will be put in place
to guide staff control their conducts and also strengthen healthcare
system;
 The native leaders/ elders should be informed and aware of the
quarry operation activities and they can assist in identifying impacts
that may be particular to them. They should have a voice in finding
in appropriate mitigation measures. Provide reasonable
compensation for lost crops/ economic trees.
 Water pond features, which are ideal places for reproduction of
malaria and other water borne diseases, should be avoided by
dewatering and refilling means.

9. 3 Social Responsibility
Community Engagement: Initiatives such as community development
projects, vocational training, and infrastructure improvement can
strengthen relationships with local communities and contribute to social
well-being.

Health and Safety: Prioritizing the well-being of employees through

rigorous safety protocols, occupational health programs, and emergency
preparedness demonstrates a commitment to social responsibility.

56 | P a g e
T
Stakeholder Collaboration: Engaging with stakeholders, including
local communities, regulatory authorities, and non-governmental
organizations, fosters transparency, trust, and support for responsible
silica sand production practices.

The economic analysis of silica sand production will consider its impact
on the economy, environment, and society. It aims to maximize positive
economic outcomes while minimizing negative externalities, ensuring
sustainable and responsible business practices.

To delve deeper into the economic, environmental, and social impact

assessment related to silica sand production, engaging with environmental
consultants, economic analysts, and social impact specialists will provide
valuable insights and guidance. Additionally, collaborating with local
communities, regulatory agencies, and environmental advocacy groups
can offer perspectives to address concerns and ensure a balanced approach
to silica sand production.

57 | P a g e
T
10. Project implementation Schedule
The Sand wash processing plant machine is already manufactured in Mekelle,

therefore the following schedule (1 year) is considered to implement after land

investment acquisition is approved.

2024
Description
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Acquisition of
Investment x x x
Land
Building
x x x x x x
Construction
Installation and
Commissioning x x x
Recruitment of
man power
x x
arranging for
other works

58 | P a g e
T
11. FINANCIAL EVALUATION
11.1 Financial Ratios
In financial analysis financial ratios and efficiency ratios are used as an
index or yardstick for evaluating the financial position of a firm. It is also
an indicator for the strength and weakness of the firm or a project. Using
the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net
income by revenue, return on assets (operating income divided by assets),
return on equity (net profit divided by equity) and return on total
investment (net profit plus interest divided by total investment) has been
carried out over the period of the project life and all the results are found
to be satisfactory.

11.2 Break-even Analysis

The break-even analysis establishes a relationship between operation costs
and revenues. It indicates the level at which costs and revenue are in
equilibrium. To this end, the break-even point for capacity utilization and
sales value estimated by using income statement projection are computed
as followed.

Break Even Sales Value = Fixed Cost + Financial Cost

Variable Margin ratio (%)

Break Even Capacity utilization = Break even Sales Value X 100

Sales revenue

59 | P a g e
T
11.4 Pay-back Period
The pay-back period, also called pay – off period is defined as the period
required for recovering the original investment outlay through the
accumulated net cash flows earned by the project. Accordingly, based on
the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 4 years.

11.5 Internal Rate of Return

The internal rate of return (IRR) is the annualized effective compounded
return rate that can be earned on the invested capital, i.e., the yield on the
investment. Put another way, the internal rate of return for an investment
is the discount rate that makes the net present value of the investment's
income stream total to zero. It is an indicator of the efficiency or quality
of an investment. A project is a good investment proposition if its IRR is
greater than the rate of return that could be earned by alternate investments
or putting the money in a bank account. Accordingly, the IRR of this
project is computed to be 25.21% indicating the viability of the project.

11.6 Net Present Value

Net present value (NPV) is defined as the total present (discounted) value
of a time series of cash flows. NPV aggregates cash flows that occur
during different periods of time during the life of a project in to a common
measuring unit i.e. present value. It is a standard method for using the
time value of money to appraise long-term projects. NPV is an indicator
of how much value an investment or project adds to the capital invested.
In principle, a project is accepted if the NPV is non-negative. Accordingly,
the net present value of the project at 10% discount rate is found to be Birr

60 | P a g e
T
50.63 million which is acceptable. For detail discounted cash flow see
Appendix

11.7. ECONOMIC AND SOCIAL BENEFITS

The project can create employment for 201 permanent and more than 500
temporary persons. The establishment of such factory will have a foreign
exchange saving effect to the country by substituting the current imports.

APPENDIX 11.A FINANCIAL ANALYSES SUPPORTING TABLES

APPENDIX 11.1: NET WORKING CAPITAL (IN BIRR)

ITEMS Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Total 11,830,50 12,092.00 12,353,50 12,615,000 12,615,000 122,615,0 122,615,00 12,615,00 12,615,00 12,615,00
invento 0 0 0 00 0 0 0 0
ry
Accoun 761,500.0 864,330.0 967,170.0 1,070,000. 1,070,710 1,070,710 1,070,710 1,070,710 1,070,710 1,070,710
ts
receiva
ble
Cash in 117,810.0 120,360.0 122,900.0 125,440.0 125,560.0 125,560.0 125,560.0 125,560.0 125,560.0 215,560.0
hand
Accoun 78,340.0 89,530.0 100,730.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0
ts
payable
Current 718,340.0 819,530.0 100,730.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0 111,920.0
liabiliti
es
Total 8,531,470 8,887,160 8,242,840 8,598,530 8,599,360 8,599,360 8,599,360 8,599,360 8,599,360 9,972,383.
workin 18
g
capital

61 | P a g e
T

Appendix 11.2 INCOME STATEMENT (Birr)

Item Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Sales 111,760,000 115,120,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,00
revenue
Less 88,638,000 89,872,000 111,106,000 121,340,000 121,340,000 121,340,000 121,340,000 121,340,000 121,340,00
variable
cost
Variable 3,122,000 5,248,000 5,694,000 4,460,000 4,460,000 4,460,000 4,460,000 4,460,000 4,460,000
margin
In % of 26.55 34.71 33.89 26.55 26.55 26.55 26.55 26.55 26.55
sales
revenue
Less fixed 1,868,000 1,868,000 1,868,000 1,868,000 1,877,000 684,000 684,000 684,000 684,000
cost
Operational 1,254,000 3,380,000 3,826,000 2,592,000 2,583,000 3,776,000 3,776,000 3,776,000 3,776,000
margin
In % of 10.66 22.35 22.77 15.43 15.37 22.48 22.48 22.48 22.48
sales
revenue
Financial 964,000 844,000 723,000 603,000 482,000 362,000 241,000 121,000
costs
Gross profit 11,254,000 12,415,000 12,982,000 11,868,000 11,980,000 13,294,000 13,415,000 13,535,000 13,656,000
In % of 10.66 15.97 17.75 11.12 11.79 19.61 20.33 21.04 21.76
sales
revenue
Income 0 0 0 560,000 594,000 988,000 1,024,000 1,061,000 1,097,000
(corporate
tax)
Net profit 11,254,000 12,415,000 12,982,000 11,308,000 11,386,000 12,306,000 12,390,000 12,475,000 12,559,000
In % of 10.66 15.97 17.75 7.78 8.25 13.73 14.23 14.73 15.23
sales
revenue

62 | P a g e
T

Appendix 11.3: DISCOUNTED CASH FLOW (in Birr)

Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 11 scrap
TOTAL 0 111,760,000 115,120,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 16,753,000
CASH
INFLOW
In flow 0 111,760,000 115,120,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 116,800,000 0
operation
Other 0 0 0 0 0 0 0 0 0 16,753,000
income
TOTAL 112,525,000 19,494,000 110,728,000 111,962,000 113,401,000 113,443,000 113,873,000 113,873,000 113,981,000 0
CASH OUT
FLOW
Increase in 91,994,000 0 0 0 0 0 0 0 0 0
fixed assets
Increase in 2,531,000 356,000 356,000 356,000 1000 0 0 0 0
networking
capital
Operating 0 18,638,000 91,872,000 111,106,000 121,340,000 112,349,000 112,349,000 112,349,000 112,349,000 0
costs
Marketing 0 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
&
distribution
costs
Income( 0 0 0 560,000 594,000 988,000 1,024,000 1,133,000 0
corporate)
tax
Net cash 0 12,266,000 14,392,000 14,838,000 13,399,000 13,357,000 12,963,000 12,927 12,819,000 16,763,000
flow
cumulative 10,259,000 5,867,000 11,029,000 12,370,000 15,728,000 18,691,000 11,618,000 20,182,000 26,935,000
net cash
flow
Net present 21,060,000 31,630,000 31,635,000 21,321,000 21,085,000 11,673,000 11,502,000 11,087,000 21,603,000
value
Cumulative 50,465,000 50,835,000 50,200,000 50,100,000 51,206,000 52,879,000 54,381,000 55,729,000 50,630,000
Net present
value

NET PRESENT VALUE =50,630,000.0

INTERNAL RATE OF RETURN = 25.51%
NORMAL PAYBACK =4 years

63 | P a g e
T

user Page 64