chapter 1 feasibility study
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PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-1
CHAPTER 1
FEASIBILITY STUDY
1.1 PROCESS BACKGROUND
2-Ethylhexyl acrylate (2-EHA) known as 2-ethylhexyl propenoate, acrylic ester, with
molecular weight of 184.28 g/mol. 2-EHA occur in liquid phase as water white liquid with
a colorless, acrylic odor, hundred percent volatile and slightly soluble in cold water and
also in hot water. 2-EHA is a stable product and to prevent polymerization, 2-EHA will
supply inhibited. The characteristic properties of 2-EHA depend upon the monomer and
reaction condition that has been selected. 2-EHA is produced by esterification by
reacting of acrylic acid with 2-Ethylhexanol in the presence of sulfuric acid as catalyst.
2-EHA used as a monomer in chemical industry for the production of polymers
and copolymers. From the actual figures available for 1999, a total amount of 90,000
tonne/annum is estimated to be available on European Union (EU) market and the total
EU production volume was 70,000 tonne/annum (Risk assessment report 2-EHA, 2005).
The actual specifications of the commercial product are assay, 99.5 wt% min;
water, 0.05-0.10 wt% max.; acidity (as acrylic acid), 0.009 wt% max.; hydroquinone
(inhibitor), 40- 160 ppm and monomethyl ether of hydroquinone (inhibitor), 10-220 ppm
and has a purity of more than 99% and also containing several impurities such as 2-
Ethyl hexanol, acrylic acid, methacrylate and water .
The goal of this project is to design equipments and processes for a large-scale
chemical industry for producing 2-Ethylhexyl acrylate with minimum production rate of
100,000 metric tones/year. The maximum fund provided for the project is RM200 million.
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Besides, the objective of the design is an environmentally friendly, safe, the most
important economically
profitable 2-EHA production plant. The project is divided into five interrelated parts:
process design, market analysis, site selection, environmental and plant safety, and
plant economics. The process design sections include the thermodynamic system,
kinetic data, mass balance, and energy balance and process simulation.
The market analysis section includes the determination of the optimal condition
of the plant as well as an investigation of the demand analysis of 2-EHA. The plant
safety and environmental consideration section includes an evaluation of all waste
stream along with waste treatment, a detail hazardous operation study of PFD based on
material safety data sheet of material, intermediate, byproduct and product. The last
section is plant economics include a detail economic analysis comprising total capital
investment, net present worth and other major economical variables.
The Uses of 2-Ethylhexyl acrylate
The main applications of 2-EHA are used in the production of polymers and copolymers.
In the production of resins, 2-EHA is used for pressure-sensitive adhesives, latex, paints,
textile and leather finishes and coatings for paper. For an adhesive, the basic
composition of general purpose tape are 75% 2-EHA, 20% vinyl acetate, 4% acrylic acid
and 1% N-methylolacrylamide (Temin, 1990). Acrylic polymers have good water
resistance, low temperature flexibility and excellent weathering and sunlight resistance
when it is used in latex paint formulations. 2-EHA also used as a co-monomer in solution
polymers for industrial metal finishing.
The minor application of 2-EHA is used as a reactive building block to produce
polymer coatings, adhesives, sealants and plastics additives such as in latex paints,
textiles finishes, paper coating and other surface coating formulations as shown in
Figure 1.1. The major consumption of acrylate ester is in manufacture of surface coating
follow by adhesive and sealants. In combination with other acrylic monomers, 2-EHA
can be polymerized by itself. The water resistance, weather ability, and sunlight
resistance of the final product can improve in presence of 2-EHA.
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Figure 1.1: U.S. Consumption of Acrylate Ester in year 2006.
(Source: DOW™ 2-Ethylhexyl Acrylate)
Ultraviolet-curable coatings is also one of the application of 2-EHA excluding
solvent which supply a glossy, abrasion-resistant finish like on book covers and record
albums. Formulation of ultraviolet-cured usually may include 20% trimethylpropane
triacrylate, 70% acrylated polyurethane oligomer, 10% 2-EHA diluents monomer and
little amounts of photo initiator. A liquid coating or ink is widening on the surface of the
substrate and then exposed to ultraviolet light for less than 1 second and is totally cured.
The estimated distribution of uses of acrylic esters are shown in Table 1.1. The
major applications of acrylic ester are in manufacture of surface coating follow by
textiles. USA is the major consumption of acrylic ester in manufacture of surface coating
compare with Japan and Western Europe.
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Table 1.1: Estimated distribution of uses of acrylic esters (% of total) (Ohara et al, 1985).
Use Japan Western Europe USA
Surface coating 34 35 42
Textiles 16 18 23
Acrylic fibers 14 7 6
Adhesives 20 15 5
Other 16 25 24
The world consumption of commodity acrylate esters in year 2006 are shown in
Figure 1.2. United State has a major consumption of acrylate ester follow by Western
Europe and other Asia.
Figure 1.2: World Consumption of Commodity Acrylate Ester in year 2006.
(Source: http://www.sriconsulting.com)
From a volume standpoint, esterification represents one of the most important
reactions of the chemical industry. The number of different esters produced for
commerce by over 100 manufactures probably exceeds 500. Table 1.2 shows the United
State production, sales volume and value of selected ester in year 1979.
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Table1.2: 1979 U.S Production, Sales Volume, and Value of Selected Ester (Mcketta, J.J., 1996)
Production
Million
lb
Sales
Million
lb
Million
$
Plastisizers:
Phthalates
Adipates
Rimellitates
1290
75
20
1232
64
18
455
35
10
Solvents:
Ethyl acetate
n-Butyl acetate
Propyl acetate
262
139
51
156
119
51
25
35
15
Monomers:
Ethyl acrylate
Butyl acrylate
2-Ethylhexyl acrylate
316
297
68
148
157
58
50
60
26
Surface-active agents:
Carboxylic esters
254
196
133
Pesticides :
Octyl-2,4dichlorophenoxyacetate
8
9
7
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1.1.1 AVAILABLE PROCESS
1.1.1.1 Esterification Process
Esters are most commonly prepared by the reaction of a carboxylic acid and an alcohol
with the elimination of water. The reaction is generally characterized by high yield with
few side reactions. Other methods for ester formation utilize carboxylic acid derivatives
such as acid anhydride, acid chlorides, nitrile, and amide. Ester can also be produce
from unsaturated hydrocarbons and aldehydes.
From a volume standpoint, esterification represents one of the most important
reactions of the chemical industry. The numbers of different ester produce for commerce
by over 100 manufactures probably exceed 500. These materials cover a broad range of
uses and include plasticizers, flavors and fragrances, pesticides, solvents, monomer for
resins and high molecular weight polymer.
The acid catalyzed reaction of a carboxylic acid and an alcohol to form an ester
and water is a reversible process. In the reaction of acrylic acid (AA) and 2-ethyl hexanol
(2-EH),
C2H3COOH + C8H17OH ↔ C11H20O2 + H2O
The rate of esterification can be represented by k[C2H3COOH][ C8H17OH], where
the quantities within the brackets represent the molar concentration of the reacting
species, and the rate of hydrolysis by k’[C10H20O2][H2O]. Thus, if the concentration are
those at equilibrium, then
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k[C2H3COOH][ C8H17OH] = k’[C11H20O2][H2O]
and
]][[
]0][[
' 17832
222011
OHHCCOOHHC
HOHCK
k
k
The constant K is called the equilibrium constant of the reaction. The value of K
will depend on the particular carboxylic acid and alcohol and is determine experimentally
by allowing the reaction mixture to reach equilibrium and analyzing for reactant and
products. The heat of reaction for many esterifications is near zero or at least quite
small. For this reaction, the equilibrium constant is essentially independent of
temperature. Table 1.3 shows the effect of reactant ratio on conversion to ester for
different values of K (Mcketta, J.J., 1996).
Table 1.3: Effect of Reactant Ratio on Theoretical Conversion to Ester for Different Values of K
Equilibrium constant,
K
Mole ratio of reactants Theoretical conversion(%) to ester
at equilibrium
5 1 69.1
5 5 95.5
5 10 97.9
Reaction Mechanism
Fischer esterification involves the formation of an ester from a carboxylic acid and an
alcohol. The mechanism is an acid promoted acyl substitution, which results in the
substitution of an alkoxy group for the hydroxyl portion of the carboxyl group. An
alternate method of ester formation involves the use of the carboxylate anion as an SN2
nucleophile upon a primary alkyl halide.
The reaction mechanism for this reaction has several steps:
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Proton transfer from acid catalyst to carbonyl oxygen increases electrophilicity of
carbonyl carbon.
The carbonyl carbon is then attacked by the nucleophilic oxygen atom of the
alcohol
Proton transfer from the oxonium ion to a second molecule of the alcohol gives
an activated complex
Protonation of one of the hydroxyl groups of the activated complex gives a new
oxonium ion.
Loss of water from this oxonium ion and subsequent deprotonation gives the
ester.
A generic mechanism for an acid Fischer esterification is shown in Figure 1.3.
Figure 1.3: Reaction Mechanism
(Source: http://en.wikipedia.org/wiki/Fischer%E2%80%93Speier_esterification)
Side reaction
Side reaction is an unwanted chemical reaction taking place that diminishes the yield of
the desired product. Side reaction occur during esterification reaction are:
First side reaction is reaction between diacrylic acid with 2-ethylhexanol
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2C2H3COOH + C8H17OH ↔ C6H8O4 + C6H16 + H2O
Second side reaction is reaction between acetic acid and 2-ethylhexanol
C2H4O2 + C8H17OH ↔ C10H20O2 + H2O
Third side reaction is reaction between propionic acid and 2-ethyl hexanol
C3H6O2 + C8H17OH ↔ C11H22O2 + H2O
For second and third side reaction, this is because the raw material supply contains
acetic acid and propionic acid with mole fraction of 0.001 and 0.0004 respectively. Since
the fraction is small, we assume no second and third side reaction.
1.1.1.2 General Process Description for Esterification
Since the esterification of a carboxylic acid with an alcohol is an equilibrium reaction, it is
necessary to displace the equilibrium in order to obtain high conversion. This is done by
removing one or both of the products. In practice, this is almost always achieved by
azeotropic distillation. The actual operating conditions will depend on the carboxylic acid
and alcohol used. Not only must the boiling points and compositions of the binary
azeotropes be considered, but also the solubilities of the alcohols and ester in water.
In the production of nonvolatile esters-for which the alcohol is not appreciably
soluble in water-the water may be removed as the alcohol-water azeotrope. After
condensing the vapors, the water layer is withdrawn from a decanter while the organic
layer is returned to the column. The process can be run under pressure or under reduce
pressure in order to maintain the desired reaction temperature and reflux of the alcohol.
Should be the alcohol be nonvolatile or fairly soluble in water, an inert liquid such as
toluene can be used to form a binary azeotrope with water. In either case, the reaction
will proceed since water is removed from the reaction mixture. It will also be necessary
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to check for binary and ternary azeotropes involving these inert liquid for the particular
system.
Many of the volatile esters form binary azeotropes with water and with the
alcohol from which they are derived. In addition they may form ternary azeotropes-
generally the lowest boiling-with the alcohol and water. For these system the ester,
water and alcohol of the approximate ternary concentration distill through an efficient
column, are condensed, and the aqueous phase-containing some ester and alcohol is
removed from the decanter for further separation. The organic phase is returned to the
column in a batch operation or removed for further purification in a continuous system. In
this case both products of the reaction are removed which allow the esterification
reaction to proceed. Separation of the product then becomes a matter of distillation.
1.1.2 ALTERNATIVE METHOD
1.1.2.1 Batchwise Esterification
H2SO4
NaOH
To reaction
Waste aqueous
liquours
Heavy
products
NaOH
Water
To reaction
2-ethylhexyl
acrylate
Hydrolysis
reactor
Extraction
column
Distillation
column
Distillation
column
Figure 1.4: Batchwise Esterification Process Flow Diagram for Production of 2-EHA (Bessalem et al., 2003)
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Process Description
The batchwise esterification process consists of reaction mixture which is carried out
batchwise and then purification section generally carried out continuously. This process
preferably operates at temperature 70°C to 200°C in the presence of and sulfuric acid as
a catalyst.
Stirred reactor
The raw material is esterified, batchwise in a stirred reactor at a specific temperature
and pressure. The reaction in the stirred reactor is being catalyzed by sulfuric acid. The
esterification reaction basically is reversible reaction, thus equilibrium limited. In order to
shift the reaction equilibrium is by providing excess of esterifying alcohol; this exhibits
the distinguishing feature of forming an azeotrope with water.
Neutralization
In the purification stage, neutralizer is used to neutralize the acidic entities in the cruse
reaction mixture where organic phase and aqueous phase is separate at separator. The
organic phase is conveyed to the extraction column while aqueous phase is pumped to
the hydrolysis reactor.
Extraction column
The organic phase is washes at extraction column by using water to remove impurities;
the washed 2-EHA is then being into the distillation column. The aqueous phase at the
bottom is passed through the distillation column for recovery of alcohol. The overall
efficiency of extraction of the catalyst is 99.5%.
Hydrolysis reactor
The aqueous phase coming out from separator is then pumped into the hydrolysis
reactor where reaction take places to convert 2-ethylhexyl hydrogensulfate to 2-
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ethylhexanol. The sulfuric acid is added to obtain a molar ratio of the number of H+ at
least equal to 1.5. The sodium hydroxide is added to neutralize to pH 8.
1st Distillation column; 2-EH recovery
The 2-EH coming out from hydrolysis reactor together with the aqueous solution from
extraction column are being into the distillation column to recover 2-EH. The 2-EH is
purified at the top of the column and waste aqueous liquors are discharged out through
bottom stream and then being sent to the biological treatment site.
2nd Distillation column: To recycle back AA and 2-EH
The washed 2-EHA from extraction column is then being sent to the distillation column
which it possible to remove unreacted AA and 2-EH which recycled back to the
esterification reactor. 2-EHA obtained at the bottom of distillation column.
3rd distillation column: purification of 2-EHA
The purification of the 2-EHA is achieved at 99.7% from heavy products discharge at the
bottom of the distillation column.
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1.1.2.2 Continuous Esterification
Acrylic acid
steam
condensate
Sulfuric
acid
2-ethyl
hexanol
Distillation
columnDistillation
columnDistillation
column
2-ethylhexyl
acrylate
High residue
boiling point
Esterification
reactor
separator
Figure 1.5: Continuous Esterification Process Flow Diagram for Production of 2-EHA
(Erpenbach et al., 1981)
Process Description
The continuous esterification process consists of reactor heater for esterification reaction
and purification stage principally carried out continuously. This process preferably
operates at temperature 85°C to 140°C in the presence of and sulfuric acid as a catalyst.
Reactor heater
At the reactor heater, the mixture kept circulating is continuously admixed with acrylic
acid. The reaction occurs as shown below:
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Azeotrope distillation column
At this stage, the reacting AA and 2-EH in presence of sulfuric acid as catalyst, which
purifying the ester obtained at the bottom while at the top, distilling off water
azeotropically together with 2-EH. The condenser is used to condensing the azeotrope
to separate into alcoholic phase and aqueous phase.
Separator
The separator is used to separate the two different layers of alcoholic phase and
aqueous phase. The alcoholic phase is recycled back to the reaction zone while
aqueous phase is send to the wastewater treatment site.
Distillation column
The 2nd and 3rd distillation column is provided to purification of 2-EHA. The purification of
2-EHA is achieved at 99.98% where about 96% acrylic acid underwent conversion or
93.6% based on the 2-ethyl hexanol which underwent conversion.
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1.1.2.3 Cascade Esterification
REACTOR 1 REACTOR 2
I
III
II
DECANTER
DECANTER
IV
PRODUCT
TO REACTOR 2
RESIDUES
AQUESOUS
RAW
MATERIALS
RAW
MATERIALWATER
Figure 1.6: Cascade Esterification Process Flow Diagram for Production of 2-EHA (Iffland et al., 1999)
Process Description
The esterification reaction is carried out in a two stage esterification cascade of two
reactors which connected with a distillation column (I). AA and sulfuric acid (catalyst) fed
into 1st reactor while 2-EH fed at the top of distillation column (I). The vapor formed in
esterification reactor comprising water fed to the distillation column. The condensate
formed was separated in separator into two liquid phases. Aqueous an organic phase
separated off via respective stream. The bottom product from 1st reactor then fed to 2nd
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reactor. The bottom product formed from 2nd reactor comprising 2-EHA, lower boiling
starting material and by-products is then fed into the lower part rectification column (II)
configured as a enrichment column served for the high boiler separation.
At the top of the column (II), product (VII) was discharged comprising 2-EHA,
lower boiling starting material and by-products. This product is then fed into stripping
column (III). The bottom product from column (II) was discharged and fed into extraction
unit. The sulfuric acid content of organic phase was lowered for the cracking by addition
of a part of the water esterification. The water stream containing 30% sulfuric acid was
discharged. The organic phase was taken off and fed into the distillation unit (IV) where
product still present and vaporized batchwise. The residue which had a high content of
sulfuric acid was cracked to form starting material, target product, water and the octenes
obtained as by product.
The combined top product was taken off and liquefied and return to the high
boiler separation while the viscous residue discharged through the bottom stream of
distillation unit. The pure product 2-EHA was taken off in vapor form and passed through
the condenser. At this stage, storage stabilizer was injected into the condenser to
change process inhibitor to storage stabilizer.
1st Reactor
At the first reactor where the esterification reaction occurs at the optimum condition of
80-130 °C and operate under vacuum environment of 200-700 mbar. The preferred
residence time of the reaction region is 2-5 hours.
2nd Reactor
For the 2nd reactor is the extension of the reaction to achieve high conversion of the
product from the raw materials and recycled unreacted raw materials. The optimum
condition of the reactor such as temperature (110-130 °C) and operate under vacuum
environment of 200-700 mbar.
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1st Distillation column
The purpose of this equipment is to remove water form from esterification reaction and
recover organic phase. The aqueous phase discharge off from this equipment can easily
discharge to the sewer because it is not containing hazardous materials and also can
reuse for further purposes. The organic phase contains small portion of product,
unreacted raw materials and catalyst are recovered for further reaction.
2nd distillation column
The second distillation column also known as rectification/enrichment columns served as
high boiler separation. At this stage, the crude mixture of product, unreacted materials
and by-product are separated from high boiling residues where it is go to the 3rd
distillation column whereas high boiling residues go to the distillation unit.
3rd distillation column
The third distillation column, also known as stripping column where the product is
produced at 98% of high purification and the product produce in liquid phase. The
unreacted materials are recycled back to the second reactor for further reaction.
Distillation unit
At this stage, distillation unit comprising separation and removal residues that cannot
utilize further. The high boiling residues from the 2nd distillation column present small
portion of target product, unreacted materials and by-product.
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1.1.2.4 Equilibrium Limited Reaction
E-2
Reactor Column Reactor heater
Condenser
Decanter
Distillation column
Distillation column
Decanter Purge
Aqueous
2-EH
Acrylic acid
DBSA
Heavies
Product
Recycle
Aqueous
Heavies and catalyst
Organic
Inhibitor
Inhibitor Inhibitor
Inhibitor
Figure 1.7: Equilibrium Limited Reaction Process Flow Diagram for Production of 2-EHA (Patterson et al., 2004)
Process Description
The above process is a continuous process in which the reactants, catalyst, inhibitor and
solvent are added periodically or uninterruptedly and product is removed uninterruptedly
from reaction zone. In reaction zone, the process is conventionally conducted at
temperature within the range of from 40 degree to 150 degree C, but below a
temperature that causes undue degradation of reactants, desire product or any catalyst
used. Temperature that are too low result in lower reaction rates and temperature that
are too high result in more by-products and have higher corrosion rates.
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Reactive distillation column
The first reaction zone, may be a single vessel or may comprise two or more discrete
vessels. The reaction occurs at this stage producing desire product and co-product.
Overhead stream is to remove co-product (water) from the esterification of acrylic acid
and 2ethylhexanol and thus drive the reaction further toward conversion to desire
product. The overhead stream subjected to rectification or other separation unit
operation such as liquefaction, condensation and liquid phase separation. The
polymerization reaction can be controlled by the use of inhibitors.
Reactor Heater
For second reaction zone, the conversion is small because the purpose is to crack
heavies for example Michael-addition heavies which is to vaporize unreacted reactant
and product.
Condenser
Vapor is introduced into condenser from second reaction zone in order to condense all
vapor mixture to form two liquid phases.
Decanter
Two liquid phases formed from condenser are then being separated by using decanter
where aqueous phase is recycle back into reaction zone while organic phase is proceed
to the next stage of purification section.
First distillation column
The purpose of this equipment is to separate unreacted reactant with product. At the top,
unreacted reactant goes back into the reaction zone for further reaction while at the
bottom, the product with high boiling residue go into third distillation column for further
purification.
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Second distillation column
The third distillation column, the purity of 99.7% of product is achieve at the top of
distillation column while high boiling residue is separated and remove through the
bottom of distillation column.
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1.1.3 PROCESS SELECTION AND METHODS COMPARISON
Based on alternative method available for esterification, Table 1.4 shows the comparison method of production of 2-EHA
based on type of process, raw material, size, processing efficiency, controllability and safety.
Table 1.4: Comparison method for production of 2-Ethylhexyl acrylate
Process Batchwise Esterification Continuous Esterification Cascade Esterification Equilibrium Limited
Reaction
Type of
process
Batch
Small volume product
Continuous
Large volume product
Continuous
Large volume product
Continuous
Large volume
product
Raw material Acrylic acid, 2-Ethyl
hexanol, Sodium
Hydroxide, phenothiazane
and hydroquinone
(process inhibitor)
Acrylic acid, 2-Ethylhexanol,
phenothiazane and
hydroquinone(process
inhibitor)
Acrylic acid, 2-Ethylhexanol,
phenothiazane (process
inhibitor), HMME(storage
stabilizer)
Acrylic acid, 2-
Ethylhexanol,
phenothiazane (process
inhibitor) and
hydroquinone(aqueous
inhibitor), HMME (
shipping inhibitor).
Reaction
mechanism
Complicated reaction
and have intermediate
by addition NaOH
Simple reaction,
directly produce ester
Residence times is 2 to
Simple reaction,
directly produce ester
Residence times is 2 to
Simple reaction,
directly produce ester
Residence times is
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Residence times is 4
hours
8 hours 5 hours 2.5 to 3.5 hours
Product
purification
99.7% 99.98% 99.8% 99.7%
Product
conversion
91.0% 93.0% 98.0% 95.0%
Profit margin RM 760.54 RM 766.54 RM 776.017 802.4275
Equipment Esterification reactor
hydrolysis reactor
decanter/separator
3 distillation columns
Extraction column
Neutralizer mixer
Total = 8
Esterification reactor
decanter
3 distillation columns
Total = 5
Esterification reactor
3 distillation column
2 decanter
Evaporator
Total = 7
Esterification reactor
3 distillation column
2 decanter
Total = 6
Catalyst Sulfuric acid
effective catalyst
corrosive to metal
less amount
required
more undesired
side reaction
Sulfuric acid
effective catalyst
corrosive to metal
less amount
required
more undesired
side reaction
Para-toluene Sulfonic acid
more undesired
side reaction
more amount
required compare
with sulfuric acid
Less corrosive
DBSA
Less impurities and
heavies
Higher efficiency
Homogeneous
catalyst
Less amount required
Less corrosive
Utilities Biological treatment plant, Waste water treatment and Waste water treatment and Only high boiling residues
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heavy product treatment
high boiling residues
treatment
high boiling residues
treatment
treatment
Cost Expensive operation
to separate the
neutralization product
and to recover the
acrylic acid
Higher operating labor
cost in standard batch
plant due to
equipment cleaning
and preparation time
Not involve neutralizer
Operating labor will
lower for continuous
processes
Safe energy, cost and
capital investment
Not involve neutralizer
Operating labor will
lower for continuous
processes
Conversion cost lower
Safe energy, cost and
capital investment
Not involve neutralizer
Reduce inhibitor and
catalyst cost
Operating labor will
lower for continuous
processes
Conversion cost lower
Size Smaller throughput favor
batch operations
Economies of scale favor
continuous processes for
large throughput
Economies of scale favor
continuous processes for
large throughput
Economies of scale favor
continuous processes for
large throughput
Processing
efficiency
Requires strict scheduling
and control
Generally, become more
efficient as throughput
increases
Generally, become more
efficient as throughput
increases
Generally, become more
efficient as throughput
increases
Controllability Complicated Easier to control
For complicated and
highly
integrated(energy/raw
material) plants, the
control become
Easier to control
For complicated and
highly
integrated(energy/raw
material) plants, the
control become
Easier to control
For complicated and
highly
integrated(energy/raw
material) plants, the
control become
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-24
complex and
operational flexibility is
greatly reduce
complex and
operational flexibility is
greatly reduce
complex and
operational flexibility is
greatly reduce
Safety Worker exposure to
chemicals and operator
error will be higher
Large chemical plant
operating continuously have
excellent safety record and
any safety procedures will
established
Large chemical plant
operating continuously have
excellent safety record and
any safety procedures will
established
Large chemical plant
operating continuously
have excellent safety
record and any safety
procedures will
established
Advantages
Free from Dioctylether
Aqueous can be
discharged without
treatment
The removal of all high
boiling secondary
components and
catalyst from
esterification product
Prevent contamination
of pure product with low
boiling dissociation
product and acrylic acid
Minimize the problem
associated with
conducting the
reaction and
recovering unreacted
reactant and product
Enables lower catalyst
and inhibitor usage
and reduce cost
Disadvantages Aqueous liquors that
discharge are highly
polluted
The unreacted AA
contained in the ester
Acid catalyst is sent
with the reaction
mixture from the
reaction zone to a
rectification unit, rather
Acid catalyst is sent
with the reaction
mixture from the
reaction zone to a
rectification unit, rather
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-25
to be neutralized.
Technically expensive
operation to separate
the neutralization
product and to
recovere the AA by
acidification with
hydrochloric acid with
the resultant formation
of a salt whereby
wastewater
preparation is
rendered difficult.
than be allowed o
remain in the reaction
zone.
than be allowed o
remain in the reaction
zone.
Lead to high
corrosion rate
Equipment fouling
Undesired side
reaction
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-26
Table 1.4 illustrated above the comparison of all those processes along with their
advantageous and disadvantageous. The 4th method which is equilibrium limited
reaction was chosen as the best process after all the critical aspects were considered
such as product conversion and purification, profit margin, process efficiency, operability,
safety, etc. The 4th method is favor for the production of 2-EHA since the conversion of
product is high and purity is achieving the customers need.
Using this method, in which feed is sent continuously to a series of equipment,
with each piece usually performing a single unit operation. Then, product, by products,
and waste leave the process continuously and are sent to storage or for further
processing. In this process, it produces high product purification which is 99.7% same
with 1st method but lower 2nd method and 3rd method. During this process, operating cost
and capital cost is also low. Economies of scale favor continuous processes for large
throughput. Generally, become more efficient as throughput increases. Beside that, this
method is easy to control, for complicated and highly integrated (energy/raw material)
plants, the control become complex and operational flexibility is greatly reduce. Large
chemical plants operating continuously have excellent safety record and any safety
procedures will establish.
The advantages of this method are removal of all high-boiling component catalyst
from esterification product, avoid redissociation of high boiler and target product in liquid
phase, prevent contaminant of pure product with low-boiling dissociation product,
minimize the problem associated with conducting the reaction and recovering unreacted
reactant and product. It also
enables lower catalyst and inhibitor usage and reduce cost. In this method, it uses DBSA
as a catalyst. A somewhat higher concentration of sulfonic acid may be required in order
to achieve the same reaction rate that can be obtained with a given quantity of sulfuric
acid.
In this production, may be contained in the liquid reaction media such as
antioxidants stabilizers, buffer and polymerization inhibitors phenothiazine is preferred
inhibitor. Since, PTZ is not soluble in water; hydroquinone is preferably used as the
inhibitor for aqueous streams. The hydromonomethyl ether (HMME) is the preferred
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-27
product shipping inhibitor and is used in the product recovery distillation column. Air or
oxygen can be used to enhance the effectiveness of the inhibitors.
1.1.4 RAW MATERIAL SELECTION
1.1.4.1 Acrylic acid (AA)
Acrylic acid with IUPAC name, prop-2-enoic acid is an organic compound with the
formula C2H3COOH. It consists of a vinyl group connected directly to a carboxylic acid
terminus and the simplest unsaturated carboxylic acid. AA is colorless liquid that has a
characteristic acrid or tart smell. It is miscible with water, alcohols, ethers, and
chloroform. Productions of acrylic acid are annually more than one billion kilograms
(Basic Acrylic Monomer Manufacturers, Inc., 2006)
AA has typical reactions of a carboxylic acid. It will form the corresponding ester
when it reacted with an alcohol. The esters and salts of acrylic acid are collectively
called as acrylates or propenoates. Methyl-, butyl-, ethyl-, and 2-ethylhexyl-acrylate are
the most common alkyl esters of AA.
Beside that, with reacting at their double bond, acrylic acid and its esters readily
combine with themselves or other monomers such as amides, acrylonitrile, vinyl, and
styrene. Homopolymers or copolymers will form after reacting them and will are used in
the manufacture of various plastics, coatings, adhesives, elastomers, as well as floor
polishes, and paints.
An essential building block is the one most commonly application of acrylic acid in
industrial and AA is a consumer products. Approximately, major manufacturing of AA in
the United States is used to produce acrylic esters such as methyl acrylate, butyl
acrylate, ethyl acrylate, and 2-EHA.
1.1.4.2 2-Ethylhexanol
2-Ethylhexanol (2-EH) also known as isooctanol is a fatty alcohol which is an organic
compound used in the manufacture of a variety of application. 2-EH has a molecular
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-28
formula C8H17OH which is a branched and have eight-carbon alcohol; clear, colorless
liquid that is nearly insoluble in water, but well soluble in most organic solvents.
There is variety of uses especially when 2-EH is can be readily converted into
esters. The minor application of 2-EH is in the manufacture of the diester bis (2-
ethylhexyl) phthalate (DEHP) also known as plasticizer. However, esters of 2-
ethylhexanol tend to have emollient properties because it is a fatty alcohol. For example,
the sunscreen octocrylene contains a 2-ethylhexyl ester for this purpose and it is also
commonly used as a low volatility solvent (2-Ethylhexanol (2-EH) Uses and Market Data,
2009).
2-EH will become combustible liquid after the temperature above 60°C. It is a
marine pollutant which can affect skin, eyes, respiratory tract and also cause nausea
and headache after inhalation, diarrhea and vomiting after ingestion. Long-term
exposure can result in defatting of the skin (2-Ethylhexanol (2-EH) Uses and Market
Data, 2009).
2-EH is the most significant synthetic alcohol following the lighter alcohol
(methanol to butanol). Alcohol component is the major use of 2-ethylhexanol for the
producer of ester plasticizers for soft polyvinyl chloride also known as PVC and has
been produced for this purpose since the mid-1930s.
1.1.4.3 Dodecylbenzene Sulfonic Acid (DBSA)
Organic compound containing the functional group R SO 2 OH, which consists of
a sulfur atom, S, bonded to a carbon atom that may be part of a large aliphatic or
aromatic hydrocarbon , R and also bonded to three oxygen atoms, O, one of which has
a hydrogen atom, H, attached to it. The hydrogen atom makes the compound acidic,
much as the hydrogen of a carboxylic acid makes it acidic. However, while carboxylic
acids are weak (with dissociation constants of about 10 -5 ), sulfonic acids are
considered strong acids (with dissociation constants of about 10 -2 ). Because sulfonic
acids are so acidic, they generally exist as their salts and thus tend to be quite soluble in
water.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Sulfonic acid groups are often introduced into organic molecules such as dyes to
stabilize them for use in aqueous dye baths. Sulfonic acid groups also improve the
washfastness of wool and silk dyes by enabling the dye to bind more tightly to the fabric.
The most important use of sulfonic acid salts (sulfonates) is in the detergent industry.
Sodium salts
of long-chain aliphatic or aromatic sulfonic acids are used as detergents. Unlike ordinary
soaps , which contain carboxylic acid salts, soaps containing sulfonates do not form a
scum in hard water because the calcium and magnesium ions present in the hard water
do not form insoluble precipitates with sulfonates as they do with carboxylates. Some
sulfonic acid derivatives, e.g., the sulfa drugs, are important as antibiotics.
Dodecylbenzenesulfonic Acid (CH3(CH2)11C6H4SO3H ) is the largest-volume
synthetic anionic surfactant having straight chain for biodegradable environmental
friendliness. It is mainly used to produce household detergents including laundry
powders, laundry liquids, dishwashing liquids and other household cleaners as well as in
numerous industrial applications like as a coupling agent and as an emulsifier for
agricultural herbicides and in emulsion polymerization.
Figure 1.8 and Table 1.5 show the molecular structure and the properties of
DBSA.
Figure 1.8: Molecular structure of DBSA
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table 1.5: Properties of DBSA (Science Lab.Com, 2008)
Properties Value
Molecular weight 326.49
Physical state Brown liquid
Melting point 10°C
Boiling point 315°C
Specific gravity 1.2
1.1.4. 4 Phenothiazine (PTZ) and Hydroquinone monomethyl ether (HMME)
PTZ is an aromatic amine that exhibits broad activity as an inhibitor, antioxidant and
shortstopping agent in a variety of diverse applications. The PTZ and HMME are
principally utilized as an inhibitor and shortstopping agent in the stabilization of acrylic
acids, esters and monomers.
PTZ is a solid material that is supplied in both flake and powder forms. The
chemical structure of the PTZ is as follows:
Figure 1.9: PTZ molecular structure
(Source: http://www.cytec.com/specialty-
chemicals/downloads/PTZ%20AB%20general.pdf)
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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The chemical structure of the HMME is as follows:
Figure 1.10: HMME molecular structure
(Source: http://www.chemicalland21.com/specialtychem/perchem/4-METHOXYPHENOL.htm)
The reaction is generally conducted in the presence of at least one
polymerization inhibitor selected in a particular from PTZ and HMME. The stabilizers are
used and injected at the top of distillation column purposely for stabilizing acrylic acid,
ester or monomers. The experiment of the separation by settling is carried out in a
separating funnel. The appearance is recorded of an emulsion at the interphase during
the separation by settling.
Table 1.6 Stabilizer of acrylic acid and aqueous-phase stabilizer (Riondel et al.,
2005)
Stabilizer Aqueous-Phase
stabilizer
Appearance of a emulsion on
neutralization
HMME - No
PTZ - No
HQ CuSO4 No
HQ Fe2(SO4)3 No
HQ Mn(OAc)2 No
HQ TEMPO No
HMME – Hydroquinone methyl ether
PTZ – Phenothiazine
HQ – Hydroquinone
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Features and Benefits
Broad stabilizer activity allows the product to function as either an inhibitor,
antioxidant or shortstopping agent in a range of diverse applications
Outstanding thermal stability facilitates performance at temperatures of 90 °C
and above
Acid resistant, will perform in low pH environments
Operational versatility, functions in both aerobic and anaerobic environments
High activity leads to functionality at low concentrations
Synergizes with other stabilizer products allowing the formulation of high
efficiency systems
Low cost, economical product
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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120
DESIGN PROJECT 1
PRODUCTION OF 2-ETHYLHEXYL ACRYLATE
SIZE FSCM NO DWG NO REV
SCALE 1:1 SHEET
GROUP MEMBER: ABDUL JALIL MOHD RASHID 2008289248
MOHD NAIM FIRDAUS B. MOHAMAD NOR 2008289228
ZURINA MD ZAINUDDIN 2007287172
ASAEELAWATI YUSUF 2008289242
RAJA MASHEERA RAJA SARIMAN 2008412908
SUPERVISOR : MISS FARAZIEHAN BINTI SENUSI
ALLIED SUPERVISOR : MOHD ISMAIL BIN BAHARUDIN
2-ETHYLHEXANOL
ACRYLIC ACID
MIX-101
MIXER
E-101
CRUDE
MIXTURE
PREHEATER
R-101
REACTOR
E-102
VAPOR
CONDENSER
V-101
DECANTER
T-101
DISTILLATION
COLUMN
E-104
2-EH-AA
CONDENSER
E-103
2-EH-AA
REBOILER
E-107
PRODUCT
COOLER
E-106
2-EHA
CONDENSER
E-105
2-EHA
REBOILER
REACTOR
HEATER
/COOLER
DECANTER
DISTILLATION
COLUMN
LEGEND
STREAM NUMBER
TEMPERATURE
(˚C)
PRESSURE
kPa
MIX-101
R-101
TEE-101
T-101
T-102
J-T VALVE 2
J-T VALVE 1
E-103
E-104
E-105
E-106
V-102
V-103
35
2-ETHYLHEXYL ACRYLATE
HIGH BOILING RESIDUE
PURGEV-101
V-102
REFLUX
DRUM
E-106
2-EHA
CONDENSER
S3
S4
S5 S6 S7
S8
30
S9 S10
35
AQUEOUSS11
S12
S13
S16 S17
S21
S23
S22
S25
P-105
S24
E-108
RESIDUE
COOLER
35
35 57.79 53.79 90
120 112.6
70.18
164.7
119.735
229.1 35
35
70.21
121.6
121.6 121.6 41.33 41.33
41.33
41.33 41.33
14
12
20
40
2.4 119.7126 116
41.33
41.33
41.33
P-104
P-103
121.6
35121.6
S18
S15
S20
P-101
P-102
P-101
RAW AA
PUMP
P-102
RAW 2EH
PUMP
P-104
RECYCLE
PUMP
P-103
RECYCLE
PUMP
P-105
PRODUCT
PUMP
E-101
E-102
E-107
E-100
Figure 1.11: Process Flow Diagram for Production 2-EHA
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-34
1.2 MARKET ANALYSIS
Market analysis can be defined as a survey of the demand and supply of a particular
product that an industry intends to produce for sale locally, regionally or globally. It is
important to determine the profitability of a product in the market. Besides that, it will
enable a company to determine related parties such as competitors and suppliers.
Specifically, this section is all about the market and the production of 100,000 mt of 2-
Ethylhexyl Acrylate (2-EHA) as well as the main product whereas involving the reaction
of Acrylic acid (AA) and 2-Ethylhexanol (2-EH). This process was helped by the
Dodecylbenzenesulfonic acid (DBSA), Hydroquinone monomethyl ether (HMME) and
Phenothiazine (PHTHZ) acting as catalyst in this process.
Petrochemical growth
Chemicals are very important in industry sector. In fact, a demand for these never falls
down but continuous showed increment every year. This is because chemical material is
very important to our daily routine application. The chemical type such as organic and
inorganic, also specialty chemical always used to make some money to country.
Malaysia especially in chemical industry showed gradual growth every year through a
chemical company like BASF and Titans.
The Malaysian Industrial Development Agency (MIDA) gives further incentives to
develop in the country. These include R&D grants, training grants and low rents. The
centre of Malaysia's petrochemical development is on the east coast of the Malaysian
peninsula in Terengganu, between Kertih and the Gebeng industrial development zones
near Kuantan. The new complex is right at the centre of this area of petrochemical
development.
Industry
The largest volume of ester produced in the market is 2-EHA because of its wide variety
of applications. 2-EHA products are versatile compounds which can be used of major
markets in chemical industry. Acrylic esters are used in the production of polymers and
copolymers with a wide range of applications. As a plasticizing co-monomer, 2-EHA is
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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used in the production of resins for pressure-sensitive adhesives, latex, paints, textile
and leather finishes and coatings for paper. 2-EHA can also be used as a co-monomer
in solution polymers for industrial metal finishing. The major current use of 2-EHA is in
acrylic pressure-sensitive adhesives, of which it is a major component. 2-EHA is also
used in ultraviolet-curable coatings without solvents, which provide a glossy, abrasion-
resistant finish such as on book covers and record albums. Other applications include
coatings raw materials and uses in the plastics and textiles industries. In addition, 2-EHA
is used as a monomer in construction-industry chemicals like floor coatings, road-
marking substances.
Table 1.7: Estimated uses of 2-EHA (% of total)
Application Japan Europe USA
Surface coatings 34 35 42
Textiles 16 18 23
Acrylic fibres 14 7 6
Adhesive 20 15 5
Other 16 25 24
(Sources: BASF
report 2009)
Table 1.7 above show the estimation uses of 2-EHA in variety of application in
three different place which is Japan, Europe and USA. It was obvious that application on
surface coating get a high request from users in these three regions. Unlike acrylic fibres
which is lowest demand of application proved thru the low product percentage.
1.2.1 Supply and Demand Of 2-EHA
Global commodity acrylate ester demand reached 2.8 million tonnes in 2005. The
market is forecast to grow at rates aligned with average global growth domestic product
(GDP). Continued focus on water-based coatings and dispersion systems will positively
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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influences 2-EHA demand in developing economies, while substitution in many
applications in developed economies has already occurred.
Table 1.8 shows a major global producer or suppliers of 2-EHA. It was identified
thru the company name, location and their status either producer or supplier. BASF from
Malaysia is not exception to be listed as producer of 2-EHA.
Table 1.8: Global Producer/Suppliers of 2-Ethylhexyl Acrylate
Country Company Status
China Simagchem Corporation Producer
China Jinan Haohua Industry Co., Ltd Supplier
China Hangzhou Meite Chemical Co., Ltd Producer
China Sinogreat Enterprise Ltd Producer
China Yongyi Chemicals Group Co., Ltd Producer
China Jiangsu Jurong Chemical CO,.Ltd Producer
China Jinan Huifengda Chemical CO,.Ltd Producer
US SIGMA-ALDRICH Corporation Supplier
US Rohm & Haas company Producer
Germany Chemos GmbH Supplier
Malaysia BASF PETRONAS Chemicals Sdn Bhd Producer
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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1.2.1.1 Global
Figure 1.12: World consumption of Acylate Esters in 2006
(Source: http://www.sriconsulting.com )
The following pie charts show world consumption of commodity acrylate esters. In terms
of regional acrylates East Asia has already overtaken the United States and Western
Europe, accounting for around 31% of global demand. By 2015, this share will rise to
around 37% as the region will lead future global demand. Demand for commodity
acrylates is forecast to grow at 3.7% annually during 2006–2011. With growing demand
for acrylic acid derivatives, led by super absorbent polymers, major producers have
debottlenecked and expanded plants and built new facilities at key sites throughout the
world.
1.2.1.2 Malaysia
Malaysia has so far been relatively untouched by the general crisis in East Asia. The
government imposed a series of exchange controls and anti-import measures, which
have given the local economy some shelter from the surrounding storm. Thus, the
country has retained good GDP growth, which is fast outpaced by the growth in
chemicals industry investment. The Far East is widely expected to see a strong upswing
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-38
in chemicals demand as the regional economy recovers from the effects of the Asian
crisis.
BASF Malaysia
In 1999, BASF Petronas Chemicals Sdn Bhd is putting together a huge petrochemical
complex in Kuantan, Malaysia. The complex will include a butanediol facility, an acrylic
acid facility, a cracker facility and a formic acid facility. The entire project is said to cost
Malaysian Ringgit 2.5 billion. The plant has achieved more than three million man hours
without a lost time accident.
Table 1.9: BASF sales 2009
Percentage (%) Product
>15 Chemicals including AA and 2-EHA
10-15 Automotive, construction and utilities
5-10 Agriculture, Plastics industry and oil industry
<5 Electrical, Furniture and paper
10-15 Other industries
(Source: BASF Report 2009)
The table shows the percentage of sales 2009 made by BASF thru direct
customers. It was obvious chemicals product such as AA and 2-EHA become a top
highest sales around the world. It is not surprised because since 2004, BASF exactly is
the worlds leading chemical company. While in 2005, the new verbund site in Nanjing,
China begins operation. In 2009, BASF’s leading a position in specialty chemicals.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Figure 1.13: BASF Acrylic acid productions
(Source: Chemicals-technology.com/BASF acrylic monomers 2010)
The bar chart illustrated an amount AA consumption of BASF companies around the
world whereas BASF Malaysia was shared a lowest place with BASF China in produce
160,000 tonne /year of AA. The others BASF in Belgium, USA and Germany was
produce amount of AA exceed 200,000 tonne /year.
1.2.1.3 Local demand for 2-EHA
As stated earlier, demand for 2-EHA always got highest request from user around the
world. The application of surface coatings, textiles and so on make a chemical company
find the ways to build up of 2-EHA plant for meet the demand. Malaysia also not
exception to face a unusual demand of 2-EHA. A production of 2-EHA was only
controlled by BASF company which is supply the product in local market. The demand
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Sites
Ton
ne
Consumption (tonne/year)
Antwerp, Belgium
Freeport, USA
Ludwigshafen, Germany
Kuantan, Malaysia
Nanjing, China
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-40
for 2-EHA has gradual increased each year, so that the plant absolutely will help to
cover up the future global demand for 2-EHA.
1.2.1.4 Forecast 2-EHA
Table shows the forecast demand for 2-EHA around the world from 2005 until 2015.
America was the first in producing a large amount of 2-EHA. Thus, it obviously state
33.27% capacity will increase in these 10 years or 247,000 metric tonnes requested to
produce. The total capacity on 2015 was expect increased two-fold comparing in 2005
which is 495,5000 metric tonnes production.
Table 1.10: Capacity to produce 2-EHA from 2005-2015
Region Year (1000 metric tons)
2005 2006 2007 2008 2009 2012 2015
America 220 230 20 230 230 240 240
Europe 78 80 80 80 80 80 80
Middle East 35 35 35 35 35 35 65
Southeast Asia 32 32 32 32 32 72 72
Northeast Asia 80.5 80.5 80.5 80.5 80.5 80.5 80.5
China 50 80 175 175 185 205 205
TOTAL 495.5 537.5 627.5 632.5 642.5 712.5 742.5
(Source: Technon-Orbi-Com/Acrylic acid and its ester 2009)
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Figure 1.14: World capacity of 2-EHA
(Source: Technon-Orbi-Com/Acrylic acid and its ester 2009)
The figure 1.13 illustrated the graph with gradual increase on capacity on
495,500,000 metric tonnes in 2005 to 742,500,000 metric tonnes in 2015. The ten years
period is sufficient to prove the actual increment of world capacity of 2-EHA. Based on
capacity of 2-EHA, it is forecasted that the capacity 2-EHA will keep increasing until
2015.
1.2.3 AN OVERVIEW ON RAW MATERIALS
The production of 2-Ethylhexyl acrylate is dependent on raw materials such as Acrylic
acid and 2-Ethylhexanol as the excess reagent and limiting reactant respectively. The
reaction between AA and 2-EH in the presence of DBSA, HMME and PHTHZ as catalyst
will result in the production of 2-EHA.
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2012 2015
Cap
aci
ty (
1000 m
t)
Year
World Capacity of 2-EHA
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-42
Table 1.11 shows 127 of companies around the world have being main suppliers
of acrylic acid, 30 companies being 2-Ethylhexanol. Thus, between 2 categories said just
know, it was observed Malaysia become a list to be suppliers to Acrylic.The only one
company whom related to these was BASF which is situated at Kuantan, Malaysia.
Therefore, it was then reveal that BASF was producing 160,000 Crude Acrylic acid tonne
/year, 40,000 Glacial Acrylic acid tonne /year. It definitely ensures the BASF as main
manufacturer of this Acrylic acid.
Table 1.11: Main AA, 2-EH, 2-EHA Suppliers around the World
Material Country Total No. of
company
Acrylic acid China, India, Pakistan, Turkey, Hong
Kong, UAE, Taiwan, Malaysia (5),
South Korea, Egypt, Indonesia, Brazil,
Belgium, France, Bangladesh, Thailand,
Singapore, UK, US, Iran
127
2-Ethylhexanol China, Hong Kong, Cameroon, USA,
Iran, Syria
30
(Source: www.alibaba.com)
1.2.3.1 Acrylic Acid (AA)
Most of acrylic acid is used as the raw material to produce acrylic ester products
including 2-Ethyl Acrylate. This field consumes about 70% of the total volume of acrylic
acid. Across the world, there are several great manufactures of acrylic acid. Major
producers include BASF, Rohm and Haas, Arkema, DOW Chemical, NSKK and
Formosa Plastics.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Figure 1.15: Main manufacturer of AA
(Source: BASF Report/ Acrylic acid production 2009)
The bar chart listed all the main country that involved on manufacturing of AA
around the world. America is the highest one to become AA producer about 1313000
tonne /year while Czech the lowest producer with 55000 tonne /year. Malaysia is seven
places to become as manufacturer of AA with 160,000 tonne /year was produced. The
total global capacity of AA produced around the world is 4061,000 tonne /year.
Table 1.12 shows a major global producer or suppliers of AA. It was identified
thru the company name, which country them situated and their status either producer or
supplier. BASF from Malaysia is not spared to be listed as producer of 2-EHA. However,
China was lead from other country in making this chemical.
160000
0
200000
400000
600000
800000
1000000
1200000
1400000C
ap
aci
ty (
ton
ne/
yea
r)
Country
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table 1.12: Producer/Suppliers of Acrylic Acid
Country Company Status
China Simagchem Corporation Producer
China Jinan Haohua Industry Co., Ltd Supplier
USA Spectrum Chemical Mfg. Corp Supplier
China Hangzhou Meite Chemical Co., Ltd Producer
China Kinbester Co., Ltd. Supplier
Germany Chemos GmbH Supplier
USA WEGO Chemical & Mineral Corp. Supplier
Malaysia BASF Petronas Chemicals Sdn Bhd Producer
(Source:
www.alibaba.com)
Demand for AA
The global crude acrylic acid reached around 3.2 million tonnes by the end of 2005.
World demand for crude acrylic acid is forecast to grow at 3.7% annually during 2006–
2011, while demand for glacial acrylic acid is forecast to grow at about 4% annually
during 2006–2011.
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Figure 1.16: World consumption of crude AA 2006
(Source: http://www.sriconsulting.com)
The pie charts show world consumption of crude acrylic acid. In terms of
geographic region, current crude acrylic acid is centered the United States and Western
Europe, which account for 36% and 27% of global demand respectively. However, the
future major investment in acrylic acid complexes will be made in developing economies.
Given strong forecast double digit demand growth in Asia, particularly China, Asia
demand for crude acrylic acid will outstrip that in developed economies, moving from
only 21% of global demand in 2005 to around 38% in 2015.
Forecast of AA
Table shows forecast demand of AA around the world from 2005 to 2015.
Meaning that in 10 years period, there is rise the capacity of AA for entire region
whereby China is the major of producing AA. The total world capacity indicates
increasing to 33.42% from 2005 to 2015 which is 1937,000 metric tonnes rise.
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Table 1.13: Capacity to produce Acrylic acid from 2005-2015
Region Year (1000 metric tons)
2005 2006 2007 2008 2009 2012 2015
North America 1363 1395 1395 1395 1395 1395 1395
Europe 997 1060 1130 1220 1290 1290 1290
Middle East 75 80 80 80 80 160 240
Southeast Asia 278 295 295 295 295 615 615
Northeast Asia 821 821 941 881 921 1001 1001
China 325 660 1025 1065 1125 1255 1255
TOTAL 3859 4311 4866 4936 5106 5716 5796
(Source: Technon-Orbi-Com/Acrylic acid and its ester 2009)
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Figure 1.17: World capacity of AA
(Source: Technon-Orbi-Com/Acrylic acid and its ester 2009)
Figure 1.16 illustrated the graph with gradual increase on capacity on
3859,000,000 metric tonne in 2005 to 5796,000,000 metric tonne in 2015. The ten years
period is sufficient to prove the actual increment of world capacity of 2-EHA. Based on
capacity of 2-EHA, it is forecasted that the capacity 2-EHA will keep increasing until
2015.
1.2.3.2 2-Ethylhexanol (2-EH)
2-Ethylhexanol (2-EH), or isooctanol, is a fatty alcohol, an organic compound used in the
manufacture of a variety of products. It is a branched, eight-carbon alcohol. It is a clear,
colorless liquid that is nearly insoluble in water, but well soluble in most organic solvents.
0
1000
2000
3000
4000
5000
6000
7000
2005 2006 2007 2008 2009 2012 2015
Cap
aci
ty (
1000 m
t)
Year
World Capacity of AA
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2-EH can be readily converted into esters that have a variety of uses. The main uses for
2-EH is in the production of plasticisers, coatings, adhesives and other speciality
chemicals. The largest market for 2-EH has been the plasticiser di-octyl phthalate (DOP)
which is used in the manufacture polyvinyl chloride (PVC) products.
Demand for 2-EH
The global recession means that 2-EH is well supplied worldwide. Total production or
consumption is estimated to reach a little over 2.8 million tonnes in 2009, giving average
utilization rates of just above 80%, according to UK-based consultant state that
Tecnon OrbiChem China is a major 2-EH importer of over 250,000 tonne /year.
Exporters include Western Europe of more than 150,000 tonne /year, Middle
East of over 70,000 tonne /year and rest of Asia at around 50,000 tonne /year. Demand
for 2-EH in China is predicted to grow at 7%/year from 2010-2015, with worldwide
growth at over 2% /year in the same period. No growth and possibly some decline is
expected in the US, Europe and northeast Asia (Japan, South Korea and Taiwan).
Source: icis.com/news 19 October 2009
Supplier for 2-EH
Table 1.14 shows a major global producer or suppliers of 2-EH. It was identified thru the
company name, location and their status either producer or supplier. BASF from
Malaysia is not spared to be listed as producer of 2-EH. However, China was in the top
rank than other country in making this chemical and become the global supplier.
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Table 1.14: Producer/Suppliers of 2-Ethylhexanol
Country Main Company Status
China Jinan Haohua Industry Co., Ltd. Supplier
US Magna-Kron Corp., Supplier
Germany Klaus F. Meyer GmbH Supplier
Canada Storchem Inc., Supplier
Netherlands Joss Elastomers B.V., Supplier
India Venus Petrochemicals (Bombay) Pvt. Ltd., Supplier
1.2.3.3 Catalyst
Dodecylbenzenesulfonic acid (DBSA) or synonym name linear alkylbenzene sulfonate is
the world’s largest-volume synthetic surfactant and is widely used in household
detergents as well as in numerous industrial applications. The products referred to as
DBSA include the various salts of sulfonated alkylbenzenes as well as the free acid.
DBSA is generally produced in equipment that is also used to produce other
sulfonated/sulfated products. Therefore, capacities far exceed demand for DBSA alone.
About 85% of DBSA is used in household detergents, including laundry powders,
laundry liquids, dishwashing liquids and other household cleaners. Industrial, institutional
and commercial detergents account for most of the other applications of DBSA, but it is
also used as an emulsifier for agricultural herbicides and in emulsion polymerization and
wetting agent.
DBSA supply/demand
Table 1.15 shows the global capacity and production of DBSA in 1994 to 1995 between
five major regions. Western is the biggest DBSA capacity with 1400000 tonne /year
while Canada just 63000 tonne /year. However, East region become a biggest producer
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of DBSA which is the production reach to 1140000 tonne /year and Canada also a minor
producer of DBSA.
Table 1.15: Global demand of DBSA from 1994-1995
Region (1000 tonne/year)
Capacity Production
Western 1400 433
Mexican 237 205
Canada 63 33
US 1038 191
East 513 1140
(Source: Chemical Economic Handbook, Feb
1996)
Producer/Suppliers for DBSA
Table 1.16 shows the Malaysia major companies which is being DBSA producer and
supplier in 2009 to 2010 whereas these three companies is situated in Kuala Lumpur,
Johor and Penang respectively
Table 1.16: Malaysia Producer/Supplier for DBSA from 2009-2010
Region Company Status
Kg Baharu, Kuala Lumpur Best Chemicals Sdn Bhd Producer
Ulu Tiram, Johor Zender Chemicals Sdn Bhd Producer
Bukit Mertajam, Penang EQX Materials Sdn Bhd Supplier
(Sources: www.alibaba.com)
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1.2.3.4 PHTHZ and HMME
PHTHZ and HMME have a same function which is a reaction inhibitor, antioxidant and
short stopping agent in a variety of diverse applications. The product is principally
utilized as an inhibitor and short stopping agent in the stabilization of acrylic acids, esters
and monomers. In its many applications, the product is extremely active, functions at
very low concentrations and will synergize with other stabilizers. Products and chemical
processes that utilize PHTHZ will exhibit enhanced and improved performance.
PHTHZ and HMME Producer/Supplier
Table shows the major producer and supplier of PHTHZ and HMME in China and Asian
region for this decade. Most companies usually manufacture both PHTHZ and HMME
because the same type of function of this stabilizer.
Table 1.17: Asian Producer/Supplier for PHTHZ and HMME
Region Company Component
China Shanghai Yancui Import & export Co.,Ltd PHTHZ & HMME
China Nanjing Yedu Trade Co.,Ld PHTHZ & HMME
China Shenyang Yishengrong Chemicals Co.,Ltd PHTHZ
China Hangzhou Garden Corporation HMME
(Sources: www.alibaba.com)
1.2.4 MARKET PRICE ANALYSIS
A market analysis is a documented investigation of a market that is used to inform a
firm's planning activities particularly around decision of inventory, purchase, work force
expansion/contraction, facility expansion, purchases of capital equipment, promotional
activities, and many other aspects of a company. The goal of a market analysis is to
determine the attractiveness of a market and to understand its evolving opportunities
and threats as they relate to the strengths and weaknesses of the firm.
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1.2.4.1 Price of 2-EHA
The global price of 2-EHA is RM 11.80 /kg. The prices always increase for the future.
According to prices of other chemicals such as AA, 2-EHA and DBSA, it would be
expected that the global trend for 2-EHA prices also undergo the same changes as well
as other chemicals trade.
Sources: www.icis.com
1.2.4.2 Price of AA
Figure 1.18: Price between Feb to Mid May 2010
(Source: www.icis.com)
The bar chart above shows the maximum price of AA from February to mid May of 2010.
It clearly observes the prices always showed slightly increase in all region whereas US
give a highest price of RM 8297.42 /tonne in mid May and also lowest price of RM
2111.90 /tonne.
4984.2
2300.4
5391.8
2111.9
7987.57348.5 7643.54
8297.42
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
China Southern Asian Europe US
Pri
ce (
RM
)/to
nn
e
Area
Max Price of Acrylic acid from
Feb-Mid may 2010
Feb
Mid May
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1.2.4.3 Price of 2-EH
Figure 1.19: Price between Feb to mid May 2010
(Source: www.icis.com)
The bar chart above showed the maximum price have achieved by 2-Ethylhexanol from
February until may 2010. It definitely observed the highest price occurred in Southern
Asian which is RM 6469.88 /tonne followed by Europe RM 5575.28 /tonne and the
lowest price in US by RM 2797.36 /tonne. However, the entire regions always give
increasing value during 4 month and will be expected rising in future.
6070.5
5247.18
2425.08
6469.88
5575.28
2797.36
0
1000
2000
3000
4000
5000
6000
7000
Southern Asian Europe US
Pri
ce (
RM
)/to
nn
e
Area
Max Price of 2-Ethylhexanol from
Feb-Mid May 2010
Feb
Mid May
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1.2.4.4 Price of DBSA
DBSA is generally sold in bulk quantities. Prices have been dropping in the past several
years, and currently in 2010, the expensive price recorded for the DBSA is RM 4939.81
/tonne in China. In contrast, the lowest average price was recorded as RM 3859.23
/tonne. As been seen, the price of DBSA is always made a changes based on global
market price demand. However, for sure the forecast prices for DBSA in next five to ten
years expected to get increased because of the ultimate demands for these chemicals
needs to industry.
Table 1.18: The latest price of DBSA in Asian region
Country Average price (RM/tonne) Status
China 4939.81 Producer
Hong Kong 3859.23 Producer
India 4908.94 Producer
(Sources:
www.alibaba.com)
Table 1.18 shows the latest price of DBSA around Asian region in 2010 which is in
China, Hong Kong and India. The prices are quite same in China and India but lowest
prices are known to be used in Hong Kong that is RM 3859.23 /tonne.
1.2.4.5 Price of PHTHZ and HMME
Demand and production of antioxidants are continually shifting from the USA, Western
Europe and Japan to the emerging markets of Asia particularly China and India. This is
mainly because wages there are lower and environmental regulations are not as strict. In
the emerging countries themselves, domestic demand for consumption products
containing antioxidants is growing. While few large suppliers of antioxidants dominate
the relatively saturated markets of industrialized countries, the market in Asia is still very
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much fragmented. New Asian suppliers are creating an additional pressure on
established manufacturers.
Despite sufficient capacities, antioxidant prices are continuing to rise. Prices for
raw materials, energy, transportation, wages, intermediate goods and final products all
raise the price on the market. However, price increases are somewhat limited by the
shift of antioxidant production to Asia. The global market price for PHTHZ is RM 610.20
/kg and for HMME are RM 552.00 /kg.
1.2.5 BREAK EVEN ANALYSIS
1.2.5.1 Introduction
Break even analysis is a technique used to analyze income, cost and profit structures
with particular references to the break even point. The break even point is the point at
which the product stops costing money to produce and sell, and starts to generate a
profit for company. The break even analysis requires an estimation of fixed costs,
variable cost and total revenues.
1.2.5.2 Process economics and estimation
A great plant design must always present a specific plant operation with an ultimate goal
of obtaining profits from its product sales. It is necessary for any plant design to achieve
its goal to yield profits by evaluating different types of cost involved for the plant
operation and establishment. Besides direct costs invested in the plant design such as
equipment purchasing and installation fees, there are also indirect costs in which must
be taken account of, for instance contractor fees and contingencies. In general, the costs
involved can be split into two major categories, namely the total capital investment and
the total product cost.
1.2.5.3 Total Capital investment
Total Capital investment by definition is the amount of money necessary for the
investment of putting the project into operation. The total capital investment to fully
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complete the plant operation is mainly consisting of two parts, which are the fixed capital
investment and working/operating (variable) capital investment. However, it also
includes start-up costs as part of the total capital investment.
Total Capital Investment = Fixed Capital Investment + Working Capital + Start-up Cost
Fixed Capital Investment (FCI)
Apart from focusing only on the price of the raw materials, a large sum of investment to
establish a fully operational plant must be made. Fixed capital investment is simply the
sum of money required to be invested at the early stage of the construction of a fully
operating plant. Purchasing of necessary equipments plus the installation is crucial as it
will be the core investment that will determine the compatibility of the plant as well as
going to be established.
Fixed capital investment is the costs required to build the process, which is represented
by the following equation:-
Fixed Capital Investment = Direct Cost (ISBL + OSBL) + Indirect Cost
Onsite costs (ISBL or inside battery limits) includes:-
a) Purchased equipment cost
b) Purchased equipment installation
c) Instrumentation and control
d) Electrical equipment and controls
Offsite costs (OSBL or outside battery limits) includes:-
a) Buildings: Process buildings, auxiliary buildings, maintenance shops, building
services.
b) Yard improvements
c) Service facilities: Utilities, facilities, non-process equipment and distribution
and packaging
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d) Land: Survey and fees, property costs
Indirect Costs which are the expenses not directly involved with material and labor of
actual installation, includes:-
a) Engineering and supervision
b) Construction expenses
c) Contractor’s fee
d) Contingency
Working Capital
Working Capital is the capital required to actually operate the plant, and includes:
a) Raw material for a one-month supply
b) Finished products
c) Accounts receivable
d) Cash on hand
e) Accounts payable and taxes payable
Start-up cost
Costs allocated for starting up the plant operation are start-up costs. Some of the
examples of start-up costs are process modifications, start-up labor and loss in
production. The estimation of total start-up cost of the plant operation is to be 10% of the
fixed capital investment.
Start-up Cost are needed to handle the glitches encountered during the beginning of the
plant operation, which includes:
a) Process modifications
b) Start-up labor
c) Loss in production
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1.2.5.4 Total Cost (TC)
Direct Production Cost is:
a) Raw materials
b) Utilities
c) Maintenance and repairs
d) Operating supplies
e) Operating labors
f) Direct supervision
g) Laboratory charges
h) Patents and royalties
Fixed charges include:
a) Depreciation
b) Local taxes
c) Insurance
d) Rent
e) Interest
Plant overhead is general plant upkeep and overhead, payroll overhead, packaging,
medical services, safety and protection, restaurants, recreation, salvage laboratories and
storage facilities.
1.2.5.5 Gross-Roots Capital Cost (GRC)
Gross-roots capital cost (GRC) is the cost of equipment installation in the plant. It
makes-up the major portion of the total fixed capital cost. Bare Module method is used to
estimate the cost of equipments used in the plant. To calculate the GRC, contingency
and fees (8% of total bare module cost, CTBM), auxiliary facilities (10% of total module
cost, CTM) are added to the initial bare module cost (Ulrich, 1984).
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1.2.5.6 Break Even Point
The objective of the break even analysis is to determine the quantity at which the
product at a price will generate enough revenue to start earning a profit. Break even
point is to estimate the volume or capacity for the company to reach the total cost equal
to the total revenue and no profit was earned yet. So, it can be defined as:
Total revenue = Total cost
(2.5)
TR = TC
The breakeven point is determined by using relations for revenue and cost at different
values of the variable, Q. The Q may be expressed in units per year, percentage of
capacity, hour per month, etc. For example, at some value of variable the revenue and
the total cost relations will intersect to identify the break even point. If Q > BEP, there is
a predictable profit. But if Q < BEP, there is a loss. Profit is defined as:
Profit = Total revenue – Total cost
(2.6)
= TR – TC
Break even point can be calculated using the equation below:
BEP =
(2.7)
1.2.5.7 Calculation of Break Even Analysis
All calculations are shown in APPENDIX A.
Estimation of Grass-roots capital
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Table 1.19: Equipment cost
Equipment Cost
Tank 3 RM 2,101,158.00
Reactor R-101 RM 13,349,659.37
Distillation column T-101 RM 10,963,226.97
T-102 RM 10,963,226.97
Mixer MIX-101 RM 489,270.00
Condenser E-102 RM 868,400.98
E-107 RM 868,400.98
E-108 RM 868,400.98
Heater E-101 RM 868,400.98
Decanter V-101 RM 639,877.30
Total Bare Module Cost, (CTMB) RM 41,980,022.53
Table 1.20: Total module cost
Contingency CC = 0.15CTBM RM 6,297,003.38
Fees Cf = 0.03CTBM RM 1,259,400.68
Total Module Cost (CC + CF + CTBM =CBM) RM 49,536,426.59
Table 1.21: Grass-roots capital
Site development CSD = 0.05CTBM RM 2,099,001.13
Auxiliary Building CAB = 0.04CTBM RM 1,679,200.90
Offsite Facilities COS = 0.21CTBM RM 8,815,804.73
Auxiliary Facilities (0.30CTBM ) RM 12,594,006.76
Grass-roots Capital, GRC = CBM + Auxilary Cost RM 62,130,433.34
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Estimation of Total Capital Investment (TCI)
Table 1.22: Direct cost
Event Cost
Onsite
Purchased Equipment Installation 30 % GRC RM 18,639,130.00
Instrumentation and Control (installed) 15 % GRC RM
9,319,565.00
Piping (installed) 30 % GRC RM 18,639,130.00
Electrical and Material (installed) 8 % GRC RM 4,970,434.67
Offsite
Building 10 % GRC RM 6,213,043.33
Yard Improvements 1 % GRC RM 621,304.33
Service Facilities 5 % GRC RM 3,106,521.67
Land 2% GRC RM 1,242,608.67
Total cost RM 62,751,737.68
Table 1.23: Indirect cost
Event Cost
Engineering and supervision 5 % GRC RM 3,106,521.67
Construction Expenses 8 % GRC RM 4,970,434.67
Contractor’s Fee 1.5 % GRC RM 931,956.50
Contingency 10 % GRC RM 6,213,043.33
Total cost RM 15,221,956.17
Total = RM 77,973,693.85
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Table 1.24: Total capital investment
Fixed Capital Investment (FCI) (FCI = GRC + Total) RM 140,104,127.19
Working Capital 12 % FCI RM 16,812,495.26
Start Up Cost 8 % FCI RM 11,208,330.18
Total Capital Investment (TCI) RM 168,124,952.63
Estimation raw material cost
Table 1.25: Raw material cost
Price for raw materials
AA RM 7.2367 /kg
2-EH RM 6.414 /kg
PHTHZ RM 3.8592 /kg
HMME RM 610.2 /kg
DBSA RM 552 /kg
Raw material usage
AA 5285 kg/hr
2-EH 9539 kg/hr
PHTHZ 5.29 kg/hr
HMME 5.29 kg/hr
DBSA 26.43 kg/hr
Annual sales
AA RM 307,497,514.38 /yr
2-EH RM 491,912,493.84 /yr
PHTHZ RM 164,137.95 /yr
HMME RM 25,952,782.32 /yr
DBSA RM 117,298,454.40 /yr
Annual sales for raw materials RM
942,825,382.89 /yr
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Estimation product cost
Table 1.26: Product cost
Price for product
2-EHA
RM 11.8 /kg
Raw material usage
2-EHA 11737 kg/hr Annual sales for product
RM 1,113,512,664.00
Estimation of utilities cost
Table 1.27: Utilities cost
Heat exchanger
E-102 RM 868,400.98 /yr
E-107 RM 868,400.98 /yr
E-108 RM 868,400.98 /yr
E-101 RM 868,400.98 /yr
Total hot and cold utilities RM 3,473,603.92 /yr
Estimation of operating labor NOL = number of operators required to run the process unit per shift
NON = number of operators needed to provide the shifts
P = number of processing steps involving the handling of
particulate solids
NNP = number of non-particulate processing step handling
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Table 1.28: Calculation for NNP
Type of Equipment No. of equipment NNP
Distillation Column 2 2
Heater 1 1
Reactor 1 1
Condenser 3 3
Decanter 1 1
Mixer 1 1
TOTAL 9
NOL = [6.29 + 31.7 P2 + 0.23 NNP] 0.5
= [6.29 + 31.7 (0)2 + 0.23 (9)] 0.5
= 2.89 operators per shift
= 3 operators per shift
Pay for 1 operator per month = RM 1,500
Pay for 1 operator per year, PO = RM 18,000 /yr
(After considering bonus and allowance)
Source: MIDA Prices
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Table 1.29: Assumptions
Plant performed 3 shifts/day
Plant is running 24 hours/day
Maintenance work 30 days/year
Operation days 335 days/year
1 year 48 weeks
Minimum 1 operator rest 2 weeks/year
Weeks can be obtained by one operator 46 weeks/year
Shifts needed for a plant in a year:
=
= 1005
1 operator can obtain shifts:
=
= 230
Operators needed in a plant by considering the working shift, NON:
NON =
= 4.37 operators
= 5 operators
Operating labor cost, COL:
COL = NOL× NON × PO
= 3 × 5× RM 18,000 /yr
= RM 270,000 /y
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Estimation of total production cost
Table 1.30: Total manufacturing expenses
Manufacturing expenses Cost (RM/yr)
Cost per production
(RM/kg)
Direct production cost
raw materials
942,825,382.89 9.991210588
Utilities
Hot and Cold utilities
3,473,603.92 295.95
Miscellaneous Maintenance & Repairs 2 % FCI 2,802,082.54 238.7392
Operating Supplies 0.5% of maintenance & repairs 14,010.41 1.1937
Operating Labor 0.2% of maintenance & repairs 5,604.17 0.4775
Direct Supervision & Clerical Labor 10 % of Operating Labour 560.42 0.0477
Laboratory Charges 15 % of Operating Labour 840.62 0.0716
Patents and Royalties 0.01% FCI 14,010.41 1.1937
Indirect Production Cost
Local Taxes 1 % FCI 1,401,041.27 119.3696
Insurance 1% FCI 1,401,041.27 119.3696
Plant Overhead 50 % of Operating labor 2,802.08 0.2387
Total Manufacturing Expenses, AME 951,940,980.01 786.645988
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Table 1.31: Total general expenses
Total Manufacturing Expenses, AME Cost (RM/yr)
Cost per production
(RM/kg)
Administration Cost 3 % of FCI 4,203,123.82 358.1089
Distribution & Selling Expenses 10% of FCI 14,010,412.72 1193.6962
Research & Development 3% of FCI 4,203,123.82 358.1089
Total General Expenses, AGE 22,416,660.35 1909.9140
Table 1.31: Rate of return
Total Production
Cost, APC
APC = AME + AGE
excluding depreciation
974,357,640.36 83015.90188
Depreciation, ABD 10 % FCI 14,010,412.72 1193.696236
Total Expenses, ATE ATE = APC + ABD 988,368,053.08 84209.59812
Revenue from sales product 1,113,512,664.00 94872
Net annual profit, ANP total revenue - ATE 125,144,610.92 10662.40188
Income taxes 30% ANP 37,543,383.28 3198.720565
Net Annual Profit, ANNP ANP- Income Taxes 87,601,227.64 7463.681319
Rate of Return (ANNP+ AD )/TCI x 100% 60.44% 94872
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1.2.5.8 Breakeven Point
Table 1.32: Calculation breakeven point
Component FC
(RM/year)
VC
(RM/tonne)
Selling Price,
SP
(RM/year)
Price, P
(RM/tonne)
2-EHA 140,104,127.19 9462.99 118 × 107 11,800.00
Break even point can be calculated as follows:
Breakeven point :
: 59,950.16 tonne /year
Table 1.33: Estimation of total revenue
Capacity FC VC TR TC
0
140,104,127.19 0 0
140,104,127.19
10000
140,104,127.19
94,629,898.68 118000000
234,734,025.87
20000
140,104,127.19
189,259,797.36 236000000
329,363,924.55
30000
140,104,127.19
283,889,696.04 354000000
423,993,823.23
40000
140,104,127.19
378,519,594.72 472000000
518,623,721.92
50000
140,104,127.19
473,149,493.41 590000000
613,253,620.60
60000
140,104,127.19
567,779,392.09 708000000
707,883,519.28
70000
140,104,127.19
662,409,290.77 826000000
802,513,417.96
80000
140,104,127.19
757,039,189.45 944000000
897,143,316.64
90000
140,104,127.19
851,669,088.13 1062000000
991,773,215.32
100000
140,104,127.19
946,298,986.81 1180000000
1,086,403,114.00
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-69
Figure 1.20: Breakeven graph
Figure 1.19 illustrated the graph capacity versus fixed cost, total cost and total revenue.
It was obvious there have intersection between lines TR with TC. The intersection shows
when the cost TR and TC get same, the breakeven point which is quantity identified as
59,950.16 tonne, There is actually the minimum production the plant should run per year
in order to achieve constant profit. It also told that all capital investment early cost has
been entirely recover at this point
-
200,000,000.00
400,000,000.00
600,000,000.00
800,000,000.00
1,000,000,000.00
1,200,000,000.00
1,400,000,000.00 C
ost
(R
M)
Quantity (tonne)
Break Even Graph
TC
TR
FC
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
1-70
Calculation of Payback Period, PBP
In order to estimate the payback period of profit from the total investment of the plant,
the discounted and nondiscounted cash flow needs to be calculated respectively. It is
important to know when the plant minimum and maximum profit will be getting back after
a few year operations.
Table 1.34: Plant assumption
Years of construction 3 years
Plant operation life 12 years
Working capital RM 16,812,495.26
Total capital investment, TCI RM 168,124,952.63
Total annual sales RM 1,113,512,664 /year
Total expenses, ATE RM 84,209.60 /year
Bank loans 1st year = 10% of TCI
2nd year = 45% of TCI
3rd year = 45% of TCI
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table 1.35: Calculation of nondiscounted cash flow
Year Al AS ABD ATE-ABD
ACI = AS + (ATE-ADD) AA ANP = ACI - ABD AIT = 30%ANP ANNP = ANP - AIT
ANCI = AI + ADD + AA + ANNP ΣANCI
0
0
1 (16,812,495.26)
(16,812,495.26) (16,812,495.26)
2 (75,656,228.68)
(75,656,228.68) (92,468,723.95)
3 (75,656,228.68)
(75,656,228.68) (168,124,952.63)
4
890,810,131.20 14,010,412.72 (974,357,640.36) (83,547,509.16) 0 (97,557,921.88) (29,267,376.56) (68,290,545.32) (54,280,132.60) (222,405,085.23)
5
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 (120,793,444.87)
6
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 (19,181,804.51)
7
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 82,429,835.86
8
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 184,041,476.22
9
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 285,653,116.58
10
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 387,264,756.94
11
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 488,876,397.30
12
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 590,488,037.66
13
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 692,099,678.02
14
1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 101,611,640.36 793,711,318.39
15 16,812,495.26 1,113,512,664.00 14,010,412.72 (974,357,640.36) 139,155,023.64 0 125,144,610.92 37,543,383.28 87,601,227.64 118,424,135.62 912,135,454.01
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table cash flow shows all cost on plant during 15 years operation including 3 year of
construction the plant. ΣANCI shows the plant begin to get profit on year 7 which is
amount RM 82,429,835.86. This is the profit after considered all total capital investment
of the plant.
Figure 1.21: Nondiscounted cumulative cash flow graphs
Figure 1.20 illustrated graph nondiscounted cumulative cash flow versus plant life of
year. From the graph, new land purchased required at time equal zero. After that,
construction phase start with fixed capital investment cost used to installing equipments
and facilities on plant. Construction work finish at end of year 3 and the plant start at
year 4 generate finish product for sales to cover up the early investment cost. At year
six, the cash flow become positive value which is meant the profit begins to earn.
Payback period to get the profit is 2 year after plant operation. The plant finally shut
down at year 15 with equipment then sold by its salvage and working capital definitely
has been recovered.
-4E+08
-2E+08
0
20000000
40000000
60000000
80000000
1E+09
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Cu
mu
lati
ve A
nn
ual
Cas
h F
low
(R
M)
Time (Year)
Nondiscounted Cash flow profile for i=0%
pay back period = 2
NPV
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table 1.36: Calculation of Discounted cash flow
Year ANCI = AI + ADD +
AA + ANNP I = 0.1 I = 0.15 I = 0.20
fd fdANCI ΣANCI fd fdANCI ΣANCI fd fdANCI ΣANCI
0 0
0
0
0
1 (16,812,495.26) 0.91 (15,284,086.60) (15,284,086.60) 0.87 (14,619,561.10) (14,619,561.10) 0.83 (14,010,412.72) (14,010,412.72)
2 (75,656,228.68) 0.83 (62,525,808.83) (77,809,895.43) 0.76 (57,206,978.21) (71,826,539.31) 0.69 (52,539,047.70) (66,549,460.42)
3 (75,656,228.68) 0.75 (56,841,644.39) (134,651,539.82) 0.66 (49,745,198.44) (121,571,737.75) 0.58 (43,782,539.75) (110,332,000.16)
4 (54,280,132.60) 0.68 (37,074,060.92) (171,725,600.75) 0.57 (31,034,841.98) (152,606,579.74) 0.48 (26,176,761.48) (136,508,761.64)
5 101611640.4 0.62 63,092,834.17 (108,632,766.57) 0.50 50,518,943.62 (102,087,636.11) 0.40 40,835,439.32 (95,673,322.32)
6 101611640.4 0.56 57,357,121.97 (51,275,644.60) 0.43 43,929,516.19 (58,158,119.92) 0.33 34,029,532.76 (61,643,789.56)
7 101611640.4 0.51 52,142,838.16 867,193.56 0.38 38,199,579.30 (19,958,540.62) 0.28 28,357,943.97 (33,285,845.59)
8 101611640.4 0.47 47,402,580.14 48,269,773.70 0.33 33,217,025.48 13,258,484.86 0.23 23,631,619.98 (9,654,225.61)
9 101611640.4 0.42 43,093,254.68 91,363,028.38 0.28 28,884,369.98 42,142,854.84 0.19 19,693,016.65 10,038,791.03
10 101611640.4 0.39 39,175,686.07 130,538,714.45 0.25 25,116,843.46 67,259,698.30 0.16 16,410,847.20 26,449,638.24
11 101611640.4 0.35 35,614,260.06 166,152,974.51 0.21 21,840,733.44 89,100,431.74 0.13 13,675,706.00 40,125,344.24
12 101611640.4 0.32 32,376,600.06 198,529,574.57 0.19 18,991,942.13 108,092,373.87 0.11 11,396,421.67 51,521,765.91
13 101611640.4 0.29 29,433,272.78 227,962,847.35 0.16 16,514,732.28 124,607,106.15 0.09 9,497,018.06 61,018,783.97
14 101611640.4 0.26 26,757,520.71 254,720,368.05 0.14 14,360,636.77 138,967,742.92 0.08 7,914,181.72 68,932,965.69
15 118424135.6 0.24 28,349,796.52 283,070,164.58 0.12 14,553,673.18 153,521,416.10 0.06 7,686,374.36 76,619,340.05
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Table shows discounted cash flow calculation on plant with 3 difference taxes rate which
is 10%, 15% and 20% respectively. The profit earn observed also in different year 7, 8
and 9 with difference value RM 867,193.56, RM 13,258,484.86 and RM 10,038,791.03
respectively.
Figure 1.22: Discounted cumulative cash flow graphs
Figure 1.21 illustrated graph Discounted cash flow versus plant operation life. It
obviously shows three type of graph which is considered taxes rates 10%, 15% and
20%. This showed the minimum profit that plant could earn. The highest rate will
influence the decrease of profit and value at end project. The profit also shows less than
nondiscounted graph with pay back period is slow to achieve.
-2E+08
-1E+08
0
10000000
20000000
30000000
40000000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Cu
mm
ula
tive
an
nu
al c
ash
flo
w (
RM
)
Time (year)
Discounted Cash flow profile
I = 0.1
I = 0.15
I = 0.2
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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1.2.6 Conclusion
The overall market analysis can be summarizing as below:
Table 1.37: Overall plant values
Selling price for 2-EHA RM 11,800 /tonne
Total capital investment RM 168,124,952.63
Total cost RM 234,734,025.87
Annual sales 2-EHA RM 1,113,512,664 /year
Maximum profit (Nondiscounted) RM 82, 429,835.86 at year 7
Minimum profit (Discounted) RM 10,038,791.03 at year 9
Rate of return profit 60.44%
Therefore, RM 200 million given budget to build up the plant has lots of saving and the
plant absolutely should be operating well. The 2-EHA plant is worthy to be constructing
based on profit before and after the taxes and its year of payback period. In conclusion,
it is wise to consider all aspect in order to have a good view of economic analysis even it
is using estimation value.
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1.3 SITE LOCATION
The site location and plant layout is an important factor that must be considered before
starting up a plant. This is because a suitable site must be found for a new project, and
the site and equipment layout planned in order to determine the successful of a
business. Provision must be made for the ancillary buildings and services needed for
plant operation; and for the environmentally acceptable disposal of effluent. Besides, the
strategic location also affect the performance of production and economic of plant. For
example, location which is near with the raw material will reduce the cost for
transportation.
1.3.1 SELECTION CRITERIA
The location of the plant can have a crucial effect on the profitability of a project, and the
scope for future expansion. A good location is required to optimize the production of the
plant. According to Coulson & Richardson’s (2000), many factors must be considered
when selecting a suitable site, below is the factors that must be consider:
a) Location, with respect to the marketing area.
b) Raw material supply.
c) Transport facility.
d) Availability of labor.
e) Availability of utilities: water, fuel, power.
f) Availability of suitable land.
g) Environmental impact and effluent disposal.
h) Local community considerations.
i) Climate.
j) Political and strategic considerations.
1.3.1.1 Marketing area
The plant should be located close to the primary market if the cost of transport a
significant fraction of the sales price. In an international market, there may be an
advantage to be gained by locating the plant within an area with preferential tariff
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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agreements. In addition, Malaysia's market-oriented economy, supportive government
policies and a large local business
community that is ready to do business with international corporations have made
Malaysia a highly competitive manufacturing and export base.
1.3.1.2 Raw Materials
The availability and price of suitable raw materials will often determine the site location.
Beside that, the quality of raw material must be maintained to produce a good product.
Therefore, best plant located is close to the source of the major raw material; where this
is also close to the marketing area. So the transportation cost can reduce.
1.3.1.3 Transportation The transport of materials and products to and from the plant will be an overriding
consideration in site selection. If practicable, a site should be selected that is close to at
least two major forms of transport: road, railway station and sea port. Road transport is
being increasingly used, and is suitable for long distance transport of bulk chemicals. Air
transport is convenient and efficient for the movement personnel and essential
equipment and supplies, and the proximity of the site to a major air port should be
considered. For example, Peninsular Malaysia's network of well-maintained highways is
a boon to industries. These highways link major growth centers to seaports and airports
throughout the peninsular and provide an efficient means of transportation for goods. So,
the site selected should have a good transportation lines to smoothen the production.
1.3.1.4 Availability of labor
There are many job categories that have offer in a plant such as labor will be needed for
construction of the plant and its operation. Skilled construction workers will usually be
brought in from outside the site area, but there should be an adequate pool of unskilled
labor availability locally, and labor suitable for training to operate the plant. Skilled
tradesmen will be needed for plant maintenance. Local trade union customs and
restrictive practices will have to be considered when assessing the availability and
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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suitability of the local labor for recruitment and training. To fulfill all these demands,
Malaysia has produced many quality workforces, educated and productive in all sectors.
1.3.1.5 Utilities
Power and steam requirements are high in most of the chemical plants, and fuel is
required to supply these utilities .Power and fuel can be combined as one major factor in
the choice of a plant site. Chemical processes invariably require large quantities of water
for cooling and general process use, and the plant must be located near a source of
water of suitable quality. Process water may be drawn from a river, from wells, or
purchased from a local authority. At some sites, the cooling water required can be taken
from a river or lake, or from the sea; at other locations cooling towers will be needed.
Electrical power will be needed at all sites to run operations unit and generate heat. The
major supplier of electricity in Malaysia is the Tenaga National Bhd and its tariff is
uniform for all states. The telecommunications is also needed to market the product.
These all facilities are continuously being developed by state government as well as
private developers to meet demand.
1.3.1.6 Environmental impact and effluent disposal
Before selecting a plant site, the regional history of natural events of this type should be
examined and the consequences of such occurrences considered for safety. Protection
from losses by fire is another important factor for selecting a plant location. In case of a
major fire, assistance from the fire departments should be available. Fire hazards in the
surrounding area of plant site must not be overlooked. In addition, industrial processes
will produce waste products, and full consideration must be given to the difficulties and
cost of disposal. The disposal of toxic and harmful effluents will be covered by local
regulations, and the appropriate authorities must be consulted during the initial site
survey to determine the standards that must be met. An environmental impact
assessment should be made for each new project.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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1.3.1.7 Local community considerations
The proposed plant must be fit in with and be acceptable to the local community
because the nature and facilities of community can have effect on the location of the
plant. Full consideration must be given to the safe location of the plant so that it does not
impose a significant additional risk to the community. On a new site, the local community
must be able to provide adequate facilities for the plant personnel: schools, banks,
housing, and recreational and cultural facilities.
1.3.1.8 Land
Sufficient suitable land must be available for the proposed plant and for future
expansion. The land should ideally be flat, well drained and have suitable load-bearing
characteristics. A full site evaluation would be made to determine the need for piling or
other special foundations. The important price of land is to reduce the cost and must be
suitable with the return of plant later on. Site location should provide storage and
handling infrastructures. The prices also vary according to the facilities available in the
location.
1.3.1.9 Climate
A suitable is really necessary for the plant to operate with smooth condition. Some
natural obstacles such as flood, thunderstorm and others may cause bad effect to the
plant. Winds are generally light according to (Ministry of Science, Technology and
Innovation (MOSTI)). This climate is more suitable for chemical plant. Some
characteristics of peninsular Malaysia climate have been identified, which are very
suitable for the operation of the plant:
i. Wind
Generally light wind. The predominant wind direction is from North from
November to March. From May to September, the predominant wind is from the
South. During inter monsoon month of April to October, the wind direction is
variable with speeds below 8 m/sec. On the average wind is calm about 40% of
the time.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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ii. Rainfall
Annual rainfall is about 2500mm. Most rainfall falls on March and September. For
the east coast of Peninsular Malaysia, rain falls heavily during the monsoon
season, which is from the end of September to early January.
iii. Temperature
Daily temperature is from 25oC to 31oC. The maximum mean temperature is
about 32oC, while the minimum temperature is about 21oC.
iv. Relative Humidity
The level of humidity is high at night and early morning. This relative value drops
to minimum around midday.
1.3.1.10Political and strategic considerations
Political stability is an important consideration in selecting plant. Capital grants, tax
concessions, and other inducements are often given by governments to direct new
investment to preferred locations; such as areas of high unemployment. The overriding
of such grants can be the overriding considerations in site selection. Malaysia has
experienced a long period of political and economic stability. These criteria make those
country great attractions to foreign investors. Government policies that maintain a
business environment with opportunities for growth and profits have made Malaysia an
attractive manufacturing and export base in the region. In addition, a well-developed
financial and banking sector has enhanced Malaysia's position as a dynamic export base
in Asia. Sophisticated financial facilities are available through domestic and foreign
commercial banks and their nationwide network of branches. There are also
representative offices of several foreign banks that wish to establish a presence in the
region. The market in Malaysia is extremely busy at the moment: during 2004 it was
estimated that the approved projects in the chemical and petrochemical sectors alone
would result in career opportunities for around 3,500 extra people; and this trend has
continued throughout 2005 and into 2006 (Nes Global).
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1.3.2 SITE LOCATION SUGGESTED
Production of 2-Ethylhexyl Acrylate is classified as a petrochemical project. The plant
must therefore be sited in a special zone provided by the government. The important
criterion to setup plant is a location of plant. Beside that, the plant must in a strategic
location that near with facilities, utilities, labor and transportation. The locations in
Malaysia that have potential are:
Teluk Kalong Industrial Estate, Kemaman, Terengganu
Tanjung Langsat, Johor
Pulau Indah, Port Klang
1.3.2.1 Detail on Suggested Location
Tanjung Langsat
a) Raw material
The raw materials for 2-Ethylhexyl Acrylate have to be import from overseas and
malaysia. This is because there are no suppliers in Johor. Tanjung Langsat is
located in the heart of South East Asia that has an easy access to the rest of the
world due to its closeness to the international shipping lane and its connectivity
with other modes of transport.
b) Price of land
According to Malaysian Development Authority (MIDA), there is 404.685
hectares land available in Tanjung Langsat with price of land about RM14 – 20
per m2.
c) Labor
Have a lot of job opportunity that can attract many people to come because there
are many facilities were provided for workers. Besides that, Tanjung Langsat is
near with Indonesia where the country of workman. The training institute such as
UTM Skudai, UiTM, Politeknik and institute Latihan Perindustrian can provide
trainer or skilled labor for our plant.
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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d) Utilities In Tanjung Langsat, the electricity will be supply by the Tenaga Nasional Berhad
and there are different tariff that depends on class it categorized. For water, it will
be supply by Jabatan Bekalan Air Johor with rate 0-20m3 – RM2.22 for industrial.
e) Transportation Designation of Senai Airport as air cargo hub provides the Port with sea-air link
for high value and perishable products. In addition, this location also near to
Pasir Gudang Port (8 km), Tanjung Pelepas Port and Tanjung Langsat port.
Beside that, Tanjung Langsat
Port (TLP) is the third port in Johor, Malaysia and is an important terminal in
Southeast Asia; it handles bulk cargo such as liquefied petroleum gas (LPG) and
hazardous chemicals. TLP is located 12 nautical miles (22 km) from international
ship routes, 5 km from the Johor Port and 30 km from Johor Bahru. We can use
North-South Highway from Bukit Kayu Hitam to Singapore as a main road. In
addition, Johor also has the railway station which is links to west and east coast
region.
f) Political and strategic consideration From the political view, with the strategic location, it can attract many investor
from outside together make some investment. So it will increase the economic of
Johor.
g) Facilities & Infrastructure
Peninsular Gas Utilisation (PGU) project
A co-generation plant
Tank farms are being developed for bulk storage of petrochemical liquid
A 12km pipeline corridor, which facilitates feedstock, links the Pasir Gudang
and Tanjung Langsat sites and data transfers.
Johor Port (Pasir Gudang Port)
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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- With a 1,000-metre berth and a hazardous cargo jetty
- Three hazardous liquid bulk terminals to handle LPG, chemicals and
petrochemicals
Tanjong Pelepas Port, a world-class container port
Tanjung Langsat Port
- Located adjacent to the 4,000 acres of industrial land in Tanjung Langsat.
- Equipped with a twin-berth jetty consisting of outer (30,000 DWT) and
inner (7,000 DWT) berths
Figure 1.23: Location of Tanjung Langsat, Johor (Source: www.wikimapia.com)
This is a map for available land in Tanjung Langsat, Johor. is for available land, it near
with Steel Bharu Sdn. Bhd( ) that is the second largest in Asia. Beside that, the
location also near with Titan Tanjung Langsat ( ) and Langsat Terminal One ( ).
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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Telok Kalong
a) Raw Material Telok Kalong is near to Gebeng, which can supply raw material (acrylic acid) to
our company. Therefore, the cost transportation can reduce.
b) Price of land The land price is about 1.8 – 44.99 per m2 and the available land is 125.10
hectares. Terengganu’s industrial land is among the cheapest in Malaysia,
compared to other states.
c) Labor The centre of Malaysia's petrochemical development is on the east coast of the
Malaysian peninsular in Terengganu and Pahang. Terengganu boasts a highly
competitive and reasonable wage structure that compares favourably to higher-
cost locations within Malaysia and Asia. Malaysia is also well-known for its
commitment to labour welfare and corporate social responsibility. Therefore the
young citizens in Pahang, Kelatan and Terengganu will focus to fill the vacancies
in our plant.
d) Utilities Water falls under the jurisdiction of the state, and is treated and distributed by the
Terengganu Water Company (SATU) with tariff 70m3 – RM1.15 for industrial. At
the moment, potable water is supplied for both industrial and domestic use. The
electricity will be supply by the Tenaga Nasional Berhad.
e) Transportation Transportation facilities around Telok Kalong Industrial area are well developed
to cater the import export activities. As an industrial estate in Terengganu,
therefore the transportation facilities have been providing such as Kuala
Terengganu Airport, Kemaman Airport and Kerteh Airport. The location is also
PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY
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near to the Kemaman Port, Kerteh Minor Port, and Kuantan Port. Besides, Karak
Highway and East-West Highway connected the Telok Kalong with other place.
The major consideration to select the best site location is port facilities. This is
because water transportation is important to export our product and importing the
raw materials. Kemaman Port is vision as Malaysia’s future deepwater port and
gateway to Asia Pacific. It is an all weather port facing South China Sea. For
authorization aspect, the Terengganu state government provides incentives to
encourage and attract investors.
f) Political and strategic consideration Terengganu as an ideal base for investors wanting to keep a ceiling on their
costs while operating in the dynamic regional economy of Asia.
g) Facilities & Infrastructure
Gas processing plants
Peninsular Gas Utilization (PGU) project
Centralised utility facilities
- Supply of utilities such as power, industrial gases, demineralised water
and steam
Training centre
- TATI or Terengganu Advanced Technical Institute
- TSTC or Terengganu Safety Training Centre
- TPTTC or Terengganu Plastic Technology Training Centre
- University Technology MARA
- Petronas Training Institute
- University Putra Malaysia
- Pusat Latihan Sirim
Kertih Port
- Centralised tankage facilities
- Mainly bulk liquid port
Kuantan Port
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- Centralised tankage facilities
- Container and bulk liquid port
- Railway linking Kertih, Gebeng and Kuantan Port
Figure 1.24: Location of Teluk Kalong, Terengganu (Source: www.wikimapia.com)
Figure 1.23 is a map of location in Teluk Kalong, Terengganu. is a location for our
plant (available land) and it is near with Konsortium Kemaman Port ( ). Beside that, it
also near with others Chemical Plant and others industries ( ) such as Nitrate Acid
Plant, Kemaman Bitumen Company Sdn. Bhd (KBC) and Malay-sino Chemical
Industries Sdn. Bhd. From this figure, it also shows the location is near with Terengganu
Safety Training Centre ( ).
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Pulau Indah, Port Klang
a) Raw Material There are factors that can be compared among all the locations selected. It is
decided that the source of raw materials play the most important role in selecting
the most suitable location for our plant. This is because the supplement of raw
materials will also have a great impact on cost of transportation. Since our raw
material will be imported from overseas that is from China so we need to setup a
plant that near to the port or airport and also have good road facilities to supply
the product. As known, North Port and West Port are two international airports.
Our raw material will be imported using ship and usually uploads the product that
the ship carried at international airport.
b) Price of land Land price in Port Klang Free Zone is cheap and reasonable compared the
others state. It is only about RM 25.00 to RM 45.99 per m2.
c) Labor The capacity of resident in Port Klang is high. This is because, this town was
become the centered of the job vacancies in Klang and Shah Alam. Besides,
student from University or college can do their internship in our plant.
d) Utilities Water is distributed by the SYABAS with tariff 0-35m3 – RM2.07 for industrial and
the electricity will be supply by the Tenaga Nasional Berhad.
e) Transportation Selangor has all the modes of transportation such as land, water and air.
Through land, there are roads connecting major towns in Selangor and other
states. Through water and air, there are seaports and airport. Beside, PKFZ's
(Port Klang Free Zone) strategic location in Port Klang, excellent connectivity,
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state-of-the-art facilities, efficient services and attractive incentives all make
perfect business sense. For air transportation, Port Klang Free Zone area is
served by 2 major airports, both located in Selangor. The 2 airports are Subang
Airport and Kuala Lumpur International Airport. Besides, Selangor also served by
2 trunk roads run parallel to coastline traverse from north to south PLUS
highway.
f) Political and strategic consideration This site located off the coast of Selangor at Westport, the biggest port in the
region and a bustling zone of business opportunities for investors. Covering a
sprawling 2,154.64 hectares (5,324.11 acre), this environment friendly park is
more than an industrial development. It is also a residential development
featuring a resort lifestyle and enhanced commercial and institutional centre that
brings potential customers practically to our plant. In addition, Malaysia's premier
portside development offers investors all the essential components to success in
international markets.
g) Facilities & Infrastructure
Training centre
- University Technology MARA
- Politeknik Shah Alam
- UNISEL
West Port
- Centralised tankage facilities Westports' large docking facility wM bring
transport costs down as it can accept vessels of higher tonnage
- Can berth vessels up to 14,000 TEUs (20 foot equivalent units).
- In addition to its sound infrastructure, state of the art information
technology (IT) and comprehensive sea connectivity, Westports has
extensive road and rail linkages from Pulau Indah that extends to all parts
of Peninsular Malaysia
North Port
- Centralised tankage facilities
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- Container and bulk liquid port
Figure 1.25: Location of Pulau Indah, Port Klang (Source: www.wikimapia.com)
Figure 3.3 show the available land in Pulau Indah, Port Klang. The location ( ) is in
Westports Malaysia and near with Northports ( ).
1.3.2.2 The summarized of the comparison of suggested locations From factors that we consider to choose the location for our plant, the land prices in
Teluk Kalong, Terengganu is cheaper than other locations that is RM4.95 per m2. Beside
that, the area available for each location are sufficient for our plant and near with ports
(important transport). The plant should be placed in an area where sufficient labor supply
is available and each location have it. This is because the training institute is near and
the student can do their internship or work in our plant after graduated such as in Teluk
Kalong which is near with Terengganu Safety Training centre (TSTC) about 3.6 km.
From the maps, it show that each site location are strategic because near with
others industries and chemical plant. Therefore the locations are already develop and it
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give advantages for our plant because easy to attract investor and have special
incentives that offered by state government such as investment tax allowance of 60% of
qualifying capital
expenditure. The each area locations are secluded and separated from most residential
area so the safety of resident is assured and give low impact on the environment.
The important in site location is cost. Therefore the plant shall be build up near
with raw material. The raw material for our plant will buying at BASF, Gebeng or
imported from China. So the distance with raw material can reduce the cost
transportation. From this factor, it shows that Teluk Kalong, Terengganu is near with raw
material than other locations.
Table 1.38: Comparison of Suggested Location for 2-EHA Plant
Factors Tanjung Langsat,
Johor
Pulau Indah, Port
Klang
Telok Kalong,
Kemaman
Distance
from town
42 km from Johor
town
10 km from Shah
Alam
9.6 km from Kemaman town
Area
available
404.685 hec 1000 hec 125.10 hec
Land prices
(RM/m2)
14 - 20 25.00 – 44.99 4.95 - 44.99
Developer JCORP
(Johor Corporation)
SSIC Berhad
(Selangor State
Investment Centre)
PMINT
(Perbadanan
Memajukan Iktisad
Negeri Terengganu)
Residential
area
Pasir Gudang
Kempas
Meru, Klang
Shah Alam
Kertih
Paka
Kemaman
Electricity
supply
Tenaga Nasional
Berhad
Tenaga Nasional
Berhad
Tenaga Nasional
Berhad
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Electricity
tariffs
Peninsular Malaysia Unit
Rates
(RM)
Tariff D – Low Voltage
For overall monthly consumption between
0-200 kWh per month
For all kW sen/kwh
32.50
The minimum monthly charge is RM7.20
For overall monthly consumption more
than 200 kWh per month:
For all kWh sen/kwh
34.80
The minimum monthly charge is RM7.20
Tariff E1 – Medium Voltage General
For each kilowatt of maximum demand per month RM/kw
23.40
For all kW sen/kwh
26.60
The minimum monthly charge is RM600.00
Tariff E2 – Medium Voltage Peak/Off-Peak
For each kilowatt of maximum demand
per month during peak period RM/kw
29.30
For all kWh during peak period sen/kwh
28.10
For all kWh during off-peak period sen/kwh
17.30
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The minimum monthly charge is RM600.00
Tariff E3 ─ High Voltage Peak/Off-Peak
For each kilowatt of maximum demand
per month during peak period RM/kW
29.60
For all kWh during peak period sen/kWh
26.60
For all kWh during off-peak period sen/kWh
16.00
The minimum monthly charge is RM600.00
Water
supply
Jabatan Bekalan Air
Johor (JBA)
SYABAS Terengganu Water
Company (SATU)
Water
Tariffs
Industrial/Commercial
0-20m³ - RM2.22
More than 20 m³ -
RM2.96
Minimum charge-RM
18.48
Industrial/Commercial
0 - 35 m³ - RM2.07
More than 35 m³ -
RM2.28
Minimum charge –
RM36.00
Industrial
RM 1.15
Subject to RM50.00
minimum charge
Commercial
First 70 m3 - RM
0.95
More than 70 m3 -
RM 1.15
Minimum charge -
RM15.00
Airport
Changi Airport, Senai
Subang Airport
Kuala Terengganu
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Airport Airport
Kerteh Airport
Kemaman Airport
Port Johor Port/Pasir
Gudang Port
Tanjung Pelepas Port
Tanjung Langsat Port
North Port
West Port
Kemaman Port
Kuantan Port
Road
facilities
North-South Highway
from Bukit Kayu Hitam
to Singapore
PLUS Highway Karak Highway
East-West Highway
Type of
industries
Petrochemical
Chemical
Petrochemical
Chemical
Petrochemical
Chemical
Training
institute
University
Technology
Malaysia, Skudai
University
Technologi MARA
Politeknik Pasir
Gudang
Institute Latihan
Perindustrian
(Pasir Gudang)
Kolej University
Tun Hussein Onn
University
Technology MARA
Politeknik Shah
Alam
UNISEL
University
Technology
MARA
Petronas Training
Institute
University Putra
Malaysia
Terengganu
Safety Training
Centre (TSTC)
Terengganu
Plastic
Technology
Training Centre
(TPTTC)
Pusat Latihan
Sirim
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Table 1.39: Raw Material Supplier for Each Location
Raw material supplier
Tanjung Langsat, Johor
Pulau Indah, Port Klang
Teluk Kalong, Terengganu
Acrylic Acid
BASF Petronas
Chemicals Sdn
Bhd, Malaysia
Qingdao On-
Billion Industrial
Co., Ltd. China
Tianjin
Xinyuantehui
Chemical Co.,
Ltd., China
BASF Petronas
Chemicals Sdn
Bhd, Malaysia
Qingdao On-
Billion Industrial
Co., Ltd. China
Tianjin
Xinyuantehui
Chemical Co.,
Ltd., China
BASF Petronas
Chemicals Sdn
Bhd, Malaysia
Qingdao On-
Billion Industrial
Co., Ltd. China
Tianjin
Xinyuantehui
Chemical Co.,
Ltd., China
2-Ethylhexanol Haihang
Industry Co.,
Ltd., China
Trust & We
Co., Ltd, China
Haihang
Industry Co.,
Ltd., China
Trust & We
Co., Ltd, China
Haihang Industry
Co., Ltd., China
Trust & We Co.,
Ltd, China
Table 1.40: Packages of Incentives Offered by State Governments
Tanjung Langsat, Johor Pulau Indah, Port
Klang
Teluk Kalong,
Terengganu
The principal
incentives in the
manufacturing sector
are contained in the
Promotion of
Investment Act, 1986
and the Income Tax
Act, 1967
General Incentives:
Pioneer Status
- A company granted
Pioneer Status enjoys
5-year partial
exemption from the
payment of income
tax. It will pay tax on
30% of its statutory
income, with the
Special Land Premium
-Land premium of
RM5.00 per meter
squares to eligible
projects
-For medium & high
technology industries
-For first 2 hectares only
Discounts on Land
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Pioneer Status
-Investment Tax
Allowance (ITA)
-Reinvestment
Allowance (RA)
Incentives For Export
Export Credit
Refinancing (ECR)
Scheme
-Abatement Incentives
For Exports
-Double Deduction Of
Export Credit
Insurance Premiums.
-Industrial Buildings
Allowance (IBA)
Incentives For
Research And
development
Incentives For
Training Tariff
Protection
-The incentives are
designed to grant relief
from taxes in various
forms
Exception from Import
duty on Direct raw
materials/
Components
-Manufacture of goods for
export and the domestic
market
exemption period
commencing from its
Production Day
(defined as the day its
production level
reaches 30% of its
capacity).
Investment Tax
Allowance (ITA)
- As an alternative to
Pioneer Status, a
company may apply
for Investment Tax
Allowance (ITA).
- A company granted
ITA gets an allowance
of 60% of qualifying
capital expenditure
(such as factory, plant,
machinery or other
equipment used for the
approved project)
incurred within 5 years
from the date on which
the first qualifying
capital expenditure is
incurred.
- Companies can offset
this allowance against
70% of their statutory
income for each year
of assessment.
- Any unutilised
Premium
-Discounts from 10%-
25% according to
districts
-More than 50 workers
in first year intake
Differed Payment for
Land Premium
-Allowed for 1 year after
20% down payment of
deposit. Negotiable for
periods more than a
year
Pioneer Status
-Tax exemption limit is
increased from 70%-
80% of statutory income
for 5 years
Investment Tax
Allowance
-ITA is increased from
60%-80% of qualifying
capital expenditure
Import Duty Exception
on Raw Materials
-Full import duty
exception is given on
raw material,
components and parts
not available locally
used in manufacture of
finished products for
domestic market
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allowance can be
carried forward to
subsequent years until
fully utilised. The
remaining 30% of
statutory income will
be taxed at the
prevailing company tax
rate.
Table 1.41: Port facilities
Kemaman Port
Dedicated Liquid Bulking Terminal under construction:
- Length of 240 meters at depth of 14 meters.
- Ship capacity up to 40,000 DW.
- Handling capacity 15,000 tons per day.
- Pipe side 8"-12" (50 in number).
Viewed as Malaysia's future Deepwater Port and Gateway to Asia Pacific.
It is an all weather port facing South China Sea.
The draft at East Wharf is initially 13 meters draft.
- Upgraded to 17 meters in October 1996.
Currently handles dry general and liquid cargo on average two to three million
tons/year.
Current capacity estimated at 6.84 million tons/year (Tango crane).
Consists of three sections:
- East wharf (684 m).
- Supply Base (650 m).
- Petroleum Export Terminal.
Pasir Gudang Port
Haulers:
- Kontena Nasional Sdn.Bhd.
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- MISC Haulage Sdn.Bhd.
- Shapadu Kontena Berhad.
- Multimodal Freight Transportation Sdn.Bhd.
- Konsortium Perkapalan Berhad.
Managed by Johor Port Sdn.Bhd..
The port has direct access to the main shipping routes of the world.
Facilities:
Six berths with maximum depth of 13 meters to cater for containers, general and dry
Bulk cargoes.
A special jetty for handling liquid cargo mainly vegetable oil and hazardous cargo
jetty for handling fuel oil and chemicals.
Transports:
- Johor Port Transport Sdn. Bhd.
- Southport Port Services Sdn.Bhd.
- Usaha Enterprise (Edar) Sdn.Bhd.
- Maha Miro Enterprise Trading Sdn. Bhd.
All transport operators provides transport services for the shippers in the free
zone, which covers 1,000 acres.
West Port
As such, investors interested in setting up their base at PKFZ will enjoy 100 per
cent foreign equity with free zone tax benefits and unrestricted reparations of
profits and capital. PKFZ will also serve as a one stop centre to help start up
operations and interface with government agencies.
Terminal
-Infrastructure & Equipment
Berth length
-11 berths (16 meter depth) 3200 meters
Terminal capacity
- 280 acres out of total built up area of 1350 acres 7.2 million TEU capacity per year
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1.3.2.3 The weightage study
1 2 3 4 5
Poor Low Average High Excellent
Table 1.42: Comparison of location in term of weightage study
Factor Weightage Tanjung
Langsat
Pulau Indah Teluk Kalong
Distance from
town
5
2
4
5
Area available 5 4 5 4
Land price 5 3 3 4
Raw material
supplier (distance)
5
3
4
5
Residential area 5 3 3 4
Electrical supply 5 4 4 4
Water supply 5 3 4 5
Airport 5 3 3 4
Port 5 5 5 4
Road facilities 5 4 3 4
Training institute 5 4 3 5
Climate 5 4 4 4
Political view 5 5 5 5
Total 65 47 50 57
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1.3.3 SITE LOCATION SELECTED
From the overall comparisons and weightage study between the 3 potential sites for the
proposed plant project, we have decided to choose Teluk Kalongt in Terengganu as the
site for our plant. The price of land in Teluk Kalong is cheap and reasonable price with
many lands available for future expansion. This industrial park which has ready-built
industrial land and factories can allocate medium and heavy industries, chemical and
petrochemical industries. The area is secluded and separated from most residential
area. It is also close to primary market and raw material source. Therefore the
supplement of raw materials will also have a great impact on cost of transportation. The
more attractive incentives offered by the Johor State Government. These include:
Low land premium
Pioneer status
Investment Tax Allowance (80% of expenditure)
Partial exemption of income tax (15% income)
5 years tax exemption
Infrastructure allowance
Import duty exemption
Export, R&D and manpower training
Beside that, transportation facilities around Telok Kalong Industrial area are well
developed to cater the import export activities. The nearest seaport to Telok Kalong
Industrial area is Kemaman Port. This port is vision as Malaysia’s future deepwater port
and gateway to Asia Pacific. It is an all weather port facing South China Sea.
Furthermore, literacy level among the work force is high and can be easily trained.
Training, half skill and full skill institutions set up for the purpose of accommodating
manpower for industries are available in Terengganu. These institutions are includes;
1. University Technology MARA
2. University College of Terengganu
3. Terengganu Advanced Technical Institute ( TATI )
4. Terengganu Safety Training Center ( TSTC )
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5. Terengganu Plastic Technology Training Center
6. Petronas Training Institute
7. Industrial Training Institute
The labor costs or salary around Telok Kalong Industrial area and the
surroundings are quite reasonable and cheap due to the cost of living in Terengganu
which is quite low compared to other states in Malaysia.
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Security
Post
Sport Center
Car Park
Workers
And
visitors
M
O
T
O
R
C
Y
C
L
E
P
A
R
K
Security
Post
R&D
Plant
Area
Future
Expansion
Office
610 sq. ft.
Maintenance
Building
Fire
Station
Assembly
Point
Administration
and HR
Building
Waste
Water
TreatmentBoiler
HouseCooling
Tower
Fuel
Storage
Safety
Office
Changing
Room
Canteen
Control
Room
Main entrance/
Exit
Exit
Entrance
Compressor
House
Car Park
High level management
Product
storage
Raw
material
storage
Raw
material
storage
Smoking
area
clinic
Water
Tank
Smoking
area
( Designed meeting locations, Emergency escape routes)
Figure 1.26: Plant Layout
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