chapter 1 feasibility study

PRODUCTION OF 100,000 TONNE PER ANNUM OF 2-ETHYLHEXYL ACRYLATE CHAPTER 1: FEASIBILITY STUDY

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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


1-7

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:

http://en.wikipedia.org/wiki/Reaction_mechanism


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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

http://en.wikipedia.org/wiki/Carbonyl

http://en.wikipedia.org/wiki/Electrophile

http://en.wikipedia.org/wiki/Nucleophile

http://en.wikipedia.org/wiki/Oxonium_ion

http://en.wikipedia.org/wiki/Ester


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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,


Residence times is 2 to

Simple reaction,


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


3 distillation column

2 decanter

Evaporator

Total = 7


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




processes

Conversion cost lower

Safe energy, cost and

capital investment


Reduce inhibitor and

catalyst cost



processes

Conversion cost lower

Size Smaller throughput favor

batch operations

Economies of scale favor

continuous processes for

large throughput



large throughput



large throughput

Processing

efficiency

Requires strict scheduling

and control

Generally, become more

efficient as throughput

increases



increases



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



control become

Easier to control

For complicated and

highly



control become


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complex and

operational flexibility is

greatly reduce

complex and


greatly reduce

complex and


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


operating continuously have

excellent safety record and

any safety procedures will

established


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


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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


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


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

http://en.wikipedia.org/wiki/IUPAC

http://en.wikipedia.org/wiki/Organic_compound

http://en.wikipedia.org/wiki/Vinyl

http://en.wikipedia.org/wiki/Carboxylic_acid

http://en.wikipedia.org/wiki/Unsaturated_compound

http://en.wikipedia.org/wiki/Carboxylic_acid

http://en.wikipedia.org/wiki/Water_%28molecule%29

http://en.wikipedia.org/wiki/Alcohol

http://en.wikipedia.org/wiki/Ether

http://en.wikipedia.org/wiki/Chloroform

http://en.wikipedia.org/wiki/Carboxylic_acid#Reactions


http://en.wikipedia.org/wiki/Salt

http://en.wikipedia.org/wiki/Acrylate

http://en.wikipedia.org/wiki/Monomer

http://en.wikipedia.org/wiki/Amide

http://en.wikipedia.org/wiki/Acrylonitrile

http://en.wikipedia.org/wiki/Vinyl

http://en.wikipedia.org/wiki/Styrene



http://en.wikipedia.org/wiki/Homopolymer

http://en.wikipedia.org/wiki/Copolymer

http://en.wikipedia.org/wiki/Plastic

http://en.wikipedia.org/wiki/Coating

http://en.wikipedia.org/wiki/Adhesive

http://en.wikipedia.org/wiki/Elastomer

http://en.wikipedia.org/wiki/Fatty_alcohol


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.



http://en.wikipedia.org/wiki/Bis%282-ethylhexyl%29_phthalate

http://en.wikipedia.org/wiki/Bis%282-ethylhexyl%29_phthalate

http://en.wikipedia.org/wiki/Plasticizer


http://en.wikipedia.org/wiki/Emollient


http://en.wikipedia.org/wiki/Sunscreen

http://en.wikipedia.org/wiki/Octocrylene

http://en.wikipedia.org/wiki/Solvent

http://en.wikipedia.org/wiki/Diarrhea

http://en.wikipedia.org/wiki/Vomiting

http://en.wikipedia.org/wiki/Defatting_%28medical%29

http://www.encyclopedia.com/doc/1E1-functiongp.html

http://www.encyclopedia.com/doc/1E1-hydrocar.html

http://www.encyclopedia.com/doc/1E1-salt.html


1-29

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

http://www.encyclopedia.com/doc/1E1-soap.html

http://everything2.com/title/Acid

http://everything2.com/title/synthetic

http://everything2.com/title/anionic

http://everything2.com/title/surfactant

http://everything2.com/title/biodegradable

http://everything2.com/title/environmental+friendliness



http://everything2.com/title/household+detergents

http://everything2.com/title/laundry+powder



http://everything2.com/title/liquids

http://everything2.com/title/dishwashing+liquid

http://everything2.com/title/household+cleaner

http://everything2.com/title/industrial

http://everything2.com/title/agricultural

http://everything2.com/title/herbicide

http://everything2.com/title/polymer


1-30

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)

http://www.cytec.com/specialty-chemicals/downloads/PTZ%20AB%20general.pdf

http://www.cytec.com/specialty-chemicals/downloads/PTZ%20AB%20general.pdf


1-31

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


1-32

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


1-33

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


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


1-35

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


1-36

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


1-37

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

http://www.sriconsulting.com/


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.


1-39

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


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)


1-41

Figure 1.14: World capacity of 2-EHA


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


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.

http://www.alibaba.com/


1-43

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


1-44

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.


1-45

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.

http://www.sriconsulting.com/CEH/Public/Reports/606.4000


1-46

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



1-47

Figure 1.17: World capacity of AA


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




1-48

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.


http://www.icis.com/v2/chemicals/9074317/polyvinyl-chloride.html

http://www.tecnon.co.uk/gen/


1-49

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

http://www.icis.com/Search/CompanyDetails/350005603/Magna+Kron+Corp.htm

http://www.icis.com/Search/CompanyDetails/10010551/Klaus+F+Meyer+GmbH.htm

http://www.icis.com/Search/CompanyDetails/350581973/Storchem+Inc.htm

http://www.icis.com/Search/CompanyDetails/300020838/Joss+Elastomers+B+V.htm

http://www.icis.com/Search/CompanyDetails/900830217/Venus+Petrochemicals+%28Bombay%29+Pvt+Ltd.htm


1-50

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)


1-51

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.

http://en.wikipedia.org/wiki/Market

http://en.wikipedia.org/wiki/Inventory

http://en.wikipedia.org/wiki/Work_force

http://en.wikipedia.org/wiki/Company


1-52

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

http://www.icis.com/


1-53

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

http://www.icis.com/


1-54

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


1-55

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


1-56

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


1-57

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


1-58

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).


1-59

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


1-60

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


1-61

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


1-62

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


1-63

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


1-64

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


1-65

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


1-66

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


1-67

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


1-68

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


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


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


1-71

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


1-72

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


1-73

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


1-74

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


1-75

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


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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


1-78

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.


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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.


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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.


1-82

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)


1-83

- 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 ( ).


1-84

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


1-85

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.


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


1-86


- 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 ( ).


1-87


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,


1-88

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.


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



1-89

- 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


1-90

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


1-91

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


Tariff E1 – Medium Voltage General

For each kilowatt of maximum demand per month RM/kw

23.40

For all kW sen/kwh

26.60


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


1-92


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


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


1-93

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


1-94

Table 1.39: Raw Material Supplier for Each Location

Raw material supplier

Tanjung Langsat, Johor


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

http://on-billion.en.made-in-china.com/



http://xythchem.en.made-in-china.com/


















http://www.chemicalregister.com/Haihang_Industry_Co_Ltd/Supplier/sid24258.htm



http://www.chemicalregister.com/Trust_We_Co_Ltd/Supplier/sid18096.htm












1-95

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


1-96

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


1-98

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.


1-101

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


1-102

chapter 1 feasibility study

Documents

eha production plant

acrylic acid

production of polymers

ethylhexyl acrylate

plant safety

production of resins

plant economics

total eu production