45.

PROFILE ON PRODUCTION OF
SODIUM SILICATE

45-2
TABLE OF CONTENTS

PAGE

I.

SUMMARY

45-3

II.

PRODUCT DESCRIPTION & APPLICATION

45-3

III.

MARKET STUDY AND PLANT CAPACITY

45-4

A. MARKET STUDY

45-4

B. PLANT CAPACITY & PRODUCTION PROGRAMME

45-6

MATERIALS AND INPUTS

45-7

A. RAW MATERIALS

45-7

B. UTILITIES

45-8

TECHNOLOGY & ENGINEERING

45-9

A. TECHNOLOGY

45-9

B. ENGINEERING

45-10

MANPOWER & TRAINING REQUIREMENT

45-11

A. MANPOWER REQUIREMENT

45-11

B. TRAINING REQUIREMENT

45-12

FINANCIAL ANALYSIS

45-12

A. TOTAL INITIAL INVESTMENT COST

45-12

B. PRODUCTION COST

45-13

C. FINANCIAL EVALUATION

45-14

D. ECONOMIC BENEFITS

45-15

IV.

V.

VI.

VII.

45-3
I.

SUMMARY

This profile envisages the establishment of a plant for the production of sodium
silicate with a capacity of 1,350 tonnes per annum.

The present demand for the proposed product is estimated at 1,500 tonnes per annum.
The demand is expected to reach at 2,828 tonnes by the year 2020.

The plant will create employment opportunities for 20 persons.

The total investment requirement is estimated at Birr 3.69 million, out of which Birr
990,900 is required for plant and machinery.

The project is financially viable with an internal rate of return (IRR) of 30 % and a net
present value (NPV) of Birr 5.31 million, discounted at 8.5%.

II.

PRODUCT DESCRIPTION AND APPLICATION

Sodium silicate is one of various water soluble substances obtained in the form of
crystals, glasses, powder or aqueous solutions by chemical fusion of silica sand and
soda ash. At present, there are 40 varieties of commercial sodium silicate, each with a
specific use.

Sodium silicate is an essential raw material in the manufacture of washing soap,

ceramic wares, flooring and metal foils, paper boards and corrugated containers, wall
board etc. Vitreous silica compounds (glass bottles and tumblers) are also produced in
a suction fed type blowing machine.

45-4
III.

MARKET STUDY AND PLANT CAPACITY

A.

MARKET STUDY

1.

Past Supply and Present Demand

Although sodium silicate has got various applications, in Ethiopia Soap and Detergent
Factories are the major consumers. The Pulp and Paper Factories also require Sodium
Silicate for hardening corrugated paper board and packaging materials. Factories
which produce pigments and adhesive and water treatment plants are among
significant users of the product in Ethiopia.

As there is no domestic production of sodium silicate, supply of the product is entirely

constituted by import ( see Table 3.1).
Table 3.1
IMPORT OF SODIUM SILICATE (1995-2004)
Year Import (Tonnes)

Source:

1995

538.6

1996

533.2

1997

183.0

1998

77.0

1999

241.6

2000

80.6

2001

800.0

2002

2,946.6

2003

557.1

2004

1,070.2

2005

2,366.7

2006

2339.9

Customs Authority, External Trade Statistics annual issues.

45-5
Table 3.1 shows that import of sodium is characterized by year to year fluctuation.
The highest import, 2366.7 tonnes, was made in 2006 while the lowest 77 tonns was
in year 1998. To estimate the present demand for the product the apparent
consumption, which is considered to be a fair approximation of demand, is used.
Accordingly, the apparent consumption of the product (i.e. import) during the last
four years, which is about 1,500 tonnes, is considered to reasonably reflect present
demand for sodium silicate.

2.

Projected Demand

The future demand for sodium silicate is a function of growth of the end-user
industries, mainly soap and detergent factories, pulp and paper mills, paint, pigment
and adhesive factories. Information obtained from Ethiopian Investment Authority
give strong indication that private investment in the aforementioned industries is
bound to grow. Hence, a modest growth rate of 5% would not be unwarranted to
forecast future demand. The demand forecast executed accordingly is shown in Table
3.2.
Table 3.2
PROJECTED DEMAND FOR SODIUM SILICATE

Year

Forecasted Demand
(Tonnes)

2008

1,575

2009

1,654

2010

1,736

2011

1,823

2012

1,914

2013

2,010

2014

2,111

2015

2,216

2016

2,327

2017

2,443

2018

2,566

2019

2,694

2020

2,828

45-6
3.

Pricing and Distribution

Based on current market price of the product and assuming margins for distributors, a
factory-gate price of Birr 3000 per tonne is recommended for the envisaged plant. The
product can be directly supplied to end-users.

B.

PLANT CAPACITY AND PRODUCTION PROGRAMME

1.

Plant Capacity

Based on the market study and nature of the plant, a capacity of 4.5 tonnes per day is
considered. On the basis of double shifts of 8 hours per day and 300 days per annum,
the total annual production would then be 1350 tonnes of sodium silicate.

2.

Production Programme

Table 3.3 shows the production programme of the envisaged project. It is prepared
based on the selected plant capacity and expected market share to be captured by the
project. At the initial stage of production, the plant may require some years to
penetrate into the market. Therefore, the plant initially will operate at 75% of its rated
annual capacity. During the second year the plant will operate at 85%, reaching 100%
capacity utilization in the third year and thereafter.

45-7
Table 3.3
PRODUCTION PROGRAMME

Year

2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Projected

Production

Capacity

Demand

Demand

Programme

Utilization

Coverage

(Tonnes)

(Tonnes)

(%)

(%)

1,575
1,654
1,736
1,823
1,914
2,010
2,111
2,216
2,327
2,443
2,566
2,694
2,828

1,013
1,148
1,350
1,350
1,350
1,350
1,350
1,350
1,350
1,350
1,350
1,350
1,350

75
85
100
100
100
100
100
100
100
100
100
100
100

85.7
81.6
77.8
74.1
70.5
67.2
64.0
60.9
58.0
55.3
52.6
50.1
47.7

IV

MATERIALS AND INPTUS

A.

RAW MATERIALS

The major raw materials required for the production of sodium silicate are soda ash
and sand. Soda ash will be supplied from domestic sources and that of Silica sand is
abundant along the course of main rivers, found in the region.

The annual

requirement for raw materials at 100% capacity utilization and associated estimated
cost are given in Table 4.1.

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Table 4.1
ANNUAL RAW MATERIAL REQUIREMENT AND COST

Sr.
No.

Description

Soda Ash

Sand

Quantity

Unit Cost

Cost (OOO

(Tonnes)

(Birr)

Birr)

1,125

1,500

1,687.5

675

103.33

69.75

Total

B.

1,757.25

UTILITIES

Electricity, water and furnace oil are the major utilities required by the plant. The
total annual requirement at 100% capacity utilization rate and the estimated costs are
given in Table 4.2 below.

Table 4.2
UTILITIES REQUIREMENT AND ESTIMATED COST

Sr.
No.

Description

Units

Quantity

Cost ( Birr)

Electricity

KWh

37,375

17,700.8

Furnace Oil

Lit

100,000

541,000

Water

M3

1250

6,875

Total

565,575.8

45-9

V.

TECHNOLOGY AND ENGINEERING

A.

TECHNOLOGY

1.

Production Process

Sodium silicate is made by fusing sodium carbonate and silica sand in an open hearth
furnace. In most common commercial silicates, the ratio of sodium carbonate to
silica, on molar basis, varies from 1:2 to 1:3.2.

Intermediate compositions are obtained by mixing, and more alkaline ratios by

addition of caustic soda. The product, upon cooling, forms clear light bluish green
glass. In all cases, carbon dioxide comes out as a by-product. Sodium silicate could
be sold as a solution where the product is ground and dissolved in water or by steam
when the ratio of silica to alkali is above two. The plant does not emit any pollutant
rejects to the environment.

2.

Source of Technology

The machinery and equipment for the plant can be acquired from the following
company which is specialized in manufacturing of chemical plants.

YATAI CHEMICAL PLANTS MANUFACTURER

No. 9 Qingchun Road, hangzhou, Zhejiang, China
Tel: +86-571-87228882,
+86-571- 87228886
Fax: +86-571-87242887

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B.

ENGINEERING

1.

Machinery and Equipment

The list of major machinery and equipment for production of sodium silicate is
indicated in Table 5.1. The total cost of machinery is estimated at Birr 1,296,640 of
which Birr 990,900 is required in foreign currency.

Table 5.1
LIST OF MACHINERY AND EQUIPMENT REQUIRED
Sr.
No.

2.

Description

Unit

Qty

Furnace

Pcs

Autoclave

Pcs

Crusher

Pcs

Grinder

Pcs

Tank

Pcs

Pump

Pcs

Boiler

Pcs

Generator

Pcs

Weighing Hoppers

Pcs

Building and Civil Works

The total area of the project is 2,000 m2 of which 850 m2 is a built-up area. The cost
of building of which at unit cost of Birr 1,800 per m2 is, thus, estimated at Birr 1.53
million. The lease value of land at a rate of 0.1 Birr per m2 for 80 years is about Birr
16,000.
3.

Proposed Location

The location of the proposed project is recommended to be in Beftu Town, located in

Benchmaji zone, Guraferedea woreda relatively nearer to the source of soda ash,
which is the major raw material. The proposed place has access to infrastructure and

45-11
utilities like electricity, water & fuel. Sand could be made available from the zone
very easily.
VI

MANPOWER AND TRAINING REQUIREMENT

A.

MANPOWER REQUIREMENT

The total manpower required by the plant is 20 persons.

Details of manpower

requirement are given in Table 6.1. The total annual cost of labour is estimated at Birr
273, 6000.
Table 6.1
MANPOWER REQUIREMENT AND ANNUAL LABOUR COST

Sr.
No.

Job Title

No. of
Salary (Birr)
Person Monthly Annual
Salary
Salary

Plant Manager

2,750

33,000

Chemist

1,600

57,600

Secretary

850

10,200

Salesman

750

9,000

Accountant

900

10,800

Personnel

1,200

14,400

Shift Leader

1,300

15,600

Operator

600

36,000

Store Keeper

750

9,000

10

Purchaser

750

9,000

11

Mechanic

800

9,600

12

Driver

550

6,600

13

Guard

300

7,200

Sub total

20

19,000

228,000

3,800

45,600

22,800

273,600

Employees
Benefit
(20% of Basic Salary)
Total

45-12
B.

TRAINING REQUIREMENT

Nine operators and a shift leader should be given a one week on -the-job training
during plant erection and commissioning by the experts of the machinery supplier.
The cost of training is estimated at Birr 20,000.

VII.

FINANCIAL ANALYSIS

The financial analysis of the sodium silicate project is based on the data presented in
the previous chapters and the following assumptions:-

Construction period

1 year

Source of finance

30 % equity
70 % loan

Tax holidays
Bank interest

3 years
8%

Discount cash flow

8.5%

Accounts receivable

30 days

Raw material local

30days

Raw material, import

90days

Work in progress

5 days

Finished products

30 days

Cash in hand

5 days

Accounts payable

30 days

A.

TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at Birr
3.69 million, of which 21 per cent will be required in foreign currency.

The major breakdown of the total initial investment cost is shown in Table 7.1.

45-13
Table 7.1
INITIAL INVESTMENT COST

Sr.

Total Cost

No.

Cost Items

(000 Birr)

Land lease value

16.0

Building and Civil Work

Plant Machinery and Equipment

990.9

Office Furniture and Equipment

75.0

Vehicle

225.0

Pre-production Expenditure*

315.1

Working Capital

537.3

1,530.0

Total Investment cost

3,689.3

Foreign Share

N.B

Pre-production

expenditure

includes

21

interest

during

construction

(Birr

215.03

thousand) training (Birr 20 thousand ) and Birr 80 thousand costs of registration, licensing and
formation of the company including legal fees, commissioning expenses, etc.

B.

PRODUCTION COST

The annual production cost at full operation capacity is estimated at Birr 3.13
million (see Table 7.2).

The material and utility cost accounts for 74.23 per cent,

while repair and maintenance take 2.4 per cent of the production cost.

45-14
Table 7.2
ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)

Items

Cost

Raw Material and Inputs

1,757.25

56.15

565.58

18.07

75

2.40

164.16

5.25

54.72

1.75

109.44

3.50

2,726.15

87.11

Depreciation

248.89

7.95

Cost of Finance

154.33

4.93

3,129.37

100

Utilities
Maintenance and repair
Labour direct
Factory overheads
Administration Costs
Total Operating Costs

Total Production Cost

C.

FINANCIAL EVALUATION

1.

Profitability

According to the projected income statement, the project will start generating profit in
the first year of operation. Important ratios such as profit to total sales, net profit to
equity (Return on equity) and net profit plus interest on total investment (return on
total investment) show an increasing trend during the life-time of the project.

The income statement and the other indicators of profitability show that the project is
viable.

2.

Break-even Analysis

The break-even point of the project including cost of finance when it starts to operate
at full capacity ( year 3) is estimated by using income statement projection.
BE =

Fixed Cost
Sales Variable Cost

= 16 %

45-15

3.

Pay Back Period

The investment cost and income statement projection are used to project the pay-back
period. The projects initial investment will be fully recovered within 4 years.

4.

Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 30 % and the
net present value at 8.5% discount rate is Birr 5.31 million.

D.

ECONOMIC BENEFITS

The project can create employment for 20 persons.

In addition to supply of the

domestic needs, the project will generate Birr 2.48 million in terms of tax revenue.
The establishment of such factory will have a foreign exchange saving effect to the
country by substituting the current imports.