Feasibility Study Report of Fertilizer Plant in Mozambique-Toyo Engineering

STUDY ON PRIVATE-INITIATIVE INFRASTRUCTURE
PROJECTS
IN DEVELOPING COUNTRIES IN FY2011
STUDY ON THE UREA FERTILIZER COMPLEX PROJECT

IN
THE REPUBLIC OF MOZAMBIQUE
FINAL REPORT
February 2012
Prepared for:
The Ministry of Economy, Trade and Industry
Prepared by:
Toyo Engineering Corporation
Sumitomo Corporation
Reproduction Prohibited
Preface
This report is written as a result of Study on the Urea Fertilizer Complex Project in The Republic of
Mozambique, which was implemented by Toyo Engineering Corporation and Sumitomo Corporation
as a Study on Private-Initiative Infrastructure Projects in Developing Countries in FY 2011,
commissioned by The Ministry of Economy, Trade and Industry.
This report is organized research to determine feasibility of fertilizer plant construction, by 1 billion
and 173 million US dollars, in an industrial area of Beira city in Mozambique, in order to supply
fertilizer both in Mozambique and in neighboring countries.
We believe that this report will contribute to implement the project and will be useful information for
interested specialists in Japan.
February, 2012
Toyo Engineering Corporation
Sumitomo Corporation
TABLE OF CONTENT
Executive Summary
1. Background and necessity of the project 2
2. Basic policy on the contents determination of the project 3
3. Outline of the project 4
4. Implementation schedule 7
5. Feasibility study 7
6. Technological superiority of Japanese enterprises 7
7. Concrete Schedule Up to Project Realization and Risk to Hamper Realization 9
8. Map indicating the project site in the surveyed country 10
Chapter 1 Overview of the Host Country and Sector

1.1 Economy and financial situation in the host country 2
1.2 Outline of project sector 3
1.3 Situations in the region 4
Chapter 2 Study methodology

2.1 Summary of the study 2
2.2 Study measures -structure 3
2.3 Schedule for the study 6
Chapter 3 Justification, Objectives and Technical Feasibility of the Project

3.1 Project background with necessity 2
3.2 Examinations required for the contents of projects 8
3.3 Plan outline of the project 33
Chapter 4 Consideration of Environmental and Social Impacts

4.1 Current situation of environmental social aspects 2
4.2 Environmental improvement effect of Project implementation 3
4.3 Environmental and social impact of project execution 3
4.4 Outline of Regulations related environmental and social considerations in Mozambique
4
4.5 Required actions of Mozambique side 8
Chapter 5 Financial and Economic Feasibility
5.1 Project cost estimation 2
5.2 Financial and Economic Evaluation 4
5.3 Economical Analysis 10
Chapter 6 Planned Project Schedule

6.1 Planned project schedule 2
6.2 EIA schedule 3
Chapter 7 Implementing Organization
Chapter 8 Technical Advantages of Japanese Company

8.1 Envisaged of participation by Japanese companies 2
8.2 Superiority of project implementation 5
8.3 Measures to be taken to assist Japanese enterprises in receiving order 6
Chapter 9 Financial Outlook

9.1 Funding Source and Funding Plan for the Project 2
9.2 Bankability of the Project 3
9.3 Cash Flow Analysis 4
Chapter 10 Action Plan and Issues

10.1 Current situation of the project 2
10.2 Current situation of the project by implementation organization 2
10.3 Legal and financial framework 3
10.4 Additional Study Requirement 7
Abbreviation
ACES Advanced process for Cost and Energy Saving

ACES21 Advanced process for Cost and Energy Saving 21
AfDB African Development Bank
AMI Mozambique Cotton Institute
aMDEA BASF Company patent MDEA (Methyl Diethanolamine)
BFW Boiler Feed Water
BOD Biochemical Oxygen Demand
BOG Boil-Off-Gas
BP British Petroleum
BWRO Brackish Water Reverse Osmosis
CCTV closed-circuit television
CEPAGRI Agriculture Promotion Centre
CIF China International Fund Ltd
COD Chemical Oxygen Demand
COMESA Common Market for Eastern and Southern Africa
CPI Investment Promotion Center
CRIP Certificate of Registered Investment of Private
DNSA National Direction of Agricultural Services
DSCR Debt Service Coverage Ratio
DPA Provincial Directorate for Agriculture
EAC East African Community
EIA Environmental Impact Assessment
EIU Economist Intelligence Units
ENH Empresa Nacional de Hidrocarbonetos E.P.
EPC Engineering, Procurement, and Construction
ESHIA Environmental and Socioeconomic and Health Impact Assessment
FAO Food and Agriculture Organization's
FDI Foreign Direct Investment
FSU Floating Storage Unit
FTA Free Trade Agreement
GDP Gross Domestic Product
GTG Gas Turbine Generators
H2S Hydrogen sulfide
HMDA Hexamethylene Diamine
HP High Pressure
HRSG Heat Recovery Steam Generation
IA Instrument Air
IDA International Development Association
IEA International Energy Agency
IIAM Mozambique Agriculture Research Institute
IMF International Monetary Fund
INCAJU National Cashew Institute
INP Institute National Petroleum
IRRI International Rice Research Institute
IUCN International Union for Conservation of Nature
JETRO Japan External Trade Organization
JICA Japan International Cooperation Agency
KR2 Food Production Support
LDA Limited Liability Company
LHV Lower heating value
LNG Liquefied Natural Gas
LP Low Pressure
MBP Mixed Bed Polisher
MDEA Methyl Diethanolamine
MDGs Millennium Development Goals
MOA Ministry of Agriculture
METI Ministry of Economy and Trade Industry, Japan
MINAG Ministry of Agriculture
MIREM Ministry of Mineral Resources
MMBTU Million British Thermal Unit
MOU Memorandum Of Understanding
MP Middle Pressure
MPHE Marine Plate Heat Exchanger
MT/D Metric Ton per Day
MTPD Metric Ton Per Day
N/C NH3(Ammonia)/CO2 mole ratio
NGO Non-Governmental Organizations
NPK Nitrogen, Phosphorus, Potassium
O&M Operation and Maintenance
OPEC Organization of the Petroleum Exporting Countries
OSBL Outside of Battery Limit
PA Plant Air
PEDSA Strategic Plan for Agricultural Development
PIL Private Investment Law
PSA Pressure Swing Adsorption
RG Reformed Gas
RO Reverse Osmosis
RSH General formula of sulfur containing organic compound
SA Joint Stock Company
SADC South African Development Community
SASOL South Africa Synthetic Oil Limited
SBA Stand By Arrangement
SG Synthesis Gas
SGU Super Granule Urea
SMEs Small and Medium Size Enterprises
SPE Special Purpose Entity
SS Suspended Solids
SWI Sea Water Intake
SWRO Sea Water Reverse Osmosis
Tcf Trillion cubic feet
TIA Trabalho de Inquerito Agricola ( Agro Inquiry Work )
TSP Total Suspended Particles
UFC Urea Formaldehyde Concentrate
UNDP United Nations Development Program
VSCC Vertical Submerged Carbamate Condenser
WB World Bank
WHB Waste Heat Boiler
Executive Summary
1
1. Background and necessity of the project
Agriculture is the main industry of Mozambique, with 81% of the workforce engaged in agriculture,
and accounts for 28.8% of the GDP. Mozambiques agricultural products include cotton, cashew nuts,
sugarcane, tea, cassava (tapioca), corn, coconuts, sisal, citrus fruits, tropical fruits, potatoes,
sunflower, beef, and poultry.
Mozambican agriculture can be summarized as follows:
1. Dryland farming characterized by self-consumption and low productivity and production

2. Weak market-orientation
3. Primitive farming techniques involving environmentally inappropriate practices
4. Low quality and small-scale production
In Mozambique, there are only three fertilizer importers: Agrifocus, Agrochemical and Agrotech.
These importers import urea mainly from South Africa. They receive 3% of the import prices as a
commission from the Government. Wholesalers buy the fertilizer at 70 to 80 US dollars per 50 kg
and sell it to farmers at 100 US dollars per 50 kg. This is not necessary a competitive price from the
perspective of the GDP of Mozambique. The fertilizer is sold at 10 US dollars per 5 kg in the
market.
The Government of Mozambique seeks development in agriculture. While the potential annual
fertilizer demand is 100,000t, the annual fertilizer consumption has increased from 18,000 to 51,000t
over the last decade. If urea is produced domestically, the demand will expand and is expected to
further increase. Fertilizer consumption in Mozambique is low compared to other African countries.
Africa: 20 kg / ha
Africa south of the Sahara: 8 kg / ha
Mozambique: 5 kg / ha
Abuja Declaration: 50 kg / ha (until 2015)
Southern African Development Community (SADC) countries, such as Zambia, Mallawi, Zimbabwe
and Congo, are fertilizer importing countries and are expected to have a growing demand for urea as
shown in the table below. This supports the need for the project.
2
Table 1 Comparison of current consumption and forecast for fertilizer for SADC countries
(2007-2011 and 2011-2017)
Year Mozambique Zambia Mallawi Total
2007 28,000 180,000 270,000 478,000
2008 32,000 192,600 283,500 508,300
2009 33,000 206,100 297,700 540,800
2010 51,400 220,500 312,600 575,700
2011 50,000 235,900 328,200 613,100
2012 53,900 247,700 338,000 639,600
2013 59,300 260,000 348,200 667,500
2014 62,200 273,000 358,600 693,800
2015 71,700 286,700 369,400 727,800
2016 78,900 301,000 380,500 760,400
2017 86,800 316,000 391,900 794,700
Source: Mozambican Ministry of Agriculture document Comparison of Current Consumption

and Forecast for Fertilizer between SADC Countries (2007-2011 and 2011-2017)
The table above does not include an increase in fertilizer demand due to the increase in farmland and
productivity brought by the Mozambique Tropical Savannah Agricultural Development Project
ProSavana being developed by JICA under Japan-Brazil cooperation. Therefore, the demand is
likely to be higher than the figure released by the Mozambican Ministry of Agriculture.
The Abuja Declaration aims to achieve a fertilizer consumption of 50 kg/ha, 10 times the current
consumption in Mozambique, by 2015, and the demand is expected to further expand. Therefore,
this justifies the necessity of implementing the project.
2. Basic policy on the contents determination of the project

The Government of Mozambique has been eager to have a domestic fertilizer project for 80 years,
and we see no basic obstacles to its implementation. Respecting the plan of Mozambique,
understanding its needs and reviewing the contents of the project, we will proceed with the survey.
1 Securing of natural gas

This investigation assumes that 33 million cubic feet/d of gas is secured out of increased production
in Pande/Temane gas fields.
2 Construction site
Considering urea shipment and environment, Beira New Industry Area is the site for this
investigation.
3 Determination of production quantity based on the urea demand

The Mozambique government plans to sell its urea not only to SADC countries, such as
Mozambique at home, Malawi, Zambia and Zimbabwe, but also to South Africa where urea is traded
with high prices. Actual demand that urea production quantity in Mozambique, Malawi and Zambia
in 2011 is 613,000t. Potential production quantity is 33 million cubic feet/day, which is equivalent to
nearly ten percent of the amount of gas production in Mozambique. Moreover, 1,725 MTPD, which
is a global standard run quantity, will be the urea production capacity as a first step in the
Sub-Sahara.
3
3. Outline of the project
The outline of the project is as follows.
Construction site : Beira new industrial area

Product : Urea 1,725 MTPD
Destination : Mozambique at home, Zambia, Zimbabwe, Malawi, etc.
Raw material : 33 mmscfd of production increase in Pande/Temane gas fields
Process : Ammonia is based on KBRs technology.
Urea is based on Toyo Engineerings ACES21.
Utility facilities : The whole quantity of power is to be generated in-house.
Industrial water is to be obtained from sea water.
Offsite facilities : Ammonia tank, urea tank, and 50 km bagging equipment
Figure 1 General view of the plant

Pande
Temane Gas
Field PROCESS PLANT & OFF-SITE
Granular
Urea
AMMONIA UREA PLANT UREA STORAGE
Liquid NH3 Urea
Natural PLANT 1,725 MTPD
Gas 1,000 MTPD & Product
BAGGING
FACILITY
AMMO
NIA
STOR
Polished Water Return Instrument Air

Condensate Sea Water & CW Plant Air
N2 Gas
SEA WATER & IA/PA ELECT.

CW FACILITY FACILITY POWER
Sea Water IGG FACILITY GENERATION
Make-up CW Make-up Water FACILITY
WATER STEAM WASTE WATER

Sea
TREATMENT GENERATION TREATMENT
Sea Water
FACILITY FACILITY FACILITY
Water intake
facility Polished Water
UTILITY FACILITY
Source: Made By the Study team
4
(1) Project costs estimation
Plant costs and the owners costs are as follows:
Table 2: Project costs estimation

Item Amount of money
EPC cost
-Ammonia/Urea plant 505 Million USD
-Utility/Offsite facilities 495 Million USD
-Total 1,000 Million USD
Owners costs
Operation start-up cost 67 Million USD
IDC 51 Million USD
Contingency costs, etc. 55 Million USD
-Total 173 Million USD
Made By the Study team
(2) Outline of the result of preliminary financial and economic analysis
The assumptions for preliminary financial and economic analysis are as follows:
Revenues are calculated based on the urea revenue at the international market price as of
December 2011; inflation is added to these prices only during the construction period.
Urea production quantity is based on the calculation with 1,725t of urea production per day for
330 days/y. The total production of urea is 569,250t per year.
Cash flows are discounted over a 20-year period.
Interest rates: Base rate 4%, plus a CIRR (Commercial Interest Reference Rate) of 4.26%
Depreciation is calculated under straight-line of at around 10% per year.
Unit price for gas input is 3.16 USD per MMBTU.
Income tax will be exempted for five years; however, after that the income tax of 32% per year is
applied. Import duty and VAT are assumed to be exempted throughout the project period.
The project site is leased as part of the national property. According to Beira state officials with
jurisdiction over industrial complexes, one-time MZN 10 per 1 m2 is required for land use. The
amount for 20 ha of land is included in the estimation.
The debt repayment period is assumed to be 8.5 years.
Financial analysis based on the above assumptions shows that FIRR is 15.31% with funds recovery
period of six years.
i. Agricultural production increase due to urea supply

Mozambiques GDP will be 10 billion USD and agriculture will represent 25% or 2.5 billion USD.
Thanks to urea supply, agricultural GDP will increase by 5% (0.125 billion USD).
ii. Creation of job opportunities

600 persons will be employed by the operational companies of urea plants. Out of wages in
Mozambique at home, 20% is taxed at source. Mozambiques average wage is MZN 4,000 to 5,000 a
month. The economic effect per year will be MZN 4,500 x 0.2 x 600 x 12 / 27 = nearly 240,000
dollars.
iii. Others
The economic effect of the technology transfer to Mozambique will be enormous.
iv. Economic effect

If this project is implemented, EIRR is estimated at 25.26% with a sufficient economic effect.
5
(3) Examination of environmental social dimension
EIA process, stage and period under Category A based on the Environmental Assessment Act (EIA
Regulations 45/2004) in Mozambique are as follows:
Figure 2: EIA process, stage and period
Source: Made By the Study Team
6
4. Implementation schedule
The schedule negotiated between the investigation team and the Mozambique government is as
follows. The detail design, bidding and project implementation are indicated below.
Table 3: Implementation schedule

Year/
Work Description 2011 2012 2013 2014 2015 2016
Months
11/18 2/23
1 Feasibility Study (FS) 3
Basic and Front End 6/1 12/31

2 Engineering Design 7
(FEED) with EPC offer
1/31
EPC Price Verification and
3 2
Final Investment Dicision
5/1 4/30
Environmental Social
4 12
Health Impact Assessment
2/1 7/31
5 Finance Arrangement 6
8/1 3/31
6 EPC Execution 32
EPC Contract Timing for increased
Commercial Operation 4/1

7 O&M Contract
(Operation & Maintenance)
5. Feasibility study
Mozambique has a plenty of demand in urea as a means for promoting agriculture, and also a large
amount of urea demand is expected to exist in the regions including the Southern African
Development Community. FIRR and EIRR have also cleared the hurdle rate, thus showing potential
economical efficiency. As a future measure to be taken in connection with the construction of
pipeline, close consultation with the Government of Mozambique is required for realizing the
necessary conditions as a joint project of gas allocation and site selection. Our study will also be
made on the details of the project while respecting the intention of Mozambique, and also on
collaboration with JICA's ProSavana Project related to the development of fertilizer.
6. Technological superiority of Japanese enterprises

Fund procurement covers debt financing on one hand, and capital stock financing on the other hand.
The former closely concerns plant construction and financial contribution by Japanese enterprises,
which requires further investigation including the menu on accommodation loan by the Japan Bank
for International Cooperation which occupies an important portion of this project.
In addition to the fund procurement of this project, there is a high possibility for Japanese enterprises
to be participated in financing with an intention of being involved in the agricultural business and in
the petrochemical business. In the first place, participation in the nitrogen-based fertilizer business is
contemplated, where capital participation in the project with a view to exporting surplus
nitrogen-based fertilizer to India, Australia, China and Japan having high demand recently will
ensure preferential handling of products.
7
In addition to the transactions involving nitrogen-based fertilizer, Japanese enterprises have a chance
for capital injection to ensure participation in the petrochemical business. Nitrogen-based fertilizer is
made of natural gas, while basic chemical products such as ammonia and methanol can also be
produced through similar processes. There remains also a high possibility for capital injection to
supply urea as a raw material to high value-added chemical products made from these products. In
such a case, however, the product configuration and plant configuration shall be reviewed.
Apart from business participation in the above-mentioned area and others for the purpose of
handling exportation-based products, participation in agriculture-related business in the South
African regions, where dramatic increase in fertilizer demand is expected will be attracting to
Japanese enterprises. It is true that the consumption of fertilizer in this area at present is far smaller
compared to that in other regions; a significant growth is expected in future, thus probably providing
us with a big business chance.
As for plant construction, materials & equipment will be procured in China, Europe, Japan, Korea
and the Southeast Asia. Equipment to be procured in Japan will include rotating machinery such as
compressors, packaged equipment such as heat exchangers and boilers, chemicals units, gas turbines
and compressors, material transporting equipments such as reclaimers, as well as pipe and special
valves.
As for ACES 21 by Toyo Engineering, the sole urea license holder in Japan, the urea synthesis
system is simplified with reduced plant construction cost, where operating conditions are optimized
to minimize the operation cost, with the following features:
A. Cost saving (compact and equipment installed at a lower position)

Reduction in construction cost. Installation of synthesis pipe on the ground due to forced liquid feed
using a high pressure ejector, Vertical Submerged Carbamate Condenser (VSCC), simplification of
synthesis loop, reduction of equipment cost, equipment downsizing by means of two-layer system,
and decrease in the number of equipment in synthesis loop.
B. Energy saving (reduction of operation cost)

Reduction of operation cost will be achieved by realizing low synthesis pressure with the adoption of
optimum process conditions.
C. Ease in operation and stability

Forced circulation within high pressure loop by means of high pressure ejector (no gravitational
flow)
D. Reduction in maintenance cost

Prevention of corrosion by adopting low synthesis system temperature and highly reliable materials.
8
7. Concrete Schedule Up to Project Realization and Risk to
Hamper Realization
Since Mozambique has long desired to establish domestic fertilizer business, it is considered that
there is no political and technical problem related to the implementation of the project. Each
governmental organization has a fairly good understanding of the importance of domestic production
of fertilizer for the purpose of promoting agriculture, and the necessity of enhanced agricultural
production to follow. It is also said that the agriculture promotion program is already put in place to
increase agricultural production.
After receiving an interest letter from the Ministry of Mineral Resources of Mozambique, Toyo
Engineering Corporation and Sumitomo Corporation submitted to this Ministry in June 2011 an
MoM (Memorandum of Understanding) focusing on the exclusive study of this project as a fertilizer
project to make use of domestic natural gas to be supplied from Pande/Temane in the territory of
Mozambique. In this connection, Toyo and Sumitomo are requesting the Minister to sign the MoM,
but they are currently discussing in the Government of Mozambique on the pros and cons for signing
it.
Securing gas supply is a key point for implementation of the project. The Pande/Temane gas fields
are currently under exploration, while this study assumes that production in these gas fields will be
increased in 2016. Thus, securing of gas constitutes a vital prerequisite for implementing the project.
Beira new industrial area located in the center of Mozambique is the No.1 candidate site for this
project. This area has a commercial port and railways, thus providing easy access to neighboring
countries. This commercial port allows importation of plant equipment, heavy machinery required
for plant construction and chemicals as raw materials for producing fertilizer. Thus, exportation of
products can also be facilitated. The Beira new industrial area is under the control of the government
of Sofala Province, but requiring approach to both the central and the local governments. Close
consultation with Mozambique is also necessary from the viewpoint of pipeline construction.
As a result of consultation between the Ministry of Mineral Resources and our survey mission, INP
has been appointed as the responsible section in charge. However, INP is the organization for
controlling the information on petroleum gas in this country, while National Enterprise of
Hydrocarbon (ENH) is nominated a candidate as a responsible section in Mozambique in charge of
promoting the urea production business in future. It is thus necessary to consult with various
organizations concerned including the Ministry of Agriculture, the Ministry of Industry and Trade,
and the Ministry of Industry and Commerce.
As Mozambique is regarded as a resource rich country because of the presence of a huge gas field in
Rovuma in the north, future consultation with the Japan Bank for International Cooperation will be
promoted on the basis of the result of this study to ensure financing. As for capital injection, future
consultation will be necessary with National Enterprise of Hydrocarbon (ENH), Mozambican
Hydrocarbon Company (CMH) that shows interest in fertilizer and the related government ministries
of Mozambique (Ministry of Mineral Resources, Ministry of Agriculture, Ministry of Industry and
Trade, as well as Ministry of Industry and Commerce).
As for the above issues, our survey mission will make approach to leaders of the Government of
Mozambique, so as to proceed with the project execution.
9
8. Map indicating the project site in the surveyed country
Figure 3: Overall map of Mozambique
Source: Google
10
Figure 4: Proposed construction site
Source: Google
11
Chapter 1 Overview of the Host Country and Sector
1
1.1 Economy and financial situation in the host country
Mozambique has emerged from decades of armed conflict to become one of Africas
best-performing economies. The country has enjoyed a remarkable recovery, achieving an average
annual rate of economic growth of 6 percent between 1996 and 2010, the highest growth rate among
African oil-importers.
Table 1-1 Economy and financial situation in Mozambique

2005 2006 2007 2008 2009 2010
Nominal GDP (USD million) 6636 7296 7868.63 9728 10468 9901
Growth rate (%) 8.4 8.7 7.3 6.8 6.4 6.5
GDP per capita 305.5 362.8 398.7 478.1 454 429.6
Annual average inflation (%) 13.1 8.1 12.1 11.8 2.3 12.7
Exports (USD million) 1745 2412 2412 2688 2147 2243.1
Imports (USD million) 2408 2869 3050 3765 3422 3240.2
Sources: Facts about Mozambique published by CPI
Table 1-2 GDP sector chart
Source: Authors estimates based on National Institute of Statistics date
The contribution of agriculture to the economy of Mozambique is one over fourth of GDP.
Mozambique government always tries to improve the conditions of agricultural practices. But still
much of it is still carried on in primitive ways.
The climate and soil of Mozambique are ideal for the growth of a number of crops. The major cash
crops grown here are sugarcane, copra, sesame seeds, sugar beans, sunflower, rice, millet and maize.
Besides these, the vegetables grown are soybeans, potato, cucumber, sweet potato, pumpkin,
2
cabbage and tomatoes.
Mozambique government aims to become world leader in the rice, horticulture vegetables and
livestock industries, among others. However, agricultural productivity and productivity growth is
weak at this moment.
For improvement of agricultural productivity, several international organizations are also supporting
to Mozambique`s effort in large scale, among others especially JICA. JICA is now contributing to its
development through ProSavana project at Northern part of Mozambique, which involves the
collaboration of Brazil as well. Supply of competitive fertilizer would be one of the key factors of
success of such aims of Mozambique government.
1.2 Outline of project sector

1.2.1 Ministry of Mineral Resources (Minister of Mineral Resources Ms. Esperanca Bias)
Ministry of Mineral Resources is responsible for the management of oil, gas and mineral
concessions for exploration. The Ministry is responsible for dealing with relating to petroleum, gas
and mineral affairs.
1.2.2 INP Chairman (Chairman Mr. Arsenio Mabote)

The National Petroleum Institute is the Institution with the mission to administrate and manage the
petroleum operations in Mozambique for the benefit of the society.
Table 1-3 INP organization structure
Source: INP website
1.2.3 Ministry of Agriculture Minister of Agriculture - Mr. Soares Nhaca

Ministry of Agriculture is in charge of agriculture policy in Mozambique.
3
1.3 Situations in the region
Beira is the second largest city in Mozambique. It lies in the central region of the country in Sofala
Province, where the Pungue River meets the Indian Ocean. It is significantly important that Beira
port acts as a gateway for both the central interior portion of the country as well as the land-locked
nations of Zimbabwe, Zambia and Malawi. Beira has long been a major trade point for exports
coming in and out of Zimbabwe, Malawi, Zambia and other Southern African nations.
Table 1-4 Climate data for Beira
Climate data for Beira ( Source: Weatherbase)

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Average 31 30 29 28 26 24 24 25 27 28 29 29 27.5
high C (F) (87) (86) (85) (83) (79) (76) (75) (77) (80) (82) (84) (85) (81.6)
Average 26 26 26 24 21 19 18 19 21 23 24 26 22.7
low C (F) (79) (79) (78) (75) (70) (66) (64) (66) (70) (73) (76) (78) (72.8)
Precipitation 267 259 264 117 66 41 33 33 25 33 122 244 1,504
mm (inches) (10.5) (10.2) (10.4) (4.6) (2.6) (1.6) (1.3) (1.3) (1) (1.3) (4.8) (9.6) (59.2)
Recently, the Mozambique government is planning on modernizing the Beira and more northern
Nacala ports. The government has also stated to plan modernizing surrounding railway and highway
infrastructure. There is also a ferry service in Beira, linking the city to neighboring cities, including
Nova Sofala and other coastal towns. Beira is served by an airport to the northeast of the city, with
both domestic and international flights.
Beira new industrial area is 10Km north from center of Beira. It is an expected project site and site
improvement has been implemented. The road from site to Beira port will be constructed.
4
Figure 1-1 <Mozambique map> Figure 1-2 <Site Map>
Source: CIA World Fact Book Source: Google earth
5
Chapter 2 Study methodology
1
2.1 Summary of the study
2.1.1 Procedure to determine the content of the study report
The study report is composed of the following steps.
1) Based on the request from the Government of Mozambique
2) To propose the project scheme definition
3) To confirm the project scheme from the Government of Mozambique
4) To summarize solutions for some problems of the project scheme
5) To ask the Government of Mozambique to understand the proposal and to embody it
2.1.2 Study scope

The scope of this study is based on the request from the Government of Mozambique.
(Chapter3.2.3)
The study scope is determined as following based on the above request conditions.
1) Market study on product and material
-Domestic product price in Mozambique
-Supplier of material and its cost
2) Plant Facility
-Block flow and material balance
-Content of process facility
-Utility consumption
-Utility facility and off-site facility
3) Project Cost
4) Finance arrangement
5) Financial and Economic analysis
6) Evaluation of Environmental and Social aspects
7) Project schedule
8) Study team proposal
-From the technical aspect
-From the financial aspect
-From the Mozambique government policy aspect
2
2.2 Study measures - structure
2.2.1 Study measures
(1) Conducted local survey and local report in order to communicate with the Government of
Mozambique.
Table 2-1Purpose of local survey

Local Survey Main purpose Communication Tools
First trip To understand requests from the government of Presentation
Mozambique Questionnaire
Second trip To discuss with the government of Mozambique on Presentation
project scheme Report draft
(2) Local survey items and measures are as following.

Table 2-2Survey items and measures
Survey items Measures
1. Situation of fertilizer consumption in Mozambique
PurposeTo clarify the necessity of fertilizer and situation both in
downstream and upstream of targeted products.
1.1 The government policy and plan for fertilizer. Hearing
1.2 Import and export situation of fertilizer. Hearing
1.3 Local price and market system of fertilizer. Hearing
1.4 Production situation of crude oil and gas, raw materials for targeted Hearing
fertilizer products.
2. Site location
PurposeTo improve the study accuracy by visiting site.
2.1 Condition of site location (current utility and offsite situation, Availability Visitation
of utility supply
2.2 Current situation of infrastructure for fertilizer transport terminals, Hearing
railways, and other transport measures
3. Environmental and Social impact
PurposeTo obtain available information/data for environmental and social
influence.
3.1 Administration and/or institution for environment regulation Hearing
3.2 Procedures for application and approval of EIA Hearing
3.3 Consideration for influence on environment and social aspects during Hearing
3
plant construction.
3.4 Items to be considered other than pollution control Environmental Hearing
approval, explanation for local residents, consideration for natural and
social environment, and other considerations
4. Basic conditions for the project implementation
PurposeTo clarify the essential conditions to implement this project
4.1 The governments functions for local legislation Hearing
4.2 Preparation for Infrastructures Hearing
4.3 Financial resource for the government of Mozambique
4.4 Functions of Government of Mozambique Hearing
4.5 Structure for the project development Hearing
5. Basic information
PurposeTo obtain enough information for the project implementation.
5.1 Related governmental organization and its function Hearing
5.2 Related organization and its function Hearing
5.3 Applications and those procedures which are essential for the construction Hearing
5.4 Trade and investment situation Data
5.5 Economic situation Data
5.6 Financial situation Data
5.7 Tax system Hearing
5.8 Transportation for construction Hearing
*Hearing means to have obtained information/data by interviewing related personnel.

Visitation means to have studied the circumstances by visiting the local site and interviewing
related personnel.
Data means to have obtained related data from related institution/organization through the
government of Mozambique or from literature.
(3) Measures for domestic study

1) Interviewed specialists to hear the current situation on some of the items written below.
-Mozambique government organization (Ministry of Agriculture)
2) Utilizing not only from books/materials but also from internet web sites for data.
4
2.2.2 Organization structure for the study
Organization structure is as following.
Figure 2-1 Organization structure for the study
Project Manager
Mitsutoshi SUZUKI
Secretary
Makiko SAITO
Coordinater
Tasuku HORIUCHI
Assistant
Technical Analysis Financial Analysis Cost Estimation Environmental / Social

H. NAKAMURA S. KAWAKAMI Analysis
T. TOMITA A. NATSUBORI Y. KATO
Technical Analysis Civil cost estimation Business Analysis

M. TANIMOTO
G. NISHIKAWA Y. SARUWATARI T. OTA
(Sumitomo Corporation)
5
2.3 Schedule for the study
2-3-1 Overall schedule
Overall schedule is as following.
2-3-2 Schedule for the local survey trip
1) The first tripNovember 28th to December 8th, to be reported on survey which were
conducted without days for transfer.
Table 2-3 The first trip schedule
Date Time Place Item
29-Nov Tue AM 6:35 Arrive at Johannesburg

8:40 Departure from Johannesburg
9:40 Johannesburg Arrive at Maputo
PM Departure from Hotel
15:00 Maputo Meeting with JICA
16:00 Meeting with embassy of Japan
Hotel Polana Serena Hotel
AM 7:40 Departure from Hotel
8:00 Ministry of Agriculture
30-Nov Wed CPI (Investment Promotion
10:00 Center)
PM 11:00 IMPACTO
Maputo
IRRI (International Rice Research
14:00 Institute)
16:00 BG/Bioglobal
17:30 Kentz
Ministry of Coordination and
1-Dec Thu 8:30 Environment Affair
10:00 Ministry of Industry & Trade
Maputo
INP (Instituto National de
PM 14:30 Petroleo)
17:00 SDV Mozambique
6
AM 8:30 Departure from hotel
10:30 3AB
2-Dec Fri MaquiTrade Lda Extraczao e
11:00 Comercio de Inertes
12:00 ENH
Maputo
14:30 MOTAENGIL
INP (Instituto National de
16:00 Petroleo)
17:30 MoCargo
Sat AM 8:00 Departure from hotel
3-Dec 11:00 Meeting with CCESCC
CCESCC's cement plant in
PM 13:00 Bela-vista
Maputo
14:00 Departure from Bela-vista
17:00 Arrive at hotel
18:00 F.H. Bertling
4-Dec Sun AM
PM Maputo
5-Dec Mon AM 8:00 Departure from Hotel
8:30 Metelology
Deloitte & Touche (Mozambique),
10:30 Maputo Lda
PM 15:00 Odebrecht
17:30 Capital Outsourcing Group
6-Dec Tue AM 5:30 Departure from Hotel
6:00 Arrive at Maputo airport
7:00 Departure from maputo
8:30 Maputo Arriving at Beira
Meet at airaport with coodinater
Mr.Pio
PM 10:00 Port Authority
7
Municipal office in Dondo & site
12:00 visit
Site visit with Beila Municipal
14:00 Office
16:30 Departure from Beira
18:00 Arrive at Maputo
Polana Serena Hotel
Ministerio da Planificazao e
9:00 Desenbolvimento
7-Dec Wed 10:00 Grant Thornton
11:00 INE ( National Statistical Institute )
Maputo SMS ( Sociedade Mozambicana de
PM 12:00 Servicos, S.A.
Ministry of Mineral Resources /
14:00 INP ( MoU submission )
16:00 TREVI SpA
Polana Serena Hotel
2) The second trip (February 8th to February 12th, to be reported on survey which were
conducted without days for transfer.)
Table 2-4 The second trip schedule
Date Time Place Item

8-Feb Wed AM 7:10 Arrive at Johannesburg
9:40 Departure from Johannesburg
10:45 Johannesburg Arrive at Maputo
PM Departure from Hotel
15:00 Maputo Meeting with JICA
-16:00
9-Feb Thu 10:00 Meeting with the director of
- AM -10:30 Ministry of Agriculture
Maputo
17:00 Meeting with the Japanese
PM -18:00 ambassador
8
18:30 Meeting with the chairman of
-19:30 CMH

12:00
PM -12:30 Meeting with ENP
10-Feb Fri Meeting with the subordinate
13:00 officer of the Ministry of
Maputo
-14:00 Agriculture
Meeting with the vice minister of
14:30 the Ministry of Mineral Resources
-15:15 and project manager of INP
AM 11:45 Departure from Maputo
12:55 In flight Arrival at Johannesburg
11-Feb Sat PM 17:05 Departure from Johannesburg
12-Feb Sun PM 12:15 Arrival at Hong Kong
14:25 In flight Departure from Hong Kong
19:15 Arrival at Haneda, Japan
9
Chapter 3 Justification, Objectives and Technical
Feasibility of the Project
1
3.1 Project background with necessity
3.1.1 Mozambique fertilizer current situation
Agriculture is main GDP sector in Mozambique which is consist of 28.8%. Total 81% of labor
population in Mozambique is engaged in Agriculture. Cotton, cashew nuts, sugarcane, tea, cassava
(tapioca), corn, coconuts, sisal, citrus and tropical fruits, potatoes, sunflowers; beef, poultry are
agriculture product in Mozambique. In such circumstance, Mozambique government plans to
increase domestic urea production which is 46% of fertilizer in Mozambique.
Ministry of Agricultures analysis
Agriculture situation in Mozambique is summarized as follows.

1. Subsistence, dry farming, characterized by low productivity and production
2. Weakly market-oriented
3. Based on rudimentary technologies with environmentally inappropriate practices
4. Low quality and small scale production
Ministry of Agriculture analyzes the Mozambique fertilizer situation shown as follows.
Table 3-1: Status of fertilizers in Mozambique

Domestic situation External situation
Strengths Weaknesses Opportunities Threats
Approval of PEDSA which Lack of a domestic Availability of raw Lack of
advocates the need to fertilizer industry; material stocks for the hydrocarbons shares
increase agricultural fertilizer industry for the fertilizer
productivity; (hydrocarbons, industry in the short
limestone, organic and medium term,
fertilizers, etc.);
Low demand for High potential of The low levels of
fertilizers; producers who do not demand make the
use fertilizers fertilizer business
less attractive in the
rural areas
Distribution of registration High prices of fertilizers; Increased loss of soil
and control of quality in many areas
agro-chemicals in the of the country
DNSA (National Direction
of Agricultural Services);
Lack of a regulatory Existence of High fertilizer costs
framework in the area of agrochemical stores arising from import
fertilizers in the rural areas duties
Poor sales network, not
wide enough to manage
the handling and sale of
fertilizers in the rural
areas
Existence of the Department
of Land and Water in the
IIAM (Mozambique
Institute of Agricultural
Research)
Source: Prepared by the survey mission
2
Urea price in Mozambique
Agrifocus, Agrochemical and Agrotech are only 3 fertilizer importers in Mozambique. They import
urea mainly from South Africa. Importer receives 3% of import price as a commission from
government. Dealer purchases fertilizer USD 70 to 80 per 50 KG and then sell it to farmer USD 100
per 50 KG which is far from the competitive price considering GDP in Mozambique. There is a 5
KG fertilizer sold USD 10 in downtown.
3.1.2 Mozambique government development plan for fertilizer
Agricultural strategy statement
Mozambique governments agricultural strategy statements are shown as follows.
1. Adoption of the Green Revolution Strategy in 2007

2. Implementation of the Action Plan for Food Production
3. Adoption of PEDSA (Strategic Plan for the Development of the Agricultural Sector)
Purpose for above plans are doubling annual production in 10 years, increased agricultural
productivity with average annual growth of 7%, increased number of farmers adopting improved
technologies and expanding the network of input providers (market).
Agricultural strategy by Mozambique government
Mozambique government overview

"A thriving, competitive and sustainable agricultural sector, able to meet the challenges of food and
nutrition security and achieve global agricultural markets"
Mission
"Contributing to food and nutrition security and to the income of farmers in a competitive manner
ensuring social and gender equality"
General Objective:
Stimulating demand and supply of fertilizers by the productive sector in order to improve
soil and crop productivity ensuring environmental quality.
Specific Objectives:
Ensuring various actors of the production process the availability and the access to the
market of fertilizers;
Strengthening research in the field of fertilizers;
Facilitating the fertilizer industry access to raw materials;
Developing a tax incentive package for the fertilizer industry and marketing;
Training technicians and service providers on fertilizers;
Developing institutional assets (regulation, laboratories, and inspectorate).
Expected Results:
Increased availability and consumption of fertilizers;
An established quality control system for fertilizers;
Trained technicians, producers and development workers regarding the use and handling of
fertilizers;
A favorable environment for the establishment of the fertilizer industry;
An updated mapping of soils in the country;
Increased number of farmers who use fertilizers;
New production technologies for organic fertilizers;
3
An approved and implemented Fertilizer Regulation
Strategic Actions:
R1: Increased availability and consumption of fertilizers:
AE-1.1: Creating easier access to credit for inputs;
AE-1.2: Facilitating the importation in "bulk";
AE-1.3: Revising the import rate on fertilizers;
R2: Established system of quality control of fertilizers:

AE-2.1: Installing regional laboratories for the quality testing of fertilizers;
AE-2.2: Recruiting and training fertilizer inspectors;
R3: Technicians, producers and development workers trained in the use and handling of fertilizers:
AE-3.1: Training technicians and development workers in the handling and use of fertilizers;
AE-3.2: Disseminating technologies to producers;
AE-3.3: Training inspectors and laboratory technicians in quality control of fertilizers;
R4: A favorable environment for the establishment of the fertilizer industry:

AE-4.1: MINAG involvement in the negotiation of hydrocarbons shares in the fertilizer
industry;
R5: An updated mapping of soils in the country;

AE-5.1: Doing lab tests in order to determine the quality of soils;
AE-5.2: Preparing maps on the fertility of soils in the country;
R6: New production technologies for organic fertilizers;

AE-6.1: Generating alternative technologies to the use of inorganic fertilizers;
AE-6.2: Updating the technical guidelines regarding the use of fertilizers or crops;
R7: Fertilizer Regulation approved and implemented;

AE-7.1: Drawing up the Fertilizer Regulation;
AE-7.2: Disseminating and implementing the regulation
Aspects of the Strategy:

Institutional capacity building:
Setting up a regulation for the fertilizer chain;
Training producers and providers in the use, management and market of fertilizers;
Creation of a program of incentives for the fertilizer chain:

Facilitating access to cheap raw materials (domestic hydrocarbons);
Facilitating the establishment of accessible credit lines to producers;
Facilitating the importation in bulk;
Market:
Setting up at least two fertilizer plants by 2014;
Creating a rural, commercial network of input supply;
Study:
Updating the mapping of soils in Mozambique;
Monitoring and Evaluation:

Coordination: DNSA, in collaboration with:
IIAM, INCAJU, AMI, CEPAGRI, DPA's
Framework survey to determine:
4
Initial data on production, imports, prices, quantities sold, quantities used, installed
institutional capacity, etc.
Methodology for the evaluation of the Strategy:
Missions for monitoring, auditing and inspection of the different participants in the fertilizer
production and value chain
TIA - Agricultural Survey
Institutional Framework and Coordination Aspects:

Responsible institution: DNSA;
Duties:
Preparing and implementing policies and regulations for
agricultural resources and inputs;
Coordinating its activities with other relevant institutions:
In the implementation of the Fertilizer Regulation;
In the training program for producers, providers, and
providers' associations;
In the implementation of the incentive plan for production
and supply;
In the setting up of an Information System about the
production and market of fertilizers;
Challenges:
Revoking of the 2.5% tax on fertilizers for use in Mozambique, and
Setting up and implementation of the Regulation for the management of the fertilizer
production and value chain;
3.1.3 Fertilizer support system in Mozambique
In Mozambique, there is no subsidiary from government to farmers. FAO provides voucher program
to farmer in Mozambique. Before the agriculture season starts, farmer receives seeds from 25kg up
to 50kg without payment. At the end of season, farmer pays two times from original cost of seeds.
Demand target
At this moment, urea is used limited to such as tobacco, sugar companies. In Mozambique, there are
4 million farmers. Small farmer which cultivate rice is limited to only from 3 to 6 % only provided
from institute which produces urea as experimental. After 10 years, Mozambique government
expected to 3.4 Million farmers which is 80% of total farmer will use the fertilizer. SADC countries
such as Zambia, Malawi, Zimbabwe, and Congo are all fertilizer importer and therefore, 600,000
Ton per year is still less according to the Ministry of Agriculture. With the view point of distribution,
our recommended plant site should be Manica province because it is located in center of
Mozambique.
Demand study
1990 - 1999: the market was centralized and the distribution was performed through the KR2
program;
It represented about 47% of the total amount of imported fertilizers;
Of these 26% came from commercial dealers (Agro-quimicos, Tabacos de Manica,
Acucareiras, Boror and Enacomo);
The potential annual demand is 100,000 tonnes of fertilizers. Just over the last ten years, there has
been an increase in the consumption of fertilizers from 18,000 to 51,000 tonnes per year;
5
The use of domestic fertilizers in comparison with the mainland and the region:
Africa: 20 kg / ha
Sub-Saharan Africa: 8 kg / ha
Mozambique: 5 kg / ha
Abuja Declaration: 50 kg / ha (until 2015)
Present analysis
Following table is the Evolution in the Consumption of Fertilizers (tonnes), 2006-2010

46% of fertilizer in Mozambique is urea.
Table 3-2: Evolution in the Consumption of Fertilizers (tonnes), 2006-2010

Year Sectors
Tobacco Sugar Others Total Average kg / ha
cultivated
2006-2007 13,000 10,000 5,500 28,000
2007-2008 13,000 10,000 5,000 28,000 4.8
2008-2009 15,000 12,000 5,000 32,000 5.3

2009-2010 16,000 12,000 5,000 33,000
2010-2011 31,400 15,000 5,000 51,400
Source: Material released by Ministry of Agriculture of Mozambique Evolution in the Consumption
of Fertilizers (tonnes), 2006-2010
Future analysis
Comparison of Current Consumption and Projections for Fertilizers among some SADC Countries
(2007-2011 and 2011-2017)
Table 3-3: Comparison of Current Consumption and Projections for

Fertilizers among some SADC Countries (2007-2011 and 2011-2017)
Year Mozambique Zambia Malawi Total
2007 28,000 180,000 270,000 478,000
2008 32,000 192,600 283,500 508,300
2009 33,000 206,100 297,700 540,800
2010 51,400 220,500 312,600 575,700
2011 50,000 235,900 328,200 613,100
2012 53,900 247,700 338,000 639,600
2013 59,300 260,000 348,200 667,500
2014 62,200 273,000 358,600 693,800
2015 71,700 286,700 369,400 727,800
2016 78,900 301,000 380,500 760,400
2017 86,800 316,000 391,900 794,700
Source: Material released by Ministry of Agriculture of Mozambique Comparison of Current
Consumption and Projections for Fertilizers among some SADC Countries (2007-2011 and
2011-2017)
6
Above table is based on the current situation and it is not included the production increase as a result
of JICAs PROSAVANNA.
7
3.2 Examinations required for the contents of projects
3.2.1 Demand forecast
As stated in (3)-2. Analysis of Future Demand, Mozambique and its neighboring nations will see
urea demand increase. With farmland expansion and productivity increase as a result of JICAs
current agricultural development project PROSAVANNA in Mozambiques tropical savanna
through Japan-Brazil cooperation, fertilizer demand will be increased. Moreover, the Abuja
Declaration aims to use 50 kg/ha of fertilizer or 10 times more than the current use in Mozambique,
leading to further demand expansion.
3.2.2 Understanding of problems necessary to examine and determine the contents of the project
Securing of natural gas
This investigation assumes that 33 million cubic feet/day of gas is secured out of increased
production in Pande/Temane gas fields. For project implementation, it is necessary to talk
with the Department of Minerals and Natural Resources which is responsible for gas
allocation.
Site
Considering urea shipment and environment, Beira New Industry Area is the site for this
investigation. For project implementation, it is necessary to talk a lot with the
Mozambique Investment Promotion Center, Beira city administration and planned project
execution agencies.
Determination of production quantity based on the urea demand
The Mozambique government plans to sell its urea not only to SADC countries, such as
Mozambique at home, Malawi, Zambia and Zimbabwe, but also to South Africa. Although
urea demand may expand with its production, the first full-scale urea plant in the
Sub-Sahara will have a urea production capacity of 1,725 MTPD as a first step.
3.2.3 Examinations of technical method
3.2.3.1 Ammonia plant
The outline of the Ammonia Plant is introduced in this Section.
Production capacity
Ammonia Plant is designed to have a normal production capacity of 1,000 metric tons of Ammonia
product per stream day.
Product specification
The Ammonia Product has the following expected value and characteristics.
8
Table 3-4: Specification of ammonia products
Composition (wt%)
Ammonia, wt% 99.9% min.
Water, wt% 0.1 max.
Oil, wt ppm 5 max.
Iron (Fe), wt ppm 5 max.
Pressure at BL, BarG 20
Temperature at BL , C 20
Raw material
33MMSCFD natural gas from Pande/Temane gas field increases production. Gas specification is
shown as follows.
Table 3-5Specification of raw material (1)

TO: CPF
SECTION: CPF
DATE: 2010/12/05
DATAFILE: C:\HPCHEM\1\DATA\05DEC10\SIG15638.D
SAMPLE NAME: DM2001-TEMANE GAS
D
COMPONENT MOL%
Methane 90.89536 Combustion Properties Units Specification Value

Ethane 3.27357
3
Propane 1.74942 Energy Content (EC) (Gross) MJ/nM (101.325 kPa @ 0C) 38.10-43.50 43.20
3
iso-Butane 0.44590 Energy Content (EC) (Gross) MJ/nM (101.325 kPa @ 15C) 37.40-42.20 40.72
n-Butane 0.55024 Relative density (RD) 101.325 kPa @ 0C 0.55-0.70 0.628
neo-Pentane 0.00943 Relative density (RD) 101.325 kPa @ 15C 0.55-0.70 0.630
3
iso-Pentane 0.17193 Wobbe Index (WI) MJ/nM 45.80-56.00 54.51
n-Pentane 0.13892 Hydrocarbon Dewpoint C @ 6.25 Barg -6.8 15.65
n-Hexane 0.26999 Water Dewpoint lb/mm scf @ 101 kpa 7
n-Heptane 0.15629 Total Inerts (N2, CO2) Vol% 5.0 max 2.28
n-Octane 0.04489 Mr g\mol 18.20
Nonane 0.00787 DMG gram 1820.11
Decanes 0.00675 H2S ppm 4.0 max 0.00
Nitrogen 2.27888
Carbondioxide 0.00057
Total Inerts 2.27945
H2S 0.00000
Oxygen 0.00000
Total 100.00000
Report By: VIOLET
Source: Material provided by the Institute National Petroleum (INP)
9
Table 3-6: Specification of raw material (2)
TO: CPF
SECTION: CPF
DATE: 2010/12/05
DATAFILE: C:\HPCHEM\1\DATA\05DEC10\SIG15639.D
SAMPLE NAME: DM200PANDE GAS
D
COMPONENT MOL%
Methane 95.22052 Combustion Properties Units Specification Value

Ethane 1.63286
Propane 0.54702 Energy Content (EC) (Gross) MJ/nM3 (101.325 kPa @ 0C) 38.10-43.50 40.78
3
iso-Butane 0.13851 Energy Content (EC) (Gross) MJ/nM (101.325 kPa @ 15C) 37.40-42.20 38.49
n-Butane 0.15139 Relative density (RD) 101.325 kPa @ 0C 0.55-0.70 0.585
neo-Pentane 0.00000 Relative density (RD) 101.325 kPa @ 15C 0.55-0.70 0.588
3
iso-Pentane 0.05290 Wobbe Index (WI) MJ/nM 45.80-56.00 53.32
n-Pentane 0.04607 Hydrocarbon Dewpoint C @ 6.25 Barg -6.8 14.86
n-Hexane 0.11589 Water Dewpoint lb/mm scf @ 101 kpa 7
n-Heptane 0.07713 Total Inerts (N2, CO2) Vol% 5.0 max 1.97
n-Octane 0.03164 Mr g\mol 17.00
Nonane 0.00989 DMG gram 1699.70
Decanes 0.01045 H2S ppm 4.0 max 0.00
Nitrogen 1.95976
Carbondioxide 0.00596
Total Inerts 1.96572
H2S 0.00000
Oxygen 0.00000
Total 100.00000
Report By: VIOLET
Source: Material provided by the Institute National Petroleum (INP)
The KBR Purifier Ammonia Process has accumulated over 300 plant-years of experience, and has
demonstrated both operating and maintenance advantages. The features all of these processes stated
here are utilized in the many of ammonia plants in KBR. The key difference is discussed in the
following paragraphs.
Feed Gas Flexibility

The KBR Purifier Ammonia Process uses a cryogenic nitrogen wash step to remove impurities from
the makeup synthesis gas. This makes the Purifier Process uniquely able to handle variations in the
composition of the natural gas feed, including variations in hydrocarbon contents, nitrogen content
and carbon dioxide content. The Purifier has the ability to absorb the variations in the raw synthesis
gas, and maintain a stable composition of the makeup gas to the synthesis loop.
Mild Primary Reforming

In the KBR Purifier Ammonia Process, primary reforming is carried out at about 100oC lower
temperature than in conventional ammonia processes. This is because some of the reforming duty is
shifted from the primary reformer to the secondary reformer. The shift in duty from the primary to
secondary reformer has the following effects:
The radiant duty in the primary reformer is greatly reduced.

The number of reformer tubes and burners is greatly reduced.
The primary reformer catalyst tubes, the outlet manifold, the transfer line and the convection
section operate at much lower temperatures.
The capital cost for the primary reformer is much lower than in a non-Purifier plant.
The life of the reformer catalyst and the reformer tubes are improved.
Secondary Reforming With Excess Air

In a conventional ammonia plant secondary reformer, the quantity of air is set to produce a 3-to-1
ratio of hydrogen to nitrogen in the synthesis gas. With the Purifier Process, extra nitrogen is needed
in the Purifier. Therefore, extra air is used in the secondary reformer. The extra air provides
additional reaction heat, allowing the shift of reformer duty from the primary to the secondary
10
reformer. Nearly 100 percent of the heat released in the secondary reformer is used at high
temperature, compared to 40 to 50 percent in the radiant zone of the primary reformer. Therefore,
the shift of duty from the primary to the secondary reformer makes the plant more efficient.
Because of the Purifier downstream, the allowable methane leakage from the secondary reformer is
much higher than in conventional ammonia plants. This reduces the required secondary reformer
outlet temperature by about 100oC. The result is much milder reforming conditions that are
advantageous in terms of both steady and reliable operation and longer equipment life. Fuel savings
is an added benefit.
The extra un-reformed methane, together with surplus nitrogen and most of the argon are removed in
the Purifier later in the process sequence, and returned to the reformer furnace as fuel.
Process Air Compressor with Gas Turbine Drive

For plants that export steam to a urea plant the process air compressor is driven by a heavy-duty
industrial gas turbine. The hot exhaust from the gas turbine is used as preheated combustion air for
the primary reformer. This represents a substantial improvement in efficiency over a steam turbine
drive. The need for start-up steam is also substantially reduced, and the cooling water requirement is
reduced.
If there is no urea plant or other unit to use the steam exported from the ammonia plant, then the
process air compressor is usually driven by a steam turbine. The final choice of driver will depend
on the overall steam balance considerations.
Cryogenic Purifier
The cryogenic Purifier is the heart of the KBR Purifier Ammonia ProcessTM. The Purifier
condenses out excess nitrogen from the synthesis gas, leaving a gas with a hydrogen-to-nitrogen
ratio of 3/1. The condensed nitrogen takes with it all the methane and most of the argon and other
impurities in the gas. The result is a very pure makeup gas to the synthesis loop. This reduces the
required synthesis pressure, synthesis catalyst volume and/or purge rate from the synthesis loop. The
pure synthesis gas also results in superior life of the synthesis catalyst. The remaining small synloop
purge is recycled to the Purifier for hydrogen recovery, thus eliminating the need for a separate
purge gas recovery unit.
Most of the net cooling required by the Purifier is provided by an expander, which causes a modest
pressure drop in the synthesis gas stream. Further cooling is provided by low-pressure vaporization
of the reject gas. The reject gas from the Purifier is used as fuel.
Figure 3-1: KBR Purifier
11
The Purifier provides a convenient flexibility to the operation of the ammonia plant. This is because
the Purifier can operate with a range of hydrogen-tonitrogen ratios in the feed, while maintaining the
required 3/1 ratio in the purified synthesis gas.
As a result, the front end of the ammonia plant can be adjusted for steam production, while the
synthesis loop is adjusted for ammonia production. The Purifier corrects the interface and stabilizes
the synthesis loop.
The cryogenic Purifier system has two controls. The energy balance is controlled by varying the
work removed by the expander. The material balance is controlled by varying the amount of liquid
removed from the bottom of the column.
Normal variations in methane slip from the reformer, carbon monoxide slip from the shift section,
and carbon dioxide slip from the carbon dioxide removal system will cause variations in the amount
of methane reaching the Purifier. The extra methane will be removed in the Purifier, and will not
disturb the synthesis loop. This stabilizes the operation of the ammonia plant.
During plant start-up, the Purifier can be cooled down during the same time period when the
synthesis converter is heated up. Operators of Purifier plants report that the Purifier does not extend
the total start-up time of the plant. During a short shutdown, the inventory of liquid nitrogen in the
Purifier will keep the system cold, allowing quick restart.
Dry Makeup Gas to the Synthesis Loop

The makeup gas contains no carbon oxides or moisture, which are poisons for the synthesis catalyst.
Therefore, the makeup gas can be combined directly with the recycle gas, and, after heat exchange,
fed to the synthesis converter. This process scheme has two advantages.
First, refrigeration requirements are reduced. In other process schemes with no dryers, the moisture
containing makeup gas is mixed with converter effluent to pass through the chilling train before
going to the converter.
Second, the size of the ammonia converter is reduced. This is because mixing of the ammonia-free
makeup gas with the recycle gas results in lower ammonia content in the converter feed.
High Pressure Steam Generation in the Synthesis Loop

The synloop design incorporates high-pressure steam generation. This maximizes the recovery of
high-level heat. The steam generators also help stabilize the operation of the synthesis loop. Changes
in production of ammonia are reflected in changes in steam production and do not affect the reactor
temperature profile.
Key Mechanical Features

KBRs superior process design is complimented with a number of outstanding mechanical design
features.
Reforming Furnace
The primary reforming furnace is a KBR top-fired design, which has been used in more than 200
ammonia, hydrogen and methanol plants. The furnace consists of a radiant cell and a convection
section. The radiant cell contains catalyst-filled tubes arranged vertically in a series of harps.
Flue gas leaves the radiant cell at the bottom and enters the convection section through a refractory
lined duct. Coils are located in the convection section to preheat the reformer feed / steam mixture,
superheat high pressure steam, preheat boiler feed water, preheat process air and preheat natural gas
feed.
The furnace is designed to use gas turbine exhaust (GTE) for combustion air. Ducts for GTE
distribution and a GTE bypass vent stack, located upstream of the reformer, are provided. Draft for
the furnace is provided by one induced-draft fan located at the base of the stack. Flue gas from the
furnace is discharged through the stack, which is designed with sufficient height to meet emission
12
requirements.
Figure 3-2: Typical radiant section of a KBR primary reformer
The GTE-fired primary reformer furnace used in KBR Purifier AmmoniaTM Plants is a modern
low-energy design, with proven service in existing plants producing from 680 to 2200 metric tons
per day of ammonia. The process heat duty in the reforming furnace is only about 60 percent of the
requirement in a conventional plant. In addition to the lower heat duty, the reformer fuel requirement
is reduced by utilizing the sensible heat in the exhaust from the gas turbine. The fuel requirement is
further reduced by burning the waste gases from the process in the reformer furnace.
The radiant section of the furnace is conservatively designed for long service life. The relatively low
primary reformer outlet temperature allows much lower tube metal temperatures than in
conventionally designed reformers, where the outlet temperatures are about 100oC higher. The
catalyst tubes are centrifugally cast micro alloy tubes with strictly controlled metallurgy, and are
bored inside to remove unsound metal.
The furnace design uses small heat release burners at the top of the furnace. The burners operate on
natural gas, low heating value process waste gases, or any combination. The same burners will be
adequate for operation at 100% capacity using only natural gas as fuel. The burners are raw gas type
with staged air input for NOx control. The inerts in the process waste gas and GTE also reduce the
flame temperature. These special burner design features result in low NOx levels.
The GTE supply system is carefully engineered to provide controlled distribution of exhaust gas to
each of the burners. Balancing dampers are provided in header ducts and a throttling damper in each
burner duct. Plenums are designed to hold noise levels low. The reformer bypass GTE vent stack has
a quick-opening tight shutoff damper. This damper is provided with remote control capability. The
reformer ID fans, the GTE ducts and vent stack are designed to permit start-up of the reformer on
ambient air drawn in through the vent stack, or start-up of the reformer with the gas turbine running
and the vent stack open to atmosphere. Either way, sufficient oxygen can be supplied to the reformer
to permit an orderly start-up. Similarly, gas turbine shutdown need not result in a complete furnace
shutdown. The furnace can be simply turned down and kept warm for early restart.
The convection section design incorporates several features to provide operating flexibility and
safety. The hydrocarbon feed preheat coil is provided with an external bypass to permit control of
the feed temperature to the zinc oxide beds. The steam superheat coil has provision for water
injection between the two coil sections.
The furnace uses the latest refractory and insulation designs to minimize heat losses. Ceramic fiber
linings in the radiant section provide rapid thermal response due to low heat storage, and low
radiation losses. Super duty hard refractory is used where burner flames contact sidewalls. Catalyst
tube penetrations are provided with ceramic cloth seals which effectively block air leakage while
13
permitting free thermal expansion of the tubes. The combination of tight setting and good
combustion control permits operation of the furnace at two volume percent oxygen on a dry basis
measured at the radiant section exit.
Secondary Reformer
Although the design conditions of the secondary reformer for a Purifier Ammonia PlantTM are less
severe than in other plants, the design still calls for special attention. The secondary reformer design
incorporates several special features which have provided superior performance in our operating
units.
A main feature is the dual layer refractory lining. The refractory lining provides for a moderate shell
metal temperature, which allows the use of a carbon steel shell. An outside water jacket is provided
to assure against overheating in the event of a refractory failure. The refractory lining exposed to the
gas stream must be low silica, 0.1 percent maximum, to prevent silica migration and the downstream
fouling of heat exchanger tubes. The refractories must be carefully selected, carefully prepared and
applied by experienced personnel.
The design incorporates an air/gas mixing chamber to provide uniform distribution and good mixing.
It is placed well above the catalyst bed for good distribution and to avoid flame impingement on the
catalyst bed. A common cause of problems in other designs is failure of their metallic gas
distributors. There is no gas distributor in the KBR design.
The shape of the secondary reformer, with a long tapered section, allows for even distribution of the
gas stream over the catalyst. The catalyst bed is supported by a refractory dome consisting of
self-supporting interlocking blocks. An all refractory support system is completely resistant to
temperature surges which would lead to failure of any metal parts.
Reformed Gas Waste Heat Boiler

High-level heat recovery downstream of the reformer is achieved in a KBR proprietary,
natural-circulation, floating-head type waste heat boiler. This is a well proven, mechanically robust
design that provides superior reliable performance. It has the following advantages over other
designs:
The heat exchanger is less costly.

More qualified vendors are available, both for the original exchanger and for a spare bundle.
The tube bundle is removable and can be repaired easily at the site.
Less plot space is required, because the boiler is installed vertically.
The floating-head boiler has a special dual-layer refractory that requires no metal liner. The design
incorporates a water jacket on the shell and on the transfer line from the secondary reformer, to
assure against overheating in the event of a refractory failure.
The waste heat boiler is used together with a steam super heater of similar design.
External bypasses are used to adjust the process temperatures.
Synthesis Converter
The proposed synthesis converter is KBRs well-proven horizontal design. This design has been
used in numerous KBR plants since 1983. The converter is intercooled and has three equilibrium
stages. The converter has been designed to achieve a high conversion of ammonia with very low
pressure drop. The converter contains a removable catalyst basket within the pressure shell. Integral
with the basket are the two intercoolers. An annular space exists between the cylindrical catalyst
basket and the high pressure shell to provide a path for feed gas cooling the shell.
The converter primarily uses 1.5 to 3 mm size promoted-magnetite based catalyst. The catalyst
volume is chosen for five to ten years life. While there are only three equilibrium stages, there are
four catalyst beds as the large third stage is split into two sequential beds. Each catalyst bed is
14
supported on Profile Wire Screens. The process flow is downwards through each bed. All of the feed
gas passes through each of the catalyst beds.
Figure 3-3: KBR Horizontal Ammonia Converter
Approximately 60 % of the preheated feed gas passes through the shell/basket annulus and is heated
in the first intercooler. Another approximately 30% of the feed is heated in the second intercooler.
The last, small part of the feed bypasses the intercoolers. The re-combined feed flows to the first
catalyst bed at approximately 379oC (EOR). The ammonia reaction is exothermic, equilibrium
governed, and proceeds with a significant temperature rise.
Upon leaving the first bed, the partially reacted gas passes through the grid supporting the catalyst
and into the space between the bottom of the bed and the basket wall. From here it is routed to the
first intercooler and is cooled to the proper feed temperature for the second catalyst bed. The hot
effluent from the second bed is similarly passed to the second intercooler for cooling and then
flows to the third catalyst bed. There is no heat exchange between the two sections of the third bed.
Hot converter effluent from the last catalyst bed exits the converter via a special connection between
the basket and the pressure shell.
For catalyst replacement, the catalyst basket can be removed by a wheel-and-track arrangement. This
way, a heavy-duty crane is not needed.
Unitized Chiller
The Unitized Chiller is a specially designed, multi-stream heat exchanger that cools the effluent
from the ammonia synthesis converter with recycle gas and with boiling ammonia refrigerant at
several temperatures. In doing so, the Unitized Chiller combines several heat exchangers,
compressor knock-out drums, and expensive high-pressure piping and fittings into one piece of
equipment. This design saves pressure drop in the synthesis loop and reduces capital cost.
The basic concept of the Unitized Chiller is the use of concentric tubes and a compartmentalized
shell to replace several equipment items with one. The converter effluent flows through the annuli of
the concentric tubes, and the recycle gas flows through the inner tubes. Refrigeration ammonia at
various temperatures boils on the shell side in several compartments. Thus the converter effluent is
simultaneously cooled by two media, the recycle gas and ammonia refrigerant.
KBR has used the Unitized Chiller in numerous ammonia plants since 1978.
Gas Turbine
KBR often uses a gas turbine to drive the process air compressor. In this design the hot gas turbine
exhaust is used as preheated combustion air in the primary reformer. This arrangement improves the
overall energy efficiency of the ammonia plant. Gas turbine selection is based on correctly matching
the shaft power to the air compressor power, and matching the gas turbine exhaust flow to the
15
primary reformer combustion duty. The KBR Purifier Ammonia Process is uniquely suited to
achieving this match. KBRs designs for gas turbine exhaust venting and flow distribution to the
reformer burners are fully proven. KBR has used gas turbines in numerous ammonia plants since
1966. Most of them were Purifier Plants.
Compressors
All process compressor trains are standard designs available from experienced manufacturers.
Special customizing or innovation is not required.
Plant Reliability
Ammonia production is a commodity business. Safe and reliable plant operation is crucial to
profitability. KBRs ammonia plants consistently obtain safe and reliable operation. A few statistics
underscore this:
A KBR Purifier ammonia plant in the US achieved 1,395 consecutive days of ammonia production,
although there were several short shutdowns.
One KBR Purifier ammonia plant in The Netherlands reported an onstream time of 99.3 percent in
2002.
Two KBR Purifier ammonia plants in The Netherlands each reported an average on-stream factor
of 97.6 percent for a recent seven-year period. This included downtime for turnarounds.
Uninterrupted runs of 960 and 920 days were obtained.
Another KBR Purifier ammonia plant in The Netherlands was shut down after producing more than
15 million tons of ammonia, more than any other single ammonia plant in the world at that time. (2)
Yaras Unit D Purifier Plant at their Sluiskil, The Netherlands site ran for 1375 consecutive days
without a single shutdown. (3)
KBR has licensed more than 200 ammonia plants. A significant reason for the success of KBR's
ammonia technology is the reliability of our ammonia plants. Reliability considerations originate
during the process design and continue throughout the entire engineering effort. Process and
equipment designs are evaluated carefully for safety and reliability. Start-up, operating and
shutdown procedures are designed to protect personnel and equipment. KBR's work is carried out to
meet ISO 9000 requirements.
The following paragraphs summarize ammonia plant surveys covering different time periods. The
surveys are based on independent third-party information by Plant Surveys International, Inc. The
surveys compare 50 plus ammonia plants operated in 20 plus countries. These independent surveys
show that:
KBRs Purifier Ammonia Plants, as a group, demonstrated the highest service factors. A major
reason for this is the lower temperatures in the primary and the secondary reformers.
KBRs Purifier Plants demonstrated the longest sustained run lengths without shutdowns, another
measure of reliability.
The tables below summarize the data from these surveys for service factor and run lengths, two
measures of reliability.
Service Factor
For the surveys, the service factor is defined as the percent of time that a plant is available to
produce ammonia to satisfy demand. Downtime for maintenance is deducted. Downtime for market
reasons is excluded from consideration and not deducted. The reported values are as follows:
16
Table 3-7: Service factor value
SURVEY DATES
2000-2001 2005
KBR Purifier Plants 94.2 % 99.5%
Non-KBR plants 90.6 % 91.1%
All surveyed plants 91.5 % 91.7%
KBR plants have a clear advantage in service factor. Three of the five highest rated plants are KBR
plants. For a 1,500 mtpd ammonia plant, and using an ammonia price of $200/mt, a three-percent
advantage in service factor corresponds to additional revenue of $3.3 million per year.
Longest Run Time

The plants reported the longest run time in their history. Any day that some ammonia was made
counted. The average for all of the plants in each group was as follows:
Table 3-8: Plant average

SURVEY DATES
2000-2001 2005
KBR Purifier plants 624 days 788 days
Non-KBR plants 385 days 392 days
All plants 424 days 408 days
Clearly the average KBR Purifier Plant stays on-line longer than the plants designed by other
licensors
Capital Cost
The capital cost of a KBR PurifierTM Ammonia Plant is less than the capital cost of a conventional
ammonia plant. At first glance this may seem surprising since the cryogenic Purifier is an additional
piece of equipment, the air compressor is larger, and a gas turbine is more expensive than a steam
turbine. However, in a Purifier plant, the primary reformer radiant section is about 40 percent
smaller than in a conventional plant. The primary reformer is the single most expensive piece of
equipment in an ammonia plant.
Also, the high-purity synthesis gas permits a simplified synthesis loop design and lower loop
pressure. In addition, the makeup gas to the synloop is mixed with the recycle and fed directly to the
synthesis converter. This increases the conversion per pass and reduces the refrigeration
requirements, further reducing capital cost and utility consumption. Also, a separate purge gas
recovery unit is eliminated.
Further, the gas turbine drive for the air compressor replaces a system that includes a steam turbine,
a surface condenser, and condensate pumps. The gas turbine also reduces the size of the cooling
tower or other cooling system and of the start-up boiler. The net effect of these savings is to entirely
offset the increased cost of the gas turbine over the steam turbine.
Operating Requirements
The KBR Purifier Process is renowned for its low energy consumption. The tables below show the
energy consumptions measured during the performance tests for two recently commissioned Purifier
Plants and compares the measured values with the expected values as shown on the process flow
diagrams. The CNOOC plant is coupled with a urea plant and uses a gas turbine to drive the process
air compressor. The BFPL plant in Australia produces all cold ammonia for export and uses a steam
turbine to drive the process air compressor.
17
Table 3-9: CNOOC Performance Test Data
Gcal/Metric Ton of NH3

Natural Gas Measured Expected
Feed 6.25 6.32
Fuel 1.93 1.91
Subtotal 8.18 8.23
Export Steam -1.72 -1.75
Net 6.46 6.48
Electricity 0.03 0.03
Total Energy 6.49 6.51
Table 3-10: BFPL Performance Test Data
Gcal/Metric Ton of NH3

Natural Gas Measured Expected
Feed 5.76 6.05
Fuel 1.59 1.43
Subtotal 7.35 7.48
Export Steam -0.61 -0.66
Net 6.74 6.82
Electricity 0.04 0.04
Total Energy 6.78 6.86
Notes to above two tables:

1) Energy is on a LHV basis.
2) Electricity converted to heat at 2828 kcal/kWh for CNOOC and 2895 kcal/kWh for BFPL and is
for the ISBL ammonia plants only.
3) Cooling water circulation rate based on 10 C rise is 170 m3/t for CNOOC and 216 m3/t for BFPL.
Difference is due to extra cooling water for the BFPL air compressor turbine surface condenser.
4) CNOOC plant has a 2.1 MW feed gas compressor and produces warm product.
5) BFPL plant has no feed gas compressor and makes all cold ammonia product.
The difference in energy consumption for the two plants is about 0.3 Gcal/t and is due mainly to the
gas turbine. A gas turbine cycle is much more efficient than a steam turbine cycle and so the
CNOOC plant is more efficient.
A Purifier Plant currently under design for Jianfeng in China is a replicate of the CNOOC design
with some minor efficiency improvements. Its expected energy consumption on the same basis as
the above two tables is 6.45 Gcal/t.
References
1. Yexin, Yang & James Gosnell: "CNOOC Chemical Ltd. New Fertilizer Plant", AIChE
Ammonia Safety Symposium, Denver, Colorado, the United States, September 2004
18
2. Verduijin, WD: "Legionella Pneumophilia in an Ammonia Plant Cooling Tower", AIChE
Ammonia Safety Symposium, Montreal, Canada, January 2002
3. de Letter, Jacky: "Over Three Years of Continuous Operation of Unit D in Sluiskil, All-time
Record", AIChE Ammonia Safety Symposium, Henderson, Nevada, the United States,
September 2007
3.2.3.2 Urea Plant
The outline of the Urea Plant is introduced in this Section.
Production Capacity
Urea Plant is designed to have a normal production capacity of 1,750 metric tons of granular Urea
product per stream day.
Product Specification
The Urea Product has the following expected value and characteristics.
Total Nitrogen : minimum 46.3 wt%

Moisture : maximum 0.2 wt%
Biuret : maximum 0.8 wt%
Product size to 4 mm : minimum 95 wt%
Average crushing strength : minimum 3.5 kgf at 3 mm
Raw Materials
Raw Materials for the production of urea are ammonia and carbon dioxide produced in the Ammonia
Plant having the following specification.
(a) Liquid Ammonia

Composition (wt%)
Ammonia, wt% 99.9% min.
Water, wt% 0.1 max.
Oil, wt ppm 5 max.
Iron (Fe), wt ppm 5 max.
Pressure at BL, BarG 20
Temperature at BL , C 20
(b) Carbon Dioxide

Composition (dry vol%)
CO2, % min. 99.0
Inerts (CH4, N2, Ar) and H2, % max. 1.0
H2O Saturated at operating conditions
in separator at ammonia unit BL
H2S, mg/Nm3 max. 0.4
Temperature at BL nor 45
(Reference Point), C
Pressure at CO2 Regenerator Outlet, min 0.5
BarG, B/L
19
Urea Plant Description
Urea Technology
The major technology suppliers of urea plants are Toyo Engineering Corporation (TOYO: Japan),
Stamicarbon (Netherlands) and Saipem (Italy). These licensors offer low energy and environmental
friendly urea technologies in the market. These companies have supplied their technologies for more
than 95% of installed ammonia capacity globally.
These technologies are highly trustworthy and experienced for the 1,750 MTPD urea plant in this
project. However, TOYO urea technology is the most efficient process among these urea
technologies in comparison of the utility consumption figures introduced in each companys
brochure. The feasibility study of this project proceed based on TOYO urea technology for the urea
plant
Table 3-11: Comparison of Raw Materials and Utility Consumption

(per ton of Urea Product)
TOYO Stamicarbon Saipem

Raw materials
Ammonia (100%) ton 0.563 0.563 0.563
Carbon Dioxide (100%) ton 0.73 0.73 0.73
Utilities
Case-1
110 bars Steam import case
Steam 110 bars ton 0.69 0.86 0.81
Cooling Water m3 75 88 95
(t=10C)
Electricity
Process only kWh 21 20 23
kWh 45(Stami)/38
Granulation 24 (TOYO) 37 (UFT)
(UFT)
Total kWh 45 65/58 60
Case-2
42 Bars Steam import case
Steam 42 bars ton 0.8 n.a.(0.99) n.a (0.94)
Cooling Water m3 81 n.a.(95) n.a. (103)
(t=10C)
Electricity
Process only kWh 21 20 23
kWh 45(Stami)/38
Granulation 24 (TOYO) 37 (UFT)
(UFT)
Total kWh 45 65/58 60
Export Steam None None None
Major Process Parameter

CO2 Conversion in Reactor % 63 - 64 58 62 - 64
NH3/CO2 in Reactor 3.7 3.0 3.2 3.4
o
Reactor Temperature C 182-184 183 188
Reactor Pressure bars 152 140 150
Note: n.a. means Not Available.
20
Since its establishment in 1961, Toyo Engineering Corporation (TOYO) is well known as a
global engineering contractor but also as urea process licensor. TOYO has designed,
engineered, constructed and commissioned over 100 urea plants based on the TOYOs own
Urea Process including its urea synthesis technologies and urea granulation process. TOYOs
the most advanced process of urea synthesis and granulation technologies are the ACES21
(Advanced process for Cost and Energy Saving) and Spout-Fluid Bed Urea Granulation
Process.
ACES21 has been established to achieve the significant energy saving and plant cost
reduction from previous modern urea processes, without sidelining reliability, ductility,
operability and maintainability. A major feature of this technology is the reduction of the
number of components in the urea synthesis loop to simplify the system. This lessens
construction costs with the installation of the reactor on the ground in the CO2 stripping
process. In addition, the operation conditions of the synthesis section have been optimized
under lower operation pressure than in the previous process. As a result, a remarkable
reduction in energy consumption has been achieved.
Spout-Fluid Bed Urea Granulation Process has been established to produce large size granular
urea by applying a combination of the spouted bed and fluidizing bed with high performance
spray nozzles for granulator, which realizes the reduction of energy requirements and
improvement of the product quality as major feature.
Urea plant mainly consists of following sections. See block flow in next page.
Synthesis
Purification
Concentration
Recovery
Process Condensate Treatment
Granulation
Figure 3-10: Block Flow Diagram of Urea Plant
21
ACES21 Process
Fig. 3-11 shows a typical process flow diagram for urea plant of ACES21. Liquid ammonia is
fed to the reactor via HP Carbamate Ejector which provides the driving force for circulation in
the synthesis loop instead of gravity for the original ACES Process. Most of the carbon dioxide
with small amount of passivation air is fed to the stripper as a stripping medium and a raw
material for urea synthesis, and the rest is fed to the reactor as a raw material and to passivate
the lining of reactor. The reactor is operated at N/C ratio of 3.7, 182 - 184C and 152 barG. The
CO2 conversion to urea is as high as 63 - 64% at the exit of the reactor. Carbamate solution
from the carbamate condenser is fed to the reactor after being pumped by the HP ejector that is
motivated by high pressure liquid ammonia. Urea synthesis solution leaving the reactor is fed to
the stripper where unconverted carbamate is thermally decomposed and excess ammonia and
CO2 are efficiently separated by CO2 stripping. Stripped urea solution is sent to HP
decomposition stage to be purified further. The stripped off gas from the stripper is fed to
Vertical Submerged Carbamate Condenser (VSCC), operated at N/C ratio (NH3/CO2 mole ratio)
of 2.8 - 3.0, 180 - 182C and 152 barG. Ammonia and CO2 gas condenses to form ammonium
carbamate and subsequently urea is formed by dehydration of the carbamate in the shell side.
Reaction heat of carbamate formation is recovered to generate 5 barG steams in the tube side.
Packed bed is provided at the top of VSCC to absorb uncondensed ammonia and CO2 gas into
recycle carbamate solution from HP absorption stage. Inert gas from the top of the packed bed
is sent to MP absorption stage.
The synthesis urea solution is fed to the Purification Section, where ammonium carbamate and
excess ammonia contained in the synthesis urea solution are decomposed and separated by
pressure reduction and heating. The urea solution is purified, and it is sent to Concentration
Section.
After unconverted ammonia and CO2 are separated from the synthesis urea solution in the
Purification Section, the urea solution is concentrated to 96 wt% concentration of urea
including biuret in Evaporator, before it is sent to Granulation Unit.
The gaseous ammonia and CO2 separated at the Purification Section are absorbed and
recovered in the two-stage absorbers, namely, HP Absorber and LP Absorber, using the process
condensate as absorbent, and they are finally recycled to the Synthesis Section.
The water vapor separated from the Evaporator is condensed in surface condensers. All
ammonia and urea mist contaminated in evaporated water from Evaporator are recovered as the
process condensate together with ammonia and urea mist.
The process condensate is sent to Process Condensate Stripper to strip off ammonia and carbon
dioxide by steaming. The overhead gas from Process Condensate Stripper is sent back to LP
Decomposer to recover ammonia in it and utilize steaming heat in Process Condensate Stripper
for decomposition heat in LP Decomposer.
From the middle stage of Process Condensate Stripper is pumped up to Urea Hydrolyzer, where
urea is completely hydrolyzed to ammonia and carbon dioxide.
Finally, the clean process condensate from the bottom of Process Condensate Stripper is
discharged to the Utility Facilities in OSBL of the urea plant.
22
Figure 3-11: Flow Diagram of ACES21 Urea Process
Urea Granulation Process

Fig. 3-12 shows the process flow of TOYOs Granulation Process configured this Spout-Fluid
type granulator.
The urea solution or molten urea is fed on the spouting urea seeds through the multi spray
nozzles to enlarge the recycle particles (seeds) in the granulator. The water in the feed urea
solution is evaporated by spouting air on the spouted beds in the granulator to produce the urea
granules. The enlarged granules are cooled to a suitable temperature by fluidizing air on the
internal fluidized beds in the granulator.
Coarse urea granules produced in the granulator are screened to separate the product size
granules from over and under size granules through the double deck screen. Small sized granules
are recycled back to the granulator as the seed and over sized granules are crushed through the
double roller type crusher and recycled back to the granulator together with the under sized
granules as the seeds.
Exhaust air from the granulator and cooler is scrubbed in the wet type dust scrubber to recover
the urea dusts in the exhaust air. Recovered urea dusts through the dust scrubber are recycled
back to the urea plant for the recovery.
23
Figure 3-12: Process Flow Diagrams
Fig.-13: Process Flow Diagram
Raw Materials, Catalyst & Chemicals Consumption

The Raw materials and Catalyst & Chemicals Specification and expected Consumption are
summarized below.
(1) Liquid Ammonia

Consumption Rate Max. 41,270 Kg/h as 100% Ammonia
(2) Carbon Dioxide
Consumption Rate Max. 53,670 kg/h as 100% CO2
(3) Catalyst
Dehydrogenation Catalyst for CO2 gas is provided for removal of hydrogen in the
carbon dioxide. The catalyst volume and expected life is as follows:
Quantity for evaluation : Approx. 1.1 m3

Life : More than 5 years (Expected)
(4) Chemicals
Urea plant will use following chemicals as follows:
1) Methanol
Quality : Grade A or similar
Max. quantity for evaluation : Approx. 7 kg/t-product
2) Caustic Soda
Quality : Industry Grade
Max. quantity for evaluation : Approx. 0.02 kg/t-product
24
3) Sulfuric Acid
Composition:
H2SO4 98 %wt
H2O 2 %wt
Max. quantity for evaluation : Approx. 3 kg/t-product
Anticipated Emission and Effluents
The typical expected quantities and composition of continuous gaseous emissions from the Urea
Plant is as follows.
Table 3-12: Exhaust air from Dust Scrubber
Flow Rate Approx. 600,000 Nm3/h

Water Saturated
Temperature 40C *1)
Pressure Atm.
Composition Urea dust less than 30 mg/Nm3
NH3 less than 30 mg/Nm3
Notes: *1) Temperature of this stream varies depending on the ambient condition.
Utility and Offsite Facilities
Utility and Offsite Facilities are designed to supply enough utilities for continuous and stable
operation of the Fertilizer Complex. The design philosophy and capacity are described in this
Section.
Utility Facilities Description
a. Natural Gas Receiving and Fuel Gas Facility

The Natural Gas is supplied to the Fertilizer Complex through the pipeline.
The received Natural Gas is delivered to Natural Gas Metering System which consists of
metering skid and flow computer cabinet.
The metering skid consists of three streams of retractable assemblies and transmitters including
upstream filters and isolation valves. Pneumatic operated valves with buffer tanks are applied to
reduce the maintenance of the related equipments such as gas filter and dryer. These three
streams will be skid mounted.
One flow computer cabinet is installed in the inter connection room. Inside this cabinet, one
flow computer is installed. The measured flow rate is compensated by temperature and pressure
in flow computer. Total amount of the receiving flow rate can be monitored and will be
recorded at flow computer. One report printer will also be installed in the flow computer
cabinet.
25
b. Sea Water Intake Facility
In this Fertilizer Complex, sea water is used as a thermal exchange medium and feed water to
Desalination System. Sea water is distributed for sea water cooling system, feed for on-site
chlorination, and feed for desalination system with sea water pumps. For such purposes, a
system to draw sea water to the plant which is called Sea Water Intake (SWI) Facility is
provided.
The type of SWI Facility is a submersible Intake Head structure which is placed on seabed at
EL 5 meters from mean sea level, connected by a buried sub-marine pipeline to the Sea Water
Intake Basin laid on a sea shore.
The intake head is equipped with sufficient screen, designed to prevent any solids and debris
from entering into the subsequent sea water cooling system.
Sea water flowing from intake head into the Sea Water Intake Basin will be activated by siphon
effect, in which a Vacuum Pump installed in the Sea Water Intake Basin will withdraw air
pocket inside the protrude intake line over the sea water level.
Traveling Screens are installed in Sea Water Intake Basin to remove and catch the entrained and
un-trapped floating debris, sea organism and lives. For maintenance of Sea Water Intake Basin,
Stop Logs are installed at the upstream and downstream of the Traveling Screen. The function
of Stop Logs is stopping the flow of sea water into the Traveling Screen during the maintenance
time. Screen Wash Pumps are provided to clean the clogged screen panels. The pumps are
designed to have sufficient pressure to sweep out all debris or trashed that stick-in the screen
panels.
To prevent and inhibit the growth of micro organism in the sea water cooling system a series of
chlorination is applied by injecting chlorine solution (sodium hypochlorite) in both sea water
intake head and sea water intake basin
The design capacity of Sea Water Intake Facility is 2,700 m3/h.
c. Cooling Water Facility

Cooling water is provided as a cooling medium to process plants and Utility Facilities. Cooling
water system consists of two system; Sea Water Cooling Circulation and Sweet Water Cooling
Circulation.
Sea water from Sea Water Intake Basis is supplied to Cooling Tower Basin as a make-up
cooling water. The total flow of sea water is continuously re-circulated by Sea Water Circulation
Pump. From Cooing Tower Basin, sea cooling water is circulated to a number of turbines
surface condensers in the Ammonia, Urea Plants and Utility Facilities and to the number of
Marine Plate Heat Exchanger (MPHE) for cooling the closed Sea Water Cooling Circulation.
A chemical Injection facility that comprises some chemical injection system is provided. The
chemical injection facility shall at least to cover continuous injection of sulfuric acid, biocide,
dispersant, and shock dosing of bromine.
Side Filter for sea water is installed at discharge of Sea Water Circulation Pump to maintain
cleanliness of sea water. In order to maintain the accumulated water pollutant of Sea Water
Cooling Circulation System in acceptable concentration, blow down of sea water is transferred
continuously to sea water outfall.
26
Sweet Water Cooling Circulation System is a closed system, circulated by Sweet Water
Circulation Pumps. Sweet Water Cooling Circulation System consists of Fresh water Circulation
and Essential Fresh Cooling Water Circulation. Fresh Water Circulation and Essential Fresh
Cooling Water Circulation are in service. In case of power failure, Emergency Sweet Water
Pump is backed up with Emergency Power to keep cooling water supply to lube-oil coolers of
the critical rotating equipment in Essential Fresh Cooling Water Circulation.
Sweet water warmed up in the users around 45C is collected through return header. It is then
cooled down to 35C by exchanging heat with sea water in MPHEs. After passing MPHE, sweet
water will be re-circulated back to the users for cooling, whereas sea water will be returned to
Sea Water Cooling Tower.
Side Filter for Sweet Water is installed at the discharge of Sweet Cooling Water Circulation
Pumps to maintain cleanliness of sweet water. Chemical Injection System which consists of
anti-bacterial and nitrite injections is provided,
One of the main equipment on cooling water system is Sea Water Cooling Tower. The type of
tower is induced draft cooling tower with multi cells. The system shall consist of Cooling
Tower Basin, circulating water pumps, side filters, make-up, blow down, pit, and chemical
treatment. Induced Draft Fans located at the upper section of cooling tower will withdraw the
air, passes through the heat transfer fill to exit tat high level via fan stacks at the top of the cells.
Returned warm sea water form MPHE is delivered in the water distribution system at the upper
compartment of the cooling tower cells, where it is sprayed over the heat transfer fill surfaces.
Water cools as it travels downwards over the surfaces of the heat transfer fill. Cooled water
falling from the underside of the fill is collected in a cold water collection basin located at the
base of tower. Concrete channel is provided to allow the collected cold water flowing into Sea
Water Circulation Pumps.
d. Desalination Facilities
The source of feed water to Desalination System is sea water from SWI. Reverse Osmosis (RO)
type is used for Desalination System. The RO Desalination System includes everything required
to produce desalinated water from sea water. It consists of Pretreatment System and two main
Sea Water Desalination Reverse Osmosis System, namely Sea Water Reverse Osmosis (SWRO)
and Brackish Water Reverse Osmosis (BWRO).
Feed water of pretreatment system is pumped from Seawater Intake Basin by Sea Water Pumps.
The Pretreatment System consists of Sea Water Micro-Filtration Automatic System, Filtered
Water Tank, Ultra-Filtration System with guard filter, Ultra-Filtration Backwash Pump and
others required for the system.
The filtered sea water is then boosted to SWRO and partly delivered to Energy Recovery
Pressure Exchanger devices for reducing energy consumption. Energy Recovery Pressure
Exchanger devices utilize the high pressure of rejected stream form the SWRO or brine stream.
The Energy Recovery Pressure Exchanger devices transfer pressure energy in the brine reject
stream to the feed stream. Then, the PX Exchanger Circulation Pump which is provided in
conjunction with Energy Recovery Pressure Exchanger devices boosts the feed stream to
combine with main of SWRO inlet feed, reducing the electrical power required during normal
operation.
27
The SWRO product stream is transferred to SWRO Product Tank. From this tank, the SWRO
product is pressurized with BWRO Booster Pump and transferred to BWRO. Raw potable water
is also delivered from SWRO Product Tank by SWRO Transfer Pumps for potable water. The
BWRO product stream is transferred to BRRO Product Tank whereas the rejected stream shall
be recovered and altogether with filtered water utilized as SWRO feed water. From the BWRO
Product Tank, the desalinated water delivered to Desalinated Water Tank by Desalinated Water
Pumps.
e. Portable and Service Water Facility

The source of potable water and service water is SWRO product from Desalination System.
Raw Potable Water is also delivered from SWRO Product Tank by SWRO Transfer Pumps.
Hypochlorous acid is injected to potable water for sterilization.
f. Water Polishing Facility

The Water Polishing System treats return process condensate, return steam condensate from
Ammonia and Urea Plants and desalinated water by ion exchange. The feed to Polishing Facility
is transferred to Mixed Bed Polisher (MBP). MBP is filled with cation exchange resin and anion
exchange resin to exchange cation and anion ion respectively.
Water outlet is then transferred to Polished Water Storage Tank. Then polished water will be
processed to produce BFW for steam generation feed.
g. Fire Water Facility

The source of fire water is SWRO Product Tank from Desalination System. Jockey pump is
consistently pressurizing fire water network. When fire happens, one of two Fire Fighting
Pumps supplies fire water to the net work. Fire Fighting Pumps are 1 Diesel Engine driven and 1
Motor driven.
h. Steam Generation Facility

Package Boiler and Heat Recovery Steam Generation (HRSG) are provided to supply MP steam.
HRSG recovers heat energy of GTG effluent gas.
i. Nitrogen Generation Facility

The air cryogenic separation type of nitrogen gas generator is provided for Nitrogen Generation
Facility. Liquid nitrogen is stored in Liquid Nitrogen Reservoir. In normal operation, gaseous
nitrogen is distributed to the users in Fertilizer Complex. In emergency case, liquid nitrogen in
Liquid Nitrogen Reservoir is vaporized by Nitrogen Vaporizer and distributed.
j. Power Generation Facility

Two Gas Turbine Generators (GTG) are provided for electric generation. In normal operation,
both GTG are operated at 50% load. In case of one GTG is failed, the other GTG is operated at
100% load to prevent plant shut down.
k. Emergency Power Generation Facility

Quick start diesel emergency power generator is provided to generate electricity at power failure.
This power supply is to be used for all essential loads, such as certain pumps, lube oil pumps,
motor operated valves, over head cranes, emergency lightning, receptacle/welding receptacle,
elevator/lift, fire alarm and gas detection system, instruments, etc.
28
l. Instrument Air and Plant Air Facility
The normal main source of Instrument Air (IA) and Plant Air (PA) is the Process Air
Compressor of Ammonia Plant. A diesel driven stand-by Air Compressor will be provided and
automatically started to cover IA and PA requirements in case the Ammonia Plant Process Air
Compressor shut-down and fail to supply the required IA and PA.
The Air Receiver is provided to create sufficient volume in the IA system in order to ensure
uninterrupted supply of IA to the users in case of upset in the Air Compressor Systems. From the
Air Receiver, the air is distributed for both IA and PA requirement. PSA is provided to dry the
air to meet the requirement for IA.
m. Waste Water Treatment Facility

The effluent from Ammonia Plant, Urea Plant and Utility Facilities are pre-treated in each Plant
and Facility and sent to Treated Water Pit.
The effluent is consist of
a) Effluent to the Treated Water Pit

In normal operation, following effluent will be directly sent to Treated Water Pit.
- Steam Trap Condensate from Ammonia Plant
- Process Air Condensate from Ammonia Plant
- WHB Blow Down from Ammonia Plant
- Others Waste Water from Ammonia Plant
- Brine from Desalination System
- Polisher Blow Down from Water Polishing System
- Cooling Tower Blow Down from Seawater Cooling Tower
The Treated Effluent will be released to the sea.
b) Oily Water Drain to CPI Separator

Oily Water will be collected in CPI separator to separate oil and water. The effluent will be
sent to Treated Water Pit. Treated effluent will be released to the sea.
In normal operation, effluent from the WWT is 1,500 t/h.
Offsite Facilities Description

The Offsite Facilities Design is described in this Section.
a. Ammonia Storage
Product ammonia is normally transferred to the Urea Plant to produce granular urea product
and diverted to Ammonia Storage Tank located at Plant Site when the liquid ammonia is not
received in the Urea Plant.
The capacity of the Ammonia Storage Tank is 5,000 tons.
b. Urea Storage and Bagging System

Granular urea product is transferred by conveyers to Urea Bulk Storage House located at Plant
Site and stored , and/or bagged in 50 Kg Bags.
The Storage House and the Bagging/Packing Systems are designed as follows:
Urea Bulk Storage House: Granular urea bulk storage for 10 Days Production with Conveyers
and Re-claimer
Bagging System: 50 Kg Bag x 750/Hr x 3 Trains (Consideration required)
29
c. Bagged Urea Storage and Ship Loading System
Bagged Urea is transferred by bet conveyor to Bagged Urea Storage House located at port side
and once stored and loaded on ship.
Bagged Urea Storage House: Storage for 30 Days Production with Conveyers Ship Loading
System for 50 Kg Bag
d. Flare Stack System

Flare Stacks are provided at Ammonia Plant Site, Ammonia Storage Tank Area and Ammonia
Loading Storage Tank Area.
(1) Main Flare Stack
The Main Flare Stack treats the VA (Vent Gas with Ammonia), VG (Vent Gas with
Natural Gas) and VH (Vent gas with Hydrogen) from Ammonia Plant, Utility Facilities.
(2) Ammonia Storage Flare Stack
The Ammonia Storage Flare Stack treats the VA (Vent Gas with Ammonia) from
Ammonia Storage Tank Area.
* Ammonia Loading Storage Flare Stack is NOT included.
e. Fire Fighting Station

The Fire Fighting Station foreseen by legal requirements for fire fighting regulations is provided
for fire monitoring and fire fighting of the Plant and consisting of 2 Fire Trucks, 1 Ambulance,
Fire Monitoring System and Offices.
Fire Water at Export Jetty area is NOT included.
f. Maintenance Shop
The Maintenance Shop is provided for the purpose of following works:
- Daily Maintenance
- Diagnosis of Equipment and Facilities
- Reconditioning of Equipment and Facilities
- Manufacturing of Small Parts
And the Shop consists of Machining Workshop, Fabrication Workshop, Electrical Workshop and
Instrument Work Shop.
g. Spare Parts Warehouse

Spare Parts Warehouse is provided for store the operation and maintenance spare parts.
5 Fork Lifts and 2 Pick-up Trucks are provided by the contractors.
h. Catalyst and Chemicals Warehouse

Catalyst and Chemicals Warehouse is provided for store the catalyst and chemicals which should
be stored in-house.
i. Administration Building
The Administration Building is provided for 200 persons including air conditioning, showers,
locker rooms, rest rooms, space for Canteen, First Aids, Conference Rooms and Offices.
j. Fence and CCTV System

The Plant is fenced with Gates, Gates Houses and CCTV System for keeping the security of the
Plant.
k. Telephone Communication System

The Telephone Communication System is provided for communicating between buildings,
offices and Portside Storage Area
30
Catalyst and Chemicals Consumption (Delete if it is not necessary, consideration required)
Following Catalyst and Chemicals are consumed in Utility Facilities.
1 Sulfuric Acid
Composition:
H2SO4 98 %wt
H2O 2 %wt
Expected Quantity: Approx. 1.4 t/day
2 Caustic Soda
Composition: NaOH 45 %wt
H2O 55 %wt
Expected Quantity: Approx. 0.8 m3/day
3 Biocide
Specification Vendor Standard
Consumption Approx 0.5 m3/day
4 Dispersant
Consumption Approx 0.2 m3/day
5 Bromine
Consumption 0.5 m3/day
6 Bisulfite
Consumption 0.1 t/day
7 Antiscalent
Consumption 0.2 t/day
8 Soda Ash Vendor Standard

0.2 t/day
9 Ion Exchange (Anion & Cation) Resin

Initial Charge Anion Resin 6 m3
Cation Resin 6 m3
Consumption 15% Vol. /Year
10 Desalination Membrane
Life 5 Years
31
11 PSA Absorbent
Initial Charge 500 Kg
Life 3 years
Anticipated Emission and Effluents (Delete if it is not necessary, consideration required)

Following Gaseous Emission and Effluent from Utility Facilities are expected.
a. Flue gas from Gas Turbine Generator

Table 3-13: Flue gas from Gas Turbine Generator
Flow Rate 434000 Nm3/h
Composition
N2 75.29 %
O2 15.24 %
CO2 2.68 %
H2O 5.89 %
Ar 0.91 %
SOx 5 vol ppm
NOx 25 vol ppm (15% O2)
b. Flue gas from Package Boiler

Table 3-14: Flue gas from Package Boiler
Flow Rate 150,890 Nm3/h
Composition
N2 68.62 %
O2 1.65 %
CO2 8.50 %
H2O 21.23 %
SOx 5 vol ppm
NOx 85 vol ppm (3% O2)
CO 100 vol ppm
Dust 50 mg/Nm3
c. Waste Water from Fertilizer Complex

The waste water is treated and finally collected in the Treated Water Pit and released into
Sea.
Table 3-15: Waste Water from Fertilizer Complex
Flow Rate 1,500 ton/h
Composition
NH3 0.2 ppm
TDS 54,000 mg/l
6.0
pH %
8.5
32
3.3 Plan outline of the project
3.3.1 Basic conditions for determination of the contents of the project
The Mozambique government has been desiring a fertilizer project for 80 years, and we sees no
basic obstacles to its implementation. Respecting the plan of Mozambique, understanding its needs
and reviewing the contents of the project, we will make an investigation.
3.3.2 Conceptual design and specification of applicable facilities
Conceptual design and specification of applicable facilities are shown as below.
Figure 3-13:
Pande
Temane Gas
Field PROCESS PLANT & OFF-SITE
Granular
Urea
AMMONIA PLANT UREA PLANT UREA STORAGE
Liquid NH3 Urea
Natural 1,000 MTPD 1,725 MTPD
Gas & Product
BAGGING
FACILITY
AMMO
NIA
STOR
Polished Water Return Instrument Air

Condensate Sea Water & CW Plant Air
N2 Gas
SEA WATER & IA/PA ELECT.

CW FACILITY FACILITY POWER
Sea Water IGG FACILITY GENERATION
Make-up CW Make-up Water FACILITY
WATER STEAM WASTE WATER

Sea
TREATMENT GENERATION TREATMENT
Sea Water
FACILITY FACILITY FACILITY
Water intake
facility Polished Water
UTILITY FACILITY
3.3.3 Contents of the proposed project
(1) Construction site: Beira New Industrial Area is proposed as the site to the Mozambique
government.
(2) Product and shipment: 1,725 MTPD of urea to Mozambique at home and its neighboring nations
with demand, including Zambia, Zimbabwe and Malawi
(3) Raw material: 33 mmscfd of production increase in Pande/Temane gas fields
33
(4) Process: Ammonia is based on KBRs technology. Urea is based on Toyo Engineerings
ACES21.
(5) Utility facilities: The whole quantity of power is to be generated internally. Industrial water is to
be obtained from sea water.
(6) Offsite facilities: Ammonia tank, urea tank, and 50 km bagging equipment.
(7) Plant cost: 1,000 Million USD
(8) Owners cost: 173 Million USD
(9) Total project cost: 1,173 Million USD
3.3.4 Issues for adopting the proposal and system and their solutions
In Mozambique, there is demand due to its agriculture promotion; Amount demanded is expected
enough, including SADC. However, along with gas allotment and site selection, the issue of cost
burden for pipeline construction needs to be discussed well with the Mozambique government for
project implementation. Moreover, for review of the contents of the project to respect the plan of
Mozambique and training in fertilizer, we would like to consider cooperation with JICAs
PROSAVANNA.
34
Chapter 4 Evaluation of Environmental and Social
Impacts
1
4.1 Current situation of environmental social aspects
4.1.1 Current situation of candidate construction site
Natural environment
Candidate construction site is in the newly developed industrial area, but there is no
actual plant and facility. Then there is no natural environmental issue for the candidate
construction site.
The candidate site does not include any sensitive ecosystem area. Nevertheless, in
Mozambique, all river courses, streams and drainage lines must be considered
ecologically sensitive areas, and the adequate measures shall be taken as a precautious
measure.
Social environment
There are mainly two dominate population groups in Sofala Province. One is the Ndau
and other is the Sena. Nada is from Beira to the South, and northwards into the Manica
Province, and is part of the Shona Tribe. Sena is from Beira to the North. But neither of
the Ndau nor Sena dominates in the Beira area where two groups coexist and interact
socially. Language spoken in Sofala Province is Cisena, followed by Cindau and
Portugues. Siao/Zione and Catholic are most practiced religions in the Sofala Province.
But half of the population is non-religious. In the rural areas, non-religious people
represent over 50% of the population compared to the urban areas where only 35.3% do
not practice any religion. In the urban areas, the most common religion is Catholic
(27.2%), followed by Protestant/Evangelic (13.7%). In the rural areas, the most
common religions are Siao/Zione, followed by Catholic.
The economy of Sofala Province is characterised by a subsistence sector, with

extremely low levels of productivity and dependent on climatic factors. The industrial
sector is weak, with poor internal economic integration and relations, a relatively large
component of services to neighbouring countries, notably in the use of migrant labour in
ports and railways. The main economic activities of the local inhabitants presently
located within the Beira Corridor are household/subsistence agriculture, charcoal
production, wood collection and selling, fishing, informal commerce and hunting.
Subsistence farming is the mainstay of about 600,000 families. Production of surplus is
low, linked with poor availability of infrastructure for delivery of produce. The most
2
important agricultural products for the farmers are maize, rice sunflower, sorghum and
cashew, which they both consume and sell. Peasant and commercial livestock
production is relatively important in Sofala. It includes cattle, pigs and other smaller
species.
Tourism is poorly developed in Sofala. Hotel capacity is currently about 1,700 beds in
various establishments of different grades. The poor state of repair of instructor and the
scarcity of properly trained staff are the main constraints faced by this sector. The
re-opening of the Gorongosa National Park and several game reserves, and the
rehabilitation of their accommodation facilities represent a major opportunity for
investors.
Future prediction
In the implementation of Project, it expects to be constructed some of the public sector
such as roads, hospitals, schools, etc. And it also creates new job opportunity. It will
contribute to activate the candidate site area. If this project would not be realized, the
above contribution might become very small.
4.2 Environmental improvement effect of project implementation

Based on the site survey, we acknowledge that there are not any environmental issues in
and around the candidate site, neither environmental improving impact.
4.3 Environmental and social impact of project execution
Based on screening form of the JBIC guideline we considered that the planned project
will be category A of JBIC guideline. And according to the environmental check list we
are required to consider the results of Environmental and Social Impact of Project
Execution as Attachment.
Generally there is no big issue of environmental and social impacts of project execution,
but local regulations are basically milder than international standard.
Then the project execution will be required to consider international standard.
3
4.4 Outline of regulations related environmental and social
considerations in Mozambique
4-4-1 Environmental regulation in Mozambique
The related environmental regulation and degrees for each sector are summarized
below:
4
Table 4-1 : Overal law summary of each sector
Water Department of public works New Regulations on

the Parameters for air
quality and Effluent
Emissions (Decree
18/2004)
5
6
Source: Handbook on Environmental Assessment Legislation in the SADC region
7
4-4-2 Typical EIA process, stages and deadlines
Typical EIA (EIA Regulations 45/2004) process, stages and deadlines for Category A
Project are illustrated below:
Figure 1 : EIA process, stage and deadlines for category A projects
Source : Handbook on Environmental Assessment Legislation in the SADC region
4.5 Required actions of Mozambique side

During this pre-FS including preliminary site-survey, we confirmed there is no critical
issue to implement the project. However, Mozambique side is kindly conducted the
following required actions as below:
- to contact the authorized EIA consultants and select the proper consultant
- to evaluate this pre-FS report under the secrecy agreement basis between the selected
consultant and the Ministry of Mineral Resources
- to conduct the project registration
8
-to confirm the expected cost and time schedule for EIA application
- to deal with the local peoples resettlement, if occur.
9
Appendix - Results of Environmental and Social Impacts of Project Execution
1. Permits and Explanation
1.1 EIA and Environmental Permits

EIA report shall be prepared and permitted according to regulatory requirements of
Host Country.
EIA Process in Host Country Role of Central Authority and Provincial
Directorate
Role of Central Authority and Provincial Directorate in EIA Process is as below.
Table 4-2 : Function of EIA process

Authority Provincial Directorate for the Coordination of the
Environmental Affairs.
a) Manage and coordinate the EIA process a) Manage and coordinate the EIA process in
compliance with the guidelines
b) Issue and release guidelines
c) Make the pre-assessment of each activity b) Make the pre-assessment of the activities
submitted for its appreciation submitted to them
d) Designate and chair the Technical Assessment c) Designate and chair the Technical Assessment
Commission for each activity of category A, Commission for each activity of category B,
whenever deemed necessary whenever deemed necessary
e) Begin the proceedings and outline the review d) Begin the proceedings and guide the review of
of the EPDA reports, TOR and EIR, as well as the specific TOR for the SERs of the activities of
begin the proceedings of their approval, for the category B, as well as their approval
activities of category A
f) Request the participation of experts from the
public sector or begin the proceedings of
engaging consultants from the private sector
whenever necessary for the EIA process
g) Conduct audiences and ensure that the public e) Ensure the carrying out of the processes of
participation be observed in terms of this public consultation and conduct audiences, in
Regulation terms of this Regulation
f) Approve the simplified environmental reports
g) Coordinate with the Environmental Impact
Assessment Authority, all the diligences
necessary to the EIA, taking into consideration
the compliance with the provisions of this
Regulation
h) Notify the tenderer for the payment of the taxes h) Notify the tenderer for the payment of the taxes
of environmental licensing in terms of this of environmental licensing in terms of this
Regulation Regulation
i) Notify the tenderer and the public entities, i) Notify the tenderer and the public entities,
directly concerned, of the granting of the directly concerned, of the granting of the
environmental license environmental license
j) Ensure that the information concerning the
environmental licensing be available to the public
k) Issue environmental licenses j) Issue environmental licenses for the activities
of category B
l) Conduct, in coordination with the bodies of k) Conduct the post-assessment process
tutelage of the activities, the post-assessment consisting of the analysis of the monitoring
10
Authority Provincial Directorate for the Coordination of the
Environmental Affairs.
process comprising the analysis of the monitoring reports and the conducting of audits, inherently or
reports and the conducting of environmental by delegation of competencies, promoting the
audits, promoting the inspection, the control and inspection, the control and surveillance of the
the surveillance of the licensed activities licensed activities.
m) Record, keep and release the registration of
the professionals and consultancy companies
qualified for the elaboration of environmental
impact reports
n) Set in motion the legal mechanisms to, in
coordination with the institutions of tutelage, lay
an embargo on or ordain the demolition of works
or cancel the exercise of activities, including
those of environmental consultancy, which by
their nature make an attempt on the
environments quality.
EIA Procedure Framework

As a first step, a proponent must consult with the competent authority to determine
which category our project falls into.
Table 4-3 : EIA category

Category Definition
Those project which may have a significant impact on the
A
environment and therefore requires an EIA
Those project which do not significantly affect communities or
B environmentally sensitive area. Therefore only Simplified
Environmental Report(SER) is required
C Those project which has a minimal effect on the environment.
Therefore these project do not require either and EIA or SER
The process to be followed is slightly different depend whether the project is Category
A, B or C. as described below;
11
Table 4 4 : EIA process of each category
Referring to the article 8 Assessment criteria of the Regulations on the procedure for
the Environmental Impact Assessment as described below, this project is supposed to
fall into category A.
Procedure of Category A
The EIA procedure of category A is described below;
12
Figure 4 -2 : EIA process flow of category A
The action to be taken by proponent is following;
Application
All proponents (irrespective of which category of project they may be proposing) must
submit the following information to either the central EIA Authority or the respective
DPCA
Description of the activity
Need and desirability of the project
Legal framework for the activity
Brief description of the biophysical and socio-economic structure of the region
Current land use on the proposed site
Environmental information from the site
Description of each stage of the EIA process (e.g. submission of TOR, EPDA, EIA,
SER, etc.)
Completion of the preliminary environmental information sheet
(Appendix IV of the regulations and attached as Appendix 10-4 of this chapter).
13
Terms of Reference
The Terms of Reference (TOR) set out the process to be followed in the EIA and should
contain at least:
Description of the speciatable studies
Description of reasonable alternatives which will be investigated in the EIA
Methodology to be used to identify impacts during each stage in the project
life-cycle
Description of the proposed public participation process
Name and address of the proponent
Names of the EIA team
Any other additional information as necessary
The TOR must be submitted to the EIA Authority for approval prior to commencing
with the EIA.
1.2 Explanation to the Public

First explanation to the public in Mozambique will be held after the application of the
proponent and screening of the authority. During the EIA study stage, public consultant
will be held at least three (3) times.
During the EIA study stage, public consultant will be held at least three (3) times.
2 Mitigation Measures
2.1 Air Quality

Air Quality Standard of Mozambique
The below table is the air quality standard of Mozambique and refereed by International
Standard.
Generally, Standard of Mozambique is much looser than that of International standard.
Current air quality is seemed to be fine according to site visit. But we have to detail
examination of back ground conditions of candidate site and design the plant
considering International standard.
14
Table 4-5 : Air Quality Standard of Mozambique
Unit: g/m3
Pollutant Ave Period Value IFC(WHO) Remarks

SO2 10 minute 500
1h 800
24 h 365 20 (Interim
125, 50)
1y 80
NO2 1h 400 200
24 h 200
1y 100 40
CO 1h 40,000
8h 10,000
Ozone 1h 160
24 h 50 (8h daily)100
1y 70
TSP 24 h 200 PM10: 50
Lead 1h 3
1y 0.5 1.5
TSP: Total suspended particles
Adequate measure to be taken
The below table is the air emission standard of Mozambique
15
Table 4-6 : Emission standard in Mozambique.
Source: Handbook of Environment Assessment Legislation in the SADC Region
Based on our many experiences, the following measures will be taken:

- Using vehicles that have passed emission testing.
- Spraying water on construction site.
- Creation of greenbelt.
16
- (Ammonia plant) Low- NOx burners to be used meet the required emission
standards.
- (Urea plant) Exhaust air containing urea dust and ammonia dust to be treated in the
dust scrubbing system to meet the required standards
- Regular monitoring of air quality to be carried out.
2.2 Water Quality

(a) Water Effluents from the Project
Standard of Water Effluent

The below table is standards of effluents of domestic liquid effluents of Mozambique.
Table 4-7 : Domestic Effluent Standard of Mozambique
And the below table is Standards of the Receiving Medium (Sea / Ocean).
17
Table 4 8 : Standards of the Receiving Medium (Sea/Ocean)
18
Table 4-9 : Standard for human health of water in Japan
Source: Environmental, Health, and Safety Guideline for Nitrogenous Fertilizer

Production / World Bank Group)
19
Standard for conservation of the living environment of coastal water in Japan
Table 410 Environmental standard of coastal water in Japan
A Item Standard value

Water use Hydrogen-ion Chemical oxygen Dissolved N-hexane
Total coliform
class concentration (pH) demand (COD) oxygen (DO) Extract (oil, etc.)
Fishery class 1, bathing, conservation of the
A 7.8 pH 8.3 2 mg/L 7.5 mg/L 1,000 MPN/100 mL Not detectable
natural environment, and uses listed in B-C
Fishery class 2, industrial water and the uses
B 7.8 pH 8.3 3 mg/L 5 mg/L - Not detectable
listed in C
C Conservation of the environment 7.0 pH 8.3 8 mg/L 2 mg/L -
Remark Total coliform should be 70MPN/100ml or less for the fishery class 1 to cultivate oyster to be eaten raw.
Notes: 1. Conservation of the natural environment: Conservation of sightseeing and other environments
2. Fishery class 1: For such marine products as red sea bream, yellowtail, and seaweed, and marine products for fishery class 2
Fishery class 2: Such marine products as mullet and dried seaweed
3. Conservation of the environment: Limit of not disrupting the day-to-day lives of the population (including things likes walks along the beach)

Production / World Bank Group)
Table 4 1 Environmental standard of coastal water in Japan

B Item
Water use
Standard value
class Total nitrogen Total phosphorus

Conservation of the natural environment and uses listed in
I 0.2 mg/L 0.02 mg/L
II - IV (except fishery classes 2 and 3)
Fishery class 1, bathing, and the uses listed in III - IV (except
II 0.3 mg/L 0.03 mg/L
fishery classes 2 and 3)
Fishery class 2 and the uses listed in IV (except fishery
III 0.6 mg/L 0.05 mg/L
class 3)
Fishery class 3, industrial water, and conservation of
IV 1 mg/L 0.09 mg/L
habitable environments for marine biota
Remarks: 1. Standard values are set in terms of annual averages.
2. Standard values are applicable only to marine areas where

marine phytoplankton blooms may occur.
Notes: 1. Conservation of the natural environment: Conservation of

sightseeing and other environments
2. Fishery class 1: A large variety of fish, including benthic
fish and shellfish, are taken in good balance and stably
Fishery class 2: Marine products (mainly fish) are taken
with the exception of some benthic fish and shellfish
Fishery class 3: Specific types of marine products highly
resistant to pollution mainly taken
3. Conservation of habitable environments for marine biota:
Level where bottom-dwelling organisms can habitat year-
round

Production / World Bank Group
20
Table 4 12 Environmental standard of coastal water in Japan
C Item
Adaptability of the habitat status of aquatic life
Standard value
class Total zinc

Class A
Water areas inhabited by aquatic life 0.02 mg/L
organisms
Special
Of the water areas inhabited by Class A organisms, those should be
class A 0.01 mg/L
conserved as spawning/rearing areas of aquatic life
organisms

21
Adequate Measures
Analyzing the effluent of this plant, the below measures for reducing impacts from
effluents will be planned.
Proper treatment facility / system (process condensate treatment unit) to minimize
fugitive emission
Gases to be recycled to optimize raw material utilization and reduce effluents
Effluent treatment level to meet the international standards
Pollutants from ships to be restricted accordingly
Installation of waste water treatment facility
Regular water quality monitoring at the discharge point
Adopting good dredging practices to be applied
2.3 Wastes
Hazardous wastes
Based on the Municipality Law No 2/97, each municipality has the local regulation
regarding the waste. The local regulation adopted will be responded.
The following measures concerning hazardous wastes will be planned.
Waste management plan
Dedicated facility / to be stored and use third party for proper treatment
Nitrogen-containing dust particulates to be recycled to in the plant
Adequate measures for preventing contamination of soil and groundwater
Waste management plan will be established. This plan will include adequate
measures to prevent contamination of soil and groundwater by leach from the waste
storage/disposal sites.
2.4 Soil Contamination

Contaminated in the past
Project site had been newly developed, and it is not anticipated that the soil of the
project site been contaminated in the past.
(b) Adequate measures to prevent soil contamination by leaked materials will be taken,
such as raw materials and chemical agents. Details will be decided and documented
during the EIA process.
2.5 Noise and Vibration

Noise and vibrations standard
In this stage we could not find out Noise and vibrations standards of Mozambique.
In case of no regulations, the plan has to be designed considering the below
international standards.
22
Table 4 -13 Noise Level Guidelines of IFC

The following measures for reducing Noise and Vibration impacts will be planned.
Using well managed machines mufflers
Implementation of proper traffic management
Operational noise regime to be consistent with international standard
And there is no residential area to be impacted around candidate project site according
to site visit.
Possibility of noise generated by large vehicle traffic
In this stage transportation method of materials, such as raw materials and products is
not decided. The method considering impact of them will be decided.
2.6 Subsidence
Only sea water will be used and no groundwater will be used as moment. So there will
be no possibility of causing subsidence due to extraction of groundwater.
2.7 Odour
Planned plant will handle odour sources such as ammonia.
The following measures for eliminating odour will be taken.
(Ammonia plant) All hazardous gasses to be sent to flare stack through a common
header
(Fertilizer plant) Ammonia to be treated to meet the international standards before
discharged into the atmosphere
Discharge point to be decided based on the international odour standards
23
3. Natural Environment
3.1 Protected Areas

There is no protected area around candidate site. Gorongoza National Park is about
100km north and Chinizula Forest is about 75km north east.
3.2 Ecosystem and biota

We suppose that the planned site does not include sensitive ecosystem area.
Nevertheless, In Mozambique, all river courses, streams and drainage lines must be
considered ecologically sensitive areas, and the following measures will be taken for a
precautious measure.
Ecological baseline study should be carried out to specify protected/endangered
species and area
Adequate engineering design monitoring, feedback system to limit disruption to
ecological process
Proper waste management plan
3.3 Flora and Fauna

Vegetation
There are different vegetation types including dune forest, woodland, grassland and
mangroves in and around candidate site of a coastal mosaic. The natural pattern of
vegetation is markedly influenced by urbanisation.
The vegetation of the area crossed by the Beira Corridor comprises a stepped sequence
of dry and moist formations related to the physiography and climate of the area.
Beira northward to Malawi and Moatize the major vegetation types are fringing
Mangroves around the coast and estuaries as well as species of Hyphaena, Phoenix or
Borassus along the sand coast separated from the lower Gorongosa.
Fauna
There is no protected Fauna in and around candidate site.
3.4 Social Environment
Present situation of around site is following.

There are mainly two dominate population groups in Sofala Province. One is the Ndau
and other is the Sena. Nada is from Beira to the South, and northwards into the
Manica Province, and is part of the Shona Tribe. Sena is from Beira to the North. But
neither of the Ndau nor Sena dominates in the Beira area where two groups coexist and
interact socially.
24
Language spoken in Sofala Province is Cisena, followed by Cindau and Portuguese.
Accordingly we have to investigate whether local public can understand EIA written by
Portuguese
Siao/Zione and Catholic are most practiced religions in the Sofala Province. But half of
the population is non-religious. In the rural areas, non-religious people represent over
50% of the population compared to the urban areas where only 35.3% do not practice
any religion. In the urban areas, the most common religion is Catholic (27.2%),
followed by Protestant/Evangelic (13.7%). In the rural areas, the most common
religions are Siao/Zione, followed by Catholic.
The economy of Sofala Province is characterised by a subsistence sector, with

extremely low levels of productivity and dependent on climatic factors. The industrial
sector is weak, with poor internal economic integration and relations, a relatively large
component of services to neighbouring countries, notably in the use of migrant labour in
ports and railways. The main economic activities of the local inhabitants presently
located within the Beira Corridor are: household/subsistence agriculture, charcoal
production, wood collection and selling, fishing, informal commerce and hunting.
Subsistence farming is the mainstay of about 600,000 families. Production of surplus is
low, linked with poor availability of infrastructure for delivery of produce. The most
important agricultural products for the farmers are maize, rice sunflower, sorghum and
cashew, which they both consume and sell. Peasant and commercial livestock
production is relatively important in Sofala. It includes cattle, pigs and other smaller
species. Tourism is poorly developed in Sofala. Hotel capacity is currently about 1,700
beds in various establishments of different grades. The poor state of repair of instructor
and the scarcity of properly trained staff are the main constraints faced by this sector.
The reopening of the Gorongosa National Park and several Game reserves, and the
rehabilitation of their accommodation facilities, represent a major opportunity for
investors.
We will choose the site which has less impact to the local people, and carefully
attention the conditions of site and take necessary following measures adequately.
Livelihood support programs for the vulnerable groups should be considered
Provision of infectious disease (HIV/AIDs) prevention programs to the local
community/ construction workers
A good coordination with project authorities and local community and their
25
leaders etc
Explanation to the local people in the public consultant during the EIA study.
4.1 Resettlement
In this stage, there is no residential area within and around the candidate site, and will
be no possibility of involuntary resettlement.
4.2 Living and Livelihood

In this stage, there seems to be no people directly impacted, around the candidate site.
But we will have explanation to the public and execute social survey on such activities
to be carried out and if negative impacts are specified, proper compensation to be
provided to their losses. We plan to execute the followings for improving living and
livelihood.
To give job priorities to the local community
Provision of job training and other necessary assistances
Continues consultation with the local community
4.3 Heritage
There is no designated area within and around the candidate project site.
4.4 Landscape
The candidate project site is in developed as industrial area and there will be no impact
to landscape by the Project.
4.5 Working conditions

Health and Safety program will be prepared / implemented by the project proponent.
We will support them.
5. Others
5.1 Impacts during Construction

Not applying only to construction stage, we plan to take necessary measures described
above.
5.2 Accident Prevention Measures

We plan to take improved enforcement on maritime security and safety measures
5.3 Monitoring
There are no any regulations regarding the monitoring system in Mozambique.
However, if necessary, we will deal with the possibility of impacts with taking measure
26
of monitoring.
27
Chapter 5 Financial and Economic Feasibility
1
5.1 Project cost estimation
As described in Chapter 9, the Project Owner is a Special Purpose Entity (SPE) that is owned by the
Government of Mozambique. The SPE purchases gas, the key input supply produced at the
Pande/Temane gas field. Urea is manufactured and sold by this SPE. The plant plans to produce
1,725 tons of urea per day, about 570,000 tons per year (330 days of operation are assumed). All of
the total production will be sold in the local and Southern African Development Community (SADC)
market. The project period is expected to be 20 years, with a few years prior for construction. Based
on these scenarios, project feasibility is reviewed in this chapter.
Export
Natural Gas Ammonia Urea

33MMSCFD 1,000MTPD 1,725 MTPD
Domestic
Results of cost estimate for Fertilizer Plant at Beira, Mozambique are summarized as bellow.
5.1.1 Accuracy
The CAPEX estimation is class 4 in AACE classification which is based on our
in-house data. Accuracy of estimate is 30%.
The OPEX estimation is based on our in-house data.
5.1.2 Methodology
The cost estimates have been prepared by equipment factored methodology in general,
with the assistance of the following databases and methodologies.
Design cost, Equipment and Material cost including transportation, Construction cost
In-house cost database
In-house cost database for location factors
Slide from the recent estimate for the same type of project
Construction cost is reflected in the upper coefficient of the estimated acquisition from
China Chemical Engineering Second Construction Corporation (China), Daewoo (South
Korea), CMC (Italy) and KENTZ LDA (Ireland).
Taxes & Duties

Taxes & duties such as custom duty, corporate tax, withholding tax, personal income tax, and
VAT/Sales tax are not included in the estimate.
2
Contingency & Mark up
Contingency and Mark ups related to EPC contract are not considered.
License Condition
Toyo Engineering Corporation will provide its KBR license for Ammonia production and license for
urea technology.
5.1.3 Plant cost estimation

The plant cost is shown as below.
Table5-1 Plant cost estimation
EPC cost
- Ammonia/Urea plant 505 MMUSD
- Utility/Offsite facility 495 MMUSD
- Total 1,000 MMUSD
Owners cost
- Operation start-up cost 67 MMUSD
- IDC 51 MMUSD
- Contingency costs, etc. 55 MMUSD
- Total 173 MMUSD
The above EPC cost includes:

- Cost for civil engineering and construction as covered in the basis for preparing the report
- Execution cost
- Basic design
- Detailed design
- Equipment and materials
- Packaging and transportation of products
- Major spare parts
- Catalyst, chemical products and lubricant for initial filling
- Labor force and assistance for construction
- Construction supervision and vendor supervisor
- Temporary construction facilities
- Electricity, gas and water service for construction
3
However, excluding the following:
- Spare parts required for operation
- Experimental equipment and devices
- Maintenance equipment and tools
- Local taxes and customs necessary for execution of EPC
- Bond cost
In addition, the following owners costs are not included:

- Land cost
- Land survey and soil survey
- Land improvement
- EIA and engineering & construction permission by government
- PMC, consultants and third party inspection
- Workers' training and training simulator
- Owner's residence fee in the sales office of EPC contractor
- Project financing cost
- Owner's staff (including workers) and related expenses
- Owner's site office and equipment
- PR activities and site compensation
- Electricity, gas and water service required for pre-commissioning/commissioning
5.2 Financial and Economic Evaluation

The assumptions for the financial and economic evaluations are summarized as follows:
Revenues are calculated based on the urea revenue at the international market price as of
December, 2011, and inflation is added to these prices only during the construction period.
The volume of urea to be produced is based on a calculation of 330 days of operation per year,
with urea production at 1,725 tons per day. The total production of urea is 569,250 tons per year.
Interest rate: base rate 4%, plus a CIRR (Commercial Interest Reference Rate) of 4.26%
Cash flows are discounted over a 20-year period.
Depreciation is calculated based on the straight-line basis at around 10 % per year.
The gas input unit price is assumed as US$ 3.16 per MMBTU.
Income tax will be exempted for 5 years; however, after that the income tax becomes applicable
with 32% per year. Import duty and VAT are assumed to be exempted throughout the project
period.
The project site will be part of the government property, and therefore, a lease agreement shall be
concluded. According to Beira state officials with jurisdiction over industrial complexes,
4
one-time MZN 10 per 1 m2 is required for land use. The amount for 20 ha of land is included in
the calculation.
The debt repayment period is assumed to be 8.5 years.
5.2.1 Capital Investment Cost

It is estimated that the total capital expenditure is around US$ 1 billion. As indicated in the table
below, the total capital expenditure is made up of the two plants, namely ammonia and urea plants.
Apart from these two plant costs, a large proportion of the capital expenditure goes to Utility
Facilities. They include ammonia storage (5,000 tons) and urea storage facilities, warehouses, and
various utility related facilities in the Site.
Table5-2 Capital Investment Cost
EPC cost
- Ammonia/Urea plant 505 MMUSD
- Utility/Offsite facility 495 MMUSD
- Total 1,000 MMUSD
Source: Made By Study team
5.2.2 Non - EPC Cost
On top of these capital expenditures, including plant costs and EPC contract values, the non-EPC
costs should be added to the capital expenditure.
Table 5-3 Non-EPC costs list
Operation start-up cost USD 67 MMUSD
Interest during the construction USD 51 MMUSD
Others USD 55 MMUSD
USD 173 MMUSD
5
Adding the total capital expenditure of US$ 1 billion and the non-EPC cost of US$ 173 million, the
total investment cost is approximately US$ 1.173 billion. Out of this figure, the plant costs and EPC
contract values account for approximately 85 % of the total investment costs.
Table 5-4 Total Investment Costs
Capital expenditure USD 1,000 MMUSD
Non-EPC costs USD 173 MMUSD
5.2.3 Revenue Sources

The plant capacities for urea are 1,725 tons per day. Therefore, assuming 330 days of operation per
year, the total sales volume of urea is estimated to be 569,250 tons per year.
The price of urea is based on the DDP price in Mozambique. The current FOB Middle East price for
urea is US$ 385 and the ocean transport cost is US$ 20. Considering import duty and freight
insurance (2.5% of the above amount), the urea price is assumed to be US$ 415.
6
5.2.4 FIRR
The financial internal rate of return (FIRR) was computed with the DCF method in order to evaluate
the profitability of a project. The result is shown as follows.
Table 5-5 The financial internal rate of return (FIRR)

Before tax After tax
IRR on INVEST 15.3 13.8
IRR on EQUITY 25.3 22.6
INCOME STATEMENTS (Profit and Loss Statements)

Unit :M
US$
YEAR 2,016 2,020 2,023 2,030 2,035
OPERATING INCOME 301,247 301,247 301,247 301,247 301,247
TOTAL SALES REVENUE 301,247 301,247 301,247 301,247 301,247
COST OF SALES 200,554 200,763 200,938 105,310 105,725
VALIABLE COST 36,912 36,912 36,912 36,912 36,912

DIRECT FIXED COST 62,786 62,995 63,170 63,650 64,065
DEPRECIATION AND
100,856 100,856 100,856 4,748 4,748
AMORTIZATION
INCREASE PROD
0 0 0 0 0
INVENTORY(MINUS)
GROSS PROFIT ON SALES 100,693 100,484 100,309 195,937 195,522
SALES EXPENSES (PRODUCT) 0 0 0 0 0

GENERAL AND ADMIN. EXPENSES 0 0 0 0 0
SALES (VALUABLE ADDED) TAX 51,212 51,212 51,212 51,212 51,212
OPERATING PROFIT 49,481 49,272 49,097 144,725 144,310
7
NON-OPERATING EXPENSES 60,184 32,161 11,144 -3,291 -3,291
INTEREST ON LONG TERM DEBT 60,184 32,161 11,144 -3,291 -3,291

INTEREST ON SHORT TERM DEBT 0 0 0 0 0
NET PROFIT OR (LOSS) BEFORE TAX -10,703 17,111 37,954 148,016 147,601
INCOME TAX 0 0 12,145 47,365 47,232
NET PROFIT OR (LOSS) AFTER TAX -10,703 17,111 25,808 100,651 100,369
DIVIDENDS 0 0 0 0 0
RETAINED EARNINGS -10,703 17,111 25,808 100,651 100,369
8
5.2.5 Sensitivity Analysis
A sensitivity analysis evaluates the effects of variations in the key variables on the base model. In
this project, three key variables are chosen to check the sensitivities to the financial effects and to
analyze the effects of commercial and financial risks of the project. Three scenarios are considered
in the analysis:
1. Effects of the production capacity reduction (based on the urea demand) while the other
variable remain constant
2. Effects of urea price while the other variable remain constant
3. Effects of capital expenditure/cost overrun while the other variable remain constant.
The result is shown below. As you can see, the urea price will affect most the project profitability
Figure 5-1 Sensitivity Analysis
9
5.3 Economical Analysis
5.3.1 Creation of employment opportunities

A business corporation operating a urea plant will employ 300 workers. 20% of the salary to be paid
in Mozambique will be deducted as tax. Average wage per month of workers in this country is in the
range of MZN 4,000 to 5,000. Thus, annual economic effect is calculated as MZN 4,500 x 0.2 x 300
x 12/27 = USD 120,000.
5.3.2 Increase in agricultural production due to supply of urea

The No.1 agricultural product in Mozambique is cassava, whose production in 2009 was 567,370
tones, equivalent to USD 592,552,000. Assuming that the supply of urea will increase the production
by 10%, then, USD 592,552,000 x 0.1 = USD 59,255,200
5.3.3 Others
Technology transfer to Mozambique will have a tremendous economic effect.
5.3.4. EIRR
EIRR is estimated to be 25.33%, which has also a significant economic effect.
Table 5-6 EIRR INCOME STATEMENTS (Profit and Loss Statements)

Unit
MUSD
YEAR 2016 2020 2023 2030 2035
OPERATING INCOME 426487 426487 426487 426487 426487
TOTAL SALES REVENUE 426487 426487 426487 426487 426487
COST OF SALES 200554 200763 200938 105310 105725
VALIABLE COST 36912 36912 36912 36912 36912

DIRECT FIXED COST 62786 62995 63170 63650 64065
DEPRECIATION AND
100856 100856 100856 4748 4748
AMORTIZATION
GROSS PROFIT ON SALES 225933 225724 225549 321177 320762
10
SALES EXPENSES (PRODUCT) 0 0 0 0 0
SALES (VALUABLE ADDED) TAX 72503 72503 72503 72503 72503
OPERATING PROFIT 153430 153222 153047 248674 248259
NON-OPERATING EXPENSES 60184 32161 11144 -3291 -3291
INTEREST ON LONG TERM DEBT 60184 32161 11144 -3291 -3291

INTEREST ON SHORT TERM DEBT 0 0 0 0 0
NET PROFIT OR (LOSS) BEFORE TAX 93246 121061 141903 251965 251550
INCOME TAX 0 0 45409 80629 80496
NET PROFIT OR (LOSS) AFTER TAX 93246 121061 96494 171337 171054
DIVIDENDS 0 0 0 0 0
RETAINED EARNINGS 93246 121061 96494 171337 171054

11
Chapter 6 Planned Project Schedule
1
6.1 Planned project schedule
The schedule discussed at site between the survey mission and the government of Mozambique is
shown below. Description is also provided below on the detail design, bidding and project execution.
Table 6-1 Planned project schedule

Year/
Work Description 2011 2012 2013 2014 2015 2016
Months
11/18 2/23
1 Feasibility Study (FS) 3
Basic and Front End 6/1 12/31

2 Engineering Design (FEED) 7
with EPC offer
EPC Price Verification and 1/31
3 2
Final Investment Dicision
5/1 4/30
Environmental Social
4 12
Health Impact Assessment
2/1 7/31
5 Finance Arrangement 6
8/1 3/31
6 EPC Execution 32
EPC Contract Timing for increased
Commercial Operation production of gas
4/1
7 O&M Contract
(Operation & Maintenance)
Source: Made By Study Team
2
6.2 EIA schedule
The schedule of Environmental assessment impact is shown as below.
Table 6-2 EIA shcedule

Action Period Remarks
After confirming the economic efficiency of project
Entry of application Can be handled by the
Registration the Five business days consultants registered in
Step 1
EIA with MICOA Mozambique and foreign capital
MICOA Approval Five business days business organizations.
Preparation of scoping
One to two months
document + TOR for EIS
(HSE, Pollution, Marine, Risk
Notification of the To be executed
assessment, Social & Economic)
execution of PC (*) Since all the within two weeks
About 80 pages. To notify the
Execution of PC documents after notification.
Step 2 local communities through the
Receipt of comment on PC shall be To receive
internet, newspapers, radio and
Submission of document written in comments within
the like.
together with comment to Portuguese, two weeks after
* Public consultation
MICOA translation execution.
MICOA Approval work will 30 business days
Preparation of EIS take about

45 business days
one year.
Submission of EIA report
Notification of the To be executed To notify the local communities
execution of PC within two weeks of the environmental impact
Step 3 Execution of PC after notification. statement through the internet,
Receipt of comment on PC To receive newspapers, radio and the like.
Submission of document comments within
together with comment to two weeks after
MICOA execution.
Source: Made By Study Team
3
Chapter 7 Implementing Organization
1
7.1 Executing agency / ministry of mineral resources
Ministry of Mineral Resources is the main implementing organization of the Project in Mozambique,
according to the Minister of Mineral Resources when this study team held the meeting with the
Minister of the Mineral resources July 2011. The study team made a presentation to the Minister
about the construction of fertilizer plant in Mozambique to utilize the outstanding domestic natural
gas. And this produced fertilizer can be supplied to the Mozambique domestic market in order to
drastically increase the agricultural production.
The Minister expressed the strong interest in this presentation to conduct the study of the possibility
of domestic fertilizer production for utilizing domestic natural gas. And the Minister confirmed that
Ministry of Mineral Resources is the responsible organization of this study and INP (Institute of
National Petroleum) who is the organization under the Ministry of Mineral Resources shall be the
counterpart against to this study team.
As the result of this meeting, the Ministry of Mineral Resources has submitted the interest letter on
August in the name of the Minister to support the study of fertilizer project to be conducted by the
study team.
Figure 7-1 Supporting organizational structure in Mozambique
Counterpart
Ministry of Industry & Mr. Sidonio dos Santos,
Ministry of Mineral Resources
Commerce (MOI) National Director
(MIREM)
Counterpart Ministry of Aguriculture (MOA) Ms. Serafina Mangana,
Institute of Nacional De Petrolo Head Department of
(INP) Plant Protection
Mrs. Jossefa Jussat,

Ministry of Co-ordination and
Ms.Isabel Chuvambe Head Department of
Environmental Action
Project Manager EIA/License
(MOCEA)
2
7.2 Implementing organization
As mentioned in the paragraph (1) of Chapter 7, the Ministry of Mineral Resources is the responsible
organization and INP is the counterpart of this study.
In order to conduct this project, support of the following organization is needed.

1) Ministry of Agriculture, for the supply system of fertilizer, supply demand balance and
agricultural policy of the Mozambique,
2) Ministry of Transportation,
3) Municipality of Beira, for the project site allocation,
4) Ministry of Energy, for the electricity supply to the project,
5) Ministry of Industry and Trade, for the licensing and registration,
6) ENH (Empresa Nacional de Hidrocarbonetos EP)(National Hydrocarbon Enterprise), for the
natural gas supply system,
7) CPI(Centro de Promocao de Investimentos)(Investment Promotion Centre), for the incentive of
Foreign Direct Investment,
8) Ministry of Environmental, for the permission to EIA (Environmental Impact Assessment) and
9) Ministry of Finance, for the financing structural study to the Project.
7.3 Evaluation for the performance of the implementing

organization
There is no operating fertilizer plant and petrochemical complex in Mozambique, but there are now
some plants under operation of gas processing and cement in Mozambique. In addition, the
Government of Mozambique has remarkable experiences to receive the Foreign Direct Investment to
the Industrial Sector to produce Aluminum and Iron Ore and to achieve the successful completion of
projects as a counterpart to the foreign investors.
Judging from the current situation, the Government of Mozambique has the appropriate organization
to develop the large scale of industrial investment project, such as the said fertilizer project.
On the other hand, in order to make the Project more bankable than the sole investment by the
Government of Mozambique, it is recommended based on the study that there are several investors
candidates to the Project who are not only the Japanese Investment Company but also 1) offshore
Chemical Company and/or 2) offshore investment fund. As for the offshore Chemical Company
participation,
3
The Government of Mozambique is ready to develop a large scale project judging from the track
records of projects; however there is no experience to construct, operate, and employ the finance to
the fertilizer plant.
Because of the current situation of the Government of Mozambique, following professional

personnel support will be in help of the due project development and implementation; such as 1)
design and engineering of the plant, 2) construction of the plant, 3) operation and maintenance, 4)
financing, 5) marketing, 6) logistics and 7) administration of the corporation.
4
Chapter 8 Technical Advantages of Japanese
Company
1
8.1 Envisaged structure of participation by Japanese companies
(investment, supply, O&M and others)
8.1.1 Funds procurement

As for the participation of the Project by the Japanese Companies, there are several ways of their
participation in the several aspects in order to contribute to increasing for the Project realization. The
fist one is the financial contribution to the Project, as it is mentioned in the Chapter 9 about the
provision of funding, there are two parts; one is the debt financing and the other one is the equity
financing. As for the debt financing, it is deeply related to the Japanese Companies participation to
the construction of the plant and equity investment to the Project, it is mentioned in the Chapter 9 in
order for employing debt financing by the JBIC financing menu.
In addition to the financing to the Project, there are possibilities of Japanese Companies investment
to the Project on the purpose of the participation to the agricultural related business and / or
participation to the chemical related business. One of the business opportunities for Japanese
companies is to handle urea that is to be exported to the third countries. Nowadays fertilizer is
demanded by the certain countries such as Australia, China, India, Japan and other countries.
Other than the fertilizer business, as for the nitric fertilizers feed stock point of view, it is natural gas,
and natural gas can be a feedstock of producing basic chemical products such as Ammonia and
Methanol. Japanese companies are interested in handling those kinds of chemical products that is to
be exported to the third countries for the feedstock in order to produce other more value added
chemical products. In such case, plant configuration might be reconsidered.
Other than the trading of products to be produced by the Project, there might be a certain strategy for
Japanese companies to participate into the agricultural business in the area of Southern Africa for
supplying the fertilizer products. Currently, there is less consumption of fertilizer in this area to
compare with other areas except Southern Africa, but because of the possibility of huge demand for
fertilizer, it is simply big opportunity for Japanese companies to be involved in this business.
8.1.2 Procurement of plant equipment and material

For construction of plant, the equipment and material are procured from China, Europe, Japan,
Korea and Southeast Asia.
Japanese companies are candidate as procurement resources for Rotating equipment such as
compressor, Static Equipment such as heat exchanger, Package equipment such as Boiler, Chemical
2
injection unit, Inert gas generator and Air compressor, Material handling equipment such as
Reclaimer, Bulk material such as Piping, special valve and electrical power equipment.
8.1.3 Facility operation and maintenance

In order to keep producing the products, all plant facilities shall be operated and maintained properly
by the Special Purpose Entity (SPE). The facilities shall be operated for 24 hours a day without
stoppage other than a regular maintenance period and emergency shutdown. To execute those kinds
of O&M, not only technical staffs but also skilled administrative personnel shall be hired and trained
under appropriate organization of the SPE as follows. Skilled technical staffs and administrative
personnel shall be hired from Japanese experienced engineers.
A. Internal Auditing Commission

This organization of the SPE shall act independently from the company ordinary commercial
operation. The members of the commission check and investigate whether the SPE operates
properly based on the SPEs company regulation and/or Mozambique regulation. The result of
the investigation shall be reported to BOD and shareholders, if it is required by the contracts, to
the lenders and / or relevant official organization.
B. General Director
General Director (GD) of the SPE shall be responsible for achieving the budget and business
plan to the BOD and to the shareholders. These figures are agreed among GD, BOD and
shareholders beforehand as a budget and business commitment. Based on the result of the SPE
during the certain period (annual), the extent of achievement shall be evaluated as a performance
of GD.
C. Human Resources Department

This department is responsible for the matters of human resources. It includes;
1) To hire domestic, overseas, manual staffs and managers, together with a relevant department
2) To make employment contracts
3) To control the fairness of salary system
4) To aim to keep good health condition for all staffs
5) To control and implement company regulations including applause and penalty
6) To issue company order based on GDs instruction
7) To take responsibility for the staff training and keeping the standard quality of staffs based
on GDs requirement, method of the system shall be described below Staff Training
3
D. Administration Dept. (including legal)
This department is responsible for administrative matters such as (excluding (4) HR);
1) To arrange entry visa to Mozambique for overseas staff under supports by Angolan
government
2) To arrange expat visa for Mozambique national staff for overseas business trip
3) To arrange accommodation for overseas staff and their family in Mozambique
4) To arrange appropriate commuter system for all staff
5) To arrange appropriate meal system for all staff
6) To arrange appropriate safety program and system for all staff
7) To arrange other necessary supports in order for keep good working conditions for all staff
8) To take care for public relations and general affairs
9) To check and review all legal matter inside the SPE, hiring company lawyer who has
enough knowledge of Mozambique law, most of the contract shall be executed after the review
of legal approval by the authorized legal person in the SPE, such person shall be designated
as Chief Compliance Officer (CCO)
E. Purchasing Department
This department is responsible for purchasing tools, consumable material, and equipment and
so on. In case the tools and consumable materials for maintenance and researches, these works
shall be made together with relevant department. Details of the execution shall be regulated in
the company regulation. All purchasing contract shall be reviewed by the CCO or its
empowered person
F. Treasury & Finance Department

This department is responsible for the finance condition of the SPE such as;
1) To implement financial right and obligation to stake holders based on the contracts
2) To make report the financial situation based on the request from stake holders to GD and
BOD, time to time
* Stake holders mean Shareholders, Financial Institutions, ECA/MLA, Governments, Tax
Authority, and CPA and so on
G. Accounting Department
This department is responsible for regular base accounting operation such as
1) To make financial report, including profit loss, balance sheet and cash flow sheet,
production cost and other necessary report required by relevant authority or GDs
instruction
4
2) To handle required tax practice
3) An audit to be executed by the CPA
4) To keep the company accounts to be located inside and outside of Mozambique
H. Sales, Marketing and Logistics Department

This department is responsible for sales activities of the SPE products such as
1) To execute sales contracts including domestic and overseas transportation, custom clearance,
receiving the sales proceeds from customers
2) To make sales promotion to new customers in Mozambique and other courtiers such as
SADC, if it is necessary for the SPE
I. Operation and Maintenance Department

This department is responsible for all production and maintenance matters in the SPE such as
1) To take care for Ammonia and Urea plant (process plant)
2) To take care for Utility / Offsite Facilities including natural gas, seawater intake
3) To implement Kaizen or improvement in the plants continuously
4) General mechanical affairs
5) General electrical affairs
J. Technical Department
This department is responsible for all technical matters in the SPE such as
1) To inspect and keep good quality controls (QC)
2) Feedstock and product analysis laboratory
8.2 Advantages of Japanese companies when implementing the

project (on the economic and technology front)
In our country, several companies which the company which holds urea technology can build in
response to the supply of one company and urea technology are located.
The urea technology which this country company holds has ACES(Advanced Process for Cost and
Energy Saving)21 which reduces the energy consumption in a urea plant sharply.
The technology attains energy saving and equipment expense reduction, and the production facility
in one series becomes 3,250 t/d.
5
Major features of this technology are given below:
ACES21 has reduced plant construction cost by simplifying the urea synthesis system; additionally,
it has reduced operation cost by further optimizing operating conditions. It has the following
advantages:
A. Low Investment Cost

Reduction of construction cost (Low Elevation and Compact Layout)
B. Low Energy Consumption and running cost saving

The operation condition of synthesis section is optimized under the achievement of lower operation
pressure than the previous process. As a result, a remarkable reduction in energy consumption is
achieved.
C. Easy Operation and High On-stream Factor

Forced flow of synthesis loop circulation by ejector and no gravity flow
D. Maintenance Cost Saving

Milder operating condition in synthesis loop (Less corrosion risk) Advanced and proven material
developed by TEC for high pressure vessel Maintenance support service
8.3 Measures to be taken to assist Japanese enterprises in

receiving order
Enterprises participating in the survey mission will also continue to carry out activities toward
realization of the project. On the other hand, execution of the project requires the provision of
finance from the Japanese official banking establishment, development of the fertilizer industry. Also,
Mozambique attracts attention as a resource-rich country because of its huge Rovuma gas field in the
northern part. Based on these findings, we will discuss the loan from the Japan Bank for
International Cooperation. For investments, it is necessary to talk with Empresa Nacional de
Hidrocarbonetos E.P. (ENH), Moambicana de Hidrocarbonetos, SA (CMH) which is interested in
fertilizer, and the Government of Mozambique (Ministry of Mineral Resources, Ministry of
Agriculture, Ministry of Industry and Trade, and Ministry of Commerce and Industry).
Concerning the above issues, the study team will lobby the government leaders of Mozambique for
project implementation
6
Chapter 9 Financial Outlook
1
9.1 Funding Source and Funding Plan for the Project
In order to consider the funding source and funding plant for the project, the ownership of the project
must be considered. There are several opportunities of the ownership for the Project. 1) The first
case is that fertilizer plant will be owned by the Government of Mozambique, 2) the second one is to
be owned by the Joint Venture between the Government of Mozambique and private Capital outside
Mozambique, 3) the third one is to be owned by the private investment inside or outside
Mozambique.
As the precondition of the Study, this plant shall contribute to the agricultural sector under the
governmental strategy plan that includes 1) improve of the production, 2) access information and
marketing, 3)water source management and 4)strong human resources 5) natural gas utilization. If
the fertilizer plant is owned by or controlled by the private capital investment, there will be certain
afraid of the conflict of interest of the benefit between the owner of the fertilizer plant and the
Government of Mozambique.
In this regard, this fertilizer plant must be owned and controlled by the Government of Mozambique
and, in order to support the operation and maintenance of this plant, private investment can be
employed.
This Project requires the cost for capital expenditure for the Plant ant, the cost for working capital,
cost for the interest during construction and other costs, total investment cost will reach to about [US
Dollars billion].
Under those preconditions, funding plant shall be considered based on this required amount.
First of all, required funding shall be divided into 2 parts, one is the equity funding and the other one
is the debt funding. Equity funding amount shall be decided from the balance of debt funding
amount. But usually in those kind of capital oriented projects, debt/(debt + equity) ratio would be
around 60-70%. Debt portion shall be financed from the outside of Mozambique. It might be
financed from the JBIC (Japan Bank for International Cooperation), in case the Japanese companies
are deeply involved in the Project as the EPC (Engineering Procurement and Construction)
contractor and Mozambique government guarantee or as the investor, or as the other substantial role
to the Project. In other words, type of funds from JBIC shall be decided by the type of Japanese
companies participation, but in case there is no Japanese Companies participation to the Project,
funding from JBIC cannot be expected.
2
As for the equity funding, fund providing shall be made by the investors. Investors other than the
Government of Mozambique is required the enough financial strength. And as for the equity
injection by the Government of Mozambique, it must be adopted by the National Congress after
approved by the Cabinet of Ministers. Through this procedure, this Project can become the national
project.
9.2 Bankability of the Project

As for the debt financing, it is subject to the Japanese Companies participation, most of the debt
amount might be financed by the JBIC. The other developed countries governmental financing
institutions have less possibility to cover this debt portion. The reason is European governmental
financial institution has a function to cover the risk as an insurance but they have no function to
become the fund providers, Provision of fund shall be made by the European commercial banks but
they have least possibility to become the fund providers under the current financial market.
USEXIM has a possibility to become a fund provider to the Project subject to the US companies
participation. This is a further possibility to seek the fund provider to the project but there must be
more strict rule as for the US companies content (100% procurement shall be made from US
companies).
As for the JBIC, their financing policy to the projects in Mozambique is case by case of each project,
but basically, they are watching this market positively. Especially, Mozambique has explored the
huge gas field and there are several plans for utilizing natural gas, and one of them is to produce
LNG (Liquefied Natural Gas) and to export to Japanese utility customers. And also they evaluate
positively about the big success of the MOZAL (Mozambique Aluminum Corporation). In addition,
They highly appreciate the current governmental stability, including the good relationship with
neighboring countries such as South Africa, Tanzania, Zimbabwe, Zambia and Malawi.
Under the current situation, most appropriate financing scheme might be JBICs Buyers Credit
to be backed up by the Government of Mozambique, such as full support by the Ministry of Finance
or in place of Joint Venture or Governmental Implementing Organization, Ministry of Finance will
be the borrower against JBIC.
Based on the above buyers credit base finance between JBIC and the Government of Mozambique,
in order to affirm the bankability for the Project, marketing of the Urea including export to
3
neighboring countries, and due operation and maintenance might be considered in further stage.
9.3 Cash Flow Analysis

In a cash flow analysis, the cash flow which this manure project produces analyzes whether it is
sufficient level for principal-and-interest payment using DSCR (debt service coverage ratio) which is
a payment possibility index of a long-term loan.
It calculated as DSCR = (after-tax income + depreciation expense)/(long-term loan this term

amount-repaid + long-term loan interest expense).
In 2023 eight years after setting 2016 when operation of a plant is started and an income enters with
a base year, It is set to 1.43, and generally, since DSCR from 1.4 1.6 can categorized healthy,
DSCR which is the numerical value which broke the single fiscal year income by the amount of
repayment of principal and interest of the debt (every year) can analyze it as satisfactory on cash
flow.
4
Chapter 10 Action Plan and Issues
1
10.1 Current situation of the project
After receiving the Interest letter from the Minister of Mineral Resources, on behalf of the
Government of Mozambique, Toyo Engineering Corporation and Sumitomo Corporation requested
again to consider the signing of the Memorandum of Understanding for the study on the possibility
of fertilizer project in Mozambique, to utilize the domestic natural gas to be supplied from
Pande/Temane submitted in the end of June 2011. As for the Memorandum of Understanding, it is
under consideration by the Ministry of Mineral Resources whether it is executed or not among
parties.
As a result of consultation with the Ministry of Mineral Resources, INP has been nominated as a
responsible department as described in Chapter 7. INP is an organ supervising information on
petroleum gas in Mozambique and the study team has requested INP for the data of the nature and
quality of natural gas.
As the first candidate site of the Project is decided Beira where is located in the middle part of
Mozambique, there is a commercial port and railway road access to the neighboring countries.
Because of the commercial port, import of equipment and material for the plant construction for
fertilizer production can be made and export of products can be also made without any trouble.
As for the financing, it is just started the discussion with JBIC, due to the current fund demand over
the world, the member of the Project have to keep in touch with JBIC more closely than before.
10.2 Current situation of the project by implementation

organization
Through the interview and discussion with Governmental Organizations in Mozambique, it is found
that most of the organizations recognizes the necessity of the fertilizer production in the country and
some of them have already started the program to strength the agricultural industries and to increase
the agricultural production through these program.
But, there is no specific governmental program to produce nitric fertilizer from the domestic natural
gas as of today. That is because of the large scale of investment and fund requirement to this. In this
regard, together with Ministry of Mineral Resources, overseas private sector should cooperate to go
forward this action, for the technical and financial point of view.
On the contrary, there are already several foreign direct investments to Mozambique including large
2
scale of investment such as aluminum production, coal mining, and petroleum sectors, and there are
lots of foreign direct investments to Mozambique. In case of foreign direct investment, there are
several kinds of permission and organizations for the investors but the Government of Mozambique
has set up the organization for centralization of the investment that is named CPI (Central Policy of
Investment). This organization will support the foreign investors as a guide of the investment.
10.3 Legal and financial framework
Because of the history of Mozambique, there is strong influence from the Portuguese legal
framework. In case of the fertilizer investment, Legal opinion shall be required but as far as this
study concerned, there is no legal obstacle for the fertilizer production and for the foreign direct
investment.
As for the financial framework, large scale of investment and / or otherwise large scale hard
currency based foreign debt, it must be considered there is required the governmental approval for
the FID (Final Investment Decision).
Several world-scale civil engineering and construction contractors have branch offices in
Mozambique. The result of hearing from local contractors shows that, in the case of a large-scale
project, Mozambicans represent 60 percent and foreigners about 40 percent. It is important how
skilled workers are effectively secured including the training of local workers with the acquisition of
foreign skilled workers consisting mainly of South Africans, Filipinos, etc.
As the cranes in Mozambique have a maximum load of 600 tons, fertilizer plants heavy loads
include equipment, such as ammonia converters, to be unloaded and assembled by renting cranes.
For construction materials, cement must be imported but sand (river sand), stones, Re-bar, gravel
and lumber can be prepared in Mozambique.
Dependent on the companies, the shipment in the Beira port is limited to a weight of 80 tons, a
length of 17 m, a width of 3.5 m and a height of 4 m. The fertilizer season in June to September is
busy.
Import of the equipment and materials exceeding the above dimensions and weight needs a way of
unloading with a barge, etc. on a temporary jetty near the site.
3
10-3-1 The Project Approval Process
In light of the Investment Law and complementary legislation the procedures for the approval of an
investment project in Mozambique are the following;
The investor submits to CPI 3 copies of a Business Plan or 3 copies of the Project Application Form
duly filled. The accompanying documents (copies of ID, company Articles of Association, maps,
proofs of technical and financial capability, investor and/or company profile, useful details or
information, etc.) should be attached to the application at this stage to facilitate the assessment and
decision process.
CPI coordinates with the Sector Authority and the Environment Authority at local and central levels
for their approval while it undertakes the assessment of the Business Proposal and drafts and
negotiates the Terms of Authorization with the investor or their representatives, as part of the
projects approval process.
Upon agreement between CPI and the Investor on the Terms of Authorization CPI submits the
project for approval by the relevant authority (Provincial Government, Minister of Planning and
Development, or the Council of Ministers).
CPI provides assessment to the Investment for the implementation of the project. The range of
assistance covers business licensing, obtaining entry visas, work and residence permits, customs
exemption authorization, licensing of land, and various other institutional assistance and facilitation
tasks related to government entities.
1) Fiscal System
The taxation System in the Republic of Mozambique integrates national and municipal taxes. The
taxes of the National Taxation System are classified as direct and indirect, acting at various levels,
namely () direct taxation on income and wealth and () indirect taxation on expenditure.
The direct taxation on incomes is made through the following system of taxes: Corporate Income
Tax (IRPC) and Personal Income Tax (IRPS).
The indirect taxation, which comprises taxes on expenditure, integrates: Value Added Tax (VAT),
Specific Consumption Tax (ICE) and Customs Duties.
The Corporate Income Tax (IRPC) is taxable on gained incomes, during the taxation period, from
tax payers, namely commercial or civil companies, cooperatives, public companies and other
4
corporates both public and private, entities with no legal personality, whose incomes are not subject
to taxation in the form of IRPS or IRPC.
The rate for IRPC is 32%;
The agricultural and aquaculture will benefit from an 80% rate reduction until 31/12/2015 and
from 2016 top 2025 will receive a 50 % reduction.
The Personal lncome Tax (IRPS) - is taxable on the global annual value of income; is paid by
singular persons residing in the Mozambican territory and by those not residing in the country but
gaining income from it.
The Value Added Tax (VAT) taxable on the sale of goods and provision of services in the national
territory by a tax payer acting as such, as well as on importation of goods. The applicable rate for
VAT is 17%.
The Specific Consumption Tax (ICE) is taxable, in a selective manner, on the consumption of
certain goods, produced or imported. The general rate of customs duties on consumption goods is
20%.
Customs Duties taxable on imported and exported goods in the customs territory, whose values
vary in the following manner:
2.5% for raw materials;
5% for capital goods (class K);
7.5% for Intermediary goods;
20% for consumption goods.
Under the SADC trade protocol implementation framework various products from the SADC region
countries benefit from exemptions from payment of customs duties.
The Taxation System is completed by other taxes, namely the Seal Tax, Tax on Successions and
Donations, SISA, Special Tax on Gambling, National Reconstruction Tax, and Vehicle Tax and
other legally established taxes and specific charges.
2) Social Security
The registration of workers and their respective employers with the National Social Security System
is mandatory.
The fee for social security is 7%, being 4% paid by the employer and 3% by the employee.
5
3) Investment Guarantees
The guarantees envisaged in the legislation in force comprise:
Legal protection on property and rights, including industrial property rights;
No restriction of borrowing and payment of interest abroad;
Transfer of dividends abroad;
Arbitration according to ICSID or ICC rules for the resolutions of disputes on investments;
MIGA and OPIC services on issues related to investment risk insurance.
The investment Law grants certain tax and customs benefits depending on the amount, location and
sector of investment activity. The incentive schemes applicable in Mozambique are as follow:
Generic Fiscal and Customs Benefits

The investments carried out under the Investment Law are exempt from payment of customs duties
and VAT on capital goods classified in Class K of the Customs Tariff and related accompanying
parts and accessories.
Benefits for Industrial Free Zones
The Industrial Free Zone Regime is applicable to two components of Industrial Free Zones, namely:
i. Development and exploration of Industrial Free Zone infrastructures (Industrial Free Zone
Operator); and
ii. Exploration of Industrial activities for export or provision of services within the Industrial Free
Zone (Industrial Free Zone Company).
According to the law in force, the government authorizes for the Industrial Free Zones all activites of
industrial nature as long as at least 70% of their production is for export.
Operators of industrial Free Zones are exempt from payment of customs duties on the importation of
construction materials, machinery, equipment, accompanying spare and accessory parts and other
goods used in the carrying out of the licensed.
6
10.4 Additional Study Requirement
The concept of this study is the preliminary study whether the fertilizer project is necessary for the
Government of Mozambique and there are possibilities to make further study on the fertilizer
production in Mozambique.
Those are; 1) is there the demand of fertilizer,

2) is there domestic feed stock of natural gas availability,
3) is there site availability inside Mozambique,
4) is there technical possibility to construct fertilizer plant
(or technical impossibility to construct fertilizer plant)
5) is there possibility to find the funding source
6) is the further optimization of the plant design
Before implantation of the Project, at least the above 1) to 5) shall be made precisely. As for the
Demand, it is investigated domestic demand and its evacuation plan in case of deficit of the demand
in Mozambique (possibility of export to neighbors and other countries). As for the feedstock natural
gas, preliminary this study is agreed with Ministry of Mineral Resources and INP that the study is
made on the base of utilizing Pande/Temane natural gas, and then the further study of natural gas
volume availability shall be confirmed. As for the Project site, preliminary this study is agreed with
Ministry of Mineral Resources and INP that this study is made based on the Beira where the city of
the central Mozambique, and then as the site selection on shore is and offshore site investigation
shall be made before FID. As for the technical point of view of the construction of the fertilizer plan,
optimization of the plant design based on the actual site condition, raw water and electric power
availability in particular, basic engineering work shall be made before FID, especially this
engineering work define the required amount of the investment and period of the construction must
be decided. As for the funding plan of the Project, it is recommended to employ the financial advisor
for the project for the further stage or at least, based on the agreement with foreign investors,
preliminary information memorandum shall be prepared for the investors and financiers.

Feasibility Study Report of Fertilizer Plant in Mozambique-Toyo Engineering

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STUDY ON PRIVATE-INITIATIVE INFRASTRUCTURE

STUDY ON THE UREA FERTILIZER COMPLEX PROJECT

The Ministry of Economy, Trade and Industry

Toyo Engineering Corporation

Chapter 1 Overview of the Host Country and Sector

Chapter 2 Study methodology

Chapter 3 Justification, Objectives and Technical Feasibility of the Project

Chapter 4 Consideration of Environmental and Social Impacts

Chapter 6 Planned Project Schedule

Chapter 7 Implementing Organization

Chapter 8 Technical Advantages of Japanese Company

Chapter 9 Financial Outlook

Chapter 10 Action Plan and Issues

ACES Advanced process for Cost and Energy Saving

Mozambican agriculture can be summarized as follows:

1. Dryland farming characterized by self-consumption and low productivity and production

Source: Mozambican Ministry of Agriculture document Comparison of Current Consumption

2. Basic policy on the contents determination of the project

1 Securing of natural gas

3 Determination of production quantity based on the urea demand

Construction site : Beira new industrial area

Figure 1 General view of the plant

Polished Water Return Instrument Air

SEA WATER & IA/PA ELECT.

WATER STEAM WASTE WATER

Source: Made By the Study team

Table 2: Project costs estimation

(2) Outline of the result of preliminary financial and economic analysis

i. Agricultural production increase due to urea supply

ii. Creation of job opportunities

iv. Economic effect

Figure 2: EIA process, stage and period

Source: Made By the Study Team

Table 3: Implementation schedule

Basic and Front End 6/1 12/31

Commercial Operation 4/1

Source: Made By the Study team

6. Technological superiority of Japanese enterprises

A. Cost saving (compact and equipment installed at a lower position)

B. Energy saving (reduction of operation cost)

C. Ease in operation and stability

D. Reduction in maintenance cost

Table 1-1 Economy and financial situation in Mozambique

Table 1-2 GDP sector chart

Source: Authors estimates based on National Institute of Statistics date

1.2 Outline of project sector

1.2.2 INP Chairman (Chairman Mr. Arsenio Mabote)

Source: INP website

1.2.3 Ministry of Agriculture Minister of Agriculture - Mr. Soares Nhaca

Climate data for Beira ( Source: Weatherbase)

Source: CIA World Fact Book Source: Google earth

2.1.2 Study scope

Table 2-1Purpose of local survey

(2) Local survey items and measures are as following.

*Hearing means to have obtained information/data by interviewing related personnel.

(3) Measures for domestic study

Figure 2-1 Organization structure for the study

Technical Analysis Financial Analysis Cost Estimation Environmental / Social

Technical Analysis Civil cost estimation Business Analysis

Date Time Place Item

29-Nov Tue AM 6:35 Arrive at Johannesburg

Date Time Place Item

Hotel Polana Serena Hotel

Ministry of Agricultures analysis