MARKET ANALYSIS

Nitrogen based fertilizer manufacture is the main

consumer of ammonia
Also used to produce explosives

Market Demand in Malaysia

Ammonium nitrate fertilizer is known to be effective for
all type of crops
Demand for ammonium nitrate is expected to increase
in future due to increase use in fertilizers industry.

Market Supply in Malaysia

Urea, ammonium based and organic fertilizers are
produced in large amounts but the urea used in
Malaysia for agriculture
because the prilled urea produced in Malaysia fetches a
high price in the international market
Ammonium nitrate industry in Malaysia still in lower
stage compared to other types of fertilizer following the
incident of September 2001

Market Demand Globally

The growth in fertilizer production and demand is
expected to be the primary driver for the growth in the
ammonia market
ammonia acts as a raw material for the preparation of
nitric acid which is further used in the production of
explosives
modest growth in other application segments of
ammonia is expected to augment the demand in the
near future

Market Supply Globally

The world ammonia capacity was 173 700 000 tonnes in
2013
Addition in capacity of about 4 700 000 tonnes, the total
ammonia capacity is 178 400 000 tonnes in 2014
Expected to rise to 201 500 000 tonnes in 2018

World and regional nitrogen supply

demand

2013

2014

2015

2016

2017

2018

World
NH3 Capacity (as 173 669

178 371

187 019

193 777

199 732

201 470

152 769

159 591

165 784

172 059

176 489

5 476

8 110

10 745

13 938

15 338

N)
NH3

Supply 149 000

Capability (as N)
Potential

N 5 310

Balance
Africa
NH3 Capacity (as 7 187

8 281

9 479

10 428

12 705

12 705

N)
NH3

6 285

7 736

8 713

10 289

10 754

1 957

3 272

4 115

5 557

5 878

Supply 5 878

Capability (as N)
Potential

N 1 725

Balance
Europe
NH3 Capacity (as N)
NH3

38 400

38 935

40 714

41 230

42 390

43 175

Supply 35 094

35 388

37 098

37 727

38 726

39 484

12 505

13 783

14 069

14 787

15 295

Capability (as N)
Potential N Balance

12 532

Overall Cost Estimation

Capital investment is the amount of investment required to construct and start
the operation of a plant
The total capital investment (TCI) is the amount needed after summing up the
fixed capital investment (FCI), the working capital(WC) and the land price.
Fixed capital cost is the total cost required to start up the plant operations.
manufacturing cost (direct capital cost)
non-manufacturing fixed capital cost (indirect capital cost)
Direct capital cost is the expenses involved directly in the production process
Indirect capital cost is the expenses which is not involved directly in the
production cost
The actual capital could not be determined as the actual specification of the
equipment is not provided but the estimated capital can be calculated based
on the Lang Factor
This method utilizes the equipment purchase cost to calculate both the direct
and indirect capital cost in the fixed investment
The working capital is the additional investment needed to start the plant up

 Working capital = RM 18,953,551.41

Land Cost = RM 6,151,254.01
Total Capital Investment = RM 404,175,834.56

Estimation of Equipment
Cost
Equipment

Quanti

RM/Uni Cost

Cost Index

ty

2011

Index

Total Cost

RM/Unit (RM)
81145.4

Cooler

12

75000

1404.7

1519.8

4
108816.

973745.28

Heater
Heat

79060

1104.2

1519.8

69
1245916

326450.07

Exchanger

905212
233000

1104.2

1519.8

.7
3206967

4983666.72

Compressor

1104.2

1519.8

.9
247817.

16034839.7

Separator
Primary

180050

1104.2

1519.8

42
534035.

1239087.08

Reformer
Absorption

388000

1104.2

1519.8

86
481733.

534035.86

Column
Ammonia

350000

1104.2

1519.8

38
432775.

481733.38

Converter
Vessel Tank

1
1

400000
90000

1404.7
1519.8

1519.8
1519.8

68
90000
165165.

432775.68
90000

Pump

120000

1104.2

1519.8

73

495497.19
76890675.0

Lang Factor for

Direct Cost
Direct Cost
F1 Equipment

Lang Factor for

Indirect Cost

Factors

Indirect Cost
F10 Design And

Erection

0.4

Engineering

F2 Piping

0.7

F11 Contractors Fee

F3 Instrumentation

0.2

F12 Contingency

F4 Electrical

0.1

F5 Buildings, Process
F6 Utilities

0.15
0.5

F7 Storages

0.15

F8 Site Development

0.05

F9 Ancillary Buildings

0.15

RM 261,428,295.27

RM 379,071,028.14

Factors
0.3
0.05
0.1

TOTAL OPERATION
(PRODUCTION) COST
Annual operating cost to manufacture the product is needed to judge the
viability of a project
direct
indirect operating cost
Direct cost
variable operating cost
fixed operating cost
Total Operating Cost = Variable Operating Cost + Fixed Operating
Cost + General Expenses
Total Variable Cost= RM 110179440.7

Summary of the Total

Labour Cost
Item

Pers

Grou

on

Summary of the Fixed Operating

Cost

Technician

Salary
(RM/mon
th)
1,800.00

Working
period
(months)
12

Supervisors

2,000.00

12

Operation
Engineers

2,500.00

12

Total Labour Cost (RM/year)

Total Annual Operating Cost

Type of Operating Cost
Variable operating cost
Fixed operating cost
General expenses
Total Operating Cost

Cost (RM/year)
180,306,114.35
71,415,500.21
3,790,710.28

(RM/year)

255,512,324.84

Subtotal
259,200.
00
96,000.0
0
360,000.
00
715,200.
00

Type of fixed operating cost

Operating labour cost (OLC)

Percent

Cost

age

(RM/year)
715,200.00
18,953,551.

Maintenance(5% FCI)
Miscellaneous (10%

0.05

41
1,895,355.1

Maintenance Cost)
Plant overhead (50% OLC)
Laboratory (30% OLC)

0.1
0.5
0.3

4
357,600.00
214,560.00
37,907,102.

Capital charges (10% FCI)

0.1

81
3,790,710.2

Insurance (1% FCI)

0.01

8
3,790,710.2

Local taxes (1% FCI)

0.01

8
3,790,710.2

Royalties (1% FCI)

0.01

8
71,415,500.

Total

20