Sugar Project Pre- Feasibilty

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Pre Feasibility Studies

In the movies, when a baby is about to be born, the doctor, with a
very concerned look on his face, comes out of the room and says, "I
need hot water, lots of it!". He doesn't need lots of hot water: I was
present at the birth of my son, and we didn't use any hot water,
though I did help give him a warm bath later.
It very much the same when the idea of a sugar factory is being
born, the project promoters say "We need engineers, lots of them".
again, this is a mistake: employing lots of engineers should come
near the end of the feasibilty process.
All of the sugar factory feasibilty studies I have worked on have
been least sensitive to the capital cost of the plant. This means you
don't need an accurate cost of the plant at this point, probably a
40% accurate price is adequate.

Wed, 26 November 2014

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The selling price of sugar is usually the most sensitive parameter,

together with things like agricultural yield and cane or beet quality.
This is where the work in producing accurate numbers is required
as these are the factors that will drive the feasibilty of the project to
success or failure

Market
So, when starting out on a feasibilty study, start at the destination,
not, the departure point.
Can you sell all the sugar you plan to make at an attractive
price?
What kind of sugar does the market want (raw, VHP, brown,
refined - colour? moisture?)
What sort of packaging does the market want, (form fill seal
plastic bags, paper, 25kg sacks, one tonne bags)

Raw Material
Next go to the other end of the process, the fields where the canes
or beets are grown.
Firstly, have you got a supply of canes or beet at an acceptable
price for the life of your project?
How many tons per hectare of cane or beet do you expect?
What sucrose content of the cane or beet do you expect?

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Sugar Project Pre- Feasibilty

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Capital Cost
Now you need an estimate of the capital cost of the factory. The are
many rules of thumb that are good enough at this point
The best one is that a sugar factory will cost you between
USD70 million and USD100 million
Another useful one is that it costs about USD500 thousand
per tch to expand a factory
You can also do an order-of-magnitude (OOM) estimate
The answers to these questions, together with an estimate of factory
operating costs and overheads, should be enough tell you whether
to continue on your feasibility or not. If the outcome of the prefeasibilty is continue, now you can employ the engineers, lots of
them, to do the design and capital cost estimate and the feasibility
study

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11/26/2014