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Caustic Soda Production As Untapped Goldmine!

Published by Guardian on Sat, 11 Feb 2012

THE chemical industry in the country has not received its fair share of development due mainly to the fact that establishing an industry in this sub-sector of the economy is relatively capital intensive. The other reason could be due to insufficient awareness that practically every industry uses the products of chemical industry in one form or the other. In this brief write-up the need, technical feasibility and profitability of establishing a small plant to produce 10,000 metric tonnes of caustic soda per annum are looked into with a view to sensitizing entrepreneurs on the immense reward of venturing into this hardly exploited goldmine. The local market demand for this product is enormous and will certainly grow with the increase in both economic and industrial activities in the years to come.The major raw material for the project is rock salt the deposits of which are known to occur in such states as Abia, Adamawa, Enugu, Cross River, Benue, Taraba, Rivers, Imo, Ebonyi, and Plateau. This rock salt is currently not being exploited commercially.Investing in caustic soda production is so rewarding that the loan incurred in establishing the plant can be paid off within three years of commencing commercial operation given its utilization at optimum level. It is therefore a golden opportunity for both local and foreign entrepreneurs to participate in this highly profitable venture.In order to produce caustic soda, you need to set up the relevant plant, have the relevant machinery and equipment procured, installed, test-run and commissioned, the raw materials purchased, power supply connected and water sources put in place.Raw MaterialsAs stated above, the raw material required for the production of caustic soda is rock salt. This has to be imported from West Indies, Australia, or Europe initially until such a time that local supply of rock salt is feasible or the government puts in place the necessary enabling environment for the development and sustenance of industries in the country.Power SupplyFor efficient performance of this plant it is a critical condition that power supply for 24 hours each day will be available. Because of this, reliance on Power Holdings Company Of Nigeria Ltd for its supply of energy is completely out of the question in view of its unreliability. And so you must be prepared to install a small power station, which will be completely independent of the national grid system. This power station could be a steam or gas turbine generator using gas or diesel fuel. Both gas and diesel are locally available.Water SupplyCaustic soda production plant requires process safe and cheap water, which should contain negligible amounts of dissolved matter. It is important that chemical analysis of the water should be carried out on routine basis before it is used to prepare the cell solution. For the purpose of this plant, soft, filtered water from the borehole, river or stream should be suitable for use as process water.Location Of PlantThis project should ideally be located in the states stated above where the raw materials occur naturally, but until the salt mining industry is commercially developed, it can be sited in any of the states of the country. It is well advised for operational and security reasons that the plant be located well away from residential areas. The location, of course, should have good road network for the purposes of delivery of raw material and evacuation of finished products. Here again the government comes in.Production TechnologyDuring the industrial production of caustic soda, chlorine is also obtained simultaneously by the electrolysis of brine (salt solution). The electrolytic dissociation of brine is carried out in a specially designed cell. The final products are caustic soda, chlorine and hydrogen.The caustic soda plant consists primarily of a huge assemblage of unit cells. The design and construction of the unit cells remain a closely guarded secret of the manufacturers which fact accounts for the reluctance of plant manufacturers to supply caustic soda plants to foreign countries. This, however, need not discourage any determined entrepreneur or organization or government agency interested in establishing and running the project.Industrial Uses Of Caustic Soda And Its By-ProductsFor you to know why you should consider this project as a good economic proposition it is important that you know the uses to which caustic soda and its by-products are put and why they are in very high demand in virtually all the industries nationwide and each of the 365 days of the year.Caustic soda is the most important and most versatile chemical used in industry. The annual world production is over 30 million metric tonnes out of which the USA produces 11 million. The chemical has many industrial uses the major ones of which are in the production of soap, dyes, aluminum (from the mineral bauxite), many metallic elements and chemicals, artificial silk, sodium cyanide (for refining gold), detergents, paper (by using it to convert wood into pulp which is used for making paper) etc.Uses Of ChlorineChlorine, the major by-product of caustic soda production plant, is perhaps the third most important chemical used in industry. It has over ten uses some of which are the production of hydrochloric acid, of bleaching powder used for bleaching wood pulp for the production of paper and for bleaching textile materials, chloroform, dry-cleaning chemicals, of chlorine water, 'bleach' and antiseptic solutions in medicine etc.Uses Of HydrogenAnother by-product of the project, hydrogen, has many industrial uses only 3 of which are mentioned here. It is used together with chlorine for the production of hydrochloric acid, extensively in the petroleum industry for the production of petro-chemicals (such as naphtha and solvents) and for the hardening of fats and oils (such as groundnut oil, soya-bean oil, cotton seed oil etc) to make them suitable for the production of margarine, soaps etc.From the above you can see that going into caustic soda production opens up a whole wide array of industrial opportunities and markets for its allied by-products. You will never experience poor or low level of sales throughout the year as customers will chase you with their money and literally beg you to supply them with your products. The multiplier effects on the economy of establishing this project are simply enormous.Market For Caustic Soda And Its By-ProductsThe caustic soda, chlorine and hydrogen to be produced by the plant will be absorbed completely by the various relevant industries operating in the country, which currently rely on importation to source their raw materials for their businesses. There will therefore not be any room for export as there is enormous internal market potential and there are no factories that meet this high demand currently.Although there is high interest in this project, the capital-intensive nature of it seems to be a hindrance to its actualisation by prospective investors. My recent research findings show that local annual market demand for caustic soda is about 200,000 MT and this is expected to rise with increase in industrial development in the country. Satisfaction of the supply-demand gap existing in the market is currently met through importation which fact reinforces the need to establish some plants here. This means that the proposed factory will have a market share of only 5% of the country's caustic soda requirement. So establishing this project will be extremely rewarding economically, socially and politically.Product CostsCurrently rock salt is being imported at the rate of $100 per MT while the manufactured caustic soda is $5,050. There will, however, be price differentials depending upon the country of purchase and whether the caustic soda is imported as flakes, pellets, solution or in granular form.Manpower RequirementAssuming that rock salt will be imported (in other words, the investor will not be involved in rock salt mining and processing) this project will be able to offer employment to not less than 250 people. Indirectly it will generate jobs for thousands of people who will be involved in marketing the finished products, these producing the packaging materials to be used, other agencies that'll be interested in its operations etc.Project CostThe complete plant machinery, equipment and power station will cost about $11,000,000. However the precise capital cost of all of these will be established when the relevant and current quotations are obtained from several manufacturers for the purpose of preparing a comprehensive package for financing the project.Project ViabilityAt currently selling prices of caustic soda and chlorine, the expected annual sales income at full utilization is going to be not less than $55,000,000 while the associated revenue expenses will be $49,500,000. This leaves a net profit after operations of $5,500,000. This is the minimum profit as the Technical Partners have given the assurance that the net profit margin in this project is between 10% and 15%.The full picture of the profitability of the venture will be known when a comprehensive and current feasibility report is prepared. It, therefore, behooves any interested entrepreneur to consider doing this first to avoid playing 'kobo wise' and 'naira foolish'.FundingIt is obvious from the point of view of cost implications that this project will be implemented only through joint venture arrangement between local entrepreneurs themselves or in partnership with foreigners. This write-up is therefore an invitation to such interested Nigerians in the country and those in diaspora investors with means as well as foreigners to come together to carry it out.On the other hand those interested can approach the Bank of Industry Limited and other industrial development institutions and agencies. The writer could be of assistance here in getting any interested investors connected to to actualize this dream if contacted.ConclusionThe local production of caustic soda is technically feasible and commercially viable. The local market demand-supply gap is very wide and the venture highly profitable. Local competition for the production of the caustic soda plant is at present non-existent. And considering the various industrial applications of caustic soda and the huge amount of foreign exchange (over one billion US dollars) being spent on the annual importation of this all-important chemical, it is desirable that a priority attention be given to its local production. The main advantages to be derived from so doing are many as will be revealed by any well-written, comprehensive, realistic and current feasibility report.To determine the financial details of what it takes to establish this project, the prospective investor is advised to approach an experienced industrial development consultant for guidance in the areas of the sources, types, costs, and installation of the relevant equipment to be used, preparation of a comprehensive and bankable feasibility study and report, and other areas of project implementation.For further information and assistance, serious investors should please contact Mr. DON ABRAHAM on (0812-478-3187 ; 0803-725-1974 ; 0704-149-5314,E-mail: wealthcreationideas@yahoo.com
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