Integrated utilization of sugarcane
production of fancy molasses, particle board and wax
This project is a model for the perfect utilization of raw materials, making full use of all waste involved. The input is sugar cane, an important crop in Egypt. It is processed to produce three different products, each of them is a profitable activity on its own: fancy molasses, a very nutritious food product with a serious export potential if produced at appropriate hygienic standards, particleboard used for furniture industry, in addition to a high quality wax suitable for many applications. The project has a substantial profitability, and a serious potential for growth, which in turn would create better market conditions for sugar cane farmers in Upper Egypt, which is generally characterized by very poor farming population. This will drastically improve the living standards of people of Upper Egypt through direct and indirect employment as part of its strategic vision.
The Business
The plant consists of the following:
- Sugar cane crusher (6 ton/hour, operating 3000 hours/year) taking sugar cane and produces 70% juice and 30% bagasse (fibrous waste)
- The juice is boiled till it becomes a viscous liquid (called fancy molasses)
- During the boiling process, a waxy slag floats on top of the liquid, which is then collected and fed to a wax extraction unit.
- Bagasse is then ground and mixed with Urea Formaldehyde and then fed into a hot press to produce particleboard
Outputs:
Fancy Molasses: 900 Kg/hour
Selling Price: 1.5 LE/kg
Total: 1350 LE/hour
Particle Board: 2 cubic meter/hour
Selling Price: 800 LE/cubic meter
Total: 1600 LE/hour
Wax: 30 kg/ hour
Selling Price: 30 LE/Kg
Total: 900 LE/hour
Total sales per hour=1350+1600+900=3850 LE
Inputs:
Sugar cane: 6 ton/hour
Cost: 220 LE/ton
Total: 1320 LE/ hour
Urea Formaldehyde (for Particle Board): 200 kg/hour
Cost: 2 LE/kg
Total: 400 LE/hour
Fuel (Natural Gas): 300 cubic meter/hour
Cost: 0.25 LE/cubic meter
Total: 75 LE/hour
Electricity: 100 kW
Cost: 0.2 LE/kW hour
Total: 20 LE/hour
Labor Requirement: 10 workers for 8 hour shift (2 shifts)
Cost: 60 LE/ Worker/shift
Total: 75 LE/hour
Equipment depreciation
Total Equipment Cost: 200,000 Euros (1,400,000 LE)
Equipment depreciation period: 5 years
Depreciation per year:280,000 LE
Depreciation per hour of operation: around 93 LE
Overheads and unforeseen:: 100 LE/hour
Total Cost=1320+400+75+20+75+93+100= 2083 LE/hour
Gross profit/ hour = 3850-2083 = 1767 LE/hour
Gross profit per year= 1767*3000 = 5 301 000 LE
Taxes (20% )= 1 060 200
Net profit: 4 240 800 LE (605 828 Euros)
This project may achieve its payback period within few months. The reason for this very quick payback is that this project results in absolutely no waste.
The investment breakdown:
Equipment 200,000 Euro
Land and Buildings 50,000 Euro
Working Capital 50,000 Euro
We will participate with the land and buildings, in addition to working capital.
This plant will be running mainly for 6 month, but for the remaining time it may work with the remaining bagasse and wax waste from other places. We may need around 30 people at the plant.
We have three main products:
Fancy molasses:
also called "black honey" in Egypt, which is a product with enormous local demand and a serious export potential in bulk or packaged form, and has a very high nutritious value. Unlike all the competition, very hygienic methods are used in the production process. The cheapest fancy molasses is currently sold at 2 LE/kg.
Part of our previous export efforts was directed to marketing Egyptian fancy molasses abroad, but this was met with no success because of the low hygienic standards of the existing producers. Now with the new product, we will be able to open a large international market.
Particle board:
This is a product with a significant demand for the furniture industry and several related applications. With no forests in Egypt, there is already a significant import activity for panelboards, and our product will fill in an existing market gap against expensive imported commodity. Some local producers produce particleboard from wood waste but they are facing problems with raw materials supply which leads to high selling prices. The cheapest quality particleboard is sold in Egypt at 1000 LE/ cubic meter
Wax:
This type of waxes is comparable in characteristics to the Brazilian Carnuba wax, mainly its high melting temperatures and can be used for the same variety of applications, as an additive for paints, car polishes, food grade waxes that can be used for lipsticks, candy production and the like. This wax is also used by paper industry in Egypt to produce glossy paper, and we can fill this market sector completely.
The main competitor is the Brazilian Carnuba wax which is sold at much higher prices, and our customers include a number of foreign and local chemicals and wax traders. The cheapest Carnuba wax is currently sold at 45 LE/kg.
We can commit approximately 100,000 Euros to this project. In cooperation with you we would like to invite more capital (hopefully at favorable conditions) to implement the full concept.
Development
Upper Egypt is a term that refers to several governorates in southern Egypt. These governorates have been out of government attention and planning for several decades.
Therefore, people living there have always been suffering from a combination of poverty, illiteracy, diseases and all the consequent social maladies.
Attention was only drawn to these governorates after many terrorist organizations began to emerge there, due to obvious reasons; unemployment, and lack of appropriate facilities for dignified human life.
In that area, farming has been the ancestral profession for local people; it constitutes the main source of income for huge number of families. Traditionally, sugar cane farmers sell their crops to one of the following:
- Sugar industry, (an exclusive subsidized government monopoly); it offers only very low prices for the crop with typically delayed payment.
- Local crushers: producing fancy molasses in very unhygienic conditions and with poor utilization of the process byproducts, with limited profits so they also offer meager selling prices to farmers
- Limited quantities are sold to very small crushers in towns to produce sugar cane juice, but this constitutes very limited demand.
Our idea is to build a very profitable project with enormous growth potential, which in turn would allow better prices for the farmers, while not affecting the project economics (our project will be very profitable even if at double the existing price of 160 LE/ton)
This project provides more employment opportunities, as it will require at least 30 people for direct employment, with average salary 800 LE/month, which is way above the average salaries in Egypt in this area, not considering the people involved in preparation and transportation.
So, by providing better income and more employment, this project will assist in eradicating poverty in these governorates.
We also aim to promote the concept of organic sugar cane plantation, and this will consequently allow farmers higher prices for their crops while seriously improving the economics of our project, due to the ability to produce certified organic fancy molasses and certified organic food grade wax.
We also would like to research the possibility of using organic Soya based resins in order to produce certified organic particleboard.