New Coal Char-Based Building Products: Manufacturing, Engineering Performance, and Techno-Economic Analysis for the USA Market
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5.1. Techno-Economic (TE) Analysis of Thin Brick
The US market size of thin brick is assumed to be 50% of the market size of bricks i.e., USD 184 million [59], and the scenario in this study is expected to capture approximately 2.5% of the market size i.e., a revenue of USD 5.76 million. Techno-economic analysis of thin brick is conducted based on the preliminary manufacturing process. For a unit producing 4,800,000 pieces of thin bricks (L 193 × B 89 × T 13 mm) per year, which is equivalent to 1556.7 metric tons (1716 US tons) of thin bricks from PC, OPC type-I, SF, SP, and HL, the total capital expenditure is estimated at USD 7,330,316. This total capital expenditure encompasses the direct cost and indirect cost. Table 2 summarizes the production cost estimates for 1716 tons of thin brick annually. The direct cost of USD 4,536,279.16 is calculated based on the equipment and components required for the manufacturing along with the purchase of land and construction of a factory. The estimated cost of acquiring 5 acres (20,234 sq. m.) of land in Gillette, Wyoming, is USD 130,000 [60]. The construction expenses are computed at a rate of 8.94 USD/sq. m. (96.23 USD/sq. ft.) [61], amounting to USD 2,886,990 for a project covering 2787 sq. m. (30,000 sq. ft.). An additional 25% of total capital expenditure is allocated for contractor fees, and 7% of total capital expenditure is earmarked for architectural fees, resulting in a total expenditure of USD 3,861,349.34. The indirect cost of USD 490,436.84 is estimated for the first plant, with many uncertainties in manufacturing the thin brick (estimated at 90% of the equipment and component purchase cost). The indirect cost includes engineering services, equipment rentals, procurement, freight, taxes, and contingencies. It should be noted that the indirect cost can be reduced when the project maturity increases.
For an average product price of 1.20 USD/pc or 64.65 USD/sq. m. (6.0 USD/sq. ft.) of char-based thin bricks, which is comparable to the average prices of equivalent commercially available thin bricks, as shown in Table 3, the total revenue is estimated at 5,760,000 USD/year. Taking 20% of the total revenue, the working capital and startup capital are estimated each at USD 1,152,000.
Our research outcomes indicate that 1741 metric tons (1919.20 US tons) of raw materials (including water) are required to yield 1556.7 metric tons (1716 US tons) of thin bricks. For the thin brick consisting of 1PC:1.34OPC:0.13SF:0.03SP:0.04HL, 525.26 metric tons (579 US tons) of PC, 702.16 metric tons (774 US tons) of OPC, 70.76 metric tons (78 US tons) of SF, 15.78 metric tons (17.40 US tons) of SP, and 393.54 metric tons (433.80 US tons) of HL are required per year. The total price of procuring these materials is as shown in Table 4.
The unit water cost is determined at 1.22 USD/thousand liters (Tliters) (4.63 USD/thousand gallons (Tgallons)) in addition to a fixed monthly cost of USD 127.04 [69]. The total water required in one year (11 working months) to produce 1716 tons of thin brick is calculated as 55.6 Tliters (14.70 Tgallons), including an additional 50% for some other applications, and the total annual water cost is estimated at USD 1465.50. Electricity is needed to power the ball mills, conveyor system, pan mixer, brick-making machine, automatic pallet jack, water pump, and dust collection equipment. The unit electricity cost is determined at 0.09311 USD/kWh in addition to a fixed monthly cost of USD 40.73 [69]. The total electricity per year consumption to produce 1556.7 metric tons (1716 US tons) of thin brick (11 working months) is determined as 143,184 kWh, and the total electricity cost is estimated at 13,913.97 USD/year. Adding all variable costs yields a total variable cost of 404,476 USD/year (Table 5).
Eight hours of labor shifts are suggested to produce thin bricks, and the production is continued for five days a week. Hence, the total number of working hours per year (11 working months) for 8 h/day shifts is 1920. For one construction manager, one supervisor, five machine operators, five helpers, one sales worker, one accountant, and one driver per shift at a variable wage rate, as shown in Table 5 [70], the combined hourly pay is USD 364.84. Hence, the yearly pay considering 1920 working hours in a year is USD 700,492.80. If 60% of the wage is considered for overtime, benefits, and supervision, the total labor wage and other benefits is USD 1,120,788.48, as presented in Table 2.
The annual maintenance cost of USD 293,228.64 is determined as 4% of capital expenditure. The yearly cost of laboratory support is estimated at 5% of total labor cost or USD 56,039.42. The plant overhead cost is the total cost involved in operating all thin brick production facilities, and the annual plant overhead cost of USD 147,005.65 is estimated to be 10% of the total labor cost, maintenance cost, and laboratory cost. Taxes and insurance costs of USD 73,307.16 are estimated at 1% of the total capital expenditure. Adding all fixed costs yields a total annual fixed cost of USD 1,690,369.36 (Table 2). Combining the total fixed cost and variable cost, the total manufacturing cost is 2,094,845 USD/year. This is equivalent to 1202.65 USD/ton, which breakdowns as 0.44 USD/pc or 25.83 USD/sq. m. (2.40 USD/sq. ft.).
The analysis shows that the percent breakdown of the annual manufacturing cost of USD 2,094,845 consists of a total fixed cost of USD 1,690,369.36 (80.7%) and a total variable cost of USD 404,476 (19.3%). The variable cost consists of PC cost (1.11%), OPC cost (4.43%), SF cost (0.52%), SP cost (0.75), HL cost (11.77%), water (negligible), and electricity (0.01%). The combined OPC and HL cost, exceeding 15% of the total manufacturing cost, plays a significant role in the TE analysis, determining the feasibility of this project. Likewise, the analysis shows that the combined OPC and HL cost is 66% of the total variable cost, further signifying the importance of the combined OPC and HL cost in this project.
A cash flow analysis was conducted using the capital expenditure and cost estimates summarized in Table 2. Before manufacturing thin brick in year 1, the total capital expenditure of USD 7,330,716 is considered in the following distributions: 25% in Year −2, 50% in Year −1, and 25% in Year 0. The working capital of USD 1,152,000 is spent in Year 0 and will be returned at the end of the project in Year 15, with the expectation that the project will become profitable over the 15-year period, allowing for the return of the working capital at the project’s completion. Hence, Figure 16 shows the negative cash flow values from Years −2 to 0 and a relatively higher positive cash flow in Year 15. The modified accelerated cost recovery system (MACRS) is utilized to allow the recovery of the capital expenditure as an asset with the following percent distributions over six years: 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76% for Years 1 to 6, respectively. The depreciation amount for each of these six years is calculated based on the respective percent distribution concerning the total capital expenditure. Considering a new corporate tax of 21%, the depreciation credit is calculated by multiplying 21% by the depreciation amount.
The annual revenue is estimated at USD 5,760,000 (see Table 2). However, it is assumed that the new plant will only reach 50% and 75% of its total capacity in Years 1 and 2, respectively, and the annual revenues are reduced to USD 2,880,000 and USD 4,320,000, respectively. The start-up cost of USD 1,152,000 is considered an expense in Year 1. The total manufacturing cost of USD 2,094,845 is included in Years 3 to 15, while only 50% and 75% of the manufacturing cost are accounted for in Years 1 and 2. Next, the annual margin, defined as the difference between total revenue and total expenses, is calculated for each year.
The tax liability per year is calculated by multiplying the annual margin by the 21% corporate tax. For a 0% return rate, the yearly cash flow is calculated by summing each year’s total capital expenditure, working capital, depreciation credit, margin, and tax liability. The cash flow is accumulated from Years −2 to 15 and plotted along with the annual cash flows in Figure 16. The cumulative cash flow begins at a negative value of −USD 1,830,000 in Year −2 and reaches the maximum negative value of −USD 8,480,000 in Year 0, before breakeven in Year 4. Similarly, to calculate discounted cash flows, a discount rate of 7% is chosen, which is higher than the prevailing discount rate of 5.5% [71], as a precautionary measure to account for potential uncertainties. For the percent return or discount rate of 7%, the annual cash flow is reduced to the present value, as shown in Figure 17. Likewise, the yearly present value is accumulated, and the cumulative current value is plotted in Figure 17. The cumulative present value begins at −USD 2,100,000 in Year −2, reaches the maximum negative value of −USD 9,000,000 in Year 0, and breakeven is in Year 5.
5.2. Sensitivity Analysis for Thin Brick
Table 6 shows the eleven cases and the base case described in previous paragraphs. The sensitivities are evaluated in terms of net present values (i.e., cumulative present value) in Year 15 for 0% and 7% return rates (NPV0 and NPV7, respectively).
Reducing the total capital expenditure by 25% in Case 1 results in a positive NPV0, positive NPV7, and positive IRR of 26.51%. Likewise, increasing the total capital expenditure by 25% in Case 2 still results in positive NPV0, positive NPV7, and IRR of 18.96%. If the product price is reduced by 50% to 0.60 USD/pc in Case 3, the project will not be feasible with a negative net present value at the return rate of 7%. However, if the product price is reduced by only 40% to 0.72 USD/pc in Case 4, the project will yield a positive NPV0, positive NPV7, and positive IRR of 9.79%. Additionally, if the product price can be increased by 50% to 1.80 USD/pc in Case 5, the project will yield significantly high positive NPV0 and NPV15, and a relatively high IRR of 30.36%. The analysis shows the insensitivity of the OPC and HL costs in the economic analysis. If the OPC cost is increased by 20%, as in Case 6, the project’s profitability can still be realized by the positive NPV0 and NPV7, and IRR of 22.05%. Furthermore, even with a combination of a 20% increment in OPC and a 20% increment in HL cost in Case 7, the project analysis shows the viability of the success with an IRR of 21.79%. However, reducing the production rate by 50% in Case 8 will result in negative NPV15 and IRR of only 4.39%. Case 9 shows that the production rate can be reduced only by about 15% to 2125 pc/hour, yielding an IRR of 18.51%. The project is more profitable if fixed cost can be reduced by 25%, as in Case 10, which will yield positive NPV0 and NPV7, and IRR of 24.68. Nevertheless, if there are any unprecedented events, such as a shortage in the workforce, the labor rates will go up, leading to an increase in fixed cost by 25%, and the project will still generate positive NPV0 and NPV7, and an IRR of 19.50%.
In summary, the project’s robustness is evident when dealing with cost and operational variations, highlighting its adaptability to changing circumstances. However, it underscores the importance of maintaining reasonable product prices and production rates to ensure economic feasibility, as substantial deviations in these areas pose significant challenges to project profitability and overall success.
5.3. Techno-Economic (TE) Analysis of Stone Veneer
The size of the U.S. stone market was 630 million as of 2021 [72], and the scenario in this study is expected to capture approximately 2.3% of the total market size i.e., revenue of USD 14.4 million. For a unit producing 4,800,000 pieces of stone veneer (L 193 × B 89 × T 40 mm) per year, which is equivalent to 3832 metric tons (4224 US tons) of stone veneer from PC, OPC type I, SF, SP, and HL, the total capital expenditure is estimated at USD 10,786,716. The total capital expenditure encompasses the direct cost and indirect cost. Table 7 summarizes the annual production cost estimates for 3832 metric tons (4224 US tons) of stone veneer. The direct cost of USD 4,536,279.16 is estimated based on the equipment and components required for the manufacturing, along with the purchase of land and the construction of a factory. Direct costs, covering equipment, land acquisition, and construction, align closely with the thin brick project with an identical total expenditure of USD 3,861,349.34. The indirect cost of USD 490,436.84 is estimated for the first plant, with many uncertainties in manufacturing the stone veneer (estimated at 90% of the equipment and component purchase cost). The indirect cost includes engineering services, equipment rentals, procurement, freight, taxes, and contingencies. It should be noted that the indirect cost can be reduced when the project maturity increases.
For a product price of 3.0 USD/pc or 129.17 USD/sq. m. (12 USD/sq. ft.) for char-based stone veneer, which is comparable to the price of equivalent commercial stone veneer, as shown in Table 8, the total revenue is estimated at USD 14,400,000/year. Taking 20% of the total revenue, the working capital and startup capital are estimated each at USD 2,880,000. The comparatively high market cost of stone veneer compared to thin bricks is associated with their cost of production. Thin bricks of desired texture and thickness can be produced efficiently using a compression machine alone. On the other hand, the manufacturing of stone veneers requires manual chipping of materials from their sides in addition to the initial casting of rectangular blocks. This labor-intensive process incurs additional costs, making the market price higher. However, the cost of stone veneer manufacturing is lower than the cost of processing natural stone. Natural stone extraction involves quarrying from the mines and then precision cutting, contributing to higher labor costs, whereas the stone veneer production process is more streamlined, and uses molds to make stone veneers of desired size, thereby eliminating the need of quarrying and cutting. It is important to note that the comparison in labor cost is also affected by the geographic locations and tools available for operations.
Our research outcomes indicate that 5202.14 tons of total raw materials (including water) are required to yield 4224 tons of stone veneers. For the stone veneer consisting of 1PC:1.34OPC:0.13SF:0.03SP:0.04HL, 1781.54 tons of PC, 2381.54 tons of OPC, 240 tons of SF, 53.54 tons of SP, and 592.80 tons of HL are required per year. Hence, based on the same unit prices of these materials as those used for thin bricks, the yearly cost of purchasing a PC is USD 71,261.54, the yearly cost of purchasing OPC is USD 285,784.62, the yearly cost of purchasing SF is USD 33,600, the yearly cost of purchasing SP is USD 48,184.62, and the yearly cost of purchasing HL is USD 336,818.18. The unit water cost is determined at 1.22 USD/Tliters (4.63 USD/Tgallons) and a fixed monthly cost of USD 127.04 [69]. The total water required in one year (11 working months) to produce 3832 metric tons (4224 US tons) of stone veneers is calculated as 229 Tliters (60.53 Tgallons), including an additional 50% for some other applications, and the total annual water cost is estimated at USD 1677.67. The total electricity consumption to produce 3832 metric tons (4224 US tons) of stone veneer (11 working months) is determined as 143,184 kWh, and the total electricity cost is estimated at 13,913.97 USD/year based on the same rate of electricity as that used for thin bricks. Adding all variable costs yields a total variable cost of 791,240.60 USD/year (Table 8). The fixed cost is determined using a methodology like the one applied in thin bricks, amounting to USD 1,876,993.36, as shown in Table 7. Combining the total fixed and variable costs, the total manufacturing cost is 2,668,233.96 USD/year. This is equivalent to 631.68 USD/ton, which breaks down as 0.56 USD/pc or 32.65 USD/sq. m. (3.03 USD/sq. ft.).
The analysis shows that the percent breakdown of the annual manufacturing cost of USD 2,668,233.96 consists of a total fixed cost of USD 1,876,993.36 (63.3%) and a total variable cost of USD 791,240.60 (36.7%). The variable cost consists of PC cost (2.67%), OPC cost (10.71%), SF cost (1.26%), SP cost (1.81), HL cost (12.62%), water (negligible), and electricity (0.01%). These combined OPC and HL costs, exceeding 20% of the total manufacturing cost, play a significant role in the TE analysis, determining the feasibility of this project. Likewise, the analysis shows that the combined OPC and HL cost is 79% of the total variable cost, further signifying the importance of the combined OPC and HL cost in this project.
The cash flow analysis is conducted similarly to how it is carried out for thin bricks. The cumulative cash flow begins at a negative value of −USD 2,700,000 in Year −2 and reaches the maximum negative value of −USD 13,670,000 in Year 0, before reaching breakeven in Year 2.5, as shown in Figure 18. Similar to thin bricks, the discount rate of 7%, which is higher than the current discount rate of 5.5% [71], is used considering the potential fluctuation in market conditions. With the percent return or discount rate of 7%, the annual cash flow is reduced to the present value, as shown in Figure 19. Likewise, the present yearly value is accumulated, and the cumulative current value is plotted in Figure 19. The cumulative present value begins at −USD 3,090,000 in Year −2, reaches the maximum negative value of −USD 14,430,000 in Year 0, and breakeven in Year 3.
5.4. Sensitivity Analysis for Stone Veneer
Table 9 shows the ten cases and the base case described in previous paragraphs. The sensitivities are evaluated in terms of net present values (i.e., cumulative present value) in Year 15 for 0% and 7% return rates (NPV0 and NPV7), respectively.
Reducing the total capital expenditure by 25% in Case 1 results in a positive NPV0, positive NPV7, and positive IRR of 44.28%; similarly, increasing the total capital expenditure by 25% in Case 2 still results in positive NPV0, positive NPV7, and IRR 33.71%. If the product price is reduced by 50% to 1.50 USD/pc in Case 3, the project will still be feasible with a positive net present value at the return rate of 25.11%. Additionally, if the product price can be increased by 50% to 4.5 USD/pc in Case 4, the project will yield positive NPV0 and NPV7, and a relatively high IRR of 44.03%. The analysis shows the insensitivity of the OPC and HL costs in the economic analysis. If the OPC cost is increased by 20%, as in Case 5, the project’s profitability can still be realized by the positive NPV0 and NPV7, and IRR of 38.02%. Likewise, even with a combination of a 20% increment in OPC and a 20% increment in HL cost in Case 6, the project analysis shows the viability of the success with an IRR of 37.86%. Furthermore, even if the cost of HL is increased by two times, as in Case 7, then the profitability of the project can be realized with an IRR of 25.11%. Furthermore, reducing the production rate by 50% in Case 8 will still result in a positive NPV7 and IRR of 25.11. The project stands to be more profitable if fixed cost can be reduced by 25% as in Case 9, which will yield positive NPV0 and NPV7, and IRR of 39.53%. Nevertheless, if there are any unprecedented events, such as a shortage in the workforce, the labor rates will go up, leading to an increase in fixed cost of 25%, and the project will still generate a positive NPV0 and NPV7, and an IRR of 36.76%. In summary, the project’s robustness is evident when dealing with cost and operational variations, highlighting its adaptability to changing circumstances.
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