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Chapter 7. Economics and planning in charcoal production


7.1 Economic analysis and cost control
7.2 The methods of economic project analysis
7.3 Cost control in established enterprises
7.4 Costing models for charcoal production enterprise
7.5 Prefeasibility cost study for charcoal production
7.6 Wood transport cost and fixed retort systems
7.7 Summary


Charcoal producers fall into two groups. The first are subsistance producers who only market charcoal to acquire cash needed to buy goods or pay taxes, etc. Economics and cost control are of little interest to this producer. He needs the cash and selling some of his charcoal is a way to acquire it.

The second group produce and sell charcoal as a business in which the circulation and growth of the capital they have invested in the business is their main concern. Economics and cost control are important for them.

Although the first group is personally not much concerned with economics, government authorities concerned with improving the charcoal industry must study the economics of subsistance charcoal production. An economic analysis must be the basis of any assistance programme to enable these producers to make more and better charcoal. In many countries subsistance produced charcoal is a major part of total charcoal production. Economic analysis is important to define the future of this sector of the industry, reveal its positive and negative features, and its long term viability.

7.1 Economic analysis and cost control

It is difficult to draw a sharp line to divide these two activities. Generally, economic analysis is of direct use in the planning phase of the development of the enterprise to project the cost of constructing and getting it into production. The objective is to demonstrate the economic feasibility of the proposal, then mobilise the investment funds required and lay down how they will be managed and repaid. Cost control, on the other hand, is concerned more with an enterprise which is up and running. It is the management tool which enables the enterprise to remain economically viable.

Production cost control is built around and forms part of the operations of a producing enterprise. It can be carried out with a background knowledge of accountancy or even just bookkeeping. The main requirement is to always use production data and statistics which are measures in the plant itself. On the other hand, economic analysis of projects requires a deeper knowledge of economics and a technical background of the processes which will be used. A large project calls for a team of technicians, some more qualified in economics, others in technology and engineering.

7.2 The methods of economic project analysis

The process of economic analysis of projects is often called a feasibility study but, strictly speaking, this is only one step along the road to setting up a complete project. For large and medium-size charcoal projects (4, 28) a team of professionals is required who must cover the fields of economics, forestry, building and civil engineering, technology of the process of production, finance and marketing. The complete study for the charcoal industry has the following aims:

1. To prove that a market or end use of adequate size exists for the charcoal and any by-products and to quantify it in detail.

2. To prove that suitable and adequate wood raw material exists and can be harvested economically for the expected life of the plant or to prove that a suitable raw material resource can be economically generated by forest plantations.

3. To choose the production technology to be used and to design the entire production system from wood harvesting through to packaging and marketing of the finished charcoal.

4. To prepare complete financial projections showing the method of financing, detailed expenditure budgets for land, plant, site preparation, infrastructure, construction, start-up and training costs. The financial projections must be carried forward approximately twenty years to a point where debts incurred in construction of the plant have been liquidated and the enterprise is functioning as an established business. For the manufacturing enterprise about twelve to fifteen years projection may be sufficient but, if the enterprise is to establish plantations for wood supply, then it is necessary to extend the financial projection till the plantation has gone through a complete rotation, involving replanting which could be twenty years or more. The financial projections will be in the form of a financial model showing profit and loss, sources and expenditure of funds, taxation and cash flow.

5. To prepare documentation for negotiations with government agencies on questions of forest resources, plant site, power and water supplies and other tax concessions, infrastructural needs, control of pollution, etc.

6. Prepare documentation and negotiate with financing agencies, both national and international, to secure financing for the project.

The list of requirements is formidable and costly and time-consuming to accomplish. Fortunately, more or less routine procedural sequences for accomplishing this work have been worked out by international finance authorities and the process is divided into a number of steps which are designed to test the feasibility of the project before committing funds for a complete technical and financial study. Normally the complete project study is preceded by at least two steps called a pre-feasibility and a feasibility study. If the results of these studies are positive, then it is worth committing funds for a full project planning exercise leading to the financing and construction of the enterprise.

The value of the complete study depends, in the long run, on the quality of the basic data on which the study rests. A study based on false premises is useless. Only experience in the field can indicate whether the data base is reasonable or not. As a guide to the effect of errors in basic assumptions, it is usual to test the complete financial model of the project, using varying values of key assumptions such as selling price of charcoal, percentage of fines, charcoal yield during carbonisation, cost of wood delivered, growing and harvesting costs, growth rates of plantations, and so on. The degree of risk entailed by variations in principal cost factors then becomes clearer and enables key factors to be more closely scrutinised. Once the financial model has been prepared and programmed on a computer, such studies are relatively simple to carry out. Planning is relatively simple: the difficult task, especially nowadays with high interest costs, is to construct the plant and get it operating profitably within the available financial resources. If there are serious cost overruns or construction delays, a situation can easily arise where the project cannot be completed or can never operate profitably. Hence the need to seek solutions in charcoal making which require minimum capital investment.

7.3 Cost control in established enterprises


7.3.1 The unit operations
7.3.2 Unit costs and budgeting


Procuring finance for and constructing a large new enterprise for making charcoal nowadays is a difficult and costly proposition. As stated earlier, capital and interest costs are so high that a few construction delays can transform a profitable project into a permanent loss maker. Therefore, more attention needs to be given to improving and developing established charcoal making operations by building on the intrinsic expertise and resources they possess, eliminating or reducing constraints which prevent them from functioning at maximum efficiency. It is usually easier and often more successful financially to expand an existing enterprise than to construct a completely new, large scale one and expect it to operate profitably without difficulties.

Established enterprises and traditional production systems are not all successful or soundly based. Nevertheless there always exists a structure of skill and experience within the system which can often be mobilised to work more effectively by proper cost control.

7.3.1 The unit operations

The first step in cost control is to set down the unit operations of charcoal making and decide on a system of cost centres, usually the same ones as the unit production operations. The following example is taken from operations in the Chaco forests of South America (4) where charcoal is made on a large-scale by traditional but well organised methods. The unit operations are shown in Fig. 14. These unit operations can be used as cost centres and unit costs calculated for each one. As total production cost is the sum of each unit cost, providing they are expressed in a common unit of measurement, e.g. per ton of charcoal at the side of the kiln, the relative importance of each unit operation becomes clear. For example, the unit cost of harvesting wood and delivering it to roadside may be calculated as five dollars per stere. This cost must be expressed in dollars per ton of charcoal at side of kiln before its contribution to overall costs can be clearly seen. This cost depends on the yield of subsequent unit process steps. In general, the only significant one is the loss during carbonisation. The cost of five dollars per stere must be multiplied by the number of stores needed to. produce one ton of charcoal free of fines. A typical figure could be 7.3 steres of wood produce one ton of charcoal free of fines. The cost of the wood at side of the road per ton of charcoal is then $5 x 7.3= $36.50 per ton of finished saleable charcoal at side of kiln. This process must be applied to all unit costs to determine their overall effect on product cost. Technical knowledge of the process as well as cost accounting skill is needed for this and to decide whether efforts to reduce the effect of a particular unit operation on costs could be worthwhile; e.g. yield of wood per hectare could be raised, by gathering more small diameter branchwood. But if this wood mainly produces only fine charcoal in the kiln, the effort could be counterproductive. Tests would be necessary to clear this point. Hence the need to combine the efforts of the technician and the cost accountant to control costs.

Fig. 14 Unit Operations in Charcoal Production

7.3.2 Unit costs and budgeting

Cost targets have to be set up in the budget for cost control. It is easier for each sector if its budgeted costs are set in the unit of measure it uses at that point, e.g. stere of fuelwood, ton of charcoal, ton/kilometre of charcoal, and so on. These figures are combined by management using appropriate conversion indices to check on overall performance in terms of the budget for the whole enterprise. To measure performance for the whole enterprise it is necessary to carry out process inventories on a regular basis, about every one to three months. The physical stock of raw material, semi-finished and finished charcoal, when combined with the input of wood and shipments of charcoal over the inventory period, enable the overall results to be calculated. In addition, records must be kept in each department of the material used, output achieved, number of kiln cycles. Unusual events such as floods, prolonged rainy periods, very dry conditions, labour shortage, equipment breakdowns, and transport delays also need to be noted in the production records of each department. Means to weigh and measure are essential.

7.4 Costing models for charcoal production enterprise

As an example in costing a charcoal making proposal in tables 5, 6, 7, 8 and 9 the layout is given of a costing model for an actual enterprise.

This model has been developed for the brick kiln technology as a basis to compare alternative systems based on continuous rinsing gas retorts. Since this model can be run on a computer it is a simple matter to study the effect of any change made in the system. This is convenient but grave errors will occur if the technical interpretation of the changes is not correct. The computer cannot judge the truth or falsity of the new assumption hence the need to ask plenty of questions before the results of such studies are put into practice.

7.5 Prefeasibility cost study for charcoal production


7.5.1 General considerations
7.5.2 The resource
7.5.3 Wood harvesting
7.5.4 Carbonisation
7.5.5 Packing and shipping
7.5.6 Cost analysis models


The objective of the study is to explore the feasibility of producing about 3,000 tons per year of charcoal from wood and forest residues as raw material. The first phase of the project is assumed to run for five years when results would be assessed to see if further investment in a charcoal making project having a higher output and an investment in continuous retort systems could be justified.

The cost studies show that at the offered price the project cannot be profitable using wood as raw material in the continuous retort system. The price offered was US $140 per ton for industrial use. If the charcoal final use is different, the price will also be different, rising to US $200 for iron production in shaft furnaces or to US $300 for residential use. Using forest residues as raw material, both options, i.e. kilns and continuous retorts are profitable.

7.5.1 General considerations

Charcoal making costs can be best understood by separating the process into its unit operations. In the attached cost study this has been followed and the incidence of the various unit operations on total costs clearly seen. The relatively minor incidence of the carbonisation operation on total costs is notable and typical of successful charcoal operations in general.

Some special aspects of the proposed scheme need emphasis. An advantage is the availability of forest residues because this implies no stumpage cost.

A general idea of the scale of the enterprise can be gained as follows. The annual input of wood needed to produce the target quantity of charcoal is about 20,000 m³ which is about the input of a large hardwood sawmill. If the production target would be greater (i.e. 10,000 t/year of charcoal) the advantages of the continuous system would be undeniable. To show this, table 9 presents an economic study for a 16,000 t/year continuous retort system using wood as raw material. Of course these cost studies are very simplified and can only be used as a first approach in order to start a prefeasibility study.

7.5.2 The resource

Although adequate raw material exists in the area to provide the quantity needed for the project it is important to get as accurate an idea as possible as to how this wood is distributed since this influences the choice of location for the carbonising site(s) so that haulage costs are minimised. Information on the diameter class of the resource is also needed though it is probably not available in detail. If low ash is required in the product it compels a preference for large diameter wood to reduce the proportion of sapwood. But there is no cheap small-scale technology for preparing this wood for carbonising.

7.5.3 Wood harvesting

The best wood harvesting policy to be followed in the resource area is integrated logging. This is more or less essential to obtain adequate regeneration of the logged areas and to extract the pulp, sawlog and charcoal in the most economic way.

If there is a large chipmill in the area it would be an adequate supply of logging contractors. This means there will be no problem in arranging for logs to be supplied to the carbonising sites. At the same time it tends to set the price at the going rate for pulpwood harvesting. The cost calculations have been made on the going rates for pulpwood harvesting and a nominal stumpage of US $3.00 per ton has been allowed.

7.5.4 Carbonisation

The choice of carbonisation system has to conform to the limitations of the project especially if a relatively short life of the enterprise is expected and the cost of labour in the zone has also to be taken into account. Although there are successful continuous and semi-continuous charcoal plants in operation in the world, in general they are much too costly in capital investment and that fact must be seriously considered in any actual project. There are many proposals for continuous charcoal making plants but there are only three industrially proven systems; the Herreschoff type rotary hearth furnace, the lambiotte vertical continuous retort and the semi-continuous Reichert retort (see Chapter 3).

Portable steel retorts are used in Europe to produce lump charcoal of good quality but only as a forest clean-up operation. They have been tried in a number of countries but are unsuitable for sustained charcoal production as they require a larger initial investment than brick kilns for the same production and their working life and labour productivity is much lower.

The only advantage which they possess is an ability to be brought to the side of the standing tree and hence are useful in forest and parkland clean-up operations, the low cost of the wood at the side of the kiln offsetting their other disadvantages. They could be of use in the early stages of the project to prove methods of block: preparation, quality, yield and so on. In some projects they would not be permitted in the forest because of fire hazard and therefore are only useful for experimental burns outside the forest.

However, any serious attempt to make charcoal would require brick kilns. The Argentine or Brazilian types are the logical choice. The Argentine half-round kiln is cheap and easy to use. About 22 kilns in two charcoal production centres would be adequate. Each group of eleven would require a carbonising crew of four with some overtime. Depending on the way the wood resource is distributed it may be feasible to locate two groups of kilns at one site which would bring operating economies offsetting a higher wood transport cost. For maximum efficiency it is necessary to operate the kilns in groups of 10-12 because of the way labour for carbonising is organised. All other services such as wood preparation and shipping of charcoal can be combined in one site.

7.5.5 Packing and shipping

After being unloaded from the kiln and before it can be shipped charcoal must be 'cured' by allowing it to adsorb oxygen from the air. If this is not done then it can spontaneously ignite. Hence there must be provision for storage of two days production on the ground and double handling into the containers. With luck it may be possible to avoid a screening operation. Most of the high ash charcoal is in the fines fraction but there is a possibility that even including fines the charcoal may still meet the ash specification. If not a simple gravity coarse screening operation at the time of loading may be required. About ten percent of the charcoal will be fines and the cost calculations assume this loss. If fines can be sold then production costs will be reduced correspondingly.

There are two sources of significant ash in the product, mud and sand picked up on the logs during skidding and earth picked up from the surface of the charcoal-making site during handling operations. Fortunately after the site has been in use for a short while it becomes covered with a compact layer of charcoal fines, admittedly of higher ash content, and this more or less prevents mineral contamination. At an early stage in project development the amount of mineral matter being carried along with the wood needs to be checked by sampling and analysis to see if special precautions are needed. This matter of contamination needs stressing because every kilo of mineral is 100% ash. One percent ash by weight is only about 0.16% by volume and is easily picked up without detection.

Carbonisation of wood produces smoke and a strong odour of wood tar and other substances in the vicinity which can be carried downwind for some kilometers. Therefore any selected site should be at least three kilometers from residential areas to avoid pollution and 'environmental impact problems'. The direction of prevailing winds is important in deciding on a potential site.

7.5.6 Cost analysis models

Two cost models were studied, one for the brick kiln technology and one for the portable steel kiln system. The latter is not recommended on cost considerations and the fact that this system requires all the wood to be reduced to a uniform size, it cannot cope with large diameter sections about 0.5 metre in diameter as can the brick kiln. Only the model for the brick kiln technology is presented here.

The cost data is based on practical charcoal making experience. More careful studies would be made when the project has advanced further to correlate these cost projections more closely with actual conditions. The structure of the models is such that sensitivity studies and the effect of changes in any of the cost parameters are easily made.

The next stage in a project study of this kind is to substitute the capital and operating cost data of a retort system for the brick kiln system. The cost model remains basically unaltered.

The retort system needs only one charcoal making centre and reduces the labour required for carbonisation slightly. The yield is higher meaning less wood has to be harvested and cut into blocks. But the retort requires smaller blocks of wood and this may increase the block preparation costs. The retort also requires a more costly site and better power and water facilities. The retort, assumed to cost US $600,000 has been depreciated over 15 years instead of the five years allowed in the brick kiln model. But the capital and interest charges are high and the overall effect of using a retort system is to raise the cost of the charcoal. In this analysis it is not possible to allow any benefit from the recovery of by-products. The cost of a refinery would be too high for the sales realised and there is insufficient need for power to make it worthwhile to generate steam or electricity by burning the off-gas in boilers. It would be recycled to the greatest possible degree back through the retort. If the wood to be used is not already dry maybe some benefit could be obtained in using the by-product gas to heat a wood dryer. The results of the two models are given in tables 5, 6, 7, 8 and 9. The calculations are estimates for the production cost for the first year when interest charges are at their maximum

7.6 Wood transport cost and fixed retort systems

The wood transport cost is a serious factor with all charcoal making systems requiring high capital investment in fixed retorts. Since the retorts cannot be moved during the life of the enterprise because of the capital tied up in their construction the enterprise must face a constantly rising wood transport cost which may become crippling. Often assumptions are made that carbonising wood is similar to the refining of oil or the coking of coal. In the case of oil the yield of product from the crude entering the process is close to 100%. Oil is concentrated and easily transported hugh distances in liquid form. Coal is mined from thick seams which can be typically two or more meters in thickness. On the other hand, a mature tropical forest may yield only about 50 m³ per hectare of wood which has no higher priced use than making charcoal. This is equivalent to a continuous seam of coal underlying the forest about 2.5 millimeters thick which is only one thousandth of the thickness of a coal seam. Hence one must harvest an area one thousand times greater to yield the same amount of finished product. Consequently the harvested area expands rapidly, leading to prohibitive transport costs. These costs have little impact if the wood for carbonising is waste at a sawmill and the wood transport cost has been paid for by some other product. The problem here however is that the quantity of waste available may be quite insufficient to feed the high technology carbonising retort.

The wood transport cost can be acceptable where the retorts are integrated with high yielding plantations. A modern rinsing gas retort may produce 10,000 tons/year of charcoal. With a conversion ratio of four tons of air dry wood per ton of charcoal, 40,000 tons of wood must be transported after drying at the stump each year. If the plantations have a Mean Annual Increment of 18 m³ of wood per hectare than a plantation area of about 5,000 ha would be sufficient to supply this wood in perpetuity once the plantations were "fully established after about twelve years. If the retorts were established in the centre of such a complex then the mean haul distance would be about five kilometers in a well laid out plantation. Such a system can continue indefinitely providing the following conditions are met:- regeneration of the harvested area must be practical; soil fertility must be able to be maintained under successive rotations; the cost of producing the wood under plantation conditions must be acceptable.

Establishing plantations to produce charcoal makes sense where the charcoal is required for a vertically integrated operation such as production of iron and steel. Here a higher than average cost for the charcoal can be absorbed within the overall economic goals of the enterprise. But when charcoal for the market must be produced the problem of the emergence of higher priced alternative uses for the plantation wood as the years pass may develop.

For example, eucalypt wood from plantations is a good raw material for either paper pulp or charcoal and it may be found later that the wood can be sold for a higher price for making pulp rather than charcoal. Hence a firm committment on the part of governments to use the wood for charcoal must be in place before funds can be invested. Complex technology methods to produce charcoal require a large investment of capital and a long cycle of investment as compared with simpler technologies. The latter pose less risk should higher priced alternative uses for the wood arise after a number of years. A lot can be learned about the problems and possibilities of using high technology methods for charcoal production by studying the experience of the Brazilian iron and steel industry which produce millions of tons of charcoal each year mostly by the brick kiln technology (15, 28). This industry has closely studied the possibilities of making at least some of this charcoal by advanced methods. A report of studies (1) made at the ACESITA steel works in Belo Horizonte, Brazil concludes that capital costs remain the principal obstacle to adoption of advanced methods.

The steel industry has a special problem in that it must have charcoal in lump form suitable for use in blast furnaces. Rinsing gas retorts have proved their technical suitability for making this kind of charcoal at the Wundowie Iron Works in Australia. This production, until the works closed recently was economic, though wood transport costs were reaching their limit. Wundowie's advantage lay in having made the capital investment in a pair of large retorts many years ago when capital costs were far lower.

7.7 Summary

The economic and planning problems of using advanced methods of charcoal production can be summed up in the following way.

Technically at least two proven methods exist today which will produce charcoal continuously and permit recovery of by-products lost when traditional methods are used.

But the factors which have an inhibiting effect on investment in this area are:-

- Rising wood transport costs caused by the fixed location of the high capital cost retorts required.

- The excessive investment cost needed especially in developing countries for the equipment which originates in the developed world. This excessive cost is mainly due to the distorted terms of trade between the developing and the developed world.

- The low value and high cost of recovering by-products of carbonisation accentuated by the lower cost of producing the same or similar products in the petrochemical industry. This makes it necessary to burn rather than refine the carbonisation by-products in the off-gas stream to produce heat. This recovered heat makes only a small contribution to the profitability of the enterprise.

- Research and good management in the operation of brick kiln charcoal complexes has tended to close the gap between the production of charcoal by this method and the complex technology routes. This has left complex technology methods dependent on the value of the byproducts to reduce production costs which as mentioned is not sufficient to justify the capital investment needed.

TABLE 5 CHARCOAL PRODUCTION COST ANALYSIS -

CASE: BRICK KILN SYSTEM (Mood as Raw Material)

A. PROJECT CONSTANTS.

CASE: Brick Kiln System with two Charcoal Production Centres (11 kilns each)

 

Unit

Value

NET CONVERSION RATIO INTO CONTAINER:

t charcoal/t wood

0.2

ANNUAL PRODUCTION TARGET:

t

3 000

PROJECT LIFE:

years

5

PROJECT INTEREST RATE:

%

0.15

STUMPAGE:

U$S/t wood

3.0

CUT, SKID and LOAD:

U$S/t wood

5.0

ROAD HAULAGE:

U$S/t wood

5.0

B. CAPITAL COSTS. ITEM

Unitary Cost

Total Cost

Depreciation per year

Interest per year

Total per year

Total per charcoal t

U$S

U$S

U$S/year

U$S/year

U$S/year

U$S/t

SITE PREPARATION

2 000

4 000

800

600

1 400

0.47

POWER AND WATER

10 000

20 000

4 000

3 000

7 000

2.33

EQUIPMENT: BRICK KILNS (22)

700

15 400

3 080

2 310

5 390

1.80

TOOLS

8 000

16 000

3 200

2 400

5 600

1.87

LOG FORK/END LOADER

20 000

40 000

8 000

6 000

14 000

4.67

VEHICLES

30 000

60 000

12 000

9 000

21 000

7.00

SUB TOTALS (Capital Cost)   155 400     54 390 18.14

C. PRODUCTION COSTS.

Unitary Cost

 

Total per year

Total per charcoal t

ITEM

U$S/t

 

U$S/year

U$S/t

STUMPAGE

15.0

 

45 000

15.0

LOGS AT DUMP

25.0

 

75 000

25.0

HAULAGE

25.0

 

75 000

25.0

CARBONISATION

10.0

 

30 000

10.0

MANAGER

6.0

 

18 000

6.0

FUEL AND LUBRICANT

4.0

 

12 000

4.0

VEHICLE MAINTENANCE

2.0

 

6 000

2.0

GENERAL MAINTENANCE

3.0

 

9 000

3.0

INSURANCES

5.0

 

15 000

5.0

WORKING CAPITAL COSTS

3.0

 

9 000

3.0

SUB TOTALS (Production Cost)

294 000

98.0

TOTALS (Total Cost)

  155400

348 390

116.14

ROAD HAUL TO MARKET

Distance (km):200

U$S/t 2 0

COST PER t CHARCOAL IN THE MARKET   U$S/t 136.14

OFFERED PRICE (For Industrial Use)

  U$S/t 140

Table 6 CHARCOAL PRODUCTION COST ANALYSIS - CASE: CONTINUOUS RETORT SYSTEM (Wood as Raw Material)

A. PROJECT CONSTANTS.

CASE: Continuous Retort System at one site

  Unit Value

NET CONVERSION RATIO INTO CONTAINER:

t charcoal/t wood

0.3

ANNUAL PRODUCTION TARGET:

t

3 000

PROJECT LIFE:

years

5 (15 for retort)

PROJECT INTEREST RATE:

%

0.15

STUMPAGE:

U$S/t wood

3.00

CUT, SKID and LOAD:

U$S/t wood

5.00

ROAD HAULAGE:

U$S/t wood

5.00

B. CAPITAL COSTS.
ITEM

Unitary Cost

Total Cost

Depreciation per year

Interest per year

Total per year

Total per charcoal t

U$S

U$S

U$S/year

U$S/year

U$S/year

U$S/t

SITE PREPARATION

70 000

70 000

4 666

10 500

15 166

5.05

POWER AND WATER

20 000

20 000

1 333

3 000

4 333

1.44

EQUIPMENT: RETORT

600 000

600 000

40 000

90 000

130 000

43.30

TOOLS

12 000

12 000

2 400

1 800

4 200

1.40

LOG FORK/END LOADER (2)

30 000

60 000

12 000

9 000

21 000

7.00

VEHICLES

30 000

30 000

6 000

4 500

10 500

3.50

SUB TOTALS (Capital Cost)

  792 000     185 199 61.70

C. PRODUCTION COSTS.
ITEM

Unitary Cost

 

Total per year

Total per charcoal t

U$S/t

 

U$S/year

U$S/t

STUMPAGE

10.0

 

30 000

10

LOGS AT DUMP

16.7

 

50 000

16.7

HAULAGE

16.7

 

50 000

16.7

CARBONISATION

-

 

-

-

MANAGER

4.0

 

12 000

4.0

FUEL AND LUBRICANT

7.0

 

21 000

7.0

VEHICLE MAINTENANCE

3.0

 

9 000

3.0

GENERAL MAINTENANCE

7.0

 

21 000

7.0

INSURANCES

8.0

 

24 000

8.0

WORKING CAPITAL COSTS

3.0

 

9 000

3.0

SUB TOTALS (Production Cost)

226 000

75.4

TOTALS (Total Cost)

 

792000

411 199

137. 1

ROAD HAUL TO MARKET

Distance (ton): 200

U$S/t 20.0

COST PER t CHARCOAL IN THE MARKET

 

U$S/t 157.1

OFFERED PRICE (For Industrial Use)

 

U$S/t 140

TABLE 7 CHARCOAL PRODUCTION COST ANALYSIS - CASE: CONTINUOUS RETORT SYSTEM (Forest Residues as Raw Material)

A. PROJECT CONSTANTS.

CASE: Continuous Retort System at one site

 

Unit

Value

NET CONVERSION RATIO INTO CONTAINER:

t charcoal/t wood

0.3

ANNUAL PRODUCTION TARGET:

t

3 000

PROJECT LIFE:

years

5 (15 for Retort)

PROJECT INTEREST RATE:

%

0.15

STUMPAGE:

U$S/t wood

0

CUT, SKID and LOAD:

U$S/t wood

2

ROAD HAULAGE:

U$S/t wood

2

B. CAPITAL COSTS.
ITEM

Unitary Cost

Total Cost

Depreciation per year

Interest per year

Total per year

Total per charcoal t

U$S

U$S

U$S/year

U$S/year

U$S/year

U$S/t

SITE PREPARATION

70 000

70 000

4 666

10 500

15 166

5.05

POWER AND WATER

20 000

20 000

1 333

3 000

4 333

1.44

EQUIPMENT: RETORT

600 000

600 000

40 000

90 000

130 000

43.3

TOOLS

12 000

12 000

800

1 800

2 600

0.87

LOG FORK/END LOADER (2)

30 000

60 000

4 000

9 000

13 000

4.33

VEHICLES

30 000

30 000

2 000

4 500

6 500

2.17

SUB TOTALS (Capital Cost)

 

792 000

   

171 599

57.16

C. PRODUCTION COSTS.
ITEM

Unitary Cost

 

Total per year

Total per charcoal t

U$S/t

 

U$S/year

U$S/t

STUMPAGE

0

 

0

0

LOGS AT DUMP

6.7

 

20 000

6.7

HAULAGE

6.7

 

20 000

6.7

CARBONISATION

-

 

   

MANAGER

4.0

 

12 000

4.0

FUEL AND LUBRICANT

7.0

 

21 000

7.0

VEHICLE MAINTENANCE

3.0

 

9 000

3.0

GENERAL MAINTENANCE

7.0

 

21 000

7.0

INSURANCES

8.0

 

24 000

8.0

WORKING CAPITAL COSTS

3.0

 

9 000

3.0

SUBTOTALS (Production Cost)

136 000

45.40

TOTALS (Total Cost)

  792000

307 599

102.56

ROAD HAUL TO MARKET

Distance (ton): 200

U$S/t 20

COST PER t CHARCOAL IN THE MARKET

 

U$S/t 122.56

OFFERED PRICE (For Industrial Use)

 

U$S/t 140

TABLE 8 CHARCOAL PRODUCTION COST ANALYSIS - CASE: BRICK KILN SYSTEM (Forest Residues as Raw Material)

A. PROJECT CONSTANTS.

CASE: Brick Kiln System with two Charcoal Production Centres (11 kilns each)

 

Unit

Value

NET CONVERSION RATIO INTO CONTAINER:

t charcoal/t wood

0.2

ANNUAL PRODUCTION TARGET:

t

3 000

PROJECT LIFE:

years

5

PROJECT INTEREST RATE:

%

0.15

STUMPAGE:

U$S/t wood

0

CUT, SKID and LOAD:

U$S/t wood

2.0

ROAD HAULAGE:

U$S/t wood

2.0

B. CAPITAL COSTS.
ITEM

Unitary Cost

Total Cost

Depreciation per year

Interest per year

Total per year

Total per charcoal t

U$S

U$S

U$S/year

U$S/year

U$S/year

U$S/t

SITE PREPARATION

2 000

4 000

800

600

1 400

0.47

POWER AND WATER

10 000

20 000

4 000

3 000

7 000

2.33

EQUIPMENT: BRICK KILNS (22)

700

15 400

3 080

2 310

5 390

1.80

TOOLS (2 kits)

8 000

16 000

3 200

2 400

5 600

1.87

LOG FORK/END LOADER (2)

20 000

40 000

8 000

6 000

14 000

4.67

VEHICLES (2)

30 000

60 000

12 000

9 000

21 000

7.00

SUB TOTALS (Capital Cost)

 

155 400

   

54 390

18.14

C. PRODUCTION COSTS.
ITEM

Unitary Cost

 

Total per year

Total per charcoal t

U$S/t

 

U$S/year

U$S/t

STUMPAGE

0

 

0

0

LOGS AT DUMP

10.0

 

30 000

10.0

HAULAGE

10.0

 

30 000

10.0

CARBONISATION

10.0

 

30 000

10.0

MANAGER

6.0

 

18 000

6.0

FUEL AND LUBRICANT

4.0

 

12 000

4.0

VEHICLE MAINTENANCE

2.0

 

6 000

2.0

GENERAL MAINTENANCE

3.0

 

9 000

3.0

INSURANCES

5.0

 

15 000

5.0

WORKING CAPITAL COSTS

3.0

 

9 000

3.0

SUB TOTALS (Production Cost)

159 000

53.0

TOTALS (Total Cost)

 

155400

213 390

71.14

ROAD HAUL TO MARKET

Distance (km): 200

U$S/t 20

COST PER t CHARCOAL IN THE MARKET

 

U$S/t 91.14

OFFERED PRICE (For Industrial Use)

 

U$S/t 140

TABLE 9 CHARCOAL PRODUCTION COST ANALYSIS - CASE: CONTINUOUS RETORT SYSTEM (Wood as Raw Material)

A. PROJECT CONSTANTS.

CASE: Continuous Retort System at one Site

 

Unit

Value

NET CONVERSION RATIO INTO CONTAINER:

t charcoal/t wood

0.3

ANNUAL PRODUCTION TARGET:

t

16 000

PROJECT LIFE:

years

5 (15 for retort)

PROJECT INTEREST RATE:

%

0.15

STUMPAGE:

U$S/t wood

3.0

CUT, SKID and LOAD:

U$S/t wood

5.0

ROAD HAULAGE:

U$S/t wood

5.0

B. CAPITAL COSTS.
ITEM

Unitary Cost

Total Cost

Depreciation per year

Interest per year

Total per year

Total per charcoal t

U$S

U$S

U$S/year

U$S/year

U$S/year

U$S/t

SITE PREPARATION AND BUILDINGS

100 000

100 000

6 666

15 000

21 666

1.35

POWER AND WATER

80 000

80 000

5 333

12 000

17 333

1.08

EQUIPMENT: RETORT

1 500 000

1 500 000

100 000

225 000

325 000

20.31

TOOLS

50 000

50 000

10 000

7 500

17 500

1.09

LOG FORK/END LOADER (4)

30 000

120 000

24 000

18 000

42 000

2.62

VEHICLES (3)

20 000

60 000

12 000

9 000

21 000

1.31

SUB TOTALS (Capital Cost)

 

1 910 000

   

444 499

27.76

C. PRODUCTION COSTS.
ITEM

Unitary Cost

 

 

 

Total per year

Total per charcoal t

U$S/t

 

 

 

U$S/year

U$S/t

STUMPAGE

10.0

     

160 000

10.0

LOGS AT DUMP

16.7

     

267 000

16.7

HAULAGE

16.7

     

267 000

16.7

CARBONISATION

-

     

-

-

MANAGER

2.0

     

32 000

2.0

FUEL AND LUBRICATION

4.0

     

64 000

4.0

VEHICLE MAINTENANCE

2.0

     

32 000

2.0

GENERAL MAINTENANCE

5.0

     

80 000

5.0

INSURANCES

6.0

     

96 000

6.0

WORKING CAPITAL COSTS

3.0

     

48 000

3.0

SUB TOTALS (Production Cost)

1 046 400

65.40

TOTALS (Total Cost)

 

1910000

1 490 899

93.16

ROAD HAUL TO MARKET Distance (ton): 200 U$S/t 20
COST PER t CHARCOAL IN THE MARKET   U$S/t 113.16

OFFERED PRICE (For Industrial Use)

 

U$S/t 140.00


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