ROOF TILES PRODUCTION PROJECT PROFILE

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Contents
I. Summary.................................................................................................................................................... 3
2. Introduction ............................................................................................................................................... 4
3. Policy Environment & Incentives ............................................................................................................. 5
4. Major reason to invest in Dire Dawa ........................................................................................................ 7
6. Project Objective ....................................................................................................................................... 7
7. Project Area Description ........................................................................................................................... 7
7.1 Land Availability ................................................................................................................................ 7
7.2 Physical Infrastructures Service .......................................................................................................... 8
7.3 Road and Transport ............................................................................................................................. 9
7.4 Electricity ............................................................................................................................................ 9
7.5 Telephone Service ............................................................................................................................... 9
7.6 Labor force potential ......................................................................................................................... 10
8. Project description .................................................................................................................................. 10
9. Market Description ................................................................................................................................ 12
A. Market Study ..................................................................................................................................... 12
1. Past Supply and Present Demand.................................................................................................. 12
2. Projected Demand ............................................................................................................................... 14
B . MATERIALS AND INPUTS ........................................................................................................... 15
1. RAW & AUXILIARY MATERIALS ............................................................................................ 15
2. MANPOWER REQUIREMENT .................................................................................................... 16
2. UTILITIES ...................................................................................................................................... 17
11. TOTAL INITIAL INVESTMENT COST ............................................................................................ 17

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I. Summary

This profile envisages the establishment of a plant for production of roof tiles from clay with a

capacity of 1 million pcs per annum.

The present demand for the proposed product is estimated at 2.03 million pcs per annum. The

demand is expected to reach 2.45 million pcs by the year 2025.

The plant will create employment opportunities for 26 persons.

The total investment requirement is estimated at about Birr 1.48 million, out of which 0.250

million is required for plant and machinery.

The project is financially viable with an internal rate of return (IRR) of 46 % and a net present

value (NPV) of Birr 4.32 million discounted at 8.5%.

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2. Introduction

It is said that the first historically known clay roofing tiles have been used in Neolithic China as
early as 10.000B.C. 5000 years ago, clay roofing tiles have been used in Babylon.

From there they made their way via Egypt and Greece to Rome. Rome was called the city of tiled
roofs. The Romans introduced Middle Europe to their excellent characteristics and long lasting
durability. Even today, buildings that have been "tiled" by the Romans exist.
In the 8th century, the Hiersar Monastery in Calw and later the monastery in Lorch, Southern
Germany.
Clay roof tiles characteristic as "fire proof roofing" were recognized 1212 AD by King John of
England as he issued building by-laws for London to eliminate combustible roof coverings. The
devastating fires from 1679 in Boston prompted the establishment of building and fire codes in
New York and Boston. By the 18th century, tiled roofs had become the standard in Europe,
wherever there was an abundant local supply of suitable raw materials. Back then, the "craft" of
tile making was hard labor and required excellent knowledge of the materials and processes
involved. Tile burning was done in piles, in which clay tiles and burning material, like coal or
wood, was layered into stacks and covered by earth.
The first attempts in industrial production of clay roofing tiles were started in the 19th century.
Improvements to the transportation infra structure and the availability of steam engines helped.
Advances in material knowledge and the introduction of the so called "ring kiln" by Hoffman in
1858 allow the further advance of the quality. With this kiln, continues burning was achieved. It
allowed the gradually rising of the temperature and was fired by coal, thrown in from above.
New forms of clay roofing tiles were introduced and the development took a leap forward to the
design and characteristics we know today. Interlocking, strong and durable clay roofing tiles with
consistent quality are available to be used as long lasting roofing material. As the popularity of
clay roofing tiles grew, transport and production were expanded.
Due to the increase in demand the method of delivery was changed. The use of clay roofing tile
used to be limited to areas were horse drawn wagons could deliver them. This limited their
distribution. This all changed with the introduction of motor vehicles.

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Further easing of the work load was achieved with the introduction of early loading and crating
systems.
In the early 1960s the mining of the raw clay was switched over to machinery. This was in part to
the rise in demand for clay roofing tiles.
Europe has a long lasting clay roof tile history that is highly visible if one looks at the roofs of
major European cities. Now in the 21st century, the quality and durability of building materials
is becoming increasingly important for the value minded home owner that can appreciate the
superiority of clay roofing products.

3. Policy Environment & Incentives

Except for reconnaissance, retention and artisanal mining licenses, applicants for a license are
required to submit an environmental impact assessment and obtain approval from the competent
authority. They are also required to allocate funds for rehabilitation of environmental impact and
participate in community development plan within the license area.

The Policies are:

a. To adopt as mineral resources are depleted sooner or later, that the long-term usability of the
land be safeguarded from the outset so that with due care during and following the mining
activities, it can still be used for agriculture and/or other economic activities;
b. To encourage and support artisanal and small-scale miners to practice mining which is
organized and responsible so as to be consistent with environmental laws, rules and regulations
to safeguard the well-being of the land and its other natural resources;
c. To advise and train mining communities in methods of environmental protection and
reclamation of abandoned mining areas;
d. To strengthen the capacity of the state sector mining agencies to regulate and administer
environmental protection in view of the increased role of the private sector and of possible
foreign investment in large-scale mining;
e. To implement continuous program of education for the public and industry, environmental
monitoring, and the provision of technical advice and assistance in environmental management
during mining operations;

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f. To provide technical and material assistance to artisanal miners to improve environmental
protection and output efficiency;
g. To use conditions of contract to ensure that licensed mining operations prepare pre-
development environmental impact studies, adopt sound environmental management practices
during operations, and undertake appropriate mitigation and reclamation measures both during
and after operations;
h. To prepare and enact specific mining environmental protection legislation; and
i. To establish a guarantee system for enforcing measures that should be taken by the licensee for
the restoration of the land to its previous conditions or to the best improved level that the
prevailing ecological conditions allow

Land Incentives
Any investor that wants to take part in the following investment areas is entitled to receiving the
investment incentives offered by the Dire Dawa Administration.
A. For types of investment projects designed to address existing gaps in the social sectors
that should have been covered by the government.
B. For types of investments that will considerably reduce or assist the poverty reduction effort
by virtue of their being labour-intensive.
C. For types of investment projects designed to make use of agricultural produces as their
main inputs (raw-materials) and produce products with added values intended for exporting
and as a result earn foreign currency.
D. For types of investment projects designed to save foreign currency by producing the basic
consumer goods formerly imported from abroad.
E. For types of investment projects designed to create forward and backward economic linkages
in the sector.
F. For types of investment projects designed to promote creativity (innovation) among the
society by providing venues for getting acquainted with specialized new know-how and
technological skills.
G. For types of construction projects designed to use and as a result acquaint the society with
low-cost construction technologies.
H. For types of investment projects designed to reduce the prevailing shortage considerably

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4. Major reason to invest in Dire Dawa

The Private investment initiative is a prime mover and plays irreplaceable role in bringing social
and economic transformation in the area. Therefore, the participation of the private sector is
highly demanded in various aspects of investment activities in the administration.

The resource potential assessment study indicates the existence of sufficient investment
opportunities in Dire Dawa Administration. There are various types of mineral resources that
could be used for industrial and construction purposes in the administration. The strategic
location, availability of basic physical and service infrastructures, better supply of technically
skilled human resources as compared to other regions makes the administration suitable for
attracting investment.

6. Project Objective

It is a common observation that roofing tiles of clay are recently becoming popular in modern
housing constructions. Besides their architectural beauty, roofing tiles of clay are useful in
regulating room-temperature and reduce costs of construction inputs. The main objectives of roof
tiles project is to produce roofing tiles, made out of clay & wood raw materials, which is
available in the Administration. Is used for roof covers in housing construction sector by which
it substitute to corrugated iron sheet whose raw material is imported in bulk. The inputs consist
of electricity, water and fuel oil which are available in the region.

Currently many of the construction project in all over the world substituted and changed from
metal sheet to Clay roof tile which is resist corrosive nature and very easily produced with local
materials with high quality and the most profitable and accountable value on foreign currency.

7. Project Area Description

7.1 Land Availability

The federal land proclamation has given the power to Regional Governments to issue laws and
regulations for detailed implementation of the proclamation. The onus for allocating land for

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investment activities, and creating leases and setting rentals on land to be transferred to investors
rests with them.

Table 7.1 DIRE DAWA ADMINISTRATION LEASE PERIOD DESCRIPTION

Purpose Lease periods

Housing 99
Manufacturing and industry 80
For education, health, science & technology, culture, sport, research & 99
study and nonprofit making philanthropist institutions
For commercial purpose 70
For urban agriculture 15
For other purposes 70
Source :Dire Dawa Provisional Administration lease regulation No. 3/1996

Currently the city administration of Dire Dawa has embarked re-development schemes that
intend to recycle urban land, which would invariably require employing land and property
valuation system to pay adequate compensation for previous developments as well as to allocate
land for new developments. Besides, it has delivered considerable land to developers in pocket,
transitional and expansion areas. To make the land transaction process transparent and fair,
numerous measures have been employed to improve land marketing in different times. Recently
Dire Dawa Administration has drafted a new land grade and bench mark price to improve the
land marketing situation of the city. The land grade has 5 main categories with a price ranges of
birr 19.33 to 619.44 per m2.

In general land required for services and other investment activities were allotted in the city
structural plan. There are land lease code, land grade and bench mark price that guide conducive
environment for accessing land to developers in the administration.

7.2 Physical Infrastructures Service

According to the GDP study of Dire Dawa(2004), the average growth of the service sector
exhibited 8.8%-next to agricultural sector. Regarding the sectoral share from the aggregate
Administration economy, the service sector holds 60% share.

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The information obtained from Dire Dawa investment institution revealed that in the past 5 years
the service sector has a total share of 52.95 % in employment creation, 45.34 % in capital outlay
and 49.02 %by involvement of investors in the sector’s investment initiative.. So it has
significant contribution in terms of employment creation and development resource generation
opportunities.

7.3 Road and Transport

The recent report of Dire Dawa Road authority shows that Dire Dawa Administration now has
about 283 km road networks within the city. From this, the asphalt road coverage is 39.45.08,
km, coble stone 56.94 km and gravel and earth road coverage is 249.9 km. Tthe overall road
network of the built-up areas of the city is well distributed. So it can be said that the road net
work of the city found in a good condition and properly accessible to support the desired
economic and social activities of the city.

7.4 Electricity

The major source of Dire Dawa city electricity supply is the connected lines of the national grid
system. According to According to Dire Dawa Administration Statistical Abstract (2011), there
are 25066 private, 259 industrial, 338 government and 3613 commercial customers of electric
from Dire Dawa substation. EEPCO is the sole provider of electric supply to theses customers.
However, there are some organizations use supplementary sources from their own diesel
generators.

7.5 Telephone Service

Telecom infrastructure has basic importance to support the massive development of the area.
According to Dire Dawa Administration Statistical Abstract (2011), the city is the user of
diversified services of telecom. The 2011 information revealed that about 12313, fixed line users
and 110,000 GSM prepaid telephone subscribers use the service.

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7.6 Labor force potential

According to the 2007 population and housing census result, the employment situation of Dire
Dawa city shows significant improvement. The unemployment rate was 24.07 in year 1994while
it decreases to 22.9% in year 2007.

According to the labor force survey conducted by CSA, the urban unemployment rate decreased
from 37.3% in year 2005 to 28 % in year 2009.Therefore net 9.3 % reduction has been exhibited

8. Project description

Here we would like to grant a look beyond the façade of clay roof tile manufacturing. We show
how tiles are made and what technology goes into the finished product, which makes such a
superior and sophisticated roofing material. It all begins with the raw materials. In order to be
frost proof exactly the right clay has to be used. This can also be achieved, by mixing several
clays from different deposits together. This mixture is a closely guarded secret. Clay was usually
formed by glacial movements in the last Ice Age. Big rocks and other non desired materials are
sorted out directly in the pit. The raw clay gets then transported to the processing plant by
conveyer, truck or train.

In the factory, work on the raw clay starts by unloading into storage pits. Some factories soak
the raw clay in large soaking pits. This also allows the factories to stockpile large quantities of
material.

In the drying process the hard work for the clay begins. Feeders and grinders work it over. To
achieve small particles and a homogeneous texture pan grinders smash the clay into a fine
powder.

A further step is to pass the wet clay through a fine screen press. The final processing step is
the rolling mill in which the clay is rolled between large rolls, just like backing dough.

Out of a super large extruder a constant string of clay is pressed onto a conveyor belt. It is then
cut to size.

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The next step is to form the raw clot into the shape desired. This is done by pressing the clay
clots into a two-piece form under high pressure. Basically two rotating drums press the constant
stream of clay clots into form.

The formed raw tiles get stacked and left to dry into a special chamber. After drying, it is time
for the color application. Special, secret mixtures of colors are used to be applied by spraying it
onto the exposed surface. Engobes produce a matt to semi-shiny finish after burning. Random
spray patterns allow for the tile to look aged. Glazes produce high-glossy colors with a glass like
surface.

After the sprayed on color has been dried, the tiles get placed into a firing tray. These trays get
stacked onto a dolly, ready for the burning process.

Modern factories use hydro-casing tunnel kilns. In there, the tiles get gradually warmed up until
the desired burning temperature is reached. After burning, it is important to slowly lower the
temperature. All this is computer controlled, but it is still necessary to have a human at the
controls, which has long time experience with the process. Since clay is a natural product, small
variations in it make it absolutely necessary to "fine tune" the burning process to constantly
achieve a product that is always of the same high quality and consistence. Burning temperatures
sometimes exceed 1100°C (2012°F).

The burned clay tiles undergo a rigorous quality testing that incorporates several steps and tests.
One of the tests is an acoustic test. A small wooden hammer bangs the tile. The denser (better
quality) the tile is, the clearer the sound is (just like a bell would sound). This way any
imperfections can be sorted out.

If the tiles have passed the quality control, they get stacked automatically onto pallets. Many
steps in the modern production of clay roofing tiles is automated. This is for several reasons: one
is that the work is often dusty and hot. Also production runs in a 24 hour/350 days a year
process. The kilns cannot be shut down in the night or on holidays since firing it up takes several
hours. In order to have a continuous production, automation is in place. The packaged tiles get
into a temporary holding yard until they get picked up for shipment.

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Specialty tiles, that cannot be produced using machines, have to be made by hand. This applies
for verge tiles (rakes), vent tiles, etc. but also for decorative roof ornaments.

Modern production facilities take up huge spaces. In the past years the emphasis has been the
reduction in the use of energy and the integration of environmentally friendly production
processes. All of our manufacturers implement "re-use and recycle" into their production. One of
the biggest and most modern productions today is the Creaton production in Grossengottern.

The tiles get delivered to the job site on flat bed trucks. The end result of the production is a
durable, long lasting roofing product with countless benefits that is made out of four of the
Elements: Earth, Water, Air and Fire.

9. Market Description
A. Market Study

1. Past Supply and Present Demand

Roof tiles are construction materials like slates used for roof covers. The tiles can be corrugated
both for architectural beauty and working convenience. Besides their architectural beauty,
roofing tiles of clay are useful in regulating room-temperature. It is a common observation that
roofing tiles of clay are recently becoming popular in modern housing constructions. Moreover,
the overall economic growth in the country and climate change due to global warming are
expected to create growing demand for the product.

The distribution of housing units by construction material in Dire Dawa Administrative Council
based on the 1994 populating and housing census is presented in Table 9.1.1 A look into the
distribution of housing units by construction material of wall reveals wood and mud, stone and
cement, stone and mud, and blockets constitute the dominant wall material, accounting for 40.12,
19.88, 17.27 and 9.06 percent, respectively, of all the housing units in the Administrative
Council. Regarding the use of roofing material, corrugated iron sheets the most common roof
types in the area covering 72.45 percent of all the housing units in the area. Housing units with
roofing material of wood and mud, and thatch, respectively, constituted 14.02 and 9.34 percent
of the housing units in the Administrative council.

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Table 9.1.1
DISTRIBUTION OF HOUSING UNITS BY CONSTRUCTION MATERIAL IN DDPA
By Material of Wall Number %
Wood and Mud 20102 40.12
Wood and Thatch 1575 3.14
Reed and Bamboo 109 0.22
Stone and Mud 8655 17.27
Stone and Cement 9961 19.88
Blockets 4539 9.06
Bricks 70 0.14
Others 4257 8.50
Not stated 834 1.66
All Housing Units 50102 100

By Material of Roof Number %

Corrugated iron sheets 36299 72.45
Thatch 4681 9.34
Wood and Mud 7025 14.02
Reed and Bamboo 272 0.54
Others 1169 2.33
Not stated 656 1.31
All Housing Units 50102 100

Source: CSA, The 1994 Population and Housing Census of Ethiopia,

Results for Dire Dawa Provisional Administration, 1995.

Roof tiles of clay can be a good substitute to corrugated iron sheet. However, Clay tiles for
roofing require different kind of truss, which could make the product more expensive for regular
type of houses. Accordingly, only one or more storied housing units and commercial buildings of
similar standard are considered as the potential users of roofing tiles of clay. One or more storied
housing units accounted for 1.21 per cent of all the housing units in DDPA in 1994. However,
roof tiles of clay are becoming popular roofing materials so much. As matter of fact taking new
constructions separately, one would observe significantly increasing proportion of modern
housing constructions using roofing tiles of clay. Taking into account the developments in the
modern housing construction and the considerably substantial and growing number of
commercial enterprises in the area which stood at 4,221 in 2001/02, a conservative estimate of
5% of the new construction of housing units is used in determining the potential users of roofing
tiles of clay. Applying a quarter of the rate of urbanization in the country (1%) on the base year

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housing data of 1994, the current urban housing units in DDPA that are expected to use roofing
tiles of clay is estimated at 2823 units. Making use of expert estimate of an average roofing area
of 108 meter square, the current effective demand (for 2006) for roofing tiles of clay in DDPA is
estimated at 304,863 meter square or 2,032,423 pieces of clay tiles of 30 centimeters by 50
centimeters dimension.

2. Projected Demand

As stated above a rate of growth of 1%, a quarter of the rate of urbanization in the country is
adopted in projecting the demand for roofing tiles of clay in DDPA. The projected demand is
shown in Table 9.2.1

Table 9.2.1
A. PROJECTED DEMAND FOR ROOF TILES OF CLAY

Year Projected Demand

In m2 In pieces
2007 307,912 2,052,747
2008 310,991 2,073,274
2009 314,101 2,094,007
2010 317,242 2,114,947
2011 320,415 2,136,097
2012 323,619 2,157,458
2013 326,855 2,179,032
2014 330,123 2,200,823
2015 333,425 2,222,831
2016 336,759 2,245,059
2017 340,126 2,267,510
2018 343,528 2,290,185
2019 346,963 2,313,087
2020 350,433 2,336,218
2021 353,937 2,359,580
2022 357,476 2,383,176
2023 361,051 2,407,007
2024 364,662 2,431,077
2025 368,308 2,455,388

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 B . MATERIALS AND INPUTS

1. RAW & AUXILIARY MATERIALS

The basic raw materials for the production of roof tiles is clay and wood. Auxiliary materials
include sodium silicate, Gypsum plaster and decorating materials. The annual requirement at full
capacity production is shown in Table 9.1.1 below.

Table 9.2.1 B

RAW & AUXILIARY MATERIALS AND COST

(REQUIREMENT AT FULL CAPACITY)

Sr. Qty.
No Unit price Cost in '000 Birr
Description
( Birr/ton)
FC LC TC
A. Raw Materials
1. Clay 30,000 kg 135 - 4,050 4,050
2. Wood 90,000 kg 650 - 58,500 58,500

Sub total 62,550 62,550

B. Auxiliary Materials
1 Sodium Silicate As Regd - 6,500 - 6,500
2 Gypsum Plaster As Regd - - 5,000 5,000
3 Decorating Materials As Regd - 7,000 - 7,000

Sub-Total 135,000 5,000 18,500

Total Cost 135,000 67,500 81,050

Table 9.2.1 C Clay Reserves Deposit in DDA

Reserve Reserve in
Deposit Location Status
Category tons
Dire Dawa B 2,500,000 Under use by the existing cement factory
A 782,000
Clay Melka Jebdu
B 1,418,700

C 5,367,900

A+B+C 8,567,900 Potential for future use

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Table 9.2.1 D Average analysis results of clay in DDA
Deposit SiO Al2O3 Fe2O3 CaO MgO TiO2 K2 O LOI Total
2
Clay 42. 11.2 6.3 13.6 2.6 1.0 1.5 20.4 98.8
2

2. MANPOWER REQUIREMENT

The plant requires both direct and indirect manpower. The direct manpower consists of
production supervisors, operators and technicians. Indirect manpower consists of plant manager,
office workers and general service workers. Table 9.2.2 shows manpower requirement of the
plant and annual labrour cost.

Table 9.2.2

MANPOWER REQUIREMENT AND LABROUR COST

Sr. Req. Salary

Description Salary Annual
No. No. Monthly
A. Administration
1. Plant Manager 1 1,500 18,000
2. Secretary 1 600 7,200
3. Accountant 1 800 9,600
4. Personnel Head 1 800 9,600
5. Sales Man 1 600 7,200
6. Stores man 1 600 7,200
7. Clerk 1 300 3,600
8. Driver 2 250 6,000
9. Guard 2 180 4,320
10. Cleaner 2 180 4,320
11. Messenger 2 150 3,600
Sub-Total 15 80,640
B. Production
1. Production Supervisor 1 1,200 14,400
2. Operators 5 500 30,000
3. Technicians 2 650 15,600
4. Laborers 3 180 6,480
Sub-Total 11 66,480

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 Workers Benefit (25 of BS) 36,780
Total Cost 26 203,900

2. UTILITIES

In puts required for the envisaged plant consists of electricity, water and fuel oil. Electricity is
used to operate production equipments, for lighting and to supply power sockets. Water is
required for process, for drinking and other general purposes. Fuel oil is burned in furnace to
fine the roof tiles. Annual requirements of utilities together with costs are given in table 9.2.3
below.

Table 9.2.3: ANNUAL REQUIREMENT OF UTILITIES AND COST

Sr. Description Qty. Unit Price Cost (Birr)

No.
1 Electricity (kWh) 3000 0.47/ kWh 1410
3 3
2 Water (m ) 1000 3.1 Birr/ m 3100
3 Fuel Oil (ltrs.) 1000 3.34 Birr/litre 3340
Total 7850

11. TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at about 1.48 million, of
which 31.21 per cent will be required in foreign currency.

The major breakdown of the total initial investment cost is shown in Table 10.1.

Table 10.1 INITIAL INVESTMENT COST

Sr. Total Cost

No. Cost Items (‘000 Birr)
1. Land lease value 25.0
2. Building and Civil Work 600.0
3. Plant Machinery and Equipment 250.0
4. Office Furniture and Equipment 75.0
5. Vehicle 225.0
6. Pre-production Expenditure* 236.86
7. Working Capital 76.53
Total Investment cost 1488.39

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Foreign Share 31.21

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