Chapter 3

, . . . ..
.. .

Professor o f Mineral Engineering ,

University of B r i t i s h Columbia ,

Vancouver, B. C .
Canada

ABSTRACT

Several c a p i t a l c o s t e s t i m a t i o n procedures a r e reviewed b r i e f l y ,

although t h e f a c t o r e d e s t i m a t e method i s discussed i n preference. A
t a b l e o f c o s t versus equipment parameter d a t a i s provided, where t h e
c o s t may be updated from t h e c u r r e n t value of t h e M&S c o s t index f o r
mining and m i l l i n g . Cost equations a r e u s e f u l t o prepare computer
programs which perform c a p i t a l c o s t c a l c u l a t i o n s . The use o f t h e
f a c t o r e d e s t i m a t e method i s i l l u s t r a t e d .

INTRODUCTION

For many y e a r s mineral processing engineers have recognized t h e

advantages of v a l i d cost d a t a unique t o t h 2 i r processing f i e l d . This
has l e d t o compilations such a s a handbook f o r e s t i m a t i n g major
equipment c o s t s and preliminary c a p i t a l c o s t s . The handbook was
published i n 1972 by t h e Canadian I n s t i t u t e of Mining and Metallurgy
(1) and contains d a t a i n t h e form of graphs, t a b l e s and equations f o r
t h e r a p i d estimation of t h e c o s t of an item of major equipment used
i n mineral processing p l a n t s . Data c o l l e c t e d from v a r i o u s sources
follow t h e equation
b
Cost = a(X)

where X i s a s u i t a b l e parameter. such as motor horsepower and a and b

*
Currently under r e v i s i o n and expansion.
 .PRELIMINARY C A P I T A L COSTS

a r e c o n s t a n t s . Such c o s t d a t a a r e u s e f u l t o e s t i m a t e t h e q t o t a l c o s t
of a processing p l a n t . .,
The c o s t equations i n t h i s chapter have a t l e a s t one t h i n g i n
common. Each was developed from p r i c e s a d j u s t e d t o a common cost
-
index value, namely, t h e Marshall & Swift index (Mining and Milling)
of 300. Towards t h e end of t h e c h a p t e r , t h e equations a r e employed
t o e s t i m a t e t h e c a p i t a l c o s t of a p l a n t from a rough flowsheet. B u t .
f i r s t , b e f o r e c a p i t a l c o s t e s t i m a t i o n s a r e considered, t h e n a t u r e and
u t i l i t y of c o s t i n d i c e s i s reviewed.

COST INDICES

Cost i n d i c e s a r e r a t i o s used t o e s t i m a t e c u r r e n t p r i c e s ' of equip-

ment from o b s o l e t e p r i c e s . A c o s t index i s t h e r a t i o of c o s t s a t a
p a r t i c u l a r time t o c o s t s a t a s p e c i f i e d base y e a r . Where t h e p r i c e .
of an item a t some time i n t h e p a s t is known, t h e c u r r e n t p r i c e i s
estimated from
cost now = (cost then) (cost index now) .' ..
(cost index then)
Cost i n d i c e s a r e based on mean c o s t s over a period of time. i h e y
have an accuracy of k10 percent and they a r e used with equal t o o r .
b e t t e r than t h i s accuracy when t h e time l a p s e i s l e s s t h a n t e n y e a r s .
As a consequence, c o s t i n d i c e s should be r e s t r i c t e d t o order-of-
magnitude and f a c t o r e d e s t i m a t e ( r a t i o e s t i m a t e ) c o s t i n g methods .

Of t h e various' c o s t i n d i c e s a v a i l a b l e , ,the' fo1,lowing a r e most ,

commonly employed i n t h e process i n d u s t r i e s : ' (a).Nelson r e f i n e r y '

c o n s t r u c t i o n index; (b) Chemical Engineering p1,ant'construction c o s t
index, (c) Engineering News-Record c o n s t r u c t i o n index (ENR) and (d)
Marshall' & Swift (formerly Marshall & Stevens) cost index (MES). ~ h e ' s e
a r e described i n Cost, October,. 1968 i s s u e , ' and a r e
summarized below.

Nelson Refinery Construction Cost Index

This index i s used p r i m a r i l y f o r e s t i m a t i o n s i n t h e petroleum

i n d u s t r y . The t o t a l index i s based on m a t e r i a l and l a b o r i n t h e
following percentages : 24% i r o n and s t e e l , 8%b u i l d i n g m a t e r i a l , 8%
miscellaneous equipment, 30% common labor, 30% s k i l l e d l a b o r . The
base y e a r i s 1946.
., ,
Chemical Engineering P l a n t Construction Cost ~ n d e x (cE,)'

This index is based on equipment, e r e c t i o n and i n s t a l l a t i o n , mat-

e r i a l , 1abor;'engineering and s u p e r v i s i o n c o s t s i n t h e ' f o l l o w i n g p e r -
centages : 37% f a b r i c a t e d equipment, 14%process equipment, 20% p i p e s ,
valves and f i t t i n g s , 7% process instruments and c o n t r o l s , 7% pumps and
compressors, 5% e l e c t r i c a l equipment, 10% s t r u c t u r a l s u p p o r t s , i n s u l -
a t i o n and p a i n t , 22% e r e c t i o n and i n s t a l l a t i o n l a b o r , 7% b u i l d i n g s ,
54 MINERAL PROCESSING PLANT DESIGN

m a t e r i a l s .and labor, 10% engineering and supervision manpower. The

index is based on 1957-1959 where it h a s a value of 100.

Engineering News -Record Constructionr Cost Index (ENR)

The ENR index i s based on t h e c o s t s of labor and b u i l d i n g m a t e r i -

a l s i n t h e following proportions-: 25 cwt. of s t r u c t u r a l s t e e l , 6 b b l .
of P o r t l a n d cement, 1.088 mfbm of 2x4 s 4 s lumber, and 200 hours of
common l a b o r . The base y e a r f o r which t h e index t a k e s t h e value o f '
100 i s 1913.

Marshall & Swift Cost Index (MES)

The M&S index has s e v e r a l v a l u e s . The value most o f t e n used and

r e f e r r e d t o is t h e a l l - i n d u s t r y equipment index. This index i s t h e
.average o f t h e i n d i c e s c a l c u l a t e d f o r 47 d i f f e r e n t i n d u s t r i e s . Other
M&S.index values a r e c a l c u l a t e d according t o t h e type of i n d u s t r y ; one
o f t h e s e i s an MES index f o r t h e mining and m i l l i n g i n d u s t r y .

These i n d i c e s a r e based on -equipment a p p r a i s a l s , modifying f a c t -

o r s and judgments concerning t h e c u r r e n t economic c o n d i t i o n s . The
base y e a r i s 1926:

Comparisons Between Cost ~ n d i c k s

Table 1 l i s t s t h e ENR, M&S and CE c o s t index values from 1950 t o

1975. Such values a r e taken from various journals such as Chemical
Engineering, Engineering News Record and O i l and Gas J o u r n a l . Of
i n t e r e s t i s a graph of M&S index (mining and m i l l i n g ) versus y e a r .
Such a p l o t i n d i c a t e s t h a t from 1966 t o 1972, t h e p r i c e of an item .
i n c r e a s e d on t h e average by about t h r e e and one h a l f percent p e r year
on a cumulative b a s i s . From 1972 t o 1975 t h i ~i n c r e a s e i s c l o s e r t o
e i g h t percent on t h e average.

Table 2 i s a review of index values f o r 1976. ~ o t et h a t t h e M&S

index f o r mining and m i l l i n g i s l a r g e r than t h e a l l i n d u s t r y v a l u e .

Example o f Use of Cost Indices

Suppose t h a t i n June of 1967 - a cone c r u s h e r was purchased f o r

$50,000. What i s t h e .approximate - c o s t o f t h i s u n i t today?

L e t t i n g "today" b e September 26, 1976, then any c u r r e n t c o s t

index may be chosen f o r t h e problem, although t h e M&S index f o r mining
and m i l l i n g is p r e f e r r e d . This index lltoday'l i s 487 from Table 2.
June i s t h e middle o f t h e y e a r s o t h e corresponding value f o r 1967
w i l l probably be r e p r e s e n t a t i v e of June. This i s 264 ,from Table 1.
Using t h e f o r p u l a on t h e previous p a g e .
487 = '$92,235
c o s t now = $50,000 x - . .
264
 PRELIMINARY C A P I T A L COSTS

TABLE 1: Cost Index Values from 1950 t o 1975

Year ENR Index MES (all-indus t r y ) M E S (min/mi 1l i n g ) CE Index

1913=100 1926=100 1926=100 1957-9=100

 MINERAL -PROCESSING PLANT DESIGN

TABLE 2: Cost Index Values f o r Year 1976

, .
Month ENR Index M&S( a l l - i n d u s t r y ) M&S(Min/Milling) CE Index
7 .

avg 2400 472 " 483 192

Jan
Feb
Mar
A P ~
May
June
July
Aug
Sept
Oct
Nov
Dec

. .
CAPITAL'COST ESTIMATION
, .
The t o t a l c a p i t a l investment i n a mineral processing p l a n t con-
s i s t s of a fixed c a p i t a l p o r t i o n and a working.capita2 p o r t i o n . ' The
f i x e d c a p i t a l c o s t p o r t i o n i s t h e t o t a l amount of money needed t o pur-
chase t h e necessary p l a n t and a u x i l i a r y p l a n t f a c i l i t i e s . The work-
ing c a p i t a l c o s t p o r t i o n r e p r e s e n t s cash t h a t must be a v a i l a b l e t o be-
g i n t h e o p e r a t i o n . Of major importance i s t h e f a c t t h a t t h e t o t a l
c a p i t a l investment i s a sum t h a t i s s e p a r a t e from t h e t o t a l product
c o s t p a i d o u t p e r u n i t time from gross income p e r u n i t time. . T o t a l
product c o s t s include operating c o s t s such as d i r e c t production c o s t s ,
f i x e d charges and p l a n t overhead, and general expenses such as admin-
i s t r a t i v e c o s t s , d i s t r i b u t i o n and marketing c o s t s , research and dev-
elopment c o s t s and gross earnings expenses.

Fixed c a p i t a l c o s t e s t i m a t e s may be based on as l i t t l e p r i o r i n -

. formation a s p l a n t capacity o r on as much as complete process and
b u i l d i n g s p e c i f i c a t i o n s . Out o f t h i s range., f i v e major types o f es t-
imations have been proposed by t h e American Association of Cost Eng-
- -

i n e e r s . These a r e :
1. Order-of -magnitude e s t i m a t e based on previous c o s t data,. I t is a
r a t i o e s t i m a t e of more than +30 percent probable accuracy.
2. Factored e s t i m a t e based on major equipment c o s t s with a probable
accuracy of +30 p e r c e n t .
3 . Budget a u t h o r i z a t i o n e s t i m a t e (preliminary e s t i m a t e ) based on
s u f f i c i e n t d a t a t o permit budgeting. Probable accuracy is +20 %.
 .PRELIMINARY CAPITAL COSTS. 57
4 . D e f i n i t i v e o r p r o j e c t c o n t r o l e s t i m a t e based on almost complete
d a t a (no s p e c i f i c a t i o n s o r complete drawings). Probable accuracy i s
-110 p e r c e n t .
5. Detailed o r c o n t r a c t o r ' s e s t i m a t e based on complete engineering
drawings, s p e c i f i c a t i o n s , and s i t e surveys. Probable accuracy i s
?5 p e r c e n t .

Types' l . , 2. and 3 . of t h e above a r e preliminary (predesign) f i x -

ed c a p i t a l c o s t estimates and r e q u i r e much l e s s d e t a i l e d information
t h a n types 4 . and 5 .

Preliminary c a p i t a l c o s t e s t i m a t e s a r e u s e f u l t o process engineers

who a r e involved i n process s e l e c t i o n and design. Since-most companies
have a l i m i t t o a v a i l a b l e c a p i t a l funds, an immediate assessment o f
i n i t i a l cash requirements i s provided. I n s i t u a t i o n s where t h e t o t a l
product c o s t of a l t e r n a t i v e processes a r e s i m i l a r , t h e one with t h e
s m a l l e s t c a p i t a l expenditure i s s e l e c t e d . Thus a preliminary e s t i m a t e
serves t o a s s e s s processing a l t e r n a t i v e s .

Type 1. estimates do not have t h e f l e x i b i l i t y of t h e f a c t o r e d

c o s t estimate (type 2 . ) ; t h e l a t t e r allows personal judgments t o be
made. .Type 3 . e s t i m a t e s r e q u i r e more information than e i t h e r type 1.
o r type 2. and, t h e r e f o r e , a r e more time-consuming. When t h e f e a s i b i -
l i t y of a process i s s t i l l being evaluated, t h e e x t r a accuracy of a
type 3. estimate i s not j u s t i f i e d . Therefore, t h i s chapter s t r e s s e s
e s t i m a t e s i n c a t e g o r i e s 1. and 2.
\ . .
Working. C a p i t a l Cost Estimates . . .
,. ,
'... . .
working c a p i t a l c o s t e s t i m a t e s a r e obtained o f t e n by taking a
percentage o f t h e f i x e d c a p i t a l investment. Approximately 10 percent
i s a reasonable average. I
. .
. .
Provided t h e corresponding information i s a v a i l a b l e , working cap-.
i t a l c o s t may be estimated from t h e following:
a . Raw m a t e r i a l s inventory (1 month's supply @ / c o s t ) $....
b . Materials-in-process inventory ( 1 month's supply @ c o s t ) $ ....
c . Product inventory (l'month @ mfg. c o s t ) $...,
d. Accounts r e c e i v a b l e ( 1 month @ s e l l i n g p r i c e ) $....
e . Available cash ( t o meet expenses of wages, raw m a t e r i a l ,
u t i l i t i e s , s u p p l i e s f o r 1 month @ mfg. c o s t ) : $....
Working c a p i t a l = a + b + c + d + e = $. ...
Fixed Capital Cost Estimates

A t l e a s t f o u r ways t o o b t a i n type 1. and type 2 . estimates o f

f i x e d c a p i t a l requirements appear t o have been used i n mineral proces-
s i n g (2). These a r e t h e s i x - t e n t h s r u l e , t h e p l a n t c o s t r a t i o method,
t h e equipment c o s t r a t i o method and t h e p l a n t component c o s t r a t i o
(factored e s t i m a t e ) method. To use t h e l a s t t h r e e methods, t h e follow-
i n g informatfon i s h e l p f u l : a rough flowsheet showing major items of
 MINERAL PROCESSING PLANT DESIGN

equipment and t h e i r corresponding s i z e s along with s u f f i c i e n t inform-

a t i o n t o estimate p l a n t s i z e and complexity. Material balances and
energy balances w i l l be of value.

Six-Tenths Rule. To use t h e s i x - t e n t h s r u l e , t h e f i x e d c a p i t a l ' . c o s t

of a p l a n t of known c a p a c i t y must be a v a i l a b l e . I n such cases -

For example, suppose a 30,000 TPD concentrator cost $ 6 0 ~ 160 t o b u i l d

i n 1970 when t h e M&S mining and m i l l i n g index was 303. Suppose t h a t
t h e cost of a s i m i l a r 40,000 TPD f a c i l i t y i s d e s i r e d a t t h e beginning
of 1977. Using t h e above r u l e ,

6
(cost) = 60x10 (40,000/30,000) O e 6
6
= $ 7 1 . 3 ~ 1 0 a t a cost index of 303
To update t h e c o s t , t h e c u r r e n t , cost index must be employed. Table 2
shows t h a t t h e index a t t h e beginning of 1977 must be c l o s e t o 497.
Hence,
6
(cost)now = 7 1 . 3 ~ 1 0 (497/303)
= $117x106 . ' .
The exponent, 6/10, i s an average and depends on t h e type of ,
p l a n t . Such f a c t o r s a s type of s i t e , economic conditions p r e v a l e n t ,
geographic location and regional p r o d u c t i v i t y a r e responsible f o r a
substantial variation.

Plant Cost Ratio Method. This method r e q u i r e s an estimate of t h e c o s t

of major items of d e l i v e r e d process equipment. I f t h i s cost i s equal
t o N , then (see reference ( 2 ) ) :
c o s t of s o l i d process p l a n t = 3.10xN
cost of s o l i d - f l u i d process p l a n t , = 3.63xN
cost of f l u i d process p l a n t = 4.74xN
Reasonably accurate estimates of equipment c o s t s must be a v a i l a b l e .

For example, suppose t h a t t h e current cost of major equipment

items i n a secondary crushing p l a n t happen t o be $ 5 ~ 1 0 ~ The
. cost
of t h e i n s t a l l a t i o n . i s estimated as
6
cost = 3 . 1 0 ~ 5 ~ 1 0
6
= $15.5~10
. %

Equipment Cost Ratio Method. Compared with t h e above method, more

accuracy r e s u l t s from multiplying categories of equipment of s i m i l a r
n a t u r e by corresponding f a c t o r s and then c a l c u l a t i n g t h e r e s u l t i n g
sum. Let t h e cost of ,the i t h major process u n i t by X i . Then a p l a n t
 PRELIMINARY C A P I T A L COSTS 59

cost a s s o c i a t e d with item i i s equal t o F.X. where F. i s an appropri-

1 1 .
ate factor.

The c o s t of t h e t o t a l p l a n t i s c a l c u l a t e d from

cost = 2 F ~ X ~

f o r a p l a n t c o n s i s t i n g of n items of major equipment. Table 3 shows

t y p i c a l Fi values (2). The t a b l e may be expanded a f t e r s e v e r a l pro-
j e c t s have been analyzed.

TABLE 3: Equipment Cost Ratios

Factor, F,
Equipment Category
Bucket e l e v a t o r
Mixer
Furnace
Drum Type d r y e r
Kiln
Conveyo r
Compressor
Electrostatic precipitator
Blower, fan
Refrigeration u n i t
Boiler
Mills
Vacuum r o t a r y d r y e r
Dry dust collector
Storage tank
Crusher
Process tank
Instrumentation
Heat exchanger
Wet dust c o l l e c t o r
pump
E l e c t r i c motor

P l a n t Component Cost Ratio Method. This method provides considerable

f l e x i b i l i t y and involves a breakdown of f i x e d c a p i t a l c o s t s i n t o com-
ponents whose c o s t s a r e a r a t i o of major equipment c o s t s . Table 4 i s
an example of t h e p l a n t component c o s t -ratio method (factored estimate
method) suggested f o r chemical p l a n t s ( 3 ) . An a l t e r n a t i v e t o Table 4
i s given i n Table 5 (see reference ( 2 ) ) .
60 MINERAL PROCESSING.PLANT .DESIGN

TABLE 4: Factored Capital Cost Estimate Guide (3).

, .
1. Purchased equipment c o s t s from references
and on c u r r e n t index b a s i s ................. :.....,.......$000,000
2. I n s t a l l e d equipment c o s t s
a . From references and on current index b a s i s o r
..............................
b. Item 1 m u l t i p l i e d by 1.43 $000,000
3. Process piping ........................................... $000,000
Type p l a n t : Percent of Item 2,: ,

' Solid 7-10 . . ,.

solid-Fluid 10-30
Fluid 30-60
4. Instrumentation .......................................... $000,000
Amount of automatic c o n t r o l : Percent of Item 2:
None . 3-5 . .
Some ' 5112 '.
Extensive 12-20
.-
5. Buildings and s i t e development.. ...........................: $000 ;000
Type p l a n t : Percent of Item 2:
Outdoor 10-30
Outdoor-Indoor 20-60
Indoor 60-100 I

6. A u x i l i a r i e s (e.g.; e l e c t r i c power). ..................... .$OOO,OOO

Extent: Percent of Item 2:
Existing 0
Minor additions . 0-5
Major additions. 5-25
New f a c i l i t i e s 25-100
7. Outside l i n e s ............................................ $000,090
Average length : . Percent of Item 2:
Short 0-5
Intermediate .' 5 -15
Long 15-25
8. Total physical p l a n t c o s t s = Sum of Items 2+3+4+5+6+7 ....$ 000,000
9.. Engineering and.construction ............................. $000,000
Complexity: Percent of Item 8:: . :. . . . . .
Simple 20-35 ...
Difficult 35-60 . . . *,
10. Contingencies ............................................ $000,000
Type process : Percent of Item 8 :
Firm 10-20
Subject t o change 20-30
Speculative - - 30-50 .
Average 30
11. Size f a c t o r ............................................... $000,000
Size plant: ;!percent
, . o f ' Iteml8.: - - . ' .
Large commercial 0-5 .
Small commercial 5-15
Pilot plant "' 15-35
12. Total p l a n t of fixed '.capi'tal c o s t s = Sum of 8+9+10+11..;. $000,000
. . a .
 PRELIMINARY C A P I T A L COSTS 61

TABLE 5: Plant Component .Cost (2)

. -Ratio Method
Purchased equipment c o s t s from reference's
and on current index b a s i s . . ....................... ... ..
; ; $000,000
Equipment i n s t a l l a t i o n .(0.17 t o 0.25 times Item 1) .......$000,000
Piping, material and labor, excluding s e r v i c e piping
.(0.0.7 t o 0.25 Times Item 1 ) . .......................... .... : $000,000
E l e c t r i c a l , m a t e r i a l and labor, excluding building. l i g h t i n g . . :
(0.'13 t o 0.25 times Item 1) .............................. $000;OOO.
Instrumentation ,(0.'03 t o 0.12 times Item 1 ) . ............ ,$000,000
Process b u i l d i n g s , including mechanical s e r v i c e s & l i g h t i n g .
(0.33 , t o 0.50 times Item 1 ) . ............................... $000,000
Auxiliary b u i l d i n g s , including mechanical s e r v i c e s & l i g h t i n g
'(0.07 t o 0.15 times -Item' 1 ) . ...................... .....
...
., - . $000,000
Plant s e r v i c e s , .such as f r e s h water systems ., sewers ,.,compressed
.................
. a i r , e t c . , (0 .'07 . t o 0.15 times Item 1 ) . .$000,000
S i t e improvements;'such as fences, roads, r a i l r o a d s , e t c .
(0.03 t o 0.18 times Item .l) ............................. .$00.0,000
Field expenses r e l a t e d t o construction management
(0.10 t o 0.12 times Item 1 ) . ....................... .. .:.. ; .$000,000
P r o j e c t management including engineering and construktion
(0.30 t o 0.33 times Item 1) .........................,....$ 000,000

'12. Fixed c a p i t a l cost.(sum of 1+2+3+4+5+6+7+8+9+10+11).? . . . . $000,000

. .

-.-
,
. Manufacturers of mineral processing equipment were contacted and
e

p r i c e s were obtained f o r major items of equipment ( 1 ) . Invariably,

such c o s t s ,were r e l a t e d t o an equipment parameter by t h e equation:
b '
c o s t = a(X)
.,. '

where X i s t h e equipment parameter and a and b a r e constants. Data :

were f i t t e d by l e a s t squares methods. When necessary t o ' maintain ,

p r e d i c t i o n s 'within 10 p e r c e n t , equations of the. above form were f i t t e d

t o cover d i f f e r e n t ranges of X . Thus a cost versus X . curve might be
described by as many as 3 o r 4 equations, each with d i f f e r e n t constar
n t s ' a p p r o p r i a t e t o a s p e c i f i c range of X .
. . ,
.Table 6 shows cost versus equipment. parameters f o r various; min-
e r a l processing u n i t s . Ranges f o r X a r e l i s t e d . Note t h a t a sub-
s t a n t i a l l y more .complete t a b u l a t i o n i s found.in reference' (1). The
equations inay be extrapolated outside t h e i r ranges with extreme caut-
ion only. .Clearly, t h e r e s u l t i n g cost i s not a direct' quote! Each:
c a l c u l a t e d c o s t corresponds t o an M&S index, mining and m i l l i n g , of,
300'.
62 MINERAL PROCESSING PLANT DESIGN
 PREL TMINARY C A P I T A L .COSTS

Calculation of Cost of Major Equipment

The information i n Table 6 may be used t o e s t i m a t e t h e c o s t o f

equipment l i s t e d t h e r e . Suppose t h a t t h e c o s t of f i v e 30-inch d i a -
meter cyclones i s d e s i r e d . The c o s t equation from Table 6 i s

c o s t = 132(diameter) 0.91

s o t h a t c o s t = 132(30) O S g 1 = 2916 d o l l a r s p e r cyclone a t an M&S index

(mining and m i l l i n g ) of 300. Since t h e c u r r e n t value of t h i s index i s
about 515 (September, 1977), then t h e c u r r e n t c o s t i s 2916(515/300)
o r $5005 p e r cyclone. Since f i v e cyclones a r e involved, then t h e
t o t a l c o s t i s $25,025.

I t i s apparent t h a t , given a flowsheet which l i s t s major equip-

ment properly s p e c i f i e d , c a p i t a l c o s t s based upon major equipment c o s t
may be estimated.

COMPUTER PROGRAMS FOR CAPITAL COST ESTIMATIONS

Using cost equations f i t t e d by l e a s t squares techniques (1) i n

conjunction with a f a c t o r e d e s t i m a t e t a b l e such as Table 4, a computer
program t o e s t i m a t e c a p i t a l c o s t s has been w r i t t e n ( 4 ) . The program
i s i n t h e BASIC language and permits d i r e c t operator-computer commun-
i c a t i o n v i a a remote t e r m i n a l . The program, which uses a "game play-
er" approach, has been t e s t e d on t h e CGE Mark I 1 time-sharing terminal
system.

Figure 1 i s a main flow diagram of t h e computer program. The

u s e r c a l l s CAPCOST t o i n i t i a t e t h e sequence.

Program CAPCOST reminds t h e u s e r t h a t c o s t s a r e based on an M&S

index of 300 and requests t h a t t h e c u r r e n t value be e n t e r e d . Input
and c a l c u l a t e d information, such a s . t h e c u r r e n t M&S value and a c a l -
c u l a t e d c o s t v a l u e , i s s t o r e d and/or r e t r i e v e d v i a f i l e COSTCOM which
i s common t o a l l programs. A f t e r an M&S index value i s e n t e r e d , CAP-
COST l i s t s t h e types of processing equipment. a v a i l a b l e and then chains
with program BRANCH.

Program BRANCH d i r e c t s t h e computational sequence t o any of e i g h t

subroutines as s p e c i f i e d by t h e u s e r . Sub-Programs CRUSH, MILLS,SIZE,
SSSEP, LEACH, SLSEP, and FLOW c o n t a i n operating i n s t r u c t i o n s and
equipment parameters. A s t h e u s e r follows i n s t r u c t i o n s typed by the,
computer and e n t e r s d a t a as ~ e q u e s t e d ,equipment c o s t s a r e c a l c u l a t e d .
Cost d a t a a r e s t o r e d and/or r e t r i e v e d i n f i l e COSTCOM. A f t e r a l l
equipment has been costed, t h e u s e r . d i r e c t s program BRANCH t o chain
t o program REPORT.
 MINERAL ?PROCESSING PLANT DESIGN

. .
.
'
,
. %

Chain
REPORT

FIGURE 1: Flow Diagram of Computer Program f o r

C a p i t a l Cost Estimations.
 PRELIMINARY CAPITAL COSTS 65
'
Program REPORT asks t h e u s e r t o supply any equipment c o s t s n o t
availab.le i n t h e program and then requests t h a t c o s t f a c t o r s be e n t e r -
,ed. A f i n a l p r i n t - o u t of t h e t o t a l c a p i t a l investment i s then prov-
tided.

A l l sub-programs r e q u i r e user-supplied s p e c i f i c a t i o n s . Sub-Pro-

grams w i l l l i s t t h e s p e c i f i c a t i o n s r e q u i r e d , along with ranges f o r
which equations a r e considered a c c u r a t e . Categories of equipment a r e :
Sub-program CRUSH contains crushing equipment such as cone, primary
and secondary gyratory, impact, jaw and r o l l crushers; hammer
m i l l s and p u l v e r i z e r s .
Sub-Program MILLS contains grinding equipment i n c l u d i n g autogenous,
b a l l , rod and pebble m i l l s .
Sub-program SIZE contains s i z i n g and c l a s s i f y i n g devices such as
cyclones, screens and c l a s s i f i e r s .
Sub-program SSSEP comprises s o l i d - s o l i d s e p a r a t i o n equipment including
t a b l e s , j i g s , e l e c t r o s t a t i c 6 magnetic s e p a r a t o r s , s p i r a l s and
flotation cells.
Sub-program LEACH includes leaching equipment and ion exchange u n i t s .
Autoclaves, a g i t a t o r s , b l e n d e r s , mixers and tanks a r e l i s t e d .
Sub-Program SLSEP contains s o l i d - l i q u i d s e p a r a t i o n devices such as
f i l t e r s , c e n t r i f u g e s , d r y e r s , thickeners and hydroseparators.
Sub-program FLOW includes blowers, c o n d i t i o n e r s , conveying equipment,
f e e d e r s , motors, pumps and d u s t c o l l e c t i o n equipment.

C a p i t a l c o s t 'estimation computer programs a r e u s e f u l because (1) .

- i n u n i v e r s i t i e s t h e teaching of process design i s f a c i l i t a t e d , (2) i n
i n d u s t r y t h e . p r o c e s s engineer r a p i d l y obtains .a c a p i t a l c o s t e s t i m a t e
f o r preliminary f e a s i b i l i t y i n v e s t i g a t i o n s , and (3) i n : f u t u r e t h e p r o -
gram w i l l be incorporated i n t o simulation an'd optimization programs t o
' f a c i l i t a t e optimal flowsheet design.
' I

EXAMPLE CAPITAL COST ESTIMATION

Figure 2 shows t h e flow diagram of a secondary crushing p l a n t ,

where each major process u n i t has been numbered. This flowsheet i s
t y p i c a l of some t h a t a r e found i n t h e l i t e r a t u r e . Several important .
d e t a i l s a r e missing. For example:
(1) The lengths and widths of conveyor b e l t s a r e missing. This i n f o -
rmation i s necessary t o c o s t t h e s e items.
(2) The equipment necessary t o e f f e c t t r a n s f e r of m a t e r i a l from ore
s t o r a g e onto b e l t s , from s u r g e b i n s onto screens and t e r t i a r y crushers
i s not l i s t e d .
(3) Motor horsepowers a r e missing.
( 4 ) Information on whether t h e p l a n t i s t o be heated and on t h e type
of dust c o l l e c t i o n system i s lacking.
(5) I t is n o t c l e a r wketker t h e screens a r e housed s e p a r a t e l y .

Note t h e importance o f s p e c i f y i n g those equipment parameters,

such as capacity o r horsepower, which have been r e l a t e d t o t h e c o s t
66 MINERAL PROCESSING PLANT DESIGN
 PRE~IMINARY CAPITAL COSTS 67

of t h e process . u n i t . This r e q u i r e s a f a m i l i a r i t y with c o s t equations

o r graphs t h a t a r e i n use.

To be somewhat more p r e c i s e , t h e equipment l i s t should have t h e

following information :
Secondary/Tertiary Crusher Building
-under coarse o r e s t o c k p i l e , 48-in. b e l t conveyor with f o u r
40"x72" v i b r a t i n g f e e d e r s , 1500 f t . of b e l t (two)
-50 f t of 54" t r a n s f e r b e l t conveyor (two)
- 7 ' s t a n d a r d cone c r u s h e r , 350 HP, (two)
-200 f t . of 72" b e l t conveyor
-20,000 cu. f t . surge b i n
- v i b r a t i n g f e e d e r , 40ttx72" ( f o u r )
-7' s h o r t head cone c r u s h e r , 300 HP (four)
-40 f t . of 54" t r a n s f e r b e l t (four)
Screen Building/Transfer Tower
-20,000 cu. f t . s u r g e b i n
- v i b r a t i n g f e e d e r s 80ttx94" ( f i v e )
-75 f t of 60" t r a n s f e r b e l t
-600 f t of 48" t r a n s f e r b e l t
-600 f t of 60" t r a n s f e r b e l t
Note t h a t b e l t lengths a r e e s t i m a t e s a t t h i s s t a g e , f o r a preliminary
e s t i m a t e is a l l t h a t i s r e q u i r e d . Dust c o l l e c t i o n systems may be
costed on t h e b a s i s o f roughly 40,000 cfm.

Conveyor B e l t Cost Estimate

Table 6 shows t h e c o s t equation f o r 36" conveyor b e l t s . Using an

M&S index of 500 a s c u r r e n t , then t h e c o s t i s found from
c o s t = (500/300)~34x(length)
To e s t i m a t e t h e c o s t of l a r g e r b e l t widths, t h e 0.6 r u l e i s used, For
example, the. c o s t of a 600 f t 36" b e l t , is about

c o s t = (500/300)x34x(600) ' ' I 3 = $78,100

A 48" b e l t would c o s t about
c o s t = 78,100(48/36) '6 = $92,800

Thus. b e l t c o s t s a r e summarized below:

Length $ for. 36" b e l t Belt size No. of b e l t s $ using 0.6 r u l e
40 3660' 54 in. 4 18,700
50 4710. . 54 in. 2 12,000
75. 7450 60 in. 1 10,100
200 22600 72 in. 1 34,300
600 78100 . . 48 in. . 1 92,800
600 78100 60 in. 1 106,000
1500 220000 48 in. 2 261,000
 The approximate c o s t f o r conveyor b e i t s i s thus $535-j000 a t an
M&S index of 500.

Vibrating Feeder Cost Estimate

T a b l e 6 i n d i c a t e s t h a t a t an M&S index of 500, v i b r a t i n g feeilers

c o s t about - ..
.0.99
cost = (500/300),xl .'28x(area)

Therefore 12 feeders of 40~~x72" a r e a each w i l l cost about $68,100,

whereas 4 feeders of 8 0 " ~ 9 4 ~a'r e a should be around $73,400., The t o t a l
cost i s about $142,000.
. < .. . . . .
Surge Bin Cost Estimate .. .

Assume t h a t b i n s c o s t about t h e same as s t e e l - t a n k s , where each

tank contains about 150,000 gallons (20,000 cu. f t . ) . From Table 6 ,
each b i n c o s t s about
.53 1
cost = (500/300) x44x(150,000) - $40,500
s o t h a t two b i n s i s around $81,000.

Vibrating Screens Cost ~ s t i m a t e -

, ,
Table 6 shows t h a t t h e cost of an 8'x20t double deck k i b r a t i n g-
screen i s around . ... .
..
c o s t = (500/300) x376x(160) '76' = $30,000
Since t h e r e a r e f i v e sc=eens ;' t h e totai:cost 'i's rdughly $150,000. , .

Crusher Motor Cost Estimate . . .. ,

From Table 6 , motor c o s t s a r e about (500;/300)x'i5. ~ X ( H P1.11 ) . , , .

A 350 HP motor c o s t s $17,000, while 'a 300 HP motor 'costs $14,300:
Total motor c o s t s a r e approximately 2 ~ 1 7 , 0 0 0+ 4 ~ 1 4 , 3 0 0= $91,000.
. . ,
Cone Crusher Cost Estimate - *. .
From Tahle 6, a 7 cone h s h e r c o s t s ( 5 0 0 / 3 0 0 ) f 4 1 5 4 ~ ( 7 ) ~o'r~
about $230,000. Since t h e r e a r e s i x , t h e n , t o t a l crusher c o s t s a r .e. . , ...
around $1 .38x106. - . . I

Dust C o l l e c t o r Cost Estimate

A 10,000 cfm c o l l e c t o r c o s t s (500/3h0)x10 .6x(104) ' 7 2 = $13,400 .,

Employing t h e 0.6 r u l e t h e cost of a 40,000 cfm u n i t would be around
$30,800. Assume 4 of these a r e used so. t h a t t h e t o t a l cost i s about
 PRELIMINARY PLANT COSTS

Total Major Equipment Costs

Major equipment c o s t s a r e summarized a s follows:

. Item $ Cost
Conveyor b e l t s 535,000
Vibrating feeders 142,000
Surge b i n s 81 ,'OOO
Vibrating screens 150,000
Crusher motors 91,000
Cone crushers 1,380,000
Dust c o l l e c t o r s 123,000

The above t a b l e shows t h a t t h e t o t a l major equipment c o s t s are about

$2,502,000 a t an M&S index of 500.

Factored Capital Cost Estimate

Once t h e cost of major equipment has been estimated, a prelimin-

a r y c a p i t a l cost may be determined. E i t h e r Table 4 o r Table 5 is use-
f u l f o r t h i s purpose. Note t h a t such t a b l e s a r e e a s i l y modified t o
r e f l e c t unique cost f e a t u r e s such as geographic l o c a t i o n (e . g . ,
Arizona versus Tasmania) .

Using Table 5, t h e estimated c a p i t a l cost is summarized below.

. .
Purchased equipment c o s t s . . ;.....................; .....
$2;502;000
Equipment I n s t a l l a t i o n (0.24 times Item 1.) ............
$600,480
Piping (0.16 times Item 1 . ) ........................
. . :... $400,320
E l e c t r i c a l (0.19 times Item 1.) ........................ $475;380
Instrumentation ( . 0 8 times Item 1 .) .................... $200,160
Process Buildings (0.45 times Item 1 . ) .................
$1,125,900
Auxiliary Buildings (0.12 times Item 1 . ) ...............
$300,240
Plant Services (0.10 times Item 1.) .................... $250,200
S i t e Improvements (0.05 times Item 1 . ) .................$125,100
Field Expenses (0.10 times Item 1 . ) ....................$250,200
P r o j e c t Management, Engineering (0.32 times Item 1 . ) ... $800,640

12. Fixed Capital Cost (1+2+3+4+5+6+7+8+9+10+11) ...........$7,030,620

The estimated c a p i t a l cost i s c a l c u l a t e d t o be about $7,000,000.
Clearly, t h i s f i g u r e could d i f f e r between i n d i v i d u a l s because t h e
s e l e c t i o n of multiplying f a c t o r s depends on personal judgment,

SUMMARY AND CONCLUSIONS

By means of c o s t i n d i c e s , major equipment' c o s t s may be updated

t o permit current equipment cost e s t i m a t e s . Such information i s em-
ployed t o obtain preliminary c a p i t a l cost estimates f o r immediate
70 MINERAL PROCESSING PLANT DESIGN

assessments o f processing a l t e r n a t i v e s . A computer program has been

w r i t t e n f o r t h i s purpose, where v a l i d c o s t equations a r e employed i n
t h e program. Such programs a r e u s e f u l t o everyone.

An example of t h e f a c t o r e d c a p i t a l c o s t e s t i m a t i o n method i s pro-

vided. Note t h a t equipment parameters r e l a t e d t o c o s t must be used
when s p e c i f y i n g major equipment.

I t must be s t r e s s e d t h a t t h e methods discussed i n t h i s c h a p t e r

a r e f o r preliminary estimations--not f o r d e f i n i t i v e ones. The methods
can be i n e r r o r by on t h e average 230 p e r c e n t , However, t h e y a r e ex-
tremely v e r s a t i l e and t h e i r accuracy may b e improved considerably with
e x p e r i e n c e . Factored e s t i m a t e t a b l e s may be modified t o f i t any de-
sired situation.

REFERENCES

1. Mular, A. L . , with E . A. Parkinson, Mineral Processing Equipment

Costs and Preliminary C a p i t a l Cost Estimations, S p e c i a l Volume 13,
Canadian I n s t i t u t e of Mining and Metallurgy, Montreal, Quebec,1972

2. Balfour, R . J . , and Papucciyan, T . L . , "Capital Cost Estimating

f o r Mineral Processing Plants", 4 t h Annual Meeting of Canadian
Mineral Processors, January 25-27, 1972, Ottawa, O n t a r i o .

3. ~ i l b r a n d,t p rank C . , and Dryden, Charles E. , Chemical ~n~inkerin~

P l a n t Design, McGraw H i l l , N . Y . , 1959.

4. Mula-r, A . L . , with E . Zickar, "A Computer Program f o r Mineral

Processing C a p i t a l Cost Estimation", CIM B u l l e t i n , May, 1973.