Ethiopian Construction Works Corporation

Proposal for Establishment

of
ECWC, Gypsum Production Plant at Chancho

ECWC, Business Development & Investment Department

January 18,2023
1
Contents

LIST OF TABLES & FIGURES

PART - 1 INTRODUCTION 1

PART - 2 PRODUCT DESCRIPTION 3

PART - 3 OBJECTIVE 5

PART - 4 MARKET OVERVIEW 6

PART - 5 SIGNIFICANCE OF GYPSUM 7

PART - 6 VISION & SOURCE OF FINANCING 7

PART - 7 PROJECT SITE & LOCATION 8

PART - 8 BENEFICIARIES OF THE PROJECT 10

PART - 9 STAKEHOLDERS 10

PART - 10 SOCIO-ECONOMIC BENEFITS 11

PART - 11 ASSUMPTIONS & RISKS 12

PART - 12 PROJECT IMPLEMENTATION & MANAGEMENT 14

PART - 13 PROJECT MONITORING & EVALUATION 15

 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

LIST OF TABLES & FIGURES

FIGURE 1.1 SITE CONDITION OF THE PROPOSED FACTORY AREA 8

FIGURE 1.2 LAND HOLDING CERTIFICATE 9

TABLE 1.1 PROJECT IMPLEMENTATION SCHEDULE 14

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 1 INTRODUCTION
Ethiopia is considered as one of the fastest growing economies in Africa. This is
apparent by fasting growing and booming industries all over the country. This has led
to the increasing requirements of industrial input materials in various ways with the
development of industries in ceramic, construction material, foundries cement and etc...

Thus, the demand for industrial minerals like gypsum, pumice and other minerals is
also increasing in proportion to the industrial development. Currently the demand for
such product is met through import and only few local suppliers.

To better help in the growth of the industry, it is imperative to increase the local
production of such materials and substitute imports. This well saves foreign currency
expenditure of the country and creates job opportunity for local population

More than 90% of gypsum are used in the building and construction industry while the
remaining are used in the agriculture and health sectors. Gypsum deposit also play
important role as a pathfinder in the petroleum industry by virtue of the fact that the
organic material commonly associated with its formation is considered as source of
hydrocarbon generation and its deposits act as seal for petroleum reservoirs.
https://businessplansinnigeria.ng/business-plans/gypsum-mining-gypsum-powder-and-
gypsum-board-production-in-nigeria-the-feasibility-report/

Gypsum is an important raw material in the production of Portland cement, Plaster of

Paris, School chalk, Wall board etc. Gypsum is also used extensively as a soil
conditioner.

Gypsum is a soft sulfate mineral composed of calcium sulfate dihydrate and is widely
used in molds, sculptures and as plaster material. Gypsum plaster is prepared when
dry POP (Plaster of Paris) powder is mixed with water and can be directly applied over
bricks or concrete surfaces to form a smooth surface. It provides good insulation
properties, is fire resistant and impact resistant. In addition, there are fewer shrinkage
cracks in gypsum plaster as it produces less heat. Due to these properties, it is
extensively being used over traditional sand cement plaster. Moreover, gypsum

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

plastering requires less time, is light in weight and decreases the structural load of the
building. The easy availability of gypsum ore in most of the African countries makes
gypsum as a readily available raw material for preparation of gypsum plaster.
Furthermore, the rapid growth in population, which has led to a rise in the demand for
housing in most of the East African countries, drives the demand for gypsum plaster.

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 2 PRODUCT DESCRIPTION

Gypsum is a hydrated sulphate of calcium, found usually in clays and limestone,
sometimes associated with Sulphur. It is the principal commercial form of hydrated
calcium sulphate (CaSO42H2O). It is usually formed by either the evaporation of salt in
shallow inland seas or by the decomposition of pyrite (FeS) in the presence of calcium
carbonate.

Gypsum is a particularly useful processed material. Its main application is as a building material,
mostly produced as so-called plaster of Paris for plastering walls and making decorative features
in buildings. However, gypsum also has a diversity of other uses, including making writing
chalk, soil conditioning for agriculture, making molds for pottery, as an additive in the
manufacture of Ordinary Portland Cement (OPC), in surgical splints, in increasing the hardness
of water, as an additive in certain foods such as tofu, and in some types of medicines and
pharmaceuticals. Its construction uses can also include external applications, such as in making
walling blocks, where the climate is generally dry and not prone to the dampness that damages
common types of gypsum.

In Ethiopia, gypsum is mostly used in the construction sector, in the manufacturing of

building, products such as plaster, plaster board, and cement. At present there are both
small scale and large scale cement factories which use gypsum as a raw material for
the production of cement. Gypsum has also significant application for chemical and
ceramic raw material fillers that aid in cost minimization and chemical enhancement.
These products have got wide applications in the glass, ceramic, fertilizer and chemical
industries.

The demand for gypsum is primarily being driven by the rapid growth of the
construction sector. In Ethiopia, like other countries, there has been increased demand
of cement, following the construction boom for the last decade. The construction of big
buildings, office tower, business building, residential, complexes, ring road and all kinds
of roads everywhere in the country need basically cement so that cement factories are
the major consumers of gypsum however, there is an increasing in demand for gypsum
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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

powder, plaster board, decorative plaster, gypsum sheets, gypsum tiles and plasters in
the current construction activities.

The most common way to improve the agricultural qualities of solonetzes and solonetzic
soils is gypsum. When gypsum is introduced into the soil, soda in the soil solution is
eliminated, and the sodium absorbed by the soil is displaced and replaced by calcium
to form a neutral salt in the solution - sodium sulfate. As a result of gypsum treatment,
the alkaline reaction of solonetzic soils is eliminated, the physical, physicochemical and
biological properties of the soil are improved, and its fertility is increased. Additionally,
gypsum powder has the following uses;

▪ It has excellent fire resistance. Gypsum board is a non-combustible material with

certain fire performance, and some can even be used as the fire protection layer
of a steel structure.
▪ It has the characteristics of keeping you warm and breathing. It can meet the
functional requirements of indoor heat preservation, sound insulation, fire
protection, waterproofing, flexible separation, etc. It is also a good indoor
ornamental material.
▪ No environmental pollution. The production process of gypsum building materials
does not emit waste gas, waste residue, wastewater, or substances.
▪ It can be recycled. The discarded gypsum building materials can be used as raw
materials for the production of gypsum building materials after being crushed,
screened, and calcined, without generating construction waste.
▪ Gypsum powder can be used as a Portland cement retarder in the concrete
industry. In agriculture, because gypsum powder is alkaline, it is possible to
sprinkle it into the acidic soil to integrate the pH value of the soil so as to make
use of a lot of land.
▪ Gypsum is the main ingredient in the well-known Chinese medicine "Baihu Tang,"
which is effective in treating acute high fever and thirsty irritable patients. In
addition, dentists use plaster to make models of gums, and surgeons also use
plaster to repair fractures.

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 3 OBJECTIVE
The ultimate goal of the proposed project is to producing gypsum powder and make
profit by selling the product primarily to the local market and to foreign market of
neighboring countries.

In addition, the project will realize the derived benefits that include the creation of
employment, import substitution effects for the economy, increasing foreign currency
earnings of the country and contributing to the government treasury in the form of
taxation.

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 4 MARKET OVERVIEW

4.1 Global Gypsum Industry

The gypsum market is predicted to grow at a 4.10 percent annual rate. Gypsum is
widely employed in the production of plaster, wallboard, and cement, as well as in
Portland cement as a hardening retarder. It’s commonly used to change the
composition and formation of heavy clay soils, especially those that have been severely
weathered as a result of intensive crop cultivation. The gypsum market is expected to
grow rapidly, owing to rising disposable income and technological advancements in
gypsum projects in the broader building industry. Furthermore, the construction sector
has been driven by the high adoption of digital solutions and rising spending on
technological advancements. As a result, cement and drywall production has increased,
expanding the scope for gypsum application and acting as a key determinant favoring
market growth.

4.2 Ethiopian Gypsum Industry

Ethiopian Gypsum Import is set to reach 1,214,200 Kilograms by 2026 from 988,560
Kilograms in 2021, growing 3.2% year on year on average. Since 2001, Ethiopian
demand was up 6% year on year. [2]

Ethiopian Gypsum Export came in at 260 Kilograms 2016, from 1 Kilograms in 2015,
compared to a year earlier [2].

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 5 SIGNIFICANCE OF GYPSUM

The demand for gypsum is rising and has become more popular as a reasonably
sustainable alternative and versatility in its use on various sectors. There are a number
of variables that determine demand for gypsum the following are the key driving factors
for its demand :

▪ Applicable in the field of construction, agriculture and the health sector.

▪ It is widely used to manufacture wall boards that are used to cover walls and
ceilings.

▪ Gypsum plastering requires less time, is light in weight, and decreases the
structural load of the building.

▪ An important raw material in the production of Portland cement, Plaster of

Paris, school chalk, wall boards, etc.

▪ Gypsum is also extensively used as a soil conditioner.

▪ Application in chemical and ceramic raw material fillers and chemical

enhancement.

▪ Applications in the glass, ceramic, fertilizer and chemical industries.

PART - 6 VISION & SOURCE OF FINANCING

The vison of the proposed gypsum production plant is to meet 20% of the total annual
national gypsum powder demand as well as the internal demands of ECWC projects.

The proposed gypsum production plant is planned to be financed from own equity and
bank loans in the proportion of 30% and 70% respectively.

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 7 PROJECT SITE & LOCATION

To minimize costs, the Proposed Gypsum Production Plant should be located around
an area where ample raw material is available for production of gypsum powder. With
this in mind, the Proposed Gypsum Production Plant will be located at Chancho ,
Oromia Region. The land proposed for the establishment of gypsum production plant is
owned by ECWC and has a total land area of 8,800m2. The location has ample raw
material for production of gypsum.

The presence of well-established infrastructures such as telecommunication, electricity

and water supply contributes for smooth operation of the project. The site location is
very close to a highway that leads to Addis Ababa and Northern parts of the Country
which would be suitable for transporting finished products.

At the site has all necessary facilities, infrastructure and amenities. There is an ‘’all
weather’’ transportation to the site. Hence locating the site within 40km from the area
where there is high demand is favorable for the project’s operation as it will help in
reducing the transportation and distribution cost of the final product to the major market
center in Addis Ababa.

Figure 1.1 Site condition of the Proposed Factory Area

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

Figure 1.2 Land Holding Certificate

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 8 BENEFICIARIES OF THE PROJECT

Beneficiaries of the proposed project are;

▪ Construction companies,

▪ Health centers,

▪ Individual house builders,

▪ Agricultural input providers,

▪ Gypsum board manufacturers,

▪ Cement manufacturers etc.

PART - 9 STAKEHOLDERS
The following institutions are among the major stakeholders of this proposed project;

▪ The government of Ethiopia

▪ Ministry of mining and petroleum

▪ Ministry of trade and industry

▪ Ethiopian standards agency

▪ Federal small and micro enterprise agency

▪ Regional states government and

▪ Financial institutions

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 10 SOCIO-ECONOMIC BENEFITS

Gypsum powder manufacturing has a wide national contribution socio-economically and
quantitatively in ample ways. Among the major contributions of this industry are:

Employment opportunities: Indeed, the gypsum powder manufacturing industry is known

to be the most labor-intensive one, so it’s an important means of mitigating
unemployment. Taking this into consideration, the existing single firm in the gypsum
powder manufacturing industry in Ethiopia also absorbs around 262 skilled and unskilled
labors.

GDP contribution: The gypsum powder manufacturing industry is one of the

manufacturing subsectors currently given priority by the government. Although there are
many gypsum powder manufacturing factories existing in Ethiopia, their contribution to
GDP is not easily considered.

Forward and backward linkage: The gypsum powder manufacturing industries have both
forward and backward linkages with various subsectors. This firm has backward linkage
with mining subsectors, which supplies input for such industries, and has a strong
linkage with the construction subsector, agricultural sector, health sector etc. which is
highly demanding gypsum for their consumption.

Source of government revenue: The subsector has been a potential revenue source for
the government in the form of taxes, investment licenses, and other certification fees.

Import substitution: The establishment and flourishing of gypsum powder manufacturing

industries have had an effect not only on supplying domestic demand but also on
troubleshooting shortages of foreign currency by promoting export and substituting
imports.

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 11 ASSUMPTIONS & RISKS

Assumptions:-

▪ In relation to economic growth, there is a significant increase in construction

plans in both the public and private sectors, and wall and ceiling work is
expected to increase the demand for gypsum.

▪ At the start of the project, ECWC is expected to be equipped with the

necessary manpower and machinery.

▪ It is assumed that the resources required to produce the product will be

provided according to the requirements.

▪ It is assumed that by the end of the project, all of the objectives will be
achieved on time and a maximum of the target beneficiaries will be benefit
from the project.

▪ The proposed project finance is expected to be sustainable.

▪ Mining extraction site provision bureaucracies are expected to be simple to

enforce for the proposed project.

▪ Top management commitment to implement this proposed project is expected

to be high.

▪ Strong government support and acceptance of the project is also assumed.

Risks involved with the project are: -

▪ Lack of commitment of the stakeholders to accept and execute the project;

▪ Lack of foreign exchange on imported goods

▪ Financial constraints for the expansion of the project at large.

▪ Change in Government structure and policy;

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

Possible mitigation measures for risks are;-

▪ Reinforce the commitment of stakeholders or continuous advocacy efforts to

the proposed project;

▪ Cooperate with the government and private financial sectors or government

stakeholders to solve foreign exchange problems;

▪ At its best, actively seek alternative sources of funding to finance the project
or reduce reliance on external financing.

▪ Actively participate in ideas to influence major governmental policy decisions;

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 12 PROJECT IMPLEMENTATION & MANAGEMENT

The proposed project is planned to be implemented following the implementation
schedule shown below under the management of Ethiopian Construction Works
Corporation.

Table 1.1 Project Implementation Schedule

Completion
No. Activities Implementing agent
Date

1. Project Initiation
Business Development & Investment
1.1 Proposal Submission & Presentation Day-1
Department
Board, CEO, Business Development &
1.2 Project Proposal Approval Day-7
Investment Department

2. Proposal Appraisal
2.1 Conduct Feasibility Study Business development Department. Day-40
Board, CEO, Business Development &
2.2 Presentation & Approval Day-50
Investment Department

3 Preparation
3.1 Financial Preparation ECWC, Management Day-90
Procurement of Machinery's &
3.2 ECWC, Management Day-240
Equipment's
3.3 Secure Raw Material Site ECWC, Management Day-90
3.4 Recruitment of Manpower ECWC, Management Day-300

4. Implementation
4.1 Factory Construction ECWC, Management Day-200
Installation of Factory Machinery's &
4.2 ECWC, Management Day-360
Equipment's
4.3 Commencement of Operation ECWC, Management Day-365

5. Monitoring and evaluation The Factory General Manager Every Month

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 Proposal for Establishment of ECWC, Gypsum Production Plant at Chancho

PART - 13 PROJECT MONITORING & EVALUATION

ECWC guidelines and procedures on reporting, monitoring, and evaluation will be
followed throughout the project implementation. Furthermore, the company's general
manager will provide ECWC with regular progress reports. These reports will enable
ECWC to evaluate the progress of the factory on a regular basis and identify difficulties
and shortcomings with the aim of overcoming them during the period of project
implementation. These reports will be reviewed by ECWC for their quality and
standards, comprehensiveness, and conformity to the proposed terms of reference and
dates of completion. In addition, a mid-term review between ECWC and the
management board members of ECWC may be conducted. An independent evaluation
by a qualified consultant will be conducted throughout the project implementation also.

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