TG Crusher - Shinile

Contents
0. Executive Summary ......................................................................... 3
1. Background .................................................................................... 4
2. Project Rationale........................................................................... 5
2.1. Project Objectives ...................................................................... 5
3. Profile of the Owner ......................................................................... 5
4. Market Analysis ............................................................................... 6
4.1. Target Market .............................................................................. 6
4.2. Demand for Crushed Stones ........................................................... 6
Table: Supply of Crushed Stones in Tons ................................................ 6
Table: Projected Demand for crushed stones in tons ................................ 7
4.3. Local Market Analysis .................................................................... 7
4.3.1. Current Local Demand ................................................................ 8
Table: Projected local Demand .............................................................. 8
4.3.2. Current Local Supply .................................................................. 8
Table: Projected local Supply ................................................................ 9
4.3.3. Demand Gap ........................................................................... 10
Table: Demand Gap........................................................................... 10
4.4. Product Marketing Channels ......................................................... 10
5. Organization and Management ........................................................ 11
5.1. Organization chart ...................................................................... 11
Figure: Company Structure ................................................................ 11
6. Plant Capacity .......................................................................... 12

Project Proposal for Stone Quarrying, Crushing & Screening Plant March 2024, Shinile
Table: Plant Capacity @ full capacity operation ...................................... 12
Table: Capacity Utilization .................................................................. 12
7. Project Financials .......................................................................... 12
7.1. Sales Forecast ......................................................................... 12
Table: Sales At full capacity operation .................................................. 12
Table: Revenue Forecast .................................................................... 13
7.3. Direct costs of sales.................................................................. 13
Table: Direct costs of sales ................................................................. 13
Table: Projected Costs of sales ............................................................ 13
7.4. Production Machine and Equipment ............................................. 13
Table: Machinery & Equipment ............................................................ 13
7.5. Utilities ................................................................................... 14
Table: Annual consumption of utilities .................................................. 14
7.6. Personnel Plan ........................................................................... 14
Table: Personnel plan ........................................................................ 15
Table: Operating Expenses ................................................................. 15
Table: Projected annual operating costs ............................................... 15
Table: Total Fixed Investment ............................................................. 16
Table: Depreciation ........................................................................... 16
Table: Repair and maintenance costs based on the standard rate............. 16
Table: Working capital Determination .................................................. 16
Table: Total Investment ..................................................................... 17
Table: Source of Finance .................................................................... 17
Table: Yearly loan repayment schedule ................................................ 17
By: Virgin Access Business Group General Partnership Company 1|Page

Table: Cash Flow Statement ............................................................... 18
Table: Balance Sheet Statement ......................................................... 19
8. Environmental Impacts .................................................................. 20
8.1. Scoping ..................................................................................... 20
8.2. Description of Impacts................................................................. 21
8.3. Positive Impacts and Enhancement Measures ................................. 22
8.3.1. Macroeconomic Benefits ............................................................ 22
8.3.2. Microeconomic Benefits............................................................. 23
8.3.2.1. Employment ...................................................................... 23
8.3.2.2. Local Livelihood Improvement .............................................. 24
8.3.2.3. Gender Equity .................................................................... 24
8.4. Adverse Impacts and Proposed Mitigation Measures ........................ 25
8.4.1. Construction Phase .................................................................. 25
8.4.2. Operational Phase .................................................................... 25
8.4.3. Impact on Air Quality ............................................................... 26
8.4.5. Impacts on Employee’s Health & Other Risks ............................... 27

0. Executive Summary
This Proposal is prepared with the objective of establishing a stone crushing
and screening plant project for the production of different types of crushed
stones on a total of area of 20 hectare (quarry site and crushing plant)
located at Shinile Wereda of Sity Zone, Somali Region.
At full capacity operation, the plant will be capable of producing 120 Tons of
Crushed Stones per day. Products include: Crushed stone (02); Crushed
stone (01) and Crushed stone (00).
The project is owned by Virgin Access Business Group General Partnership

Company, a Company formed by highly qualified professionals and
businessmen.
Our market study and prior experience in the industry show that there is a
huge unsatisfied demand for our project’s products in our target market
segments of Shinile Wereda and neighboring Weredas of Somali Region.
The total investment cost of the project amounts to Birr 34,670,310.73, of

which Birr 4,280,440.17 is for working capital while the remaining Birr
30,389,870.56 (for purchase of capital goods) shall be financed by the Lease
Finance Policy of the Development Bank of Ethiopia.
In addition to its financial viability and economic benefits, the project will
generate revenue to the government in the form of taxes over the life of the
project. Further, the project shall provide about 24 permanent workers with
different job title and up to 20 temporary workers.

1. Background
Ethiopia is considered as one of the fastest growing economies in Africa this
is apparent by fast growing and booming construction industry all over the
country. This lead to the increasing requirement of building and construction
materials in various ways with the development of the housing industry, and
the demand will also increase in proportion to the diversified dwelling.
Currently the demand is met through import and one local factory.
Investment, both public and private, being the driving force for
development, has been given utmost importance by the Government of
Ethiopia. Investment offices at federal and regional level have been
established to encourage, promote and coordinate investment activities. The
federal investment proclamation No. 15/1992 has been amended every time
to widen the scope of participation of private investment and to make the
system of administration transparent and efficient. Both at federal and
regional levels, many incentives have been permitted to encourage both
domestic and foreign investors.
To better help in the growth of the industry, it is imperative to increase the

local production of this material and substitute imports. This will save foreign
currency expenditure of the country and creates job opportunity for local
population.
The construction industry has been helped by the fact that some of its
chemical elements already exist in Ethiopia, for instance the availability of
locally manufactured cement and availability of sweet sands have helped to
reduce the demand imported ones. To reduce the dependence on foreign
resources, an industry to supply the plastering and finishing goods have to

be established. This will not only support the local market but also to
generate foreign currency through export.
2. Project Rationale
Construction Materials Manufacturing is an important industrial sector in the
country. Over the last 10 years, the Construction sector has been registering
strong growth rates in the country.
2.1. Project Objectives

The ultimate goal of the project is to make profit by producing and selling
crushed stones to builders and contractors as well as other potential
customers in Shinile Wereda.
In addition, the project will realize the derived benefits that include creation
of employment and contribute to the government treasury in the form of
taxations
3. Profile of the Owner

Virgin Access Business Group General Partnership Company is a
general partnership Company formed by the alliance of well experienced
businessmen. Members of the Company have got very good entrepreneurial
skills and long years of experience doing independent businesses in different
Cities around Ethiopia.
The Company is engaged in different lines of businesses ever since its

establishment. Currently the ultimate goal of the project is to make profit by
producing and selling crushed stones to builders and contractors as well as
other potential customers in Shinile Wereda.

4. Market Analysis
4.1. Target Market
The target market for our products are Hollow Blocks manufacturers,
Concrete manufacturers and other building and road contractors in Shinile
Wereda and neighboring Weredas of Somali Region.
Table: market segmentation
No. Products Market

segmentation
1 Hollow Blocks 60%
manufacturers
2 Concrete manufacturers 10%
3 Building contractors 30%
4 Road contractors 10%
4.2. Demand for Crushed Stones

The demand for Crushed Stones is derived mainly from building
construction. The demand for the country's requirement for crushed stones
is met through domestic production.
The quantity of production of the products during the period 2015 - 2022 is
shown in the following Table. During the period under reference, the supply
of crushed stones which constitutes only domestic production, averaged at
3.05 million tons, with an average increment rate of 9.01%/year.
Table: Supply of Crushed Stones in Tons

Year Domestic Production
Crushed Stones (tons)

2015 2,208,441
2016 2,427,125
2017 2,637,557
2018 2,894,718
2019 3,148,585
2020 3,400,157
2021 3,687,130
2022 4,041,095
Average 3,055,601
Growth rate 9.01%
Source: CSA, Statistical Abstract, various years
Since the consumption of the products is associated with the construction

sector, a rate of growth of 10%, which corresponds to the estimated growth
rate of the sector, is employed in estimated projected demand. As such, the
projected demand for the product is presented in the following table.
Table: Projected Demand for crushed stones in tons

Year Projected Demand Crushed
Stones (tons)
2024 3,631,026
2025 3,958,181
2026 4,314,813
2027 4,703,578
2028 5,127,370
4.3. Local Market Analysis

A localized market study was conducted to estimate the demand, supply and
demand gap for the products at local level (constituting the market areas

targeted by the project), which include: Shinile Wereda and neighboring

Weredas of Somali Region.
4.3.1. Current Local Demand
In estimating the current effective local demand (for the year 2024) for our
products, it is assumed that the above mentioned target market areas will
constitute at least 15% of the total national demand.
Accordingly, the present local effective demand for crushed stones is

estimated at 544,654 tons. The following table shows projected demand,
taking the average growth rates employed in the above national level
analysis for both products.
Table: Projected local Demand

Year Demand in tons
2024 544,654
2025 593,727
2026 647,222
2027 705,537
2028 769,106
2029 838,402
2030 913,942
Average 716,084
4.3.2. Current Local Supply

In an attempt to estimate the local supply of the products in the target
market areas, we have assessed the volume of production by local producers
in these areas.

Our study results showed that the currently operating local producers are
not only little in number but also are operating at a relatively smaller
capacities. As such, we have estimated the local supply to reach 360,000
tons per year assuming there are 10 stone crushing plants in our target
market areas, each of which are assumed to operate at a capacity of 120
tons per day.
However, compared to the average local demand estimated, which is

716,084 tons per year, we can see that the local supply of 360,000 tons per
year only covers around 50 % of the current local demand.
Therefore the establishment of our Plant in Shinile area will be first to

market and is expected to take adequate market share in the local market
areas.
Further, assuming a 10% increase in local production per annum, the

following shows projected supply, which leads to the estimation of demand
gap.
Table: Projected local Supply

Local prod. in
Year
tons
2024 360,000
2025 396,000
2026 435,600
2027 479,160
2028 527,076
2029 579,784
2030 637,762

4.3.3. Demand Gap

Based on the above estimated supply and demand projections, the following
table shows demand gap for the products at local level.
Table: Demand Gap

Supply Crushed Demand Crushed Demand Gap Crushed
Year
Stones (tons) Stones (tons) Stones (tons)
2024 360,000 7,662,600
184,654
2025 396,000 544,654
197,727
2026 435,600 593,727
211,622
2027 479,160 647,222
226,377
2028 527,076 705,537
242,030
2029 579,784 769,106
258,618
2030 637,762 838,402
276,180
average 487,912 716,084
228,172.51
As shown in the table above, an average demand gap of 228,172.51 tons

exist in the target market areas which implies that around 32% of the total
demand are not being supplied by the existing local producers.
Hence, it can well be concluded that the proposed project is feasible and can
well serve in fulfilling the existing demand gap at least to some extent.
4.4. Product Marketing Channels

In the manufacturing industry, marketing is considered to be of significant
importance. In the construction materials industry, marketing parameters
are very limited and usually in some degree associated with the construction
sector.
Some of the marketing promotion activities which should duly be rendered

are given below:
By: Virgin Access Business Group General Partnership Company 10 | P a g e

 Connection development with the building material suppliers, well

known builders and contractors.
 Update information on civil and construction works initiated by local
and central government.
 Draw linkages with the housing industry at town level.
 Establish contacts with local civil engineering firms, individuals and
professionals.
5. Organization and Management

5.1. Organization chart
The Company will employ technically capable and bigly motivated
employees. The project will be led by a competent manager who will be
assisted by different functionally related departments.
The following figure shows major departments in the Company. Overall the
plant requires 24 work forces.
Figure: Company Structure

6. Plant Capacity
Based on demand projection indicated in the market study, the suggested
plant capacity for shall be 120 tons per day.
Table: Plant Capacity @ full capacity operation

Products Tons per day proportion Qty/year in Tons
Crushed stone (02) 60.00 50.00% 18,000
Crushed stone (01) 36.00 30.00% 10,800
Crushed stone (00) 24.00 20.00% 7,200
Subtotal 120.00 100.00% 36,000
The project will start operation by using its 70% capacity in the first year
then attaining 85% and 100% capacities by the second and third year of
operation respectively.
Table: Capacity Utilization

Year 1 Year 2 Year 3
Capacity Utilization 70% 85% 100%
Prod., tons 25,200.00 30,600.00 36,000.00
7. Project Financials
7.1. Sales Forecast
Table: Sales At full capacity operation

Products Tons per day proportion Qty/year (Tons) Unit price Annual Revenue
Crushed stone (02) 60.00 50.00% 18,000 1,500.00 27,000,000.00
Crushed stone (01) 36.00 30.00% 10,800 1,500.00 16,200,000.00
Crushed stone (00) 24.00 20.00% 7,200 700.00 5,040,000.00
Total 120.00 100.00% 36,000 48,240,000.00

Table: Revenue Forecast
Year 1 Year 2 Year 3

Capacity Utilization 70% 85% 100%
Revenue Forecast 33,768,000.00 41,004,000.00 48,240,000.00
7.3. Direct costs of sales
Table: Direct costs of sales

No Description measurement Annual Cost (Birr)
1 Royalty Fee 3% of gross sales 1,447,200.00
2 Explosives 2% of gross sales 964,800.00
Total 2,412,000.00
Table: Projected Costs of sales

Description Year 1 Year 2 Year 3
No.
Capacity utilization 70.00% 85.00% 100.00%
Costs of sales
1,688,400.00 2,050,200.00 2,412,000.00
7.4. Production Machine and Equipment

The proposed project production process will be operated with
technologically viable machine to meet the standard and volume of
production per day.
Table: Machinery & Equipment

Description of goods Quantity FOB FOB Shanghai Total Price,
Shanghai Port ETB
Port
Unit Price Total Price
Stone Crushing & Screening Plant 1 155,472.50 155,472.50 8,706,460.00
CATERPILLAR 320GX 20 Ton Crawler Excavator 1 112,320.00 112,320.00 6,289,920.00
XCMG ZL50GN 5 Ton Wheel Loader 1 53,400.00 53,400.00 2,990,400.00
Sound Proof 650kw Diesel Generator HJ-C710 1 100,140.00 100,140.00 5,607,840.00

Spare parts 63,199.88 3,539,193.00

Total 4 484,532.38 27,133,813.00
Description Actual Total value
Total (FOB) ETB 27,133,813.00

Freight (3 % FOB) 814,014.39
Insurance (1% FOB) 271,338.13
Bank Charges (3% FOB) 814,014.39
Port handling and local
678,345.33
costs (2.5 % FOB)
Installation and Supervision
678,345.33
(2.5 % FOB)
Total 3,256,057.56
Total Cost of Machinery 30,389,870.56
7.5. Utilities
The total annual expenditure on utilities is, thus, about Birr 1.37 million.
Annual requirement and cost of utilities is indicated in Table below.
Table: Annual consumption of utilities
No. Items Cost Birr

1 Electricity 2,554,000.00
2 Water 500,000.00
Total 3,054,000.00
7.6. Personnel Plan

Construction and allied industry is a labor intensive industry; therefore, a
total of 24 persons will be required to handle the production operations. The
business unit will work on one shift basis (8 hours daily).
Total approximate manpower required for the business operations along with
the respective salaries are given in the table below:

Table: Personnel plan
No. Description Req. Salary per Annual Salary

Month (Birr) (Birr)
1 Manger 1 30,000.00 360,000.00
2 Engineer 1 12,000.00 144,000.00
3 Geologist 1 10,000.00 120,000.00
4 Commercial staff 2 10,000.00 240,000.00
5 Administration and finance staff 2 12,000.00 288,000.00
6 Technical staff 2 9,000.00 216,000.00
7 Skilled workers 4 6,000.00 288,000.00
8 Unskilled workers 4 4,000.00 192,000.00
9 Drivers 5 12,000.00 720,000.00
10 Machines Operators 2 15,000.00 360,000.00
Sub-Total 24 2,928,000.00
Benefits (15%) 439,200.00
Grand Total 3,367,200.00
Table: Operating Expenses
Description Cost (Birr)

Utilities 3,054,000.00
Truck Rental @ 220,000 birr per month *2 trucks 5,280,000.00
Maintenance and repair 941,696.12
Employees 3,367,200.00
Administration Costs 436,000.00
Fuel & Lubricant Expense 3,254,476.28
Total Operating Costs 16,333,372.40
Table: Projected annual operating costs

Description Costs (birr)
year1 year2 year3
0.70 0.85 1.00
operating costs 11,433,360.68 13,883,366.54 16,333,372.40

Table: Total Fixed Investment

No Description Total
1 Office Furniture &
Fixture
1,000,000.00
2 Machineries &
Equipment
30,389,870.56
Total
30,389,870.56
Table: Depreciation
Depreciation Original value Annual Dep.
Description
rate (Birr) (Birr)
Office Furniture &
0.10 1,000,000.00 100,000.00
Fixture
Machineries &
0.10 30,389,870.56 3,038,987.06
Equipment
Total Fixed
31,389,870.56 3,138,987.06
Investment
Table: Repair and maintenance costs based on the standard rate
Description Percentage Total Repair

investment &maintenance
Office Furniture & 0.03

1,000,000.00 30,000.00
Fixture
Machineries & 0.03
30,389,870.56 911,696.12
Equipment
Total 31,389,870.56 941,696.12
Table: Working capital Determination
Days of Required working

Description coverage capital
Costs of sales
3 months 422,100.00

Operating expenses
3 months 2,858,340.17
Total required working
capital
3,280,440.17
Table: Total Investment
Description Total
Office Furniture and Fixture 1,000,000.00

Machineries & Equipment 30,389,870.56
Subtotal (Fixed Investment) 31,389,870.56

Working capital 3,280,440.17
Total Investment Capital 34,670,310.73
Table: Source of Finance
Description Total Costs Owners equity Bank Loan

Amount % Amount %
Office Furniture and 1,000,000.00 100% 0.00 0%
Fixture 1,000,000.00
Machineries & 0.00 0% 30,389,870.56 100%
Equipment 30,389,870.56
Subtotal (Fixed 1,000,000.00 3% 30,389,870.56 97%
Investment) 31,389,870.56
Working capital 3,280,440.17 100% 0.00 0%
3,280,440.17
Total Investment 4,280,440.17 12% 30,389,870.56 88%
Capital 34,670,310.73
Table: Yearly loan repayment schedule
Year Loan Repayment Interest Outstanding

(12.5%) Balance
0 30,389,871
1 6,077,974 3,798,734 24,311,896
2 6,077,974 3,038,987 18,233,922

3 6,077,974 2,279,240 12,155,948

4 6,077,974 1,519,494 6,077,974
5 6,077,974 759,747 0
Note: The loan shall be paid on a quarterly basis
Table: Profit and Loss Statement

Description Project Years
1 2 3 4 5
Sales 33,768,000 41,004,000 48,240,000 53,064,000 58,370,400
Direct cost of sales 1,688,400 2,050,200 2,412,000 2,532,600 2,659,230
Gross Profit 32,079,600 38,953,800 45,828,000 50,531,400 55,711,170
Gross Margin(%) 95.00% 95.00% 95.00% 95.23% 95.44%
Operational expense 11,433,361 13,883,367 16,333,372 17,150,041 18,007,543
Profit before tax and
20,646,239 25,070,433 29,494,628 33,381,359 37,703,627
interest
Depreciation
3,138,987 3,138,987 3,138,987 3,138,987 3,138,987
EBITDA (Earning
before tax, interest 23,785,226 28,209,421 32,633,615 36,520,346 40,842,614
and depreciation)
Interest expense 3,798,734 3,038,987 2,279,240 1,519,494 759,747
Profit tax (35%)
Net profit 16,847,506 22,031,446 27,215,387 31,861,865 36,943,880
net profit margin
ratio
49.89% 53.73% 56.42% 60.04% 63.29%
Table: Cash Flow Statement

Production Year
Cash in flow 0 1 2 3 4 5
Owners' equity 4,280,440
Existing Bank
0
Loan
Additional Bank
30,389,871
Loan
Net Profit 0 16,847,506 22,031,446 27,215,387 31,861,865 36,943,880
Depreciation 3,138,987 3,138,987 3,138,987 3,138,987 3,138,987

Total Cash in
34,670,311 19,986,493 25,170,433 30,354,374 35,000,853 40,082,867
flow
Cash out flow
Replacement 0 0 0 0 0
loan repayment 6,077,974 6,077,974 6,077,974 6,077,974 6,077,974
Capital
31,389,871 - - - - -
Expenditure
Working capital 3,280,440 - - - - -
Pre-operating
expenses and
interest
Total Cash out
34,670,311 6,077,974 6,077,974 6,077,974 6,077,974 6,077,974
flow
Net Cash Flow 0 13,908,518 19,092,459 24,276,400 28,922,878 34,004,893
Cash balance 17,188,959 36,281,418 60,557,818 89,480,697 123,485,590
Table: Balance Sheet Statement

Description Investment Production Year
ASSETS 0 1 2 3 4 5
Current Assets
Cash 3,280,440 17,188,959 36,281,418 60,557,818 89,480,697 123,485,590
Other Current
0 0 0 0 0
Assets
Total Current
3,280,440 17,188,959 36,281,418 60,557,818 89,480,697 123,485,590
Assets
Fixed Asset
Office Furniture
1,000,000.00 900,000 800,000 700,000 600,000 500,000
and Fixture
Machineries &
30,389,870.56 27,350,884 24,311,896 21,272,909 18,233,922 15,194,935
Equipment
Vehicles 0.00 0 0 0 0 0
Total Fixed
31,389,871 28,250,884 25,111,896 21,972,909 18,833,922 15,694,935
Asset
Total Asset 34,670,311 45,439,842 61,393,314 82,530,728 108,314,619 139,180,525
LIABILITIES
Short term
- - - - - -
liability

Long term
liability (Bank 30,389,871 24,311,896 18,233,922 12,155,948 6,077,974 0
Loan)
Sub Total 30,389,871 24,311,896 18,233,922 12,155,948 6,077,974 0
CAPITAL
Owner's Equity 4,280,440 4,280,440 4,280,440 4,280,440 4,280,440 4,280,440
Retained
0 16,847,506 38,878,952 66,094,339 97,956,205 134,900,085
Earnings
Earnings 16,847,506 22,031,446 27,215,387 31,861,865 36,943,880
Sub Total 4,280,440 21,127,946 43,159,392 70,374,779 102,236,645 139,180,525
Total Liability &
34,670,311 45,439,842 61,393,314 82,530,728 108,314,619 139,180,525
Capital
Net Worth 4,280,440 21,127,946 43,159,392 70,374,779 102,236,645 139,180,525
8. Environmental Impacts
This section discusses major environmental issues and constraints that can
arise from the project implementation. Positive, negative, Direct, indirect
and cumulative impacts are addressed.
8.1. Scoping
The scoping process intends to ensure that the EIA focuses on pertinent
issues. In pursuit of deciding upon the boundaries and sensitivity of the
study area for the project and drawing the list of activities and impacts to be
studied during the assessment, the consultant has carried out an initial
environmental examination and scoping.
Since the project site is located within the industrial zone of the city,
specifically demarcated for similar and related processing categories, there
are no human settlements at the nearer distance of the project. Therefore,
the consultant has focused on biological and physical components found

inside the project area as well as employees to be hired in both the

construction and operation phases as important elements in the study.
Based on the scoping process particular attentions have been given to the
following environmental issues:
Generation of dusts
Dry waste and
Employee’s health hazard and safety
8.2. Description of Impacts

This section addresses potential impacts associated with the proposed
project and measures for both mitigating (i.e. avoidance, reduction, or
restoration of) negative impacts, and enhancing (i.e. improvements of)
positive effects of the Crushed Stones Production project.
The major positive impacts of the proposed project are mainly the economic
and social benefits that can be acquired at the national, regional and local
level. Although reversible and localized, the adverse impacts of the proposed
project arise from generation of dusts and employee’s heath impact.
Cost-effective and environmentally sustainable techniques that can mitigate

the adverse impacts are proposed. Emphasis was given in selection of best
available techniques (BAT) and practices for preventing and reducing
potential adverse impacts to the environment without compromising the
economic and social benefits of the project.

8.3. Positive Impacts and Enhancement Measures

The establishment of this project will have a number of positive impacts both
at national regional and local levels. Some of the major positive impacts
include technological capacity building, economic development and creation
of employment. These potential positive impacts, their origin and
characteristics are presented below.
8.3.1. Macroeconomic Benefits

The implementation of the project has an array of economic benefits. It
transforms raw materials to a higher value, provides consumer goods,
generates employment, promotes skill development and disseminates
technological changes.
As it is plainly stated in the previous sections of this feasibility study, the

project developer will generate financial benefit in the forms profit that will
be used for saving and family consumption when the project gets
operational.
Enhancement Measures: Executing the proposed project in a manner that

benefits the country at large (example: production of quality products,
introduction of technologies that maximize the product yield as the same
time by reducing the environmental burden of the production process) is the
proposed benefit enhancement measure.

8.3.2. Microeconomic Benefits

8.3.2.1. Employment
The direct and indirect employment opportunities to be created for citizens
are other economic benefits of the project beyond those economic outputs
discussed above. The feasibility study of the project indicates that, the
enterprise will create direct job opportunities for 35 workers, most of whom,
are from local people residing near by the project area and from Shinile
town.
Thus, the project will be an opportunity for the town by lightening the brunt
of unemployment in the town to some extent. Moreover, the building
renovations phase of the project will have a short term employment
opportunity particularly for the local laborers.
Enhancement Measures: Hiring professionals and service providers will be

based on merits and yet on competitive base in order to get quality technical
workers, it will enhance the benefits of project to give especial consideration
for the people residing near by the project site to provide them with job as
priority for those positions not requiring especial skill.
As there will be high demand for daily laborers during construction phase of
the project, it will be twofold advantages to hire laborers from local people.
First, the project promoter will reduce time of searching for laborers and
save his money that is needed for transportation of laborers to project site.
Second, fairly distributing the benefits of the project will enhance project
social acceptability in general.

8.3.2.2. Local Livelihood Improvement

The employment opportunity to be created by the project will have a positive
implication on the improvement of local livelihoods of the community
residing nearby the project site. This local income generation related social
benefit will have long term as well as cumulative benefits.
Enhancement Measures Utilization of the available labor force in the area

enhances the benefits at local level. Out sourcing commercial activities like
cafeteria services for local competitive service providers maximizes the
social benefit of the project.
8.3.2.3. Gender Equity

Women’s efficiency in carrying out some of the production processes make
them preferable for industries like this one. This gender specific opportunity
will address the historical disproportionate burden of unemployment on
woman.
Enhancement Measures: Consideration to be given for keeping the above

beneficial opportunity to women and actions to avoid work area problems
women can face. The actions to be taken include: providing equal work
opportunity, strict rule on work area sexual harassments, job security,
appropriate payment (equal payment standard with men engaged on
equivalent work load), medical and reproductive health follow-up for women,
joint counseling service RH and HIV AIDS for needy employees.

8.4. Adverse Impacts and Proposed Mitigation

Measures
Although reversible and localized in their nature, noise, dust, employees’
health hazard; and generation of solid wastes are found to be the main
environmental impacts of the operation phase of the project. Generally, the
proposed project is characterized with insignificant negative impacts of both
construction and operation phases. This section of the report outlines these
adverse impacts and presents the proposed prevention and mitigation
measures.
8.4.1. Construction Phase

Since the project is planned to be implemented in the already constructed
sheds, which only require small modification and renovation works. As such
the construction phase of the project does not have any adverse impacts.
8.4.2. Operational Phase

Environmental aspects of the project that cause adverse environmental
impacts are emission of dusts from production units and generation of
nuisance noises from operation of production units. Accidents and work area
hazards are the other work environment aspects of the project.
There are both environmental pollution sources and human health hazards
that can be caused by the production process of the Crushed Stones. These
production process environmental aspects can be summarized as:
Solid wastes
generation of dust and nuisance noises from operation of machineries
generation of dusts and
Employee health hazard

8.4.3. Impact on Air Quality

Although the machineries in the production process are fully automated by
electric power, there will be dust emission associated with the production
process. Hence, there is a way that the potential pollutants like CO, NOx and
Sox might arise in the production process.
In this context, the operation of the stone crushing and screening plant
facility will actually contribute significantly to the overall air quality.
Mitigation measures: Control of the dusts associated with the production

process may be achieved by scrubbing exhaust fumes and, if necessary,
incinerating the remaining volatile organic compounds (VOCs).
8.4.4. Impacts of Solid Wastes

The production process of the proposed project is characterized by the
generation inevitable but less amount of solid wastes: Empty containers of
raw materials and scrap paper packages are the major solid waste issues of
the production process of the project.
Although solid waste may be less significant problem in qualitative and

quantitative aspects, it will have considerable environmental risks, if it is not
managed properly. Storing of solid wastes generated from the production
process in open areas, which is the common practice, will have a direct
impact on the land which is the main receiver of solid wastes.
Mitigation measures: Preventing and minimizing the generation of the

solid waste at its source is the primary measures to mitigate the impact they
can induce on the environment.

8.4.5. Impacts on Employee’s Health & Other Risks

Since a work place is a potentially hazardous environment, workers
encounters direct, indirect and long-term potential health problems during
the operation of the proposed project.
Production and technical personnel have the exposure to continuous noise

and vibrations created from machines electrical motors and machineries.
Inhaling of the emissions results from operations of the production process
are potential workers’ health threat.
Interference of technicians and operators in running machine parts can

cause body injury. Interference of individuals with electrical systems and
failure from structures are other causes for injury. The main environmental
risks are associated with the following activities:
Activities inside the repairs and mechanical workshop of the factories may
cause oil contamination risks to the land. In addition, there may be risks to
the workers, including exposure to fumes, injury with sharps etc.
General occupational health risks exist throughout the enterprise from noise,
dusts, or machineries operation.
Mitigation measures: Anticipation of potential hazards and risks in the

work environment and implementing control methods to remove or reduce
the hazard exposure of the worker is the proposed measures to mitigate the
impacts under consideration:
The general control methods available for control of hazards include:

Using local supply ventilation and natural ventilation systems to assure

the comfort of operators in production areas
Training workers regarding work area safety and hazardous control
like the fire hazardous and controlling mechanisms; application of
safety and hazard control equipment; monitor the work area or the
worker, good housekeeping, and preventive maintenance.
Using personal protective equipment like: skin protections (gloves and
aprons); eye protection (safety glass, goggles, face shield, and hood);
ear protection (ear muffs); respiratory protection (air-purifying
respirators); and safety shoes.
Besides the above; the following measures need to be considered regarding

employees’ health:
Pre-employment and periodic health checkups for workers

Insurance policy and procedures for work area caused damages
8.4.6. Impact on Energy Resources

The operation of the proposed project requires a considerable electrical
energy resource for: running of machines, power for the enterprise
buildings, etc. As the project uses a renewable energy source hydroelectric
power the impact is not significant. However, from economical point of view
the issue requires attention.
Mitigation Measures: Avoiding idle operation of machineries and

implementation of proper power use practices are the mitigation measure for
reducing electrical power consumption. Installation of less energy intensive
equipment (like using florescent light rather than bulbs) reduces the energy
consumption. Training and reminding workers to switch off lights when

leaving offices is the other managerial proposed option for minimizing the
problem.
Generally, the following measures help to reduce the impact:

Train operators on operation of equipment in efficient way to minimize
energy
Supervise production processes in order to improve production
efficiency
Switch-off idle machines and unused bulbs
Provide interlocked control system for the generator to sawed-off itself
when external power returned
Setup written procedures for production operations
Avoid reprocessing and reworks
8.5. Environmental Management Plan

In order to be effective in minimizing adverse impacts and enhancing
beneficial impacts, environmental management must be fully integrated with
the overall project management effort at all levels. Hence, the overall goal of
the Environmental Management Plan (EMP) of the propose project to
minimize adverse impacts of the project by managing and implementing the
proposed impact alleviation measures and good working practices.
A great concern is given for the environmental management and protection

program during the project’s operation phase. The objectives of the
environmental management program at this phase of the project are:
protection of the environment from the production process and service
pollutants, protection of workers from work area health hazard, efficient use
of energy resources, waste management and improve the environmental
performance of the company.

Beside the environmental management tasks to be performed by different

functional units of the company; the Consultant proposes an
environmentalist and safety officer to operate the environmental
management program at this stage of the project. The environmentalist and
safety officer will coordinate and monitor all aspects of the environmental
management programs; develop further an environmental oversight
capability within the company; and facilities for the implementation of
companywide Environmental Management System (EMS).
8.6. Environmental Monitoring Program

Various kinds of environmental monitoring and evaluation will be conducted
by responsible staffs of the company. The Environmental and Safety Officer
will be responsible for most of the monitoring activities and will report to the
company top management in a weekly basis.
The company top management and affiliated units of the Somali Region
Environmental Protection Authority, such as technical divisions of
Environmental Pollution Research, control and impact assessment core
process will make occasional and random monitoring, respectively. The
monitoring will involve both quantitative and qualitative data, as appropriate
to the nature of the information which will involve during the production
stage of the project.
8.7. Conclusions and Recommendations

The implementation of the proposed project will have a pack of economic
and social benefits. It plays a role on the country’s economic development
activity through creation of employment opportunities for citizens,

generation of income for the local community, and it also paves the way for
rural development in the area.
On the other hand, the proposed project has some associated environmental
aspects that might cause adverse impacts. However most of these
environmental effects can be reduced to acceptable levels with
implementation of pollution prevention and control techniques. Therefore, it
can be concluded that there will be no severe or irreversible adverse impacts
that will prevent the implementation of the proposed pa[er products
processing project.
To have minimal and acceptable residual environmental impacts, it is

recommended that mitigation measures should be properly implemented. A
close follow up of the effectiveness of the implemented measures is also
recommended since a well-planned monitoring program is critically
important.

TG Crusher - Shinile

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Contents

0. Executive Summary ......................................................................... 3

2.1. Project Objectives ...................................................................... 5

3. Profile of the Owner ......................................................................... 5

4. Market Analysis ............................................................................... 6

4.1. Target Market .............................................................................. 6

4.2. Demand for Crushed Stones ........................................................... 6

Table: Supply of Crushed Stones in Tons ................................................ 6

Table: Projected Demand for crushed stones in tons ................................ 7

4.3. Local Market Analysis .................................................................... 7

4.3.1. Current Local Demand ................................................................ 8

Table: Projected local Demand .............................................................. 8

4.3.2. Current Local Supply .................................................................. 8

Table: Projected local Supply ................................................................ 9

4.3.3. Demand Gap ........................................................................... 10

Table: Demand Gap........................................................................... 10

4.4. Product Marketing Channels ......................................................... 10

5. Organization and Management ........................................................ 11

5.1. Organization chart ...................................................................... 11

Figure: Company Structure ................................................................ 11

6. Plant Capacity .......................................................................... 12

Table: Plant Capacity @ full capacity operation ...................................... 12

Table: Capacity Utilization .................................................................. 12

7. Project Financials .......................................................................... 12

7.1. Sales Forecast ......................................................................... 12

Table: Sales At full capacity operation .................................................. 12

Table: Revenue Forecast .................................................................... 13

7.3. Direct costs of sales.................................................................. 13

Table: Direct costs of sales ................................................................. 13

Table: Projected Costs of sales ............................................................ 13

7.4. Production Machine and Equipment ............................................. 13

Table: Machinery & Equipment ............................................................ 13

7.5. Utilities ................................................................................... 14

Table: Annual consumption of utilities .................................................. 14

7.6. Personnel Plan ........................................................................... 14

Table: Personnel plan ........................................................................ 15

Table: Operating Expenses ................................................................. 15

Table: Projected annual operating costs ............................................... 15

Table: Total Fixed Investment ............................................................. 16

Table: Depreciation ........................................................................... 16

Table: Repair and maintenance costs based on the standard rate............. 16

Table: Working capital Determination .................................................. 16

Table: Total Investment ..................................................................... 17

Table: Source of Finance .................................................................... 17

Table: Yearly loan repayment schedule ................................................ 17

By: Virgin Access Business Group General Partnership Company 1|Page

Table: Cash Flow Statement ............................................................... 18

Table: Balance Sheet Statement ......................................................... 19

8. Environmental Impacts .................................................................. 20

8.1. Scoping ..................................................................................... 20

8.2. Description of Impacts................................................................. 21

8.3. Positive Impacts and Enhancement Measures ................................. 22

8.3.1. Macroeconomic Benefits ............................................................ 22

8.3.2. Microeconomic Benefits............................................................. 23

8.3.2.1. Employment ...................................................................... 23

8.3.2.2. Local Livelihood Improvement .............................................. 24

8.3.2.3. Gender Equity .................................................................... 24

8.4. Adverse Impacts and Proposed Mitigation Measures ........................ 25

8.4.1. Construction Phase .................................................................. 25

8.4.2. Operational Phase .................................................................... 25

8.4.3. Impact on Air Quality ............................................................... 26

8.4.5. Impacts on Employee’s Health & Other Risks ............................... 27

By: Virgin Access Business Group General Partnership Company 2|Page