ASSIGNMENT

Class Activity

Cement Manufacturing Plant “Pre-Feasibility,

Process & Cost Components”

Submitted By: Iqbal Sayed F2022374019

Fatimah Ali F2022374018
Aaminah Ali F2022374016
Sultan Akram F2022374006

Program: EMBA (W)

Submitted To: Mr. Abdul Rafay

Subject: CFN 520- Cost Management & Control

MAY 18, 2024

Introduction
Cement manufacturing serves as a cornerstone industry, underpinning the infrastructure
development and economic growth of nations worldwide. As a fundamental building material,
cement is indispensable for constructing residential, commercial, and industrial structures,
forming the very foundation of our built environment. Its applications extend beyond buildings,
playing a vital role in the creation of essential infrastructure such as roads, bridges, and dams,
which facilitate the efficient movement of goods, services, and people.

Establishing a cement manufacturing plant necessitates a rigorous feasibility study

encompassing a multitude of factors. Market demand analysis is paramount, ensuring sufficient
economic activity to justify production capacity. The availability and accessibility of raw
materials are crucial for sustained operation, while a thorough understanding of technological
requirements ensures the adoption of efficient and cost-effective production processes.
Environmental regulations must be meticulously evaluated and adhered to throughout the entire
life cycle of the plant, minimizing environmental impact and ensuring compliance with local
and international standards. Finally, comprehensive financial considerations are essential,
encompassing both capital expenditures (land acquisition, facility construction, equipment
procurement) and operating expenses (energy consumption, labor costs, maintenance fees) to
guarantee the project's economic viability and long-term sustainability.

Feasibility for Cement Manufacturing

• Demand & Competition
Market Demand: Cement demand is related to infrastructure developmental projects,
urbanization and real estate development. Local as well as regional demand is important for
feasibility

Competition: Cement industry faces tough competition due to already established competitors
in market pricing, market share ad entry barriers.

• Availability of Raw Materials

Limestone: The primary raw material for cement manufacturing. Proximity to limestone
quarries is essential to reduce transportation costs.

Clay, Sand & Iron Ore: These materials are needed in specific ratio. Availability and cost
of these materials are important factors.
 • Infrastructure & Location
Location: Proximity to raw materials, market, and transportation networks (roads, rail, ports)
to minimize logistics costs.

Utilities: Reliable supply of electricity and water is critical for the manufacturing process.

• Environmental & Regulatory Compliances

Regulation: Compliances with local health, environment safety protocol, which include
emission & controlled waste management system.

Permits: Obtaining permits for waste management, mining & construction of plant.

• Technology & Process

Technology: Investment in efficient technology which can reduce operational costs and
improve product quality.

R&D: Continuous investment in research and development for process improvement and
product diversification.

Manufacturing Process

• Mining & Crushing:

Raw Material Extraction: Limestone and other materials are extracted from quarries.

Crushing: The extracted materials are crushed into uniform size.

• Raw Materials Preparation

Blending: Crushed materials are blended to achieve the desired chemical composition.

Grinding: The blended raw materials are ground into fine powder (raw meal).

• Clinker Production

Preheating: Raw meal is preheated using hot gases from the kiln.

Calcination: The preheated material undergoes calcination at around 850°C in a pre-calciner.

Clinkering: The calcined material is heated to around 1450°C in the rotary kiln to form clinker.
 • Cement Grinding

Cooling: Clinker is cooled and then mixed with additives like gypsum.
Grinding: The mixture is ground to a fine powder to produce cement.

• Packaging & Distribution

Storage: Cement is stored in silos.

Packaging: Cement is packed in bags or bulk and distributed to markets

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Cost Components & Breakdown of Costs
• Capital Cost (30-40%)

Land & Building (10-15%): Costs for land acquisition and construction of the plant.
Machinery and Equipment (15-20%): Investment in crushers, mills, kilns, preheaters,
coolers, and packing machines.
Infrastructure (5%): Costs related to utilities, transport links, and waste management
systems.

• Operating Cost (60-70%)

Raw Materials (20-25%): Cost of limestone, clay, sand, iron ore, and additives.
Energy (20-25): Significant energy consumption for grinding and heating, including electricity
and fuels (coal, natural gas).
Labor (10-15): Wages and salaries for skilled and unskilled labor.

• Repair & Maintenance Cost (3-5%)

Regular periodic & preventive maintenance of machinery and equipment to ensure efficiency
and reduce downtime.

• Logistics & Distribution Cost (5-10%)

Transportation (3-5%): Costs of transporting raw materials to the plant and finished products
to the market.
Storage (2-3): Costs associated with storing raw materials and finished cement.

• Environmental Compliance Cost (2-3%)

Emissions Control (1-2%): Investment in technologies to reduce emissions and comply with
regulations.
Waste Management (1%): Costs for handling and disposing of waste materials.

• Administrative Overhead Cost (3-5%)

Management (2-3%): Salaries for management and administrative staff.

Other Overheads (1-2%): Costs related to marketing, sales, and general administration.
Proposed Location
Industry: Cement Industry
Proposed Business Name: Chakwal Cement
Location: Chakwal, Punjab, Pakistan
Reasons for Choosing District Chakwal for Chakwal Cement Industry
Proposed location for “Chakwal Cement is “District Chakwal, Punjab” for several reasons;

• Abundant Raw Materials Supply

• Strategic/ Centralized Location
• Proximity to Major Locations
• Industrial Presence
• Government Incentives such taxes breaks and subsidies to attract investment
• Energy Availability i.e., Electricity and Natural Gas
• Road Network & Railway Connectivity
• Labor Availability & Education Institutes
• Regulatory & Community Support
• Infrastructure Growth
• Economic Policies

District Chakwal in Punjab, Pakistan, is an ideal location for setting up a cement manufacturing
plant due to its abundant limestone reserves, strategic location near major markets, existing
industrial infrastructure, reliable energy supply, efficient logistics network, and supportive
government policies. These factors collectively provide a conducive environment for the
successful and sustainable operation of a cement manufacturing plant.