The economic evaluation of the production of oil-palm-shell-based phenol

Abstract

Previous work done in the extraction of phenol from oil palm shells showed that it contained up to 80.1% purity of phenolic compounds. The oil-palm-shell-based phenol is applicable to replace petroleum-based phenol in preparation of phenol formaldehyde wood adhesives. Since the average price of petroleum-based phenol is around RM 3600/ton, this work was done to estimate the cost of oil-palm-shell-based phenol. In this present research, three oil-palm-shell-based phenol manufacturing plants were investigated. Their manufacturing capacities are 1000 ton/year, 10 000 ton/year, and 100 000 ton/year. All the designs are based on the results from simulator DESIGN II. From the economic analysis, the cost of the oil-palm-shell-based phenol is RM 1084, RM 1008, and RM 972 per ton respectively. It shows that the cost of the oil-palm-shell-based phenol is reduced when the productivity is high. The net profit after taxes for these plants is RM 361,530, RM 4,140,764 and RM 43,943,092 per year respectively. The plants require 3 years for starting–up and their operating life is 17 years with a depreciation of 10% per year. For undiscounted cash flow, the pay back period is 10.0, 8.4, and 7.8 years respectively including the first 3 years. For different discount rates, values of net present value and discounted break–even point vary. The discounted cash flow rate of return is 14.0%, 20.0%, and 25.0% respectively in these plants with related net present value becomes zero. The after tax rate return obtained are 71%, 169%, and 426% respectively.