What to include in a feasibility study
Cement plant projects require huge investments, not to be undertaken lightly. That’s why a feasibility study is critical to determining whether or not the project should go ahead.

There are many factors to take into account in a feasibility study and it’s important to consider them all as objectively as possible. Here’s a brief list of just some of the items. For more detailed information of what we include in our feasibility studies, please get in touch.

Is there opportunity?
Every feasibility study should begin with an analysis of the market opportunity and competitors. Is there sufficient demand to cope with a new player? Is that demand already being fulfilled by local manufacturers? Importers? Are there projects in the pipeline that might change the market landscape? What could the future import scenario be, based on your assessment of other nearby and interested parties? Include an examination of environmental and political factors that could affect the project’s viability.


What will the costs be?
In terms of the technical aspects of the project, a feasibility study doesn’t need to get into the detailed engineering design aspects – but it is important to have an estimate of the capital and operating costs of the project. Obviously the size of the plant needs to be relative to the market opportunity, but other things to consider will be where the raw materials and fuels will come from, what that supply chain looks like, etc.


What is the long-term viability? 
More often than not, we see cement producers rushing to build plants in growth markets to the point that supply soon outstrips demand – we only have to look at Egypt, Indonesia and Vietnam, but there are many, many examples of this. This suggests a lack of long-term planning. Market forecasts should include an estimate of peak demand levels – no market will grow and grow forever, and your investors will know that. I find financing parties like to see a healthy injection of reality in their reports. No one wants to risk their investment on questionable numbers. Looking at demand in terms of cement consumption per capita is one of the best ways of providing a realistic forecast.

What if your forecasts aren’t met?
A feasibility study should also include a plan for what will happen if your market forecasts aren’t met. Is there another market nearby that could use any surplus product? Have you outlined the production level at which the plant is profitable?
Investors will want to see the plan for a worst-case scenario, to feel reassured that the project could withstand a variety of conditions.

To read about some of the feasibility studies we have conducted for our clients, take a look at our references and testimonials page, or just give us a call to discuss further.


  0 Comments

0 Comments