Investments Opportunities

Biomass pellets production facility

Opportunity Description: This opportunity also takes advantage of local waste streams, mainly sugarcane bagasse, corn stalk, as well as wood cuttings and sawdust, palm tree fronds and banana tree leaves. The end-product is high-calorific value biomass pellets that can be burned on-site at energy intensive factories such as cement plants.
The potential lies in serving local energy-intensive industries, which have already started preparing their factories to receive alternative fuels, such as the cement plants in Qena and Assiut.
PRODUCT: Biomass pellets made from agriwaste
Sector: Renewable Energy, Waste Management
Market: Local Energy Intensive Industries, Export
Initial Investment Required: EGP 58m
Details Available: Pre-feasibility Study
Market Potential: In Upper Egypt, there are two major cements plants; Misr Qena and El Nahda, which have a combined demand of 2.94 million Gcal per year at full capacity. That is 590 thousand tons of pellets, worth around USD 20 million alone (at local prices).
Year 1 revenues for this facility are expected be around USD 3 million, with a net margin of 14%, at 50% operational capacity. This improves by Year 5 to USD 8 million, with a net margin of 24%, at 91% operational capacity.
Supply: If the facility is operating at 100% capacity, it will consume the following amounts of agriwaste per year:
90,000 tons of agriwaste, consisting mainly of sugarcane bagasse and corn stalk (the most abundant locally), to produce around 67,500 tons of pellets per year, a yield of 75%.
Process: The technology used is mainly imported from Europe and the USA (or possibly China but at a fraction of the productivity), which is used to shred the agriwaste, and pelletize it.
The production process consists mainly of the following steps:
1. Receiving raw material
2. Screening (optional)
3. Preparation/ Chipping
4. Drying
5. Grinding
6. Pelletizing
7. Cooling
8. Packaging
Human Resources: Position # of Staff
Production - Permanent
Plant Manager 1
Quality Control 2
Hall Supervisors 2
Engineering 2
Workers 4
Production – Seasonal
10 workers at any given time 10
Sales, General and Administration
Procurement 2
Sales Manager 1
Sales 2
Marketing 2
Finance & Accounting 2
HR Manager 1
Maintenance 4
Security 2
Total 38
Financial: Capital Expenditure Requirements EGP 49m
Working Capital Requirements for 3 months EGP 9m
Minimum Investment Required EGP 58m
Internal Rate of Return 34%
Simple Payback 4.1 yrs
Profitability Index 2.08
Risk: Selling pellets to local energy intensive industries is not lucrative enough to keep the operation feasible. This study assumes at least 60% of production needs to be directed to export markets to make the investment attractive.
Agriwaste, especially with high percentage of bagasse, usually has high moisture and ash content. Adding a trommel screen in the beginning of the process removes impurities but increases CAPEX.
Agriwaste collection can be complicated and requires long-term agreements with several farmers to secure supplies all year round.
IMPACT: Economic - Value added to local agricultural waste is quite significant. Based on this study’s assumptions, before deducting other COGS (cost of goods sold) and overheads:
1 ton of agriwaste, costing EGP 500, produces around 0.75 tons of biomass pellets, selling at an average price of EGP 1,600– that is 60% value added to the waste.
Social - Direct jobs created by this facility will include 28 permanent plant staff plus another 5-10 seasonal workers. Indirect jobs created will be mainly in logistics, marketing and distribution.
Environmental – It helps mitigate burning of agricultural waste and therefore reduce carbon emissions.