CONTINUOUS BASALT FIBRE (CBF) PRODUCTION PLANT

CONSTRUCTION OF CONTINUOUS BASALT FIBRE

 

                                                                          Basalt fibre

The mechanical and thermal properties, as well as the chemical resistance of basalt fibre makes it a more and more desired product used in many areas of industry, replacing the commonly used glass fibre more and more often. The worldwide supply of basalt fibre is relatively at a very low level, which is caused by the geographic location of basalt deposits having proper chemical composition (Russia, Ukraine, China, Canada, USA). Moreover, since the end of World War II until the beginnings of the 1990s, the production technology had been protected by the USSR because basalt fibre was used in the military and space industry.

Basalt fibre is manufactured in the following forms:

a)                  Single yarn

b)                  Twisted basalt yarn

c)                   Single end basalt roving

d)                  Multi end basalt roving

As a result of texturing process (treating the fibre with compressed air by extruding it through special nozzles), the following is obtained as well:

a)                  textured basalt yarn,

b)                  textured basalt roving.

They are used in the manufacture of ropes, heat-resistant and reinforcement tapes, specialist technical textiles with various weaves and grammage, pads, as well as a filler or the so called reinforcement in the production of polymer composites.

The company plans to manufacture basalt fibre with filament diameter between 8 and 22µ mainly, with a full range of fibre types.

The offer will be targeted to manufacturers of the above products in both Poland and abroad.

 Technology

The innovative nature of the technology the Company plans to implement consist in the application of a highly efficient technological module consisting of a colloid mill, induction furnaces for the melting of basalt aggregate, as well as modified (in comparison with traditional solutions) equipment for the drawing of basalt fibre, sizing and reeling of the finished product. The main advantages of the developed technology in comparison with traditional CBF production methods used in the plants in Russia, Ukraine, China and Canada are:

-                    tight control of the chemical composition of basalt aggregate for melting, allowing the factory to ensure constant technical and functional parameters of the final product, as well as standardisation of the final product,

-                    significant reduction of consumption of energy, gas and water in the production process,

-                    reduction of time necessary to melt basalt aggregate into polycrystalline silicon,

-                    high efficiency of induction furnaces,

-                    elimination of the risk of complete installation shutdown and idle time due to furnace malfunction; each furnace works in an independent system and the malfunctioning furnace will be moved to a specially designated place, the so called rest place for repair; the remaining furnaces will remain operational,

-                    minimal and environmentally neutral production waste,

-                    closed circulation of all technological processes, preventing from the release of hazardous volatile substances into the atmosphere,

-                    full automation of the technological process. 

The technology meets the current EU directives concerning the reduction of production process power consumption and emissions of greenhouse gases.

 

Raw materials supply

The so called specific basalts containing olivine, magnetite and plagioclase are used to produce basalt fibre. The company shall acquire raw materials with the required chemical composition from the basalt mine in the territory of Opole province. The proper chemical composition of basalt rocks has been confirmed by tests. The expected deposit mining period is 20-25 years. Taking into consideration the fact that the Company will need 11,000 tonnes of basalt aggregate each year, it is possible to assume that its needs will be fully satisfied in the above period. However, the Company plans to take actions to diversify the supplies of the raw material in order to ensure continuous production in the event of Acts of God or cessation of mining by the main supplier. Acquisition of a foreign supplier is also taken into consideration.

 Technical infrastructure

In order to implement the project, it is necessary to build technical infrastructure comprising:

-                    a production and storage hall with an area of ca. 2,000 sq.m., 

-                    a laboratory and office building with an area of ca. 650 sq.m.,

-                    a plant security building with an area of ca. 50 sq.m.,

-                    internal roads, squares and parking lots with a total area of ca. 3,000 sq.m.,

-                    a fire safety tank and a reservoir with parameters according to the permit required by the Water Law. 

-                    external lighting and fencing,

-                    supplying the area with necessary networks and development of the remaining biologically active area in accordance with the building permit.

The purchase of investment goods provides for:

-                    complete technological equipment, 

-                    warehouse equipment, 

-                    means of transportation, 

-                    plant laboratory equipment 

-                    equipment of office accommodation, common and sanitary areas, 

-                    TIK software, computer software.

 Human resources

Having reached the planned production output in the amount of 10,000 tonnes of product per annum, the Company shall employ ca. 55 employees, including:

-                    managerial and administration staff - 6 employees, 

-                    technical supervision - 4 employees, 

-                    trade, marketing and logistics department - 6 employees, 

-                    production operatives and warehouse staff - 35 employees, 

-                    laboratory staff - 3 employees, 

-                    other - 2 employees. 

Part of the works will be subcontracted to third parties (e.g. legal service, maintenance of IT networks, security, cleaning, car transport).

 

The company plans to employ local people in the first place. In the case of specialist staff, the Company plans to carry out recruitment process on its own or through HR agencies.

 

 Setting

-                    Currently, the worldwide basalt fibre market is dominated by several manufacturers, including Technobasalt, GBF, Basalt Fiber Co. Ltd, Asamer Basaltic Fibers, Sudaglass Fiber Technology and Kamennyj Vek. Kamennyj Vek company has a monopoly in the European market, currently manufacturing ca. 30,000 tonnes of basalt fibre and its derivatives per annum. The company sells its products under trade name “Basfiber”. For the last 20 years of its activity, the company has allocated huge financial resources to research and development and created a strong, effective and well-motivated trade network on international markets.

-                    There are no competitors on the Polish market.

-                    The current EU directives tightening the laws on power consumption and CO₂ emissions open new development opportunities before the manufacturers of basalt fibre. This applies mainly to the construction composite industry. Construction composites are more and more competitive to traditional products (reinforcement rods and mesh, construction profiles). Regarding power consumption and CO₂ emission, replacing 1 kg of standard steel with 1 kg of basalt fibre saves 9.12 kWh/kg and 3.95 kg of CO₂. Products containing basalt fibre usually meet the 4R rule (Reduce-Reuse-Recycle-Recover), as on many stages of production and application of such products, energy consumption and level of carbon dioxide in the atmosphere can be reduced. A large part of them can be reused and, what is more, they are safe and easy to recycle, for example as reinforcement of concrete elements, they do not require separation and can be crushed mechanically together with concrete (Recycle).

 Competitive advantage

-                    If the production plant is launched according to the timetable, i.e. in the second half of 2019, the Company could gain financial profits from the business in the area of  “EURO PARK WISŁOSAN” Tarnobrzeg Special Economic Zone”. The amount of state aid that may be granted to businesses in the zone is one of the highest in Poland - 50% of incurred qualified costs, increased by 10 percentage points in the case of medium businesses and 20 percentage points in the case of micro- and small businesses. Taking into consideration current capital ties of the company, the total amount of company's revenue and the number of employees, the Company is a small business. In the event of acquiring new investors, the Company’s category may change to a medium-sized business. The company could use tax relief deducted consecutively from CIT (income tax) until 31 December 2026, when all SEZs will cease to exist in their current form. Tax relief gives the Company the opportunity to recover over half of the capital  invested in the erection of the plant in a relatively short period, depending on the profitability of production.

-                    One of the shareholders holding the office of the Chairman of Company's Management Board has strong ties with “basalt industry” in the research area; access to know ‑ how;

-                    Access to cheap local raw material.

-                    Lower cost of transport for clients from Central and Western Europe thanks to the location of the plant;

-                    The size of construction plots to be purchased enables expansion of the plant in the future, e.g. by adding new basalt fibre products to the offer. 

-                    There are no competitors on the Polish market.

 Risks

-                    Risks beyond the Company's control resulting from:

·                   political and macroeconomic situation of Poland,

·                   changes of legal and tax regulations concerning Company's business, 

·                   changes in the demand on international markets, 

·                   actions of foreign competitors,

·                   detrimental changes of foreign exchange rates,

·                   increase in the prices of raw materials and means of production,

·                   irregular supplies of raw materials by main suppliers or suspension of supply,

·                   losing key specialists and difficulties with finding new ones,

·                   Acts of God,

-                    Risks within Company's control resulting from:

·                   insufficient diversification of recipients, 

·                   loss of financial liquidity,

·                   failure of machinery and equipment due to improper use,

·                   high fluctuation of production operatives,

·                   lack of effective marketing strategy,

·                   Inefficiency of the sales department,

·                   penalties due to late delivery.

The Company plans to implement a management system compliant with ISO 9001 2015 standard, also including the risk management plan.


 

Attachment No. 1

Item

 Cost component

UoM

Quantity

Cost in thousands €

Cost in thousands PLN

 

Purchase of land

Ha

4.9645

348.84

1,500

 

1.

Production and storage hall

sq.m.

2,000

1,046.51

4,500

 

2.

Office and amenities building, including plant laboratory

sq.m.

650

604.65

2,600

 

3.

Security building

sq.m.

50

37.21

160

 

4.

Internal roads, squares and parking lots (excluding separator's price *)

sq.m.

3,000

83.72

360

 

5.

External networks (water and sewage, sanitary, storm drain, electricity, gas)

set

1

162.79

700

 

6.

External area fixtures (fencing, lighting, small architecture, greenery)

set

1

81.40

350

 

7.

Fire safety tank, reservoir**

set

no data

-

-

 

8.

Project building documentation, including author's supervision + surveys and administrative fees

set

1

116.28

500

 

9.

Joint presentation to the project building documentation

set

1

8.14

35

 

10.

Technological documentation of production equipment

set

1

116.28

500

 

11.

Purhase of technological devices

set

1

5,651.16

24,300

 

12.

Assembly and startup of the devices mentioned above

set

1

604.65

2,600

 

13.

Storage room equipment

set

1

116.28

500

 

14.

Plant laboratory equipment

set

1

255.81

1,100

 

15.

Office, archive rooms, amenities rooms and sanitary rooms equipment

set

1

81.39

350

 

16.

Access, surveillance and security system

set

1

46.51

200

 

17.

TIK system + computer hardware

set

1

51.16

220

 

18.

Project management (construction part and technological part)

set

1

176.75

760

 

19.

Training for production operatives

set

1

23.26

100

 

20.

Means of transportation (transport vehicles and cars)

set

1

139.53

600

 

21.

Garden equipment (lawnmowers, sweepers and snow blowers)

set

1

23.26

100

 

 

 

 

Total:

 

9,775.60

 

42,035

 

 

* No data concerning the parameters of petroleum-derivative separator with a filter, the parameters will be defined in the project documentation.

** As above.

The cost of missing elements has been estimated to PLN 300,000, which shall be added to total costs.

Estimated total costs - PLN 42,335,000

 

Attachment No. 2

Financial forecast

2020

2021

2022

2023

2024

2025

2026

Sales revenue

43,000,000

86,000,000

86,000,000

86,000,000

86,000,000

86,000,000

86,000,000

Fixed costs:

 

 

 

 

 

 

 

- real property tax

70,000

70,000

70,000

70,000

70,000

80,000

80,000

- administrative fee

96,000

96,000

96,000

96,000

96,000

96,000

96,000

- environmental fee

10,000

20,000

20,000

20,000

20,000

25,000

25,000

- other (means of transportation, waste collection)

15,000

35,000

35,000

35,000

35,000

40,000

40,000

- salaries: total employer's cost

8,400,000

10,080,000

10,080,000

10,080,000

11,088,000

11,088,000

11,088,000

- annual straight-line depreciation:

 

 

 

 

 

 

 

- 2.5% buildings

186,500

186,500

186,500

186,500

186,500

186,500

186,500

- 25% basalt melting furnaces

2,500,000

2,500,000

2,500,000

2,500,000

 

 

 

- 14% other devices and machinery

602,000

602,000

602,000

602,000

602,000

602,000

602,000

- 20% transport vehicles and cars

120,000

120,000

120,000

120,000

120,000

 

 

- 25% electronic control and measurement equipment for laboratory tests

175,000

175,000

175,000

175,000

 

 

 

- furniture and furnishings PLN 3,500 net

20,000

20,000

20,000

20,000

20,000

 

 

- 50% computer software

80,000

80,000

 

 

 

 

 

- marketing

100,000

100,000

100,000

120,000

150,000

150,000

150,000

- office costs

10,000

8,000

8,000

8,000

8,000

8,000

8,000

- facility insurance

250,000

250,000

250,000

250,000

250,000

250,000

250,000

- non-production utilities

50,000

60,000

60,000

60,000

65,000

65,000

65,000

- maintenance and repair of buildings

10,000

10,000

10,000

20,000

20,000

20,000

20,000

Variable costs:

 

 

 

 

 

 

 

- purchase of raw materials EXW plant

5,500,000

11,000,000

11,000,000

12,100,000

12,100,000

12,100,000

13,310,000

 

13,750,000

27,500,000

27,500,000

30,250,000

30,250,000

30,250,000

33,275,000

- license fees (production technology and basalt thread)

2,688,500

5,377,000

5,377,000

5,377,000

5,577,000

5,577,000

5,577,000

- technological replacement of furnace inserts, replacement parts and maintenance

2,500,000

2,500,000

2,500,000

2,750,000

2,750,000

2,750,000

3,025,000

- fiber winding reels, foils

300,000

300,000

300,000

330,000

330,000

330,000

363,000

- third-party services (transport, legal service, security, cleaning etc.)

250,000

300,000

300,000

350,000

350,000

350,000

400,000

- fuel

60,000

70,000

70,000

75,000

75,000

75,000

80,000

- business trips

50,000

 

 

 

 

 

 

- employee recruitment and training

100,000

100,000

50,000

50,000

60,000

60,000

60,000

Total costs

37,893,000

62,278,500

62,149,500

65,644,500

64,222,500

64,102,500

68,700,500

Pre-tax profit

5,107,000

23,721,500

23,850,500

20,355,500

21,777,500

21,897,500

17,299,500

CIT tax at 19%

970,330

4,507,085

4,531,595

3,867,545

4,137,725

4,160,525

3,286,905

Corporate net profit

4,136,670

19,214,415

19,318,905

16,487,955

17,639,775

17,736,975

14,012,595

 

Investment costs to be deducted by the company under CIT tax relief:

PLN 42,335,000 X 60% relief = PLN 25,401,000

year

value of CIT tax relief

2020

970,330

2021

4,507,085

2022

4,531,595

2023

3,867,545

2024

4,137,725

2025

4,160,525

2026

3,226,195

total

25,401,000


 

If you are interested in this undertaking, please contact us directly by phone or visit us.

We are looking forward to doing business with you!

Project coordinator: Waldemar Wierzycki, tel. +48 600 483 058, +44 (0)20 3289 3586 email: waldemar.wierzycki8@gmail.com

 

CONSTRUCTION OF A CONTINUOUS BASALT FIBRE (CBF) PRODUCTION PROJECT