This feasibility study is to consider whether to build a sulfamic acid plant from the point of view of market or demand, raw material supply, production process, plant location and financial analysis. .

It is estimated that 1996 sulfamic acid demand is 13,731 tons/year which grows at compound rate of 22% per year and the domestic production is 11,250 tons/year. With the most optimistic growth of 22%, there will be a need of2 x 3,600 tons/year of newly installed capacity while with the most pessimistic growth of 10%, there will be a need of 1 x 3,600 tons/year of newly installed capacity. Sulfamic acid demand, a derived demand of mostly sodium cyclamate manufacturers, will be determined by how fast the expansion of sodium cyclamate manufacturing capacity. Continuously monitoring both sodium cyclamate capacity and capacity expansion of sulfamic acid competitors are a must.

The recommendation is to build the 1 x 3,600 tons/year plant as soon as possible and to penetrate the market. When demand is growing, it is suggested to extend the capacity of 1 x 3,600 tons/year.

There are some possible future demand drivers of sulfamic acid namely ceramic cleaner, flame-rotten-insect resistance wood, carbonate scale cleaner, calcium cyclamate, nickel and ammonium sulfamates, export market and cleaner for residue at industrial processing equipment.

The plant should be built in Gresik which has good export facilities and good land transportation to surrounding customers (most sulfamic acid customers are located in Java). Another reason is that Gresik is close to P.T. Liku Telaga, a sulfuric acid manufacturer that can supply the sulfuric acid and sulfur trioxide or oleum 40% w/w, and is close to P.T. Petrokimia Gresik, an urea manufacturer. The land price in Gresik is reasonable enough to allow Lautan Luas to have positive net present value.

It is recommended to implement alternative 5 of method D which has net present value of Rp 31 million at average price level of Rp 1,400/kg and at cost of capital of 0.1725. This alternative will use the available oleum 40% w/wand urea as raw material and does not need any distillation and any new special oleum tower. There will be only carbon dioxide gas and excess sulfur trioxide which can be injected back in the form of oleum or in liquid phase. This alternative 5 will have maximum production of 62.3% of installed capacity.

If the market of diluted sulfuric acid is-available and secured, it is better to choose alternative 2 because it has higher capacity utilization of 95.2% and net present value of Rp 3,441 million. The alternative 2 will use urea, sulfuric acid and pure sulfur trioxide gas as raw materials. The possible market of diluted sulfuric acid is sodium sulfate and paper and pulp industries to control their pH.

Financially, at installed capacity of 3,600 tons/year and at average selling price of Rp 1,400/kg, the sulfamic acid investment will have positive net present value or similar to the opportunity rate of return. Meanwhile, at production capacity of 7,200 tons/year and at the average selling price of Rp 1,300/kg, the net present value is also positive.

The sulfamic acid market is an oligopoly market allowing both P.T. Lautan i Luas and P.T. Timur Raya Indah to make money. Therefore, a price competition is not recommended unless it is really necessary to penetrate the market.

Since sulfamic acid is in industrial goods with 12 main customers, direct selling and no mass marketing advertisement are suggested. Lautan Luas could give its customers the technical brochures and report~ of laboratory and impurity test. Besides a bulk or quantity discount allowance, Lautan Luas can offer a trade inventory allowance to attract its customers. Because of information technology and stable compound of sulfamic acid (no expired date), P.T. Lautan Luas can reduce the inventory turnover and the inventory carrying cost.



Research Location: PT. Lautan Luas

Supervisor: Dr. Ir. Antarikso Abdulrachman, MBA, CPIM, Dra. Wiwiek M. Daryanto, Ak., MM

Accepted on 1996



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