ABDUNASIR MOHAMMED

PROJECT PROPOSAL

TO PRODUCE

CRUSHED STONES

AT

ABOKER MUTI AREA

November, 2022
 CHAPTER 1

1.1 EXECUTIVE SUMMARY

The proposed project envisages setting up of a Stone Crushing Plant. The stone crushing
industry is an important industrial sector in the country. Crushed stone is used as raw
material for various construction purposes such as construction of houses, cemented
block units, tough tiles, roads, bridges, buildings and canals. For building and
construction purposes, generally Hard Lime Stone is used. In addition, it is also used for
decorative purposes for its beauty and shaded colors. The Stone Crushing Plant can be
setup in the vicinity of almost all major cities and towns.

Production capacity of the plant would be 40 cubic meter per day with single shift of 8
hrs at 100%. A total of 16 employees will be working directly in the project. Given the
cost assumptions, IRR is 29% with 2.5 years payback period.

1.2 BRIEF DESCRIPTION OF PROJECT & PRODUCT

 Technology: The proposed project of Stone Crushing Plant consists of Jaw

Crusher, Vibrating Screen to crush limestone in different sizes of ¾, ½ and 3/8
inches.

 Location: The proposed location is Aboker Muti area, where access to limestone
deposit is easily available.

 Product: Crushed stone is used as raw material for various construction purposes
such as construct of houses, cemented block units, tough tiles, roads, bridges,
buildings and canals, etc. Initially, the plant will be established at small scale and
will be upgraded once the business turns sustainable.

 Target Market: Crushed limestone is used for construction of houses, roads and
cement block units etc. The product produced will be supplied to contractors and
builders all over the region and eastern Oromiya region.
  Employment: The project will provide direct employment to 16 people.
 Profitability: Financial analyses show that the project will be generating
income from the first year of its operation.
1.3 CRITICAL FACTORS

Successful operation and sustainability of the proposed plant is dependent on following

factors:

- Establishment of the project near limestone reserves, in order to reduce

transportation cost.
- Timely receiving of raw material and supply of order.
- Careful pricing and margins to builders, suppliers and retail customers.
- Adequate supply of electricity.
1.4 INSTALLED & OPERATIONAL CAPACITY

Total installed capacity of the plant will be up to 40 cubic meters. Per day in single shift
of 8 hours. Initially, the plant will operate on 50% of capacity, crushing 20cu. meter of
limestone per day in 8 hours shift.

1.5 GEOGRAPHICAL POTENTIAL SUITABLE LOCATION

Proposed location for setting up a small scale stone crushing plant largely depends on
the availability of raw limestone and its transportation to the factory at low cost.
Therefore, small scale stone crushing plants are mostly being operated in areas where
limestone reserves exist. It is recommended that the plant should be established in
periphery of Aboker Muti. Availability of manpower, utilities and easy access to the
target markets should also be.
1.6 POTENTIAL MARKETS/CUSTOMERS

Crush stone can be used for various construction purposes. Usage of crush stones has
doubled over the last 4 to 5 years. The growth in construction of housing, commercial
building, block making units and other construction related projects clearly indicates that
demand for crush stone is increasing day by day. Some of the target market/customers
for stone crushing are:

- Builders and constructors

- Retailers/Traders dealing in construction materials
- Concrete prefabricated products/Blocks making units
- Tough tiles making units
 CHAPTER 2

2.1 General Geology

The geology of Harar region is characterized by five litho logical units ranging in age
from pre-Cambrian to Neogen, according to Greitzer (1961). These are from old to
young;

Basement complex which is an assemblage of granites, Gneisses and schist. Sandstone

unit (Adigrat Sandtone) composed mainly of sand stone alternating with many layers of
marl, chalk, and limelstone which is 80m-90m thick resting uncomfortably on the
former, lower limestone unit, which is 170m-180m thick, consisting mainly of limestone
with many macro fossils, upper limestone unit which is 40m to 50m thick, composed
mainly of grey limestone and a unit which is neogen is age. The upper and lower
limestone units are named together as Hamanlei formatting by other investigators like
V. kazminer (1972).

It is within this formation (Hamanlei) that the Aboker Muti Limestone deposits are
found. Detailed geological study has also divided the limestone into two units, namely
upper and lower limestone units.

The lower limestone unit covers the area extending from the foot of the gentle slope
exposing the upper limestone up to the road. It shows vertical variation in which a layer
of micritic limestone overlies intercalation of thick and thin beds. The micritic
limestone, having more than 50cm unit bed thickness, is very fine grained, light gray to
white in color, compact, massive and hard whereas the intercalations is fine grained,
light gray to white in color, and has beds that are up to 1m thick.

The upper limestone unit, which is calcarenite limestone occupies part of the area
forming a gentle slope and lies over the lower limestone unit. It has colors ranging from
light brown though grey to light grey and is fine to medium grained.
An individual bed thickness in this unit is commonly between 50cm to 1m. Occasional
fossil structures of bivalves are also embedded in this rock.

The limestone covering the whole area has remained unaffected by large scale tectonic
structures such as faults and folds since its deposition. It is however, affected mainly by
north-west trending joint set which are vertical to sub-vertical and rarely by south-west
trending joint set.

2.2 The study area

The concession area is situated where one of the best limestone formations is found in
abundance and good quality. In our survey we have made traverses that enabled us to
observe and study the outcrops carefully with an eye on the deposit required due to the
presence of pre-existing quarries which were quarried by artisanal miners at the site.
Since our interest is the limestone deposit, we will deal with this unit in brief.

This unit has about 10 meters thickness and is finely grained aphanetic, light grey
massive, compact and hard, there are also micro and macro fossils and other secondary
sedimentary units. Therefore, this has been considered as meeting the standard
requirement for production of aggregate materials.

2.2.1 Location

Aboker Muti limestone deposit (especially the concession area) is located on the right
side of all-weather gravel of the main road which leads to the area locally named Mount
Geogis. It Shares boundaries with quarries owned by Abduletf Abdi limestone block
producer.
Geographic coordinates of the concession Area

Corner Latitude Longitude

A 90 19’31.72”N 420 06’15.11”E

B 90 19’32.74”N 420 06’18.07”E

C 90 19’36.13”N 420 06’16.85”E

D 90 19’35.44”N 420 06’13.82”E

2.2.2 Reserve

To estimate the reserve of the deposit, the following parameters are considered.

A = the total area covered by the deposit is 11,000m2

T = average thickness of the limestone unit measured from geological cross-section is

10m.

V = volume of the deposit to calculate the reserve of deposit, we take the volume

V=AxT

V = 11,000 m2 x 10m

V = 110,000m3

The total reserve of the concession area of Aboker Muti limestone deposit which is
going to be quarried by this project is calculated to be 110,000m 3 as shown above the
annual production capacity of the project depends on feed and crushing capacities of the
quarry operation and crushing plant respectively.

CHAPTER 3
3.1 Mining procedure/plan

Before the quarry is developed, pre-operational activities and preparations will be

accomplished. These may includes excavation of overburden (including minor floras),
selecting crusher sites and installation of the crushing plant etc.

Opening a quarry face at any point, preferably, having a relatively lower elevation in the
proposed license area can be used to start quarrying and exploit the proposed limestone
for the project by drilling directly in to the deposit by compressor. The exploitation will
systematically be in progress throughout the area to have effective mining, which
follows appropriate and modern methods of quarrying including benching and terracing
systems etc. In short, series stages of the processes involve quarrying the stone, loading
and transporting it to the crushing plant supposed to be installed at the proposed quarry
site. The stone will then be crushed, screened, and stored and the desired products for
marketing.

The rock is processed in a single crusher with effective capacity of 8m 3/hr to produce the
required crushed aggregates of various sizes. The ultimate aggregate produces are
expected to include the following particle sizes:

1. 00 (00-10mm)
2. 01 (10-15mm)
3. 02 (15-25mm)
4. 03 (greater than 25mm)

CHAPTER 4
Environmental aspects

Some parts of the project area are naturally covered by some floras (small trees) and soil
so that it will be necessary to use the excavator to clear them with a minimum
environmental risk if the project is implemented. The quarry and stone crushing plant
sites are located at considerable distance away from settlement area and the existing
infrastructures such as road, power lines, etc. So the exposure of the locals to noise,
vibration is minimal. Dust will be controlled if possible by frequently showering with
water for the safety of the workers as well as the society in relatively distant areas
around the site. For the purpose in the later case, water is available from the nearby
source as much as possible because there is no water source at the site.

Physical impacts on the environment are probable mainly due to excess excavation of
the stone. The process involves excavation and quarrying of the lime stone, loading and
transporting, and crushing and screening, which may entail topographic changes and
generate noise and dust during the operation. Under such conditions, appropriate
measures will be to mitigate the effect. The exploitation scheme follows modern stone
quarrying methods like benching and terracing designed by an experienced quarry
methods like benching and terracing designed by an experienced quarry technician. The
planned average excavation depth is about below the existing ground surface, which is
going to be carried out systematically according to the appropriate quarrying
mechanisms. In this case, no pronounced hazardous landform will be resulted since the
anticipated exploitation pits will progressively be refilled according to the planned
reclamation schedule.

Nearly, 10% of the quarry material is supposed to be a leftover in the lime stone
quarrying and aggregate production process so that this, added to other soil matter to be
delivered from areas somewhere around the project site, could be used to help the back
filling rehabilitation program.

Planting appropriate trees and other intervening vegetation, and assuring their growth
then will afforest the area at the end, according to the planned environmental
rehabilitation program. In order to protect workers from personal injuries and damages
to human life in the processes of quarrying and stone crushing, appropriate protection
measures such as providing safety wears, including safety goggles, helmet etc will
properly be considered.

CHAPTER 5

5.1 Resource requirement

The major input requirements of the project include manpower (semiskilled and
unskilled), machinery and equipment, etc and related financial necessities, as indicated
in the following subscription. In addition, the intended project requires office, store, and
etc to be constructed at the site.

5.1.1 Man power and organizational structure

The project will mainly be executed by organization of a general manager, secretary, site
administrator, accountant, machinery and plant operator, guards, and a number of daily
labors. This is tentatively to be about 19 persons.

5.1.2 Machinery, equipment and other materials

The major machinery and equipment requirements include crushing plant (Crusher),
compressor, and hand tools such as shovel, crow bar, and office furniture and required.

5.2 Financial requirements

5.2.1 Pre-production cost

The outstanding expenditure for pre-production are supposed to include consultancy fee
for exploration and financial analysis, road construction inside quarry and development
costs, machinery installation and loading/unloading expenses, establishment of
infrastructures (office and store, etc) project promotion (consultancy and license fees,
land rent etc)

No. Description Amount (Birr)

1 Consultancy fee 25,000

 2 Site development (road construction, 50,000
quarry development etc)

3 Machinery installation (loading/unloading, 150,000

etc)

4 Project promotion (License fee, land rent, 10,000

etc

5 Establishment of office, store, etc 150,000

SUB TOTAL 385,000

5.2.2 Fixed Capital Expenditure

As described above, it is planned to invest on the following machineries, equipment, and

other, depending up on the scope and volume of the work involves in the project’s
operation.

No. Description Qty Unit price Total price

1 Crusher 1 550,000 550,000

2 Compressor 1 250,000 250,000

3 Hand Tools Lump - 50,000

4 Office furniture Lump - 100,000

 Total 950,000

5.2.3 Operating cost

Operating cost is calculated on the basis of expenditures required for cost of labor,
working expenses of the machineries and equipment, cost of environmental
rehabilitation and others for the envisaged project operation, since all these items go
together as art of the operating cost throughout the project life, it includes the following.

5.2.3.1 Manpower

No. Description Number Monthly salary Annual salary

1 General manager 1 6,000 72,000
2 Quarry operator 1 5,000 60,000
3 Secretary 1 3,500 42,000
4 Cashier 1 3,000 36,000
5 Guards 2 4,000 48,000
6 Daily laborers 10 30,000 360,000
Total 16 618,000

5.2.3.2 Cost of energy consumption

No. Fuel/Electric consumption

Machine Consumptions/yr Unit cost (Birr) Total cost
(liter/kw) (Birr)
1 Crusher 25,600 2.5 62,000
2 Compressor 1,040 50 52,000
114,000
5.2.3.3 Miscellaneous Expense

Safety dresses (overall, helmet, Goggle safety shoe, etc) = 50,000

Maintenance = 20,000

Cost of environmental reclamation (yearly average) = 10,000

Total = 80,000

Summary of financial expenditure

a. Summary of operating cost

No. Description Amount

1 Salary and wedges 618,000

2 Fuel 114,000

3 Miscellaneous expense 80,000

Total 812,000

b. Summary of financial expenditure

No. Description Amount

1 Pre-production cost 385,000

2 Fixed capital 950,000

3 Operating cost 812,000

Total 2,227,000
 5.3 So urce of fund

The total capital for the investment is Birr 2,227,000 and it is financed by the promoters.

Chapter 6

Revenue and financial evaluation

6.1 Revenue

Even though the capacity of the crusher 8m 3/hour, for the case of our project let us take
the annual crushed stones production is about 12,000m 3. During the initial year of
operation the mining may not attain the envisaged full capacity, mainly due to the
preparation period which may extend through the first six months, and to some extent
due less gained technical experience, to fully run the project. Hence capacity utilization
in the first year is assumed to be 50% of the annual production capacity that of the
remaining years being 100%.

It has been indicated in the preceding section that the size grades of crushed stones
produced through the crushing-screening process will be 00, 01, 02 and 03.
6.2 Financial evaluations

The financial and profitable analysis of the project is due considering the following
assumptions.

1. Depreciation is calculated from the time the project starts operation. Straight line
depreciation over ten years is applied machineries and light vehicles respectively.
2. The fixed asset is assumed to have 10% of its initial cost after depreciation, as a
salvage value.
3. The price per m3 of crushed stones 250 Birr is assumed to be constant throughout
the project life.
4. The preproduction cost is considered to be cost required to make some verification
expenses, amortized in 14 years.
5. The annual operating cost amount 812,000 Birr is considered for 100% capacity
utilization, supposed to be attained starting from the second year.
6. The tax, royalty and other sillier points considered in the analysis are based on
mining laws and regulation of Ethiopia.

Based on these assumptions and data in the preceding section, the projects financial
evaluation, in terms of profit and loss statement, is presented in the following table.
 Financial statement (profit and loss) (in birr)

No Years
1 Cash flow 0 1 2 3 4 5
A Pre-production 385,000
cost
B Fixed cost 950,000
C Operating cost 812,000
Total 2,227,000
2 Sales revenue 1,500,000 3,000,000 3,000,000 3,000,000 3,000,000
3 Royalty (3%) 45,000 90,000 90,000 90,000 90,000
4 Depreciation 95,000 95,000 95,000 95,000 95,000
5 Operating cost 406,000 812,000 812,000 812,000 812,000
6 Total cost 546,000 997,000 997,000 997,000 997,000
7 Taxable income 954,000 2,003,000 2,003,000 2,003,000 2,003,000
8 Income tax (35%) 333,900 701,050 701,050 701,050 701,050
9 Net profit 620,100 1,301,950 1,301,950 1,301,950 1,301,950
10 Cash flow