THE 'EX'-PENSE OF POWDER HANDLING

Not Just Capex and Opex: Add Envex and Safex too!

Bulkagram 6, August 9

Almost all plant expansions, greenfield or brownfield, involve a powder handling component. Estimating the costs of such expansions for investment decisions involves arriving at as accurate a figure as possible for the total cost of the project.

The conventional capex plus opex approach often ignores many hidden costs. More often than not, the final project cost always exceeds the estimates.

You need to consider the factors below when you are estimating your overall powder handling project cost:

What is my plant life cycle? A non abrasive and free flowing product can have a 20 year plant life cycle whereas for an abrasive and dusty material you can consider 15 years. Many do not consider this at all. While capex - capital expenditure- takes pride of place, opex- operating expenditure, is often given stepmotherly treatment.

What is my Envex? Often completely ignored, Envex refers to the cost of environmental compliance of the capital equipment being procured. You will need to comply with occupational health regulations and your capital equipment vendors have to ensure that their units meet these regulations. If this is not informed to the vendor in advance, you will end up with costly surprises.

What is my Safex? Not only does equipment have to conform to standards of design, manufacture and quality but they will have to also meet safety regulations and standards that vary from country to country. Some countries are lax, some are stringent. In either case there is a cost that adds to your life cycle cost.

What is my Opex? Opex should not only address the cost of operating the equipment - manpower, consumables, spares, routine maintenance- but will also address the cost of maintaining envex and safex uptodate. Safety and environmental clearances and certificates have to be renewed, periodic testing of equipment to be done for compliance and the costs associated with these factors have to be added into opex.

Contact your vendors for a detailed checklist and costing for the Powder Handling Component of your plant.

The temptation to settle for a powder plant that has the lowest capex is very much the low hanging fruit that many purchase managers grab at first chance often not considering whether envex, safex and the opex of these factors has been considered. The result is that while the project capex looks very attractive, the plant operating cost going forward gnaws big chunks out of your profitability while everyone keeps wondering why.

Thankyou!

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Balan