Minimum production scale for economic feasibility of a titanium dioxide plant

Abstract

AbstractTitanium dioxide (TiO2) is an important industrial chemical that is completely import dependent in Nigeria. Local entrepreneurs seeking to establish a production scale TiO2 plant in Nigeria face both financing challenges and challenges to right‐sizing plants to best fit the local markets. In this study, we ask: What is the minimum scale for the economic feasibility of establishing a TiO2 plant in Nigeria, considering the country's currently small market size for the chemical and the limitations imposed by the economy of scale? We determine that the required minimum production scale varies from 21 867.44 to 11 202.16 tonnes per annum (tpa) for an investment lifetime of 10–20 years – compared to a typical developed world plant size of 150 000 tpa. A sensitivity study shows that minimum production scale decreases rapidly as product price increases, enhancing the economic prospect of a small‐scale plant in Nigeria where the retail price of TiO2 is as high as 328% of the average global price. Further studies emphasize the importance of future growth in demand and government incentives in enhancing the plant's economic prospect. The modeling framework developed and used for this analysis is adaptable to other applications in determining minimum scales for economic feasibility of constructing and operating flexible chemical plants in young and uncertain markets with potential to scale in the future. This study offers unique contributions to address investment challenges around chemical manufacturing, a critical component of industrialization and economic development for developing countries.