# Review of Activated Carbon Injection Cost

August 6, 2010

# Costs used to assess activated carbon injection (ACI) systems in the proposed NESHAP for portland

cement manufacturing were developed using cost supplied by the New Jersey Department of

Environmental Protection. They had prepared an analysis of ACI cost for utility boilers. Based on

those cost and exhaust airflow information, costs were developed for portland cement kilns. Cost

information on an ACI system that was being installed on a portland cement kiln was received. We

compared our cost with those submitted by a vendor supplying the system. A comparison of the

NJDEP costs and the vendor cost were compared. In addition, we updated our cost to 2005 as well as

updating the cost for powdered activated carbon.

# Comparison of PAC Capital and Annual Cost Estimates from NJ DEP and Industry (FL Smidth)

3/12/2010

• The capital and annual cost estimates from industry (prepared by FL Smidth) are substantially

higher than those from EPA (prepared based on data from NJ DEP).

o NJ DEP: capital cost $1.69

‐ $2.79/ton clinker; annual cost $0.80

‐ $0.99/ton clinker

o Industry: capital cost $13.33/ton clinker; annual cost $5.81/ton clinker

• We attempted to determine the source of the differences in the costs by comparing the sources

and algorithms for the NJ DEP and industry cost estimates.

• The capital costs from NJ DEP were derived from two sources:

o The capital costs for the PAC equipment ($3,000/MW) and polishing baghouse

($24,000/MW) were derived from estimates provided by a source identified as “Serpil”

(perhaps Serpil Guran of NJ DEP). The basis for these estimates is not known.

o The other capital costs (instrumentation, sales tax & freight, and direct/indirect

installation costs) were derived from the fabric filter capital cost algorithms in the

OAQPS Control Cost Manual.

• The capital costs from industry include the purchased equipment cost (PEC) and the

direct/indirect installation costs, which were calculated based on the purchased equipment cost.

o The purchased equipment cost was based on a vendor quote, the components of which

are unknown.

o Industry's algorithms for direct/indirect installation costs include smaller cost factors

than NJ DEP's.

• Given that industry’s capital cost estimate includes smaller cost factors for direct/indirect

installation than the NJ DEP estimate, it is clear that the difference in PEC estimates is the main

reason for the difference in capital costs. See Table 1 for a more specific comparison of the

capital cost estimates from NJ DEP and industry.

• The annual costs from NJ DEP are based on OAQPS Control Cost Manual cost equations,

although I was unable to determine the exact equation used to calculate ash disposal. Industry

used its own approach to estimating annual costs.

• The following bullets illustrate the differences between the annual cost estimates provided by

NJ DEP and industry. See Table 2 for a more specific comparison.

o Industry's estimates of labor requirements and wage rates are lower than NJ DEP's,

except for supervisory labor (20% vs. 15% of direct labor).

o Industry's estimate of PAC consumption is higher than NJ DEP's (3.15 lb/hr vs. 0.40 and

1.41 lb/hr).

# o Industry's estimate of PAC unit cost ($1.15/lb) is more in line with current online cost

estimates

, while NJ DEP's is considerably lower ($0.50/lb).

o Industry's estimate of PAC cost includes an extra factor of 57, the reason for which is

unknown, which greatly increases the cost.

o Industry's estimate of maintenance materials cost is based on direct capital cost, while

NJ DEP's is based on maintenance labor cost, which results in a much higher

maintenance materials cost.

o Industry's estimate of electricity usage (kW) is considerably higher than NJ DEP's.

o Industry's estimate of ash disposal (lb/yr) is considerably higher than NJ DEP's, likely due

to the higher PAC consumption estimate.

o Industry's estimate of ash disposal unit cost ($100/ton) is much higher than current

landfill tipping fees; NJ DEP's estimate ($40/ton) is more in line with current fees.

o Industry's equation for overhead includes a smaller cost factor than NJ DEP's, but the

factor is applied to a higher maintenance materials cost (based on direct capital cost

rather than maintenance labor).

o Industry's equations for indirect annual costs are similar to NJ DEP's (4% of TCI overall),

but its cost estimates are much higher due to its higher TCI.

o Industry's estimate of capital recovery is based on 7% interest (consistent with current

EPA guidance) and 10

‐ year equipment life (20 years is more typical for fabric filter),

resulting in a higher capital recovery factor than NJ DEP.

o NJ DEP's estimate of capital recovery is based on 9% interest (7% interest is current EPA

guidance) and 20

‐ year equipment life (typical for fabric filter), resulting in a lower

capital recovery factor than industry.Table1.ComparisonofPACCapitalCostEstimatesfromNJDEPandFLSmidth(3/12/2010)NJDEPNJDEP‐VinelandNJDEP‐BLEnglandIFLSmidthFLSmidthParametersEquations$/yr$/ton$/yr$/tonEquations$/yr$/tonStackFlowRate,acfm132,600132,600470,000470,000262,614262,614CapacityMW2323135135Equiv/actualtonclinker/yr438,068438,0681,552,7311,552,731936,225936,225PurchasedequipmentcostsPACequipment$3,000/MW$69,000$0.16$405,000$0.26Polishingbaghouse$24,000/MW$552,000$1.26$3,240,000$2.09Total(A)PAC+Pol.BH$621,000$1.42$3,645,000$2.35Instrumentation0.1AincludedincludedSalestax&freight0.08AincludedincludedTotalPEC(B)sumofPECs$621,000$1.42$3,645,000$2.35vendorquote$7,370,200$7.87DirectinstallationcostsFoundation&supports0.04B$24,840$0.06$145,800$0.09Handling&erection0.50BincludedincludedElectrical0.08B$49,680$0.11$291,600$0.19Piping0.01BincludedincludedInsulationforductwork0.07B$43,470$0.10$255,150$0.16Painting0.04BincludedincludedTotalDIC(C)0.74B$117,990$0.27$692,550$0.450.45B$3,316,590$3.54Indirectcosts(installation)Engineering0.10BincludedincludedConstruction&fieldexpense0.20BincludedincludedContractorfees0.10BincludedincludedStart‐up0.01BincludedincludedPerformancetest0.01Bincludedincluded0.03(B+C)$320,604$0.34Contingencies0.03Bincludedincluded0.20B$1,474,040$1.57Totalindirectcosts(D)0.45B$0$00.2435B$1,794,644$1.92Totalcapitalinvestment(TCI)E=B+C+D$738,990$1.69$4,337,550$2.79E=B+C+D$12,481,434$13.33TCI(using6/10rule)$1,113,533$2.54$3,058,979$1.97Table2.ComparisonofPACAnnualCostEstimatesfromNJDEPandFLSmidthNJDEPNJDEP‐VinelandNJDEP‐BLEnglandIFLSmidthFLSmidthParametersEquations$/yr$/ton$/yr$/tonEquations$/yr$/tonStackFlowRate,acfm132,600132,600470,000470,000262,614262,614CapacityMW2323135135Equiv/actualtonclinker/yr438,068438,0681,552,7311,552,731936,225936,225DirectCapitalCosts$738,990$1.69$4,337,550$2.79$10,686,790$11.41TotalCapitalInvestment$738,990$1.69$4,337,550$2.79$12,481,434$13.33DirectAnnualCostsOperatinglaborDirectlabor2hr/shift*3shifts/d*$30/hr*360d/yr$64,800$0.15$64,800$0.041man‐yrat$60,000/yr*0.25man‐yrs$15,000$0.02Supervisorylabor15%ofdirectlabor$9,720$0.02$9,720$0.0120%ofdirectlabor$3,000$0.003OperatingmaterialsPACconsumption3lbPAC/Macfm*stackflowrate/1E60.401.4112lbPAC/Macfm*stackflowrate/1E63.15PACcost$0.50/lbPAC*lb/hrPAC*8760hr/yr$1,742$0.004$6,176$0.004$1.15/lbPAC*lb/hrPAC*8,760hr/yr*57?$1,809,569$1.93MaintenanceMaintenancelabor1hr/shift*3shifts/d*$30/hr*360d/yr$32,400$0.07$32,400$0.021man‐yrat$60,500/yr*0.25man‐yrs$15,125$0.02Maintenancematerials100%ofmaintenancelabor$32,400$0.07$32,400$0.025%ofdirectcapitalcost$534,340$0.57UtilitiesElectricity0.000181*stackflowrate*5.15in.H2O*8,640hr/yr*$0.0671/kWh$71,658$0.16$253,992$0.16(25+925)kW*$0.0665/kWh*8,760hr/yr$553,413$0.59Compressedair1.5scfm/1000acfm*stackflowrate*$0.25/1000scf*8,640hr/yr*60min/hr$25,777$0.06$91,368$0.06‐‐nocostnocostAshdisposal$40/ton($0.02/lb)$2,142$0.005$22,882$0.011,573,538lb/yr*$0.05/lb($100/ton)$78,677$0.08TotalDAC$240,640$0.55$513,738$0.33$3,009,123$3.21IndirectAnnualCostsOverhead60%oflabor&material$84,637$0.19$87,297$0.0630%ofoperatinglabor+26%oftotallabor&maint.mat.$152,941$0.16Administrativecharges2%ofTCI$14,780$0.03$86,751$0.062%ofTCI$249,629$0.27Propertytax1%ofTCInochangenochangenochangenochange1%ofTCI$124,814$0.13Insurance2%ofTCI$14,780$0.03$86,751$0.061%ofTCI$124,814$0.13Capitalrecovery0.10955*TCI(9%,20yrs)$80,956$0.18$475,179$0.310.14238*TCI(7%,10yrs)$1,777,075$1.90TotalIAC$195,153$0.45$735,978$0.47$2,429,273$2.59TotalAnnualCost$435,793$0.99$1,249,716$0.80$5,438,397$5.81RevisedPACCapitalCostEstimatesfromNJDEP,April2,2010NJDEPNJDEP‐VinelandNJDEP‐BLEnglandIParametersEquations$/yr$/ton$/yr$/tonStackFlowRate,acfm132,600132,600470,000470,000CapacityMW2323135135Equiv/actualtonclinker/yr‐revised446,046446,0461,581,0061,581,006PurchasedequipmentcostsPACequipment2005$3,000/MW$80,423$0.18$472,046$0.30Polishingbaghouse2005$24,000/MW$643,382$1.44$3,776,370$2.39Total(A)PAC+Pol.BH$723,804$1.62$4,248,417$2.69Instrumentation0.1AincludedincludedSalestax&freight0.08AincludedincludedTotalPEC(B)sumofPECs$723,804$1.62$4,248,417$2.69DirectinstallationcostsFoundation&supports0.04B$28,952$0.06$169,937$0.11Handling&erection0.50BincludedincludedElectrical0.08B$57,904$0.13$339,873$0.21Piping0.01BincludedincludedInsulationforductwork0.07B$50,666$0.11$297,389$0.19Painting0.04BincludedincludedTotalDIC(C)0.74B$137,523$0.31$807,199$0.51Indirectcosts(installation)Engineering0.10BincludedincludedConstruction&fieldexpense0.20BincludedincludedContractorfees0.10BincludedincludedStart‐up0.01BincludedincludedPerformancetest0.01BincludedincludedContingencies0.03BincludedincludedTotalindirectcosts(D)0.45B$0$0Totalcapitalinvestment(TCI)E=B+C+D$861,327$1.93$5,055,616$3.20AverageTCI2.56RevisedPACAnnualCostEstimatesfromNJDEP,April2,2010NJDEPNJDEP‐VinelandNJDEP‐BLEnglandIParametersEquations$/yr$/ton$/yr$/tonStackFlowRate,acfm132,600132,600470,000470,000CapacityMW2323135135Equiv/actualtonclinker/yr‐revised446,046446,0461,581,0061,581,006DirectCapitalCosts$861,327$1.93$5,055,616$3.20TotalCapitalInvestment$861,327$1.93$5,055,616$3.20DirectAnnualCostsOperatinglaborDirectlabor2hr/shift*3shifts/d*$30/hr*360d/yr$64,800$0.15$64,800$0.04Supervisorylabor15%ofdirectlabor$9,720$0.02$9,720$0.01OperatingmaterialsPACconsumption3lbPAC/Macfm*stackflowrate/1E60.401.41PACcost,updated$1.15/lbPAC*lb/hrPAC*8760hr/yr$4,007$0.009$14,204$0.009MaintenanceMaintenancelabor1hr/shift*3shifts/d*$30/hr*360d/yr$32,400$0.07$32,400$0.02Maintenancematerials100%ofmaintenancelabor$32,400$0.07$32,400$0.02UtilitiesElectricity0.000181*stackflowrate*5.15in.H2O*8,640hr/yr*$0.0671/kWh$71,658$0.16$253,992$0.16Compressedair1.5scfm/1000acfm*stackflowrate*$0.25/1000scf*8,640hr/yr*60min/hr$25,777$0.06$91,368$0.06Ashdisposal$40/ton($0.02/lb)$2,142$0.005$22,882$0.01TotalDAC$242,905$0.54$521,766$0.33IndirectAnnualCostsOverhead60%oflabor&material$85,996$0.19$92,115$0.06Administrativecharges2%ofTCI$17,227$0.04$101,112$0.06Propertytax1%ofTCInochangenochangenochangenochangeInsurance2%ofTCI$17,227$0.04$101,112$0.06Capitalrecovery,revised0.0944*TCI(7%,20yrs)$81,309$0.18$477,250$0.30TotalIAC$201,759$0.45$771,589$0.49TotalAnnualCost$444,664$1.00$1,293,356$0.82Averagecost/tonclinker($1.00+$0.82)/20.91Annualcost,excludingcapitalrecovery$363,355$0.81$816,106$0.52Averagecost/tonclinker(w/oCR)($0.81+$0.52)/20.67

# ACI Capital, Annual, and Annualized Capital Costs ($2005)

Total Cost ($) Clinker Production

(tpy) Cost/Ton Clinker

Avg $/Ton Clinker VL

plant BLE plant VL

plant BLE plant VL

plant BLE

plant

TCI 861,327 5,055,616 446,046 1,581,006 1.93 3.20 2.56

Annual Cost, excluding CR and carbon 359,348 801,902 446,046 1,581,006 0.81 0.51 0.66

Carbon ($/yr) 4,007 14,204 446,046 1,581,006 0.01 0.01 0.01

Capital Recovery (7%, 20yr) 81,309 477,250 446,046 1,581,006 0.18 0.30 0.24

Total Annualized Cost 444,664 1,293,356 446,046 1,581,006 1.00 0.82 0.91

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# 2007 Price Announcement

December 1, 2006 - As the cost of energy, packaging, and coal

continues to rise along with costs for employee healthcare and pensions,

it is impossible for Norit Americas Inc. to maintain our current activated

carbon pricing. Therefore, effective December 30, 2006, we will increase

pricing for all products shipped after th at date, regardless of the date the

order was placed.

View the Producer Price Index PDF for Basic Organic Chemicals with

data shown from 1996 until present. This is the US Government Pricing

Index that best mirrors our industry and is accepted by most companies.

As you can see from this chart, between 1996 and 2002 the cost of

producing basic organic chemicals (such as activated carbon) did not

increase a significant amount (annua l average). During those times Norit

did not increase prices to any extent.

From 2002 until 2005 the cost of producing basic organic chemicals

increased over 56%. During that time, Norit improved its efficiency in

carbon production. As a result of those efforts, we were able to minimize

price increases. Over the past 18 months we instituted moderate price

increases that have captured a small fraction of our cost increases. While

those price increases have been helpful, they certainly have not recouped

the tremendous cost increases we have experienced over the last four

years in spite of our efficiency improvements. The year 2006 has been no

exception to the latest trend as costs increased over 10% through

October. Therefore, the action we are taking at this time is an important

step, as we work toward a return to reasonable profitability.

You may also be aware of the antidump ing duties recently imposed on all

steam-activated carbon imported from China. The effects of low market

pricing caused by dumped Chinese imports have greatly contributed to

the situation in which the carbon industry finds itself. However, as can be

seen by the PPI, rising costs continue to be the major component of the

need for price increases.

We value the business you have entrusted to us and assure you that we

are continuing our cost control efforts. We appreciate your patience and

understanding during this challenging period. If you have questions

please feel free to contact us at 800-641-9245.

More Press Releases FOR IMMEDIATE RELEASE Contact

Norit Americas Inc.

800-641-9245 

# Page 1 of 1 Press Release - Norit Amer icas - 2007 Price Announcement

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