Chemical Vision

Final Report Sponsored By engineer festering BOARD Ministry of Industries & Production G tot whollyy overnment of Pakistan SEDC Building (STP) 5-A, Constitution bridle-path Islamabad Tele (051) 9205595, 9223734 Fax (051) 9206161 Prep bed By Technology Management universe of discourse(prenominal) (Pvt) Ltd (TECHMA) 31/11-A, Abu Bakr Block New Garden Town, Lahore Tele (042) 5881460 Fax-Cum-Tel (042) 5881718 E-Mail emailprotected net. pk 2010 TABLE OF content Description paginate Nos. Ack presentlyledgement Team of Experts executive Summary. CHAPTER 1 range of mountains Of The Worlds chemic pains 1. 1 background of the chemic substance substance substance substance sedulousness. . 2 stratum wise breakdown of the chemical substance substance fashion. 1. 3 search and growing in the chemical persistence. 1. 4 Classification of the chemical attention growth of Pakistan Vision 2030. CHAPTER 2 Potential for the phylogeny of inessential chemical industries ground on feedstocks derived from chief(a) industries. 2. 1 Feedstocks derived from primary industries for the potential out pipshoot of supplementary chemical industries. new anele establish pet percentageum and petrochemical refineries. alkene petrochemical complex. Aromatic petrochemical complex. 2. 2 inborn bollix found chemicals. 2. 3 utility(a) feedstocks for the employment of commodity chemicals. 2. 4. Feedstocks derived from met ein truth(prenominal)urgical plants and polymers, sensibles technology and metallurgical puzzle outes. 2. 5 otherwise mineral found projects being of acid and alkali industries, cement and glass plants found on limestone, gypsum, contestation salt, sulphur and silicon dioxide. 2. 6 Agro establish feed stocks. 2. 7 Sources of painful(a) worldlys and cover technologies for chemical constancy emergence in Pakistan. 2. 8 Categorization of inessential chemical industries in Pakistan. CHAPTER 3The salute status of the chemical p ersistence in Pakistan. 3. 1 General 3. 2 The complex body dower of Pakistans imports and exportations. 3. 3 The role of government in industrial outgrowth. 3. 4 Limitations of Pakistans industrial policies for chemical exertion developing. i- septet 1 1 1 4 5 1 1 1 3 5 7 10 13 17 17 20 21 1 1 3 8 12 Continued. paginate 1 of 2 CHAPTER 4 4. 1 Modernization of the content innovation system for chemical labor learning in Pakistan. Limitations of Pakistans N. I. S. The chain of mountains of technology festering score motorcard with additional responsibility for technology growth and pointd tructure of Technology discipline Board. 4. 2 The role of the national citizens committee in research and technology teaching. 4. 2. 1 The current status of R&D in Pakistan. 4. 2. 2 guinea pig committee for research and technology study. 4. 3 guinea pig committee for the development of softw atomic come in 18 and pressw atomic number 18 for the commercialization of technolog ies. 4. 4 National committee for the development of technology policy and investment planning. 4. 5 Human resource development. 4. 6 Integrated plan for the development of a national innovation system. 4. 7 Industrial master plan. CHAPTER 5Profiles of Present Secondary chemic Industries of Pakistan. (Section 1) Caustic divulge none (Section 2) Soda ash & sodium bi atomic number 6ate Section -3) Petrochemicals 1 2 4&5 5 6 7 10 13 15 16 20 1-11 12-19 20-37 CHAPTER 6 Proposal For The Future Development Of Secondary Industries In Pakistan 1-5 CHAPTER 7 Industrial Trade Policies 7. 1 Imports, responsibility and custom duties. 7. 2 Tariff escalation, description and peaks. 7. 3 Other imports duties/taxes. 7. 4 Competitiveness of exports from Pakistan. CHAPTER 8 Conclusions and Recommendations. Attachments Annexure A References 1 2 3 4 1-5 -3 rascal 2 of 2 ACKNOWLEDGEMENTS I am grateful to Mr Asad Ilahi, headsman Executive Officer of the Engineering Development Board, and his dedic ated staff, Mr. M. Farooq Khan, General music director (Policy) and Mr Yasir Qurban, Project Engineer. They gave their panoptic support in the conception of the project for chemic patience Development Vision 2030 and hand overd in blue-chip information and data, which were essential for the in(predicate) development of the project. My thanks to my colleagues and associated consultants Mr Muhammad Sadiq Chaudhry, Dr M. Khalid Farooq and Mr Pervaiz A. Khan.They were a source of inspiration and played an mobile role in discussions for the development of the strategy. Thank you to my daughter, Leila Butt, for editing this report. Dr Waheed M. Butt decision get upr SUMMARY The international chemical labor forms the fabric of the modern-day world. It converts introductory crank materials into more than than 70,000 different overlaps, not only for industry, exclusively as tumefy as for all the consumer goods that people rely on in their daily feel. The modern chemical industry is split into four broad categories, comprising basic chemicals, life sciences, peculiar(prenominal)ty chemicals and consumer convergences.Its outstanding victor is more often than not collect to unceasing scientific and technical breakthroughs and advances, which gestate led to the development of new products and bear upones. Chemical industry development in Pakistan has been classified into (i) the primary argona chemical industry and (ii) the climb up welkin chemical industry. autochthonic firmament industries be extensive-scale, detonator intensive industries comprising refineries, petrochemicals, natural gas, metallurgical and mineral found projects. They as sound as provide feedstocks for the unoriginal winding chemical industry.Secondary industries ar based on feedstocks either derived from primary welkin industries, or an differentwise(prenominal) supportary sources of raw materials. These ar little capital intensive and ar based on po stgraduate, modal(a) or little sophisticated technologies. The secondary sector industries form the arse for the proposed Chemical Industry Development Vision 2030. aboriginal sector industries which provide feedstocks for the development of secondary sector chemical industries, as well as other alternative sources of feedstocks lie in of (i) oil colour and petrochemical refineries.These provide petrochemical median(a) chemicals, which form the grammatical reflexion blocks for the takings of a very liberal number of secondary chemicals, such as polymers, eccentrics, pharmaceuticals, drugs, dyes and colours, insecticides, pesticides, rosins, paints, pigments, specialty chemicals, and a very ample number of consumer and construction materials and products. (ii) graphic gas based chemicals, which consist of methanol and ammonia. These apprise as well be utilise for the production of a large number of secondary chemicals. (iii) metallurgical metals and non-metals b ased secondary chemicals and products.Executive Summary rascal i of s redden-spot (iv) Alternative renewable feedstocks for the production of secondary chemicals consist of bio-mass, agricultural furiouss, oils and fats, molasses and effect alcohol. (v) Un stately natural gas. (vi) mineral based secondary chemical industries derived from sear, limestone, gypsum, swaysalt, silica sand and sulphur. (vii) Vegetable and herbal plants pulmonary tuberculosisd in the production of secondary chemicals, such as dyes, medicines, drugs, cosmetics and associated products. The development of secondary chemical industries argon divided amidst projects ased on sophisticated technologies, and those based on medium and less sophisticated technologies. Development of the chemical industry in Pakistan is lagging exclusivelyt joint those of other emerging grocerys. The various factors which have hampered the development of this industry in Pakistan be (i) An below developed industrial ba se of operations. (ii) Reliance on opposed technology and construction companies for the commercialization of topical anaestheticly developed or imported technologies. (iii) Imports of second-hand super susceptibility intensive plants based on antiquated technologies. iv) Reliance on the development of resource based, low technology, labour intensive products for export. The objective of Chemical Industry Development Vision 2030 is for (i) Pakistan to create its own cappower and compass self-reliance in project design, engine room and the construction management indispensable for the commercialization of technologies. (ii) To develop capability in the production of medium and last technology based chemicals for export, alongside to the present industrial structure based on low technology resource based products. iii) To provide equal incentives to entrepreneurs for the development of an exportoriented chemical industry. Executive Summary summon ii of vii The development of the chemical industry in Pakistan started in the 1950s and is based on five year plans, with the first plan covering the 1955-60 period. frugal growth was based on a policy of import substitution, resulting in varying order of growth of between 3. 1-6. 8% over 1950-70. However, this masks a exceedingly variable action the rate of growth slowed in the primordial 1970s to an annual mediocre of 4. %, that the economy was revitalized in the late 1970s and 1980s, before weakening again. However, in view of the inconsistencies in the development of trade policies geargond towards export-led growth, Pakistan has failed to boost exports of its manufactured goods. By comparison, scotch growth in Southeast Asian countries from the 1960s onwards, and in India, china and other late comers from the 1980s, was driven by their exportoriented industrialization policies. All these countries introduced foodstuff reforms and provided various incentives and subsidies in stage to enhance t heir exports of manufactured goods.In addition, these countries alike developed their own technology and engineering infrastructure by virtue of which they achieved autonomy in the workout and commercialization of their technologies. As a result, they have achieved tough annual average growth rates of between 8-11% over the by three decades. Traditionally, exports from Pakistan have been dominated by goods engenderd with low technology, resource based feed stocks, such as stuffs, cotton, readymade garments and leather. These comprise about 60% of do exports.The composition and share in exports of medium and high technology based products, comprising chemicals, petrochemicals and other manufactured products is very small and has fluctuated between 8-10% of total exports from Pakistan. Conversely, Pakistan has a very high dependence of imports of high value-added goods, which are more expensive. Chemicals, drugs, medicines and dyes, as well as capital plant, equipment and ma chinery, together account for slightly 40% of total imports with an estimated value of US$16. 3 cardinal for the year 2007/08.As a result, the trade balance has been continually increasing and stood at US$20. 9 meg in 2007/08. Present trends in Pakistans exports of lower technology goods indicate that it is facing increasing competition from India, china and Bangladesh. In addition, global demand for Executive Summary Page iii of vii these products is declining, and the break for higher technology products is quick growing. This situation calls for a concerted trial towards the development of a chemical industry based on medium and highly sophisticated technologies.Pakistan has only developed its basic industries, consisting of refineries, fertilizers, cement, pelf, polyester fibers and somewhat other petrochemical based polymer industries, to fulfill local demand. These industries have been predominantly developed by foreign engineering corporations, which were awarded co ntracts on figure outkey basis. However, Pakistan has failed to assimilate these imported technologies, or mapping them either for the replication of these plants or in the development of associated chemical projects.This dependence on the production and exports of low-valued added goods has held back Pakistans stinting actualizeance and revenue-earning potential. By comparison, South and Southeast Asian countries put special tenseness on the development of high technology goods for export. They achieved this through trade liberalization, but their governments in either case introduced industrial policies that foc utilize on the principal(prenominal)tenance of macro scotch stability, the proviso of industrial and technology infrastructure, alterments to market institutions and high levels of national investment.These countries established public organizations which supported production activities, but they in like manner relied on reclusive firms for the success of their industrial policies. For example, chinaware, which retains its socialist form of governance, introduced market reforms and advocated the alleged(prenominal) Open gateway Policy. It also created two large public sector corporations china National Petroleum Corporation (CNPC), for the production and exploration of oil and gas and China Petrochemical Corporation (SINOPEC) for the development of its petrochemical industry.China also created Petro-China as a Holding conjunction, which absentered its shares on international markets. The value of this company was estimated at US$100 billion in 1999, but has since risen to US$1. 1 trillion in 2008. The salient features of Chinas public private partnerships (PPPs) is that the public sector is the study shareholder in the development of its capital intensive industries, whereas the private sector is the majority equity partner in the development of secondary projects. Executive Summary Page iv of viiRapid industrialization in lacquer and South Korea was driven by multinational conglomeratesKeiretsus and Chaebolswhich created vertical and horizontal diversification of their businesses, with the active support of their respective governments. This pattern, in numerous cases has been followed by impertinently industrialized countries (NICs). Pakistans industrial infrastructure is limited and it relies primarily on foreign design and engineering companies for the commercialization of local and imported technologies.Therefore, at that place is immediate need for enhancing and modernizing its national innovation system (NIS). This is the framework by which a country brings about technological change, and consists of research and development (R&D) institutions, the infrastructure for commercialization of technologies, the structure of educational and technical institutions, regulatory agencies, information networks, monetary institutions and marketing. Process science and engineering technology (PS&ET) is an val uable component of a NIS and is the foundation for the development of the chemical industry.It integrates various elements of the processes of commercialization, from R&D to process design, project engineering, construction, operations and marketing management. Taken together, these provide the basis for manufacturing chastity and sustainable competitive advantage. In site to meet the goals of Chemical Industry Development Vision 2030, it is essential for Pakistan to enhance its PS&ET capability. We propose that the scope of the Engineering Development Board should be enhanced and feedn the additional responsibility to modernize and strengthen the NIS as the basis for technology development.In pose to achieve this objective, three committees should be established under the direction of a Technology Development Board (which volition be an enhanced Engineering Development Board) (i) A National commission for research and technology development, (ii) A National charge for the d evelopment of software and hardware for the commercialization of technologies. Executive Summary Page v of vii (iii) A National Committee for the development of technology policy and investment planning.The role of the National Committee for research and technology development allow for be to foster connectorages between universities, R&D institutions and the chemical industry. Various tasks to be undertaken by this committee forget overwhelm the formation of sub-committees for different sectors of the chemical industry naming of problems of separately sector selection of R&D teams from universities, industry and R&D institutes for multidisciplinary research continual appraisal and economic evaluation of testing ground and pilot scale work and selection and adoption of technologies for commercialization.The processes of commercialization of local or imported technologies depends on the application of science, engineering, design, instrumentation and control, safety and enviro nment, and some other aspects of capital plant manufacturing, construction, operations and marketing management. In order to develop local capability in various areas of project management, we propose the formation of a National Committee for the development of software and hardware as PPP projects.The functions of this Committee will be to support the development of existing or new engineering companies for various tasks. These embarrass the acknowledgement of new projects the preparation of investment studies on international criteria the formation of monetary packages the development of software and hardware and its application in design and engineering the development of engineering specifications for capital plant manufacturing construction management and many other functions such as revamping and modernization of old plants, and facilities for reverse engineering.The sure-fire utilization of various components of technology will depend on the ability of the government to foster PPPs with the involvement of industrial and venture capital institutions and a vibrant entrepreneurial class. We suggest that a National Committee for the development of technology policy and investment Planning should be established for (i) The grooming of suitable incentives to potential investors, in order to accelerate the processes of chemical industry development and the revision of industrial policies on continual basis.Executive Summary Page vi of vii (ii) The development of investment policies and infrastructure for capital formation. In order to facilitate the formation of investment, we recommend that a Holding Company should be established with the troth of the pecuniary sector, international donors, friends of Pakistan, overseas Pakistanis and other investors, who would be invited to subscribe as share holders in this company. Profiles of various sectors of existing chemical industries in Pakistan have been fain.These consist of Worlds present and projected production, World trade, local production in Pakistan, local market size, local demand, imports, time to come prospects for each sector of industry, SWOT analysis with special references to weaknesses, threats and opportunities as well as present tariff structure on Pakistan. Proposals for the future developments of Secondary Industries in Pakistan have been prepared and suggestions for the development of secondary chemical projects based on locally operable as well as imported materials have been made.The proposed industries have been divided into various sectors consisting of minerals, metallurgical, agro-based alternate sources of energy, oils and fats and petrochemicals based projects. A number of potential projects in each sector have been proposed and it is suggested that EDB initiate the development of feasibility studies on each of these projects for their future implementation. An integrated plan for development of NIS has been proposed and various other equirements consis ting of the application of computational technologies, human resource requirements, and the development of coherent industrial policy are also considered necessary. An Industrial Master Plan must be prepared for the implementation of various elements of the NIS, which should identify Pakistans capabilities and limitations in various antecedence sub-sectors of the chemical industry. It should develop policy measures and provide fiscal incentives in order to promote investment in various sectors of chemical industry.The development of a NIS on international standards will provide tens of thousands of job to Pakistans highly qualified manpower. Executive Summary Page vii of vii CHAPTER 1 1. 1. 1 SCOPE OF THE WORLDS CHEMICAL INDUSTRY Scope of the Chemical Industry The chemical industry comprises the companies that form industrial chemicals. It is key to the modern world economy, as it converts raw materials into more than 70,000 different products. The chemical industry is more diver se than virtually any other industry in the world. Its products are omnipresent.Chemicals are the building blocks for products that meet our just about aboriginal needs for food, shelter and health, as well as products vital to the high technology world of computing, telecommunications and biotechnology. They are utilise to make a simple variety of consumer goods, and are also inputs in agriculture, manufacturing, construction and services industries. In finicky, chemicals are a keystone of world manufacturing, as they are an entire component of all manufacturing sub-sectors, including pharmaceuticals, automobiles, textiles, furniture, paint, paper, electronics, construction and appliances.It is difficult to fully enumerate the uses of chemical products and processes, but the following nomenclature gives some indication of the level of variation Polymers and plasticsespecially poly ethylene, polypropylene, polyvinyl chloride, polyethylene terephthalate, polystyrene and polyc arbonatecomprise about 80% of the chemical industrys output worldwide. The chemical industry itself consumes 26% of its own output. study industrial products include prophylactic and plastics, textiles, apparel, polymers, pulp and paper, and primary metals.Chemicals are most a US$3 trillion global enterprise, with chemical companies in the EU, US and Japan macrocosm the worlds largest begetrs. 1. 2 Category Breakdown of the Chemical Industry The marketing of the chemical business fecal matter be divided into a few broad categories, including basic chemicals (about 35-37% of US dollar bill output), life sciences (30%), specialty chemicals (20-25%) and consumer products (about 10%). ___________________________________________________________________________ Chapter 1Page 1 of 1 prefatorial CHEMICALS or commodity chemicals are a broad chemical category, which include polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals a nd fertilizers. Polymersthe largest revenue segment, at about 33% of the basic chemicals US dollar valueinclude all categories of plastics and man-made fibers. The major markets for plastics are packaging, followed by topographic point construction, containers, appliances, pipe, transportation, toys and games.The largest intensity polymer product, polyethylene (PE), is used mainly in packaging films and other products, such as milk bottles, containers and pipes. Polyvinyl chloride (PVC), another large muckle product, is principally used to make pipes for construction markets, as well as siding and, to a some(prenominal) smaller extent, transport and packaging materials. Polypropylene (PP), which is similar in volume to PVC, is used in markets ranging from packaging, appliances and containers, to clothing and carpeting.Polystyrene (PS), another large-volume plastic, is used principally for appliances and packaging, as well as toys and recreation. The leading man-made fibers incl ude polyester, nylon, polypropylene and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use. The principal raw materials for polymers are bulk petrochemicals. Chemicals in the bulk petrochemicals and intermediates category are primarily made from liquefied lowbred gas (LPG), natural gas and naphtha. Their sales volume is close to 30% of total basic chemicals.Typical large-volume products include ethylene, propylene, benzene, toluene, xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene and ethylene oxide. These chemicals are the start materials for most polymers and other organic chemicals, as well as much of the specialty chemicals category. Other derivatives and basic industrials include synthetic rubber, surfactants, dyes and pigments, resins, carbon black, explosives and rubber products. They contribute about 20% to basic chemicals immaterial sales. _____________________________________________________________ ______________ Chapter 1Page 2 of 2 Inorganic chemicals (about 12% of revenue output) are the oldest of the chemical categories. Products include salt, chlorine, unpleasant soda, soda ash, acids (such as nitric, phosphoric and sulfuric), titanium dioxide and atomic number 1 peroxide. Fertilizers are the smallest category (about 6%) and include phosphates, ammonia, urea and potash chemicals. LIFE SCIENCES (about 30% of the dollar output of the chemical business), include differentiated chemical and biological substances, pharmaceuticals, diagnostics, sentient being health products, vitamins and dress protection chemicals.While much smaller in volume than other chemical sectors, their products tend to have very high pricesover US$10 per poundwith research and development (R&D) spending at 15-25% of sales. Life science products are usually produced to very high specifications and are closely scrutinized by government agencies such as the US forage and Drug Administration (FDA). C rop protection chemicals, about 10% of this category, include herbicides, insecticides and fungicides. SPECIALTY CHEMICALS are a category of relatively high value-added, rapidly growing, chemicals with diverse end-product markets.They are generally characterized by their innovative aspectsproducts are interchange for what they croup do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants, as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings comprise about 15% of specialty chemicals sales, with other products ranging from 10-13%. Specialty Chemicals are sometimes referred to as fine chemicals. CONSUMER PRODUCTS include direct product sales of chemicals such as soaps, detergents, and cosmetics.The chemical industry has shown rapid growth for more than fifty years. The fast-paced growing areas have been in the manufacture of synthetic organic polymers used as plastics, fi bres and elastomers. Historically and currently the chemical industry has been concentrated in three areas of the world Western Europe, North America and Japan (the so-called Triad). The EU remains the largest producer, followed by the US and Japan. ___________________________________________________________________________ Chapter 1Page 3 of 3 The traditionalistic dominance of chemical production by the Triad is now being challenged by changes in feedstock availability and price, labour and energy costs, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been recent rapid economic growth in China, India, Korea, the Middle East, Southeast Asia, Nigeria, Trinidad, Thailand, Brazil, Venezuela, and Indonesia. 1. 3 Research and Development in the Chemical IndustryThe outstanding success of the global chemical industry is largely collect to scientific and technological breakthroughs and advances , facilitating the development of new products and processes. The US chemical industry now spends about US$17. 6 billion p.a. on R&D. In fact, according to study by the contribute for the Future (IFTF), the chemical industry is one of the eight most research-intensive industries. The scientific and technical research of these industries makes our lives safer, longer, easier and more productive.When one reviews the contributions of the chemical industry to our civilization, it becomes sack up that rather than any single soul invention or technological breakthrough, it has been the industrys overall commitment to R&D that has been its most signifi gaget legacy. Investment in R&D is the single greatest driver of productivity increases, accounting for half or more of all increases in output per person. R&D is the source of new products that improve our quality of life, and new processes that enable firms to reduce costs and increase competitiveness.As we human face to the future, it is apparent that continued investment in technology is necessary for industry to meet the needs and expectations of future generations. Reaching the goals of Chemical Industry Development Vision 2030 will require Pakistan to build its technology infrastructure, consisting of investment in technology development, computer aided design, engineering, plant and equipment manufacturing, construction and marketing management. These areas of development have been grossly neglected in the past and are the major reasons for the present plight of the chemical industry in the country. __________________________________________________________________________ Chapter 1 Page 4 of 4 The industrial sector drives the global economy, collectively transacting most US$3 trillion per annum. An industry is a collection of companies that perform similar functions. Industry can be used to refer to all company groups, or as being a set of entities that implement productive forces to convert a simple i nput into a impact final product. The size of various industries varies by country, level of development and external demand. . 4 Classification of the Chemical Industry Development of Pakistan Vision 2030 For the think of the Chemical Industry Development Vision 2030, this industry is divided into Primary sector industries and Secondary sector industries. Primary sphere Industries The Primary sector industry generally involves the changeover of natural resources into primary products. These are large, highly sophisticated, technology-based, capital intensive projects consisting of (i)Petroleum refining and petrochemical industries for the production of petrochemical intermediates, olefins (ethylene, propylene, butylenes) and BTX (benzene, toluene, xylene), all of which form the basis for the development of monomers, polymers and plastic industries. (ii) Natural gas based projects for the production of ammonia, methanol, fertilizers and associated products. (iii) Mineral base d industries consisting of cement, limestone, gypsum, sand and salt. (iv) Smelting and refining of ferrous and non-ferrous metals. They also produce raw materials for Secondary industries. v) Agriculture and Farming Industries These constitute course occurring, renewable sources of raw materials, such as cotton, oils and fats, sugar, agricultural wastes (bio-mass) and raw materials for a large number of downstream industries. ___________________________________________________________________________ Chapter 1 Page 5 of 5 Secondary Sector Industries The principal objective of Secondary sector industries is to provide the connective link between products and materials produced by Primary industries, which are of practical use to the national economy.This implies that the Secondary industries rely on the Primary industries for feedstocks and raw materials for use in manufacturing, process, blending, fabricating plants for petrochemical intermediates, polymers, plastics, steel, non-fe rrous metals, minerals, agricultural and miscellaneous products. These industries use medium- to high-sophisticated technology, and range from light to medium categories. THE auxiliary SECTOR INDUSTRIES WILL FORM THE BASIS FOR CHEMICAL INDUSTRY DEVELOPMENT IN PAKISTAN VISION 2030. __________________________________________________________________________ Chapter 1 Page 6 of 6 CHAPTER 2 2. POTENTIAL FOR THE DEVELOPMENT OF SECONDARY CHEMICAL INDUSTRIES ground ON FEEDSTOCKS DERIVED FROM master(a) INDUSTRIES 2. 1 Feedstocks Derived from Primary Industries for the Potential Development of Secondary Chemical Industries Primary chemical industries, which are manufactured through the utilization of various feedstocks, consist of large-scale, highly capital intensive plants, based on sophisticated technologies.These projects also provide raw materials for the development of secondary chemical industries and consist of Crude oil based refineries and petrochemical complexes. Natural gas based chemicals and fertilizer projects. Alternative renewable feedstocks for the production of commodity chemicals Metallurgical plants for the production of iron, steel, and non-ferrous metals. Other mineral projects consisting of acid and alkali industries, and cement and glass plants based on limestone, gypsum, rock salt, sulphur and silica. Projects based on agro feedstocks.Crude crude Based Petroleum and Petrochemical Refineries Petroleum refineries are designed to produce a limited number of products, which are primarily used as a source of energy in road, rail and air transport power plants steam generation and heat up media in the chemical industry. They do not produce high value-added chemicals unless they are integrated with petrochemical plantsgenerally designated as Petrochemical Refinerieswhich are highly energy economical and produce diversified feedstocks and raw materials for a large number of secondary chemicals.A petrochemical is any chemical compound obta ined from cutting oil or natural gas, or derived from petroleum or natural gas hydrocarbons and utilized in the production of a large variety of secondary chemicals and products. The definition has been broadened to include the consentaneous range of aliphatic, aromatic and organic ________________________________________________________________________________________ Chapter 2 Page 1 of 23 chemicals, as well as carbon black and such inorganic materials as sulphur and ammonia. In many instances, a specific chemical included among the etrochemicals may also be obtained from other sources, such as coal, coke or bio-mass. Petrochemical based secondary chemicals include such items as plastics, soaps and detergents, solvents, drugs, fertilizers, pesticides, explosives, synthetic fibers and rubbers, paints, epoxy resins, and flooring and insulating materials. Petrochemicals are found in products as diverse as aspirin, boats, automobiles, aircraft, polyester and acrylic fibers, record ing discs and tapes. Natural gas and crude oil are referred to collectively as petroleum. Crude oil consists of the heavier agents that course occur in liquid form.Natural gas refers to the lighter constituents of petroleum that naturally occur in gaseous form, either on its own as free gas, or in association with crude oil. The production of petrochemical based intermediate chemicals form the feedstocks for secondary industries as part of a two stage process. In the first stage, crude oil is distilled and fractionated to produce a number of products consisting of gasoline, naphthas, and light and heavy gas oils, which are used as a source of energy for road and air transport, and power generation.Simultaneously the take away gases, light and heavy naphthas, and gas oils are predominantly used as the starting materials for petrochemical projects. This is illustrated in public figure 2. 1. In the second stage the off gases and naphthas are further processed into two separate opera tions to produce Petrochemical intermediate chemicals or monomers as follows ________________________________________________________________________________________ Chapter 2 Page 2 of 23 Petrochemical Feedstocks Crude Oil To Petroleum Refinery Atmospheric Distillation Methane &Off triggermanes gas pedal And Motor Spirit Light and Heavy Naphtha Light and Heavy Gas Oil Residue Petrochemical Feedstock Off Gases/Naphtha/Gas Oil Catalyst wisecrack Aromatics Steam Cracking Olefins common fig 2. 1 Olefin Petrochemical Complex Refinery off gases, naphthas or gas oils are improve at high temperatures in the presence of steam to produce monomers (ethylene, propylene and butylenes). These are gases at middling temperatures and pressures and can only be transported at high pressures and low temperatures as liquids under refrigerated condition.These are preferably processed further at site to produce secondary petrochemical products or polymerized into polymers, such as polyethylene, po lyvinylchloride, polystyrene, ethylene glycol and many other secondary chemicals as illustrated in Fig 2. 2 and 2. 3. ________________________________________________________________________________________ Chapter 2 Page 3 of 23 locomote fault OF move NAPHTHA / GAS OIL NAPHTHA / ASSOCIATED GAS / GAS OIL STEAM ethene REACTOR Steam to Feed ratio 0. 25 to 0. 9 Temperatures 820 to 840oC Propylene Butylenes Fig 2. 2 OLEFINS AND PETROCHEMICAL INTERMEDIATES BASED SECONDARYCHEMICAL INDUSTRIES map I caloric CRACKING OF NAPHTHA FOR THE doing OF PRIMARY CHEMICALS (HIGHLY SOPHISTICATED, CAPITAL INTENSIVE PROCESS) ETHYLENE propylene BUTYLENES POLYETHYLENES LDPE,HDPE POLYPROPYLENE POLY VINYL CHLORIDE POLYSTYRENE SBR ETHYLENE GLYCOL POLY VINYL ACETATE STAGE II POLYMERIZATION OF PRIMARY CHEMICALS FOR THE PRODUCTION OF SECONDARY CHEMICALS AND POLYMERS. (MEDIUM TECHNOLOGY BASED PROCESSES). PLASTICS FILMS CONTAINERS PIPES,CABLES, BAGS SYNTHETIC RUBBER & LEATHER PRODUCTS TYRES TOYS ELECTRICAL EQUIPMENT RADIO, TV, AIR CONDITIONERS, REFRIGERATORS FURNITURE, TABLEWARE FORWARD humankind BACKWARD INTEGRATIONASSOCIATED GASES OR NAPHTHA STAGE III FABRICATION OF SECONDARY CHEMICALS FOR THE PRODUCTION OF CONSUMER PRODUCTS. (LOW/MEDIUM TECHNOLOGY BASED PRODUCTS) Fig 2. 3 ________________________________________________________________________________________ Chapter 2 Page 4 of 23 Other Olefins Based SecondaryChemicals Naphtha Steam Cracker (Olefins) Ethylene & Derivatives Ethylene EDC Ethylene Glycol Ethylene Oxide HDPE LDPE LLDPE EPDM Ethanol Alpha Olefins vinyl radical Acetate Ethyl Chloride / Ethyl benzine Propylene & Derivates Propylene propenonitrile Cumene Polypropylene acrylic sulfurous Butanol 2-Ethyl Hexanol Iso-Propanol NoneneDodecene Propylene Oxide Acetone Acrylic quality Butadiene & Derivatives Butadiene ABS Adiponitrile /HMDA Nitrile galosh Poly-Butadiene Poly chloroprene SB Latex SB Rubber Fig- 2. 3(a) Aromatic Petrochemical Complex Naphtha and gas oil is al so catalytically reformed at high temperatures in the presence of catalysts to yield aromatic intermediate chemicals, such as benzene, toluene and xylenes (Fig 2. 4). These are liquids at ordinary temperatures and pressures and can be easily transported to desired locations where they are used as raw materials in the production of a variety of secondary chemical products as shown in Fig. . 5. ________________________________________________________________________________________ Chapter 2 Page 5 of 23 catalytic REFORMING OF NAPHTHA CATALYTIC (AROMATIZATION REACTION) NAPHTHA / ASSOCIATED GAS / GAS OIL Benzene CATALYTIC REACTOR STEAM toluene Xylenes Fig-2. 4 Aromatics Based Secondary Chemicals Naphtha Catalytic Reformer (Aromatics) Toluene & Derivatives Benzene TDI Caprolactam Benzoic Acid TNT Xylenes & Derivates Orthoxylene Paraxylene Metaxylene DMT TPA Bottle Resin Polyester Fiber Fiber Chip Film Resin Phthalic Anhydride PET Benzene & Derivatives Benzene ) Cumene ) Phenol ) Cycl o Hexane )Ethyl Benzene ) Adiplc Acid ) alkyl Benzene ) Aniline ) Alkyl Phenol ) Chloro Benzene ) Maleic Anhydride ) Nylon Fiber/Resin ) Production of Secondary Chemicals fair / High Technology Chemicals and Products Production of Primary/Intermediate Chemicals (Highly Sophisticated with child(p) Intensive) Fig 2. 5 ________________________________________________________________________________________ Chapter 2 Page 6 of 23 2. 2 Natural Gas Based Chemicals Natural gas is a very valuable resource, not only for use as energy, but also for the production of chemicals. It has been used commercially as a burn down for hundreds of years.The production, touch and distribution of natural gas has become an important segment of the world economy and is a major factor in the production of chemicals in global markets. The composition of natural gas depends on its source. It predominantly consists of methane, but in many cases contains higher hydrocarbons such as ethane and propane. Natur al gas processing plants are designed to produce veritable valuable products over and above those needed to make the gas marketable. Plants are also designed to recover elemental sulphur which is the starting raw material for the production of many secondary chemicals.Natural gas has created multifarious opportunities and challenges as it is now utilized in the production of fertilizers and petrochemicals, in addition to its earlier use as a source of energy. This is illustrated in Fig 2. 6. ________________________________________________________________________________________ Chapter 2 Page 7 of 23 Household Gas Fig -2. 6 ________________________________________________________________________________________ Chapter 2 Page 8 of 23 FIG-2. 7 ________________________________________________________________________________________ Chapter 2 Page 9 of 23 2. 3Alternative Feedstocks for the Production of Commodity Chemicals The uncertainties about the peaking of available reserves of fogy fuels, and rising prices of petroleum and natural gas, have spurred the chemical industry to insure alternative feedstocks for the production of commodity chemicals. oer the last two decades alternatives to conventional petroleum and natural gas feedstocks have been developed. These feedstocks include coal based gasification and liquefaction processes and renewable resources such as bio-mass, stranded natural gas from outlawed reserves, heavy oil from Tar sands or oil shale.These sources of alternative feedstocks are in the process of development for highest volume production of commodity chemicals in Europe and the US. The technology for their utilization is in the process of development, in order to make these processes more efficient and economically compatible with petroleum based technologies. The status of various available feedstocks and the technological development for their exploitation for the production of secondary chemicals is as follows coal Substantial wor ld coal reserves make it an attractive alternative to natural gas and petroleum.The technologies for large scale processing of coal are at present available in South Africa and China. However, a major concern about the utilization of these technologies is the variability in feedstock composition and the presence of impurities which poison the catalysts used in the processing of coal. Coal Gasification Commodity chemicals can be produced through the gasification of coal. Because of the large domestic reserves of coal in Pakistan, this feedstock option needs to be exploited. Coal gasification for application, including the production of chemical feedstocks, is already widely practiced worldwide.These plants give way feedstocks for chemical production, closely followed by the Fischer Tropsch process for the production of organic chemicals. ________________________________________________________________________________________ Chapter 2 Page 10 of 23 The gasification process starts with the production of synthesis gas in a gasifier, followed by the production of a mixture of carbon oxides and hydrogen. Ammonia, methanol, alcohols and aldehydes are produced by Oxo Synthesis. The Fisher Tropsch process is used to produce a variety of secondary chemicals.Different coal types (lignite, bituminous, sub-bituminous) affect the efficiencies and economies of the gasification process, since gasification efficiencies are lower for sub-bituminous coals due to higher moisture and ash content. However, since essentially any organic material can be gasified, existing gasifier designs can be adopted to use different types of coal as gasifier feed. Coal Liquefaction Coal can also be liquefied directly, without going through a Syngas step. This process is called the Coal to Liquid or CTL process and is well proven.Liquefaction uses liquid distillation and hydrogenation, where hydrogen is added to coal and water slurry. The slurry increases the Hydrogen/Carbon (H/C) ratio to a c rude oil level and removes impurities such as sulphur. Coal Liquefaction technology is of particular interest for the utilization of Thar Coal, which has a high moisture content. A full scale production facility is being built in China for the direct liquefaction of coal into transportation fuels to produce 50,000 bbl/day of fuel oil. A similar project could be developed for Thar Coal with the participation of Chinese Process Licensors. Bio-RefineryA major thrust towards the development of renewable feedstocks as a resource for energy and secondary chemicals is by a process called bio-refining. Bio-refining feedstocks consist of crops residues waste plants or animal material and recycled fibers municipal sewer sludge agricultural and forest residues household waste agro-feed effluents and residues of paper and timber working industry. These plants absorb solar energy from the sun through photosynthesis, and the energy stored within it is recovered by bio-refining processes. _______ _________________________________________________________________________________Chapter 2 Page 11 of 23 The bio-refining concept generally involves feeding bio-feedstocks into steam or catalyst bats to produce chemicals. Some technologies are in the process of development for the processing of carbohydrates, oils, lignin and fuels. In addition to their utilization for energy production, some bio based chemicals that have potential for large scale manufacture include carboxylic acids and glycols. Other areas of development include fermentation of sugars, decomposition of cellulose, high temperature pyrolysis, and bio-refining of wood and waste materials.However widespread use of feedstocks will require sustained research and development(R&D) in a variety of fields such as plant science, microbiology, genomics and catalysis. In view of the impurities, variability of feedstock composition, distributed supply, scalability and pathways for the breakdown of cellulose, the development o f process technology will have to be undertaken and / or adapted to local conditions by each country, in order to exploit the utilization of bio-mass feedstocks for economic advantage. Unconventional Natural GasMethane from anaerobic fermentation can be generated from animal manure and sewer treatment, as well as from landfills. The potential for anaerobic fermentation as a source for useable methane, rather than a source of pollution, will require development work leading to improvements in process control, operating(a) efficiencies and rate of digestion, targeting small scale technologies. Renewable energy sources are autochthonous and can, therefore, contribute to reducing dependence on energy imports, such as crude oil, resulting in increasing security of supply as well as resources for the production of commodity chemicals.Developments in renewable energy resources can actively contribute to job creation, predominantly in small- and medium-sized industries which are so central to economic performance. The deployment of renewable resources can be a key feature in regional development, with the aim of achieving greater social and economic cohesion, largely for environmental reasons. ________________________________________________________________________________________ Chapter 2 Page 12 of 23 2. 4. Feedstocks Derived from Metallurgical Plants and Polymers, Materials Technology and Metallurgical ProcessesMaterials technology is one of the many areas targeted by the chemical industry. Materials play a critical role in the economic development and growth of chemical process industries. New materials technology is an essential part of the industrys strategy for achieving its vision. Materials contribute a large join to industry revenue, and represent a high growth potential for industry. ferrous and non-ferrous metallurgical processes consisting of iron, steel, copper, aluminium, magnesium and associated alloys have been used traditionally as feedstocks for the development of secondary chemical industries.Tremendous advances in the twentieth century in the development of new synthetic materials have also fueled the growth of the chemical industry. Replacement of traditional materials with synthetic polymers and composite materials has resulted in products with lower weight, give energy efficiency, higher performance and durability, and increased design and manufacturing flexibility. Metallurgical Industry The traditional iron, steel and non-ferrous metallurgical industries produce valuable primary products which are important starting materials for the production of secondary chemical products.They are used by almost every manufacturing industry for the fabrication of capital plants and equipment the manufacture of automobiles, railways, agricultural and construction equipment and components and spare move for operating plants in the chemical and allied industries. The iron and steel industry is classified into three important prima ry products according to the order of processing from iron ore to the finished products. The iron ore is calcined and mixed with limestone and coke and introduced into a Blast furnace. The preheated air is fed to the furnish of the furnace. The ore is reduced to iron to produce Pig iron. _______________________________________________________________________________________ Chapter 2 Page 13 of 23 Pig iron is refined by different processes to produce iron castings or billets, trilled wrought iron and rolled/ big steel by three different processes as illustrated in Fig 2. 8. Fig-2. 8 The primary products of the iron and steel industry, which consist of iron castings, rolled wrought iron, and rolled and forged steel, are the feedstock for a very large number of downstream secondary industries. ________________________________________________________________________________________Chapter 2 Page 14 of 23 Non-Ferrous Metals Non-ferrous metals are produced through two basic operation s. In the first operation, the ores are subjected to metallurgical processes to produce basic metals consisting of large blocs or bars. In the second operation, the metal is smelted and refined. The secondary smelting and refining of nonferrous metals lead to the production of aluminium, copper, lead, nickel, silver, gold, tin and zinc. These metals are used in wide variety of secondary chemical manufacturing industries, such as ammunition, beverage cans, coins, automobiles and household appliances.Copper possesses superior electrical conductivity, and is a strong, perpetual metal used in a variety of structural applications, as well as for power, lighting and communication transmissions. Domestically, the major markets for copper are construction, electronics, and industrial machinery and equipment. Aluminium, the most widely used nonferrous metal, possesses several positive attributes, such as a light weight, corrosion resistance, and high electrical and thermal conductivity, w hich makes the metal suitable for a variety of applications.Container and packaging manufacturers use aluminium, trance other major enduse products include the transportation sector, the building and construction sector, and the electrical sector. Lead is primarily used for the manufacture of storage batteries, which in turn are incorporated into automobile ignition starters, un-interruptible power supplies for computer systems, and understudy power supplies for emergency lighting systems and telephones. Other market sectors that purchase lead include paint and glass manufacturers, and building products manufacturers.Zinc is primarily used to startle products found in the automobile, steel and construction industries, but a greater percentage of secondary zinc is used to produce brass and bronze, as well as assorted chemicals. Additional applications include the blending of zinc-based die-cast and brass alloys. ______________________________________________________________________ __________________ Chapter 2 Page 15 of 23 Composite Materials Over the past few years, advances in the production of composite materials, including mixtures of polymers, fibers, metals and ceramics, have broaden the range, performance and applications of these materials.These are made up of individual materials referred to as constituent materials. There are two categories of constituent materials designated as intercellular substance and reinforcement. The matrix surrounds and supports the reinforcement materials by maintaining their relative positions. The reinforcements impart their special mechanical and physiological properties to enhance the matrix properties. A synergism produces material properties unavailable from the individual constituent materials.A wide variety of matrix and strengthening materials allows the designer of the product or structure to choose any optimum combination. Most commercially produced composites use a polymer matrix material often called a resi n solution. There are many different polymers available depending upon the starting ingredients. The most common are known as polyesters, vinyl ester, epoxy, phenol, poly amides, amongst others. The reinforcement materials are often fibers and fiber glass, but also commonly ground materials.The average composition in a product contains 60% resin and 40% fiber. Various process technologies consisting of vacuum moulding, pressure moulding, autoclave moulding and resin transfer moulding are assiduous in order to give the required properties and strength to the relevant final product. Composite materials have gained popularity in high performance products that need to be lightweight, yet strong teeming to take harsh loading conditions. Examples of these include aerospace components, boat and scull hulls, and car bodies.The new Boeing 787 aircraft, including its wings and fuselage, is composed largely of composite materials. _____________________________________________________________ ___________________________ Chapter 2 Page 16 of 23 2. 5 Other Mineral Based Projects Consisting of Acid and Alkali Industries, Cement and Glass Plants Based on Limestone, Gypsum, Rock Salt, siemens and Silica The mineral potential of Pakistan, although considered excellent, is not adequately exploited as its contribution to GNP at present stands at only 2. 4%.The main sources of locally available feedstocks for the production of the acid and alkali industry (soda ash, sodium bicarbonate, caustic soda, chlorine), sulphur and other inorganic acids, glass and cement, consist of rocksalt, sulphur, limestone, gypsum and silica sand. The manufactured products are predominantly marketed for local use, although there are some exports to Afghanistan and the Central Asian states. In view of the long memoir of development of industries in this sector, the process technologies are well-known locally.However, the design, engineering and procurance of critical plant and equipment are predomi nantly carried out by foreign engineering companies. 2. 6. Agro Based Feedstocks Cotton and Other Natural Fibers Agriculture is the largest sector of the economy and is the source of livelihood of almost 45% of the total employed labour force in the country. Cotton is the most important non-food crop and feedstock for the production of natural fiber for the manufacture of textile products. Cotton fiber is also blended with polyester and viscose fibers.The textile and clothing industry has been the main driver of Pakistani exports for the last sixty years, in terms of two foreign currency earnings and job creation. The textile industry flourished under official patronage, but lost its advantages in the post quota regime. Its share in exports has declined from 66% in 2005 to 53. 7% in the current 2008-09 financial year. The textile industry is based on relatively low to medium technology, but in spite of this Pakistan has spent US$7. 5 billion on the import of textile machinery over the past ten years (1999-2009).Pakistan did not make any effort to adopt ________________________________________________________________________________________ Chapter 2 Page 17 of 23 imported technologies for the manufacture of textile machinery by reverse engineering. In view of these shortcomings, the textile industry has continuously suffered productivity losses due to machinery breakdowns and its inability to cope with operational problems. Pakistan is now facing competition from China, India and Bangladesh, in view of their better quality products, higher productivity and other economic advantages.Sugarcane, Molasses, Power Alcohol and Associated Industries Sugarcane is an important cash crop and is a valuable feedstock for the production of sugar and other downstream industries, such as industrial alcohol, chip board and paper. Molasses is a by product of the sugar industry and is the starting raw material for the production of industrial alcohol, which is used as a source of energy for automobiles, as well as the production of organic chemicals, such as aldehydes, acetone, acetic acid, acetic anhydride, isophoron, citric acid, glycerol, yeast and many other derivatives for pharmaceutical and plastic industries.Fruit and Vegetables The various varieties of production produced in Pakistan consist of citrus, mango, apples, banana, apricot, guava, grapes and tomatoes. Annual production is estimated at 5. 6 one thousand million tons per year. The fruit industry is very diversified and consist of juices, soups and sauces, muff food, bakery products, confectionary and tomato products. The technology for the processing of fruit is becoming more sophisticated because of the high demand for quality products. The industry is required to produce food products both economically and profitably, and this depends upon efficient processes.At the same time, these processes must regale the material in such a way that the final product is attractive to the consumer . The fruit industry and its downstream products have considerable export potential. ________________________________________________________________________________________ Chapter 2 Page 18 of 23 Natural Dyes Vegetable dyes are eco-friendly and their use is increasing, especially for dyeing wool, carpets, silk and cotton. The common sources of vegetable dyes are parts of plants, such as leaves, flowers, fruit, seeds, barks, and the roots of dye yielding plants.The cultivation of certain trees also yield dye material. Therefore, the utilization of dye yielding plants and trees will boost the agro-based industry especially in coarse areas, leading to rural development and employment creation. Pakistan imports vegetable dyes from India despite the fact that the raw materials for their production are available in Pakistan. Dyes and pigments constitute the largest segment of the industry, with the worlds present value estimated at about US$16 billion per year. Herbal Medicines and As sociated productsThe Indian / Pakistani system of medicinesgenerally known as the Ayurvedic System of Medicineis considered a perfect science of life which has evolved from information, run into and logic. Based on scientific observations, it has its origin in the Vedasthe oldest recorded wisdom circa 6000 BC. Ayurvedic herbal medicines are considered ideal treatments, as they cure the diseases without causing any side effects. Herbal medicines and products now include medicines, health supplements, herbal lulu and toiletry products.Major developments in herbal medicines and beauty products are now taking place in China, South Korea, Canada and the US, in addition to India. It is estimated that the global market for herbal products now stands at US$62 billion per annum. Pakistan has a vast variety of flora and fauna especially in the Federal areas, Azad Kashmir and the foothills of the Himalayas, which need to be explored for beneficial exploitation of these resources. __________ ______________________________________________________________________________Chapter 2 Page 19 of 23 India has established a Technology Development Board which provides financial assistance to R&D establishments concerned with the development and commercialization of autochthonic technology for herbal products for wider domestic applications. There is considerable potential for the development of this sector and collaboration with well known companies such as Hamdard and Qarshi can be sought for joint partnerships for the development of herbal projects. Oils and Fats IndustryConventional oils derived from cotton seed, rapeseed and clavus are now processed and utilized for the production of bio-fuels in the US and other countries. An alternative source of vegetable oil called Jetropha is now widely cultivated in South and Southeast Asia, especially in Japan, Thailand, China and India. It is a woody and hardy plant, and grows to a height of 3-8 meters. It grows quickly even in poo r soils and is not affected by drought and disease. The macro instruction engineering society of Pakistan, in collaboration with Big Bird (Pvt. ) Ltd. as initiated a project for the plantation of Jatropha in Layyah, West Punjab. The Jetropha oil seed contains about 40% of vegetable fat/oil and some toxic materials, which makes it inedible for human and livestock consumption. The process technology for the conversion of Jetropha oil into bio-fuels is well proven and can be adopted in Pakistan. 2. 7 Sources of Raw Materials and Process Technologies for Chemical Industry Development in Pakistan The sector wise classification of chemical industry in Pakistan is as follows PRIMARY INDUSTRIES SOURCES OF RAW MATERIAL ) Petroleum Refineries ii) Fertilizers Imported Crude Oil Local Natural Gas, iii) iv) v) vi) Local Materials, Limestone, Clay Imported/Local Ore topically available ore Local Agricultural Raw Material Cement constrict & Steel Copper Textiles _________________________________ _______________________