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UBC Theses and Dissertations

Economic feasibility of basic chemical manufacturing in the province of British Columbia Dobbie, John Wright

Abstract

The requirements for an investment in a chemical manufacturing plant to be economically feasible have been investigated. The items studied included the market which exists for chemicals, the resources required to manufacture chemicals, and the finances commited to the investments in manufacturing plants. The chemical plants investigated were confined to that sector defined as basic and intermediate chemicals, further, the study was restricted to the geographic region of British Columbia. Three sources of information were pertinent to this study. These were the external trade data for the province of British Columbia, available through Victoria from the Dominion Bureau of Statistics; the growth in the forest industry, available from journals and news releases; and specific expense information, obtained or confirmed from private communication with various individuals in the industries pertinent to the study. Other miscellaneous books, publications, and unpublished materials were used as required to complete the analysis of the study. The perinent information including markets and prices (revenue), resources (expenses), and capital commitment were combined to determine rate of return on investment. Return was considered to be the principal criteria for the evaluation of the economic feasibility of a chemical manufacturing plant. The results of the study indicated that the growth of the forest industry accounted for the feasibility of chemical plants in the province in the recent past and the near term future. The chemical pulp exports especially to Japan and Europe are expected to sustain growth in pulping and bleaching chemicals. A declining per capita consumption for plywood and increased exports of this material are expected to sustain a straight line growth in plywood resin chemicals in the near term future. The possibilities for opportunities in basic aromatic chemicals, and plastics, and synthetic detergent intermediates were outlined, all of which would require market development. Resources and capital commitment were not found to be a restriction upon economic feasibility. Sulphur and petroleum are available within the province, but the majority of the mineral raw materials are imported. Technology was in each case the organization's own. Capital for the investments made in British Columbia has been provided by the routine operations of the parent organization, and funds flow from the local plants operations should sustain expansion. The return on investment for the basic chemical plants which have been established recently in British Columbia was found to be modest in the short run. Various factors contributed to reductions in rate of return including rate of incremental expansion, market structure change, price reductions, and competition.

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