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CARTRIDGED SLURRY EXPLOSIVES MANUFACTURE
IN HONG KONG
ICI have been manufacturing slurry explosives in Hong Kong since 1973 and have maintained a close liaison with the Mines Department and Environment Department on the question of local manufacture of a cartridged product through ICI (China) Ltd and regular visits of per- sonnel from Nobel Explosives Co Ltd, Scotland (see Appendix 1).
Recently the question of establishing an export-oriented plant was revived. ICI had understood that this option had been dropped. ICI's interest in exporting explosives from llong Kong is outlined in Appendix 2. In view of the re-raising of the export option, ICI is now uncertain of Government thinking and of the basic terms which Government will require for manufacture to be permitted,
These terms could affect the viability of the project and will take some time to evaluate when known. The project is now less attractive than when first proposed by ICI as profitability has been eroded because of increased capital costs arising from:
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The need for plant modifications to accommodate the reduced outside licence distance,
. Escalation of equipment costs due to delay in the project.
The cost of a pier through which to bring in raw materials.
The Government requirement that the necessary land be purchased and not rented. This latter is most important as in the original ICI proposal it was assumed that the land would be rented, If the land is purchased at a price of say IIK$45 per sq ft, ICI estimate that this will need to be offset by an increase in the current selling price of the explosives in Hong Kong of the order of 10%. If an auction is held for the land and a higher price is obtained, it will result in a corresponding increase in the price of explosives.
ICI's current position is that it has submitted a generalised proposal and feasibility study to Environment Dept and is awaiting Government approval. Following receipt. of this, the standard ICI procedure is to send a technical mission to prepare a capital estimate of sanction status for internal approval. The preparation of such an estimate requires all capital variables, eg land cost, to be fixed within narrow limits. Following internal approval, a detailed proposal is then submitted to Government for final approval. This procedure conflicts with the anticipated tender procedure proposed by Government, eg the unfixed land costs, and will make it impossible for ICI to submit en unhedged proposal to Government against the tender document.
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