CAPITAL INVESTMENT ANALYSIS OF COAL WASHING PLANT IN PT. XYZ, SOUTH KALIMANTAN

• Main Author: Warman, Okky
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/50566
• Institution: Institut Teknologi Bandung

Indonesia, as one of the coal exporting countries, has produced 557 million tons in 2018, where 63% of it was exported and the rest of 37% was consumed to support domestic needs (DEN, 2019). Due to the significant contribution of coal to national energy source and income, it is important to improve the efficiency in resource and reserves exploitation which aligns with coal conservation. Based on the fact that certain part of a coal seam on its upper and lower parts in coal production activity is discarded, it is important to start looking into the potential revenue of discarded coal if a process of cleaning can be applied. Many coal companies have implemented a coal washing activity to remove unwanted particles from coal to increase its quality profile and meet market requirements. However, this technology is commonly used in high-grade coal (GAR5000 and above) instead of low-grade coal (below GAR5000). The establishment of a washing plant project requires a significant amount of investment. For example, an investment of approximately USD 44 million is required to develop a coal washing plant that can produce 2 million tons of coal annually. Several coal companies have failed in the attempt to establish their coal washing plant due to the amount of required capital expenditure, as well as the concern of their shareholders in terms of its operational risks due to lack of experience in this specific field. To resolve the lack of capital availability, cooperation with particular business partner may create higher possibility of the fulfillment of initial investment. The partnership may also reduce the cost of capital that will leads to higher project’s financial performance. In term of PT XYZ’s project, the cooperation is about to be established with a coal washing plant manufacturer from Europe as the supplier and operator of the washing plant. At the early stage of joint development, the supplier demanded a fixed annual fee at certain volume which is later be called as the washing cost. This factor can be considered critical to achieve a successful negotiation with the supplier. Thus, this factor needs to be addressed carefully before further negotiation takes place.