APPLICATION OF REAL OPTION ANALYSIS ECONOMIC EVALUATION ON THE PLAN TO SWITCH ROTARY KILNELECTRIC FURNACE (RKEF) WITH SELECTIVE REDUCTION FOR NICKEL PIG IRON (NPI) PRODUCTION PROCESS

• Main Author: Kelvin Eddy Husin, Michael
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/54423
• Institution: Institut Teknologi Bandung

The need of increased efficiency in nickel processing industry is always rising from time to time. Nickel pig iron (NPI) is a low grade ferronickel that has a role as an alternative of pure nickel especially as the raw material for the construction of stainless steel. The rotary kiln – electric furnace process utilized by most NPI manufacturer in Indonesia is not commercially viable to produce medium grade NPI or better from low grade lateritic nickel ore. This is a large concern due to the increasing demand of NPI and nickel price. The utilization of selective reduction – magnetic separation process has proven to be able to increase the recovery value to 95% and produce NPI 5% from low grade lateritic nickel ore. Nevertheless, the proposed change to the production process and the final product itself needs to be further evaluated and analyzed if it is really going to be upgrading the economic value of NPI production. The method of real option valuation was utilized because of its ability to accommodate the uncertainty factor in this analysis, which is the movement of nickel commodity price. The result of the real option valuation showed that the implementation of the selective reduction method is economically viable on an operating smelter because it has higher strategic NPV of $205.784.809 when compared to existing RKEF process with the strategic NPV of $181.286.503.