FINANCIAL FEASIBILITY STUDY AND JOINT OPERATION STRATEGY IN MINING INFRASTRUCTURE OF COAL TRANSPORT SUBSTITUTION FROM TRUCK HAULING TO OVERLAND CONVEYOR SYSTEM (A CASE STUDY OF PT.ABC)

• Main Author: Fahmi, Surya
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/59617
• Institution: Institut Teknologi Bandung

PT ABC is one of a leading coal mining company in Indonesia. Currently, in one of its mining area, PT ABC is still using trucks for coal transport. Transporting coal using trucks is not the most efficient way, PT ABC is planning to construct a 19 km overland conveyor system to partially replace the truck hauling method to connect the mine and port to significantly reduce coal handling cost. PT. XYZ is a newly mining operation located at the west side of PT.ABC’s concession area which is planning to start production in 3 years. PT. XYZ is geographically isolated from access to wide rivers or the coastline, to be able to sell its coal products PT. XYZ must get access permission to build its own coal transportation route either using the same truck hauling method or the conveyor system through PT.ABC’s concession area, all the way to its planned port facility at the coastline. Recently, parent company of both PT. ABC and PT. XYZ had formed a consortium along with other investor to build a coal gasification plant with both companies committed to provide the coal feedstock. This joint commitment creates opportunity for PT.XYZ to get access to transport its coal through PT. ABC’s concession area, as well as an opportunity for joint operations with PT. ABC of an overland conveyor system for coal transport. The study is aiming for a comparative feasibility study of four scenarios, Scenario 1: PT. ABC to build 15 MTPA conveyor systems for its own coal transport and assumed that PT.XYZ to build its own haul road separately. Scenario 2: Joint operation of PT. ABC and PT.XYZ with PT. ABC to build 30 MTPA conveyor systems including to handle the operation and maintenance work of the facility to serve 15 MTPA capacities for each party and PT.XYZ will be charged a rental fee. Scenario 3: Joint operation of PT. ABC and PT.XYZ with PT. XYZ to build 30 MTPA conveyor systems including to handle operation and maintenance work of the facility and PT.ABC will only be charged a rental fee. Scenario 4: Joint operation of PT. ABC and PT.XYZ with PT. XYZ to build 30 MTPA conveyor systems and PT.ABC to handle operation and maintenance work of the facility and also will be charged a rental fee. For all scenarios, power supply will be provided from PT. ABC’s existing power station situated approximately 75 km from the site. The study demonstrates that the scenario 1 for PT. ABC to build 15 MTPA conveyor systems is not financially feasible as seen from IRR 5.1% which is smaller than hurdle rate, and the negative NPV of USD 54,193,177 with 96.1% certainty of this project will achieve IRR less than or equal to hurdle rate. As for scenario 2 for PT. ABC to build 30 MTPA conveyor systems is financially feasible with IRR 14.5 % and NPV USD 63,936,311 with 70.3% certainty of this project will achieve IRR higher than or equal to hurdle rate. However, lease alternative in scenario 3 and 4 shows possibility of cheaper cash outflow compared to build alternative in scenario 2. Scenario 3 shows 35.4% certainty lease will be cheaper, whereas scenario 4 shows 96.57% certainty that lease will be cheaper than build. Scenario 4 is recommended by considering cheapest cash outflows and strategy analysis that PT.ABC has high relevancy in existing resource in engineering, operational and maintenance of overland conveyor facility which will be beneficial in the arrangement and also gives PT.ABC a higher bargaining position in the negotiation process to get a competitive leasing fee.