FINANCIAL FEASIBILITY STUDY FOR A RIVER DIVERSION PROJECT TO OPTIMIZE THE PIT P MARGINAL RESERVE AS PART OF PT PQR’S IMPLEMENTING THE COAL CONSERVATION ASPECT

• Main Author: Alfi Syahrin, Seno
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/62143
• Institution: Institut Teknologi Bandung

One part of the Good Mining Practices (GMP) application is related to coal conservation aspect, in which mining companies are expected to follow operating practices that promote optimal reserve conservation to ensure the mine's sustainability and generate income for the state and company. One aspect of coal conservation is the optimization of marginal reserves. PT PQR has identified and reported marginal reserve areas and seeks to upgrade it to reserves status. Near the Pit P area is one of the company's marginal areas. It is estimated that the Pit P area contains 16.6 million tons of marginal reserve. The unmet modifying factor for this Pit P area is the reserve beneath a major river. The river must be diverted in order to mine coal and maintain the environment. Financial feasibility analysis of the project must be conducted. To determine the project's feasibility, a financial model, capital budget analysis, and risk analysis technique are constructed. The analysis shows that it is financially viable, as demonstrated of scenario 1 of river diversion (North) by its NPV of US $35.6 million (more than 0), profitability index of 4.47, and IRR of 34.94 percent (more than the discount rate of 11.87%). It has a 61% chance of success, according to Monte Carlo simulations. Mitigation actions must be developed to address three crucial variables: coal recovery, coal price, and operating costs. The 39 percent NPV 0 occurrence is projected to be minimized with a well-defined, quantifiable, and closely monitored mitigation risk in place. 16.6 million tons of coal in Pit P could be upgraded to reserve status from marginal reserve status. The addition of Pit P as a reserve increases production from 2026 to 2031. More output results in a creation company’s profits, which eventually results in increased income for the state. The additional state income is projected to be US $182 million (royalty, corporate tax, and profit sharing contributions).