PROPOSED STRATEGIC MINE PLANNING AND ECONOMIC VALUATION OF PIT C2H SAMBARATA PT BERAU COAL

• Main Author: Budiarto, Arif
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/70268
• Institution: Institut Teknologi Bandung

PT Berau Coal (PTBC), located at Berau District, East Kalimantan, is a mining coal company with Concession Area / Coal Mining Concession Work Agreement (PKP2B) about 108.009 Ha. A detailed exploration activity has been carried out by PTBC, and has obtained approval of the Final Exploration Report and recommendations to carry out a Feasibility Study from the Director of the Directorate of Mineral and Coal Businesses since 26 April 1983. PT Berau Coal, in running its business always prioritizes innovation and low-cost mining strategies. This is part of the corporate strategy. In the midst of a history of fluctuations in global coal prices and rising mining costs, PTBC can always survive with existing conditions. Various kinds of alternatives or mining options are made, in-depth analysis is carried out, the best alternative is chosen that produces the most optimal profit for the company so that the company can survive to this day. This is included in the operation strategy, part of the business strategy, which is in line with the corporate strategy. Pit C2H is one of the pits / mines located at the Sambarata Site, one of the sites in the PTBC work area. Pit C2H began operations in 2019, starting mining in the southern part, called the Pit C2H South. A year later in 2020, the mining process began to be carried out from the north side, called the Pit C2H North. At the initial stage, no firm boundaries have been determined for the division of the working area and the division of production volumes between the Pit C2H North and the Pit C2H South. In the initial contract, only the estimated production volume of each area with a volume deviation tolerance of up to ±20% is stated. In accordance with the 2018 PTBC Site Sambarata Feasibility Study document, the mining of the Sambarata Site, including the Pit C2H in it, will end until 2025. For the remaining mining of the Pit C2H for the period 2022-2025 (4 years), some alternatives strategy has been determined for re-evaluating process, the proportion / division of mining volume between the Pit C2H North and Pit C2H South, where it will implement a low-cost mining strategy, to generate highest value PTBC. The method used is the preparation of 3 alternatives for planning the volume of mining production, then re-evaluating process, calculating the economic valuation of the three alternatives using the discounted cash flow (DCF) method. In calculating the valuation, it has considered additional capital expenditure (CAPEX) costs for the 2022-2025 period. For pre-issued CAPEX, use the actual cost approach. This research is re-evaluating capital budgeting analysis, but more focused on the rest of the current year 2022 until the final mining plan in 2025. From the results of the re-evaluating, analysis and comparison of the three alternatives of dividing the composition of production volumes, it was found that Alternative A, by increasing the volume of the Pit C2H South by about 20%, obtained the highest NPV of $55 million, compared to Alternative B (the alternative of dividing volumes based on the current contract) NPV was only $49 million, and alternative C enlarged the volume of the Pit C2H North, obtained NPV only $44 million. For IRR, Alternative A also produces the biggest IRR compared to Alternative B and C, which is 40% for Alternative A, 37% for Alternative B, and 35% for Alternative C. For Payback period, Alternative A produces the fastest payback period of 2.54 years, compared to Alternative B 2.67 years, and Alternative C 2.81 years. For profit to investment (PI), Alternative A also has highest PI 1.77 compare to Alternative B 1.58 and Alternative C 1.42. In conclusion, that Alternative A is recommended to be chosen as a low-cost mining strategy because it generates highest value for the company, it’s also a solution to the business issue faced, for the completion of the Pit C2H in 2025.