INVESTMENT ANALYSIS AND BUSINESS RISK OF ADDITIONAL NEW CRUSHER TO SUPPORT INCREASING COAL PRODUCTION PLAN STUDY: AREA ABC, PT. XYZ

• Main Author: Permana Putra, Dian
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/70594
• Institution: Institut Teknologi Bandung

The coal mining industry is a capital-intensive industry that has a high business risk, due to the high uncertainty throughout the mining project. Externally, this industry is strongly influenced by fluctuations in coal prices and changes in macroeconomic conditions. Internally, this industry is strongly influenced by the effectiveness of operational management so that it can take place in a stable and long term. In 2020 the price of coal fell to 49.42 usd/ton (HBA), which was the lowest price in the last decade. One of the main causes is Covid-19 which has reduced demand for coal as one of the consumption of electricity in coal importing countries, so that several coal companies in Indonesia have decided to stop operating because the profits from coal sales are lower than operating costs. Amid the uncertainty of coal prices in 2020, PT. XYZ still decided to open a new mining project namely Area ABC in June with a production target of 0.86 million tons for 2020, this is part of PT.XYZ's strategy in maintaining annual production capacity of the entire area mining operations. The decision taken by PT. XYZ proved to be right, because at the beginning of 2021 there was a rebound trend of rising coal prices until it reached a highest price of 215 usd/ton (HBA) in December 2021. Therefore PT. XYZ decided to plan to increase coal production in the following year. To support the fulfillment of the production target of 6.4 million tons of coal in 2025, a technical study was carried out and the results of the technical study concluded that it is necessary to add a new crusher in the coal processing plan, this is due to the ability the existing crusher is only capable of 3.5 million tons/year. The construction of this new crusher is planned for the period from January to December 2022. This project requires a capital expenditure of USD 8,1 million, with the construction of the crusher carried out by the contractor and referring to the allocation of the scope of the work contract. The certainty of financial projections and project stability amid high uncertain coal price fluctuations are the objectives of this research. Investment analysis and risk management is expected to be a comprehensive method in providing solutions to the challenges faced by PT. XYZ. Based on the study, the project to add one new crusher is financially feasible by providing NPV of USD 52,40 million, IRR 150%, PBP 1,02 years, and PI 7,46. Potential losses on the decision to build a new crusher have also been anticipated by implementing risk management