INVESTMENT PROJECT ANALYSIS OF PT BERAU COAL BLOCK A, BLOCK B AND BLOCK C COAL MINING PROJECT USING DISCOUNTED CASH FLOW METHOD
The coal mining industry is a business that requires very high costs, besides that it also has a high risk where there are many uncertainty factors that affect this industry, so that the assessment of business projects that have high complexity and uncertainty will require a comprehensive analysis....
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/71099 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The coal mining industry is a business that requires very high costs, besides that it also has a high risk where there are many uncertainty factors that affect this industry, so that the assessment of business projects that have high complexity and uncertainty will require a comprehensive analysis.
PT Berau coal is building a new region to improve production capacity, the new areas include Block A, Block B and Block C. These three blocks are intended to use an integrated coal transportation route, from each pit to a coal processing plan then to Harbor. There are 3 scenarios chosen for coal transportation routes. The purpose of this project is to assess the valuation value of each investment scenario that has become the preferred option for companies to expand in the new area, so that it can be determined which option has a reasonable valuation value that can be used as a basis for consideration of how expansion in that area can be developed
Currently PTBC employs the Discounted Cash Flow (DCF) method to assess an investment’s feasibility. The mathematical findings of the DCF approach will be used as management considerations for decision making in mining. This strategy has a limitation because it does not provide flexible options for management, so further studies are needed to be able to optimize shareholder wealth.
Based on the results of the DCF calculations performed on the three alternatives, option 2 is the best choice. Option 2 meets the criteria with an NPV of $553,23, an IRR of 59.27%, and a Payback Period of 4.2 years. In Block A, mining operations will commence utilizing the same coal hauling road and coal processing plan as in the previous two years. In tandem with this, a brand-new infrastructure for transporting coal will be developed. After the first year of operation, block C was made available for mining to commence. The following year, operation of block B will commence. By the end of the third year, each and every block will have adopted the new infrastructure.
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