INVESTMENT PROJECT ANALYSIS OF PT. BERAU COAL BLOCK 5-6 BINUNGAN USING DISCOUNTED CASH FLOW METHOD
The evaluation of business projects that have high complexity and uncertainty will require a thorough study since the coal mining industry is a business that has extremely high costs as well as a high risk where there are many uncertainty elements that impact this sector. Blocks 5 and 6 are loca...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/71154 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The evaluation of business projects that have high complexity and uncertainty will
require a thorough study since the coal mining industry is a business that has extremely
high costs as well as a high risk where there are many uncertainty elements that impact
this sector.
Blocks 5 and 6 are locations that have previously been mined by PT. Berau Coal in an
effort to boost output. PT. Berau Coal now wants to reopen the block 5-6 region to
optimize the area that was previously deemed unproductive for mining in an effort to
boost coal output there. To assess if the block 5–6 region can be mined once more in
an endeavor to increase PT. Berau Coal's production reserves, an analysis is thus
required.
PT. Berau Coal currently uses the Discounted Cash Flow (DCF) approach to determine
the viability of an investment. The mathematical results of the DCF technique will be
taken into account by management when making mining decisions. Further research is
required to be able to maximize shareholder value because this technique has a
restriction in that it does not offer flexible project for management.
We obtain an NPV of $14,44 million, an IRR of 67,98%, and a Payback Period of 3.4
years based on the results of the DCF calculations performed on the Block 5-6 project
from the mine plan for PT. Berau Coal. There are a number of preparations that must
be made for the mining plan for this project, including the building of farm roads to
replace existing roads that are part of the mining plan and pumping operations to lower
the water level in the mining plan area. There is no new investment required because
the infrastructure for mining equipment is already a part of the contractor selection
component and the infrastructure for processing coal already uses it.
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