FINANCIAL FEASIBILITY STUDY ON ANTAM PONGKOR LOW-GRADE GOLD ORE MINE AFTER IMPLEMENTING BUSINESS-LEVEL STRATEGY

• Main Author: Adi Putra, Hoppy
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/75920
• Institution: Institut Teknologi Bandung

Antam operating segments are distinguished according to three core businesses (a) nickel, (b) gold and refinery, and (c) bauxite and alumina. The gold and refinery operating segment are comprised of gold and silver mining, Gold and silver are produced from mining and smelting of gold ore into gold bullion. Antam currently mines gold ore from its underground gold mines in Pongkor, West Java, operated by Antam’s Gold Mining Business Unit. The Pongkor Gold mine is under Production Operation Permit until 2031 based on the Decree of the Head of the Investment Coordinating Board No. 171/l/IUP/PMDN/2020. The existing financial feasibility study find that Antam have positive margin when the gold ore grade above 4 gpt (cutoff grade) while the existing feasibility study stated that Antam only have economical number until 2025 with 1.5 million wmt gold ore mined. Pongkor Gold Mine has resources in low-grade gold ore (below 4 gpt) about 1.9 million wmt gold ore mined with the average grade is 3.61 gpt. The fact that the Pongkor production permit until 2031, putting Pongkor Gold Mine to found some strategies in order to processed the low-grade gold ore to maximize the length of permit time (5 gap year). This study started with business situation analysis, analysis is explored using qualitative tools, frameworks, collecting primary data through depth-interviews and secondary data through literature review. PESTLE (Political, Economic, Sociocultural, Technological, Legal, and Ecological) analysis, Porter’s Five Forces framework and External Factor Evaluation (EFE) matrix are conducted as external environment analysis. While for internal analysis are conducted by VRIO (Valuable, Rare, costly to Imitate, Organized) framework, and Internal Factor Evaluation (IFE) analysis. The business situation analysis showed Pongkor Gold Mine in region V in internal-external (IE) matrix, the region indicated that hold and maintain strategies are suitable for Pongkor Gold Mine. Study continued with Porter generic competitive strategy to define the strategy that most suitable with Pongkor Gold Mine condition. The analysis showed cost leadership strategy is the most suitable strategy with the detailed strategy are Implement a cost reduction program every year, Substitute retired organic workers (Permanent Employee) with outsourced or contracted workers, limiting investment only to things that have a direct impact on revenue and long-Term Contract in Heavy Equipment. These strategies will be impacted in cost production and depreciation and amortization cost that will be calculated in financial feasibility study. Financial feasibility study uses financial criteria of Net Present Value (NPV), Internal rate of return (IRR), and payback period (PBP). The results showed NPV in 25.33 million US$, IRR in 52.2% and payback period in 21 months, these number indicated the Pongkor project extension is feasible. This study also intended to determine the most affecting variable to the NPV by conducting sensitivity analysis. The results showed that the extension project is feasible as long as the gold price not declined more than 18.4% from the base, production cost (COGS) not increased more than 22% COGS and the productivity not decreased more than 16.94% from the base.