INVESTMENT PROJECT ANALYSIS IN THE CRUSHER REPLACEMENT PLAN

• Main Author: Yanuar Salam, Restu
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/85897
• Institution: Institut Teknologi Bandung

The global coal market experienced three tumultuous years. Demand declined sharply during the Covid pandemic, only to jump during the post-Covid rebound and after Russia’s invasion of Ukraine. In 2022, global demand for coal reached its highest level ever (8,415 million metric tons), driven by growth in China and India. Today, coal remains the largest source of energy for power generation, steelmaking, and cement production, maintaining a central role in the world economy. And by 2023, global coal demand, although increasing slightly by 1.4%, will reach an alltime high (a new record) of around 8,536 Mt. The IEA forecasts a net decline in global coal production starting in 2024. The ongoing decline in the United States and the European Union will most likely be followed by a decline in production volumes in Indonesia, as China’s demand for sea-transported thermal coal will most likely decline. The coal price trend is also likely to continue to decline, posing a challenge for mining companies. Business issues at PT Berau Coal Site Binungan Mine Operation (BMO) focus on the coal crushing process. The site has four coal crusher plants, and the main focus is on Crusher CR12. The crusher frequently experiences breakdowns, which leads to increased maintenance costs, production downtime, and a decrease in overall efficiency, eventually hurting the company’s profits. This research aims to overcome these problems by analysing the AHP method to select the secondary crusher brand that is most suitable for the characteristics of the BMO coal site. After one brand is selected, the project investment feasibility analysis is carried out using the discounted cash flow (DCF) method, then continued with risk analysis. Based on the results of the analysis using AHP, Brand Shumar was selected as the most superior. Analysis of the project’s investment feasibility using the DCF method estimated an investment of $680,924 from CAPEX with a WACC of 11.64%, resulting in a net present value (NPV) of $3,558,640, with a short payback period of only 0.65 years and a discounted payback period of 0.72 years, as well as a positive profitability index of 3,8. To determine the financial risk, analysis was carried out from 3 sides, namely sensitivity analysis, scenario analysis, and Monte Carlo simulation. Based on the sensitivity analysis results, the most sensitive variable affecting the NPV value is CAPEX. Then, based on the results of the scenario analysis, even though the project is in the worst scenario, the project still produces a positive NPV value of $3.189.064 with a payback period of 0.85 years. From the Monte Carlo simulation results, even under the worst conditions, the net present value (NPV) of the project showed a positive result of $3,274,876. Meanwhile, under the best conditions, the project can generate an NPV of $3,827,510. The most likely NPV expected from this project is $3,559,116 with a 50% probability. In addition, the probability of success of this project (NPV > 0) is 100%, so the project of replacing the secondary crusher with Shumar brand is very feasible and has added value to PT Berau Coal, both in terms of cost and operational efficiency in the future.