Investment Valuation of Crushing Station Upgrade to Support Coal Production in Pit Z using Discounted Cash Flow Method
DOI:
https://doi.org/10.46799/ajesh.v3i8.409Keywords:
Pit Z, Discounted Cash Flow, Hardgrove Grindability Index, Crushing Station, Incremental Cost, NPVAbstract
Pit Z at the Binungan site contains substantial coal reserves, estimated at around 10.77 million metric tons based on Life of Mine (LOM) data. The current issue involves the breakdown of the crusher unit at the crushing station during the processing of Pit Z coal. Further investigation revealed that the damage was caused by the Hardgrove Grindability Index (HGI) of Pit Z coal (29-36), which is lower than the crusher unit's specification (HGI ? 40). The HGI measures coal's resistance to crushing; the lower the HGI value, the harder the coal is to crush. This study aims to evaluate the financial feasibility of constructing a New Crushing Station, utilizing the Discounted Cash Flow (DCF) method with incremental cost analysis. The construction of a new crushing station yields the following financial parameters: NPV of Rp. 60.236 billion, Profitability Index (PI) of 2.69, IRR of 61.65%, Payback Period of 1.63 years, and Discounted Payback Period of 1.81 years. Sensitivity analysis indicates that coal production is the most sensitive parameter affecting NPV, with a ±20% change in this parameter resulting in a ±33.69% fluctuation in NPV. Additionally, Scenario Analysis and Monte Carlo Simulations reveal that the worst-case scenario produces an NPV of Rp. 54.581 billion, the best-case scenario an NPV of Rp. 64.498 billion, with a 0% probability of NPV < 0, and a 47.28% probability of NPV exceeding the Base Case. This study suggests that constructing a new crushing station is financially viable with manageable risk.
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Copyright (c) 2024 Adnan Fadhlullah Muharam, Taufik Faturohman
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