Analysis Project Investment: Study Case Build Inloading Conveyor

Abstract

This research examines the coal transportation system at Site Port S, a PT BCX coal mining concession. The site serves as a transit terminal for coal hauled from Site B using trucks, where the coal is dumped via two inloading conveyors. Currently, the daily haul truck capacity is 50,000 tons, while the conveyors handle 54,000 tons daily. However, when one of the conveyors is under maintenance or experiencing technical issues, production opportunities are lost, jeopardizing the achievement of future coal production targets, especially as peak production is expected over the next three years. To address this, the research aims to assess the feasibility of building a new inloading conveyor to serve as a backup system. The research uses capital expenditure (CAPEX) calculations, including previous inloading conveyor costs and inflation rates, as well as operating expenses (OPEX) and cost per ton to operate the plant. A discounted cash flow (DCF) analysis was conducted to determine the net present value (NPV) of building or renting a new conveyor unit. With a weighted average cost of capital (WACC) of 11.9%, the NPV results show a positive $4.8 million for building a new unit, compared to a negative $22.3 million for renting. The results indicate that building a new conveyor unit is significantly more profitable than renting. Additionally, owning the unit provides flexibility, as it could potentially be used at other sites in the future. The findings have important implications for optimizing coal transportation systems and ensuring long-term production efficiency.