Financial Analysis for Land Reinforcement Project to Optimize Dump Capacity INL Pit Case: Coal Mining Company PT. XYZ East Kalimantan

PT XYZ, a leading coal mining company in Indonesia located in East Kalimantan, boasts a production capacity of 55 million tonnes annually. Engaging in coal mining and sales for domestic and international clients across diverse industrial sectors, PT XYZ’s INL Area plays a pivotal role in its production for the next eight years, producing low-quality coal with an average calorific value of 4200 Kcal/kg GAR. As a cost leadership business, the company prioritizes cost efficiency, particularly in fuel consumption, notably for overburden movement. To enhance efficiency, PT XYZ explores the optimization of the distance from the mining front of the INL pit to the waste dump. A financial analysis case study compares two scenarios using a financial model: Scenario A, utilizing the recent waste dump with a cycle time of approximately 6.7 km, and Scenario B, proposing a new waste dump design with an investment in borepile reinforcement to accommodate overburden removal for the INL pit, resulting in a reduced cycle time of around 5 km. The financial model assesses feasibility parameters such as NPV, IRR, PI, and PBP between the scenarios, conducting scenario analysis to measure project success probability and identify significant variables affecting project feasibility. A Rsik Analysis on the project considers coal price realization and fuel consumption as key variables influencing the project’s value. The recommended option is Scenario B, presenting higher value for PT XYZ, with an investment in borepile reinforcement yielding a potential NPV of around $144.24 million, an IRR of 33%, and a PBV of 4.2 years.