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

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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.

Financial Feasibility Study in the Construction of the “Katering Nusantara” Project in the New National Capital of Indonesia (IKN) PT. XYZ

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The development of an Indonesia new national capital requires a significant workforce, with over 260,000 construction workers needed for the phase 1 construction between 2022 and 2024. To support this massive undertaking, PT. XYZ received an opportunity to provide catering services for 4,500 employees involved in building the nation’s capital, known as Katering Nusantara. Recognizing the potential of the catering industry as a stimulant for corporate growth, PT. XYZ expanded its product line, from only focusing on inflight catering to remote industrial catering. While the inflight catering business relies on flight availability and aviation infrastructure, the industrial catering segment offers more flexibility and opportunities for growth through participating in tenders at various factories across Indonesia. As part of the study, a financial feasibility analysis will be conducted to evaluate the investment in Katering Nusantara, considering factors such as investment costs and overall feasibility. Financial feasibility study conducted in this project to allow PT.XYZ assess the potential risk and return associated with the Katering Nusantara project. The investment of Katering Nusantara will cost Rp5,275,990,000 and will be funded using debt and equity. In the research reveal that the payback period 3.82 years, with a Net Present Value (NPV) of Rp. 11,647,468,485, a profitability index 2.21, and Internal Rate of Return (IRR) of 45%, which surpasses cost of capital 14.38%. This suggests that PT.XYZ should proceed with the implementation of the Katering Nusantara project. At the same time, it is important to note that the project’s financial performance is sensitive to changes in catering sales prices, emphasizing the need for cost optimization and alternative pricing strategies to mitigate potential fluctuations.