# Real Options Analysis of a Coal Mining Project
> Amalia R.

URL kanonis: https://discover.unhas.ac.id/publications/real-options-analysis-of-a-coal-mining-project
Jurnal / Konferensi: Iop Conference Series Earth and Environmental Science
Tahun terbit: 2025
DOI: https://doi.org/10.1088/1755-1315/1451/1/012025
ISSN: 17551307
Citations: 1

## Authors
- Amalia R.

## Abstract
Abstract In 2021, PT ABC planned to open a new pit, namely Pit XYZ. Currently, PT ABC uses the Discounted Cash Flow method to determine the economic feasibility of Pit XYZ. However, this method does not accommodate changes in coal commodity prices which fluctuate over time. A real options (RO) analysis was performed in this study to obtain the value of the option to abandon the Pit XYZ project plan of PT ABC. This study used NPV parameters as the underlying asset, with an NPV value of US $105,126,304.47, coal price volatility of 30.60%, a risk-free rate of 3.42%, and a mine life of 5 years. The results of the RO analysis show an Expanded NPV of US $105,126,313.05, which exceeds the value of the DCF analysis results. Therefore, PT ABC is advised to carry out the project as planned. However, upon the occurrence of a significant economic downturn, where the project value drops to US $6,031,721.79, it would be best for the company to halt the opening of Pit XYZ.

## Keywords
- Coal mining
- Coal
- Petroleum engineering
- Computer science
- Mining engineering
- Environmental science
- Geology
- Engineering
- Waste management

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Sumber: Discover Unhas — RIMS Universitas Hasanuddin.
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