Financial Analysis and Fast Tracking of Sponge Ferro Alloy Smelter Construction Project at PT Sebuku Iron Lateritic Ores in Sebuku Island, South Kalimantan

Abstract

PT SILO executed a smelter project on Sebuku Island, South Kalimantan, worth US$ 51.5 million to process 4,725,000 WMT/year of iron laterite ore into 1,701,325 DMT/year of Sponge Ferro Alloy. The Smelter was built to increase the added value of minerals in accordance with UU No. 4/2009 on mineral and coal mining. Financial analysis is carried out to determine the feasibility of the project and its investment capability in providing benefits. Furthermore, fast tracking analysis is carried out to determine the opportunities for accelerating the project completion schedule and its effect on project feasibility. The results showed that the project was financially feasible with an NPV of US$ 86,209,478; IRR of 16.18%; PBP for 12.76 Years; BCR of 1.0520; and BEP at US$ 253.51/ton for the production of 1,617,000 DMT/year. Projects can be fast tracked to accelerate the duration of up to 4 months while maintaining financial feasibility.