Optimisation Analysis of Investment Feasibility in Bauxite Mining using Project Evaluation Method at PT X, West Kalimantan

Abstract

Bauxite mining, particularly in support of the downstream and value-added minerals policy, is an important sector for Indonesia’s economic development. PT X in West Kalimantan is faced with the challenge of ensuring the investment feasibility of the project under the fluctuating commodity prices, operating costs and global market dynamics. This study aims to analyse the optimization of investment feasibility of bauxite mining projects using project evaluation methods including Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP) and Profitability Index (PI) analyses. The study evaluated the impact indicators using a cash flow scenario approach. The results showed that the optimization scenario with a bauxite price increase of 10 to 30% yielded a NPV of $16,338,624, IRR of 39.93%, PBP of 2 years and 6 months and a PI of 1.47. The project’s resilience to fluctuations in economic variables was also shown by the sensitivity analysis. The investment project for the mining of bauxite at PT X is financially viable and offers a significant potential for profit. This study provides strategic recommendations to assist in the decision-making process for sustainable investments, particularly in the bauxite mining sector in Indonesia.