Underground Coal Block Mining and the Associated Sensitivity (Risks)
There are three parameters namely operating cost, rate of production and capital expenditure which would govern the output cost of the coal at large and hence are considered most prone to the risks. These factors are put to variance using the discount factor of 12% . For an open cast mine we have considered an example of Sitanala Coal Block which has two components in mining i.e. open cast and under ground both. For the open cast mine portion we have considered two cases upon which the parameters would be varied as highlighted in Table 01 and Table 02 respectively.
Operating Cost : This is the cost which is derived out of the summation of direct and indirect costs as these are the two components which are used to produce the run of mine (RoM) coal and the other components like taxes and royalties and transportation cost are calculated over RoM coal component.
Production: This parameter highlights the rate of RoM coal production with respect to each individual year as per the life of mine and mineable reserves in MTs for the mine.
Capital Expenditure: This parameter would indicate the derived cost of bidding of each block which is determined for the base case scenario wherein the cost of bidding for the block is assumed at 20% of the final price per kg of coal and the end user plant is assumed within a distance of 125 km.
Apart from the above listed parameters the other LCOC driving parameters like transportation and tax components are not considered because these components apply only post production of the coal and not prior to that.
Case Study of Sitanala Coal Block
In case of an under ground operations the LCOC which comes out for the life of mine is INR. 1.35/kg. Basis the LCOC the mentioned three parameters are varied as per Case I to obtain the variance and hence the sensitivity. The parametric variation as per Case I is depicted in Table 02 for -40% to 30% variance.
From Exhibit 01 it is evident that the Sitanala Coal Block for UG operations is maximum sensitive to the operating cost and production with operating cost leading marginally in case of sensitivity.
The degree of variance as depicted in Table 04 in form a spider diagram as per the change in percentage is depicted in Exhibit 02 for the Sitanala UG Coal Block for Case II.
From Exhibit 02 it is evident that the Sitanala Coal Block for UG operations is maximum sensitive to the operating cost and production with operating cost leading marginally in case of sensitivity.
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