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Case Study

StepWise delivers positive investment outcome

coal factory blurred

One of South Africa’s largest coal mining companies was looking to build a new coal mine in the north east of the country and needed to conduct an optimisation study.

The Situation

One of South Africa’s largest coal mining companies was looking to build a new coal mine in the north east of the country and needed to conduct an optimisation study to conceptually identify opportunities to reduce or defer project CAPEX, that would not negatively impact project execution timing or the overall project value proposition. Advisian was awarded the study based on the proposal of our unique StepWise Model; a structured, mature and well tested approach that also required close interaction with the client’s value improvement team members. 

Approach 

The Advisian team based in Johannesburg provided the financial analysis, while deep domain knowledge and technical expertise was provided by the WorleyParsons services team housed in the same office. 

The teams had to identify opportunities to reduce or defer project CAPEX by 30% while simultaneously considering the impact on the overall project execution timing and value proposition. The project execution date was not to be delayed through design or engineering changes that may trigger a licensing re-application, so options had to meet project drivers as well as associated risks and engineering constraints. 

Results

Utilising StepWise’s distinctive capability of building flexibility into the structure of the models in order to do trade-off analysis of different technical and economic options, the client was able to quickly identify an alternative option that presented a 31% reduction in start-up capital required from the initial base case. Furthermore, this alternative option increased the Net Present Value (NPV) by 52%, and predicted an Investment Return Rate (IRR) increase of 21%. 

Advisian enabled the company to provide surety on their investment decision and successfully secure funding for the next phase of growth for the project.  

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