 The cost of mine suspension from social conflict: A decision tree modelBenjamin Teschner and Elizabeth Holley Resources Policy, 2021, vol. 74, issue C Abstract: This paper presents a method which incorporates the risk associated with project suspension from social conflict into a mining project's net present value (NPV). The model applies a series of decision trees to a project's discounted cash flow (DCF) allowing for the chance of project suspension from a company-community conflict event. The model determines a social-risk-adjusted NPV for the project based on the likelihood of project suspension and the potential loss of future opportunity. This paper applies the model to a generic mining cash flow using two different approaches to estimating the project's likelihood of suspension and compares the efficacy of each method. The paper then applies the model to the proposed Pebble Project in Southwestern Alaska. The work concludes that after the risks associated with stakeholder opposition are accounted for, the NPV of the Pebble Project drops from approximately $6 billion to $1.1 billion. The model translates stakeholder concerns and priorities into potential financial consequences for investors, thereby demonstrating the business case for incorporating stakeholder positions into mine design and planning. Keywords: Mine valuation; Decision-tree modeling; Social risk; Stakeholder engagement; Pebble mine (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:74:y:2021:i:c:s0301420718305853 DOI: 10.1016/j.resourpol.2019.101443 Access Statistics for this article Resources Policy is currently edited by R. G. Eggert More articles in Resources Policy from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.