Study On The Coal Mine Investment Decision Oriented By Real Options

In the process of high-speed development of China’s coal industry, many problems like the disorder of the development of coal resources, severe environmental pollution and ecological damage, grim production safety situation etc. become the core problems that hinder China’s coal industry develop healthily and rapidly. To accelerate the development of promoting the construction of large-scale modern coal mines has become an important task of the coal industry. The construction of large-scale modern coal mine is a very complex system engineering. A large number of random factors which exist in coal mine construction and mining processes leads to a high risk and uncertainty of the large modern coal mine construction. The investment decision of coal mine project is throughout each stage of coal mine construction. Therefore, how to evaluate the value of construction projects and make timely and reasonable investment decision according to the scientific method become an urgent issue in the construction process of coal mine in our country.This dissertation analyses kinds of options value of coal mine investment projects using binary tree pricing method, constructs coal mine investment option pricing model using partial differential method, and considers the actions of competitors into the framework of the real options model, introduces the theory of option game to solve the conflict that is to wait to get value or to the get the advantage of first investment. The dissertation establishes an option-game model of coal mine investment decision, and discusses the optimal investment opportunity for leader and follower enterprises under competition under the condition of competition. Finally empirical study proves the optimal model’s application. The main contents and innovation include as follows:(1) Option characteristic analysis and option analysis of coal mine investment project. This dissertation discusses the characteristics of coal mine projects investment and analyses its uncertainties, then points out the flexibility of coal mine project investment and proposes the necessity of coal mine investment into real option method. It analyses option characteristics of coal mine project investment. It introduces the basis knowledge of binary tree pricing theory, and analyses the value of option to abandon, option to expand, option to contract, compound option and choose option.(2) Discussion on the optimal investment opportunity of coal mine project. It introduces the basic knowledge of real options theory, and builds an optimal investment opportunity model for coal mine projects, so investment opportunity is selected by quantitative method. Finally, analyses the parameters in the model and discusses the influences on option value of coal mine projects. The discussion avoid underestimate the value of coal mine investment project, and makes up the shortage of traditional investment decision method of coal mine such as static decision analysis method which may overlooked investment project uncertainty factors.(3) Discussion on the option value of coal mine projects under competition. Due to the optimal investment opportunity model is established under the hypothesis of market non-competition, and considering the market competition, game theory is applied in real options analysis framework. It establishes an option-game model of coal mine investment decision, and discusses the optimal investment opportunity for leader and follower enterprises under competition.(4) Empirical study. According to investigation of one coal mine of Coking Coal Group, analyses the optimal investment opportunity and investment thresholds of coal mine using the real options method and option-game model above, therefore supports for the investment practice.The results showed that the combination of real option method and the game theory can take full account of the market competitive factors and help to balance advantage to enter the market first and wait for the conflict between option value, which provide theoretical guidance for the investment of coal mine under competitive environment. This rich the theory of coal project investment decision and has realistic significance to the scientific and rational investment decision of coal mine.