Skip to main content
SpringerLink
Log in

Finding the Right Time to Mine: A Real Options Analysis of Landfill Mining Projects

  • Conference paper
  • First Online:
Proceedings of the 18th Symposium on Environmental Issues and Waste Management in Energy and Mineral Production (SWEMP 2018)

  • 285 Accesses

Abstract

The raw material extraction has increased rapidly since the last century. At the same time, each year billion tonnes of waste containing useful materials (e.g., glass, plastics, and metals) are disposed of in uncontrolled and controlled landfills. One option to tackle this problem is to follow the landfill mining (LFM) approach, which could be the chance not only to transform landfills into the new “mines,” but also to enhance the image of mining sector in the society. Provided, however, that the economic factors associated with LFM are numerous and complex, this paper aims at estimating the economic feasibility of LFM projects by means of a modern management approach, namely the Real Option Valuation (ROV). For the purpose of the analysis, a hypothetical “typical” landfill site is examined and different alternatives are formed. The proposed project is examined via conventional DCF and ROV, taking into account multiple sources of uncertainties. The results indicate that the DCF approach results may be questionable. On the other hand, ROV analysis reveals through the passage of time events and appropriate actions to be taken and assists in identifying and capturing a higher economic value for the investment.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Black, F., Scholes, M.: The pricing of options and corporate liabilities. J. Polit. Econ. 81(3), 637–654 (1973)

    Article  Google Scholar 

  • Brennan, M.J., Schwartz, E.S.: Evaluating natural resource investments. J. Bus. 58(2), 135–157 (1985)

    Article  Google Scholar 

  • Carius, S., Hogland, W., Jilkén, L., Mathiasson, A., Andersson, P.-Å.: A Hidden waste material resource: disposed thermoplastic. In: Proceedings of the 7th International Waste Management and Landfill Symposium, Cagliari, Italy, 4–8 Oct 1999. pp. 229–235

    Google Scholar 

  • Cossu, R., Hogland, W., Salerni, E.: Landfill mining in Europe and USA. ISWA Year B, Int. Solid Waste Assoc., 107–114 (1996)

    Google Scholar 

  • Damigos, D., Menegaki, M.: Modern management tools in mining industry in the era of uncertainty. In: 20th International Symposium on Mine Planning and Equipment Selection (MPES 2011), Almaty, Kazakhstan, 12–14 Oct 2011

    Google Scholar 

  • Damigos, D., Benardos, A., Menegaki, M., Kaliampakos, D., Papagrigoriou, S., Gaitanarou, Z., Stasinos, S.: Assessing the economic viability of landfill mining projects in Greece. In: 4th International Conference on Sustainable Solid Waste Management (CYPRUS 2016), Limassol, Cyprus, June 23–25 2016

    Google Scholar 

  • Danthurebandara, M., Van Passel, S., Vanderreydt, I., Van Acker, K.: Environmental and economic performance of plasma gasification in enhanced landfill mining. Waste Manag. 45, 458–467 (2015)

    Article  Google Scholar 

  • de Neufville, R.: Real options: dealing with uncertainty in systems planning and design. Integr. Assess. 4(1), 26–34 (2003)

    Article  Google Scholar 

  • Dimitrakopoulos, R., Sabour, S.: Evaluating mine plans under uncertainty: can the real options make a difference? Resour. Policy 32(3), 116–125 (2007)

    Article  Google Scholar 

  • Frändegård, P., Krook, J., Svensson, N., Eklund, M.: A novel approach for environmental evaluation of landfill mining. J. Clean. Prod. 55, 24–34 (2013)

    Article  Google Scholar 

  • Frändegård, P., Krook, J., Svensson, N.: Integrating remediation and resource recovery: On the economic conditions of landfill mining. Waste Manag. 42, 137–147 (2015)

    Article  Google Scholar 

  • Hogland, W., Marques, M., Thörneby, L.: Landfill mining—space saving, material recovery and energy use. In: Proceedings of Seminar on Waste Management and the Environment-Establishment of Cooperation Between Nordic Countries and Countries in the Baltic Sea Region, Kalmar University, Kalmar, Sweden, 5–7 Nov 1997. pp. 339–355

    Google Scholar 

  • Hogland, W., Marques, M., Nimmermark, S.: Landfill mining and waste characterization: a strategy for remediation of contaminated areas. J. Mater. Cycles Waste Manag. 6, 119–124 (2004)

    Article  Google Scholar 

  • Jones, P.T., Geysen, D., Tielemans, Y., Passel, S.V., Pontikes, Y., Blanpain, B., Hoekstra, N.: Enhanced landfill mining in view of multiple resource recovery: a critical review. J. Clean. Prod. 55, 45–55 (2013)

    Article  Google Scholar 

  • Kapur, A., Graedel, T.E.: Copper mines above and below ground. Estimating the stocks of materials in ore, products, and disposal sites opens up new ways to recycle and reuse valuable resources. Environ. Sci. Technol. 40, 3135–3141 (2006)

    Article  Google Scholar 

  • Kelly, S.: A binomial lattice approach for valuing a mining property IPO. Q. Rev. Econ. Finance 38, 693–709 (1998)

    Article  Google Scholar 

  • Kodukula, P., Papudesu, P.: Project Valuation Using Real Options: A Practitioner’s Guide. J. Ross Publishing, N. Andrews Way, Florida (2006)

    Google Scholar 

  • Krook, J., Svensson, N., Eklund, M.: Landfill mining: a critical review of two decades of research. Waste Manag. 32, 513–520 (2012)

    Article  Google Scholar 

  • Kurian, J., Esakku, S., Nagendran, R.: Mining compost from dumpsites and bioreactor landfills. Int. J. Environ. Technol. Manag. 7, 317–325 (2007)

    Article  Google Scholar 

  • Lee, G.F., Jones, R.A.: Use of landfill mining in solid waste management. In: Water Quality Management of Landfills Conference. Water Pollution Control Federation, Chicago, IL (1990). p. 9

    Google Scholar 

  • Menegaki, M., Benardos, A., Kaliampakos, D., Tsakalakis, K.: Is landfill mining a new prospect for the mining sector? In: 24th International Mining Congress and Exhibition of Turkey, Antalya, Turkey, 14–17 Apr 2015, pp. 101–111

    Google Scholar 

  • Menegaki, M., Benardos, A., Damigos, D., Kaliampakos, D., Tsakalakis, K.: Emphasizing the role of e-waste in the financial profitability of landfill mining projects. MATTER Int. J. Sci. Technol. 3(2), 122–144 (2017)

    Article  Google Scholar 

  • Merton, R.C.: The theory of rational option pricing. Bell J. Econ. Manag. Sci. 4, 141–183 (1973)

    Article  Google Scholar 

  • Moyen, N., Slade, M., Uppal, R.: Valuing risk and flexibility: a comparison of methods. Resour. Policy 22(1/2), 63–74 (1996)

    Article  Google Scholar 

  • Mun, J.: Real options analysis—tools and techniques for valuing strategic investments and decisions, 2nd edn. Wiley, Hoboken, NJ (2006)

    Google Scholar 

  • Obermeier, T., Hensel, J., Saure, T.: Landfill mining: energy recovery from combustible fractions. In: Proceedings Sardinia ’97, Sixth International Landfill Symposium, Cagliari, Italy (1997). pp. 569–578

    Google Scholar 

  • Poulimenou, N., Damigos, D.: Corporate environmental performance and economic crisis. In: Fifth International Conference on Environmental Management, Engineering, Planning & Economics (CEMEPE 2015), Mykonos Island, Greece, 14–18 June 2015, pp 566–572

    Google Scholar 

  • Sabour, S.A., Dimitrakopoulos, R.G., Kumral, M.: Mine design selection under uncertainty. Mining Technol. IMM Trans. Sect. A 7(2), 53–64 (2008)

    Google Scholar 

  • Samis, M., Davis, G., Laughton, D., Poulin, R.: Valuing uncertain asset cash flows when there are no options: a real options approach. Resour. Policy 30(4), 285–298 (2006)

    Article  Google Scholar 

  • Slade, M.: Valuing managerial flexibility: an application of real-option theory to mining investments. J. Environ. Econ. Manag. 41(2), 19–233 (2001)

    Article  Google Scholar 

  • Zhou, C., Gong, Z., Hu, J., Cao, A., Liang, H.: A cost-benefit analysis of landfill mining and material recycling in China. Waste Manag. 35, 191–198 (2015)

    Article  Google Scholar 

Download references

Acknowledgements

This work was supported by the LIFE + financial instrument of the European Community in the context of LIFE RECLAIM “Landfill mining pilot application for recovery of invaluable metals, materials, land and energy” (www.reclaim.gr), Grant: LIFE12 ENV/GR/000427. The coordinating beneficiary is ENVECO S.A., and the associated beneficiaries are the Municipality of Polygyros, School of Mining & Metal Engineering NTUA, and HELECTOR S.Α.

Author information

Authors and Affiliations

  1. School of Mining and Metallurgical Engineering, National Technical University of Athens, Athens, Greece

    M. Menegaki, D. Damigos, A. Benardos & D. Kaliampakos

Authors
  1. M. Menegaki
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. D. Damigos
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. A. Benardos
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. D. Kaliampakos
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to M. Menegaki .

Editor information

Editors and Affiliations

  1. AMTC, University of Chile, Santiago, Chile

    Eleonora Widzyk-Capehart

  2. DIMET, University of Concepción, Concepción, Chile

    Asieh Hekmat

  3. International Journal of Mining, Reclamation and Environment, Calgary, AB, Canada

    Raj Singhal

Rights and permissions

Reprints and permissions

Copyright information

© 2019 Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Menegaki, M., Damigos, D., Benardos, A., Kaliampakos, D. (2019). Finding the Right Time to Mine: A Real Options Analysis of Landfill Mining Projects. In: Widzyk-Capehart, E., Hekmat, A., Singhal, R. (eds) Proceedings of the 18th Symposium on Environmental Issues and Waste Management in Energy and Mineral Production. SWEMP 2018. Springer, Cham. https://doi.org/10.1007/978-3-319-99903-6_23

Download citation

Publish with us

Policies and ethics

Search

Navigation