The world’s largest coal producer came to us with three very different options for potential growth. They were unsure which to pursue, so we helped take the mystery out of the decision.
To find out which option would have the best payoff, we created five different models. We employed pure cash flow modeling, real options valuation, agent-based simulation and scenario economics to test future scenarios against potential strategies. Of our five models, four indicated that the best strategy was to double down in North America. One of the five indicated that diversifying beyond coal would also be an interesting option. They chose to double down, but our predictions about diversification also came true.
OUTCOME: They bid for a massive coal mining company in Australia worth $2bn. After 3 bids they eventually succeeded!