Anybody out there with experience in quarrying rock?

[Ancutza]

I've recently won, by tender, a concession on a quarry, valid for 25 years. I've got to invest a not inconsiderable sum to obtain an operating licence and then I've got to equip and run said quarry. EU Structural funds available for the gear and access to bank financing once approved for funding.

I'va absolutely no experience in quarrying. I just took a gamble on it. I'd prefer to sell the concession once I've got the licence and let it become someone elses headache. That said if I have to run it then I have access to skilled people and customers who want rock.

I know approximately how much rock is there and the price per tonne on the local market.

My question is this. Given that the quarry is not yet operational and therefore there are no balance sheets available how would I even start to put a value on it?

 

[Roundy#]

planning conditions for quarries are now very strict.......a considerable amount of investment will be required

 

[Ancutza]

Should have mentioned that this is in Romania, not Ireland.

I've already done my homework on the planning. I have been in touch with those responsible for mineral resources and the environment. The concensus is that I'll be granted a license to operate with few conditions in about 3 months from application.

 

[Roundy#]

What details on the quarry do you have.........Just thinking out loud, but I'd presume you know the type of rock involved; its strength, hardness, crushability, clay content etc etc. Have you a specific market to aim at??; ie. say if it's for local infrastructure then you'd have to have various testing carried out to determine suitablity (not sure how applicable this would be to Romania, but with the onset of european funding.......then maybe this something else which would need consideration)

 

[MOB]

My question is this. Given that the quarry is not yet operational and therefore there are no balance sheets available how would I even start to put a value on it?

In Ireland, aggregates are not a scarce resource. The scarce resources are good locations and planning permission. If you take an ordinary rock quarry and if, say, you are hauling large quantities of rock to a single project (such as a road scheme) and you are competing with a quarry that is 10 miles closer, the closer quarry has an almost insurmountable cost advantage. If you want to read some related economic theory google 'location theory' (and prepare to be bored). Paradoxically, you might be better off in Romania with a slight location advanatage than with a massive location advantage. A massive location advantage might only guarantee that a competitor will open in the same area (assuming, as I do, that securing planning is not a major obstacle).

In Romania, I have no idea if planning is difficult to get for a quarry. I rather suspect that it isn't. I likewise have no idea if suitable quarry sites are rare or ( as in Ireland) very common. It may be that your quarry concession only has value to the extent that the location gives you a temporary advantage over existing operators in terms of closeness to good markets. Of course, it may be a quarry site with particular site-specific cost advantages ( limited overburden, easy site, good stone all the way, or sand and gravel which are of course higher value products).


If this was in Ireland, I could point you to experts in quarry valuation. I am sure that there are similar experts in Romania ( but not many - it is a small niche). You really need to find a suitable local expert if you want to know the value of what you are selling.