Application of Discriminant Analysis for Avoiding the Risk of Quarry Operation Failure

Adriana Csikosova,Katarina Culkova,Maria Janoskova

doi:10.3390/jrfm13100231

Abstract

Activity in the mining industry is based on the profitability principle similar to other business sectors. In the case of stone pits, gravel and sand quarries, it presents a very complex task, mainly due to the fact that the economy of localities is influenced greatly by natural conditions, which cannot be changed. The presented contribution deals with the problem of how mining companies, realizing the surface extraction of construction materials, could be profitable in the future. The main research method of this contribution presents regression and correlation analyses with the goal of determining parameters with a decisive influence on the future economic development of the locality. A complex system of stone pit, gravel and sand quarries demanded discriminant analysis to evaluate individual localities with the goal of dividing them into profitable and not profitable localities. The results of the contribution divide localities of quarry mining among profitable or not profitable, serving for predicting the future development of the company, based on discriminant analysis. The results of maximally possible measures respect assumptions, enabling the correct application of such multivariate statistical methods. A further orientation of the research in an area of model creation for predicting the future development of the company is possible in the application of logistic regression and neuron nets.

Highlights

In the 1990s, the extraction of raw materials in Eastern Europe was connected with the decreasing production and liquidation of mining capacities
To decide on the acquisition of mining capacity, extraordinary importance is given to the estimation of future economic results
The use of the control sample proved the suitability of the mentioned method used for the classification of localities from the perspective of their future economic results

Summary

Introduction

In the 1990s, the extraction of raw materials in Eastern Europe was connected with the decreasing production and liquidation of mining capacities. The main reason pertained to economic results and decreasing donations from the state. The extraction of construction materials increased due to the support of foreign capital. The public attitude to mining worsened and new mining projects became difficult to realize. Economically strong companies could provide their development mainly by the acquisition of operation localities. The reason for development was an effort to evaluate the capital of the company, and the limited life cycle of the mining organization. The volume of mined stocks and mining intensity determined this. To decide on the acquisition of mining capacity, extraordinary importance is given to the estimation of future economic results. Profit in the future is influenced by a single decision of an acquisition and by the price of the acquisition

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Results

Discussion

Conclusion