## 5 Results and Discussions  
Table 5 depicts the estimated ore purchasing cost and decrease in profit as the Ni% reduces from 2.0% to 1.5% in 0.1% intervals. As can be seen, when the ore content is reduced by 0.1%, the price of the ore will decrease by $3.6 M USD/ton. \begin{table}
\begin{tabular}{l c c} \hline \hline
**Variable** & **Value** & **Unit** \\ \hline Construction Duration \({}^{\star}\) & 2 & Years \\ Project Operation Duration & 15 & Years \\ Depreciation Duration & 15 & Years \\ Tax Rate & 24.2 & \% \\ Discount Rate & 7 & \% \\ Investment Cost & 260 & \$ million \\ Operation (maintenance) Cost & Partially \({}^{\star\star}\) & \\ Operational Profits & Varies \({}^{\star\star}\) & \$ million \\ Ni Production & 26,000 & Tons \\ Ni LME Price & 15,000 & \$/ton \\ \hline \hline \end{tabular} \({}^{\star}\) The construction duration of Ni production facility was estimated to be two years based on Company A’s past experience with Ni smelters. This value is used for the capital expenditure investment timeline in the cash flow and NPV. \({}^{\star\star}\) Operation cost for equipment maintenance is assumed about 1.5% of investment cost per year. Other operational costs (e.g., operation man-hour) are not included, as they are common cost components for all scenarios (therefore cancelled out in a LCCA comparison). \({}^{\star\star}\) Operational profits include operational costs and sales derived from Ni and Fe ore content.  
\end{table} 
Table 4: Assumptions for Economic Analysis. \begin{table}
\begin{tabular}{l c c c c c} \hline \hline
**Variable** & **Ni Content** & **2.0** & **1.9** & **1.8** & **1.7** & **1.6** & **1.5** \\ \hline Ore Price (\$ M USD / ton) & 72.0 & 68.4 & 64.8 & 61.2 & 57.6 & 54.0 \\ Ore Purchasing Cost (\$ M USD \({}^{\star}\)) & 112.1 & 106.5 & 100.9 & 95.3 & 89.7 & 84.1 \\ Profit Decrease (\$M USD \({}^{\star}\)) & - & 16.5 & 33.1 & 49.6 & 66.1 & 82.6 \\ \hline \hline \end{tabular} \({}^{\star}\) Currency conversion from KRW (Korean Won) to USD was made based on the average exchange rate of 1 USD = 1000 KRW in 2018.  
\end{table} 
Table 5: Cost and profit with Ni content variation (constant price ratio). Using the price ratios for Model 2, defined in Table 1, Table 6 depicts the ore price, ore purchasing cost, and profit decrease. With a set price ratio, the purchase cost of ore is reduced as the Ni content within the ore is reduced due to a reduction in the \"Net Ni Weight\". However, due to the reduction of quality of the ore, it can also be seen that the profit decreases significantly from 2.0% to 1.5% Ni. This reduction is caused by the increased production costs of poor-quality ores. With Model 1, this risk is transferred 100% to the manufacturer. Alternatively, with a fluctuating price ratio, the risk is shared between the supplier and manufacturer, as seen in the higher profits at 1.5% Ni content. Although the increase in the Fe content in the ore is not a purchasing decision variable in feedstock agreement, it results in a decrease in profits. With the \"as-is\" scenario, the ore price remains unchanged as the Fe content increases. Using the price ratios defined in Table 2, Table 7 depicts the ore price, ore purchasing cost, and profit decrease. By applying an ore purchase price ratio that varies according to the Ni or Fe content, the manufacturer's risk is mitigated. The above is an illustrative example of this. To validate this model's risk sharing potential (in comparison to the existing model), a LCCA was performed. The LCCA was performed using the @Risk Monte Carlo software, with the calculations and assumptions outlined in Equations (10)-(14). The outputs are the smelter's NPV, IRR, and PI when the model is and is not used. As can be seen in Figure 8, using the model equates to an NPV average increase of 16 M USD. However, it should be noted that the results of using the model depict lower minimum and maximum profits. Figure 9 depicts the IRR results, showing that using the model equates to an approximate increase to the internal rate of return of 5%.