PT Merdeka Battery Materials Tbk (MBMA), a nickel mining company, recently initiated its initial public offering (IPO).
The company has the opportunity to make a profit of about IDR 8.75 billion, which will be used for its HPAL project.
The company mainly focuses on the nickel sector and is the owner of the largest nickel mine in the world in nickel content supported by technology & human resources in the downstream business.
MBMA is currently interested in carrying out downstream activities in the electric vehicle battery value chain.
With a number of significant assets in Central Sulawesi and Southeast Sulawesi, the company has a number of important sponsors such as the Provident Group, Saratoga Group, and Garibaldi Thohir.
The company’s assets are, among others:
- Sulawesi Cahaya Mineral (SCM) Mine (51.0% MBM; 49.0% Tsingshan);
- Rotary Kiln-Electric Furnace Smelter (RKEF) (50.1% MBM; 49.9% Tsingshan);
- Acid Ferrous Metal (AIM) Project;
- Konawe Indonesia Industrial Park (IKIP);
- High-Pressure Acid Leach (HPAL) Factory; and
- 50km of infrastructure, and a 500ha limestone mining concession area.
MBMA aims to expand to the downstream industry from IPO
The company recently released its IPO and will plan to use the IPO for construction costs and the development of a number of nickel processing projects such as HPAL facilities, nickel matte converters, and sulfuric acid production facilities through the Acid Iron Metal I (AIM I) project.
In addition, it will use the IPO to repay loans.
The planned construction and development are related to the downstream value chain for electric motorized vehicles; and HPAL facilities and nickel matte is the most important component in producing nickel sulfate and cobalt sulfate.
The company is strengthened by subsidiaries such as PT Sulawesi Cahaya Mineral (SCM), which is a nickel mining company with the largest nickel resources in the world.
Currently, SCM has more than 1.1 billion dry metric tons of ore containing 13.8 million tonnes of nickel, 1.22% Ni grade, and 1 million tonnes of cobalt 0.08% Co grade. The company’s capacity can reach 14.6 million wet metric tonnes in 2024.
“Currently our focus is to complete projects under construction and integrate them with SCM mines. The IPO funds will ensure that this entire process runs on time and in optimal synergy,” said Devin Ridwan, President Director of MBMA.
Jason Greive, Vice President Director of MBMA as reported from MBMA’s press release on March 30, 2023, said that the company’s source of income comes from the operation of the RKEF smelter which produces nickel pig iron (NPI), with a capacity of up to 38,000 Ni per year as of 30 September 2022.
After the construction of the new RKEF smelter, SCM mine, and the AIM I project, it is projected that production will reach 88,000 Ni per year, and 1.2 million tons of acid per year.
Meanwhile, at the IPO, MBMA offered as many as 11 billion new shares, equivalent to 10.24% of the total shares to the public on the Indonesian Stock Exchange (IDX), with a maximum increase of 12.1 billion, or 11.14%. The company will register itself starting April 18, 2023.
The share offering process will begin on April 12 to April 14, 2023, at a price of IDR 780 to IDR 795 per share. The total additional funds can touch a maximum of at least IDR 9.62 trillion.
Ridwan, as reported in its press release explained that this IPO will help MBMA become stronger to execute the company’s strategic plans in the future.
“Currently we are still in the early phase of expanding into the downstream industry along the electric motor vehicle battery value chain which will be vertically integrated with nickel resources capable of production for more than 20 years. With this IPO, MBMA will ensure that the company’s strategic plans can run optimally so that we can optimize our resources to meet the world’s future demand for electric motorized vehicle batteries,” Devin explained in a press conference for the MBMA IPO public expose in Jakarta, March 30, 2023.
Wood Mackenzie, a well-known research company estimates that the global penetration of electric vehicles in 2040 will reach 69% compared to 19% at present, and predictions that world sales of electric vehicles will increase from 16 to 93 million from 2022 to 2040.
So far, the company’s financial condition has been quite solid. As of September 2022, the company recorded revenues of US$ 289.45 million, with a gross profit of US$ 31.31 million, with total assets of US$ 1.89 billion, and equity of US$ 1.29 billion.
As part of the development plan and strategic asset development, MBMA cooperates with many global players such as the Tsingshan Group, Huayou, and CATL; as well as strong sponsors in funding and corporate governance.
The underwriters for the IPO are PT Indo Premier Sekuritas and PT Trimegah Sekuritas Indonesia Tbk.
