Three Amman Mineral (AMMN) Expansion Projects Continue Amid Challenges

Amidst the dynamics, PT Amman Mineral Internasional Tbk (AMMN) reported a strained performance in the first half of 2025, while also revealing its focus on three strategic expansion projects.The three projects are the smelter-Precious Metal Refinery (PMR), the construction of a liquefied natural gas (LNG)-fired steam power plant, and the expansion of the concentrator plant.Based on the financial report, in the first six months of 2025, AMMN produced 191,657 metric tons of dry concentrate with an 89 thousand ton copper content and 59.7 thousand ounces of gold. The new smelter's copper cathode production reached 19,005 tons, while gold was only 4.1 tons.Gold production dropped significantly compared to the previous year due to a lower ore grade, while copper production remained relatively stable. This production pressure directly impacted financial performance. Net sales were only recorded at USD 182.6 million, a sharp decline from USD 1.55 billion in H1 2024. EBITDA fell to USD 368 million from USD 952 million, and net profit reversed to a loss of USD 146.4 million.Nevertheless, management emphasized that the operational foundation remains resilient. AMMN President Director Arief Sidarto stated in a written release that the transition to the downstreaming phase is a major agenda that must be undertaken."We have made significant progress, but we still face challenges in ensuring operational readiness for the transition to the full production phase. This is a long-term investment that will bring great benefits to the company and the national economy," he said, quoted on Thursday, September 11, 2025.In addition to technical constraints, AMMN faced regulatory challenges related to domestic sales obligations and export duties on concentrate. These regulations put pressure on the company's cash flow in Q1 2025. However, sales volume increased in Q2 as mining strategy was adjusted.The global commodity market also remains volatile. Copper prices tend to be under pressure due to the global economic slowdown, while domestic demand for downstreaming is growing.Despite the loss, AMMN still affirms its optimism. Capital expenditure in H1 2025 reached USD 6.05 billion, an increase of 4 percent from December 2024. This increase was largely to complete the smelter, LNG power plant, and concentrator projects.With the Batu Hijau copper reserves and plans for the development of the Elang mine, these three expansion projects are projected to be catalysts for long-term growth. Downstream integration is also seen as a strategy to reduce dependence on raw exports, while also increasing the added value of minerals domestically.Arief concluded with the belief that a recovery momentum will come after the ramp-up phase. "We believe that the success of these three expansion projects will be the foundation for sustainable growth. AMMN is not only transforming as a mining company but also becoming a driver of national downstreaming," he said.Smelter and Precious Metal RefineryThe first project is the construction of a smelter with an input capacity of 900 thousand metric tons of concentrate per year from the Batu Hijau and Elang mines.This facility is designed to produce 220 thousand tons of copper cathodes, 830 thousand tons of sulfuric acid, 370 thousand tons of copper slag, and 170 thousand tons of gypsum.In addition, there is a PMR capable of refining 70 tons of gold and 350 tons of silver per year. The presence of PMR makes AMMN one of the few mining companies in Indonesia that is truly integrated from upstream to downstream.Arief stressed that the success of the smelter-PMR project will be the main catalyst for future performance. "The smelter and PMR not only fulfill our downstreaming obligation but also strengthen Indonesia's position in the global copper and gold supply chain. We are committed to ensuring this facility operates at full capacity with the highest standards," he said.However, management also acknowledged the technical challenges during the commissioning phase. This process is complex, requires high costs, and is prone to production disruptions before stabilization. The company stated that the initial ramp-up only targets about 50 percent utilization until the end of 2025.LNG-Fired Power PlantThe second expansion is the construction of an LNG-fired steam power plant with a capacity of 450 MW. This plant will replace the old oil-fired unit, which is expected to provide better cost efficiency and reduce carbon emissions.Management stated that the LNG power plant is one of the largest energy projects ever undertaken by Amman Mineral to support downstreaming.Management explained that the energy needed to operate the smelter and PMR is very significant. The facility is projected to consume a substantial amount of electricity annually, making a new, more stable energy source essential."The construction of the LNG power plant is an important part of our clean and sustainable energy strategy. This facility ensures a stable electricity supply with more efficient costs," said Arief.In addition to efficiency, the LNG power plant is also designed to support the company's decarbonization targets. With more modern technology, this plant can reduce its carbon footprint compared to the old facility. AMMN stated that this step aligns with global sustainability practices and national energy policies that encourage a transition to more environmentally friendly energy.The LNG power plant is expected to be fully operational in 2025, in line with the ramp-up of the smelter and PMR. If on schedule, the plant will become one of the largest LNG-based energy infrastructures in Indonesia's mining sector, also affirming AMMN's commitment to building a fully integrated copper and gold downstream supply chain.Concentrator Plant ExpansionThe third project is the expansion of the concentrator plant to increase ore processing capacity from 40 million tons to 70 million tons per year.This expansion is needed to support Phase 8 of the Batu Hijau mine and the integration of the Elang mine, which will be developed soon.

Source https://djakarta-miningclub.com