DEPOK (eNBe Indonesia) - More heavyweights in the market. Nickel-EV time. After Harita Nickel, PT Merdeka Battery Materials (MBM), subsidiary of PT Merdeka Copper Gold Tbk (MDKA), kicked off the initial public offering (IPO) for 11 billion shares, representing 10.24% of total issued and paid-up capital, priced at Rp780-795 per share, to raise total proceeds of maximum Rp8.74 trillion.
At the upper band, MBM will start the trading with market capitalization of Rp85.4 trillion, bigger than the established nickel producer Vale Indonesia (Rp65 trillion). MBM claims of holding one of the world’s largest nickel reserves.
MBM has option to add 1.1 billion shares, or 1.01%, offered to public if the offering led to the oversubscription.
Then it would earn maximum proceeds of Rp9.62 trillion. MBM is key in the wider group’s interest in growing the so-called EV ecosystem.
The book building started on Tuesday (March 28) and will last in April 4, 2023. The offering is set for April 12-14, 2023 and listing on Indonesia Stock Exchange (IDX) is scheduled for April 18, 2023.
Acting as underwriters for this IPO are PT Indo Premier Sekuritas and PT Trimegah Sekuritas Indonesia.
MBM will use IPO proceeds for paying debts (48%), 14% will go to PT Zhao Hui Nickel (ZHN), 5% for taking over billing rights (US$300 million), 5.5% will go to PT Sulawesi Cahaya Mineral (SCM), 1.5% for working capital, and the rest for capital injection or placement in PT Merdeka Industri Mineral (MIN).
ZHN builds rotary kiln electric furnace (RKEF) smelter at IMIP (construction, commercial in July 2023). 49% shares are held by Strengthen Holding Pte Ltd. 4 RKEF lines with 50,000 TNi are scheduled for commercial operation in the second quarter of 2023.
SCM is holder of nickel concession, main supplier of nickel ores to own smelters and PT Huayue Cobalt Nickel (HNC)—-co-owned by Huayou & Tsingshan.
SCM has estimated reserves of 2.3 million tons of nickel and 200,000 tons of cobalt. SCM supplies between 540,000 WMT and 670,000 WMT per month of limonite ores to HNC.
Other subsidiaries are;
1/ PT Bukit Smelter Indonesia: RKEF, 19,000 TNi per annum (in the form of NPI) at IMIP. 49% shares are held by Reef Investment Limited.
2/ PT Cahaya Smelter Indonesia: RKEF, 19,000 TNi per annum (in the form of NPI) at IMIP. 49% shares are held by New Edge Asia Industrial Limited.
3/ PT Merdeka Tsingshan Indonesia: Acid Iron Metal (AIM) at IMIP, a joint venture with Tsingshan. This company supplies acid and steam to Huayue Nickel Cobalt (HNC) in IMIP.
4/ PT Indonesia Konawe Industrial Park (IKIP): Industrial park in Routa, Konawe, which is a joint venture with Tsingshan. The industrial park sits over 3,600 hectares of land with focus on nickel and EV battery components.
While HPAL is a priority, RKEFs will also be built in IKIP. MBM plans two HPAL projects with combined capacity of 120,000 tons of MHP per annum in partnership with Tsingshan and Huayou.
As of September 30, 2022 MBM’s assets reached US$1.8 billion, while liabilities amounted to US$602 million. MBM booked net profit of US$32.47 million in January-September 2022 period (9M), on revenues of US$289.4 million.
MBM is interesting because CATL, the world’s largest EV battery producer, is an indirect minority shareholder. MBM and CATL, the world’s largest EV battery producer, are also working on HPAL to produce nickel for EV battery.
CATL is also entering into a nickel-to-EV battery alliance with MIND ID, holding company for state mining companies. MIND ID controls Aneka Tambang (ANTM), one of holders of vast nickel resources in Indonesia.
Few years ago, CATL entered into the so-called ‘triangular lithium deal’ with Glencore and VW, wherein Glencore agreed to supply cobalt to CATL.
CATL has recently been trying to control Sinuowei Mining, considered a super-large lithium mine. Indonesia has huge nickel resources, but does not have lithium mine.
Glencore and Adaro Energy (co-owned by Edwin and Boy Thohir) are partner shareholders in Cita Mineral (CITA).
CITA and Adaro, as you know, are now partners in the development of aluminium smelter, targeting to supply future EV manufacturers. All about EV ecosystem.
Like Harita Nickel, of course, investors should carefully looking into ESG practices of MBM and subsidiaries. Why? Because like palm oil, Indonesia’s nickel has increasingly been scrutinized by global NGOs.***
