On 17 May 2022, PT Merdeka Copper Gold Tbk (IDX: MDKA, “Merdeka” or the “Company”) is pleased to announce that MDKA’s controlled subsidiary, PT Batutua Tambang Abadi (“BTA”) has completed the acquisition of PT Hamparan Logistik Nusantara (“HLN”) to subscribe 55.67% of HLN’s shares with total value of IDR5.4trillion (“HLN Acquisition”). HLN, is currently the majority indirect owner of PT Sulawesi Cahaya Mineral (“SCM”), which holds the mining permit (“IUP”) for nickel resources. HLN is also pleased to announce it has successfully completed the acquisition of an increased stake in its two existing Rotary Kiln & Electric Furnace (“RKEF”) smelters and a stake in an under construction RKEF smelter located in the Indonesia Morowali Industrial Park (“IMIP”) with total transaction value of USD 319 million.

The acquisitions include stakes in the following assets:

  • SCM Nickel mine, the world’s largest undeveloped nickel resource.
  • Cahaya Smelter Indonesia (“CSI”) and Bukit Smelter Indonesia (“BSI”), two operating and cash flow generating RKEF nickel smelters.
  • Zhao Hui Nickel (“ZHN”), one under construction RKEF nickel smelter.
  • Indonesia Konawe Industrial Park (“IKIP”), a joint venture nickel industrial park within SCM’s IUP.

SCM

SCM is the world’s largest nickel resource (1) with a low cost and low risk open pit mining operation in close proximity to downstream processing plants which located approximately 50 km by road from the existing IMIP. A road is currently being constructed to allow SCM saprolite ore to be trucked to IMIP for processing at CSI, BSI, and ZHN RKEF plants to produce nickel pig iron (“NPI”). Saprolite ore supply will target 3 million tonnes per annum by mid 2023, increasing to 7 million tonnes per annum of ore supply.

The SCM mine will also supply limonite ore to HPAL plants at IMIP (i.e., Huayue Nickel Cobalt (“HNC”) HPAL plant) and future HPAL developments that are expected to be developed in IKIP located within SCM’s IUP. HNC will build a pipeline connecting an ore preparation plant in SCM to their HPAL in IMIP. Limonite is useful in producing Mixed Hydroxide Precipitate (“MHP”) – used in battery production. Approximate ore supply is 6-8 metric tonnes per annum of limonite ore commencing mid of 2023.

A total JORC resource of over 1.1 billion dry metric tonnes ore at 1.22% grade of nickel and 0.08% grade of cobalt containing 13.8 million tonnes of nickel and 1.0 million tonnes of cobalt. Including reserves of 189 dry metric tonnes of ore at 1.20% Ni Containing 2.3 million tonnes Nickel and at 0.10% Co containing 0.2 million tonnes cobalt.

CSI & BSI

CSI Smelter and BSI Smelter are jointly owned and operated with Tsingshan at IMIP. They are both fully operational and have a combined nameplate capacity of ~38,000 tonnes of nickel per year. Both CSI smelter and BSI smelter were built by Tsingshan in 2020. Tsingshan pioneered the development of RKEF smelters. Tsingshan related RKEF smelters in Indonesia currently produce >500ktpa of Nickel. RKEF produces NPI which are used in the production of stainless steel – both within IMIP and exported.