PEFINDO has assigned its idA rating to PT Merdeka Battery Materials

(April 4, 2024)--PEFINDO has assigned its idA rating to PT Merdeka Battery Materials Tbk (MBMA)’s Bond I Year 2024 of IDR1.5 trillion. At the same time, PEFINDO has affirmed its idA rating to MBMA. Outlook for the corporate rating is stable.

The rating reflects MBMA’s vertically integrated operations, strong synergy with the group and strategic partners, as well as sizeable reserves and resources. However, the rating is constrained by risk of developing new projects and exposure to nickel price volatility.

The rating may be raised if MBMA strengthens its diversification profile, including by having more downstream projects in the electric vehicle battery materials value chain.

The rating may also be raised if MBMA successfully operates its new projects as scheduled and generates higher revenue than projected while improving its profitability indicators, which will further positively affect its financial profile on a sustained basis. However, the rating may be lowered if MBMA generates lower revenue and profit margins than projected due to underperformed new projects or as a result of significant deterioration in nickel price. The rating may also be under pressure if the Company obtains substantial debt to finance its new projects without being compensated by a higher revenue or EBITDA.

MBMA is a holding company of several operating entities located in Indonesia Morowali Industrial Park (IMIP), including three Rotary Kiln Electric Furnace (RKEF) smelters, one nickel matte converter, and Acid Iron Metal (AIM) project, as well as in Konawe for nickel mining. The Company is also in the process to build High Pressure Acid Leaching (HPAL) plants in IMIP dan Konawe. As of September 30, 2023, its shareholders consisted of PT Merdeka Energi Nusantara (50.03%), Garibaldi Thohir (9.42%), Huayong International (Hong Kong) Limited (7.55%), Winato Kartono (5.43%), and public (27.57%). (ends)