Good morning, ladies and gentl emen. Thank you for those who j oined us offli ne and online as well. Welcome to PT Vale Indonesia 2025 earnings call for today. My name is Ander Adi, and I will be the moderator of today's call. With me now, we have, I think, most of the C-level or senior level from our company, while some of them also joining online. The meeting today will be started with a brief presentation by our CEO, and then follow up with the Q&A session. During the session, our CEO will share some key highlights about our company from 2025, and then also providing some 2026 outlook. That includes any operational milestones, financials, and updates on our growth projects. Next one. Okay, today's agenda will be divided into five agendas.
Number one, part 1 is 2025 challenges and our path forward will be presented by Pak Anto, our CEO, and then followed by presentation from Pak [Wiyawan] to update on the sustainability. Then part 2 and 3, the operational and growth project updates will be presented by Pak Asril. Then part 4 will be presented by our CFO, Pak Rizky, in terms of results. Then part 5 will be presented again by our CEO, Pak Irmanto. Okay, next one. Just a reminder that this presentation and discussion comprise assumptions and forward-looking statements that involve risks and uncertainties. In addition, all opinions and assumptions constitute our judgment and are subject to change without prior notice. Please refer to all the cautionary note and disclaimer in it.
Again, just for a reminder, I encourage all of you to, should you have any questions, just put it on the Q&A window, and then we can address those questions after the presentation. Without further ado, I will now hand the session to Pak Irman to begin today's presentation.
Yeah. Thank you, Andaru. Hi, everyone. Morning. Let me begin with a quick recap of 2025, a year where PT Vale Indonesia demonstrated resilience, discipline, and also strategic execution despite the dynamic market environment. First of all, I think we successfully strengthened our operational foundation, delivering several nickel matte production. We actually exceeded the target of nickel matte production last year while maintaining one of the lowest unit cash costs in the past four years. If you remember, we started 2025 quite slowly. We had a gap in our production that we catch up in the remaining months in 2025. This reflect not only operational excellence but also our ability to manage cost and condition. At the same time, we diversified our revenue stream by introducing a separate product for sales from Bahodopi .
This is an important milestone that enhanced margin flexibility and reduce reliance on single product line. On top of Sorowako, now we have Bahodopi and Pomalaa as well. From the growth perspective, we made significant progress on our strategic program, particularly in Pomalaa and Bahodopi, while also securing RKAB approval, ensuring continuity of mining operation. Importantly, we navigated operational challenges, including infrastructure disruption, as you know. Last year, we experienced major challenges from oil pipeline leakage. We able navigate through the challenges without compromising safety or business continuity. This highlight the strength of our system and leadership on the ground. Beyond financial and operational performance, we continued to advance our ESG leadership as well, receiving multiple international and national recognition, and also progressing toward IRMA certification. Reinforcing our commitment to responsible mining. In short, 2025 was not just about performance.
I think it was about building a stronger and more diversified and also future-ready platform for growth. I will hand over to the next presenter. Thank you.
Yeah. Thank you, Pak Irmanto, to start the description for today's meeting. Please allow me to continue, everyone. If we see from the sustainability aspect that PT Vale Indonesia is still solid performance, that from the sustainability achievement, that put us as one of the lowest risk in our business, right? 23.7, this is the lowest numbers that we achieved. Also that if you see the key parameters, the key objective for the sustainability, for example, for the green GHG intensity as well as the SO2, which still remain below the target. However, if we see that SO2, sulfur dioxide, that if we see now the dynamic of the sulfuric acid situation due to the crisis in Middle East, this is our opportunities also that within this year that we keep remain to put more operation in our efficient mode.
PTVI is recognized also through several awards, especially through the Subroto Award, which is overall including good mining practices in mine and mineral resources activity as well as for the social. For the others, like for the other award related to the sustainability that put PTVI in the strong position on this. The next, as you see that IRMA 50 as one of our journey as well, that demonstrate the company's long-term commitment for the sustainability, how to be the right nickel producers. 2026, we continuing to follow up what become the recommendations from the auditors of the IRMA, even though that we're still coordinating with them to get the complete report assessment from last year. If you see the milestone there, that why IRMA is very important, this is one of the window for us how to strengthening our positions in this industry.
That is I think that highlight from my side. I hand it over to the next presentation.
Thank you, Pak Sudi. Good morning. Can you hear me?
Yes.
Good morning, everyone. Let me speak first from the safety performance. Nothing is more important than life. That is the main value of all activities that we do in project and also in operations. The company continues to place occupational safety and health as top priority. Throughout 2025, the company management, along with contractor and partners, actively conduct field visits through the Leadership in the Field with All, as well as the critical control verifications. More than 200 critical risks that daily that we visited and also having control over that. This effort strengthening operational disciplines, increase accountabilities, and emphasize safety as a top priority of the companies, include operational as well as in the project activities. This discipline enabled the company to close 2025 without single fatalities. These achievements reflecting the collective commitment of all company activities throughout safety management system. Next slide to the productions.
Okay, PT Vale delivers solid operational performance in 2025, with full year nickel matte production rising to 72,027 metric tons. This mark encouraging increase from 71.3 in 2024. In quarterly basis, you can see also the production was only 17,000 metric ton, about 12% below Q3 2025. This mainly due to plans of the furnace degree rebuild that began in November 2025 and target to be completed by May 2026, which is months ahead. Compare with Q4 2024, when the prod uction was 18.5 metric ton. Output of the Q4 2025 is moderately lower, but yet in overall year, full year productions remain higher year-on-year, that we can see in the results on the chart.
In addition to our core nickel productions, as mentioned by Pak Irmanto earlier, Vale continued to make steady progress in broadening the portfolio this year, which is through the sale of nickel supply from both Bahodopi and Pomalaa Block. Supply ore sales reaching 2.3 million tons, which is about 60% actually above of the dual budgets. That is mostly coming from the Bahodopi Block and part of it is about 300,000 tons coming from Pomalaa Block. Next slide, we move into the growth project. 2025 also marks an important milestone of PT Vale entering the new phase of business diversifications through the sale of saprolite sales and also limonite sales that are going to be starting soon. Looking ahead, the company is sharpening the strategy, focused through the development of mining project and downstream processing facilities collaboration with our JV partners in three areas.
Just to recall back in our growth project, there are three areas which is in Morowali, which is in Bahodopi Block, Pomalaa and Sorowako Limonite, while Tanamalia is still in development phases, that you can see in the pictures. We have started phase one Pomalaa mining operations since July 2027, which is about three months ahead of the plan, resulting higher ore sales in year 2025 that mentioned earlier. We now moving to the phase two of mining development in Bahodopi Block, which is preparing of the limonite ore sale supply to HPAL plant in Sambalagi. The HPAL plant in Sambalagi also made a significant progress with a plan to have the first mechanical completions by Q4 2026. Specifically in Pomalaa, our mining project has started now in mining operation in development of infrastructures reaching 60%.
Again, since starting last year October, we are starting mining through our partners. Today that we are starting also selling our limonite to our APP for HPAL plant supply, which we are planning to have first mechanical completion by Q3 2026. Sorowako Limonite also having significant progresses in mining. Now we are actually building our stockpile. We are stockpiling about 3 million total limonite mine ship good in stockpile, while GP site, the partners now is starting to construct FPP and slurry pipeline while they are actually securing link acquisition in this area down in Malili. In addition to the discipline of the execution, we are also ensuring project are execute efficiently. For mining project, the cost forecast are approximately about 30% lower than the approved budget.
Again, all of the strategic initiative continue to be executed with prudent financial disciplines, strong governance, and unwavering commitment to long-term sustainability. The next slide is just showing some pictures. If you go to the next slide, which is three areas, as I mentioned earlier. There are about 10,000 workforce now working in the ground. As of today, we are about reaching 40 million man hours, work hours without significant injury, which is again reflecting our discipline and execution and also our commitment to manage the project and operations safely. Thank you. Back to Pak Rizky to deliver the finance. Thank you.
Yeah. Okay. Thank you, Pak Sudir. I think I will try to be brief, since I think most of you already have seen our financial result. Yeah, I think as Pak Irmanto mentioned in the earlier section that 2025 was not an easy year as well. Many challenges coming from not only operational, I think in the beginning of the year, but also from a cost structure point of view. B40 being one of the aspect that was implemented last year. I think, in terms of pricing, you can see here that from an LME standpoint, from professional nickel pricing standpoint, it was even further challenging when compared to 2024. The numbers that we presented here, you see that despite those challenges, it is actually showing a stable and an improvement when we compare to 2024.
This is actually showing the resilience that was mentioned earlier. Production, we can see that from a year-on-year basis, and especially when it comes to production, let us not forget that 2025, there was a period of 2 to 3 months of force majeure. We thankfully and safely managed to achieve an improvement when it is comp ared to 2024. Also it resulted in a higher revenue because of the higher production and shipment. Aside from that, payability plays a factor, which I think most of you have already noticed that starting July of 2025, we started with a new payability of $0.18. With a good cost discipline, we managed to book a UCC of sales of $9,339, which is a modest improvement when we compare to 2024.
But see it from the perspective of this improvement is actually on top of the additional cost structure such as B40, such as the increase in royalty. Of course, I think in terms of how we mitigate our safety and also operation in terms of oil leak incident, we still manage to improve the cost base of the company. With that, we end up with a good EBITDA figure of $228 million, which is a 1% improvement against the previous year, which then trickled down to the net profit of the level of $76 million for 2025. With this number, I think it is a relatively good performance. It reflects as well that from a cost avoidance point of view, it is proof that net profit can be higher as well, right?
From a cash and cash equivalent, we managed to keep a good amount of cash to start the year of 2026. Next slide. Yeah, I think this is showing that we are ready for growth, right? We ended the year with still a good amount of cash. I think one important point is that progress on the ground is looking good, which comes with a significant amount of CapEx and commitment going forward. This is a bit of a guidance of how much CapEx that the company will be committing for the next three years. I think we are happy to announce that actually, as of today, we already have a standby facility to support this commitment going forward, which is a sustainability linked loan with $500 million facility, with a green shoe option of $250 million.
I think you can see that from previous communication, up until today, we have been executing the commitment. Even previously, when we compare to the prior decisions, it has been actually quite faster than, for instance, the Banpu mine actually entered into commercial operation quickly compared to the previous investment decision. Then I think Pomalaa also starting this year, we already showed the operation is actually on track. Hopefully this commitment going forward will also show a good timeline when it comes to execution.
I think that is all from my end. I will give it back to Pak Irmanto for 2026.
Moving into 2026, our strategy is quite clear and focused as well. One, hopefully we need to deliver the growth agenda. I think as Pak Asril mentioned, Pomalaa, Bahodopi, Sorowako project are all on track in term of schedule as well as the cost and quality. Second is maintain discipline, and I think the trick and the most important thing to me is we need to unlock the profitability of the company. First, we remain committed to financial discipline while we are entering the investment intensive phase. Pak Rizky has mentioned about that one. We are carefully balancing growth with resilience. I think Sorowako, as the backbone of the company, we still need to pay attention to it, supported by approximately, and then Pak Rizky has mentioned, right?
The sustainability-linked loan that Rizky explained which strengthen our funding visibility while aligning as well with the ESG target. It is something that we are quite proud of. I think, probably, of all the mining project in Indonesia, I think we are the first time to get this sustainability-linked loan, which reflect also the trust from the lenders. Second, we focus on scaling the production and keep diversifying revenue. I think with dual operation coming online in Pomalaa and Bahodopi, alongside our core Sorowako asset, we are building a multi-sources production base. I think it is going to be very good because we are no longer depending on one sources. We will have different sources as well. At the same time, our sales will continue to be meaningful contributors. Hopefully, and I am confident that we can get the RKAB revision for Pomalaa and Bahodopi.
It is going to be, again, I think it is going to be meaningful contribution for the company in 2026. Third, we are accelerating downstream expansion. Asril mentioned about the Pomalaa. The mechanical completion for Pomalaa is going to be in Q3, sometimes in August. It is going to be another milestone for the company. In parallel, we are developing additional processing capability. I think it is not new. We discussed about this one. We are assessing the possibility of actually capitalizing as well the ore that we have. You heard about OSBF, for example. If we can actually do the trial, which we expect to be happening very soon, and it works, that is probably the option for us as well. But we need to be mindful of the market situation as well. Finally, and most importantly for investor, for analyst, we are sharpening and focus on profitability.
Unlocking the values and profitability of the company is our focus. I think through discipline, cost management, and again, sourcing optimization, energy efficiency initiative. We have a crisis now, right? The Middle East crisis actually have an impact on us. I could confidently that probably among the IDL that we got through because we have hydro plan, we are the most ready in anticipating the crisis. We are targeting a clear improvement in earning starting from 2022 and forward. All of these initiatives are anchored in one objective, to position the Vale for sustainable earning growth and long-term value creation. We are not just growing, but we are growing strategically, and also responsibly. That close my presentation. Thank you.
Thank you, Pak Irmanto. Thank you, [Biuri}, for the presentation. Just to recap a bit. Year 2025 was solid, not only reflecting our company resiliency, but also at the same time, putting back a good foundation for future growth in the future. I think next one, we will have the Q&A session. I will encourage all of you to ask. I am going to give the first opportunity for those gentlemen and ladies who are attending offline. Please mention your name and your institution.
Thank you, Pak Irmanto, and management team. I made a comment from
Okay.
Maybe my first question is on the cash cost. Is there any guidance for this year? How much do you think the cost will increase from the current situations? On that cost part, have you started to see maybe some kind of negotiating power towards your mining contractor? I think the last time I talked with one of the mining contractor business, they said they are starting to see some kind of price war within the mining contractors because they are trying to secure as much as volume related to the government's plan to cut the production volume for both nickel and coal. Thank you. Maybe that is
Okay. I think the first one, Pak [Chipper] will handle. Okay. Can you handle?
I think in terms of cash costs, when we compare to last year, probably it is going to be a bit higher because again, I think flexibility being one of the main factor. We expect hopefully anytime soon, before May, we can complete that, meaning that some portion of the matte production will be lower compared to last year which will result in a bit of a higher cash cost. But we see that probably within $1 0,000 is still going to be manageable, hopefully. I think this is also related with how we can actually mitigate the situation of the current energy crisis and also coal, which is
Showing a similar trend at this point in time. I think one important point that I would like to convey is that we are quite ready. I think [Pandu] mentioned, we are if not one of the most ready in terms of facing that situation, especially given the hydro power plant that we have as the mix. On top of that, I think inventory management is also one of our strengths. For instance, when it comes to sulfur, we have quite a good amount of inventory balance. We have up until, I think, the end of third quarter or maybe the early of fourth quarter to start the year. I would say that, in that sense, security of supply, in that sense as well, in terms of inventory pricing should be reducing the pressure for the company to continuously produce nicomak.
On top of that, I think in terms of oil, in terms of coal as well, we also have a good amount of weeks of inventory balance. Also since last year, we have been increasing the procurement category to actually support the competitiveness of our sources. For mining contractor, I think later on maybe Basri can further add. I think there is actually quite a good amount of confidence level that we have a long-term contract with. It is a long-term contract, a big amount of tonnage that would be operated for the next 10 years. What we see is that, of course, we have a room for negotiation. What we see also, I think, the coordination has been quite smooth for us with the mining contractors, both in Bahodopi and Pomalaa.
I truly agree that one of the most ready to capture volume should be on the contractor side as well. We will continuously have a discussion, and I think Basri can later on mention that the cadence is also showing a good discussion with the management of the contractors as well. Maybe Basri might have anything to add.
Okay, thank you. Just to add on that. Thank you, Risky. We have very close collaborations and also coordination among with three contractors within us, Petrosea, Sifama, and also AMM. In terms of the contract, we have rise and fall mechanisms in the contract says that we are quite fair for both actually PT Vale and also the contractors toward the cost of mining today. But for sure, despite that we have a rise and fall mechanism, we are actually discussing the impact of what is going on today, right? For both sides to have really close coordinations on how to tackle the situations. Again, in terms of how to be more efficient in mining operation. For example, that probably something that we are following up is basically in the mining side mechanisms saying that, "Okay, let us do the mining, increase the volume, but reduce the distance," for example.
Some improvement that we made in mining operation as well as in the hauling and also in the planning as well. In terms of the volume, probably just a little bit on that, actually, because of today that we are having RKAB for sure for both Pomalaa and Bahodopi. We are aiming to submit the revision one. But for sure, increasing volume, with the current prices is one of our targets. Again, to be more efficient in mining operation. Today, is still in the level of the good cost comparing with the margin that we are having today in mining. But for sure, it is really close coordination and lost control over the mining cost and operation. Thank you.
Probably just provide a bit clearer about the situation, right? That we are facing about the cost pressures. We do not know how long this is going to be happening. For PT Vale, I think the situation, yes, it is a risk, but I think we need to see the risk from the positive angle in the sense that, well, we have to reevaluate, redefine everything about our operation as well. Just to share some of the discussion and ongoing initiatives that we have. One is about supply resilience, right? Okay, the concern is about, okay, we all talk about how high the price of oil and sulfur and coal are going to be. But the more fundamental question is: Are they going to be available, right? So availability and price is real risk, right?
The more we can be less dependent on those commodities, the better for us, right? We have actually started this. Lucky enough that we have started some of the initiatives even before this happened. For example, in our Sorowako operation, we use sulfur as well for the nickel matte production in Sorowako. We have done trial to replace sulfur with pyrite, right? That trial seems to be working quite well, right? That actually diversifies the feeds, the supply, the bath that we need. Then we are now coordinating with our buyer to ensure that the nickel matte produced using pyrite is actually also acceptable. But if it's actually working well, then it's actually off. Don't worry about sulfur, right? We have alternative.
The other point as well, we also try to, again, reduce energy consumption, reduce the fuel consumption, and you know that we have started the trial of electric truck the other day. We have set a quite aggressive target.
Accelerating the adoption of EV as well. The trial is happening, looks good, but it needs more time really to conclude. But I think 30% of the whole EV truck population by 2030, that's going to be our ambitious target, if not more. That basically is actually limited as well by availability of the hydropower available for the truck. Then we try to repeat it whether we can actually remove dryer. Whether we can actually go directly from the mining to kilns.
To the kilns.
A lot of initiatives that we are doing now. It's not going to be happening this year, but some of the initiatives like the ore dewatering, we hope that ore dewatering is that which is how to naturally dry the ore from the mining. If this actually works and we have done some trials, if it works, it can actually reduce the moisture and reduce the oil consumption. We want to actually reduce as much as possible to technically, practically possible our dependency into fuel, into coal, into sulfur. I think it's progressing well. We made some commitment and it's going to be our legacy. This board of directors legacy, we can actually transform this entire operation into less dependent into those three commodity, and that's actually also increasing our resiliency to geopolitical risk.
Yeah.
Okay. Thank you, Pak Irmanto.
It sounds like you were discussing the idea of-
Next question.
Yes. I am Asif Pak from BofA. I have three questions. First of all, is that how ASP for your saprolite for sales in Bahodopi and Pomalaa, is it already contracted or not? Also for the unit cash cost in Bahodopi is about $18 per WMT. Can we use this unit cash cost of sales for Pomalaa also in 2026? The third one is the consumption for Pomalaa HPAL is still about 53% and your target is what, in Q3 2026. Is it achievable or not?
Sorry, can you repeat the third question?
The first one is whether it is possible to-
Oh, okay. Okay, I will try to answer the first, later pass over to the third. Yeah, I think the average selling price for Bahodopi and Pomalaa and whether it is already contracted or not, that is the first question, right? Yeah. First of all, I would like to say this, it is still a premium market. So it is still a premium market that we are working. Especially when it comes to first quarter and then moving on to second quarter, it is showing a higher premium environment when compared to last year.
Right? Unfortunately, I cannot mention specifically the pricing today because we have not released the first quarter number. But I can safely say that there is quite a good amount of increase from the previous number that we showed for the average for 2025. So yes, I think that is in terms of pricing of the ore.
And whether it's contracted or not. The total quota that we have as of today outside Sorowako is around 8.1 million. And we have some portion of maybe around 2 million for limonite. So it's basically talking about the remaining 5 million to 6 million, right, of saprolite. We can safely say that majority from that portion have been contracted. What we see is that it's actually a good timing from risk mitigation point of view. Also it's a good timing for us to lock the good pricing environment. Of course, there's an opportunity, but there's also a risk that we need to see, right, when it comes to pricing. A big portion, I would say, out of the saprolite that we have been contracted up until the second half of the year. For the second question, $18 cash cost, right, including royalty.
Yes.
For Bahodopi, whether we can use that for Pomalaa or not. Conservatively, yes, you can use that. But when it comes to Pomalaa, actually it's a larger scale. So scale and efficiency meaning that there is actually an upside towards the lower scale of business, right? What I'm saying is there is an opportunity for it to become lower than $18 for Pomalaa. But yes, I think conservatively you can use that as a base for Pomalaa.
Thank you.
Pak Asril, I think for the third question.
Yes. If I understood correctly about the Pomalaa project for both mining and JV, even though the progress of mining is reaching only 60%, we have actually two milestones. The first milestone that is mentioned here is 60% overall project. The second milestone is about ore delivery or operation delivery. As mentioned in the project presentation, we started the mining operation in Pomalaa since last year October. Today we are starting delivery the ore, 20 PP limonite, and we just starting also last week ago of delivering also the saprolite. Now we are preparing to deliver saprolite to the port. We are aiming to starting in April. Having said that, in mining, I can say that we are ready to supply off our HPAL plant in Pomalaa.
In HPAL site again, this 60% is reflecting the overall progress. Just to recall back again, our partner starting the construction in Pomalaa is just effectively last year, February 2025. Within this year, February to February, one year, it is reaching 60% is quite significant progress and quite fast. When we see things in the ground today, we strongly believe that Q3 is really achievable. Today they are starting to testing some of facilities, include the H-power plant, the ATPs, pipeline already being installed, and also LNG plant that already is starting to be commissioning today, cold commissioning. Those are physical construction in the ground, make us believe that the plan that we are putting there, actually three months ahead of the plan, is achievable. Thank you.
Yeah, maybe just to add, I think the remaining work to be done is actually installing the autoclave. The autoclave actually arrived already on site. By quarter three, the first autoclave is going to be installed, done. First mechanical completion is one autoclave. Subsequently, the other autoclave will be installed. By quarter one next installed already. The first mechanical completion is one autoclave, and subsequent months, the other autoclave is going to be installed. Hopefully quarter one 2027, the whole pipeline is going to be in place.
Thank you. Anyone from the floor?
How big is the ene rgy cost for the autoclave and how long the fuel inventory for this year, like two months or how many months?
Yeah. I think for energy mix, it is still the same, right, with the previous year. You are referring to the nickel matte?
Yeah.
Yes. It is 30%-40% for energy mix. But again, when we talk about 30%-40%, there is a portion of hydro to that as well, right? But in terms of inventory, I think this is one of the good legacy I would say that Malee has been providing us.
When it comes to BCP, business continuity. We ha ve been comparing our inventory balance, and we have around two months, which is quite good when compared to even the average industry. You can see the sulfur one, right? Sulfur 35 or 33 weeks of inventory balance.
Yeah. Safe until September.
We can say that up until the end of September or the month of October, we can still use the inventory that we've been carrying out from last year. But I think one of the stress points is actually what Pak mentioned before, to reduce consumption for the flying [emissions] in the kiln, so that going forward, we can actually reduce the dependency for suppliers.
If for example the pilot works well for sulfur, and the sulfur consumption is actually going down, and it's probably safe until the end of the year even, right? It's the balance.
Yeah. Even that we established the ad hoc committee who are looking closely monitor the current situations, right? Even though that we have good inventory, but our team is continuous to close monitor the situation, then bring us day to day, daily or weekly basis on the progress.
Okay. Probably before going to the group, I think we have to look at the online questions. We have the first question coming from Paras from Macquarie. Can the management give some color regarding the volume for Morowali and Pomalaa ore for this year, considering the RKAB quota cut by this year, any strategies to meet?
Yeah, I think Rizky just mentioned, right? What has been approved for Pomalaa Morowali is about 8 million, right?
Yes.
One strategy definitely is to optimize the 8 million, showing that we actually are able to produce as what approved. I think the problem for last year, I think the government also learned that there are so much being approved, but the actual production is not that much, right? That means that some of the miner didn't produce as what has been approved, right? One of the strategies really to show the government that, yeah, we can actually do what we propose. That's right. We want to optimize that up to June, July, right? Secondly, remember that we have commitment to our partners, to our JVs, to supply the limonite and to H-power. We will, and we are now engaging the government, the ESDM, basically, to show them that the progress of the project is there. It's almost there.
The ore needs to be stockpiled already, right? It's not only ab out we are actually trying to monetize the ore, but we are actually fulfilling our commitment to our partners. By the way, the commitment is actually mandated by the government as well, under IUPK. We want to continue, and as we speak now, we're preparing all of the revision already. We prepare all the data. We actually informally also consult to ESDM whether the data is enough or not. Hoping that by the time the window open, we are ready. Because all of this data are ready, and they already understand the data. Hopefully that it can be done quickly. There are several possibilities, and I think the government, ESDM, is also preparing some regulation related to that, whether it's going to be reviewed quarterly, for example.
We heard about that one. If we refer to the normal regulation, the window for the RKAB revision is going to be in July. That's the normal one. Facing the situation today, uncertainty, I think they're preparing and reviewing the total RKAB quota realization quarterly. If, for example, some miner could not produce as much, then they will reallocate to the others. Probably that's the idea. Also looking at the market dynamics, and probably the possibilities to increase the quota, and so on and so forth. We are closely engaging with the government, but at the same time, we are also showing them that we are able to deliver what we propose. We have a commitment to fulfill, and then we are ready, basically, to execute. That's more or less the strategy or the approach.
Thank you . Sorry, I have to move to another. Sorry for all that, I need to move with the stakeholder that they came from Sulawesi. Business.
Thank you.
Thank you. Next question, we also have coming from Emily Manusia, participant. The question is related to HPAL utilization rate for this year. Could management provide some guidance regarding the HPAL utilization rate for this year, considering the formal HPAL will start in operation in quarter 3. Probably that's something that-
Yes. I think Marcus can answer. But specifically, I think I have mentioned. It's going to be, in term of mechanical completions, it's going to be gradual from first mechanical completion for one [auto clock] on the fifth mechanical completion. I think as for now, there's no plan to reduce the ramping up. We will still actually doing the ramping up as we planned before. I think specifically for sulfur, I think what HPAL need for leaching is sulfuric acid. It's not sulfur per se. But sulfuric acid can be produced. I think Vinicius is here. Vinicius just educated me about the sulfur market. He went to Bali for the conference specifically for sulfur. Vinicius, you can add. The sulfuric acid can be produced from sulfur, and that's what a lot of the HPAL producers actually doing.
They buy sulfur, they burn sulfur, they produce sulfuric acid. But sulfuric acid can be produced from other sources as well. Sulfuric acid is not as bad as sulfur per se. Because there are many different sources of sulfuric acid. You know China. When it happened, they have already thinks beyond what we possibly think. They are actually looking for alternative sources. Vinicius tell me about, oh, they're actually building now from phosphogypsum. So it's actually the solid waste from phosphate. From the fertilizer production. And they actually produce sulfuric acid from that. They're so creative, so innovative in every capturing any values from that. But again, I think Vinicius you can add. But we are not actually revising the ramping up plan. Once actually done, it's installed, then we will ramping up as per plan. But Vinicius please, you can add.
Yeah. We say that sulfur now is like a sulfur price is the new normal because we saw a lot of refineries in the Middle East that was bombed, but as Irmanto said, the Chinese are coming with R&D because most of the sulfur come from oil, gas. They are now bringing optionalities to bring sulfur from other like gypsum, like pyrite, and like tailings as well. We will see in the midterm, I would say six months, one year, Chinese bringing, when I say Chinese, our partners bringing options like pyrite. Pyrite, you know you can produce sulfur, but gypsum is something new. In this seminar, I saw there are companies already building sulfuric acid production from gypsum. Gypsum is commonly found in Indonesia and everywhere. That's the trend.
We have sulfate or sulfur and a lot of other elements rather than the oil, and you will see this coming as an option. On average, what the Chinese producer are trying to do is to recirculate more, recycle more the sulfur to buy less sulfur from Middle East and have less dependency on this market. So far, I'm confident that for our two JVs that will ramp up this year, we still have time to build our, let's say, optionalities to the sulfur from Middle East. Like Irmanto said, pyrite, like gypsum or tailings. Yeah, that we are going to see, which is good. It's like when COVID come online, meetings suddenly come. We will see production of sulfuric acid from other sources rather than oil, which was a good push from this war.
Yes. Also, I think you told me as well, I think longer term, they might replace sulfuric acid with other acid.
Yeah.
For the leaching. This hydrofluoride, HF.
Yeah.
That's another option for the leaching, but it's probably more mid, longer term. They need to study that. They have to do some research on that. HF is much more easier to produce compared to sulfuric acid. HF can be produced.
Hydrofluoride can be produced from seawater.
Yeah.
The new, let's say, the new generation of HPAL, let's say two years ahead, we will see is less dependent on the acid from sulfuric and more from other kind of acid, because what you need is to change the pH coming from hydrofluoride, which is one option, which is from the sea. Yeah. Good that R&D is moving fast.
Yeah.
We can see that this is putting us some alternatives. Not competing with fertilizer, food, which will be really tough if we go to this side.
Okay. Thank you, [Pandu]. Basta, you want to add something or?
Just add on the HPAL, actually, what [Pandu] said. Basically, the plan is to have first mechanical completion by September. So one by one. So we have five autoclaves, September, October, November, December and January. So by January or Q1 2027, we are aiming to have full production in Pomalaa. Thank you.
Okay. Thank you, Basta. Okay. I think next, we will see Cynthia.
Yeah. I just have one follow-up question when we are talking about the revision window for RKAB. I understand that the quarterly review period is probably something that we can expect for next year or next two years. But for this year, have you been hearing the window for the revision to be accelerated to maybe April or sometime earlier than June or July? That is my first question. And my second question is, how flexible is your mix of between saprolite and limonite for this year out of the 8 million tons that you have gotten the RKAB for? Say, the government suddenly releases a new HPM, and then they consider cobalt contents whatsoever.
Will you be flexible enough to, say, move some of your production to limonite since you have interest to stockpile for your HPAL and you have a higher ASP for limonite by then? Or how flexible is it, the mix between those two? Thank you.
I think as I mentioned, that is a possibility too, for the revision window to be earlier than June, July. That is what we are discussing, and we try to approach, we try to also consult with the government to be able to do that. Because otherwise, if everyone is actually submitting their revision, and I do believe there will be a lot of companies submitting their revision on June, July, it is going to be complicated because the approval is going to be closer to the end of the year, right?
So that is the issue. And I can see that possibility is there. But about, okay, what happened? Is there any flexibility? The mining plan, basically for Pomalaa and Bahodopi, the way we design the mining plan is really to supply the HPAL. So that is the main purpose. Unfortunately, the saprolite is kind of seen or considered as a byproduct of limonite.
Because again, I think the main purpose is really to supply the limonite into HPAL, and then that is what we are focusing. But again, I think things might change, but it is not as easy as just flip, okay, let us now increasing this hub and reducing this hub, because it requires a lot of recalculation, a lot of consideration as well on the ground. But what we plan, you can have that.
Yeah, just to add on that, Pandu, that again, the basis of RKAB is feasibility studies that we have to submit it and approved by MEMR as well. So in term of the flexibility, again, we are actually looking for the demand of our partner for sure that basically, as I mentioned, that in Pomalaa is much more advanced compared with Bahodopi, for example. So we are actually focusing on developing mining, specifically in limonite in Pomalaa today. But we should not forget also Bahodopi, because we have also partnered there, that again, as I said earlier, that they plan to have mechanical completion by Q4 2026. So we have to balance on that too. And also again, because the high price for sure today is in the saprolite side. So again, when we mining saprolite, we mining limonite.
So balancing in operations, the planning in mining, again, as I said, also that we need to see and control the cost in mining for both and comparing the demand. We are actually planning on that for sure, and at the end of the day, it is subject to RKAB. The windows, as Anton said, there are some opportunities probably earlier that we are now having some flexibility actually in the planning. But again, considering all of those factors that I mentioned earlier. For example, let us say we are delaying a little bit in Sambalagi, so we are probably shifting a little bit more in saprolite and stockpiling more in limonite. We are playing on that. But again, our reference will always be at maximal level in the feasibility studies as reference of RKAB submission. Thank you.
But is it true that I understand your first half, it would be majority saprolite?
Of course.
But if we are targeting for a mechanical completion of the HPAL by third Q, fourth Q this year, is there any comfortable level of inventory you need to have at your HPAL to start running the HPAL? Say you do not have any revision for the second half, you cannot mine limonite for your HPAL. What will happen then?
Asril, probably.
I can answer that. Actually, as I said, for sure today, when we see the target plan that is given to us from our partner, for example, Pomalaa, the demand for this year is about 8 million-11 million tons of limonite. Okay? Therefore, that in mining and also in HPAL plan that we are also building a big, huge stockpile. Okay? This is for preparation for us to be more flexible in the mining operation, also to supply to our partners. Okay? Let us say that we are fulfilling our commitment to build and the mechanical completion, and we have to go that way. For sure, we have to mine more, okay, as according to the plan. In our FS slide today, in our feasibility studies today in Pomalaa, we are actually 30% higher than the demand of limonite. Okay?
We have flexibility to go on budget, or we go beyond, again, depending on the stockpile estimation. Okay? In that sense, again, we are much more flexible today as we speak. Again, this is subject to RKAB approval later on. Okay? Thank you. Hopefully, this answers your question.
Thank you.
Thank you, Asril. Anyone else from the room?
Maybe regarding the timeline, because you have the option to own 30% in the HPAL, when will be the timeline since it will start to operate? Are you waiting for it to be EBITDA positive, or what is the consideration for the timeline? Also maybe on the royalty hike, we heard that there is another royalty hike because of government with some revenue statement.
Yes. Okay. The first question is about when we will start the call option, right?
Yes.
Ideally, again, before entering into the call option, definitely there will be a due diligence process, right? When it comes to due diligence, it is not only covering the financial result, which is, as you said, positive numbers, be it EBITDA or profit. But also it is about specification and also reliability, right? Most definitely it would be post the mechanical completion of all the autoclaves, right? So third quarter, sometime in August, September, it is probably going to be the first autoclave, and then gradually up until the end of the year, we will complete all of the five, right?
It will be a 2027 execution. I think it was actually also reflected in the previous CapEx guidance as part of the 2027 equity injection. I think that hopefully that answers the first question. For the second question on the royalty hike. From what we understand, I think there are two significant reviews, at least from the government, that are still ongoing. The first one is the HPM of the oil. The second one is an increase in royalty. Hopefully, this is true, but what we understand is that if one of it is actually coming out to the market, then the other one is actually not going to be as an addition. What we have been hearing the debate is actually of which path that is going to be, which initiative or regulation is going to be out to the market.
We have not heard any formal announcement yet, but I think looking at the news, same as you guys, you can see that I think the pricing is currently being more aggressively announced, probably testing the market as well. Hopefully that is actually going to be the case for the new regulation.
Just two questions from my end. I think the first one is with regards to the oil leakage. Any kind of numbers that we should be expecting, at least for this year? Or has everything been completed for Q25 last year? Second, I think with regards to the mining cash costs, I think $18 has been mentioned quite extensively this time, but given the recent fuel price hike itself, what kind of reasonable numbers that I should be expecting to be going on this? Lastly, I think just a few updates on Tanamalia projects.
Okay. I think later on, Asril can help the third question, for Tanamalia. Or is Fasa doing it?
Thank you.
Okay. Basri. Okay, so maybe Basri, for the third question first before you take off. Status of Tanamalia project, Basri.
What?
You saw.
Oh, you saw. Okay.
Sorry. Sorry. Just to understand better, it's about our Tanamalia project, right? The progress?
Yeah.
Yes.
Yeah. As I mentioned also that we are still in the developing stages in Tanamalia. Today, our team is working in the field too, while we are actually working with external team, with Pujawansa team for our plan to get into the area to start drilling for phase 2 as well. Okay? While I think from partner point of view, we are progressing also to select the partners. Probably later, GP can explain the latest status, but I think we are very close to that partner selections.
I will continue with the first question, which is oil leak. I think if you notice in the financial report, the audited financial report that we disclosed, there was a rehabilitation cost section in that, and it showed quite a good increase from the tax terms that we covered. That number, that increase is actually not only an actual number, but also a provisional number. I think what we can safely say is that, first of all, a majority of the portion, be it from a compensation point of view, be it from infrastructure upgrade or enhancement point of view, the costs have been majority deployed in 2025, with some provisional number that have been provisioned in 2025 as well. Of course there is possibility, some additional number, but it wouldn't be as significant as what was in 2025.
I think on top of that, what we would like to mention is that we have an insurance claim that is ongoing as well. As of 2025, it was only a minority portion that was actually claimed. I think there will be actually a counteracting to the cost that have been incurred in 2025, in relation to oil leak compensation. For the second question, I think it was the fuel price impact to costs, which is especially for the mining contractor side. It's going to be hard, of course, to provide sensitivity and how it will be directly impact to the rise and fall. There will be a negotiation process to that as well. I think there is a counter effect when it comes to the existing cost base.
When we see the $18 that we have today, it's only a small portion that we work with. Then comes here because there's a fixed portion and variable portion. There is a room for $18 to actually improve. What I'm trying to emphasize is that, probably using a base case of $18 would still be relevant in hoping that we can absorb any possibility of rise and fall in the contractor costs. Thank you.
Thank you, Basri. I think last question from the online participant. She's from our shareholder. Do you have the scope to renegotiate nickel matte payability given the higher current market levels versus your contract?
It depends, right? When it comes to significant market change, then there is an avenue for that, right? I think not only on price, but also on volume, right? It is also talking about availability of supply of commodities, right? Yes, if there is a significant change in market situation, we actually have that avenue. But I think the main hope is actually for this not to be too long, right? I think that it is a reasonable contract that we have with the buyer. If such a situation actually got worsened, then definitely there is an avenue for that. But hopefully anytime soon, the situation can be resolved.
Yes. Thank you, Basri. Okay, final round for the offline participant.
I think.
Yeah.
Maybe I just want to try to understand how the mining practice is on the ground. You mentioned earlier that today's, sorry, this year's productions target is 8.1 million. Is it possible for you, say, to dig more ores and put it as kind of like inventory, so that by the time you get the approval for the category revisions on the second half, you can actually start to accelerate all the process? Considering that it takes the government three months to approve this category from this general approach.
Good question. I think Basri will answer. [inaudible]
Sorry. Can you repeat the last part of the question, because I lost about-
Yeah, I just want to try to understand how the mining practice is on the ground. Is it possible for you, say, to dig more ores beyond the 8.1 million target during the first half? Yeah.
Yes. Actually, thank you so much. Actually, we have our own strategy. The aim for us is to increase our inventory. The inventory can be two, right? The inventory can be above ground or below ground. What I'm saying below ground is in the mining, which is we are actually preparing the stripping, more stripping, opening area. So whenever we're ready to get more, we get more rock, for example, then we can go immediately to mine. Today in Pomalaa, in Bahodopi, our mining fleet is still in the full productions target, not in the approved RKAB. So basically, we are ready. We are not necessary to mobilize more equipment later. That's what I'm saying. They are actually, today, job is to open more phase, ready to go when we get more RKAB.
At the same time, as I said, above ground, also preparing huge, especially in Pomalaa, huge stockpile available. We put there actually. Actually, today, we consider, to be honest, in Sorowako, limonite is basically waste. We are actually putting into the stockpile and ready to go also when we get more quota RKAB. The third one, I don't know if this is mentioned earlier. Our mining in Pomalaa, in Bahodopi, in our mining plan and life of mine, the grade is about 1.7%, 1.8%, or 1.6%. Actually, market today's demand is about 1.5%, for example. Meaning we can get more volume actually if we're blending in more. We can mine the transition zone between limonite and saprolite, right? We can get more volume actually there when we're mining both saprolite and limonite.
Those are the strategies, as I said. Resources are enough to do the work. We open more phase, ready to go. Again, with the aim, we pray to get more quota according to the budget that we are going to submitting in the near future. Okay? Thank you. Hopefully, this answer your question.
Thank you.
Thank you, Basri . Okay, I think that will be our last questions. Thank you very much, everyone, for attending the conference call. Hope to see you in the near future for our first quarter earnings call. Thank you very much.
Thank you. Goodbye.