Digging Deep

An electric vehicle (EV) requires four times the amount of copper than an internal combustion engine vehicle, making the metal a key material in the renewable energy space. As demand for EVs grows, so too has demand for copper – a spike Amman Mineral Nusa Tenggara (AMMAN) fully intends to capitalise on.

After all, the company has a strong track record in identifying opportunities. It acquired the Batu Hijau mine on the Indonesian island of Sumbawa, just east of Bali, in 2016. Although its previous management struggled with high operating cost and uncertainty regarding the mine life, AMMAN succeeded in turning it around and extending mine life.

Now, after several years complicated by the uncertainty of the pandemic, AMMAN President Director Rachmat Makkasau is focusing firmly on the prospects that lie ahead of the mining firm, with a copper smelter to play an important role in its future success. “We have completed detailed contracts with engineering, procurement and construction (EPC) contractors to build AMMAN’s smelter projects in West Sumbawa Regency, West Nusa Tenggara Province,” Rachmat tells The CEO Magazine.

“The smelter is considered a significant project. To execute this project, we need support from all stakeholders including the government at local and national levels, business partners and the surrounding communities.”

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“The pandemic had a serious impact on operations at the site location. Since April 2020, Medika Plaza as a health provider, appointed by AMMAN, succeeded in providing preventive, promotive and curative services when facing COVID-19 challenges, by implementing agility and great collaboration.” – Johandi Kumaheri, President Director, Medika Plaza

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Indonesia’s Ministry of Energy and Mineral Resources stated in 2021 that the country’s copper exports had reached 2 million tonnes, placing it among the world’s top exporters of copper concentrate. However, in mid-2023 the government is set to impose a no-export policy on certain minerals, including copper, in a bid to boost domestic processing and increase exports of more valuable products such as copper cathode.

“We are committed to supporting the government’s objective by constructing a state-of-the-art smelter with a capacity of 900,000 metric tonnes a year,” Rachmat says. “The smelter will be energy efficient and equipped with the most advanced technologies.”

In addition, the company is entering a new phase in its mining operations. “Seven years ago, before AMMAN took over, phase seven was considered unfeasible due to the high cost of production. The transformation achieved within the first three years of acquisition allows AMMAN to operate Batu Hijau mine in more efficient and productive ways. We are now mining at the core of phase seven,” Rachmat explains.

So how has AMMAN managed to drive down costs to such an extent? According to Rachmat, it actually started with the transition of the company’s ownership back in 2016. “We were all together in one room with very supportive shareholders and brilliant and innovative new directors,” he recalls. “It was a very systematic process – we looked at each item one by one and discussed where we thought we could reduce cost. And, like I say, new blood in the companies, new shareholders, brilliant new directors, new direction – they all help.”

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“It has been a fruitful journey working together with AMMAN since the construction stage. We solved many challenges together, proving that AMMAN trusted SuprA as a reliable business partner. As such, we continue to provide quality products and services.” – Jimmy Hadinata, General Manager, Suprabakti Mandiri

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Even during the disruption of the pandemic, as AMMAN worked around various new constraints and challenges, it managed to keep things positive, significantly contributing to the mining sector’s strong performance in West Nusa Tenggara Province. According to the Regional Integrated Investment and Licensing Service Agency, the mining industry generated 50 per cent of the province’s total investment in the first quarter of 2020, growing 47.8 per cent in the second quarter of the same year.

“We were able to improve our productivities despite the challenges during the pandemic due to our agility and brave-thinking mindset,” Rachmat reflects. “We constantly re-examine our standards, aiming to set best practices for our operations – and to become the model for other mining companies across the globe. That is our way to achieve our vision, which is to create the legacy of being the best in everything we do.”

Rachmat realises that, in order for AMMAN to achieve its vision, mission and commitment, the company has to ensure that all employees and business partners are engaged with its values. Therefore, in March 2021, AMMAN embarked on a brand transformation journey, with extensive campaigns to ensure the internalisation of its new identity.

In addition to its new identity, AMMAN also celebrated various achievements that show its commitment to exercising responsible and sustainable mining practices. In September 2021, AMMAN received two prestigious trophies in the Environmental Management and Mineral Conservation categories from the 2021 Good Mining Practice Awards, held by the Energy and Mineral Resources Ministry.

The company’s policy also includes responsible management of social and environmental aspects as an integral part of its business. As AMMAN currently accounts for more than 80 per cent of economic activity in West Sumbawa Regency and close to 20 per cent of the West Nusa Tenggara provincial economy, the anticipated closure of AMMAN’s operations will leave a big gap in the regional economy.

Therefore, the company has been devoting significant resources to establishing Sumbawa as a regional tourist destination and is supporting the efforts of local communities to develop small and medium-scale enterprises. Moreover, AMMAN has also established various vocational scholarship programs to prepare highly skilled workers to be ready to compete at national and international level.

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The global market has seen growing demand for companies to exhibit good environmental stewardship. Rachmat shares that such requirements have been considered in AMMAN’s business strategy. In mid-2022, AMMAN will commission a 26 MWp solar PV power plant and the facility will take full advantage of Sumbawa’s solar radiation.

“Environmental stewardship and cleaner energy will become our main considerations in developing strategies for future development,” he says. “Greener concepts and future living will gather momentum and, for us in the mining sector, these new approaches will happen, too.”