Fig. 2: AMMN – Copper-equivalent reserves comparison 

Fig. 3: AMMN – C1 cash cost position

Fig. 4: AMMN – Improving EBITDA margin trajectory

Strong operational momentum; capex cycle behind us; expect 42% EBITDA CAGR over FY25-28F

We forecast copper cathode production to grow from 80kt in FY25 to 203kt in FY28F (37% CAGR FY25–28F), translating into IDR5.2bn/IDR2.6bn in revenue/EBITDA in FY28F (41%/42% revenue/EBITDA CAGRs FY25-28F), as AMMN harvests returns on its USD5.5bn end-to-end investment. Key upcoming milestones include: 1) a 220ktpa copper smelter ramp-up; 2) processing capacity expansion to 85Mtpa; 3) a gold refinery ramp-up; and 4) the Phase 8 mining ramp-up, which will all be run by an improved energy mix via a 450MW Combined Cycle Power Plant (CCPP) and liquefied natural gas (LNG) regasification. Management expects smelter utilization to reach ~85% following the resolution of initial bottlenecks and maintenance. 

With capex normalizing, growing downstream integration, and embedded upside from Elang and the gold retail initiative, we forecast AMMN to improve its free cash flow generation, with average EBITDA and FCF of USD2.3bn/USD622mn in phase 8 (vs phase 7 averages of USD1bn/-USD700mn, respectively, during 2019-24), due to steady operational ramp-up and favorable copper and gold market dynamics. Following full local smelter compliance, AMMN is progressing toward a permanent lifting of concentrate export restrictions, according to management, which in our view would represent incremental upside.

Fig. 5: AMMN's copper production CAGR of 37% (FY25–28F) ranks among the highest in the global

Fig. 6: AMMN – Revenue forecasts

Fig. 7: AMMN – EBITDA forecasts

Fig. 8: AMMN – Capital expenditure

Fig. 9: AMMN – FCF generation

Headwinds largely priced in with undemanding valuation

AMMN has recorded the largest outflow across our Indonesia coverage YTD, with foreign investors selling a net IDR3.9tn (USD223mn). In our view, this de-rating reflects a confluence of headwinds that are now largely in the rear-view mirror. First, the overhang from a potential revision to the royalty framework and a prospective gold export tax appears already priced in, in our view, given the significant underperformance of the broader Indonesian mining sector. Second, the proposed state export body under Danantara is set to be rolled out in two phases; we believe the transitional arrangements under Phase 1 will not materially disrupt cathode export flows. Third, the MSCI exclusion overhang – which we estimate drove roughly USD500mn of passive outflows – has now passed and is largely priced in, in our view.

With these headwinds dissipating, we believe AMMN trades at undemanding 15.0x/11.4x FY26F/FY27F P/Es, a substantial discount to peers at 26.3x FY26F P/E (Bloomberg consensus), leaving meaningful room for a re-rating as sentiment normalizes.

Fig. 10: Indonesia commodities sector – Foreign net inflow (outflow), 2026 YTD, (IDRtn)

Fig. 11: AMMN vs average copper peer EV/EBITDA comparison

Fig. 12: AMMN – Share price vs gold price

Fig. 13: AMMN – Share price vs copper price

Financials and operational outlook

Operational momentum is set to accelerate over the next 12–24 months, in our view, supported by ~900 kdmt of copper concentrate at 28% copper and 21 g/t gold, respectively – improving from FY25 as the company targets higher-grade ore body from Phase 8. We acknowledge Batu Hijau Phase 8’s full capability to produce over 1mn dmt of copper concentrate with ~300 ktpa copper equivalent and ~1Moz gold annually through at least 2030. We incorporate Batu Hijau phase 8 mine life until 2030 transitioning to the company’s Elang project by 2031, with a mine license option up to 2050.

• The company is focused on stabilizing its copper cathode smelter at above 85% utilization after reaching ~55% in October 2025. We expect minor yearly maintenance and major maintenance every five years.

• The second mill (two new lines) is scheduled to be fully online by early 1Q26, expanding processing capacity from 40mt to 85mt to handle more than 900kdmt of annual concentrate output feeding the smelter.

• Concentrate export is expected by management to be about 30-35kt in 2026F as more volume is redirected to internal downstream processing, which should translate into higher added value and stronger earnings through 2027F.

Our key assumptions are as follows:

• We assume copper and gold prices of USD13,000/t and USD4,500/oz respectively for FY26F with long-term price yearly escalation of 2.2% every year for gold, underpinned by a structural copper deficit outlook and sustained gold demand.

• We expect AMMN to deliver a 69% earnings CAGR over FY25-28F, driven by copper and gold sales volume that could grow from 76kt/114koz in FY25 to 198kt/564koz in FY28F, deliver a CAGRs of 38%/70% over FY25–28F (Fig. 14).

• We expect a unit cost of ~USD3/ton assuming higher cost and fuel price for FY26F. Despite that, overall mining cost is improving following the end of the transitional period to phase 8.

The bulk of the heavy capex cycle is already over, with an estimated ~USD6bn of capital largely sunk, leaving roughly ~USD200mn for maintenance capex. Future growth capex, according to management, will be increasingly tied to Elang, where further FEED and feasibility work is expected in 2026 to determine the construction timeline, while capex intensity is mitigated by sharing infrastructure with Batu Hijau, including a planned conveyor‑belt connection. While waiting for further clarity, we assume Elang development capex totaling ~USD3bn that will be expensed starting 2028F. In addition, management is also preparing to enter the gold retail segment by selling pure gold bars, a comparatively low‑capex initiative that can monetise refinery output and diversify earnings and sales locally. 

Fig. 14: AMMN – Key assumptions

Fig. 15: AMMN – Copper production in concentrate and cathode

Fig. 16: AMMN – Gold production in concentrate and refined gold

Fig. 17: AMMN – Revenue forecasts

Fig. 18: AMMN – NPAT forecasts

Fig. 19: AMMN – Net debt, EBITDA, and ROE trajectory

Fig. 20: AMMN – GPM, OPM, and NPM trends

Fig. 21: AMMN – Development timeline

Valuation

We initiate coverage on AMMN with a Buy rating and a target price of IDR5,400, based on a sum-of-the-parts valuation: 1) DCF for its reserve base until 2050 (including Elang operation) with 10.4% WACC and 2) asset-based valuation of USD1,100/t of CuEq for resources. The copper equivalent (CuEq) formula converts the value of all metals in a deposit into an equivalent grade of copper. In this case, we have converted the vast gold reserve/resources based contained in the asset for better capture not only the copper but also the gold economics. Key risks include commodity price volatility, regulatory changes, and project execution challenges (more in the Risk analysis section).

Fig. 22: AMMN – SOTP valuation

Fig. 24: Copper peer comparison

Industry

Indonesia copper

Indonesia's copper reserves accounted for 2% of global reserves and 3% of global copper production in 2025, according to USGS. These reserves and production are concentrated in two provinces, namely in West Nusa Tenggara and Papua. Batu Hijau and Elang together account for 3.14Mt of reserves and 27.0Mt of resources in West Nusa Tenggara, representing ~15% of Indonesia's 20.3Mt national reserve base behind only Grasberg in Papua — the two provinces collectively hold ~90% of national reserves, with all others sub-scale and exploration-stage.

Fig. 27: Indonesia copper resources and reserves

Fig. 28: Map of Indonesia’s copper mines and smelters

Fig. 29: Indonesia copper smelter capacity by producer

Indonesia's copper export mix has structurally shifted from concentrate to refined products. Following the January 2025 concentrate export ban, FY25 total export volume fell -34% to 1,877kt, yet total export value declined only -24% to USD9bn – as copper cathode displaced concentrate at a ~68% per-tonne value premium. The trend continued into 1Q26, with total export value recovering +5% y-y to USD1.5bn despite volume falling a further -46% y-y to 148kt. To put AMMN's scale in context, its cathode exports alone represented ~26% of Indonesia's total copper complex export value in 1Q26 – a share that we expect will grow as its smelter continues to ramp toward nameplate capacity. 

Fig. 30: Indonesia copper export breakdown

Copper macro outlook: Deficit to persist in 2026 and potentially in the long term on disruptions

The global copper balance faced a significant shortfall of 0.9 MMt in 2025 and is expected to stay in deficit by 1.0 MMt in 2026, according to S&P Global. This is due to its critical role as a fundamental input to electrification (accounting for ~5–15% of electricity infrastructure costs and ~7–10% of EV costs), with demand currently rising faster than supply for the reasons discussed below. This situation has driven copper prices significantly higher in global markets, reaching an all-time high by the end of 2025 after breaking significant technical resistance.

Worldwide copper consumption is expected to increase by 3% in 2026 and ~50% by 2040, in line with projected growth in global electricity consumption, according to S&P Global. This exceptional growth is expected to be driven mainly by core economic demand (i.e., construction, electrical appliances, and machinery) and the energy transition, which together will account for 86% of the incremental demand for copper by 2040. Additionally, AI and data centers are expected to emerge as a crucial future demand driver, given their high electricity intensity, direct copper usage, and rapid industry growth, collectively contributing around 10% of incremental demand by 2040 (Fig. 32). From a regional perspective, China and Asia will be the strongest demand region, contributing for 60% of the incremental demand, while North America and Europe will see smaller but substantial increases related to digitalization and renewable energy (Fig. 34).

While demand continues to accelerate, S&P Global forecasts the global copper supply to tighten further in 2026, expanding by only around 1%, due to ongoing disruptions at major mines following events in 2025. For example, Grasberg, the world's second largest by output (Freeport-McMoRan, ~750kt/year pre-event) remains far below capacity post-2025 mudflow, with phased restarts starting 1H26 at limited levels and full recovery not until 2027. Quebrada Blanca Phase 2 (Teck, targeting 300,000+t/year) saw 2026 guidance cut to 200,000–235,000t due to tailings issues, postponing optimizations to 2027-28.

Copper mining costs are rising structurally as the industry moves away from high-grade, near-surface deposits toward deeper, lower-grade, and more complex resources (Fig. 35). In South America (major copper producer), average grades have fallen 44% from ~1.3% in 2000 to ~0.7% in 2025, the stripping ratio has essentially doubled. In parallel, global copper exploration expenditures in 2025 will be approximately USD3.3bn, which is less than half of the USD6.6bn peak in 2012. This will lead to fewer significant discoveries and a greater cost per marginal resource. Consequently, future supply is increasingly dependent on higher-cost greenfield projects and brownfield expansions that exploit progressively lower-grade material. Reflecting this structural shift, S&P Global estimates the marginal cost of copper production (90th percentile of the cost curve) rose by 37% between 2019 and 2025, lifting the industry’s cost floor and implying tighter margins, therefore there is a need to sustain higher copper prices to incentivize new supply.

In the long run, S&P Global forecasts a conceivable ~10Mt copper supply shortfall by 2040 if investment in new mines and mine-life extensions remains insufficient (Fig. 31). Under this scenario, primary mined copper supply reaches only ~22Mt by 2040, materially below the ~32Mt required to meet projected demand. This outcome reflects growing constraints on investment, as rising development costs increasingly undermine the economic viability of new copper supply.

Fig. 31: Supply unable to keep pace with demand – copper balance, 2020-40 (MMt Cu)

Fig. 32: Copper demand by end-use: 2025 vs 2040 incremental change (MMt Copper)

Fig. 33: Mined copper production by country, 2024-25 (MMt)

Fig. 34: Copper refined demand by country, 2024-2 (MMt)

Fig. 35: Copper average head grade for major copper mines (2000-24)

Fig. 36: Development times for copper mines, global averag​​​​​​e
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Company overview

PT Amman Mineral Internasional (AMMN IJ) is Indonesia's largest listed copper operator and one of the world's lowest-cost copper-gold producers, operating the Batu Hijau open-pit mine in West Nusa Tenggara – Indonesia's second-largest copper-gold mine – through its AMNT subsidiary. Majority-owned by Salim Group (~32%) and Medco Energi (~21%). The company's asset base ranks among the top globally by copper-equivalent contained reserves. AMMN is fully integrated across the entire copper-gold value chain – from open-pit mining at Batu Hijau (Phase 8) and the undeveloped Elang deposit, through ore processing, smelting, and precious metals refining – all supported by 100%-owned infrastructure including a 450MW combined cycle power plant, LNG regasification terminal, and a 26.8MWp solar farm. 

Fig. 37: AMMN – From single-mine operator to fully integrated copper-gold producer

Since its prior acquisition from Newmont, AMMN has improved:

1. Exploration and development: Drilled 69 km extending Batu Hijau Life of Mine by 6 years. Currently, AMMN has extended its operation to phase 8 with potential phase-8 extension.

2. Mining: Successfully secured phase 7 and beginning of phase 8 of Batu Hijau, with possibility of phase 8 extension. AMMN has a track record producing 1% global copper equivalent.

3. Processing: Successfully doubling its current processing plant from 40Mtpa to 85Mtpa, commissioned early 2026. AMMN is also building a 450MW CCPP and LNG facilities replacing coal-fired power plant (CFPP).

4. Smelting and refining: A copper smelter and a precious metal refinery have commenced production in early-mid 2025.

Fig. 39: AMMN’s ownership and group structure

Risk analysis

AMMN's investment case is compelling, but we acknowledge some concerns on AMMN's operating environment, especially regarding asset concentration and the current regulatory climate in Indonesia. We identify several key risk factors that we need to watch:

1. Copper and gold price volatility
   AMMN sales depend on spot copper and gold price. Any risks to the global economy could change copper and gold prices and impact earnings. We estimate every 1% decline in copper or gold prices would reduce FY26F earnings by approximately 1.4%.
2. Concentration asset risk
   AMMN is exposed to asset concentration risk. Unlike its global peers which have diverse operating assets, the entire integrated mine-smelter-port value chain is concentrated on a single island, Sumbawa. This is a structural feature inherent to tier-one copper mining globally, and AMMN has moved to engineer down the tail risk by building infrastructure designed to mitigate it. For example, the processing expansion is built to seismic standards, and the coastal smelter runs on seawater intake, reducing freshwater dependency.

3. Royalty and fiscal term risk
   The Indonesian government push to capture a greater share of commodity upside through the proposed revision of Government Regulation No. 19 of 2025.
   1. Impact: We estimate that every 1% hike in the royalty rate impacts earnings by -3%. Our estimates already incorporate the latest royalty rates, including 13%/7% for concentrate/cathode and 16%/5% for gold/silver, respectively, providing what we believe to be a conservative baseline even as implementation remains postponed.
   2. Mitigation: We view the read-through to AMMN as low risk relative to peers. The company already operates under an IUPK license, one of the more government-weighted profit split arrangements among domestic miners, with the state capturing approximately 58% in 2025 through royalties, export duties, and IUPK profit sharing, well above the industry average of 55%.

Fig. 41: Indonesia proposed royalty tariff adjustments

Fig. 42: Indonesia-listed consolidated profit split to government, FY25 (%)