PT Vale Indonesia Tbk (INCO) Earnings Call Transcript

Okay. Good morning, ladies and gentlemen. Thank you for coming in INCO Year-end Analyst Gathering 2025. So on behalf of the management, I would like to apologize for our President, Director and CEO, Bapak Bernardus Irmanto as well as our Vice President, Director and Chief Operating Officer, Bapak Abu Ashar are unable to join us this morning. However, we still have the rest of BOD members join us here physically and Pak Budiawansyah, Director and Chief Sustainability and Corporate Affairs Officer, also on the way. Yes, coming in the right time. Good morning, Pak Budi. Thank you for coming Pak. So first, let me greet and introduce you to our BOD member. First, we have Bapak Rizky Andhika Putra, our Director and Chief Financial Officer. Good morning, Pak Rizky. How are you, Pak? I believe most of the team here have been met Pak Rizky before. But if it's not, I think today is a good moment for you to meet Pak Rizky in person. Next, I'll move on to Bapak Muhammad Asril, our Director and Chief Project Officer. Good morning, Pak Asril. How are you, Pak? So if I may still a little bit with you, today is going to be special because Pak Asril will show you something about our recent development progress from each area -- each project area. So instead of doing a usual presentation, he has a surprise today. So let's see and hear from him directly live from our side. Next, we also have Bapak Heriyanto Agung Putra as our Director and Chief Human Capital Officer. Good morning Pak Heri. How are you, Pak? Thank you for coming. So in the next few minutes, Pak Heri will also present something about our cultural transformation post divestment last year. I think it's good to have update from him directly today. And next, we also have Bapak Slamet Sugiharto, our Director and Chief Strategic Technical Officer. Good morning, Pak Slamet. How are you, Pak? So yes, also interesting today because Pak Slamet will also present about our exploration activities in the near future. I think this is something that our Capital Market team here are waited, Pak. And for your information team, Pak Slamet is our newest BOD member appointed through the EGMS on September 23, 2025. Okay. I will next move on to Bapak Budiawansyah, our Director and Chief Sustainability and Corporate Affairs Officer. Good morning, Pak Budi. How are you, Pak? Thank you for coming. So yes, Pak Budi will also present something about our sustainability progress and the latest achievement through awards that we have as well as the IRMA 50 journey. So yes, interesting to see and hear from him directly. All right. Last but not least, we also have Bapak Vinicius Mendes, our Director and GV Streaming. Good morning. Pak Vini, how are you? Thank you for coming. Okay. Without further ado, I will pass this station to our BOD members to begin the presentation. And the first agenda about third quarter 2025 key updates will be presented by our Rizky Andhika Putra, Director and Chief Financial Officer. Pak Rizky, the floor is yours. Thank you.

Okay. Good morning, and probably good evening to some of you joining online. So I guess welcome. And again, thank you for joining our annual event. I think the purpose, I think same as last year, we try to have this at least once a year. We try to have an intimate session. I think most of you, I think I've met several times throughout the year, but it's a good opportunity for you guys as well to meet our BOD members. So we try to have all of the BOD members to join offline. But unfortunately, there's a visit that our President Director, Pak Bern and also Pak Abu, our VPD, needs to attend. So -- but I think we have a lot joining here and the spirit today, I think, is for us to have an interactive discussion. I propose this actually not so much on the presentation side, more on the Q&A side. At the end of the day, I believe you guys already see the third quarter number that we have, right? So I think it's more of how we approach the close of 2025 and, especially when it comes to the context of 2026. And I think I would like to start off with a bit of a reflection point. I think we can all agree that 2025 specifically in isolated is not an easy year for nickel, right? Especially when we compare to other commodities, nickel in general, when we compare to the previous year like 2023, it has its challenges, right? We started the year with some regulatory surprises. We started the year with a continued decline and pressure on the pricing side of things. But I think the optimism is still there, right? I'm seeing all of you here, having all of the BOD -- most of the BOD here as well, it actually reflects that we still believe in the long-term value of nickel, right? And I believe we are here to witness one of the inflection point of PT Vale Indonesia as well. If I flash back to the position that we had on 2024, we were one smelter company with one mining site only active in Sorowako for quite some time, 56 years since inception. It has been the mode. It has been the operating that we have been accustomed to. But today, we're heavily expanding. I think when it comes to 2025, all of you already witnessed -- and later on, we will have a specific session on our new operational site as well. We had the Bahadopi site on stream in July. Some portion of sales already coming in. But in 2026, it would be a game changer. So -- that is Morowali and then Pomalaa would be the third site as well when we approach 2026 later on. So what I'm seeing is actually when we believe in the long-term value of nickel, we also see the long-term value of PT Vale. We have a place -- we have a position to play in the Indonesian market and the nickel space, but we will come in a different volume. So I think the idea today is actually to share more and discuss more on what the management and also the company is aiming to be. Our profile would be significantly different when it comes to operational side and later on also in the financial side of things. I would like to start a bit with the third quarter updates. So I think most of you are probably already aware with the publication that we had in terms of third quarter, we had a higher nickel matte production, right? And I think this was already anticipated back in the first half of 2025. At that time, we had an incident in the first half, which is an electrode issue that we had at the time. And we took the privilege to actually took some of the maintenance portion to the first half of 2025. Hence, the result is actually reflected in the third quarter and follow through hopefully in the third -- the fourth quarter of 2025. So higher production in the nickel matte and come along with it actually with the higher payability. So I think if you guys have noticed, starting the shipment of July, there's a new payability that has been implemented with the buyers that we had for the nickel matte. That came from the nickel matte and Sorowako operation. And the second point is actually on the new operational side. Bahadopi starting in the 1st of July, we commenced operation, and we already shipped some portion up until today, I think we already -- up until the third quarter, we already shipped until around 900,000 wet metric ton. I think when we speak today, it's already 1.5 million probably up until today. And we're still optimistic that up until the end of the year, we can close the whole quarter of 2.2 million coming from Bahadopi. And just as a refresher for Bahadopi specifically, it's a good reflection of how competitive the market is when it comes to saprolite ore. It yields good premium. And hopefully, it's the same situation when it's approached to 2026. And as a result, of course, revenue is higher because of the new payability, because of the increased production volume for nickel matte and also the new additional volume of sales in saprolite coming from Morowali. And we had an EGM back in September. So later on, I think our BOD one by one will try to have a good discussion with all of you in their respective directors because I think the spirit is actually to have what are the -- to have a discussion on what are the key fundamental drivers, what are the key changes? And again, just to stress this out, right, it is an inflection point that it does not only require operational readiness. But later on, I think Pak Heri will explain from a fundamental culture and also transformation point of view. And just as an FYI, this is probably going to be the first year that from a 3-year rolling RKAB, Chief Budi, we came back to a 1-year submission for the RKAB quota. We've submitted our 2026 plan. Later on, we will provide a bit of a guideline on the numbers that we submitted. For the '26, we have the base for Sorowako already in place. So I think this is a matter of securing the potential sales, especially when it comes to the Bahadopi site and later on, especially on the volume coming out of Pomalaa. Next. So yes, I think this is just showing a bit and refresher that we had an EGM back in September. Pak Slamet at the time was joined and appointed back in September as our new Chief Strategy and Technical Officer. And also, I think Pak Heri, even though it was before September, but this is the first time that you guys met Pak Heri. So I think it will be a good opportunity later on to talk about how the human capital and transformation side can enable the changes in PT Vale. So next. So I think without further ado, I would like to invite Pak Heri to start off. When it comes to change of the company, the business plan is one thing, but what it is actually very important is to have that fundamental changes in place. So it starts with culture and also it starts with how we see things and we plan and approach things as well. So I think Pak Heri will provide a bit of context on that.

Thank you, Pak Rizky. Good morning, everyone. Okay. Today, I would like to share why we are focusing also other than not only the business, but also how the culture, especially culture transformation and why culture is a part of the important things that we have also to manage because I think everyone knows that corporate culture is a driver foundation for the sustainable growth and how we are going forward and also where we are now and how we drive the internal situation to be connected with the external situation. Actually, PT Vale is -- already has purpose or in some company, purpose is a vision. We exist to improve life and also how it transforms the future. This is something that's not so easy to achieve or how to reach this vision or this purpose. And to fulfill that purpose, we also have these values. These 5 values is a part of how we manage the internal and also to bridge with the external situation. We already have 5 values here. Those values will consist also -- reflect with the -- how the behavior of the people in the company and how the attitude of the people in the company, how we interact each other within the employee in the company because it will reflect also to the -- how we motivate people and how also we engage with the environment within the stakeholder.. Next. So go to the culture transformation here. Actually, we have the model also the -- we set up the model that from the purpose and also the vision and strategy and we also have the aspiration also. Probably 3 or 6 months ago, some of already mentioned the -- how the aspiration of the Vale itself. To manage the culture transformation, we have to be aware also that the external factors -- external factor or external situation is something that we have to consider because now we are aware that the nickel price also pressure us and fast-moving technology and also the sustainability, community expectation also getting higher. Next, you can ask how we manage the external with others, Pak Slamet, Pak Budi and Pak Abu [indiscernible]. Related to the culture transformation, we are focusing on how we manage the competitive advantage in the company that we have very accountable people, agile people in the company and also the engagement rate in Vale is quite high compared to the industry. And so we are talking about the sustainability -- the strategic partnership with MIND ID, which is one of the strong position for us because they already have some strategy, which we have -- we can align with them because in the perspective of the holding, it can be also give us some advantages. In the culture itself, we have around 7, but probably not all of the activity here that we are focusing. But one thing that we need to be a high-performance organization here, we are focusing on how leadership management also manage the company overall and also how the performance model -- performance management system is one of the tools that we can make sure or ensure all the KPI -- all the program or the project will be achieved for some time. Overall, we are sharpening some of the program. But I think later on, we will share also if we need -- we will give you some explanation related to how we sharpen some of the process related to the transformation. We have the values. We already make a socialization internalization someday. If we already -- all the value -- behavioral attitude is already embedded in the people mind in the Vale, then we are sure that going forward, we are talking about the sustainable growth is something that we can really -- or really easy for us to achieve that matters. So far, that's all that we are -- how we are focusing on the -- culture transformation is a part of how we strengthen our foundation to deliver what we need to achieve in the future. Thank you. Is there any question or there's no questions? Thank you. Next Pak Abu -- Pak Muhammad Asril, sorry. Thank you.

Good morning or good evening, the wonderful attendee from overseas. Let's go to the next slide, please. Okay. It's -- always our ultimate purpose is actually to be focusing on the safety and environmental in our all of operations and projects. In the quarter 3, 2025 that we can see also the improvement of our frequency -- incident frequency rates compared with last quarters, which is -- this is involving about 13,000 workforces in the projects, plus in our operation about 6,000 and coming 2,000 because of we are doing now today furnace rebuild starting last week. So those are also marked that our focus still remain the same while delivering a good performance in the operation in the project, but also we are not forgetting to make sure that our route is also been managing very well. So the fatalities to date also is 0. Again, this is also demonstrating our very strong cultures in safety management in the ground. This is being achieved not only because of we're doing things normally, but we have very good -- very strong leadership cultures in terms of safety management. We have -- hundreds of our leaders is always every day doing their own leadership in the field and talking with the people in the ground as well as that we are also implementing a high risk control, which is we have over 200 critical risk in the operation and also in the projects that we're doing verifications, regular audit, et cetera, to make sure that all of those are being controlled very well. So those are actually demonstrating that we are achieving a good trend on the production and projects acceleration as well, but at the same time also that we are showing a tremendous trend of safety improvement in the ground. Next slide. This is just to repeat again what Pak Chief Rizky mentioned earlier that despite that we had some issues in the first half of 2025, but we are able to catch up in the quarter 3 and also last quarter, which is ongoing today. This is also still involving our furnace rebuild, which has started last week. So we'll be able to achieve 71,234 by the end of the year for our net production from Sorowako. Again, this is not easy task, but I can say that the team in the ground that can do things very well. And then for sure, our -- guarantee that we can achieve our production -- net production from Sorowako this year. Thank you.

Yes. Good morning, good evening, everyone. Continues from about transformation cultures that we run right now, sustainability is one of the key. So just to let to you to share what we have done in this couple of weeks, just back from conference of party at Belém, Brazil. So there was a concern there about the extractive industry like us, one of the major energy consumptions, how we can put ourselves in this challenging decarbonization program. But we keep remain to be consistent that on 2030 that about 33% that we are going to reduce there for decarbonization program. So as you see here, the parameters showing good trends, especially for the greenhouse emissions that all the operation is still below from the target. And then we keep remain the next couple of years that we are going to improve discharge as well as the SO2 intensity as well. Although the activities in operations there happening now like furnace rebuild is not impact to these parameters. Another thing that we can share to you is our strong performance in the sustainability is where the sustainalytics performance is -- it continues very good trend, which is this is -- now is -- the lowest sustainalytics score we have is about 23.7 from previously. We have -- yes, we have experienced that jumps a little bit before '29. But what we learned as organizations is how we can do things in transparent as well as expose what we have. As you know, that there was an incident a couple of months ago, but we learned from that one, major organization can do well and then have ability to respond with that kind of incident. So that's why this is reflection our resilience in these businesses, especially in the extractive industry. As you see here, there are some awards close to PT Vale. The latest one is the Subroto Award. As you know, Subroto Award is the highest award from the MEMR, Ministry of Energy and Mineral Resources that handed directly from the Minister of the MEMR that acknowledge of PTVI's socials and performance are there. So at the end of my presentation, I would like to impose that PT Vale is keep remained for the consistent of the one of the extractive nickel smelters for the lowest carbon. And then we're seeking the technologies to support this as well as you see that reflection is our sustainalytics score, which is -- now is the lowest what we have, 23. The next flagship initiative is we are going to do the IRMA 50 audit. I can bring you a summary update that now the team is keep working to close around 70% of our critical requirements of IRMA. Now the team is on the field. We already do the announcement to publicly that we are going to do this audit of IRMA 50. And then perhaps that next year, our target is to continuing close the gaps and then also get the certificate. But now we are going to -- as you see there, critical requirement improvements now is being done. By December this year, we do the Stage 2 audit. So now we can understand where is our position officially. And then we get some mirroring from the independence party, including independent certification body to see our position for this IRMA 50 audit. So perhaps everything can going well because this is very strategic for us. with the commodity situations right now, this is put PTVI's in keep going -- keep in the -- become one of the partner of choice in this nickel -- sustainability nickel producers. Thank you.

Thank you. So just recall back again when I sitting at the same events last year -- right last year, that at the time that we're just presenting -- means that we're going to have this in the following year, which is this year, right? So those are actually the promise that we made last year. But today, we're going to show you what has happened in the last 1 year, 12 months in 3 sites, Sorowako, Pomalaa and Bahadopi. Next. So this is just to remind all of us, next slide. For 3 growth agenda for PT Vale in 3 provinces, okay? Let me start from Sorowako. So in Sorowako, we're going to build each power plant with our partner, Huayou, which is 60 kiloton -- okay. Let me go direct to this. So this is in Sorowako. So last year, we're just thinking about starting permitting and also talking about our partners and start preparation things. But today, we have -- you can see some progresses in mining and also in some pieces of progress in our JV side. In the right side, you can see those in the video from the top there. You see those are stockpiles. Today, we already -- we are stockpiling about 2 million of limonite, which is used to be being disposed part of the waste of Sorowako operations today. Now we are actually stockpiling those, actually prepare for next year, pumping it down to our HPAL in Malili, which is 60 kilometers away on that. So I strongly believe that we are able to make this in mining for sure today, which is investment of about $200 million. In the left side, some facilities being prepared also for our Sorowako limonite JVs, which is down in Malili but FPP in Sorowako. So FPP in Sorowako, we're going to build 60-kilometer slurry pipeline down to the HPAL plant. So those are being prepared today. We are almost finishing off the land acquisitions. The critical permit also is in finalizing for the HPAL site in Malili, but we're going to have the first cut of land preparations for FPP December this year for HPAL plant. This investment is about $1.6 billion, $1.7 billion in total with Huayou, our partner from China today. So again, with the aim to finish off the HPAL completion by Q2 2027, formally the HPAL plant. So this is really recent recording, which is 21st of November, which is last 3 days ago. Okay. Next, what is it, Pomalaa? Okay. This is Pomalaa. So the right side, this is in mining preparations, but I can also disclose that we are already finishing off selling the Pomalaa ore this year. It's about 298,000 based on the RKAB we have today in preparation for RKAB for 2026. And this is all the facilities today. You can see main facilities in Pomalaa, again, this is live, which is 3 days ago that we took. So the progress is there, saying and then we are preparing of mining operation starting 1st of January 2026. We already had a first cut mining last month with our mine surface company, okay? So they are preparing the stripping today and ready to go by 1st of January subject to RKAB. So this is in mining site. So even though the progress we can say only 56%, but the same with Pomalaa and Bahadopi site, we are able to finish off infrastructure at the same time also in mining and selling the ore through our facilities. In the left side -- sorry, you can see that the 2 autoclaves just arrived in Pomalaa, today, is about landed in the jetty today. It's probably today late afternoon, 2 autoclaves from China is just arrived in Pomalaa. Two is going to arrive in December and the last one by January 2026. So this is live. I can see 20s. So this is overpass of provinces crossing into the jetty to the top side there and in the left side go down into -- this is autoclave. This is just arrived. This is routine life today. Two autoclaves just arrived in the port. So -- and then you can see this is the jetty and the ports that have been built by our partners by Huayou. And this is -- you see this is in the plant side here, the sulfuric acid plant, the foundation of autoclaves, the power plant also there. So most of the foundation is being completed. You can see this is really -- I can say that in the last year that we say that seeing is believing. So this is really live that you can see the progress really fast in the ground today with a target to complete this by the quarter 3, 2026, first mechanical completions. We are actually strongly believe that we can deliver this. So at the same time, I can say we are preparing in mining. By mining, we're going to -- we're able to deliver the ore by January for sure, but the plant is going to be finished off by Q3. So this is like you can see living areas, okay, there, which is now the workers is already live there. Again, in total of workforce today in all of JVs is 13,000. It's going to increase up to 20,000 people for 3 projects in Bahadopi, Pomalaa here and also Sorowako. So you can see live there overpass, used to be that we had an issue on the ANTAM site so this been ANTAM already been finished off. So they're crossing and they go direct to the jetty, okay? Next, let's go to Bahadopi. Just to remind again, in Bahadopi, we have plant in Bahadopi and also plants in Sambalagi, which is about 30 to 40 nautical miles away. So we have to barge our ore from mining side to Sambalagi. In the right side, this is really live document that I took this from CCTV actually. So you can see mining phase there. We say this is [ Majesty and Royal Pit ]. And on those directions, those are actually the jetty site, okay? It's about 7 kilometers from the pit, go to the port of Morowali. I don't know. We can show also that live jetty there. We have 4, 5 actually jetty that barges can land there, which is -- probably if the video can be shown that there are 4 barges there, now is being loaded for us to deliver 2.2 million based on the RKAB that we have today. We almost finished all the facilities and all the infrastructure for Phase 1. And then we move into Phase 2 to expand for us to be able to deliver the limonite to Sambalagi next year, again, subject to RKAB, okay? So this is the mine site, I can say it's ready to go -- not ready to go. It's under operation for sure today for Bahadopi site. In the left side, this is in Sambalagi. This is on the 4th of October. You can see some of the constructions in the water fortification. HPAL is being leveling and also sulfuric acid also that probably in the next month -- sorry, those are -- actually you see the trucks is going actually to loading the ore into the 4 barges at the same time, okay? So our facility is ready for the first one of ore mining. You can see those actually. So as Pak Rizky said that we are pushing to deliver because of the price is really good for ore today, okay? The left side, as I said, actually, those are in Sambalagi. So this is also work in progress, is really fast I can see. I've been there actually last week and the plans to finish off this by Q4 2026, okay, in Sambalagi. There are some videos that show in the November. I don't know if we can -- here is still October. This is in the port side actually down below and those are actually in the plant site so about 1,000 hectares belong to [indiscernible] but 400 hectares for BNSI. This is -- okay, this is November. You can see there actually by October or July, those are actually living facilities, not there yet. But within 3 months, they'll be able to build it. And this you can see also by November, 1 month different. This is sulfuric acid areas actually that you can see they are actually really fast in building those actually. Therefore, from my side, we are actually strongly believe that we'll be able to deliver all of those 3 according to the plan or earlier than the plan, okay? Thank you. Those are actually the update from growth projects. So that's a live document. I think from my personal that -- we invite all of you to come to site to see basically what's happening in the ground. Thank you.

Thank you for your explanations, Pak Asril. Now coming back to Pak Rizky for financial updates.

Okay. Let's wait a bit until the slide shows up. But I think I don't want to talk about too much about third quarter financials, right? I think all of you -- most of you are already aware. But I think essentially, third quarter is actually a reflection of the previous efforts. You could see that in the third quarter in terms of profit, in terms of EBITDA generation, especially when we see it on a quarter-to-quarter basis, it showed quite a significant hike. And I think the reason being is because starting 1st of July, again, we shipped some portion already coming from Bahadopi site. We've reflected a new average selling price for the nickel matte with 82% effectively. We've increased the production of matte when we compare with the second quarter, which there was an incident at the time. And we believe that cash cost is still remain and will continue to remain as one of the key focus area. We managed it to be below guideline. Actually, I think last year, when we had this session, I provided a bit of a guideline of $9,500 for 2025. For third quarter, year-to-date, it was being managed and kept at below $9,100. We could see that the impact is actually reflected into net profit level, especially and also EBITDA. When we see from a year-to-date perspective, 9 months, it is higher when we compare with last year's position, even though that if we try to reflect back at the time, LME nickel price was still higher. So I think it reflects an agility in the sense that despite market condition, despite some effect in 2025 from a cost perspective because of regulatory issuances, there was increase in royalty, if I can just put it out there. There was an increase in cost for commodity input because of P40 implementation. However, we see that continuous discipline in cash costs and also a shift in mindset and business from a nickel matte focus to an additional volume -- significant volume from our ore selling. It is actually reflected in the third quarter position. Cash and cash equivalent, I could say that we're still in a comfortable position of $500 million, and this is actually excluding restricted cash. So we still have quite an ample amount of cash to work with. I wouldn't say this is going to be a permanent position, especially when it comes to '26. Later on, I will provide a bit of a guideline, which I think exciting in the sense that we are heavily expanding and we can see that this is going to be the first year 2026, PT Vale to be in that position, but it's going to be a productive debt. And as we approach the new mines, we can see the full potential of PT Vale going forward. And just a bit of a focus on the cash cost side again. So I think for nickel matte, it's quite manageable below $9,100. And for Bahadopi, you could see here that we actually can see quite a good cash cost, so $17 to $20 of cash cost per ton, but this already includes royalty. So to bring you a perspective, royalty probably at this point in time would take around $6 to $7 per tonne. So from a service contract perspective, from a mining perspective, you can deduct that number from this cash cost guidance. And for Pomalaa, I think it's too preliminary for us to see this year's number as a guidance. So one thing I can provide is that Pomalaa will come in a significantly higher volume. It will have a more strong resource base. So in a sense, when we translate that into a per tonne of nickel of cash cost, it's going to be more competitive even when we compare it to Bahadopi. Next slide. Okay. So I think the main idea of this slide is actually to provide you guys with a bit of a recap and also a bit of a guidance and highlight of what to expect to the closing of 2025. Today, I think we're in the mid of November, so it's only like 1.5 months to go. So far, what we've seen, and I think what we have been noticing not only this year, but I think starting from last year, nickel price continue to be in a pressured position. Production, there was a disruption and then cost pressure from a regulatory point of view as well was reflected in the first half, especially. But I think it tested the resiliency of PT Vale. We answered that with optimism. We challenged the status quo. So payability increase. We try to see lens from an efficiency point of view, be it from a cash cost, be it from a CapEx point of view. So I think in the previous earnings call, we've provided a bit of an update that from the previous FID for the 3 projects that we have, we've accumulated around $700 million of cost avoidance. So we've reduced around $700 million to $800 million of CapEx. Hence, what was supposed to be in that for us -- in that position for us this year, we're looking at a leverage position to be sometime around probably Q2 in 2026. So that's actually one of the reasons why we're still having quite an ample room in cash because we managed to reduce cash spend, especially on the project side of things. And Pomalaa and Bahadopi ore sales realized for this year, I think it's still -- it's a good number. It's a good starting point. Bahadopi is still ramping up. So $2.2 million from Bahadopi and then around $300,000, maybe $290,000 coming from Pomalaa. And of course, in terms of savings and uplift, we try to continuously see competitiveness across the board, be it from a procurement category, be it from how we do things on the ground to actually remain competitive, especially when it comes to cash costs. And as a bit of a guidance and also as a bit of a highlight for 2025, we see that we're quite on track to deliver the production of nickel matte around 71,000 nickel matte for 2025. And Bahadopi and Pomalaa will continue to ramp up and especially Pomalaa, we're trying to have on January 2026 to be the first commercial date of Pomalaa. And then nickel ore sales, we see that up until today, we're quite on track as well to deliver around 2.5 million of wet metric tonne of saprolite ore. The 290,000 coming from Pomalaa is already completed. So the only homework up until December is actually the 2.2 million from Bahadopi, which I think we're quite on track from a logistical point of view and from a contractual point of view. So we are quite optimistic in this progress. And growth, I think we've managed to secure the key catalysts. Asril already mentioned, virtually the progress on the ground. And I think it will be good if some of you -- or most of you can also come to the project, especially when it comes to next year. And I think the last one, of course, profitability. We are seeing a higher profitability figure, especially when we compare to the last year position of 2024. I think next slide is actually talking about the market and also business development. Pak Slamet will provide a bit of a context. But I think one of the most important points that Pak Slamet will try to elaborate is actually the long-term value of PT Vale. Pak Slamet is a veteran geologist, if I can say that, right? So what we have on the ground, the whole 118,000 hectare of concessional area, it provides a lot of future value, and Pak Slamet will guide us through that. Pak Slamet?

Thanks, Pak Rizky. Good morning, and good evening, everyone. A lot of slide has been presented to you more with the downstream process. It is a mining industry where we have upstream and downstream and lucky that we have everything, both downstream and upstream. From downstream, a lot of target has been planned and designed to process the nickel ore by using various technology both OESBF and also HPAL. But for the upstream, we need to have to ensure that the ore is available to supply without ore, without data or inventory of ore resource and reserve all the downstream process is nothing. So Vale is pioneering a next-generation exploration approach to unlock untapped revenue potential. I mean it is in the future. We want to have -- to ensure that life of mine is enough to supply the ore to the industry in the downstream. We aim to increase 2.5x of the current level. How to get this target achieved? By massive exploration to drilling, geophysic survey and all the instrument to collect the data as much as possible by increasing drilling spaces to increase the resource classification, infill drilling spaces to increase the reserve classification from probable to proven. And a part of that, we also targeted to discover new mineral resources that still in the greenfield, and it is drilling with spaces greater than 50 -- by 50 meters. And as I mentioned, we have limonite drilling. It is limonite drilling have to be done and inventory must be collected from the -- our drilling data because previously, we have limonite as a disposal that we need to optimize everything from the previous limonite and then will be processed using -- by using the new technology as well. And then how we do that, we allocated the exploration program from 2026 or next year until 2037 with 6,000 -- more or less average 6,500 drill holes and supported by 50 to 65 drill rigs per annum. And this is various program, including the research geoscience to support the drilling program. Next page, please. In terms of market outlook, we can see here that from the research report notes that persistent nickel still oversupply it is -- remain a challenge. It is until 2031, where oversupply still happen. And then supply continues to grow due to rising OESBF and also more HPAL plants to develop. And OESBF itself will be a big disruptor in the future. It is because of the low energy and then it can absorb a lower grade of the nickel ore. And then on the cost curve pressure at 15,000 tonne nickel price roughly 40% of global producers are facing negative cash flow. And then the current price is below -- less than 15,000 and then roughly 70% of the global producers are facing negative cash flow. Then the implication for INCO, short-term price weakness may persist, it is given oversupply and also rising inventory. And then cost pressure could lead to supply adjustment. Indonesia producers, including NPI Matte operators may face tighter ore supply. It is fortunate -- quite fortunate for us that we have ore compared to the IUE. We are IUPK. We integrated industry from upstream to downstream. And rising input cost, it is with a tight ore supply, rising input costs, which could influence the margin. Overall, PTVI position as low-cost producers and with audio baseline provide relative resilience, but mining sector dynamics and concerns around the existence of new government regulation, PPE28 2025, it is warrant for close monitoring. I think that's next slide.

Okay. So I think this is going to be the last slide. We try to allocate some time to have good discussion with all of you. Just a bit of a context. This is for '26. I think Pak Slamet just provided a bit of an understanding of the industry. But more important, I think the key point is despite the nickel price situation, despite the industry situation that we are in today and what we are seeing in the future, when it comes to the context of nickel, I think we're in one of the best, if not the best position to actually realize the value of nickel, right? Nickel price, we see, of course, it's still going to be in the current situation for quite some time, especially in the short to medium term, which is not a bad thing in the sense that how can we actually get the value, how we see this as an opportunity, right? When we talk about nickel pressure, it provides a lot of pressure in the intermediary side, but it actually provides a good opportunity when it comes to the oil selling side as well. And regulatory landscape, we see that, of course, there will be a full year impact for 2026, but I think we already have some initiatives in place to manage that in a good position in the cash cost-driven decision-making as well. And production next year, we covered a bit of electric furnace rebuild. So for next year, probably for nickel matte, it's not going to be 70,000. We've anticipated this. It's probably going to be hovering around 67,000 for next year, which I think is still a good number to work with, especially when we have around 4 to 5 months of absence in one of our furnaces. So we believe that 67,000 of nickel in matte production would be a good number to work with for '26. And project delivery, we can see that for the mining side of things, it will be live all 3 of them. So Bahadopi already started in July. We'll see quite a significant volume in Bahadopi next year. Pomalaa will be starting in January, and we will have a full year ramp-up for Pomalaa as well. A bit of a guidance, we've submitted our RKAB. So we actually submitted quite a substantial amount for the RKAB. But for a base case production volume next year, we are seeing around 20 million tonnes for a combination of Bahadopi and Pomalaa. And last but not least, I think funding requirements, right? It's -- we need to see it from an excitement point of view, right? Because when it comes to funding, it gives a signal that we're quite optimistic with the growth ahead. Hence, we're actually boosting it. We're actually funding it externally, and the market is actually in a good position to fund that as well. I think if you have been following the debt side of things, debt market, it's a good market that we have today as well with a good outlook going forward. And it's quite exciting that even from a loan perspective, even from a funding perspective, it reflects the value of Vale. We're aiming to have a sustainability-linked loan for next year. So in parallel, as Budi mentioned before, with the IRMA 50 that we're trying to achieve in 2026. On top of that, we're trying to look for a sustainability-linked loan for our funding side as well. So probably next year, it's not going to be a substantial amount, given the ample cash balance that we still have today, probably the maximum amount of loan that we will be drawing is around USD 350 million to USD 400 million. It's going to be a USD funding requirement as we speak. And I think as a focus, of course, we remain focused on cost leadership. When we talk about costing side of things, especially on Sorowako, because of the tonnage that will be reduced, of course, it will translate into a slightly higher cash cost per tonne, right? But we believe that it will be hovering still within $9,500 to $10,000 per tonne of cash cost. For Bahadopi, I think we've provided a bit of the actual cash cost for 2025. So the 17 to 20, it includes royalty, right? So when it comes operational, we can reduce at current price of probably around $7 to $8 per tonne. So that would be roughly the guidance for Bahadopi cash cost. For Pomalaa, I think since this is not yet operational, I would not provide a specific number. But again, just to emphasize, with a higher volume with a higher potential nickel grade, it would be very competitive when we compare Pomalaa with Bahadopi. So I think I would stop there. And just to give you a bit of a hint that Pomalaa is actually going to be the significant volume that we have in 2026. So I think with all of that, we're quite optimistic that even on the project side of things, we will be on track. So from 1 mine before, we will have 3 mines next year, from 1 smelter, probably all of the autoclave will arrive, and we will have the HPAL to be in mechanical completion, our first HPAL, the 120,000 tonnes of nameplate capacity in Pomalaa to be ready in hopefully, the third quarter or the fourth quarter of 2026. And then we will have the following HPALs to be live probably in 2027. So I think just to hold a pause there, right, from 1 mine, we will have 3 mines. Possibly in '27, we will have even our fourth mine because Sorowako limonite, as Pak Asril mentioned, it already showed a good progress as well. So from 1 mine to potentially 4 mines. And from 1 smelter potentially in the next 3 years, we will have 4 smelters with 70,000 tonnes of nickel in matte roughly per year. And also in addition to that, we will have around 240,000 tonnes of nickel in MHP, which we will be looking at 30% of contribution throughout the board. Next slide. Yes. Okay. So I think that is actually the last slide before we go into Q&A. I think I just want to thank you, all of you again for coming here. It shows that we are quite optimistic with what's going on ahead. We've tried to share this as frequent as possible to you in terms of progress. We can see that Vale is actually showing step-by-step progress, right? Last year, I think the last time we met, we were planning to open a site. Now we have a site, additional site. We were planning to sell some portion of ore selling. We're actually going beyond what we expected before. So I think despite the current situation of the industry that we have, history repeats, right? Commodity, it's a cycle. And I think with what resource and reserve that we have, with the cost leadership that we maintain and with a continuous focus in terms of spending and seeking where value is and how to actually deliver that and maintaining, of course, the focus of sustainability in our practices will definitely be one of the competitive advantage of PTVI. And we believe that we will still be relevant, if not even more relevant with the substantial volume going ahead and focusing on delivering not only profit, but how to balance it with people and planet as well. So again, thank you. Thank you very much.

Thank you, Pak Rizky. Let's give applause to our management first. Okay. So I think after this, we will divide into the Q&A session. So we'll have 3 sessions. For each session, we'll have -- we'll gather 3 questions from the floor and then also from online. So I think without due course, I think I need to invite if anyone of you have any questions, please let us know, please. Please mention your name and your institution.

My name is Ilham from [indiscernible]. I think I have 2 questions for now. The first one is that -- sorry, I think related to the -- your explanations about the RKAB of 20 million tonnes production from Bahadopi and Pomalaa mines for next year. Is there any constraints to -- for Vale Indonesia to achieve or to optimize that target maybe related to port capacity or trucking and et cetera? Or should we expect any kind of additional CapEx for this area for next year? My second question is related to your costs. You mentioned that your cash costs are declining for the third quarter. Is there any more drivers going forward for the cash cost to decline further? And could you give us some color related to your all-in sustaining costs, considering that I think the company is still investing in some -- still spending in some area on the new mining as well as on the rebuilding of the electricity furnace. So should we expect the all-in sustaining cost to still increasing for 2026? I think that's my questions.

I think we better answer the question sequentially. So there are 2 questions. Number one is logistic constraints with regards to achieve production from Pomalaa RKAB. And then the second one is about the cash cost.

I think I'll try to answer the costing side of things that later the management can add. So Ilham, the question is the first one for RKAB constraint. So the 20 million is a base case for us. So what we actually submit and I think we wouldn't go actually to the exact number that we submit, but it's much more than that. So 20 million is actually the base case that we, as a management, try to anticipate. When we talk about potential, especially when we talk about a full year production ramp-up, when we talk about the possibility from a logistical constraint as well, it is much higher than that. So the number that we submit is higher than 20 million. But we are saying that the base case for us from a management point of view as a base case is 20 million coming from both Bahadopi and Pomalaa. From a CapEx point of view, yes, there will be more CapEx, of course. Next year, we're looking around probably $700 million of CapEx next year. Majority of it still on the mining development side of things for both Pomalaa and also Bahadopi, right? And we see that in terms of CapEx drawdown, it shouldn't be a problem because what we see so far as a trend is actually in an accelerated trend. And the second question, I think it's on cash cost for the fourth quarter. So I think for the third quarter, we're seeing a really good number, right, $9,000 -- around -- below $9,100 year-to-date position. In Q4, unfortunately, there's a furnace rebuild that's already started since last week. So when we talk in a relative term, especially when it comes to per tonne basis, with the reduction in tonnage, it will be slightly higher when we compare with the third quarter. But as a guidance, again, we're quite optimistic that it will be well below $9,500. What we're seeing probably as a guidance, it's going to be hovering around $9,250 to $9,500 as a year-to-date position for nickel cash cost. And for all-in sustaining costs, yes. So we're looking at sustaining cost to be on track as well. What we see is for sustaining CapEx for the year, we will probably spend around $155 million of sustaining CapEx, right? And with that, I believe all in C1 plus sustaining costs, we will still be below $12,000, probably $11,800 or $11,900. So in terms of that $150 million amount, it already captures the furnace rebuild, some portion of the furnace rebuild. And there will be an additional portion, of course, in next year for furnace rebuild since we have around 4 to 5 months for 2026. Maybe Pak Asril, some additional comments.

Okay. Thank you. So if you can go to the last pictures, I'm going to show that in Pomalaa. So basically, for talking about the logistics side relative to the availabilities of our infrastructures to delivering the RKAB 2026. So this is an example that this is the JT that there are -- I don't know how to show that there are 9 JT that's available for us there -- for us to be able to deliver -- here we go. So there will be 6 here landing barges and also there will be 3 here, so 9. So if you're going to deliver, let's say, 7 million or 6 million tonnes of ore delivered out coming from Pomalaa, we're going to use this being agreed to our partners to use this include some facilities of stockpiling somewhere here. And in the future, this is going to be like a stockpile for our delivery in board actually. Those are saprolite, for example. For limonite, actually because of the plant is basically close to the mining. So we only delivered the ore to HPAL area, which is basically in the mining side. So we actually the plan for full production is about 21 million of limonite delivered to the plant from mining side, which is very close by. So logistic-wise that I mentioned earlier that we are basically preparing today, which is part of the CapEx in mining as well. In Bahadopi site, I show you also the JT. Those are actually JT capacity is about 5 million to 6 million. And then we are actually progressing to expand to go for the limonite delivery to Sambalagi, which is work in progress as well. Our plan is to finish off 2 or 3 additional barges -- sorry, JT is in second half of next year. So in total of RKAB that we are planning next year is basically we are preparing at the same time also logistics include road and also the JT is available today, which is part of the CapEx.

Okay. Anyone else from the table, same table...

This is Cynthia from Latvia. So maybe I want to ask about there's the new [indiscernible], which states that a moratorium for MHP. And there has been also talks about like other commodities being taxed for exports. So are you mitigating the risk of that happening to MHP? And if that happens, do you consider a plan to build converter from MHP to sulfate? And have you done a due diligence on what sort of CapEx are we looking at? What sort of like increase in payability are we looking at from like selling MHP to nickel sulfate? Yes. That's my question.

Yes, I've already anticipated this kind of question actually for this session. Yes, but I think it's quite new, right, [indiscernible] is quite new. There are several viewpoints, right, to see this. I think the first one, it shows seriousness of the government in terms of protection of industry, industry protection in that sense. It shows that it still remain as a focus also from the government to look at those specific commodities specifically. But I think for us, at Vale Indonesia, we see this as an opportunity, right? When we talk about the 240,000 nameplate capacity, we already have that IUI in place. So when moratorium is in place, it's actually a downside protection, right? Because then we know that there will be a much more strict and much more serious attention for new issuances going forward. For us, we're in a fortunate position that we already have that license in place. So what we see in that sense is it's actually going to provide -- it's going to provide a downside protection in terms of the investment that we have on the downstream side of things. But when it comes to future pipelines outside of the 3, it will be an ongoing discussion that we will have with the government. We've noticed that there are some potential areas where I think we can do that if we do it in industrial park. I think there's an opening as well if there is a further downstream to do some product, if I'm not mistaken. So I think it will provide an impact for the pipeline beyond what we have for the 3 HPALs. I think as Pak Slamet mentioned, we still have a lot of resources that we can still underground, we can still optimize in terms of value and also in terms of potential investment. But I think it's still early, and we're trying to understand also what would -- in terms of structure can be workable. But again, for the existing pipeline, it's more or less -- we see it as a downside protection for our existing HPAL pipeline. And for the tax export, yes, we are still trying to study, to be honest, with the tax export. What we see, of course, it's focused more on the gold as a commodity. I think that is quite clear in the narratives outside. We see a potential of impact if that is actually being implemented. But in our view, probably there will need to be further iteration. I think what's good is that something in terms of royalty discussion, in terms of export rate discussion, in terms of previously the GMT case discussion, there's a discussion in place, right? So as of today, I can safely say that it's still quite early. There is no significant development that can be seen as a guideline. But I'm quite optimistic in the sense that I don't think the government is trying to kill the industry. Billions of dollars of CapEx -- we're talking about billions of dollars of CapEx here, right? So I believe there will be a good series of discussion going forward, and we will keep you up to date.

I'm from Marissa from [indiscernible]. Maybe regarding the reserve and resource upgrade, I understand that in the slide, there is like 2.5x potential upgrade on the resource and reserve. Can you share the time line? When will be the announcement for the resource and reserve update? Is it will be like yearly or quarterly or something like that?