International rating agency S&P Global has upgraded the credit rating of the Almalyk Mining and Metallurgical Complex (AMMC) to ‘BB-/Stable/–’ from ‘B+/Stable/–’, Trend reports.
The upgrade reflects the recent improvement in Uzbekistan’s sovereign rating and S&P’s reassessment of the likelihood of government support to "high" from "moderately high."
According to S&P, AMMC is preparing to launch one of the largest industrial projects in Uzbekistan—a nearly $5 billion copper and gold mine with an ore-processing facility developed under close government supervision. Upon commissioning, the initiative will significantly augment the enterprise's ore-processing throughput, effectively more than doubling its operational capacity. Simultaneously, AMMC is orchestrating the construction of a novel copper smelter, highlighting the regulatory bodies’ proactive engagement in sculpting its strategic evolution.
In light of the buoyant valuations for gold and copper commodities, S&P has observed that AMMC's independent fiscal metrics continue to lag behind those of its industry counterparts. The agency anticipates that the funds from operations (FFO) to debt ratio will remain within the 20-30% bandwidth, given that significant capital expenditures and dividend distributions will constrain deleveraging efforts. Dividend disbursements are projected to contract from a full 100% of net earnings to 80%, yet they will continue to augment gross and adjusted leverage, underscoring the jurisdiction's dependency on the firm's fiscal allocations.
The stable outlook indicates that S&P does not anticipate a rating change over the next 12 months. The agency expects that, as the new copper-concentrate facility ramps up, AMMC’s production volumes and EBITDA will grow, while its credit metrics remain broadly in line with the current rating category.
S&P sees several risks that could trigger a downgrade. These include a marked increase in debt; operational setbacks that reduce output and EBITDA, for example, if gold or copper prices fall; or a deterioration in liquidity if internally generated cash flow is insufficient to cover upcoming debt maturities and investment needs.
An upgrade is viewed as unlikely in the near term. S&P would consider raising the rating only if AMMC significantly reduced leverage, scaled back investment spending, and started generating sustained positive free operating cash flow, supporting a stronger stand-alone credit profile.
In its qualitative assessment, S&P notes that AMMC’s issuer credit rating is ‘BB-/Stable/–’, with a stand-alone credit profile of ‘b+’. The company’s business risk is assessed as weak, country risk as high, and industry risk as moderately high. Its competitive position is viewed as fair, while financial risk and leverage are considered aggressive. Liquidity is assessed as adequate, and management and governance as moderately negative. AMMC benefits from a high likelihood of government support, which provides an uplift to the stand-alone profile, while the final rating remains aligned with Uzbekistan’s sovereign rating of ‘BB’.
