In a historic move, S&P Global Ratings has assigned its first-ever credit rating to the Navoiy Mining and Metallurgy Combinat (NMMC). The company received a long-term credit rating of “BB-“ with a stable outlook, matching Uzbekistan’s sovereign credit rating. Additionally, NMMC’s standalone credit profile is rated “BB+”, the highest rating ever awarded to a company in the country.
According to the press release, NMMC produced 2.9 million troy ounces (90.2 tons) of gold in 2023, ranking it fourth globally. The company aims to increase production to 3.1 million troy ounces (96.4 tons) this year and reach up to 3.5 million troy ounces (108.8 tons) by 2030.
The production cost of NMMC’s gold is currently $745 per troy ounce, one of the lowest among gold miners. This efficiency is attributed to cheap labor, high-quality ore, a well-developed production base and service infrastructure, and predominantly open-pit mining methods.
S&P assessed NMMC’s financial condition as generally stable. The company’s credit load remains low, with an operating income to debt ratio of 60%. In 2023, NMMC’s EBITDA was $3.3 billion, and it is expected to increase to $4 billion in 2024 due to high global gold prices.
NMMC hailed the credit rating as a “historic event”. Yevgeny Antonov, First Deputy General Director for Transformation, highlighted that S&P’s release is a significant milestone for the republic’s largest enterprise, enhancing its access to international capital markets and increasing its global recognition, indicating successful reforms and transformations within the country and the company.
Despite this, S&P warns that NMMC, as the largest taxpayer in Uzbekistan (contributing 16.7% of the state budget), is in a potentially vulnerable position. NMMC is not insulated from negative government interference, as the state owns 100% of the company’s shares. Currently, the company’s mineral resources are estimated at 148 million ounces (4600 tons), with 60% of production coming from the largest deposit, Muruntau-Myutenbai. Any significant accident there could substantially impact production and revenue.
Another major risk factor is the environment. Dwindling water resources could become a “particularly sensitive issue” for NMMC, given its operations in the Kyzylkum desert. Most of Uzbekistan relies on water from just two rivers, the Amu Darya and the Syr Darya, along with their tributaries. Rapid population growth, intensive agricultural and industrial water usage, significant water losses, and glacial melt could make water one of Uzbekistan’s scarcest resources in the short term, S&P noted.
