Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the century aluminum third quarter 2019 earnings conference call. At this time all participants are in listen only mode. Later, we will conduct a question answer session instructions will be given at that time.
If you should require assistance during the call. Please press Star then zero and as a reminder, this conference is being recorded I would now like to turn the conference over to our host Mr. Peter Trpkovski. Please go ahead Sir.
Thank you very much Greg good afternoon, everyone and welcome to the conference call.
I'm joined here today by Mike Bless century's, President and Chief Executive Officer in Craig can eat or executive Vice President and Chief Financial Officer.
Sure prepared comments, we'll take questions.
As a quick reminder, today's presentation is available on our website www dot sentry aluminum dot com.
We use a website as a means of disclosing material information about the company and brick complying with regulation D.
Turning to slide one of today's presentation. Please take a moment to review the cautionary statements shown here with respect to forward looking statements and non-GAAP financial measures contained in today's discussion.
With that in the called a month.
Thanks, very much feed and as usual thanks to all of you for joining US late your afternoon. If we could just a flip to page three please I'll give you a rundown of the last couple of months I'm. Just a couple of minutes Craig will give you detail on the results for the third quarter, but let me just make a couple of quick comments before we get started.
The results for the quarter came in just where we expected with one exception we had significant aluminum quality issue at Hawesville that began to cause real disruption to the cells late in the summertime.
And that compelled us to make the decision to shut the last remaining continuously operating potline just a couple of months earlier than we had originally plan.
This resulted in us I'm missing volume and a little bit added cost for the quarter and I'll give you some more detail on the Hawesville restart program in total and this alumina quality issue and just a moment.
Otherwise the company's operating quite well all the plants, we continue to see excellent management up controllable costs and type working capital management.
Companys financial condition remains strong.
As Craig will detail and as Weve long expected, we'll see a significant decline in the realized alumina cost in the fourth quarter results.
And even at recent metal prices this will produce a meaningful improvement to EBITDA in the fourth quarter.
We're already seeing that impact in a declining working capital balance again, Craig will take you through that.
He is going to give you some data on industry fundamentals and just a couple of minutes, but let me just make a couple of quick points to put the rest of my comments into perspective.
Goes without saying that geopolitical conditions haven't gotten much clearer since we reported Q2 results to a couple of months ago.
Obviously, we've seen some recent developments trending in the right direction, but that said significant uncertainty continues to hang over manufacturing activity and obviously financial markets in general.
The impact on commodity evaluations has been obvious the metal price has been trading it up depressed level and then a recently narrow band.
And obviously in our view, it's too early to determine if the recent movement denotes a trend.
And the physical market, we've seen reasonably consistent slot signs of slowing growth in some key end markets in both the U.S. and in Europe .
And the data show that actually the growth began to slow earlier than the year, then perhaps was understood until recently.
Where you saw a slowing order rates throughout the value chain.
Of course, some sectors have been hit harder than others. For example, the conditions in the automotive industry have been well reported.
And our market specifically the situation is felt most directly in product premiums.
Again, it's been very well reported in the industry value added product premiums will be off meaningfully in the U.S. and in Europe in 2020.
This is doing due to slowing demand, but also to an increase in imports, especially in the U.S.
We think it's important to keep in perspective, where we are now from a relative standpoint, if you go back and look.
Todays conditions aren't even approaching what we saw in the last two difficult cycles, obviously, those being 2015 going into 16 and of course 2009.
And obviously the macro backdrop as much healthier, especially in the U.S., but you've got employment interest rates consumer spending other key factors still at healthy levels.
These factors reinforce the thesis that conditions could improve reasonably quickly.
That all said, we think it's prudent to prepare for a prolonged seer period of softness conditions over the next couple of quarters.
Moving along as expected the slide in the alumina prices continued we've been talking about this for some time.
The new supply has been coming along as expected, notably in the Atlantic Basin.
Of course general macro conditions aren't providing much underpinning to the aluminum price.
All that said, we haven't seen any meaningful smelting curtailments yet.
And if any of these were to occur we think the alumina price because that significantly further to fall.
At this point the alumina prices within a range, we consider to be within the long term fair value.
The current index price represents just under 16% of the metal price.
Price development of other key inputs in our business continues to be favorable coke prices continue to ease and U.S. power prices remain attractive, especially the commodities to which were expose those are obviously wholesale power prices in the Midwest and the price of natural gas.
Let me just take a step back now and as promised and talk about the Hawesville restart program.
To some background those of you have been following the company for sometime now while this plant has five potlines equal each produced 50000 tons when producing fully.
As you know in late 2015, when the commodity price started to fell precipitously, we curtailed three of those pot five potlines. They were all down by the end of 2015.
The remaining two have continued to run well past the approximate five year service life.
Again as you know in March of 2018, we announced our intention to restart the three lines that had been curtailed.
These all required to full rebuild that they were also well pass their service life.
The process of rebuilding and restarting. These three lines were completed per the original schedule with a third line, becoming fully operational earlier this year.
Then again consistent with the original schedule, we took down the first of the two lines that have been continuously operating that happened in the spring right. When the third line came back up.
The rebuild the that in essence here fourth line is on schedule, we expect to begin to restart those cells in January .
In line producing at full production by the end of the first quarter and if that's what we'll have full four lines operating so the plan, obviously will be at 80% of capacity four or five lines.
As a reminder, as we told you last time, we had hoped to keep that lasted the to continuously operating lines in essence, the fifth line here going for as much as 2019 as possible hopefully into December right before it was time to start restarting Thats fourth line.
Cells were at this point or are at this point.
Over six to eight years old so very fragile way past their service date.
At the end of the day as I said, we made a decision at the end of this summer to curtail the remaining line.
A very poor quality alumina supply cause these already fragile cells to become unstable.
And we made the decision proactively and prudently in our opinion to disconnect. This line before experiencing any safety or certainly any quality problems that would manifest.
Themselves with our customers again. This was just a couple months before we had originally intended to take that line down.
And this is the reason as I said, what production and shipments look a bit light in Q3.
And Craig will give you all the details of the full financial impact of that poor quality aluminum in just a couple of moments.
Positive now performing much better, but it took a couple of months to get the plant out of the soup.
The other plants are performing well as I said in just a couple moments I'll give you a detail on on the operations as I normally do.
Lastly, before we move along we had an encouraging development at Mt. Holly. This quarter. This is on the long running process as you know to achieve full access to the wholesale power markets.
He may have noted that the city of Goose Creek announced in early September that the city Council had voted to hold the referendum to forming municipal utility.
Our plants, it's on land that is just contiguous to the city. It goes Creek.
The vote is vote of the citizens is scheduled for early December end, if approved under state law that new utility would have the right to serve Mt. Holly.
As a reminder, and again as you know the plant is currently has been for several years now running at half capacity.
And for the power to power that have plant that half of the plant we have been purchasing 75% of the power acquired from the competitive wholesale market.
And 25% from the legacy power supplier.
The natural gas generated wholesale power is priced in the attractive part I either lower part of the second quartile on the global power cost curve to smelters.
But the legacy power that is squarely in the fourth quarter to almost doubled the price of the wholesale power.
And that's the weighted average of that mix puts us in the third quarter. Allen. This is the reason the plant obviously has been running at have capacity now for the last four years.
Service from the city utility would be 100% at the wholesale price fully at the wholesale price.
And that would enable the restarted the second pot line and a return to full production capacity.
Lots still has to happen water requirements have to be satisfied, but we're really excited about this opportunity.
And 60, if it were successful of course that would allow this excellent plan to operate as originally designed.
And with that I'll turn it over to Pete talked about the industry. Thanks, Mike If we move on slide four please I'll make some comments during the current state of the global aluminum market.
The cash I'll, let me price averaged 17 61 per ton in the third quarter.
Which reflects a 2% decrease from the second quarter.
Aluminum prices at an average 17 30 per tons. So far in the current quarter and are currently sitting around 18 15 per ton.
In the third quarter regional premiums average approximately 17.8 cents per pound in the us down 6% quarter over quarter and $153 per ton in Europe , an increase of 5% from the prior quarter.
Spot premiums are around 17, five cents per pound in the U.S. and $140 per ton in Europe .
In the third quarter of 2019 global aluminum demand was flat as compared to the year ago quarter.
We saw demand contraction in the world ex China at approximately 2%.
And approximately 2% demand growth in China.
Global production growth was down a modest 1% in the third quarter year over year.
We saw about 2.5% net production increases in the world ex China.
While China production fell 3% year over year.
As a result for the third quarter of 2019, the global aluminum market recorded a deficit of approximately 500000 Tom.
Looking forward for the full year 2019.
Continue to expect to see a global supply deficit of at least 1.2 million tons.
Despite softening demand the global deficit has led industry stock levels to decline to levels, we haven't seen in more than a decade.
Industry experts see global inventory days of primary aluminum consumption falling below 60 days during the fourth quarter.
And with that I'll hand, the call back to Mike.
Great. Thanks.
If we can just flip to page five couple of quick comments on the operations before I turn it over to Craig.
Most importantly, we have another good quarter in safety performance across the company.
Don Holley in particular continues to perform at a really high level. They notched another quarter of zero recordable incidents, we really just couldn't be more proud of the team. There. It's just it's fantastic to see.
On production volume at Hawesville, you can see the decline there most of that decline was plan again that was the impact of taking that fourth pot line in the first to the two continues the operating pot lines.
In the spring as originally scheduled but a couple of points. There again is the impact of taking that fit line down a couple of months earlier than we would otherwise planned.
You also see a small issue at a small impacted seebri same thing same alumina supply goes to see we that goes to hawesville.
Production metrics off meaningfully at Hawesville during the quarter as I said the plan is now almost back fully to a stable condition.
Plants are very good shape.
Pardon.
Production costs again, you see the impacted the poor quality aluminite hawesville. It manifests itself in two ways. First obviously you have the lost production. These data again, our stated on a per metric ton basis. So you see the impact of the lower fixed cost absorption from the couple of thousand some lower today than we had planned.
Then you had some increased maintenance and other spending during the quarter as we as we spend some money to remediate the situation again thats behind us now.
Probably the little bit of an aberration here that is Mt. Holly continues to do an excellent job on cost control as you remain may remember the first two quarters. We showed you that Mt. Holly was running significantly below its maintenance budget for the year. They had some deferred projects as plan now they've they've begun to catch up in some of those projects. So the maintenance cost is going back.
Still below budget, but back to closer and closer to a normal spend rate cc. The conversion costs up a couple of tens of dollars a ton. That's all that is for the quarter.
And with that I'll give you to Craig.
Thanks, Mike.
Let's turn to slide six and I'll take you through the high level results for the third quarter.
On a consolidated basis global shipments were down 2% quarter over quarter. This reduction was largely driven by reduced production of the legacy non rebuilt Hawesville line, which was impacted by poor quality alumina as Mike detailed earlier.
Realized prices were down 4% as a result of lower lag LMP prices.
Looking at operating results adjusted EBITDA was a loss of 12 million this quarter and we had an adjusted net loss of 37 million or 39 cents per share.
In Q3, the primary adjusting items were at 10.1 million unrealized gain on derivatives and 5.7 million of net realizable value inventory adjustments.
Additionally, we had a 1.4 million adjustment related to the historical seebri equipment failure.
As of Q3, our total recovery has been $15.8 million.
As we've mentioned previously we will continue to call out the associated TNL impacts and cash receipts as they occur.
We expect to receive the balance of the claim proceeds in the coming.
Our liquidity remained strong with 200 million of funds available via a mix of cash on hand and credit facilities.
Availability under our revolving credit facilities remains robust at $178 million all revolving facilities were undrawn at the ended the quarter.
Okay, Let's go to slide seven and I can walk you through a quarter to quarter rage of adjusted EBITDA.
The 24 million decrease versus Q2, adjusted EBITDA of 12 million was largely driven by lower LMP prices as we forecast on our last call and the proactive decision to curtail the one remaining legacy line at Hawesville as Mike discussed earlier.
On a realized basis now let me was down $72 per tonne. The us Midwest premium was down $17 per ton and the European duty paid premium was up $19 per company, which in some drove 15 million of decreased EBITDA during the quarter.
The Q3 realized alumina and aluminum price of 390 $390 per tonne was essentially flat with Q2 levels given the lag nature of pricing and timing of deliveries as we forecast on our last call.
Our realized alumina price will meaningfully decrease in Q4 as lower cost alumina has consumed in the production process.
As Mike discussed their curtailment of the legacy Hawesville line, largely driven by poor quality aluminite damaging the R&D end of life fragile sales negatively impact in Threeq EBITDA as compared with prior quarter.
Production at our Hawesville facility was about 6000 tons less than Q2 and drove 4 million of volume related EBITDA degradation.
In addition, nearly 3 million of increased operating expense was incurred primarily on the legacy line as a result of decreased deficiencies driven by the usage of poor quality illumina.
Looking ahead to Q4, specifically.
The lag LNG is down about $30 per continent, and the lag us Midwest premium is down $20 per tonne, while the European delivering premium is essentially flat Q3 levels.
We expect our realized alumina cost to be materially lower than Q3, with a realized value of approximately $325 per ton.
These items translate to a net increase of approximately $20 million to $25 million and EBITDA from Q3 levels.
Let's turn to slide eight and we'll take a quick look and cash flow.
We started the quarter with $26 million in cash and ended September with $23 million.
During the quarter, we had $19 million of Capex spending $13 million of which was related to the ongoing hawesville restart.
Working capital was a sizable inflow for Q3, primarily driven by the continued decline in alumina prices.
To close out today's presentation, we'd like to revisit the discussion we had last quarter regarding aluminum pricing and how it impacts our business.
As Mike mentioned earlier, we believe that the spot aluminum price with respect to be let me is in the range of what we consider to be long term fair value.
The spot movement up price of $283 per tonne represented 15.6% of today's LMC price, which was which is within the historical range of 15% to 17%.
On page nine we wanted to illustrate how the current spot price for aluminum could impact our business.
As we pointed out earlier, our Q3 adjusted EBITDA was a loss of 12 million with a realized alumina price of $390 per ton.
Adjusting for the spot alumina price of $283 per tonne with all else remaining constant EBITDA would increase by 37 million for a total of $25 million.
Please remember this is an illustrative example, using Q3 as a starting point and is not intended as an outlook for particular future quarter.
In short recent spot pricing will continue to benefit our PML materially in the near future due to the lag nature of aluminum pricing and consumption.
This concludes our prepared remarks. Thank you for your time attention I'd like to turn the call back over to Greg to be grades to begin the Q1 day session Craig.
Thank you, Sir ladies and gentlemen, if you'd like to ask your question. Please press one than zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command.
If you're using a speakerphone please pick up the handset before pressing the numbers. Once again, if you have a question you may press one than zero at this time and one moment. Please for our first question.
Yes.
And we first turn to line up Lucas pipes with B. Riley fiber. Please go ahead.
Hey, good afternoon everybody.
Okay Lucas.
First wanted to follow up on Hawesville and I wondered if you could provide us with a little bit more color as to the cadence of to restart from here on out so.
I assume utilization rates will be close to now.
Here in the in the fourth quarter and then.
How is it going to be ramping up Q1 Q2 Q3.
Over the course of next year. Thank you very yep Yep. Thank you great question, So I think I.
And rephrase your.
Your assertion about utilization rates in Q4, so what would I think you'd probably meant was.
Was the plant will be operating with threefold potlines going so in that perhaps the way you're defining it 60% utilization rate. That's it that's an annual run rate of roughly 150000 tons and neither of the two currently curtailed pot lines will be producing this quarter then go into Q1.
We'll have one of those lines as I said beginning to restart at the beginning of the corridor, finishing that restarted the ended the quarter, it's really tough to tell kind of where do you reach the midpoint, but you can you can just to sort of pencil it out roughly half of a line producing somavia utilization rate there obviously somewhere between.
I mean.
Pardon me 60, and 80%, maybe something just shy of three quarters.
Then thus far as Lucas we haven't made a decision exactly when the the last line will be restarted. So so at what we what I'd rather do there is when we as you as you know normally when we report.
Q4 earnings Ari.
That would be in in fab in February of this coming year, we'll give you the answer to that question in our full production cost and Capex and SG unite all of our all of our metrics for the coming either.
But that should give you enough to work with hopefully for Q1.
That's right that's very helpful on the USA space I associate at.
I.
Do you want to follow up.
You just mentioned you want to give more detail on the Q4 call, but I want to give it a shot can you kind of felt from same question, but capex and opex.
Rough rough guidance as to how the restart schedule as as an impact on those metrics.
Yes go ahead.
Lucas High I know, where you're going with that one and I'd really rather come back after we've done our full internal roll up and that this through we're still little early in our cycle to be anything and be able to stick.
Yeah, I mean, we'll provide you all the detail than we have in the past in February obviously, just at a high level, you're going to have alumina that's way down its ray other commodities are going to be down nicely powers, probably going to be flattish to down a little bit other costs will be really flat ish and then on capex as normal.
The maintenance Capex sustaining capex, however, you want to define into the four plants inclusive and the corporate ita spending.
With that normal run rate of around $20 million hasn't changed at all and then the real.
The real.
Flip there will be well when we spend the the last capital to to rebuild that fifth line that at Hawesville, but that gives a little bit of foreshadowing rightfully, but I I, realizing with apology, probably not the precision that you're seeking.
Hi, I appreciate the color Nonetheless, thank you for that.
Quick.
Switching topics quick question on Mt. Holly interesting developments there.
And it sounds like there's still some some wood to chop and obviously not not not in your control, but can you give us sense of rough timeline, if things were to play out favorably how quickly could things.
Moved favorably for ammonia sure. That's a good that this is a good that's a good question in the first a fact just to remind you of is that the current contracts floral I'd a for the for the wholesale power and be for the legacy power goes through 2000, they they expire in deck 20 at December .
2020, so so that would be the quickest that it would.
Revert to a 100% market power would be say January of 22021.
Because I did this probably it's probably not feasible that either the to current contracts would that would change materially during their pendency other than that it's really tough to tell you know we're convinced that.
The work that we can control on our side.
And that more important to obviously because very little of it has to do with us that the city can control on their side because it's their utility that theyre, establishing we would just be a customer.
Can get accomplished during that time period in fact, certainly comfortably during that time period. It's just trying to guess what all the other twists and turns in the process might be is.
It's difficult, but I would say got into our it sort of base case, if all goes Jana 20 on January 21.
Oh interesting.
Well this is a great development and I wish you best of luck in that.
Good to see thank you very much.
Thank you so much.
And our next question comes from the line of David Gagliano with BMO capital markets. Please go ahead.
Okay. Thanks for taking my questions I just wanted to follow on Lucas is one of those discussions about.
The timeline on Hawesville, a the fifth pot line.
I realize that.
Are going to be covered more in February but is it still in the plan for 2020 as it has been previously communicated at some point 2020, it will be restarted.
Yes, David absolutely. So just to give you. Thanks for the follow up so so if we did it.
And please don't take this is foreshadowing they look as I said will give us yards fab, but if we did it like we've done the other than lines then as so the cadence somebody else used that term I think it's a good ones.
As the fourth line is coming back we start rebuilding the fifth line and that rebuild process. As you know it takes a couple of months 456 months and then as soon as that rebuild was done you you start rebuilding [laughter] restarting the sales which takes another three so if you read.
Started it around the same time as we restarted the other lines as the line before that it's come on you know it's kind of light.
Serially sort of a nine month process. So it would be restarting in the fourth quarter of a 20.
But you know it's kinda, it's that's dependent on that that if hopefully that gives you some sense with it would be some production in in 20 from it but.
Not a ton not a lot.
Okay, Okay, and I mean, how has that thinking just I means I don't want harp onto my for has nothing changed since you know in the last three months or no currently or no.
No it has not and Uh huh.
Only reason it would change David is if market conditions deteriorated meaningfully and if anything I guess this maybe is a little foreshadow if anything of course.
We got to trend Thats, a week goal, but if anything they've improved.
So that would be the only reason I'll underscore only underscored a couple of times that we would defer the rebuilding restarted that fifth line, if if things got really really ugly.
Okay Fine. Thanks, and then just just moving on the commentary on the fourth quarter.
I was trying to write downs, because I could I think I think I got it but so we had alumina coming down obviously Midwest premiums coming down as a partial offset and the comment was basically net to increase of 20 to 25 million in EBITDA versus Q3 for those moving parts is that note we know.
No not the increase in go to slides credit go ahead go to slide nine well Craig is starting to gear up here go for it yeah.
The things as you're walking so what I was doing there I was walking from Q3 to Q4 days, Okay and another part of this that you'd maybe it didnt make explicitly call out and bridge there we talked about the impact of of hospitals. So as we went from Q2. The Q3 right. We saw a 4 million of negative volume impact.
And then we had to take down or curtail the legacy line early and we saw about 3 million of operating expense impact from running that poor quality illumina, primarily through that legacy line most cost won't recur in the fourth quarter.
Okay.
So that should get you closer to that increase so if you're a is it just to be clear if you're looking at slide nine David.
Minus 12 was the actual quarter. We just reported that includes a detrimental impact of Hawesville that 7 million that Craig to occupancy is a big chunk of that back all else being equal and then just marking the aluminum at a market alone you're going to get another 37, and then that's going to again that the illustrative quarter here.
I would kitsch out to minus 12, plus 37 is at 25, that's right then you'd add some amount of at Hawesville seven back to that 25, and then just to give you a sense you didnt ask but may be somebody's wondering.
The realized Ellen made a two month lag delome in the quarter. We just reported was about 17 75.
So if you were to also mark that you can use a sensitivity that we provided the back of this deck here. If you actually wanted to mark that it's about 35.
40 bucks above that today. So if you wanted to have them mark that the market quote unquote as well you'd have an uplift in that pro forma or less to get results also.
Craig Okay. That's helpful. Just to that's helpful. Thank you thought last piece, but just to come back to the my.
Clarification question.
I I prior to talking about slide nine I I'm pretty sure. There were some comments regarding Q3 bridging to Q4 would you typically provide every quarter right and I Oh I got confused.
Sorry, I thought it was argon.
Gogo I apologize keep going.
Well no I'm, just trying to clarify, though my comments there weren't a shortlist 20 to 25 million in Fourq versus Threeq. So I thought he got.
Got it Okay. David are you. Good are you want me to go back note go through it again no would you mind I jumped up yeah. You bet you bet. Okay. So the lag Delome now. This is this is Q4 versus Q3, the lag delome is going to be down about $30 per ton.
Lag us the west premium is down about $20 per ton.
European delivery premiums are flat versus Q3.
In one of the bigger movers and is our realized alumina price, that's going to $325 per tonne right and thats bridging from 390 or $390 per ton realized in the second which gives you an into third quarter, which gives you how many millions that difference as Dave.
The impact from.
We can do we had about 20 to 25, just on Illuminati ago, and that's about a hit about seven to 10 on I'll, Let me in sort of what's missing here is what Craig started with which was the hawesville impact of about 7 million.
So David I'd sent to you is straight I didn't realize you were trying to bridge Q3 to the changes that we gave going into Q4. So that's that's what it is so they're the as Craig correctly said that lagged and let me right lag because you're talking now about prices.
ER August September October prices early October prices is down a couple of tens of Butcher and just just to finish the thought when you plug in that LMP Midwest premium the into realized alumina.
Thanks to the 2025 increase that I'm talking about you also have to take out the Threeq you onetime impact for Hawesville, which was $7 million formulated Atlas volume $3 million that was opex from the for from the poor quality aluminum.
Okay.
So just to summer highs I think I haven't right and I apologize okay.
But just summarize started a minus 12 goes up by 20 to 25 when you do all that other when you when you that plus 20 to 25 is the sum of all is the net result, correct incorrectly.
Okay. Thank you that's that's all right I'm wondering do the other question I just wanted to ask tied to that was are there any other moving pieces.
Yes, such as volume that we need to be thinking about Q4 versus Q3.
Is the short answer the short answer is no I mean, we're going to have more volume in Q4 than we had in Q3.
But materially no no there's no material moving pieces in the one we just went through.
Okay. Thank you.
Thanks, David.
Yeah.
And as a reminder, if you'd like to cure for question. Please press one than zero.
Next we turn to line of John Tumazos with John Tumazos Research. Please go ahead Sir.
Thank you for taking my question.
Joel.
Do you think proposed I want to me a inventory accounting rule.
Well cause.
Very much say 100000 tons more.
Reported on me inventory Wanna simple math next year first question.
Second could you just explain what the lower quality.
Oh lumen.
Does or what are the impurities into those in impurities get into the metal or does it cause you to make a little less model or to use a little more electricity because two electrolysis make battle.
Great Great question, John on the first is I have an easy answer maybe knowledge, we really don't have an opinion there we read what's out there.
How it might impact reported stocks, how it might positively impact premiums, but we don't we just don't have a good.
Okay and informed view there we just be repeating.
The.
Significant amount of stuff that's out there.
On the aluminum quality, it's not impurities at all it's the physical characteristics or physical properties of the alumina in the jargon of the industry the fines and what it is is to try to explain it to the Laypersons terms the actual technical term for aluminum at spec in any alumina contract San detail sign.
Coming up with underscore understand the in and that's because the alumina two and untrained eye or even a trained I quite frankly audit had the looking appearances of sand, it's a little bit course, when you have illumina. That's high end finds again apologies for the technical term it looks more like flour and.
And what that does it not only does it flying all over the place and so you're alumina usage goes up but and you were on the right track or get there in a moment.
Dissolves in the solution in the Salim properly and you get a lot of again I'll use the technical term. That's the guys use mucking up of the cells, which screws up your bath usage screws up your power consumption and results in overheated sales as well, which is ultimately what caused us that last last condition was sort of.
Straw that broke the cells back here in cause us to disconnect. The line before we had any serious arc flashing or others. So so there was no there were no product quality issues because the chemical properties that we were receiving at that time were within spec. It was just the physical properties of of the or.
Wow, that's really subtle thank you very much.
Thanks, John .
And speakers, we have no further questions in queue.
We we thank you all as usual for your time it interest and look forward to speaking with you again in a couple months take care.
Okay.
Which came from us.
That does conclude our conference for today. Thank you for your participation or for using 18 <unk> Executive teleconference Service you may now disconnect.