Q4 2021 Sociedad Quimica y Minera de Chile SA Earnings Call
Yeah.
Good day and welcome to the Q in fourth quarter 2021 earnings conference call.
I guess, the bench will be in a listen only mode.
Need assistance. Please signal a conference specialist by pressing Star then zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you meet the Star then one on the desk phone does enjoy your question. Please press Star then two please note. This event is being recorded I would now like to turn the corner.
Kelly O'brien head of Investor Relations. Please go ahead.
Okay.
Good morning, Thank you for joining us on the fourth quarter 2021 earnings Conference call. This conference call will be recorded and is being webcast live lives our earnings press release, and a presentation with a summary of the results have been uploaded to our website, where you can also find a link to the webcast speaking on the call today will be Ricardo.
<unk>, Chief Executive Officer and Heather.
Yeah, Chief Financial Officer, Carlos <unk> Executive Vice President of the lithium business.
The ultimate executive Vice President of the Ida Nitrates business will also be available to answer any questions. Before we begin let me remind you that statements in this conference concerning the company's business outlook future economic performance anticipated profitability revenues expenses or other financial items anticipated cost since.
And product or service line growth together with other statements that are not historical facts are forward looking statements.
Term is defined under federal Securities laws.
These forward looking statements are estimates, reflecting the best judgment.
They currently available information and involve a number of risks uncertainties and other factors that could cause actual results to differ materially.
As stated in such statements, including our ability to successfully implement the sustainable development plan.
Uncertainties and factors that could affect the accuracy of such forward looking statements are identified in our public filings made with the U S Securities and Exchange Commission and in our earnings press release issued.
And these forward looking statements should be considered in light of those factors, we assume no obligation to update such statements whether as a result of new information future developments or otherwise, except as required by law I now leave you with our CEO Ricardo Ramos.
Thank you Kelly good morning, and thank you for joining the call today.
Earnings during the fourth quarter of 2021 were significantly higher diner. It makes reporting unit same period last year. These resource work.
Driven by considerably higher sales volumes on prices across almost all our business lines for the same reasons.
Net income in 2021.
Over three times higher than the net income reported in previous year.
FERC nicer markets saw prices increase considerably in 2021.
We believe that average prices during 2022 will be higher than the average prices reported during 2021, our average prices in the potassium 40 business line during the fourth quarter reached almost $685 per metric ton prices that haven't been seen in over a decade.
These pricing environment has also had an impact on the global prices of potassium nitrate and I would average price in the SPN business line was approximately 40% higher during the fourth quarter 2021, when compared to the same period 2020.
Positive news was also seen in the market.
By 2021, surpassing pre pandemic levels. These are strong recovery recovery led to a strong pricing environment during the year with prices increasing over 11% in the fourth quarter 2021, when compared to the third quarter as a result of tight supply demand.
We're.
<unk>, Yeah, that's where pricing trend to continue during 2022.
We are working on expanding our capacity.
To bring on an additional sell some metric tons of capacity next year in parallel we are working on the bump up Oklahoma project in the South Africa region will allow us to increase the effect devalued and capacity by approximately $2 5000 metric tonne using sea water for the leaching operations I E.
He is expected to begin operations during 2024 in the lithium market our sales volumes that new records during 2021, when they support hundreds thousand metric tons, we sold over 31000 metric tons during the fourth quarter.
The average price for approximately 40 $14 $6000 per ton.
During the period approximately 20% of the sales volumes, we expect to sell in 2022 are contracted at a fixed price or are those already of enterprise with specific floors and ceilings, while approximately 50% of our sales volumes we have contracted.
Variable prices linked to a specific price in this is the remaining 30% of our volumes for 2022 are you still open.
Important to remember that we will see a lag between market prices.
In our realized average prices because of the structure of our variable price contracts, we believe that that wood prices in the first or second quarter of 2022 will be significantly higher than the prices reported during the fourth quarter 2021. Additionally, we believe that.
Volumes rose to about 140000 metric tons during 2022.
I'm extremely proud of the successful lithium expansion in recent years, our expansion 280000 metric tons of carbonate of 30000 metric tons of hydroxide should be completed during the first half of 2022 ahead of schedule.
Had begun working on a new project I think Adam.
Carmen lithium facility to do.
That was announced without work.
This project will further expand our lithium carbonate and lithium hydroxide capacity to 210000 metric tons 40000 metric tons respectively.
This year with an expected capex of approximately $250 million I remind you that this capex was not included in the $2 billion Capex that was previously disclosed we remain committed to our previously announced goal to reduce Brian extraction, whether usage on our card one foot premium disallowed glaucoma.
These growth plans and environmental goals to be met with relatively low capex has only become possible after years of research and development jewelry improvement expertise expertise and of course, a strong effort by our production and engineering teams.
Operator, well now go to questions.
Okay.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the peak cutting you've done. Your question has been addressed and you would like to withdraw your question. Please press star two.
At this time, we will pause momentarily to assemble thereafter.
The first question comes from Cesar Perez Novoa with BTG Pactual. Please go ahead.
Good afternoon, ladies and gentlemen, and congratulations for the stellar quarter and year. If I may a couple of questions from my end and the press release you state that you earn.
Around 20% of your volume.
It's tied to fixed parameters, 50% referenced.
Two a benchmark and the remaining 30% open floor for pricing could you. Please provide.
Added disclosure.
On this and to be clear.
The 50% is it's tied to what.
Our pricing benchmark and certainly what our target.
Pass through what would that entail for example, 30 days indexation 60 days whatever the spot and the final 30% would that go twice to the current Oh spot Oh could you provide perhaps some similar condemning exam.
And both your radical example that we can understand and the.
The other question.
I have is is that you you you will rollout.
250 million expansion.
My question is when would that facility go market.
Also.
<unk> filed in late December certainly at 1 billion program for total Chilean lithium production of 270000 ton.
For years.
Its yesterdays announcement part of this program or would this be a separate expansion and if so are there any regulator her regulatory hurdles that you may have to clear.
To conduct the upgrade piece would be my questions Oh.
Thank you very much.
Okay.
Okay.
Uh huh.
Hey, good morning, So just wanted to thank you for your question do you make a little.
Try to.
On your question first of all.
According to our contract.
Our prices.
We follow.
Those contracts are linked to the well recognized price indices, which we seem to represent me whether the actual market prices.
Obviously, there is a natural lag due to different Nissan administrative or operational risk. So we're trying to follow the market.
We're very close with that with the with the brokers that we're selling.
And Budd.
The market.
On a related to the U S to Purdue.
The expansion is allowed to assume at the bottom line.
Well, we're expanding.
The lithium carbonate and lithium hydroxide capacity.
We expect that the middle of this year, we spun out, though I think the carbonate capacity to 180.
So with respect to go pick that in EMEA this year.
At the same thing.
Already working to expand our capacity to 210000, but we expect that it will be completed in.
Early next year.
Okay. Thank you but.
Incremental 40000 metric tons, a 30000 foot carpet at 10000 per hydroxide is just part of being filed a lithium production.
Made in December for a total of 270 are you going to work that in stages or where are you going to do this.
Expansion.
Okay all of our expansion on our part of the but it went up quite a bit that I was asking.
Okay, Alright, Okay fair enough.
Thank you.
Our next call comes from Joel Jackson with BMO. Please go ahead.
As the color disconnected. The next question comes from Colin Blanchard with Deutsche Bank. Please go ahead.
Hey, good morning, everyone. Congratulations on a good quarter I'm just if we can come back on there is some pricing can.
Can you provide any color at all.
Maybe like a yellow bar, yeah increase the range that we could.
For 2022.
Okay.
Hello, Gary.
Do you see.
What we're saying is under the body of a price point that they were sitting just below it and no Oh forgot the final price for this year.
However, we can say that during the first quarter price would be significantly higher compared with the fourth quarter of last year.
Okay. Okay, that's fair.
One follow up question after question, Nigeria with a 30%.
Oh, what I've been up for negotiation would you like what do you intend to do you intend to do more export prices or do you do you would you be doing index benchmark is what.
Well, we're still reviewing that and well always try to maximize.
Our budget is done and we're going to say later on if this is gonna be a thesis of a formula.
Turning to the market thesis.
Alright. Thank you and then maybe if I can just a last question on cost last quarter, you had mentioned seeing some inflation coming through for most of the calls like you paid out to our.
The industry can you comment on maybe Ali did impact the Capex. So what do you expect to keep school throughout 2022. Thank you.
Hi, Cory this is get out of it yet.
Well of course, it ourselves if necessary.
Turning over to work.
Because of the increased cost of robots.
Labor of course, we are also affected sometimes positively by the exchange rate and how it looks but we don't see that there would be anything.
They began to change what our cost structure.
Alright, thank you.
The next question comes from Ben Isaacson with Scotia Bank. Please go ahead.
Buddy and congrats again on the great quarter.
Can I ask you a pricing question again try and approach it from a different way.
20% fixed or variable with the ceiling.
50% variable and 30% are not.
Not contracted yet if prices didn't change from where they are today for the whole year and just excluding that 30%. So if we know what pricing is right now what would your average selling price speed.
Ben It's a very good question, probably I don't want to answer.
Let's go to the speaking.
Yes. The reason why I prefer not to answer that question is that of course I won't I don't.
No one now two disclosures some agreements with fixed price that we have with some clients that are confidential.
If I said dad, you will know the prices, but if the price today price environment and Theres nothing really thinks about the price of lithium just enterprise problems just went up with different at today's prices, we see the trend in the last 30 days.
But even though we will continue with enterprise as it is today, all our contracts and mainstay close to 80% would be up to date pricing because even though we're going to use. These indicators are saying. This is this is this will reflect the price at home.
Sales will reflect that Brian .
Of course today price is very high it means that our realized price for the year 2022 would be significantly higher than the year before.
I just have three very quick questions left are number one is on what's happening with Russia, and Ukraine, and maybe just in Europe . Overall I believe you have no assets there.
You don't have any.
Risk to different feedstocks of course, but you do make sales in Europe can you talk about where those sales are in Europe , and what are you actually selling it for yourself to Ukraine.
Maybe just talk about your exposure to Europe .
Ben first first let me say something that we deeply regret the current station into great. That's that's for the first volume.
The company only half our support for the people who are suffering.
We hope that the current tough tragic situation kind of began to be solved in the short term.
Moving to your question.
You mentioned, a crane on Russia, I'm not relevant markets in our business, we're still very small amount of fertilizer single crane.
Very small amount of fertilizers in Russia. It means it will be no issue for us in terms of Ukraine.
Crane, Rasho Endo, Russ Bendel, Russia, but of course Europe itself very important market for us is ski markets. So far I'm talking about today.
Our sales in Europe are go away not very strong.
The price is very strong the fertilizer market and agriculture market in euros moving it is strong in the right direction.
But no I don't I don't know the future mean, six if you have a recession in Europe or you have a award that is expanded is difficult to have another spoke about but what is going on today. If you maintain these dis.
Situation, obviously focused crane.
Russia, Belarus without affecting the rest of Europe of course for our business. It will have almost no impact.
Perfect just two more quick ones number one I think you said.
Iodine prices were about $39, if I'm not mistaken can you talk about how tight supply is.
Or can we see new supply coming on at $39 or docs.
Maybe I'll just leave that question there.
What is $39 actually means in terms of the.
The potential and the timing of new supply.
Okay.
Yeah.
Good morning, Paolo <unk> speaking.
Got it.
As you saw last year, we saw a great recovery on demand.
But the situation that the way to explaining the high prices levers and stuff, we have not seen more supply and actually according to the information that we have today, we have not seen a DVD.
DVD and supply so despite of the price remains what it was at that level.
The project cannot enter so quickly to the market so at the moment.
And you know the capability of the different suppliers towards more growth, but we don't see that we're having in the short term. So the current situation is something that.
We expect that that's.
That's why we just picked up the prices you know we continue growing during the year.
Great. Thank you and just my last question.
And I'm not trying to sneak out the lithium price again from you, but in a spot if we stay at the spot we're in.
Potash iodine lithium whatever it is youre going to generate a tremendous.
Immense amount of free cash flow this year.
Can you talk about how you would allocate that free cash flow you've got a you've got a sizable capex program. This year, but then after that how does free cash flow get.
Allocate it thank you.
Yeah.
Probably not.
Yeah definitely.
We he's very good to have cash flow in order to finance our topics.
We will we are working very hard because as Howard Capex I think it's going to be very good for the future it off the company.
And we're doing great in the Capex in the past in the last three or four years and we will continue to do great. I Hope, we will do our best about that and of course the company. We have shareholder Sun. We worked what I wish you hold this will pay dividends.
A portion of the cash flow will be used for the dividend.
Usually with a important amount of dividend and finally, we will increase our way we will reduce our debt that's very good and we will find out some working capital because we are significantly increasing our sales this year because prices are better volumes or better considering both the accounts receivables will be high here, yes, we will.
Finance with some of the cash flow these additional account receivables.
Yeah.
Great. Thank you very much.
Our next caller. Our next question comes from P. J <unk> with Citigroup. Please go ahead.
Hi, This is Patrick Cunningham on for P. J and good afternoon, everyone.
So my first question is kind of on lithium expansion you know more broadly I mean are you.
Turning to see aggressive forecasts for demand you know over 1 million tons by 2025 could you just give us your outlook on.
If if you think you know supply from competitors and yourself can keep up or is there a serious risk where you know prices go high enough you could start to see demand delay and demand destruction, and then sort of on the flip side of that would you see this as an opportunity to you know.
Grow faster than the underlying market and gain market share. Thank you.
Well, there's a lot of them.
<unk>. Your question I mean, we don't know really what's going to happen next year. The next two years, but but of course, we're doing our best to increase how worried capacity not only maintained it remember that two or three years three years ago, we were at close to 60000.
Now moving in the next few months to the hedge it in eight T. Cells. Then we would move in during next year to the dentist has it means we're doing a great job increasing capacity. That's the first answer for D. C.
Increasing demand second we're working very hard with our partners in Australia, we have a very interesting project in Australia, and we expect it to be.
Producing 50000 metric tons in the first stage probably will go to the next stage, we expect to go to the next stage.
Close to the 100000 metric tonnes.
In Australia have been important potential project for us. It means we're doing a lot to increase.
Total capacity that is the best way to get benefits all of these positive churn of the demand.
So far even considering what is of course is <unk>.
If the price of these field. He says it is today the cost of production of electric cars, not only because lithium because all of the raw materials are are more expensive not large, but a more expensive, but considering the strong demand and we don't foresee that these trends positive churn up the demand.
<unk> would be affected.
In the near term it means that our main main focus now is to produce the best lithium to provide the best lithium quality and quantity and logistics to our customers. The example, it's clear from 60000 or less than 50, 60, <unk> three years ago moving to 10 plus.
Plus 50 means we're going to be into 260000 metric tons in the year 2024 minutes.
Of course, it's the 50 <unk> joint venture.
Great.
So just curious how do you move forward. It means we're doing our best in order to provide more lithium to the market and getting the benefits of that.
Okay.
That's great thanks, and on the on that on those joint venture volumes. You know you mentioned there is an opportunity to go to 100000 tons potentially what would be the timeline to that how long would that take to.
To get to production.
Hi.
Uh huh.
Microphone six he was living in Australia for three or four years, I don't know where it can in the project.
From a scale point of view is hitting the <unk>.
In a meeting room with us and Mark to give us just a summary, what do you think about the project what it's going to be the next step, let's overview, what's weird kind of doing a struggle in the near future Mark. Please.
Thanks.
Yeah.
First I would like to comment at this point is not only important for US Jim itself. It's also very important for our requirement great partners with farmers. It's also relevant for the Western Australia future battery industry. So this is a great efficacy and many stakeholders in Australia very important and it's gratifying to see where it is today the frame today's.
And I think very well.
We have already received every room pipeline numbers in non processing infrastructure in the Montana in mind.
<unk> has already started construction at both the concentrator and the refinery plant.
I don't think we know the concentrator near the mine.
And we continue with our first estimation of having furloughs in the second half of 'twenty 'twenty four first for lithium hydroxide as well as we continue with the same expectations capital expenditure of $1 4 billion split.
Two partners.
However, we are not now of course then.
We cannot avoid the inflationary pressures that every capital expenditure is subject to the NOL.
Even with that we continue with the same expectations anymore.
Our current estimation and we are already working on expansion as you mentioned.
Expansions, we will take any plans to build between two and three years. Upon when the decision is made we have not made a decision yet and we are preparing the recommendation for presenting to the board to present that expression when time comes.
Okay.
Great. Thank you and then maybe one last question and then another one on pricing, but a little less specific on this one is for SPN. So how should we think about pricing in specialty plant nutrition, obviously, we saw a pretty tremendous prices in this quarter.
If fertilizer prices swing either direction, maybe an extended supply risk or perhaps tension eases in Russia, and Ukraine and prices start to come off a bit now help me think about what's the lag time for that to kind of show up in <unk>.
Our overall specialty plant nutrition prices.
Underlying spot fertilizer markets move.
How will that affect your SPN price.
Okay.
Okay photo stimulus is speaking well you know that right now the situation is really cool we already closed the price increase we got into it.
2020.
We believe that the trend will continue.
The situation today is good the prices of potash that is good but also influenced the price of the SPN products.
And actually also it is important to situations. These have been inaugurated in Russia, because that situation could potentially we don't know what will happen, but we are following up because.
Also affected the.
So plenty of Photoshop user come in and put some pressure well we will see you know what Richard prices. So the expectation is that the price trend will continue in a positive way.
Thank you.
Our next question comes from Lucas.
<unk> with JP Morgan. Please go ahead.
Hi, everybody. Thanks for taking my questions I have two the first one is the kind of a follow up of your capital increase.
In the second quarter of last year.
I think one of the reasons for the capital increase was to be ready for potential M&A and we've been seeing the market quite active in M&A recently.
So my question to you with that Youre seeing any interesting opportunity or are you.
Just because the prices probably asset prices also went up.
Should we expect you guys to still investing more into organic growth as opposed to M&A, where if there is any interesting project to develop any anywhere in the world. So much from Mount Holland, Mount Holland in Chile.
Does it could be in your plates for the future.
My first question.
And the second question is.
I understand a little bit those yields improve.
Improving yields.
Youre brines.
It is allowing you to increase production in Chile. So just wondering if there is more potential whose technology is improving enough.
For you to even go beyond two ton capacity in the future respecting your lemons right extraction limits we have.
Thank you.
Okay.
Got over almost speaking yeah, we were always exploring new alternatives or businesses that generate value for the company and I wish of holders.
Quite concerned with you about <unk> and M&A or buying companies.
We are going to be very active doing M&A. If we can find an alternative that is good and create value. It's not keep in mind that our priority today is not to lose focus on our current projects. We have a very important projects are complex powered.
Or possibly square ready conflicts.
We will keep focused on it.
And we've seen that won't projects today are essential for the future risk and that's why we keep up with it.
Fortunately, mainly in order to to do again.
Keep ahead of our schedule delivering product to the market.
Okay.
The second question about it I think.
Carlos can explain what we are doing it because we're doing a lot of things setting based on <unk>.
R&D in order to do it is to do it again.
Good morning Lucas.
If we go to see whether I'm doing a lot of there with citizens are being <unk>.
And how to improve our <unk> and Brian .
Once I have been having a lot of docomo.
And our plan in lithium carbonate.
Macro excited in Antofagasta hustle.
We have been working on that in the last three or four years, and we went to work in improving our juice.
We have been successful now, but it was to have a lot of projects to develop because we'd have a lot of excuses China.
For one time to reduce our.
Brian <unk> structure.
For the for the opposite side to increase our production to lithium. So so that is all accused Jonathan but we have been successful up to now and we expect to continue increasing our U.
Yeah.
Thank you very much.
Our next question comes from.
BMO. Please go ahead.
Hi, do you hear me.
Hello, guys, Hi, Joel Jackson BMO, three I had a problem earlier I have a few question I'm going to ask them one by one.
Can you talk about.
What if you wanted to and you can produce at maximum capacity.
I'll see what lithium carbonate production can you achieve in 2022 and 2023.
You want to go full out thank you.
Yeah.
Yes.
Joe as we explained in the country and in the press release, we expect to be at the hundred and 80000 metric tons during.
The next few months it means that we will start operating the new increased capacity so far.
We're going to start up of new facility I.
I want to be just a little bit conservative that we've got another one that would be producing from day number 180000 metric ton.
Probably with the surprises we had in the last three years, probably will be producing 280000 metric those part of the day number one I hope Carlos wheel will deliver it again this kind of success story.
But anyway as we mentioned previously we or we expect to sell this year close to 140000 metric tons of lithium carbonate. That's a very important increase keep in mind that last year. We sold had this hudson and moving to 100200 40000 high quality lithium products.
This year <unk>.
Things are much better than expected in the in the production. We can increase just a little bit more than I had been a 40, we will see.
So far our target is to have production.
More production of course, we need some inventories in order to.
40% of our sales but.
Leasing everything is going in the right direction to deliver high quality products to the customer's final customer during this year I mean that 40% increase that means that we will be able to increase our working capital increase our volumes of our bedroom and saw this as this year next year I'm completely sure that they had to that 80000 metric ton.
We'll be more than ready it means that we will be in a position to.
As I said at least a 180000 metric tons plus.
Some additional production coming from these additional increased capacity did that I've already mentioned to you.
The final decision about the sales in 2023, something probably that will review during the third and fourth quarters. This year, because it will depend on market conditions depend of the demand.
Like everything, but we are going to be ready to supply the market if they make a request.
We closed 290000, if it is possible 200000 metric tons next year, yes. It will be possible, we will try to do our best but at the end it will depend on the market conditions that who will review duty at the end of <unk> very soon.
Certainly mark as the lithium market as you can see in the last 12 months, we need to reviewing our strategy every quarter.
One thing that is for us extremely clear is that we will increase capacity.
It will improve quality and network quality is the best we will continue to be even better and our quantity where we have been the best one in terms of increasing capacity will grow to be the best well Budd.
This study during next year will be according to market conditions.
And what was it.
Okay.
Second question, then would be kind of three small class with my second question would be.
What is the capital intensity is how much capex do you need to spend to get the next 30000 tonnes LCR comments I'll go to 210 and then.
Your capex seem to rise this year versus expectations by $40 million, how much what is the incremental $40 million exactly from 509 hundred and then.
You've got a $2 billion Capex plan from 2021, and 2024, what would that total capex now be 'twenty one to 'twenty four.
Yeah.
Hi, George this is Gino.
Well last year, we announced our Capex on expansion programs for 2021% to 30, Florida include a total of $2 billion of Capex.
The breakdown was approximately $1 $1 billion for lithium expenditure.
440 <unk>.
<unk> dollars for nitrogen.
The rest was related to maintenance capex.
These $250 million that we said is going to be the total capex for expansion to reach 210000 metric tons of lithium carbonate and 40000 metric tons of lithium hydroxide.
On top of the $2 billion that we announced last year for this year. We are predicting that the total capex is going to be around 900000 $900 million.
Buddy it full so we are indeed.
Sure.
<unk> of projects and expanding capacity.
Lithium.
From 120 to 180 from 182 too thin.
Lithium coverage also expanded in lithium hydroxide developing deployed in Australia that Mark mentioned, a few minutes ago, expanding our nitrogen capacity 1000 metric dose by the end of this year to 5000 metric tons by the end of next year.
Expanding our nitrogen capacity all of that if it included it now we've got call it $225 billion capex throughout 2021 to $2 85.
Okay. So just following up on that ignoring hydroxide expansion, if I understand what you're saying the additional 30000 tonnes at the comma LTE is going to be coming on for less than $8000 correct.
That math is right that's correct.
Glad I am glad I can do math, okay. So my last question is that.
If we look at do you have big growth plans Atacama, you're executing on that and you got a bit more we know what's going on in Australia with west farmers I'm at Holland.
If I think about the back half of the decade, 2026, 27, and 2029, you'll be adding a little more capacity in Australia, but after that your volume growth your potential capacity growth really goes down to very little.
So are you prepared to use your balance sheet now to go acquire more resource assets go acquire other lithium producer of smart upstart producers like are you are you have an urgency.
To keep your capacity growth growing by using your balance sheet to buy new assets.
Youre right it means.
We are always exploring New York Trinity, we're very committed in the lithium business, we think that we're pretty good in the lithium business.
Yes, we have a team looking for alternatives will continue looking for the Trinity of course.
Again, our growth lithium we will be.
Profit projects that are going to be good for the company. Good for shareholders not just to grow growth creating value for the company, we're working very hard on it.
We have a complete team looking for potential New York Trinity We're conservative.
Jim said, we don't want to buy everything that is on sale.
Are you going to be ready to buy something to get involved in any business. We think is good for the company's shareholders.
If I can be greedy and ask one more question.
Thank you for your lithium cost per ton.
Your lithium price is probably going to be up let's pick a number $10000 of time this.
This year and are more and it's going to be over the highest marginal brackets youre going to pay the 40%.
Royalty rate to carve out on that additional price.
How are you how our cost for lithium progressing in 2022, if I could nor royalties the non royalty part should we see flattish cost per ton.
You're balancing inflation plus you know 40% more volume so was there an offset.
Okay.
Hey, Joel this is Sheila.
Jim.
We're not foresee well firstly there is.
Very important factor that I think it's important to consider that you mentioned, which is the lease payments that we make to court D. C high prices of course core for you Sir.
But with a very very high payments that we are making to them and we will continue to make to them. So that is reflected on our cost line on our P&L. That's the first thing second as we are seeing all over to where there are inflationary pressures.
The different industries that of course, we buy some raw materials to produce lithium that we produce.
There are.
Additional costs associated with labor and other issues that is putting some pressure on our gross but on the other hand.
The larger capacity of our plant and improvements.
Our ratios are letting us reduce.
Let me, let me say offset some of these inflationary pressure.
Pretty sure so excluding the royalties or not Brian .
The lease payments that we make to Corfu.
We expect that the cost should be it should be quite stable.
The upcoming quarters.
Okay. Thank you for letting me ask so many questions.
Excellent. Thank you.
This concludes our question and answer questions.
The conference back over to Toby O'brien for any closing remarks.
Thank you for joining the call today, we look forward to you joining next time.
Yeah.
The conference has now concluded. Thank you question in today's presentation you may now disconnect.