Q3 2023 Century Aluminum Co Earnings Call

Speaker 1: Good afternoon and thank you for attending today's century aluminum third quarter earnings call. My name is Jason and I'll be the moderator for the call today.

Good afternoon, and thank you for attending today's century aluminum third quarter earnings call. My name is Jason and I'll be the moderator for the call today.

Speaker 1: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your telephone keypad. And now I'd like to pass the conference over to our host Ryan.

All lines will be muted during the presentation portion of the call as an opportunity for questions and answers at the end if you'd like to ask a question. Please press star one on your telephone keypad.

I'll now pass the conference over to our host Ryan.

Speaker 2: Thank you operator. Good afternoon everyone and welcome to the conference call.

Thank you operator, good afternoon, everyone and welcome to the conference call.

Speaker 2: I'm joined here today by Jesse Gary, Sentry's President and Chief Executive Officer.

Joined here today by Jesse Gary Centurys, President and Chief Executive Officer.

Speaker 2: Jerry violet, executive vice president and chief financial officer.

Jerry <unk> Executive Vice President and Chief Financial Officer.

Speaker 2: And Peter, senior vice president of finance and treasurer. After our prepared comments.

And Peter chips, Gartzke, Senior Vice President Finance and Treasurer.

After our prepared comments, we will take your questions.

Speaker 2: As a reminder, today's presentation is available on our website at www.centuryaluminum.com.

As a reminder, today's presentation is available on our website at www dot century aluminum dotcom.

Speaker 2: We use our website as a means of disclosing material information about the company. And for complying with regulation F. D.

We use our website as a means of disclosing material information about the company and for complying with regulation FD.

Speaker 2: Turning to slide 1, 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. And with that.

Turning to slide one 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 I'll hand, the call to Jesse.

Speaker 3: Thanks, Ryan, and thanks to everyone for joining. It was a busy quarter with lots to discuss, so I'll get right into it.

Thanks, Ryan and thanks to everyone for joining it was a busy quarter with lots to discuss so I'll get right into it.

Speaker 3: Turning to slide 3, lower LME and regional premiums were the primary drivers of reduced 2, 3 adjusted EBITDA of $9 million.

Turning to slide three lower <unk> and regional premiums were the primary drivers of reduced Q3, adjusted EBITDA of $9 million.

Speaker 3: While we were able to offset a significant portion of the falling metal prices with lower input prices, higher than expected, now all the power costs resulted in our Q3 results falling a bit below expectation.

We were able to offset a significant portion of the falling metal prices with lower input prices higher than expected now Holly power costs resulted in our Q3 results falling a bit below expectations.

Speaker 3: We expect mental-holly energy prices to return to normal in Q4. And as we recently announced, we entered into a new power contract from out-holly that will become effective on January 1st. I'll provide some additional detail on that new con.

We expect Mt. Holly energy prices to return to normal in Q4, and as we recently announced we entered into a new power contract for Mt. Holly that will become effective on January 1st I'll provide some additional detail on that new contract in a bit.

Speaker 3: In general, the macro environment for aluminum remains complex.

In general the macro environment for aluminum remains complex.

Speaker 3: As you can see on page 4, the global market remains roughly balanced, with Chinese deficits largely offsetting a small surplus in the rest of the world.

As you can see on page four the global market remains roughly balanced with Chinese deficits, largely offsetting a small surplus in the rest of the world.

Speaker 3: Turning to China specifically, Chinese demand has benefited from strong solar and electric vehicle demand, with Chinese solar demand alone up around 1.5 million tons from last year.

Turning to China, specifically Chinese demand has benefited from strong solar and electric vehicle demand with Chinese solar demand alone up around one 5 million tonnes from last year.

Speaker 3: Recent stimulus announcements in China should drive further recovery and building construction demand as the Chinese economy continues to recover from the lockdown.

Recent stimulus announcements in China should drive further recovery in building construction demand as the Chinese economy continues to recover from Covid Lockdowns.

Speaker 3: Reports have also recently emerged the Chinese smelters in Yunnan will again have to curtail around 1M tons of capacity to the low reservoir levels in their hydroelectric scheme.

Reports have also recently emerged the Chinese smelters and <unk> will again have to curtail around 1 million tons of capacity due to low reservoir levels and their hydroelectric schemes. Once confirmed this third straight season of Chinese production cuts would add to the Chinese deficit as shown on slide four.

Speaker 3: Once confirmed, the third straight season of Chinese production cuts would add to the Chinese deficit shown on slide 4.

Speaker 3: Overall, while realized LME prices fell to average $2,155 in Q3, global updates of inventory remained below 50 days.

Overall, while realized <unk> prices fell to averaged $2155 in Q3 global that days of inventory remained below 50 days.

Speaker 3: With inventories of these historically low levels, LMEs should be poised to recover quickly on any positive demand recovery or any further supply side disruptions. As we saw following the announcement of the UN seasonal curtailment.

With inventories at these historically low levels, telling me it should be poised to recover quickly on any positive demand recovery or any further supply side disruptions as we saw following the announcement of the seasonal curtailments.

Speaker 3: While we wait for the macro cycle to improve, we have implemented programs across the company to lower costs, increase efficiency and free up cash for possible. One example of this is a renewed focus on working capital management that Jerry will discuss with you in a minute.

While we wait for the macro cycle to improve we have implemented programs across the company to lower costs increase efficiency and free up cash for possible.

Speaker 3: These efforts will help us remain robust during this portion of the cycle without interrupting our long term investments and strategies.

These efforts will help us remained robust during this portion of the cycle without interrupting our long term investments and strategies.

Speaker 3: Branded to slide six, we can see that falling input prices have also helped to offset the decline in metal prices. Indie have a nor bold have both remained constructive while co-concotic prices have continued to follow towards normalize both.

Turning to slide six we can see that falling input prices have also helped to offset the decline in metal prices and do you have an or poll at both remained constructive well coke in caustic prices have continued to fall towards normalized levels.

Speaker 3: National gas inventory has been both the US and Europe , remain well above five-year averages, making repeat of the high-energy prices from last winter less likely.

Natural gas inventory, it's been both the U S and Europe remained well above five year averages, making repeat of the high energy prices from last winter less likely.

Speaker 3: Turning to operations, we made significant progress on a number of our longer term initiatives during the quarter.

Turning to operations, we made significant progress on a number of our longer term initiatives during the quarter.

Speaker 3: At Mt. Hawley, we were very excited to announce late last month that we reached a new three-year power contract with Santa Cooper through 2026.

Holly we were very excited to announce late last month that we reached a new three year power contract with Santee Cooper through 2026.

Speaker 3: The agreement represents extensive work between the century and fancy teams to structure a mutually beneficial arrangement.

The agreement represents extensive work between the century in Santee teams to structure a mutually beneficial arrangement.

This agreement allows us to continue to invest in this excellent plant preserved approximately 470 jobs for our employees and continue to contribute to the economic success of the surrounding community.

Speaker 3: Disagreement allows us to continue to invest in this excellent plan, preserve the approximately 470 jobs for our employees, and continue to contribute to the economic success of the surrounding community.

Speaker 3: Under the new arrangement, Mount Holly will be less exposed to changing fuel costs, including a fixed all-in 2024 energy rate that is below our 2023 realized rates. Mount Holly also has the right under the agreement to increase the amount of energy provided under the contract, should we decide to return the smell to full production when market conditions weren't.

Under the new arrangement now Holly will be less exposed to changing fuel costs, including a fixed all in 2024 energy rate that is below our 2023 realized rates.

<unk> also has the right under the agreement to increase the amount of energy provided under the contract should we decided to return the smelter at full production when market conditions warrant.

Speaker 3: In Iceland, operational performance is strong, continuing to reflect the excellent team we have built there.

In Iceland operational performance was strong continuing to reflect the excellent team we have built there.

Speaker 3: The Grindertongue Cat Stealth project is near in completion and remains on track to deliver our first sales, low carbon natural billet to European customers early next year.

The <unk> project is nearing completion and remains on track to deliver our first sales low carbon natural ability to European customers early next year.

Speaker 3: We will provide you with additional details of the expected benefits of this value added production on our Q4 call.

We will provide you with additional details of the expected benefits of this value added production on our Q4 call.

Speaker 3: In Jamaica, the 1st major project in our project resource CAPEX program is nearing completion with the recommissioning of 1 of the plants high efficiency boilers set to be completed by the end of Q4.

And to make our first major project and our project to our Capex programs nearing completion with the re commissioning of one of the plants to high efficiency boilers are set to be completed by the end of Q4.

Speaker 3: This boiler will increase the efficiency of the refinery steam generation systems while also driving improved stability in the plant's powerhouse.

This boiler will increase the efficiency of the refinery steam generation systems, while also driving improved stability in the plants powerhouse.

A second high efficiency boiler is expected to be Recommissioned in late March.

Speaker 3: A second high efficiency boiler is expected to be recommissioned in late part.

These projects should begin lowering <unk> cost of production beginning in Q1.

Speaker 3: These projects should begin lowering De Malco's cost of production beginning in Q1.

Speaker 3: Today, the cost of these programs are coming in on the low end of our expected catics, and they need to malco for 2023.

To date the cost of these programs are coming in on the low end of our expected capex spending of tobacco for 2023.

Speaker 3: In September , Demalco separated power disruption resulting from an equipment failure and the same power generation unit responsible for the disruption in Q2. This caused the refinery to operate at partial production levels for portion of September and all of October . We believe the refineries now return to full and stable operation.

In September to Melco separated power disruption, resulting from an equipment failure and the same power generation unit responsible for the disruption in Q2.

The refinery operated partial production levels for a portion of September and all of October.

We believe the refinery has now returned to full and stable operations.

Speaker 3: Without these disruptions, Jamal though would have operated a roughly breakeven in the third quarter at Spot, aluminum price.

Without these disruptions Jim also would have operated at roughly breakeven in the third quarter at spot aluminum prices.

Speaker 3: Given the magnitude of these disruptions, we have submitted these claims to our insurers and expect to recover those losses under our insurance policies.

Given the magnitude of these disruptions we have some great. These claims to our insurers and expect to recover those losses under our insurance policies.

Speaker 3: In line with our past practice, we will adjust out both the impact of the outage and the future recovery of insurance proceeds from our results. Jerry will cover this more in his remarks.

In line with our past practice, we will adjust out both the impact of the outage and the future recovery of insurance proceeds from our results.

Jerry will cover this more in his remarks Jerry.

Speaker 3: Thank you, Jesse. Let's turn to slide seven and I'll walk you through the results for the third quarter. Consolidated Q3 global shipments were 172,000 tons down about 1% sequentially. Realized mental prices were down nearly 6% for the quarter, with net sales at $545 million down 5% sequentially.

Thank you Jesse let's turn to slide seven and then I'll walk you through the results for the third quarter Consol.

Consolidated Q3 global shipments were 172000 tons down about 1% sequentially realized metal prices were down nearly 6% for the quarter with net sales at $545 million.

Down 5% sequentially.

Speaker 3: looking at youth 3 operating results, adjusted not laws with $14 million or 13 cents per share.

Looking at Q3 operating results adjusted net loss was $14 million or <unk> 13 per share.

Speaker 3: This was a decrease of 29M dollars compared with prior quarter.

This was a decrease of $29 million compared with prior quarter.

Speaker 4: The major adjusting items for the third quarter were add-backs of $22 million and unrealized losses on forward contracts.

The major adjusting items for the third quarter were add backs of $22 million in unrealized losses on forward contracts.

Speaker 4: $9 million in costs associated with the Jumalco equipment failure, and $1 million for share-based compensation.

$9 million and costs associated with the Jim Alco equipment failure.

And $1 million for share based compensation.

Speaker 4: These partially are set by a $4 million deduction for lower of cost or net realizable value on inventory.

These partially offset by a $4 million deduction for lower of cost or net realizable value on inventory.

Speaker 4: Justity Bada, attributable to century, which includes our 55% share of the Jamalco J.B. in Jamaica, was $9 million, a decrease of $20 million from the prior quarter.

Adjusted EBITDA attributable to century, which includes our 55% share of the <unk> JV in Jamaica was $9 million, a decrease of $20 million from the prior quarter.

Speaker 4: liquidity improved by $75 million compared with prior quarter to $306 million consisting of $70 million in cash.

Liquidity improved by $75 million compared with prior quarter to $306 million consisting of $70 million in cash.

Speaker 4: $23 million in restricted cash, and $212 million available on our credit facilities.

$23 million in restricted cash and $212 million available on our credit facilities.

Speaker 4: Net debt on September 3, it was $424 million down $83 million from prior Thursday October 13, 2020.

Net debt on September 30 was $424 million down $83 million from prior quarter.

Speaker 4: During my first year at Century, we've focused on optimizing working capital and improving liquidity and are beginning to see significant progress. I'll talk more about this in a moment when I address cash flow.

During my first year at century, we've focused on optimizing working capital and improving liquidity and are beginning to see significant progress I'll talk more about this in a moment when I address cash flow.

Speaker 4: Turning to slide eight to explain the third quarter sequence will adjust to the EBITDA bridge.

Turning to slide eight to explain the third quarter sequential adjusted EBITDA Bridge.

Speaker 4: Realized at LEME with $2,237 per ton, down $134 versus the prior quarter.

Realized <unk> with $2237 per ton down $134 versus the prior quarter.

Speaker 4: While realized US Midwest premium of $493 per ton with down $69 and realized European delivery premium of $323 per ton was up $24. These reflecting our one to three month legs in realized metal prices.

While realized U S Midwest premium of $493 per ton was down $69 and realized European delivery premium up $323 per ton was up $24 <unk>, reflecting our one to three month lag and realized metal prices.

Speaker 4: Together, these factors resulted in a $28.9 decrease in e-bid dye in the quarter.

These factors resulted in a $28 million decrease in EBITDA in the quarter.

Speaker 4: power costs were down slightly from prior to order, with that 51% reduction in Nord Pool market prices being partially offset by a 4% increase in my Soindy Hub exposure and higher cost of service rates at Mount Hally, netting to a $3 million benefit to Yvdda.

Power costs were down slightly from prior quarter at 51% reduction in Nord pool market prices being partially offset by a 4% increase in MISO Indy hub exposure and higher cost of service rates at Mount Holly netting to a $3 million benefit to EBITDA.

Speaker 4: You three realize the Luminac cost was $396 per ton, $4 lower on a sequential basis.

Q3 realized alumina cost was $396 per ton $4 lower on a sequential basis.

Speaker 4: Remember, there's a three to four month lag for Lumenikoff to work through our income statement.

Remember there is a three to four month lag for alumina costs to work through our income statement.

Speaker 4: Realized Coke prices decrease 17% and realize pitch prices decrease 8%. Together, Halumuna and other raw material costs resulted in a $4 million improvement in EBITDA.

Realized coke prices decreased 17% and realized pitch prices decreased 8% together illumina and other raw material costs resulted in a $4 million improvement in EBITDA.

Speaker 4: Volume of X improved the DAB by $3 million. Unfavorable sales mix was a $3 million headwind.

Volume Opex improved EBITDA by $3 million unfavorable sales mix was a $3 million headwind.

Speaker 4: Overall, adjusted EBITDA was $9 million for the third quarter.

Overall, adjusted EBITDA was $9 million for the third quarter.

Speaker 4: No, the impact of downtime and loss production, and I'll put at Jamago that Jesse mentioned in his opening remarks has been adjusted from the results presented here as century has filed an insurance claim and expects that losses less estimated deductibles will be covered under its insurance policies. You can see the full reconciliation to gap in the appendix on slide 13.

No the impact of downtime and lost production and I'll put it to Mako that Jesse mentioned in his opening remarks has been adjusted from the results presented here at century has filed an insurance claim and expect that losses estimated deductibles will be covered under our insurance policies you can see the full reconciliation to GAAP.

In the appendix on slide 13.

Speaker 4: Now let's turn this slide 9 for a look at cash flow. We started the quarter with $51 million in cash. During the quarter, we completed the transaction to sell certain excess land at our Mount Holly site, generating cash of $26 million.

Now, let's turn to slide nine for a look at cash flow, we started the quarter with $51 million in cash during the quarter, we completed the transaction to sell certain excess land at our Mount Holly site generating cash of $26 million.

Speaker 4: CAPEX, primarily for the construction of our new cast house in Iceland, used $26 million.

Capex, primarily for the construction of our new cast house, and Iceland used $26 million.

Speaker 4: as part of our working capital optimization efforts, we monetize excess European emissions allowances to generate an additional $34 million. In case you were not familiar with the European Union emissions trading system, the ETS is a cap and trade system aimed at decreasing emissions over time, in line with the EU's climate target.

As part of our working capital optimization efforts, we monetize excess European emissions allowances to generate an additional $34 million in case, you're not familiar with the European Union emissions trading system, the Etfs as a cap and trade system aimed at decreasing emissions over time in line with the ease.

Climate target.

Speaker 4: Each year, century, we see a screen mission to the launches or EUAs for our Grinidad-Tonguys melt to run Iceland.

Each year century receipts free emissions allowances or <unk> for our <unk> smelter in Iceland.

Speaker 4: These allowances must be surrendered in the following year to offset emissions from the smelter. Historically, we have held these units until...

These allowances must be surrendered in the following year to offset emissions from the smelter.

Historically, we've held these units until they become due.

Speaker 4: As an ongoing source of liquidity, this year we implemented an EUA monetization program to sell the excess units and to repurchase EUAs at a future fixed price to settle the EUA obligation when due.

As an ongoing source of liquidity. This year, we implemented an EUA monetization program to sell the excess units and to repurchase EUA is at a future fixed price to settle the EUA obligation when due.

Speaker 4: Similar to other working capital optimization efforts, this program allows Century to utilize the interim value of the credits more effectively, improving liquidity and lowering leverage.

Similar to other working capital optimization efforts. This program allows century to utilize the interim value of the credits more effectively.

Proving liquidity and lowering leverage.

Speaker 4: I'm also excited about the progress we're making driving optimization in the cash conversion cycle across all our sites.

I'm also excited about the progress, we're making driving optimization and the cash conversion cycle across all our sites.

Speaker 4: During the quarter, we realized working capital saving totaling $76 million with $7 million coming from moving to more favorable vendor payment terms that are gemocular finery and the balance from various actions that are smelter.

During the quarter, we realized working capital savings totaling $76 million with $7 million coming for moving to a more favorable vendor payment terms that are Jim Aqua refinery and the balance from various actions at our smelters.

Speaker 4: We expect to retain $20 to $30 million of these working capital benefits going forward through aggressive inventory targets and other working capital optimizations. The remainder of these savings will relate it to the timing of material flows, which we expect to reverse in Q4.

We expect to retain 20% to $30 million of these working capital benefits going forward through aggressive inventory targets and other working capital optimizations. The remainder of these savings were related to the timing of material flows, which we expect to reverse in Q4.

Speaker 4: Finally, we used $68 million to paid on the revolvers. These actions resulted in Q3 ending cash and restricted cash of $93 million, a $42 million improvement compared to the second quarter.

Finally, we have $68 million to pay down our revolvers. These actions resulted in Q3, ending cash and restricted cash of $93 million or $42 million improvement compared to the second quarter.

Speaker 4: Now, let's move to slide 10 for insight into our expectations for the 4th quarter. For Q4, the lagged LME of $2,161 per ton is expected to be down $76 versus Q3 realized prices.

Now, let's move to slide 10 for insight into our expectations for the fourth quarter for.

For Q4, the lagged <unk> of $2161 per ton is expected to be down $76 versus Q3 realized prices.

Speaker 4: The Q3 lagged US Midwest premium is forecast to be 425 dollars per ton down 68 dollars and the European delivery premium is expected to be 279 dollars per ton or down about 44 dollars compared with the 3rd quarter.

Q3, lagged U S. Midwest premium is forecast to be $425 per ton down $68 and the European delivery premium is expected to be $279 per ton are down about $44 compared with the third quarter.

Speaker 4: Taken together at the LME and delivery free hands are expected to decrease Q4 ePETA by approximately 20 to 25 million dollars compared with Q3 levels.

Taken together the <unk> delivery premiums are expected to decrease Q4, EBITDA by approximately 20% to $25 million compared with Q3 levels.

Speaker 4: No, the LME prices closed yesterday about $100 fire than our expected realized prices for Q4. As you can see from our sensitivities on slide 16, should these spot levels hold, we would expect this change alone to increase EBITDA by around 10 to $15 million per quarter. Looking at our other key raw materials, lagged, realized, aluminum on cost is expected to be $385 per ton down slightly. We expect a favorable impact

Note <unk> prices closed yesterday about $100 higher than our expected realized prices for Q4.

As you can see from our sensitivities on slide 16 should these spot levels hold we would expect this change alone to increase EBITDA by around 10% to $15 million per quarter.

Looking at our other key raw materials lagged realized alumina cost is expected to be $385 per ton down slightly.

We expect a favorable impact from lower coke and pitch.

Speaker 4: caustic soda prices are also down slightly, but as it takes five to six months for caustic spot prices to flow through our P&L Most of this benefit will be realizing Q1 2024

Caustic soda prices are also down slightly but as it takes five to six months for caustic spot prices to flow through our P&L. Most of this benefit will be realized in Q1 2024.

Speaker 4: All in, we expect lower raw material cost to contribute between 10 to 15 million dollars to EBITDA compared with third quarter.

All in we expect lower raw material costs to contribute between $10 million to $15 million to EBITDA compared with third quarter.

Speaker 4: We expect volume gains in operating cost improvements to add about $5 million to EBITDA in the fourth quarter.

We expect volume gains and operating cost improvements to add about $5 million to EBITDA in the fourth quarter.

Speaker 4: All factors considered are Q4 outlook for adjusted EBITDA is expected to be in a range of between zero and $10 million.

All factors considered our Q4 outlook for adjusted EBITDA is expected to be in a range of between zero and $10 million.

Speaker 4: And finally, we expect a realized gain of about 10M dollars in the 4th quarter from hedging activity and tax expense of between 0 to 5M dollars. As a reminder, both of these items fall below EBITDA and impact adjusted net income.

And finally, we expect a realized gain of about $10 million in the fourth quarter from hedging activity and tax expense of between zero to $5 million. As a reminder, both of these items fall below EBITDA impact adjusted net income.

Speaker 4: and update them in the purchase accounting for our Jamalco acquisition.

An update on the purchase accounting for our <unk> acquisition at.

Speaker 4: As discussed in note two of our current quarter 10Q, we continue to work through the purchase accounting, which requires the acquired assets and liabilities to be reported at fair value as of the acquisition date.

As discussed in note two of our current quarter 10-Q, we continue to work through the purchase accounting, which requires the acquired assets and liabilities to be reported at fair value at the acquisition date, we have up to 12 months from the acquisition date to perform the necessary work to finalize the fair value and based on our preliminary.

Speaker 4: We have up to 12 months from the acquisition date to perform the necessary work to finalize the fair value. And based on our preliminary fair value estimates, we reported a deferred gain as a current liability on the balance sheet as of September 30th. And now, back to...

<unk> fair value estimates, we've recorded a deferred gain as a current liability on the balance sheet as of September 30th.

And now back over to you Jessy.

Speaker 3: Thanks, Jerry. While we find ourselves in a challenging portion of the commodity cycle, with the LME and delivery of premiums reaching two and a half year lows in the third quarter, we remain focused on operating the business as efficiently as possible.

Thanks Jerry.

While we find ourselves in a challenging portion of the commodity cycle with the <unk> and delivery premiums, reaching two and a half year lows in the third quarter. We remained focused on operating the business as efficiently as possible.

Speaker 3: We are proud of the progress we made on our long-term initiative string and quarter, including the extension of the Mount Holly Power contract, nearing completion of our first major capital investment at Jamalco, and completion of the Gruner-Tongu Chastats early next year.

We're proud of the progress we made on our long term initiatives during the quarter, including the extension of the Mt. Holly power contract nearing completion of our first major capital investment at Melco and completion of the Gruner talking cast house early next year.

Speaker 3: We are also pleased with the continued optimization of our balance sheet, including completion of the Mt. Holley Land Sale and progressing working capital optimization program, leaving us well positioned with significant liquidity to continue our long-term investments during this portion of the cycle.

We're also pleased with the continued optimization of our balance sheet, including completion of the Mt. Holly land sale and progressing working capital optimization program, leaving us well positioned with significant liquidity to continue our long term investments during this portion of the cycle.

Speaker 3: All in all, despite the challenging macro environment, we are managing the business to continue to provide positive EBITDA and unlock additional liquidity and cash.

All in all despite a challenging macro environment, we are managing the business to continue to provide positive EBITDA and unlock additional liquidity and cash.

Speaker 3: Long-term macro trends towards decarbonization and electrification are beginning to play out and grow stronger. As government stimulus funds in China and inflation reduction act funds in the US are beginning to be distributed.

Long term macro trends towards decarbonization, and electrification are beginning to play out and grow stronger as government stimulus funds in China and inflation reduction Act funds in the U S are beginning to be distributed.

Speaker 3: Our plans are running well in a plane production levels, leaving us well positioned to benefit as the commodity cycle improves. We look forward to your questions today.

Our plants are running well and our planned production levels, leaving us well positioned to benefit as the commodity cycle improves.

We look forward to your questions operator.

Speaker 1: If you'd like to ask a question, please rest star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please rest star followed by two. Again, to ask a question, it is star one.

If you'd like to ask a question. Please press star followed by one on your telephone keypad if for any reason you'd like to remove that question. Please press star followed by two again to ask a question. It is star one.

Speaker 1: Our first question is from Lucas Pipes with the Riley Securities. Your line is now up.

Our first question is from Lucas pipes with B Riley Securities. Your line is now open.

Speaker 5: Thank you very much, operator. Good afternoon, everyone.

Thank you very much operator, good afternoon, everyone.

In.

Speaker 5: Your final comments there, and you're prepared to mark, you mentioned the IRA and the benefits for demand. But then, if I understand it correctly, there are also provisions in the IRA specifically for primary aluminum production. I think it's Section 45X and it relates to

Your final comments there in your prepared remarks, you mentioned.

Thank you mentioned the.

IRA.

The benefits for demand.

But then.

If I understand it correctly. There are also provisions in the IR specifically for primary aluminum production I think it's section 45 X and it relates to.

<unk>.

Speaker 5: credit 10% of the production cost. And obviously, on the surface, this appears pretty material. So I wondered if you could maybe speak to that and where that currently stands. Thank you very much for your perspective.

Credit.

10% of the production costs.

And obviously on the surface disappears.

Pretty pretty material.

So I wondered if you could maybe speak to that.

And where that currently stands thank you very much for your perspective on that.

Okay.

Speaker 3: Hey, look at this. Thanks. Very good question. So you're correct that aluminum is listed as a critical mineral under Section 45X for the Replacement Reduction Act. Maybe just to back up Section 45X is a provision that amongst other things is intended to incentivize a US production of critical minerals here domestically.

Okay Lucas thanks.

Very good question.

So you are correct that aluminum is listed as a critical mineral under section <unk> buybacks placement reduction Act, maybe just to backup section 45 X is a provision that amongst other things.

It is intended to incentivize U S production of critical minerals.

Here domestically.

Speaker 3: We're obviously very excited about the potential benefits that we might receive under Section 45X, but the US Treasury Department has not yet issued guidance for the provision. Given that, it's a bit difficult at this point to quantify what the potential benefits might be for century.

We're obviously very excited about the potential benefits that we might receive under section 45 X.

The U S. Treasury Department has not yet issued guidance for the provision given.

Given that it's a bit difficult at this point to quantify what the potential benefits might be for century.

Speaker 3: But the Treasury Department has come out publicly and said that they expect to issue that guidance before the end of the year. So what we intend to do is once that guidance has been released, we plan to hold a follow-up call to further discuss and quantify what those benefits might be to sentry. And until we have that guidance, so it's hard to provide too much more information for now.

But the Treasury Department has come out publicly and said that they expect to issue that guidance before the end of the year. So what we intend to do is once that guidance has been released.

We plan to hold a follow up call to further discuss and quantify what those benefits might be to century and until we have that kind of it and so it's hard to provide too much more information for now.

Speaker 5: But at this point, I guess it would be an...

And but at this point there haven't been any any of it.

I guess it would be an accrual.

Speaker 5: essentially potentially given I think this credit would start in January 1st, 23, that would be a benefit of

Essentially potentially.

Potentially given I think this credit.

Darden.

January one 'twenty three.

That would be a benefit.

For this year right.

Speaker 3: Yeah, well, we await the guidance. The provision did become effective, that obviously the law has passed, but the provision did become effective January 1st, 2023. But until we have that guidance, it's tough to really say more than that, but you're correct that the law itself does mention that it would apply beginning in January 1st, 2023.

Yeah.

Well, while we await the guidance the provision did become effective obviously the law has passed.

And the Parisian did become effective.

On January one 2023.

But until we have that guidance, it's tough to really say more than that.

But you are correct that the law itself does mention that it would apply beginning January one 2023.

Speaker 5: I really, really appreciate that. And in terms of the guidance or clarification needed, can you elaborate on...

Really really appreciate that.

In terms stuff.

At the.

The guidance clarification needed.

Can you elaborate on.

What exactly you're.

Yeah.

Speaker 5: you're waiting for is, I know this can be technical, but.

Youre waiting for us.

I know this can be technical but.

Speaker 5: Could you maybe comment on what guidance specifically or your waiting?

Could you maybe comment on.

What what guidance specifically.

Youre waiting for it thank you.

Yeah.

Speaker 3: Sure, I'll try to keep it relatively high level since until we have the guidance, it's really hard to comment on what will be in the guidance. But that said, your summary was was.

Sure.

I'll try to keep it relatively high levels until we have the guidance, it's really hard to comment on what will be in the guidance.

But that said.

Sure.

Murray was was.

Okay.

Speaker 3: What's well done, Section 45X does provide for production tax credit for critical minerals.

Well done.

Section 45 X does provide for production tax credit.

For critical minerals.

Speaker 3: And that production tax credit applies to what the law calls cost of production.

And that production tax credit applies to what the law calls cost of production.

Speaker 3: And what the law does not do is provide any guidance as to how that cost of production should be calculated. And so you can imagine a bunch of different provisions that may be included or not included in cost of production. For instance, one example might be whether depreciation is included in cost of production.

What the Lord does not do is provide any guidance as to how that cost of production should be calculated.

And so you can imagine a bunch of different provisions that may be included or not included in cost of production.

For instance, one example might be whether depreciation is included in cost of production.

Speaker 3: And so without further guidance from the Treasury Department after talking with, you know, our advisors outside advisors.

So without further guidance from the Treasury Department after talking with our advisors outside advisors.

Speaker 3: discussing it internally with our team. We thought it was too early to record anything on our financial statements. And difficult to do again without any guidance on what the quantum of those benefits might be. So for now, that's where we stand and what we intend to do is once that guidance comes out, which again, the Treasury Department says they expect to do before the end of the year, we'd hold a follow-up call where we can discuss that in more detail.

Got something internally with our team.

We thought it was too early.

To record anything on our financial statements and difficult to do again without any guidance on what the quantum of those benefits might be.

So for now that's where we stand and what we would intend to do is once that guidance comes as it comes out which again the Treasury Department says they expect to do before the end of the year.

We would hold a follow up call, where we can discuss that in more detail.

Speaker 5: I really appreciate this discussion. I'd have further questions. But...

I really appreciate this discussion I have further questions.

<unk>.

So now I'll move on to different different theme I really appreciate that color. Thank you.

Speaker 5: or now I'll move on to a different, different theme. I really appreciate that color, think.

Speaker 6: well.

Okay.

In.

Speaker 5: When I look to kind of value add products and the Billet Premium for 2024, have those negotiations started, have they been completed? And could you comment maybe comment on what you would expect in terms of that Billet Premium?

When I look to kind of value add product.

And the pellet premium for 2024.

Those negotiations started have they've been completed.

And.

Could you comment on what you would expect in terms of that pellet premium.

Speaker 5: in the current environment for 2024. Thank you very much.

In the current environment for 2024, thank you very much.

Speaker 3: Sure, the good things, another good question. And so both for the US and of course as we've discussed, our new Gritertongue Cast House will also come online and begin producing Billet early next year. We've really just started to discuss the 2024 sales.

Sure Lucas Thanks, another good question.

So both for the U S and of course, as we've discussed our new grid or tongue cast house will also come online and begin producing bill it early next year.

We've really just started to discuss 2024 sales.

Speaker 3: The season has started a bit later this year than maybe it has in past years, which I think reflects probably a bit of the general market dynamic that we see. As I mentioned, there have obviously been a bunch of macro drivers that have resulted in both all the alamy and regional delivery premiums reaching sort of 2 and a half year lows.

The season has started a bit later this year than maybe it has in past years.

I think reflects probably a bit of the general market dynamic that we see as I mentioned.

There have obviously been a bunch of macro drivers that have resulted in both <unk> and regional delivery premiums, reaching sort of two and a half year lows, but of course until we really get very far in those discussions it is hard to predict what 2020 for premiums might be.

Speaker 3: But of course, until we really get very far in those discussions, it's hard to predict what 2024 premiums might be. But we'll definitely include those on our key four call when we give you the rest of our 2024 guidance. And I would definitely expect.

But we will definitely include those on our Q4 call. When we give you the rest of our 2020 for guidance and I would definitely expect definitely for the U S. We would have those premium set.

Speaker 3: Definitely for the US, we would have those premium set. Going forward for Europe , that market is more of a quarterly market, so you'll see a sector reflect. Bill of premiums in Europe more on a quarterly basis because it can change from quarter to quarter, where the US is more of an annual market.

Going forward for Europe that market is more of a quarterly market. So you'll see us start to reflect billet premiums in Europe more on a quarterly basis, because it can change from quarter to quarter towards the U S is more of an annual market.

Got it that's helpful.

Speaker 5: really quickly on Montali, good to see that that that contract comes through. If I recall correctly, Montali is running at 75% utilization. Have there been discussions about that?

Really quickly on Mount Holly.

Good to see.

That contract come through if I recall correctly, Mount Holly's is running at 75% utilization.

Have there been discussions about.

Increasing this cost of surface power allocation to Mount Holly.

Speaker 5: increasing this cost of service power allocation to Mont Holly so that the plant can run at 100%.

So that the plant can run at 100%.

Speaker 3: Yes, and actually that's something that we negotiated as part of this contract is we do have the right to call the additional power that would be necessary in order to restart the remaining 25% of the amount of pots. And so as we monitor the market conditions, we have that option on, you know, within a notice period that would work with a restart and to call that power. So securing the power won't be roadblocked to restarting those pots and not Holly.

Yes, and actually Thats something that we negotiated as part of this contract is we do have the right to call. The additional power that would be necessary in order to restart the remaining 25% of the Mt. Holly parts.

So as we monitor the market conditions, we have that option.

Within a notice period that would work with a restart.

On the call that power so securing the power it won't be a roadblock to restarting those parts at Mount Holly.

Speaker 5: And the power would it be at the same cost of service rate, or would there be a different tariff of sorts?

And the power would it be at the same cost of service rate of what therapy at different tariff of sorts.

Speaker 3: Yeah, the option within the contract is linked to there's actually a few different terror schedules that we will take power on from Santee Cooper under that contract. But the option is linked to 1 of those rates. That's in the rest of the Mount Holly.

Yes.

Option within the contract.

<unk>.

As a link to there's actually a few different tariff schedules that we will take power on from Santee Cooper under that contract, but the option is.

A link to one of those rates.

That's in the.

The rest of the Mt Holly.

Power contract package.

Alright, I really appreciate all the color.

Speaker 5: Alright, I don't really appreciate all the color and um, to you and the team best of luck.

The team best of luck.

Thanks Lucas.

Okay.

Speaker 7: Our next question is from Tim Nutaners with Wolf Research. Your line is now open. Yeah, hey, good afternoon. I hope everyone can hear.

Our next question is from Timna Tanners with Wolfe Research. Your line is now open.

Yeah, Hey, good afternoon, and I hope everyone can you hear me okay.

You sound great Timna. Thanks.

Speaker 7: Thank you for thanks, just had the tick. All right, so I had a couple questions I thought I would hone in on the situation in Zimalco. I thought it was interesting. It was material enough to fall for insurance recovery, but I might have missed a press release or an announcement about it. I wanted to know a little bit more about the incident. You said it was the second time this has happened, but you feel like you've sufficiently addressed the situation so that it won't recur.

Okay, Alright, Thanks, just had the tech alright, so I had a couple of questions I thought I would hone in on them.

In the Moscow.

I thought it was interesting it was material enough to file for recovery.

And then I might have missed our press release or an announcement about it.

I wanted to know a little bit more about the incident you said it was the second time. This happens do you feel like you've sufficiently address the situations where that won't recur.

Speaker 3: Yes, so a very question. I may back in provide a little more detail and just why we feel confident that we've now got an under control. And so within a refinery in general, you'll have some steam generation steam powered electric electrical generation units that supply energy to the plant.

Yes, so great question.

Maybe I can provide a little more detail and why we feel confident that we've now got it under control.

So within a refinery in general Youll have some steam generation steam powered electric electrical generation units that supply energy to the plants.

Speaker 3: and also regulate the speed pressure going into the refinery.

Also regulate the steam pressure going into the refinery.

Speaker 3: And in this case, one of our steam generation units suffered a failure originally back in the mid-June time period and then we thought we had it a draft.

And in this case, one of our steam generation units suffer.

Suffered.

Failure.

Generally back in the May June time period, and then we thought we had it addressed but it recurred.

Speaker 3: but it recurred in the late September time period. And we dug a little further. We brought in engineers from the manufacturer who went through the machine with us.

The late September time period.

And.

Doug a little further we brought an engineer some of the manufacturer.

We went through that machine with us.

Speaker 3: and have now helped us bring it back to its normal operating status.

And have now helped us bring it back to its normal operating status so given those steps.

Speaker 3: So given those staff again with the engineers from...

Again with that engineers from the.

Speaker 3: The manufacturer as well, we feel confident that that issue is now behind us.

The manufacturer as well, we feel confident that that issue is now behind us.

Speaker 7: Thank you. And then when do you think you might be able to record a recovery from your insurance company and like for what timing and also what might the

Okay. Thank you and then when do you think you might be able to be quite a recovery from your insurance company and what timing and also what might the deductibles look like.

Speaker 3: Sure, we won't give specific guidance on the deductible, although it's just a relatively small portion of the overall plane. And so one should not be material from a cash matching standpoint to the losses that we incurred.

Sure, we wont give specific guidance on the deductible, although it's just.

Small relatively small portion of the overall claim.

So it should not be material from cash matching standpoint to the losses that we incurred.

Speaker 3: But that claim, we just made it. So we really need to engage with Centurb to talk about timing for payment. You might look back to our 2018 claim for CBRY when we had an outage that...

But that claim we've just made it.

So we really need to engage with insurers to talk about timing for payment.

You might look back to our 2018 claim for <unk>, when we had an outage that.

Speaker 3: some power delivery so the plant resulted in some production being lost. That recovery, I think, took about a year to actually get the cash in the door. So that might give you some guidance as well, it might be here, although it's hard to say at this point.

Scott.

The power delivery so the plant resulted in some.

Production being lost that recovery I think it took about a year to actually get the cash in the door.

So that might give you some guidance as to what may be here, although its hard to say at this point.

Speaker 7: Okay, that's helpful. And then I know there was a mention when we were going through the guidance that the price data, the recent levels, they're being additional. I just want to make sure I understood those comments correctly. Is that just to say that, I think I have to go back to my notes. It was an extra 15 to 20 million of EBITDA. Or, and I assume that was to say that if today's LME price were sustained through the rest of the quarter, but I just want to clarify what was intended by those.

Okay. That's helpful. And then I know there was a mention them youre going to that guidance that that price data that recent levels. There will be an addition.

I just want to make sure I understood. The comments correctly is that just to say that.

I think I have to go back to my notes here over the next $15 million to $20 million of EBIT.

And I assume that was to say that if today's price.

Price were sustained through the rest of the quarter, but I just want to clarify what was intended.

Yes.

Speaker 3: Yeah, you got it almost exactly correct in the basically we're just saying the cash prices today are about $100 higher than what our realized Q3 LME prices work

Got it almost exactly correct.

Basically we're just saying the cash prices today are about $100 higher than what our realized Q3.

<unk> prices were and so if that were to sort of sustain going forward. If you go back to our sensitivities.

Speaker 3: And so if that were to sort of sustain going forward, if you go back to our sensitivities in our deck, you'll see it should have about a $10 to $15 million quarterly impact on EBITDA going forward.

Youll see should have about a $10 million to $15 million quarterly impact.

EBITDA going forward so in other words.

Speaker 3: So in other words, what we're hopeful of is we have started to see some green shoots on both the demand and the supply side globally. Some of the things I talked about, we've seen really strong renewable demand in China, strong EV demand in China, both of which are things that should extrapolate to the rest of the world as a macro-pict situation rebounds.

Well, we're hopeful of is we have started to see some green shoots on both the demand and the supply side.

Globally.

Some of the things I talked about we've seen really strong renewable demand.

In China strong EV demand in China, both of which are things that should extrapolate to the rest of the world.

As the macro picture situation for.

Speaker 3: And then we've also seen on the supply side, you know, additional outage in China. So a lot of those are what drove that LME prices start to improve. And so obviously we're hopeful that those trends continue. And if they do, you know, there's a lot of earnings power in this business as we've shown in previous quarters.

Rebounds, and then we've also seen on the supply side additional outages in China. So a lot of those are what drove that LNG prices start to improve and so obviously, we're hopeful that those trends continue and if they do there is a lot of earnings power in this business as we've shown in previous quarters.

Speaker 7: Okay, and then just wrapping up as I could on the raw material side, just looking at the guidance and no cost because you have to fully slow through in your numbers. But do you see a lot further downside to cook and pitch? And then remind us if you could on Jamalco, what a lumina price is very even for you.

Okay, and then just wrapping up if I could on the raw material side and just look at the guidance and I know caustic has yet to fully flow through in your numbers, but do you see further downside the coke and pitch and then remind us if you could what alumina price.

Is breakeven sale.

Speaker 3: Sure. So, yeah, on the CokenPitch side, it's given the course of the past couple of years. It's hard to really set what your expectations are because we've been stuck for almost two years now with CokenPitch prices that are just materially higher than what we ever saw in any previous period.

Sure.

So on the Coke and pitch side, it's given the course of the past couple of years, it's hard to really set what your expectations are because we've been stuck for almost two years now.

With Coke and pitch prices that are just materially higher than what we ever saw on any previous period.

So as they've come down I mean, coke prices are down almost 50% from where they are high it was but they're still well above historical levels or so.

Speaker 3: So as they've come down, I mean, co-pricers are down almost 50% from where their height was, but they're still well above where historical levels are. So, obviously a lot of this will have to do with the oil market.

Obviously, a lot of this will have to do with the oil markets.

Speaker 3: and energy markets globally and steel markets frankly. But we continue to see them coming back down towards normalize levels. There's really no reason why they shouldn't. So we'd expect that to continue overcoming quarters of although we just wish it would happen faster than it has. Cauts.

<unk>.

In energy markets globally.

And steel markets frankly.

But we continue to see them coming back down towards normalized level. There is really no reason why they buy they shouldn't so we'd expect that to continue over coming quarters. Although we just wish it would happen faster than it has.

Yes.

Caustic.

Speaker 3: As we said last about six months, it takes longer to come through, but cost of prices have really come off substantially. And you really haven't started to see the benefit of that really flow through our results because that downturn happened more recently. So we're required to see that more significantly starting into one.

As we've said less about six months it takes longer to come through but caustic prices have really come off substantially and you really haven't started to see the benefit of that really flow through our results because of that that downturn happened more recently, so we'll start to see that more significantly starting in Q1.

Speaker 3: And then on the refinery side, we're not giving cash break events for any of the assets. But what I did say in my prepared remarks was absent the power disruptions that we had at Tremel in the quarter would have been a pop break event for the quarter. So that could be some sense. Got it. OK.

And then on the on the refinery side, we are not giving cash breakeven for.

Any of the any of the assets, but what I did say in my prepared remarks was absent.

Absent the power disruptions that we had in the quarter would have been about breakeven for the quarter.

I'll give you some sense got it.

Okay I'll leave it there. Thank you very much for the color.

Speaker 3: Thanks, Senator. And then maybe just add on for Jamalco. Obviously we've got a lot of CAPEX programs ongoing there. So we would expect that to continue to improve over the course of 2024, but that's where we stand today.

Thanks, and then maybe just to add on for Jim Alco, Obviously, we've got a lot of capex programs ongoing there.

So we would expect that to continue to improve over the course of 2024, but that's where we stand today.

Alright, thank you.

Thanks, Tom.

Yeah.

Speaker 8: Our next question is from John Tommaso with John Tommaso's very independent research. You know why it's now open. Thank you. Could you?

Our next question is from John Tumazos with John Tumazos, very independent research. Your line is now open.

Thank you.

Shed some light on the rig.

European power prices or the Nord pool price.

Is it more due to a weaker demand slowing European economy as opposed to.

Any increase in electricity supply.

Yeah. So.

Speaker 3: Yeah, so it's a very good question, John . Thanks. When you're looking at your pink power prices, probably the easiest common factor to look at is natural gas prices. And in Europe , obviously, that's referencing TTS.

Very good question, John and thanks.

When youre looking at European power prices, probably the easiest common factor to look at as natural gas prices.

And in Europe, obviously, thats referencing TTS.

Speaker 3: So if you take a look at TTF over time, it obviously had very, very historically high levels, multiples of where it had been over history in the energy crisis that really hit late last fall, early winter.

So if you take a look at TTS.

Time.

It obviously had very very historically high level, it's multiples of where it had been over history in the energy crisis that really hit late last fall early winter.

Speaker 3: And the situation is definitely improved from them. So European natural gas storage is near capacity today. And

And the situation has definitely improved from them so.

European natural gas storage is.

Near capacity today.

And.

Speaker 3: you know, LNG availability is relatively strong. And so you've seen TTF come back down significantly from the record level that's passed here. That's it.

LNG availability.

<unk> is relatively.

Strong.

And so you've seen TGF come back down significantly from the record levels of last year.

That said, it's still multiples above where it stood historically and.

Speaker 3: multiples above where it stood historically. And obviously, multiples above say where Henry Hub is here in the United States.

Obviously multiples above say, where Henry hub is here in the United States.

More than 10 X.

Speaker 3: So, when you look at it from that standpoint, maybe 10X isn't the right multiple, but it's multiples above where Henry Hub is today. So, when you look at it from that standpoint, European energy prices are going to stay high while that dynamic remains.

So when you look at it from that standpoint.

<unk>.

Maybe tenants isn't the right multiple but it's.

Multiples above where Henry hub is today. So when you look at it from that standpoint.

European energy prices are going to stay high well that dynamic remains.

Speaker 9: And, well, thankfully gotten better. I think there are still challenges. And you can then see that in industrial demand. What are we seeing, relatively subdued European economy? In your demand supply.

And thankfully gotten better I think there are still challenges and you can then see that in industrial demand.

Where we've seen relatively subdued European.

Economy.

And your demand supply balance you had almost a million tons excess demand China.

And a million and a half times.

Sure.

Demand less output.

Ex China.

Is that demand decline.

Mostly in Europe.

Or is it more broadly spread out U S Europe developing world.

Speaker 3: Yeah, I think you've got it about right, John . It's definitely the most significantly in Europe , which I would say, really, of all regions globally. It's been the most challenge over this period.

Yes.

I think you've got it about right John and definitely in most significantly in Europe, which I would say.

Really if all regions globally.

<unk> has been the most challenged over this period.

Speaker 3: much better in the US, to be honest, although obviously not at levels that we would like to see it and that we think it could return to. So, you know, we, for both markets, frankly, are eager to see the cycle go ahead and turn over because both markets remain very short on the aluminum side and Frank's gotten much shorter, given the economic situation over the last

And much better than the U S.

To be honest although.

Obviously not at levels that we would like to see it and that we think it could return to.

So we for both markets frankly.

Are eager to see.

The cycle goes.

Ahead in turnover.

Because both markets remain very short on the aluminum side.

Frankly, not much shorter given the economic situation over the last.

Okay.

Speaker 3: several years. So, you know, as I said, we're trying to see some green shoots, obviously.

Several years.

No.

As I said, we're starting to see some green shoots obviously.

<unk>.

Speaker 3: And the UAW strikes here in the US should help auto-motives man going forward.

And of the UAW strikes here in the U S.

Should help other automotive demand going forward.

Speaker 3: It's sort of an interesting one to predict, but obviously people saw those UAW strikes coming. So we started to see a little bit of demand impact going in even before the strikes started, but now that there's certainty there, everything that should help pick up.

Sort of an interesting one to predict but obviously people saw those UAW strikes coming so we started to see a little bit of demand impact going even before the strike started.

But now that there's certainty there we think that should help to pick up.

Speaker 10: Aerospace demand has also been very strong here in the US, which is a real nice pale one for us. And then as interest rates come down, we should see some recovery and building construction as well. Thank you. If I could ask one more, and I apologize, sometimes I...

Aerospace demand has also been very strong here in the U S.

<unk>, which is a really nice tailwind for us.

And then as interest rates come down we should see some recovery in building construction as well.

Thank you if I can ask one more and I apologize.

Sometimes I try to ignore Washington, and government so disgusting.

Could you explain these strategic tax credits so a little more.

Again, because I hadn't been studying them.

With the benefit to century on a full year basis, when theyre codify would it be closer to 1 million or 10 million or 100 million or more.

Give us a crude range your order of magnitude.

Speaker 3: Yeah, thanks, John . As I said before, until we have those regulations come out, it's very difficult to quantify exactly what will be included in cost of production. But you can go back to the law itself and see what it lays out. It's a tax credit, production tax credit, equal to 10% of cost of production of these critical minerals.

Yes, Thanks John.

As I said before until we have those regulations come out it's very difficult to quantify exactly what will be included in cost of production.

But you can go back to the.

LOL itself.

And see what it lays out.

Tax credit production tax credit equal to 10% of cost of production of these critical minerals.

Speaker 9: And so you can take over to that, but until we have the regulations, we're not going to estimate what that credit could be. So that could be 10% could be 15%.

So.

You can take a look at that but until we have the regulations were.

We're not going to estimate what the credit could be.

So that could be 10% could be 15 cents a pound for your U S output.

I don't mean to put words in your mouth, just I'm sorry.

No problem. Thanks, John.

Okay.

Speaker 1: Our next question is from Cartier, John Tick, with BML. You're on snap.

Our next question is from cut yet John sick with BMO. Your line is now open.

Hi, Thank you for taking my questions, maybe starting with Jim I'll call can you provide any preliminary views on how we should think about capex for next year.

Speaker 11: Hi, thank you for taking my questions. Maybe starting with Jamal, can you provide any preliminary views on how we should think about Capix for next year?

Well in line with our normal cadence Pat Yes, I think we will wait to give any 2024 guidance until our Q4 call.

Speaker 3: Well, in line with our normal cadence, Petya, I think we'll wait to give any 2024 guidance until our Q4 call. And so, yeah, we'll come back to you with that in February .

So yes, we will come back to you with that in February.

Speaker 11: Okay, and what would be, can you just say what the maintenance cap X typically would be?

Okay, and what would be can you just say what the maintenance capex typically would be.

Sorry could you repeat that.

Speaker 11: Right. If you could maybe, right, what the maintenance capex for Jamalco would be?

Okay, if you could.

Maybe what the maintenance Capex for Jim I'll call would it be.

The typical maintenance.

Speaker 3: Yeah, again, we'll go ahead and give those numbers on our Q4 call. And what we did talk about last time.

Yes, again, we'll go ahead and give those.

Numbers on our Q4 call.

We did talk about.

Last time was that we expected.

Speaker 3: Basically second half 2023 cap X for the refinery to being the 10 to 20 million dollar range.

Basically second half 2023, capex for the refinery to be in the $10 million to $20 million range.

Speaker 3: What I said on my prepared remarks, we expect to be coming in on the low end of that range for the rest of the year. That includes both the maintenance cap ex and some investment cap ex, including the restoration of the high efficiency boiler that I mentioned. So if you're just looking for some general provisions that gives you a sense, although we'll begin a little way to guide for 2024 until that Q4 fall.

What I said on my prepared remarks, we expect to be coming in on the low end of that range.

For the rest of the year.

That includes both maintenance Capex and some investment capex, including the <unk>.

Restoration of the high efficiency boiler that I mentioned.

So if you're just looking for some general provisions that gives you a sense although again.

Way to guide for 2024 until the Q4 call.

Speaker 11: Okay, and maybe I missed this on the European credits. Is there further credits you can monetize, or how should we think about that?

Okay, and maybe I missed this on the European credits is there further credits you can monetize.

How should we think about that.

Okay, what we get as we monetize the excess credits that we had.

Speaker 1: Okay, well, we did as we monetize the excess credits that we had that have been allocated to us for free.

That had been allocated to us for free.

Speaker 4: with the agreement to repurchase them before they're due in 2024. So we've monetized what are available to us for that birth.

With with the.

Agreement to repurchase them before they are due in 2024, so we monetize what are available to us for that purpose.

Speaker 3: But I think the best way to sort of think about that going forward is to relate it to our overall working capital optimization programs.

But I think the best way to sort of think about that going forward is related to our overall working capital optimization programs.

Speaker 1: So we do, we will continue to have those ETS credits granted on an annual basis as part of the regulatory scheme. And so what our intention would be would be to continue to optimize that working capital, namely the EUA credits continuously over time as additional source of liquidity.

So we will continue to have those etfs credits granted on an annual basis as part of the regulatory scheme and so what our intention would be would be to continue to optimize that working capital, namely the EUA credits.

Continuously over time.

I think that that's an additional source of liquidity.

Speaker 11: Okay, and maybe just one more if I may. On Mount Holly, if you did decide to increase operations to full capacity, what would the CAPEX required be and how long would it take you to do that?

Okay, and maybe just one more if I may on Mount Holly. If you are if you did decide.

Increased operations to full capacity, what would the capex required be and how long would it take you to do that.

Speaker 3: Thanks, Katya. That's a very good question. In terms of the timing, obviously just a couple years ago now, we went through a restart of the continuously operating line in an additional 25% of those pots. And that took somewhere from 12 to 18 months to do that. So that will give you a sense of the time frame if we were to restart the remaining pots at Mount Holly as well.

Got you that's been a very good question.

In terms of the timing.

Obviously, just a couple of years ago now we went through a restart of the continuously operating line and an additional 25% of those parts.

Took somewhere from 12 months to 18 months to do that so that'll give you a sense.

The timeframe, if we were to restart the remaining parts at Mount Holly as well.

Speaker 3: From the cost side, we're undertaking that work now. Obviously, it's a bit hard to predict, you know, based on past experience given the cost environments that we found ourselves in over the past couple of years. So we're actually undertaking that work, working through what the cost would be. And I think we should be in a better position to give you some better figures and Q4 or Q1.

From the cost side, we are undertaking that work now.

Obviously, it's a bit hard to predict.

On past experience given the cost environment that we've found ourselves in.

Over the past couple of years, So we're actually undertaking network working through what the costs would be and I.

I think we should be in a better position to give you some better figures in Q4 Q1.

Okay. Thank you.

Speaker 1: Our next question is from Lucas Pipes with Beeralei Security.

Our next question is from Lucas pipes with B Riley Securities.

Your line is open.

Speaker 5: Thank you very much, operator. Thank you for taking my follow up question. My goal, one of my goals for this evening is to get continuum education credits on US tax law. And I really appreciate you.

Thank you very much operator, thank you for taking my follow up question.

Michael one of my goals for this evening is to get continuing education credits on U S tax law and.

I appreciate it.

Speaker 5: Taking all these questions I have one more. It is a credit, right? So it's not a deduction of US federal income tax

Taking all of these questions.

I have one more.

It is a credit right. So it started deduction.

U S.

Federal income tax.

Speaker 12: It's a credit. So whatever the amount is.

It's a credit so so whatever the amount is.

Speaker 12: This is a cash reduction of your operating costs, correct?

This is a cash reduction of the operating costs correct.

Speaker 3: Well, I think you know I used to be a lawyer. I wasn't a tax lawyer, so plenty of disclaimers around that. And I can't give any continuing credit directly.

Well I think I used to be a lawyer.

Isn't a tax lawyer, so plenty of disclaimers around that and I can't give any continuing.

Continuing the credits directly.

Speaker 3: That said, that said, I, any might imagine I have read the law. And again, until we have that guidance, you know, this is all very preliminary and we, we can't say for sure, but what the law does provide is that for the first five years that a credit would be realized.

That said.

As you might imagine I have read the law.

And.

Again until we have that guidance. This is all very preliminary and we can't say for sure but what the law does provide is that for the first five years and the credit.

Would be realized.

Speaker 3: that credit would be a direct pay, so a cash credit, or you can elect to have it be a cash credit. And if you're not otherwise a US taxpayer, or you don't otherwise have a US tax, enough US taxable income during the period, after the first five years, that direct pay provision that stays out and the tax credits become tradable.

That credit would be a direct pay and.

So our cash credit.

Or you can elect to have it be a cash credit.

Otherwise a U S taxpayer or you don't otherwise have U S tax U S taxable income during the period after the first five years.

That direct pay provision that stays out.

The tax credits become tradable.

Okay.

Speaker 12: very helpful, very helpful. I'll take those credits over continuing education. I really appreciate that thing.

Very helpful very helpful. I'll take those credits over continuing education I really appreciate that.

Yes.

Alright, Thanks Lucas.

Our next question is from Timna Tanners Your line is open.

Speaker 1: Our next question is from Tin La Tenors. Your line is open.

Speaker 7: Yay, thanks for taking two quicks all up. And one was that my team and I were kind of confused actually we weren't 100% clear on how to think about the impact from alkoving clothes. It sounds like most of October . So it's part of September was 16.9 million equipment failure. Is it gonna be an increased amount into the fourth quarter? And then assuming that's not gonna be in your adjustity but that but just for, you know, calculate.

Yeah, Hey, thanks for taking two quick follow ups, one was that my team and our kind of confused actually we weren't 100% clear on how to think about that.

Pat from marketing.

It sounds like most of October. So it's part of September was $16 9 million equipment failure is it going to be an increase came out into the fourth quarter and then assuming that's not going to be in your adjusted EBITDA, but just for now.

Calculation.

Yeah.

Yes.

Speaker 3: Thanks, and good question. It is in the guide what we expect for keep the Q4 impact to be. So it's included in that guide.

Thanks, Tim good.

Good question. It is in the guide what we expect for keep the Q4 impact to be.

So it is included in that in that guidance.

Alright.

Excluded Jim Alto equipment failure from third quarter EBITDA guidance. So we didn't think that you would include it for the fourth quarter.

Speaker 7: Failure from third quarter, even though guidance. So we didn't think that you would include it for the fourth quarter.

Speaker 3: Yeah, it is excluded, but the impact.

Yes, it is excluded.

But the impacts.

Speaker 3: sort of calculated as we run through those results, but it is adjusted out. That's correct. And.

Sort of calculated as we run through those results, but it is adjusted out that's correct.

Speaker 3: Well, as you might imagine, I mean, we haven't closed the book for October yet. Even so it's a bit difficult to say exactly what that will be. But if we do expect that at that point, you will have fully in through any deductibles, frankly, well before that. And so all of that should be recoverable dollars, which is why we decided to just it out.

As you might imagine we haven't closed the books for for October yet, even so it's a bit difficult to say exactly what that will be but we do expect that at that point you will attract.

It fully.

In through any deductibles, frankly, well before that.

So all of that should be recoverable dollars, which is why we decided to test it out.

Speaker 7: That makes sense. Okay, but you aren't going to, but for the fourth quarter, you'll include it and not exclude it. Is that what you're saying?

That makes sense, okay, but you are going to the fourth quarter you included and not excluded is that what you're saying.

Sorry, no we will adjust it out what I'm I guess, what I'm, saying is dollar for dollar should it should be included under the insurance policy.

Speaker 3: Sorry, no, no, we'll just do that. What I guess I'm saying is dollar for dollar should be included under the insurance policies completely deductible to already have been that well before that.

Deductibles are already have been that.

Well before that.

Okay, but the fourth quarter relative to the third quarter would you expect that larger similar.

Speaker 7: Okay, but the fourth quarter relative to the third quarter, would you expect it larger, similar, smaller, just not clear on the dynamics given us out for a longer period of time in October ? Or do you not know, I'm sorry if that.

Not clear on that dynamic given them out for a longer period of time in October alright, Im sorry, I understand sorry, I understand your question.

Speaker 3: Sorry, I understand your question. I'm sorry, I understand your question now. It's a bit hard to relate it back to the previous period because the Q3 number had some impact on the June outage running through it. So it's a bit hard to sort of compare. There's a few different things going on there. So I think it's probably easier just to wait until the Q4 call will give you the exact detail of what it turned out to be. But again, it should be fully covered under the insurance policy.

Sorry, I understand your question now, it's a bit hard to relate it back to the previous period because.

The Q3 number had some impacts from the June outage running through it.

So it's a bit hard to sort of compare theres a few different things going on there. So I think it's probably easier just to wait until the Q4 call. We'll give you the exact detail of what it turned out to be but again it should be fully covered under the insurance policy.

So.

Got it Okay. One last thing if I could so the discussion is moving to full capacity makes me wonder if ravenswood is becoming less likely to return. So I just wanted to ask about any updated thoughts there and the longer that robin without doesn't that make it also more difficult to restart.

Speaker 7: Got it. Okay. One last thing if I could. So the discussion is moving Mont-Holy to full capacity makes me wonder if Ravens would is becoming less likely to return. So I just don't have to ask about any updates off there and the longer that Ravens would out does not make it also more difficult to restart.

Speaker 7: Tim, you're showing how long you covered Century because you're referencing Ravenswood, which was in West Virginia. It was permanently cut out back in 2008. I got a different insight. You know I'm in hospital, I'm sorry. But I know what you mean. Yeah, yeah.

Timna youre showing how long you covered century, because youre referencing ravenswood, which was in west Virginia was permanently curtailed.

And yes, it's hot 2008.

Okay.

Hi.

But I know what you mean.

Speaker 3: Yeah, I know what you mean, a hospital. No, no real comment on a hospital at all. Obviously, it's much easier to take action at an operating smelter like Nell Holly than it is to we start a curtailed smelter like a hospital. And so when we look at options,

Yeah, No I know what you mean.

So.

No.

No real comment on hospital at all.

Obviously, it's much easier to take action at operating smelter like now Holly than it is to restart our curtailed smelter like Huntsville.

And so when we look at options.

Speaker 7: you know, going forward, I think it'll be pretty consistent that you'll see us talk about Mount Hawley as the first option to add production. But it's really not a comment on the future prospects of possible at all. Hazzal, I'll get that straight next time. Thank you again.

Going forward I think it'll be pretty consistent that youll see us talk about Mt. Holly as the first option to add production.

But it's really not a comment on the future prospects of possible at all.

I'll get that state next time, thank you again.

Thanks Anna.

Speaker 1: There are no more questions. I'll pass the call back over to the management team for closing remarks.

There are no more questions. So I'll pass the call back over to the management team for closing remarks.

Speaker 3: Thanks everyone. We really appreciate the questions and we look forward to talking to you in February for a Q4 call. Thanks.

Thanks, everyone. We really appreciate the questions and we look forward to talking to you in February on FERC Q4 call.

Speaker 1: That concludes the conference call. Thank you for your participation. You may now disconnect your line.

That concludes the conference call. Thank you for your participation you may now disconnect your line.