Q4 2024 ArcelorMittal SA Earnings Call
Yes.
[music].
Yeah.
Good afternoon, everyone. This is Daniel for me Arcelormittal Investor Relations team. Thank you for joining this call to discuss the Oscar Mitchell's performance and progress in 2024.
Speaker Change: Present on the call today, we have CEO Mitchell and our CFO Jeremy No Kristina.
Speaker Change: Before we begin I would like to mention a few housekeeping items as usual, we will not be going through the results presentation, which we published this morning on our website.
Speaker Change: I do want to draw your attention to the disclaimers on slide 23 of that presentation.
Speaker Change: Calling some opening remarks from a detour and Jamie we will move directly to the Q&A session. So if you would like to ask a question. Please do press star one one on your keypad to join the queue. So that construction is star one to join the Q&A queue.
Speaker Change: And with that I will hand over the call to Alicia.
Alicia: Thanks, Danielle and welcome everyone and thank you for joining today's call.
Alicia: Before I ask Jim to comment on our financial performance I want to spend a moment reviewing the progress we have made against our priorities.
Alicia: First.
Alicia: To talk about safety.
Alicia: Across the company our people our galvanized to improve our safety performance and achieve our goal of being fatality and injury free.
Alicia: 2024, so on and the completion of the DSS plus group wide safety audit and the recommendations, which focus on our risk management processes.
Alicia: Tableau Shing, a consistent safety first culture across our group operations.
Alicia: And determine that we improve our safety performance this year and believe the detailed unit specific roadmaps developed from the audit will support our efforts to do so.
Alicia: Reflecting on our strategic progress in 2024, we have achieved a great deal.
Alicia: We have faced challenges as we all know the cycle has not been in our favor yet. Despite those headwinds we have delivered resilient results $2 billion of investable cash flow generation in this environment speaks to the progress we have made as a company.
Alicia: This has allowed us to invest counter cyclically and reward our shareholders at the same time.
Alicia: Everyone that our ceramic those who take pride in this.
Alicia: Growth is an increasingly important theme for our ceramic though this.
Alicia: This year, we will start to see the benefits of the organic investments we've been making over the last few years, we expected structural EBITDA impact from our portfolio of high return strategic projects now stand at $1 9 billion.
Alicia: $400 million of this is due to be captured in 2025 with a further $600 million due in 2026.
Alicia: Our recently completed projects <unk> got Cold mill complex in Brazil, the new Hot strip mill in Mexico, and the one gigawatt renewable project in India are performing well.
Alicia: The fact that these projects are delivering new incremental EBITDA, we expected should instill confidence that our strategic Capex will add significant structural earnings and cash flow benefits.
Alicia: Similarly, the assets that we've acquired in recent periods, including past them in Brazil, Texas Hvis facility undertaken <unk> are all performing well, adding further structural earnings and cash flow growth.
Alicia: This growth supports higher shareholder returns.
Alicia: Over the past four years, our dividend has grown at a compounded rate of 16%.
Alicia: Reflecting our confidence in the outlook of our company.
Alicia: On top of our dividends, we have returned significant cash to our buybacks, allowing us to reduce our share count by 37% over the last four years, our rate unmatched by any of our peers.
Alicia: Our policy and capital return intentions are clear.
Alicia: On the team of <unk> I want to highlight that our surrebuttal absolute carbon emissions today are approximately half the level of 2018.
Alicia: Much of this has been the result of our portfolio optimization and the steps that we have taken to shape our business around our most competitive assets.
As we move forward, we are determined to follow a transition pathway that is economic and ensures that we remain competitive.
Alicia: When it makes sense, we are making investments.
Alicia: <unk> and the revamped over two years since the style are both good examples.
Alicia: These economic projects support our growing offering of low carbon solutions to our customers under our <unk> brand.
Alicia: It is critical that we see Europe make swift progress in providing a policy environment that appear.
Alicia: Greatly incentivize the further investments required to accelerate decarbonization in Europe.
Alicia: As I conclude my message is quite simple.
Alicia: We are a transformed business.
Alicia: We have the best talent we.
Alicia: We have excellent market positions in all of the attractive geographies, including a unique exposure to India and we have a reputation for quality and innovation that is unmatched by any of our peers.
Alicia: Tier one balance sheet is a strategic asset asset that underpins, our consistent growth and continued value creation.
Alicia: I would like to take this opportunity to thank all our employees customers and shareholders for placing your trust in us.
Alicia: With that I will now hand, it over to Jean Reno to talk more about our financial performance.
Jean Reno: Thank you, Jeff and good afternoon, everyone.
Jean Reno: We delivered a resilient performance last year, despite the challenging market backdrop.
Jean Reno: EBIDTA was 7.1 billion for the year, which translates to $130 of EBITDA per ton shipped.
Jean Reno: This is almost double the level of previous cycle lows showing that the business and its earning capacity. If you had restructuring has transformed.
Jean Reno: The benefits of our optimized asset base and our relatively diversified exposures have also seen our results show significantly more stability than peers.
Jean Reno: This was particularly evident in the fourth quarter.
Jean Reno: Adjusted net income of $2 2 billion in 2024 represents a $4 four return on the book value of equity, which now stands at 6% to $4 per share.
Jean Reno: Return on capital employed in 2024, 6%.
Jean Reno: Considering where we are in the cycle I believe both of these figures are commendable.
Jean Reno: Moving on to cash flow, we generated over 2 billion of investable cash flow in 2024, bringing the total to 21 billion since 2021.
Jean Reno: Last year <unk>.
Jean Reno: It's $1 3 billion and the high return and strategic growth projects that are due to described we retired $1 7 billion to shareholders, including the repurchase of 6% of our outstanding shares.
Jean Reno: And we invested a net.
Jean Reno: 6 billion and M&A, including of course, our 28% stake in <unk>.
Jean Reno: Our performance provides strong evidence that arcelor mittal can deliver value through all aspects of this deal cycle and is testament to the progress we have made in recent years.
Jean Reno: I believe this is reflecting the dividend increase to 55 cents per share.
Jean Reno: This is a 10% increase on last year's dividend and brings the total increase since 2012 and control over 80%.
Jean Reno: Finally on the outlook, we are forecasting slightly positive apparent demand growth.
Jean Reno: And are well positioned to benefit from any recovery.
Jean Reno: We're confident we will continue to generate positive cash flow this year and beyond.
Jean Reno: Which will continue to be allocated via our establish capital return policy.
Daniel: With that Daniel I believe we can move to.
Daniel: The furnace.
Daniel: Great.
Daniel: Thank you Jamie.
Speaker Change: We will take our first question from <unk> at Citigroup.
Speaker Change: Please go ahead.
Speaker Change: Thank you three quick questions firstly with the plant non green CW plant in Calgary to comments end of 2007 does that mean anything for the second yes at Calvert either in terms of accelerating the timeline or delaying in terms of project complexity can sequencing X.
Speaker Change: That's it.
Speaker Change: First one secondly on Capex.
Speaker Change: Firstly on the strategic growth of one three to $1 5 billion new projects also coming into the pipeline like the electrical steel plant.
Speaker Change: Should we expect it to remain at these kind of levels beyond 2026, as well as long as the balance sheet remains under geared and on the <unk> 4 billion of Decarbonization Capex. After the channels open letter of the Ft is that ultra right. The thing that it would remain at.
Speaker Change: For the placebo.
Speaker Change: Future at these levels unless there are major changes in the form of some regulatory support and.
Speaker Change: Thirdly, slightly pedantic question of the volume increase in Liberia from incremental 10 million tons to 15 million tons why is the EBITDA potential only increasing from.
Speaker Change: By about 100 million from $2 50.
Speaker Change: Lying assumption on the cost or pricing that changed as well. Thank you.
Speaker Change: Okay.
Speaker Change: See you soon.
Speaker Change: A lot of questions, but let me take a stab at them.
Speaker Change: In terms of Calvert, Alabama look I think the first headline is that we are in the process of.
Speaker Change: Commissioning our brand new electric furnace. This is the most technologically advanced electric furnace.
Speaker Change: In the United States with Gastro and Hot strip mill with.
Speaker Change: With the capability of producing exposed automotive grades so and I'll remind you that this game changing its cutting edge.
Speaker Change: <unk> got a good cost base and further strengthen our strong franchise that we have in the NAFTA region, we're building on that.
Speaker Change: With electrical steel announcement. This morning that we made this is going to be 100% owned by <unk>.
Speaker Change: It's another world class cutting edge electrical steel.
Speaker Change: Facility for non grain oriented steels for the premium automotive.
Speaker Change: Demand requirements.
Speaker Change: Really good gauge capability and excellent quality characteristics.
Speaker Change: We are also looking at a second EES and your question was does the electrical steel facility delay that.
I don't believe it materially delayed the second EES I think what we're focused on to its commissioning the first es and then utilizing the resources that we have for the first GDS.
Speaker Change: In staffing the project for the second year, So that's fundamentally the plan.
Speaker Change: We're commissioning the first year, bringing another world class electrical steel facility in terms of electrical steels in Calgary and then we'll start on the second.
Speaker Change: In terms of the medium term capex in <unk>.
Speaker Change: Fundamentally.
Speaker Change: It's a great question, our focus remains to keep the.
Speaker Change: Overall, capex envelope between four $5 billion to $5 billion.
Speaker Change: Really the focus and we have the ability to modify and where we spend our capex.
Speaker Change: Capex right. So you saw in the third quarter, we announced we are not going ahead with one of our project in Brazil.
Speaker Change: Instead, we substitute that with the electrical steel project in Calgary, Alabama.
Speaker Change: So similarly, I think you can expect developments like that where we see the market is changing or we can be more agile and dynamic in allocating where we want to invest our capital and that also applies to become I'm not suggesting that all of this growth Capex will go into detail, but perhaps based on acceleration of policy.
Speaker Change: Issue that we want.
Speaker Change: And in case that happens, we could have more than just $300 million of telecom capex.
Speaker Change: A year.
Speaker Change: In terms of Liberia look that's a very good question, we have not changed our long term assumptions.
Speaker Change: Iron ore and they remain conservative, especially compared to spot today.
Speaker Change: The reason why you don't have the same delta I mean, you have a similar delta in terms of volume growth.
Speaker Change: The reason why it is slightly less is primarily because of quality considerations right. The 5 million tons of the DSO product. So it has a much lower <unk> than the <unk> product that we will make.
Speaker Change: And so as we blend we get.
Speaker Change: Some revenue uplift.
Speaker Change: So maybe to explain more thoroughly to data the concentrate can do 15 million tonnes of concentrate in 5 million ton of DSO. The original plan was we lose a 5 million ton of DSO and now the new plan is that we blend it and we have a 20 million tonne incentive fee product.
Speaker Change: And so the Delta is obviously there is a positive.
Speaker Change: On the volume side offset by some of the changes on the revenue side. So we can provide you with more detail on the math behind that.
Speaker Change: Thank you that's clear.
Speaker Change: Great. Thanks.
Speaker Change: So I will move to take the next question from Patrick at Bank of America. Please.
Speaker Change: Please go ahead Patrick.
Patrick: Thanks very much for the question.
Speaker Change: I'm sure you guys knew this was coming.
Speaker Change: If we saw kind of a re emergence of a threat.
Speaker Change: On Canada, and Mexico from the U S.
Speaker Change: How are you guys thinking about the potential impacts on dofasco in Mexico.
Speaker Change: Thanks.
Speaker Change: Sure.
Speaker Change: So yeah, Andrew we are expecting this question to come soon.
Speaker Change: Thank you for asking it.
Speaker Change: Look the high level first are the global perspective, and you guys. All know this better than us the significant global overcapacity.
Speaker Change: So any action to tackle that is welcome.
Speaker Change: We see similar actions underway in the European marketplace.
Speaker Change: Similarly in India than had been actions already taken in Brazil, there's discussion for potentially some more nothing has really materialized.
Speaker Change: And.
Speaker Change: We see similar issues in the United States.
Speaker Change: In terms of specifically the tariffs.
Speaker Change: <unk>, Canada or Mexico, we've been there before.
Speaker Change: I think if you remember in 2018 to 2019, when 232 was imposed.
Speaker Change: It is.
Speaker Change: <unk>.
Speaker Change: Tariffs that came from.
Speaker Change: There was tariffs on Canadian steel.
Speaker Change: Mexican steel.
Speaker Change: And.
Speaker Change: Our fleet cost so that's about $100 million.
Speaker Change: Per quarter.
Speaker Change: But this was more than offset by revenue right. So if you look at the revenue impact of the spark greater I'm, not suggesting that that would happen again in the spirit.
Speaker Change: The security one mitigating factor would be the revenue impact on some of these terrorists secondly, I would just add that I talked about the caliber EES.
Speaker Change: So you heard about that so we have much more.
Speaker Change: Slides, we should domestically produce which are melted and poured so thats another mitigating.
Speaker Change: But fundamentally I guess, the last point I would make is that.
Speaker Change: These discussions remain uncertain.
Speaker Change: What will end up happening, but the fundamental focus that we have as an organization is really to strengthen the NAFTA trading blocks, we see a lot of imports that are coming into Mexico, and Canada and to the extent that the desire is fundamentally to strengthen NAFTA that will be a net positive.
Speaker Change: And excuse me, Patrick but the names and names mixed up so thank you for your question.
Speaker Change: No problem. Thank you chip.
Speaker Change: Thank you.
Patrick: Alright, Thanks, Patrick So we will move now to a question from Andrew at UBS.
Speaker Change: UBS. Please go ahead.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Your line is open.
Speaker Change: Just a follow up on that final question I guess.
Speaker Change: Just to spell out the actual volume of flows into the U S. Can you just give us the numbers around what's coming from Mexico. Obviously, this third largest slab volumes could you quantify that.
And then the other products and also how much is going from the <unk> Kevin.
Speaker Change: You're asking anything from Europe, all for sale.
Speaker Change: Give us some volume numbers will be helpful.
Speaker Change: Secondly, just don't have electrical steels can you just talk a little bit about the market for downgrade or insights it like how you see.
Speaker Change: That growing in the coming years.
Speaker Change: What is there any other supply coming down the pipe.
Speaker Change: Tight do you expect that market to be by the time. This metal comes through and can you just talk through a little bit.
Market situation that please thanks.
Speaker Change: Okay, great. Thank you Andrew I will talk about electrical steels, and then I'll see if Jay.
Speaker Change: I can provide you with any color on your voting requirements where volume question.
Speaker Change: In terms of the non grid.
Speaker Change: Oriented electrical steel market noise is you could call it that.
Speaker Change: Today the market is in deficit.
Speaker Change: E Cigs.
Speaker Change: Significant amount of the supplies through imports.
Speaker Change: So if you look at our volume it's about 150000 tons.
Speaker Change: Basically it covers the import volume.
Speaker Change: First 0.2nd point I would make is that the market continues to grow.
Speaker Change: And we should not think of this as just an electrical.
Speaker Change: Cause we should think of this as a market, which is electrical cost plus hybrid because electrical steels that go into both vehicles.
Speaker Change: So theres still strong growth in hybrid hybrid vehicle demand and will be catering to that the third point I would make is that yes. There are some announcements of new capacity that you really need to look at that capacity and what is the capability of that capacity to deliver the high quality premium automotive.
Speaker Change: Material.
Speaker Change: And that I think is actually much shorter or much less than the overall market situation. So in that sense I think we have a unique product offering there.
Speaker Change: Very high quality capability and the market is there for our product.
Speaker Change: But generally no.
Speaker Change: Yes, thank you operator.
Speaker Change: Andrew Andrew as you know, we don't typically disclose the volumes.
Speaker Change: Kohls com.
Speaker Change: And then Mexico into the U S and vice versa, and Thats why we are trying to be helpful by Reconfirming.
Speaker Change: The cost impact that we saw back earnings for 2018.
Speaker Change: When we look at the close today.
Similar and that's why we continue.
Speaker Change: The $100 million that you talked about on the cost side and then of course, we will see what happens on the auto side of your question on the revenue side.
Speaker Change: Okay fair enough. Thank you.
Speaker Change: Great. Thanks, Andreas I will.
Timna: Next question from Timna at Wolfe.
Speaker Change: Wolfe research.
Speaker Change: Got it.
Speaker Change: Actually I think Timna might've, just dropped off the call. So we'll move directly to the next question, which we will take from Tristan.
Speaker Change: Excellent BMP.
Speaker Change: Interesting.
Speaker Change: Yes, hi, Thank you for taking my questions I have two first on the strategic projects. So this year, you expect zero point $4 billion.
Speaker Change: Cliff.
Speaker Change: From Vega, India in Liberia, but you also have three projects I think that we're supposed to be wrapping up now.
Speaker Change: <unk>.
Speaker Change: And now they are due to be completed in 2025. So first can you explain a bit the delay and why you don't expect at least some contribution from those three projects this year already.
Kristen: Thank you Kristen.
Kristen: Very important question so just on the high level overview.
Kristen: We have we expect about $100 million EBITDA contribution from these projects and so instead of receiving that are getting that EBITDA contribution in 2025 that has been between 2006, and therefore, we expect $400 million EBITDA lift in 2025, and now we expect $600 million uplift.
Kristen: In 2026. So these are three different projects.
Speaker Change: So Marty because electrical steel facility in Europe.
Kristen: We are building.
Kristen: There were various reasons for delay.
Kristen: Predominantly they had to do with equipment supply.
Kristen: And also I would say lack of experience in doing large scale projects right and European not been investing assume you had a project team and engineers that there is.
Kristen: A lack of experience what we see is that when you have a project team, which has done one project. The next project flow is much more smoothly.
Speaker Change: And Sarah Xu we ran into.
Speaker Change: Such as mining difficulties, which has delayed that project.
Speaker Change: Buyer months again.
Speaker Change: <unk>.
Speaker Change: Similar issues as main deck equipment as well as lack of project experience at the same time in Brazil, which is very interesting for us the flat operation delivered the Vega project on time and on budget and that has ramped up in record time actually faster than what we had anticipated or which wasn't.
Speaker Change: In our project.
Speaker Change: Project approval process.
Speaker Change: So it's been very interesting learning for us, where we see similar geographies.
Speaker Change: Similar teams perform differently and as a result.
Just in December we have created a new global projects team.
Speaker Change: At the central level and as the individual cold barge, who is who is spearheading that to bring in our global expertise to bear because we have the expertise fundamentally are sort of knows how to do projects, we have been delivering projects on time and on budget, but its not uniform.
And the task is really to bring that capability across the organization. So we don't have further projects, which get delayed so.
Speaker Change: So I hope that helps answer the question.
Speaker Change: Yes.
That's very clear and maybe just a quick follow up on that on the projects.
Speaker Change: Don't see the doubling of HDI capability and takes us anymore. In the release is that a project that you definitively dropped or is it tied to <unk> carbon Europe, so any comment there.
Speaker Change: Yes, so it's a good question and I'm glad you asked it I think the projects that we have put in our presentation are in the.
Medium term pipeline, so theyre not necessarily in the long term pipeline, we have a few others.
Speaker Change: Just to talk about Brazil for one where we've talked about expanding our finishing operations as this court ruling in gout.
Speaker Change: We're also thinking that since we are slot long to do hot strip mill and Thats not so so there are numerous examples in Iberia, we have a very good resource body and excellent resource body, where you can actually do more in Iberia. So the idea now is at 20 million tons judge where we are figuring out what is the economics based on the long term.
Some iron ore and then decide if we want to continue to grow but those are all options that we have in Texas I think what we have.
Speaker Change: As we have focused our efforts on Calvert right. Now so you heard me talk about the projects in Calgary, the electrical steel line, yes.
Speaker Change: So after all of that we would reevaluate Texas.
Speaker Change: Correct, it's all.
Speaker Change: Also linked to the progress on European Telecom, So it's not that it's not there.
Speaker Change: For the foreseeable future is just not there in the medium term.
Speaker Change: Alright, Thank you and if I could just squeeze one more on projects just <unk>.
Speaker Change: The NGL line in Calgary.
Speaker Change: It seems the scope of the project is larger just an electrical lines that can be 400 million capex. So I see the.
Total capex was $1 two as it includes our cold Rolling mill.
Speaker Change: And the other equipment can you explain the capacity of the other equipment and explain the rationale of the investment and does that replace existing capacity as well and how should we think about it.
Speaker Change: So it's.
Speaker Change: It's all incremental capacity.
Speaker Change: So there's no replacement Theres no cold Rolling Mill line for.
Non grain oriented steel products. So this is really electrical steel line, perhaps you're comparing it to the <unk> facility, which is roughly.
Speaker Change: The amount recorded a bit more than that but let's use that as a reference.
Speaker Change: So the two or three key differences.
Speaker Change: The first and most important is the.
Speaker Change: It's a greenfield site.
Speaker Change: Right. So we have to do the full construction of the facility, including the whole building.
Speaker Change: In <unk>, we were able to utilize an existing building.
Speaker Change: Construction costs are quite expensive and that that adds number two and.
Speaker Change: Importantly.
Speaker Change: The line in the U S has even more capability than the line in Europe.
Speaker Change: That is a market function, we see that the U S market is moving to higher grades.
Speaker Change: For this primarily because of the SUV segment in other and other unique characteristics of the North American marketplace.
Speaker Change: And so you need more capable equipment more equipment more rolling capability and that obviously adds to costs and the third is <unk>.
Speaker Change: Obviously construction costs manpower costs steel costs.
Speaker Change: And other costs are higher in the U S than they are in Europe. So those are the primary three factors when you make a comparison on the electrical steel line in France, and then versus the ones that we're building in Alabama.
Speaker Change: Alright, Thats very clear thank you.
Speaker Change: Great. Thanks Tristan.
I'll move now to our next question.
Speaker Change: Which we will take from.
At Morgan Stanley. Please go ahead of it.
Speaker Change: Thank you of course, taking my question I have just one question on the buyback program you are in the final stages of completing your existing program and do you expect a positive free cash by 'twenty five.
Speaker Change: Trading at a steep discount to fair value.
Speaker Change: What are you thinking going forward you don't have a clear framework, but the question is are you willing to also stretch our balance sheet.
Speaker Change: The opportunity at the moment, how should we think about that going forward. Thanks.
Ella: Okay, great. Thank you Ella.
Speaker Change: <unk>.
Speaker Change: As you heard from Us and as you saw from our release, we had done quite a lot in terms of returning capital to shareholders.
Speaker Change: We think we are unmatched by any yes.
Speaker Change: What we said.
So we have bought by 37% of the company.
Speaker Change: It's 2020, we have generated about $21 billion of cash and about $13 billion $13 2 billion has been returned to shareholders. So thats very very significant.
Speaker Change: We've also increased our base dividend.
Speaker Change: Hi.
Speaker Change: 10 10.
Speaker Change: <unk> <unk> 55 per share.
Speaker Change: That reflects the buybacks that we have done. It also reflects the underlying resilience slash benefits of the growth projects that are underway.
Speaker Change: In the company. So you can see that the direction of travel is very clear. We are very focused on returning capital to shareholders and I think we've done an excellent job in that over the last few years.
Speaker Change: Going forward, we believe our policy serves us very well.
Speaker Change: And which we will.
Speaker Change: Take the free cash subtract the minimum dividend and then half of the remaining free cash is returned capital to shareholders.
Speaker Change: We think that allows the company to continue to grow develop its business and also return a significant amount of capital slash cash to share.
Speaker Change: So we're very comfortable with the policy that we have.
Speaker Change: Please.
Speaker Change: Thank you.
Speaker Change: Great. Thanks, a lot.
Speaker Change: Move to the next question, which we'll take from Goldman Sachs. Please go ahead ma'am.
Speaker Change: Hi, good afternoon.
Speaker Change: Can you just get a better understanding on the rationale for the timing of this expansion in Liberia.
Speaker Change: Has.
Speaker Change: As your demand outlook for sinter feed changed or has this decision has been taken to provide the infrastructure for flexibility in product spec in the future just given some of the pressures we're seeing on high grade Iron ores currently and then with the spend.
Speaker Change: Your upside in the infrastructure of the 20 million tons or will this also now provide a more capital efficient pathway for that incremental.
Speaker Change: 10 million tons that you may consider in the future.
Speaker Change: Yes. Thank you. Thank you Matt So let me just give you a high level it will help.
Speaker Change: Explain I hope.
Speaker Change: Are you concerned that your question.
Speaker Change: So we had a new mining team that joined under that leadership I think the first thing that has been delivered and you guys have all seen this is safe operations and record volumes in Q4 in mines, Canada as well as strong volumes in Iberia and fourth quarter.
Speaker Change: We expect that to continue.
Speaker Change: The team is doing a great job and the second asset we asked them apart from safe and reliable operations was to really look at the Liberian project.
Speaker Change: And the team that has joined was that our surrogate.
Speaker Change: As we go.
Speaker Change: You can go through the names and so they've come back and their thought process was that we should not stop the DSO product.
Speaker Change: If you remember the original project was that we have DSO is basically run a mine.
Speaker Change: Many times the volume of that.
Speaker Change: In Iberia, we start up the concentrator and we stopped the DSO. So the net increase in volume is about 10 million tonnes.
Speaker Change: Two things number one the resource and reserve base is much greater.
Speaker Change: We can run product for longer and number two we felt that the concentrate product doesn't have such a good market acceptability.
Speaker Change: Sinter feed.
Speaker Change: And so you bring the two ideas together.
Speaker Change: And we felt that we could maintain it.
20 million ton output mine versus a 15 million ton, which would require investments in core infrastructure rail.
Speaker Change: Blending capability and instead of doing just $15 million on concentrate we're now going to do more sinter feed and a little bit of DSO and concentrate and so thats really the new concept in terms of capability beyond right now the investments are there for 20 million tons, but when you make certain <unk>.
Speaker Change: <unk> the ability to expand capacity and you're obviously is there is not as expensive because theres been a lot of work done on the Port side for example, as part of the 20 million tonne expansion.
Speaker Change: So I hope that helps answer your question Matt.
Matt: Thanks for that and say, that's not really a margin driven decision, which makes all the sense.
Matt: I have a couple of others. If I may just on the Calvert Eas that youre commissioning when can we expect that to reach full capacity.
And you touched on.
Matt: So for any comment just on some slab being sourced domestically assuming the CIA is up and running.
And you keep that domestic contract in place.
Matt: How much are you importing into Calvert on the slab side.
Matt: And then just more broadly across the portfolio we've seen in some of your key markets, particularly Brazil, just the FX depreciation.
How should we be thinking about this in terms of a cost tailwind just given some of your raw materials are all.
Matt: Price in U S dollars are you seeing much of a.
Matt: Costco in the thanks.
Matt: Sure.
Matt: So in terms of caliber.
Matt: As I mentioned earlier and perhaps here with them.
Matt: This is really producing automotive quality steels.
Matt: Expose quality product.
Matt: So there is a qualification process with automotive.
Matt: And that is a normal that is normal but that causes.
Matt: Ramp up to be slower. So we are anticipating roughly 12 months from today for a full ramp up volume of that facility.
Matt: In terms of the specifics of volume I don't know if you can provide you with more color I think we don't really disclose volume and.
Speaker Change: I'll get him to answer <unk> question on Brazil.
Speaker Change: Yeah, sure Hi, Matt Matt to the FX question the way we look at it.
Speaker Change: Absolutely Ryan So we saw very significant.
Speaker Change: FX volatility during this quarter.
Speaker Change: And we all.
Speaker Change: Depreciated significantly.
Speaker Change: But also in euros it was across the board.
Speaker Change: As we know it soon interest finance, primarily dollar business and.
Speaker Change: So then what we what we normally see is the following and depreciation.
Speaker Change: Price expense should then be corrected.
Speaker Change: The new exchange rates.
Speaker Change: And and then.
Speaker Change: Lance.
Speaker Change: That change is so significant that can impact the economies.
Speaker Change: It tends to be positive to our business because our cost base.
Then go sell your revenues just adjust within your exchange rates and then in the medium to long.
Speaker Change: Your business is just more profitable so thats, what we see.
Speaker Change: Sure.
Speaker Change: That's why we typically see when we have significant devaluations.
Speaker Change: That's great. Thanks for taking my questions.
Alright. Thanks.
Speaker Change: So we will move to the next question, which I think will take from Dominic at J P. Morgan. Please go ahead domenic.
Dominic: Thank you I just have a few questions.
Speaker Change: We are starting to see signs of green shoots on pricing in Europe.
Dominic: Yes.
Dominic: And obviously some discussions around.
Dominic: Maybe some import restrictions coming in in Europe. So I'm just wondering if you could just maybe give us a little bit more color on how you're seeing kind of orders evolving.
Dominic: <unk>.
Dominic: That would.
Dominic: My first question second question.
Shouldnt your working capital optimization for 2025, I just wondered if you could put maybe put a quantum on that in terms of what you think is.
Dominic: Optimal.
Dominic: Working capital.
Dominic: Carry forward number into 2025, and then final question, just we're getting a lot of questions and coming around Ukraine. So just as things stand today could you just maybe give us a sense of how quickly you could.
Dominic: Return to pass over some production back to the market and if it would come with an incremental cost specifically capex. Thanks.
Dominic: Thank you.
Dominic: Ukraine, and then I'll get your views and answer the rest.
Dominic: So in terms of Ukraine.
Dominic: It's obviously been very difficult for our employees.
All of Us actually to just watch what has happened to our people into our facilities.
Dominic: As you know.
Dominic: We're operating at about 30% of its capacity.
Dominic: We are breakeven on an EBITDA basis, but we arent, losing cash we have been losing cash.
Dominic: The day one months.
Dominic: The invasion and Thats been.
Dominic: That's amplified the difficulty.
Dominic: In terms of moving forward.
Dominic: Clearly, we would hit cash breakeven.
Speaker Change: Amy we double utilization rates, that's our expectation so I would take the facility to about 2 million tonnes.
Speaker Change: That's still at 60% utilization rate. So there is still less much less than where we were before.
Speaker Change: To go beyond that would require capex.
Speaker Change: At this point in time, I think it's a bit early to speculate on what that capex would be and how.
Speaker Change: And how we would do it I think it also depends on how quickly demand returns what happens in terms of the rebuild plan and what type of piece.
Speaker Change: Actually the Netherlands.
Speaker Change: So.
Speaker Change: So I think I would leave you with the thought that we can quickly bring it back to cash breakeven to a 3 million ton rate, obviously, depending on prices and stuff like that it can be even better than cash breakeven.
Speaker Change: Future steps, we would discuss it with all of.
Speaker Change: Once there is more clarity.
Speaker Change: Okay.
Speaker Change: Yes sure.
Speaker Change: So let me start with Europe, so in Europe.
Speaker Change: All in all of the important developments.
Speaker Change: We should see.
Speaker Change: No other conclusion is very strong.
Speaker Change: One an important one off cost since the antidumping investigation I guess a few.
Speaker Change: Asian countries.
Speaker Change: So that of course can be quite positive.
And that is confirmed.
Speaker Change: Then a second piece that is also can be also very important.
Speaker Change: Review of safeguards that we also expect to be completed very soon.
So.
And then what we see right now.
Speaker Change: The competitiveness of imports given where prices are in Europe.
Speaker Change: Not so attractive.
Speaker Change: From a from our position of our order book for quarter, one is almost basically completed.
Speaker Change: And I think everybody is looking for.
Speaker Change: The trade actions that should potentially improved quite significantly.
Speaker Change: Actuation in Europe.
Speaker Change: I think the.
Speaker Change: Situation is.
Speaker Change: We are starting to see also a price announcements switches, which is good.
Speaker Change: Sure.
Speaker Change: How it develops.
Speaker Change: In terms of our working capital I think what we our guide is that based on what we can see today current market conditions, we don't expect to invest in working capital in 2020 filings our expectation is to see some release and we are not quantifying that amount right now.
Speaker Change: But.
Speaker Change: At current market conditions, which would see some relief we are building them through slab inventories that will be used.
Speaker Change: And one of our customers in Europe that we.
Speaker Change: We're going to need to rely so we have been in a battery life all of that of course released during the year.
Speaker Change: And as we know also in the first half of 2020 for raw materials.
Speaker Change: More expensive, so I guess youre walking through that so that should also benefit.
Speaker Change: <unk> capital.
Speaker Change: 2025.
Speaker Change: That's great thanks very much.
Speaker Change: Alright, Thanks, Dominic So I'll move now to take the next question, which will be from Phil at Keybanc. Please go ahead Phil.
Speaker Change: Hey, good afternoon at this agenda, we know Daniel.
Phil: Thanks for taking my question.
Phil: On automotive in North America, and Europe, just broadly what are you seeing.
Phil: Seeing this year what are you what are you expecting in those markets and regions.
Phil: Yeah.
Phil: So.
Phil: But we have seen more stability.
In North America.
Phil: 2024 was.
Phil: It was relatively stable.
Phil: For us we gained some market share and we were pleased with that.
Phil: And in Europe.
Phil: Yes.
Phil: We saw a decline in production six 7%.
Phil: Some destocking that happened also.
Phil: End of.
Phil: <unk> fourth quarter, so the base case for.
Phil: For Europe in 2025.
Phil: A modest decline in production.
Phil: The latest forecast, but then there are some offsets we have offsets and in Brazil, where we record changes.
Phil: The increase.
Phil: Ability in North America, and then a small decline.
Phil: In Europe.
Speaker Change: And then just a second question if I may.
Phil: Calvert you've talked about.
Speaker Change: Not today, a lot of good color, which we appreciate.
Speaker Change: Or have there been any meaningful startup costs within the results associated with with the commissioning of that mill.
Speaker Change: So Phil it's new I mean this is a.
Jamie: Jamie so.
Jamie: At this point in time in quarter four not random.
Speaker Change: Thank you very much.
Speaker Change: Alright, Thanks Bill.
So I'll move to our next question.
Speaker Change: We will take from Bastian at Deutsche Bank. Please go ahead.
Bastian: Yes, thanks, and good afternoon, everyone.
Speaker Change: I've got two questions left please my first one is just on your European performance.
Speaker Change: And I guess, most most of those so it would've been pretty amazed by your ability to preserve literally flat margins in Europe in the spot environment.
Speaker Change: <unk> spreads have come off by about $100 versus the last few quarters. So what exactly has allowed you to perform as well and has there been any benefits such as energy cost prepayments or anything else, which supported your cost performance here and then also can we expect your margins to already have reflected the low point.
Speaker Change: In the cycle here, which I guess was the second half of last year.
Speaker Change: My first question.
Yeah.
Speaker Change: Sure.
Speaker Change: We are actually very pleased with the performance of Europe.
Speaker Change: P&G business, given the current market conditions and I think.
Speaker Change: To me that explains the performance is very strong cost performance.
Speaker Change: Performance right.
Speaker Change: The fact.
We look at our production numbers in quarter four compared to last year.
Speaker Change: You can see that there is a significant improvement and then of course in the solar industry.
Speaker Change: Producing.
Speaker Change: Well then of course your costs come down I think we had a good performance also in terms of fixed costs and that is supporting our results.
Speaker Change: In quarter, four and the whole of <unk>.
Speaker Change: 2024, we had a much better year in terms of operations.
Speaker Change: Okay. Okay sounds good and then just.
Speaker Change: My second question is on your footprint and I guess, you've done a lot of changes over the last few days I guess the recent ones in terms of the service centers have been closing in France were slightly smaller in nature.
Speaker Change: Are there any further footprint steps, which are currently looking at more closely be it either when the restructuring side. The divestments, albeit also on the <unk> side.
Speaker Change: Thank you Bob what was the loss would have real incentives divestments.
Speaker Change: So.
Speaker Change: Basically acquisitions I E.
Speaker Change: Is there anything meaningful that you currently have on the radar in terms of restructuring or divestments or acquisitions.
Speaker Change: Okay, great. Thank you.
Speaker Change: So in terms of Europe.
Speaker Change: Just to provide a little bit more context.
Speaker Change: Fundamentally.
Speaker Change: As you know there are three policy issues in Europe. The first is high energy prices, which is impacting the European steel industry.
Speaker Change: Second the trade if you look at four five years ago imports were 15% 927%.
Speaker Change: And this is because the quotas and the safeguard keep on increasing while apparent steel consumption has not.
Speaker Change: What are the actions that are being undertaken one there is an anti dumping case. The second is the safeguard measures themselves are being viewed and the third after trade is really common regulation.
Speaker Change: And again, there is a lot of discussion on climate regulation that the C band needs to be fair and equitable delinquent domestic European statement.
Speaker Change: Assuming those things pan out the way.
Speaker Change: We would hope.
Speaker Change: The actions that we need to take to further improve the competitiveness and concentrate our operations and improve productivity, we will be more limited in nature to the extent that those actions don't Pan out then clearly we will need to act to restore our competitiveness to our business, we know how to do it.
Speaker Change: We've done it in the past and then we'd be embarking on such a strategy.
Speaker Change: No.
Speaker Change: I hope that answers your question on how we think about our European business and how we can maintain competitiveness going forward.
Speaker Change: Okay, great. Thank you.
Matthew: Thanks Matthew.
Matthew: So we will move to the next question.
Speaker Change: We will take from Paris.
Speaker Change: Please go ahead.
Speaker Change: Hi, Thank you for taking my question, maybe is it put a label on that one.
Speaker Change: You've been very straightforward.
Speaker Change: Regarding the.
Speaker Change: These issues.
Speaker Change: European.
Speaker Change: Did your European footprint faces.
Speaker Change: Hello.
Speaker Change: Would you say that.
Speaker Change: You have the feeling to have been listened by the European Commission.
Speaker Change: That's my first question and second question would be on the <unk> stake today, you have 28%.
Speaker Change: Great Thats it.
Speaker Change: Puts us at a reasonable price and.
Speaker Change: Now that you have some time.
Speaker Change: Spent some time with.
Speaker Change: The February team.
Speaker Change: How do you see the future there in terms of synergies and why not buy the entire company.
Speaker Change: Okay.
Speaker Change: Sure. So in terms of your first question, yes, obviously listen to.
When this thing is not enough right.
Speaker Change: As to the action.
Speaker Change: And Thats, what we are looking forward to action in the first half of this year. There has been some action. However, if you. If you had noticed last week, the CSR deregulation smokeless bone ore and change so that's positive, but we need specific action to support the steel industry.
Speaker Change: Europe.
Speaker Change: And as you may take longer because it's a geopolitical issue, but clearly action on trade, which is under control.
Speaker Change: The European regulators as well as C band.
Speaker Change: So there is no change in our thought process, we need this to continue Decaf, Johnny we need this to continue to maintain although all of our operations and.
Speaker Change: There is sympathy, but clearly we want to see the actions.
Speaker Change: <unk> accomplished in terms of the other rig you're right. It's a great company, it's a great asset.
Speaker Change: The management team is doing a great job.
Speaker Change: We're very happy with our stake at this point in time, we have no intentions.
Speaker Change: Of increasing it further.
Speaker Change: Okay great.
Speaker Change: Thank you Boris.
Speaker Change: I'll move to the next question, which we're going to take from coal at Jefferies. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking my questions over to my side. The first one is just on on India I'd Love to get your thoughts on.
Speaker Change: Current trends, you're seeing in the market there and what are the key positives or potential negatives that you're seeing into 2025.
Speaker Change: And then the second question is a bit of a longer one but I'd love to hear your thoughts how you think about it.
Speaker Change: Slide number two you've been calling out for a while kind of structurally higher margins through the cycle and you've talked about.
Speaker Change: Disposals of businesses in HIFU reposition, but should we think about this into the future that your new capex projects or more value over volume focused.
Speaker Change: This even at the bottom of the cycle.
Speaker Change: King.
Speaker Change: 130 EBITDA per ton.
Is this kind of marking the neutral for you hopefully through the cycle. How do you think about that kind of value proposition going forward. Thank you.
Speaker Change: Okay.
Speaker Change: Great. Thank.
Speaker Change: Thank you let me, let me talk about India.
Speaker Change: In terms of India, we had a great investor visit a few months ago. Our people could see that we have a very high quality asset with very engaged passionate and committed team.
Speaker Change: Our facilities are world class they are coastal facilities with very good iron ore linkages. So we have a very very strong foundation to build on we are presently building on that we are doubling the capacity, but it's not only just doubling the capacity.
Speaker Change: We are investing upstream in terms of iron ore capability and pellet plants, but we're also investing downstream because we are in the process of commissioning downstream automotive.
Speaker Change: Our facilities. This court ruling the lines Galeb lines. So there is a significant upgrade to the quality and capability of the mill and we're also bringing new products like Mcnellis.
Speaker Change: In terms of the short term the short term it's difficult in India.
Speaker Change: The market.
Speaker Change: Is flooded with imports.
Speaker Change: Like other parts of the world because of the overcapacity that exists in the global steel industry.
Speaker Change: What is the government doing the government is evaluating safeguard action, we should hear the results of the investigation in the first quarter of this year. If you were to ask how confident are you that DCF constant support.
I am quite confident the reason why I'm confident is because.
Speaker Change: India is a very clear strategic direction, they call it <unk>, which basically translates into self reliance.
Speaker Change: Reason why we invested in the country in the first place was because of the shift in policy, where the Indian government is very clear that they need to make steel domestically.
Speaker Change: Other competitors have spoken out loud that cooperative mode of action is not put in place and it will be difficult for them to continue to expand and to cater to domestic.
Speaker Change: Demand and therefore, I do believe that appropriate action will be taken it will allow us to continue our growth plan and build on a very excellent foundation that we have in the country already.
In terms of your second question on structurally higher margins look the short answer is yes, because we are not really growing crude steel capacity.
Speaker Change: Right. If you look at the projects that we're doing they're all value add in nature.
Speaker Change: There is the electrical steel capability.
Speaker Change: And the caliber or even vertical integration in mining supports our business as it lowers the overall <unk> cost.
Speaker Change: All of our product offering whether it's on the downstream investments Dominion in Brazil and.
Speaker Change: Calvin also to the extent that we are growing if you already have the finishing capability. So on our part 10 basis. The shipments are not really increasing this is us moving upstream to capture more of the value make it melted and poured in the U S. You Eef quality Green steels for.
Speaker Change: For the marketplace. So fundamentally the idea is exactly that structurally higher margins.
Speaker Change: Which creates which.
Speaker Change: Which creates a much better quality business in a much better dynamic for us as we ride through the cycles of the steel industry.
Speaker Change: And then maybe just to be helpful.
Speaker Change: Right got it keep the threat going here.
Speaker Change: Could you just remind us of some of the actions that you've done maybe over the last five years that have improved the margins of the metal steel business. Thank you.
Speaker Change: Sure many many actions.
Speaker Change: I think the biggest one is how we have changed our portfolio.
Speaker Change: Right.
Speaker Change: And.
Speaker Change: So if you saw we also announced the absolute carbon emissions are down 50%. So that reflects how our portfolio has shifted to higher quality assets.
Speaker Change: Which are higher quantity because of their cost position as well as their quality position in terms of.
Speaker Change: So that I think is the overarching.
Speaker Change: Theme, we have rounded out that asset base.
Speaker Change: It's very good acquisitions. So for example, a person in Brazil was.
Speaker Change: It was built at a cost which is a T X multiple and what we bought it for the World Class lab asset, it's really low cost highest quality.
With multiple growth options. So that's also another example of how we have upgraded our asset.
Speaker Change: Portfolio, we've talked about <unk>, that's a great asset, it's delivering well the stock has done well it has a good return.
Speaker Change: I expect it to have a good cash return as well as time goes by.
So that's another example, the hot strip mill in Mexico.
As another very good example, where.
Speaker Change: We had a slot plant in Mexico, there is a very strong market.
Speaker Change: We invested in the Hot strip mill, it's a great Hot strip mill and you can see that the profitability of Mexico, which is reflected in NAFTA has fundamentally changed and this is for the domestic Mexican market its not for exports to.
Speaker Change: The U S. So these are a few of the examples we obviously had our management gains program. These amount of portfolio optimization in Europe and in other.
Speaker Change: Pieces, we don't talk a lot about the continuous improvement the impact of the R&D and innovation in the company, but all of that translates too and so that's why you can see that we continued to perform well and we continue to perform or perform at the highest level.
Speaker Change: I should say should outperform the competition in the regions in which we are.
Speaker Change: And thats fundamentally the dynamics of our business and our company.
Thank you.
Speaker Change: Thank you.
Speaker Change: Great. Thanks.
Thanks, Carl Thanks for leaving up against time here, but I think we've got time for another couple of quick questions. So we will take the first from Timna.
Speaker Change: Ralph Research. Please go ahead.
Speaker Change: Thank you I'm, sorry, I dropped off earlier, so I guess I wanted to ask a few maybe quick ones one is on that.
Speaker Change: The electrical steel in the U S. The green oriented steel is that really the Taiwan is it possible that you also make that or are you just going to focus on non green just one question and the other one is on <unk>.
Speaker Change: Not as quick but on that.
Speaker Change: Gross forecast people, what's your forecast very closely of course.
Speaker Change: You don't include what you think happens in China. So I'd, just like to get a little more of your thoughts about China. Since we've been dancing around this global oversupply do you think that they rectify that do you think exports could shrink this year just your thoughts there. Please.
Sure.
Speaker Change: Sure.
Speaker Change: In terms of the electrical field facility. It is not great. So that's our focus and these are different markets right.
Speaker Change: The gross product goes into Transformers, and electric grid, the non green basically goes into automotive and the reason why that market has changed I mean, <unk> always existed but the reason why it has changed is because of electrical car electric cars as well as hybrid vehicles.
Speaker Change: And the quality requirements that they have is very different from the usual I should say what are the commodity type nongraded electrical steels. This is really premium and there is a good price point and equally important is that continues our franchise right. We are the leading automotive supplier in the NAFTA market, just thinking of the quality and tech.
Speaker Change: Nickel capability that we have and discontinued that franchise.
Speaker Change: We have as our assortment.
Speaker Change: In terms of China.
Speaker Change: The high levels are that China is exporting 110 million tonnes of steel. These are record levels. We saw this last in 2015 2016, but fundamentally the company did well.
Speaker Change: We generated over $2 billion of investable free cash flow in spite of 110 million tonnes of Chinese exports going forward I expect.
Speaker Change: A lot of.
Speaker Change: Trade action to level, the playing field.
Speaker Change: The U S slash, NAFTA, or Europe, or Brazil, or India, and perhaps the trade action spuds reduction in overcapacity or reduction of exports in China, that's really the base case.
Speaker Change: Not so focused on what is happening in terms of China, but perhaps the trade actions.
Speaker Change: Capacity rationalization. So I hope that provides you with the flavor of our thought process.
Speaker Change: Great. Okay. Thank you.
Speaker Change: Kevin.
Speaker Change: So we will move now to take the.
Speaker Change: Next question, which is from Max It out and then we will take one.
Speaker Change: One final question after that.
Speaker Change: Please go ahead ma'am.
Speaker Change: Yes.
Speaker Change: For taking my question good afternoon.
Speaker Change: Question is on the bridge from Q4 to Q1 the DTA.
Speaker Change: Can you provide some insight on the moving parts traditionally Q1 is a better seasonality higher volumes, especially in North America and Europe in Q4, So can we expect an uptick.
Speaker Change: <unk> EBITDA.
Speaker Change: Q1 versus Q4.
Speaker Change: Yes, Mike Let me take this one so you're.
Youre right, so going through the regions starting with the U S. Our expectation is we'll see some.
Speaker Change: Better shipments I mean, as we normalize production and basketball as well.
Speaker Change: So our expectation is for shipments should be higher.
Speaker Change: Higher and then in terms of prices and costs, we expect to remain.
Speaker Change: Relatively stable.
Speaker Change: In Brazil, we also delayed.
Speaker Change: Shipments should be relatively stable.
Speaker Change: And <unk>.
Speaker Change: Prices and costs.
Speaker Change: Well.
Speaker Change: And in Europe, and we do expect some positive also a volume pick up but.
Speaker Change: Our price adjustment as we know in Europe.
Speaker Change: It took longer to start.
Speaker Change: Some are recovering well.
Our and are being slightly lower in Q1 on higher higher higher volumes.
Speaker Change: Slightly lower.
Speaker Change: Prices.
Speaker Change: And a relatively stable cost.
Speaker Change: On the mining side.
Speaker Change: We do expect another strong performance. We are expect to also volumes during growth, especially in Liberia and another strong performance.
Speaker Change: We buy in Canada.
Speaker Change: Thank you.
Speaker Change: Second and last one is on the decarbonization of industrial you are suspending your actions in Europe.
Speaker Change: But could you give us an update on kind of that do you see the situation is sufficiently supportive to carry on with your decarbonization expenses there.
Speaker Change: I think we're planning to complete the transition from 2026 to 2028 or is it on track to do that Tim.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: So I would say suspended as a very strong word.
Speaker Change: In terms of our Europe <unk> plans.
Speaker Change: I would say that we are progressing we have electric furnace, which is coming on stream and <unk> as well as we are revamping defenses in some style. So we have some product coming out.
Speaker Change: Both long and flat, which is decarbonize in nature.
Speaker Change: In terms of our plans we are awaiting for appropriate regulatory framework to to continue on decarbonizing, our existing European business. So you talked about this a lot in terms of energy aid and C band, we need preconditions to continue that and to two acts.
Speaker Change: The <unk> journey in Europe, and I also mentioned that overall, we are cognizant of the Capex envelope to medium term capex envelope of four to five so we expect it to be within that.
Speaker Change: Yeah.
Speaker Change: Envelope in terms of Canada.
Speaker Change: It's a similar similar questions are there.
Speaker Change: Related to the regulatory environment.
Speaker Change: As you are also connected to what have business with the <unk>.
Speaker Change: Added states as.
Speaker Change: As well as what happens in the elections in Canada, which are forthcoming in 2025.
Speaker Change: So I don't expect significant progress in Canada until we have clarity on some of these questions that exist.
Jimmy: I hope that helps I don't know if theres anything more Jimmy do you want to add on this question.
Jimmy: No I think I think you touched on everything.
Jimmy: Okay.
Jimmy: Perhaps at the higher level getting decoupling, you think that because as you are.
Jimmy: Kind of more cautious both in Canada or in Europe, but despite that you're still.
Jimmy: Thinking that decarbonization is economically viable.
Jimmy:
Jimmy: Or are you facing some constraints.
Jimmy: Perhaps.
Jimmy: You were not expecting.
A few years ago when you launched this initiative.
Jimmy: Yeah sure. So I think the key the key word or the key thought to takeaway is economic decarbonization.
Jimmy: Clearly we believe it is important for the global steel industry and for us to Decarbonize.
Jimmy: No two ways about that.
Jimmy: However, it has to be economic for industry, otherwise, how we were going to afford it and then teen output and maintain jobs right and it's not possible.
Jimmy: And what has changed in the last few years is that the pace of policy regulation has to rebound.
Jimmy: There has not been the type of action.
Jimmy: We had expected on top of it specifically in Europe, you have seen in energy prices unfold, which is also delayed how youre decarbonize, because we need to decarbonize, what do we need to do fundamentally substituting coal coal.
Jimmy: Coking coal with natural gas and electricity and as you know in Europe natural gas has gone through the roof and soon as electricity and coking coal is a global commodity has not had that same price action that the other two have had and so it makes it very difficult to move forward without an appropriate regulatory framework. So that's how I would describe it.
Jimmy: So the focus of the company as economic <unk> doesn't mean, we're not doing anything.
Jimmy: Done a lot right at 50% of absolute emissions are down from 2018 share of Es is going up from 18% to 25% in the last six years. The monies that we have spent on Dekalb has generated.
Jimmy: EBITDA and most importantly, our product offering in the marketplace. So ex Scott products, which is fundamentally thats Euro Green steel continues to increase right. It's doubling now.
Jimmy: So I think we are in a good position when it comes to our customers and our competitive position in our business when it comes to our cost base.
Jimmy: And and.
Jimmy: Underlying this theme we have the capability, whether it's people or technology or knowledge to decarbonize, we just need the appropriate policy framework to make it economically viable.
That's very clear thank you.
Jimmy: Thank you.
Jimmy: Great. Thanks, Brian So we're going to try and squeeze in one final follow up question from Tristan.
Speaker Change: BNP Exxon's. So please go ahead.
Speaker Change: Yes. Thank you for taking the follow up just on the Seo action plan. When you talk about the things you need to see in Europe. The seaborne takes more trade support.
Speaker Change: Other industry has pushed also regarding the timeline of certain regulation like the ETS phase out do you believe that is something on the table at the moment do you need to see that.
Speaker Change: And lastly, just a quick update on South Africa, given there's been a lot of headlines there would be helpful. As well. Thanks. Thanks again.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Look in terms of regulation.
Speaker Change: Our focus is C band that trade to the extent that the free allowances I think thats, what youre talking about get extended.
Speaker Change: Net positives for the competitiveness of the European steel industry.
Speaker Change: However.
Speaker Change: That is not necessarily a precondition the precondition is really appropriate create action inappropriate C band policy.
Speaker Change: I think those three conditions are much more than just about <unk>. They're also about the viability sustainability of the European business. So perhaps that's why we have much more focus.
Speaker Change: On those two initiatives and Youre right there Mario Draghi report on the new Green industrial deal.
Speaker Change: Has really kick started a process within the European Commission within European governments to reexamine I think events in the U S has accelerated all of that discussion.
Speaker Change: And clearly you're asking the question was asked I think this thing is of course, they're listening.
Speaker Change: Key and most important is that the actions that they take.
Speaker Change: In terms of South Africa.
Speaker Change: The headlines are around the long business.
Speaker Change: And then if you look at the long business in South Africa. It's a good operation. It's a good facility. It has been challenged by a scrap imbalance. So what has happened over the years as there is an export tax on scrap.
Speaker Change: And because there is an export tax on scrap mini mills, who are utilizing our scrap are much more competitive because scrap is very cheap in south Africa.
Speaker Change: Relative to other metallics and integrated operation of Newcastle.
Speaker Change: Has become uncompetitive and that is not a story of yesterday. It's a story that has been going on for the last few years and we've been working with the government to try and make that facility competitive then and we realized we comped.
Speaker Change: Theres not enough support is on enough conditions, there's no change in the script.
Speaker Change: Regulations, and therefore, we've taken the decision to shut it down.
Speaker Change: The other business the flood business remains viable. So this remains a continuing discussion with the South African government.
Speaker Change: To ensure that the overall answer.
It remains viable healthy and competitiveness.
Jamie: I don't know if Jamie that was there anything else you wanted to add.
Jamie: No I think Thats fair.
Jamie: That's a very quick summary, and then of course, South Africa, and some intercompany thing, but these results today you can also see.
Jamie: Our earnings release that you.
Jamie: Do you have more information there, but that's fundamentally where we are in this in this process.
Jamie: Sure.
Jamie: Alright, thank you.
Jamie: Great. Thanks.
Jamie: So that was our last question, so I'll hand back to the tariff for any concluding remarks.
Jamie: Okay, great. Thank you.
Jamie: Let me just reiterate some of our key messages.
Jamie: I hope you have appreciated that our performance demonstrates that we are a transformed company.
Jamie: No there were a few questions on that on our cycle through Q2 EBITDA of $130.
Jamie: As I said before I passionately believe we have the best talent in the steel industry and we are.
Jamie: Harnessing the styling to outperform the competition.
Jamie: Get our numbers on a region by region basis, we do really really well.
Jamie: We have a very strong balance sheet.
Jamie: It.
Jamie: Allows us to continue to grow in a counter cyclical fashion.
Jamie: And has allowed us to return capital to shareholders looking to the medium and longer term the outlook for our business is clearly positive we're well positioned to capture demand in growth markets through strategic investments in India, Brazil, and the U S.
Jamie: These are all very exciting opportunities for us with that I will close today's call and I look forward to speaking with you soon thank you.
Jamie: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
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