Olof Grenmark: Ladies and gentlemen, I would like to welcome you to Boliden's Q3 2026 Results presentation. My name is Olof Grenmark, and I am head of investor relations. Today, we will have a presentation led by our President and CEO, Mikael Staffas, and our CFO, Håkan Gabrielsson. We will also have a Q&A session, which I will moderate, and we will start here in Stockholm. Mikael, welcome.
Mikael Staffas: Thank you, Olof, and welcome to all of you here in Stockholm and everybody who is listening to this online. It is, of course, an especially pleasant day to come and visit you all. We have presented our quarter results, and it is the best quarter result ever, which always feels good to say. Of course, helped by the fact that we have very good prices and terms, but also from a very good production quarter in general. Let us jump into the material. More easily said than done, and here it goes. The highlights, as I already pointed out, we have strong earnings of about SEK 4.9 billion. We have a solid performance in general across the mines. I am picking here specifically Somincor, which is doing very well, and also Kevitsa, which is doing well.
Mikael Staffas: The ramp-up plan in Garpenberg is also going very much according to what we have said we are going to do, even though we are, of course, still much below where we were last year. We also have in our smelters, especially Harjavalta, a very strong quarter. I would say almost exceptional availability of the equipment in Harjavalta. We also have a new record in Harjavalta in terms of nickel feed. The other smelter is moving on in a much better pace than it has in previous quarters. We have come up to an availability in the quarter about 50%, way up from the 17% in Q2. In the last month of the quarter in September, we had 70% availability. The curve is clearly going in the right direction as of right now.
Mikael Staffas: During the quarter, as you all know, we also announced that we are going to go ahead and acquire, first of all, the Votorantim stake in Nexa, and then after that, also continue with a broader offer for the minority shares. Looking at the financial performance, you can see here very clearly a big uptake around these ones, bringing a profit of SEK 4.9 billion. There is a little bit of planned maintenance in this quarter as well, although much less than in Q2. We have a positive cash flow. Håkan Gabrielsson will come back in a little while and talk a bit more about the details. We have the net debt to equity. The gearing is now down to 21% again. CapEx at SEK 3.4 billion, right exactly how we guided and what we also had planned for.
Mikael Staffas: The key projects, I will start with the Rönnskär tankhouse because, as we have always said, we intended to start it up in Q4 of this year. Earlier today, we actually had power on in the first of three sections in Rönnskär. So the tankhouse is, as I am speaking right now, already producing on that first section. The other two sections are intended to have the power on later during the quarter. As we go into Q1, we should have a full pace of production. The Boliden Area sand recycling is working according to plan. The Rönnskär SCMentum is still very early days, but for ramp-up in the H1 of 2029. The Garpenberg project, those who read Swedish news will know that we had the official start of the project with the ceremony for the first excavation for the new shaft the other day.
Mikael Staffas: That one is on track as well, although it is very early days, but that looks good. The other expansion, the ramp-up is ongoing. The availability of the roaster is increasing as I said before. We saw 50% on average for the full quarter, 70% in September. This is clearly moving in the right direction. The mechanical issues that we had in the beginning, linked not so much to the actual critical equipment, but linked to things like transport and other thing, have now been cleared out to a large extent. On the ESG side, we did not have the best of quarters in terms of lost time injuries. There has also been a fatality during the quarter, or actually right after the quarter in early October. A very unfortunate event.
Mikael Staffas: It is still a little bit unclear to us what really happened, also a little bit unclear whether it is a workplace-related fatality or whether it is a sickness fatality. It does not really matter. We have had a fatality. We are working around it, trying to figure out what really happened and how we can get better from that. The other long-term injuries also in the quarter was not brilliant.
Mikael Staffas: We had a higher level than what we had last year, and we continue to work with these issues relentlessly. The sick leave, however, is going towards the right direction. We now had 4.0% in the quarter. That is around the level of what we were before the pandemic. We have been on much higher levels, and you can say this is the first time we are back to pre-pandemic levels. The greenhouse gas emissions is going according to our plan.
Mikael Staffas: Market development, I think that you all know that we have good price and terms. You can see here that the Boliden Index, which is the red line here, has plateaued, but on a very high level compared to before. Just from 2021, we are at Index 175, so 75% up for the mix of metals that we have. The currencies are also helping, although a little less scale, but the currencies have also been helpful in this situation. I also must point out the sulfuric acid prices, which are also helping quite a lot in this situation. The prices for copper and zinc, I am not going to do any detailed market analysis, but you can almost see here that compared to the cost levels in the industry, we have high price levels. Most everybody in the industry makes money.
Mikael Staffas: You can see that on the copper side, actually costs are going up, which could be an indication that the margins might get a little bit smaller going forward. This cost increase on the copper side has to do with diesel prices going up, and also has to do with the sulfuric acid prices going up, which for many copper mines is a cost. On the zinc side, also a good margin on this one and more of a flattish cost level development across the industry. If we then go to Boliden and look at our production, as I said earlier, we have had a good production. Aitik has a mill volume of 10.3 million tons, which is clearly better than last year. Also strong mine production when you add on the waste rock production, the stripping going on is very strong.
Mikael Staffas: The copper grade is in line with previous quarter, higher than last year, but it is lower than we had indicated in the guidance. We will reduce guidance for the copper grade for the whole year in Aitik, based on this, but we will increase the guidance for throughput for the year. Boliden Area, very stable operation, looks very good. Garpenberg, yes, it is not a good thing that we do not have the Lappberget available, but given that situation, very good production in the quarter, producing according to the plan that we had internally and that we have given to the market. Actually slightly better grade than we had guided for. Kevitsa a record volume, very good. It is a mixed grade, but it is still a relatively good level. Somincor, very strong, in particularly copper. We are very positively surprised by Somincor coming into the family.
Mikael Staffas: Tara, a little bit lower than what we would like to, but still within reason. Zinkgruvan has stable operations. So mixing it all together, very good mine production. On the smelter side, let me take Harjavalta first, which is outstanding in the terms of equipment availability, has had a very strong quarter in general, and it is a quarterly record in terms of feed on the nickel line. Kokkola, also very strong production, which is clear that we also get better production than last quarter. Vaajakoski, very strong production. Rönnskär has had a maintenance stop around that and also lower silver production due to lack of availability of one of the silver furnaces that is now fixed. So Q4, we are full speed also on the silver line. Odda, as I said, we have had the availability going up, which is much better than it was before.
Mikael Staffas: We have, however, encountered somewhat of a difficulty on the old Odda roaster and the associated acid plant, which means that we have more planned maintenance going into the old roaster and the old acid plant in Q4. We are also therefore guiding up for total effect from maintenance stops for smelters from SEK 450 million to SEK 500 million. With that, Håkan, go through numbers please.
Håkan Gabrielsson: Thank you, and good afternoon. Mikael pointed out, a strong quarter. We are reporting an operating profit of SEK 4.9 billion, which is clearly up to the comparisons, and it is in fact the best quarter so far for this profit level. CapEx, SEK 3.4 billion in line with guidance. We also in this quarter had SEK 219 million payout for acquisition activities. That is the contingent consideration for the acquisition of Somincor Zinkgruvan. These two newer assets have had a really good development, both in terms of operational development and also prices. As we have a profit-sharing in the contingent consideration, there is a payout going to the sellers. Free cash flow SEK 1.1 billion. I will come back to that.
Håkan Gabrielsson: Looking at per business area, as you can see, both in the charts and in the table, there is a good development in both business areas, starting with Mines up to close to SEK 4 billion. Compared to Q2, Mines are helped of course by the strong price development, but there is also a significant effect from Garpenberg producing in line with the guidance. Also a good development in Smelters, and there you have to remember that Q2 was as usual impacted by quite extensive plant maintenance, and of course, Smelters also has some help from prices. Moving into operating profit deviation, the EBIT bridge year-on-year, starting first on Q3 of this year compared to Q3 of last year. We have a very big impact from prices, SEK 3.2 billion.
Håkan Gabrielsson: This is of course mostly metal prices, where we have a good development of copper, zinc, and gold to take them in order of importance. It also includes a significant effect from provisional pricing. It is not only the metal price, it is also a small but significant increase of byproducts. We have in here about SEK 200 million from sulfuric acid. Volumes are down compared to last year, and this is over explained by Garpenberg. So we have lower production in Garpenberg, and then as a result of the seismic events last year, or early this year, but it is partly offset by better production at other sites. Some that are worth mentioning are Aitik with a good production, Somincor performing well, and Harjavalta, which Mikael talked about. Costs compared to the same quarter last year are up by about SEK 600 million.
Håkan Gabrielsson: In there is an oil-driven inflation that hits oils, it hits chemicals, and it hits transports. We also have some additional cost in Odda during the ramp-up. Also due to the fact that we have a strong Q3, we have had to increase the provisions for our profit-sharing programs that goes to all staff. In the other line, the +259, there are different things foreign exchange and others, but the biggest individual item there is the sales of excess electricity that we do in Odda. Of course, when we will get up to full capacity there, this part will disappear because we will consume the electricity ourselves. But for now, there is a significant impact from sales of electricity. Comparing instead sequentially, Q3 to Q2, it is a similar story, a good development of prices and terms.
Håkan Gabrielsson: Again, it is copper, zinc, and gold primarily, but also about SEK 100 million each from foreign exchange and sulfuric acid. Volumes compared to Q2 are up 900. Getting Garpenberg up from where we stood in Q2 to the current rate in Q3 is about a third of that amount, meaning around SEK 300 million. In addition, we have got better grades in Aitik and good production in Somincor Zinkgruvan and less plant maintenance in smelting. So good volume quarter.
Håkan Gabrielsson: Costs are lower than in Q2. Two parts in that. It is the less plant maintenance this quarter, and then we also have some seasonal effects where we have a little bit of a lower cost during the vacation period that we had in Q3, even if it is easy to forget now when we are in October. Depreciation is up SEK 80 million. That is largely Odda. Odda is not depreciating in full pace yet.
Håkan Gabrielsson: We expect another SEK 150 million roughly in pace in Q4, and then Odda will be depreciating at the full pace after the expansion. But we had some impact already in this quarter. Further on for next year, we will of course have an effect in Rönnskär also when that is producing. Moving over to cash flow. I think we commented the operating profit and the investment side. Working capital is -SEK 1 billion. That is two things that are worth highlighting. With the price development that we have had, we get a quite significant impact on working capital for better prices. We tie more inventory in Swedish krona than if we have a higher copper price and high zinc price and so on. So that is a significant part. But we have not quite been able to reduce all of the working capital that we tied in Q2 either.
Håkan Gabrielsson: Looking forward on the working capital side, I would just like to remind you that in Q4 we will tie working capital in the tankhouse in smelter in Rönnskär. We mentioned a number of SEK 2 billion last quarter, and since then prices have increased even further. So filling the tankhouse with copper and gold and so on, that means that we are going to build some working capital. So for those of you modeling, please include that. Apart from that, I think we have covered the remaining parts in cash flow. That leaves us with this final slide from my side. It is a strong balance sheet. We have got 20% debt to equity ratio, which I think is a good level to be when we look back at the Lundin acquisition, and we look forward to the next acquisition.
Håkan Gabrielsson: We have a net payment capacity of SEK 19 billion and all in all, a strong balance sheet. Mika, you want to continue?
Mikael Staffas: Thank you. First of all, just remind you about the Capital Markets Day that we are planning for March. It is very high time to report your participation if you want to join us. Outlook going forward, I think we touched upon this very much. There is a lowering for this year of the grades in Aitik, but a hiring of the throughput in Aitik. Apart from that, there is not really anything that changes. There is a little bit of a difference of the classification on the CapEx on the mining side, with the larger part going to mine sustaining and a smaller mines, but otherwise the guidance is very stable. Well, I should also, by the way, mention, as I said before, smelters planned maintenance is also up from SEK 450 million to SEK 500 million.
Mikael Staffas: With that, I leave the floor open to questions and for Olof to monitor us through this session.
Olof Grenmark: Ladies and gentlemen, that opens up our Q&A session. We will start here in Stockholm. We have Johannes Grunselius from SB1 Markets, please.
Johannes Grunselius: Yes. Hi, everyone. It is Johannes here, SB1. Two questions, please. The first one on Aitik. You have lowered the grade guidance for us to 0.16. How should we think about 2027? I know you are going to talk more in depth in December, but could you give us some color at this point?
Mikael Staffas: Not really. You are absolutely right. We are going to talk about in December, and the mine plan for next year is not finished yet. Until it is, I am not going to comment too much.
Johannes Grunselius: But if we look at the previous guidance, that implied an uplift in H2, which is not coming through. Should we think that that is basically pushed one or two quarters? Could you help us with that?
Mikael Staffas: I can give you a little bit of light. There is part of that is being pushed out. There is also one thing that we hope is more of a one-off effect of this one, that we are having a couple of benches which have a higher waste rock dilution than we are used to in Aitik. That is also linked to why we are having a higher throughput, is that we are not trying to separate this waste rock. We are loading it all through the mill, helping on the volume, but being negative on the grade. We of course need to look around this. We have a sense that Aitik should go back to normal, that we do not have much of waste rock dilution as we come to the deeper benches. We have been trying to check for this as this thing has happened.
Mikael Staffas: It is unexpected waste rock dilution and a combination also that by mining a little bit slower than the initial thoughts, it takes a bit longer to get to the better grades.
Johannes Grunselius: Then, the other question I have is on sulfuric acid. I think you said, was it SEK 200 million plus in delta year-over-year? I know you have plenty of annual contracts in your portfolio. Do you expect more incremental profit from acid sulfur going forward given where prices are right now?
Håkan Gabrielsson: To that I can say yes. If you want to know about how much, I need to look at my neighbor. I am not going to guide how much, but we see a positive trend in there. I think that we will see a positive number also next quarter. But I am not going to give an exact number on that yet.
Olof Grenmark: Johan Sjöberg, Nordea Securities, please.
Johan Sjöberg: Thank you, Olof. Could you talk a little bit upon the EBITDA contribution from Norzink and from Rönnskär now when you are ramping up that given the current metal prices? Also, sort of how we should look at that into Q4 given the positive trends in Odda, and then also when it comes to Rönnskär's tankhouse, when we should start to see the positive impact on EBIT from that?
Mikael Staffas: It is good to hear somebody saying Norzink.
Johan Sjöberg: Thank you.
Mikael Staffas: It has been a long time since I heard that word last time, but it is a nice name. We will give it back the numbers exactly to Håkan, but just the sense of it, we have not had anything come through yet in Rönnskär, and therefore it is all ahead of us with the positive impact that we want to see. On Odda, it is a little bit more complex and as you saw, we have gotten much better. As I said, we have gotten much better throughput. There is more still to come. But there also in Odda we have been holding back on silver-rich concentrates because until we have everything under control, we do not want to risk wasting silver into tailings. Therefore, there you will get the effect once we will start daring to take silver-rich concentrates in there. Now, Håkan, numbers.
Håkan Gabrielsson: Yeah. Well, I am not going to give you an update on numbers for both cases because there are so many moving parts with sulfuric acid, zinc, and so on. I would rather refer back to the Capital Markets Day where we gave an update. It has moved in the right direction since then. Only additional comment is that for Odda, I think it is important, and also for Rönnskär, there are a few weeks before you sort of put it in until you get it out. For example, in Q3, we had almost no extra effect from Odda, even if it is moving in the right direction. I think there is some lag, but we will see money starting flowing in Q4.
Johan Sjöberg: A follow-up question on Johannes on sulfuric acid and the contracts. How big share of your volumes have been exposed to this price increase? That is, how much is sort of renegotiated next year? The delta between Q1 and Q4.
Håkan Gabrielsson: Well, there are all kind of versions in there. It is a fairly small part that is directly linked to spot. In particular, if you read in the newspapers about global spot prices, that is a very tiny part of our sales. Most is connected to European indexes of various kinds. Contract by contract, it differs on how often it is reset. If anything, I would say that 80% of the production we have is connected to European index on some frequency, yearly or shorter.
Johan Sjöberg: Okay, but how big share have you seen already being impacted by higher prices?
Håkan Gabrielsson: Well, it
Johan Sjöberg: How much is sort of yet to come next year?
Håkan Gabrielsson: That comes gradually, but I think when we are through with this year, we will have a fairly recent impact on all of the sales. There are a few contracts reset every quarter, so it is continuous, if you like.
Johan Sjöberg: Okay. Thank you.
Olof Grenmark: Kaleb Solomon, SEB.
Kaleb Solomon: Thank you. In Q2, you expected Odda to reach full production during Q3. You said roaster availability averaged 50% this quarter, and I think you said it was 70% by September. Is that a fair run rate to assume for Q4? What still needs to be resolved before you can start to sustain full production?
Mikael Staffas: Well, as always, when you have these things, I should say, by the way, that when we run, we run 100%, so we do not really run it slower. The question is how do you avoid having to stop as many times? I think you have had the discussions. We have had mechanical issues. We have had issue with the safety system that has blocked out at different stages when it should not have, and so on. We are getting better and better at this, and I think that 70 should be the new floor and then moving up towards somewhat like 90%, where the availability should be for equipment like this. So I think we are quite close to getting there to get the ramp up.
Mikael Staffas: Once we have the ramp up, just to get everything clear, once we have the ramp up, when we have the full feed, that is the only time we can start using all the later stages, the leaching and everything else going on full pace. That is when we also need to make sure that we get the recoveries of silver right and start mixing in more silver-rich concentrate. So it will take some time to fine-tune this thing, but I think the mechanical problems that we have had, which has been the problem, especially in Q2, mechanical problems that should not happen, they are behind us. The mechanical issues are solved.
Kaleb Solomon: Okay. That is helpful. Thank you. Just on Aitik volumes, when we asked you about the very good development last quarter, you partly mentioned seasonality and less relining. Is it fair to interpret you now as this being a lasting improvement, and should we expect it to carry into next year?
Mikael Staffas: Yeah, we had a very good Q2. Q3 is a little bit slower than Q2 because of the reasons you just mentioned. We think we reached a better base level, if you want to say so, in Aitik.
Kaleb Solomon: Thank you.
Olof Grenmark: Anyone else here in Stockholm? Okay, operator, then we start with the international guests, please.
Operator: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Alain Gabriel from Morgan Stanley. Please go ahead.
Alain Gabriel: Yes, good afternoon, and thank you for taking my questions. I have a couple of questions. Firstly is on Odda. I think, Mikael, you mentioned that 70% utilization is the new floor. Is the ramp-up to 100% going to be a straight line from here, or will it be more of a hockey stick trajectory? Over what time period do you expect it, now that you are over the mechanical issues, to get to 100%? That is my first question.
Mikael Staffas: Here, you should be careful with 100%. You never have 100% availability. There is always some downtime in a roaster. I have said that 90% is probably a reasonable full availability, and we hope that we are going to get there pretty soon. Now, our self-confidence is not so strong regarding all that because I said that before, but generally speaking, we should get there pretty soon to get the throughput in place and working with the other parts.
Alain Gabriel: Thank you. The second question is on the Nexa deal. Do you have any updates on the MTO process for Peruvian-listed subsidiaries? I believe the last public comment you made, you had given a rough estimate of around SEK 3 billion to take out the minorities there. Does this figure still stand? What are the next regulatory or legal steps that are needed for you to move forward with the process?
Mikael Staffas: I am going to have to come back to. I am going to answer the way I hate to answer, but I am going to answer that due to legal advice regarding both the voluntary tender offer and the mandatory tender offer, I will refer to what is in the press release and not say anything more.
Alain Gabriel: Okay. Understood. Thank you.
Operator: The next question comes from Adrian Gilani from ABG Sundal Collier. Please go ahead.
Adrian Gilani: Yes, hello. I guess first of all on Garpenberg, you write that the ramp-up is going as planned, but if anything, you seem to be above the 30% utilization rate that you talked about previously. Is that just sort of a normal quarterly fluctuation, or can there be some upside to the ramp-up timeline you communicated before in Garpenberg?
Mikael Staffas: Well, the guidance we have given is the 1.5 million tonnes for the whole year. That is what we need to deal with. Then you can say a couple of 10,000 up and down in a quarter is not really relevant. So we are very much in line with the guidance we have given. Somebody made a little bit of a smart comment that, okay, so you are going to go from 100,000 tonnes to 200,000 tonnes. Is that happening on New Year's Eve? No, it is not really happening on New Year's Eve. It is, of course, happening gradually. Yes, theoretically, we could go a little bit faster in Q4. We are not going to be at the pace of 200,000 tonnes per day on 1 January either. So it is going to be a gradual pieces. But we are guiding for whole years.
Adrian Gilani: Understood. My second question, could you talk a bit about your view on benchmark TCs for copper and zinc heading into 2027? If they do end up being negative, would you still stick to your policy of locking in 85% of your smelter volumes on benchmark terms?
Mikael Staffas: We will stick to that one because we have those contracts already in place, so we cannot really step away to a large extent from the strategy that we have. We will have roughly 80% on benchmark, even if they go negative. So I am not going to speculate in what the number will be. The number will be what the number will be. I will just make the general comment that if you add in the very bad treatment charges with the very good value of free metals and the good value of the sulfuric acid, smelter terms as a package are not that bad.
Adrian Gilani: Yeah. Understand. I guess in that case, those were my questions. Thank you.
Mikael Staffas: Thank you.
Operator: The next question comes from Liam Fitzpatrick from DB. Please go ahead.
Liam Fitzpatrick: Good afternoon. Three questions from me. Firstly, on Odda, you mentioned, Håkan, excess power sales in Q3. Could you quantify that number for us? Second question is on working capital. Was any of the SEK 2 billion build related to Rönnskär in Q3, or is that all in Q4? Related to that, we normally see a seasonal reduction in working capital in Q4. I mean, ex Rönnskär, should that still come through? The final question is a bit of a follow-up on treatment charges. It is tough to model the TCs into next year, given we are now in negative territory. Are you able to give us some sort of number for copper TCs? If we were to see or if 2026 was a negative TC of, say, -100, what would that have meant in terms of impact on EBIT this year?
Håkan Gabrielsson: Okay. Do you want to start or should I start?
Mikael Staffas: You can.
Håkan Gabrielsson: Okay.
Mikael Staffas: I think these are most yours, all of them. You go ahead.
Håkan Gabrielsson: Yeah, okay. Starting with the excess electricity, excess power, I think it is about in the quarter, just over SEK 150 million. Working capital, nothing of the Rönnskär tankhouse working capital that we are going to tie with the SEK 2 billion, nothing of that happened in Q3. All of that will happen in Q4. You are right, seasonally, we typically have a good Q4 when we come to working capital. I think the underlying development is probably going to be pretty okay, except the capital build in Rönnskär, perhaps less so than last year. We ended last year on very low inventory numbers, and I do not think we will be at quite the same level this year.
Håkan Gabrielsson: Also, I could just mention that in a copper smelter, the value of the inventory is very big, so it does not take very much of a hiccup in the ramp-up to build extra working capital in there. I am a bit conservative in my estimates for Q4 working capital, but you are right, the seasonality is still there, so that is a fact. Could you please repeat the last question, or did you get that?
Mikael Staffas: No, what is the impact of negative 100 TCs would have done? I do not know. We published the TC sensitivities.
Håkan Gabrielsson: Yeah, we have the sensitivity in the.
Liam Fitzpatrick: Yeah, I guess the issue is the copper TC is zero this year, so yeah.
Håkan Gabrielsson: Yeah. I think we will have to redo those. What we do see right now is that I think if you just work at the feed level, I think you can get the general idea. TC is a very small part of the money we make as smelters.
Håkan Gabrielsson: In our case, it is positive though, because we do get payments for complex material in the feed. But I have to come back to some form of sensitivity on those thesis.
Liam Fitzpatrick: Okay. Thank you.
Operator: The next question comes from Jason from Fairclough. Please go ahead.
Jason Fairclough: Hi, gentlemen. Thanks for the presentation. Just two questions from me. One, any thoughts you could frame for us on how the smelters are under-earning relative to their capitalization and the recent investments that you have made? That is the first one. Second one, Mikael, you seem quite excited about Somincor. I am just wondering how you are thinking about the optionality in this asset. Is there any option for a low capital cost de-bottlenecking there?
Mikael Staffas: If we start with the second one, the answer is yes. There are, and we have talked about that many times, there are geographic or geological potential in there. If you read the European Union list of strategic projects, there is an expansion in Somincor in there. Yes, there are clearly options for, as you described, typical greenfield expansions with relatively little CapEx. I would say yes, the answer is yes. The first question, just to understand, you were talking about the underperformance of smelters, and it depends, of course, where you put your baseline. I am not sure that there is really an underperformance of smelter, but there is an upside of smelters, which I would argue is all of the guided uptake in EBITDA in Rönnskär, because nothing of that has happened as of Q3.
Mikael Staffas: It is most of the indicated EBITDA uptake on Odda, even though some has happened, but as Håkan pointed out, with the fact that there is a timing delay between the time you can feed, which is linked to the availability, until you get the product out. Most of that has not come out yet, and we have also had still somewhat higher cost for adaptations we needed to do. I would argue also that most of the upside, as communicated in the Capital Markets Day in Odda, is ahead of us.
Jason Fairclough: Sorry, Mikael, could you just remind us then the bridge from what is the EBITDA uplift potential that you see in each of the two smelters from here?
Mikael Staffas: In the Capital Markets Day, I am looking at Håkan to remind me if I say the wrong thing, but I think that we said it was €150 million in Odda at the outtake, which was at the time of the Capital Market Day, €250 million with the price and terms as of March this year. For Rönnskär, we said SEK 1 billion to start with, that we said I think had gone to SEK 1.5 billion, right?
Håkan Gabrielsson: That is correct.
Mikael Staffas: With the prices and terms as of March this year. Since March, the prices and terms have improved. So these numbers should be slightly higher today, but we do not have, I at least do not have an exact number.
Jason Fairclough: Okay. Overall, we should be talking about call it SEK 2 billion to SEK 3 billion improvement once these things are running properly? Fully ramped up?
Mikael Staffas: Well, if you add what I said, it was four.
Jason Fairclough: Okay. Sounds good. Thank you very much, sir.
Operator: The next question comes from Amos Fletcher from Barclays. Please go ahead.
Amos Fletcher: Yeah, afternoon, gentlemen. A couple of questions. First one was just on the subject of Nexa. It had a credit rating downgrade to junk earlier this week. I just wanted to ask, what are the implications if we get another agency downgrading them and the bonds get put to the company?
Mikael Staffas: You can put this in two ways. There will be the opportunity for the counterpart to ask for a prepayment on the bonds. This particular one that happened is going to have a quite limited impact, and other ones could have a bigger impact if they were to happen. Then it is a question whether anybody wants to prepay or whether they would like to stick with them anyway. I would say that this is a little bit of a complicated matter, it has to do with many things, but we feel relatively good about the situation.
Amos Fletcher: Okay. Secondly, I just wanted to ask, just to, I guess, a little bit more clarity on the working capital side. Just whether you have built all of the concentrate inventory at Odda that you are requiring for the full ramp-up, or whether there is going to be any more of that to happen in Q4 that we should be aware of?
Håkan Gabrielsson: I think basically we have built all we have to build in Odda, and we have not built anything that we need to build in Rönnskär. I think that is the easy way of putting it.
Amos Fletcher: Okay. I just wanted to ask on the sort of timing on the Odda ramp-up, as you were saying you are hopeful to get towards 90% relatively soon. I just wanted to ask, what is the kind of timeframe for getting the recoveries right and then putting the more silver-rich concentrates feed through the plant? Is that something that happens through H1 next year, or is it likely to take a bit longer?
Mikael Staffas: As I said, my self-confidence in promising things in Odda is a little bit low, but I would say it should clearly happen in the first half of next year.
Amos Fletcher: Okay. I just wanted to ask on, you were mentioning about D&A uplift or depreciation uplift from Rönnskär as it ramps up in 2027. Have you got any sort of guidance on the quantum of D&A uplift one should expect from that?
Håkan Gabrielsson: On depreciation? It is about, let's see, SEK 150 million. SEK 150 million we are talking about, roughly. Per quarter. Per quarter. Per quarter.
Amos Fletcher: Okay, perfect. That is all my questions. Thank you.
Operator: The next question comes from Daniel Major from UBS. Please go ahead.
Daniel Major: Hi. Thanks for the questions. First one on Garpenberg. Last couple of quarters, you have given us a quarterly EBITDA, EBIT, run rate just to help us model through the year. Clearly, volume has improved. Can you give us the same or frame it a different way? How much of the volume delta in mines quarter-on-quarter came from Garpenberg?
Håkan Gabrielsson: See if I can. I am starting to think what I should say. I think if we compare Q2 to Q3 and talk about the volume aspect, there was about SEK 300 million in volume uplift between the quarter. That also brought the mine from a slight loss to close to SEK 300 million EBIT profits Q2 to Q3.
Daniel Major: Around 300. Okay, that is clear. Yeah, thanks. The second one, I think little surprise, both mining and smelting had a positive cost benefit in the quarter given some of the fuel pressures. Can you just remind us the fuel sensitivity and from a perspective of any time lags, if the status quo for European diesel pricing remain the same Q4 into next year, what would the cost delta be?
Håkan Gabrielsson: Well, there's a little bit of a time lag, but I can give you the overall numbers that we spent in the quarter, and then you can apply various percentages. On oil and diesel, we've spent about SEK 400 million in the quarter. So depending on price developments from here, that's the base. Power, we've spent about SEK 700 million in the quarter. And on other forms of energy, it's about SEK 100 million. So that's what we have. And then in addition to that, the diesel also impacts transport, chemicals, although with some lag. So I think if we spend SEK 400 million on oil and diesel, I think you can add roughly the same amount on chemicals and transport. So that's the base, and then you can apply the percentages that you want to apply on that.
Daniel Major: Okay. But just follow up on that. You said there is some time lags. If it just spot remain the same Q4 and into next year, would that be material or have you largely realized the kind of uplift in the spot price this quarter?
Håkan Gabrielsson: I think we would largely have it in. I guess it's a month lag or something like that. We will have most of it.
Daniel Major: Okay, that is clear. Thanks. Just maybe the final one, what was the provisional pricing impact on the quarter?
Håkan Gabrielsson: Provisional pricing was about SEK 200 million positive. When I say provisional pricing, then as usual, I refer to the preliminary price volumes at the end of Q2 that were then finally priced in Q3. That had a positive effect of SEK 200 million.
Daniel Major: Great. Thanks a lot.
Operator: The next question comes from Matt Greene from Goldman Sachs. Please go ahead.
Matt Greene: Hi, Mikael, just a quick question on Garpenberg, you touched on production is recovering as planned, but just more on development meters, it has fallen again quarter on quarter. Where do you need to get those rates to support 2.3 million tons next year? I guess just trying to sort of see if there is any technical personnel or equipment constraints in you being able to lift those development meters, appreciating that you do need to open up new mining areas given 70%, 75% of your working areas were lost with Lappberget. Thank you.
Mikael Staffas: I think we are at around 1,300 meters, right? 1,300, 1,350 meters of development, and that is roughly what we need. We are not with a big margin, but we are tunneling at roughly the pace that we need to tunnel in order to be able to meet what we have guided for and also to be able to do the tunneling that is needed for the new shaft that is also now starting to being put in place.
Operator: The next question comes from Krishan Agarwal from Citigroup. Please go ahead.
Krishan Agarwal: Hi, thanks a lot for taking my question. Most of them have been answered. A quick follow-up on the Nexa process. You have announced in the release that you have got approval on 27 October for one of the water interns, FDI, received in the Swedish market. Can you help us with any of the other major regulatory approval that are still pending for the transaction? Also the vote which you are going to held on 23 November, that has to be the simple majority or the super majority?
Mikael Staffas: To start in the back, that is a simple majority needed for that in our EGM. Then if you look at the, there are all together roughly 15 regulatory approvals that we need. That is a combination of the ones we already gotten, the FDI in Sweden. There is a combination of the permits that we need in Brazil for owning some natural resources, and then anti-competition and the competition rulings that we need from roughly 10 countries. All of them are well in progress and well processing, but it is only one so far that we really gotten. But we feel that the process is okay for a closing in Q1, but you never know. We do not control the process.
Krishan Agarwal: Understand. Then of the 10 countries, does that include China?
Mikael Staffas: No, not China. China is not on the list.
Krishan Agarwal: Okay. Thanks.
Operator: As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Christian Kopfer from Arctic Securities. Please go ahead.
Christian Kopfer: All right. Thanks very much. A few follow-ups from my side. Firstly, you talked about the guidance in Aitik, and I appreciate that you update on the grades there in H2. I also, if I understood you correctly, it seems that there is some upside to volume guidance in Garpenberg for Q4. If I look at pretty much all other mine assets, and if I try to square those production numbers to your full year guidance, it seems like there is upside more or less all over the place, including grades. Are you just being cautious or should we expect pretty much having to fall down in Q4?
Mikael Staffas: I think that we've always warned everybody to try to, when you're standing at Q3 and you get a full year number and you're trying to work out what Q4 is by taking the full year minus the three quarters that have been presented, there is always a big risk in taking that too long. I would also say that don't take that too seriously. When we don't change the guidance, that means that we're more or less going to continue the way that we have guided before, and don't take that too long. So it looks pretty good, but don't overdo it, Christian.
Christian Kopfer: All right. Just a small detail perhaps in the EBITDA that you present. Sorry if you already talked about it, if I missed it, but you had some minus number on metal premiums. Where is that coming from? Also pretty big minus number on TC/RCs. Is that spot related or what's going on there?
Mikael Staffas: Well, Håkan, I will let you go into detail, but TC/RCs must be spot related. We do have some spot in the mix that will go through there. The premiums, Håkan, help me.
Håkan Gabrielsson: Well, as you say, the premium level is related to spot during vacation periods. The TC that is, I will have to get back on that. We are following the benchmark, but then you have quarterly variations depending on the amount of complex material, the amount of, for instance, mercury and similar that we get extra payments for. So it is a variation, and given the ramp up of Odda, the flows have been a bit more volatile than usually. I will come back to you separately on that, I think.
Mikael Staffas: But that is a good point. If you are comparing premiums Q on Q, we always have lower premiums in Q3 because of the vacation period and thus selling more overseas with the lower premiums when industry in Europe take vacation.
Christian Kopfer: All right. Fair enough. Thanks.
Operator: The next question comes from Erik Rougier from Fearnley Securities. Please go ahead.
Erik Rougier: Hi, Mikael, and hi, Håkan. Thank you for presentation and for all the questions. I had a few questions. On Tara, I see unchanged full year guidance. This implies approximately 500 kilotons milled in Q4, which is roughly 60% above Q3 and subsequent other previous quarters. What supports this implied acceleration going forward?
Mikael Staffas: Once again, I will refer to what you said here. Be a little bit careful exactly how you look at the guidance and exactly what kind of conclusion you draw for Q4 individually. Also pointed out by Christian just a while ago, I think that there is some upside to certain numbers that could be downside to certain numbers as well in terms of guidance, and we have not overspent going into the exact details of certain mine site. In general, Tara is continuing more or less where it is. Maybe slightly better in Q4 because things are sorting itself out, but it is in line with what has happened before.
Erik Rougier: Thank you. Much appreciated. Also, following the proposed Nexa acquisition, should we expect the balance sheet and de-leveraging to take priority over additional growth in investments? I am thinking, for example, projects such as Laver.
Mikael Staffas: Well, it is a good question, but it is a little bit difficult to answer right now. We will answer capital commitments to projects like Laver or Nautanen as they mature and we will take a look into what the balance sheet will look like in every time. Now, having said that, you know that those two big-ticket items are a couple of years out, which means it gives us a few years of hopefully good positive cash flow to make sure that we have a balance sheet where we want it to be.
Erik Rougier: Thank you. That is a perfect segue for my last questions. On Garpenberg, you reiterated the 2.3 million tons production target for 2027, but I saw mention of an ongoing permitting process for additional waste rock storage following the seismic event. How confident are you that the necessary approvals can be secured in time? Does your 2.3 million ton guidance assume that the new stockpile is operational for the H1 2027?
Mikael Staffas: You are referring to, and just for everybody's clearance, there has been some discussions in Sweden that we have asked for a permit to store more waste rock above and on surface for our plan going ahead in Garpenberg. The county board, who can give an exemption, have decided this is too much of a change to give an exemption. We need to get an altered environmental permit from the court, and that is what you are referring to. I think just to be very clear, we do not have any issue to handle the waste rock. There are many other ways of doing it, including the very simple one, to just put it through the mills and put the tailings out in the tailings facility because we have full permit for that.
Mikael Staffas: It is a little bit stupid to spend energy on grinding waste rock just to put it in a tailings facility, and I think everybody is aware of this. So I do not think that in the end of the day, this is going to be any issue whatsoever. There are lots of plans that might not be the perfect plans if for some reason this permit gets delayed.
Erik Rougier: Thank you for your clarification and for the encouragement and the guidance.
Operator: The next question comes from Boris Bourdet from Kepler Cheuvreux. Please go ahead.
Boris Bourdet: Hello, gentlemen. Thank you for taking my question. It is a follow-up on Garpenberg, following your comments on the SEK 300 million sequential improvement. I just wanted to check that is an EBIT figure, as far as I understand, and that compares to something that was close to zero in Q2. I would be interested in getting, if that is actually EBIT contribution, how much is the related depreciation? Thank you.
Håkan Gabrielsson: Well, it is an EBIT number, but the depreciation is not very variable, so it is fixed. It would be the same in Q2 and Q3. The EBIT change is pretty much the same number as you get as a revenue change. The variable cost is very limited in this situation.
Boris Bourdet: Okay. Last year the depreciation was SEK 650 million, so we would divide that number by four and get the depreciation by quarter, right?
Håkan Gabrielsson: That is correct with the addition that we wrote off a few hundred million SEK, and that goes away from the depreciation base. But apart from that, you should be pretty close with what you are saying.
Boris Bourdet: Okay. Thank you.
Mikael Staffas: With that, it looks like we are coming to the end of the questions. Then I would just like to wish all of you a very happy All Saints' Day if you are in the part of the world that celebrates All Saints' Day. I wish you also then a very good end of the year, and I look forward to seeing most of you in. Well, some of you we will talk to at least through a press release in early December with the guidance. Otherwise, we will see you all in this setting in three months from now. Thank you.
