Century Aluminum Company

Ladies and gentlemen, thank you for standing by and welcome to the Century Lumen Company third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would like to now hand the conference over to your speaker today, Peter Tchaikovsky. Thank you. Please go ahead, sir.

Peter Tchaikovsky Thank you very much, April.

Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Mike Bless, Century's President and Chief Executive Officer, Craig Conte, our Executive Vice President and Chief Financial Officer, and Shelly Harrison, our Senior Vice President of Finance and Treasurer. After our prepared comments, we'll take your questions. As a brief reminder, today's presentation is available on our website at www.centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation SB. Turning to slide one of today's presentation, please take a moment to review the cautionary statement shown here with respect to forward-looking statements and non-GAAP financial measures contained in today's discussion. With that, I'll hand the call to Mike. Thanks, Pete. Thanks to all of you for joining us this afternoon. We appreciate your time, as always. If we could just flip to page three, please. I'll take you through a quick rundown of the last couple months. At first, we plan to continue to operate without any interruption. Most importantly, the safety performance has been really good across the whole company during the last couple months. and we're really pleased and proud of this achievement. Running these plans safely and sustainably is always more challenging in an environment that's different than people are accustomed to. Even the daily scheduling and execution of the work needs to be done consistent with our health and safety protocols. And human nature says that simply people are at risk of focusing on too many other things versus a job at hand in a complex environment like we're dealing with today. All that means is that we'll continue to remain vigilant every day. And bottom line, the health environment and all the location remains under control. That said, we've got no intention at all to throttle back in the foreseeable future on any of the protocols we put in place back in March and April. In fact, as you would expect, we're prepared at any time to tighten things up as the public health situation near any of our operations. In just a couple of minutes, Pete's going to give you some detail on the industry balance, pricing, and other fundamentals, but let me just make a couple of quick comments now on what we're seeing directly on the ground. Our end markets in the U.S. have continued to improve over the summer and into the fall. Most of the sectors are near or even above their levels of January and February, obviously before the impact of the health crisis. For example, the automotive and durable goods and machinery markets have fully recovered. This is all consistent with the data that you've seen more broadly. Packaging and consumer sectors have remained quite strong. Construction, on the other hand, is a bit further to go, with residential quite strong and relatively weaker activity on the commercial side. In Europe, we're seeing more or less the same trends, yet, as you've seen, the general recovery is behind that of the U.S. It goes without saying that all of this is at risk of development on the public health situation over the coming months. Looking at our own specific customers, we see similar trends. If you take our six largest value-added product customers, for example, that group has broad exposure to automotive, to construction, to communications, amongst other sectors. As we previously told you, the daily sales rate for that group of customers was down 35% in Q2 over Q1. In Q3, it was up 45%. over Q2. And thus far, order rates for October and November are up a further 10% versus Q3. So we're now moving at a rate that's up 60% over the Q2 low and actually up 5% over the first quarter. You obviously had some degradation towards the end of the first quarter as the pandemic began to have effect. Moving along, our third quarter financial performance came in as we expected. As we forecast, the lower realized metal prices coupled with higher seasonal power prices drove the vast majority of the drop in quarter to quarter EBITDA. As you well know, our sales contracts are priced on a two- to three-month lag, and in that context, the realized cash LME during the quarter was $1,550 per ton. As I said, seasonal power prices were higher as usual over the summer. More than the rest of the decline in EBIT came from our decision to start catching up on the relining of sales at the Kentucky plants. As you'll recall, we ceased all relining activity at these plants during the first few months of the pandemic. And a variety of other items taken altogether actually improved profit a bit. The financial picture, of course, is much stronger at current commodity prices, and Craig will go into detail on all this in just a couple minutes. Let me just make some remarks about Mount Holly. You've obviously seen the war notice we were regrettably forced to issue last week. We were shocked to see the South Carolina courts ruling in the litigation between the city of Goose Creek and Sandy Cooper. We've talked to you about this, of course, over the year. First, our analysis indicated that Goose Creek had every right under both federal and state law to form a utility and to serve Mount Holly. And then FERC agreed fully in its order issued in August And importantly, the determination in its order said it was made with reference to both federal and state law. Lastly, the actual hearing in front of the judge strongly suggested, in our opinion, that Goose Creek's position was the correct one. When the court's order was finally issued two weeks ago, it said regrettably the opposite. The city has asked the judge to reconsider the ruling, and if that's not granted, Goose Creek has informed us that they plan to appeal. The city has told us they'll ask the court to move quickly, but the appeal process would likely take at least a year to fully play out. Just to go back, most of you who've been following the company know all this, but as a reminder, under the arrangements we've had over the last couple of years, Mount Holly's been buying 75% of its electric power requirements from the competitive wholesale market and 25% from Sandy Cooper's on resources. Mount Holly also paid Sandy Cooper a transmission fee for the power brought in from the third parties. The third party rate for the 75% of the plant's power requirement is very competitive, as we've said. It's frankly just on par with what we pay at the Kentucky plants. The 25% we buy from Sandy Cooper is regrettably the killer. It comes at two times the delivered price of the third party power, and thus the weighted average price is simply uncompetitive. The evidence that the market price is competitive can easily be seen in the status of the Kentucky plants. As you know, we've doubled the capacity of Hawesville and added billet capacity in Seabree during the last two years, double investment of over $100 billion. And at 100% market power and at full capacity, Mount Holly's cost structure and revenue profile would be actually superior to that of the Kentucky plants. Regrettably, the opposite, of course, is true with the current blended power prices, to give you a sense. Mount Holly's year-to-date nine-month EBITDA has been a $10 million loss, and the plant will also be unprofitable in the fourth quarter. Looking at next year, importantly, the loss would be worse. On the one year, the average metal price, of course, should be higher, at least if you look at today's forward prices. But this is much more than overcome by the requirement to begin relining cells, even to maintain production at 50% of capacity. As you know, given the uncompetitive power price, we haven't relined any sales at Mount Holly for over four years. Over the last several weeks, we've been in direct discussions with Sandy Cooper, and we're also speaking with all the relevant constituencies, including local, state, and federal authorities. We're really hopeful now that all the parties can come together and find a commonsensical solution that's fair to all. First and foremost, this includes no harm done to any other Sandy Cooper customer. At stake here are 300 direct jobs and 600 to 700 additional jobs currently supported by the plant, along with a half a billion dollars of annual economic activity in South Carolina. That's what the plant is at its current half capacity. So achievement of that competitive price would allow us to restart the second hotline and rebuild the line that's been continuously operating, which, as I said, needs a rebuild. It would not only preserve the current jobs, but of course it would add a further 300 jobs and an additional 600 to 700 support jobs, and then you get to realize the full billion-dollar annual economic impact in South Carolina. It's obviously a complex situation, but one that can truly be solved overnight with a rational, logical approach. And with that, I will turn it back to Pete. Thanks, Mike. If you can move on to slide four, please. I'll briefly take you to the current state of the global aluminum market. The cash LME price averaged just over $1,700 per ton in the third quarter, which was up approximately 14% or about $215 per ton from the second quarter as we saw a strong recovery on the global economy in the quarter. Industry conditions continue to improve, and the LME price has averaged approximately $1,800 per ton for the month of October and that is right about where the current price is sitting. In the third quarter, regional premiums averaged approximately 13 cents per pound in the U.S., a 5% increase quarter over quarter, and approximately $120 per ton in Europe, an increase of 2% in the prior quarter. Current spot prices are around 13 cents per pound in the U.S., Midwest, and about $130 per ton in Europe. In the third quarter of 2020, global aluminum demand was down about 3.5% compared to the third quarter of 2019. In the world, excluding China, we saw demand contraction of approximately 11.5% from the prior year quarter. This was a significant recovery from what we saw in the second quarter as manufacturing activity in the US and Europe continued to improve. In China, we saw demand grow up to 3% as compared to the prior year quarter. Global production was up approximately 2% in the third quarter as compared to the previous year. We saw approximately 4.5% production growth in China versus the same quarter last year, which was offset by about 1.5% decline from the rest of the world in the same period. As demand continues to strengthen in our markets, we've seen the LME price continue to rally to levels pre-pandemic. We continue to see strength and support in the LME price, driven by a weaker U.S. dollar, low interest rates, and global manufacturing expansion led by the U.S., China, and Europe. Briefly looking at our key raw materials, the Illumina index price averaged approximately $275 per ton in the third quarter, which is right about where the spot price is today. And with that, I'll hand the call over to Craig.

Thanks, Pete. Let's turn to slide five, and I'll take you through the results for the third quarter. On a consolidated basis, global shipments were down 3% quarter over quarter, and realized prices were down 5%, primarily as a result of lower lagged LME and regional previews. Looking at operating results, adjusted EBITDA was a loss of $31.4 million this quarter, and we had an adjusted net loss of $64.4 million, or $0.67 a share. In Q3, the primary adjusting items were $15.4 million for the net realizable value of inventory, $8 million for the unrealized impacts of forward contracts, and $1.2 million for the early extinguishment of debt. our liquidity remains solid with $169 million of funds available via a mix of cash on hand and credit facilities. As we will discuss in our cash break shortly, in addition to refinancing our long-term debt and extending the maturity of our revolving credit facilities, we paid down about $45 million of short-term borrowings in the third quarter as our end markets continue to improve. Let's turn to slide six, and I can walk you through our quarter-to-quarter bridge of adjusted EBITDA. As we forecast on our last call, lower lag LME prices and delivery premiums coupled with seasonal power cost increase comprised the majority of the EBITDA reduction versus Q2 levels. The Q3 realized LME of $1,550 per ton was down $80 per ton from Q2 levels of realized European delivery premiums of $107 per ton were down $34 per ton over the same period. U.S. Midwest premiums were largely flat quarter over quarter. Average domestic energy prices were up over 15%, while the North Pole price, which we referenced for approximately 30% of our Icelandic power needs, was up about $4.50 per megawatt hour. Finally, as Mike mentioned earlier, we began to catch up on previously deferred pot reliance at our Kentucky plants, which, as you may recall, we paused at the onset of the pandemic. This catch-up spend amounted to $6 million of Q3 costs and will normalize as we proceed into the fourth quarter. Looking ahead to Q4 specifically, the lagged LME of $1,725 per ton is expected to be up $175 per ton from Q3 realized prices. The Q4 realized U.S. Midwest premium is forecast to be $300 per ton or up about $50 per ton, and the European delivery premium is expected at $125 per ton or up about $20 per ton versus the third quarter. Realized alumina is expected to be $290 per ton or up about $10 per ton versus prior quarter. Taking together, the LME, Illumina, and delivery premium pricing moves are expected to increase Q4 EBITDA by about $35 to $40 million versus Q3 levels. As a reminder, these forecasts contain at least one month of unpriced LME and delivery premiums. We have assumed the unpriced month at current spot values. Additionally, we expect a more levelized hot reliance spend versus the higher levels required to catch up in Q3 given the cessation of sell reliance through midsummer of this year. We expect the reduced spend will increase sequential EBITDA by about $5 million in the fourth quarter. Finally, realized power prices are expected to rise based on current forward curve projections, particularly in Europe, and will negatively impact Q4 EBITDA by about $10 million versus Q3. Please keep in mind that we buy power on the day-ahead market, and we still have two months of unpriced purchases assumed in this incremental impact. In sum, we expect these items in isolation will equate to an approximate EBIT increase of $30 to $35 million versus Q3 levels. Okay, let's turn to slide seven, and we'll take a quick look at our major cash flow items over the last quarter. We started the quarter with $174 million in cash and ended June with $81 million. Refinancing costs associated with our $250 million note were a $9 million usage in the quarter. As a reminder, the newly refinanced notes mature in 2025. In addition, we paid down the vast majority of our outstanding U.S. revolver, which was the largest driver of our $45 million repayment usage. Finally, normal shift in timing drove a small working capital usage of $5 million during the third quarter. This concludes our prepared remarks. Thank you for your time and attention. I'd like to turn the call back over to April to begin the question and answer session. April?

And as a reminder, that is star one to ask a question. And your first question comes from the line of David Gagliano from BMO Capital Market. David, your line is open.

David, we can't hear you. You might be on mute there.

Still can't hear you, David. Let's go to, I think Lucas is in queue. If we can go on to that question, and hopefully David can get back in the queue.

David, if you want to re-queue, we can try you again. And next question is from Lucas Pikes from the Raleigh Securities.

We're not hearing Lucas either.

All right. Let's see. Let me try something here. And Lucas, if you can recue as well. And we'll go back to David. David, your line is open.

No, we still can't hear them.

Let's try John. John, your line is open.

April, do we have a backup line or anything else that we could try to get the questions?

Give me one moment. I'll try something else. Okay, David, I have your line open. See if we can hear you now. Give me one moment.

Try it now. How about now?

Okay.

How about now?

Okay.

There we go.

There we go.

I believe everybody on the call could hear us ask you the questions except Central just for what it's worth. But nevertheless, I just really wanted to drill down a little bit. I may have missed it on the prepared remarks. I apologize. But on the Mount Holly situation, what are the next steps and, you know, near term? And what's sort of the, I guess what you would say, you know, drop a dead, you know, date or, when you have to make a decision to, you know, completely idle the facility or, you know, or go up to 100%. Sure.

David, thanks. It's Mike. And apologies to you and all for that snafu. Thanks for staying with it. Next, your question's in order. So as I said, next steps are we're in discussions with Sandy Cooper. Obviously, they're going to just based on the circumstances, they are going to be a supplier or the supplier or a major supplier this coming year. And so we are in productive discussions with them, which is encouraging in and of itself, of course. The answer to, and that's really at this point in time, to answer your question, the next step. Hard to predict where those go. And into your second question, if we get to, let's call it the end of the month, November, pardon me, that's the time where you really have to start the orderly shutdown of the reduction cells of the pods. It goes without saying, you know, how these plants work and how these businesses work. Each successive day and week gets more difficult. There's productivity. That'll be produced in January and February, hopefully, that we haven't sold yet. We have customers who are very concerned. We have employees, most importantly, and families in the community who are very concerned. We have to order commodities. All those things can be dealt with. It's not easy, but they can all be dealt with, and we have contingency plans for everything on the hope and assumption that we can find a path to a competitive power price.

Okay. And then on the resumed pot reline spending, presumably, I guess it's at Hawesville. I'm not sure, though. But is there a plan to – can you remind me again what the plan is with regards to the fifth pot line at Hawesville? And does that potentially mitigate or offset if not only does it shut? Sure.

I don't know. I'll answer your second. There's no connection between the two. And so there's a clear point on reliance for the Kentucky plant. There was a short-term issue, which is behind us, as Craig said, and a medium-term issue, let's call it. The short-term issue was simply that wheat stopped relining cells, I don't remember when it was, March or April, but during the early days of the pandemic. somewhat because it's got a financial cost to it, but mostly because we were concerned about, at that point in time, about having enough people to just run the cells, and we didn't want to take any risks. In essence, we didn't want to have any activity inside those plants that wasn't just attended to running the plants every day, setting carbon, tapping metal, et cetera, et cetera. So you know how it is. About a fifth of the cells fail every year on a schedule. And that's their economic or their practical life. And so you're having a couple cells fail every week. So we had a bunch of those built up. We had a backlog of those. And we got that done in the third quarter. And as Craig said, that's behind us. On the rebuild of the final pot line there, we're ready to go. There's some long lead time supplies that you need, cathode collector bars, cathodes, some other cell relining materials. And so those would be a couple months to get in. And if you were to ask what are you waiting for, the answer is the obvious one. We're just waiting for a little bit more stability here, you know. Two or three weeks ago, if you had asked us, we would have said, you know, pull the trigger right after Christmas. Today, I think we're just all going to do some watchful waiting here on the situation over the coming couple months. That probably goes without saying.

Okay. All right. That's helpful. Thanks. Thanks, David.

Sorry about the technical delay, but if you could start one again and where you can open up your lines. And the next one is from . Please go ahead.

Hey, good afternoon, everybody. For what it's worth, it's the second conference call today where there were technical issues. So maybe something brought up in the system. But I wanted to ask another question on Mount Holly. back of the envelope, it appears that maybe like around a billion dollars in economic activity is on the line over tens of millions of dollars of electricity costs. I wonder if that seems roughly accurate. And then secondly, just to follow up on David's question, not so much on the timing, but just kind of what are the options on the table here? Is it really just coming to an agreement with Santee or shutting down, or are you, even though this municipal option kind of fell through, are you still considering third, fourth, fifth options here at this time? Would really appreciate your answer. Thank you.

Thanks, Lucas. In answer to just your first question, yes. The study was done by a professor at the University of South Carolina. It's not our study. And the study came up with, to be specific, $985 million was the annual economic activity that is in South Carolina that's produced by the plant. So your understanding of the situation, I thought you put it, frankly, succinctly and well. Number two is you've got it right on the back end, pardon me, on your second question as well. At this point in time, it is all about coming to an agreement that works for the supplier, that works for Shanti Cooper, and that they feel is fair and equitable. And, of course, that can get us to a competitive price so we can rebuild those plot lines and get the plant back to full capacity. and make a reasonable economic return, of course, over the cycle. And so that really is it. In terms of our partners at Goose Creek, of course, we will watch with interest the legal proceedings and the reconsideration request and then the appeal of that if the first isn't granted. They've been great partners. They're important neighbors. The lovely city backs right up onto our site there. I don't know if you know, but we have almost 5,000 acres of which only 300 is used for the plant itself in the required buffer zones, you know, dispersion zones. So there's quite a lot of interesting things that can happen there over the years. And the city's been great partners and will continue to be in many respects. Asking your question, I don't want to speculate about what you might have in mind, third or fourth or fifth options, but at that point, that really is it. I don't want to oversimplify because there are a lot of complexities in the current situation, but that's it as it sits today.

That's very helpful, and I wish you and everybody involved best of luck and good decision-making in this. I wanted to, in my second question, try to get a little bit of a clear understanding on the current state of Canadian import tariffs. There was a little bit of back and forth over the past quarter. Just wanted to make sure I understand and investors understand kind of what's the status quo. And alongside this question, there's been a little bit of volatility in the Midwest premium. Would you be able to comment on that and the output from here? Thank you very much.

Of course. Thanks for the question. So on the first part of your question, the current situation is as follows. The USTR put out an announcement, gosh, I can't, I would guess it comes to my head, four or five, six weeks ago, let's call it four weeks ago, plus or minus. And that announcement said that Canadian imports of primary aluminum, would be exempted from the tariff after September the 1st, as long as imports met or were lower than certain threshold amounts that USTR included in that release. You saw it. It was shy of 100,000 tons on a monthly basis, which would have been, which will be or would be, I should say, a meaningful significant reduction from the run rate over the last year. There was, was it yesterday or two days ago, I can't recall now, the President's official proclamation confirming that was issued, but it was simply a repetition of what USTR put out four or five weeks ago. You may ask, are the imports going to be below that threshold? And the answer is no one knows yet. Those data for September won't be published for another two weeks or so. And so we'll see. The market, to your point, one could look at the movement in the Midwest and take the position that the market perhaps believes that the imports are coming down. Metal is very tight. If you were to ask traders and customers, most importantly, they would say there aren't a lot of problem units in the U.S., specifically, especially in the Midwest. You've seen the Midwest premium ticked off here. to a posted level of just a little bit shy of 13 cents, 12.7, 12.75. And that's up from a low of mid-8s before the tariff came back on Canada and then came back off. So it's up significantly since then. It's off from the recent high that it reached of around 15 cents. And so, the market for the delivery premium has, as you cite, strengthened here over the last three or four weeks.

Very helpful. I appreciate all the cover and best of luck with everything. Thank you.

Thank you so much. Appreciate that.

Next question comes from the line of John from very indigenous research.

Thank you. We realize Century bought a lot of the assets very economically often for the value of working capital. So there's negative goodwill in most cases or big discounts to real value. You're $899.4 million of net PP&E. Could you just explain how much is Mount Holly worth? How much is in Kentucky? How much is in Iceland? How much is the carbon anode plant or real estate? So we get a flavor of what would be the financial exposure if you idled or abandoned Mount Holly.

Sure, John. Right, John. So this is Craig. Thanks again for the question. You know, I won't break down the whole balance sheet, but just to give you the sense for – Vermont Holly, the gross PP&E there is between $150 and $175 million. And, you know, that's, again, gross on a net basis. It's roughly half of that.

So you can recall, John, it's Mike. Thanks for the question. The purchase price that we paid for half of the plant six years ago, six years ago, was just a little over $50 million. So that puts Craig's quantification into context.

So it might be, I'm just thinking out loud, in South Carolina, 5,000 acres of timberland, it's just timber, would be worth about $2,000 an acre or $10 million. I'm assuming at buffer land around there is loblolly pine. But this is on the bay, and it's a beautiful area and developable. So there's a chance that the idle land is worth more for development than you're carrying it as an aluminum smelter.

John, your point is well taken. It's lovely land. It's right in the middle. of a very fast-growing area that said Goose Creek has been exploding. It's a really well-run municipality that's really grown right up to, if you've been to the plant, from the south up to the west border of our property there. And there's other industry around, some good partners and customers of ours. So a good chunk of that land, as you say, is available. But right now, we think the best use of that property is under a competitive power price to run that smelter. I mean, under the competitive power price, if you want to just get very economic about it, that's the highest NPV. If you could get a power price, a canyon, the same zip code as our delivered price in our Kentucky plants, over a cycle, that plant produces a nice economic value. And so that's what we're going for there. And that's what makes economic sense for the shareholders in our strong view.

Mike, even in the current recession, tough climate, your operating cash flow of $33 million was more than the capex of $11 million. which all things considered is better than U.S. Steel or a lot of other companies. You borrowed a little bit of money and did some refinancings. Could you explain the practical reasons why you were a small net borrower in the nine months, even with the positive cash flow?

Sure. There was a great question, John, and thank you for the comment. There were two reasons. One is, as you may recall, in the first Second quarter, when did we draw on those revolvers? It was in April. Thanks, Craig and Keith. In April, so early in the second quarter, we drew down on those revolvers. We didn't think we'd need the liquidity or the cash. Let's call it we always have the liquidity, I suppose. That was a bad word. We didn't think we'd need the cash. But as we all remember, just thinking back to 2008 and 2009 and concerning post-Lehman, about banks' ability to fund and whatnot. We just... The borrowing costs there are... The funding costs there are extremely low. So we took down that cash, and as Craig said, we paid off roughly half of it the third quarter, and we'll roughly... Pardon me. We'll likely, you know, do the rest coming up here soon. That's right. On the other, it was... Our one public debt, our one term debt issue was... Coming up to its one year from maturity, it was due on 1st of June in 21. And again, this is taking yourself back to the April-May timeframe. No one knew sort of where this thing was going. And we thought, again, out of an abundance of caution, it made sense for the share owners to pay a bit of a premium, insurance premium there is the way we looked at it, to get that note refinanced. And so that's what we did. There's obviously fees attached to that tender. We had to tender for the outstanding issue. We could have called it the economics of slightly better tender for it. And that's why you see you put all that together and stir it up, and you see that net position that you correctly described.

Thank you very much, and good luck.

Thank you so much, John.

And your next question comes from the line of Tosh from . Go ahead. Your line is open.

Great. Thanks for taking my question. I was just curious, are there any major moving parts in your cost structure as you look at next year, at least the first half? I mean, except for all the things for which you provide sensitivities. And I guess related to that, have you given any thoughts on your Illumina supply for next year? What kind of pricing structure are you contemplating right now?

Thank you. Thank you very much for the question. You want to, Craig, go ahead on the cost structure? Yeah, sure.

So for the cost structure, I'll split it into two pieces. So for the balance of the year, it should be very much like we talked about when we came out in April. As we look out for 2021, we really use our Q4 call, which we'll do in January. to lay out any big changes. You know, I think if you look from the third, fourth quarters we talked about, we continue to see power forwards increase. That trend could just as easily, I mean, it's pretty far in the future for a power forward, so that could just as easily revert. So I don't anticipate any major changes coming in 2021 that I have visibility to today. Certainly back in January to the rest.

From an operations standpoint, the big one would be Assuming we're able to find a solution on Mount Holly, as I've said, there's been no pot relining expense in that cost structure of Paradise over the last couple of years. And as you know, unlike some of our peers, GAP allows either treatment, but unlike some of our peers, we expense the expense rather than capitalize that pot rebuild cost. And so there'll be a big dose of that in our cost of sales next year and a smaller amount in 2022, assuming that we can solve the power problem. So that would be the major mover amongst the plants. In answer to your second question, yes, we have concluded the negotiations for the vast majority of our – frankly, for all of our – the vast majority, I should say, of our alumina supply in 2021. And even more so than 2020, the vast, vast majority will be percentage LME priced. I can't really quote the specifics, but you know what we decided to be the fair value range of Illumina as a percentage of LME. And we've said it before, I'll say it again. We wouldn't agree to any contract that wasn't priced in that range that we define as fair value.

Got it. Great. That's great color. And then I guess the other, I don't know if you covered that and apologize if you already did. Any color you could provide on premiums that you're seeing in the market and any, I guess, any discussion you've had recently for next year as to how to think of that part of the price?

Yeah, that's a great question. Yeah, I mean, the short, simple answer is they're back to about where they were, frankly, 12 months ago as we were concluding filling in other contracts for this year, for 2020. I mean, commodity billet premiums went from sort of – these are all delivering prices now above Midwest, of course. You know, they were sort of 8 tenths plus or minus 12 months ago. They went to zero. truly zero or very little bit above zero, and they're back to, you know, high, high single digits right now. And that's kind of what we're expecting without any major changes facing the situation today.

Got it. All right, that's all I have. Thanks, Mike, and good luck with the negotiations at Mount Holly. Thank you so much. We really do appreciate that.

That's all the questions I have at this time.

Okay. Again, we appreciate the interest. Everybody has very good questions, and I hope everybody is continuing to keep safe. We'll talk to you soon. Take care.