AMG Advanced Metallurgical Group N.V.

Good day and welcome to AMG's first quarter 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michelle Fisher. Please go ahead, ma'am.

Welcome to AMG's first quarter 2020 earnings call. Joining me on this call are Dr. Hein Schimmelbusch, the Chairman of the Management Board and Chief Executive Officer, Mr. Jackson Dunkel, the Chief Financial Officer, and Mr. Eric Jackson, the Chief Operating Officer. AMG's first quarter 2020 earnings press release issued today is on AMG's website. Today's call will begin with a review of the first quarter 2020 business highlights by Dr. Schimelbusch. Mr. Dunkel will comment on AMG's financial results, and Mr. Jackson will discuss operations. At the completion of Mr. Jackson's remarks, Dr. Schimelbusch will comment on strategy and outlook. We will then open the call to take your questions. Before I pass the call to Dr. Schimmelbusch, I would like to comment on forward-looking statements. This conference call could contain forward-looking statements about AMG Advanced Immunological Group. Forward-looking statements are not historical facts but may include statements concerning AMG's plans, expectations, future revenues or performance, financing needs, plans and intentions related to acquisition, AMG's competitive strengths and weaknesses, reserves, financial position, and future operations and development. AMG's business strategy and the trends AMG anticipates in, the industries, and the political and legal environment in which it operates and other similar or different information that is not historical information. When used in this conference call, the words expect, believe, anticipate, plan, may, will, should, and similar expressions and negatives thereof are intended to identify forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that any predictions, forecasts, or similar projections contained by such forward-looking statements will not be achieved. These forward-looking statements speak only at the date of this conference call. AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in AMG's expectations with regard thereto or any change in events, conditions, or circumstances on which any forward-looking statement is based. I will now pass the floor to Dr. Shimabushi, AMG's Chairman of the Management Board and Chief Executive Officer.

Thank you, Michelle. I'm pleased to report that out of 3,200 total AMG's employees, in 33 sites, and 15 countries, AMG has only had one employee test positive for COVID-19. The employee has since fully recovered and has returned to work. We have presently only five active self-quarantine cases. However, as a result for the coronavirus crisis, some of our production facilities are operating below capacity, reflecting reduced demand levels. Our financial results reflect the lowest price environment we are experiencing, and we continue to operate in an austerity mode and focus on things we can control, such as operational efficiency, capital expenditures, and overhead costs. The focus on expenditures will help to preserve our solid liquidity position. Despite our intense focus on cash flow, we continue to progress our key strategic programs, the construction of the plant in Saintsville, Ohio, which essentially will double our recycling capacity for refinery residues, and that is proceeding as planned, utilizing the funds raised from our municipal bond issue. Basic engineering of the new lithium hydroxide production facility in Germany is expected to be completed by year-end. Shell and AMG Recycling BV has started to operate and will pursue refinery residue recycling opportunities globally. We had an excellent order intake in 2019 of 240 units. $9 million and $104 million in the first quarter of 2020, representing in that quarter a strong 1.3 times book-to-bill ratio. But the unfortunate foreseeable depressed conditions in the aerospace industry due to COVID-19 has forced us to postpone the pursuit of a public offering of EMG technologies. I would now like to pass the floor to Jackson Dunkel, AMG's Chief Financial Officer.

Jackson. Thank you, Heinz. I will be referring to the first quarter 2020 investor presentation, which was posted earlier today on our website. Starting on page three, with an overview of the financial highlights of the quarter, AMG's financial performance in Q1 was lower versus the prior year. Revenue for the quarter decreased by 20% to $278 million, driven by a significant metal price decline across AMG's entire portfolio versus the prior year. EBDA decreased by 56% to $22.3 million in Q1 2020, from $50.4 million in Q1 of last year, which is primarily due to lower prices for ferrovanadium and lower titanium alloy sales. Net income attributable to shareholders for Q1 decreased to a loss of $13.6 million compared to income of $14.8 million in the prior year. However, the result this year was significantly affected by an $11.7 million non-cash deferred tax charge in Brazil that I will discuss later. I'll turn to a discussion of our two segments and start with AMG Critical Materials on page four of the presentation. On the top left, you can see that Q1 revenues decreased by 30% to $159 million versus the prior year. This decline was largely driven by lower average prices across all seven of the business units. These price decreases were partially offset by higher volumes in ferrovanadium, graphite, and silicon metal. On an adjusted basis, Critical Materials Q1 gross profit decreased by $25.7 million compared to the first quarter of last year. The reduction in gross profit was largely driven by lower profitability in our vanadium business, offset by increased profitability in graphite and silicon. Critical Materials Q1 S&A expenses were $18.8 million, $2.7 million lower than Q1 2019, primarily due to lower personnel costs, lower professional fees, and initial cost reduction efforts across the business. EBITDA for the critical materials segment was $9.7 million, representing an EBITDA margin of 6%. Moving on to AMG Technologies, on page 5 of the presentation, and starting on the top left of the page, you can see that revenue increased in this quarter. This is mainly due to the completion of engineering's first ceramic matrix composite vacuum furnace, and was offset by lower prices and volumes in the titanium alloys and coatings business that was driven partially by a slowdown in the aerospace sector. First quarter gross profit decreased by $7 million compared to Q1 2019, mainly due to lower profitability from titanium alloys and coatings. SG&A expenses were essentially flat at $16.1 million, primarily due to higher insurance professional fees offsetting initial cost reductions. AMG Technologies' first quarter 2020 EPA decreased by 34% from Q1 2019 to $12.7 million due to lower profitability of the titanium alloys and coatings business noted earlier. The company signed $104 million in new orders during the first quarter of 2020, the highest since Q1 2018 and representing a 1.3 times book-to-bill ratio. This higher book-to-bill ratio was largely driven by strong orders of turbine blade coating and remelting furnaces for the aerospace market. Turning now to page six of the presentation, on the top left, you can see that AMG's first quarter 2020 expenses were $34.9 million compared to $37.4 million in the first quarter of 2019. This decrease is primarily driven by critical materials, as I noted earlier. AMG's first quarter 2020 net finance costs decreased to $5.4 million from $9.2 million in the first quarter of 2019. This decline is mainly driven by lower borrowing rates and lower FX rates, in addition to a large derivative charge in the prior period. AMG recorded an income tax expense of $16.5 million in the first quarter of 2020, compared to $5.9 million in the same period in 2019. This increase was primarily due to the significant devaluation of the Brazilian currency. Movements in the Brazilian real exchange rate impact the valuation of the company's net deferred tax asset base. The devaluation of the real during the first quarter of 2020 resulted in an additional non-cash tax expense of $11.7 million. In contrast, the appreciation of the real in the first quarter of 2019 resulted in a $1.9 million tax benefit. If you strip out these two effects, AMG's income tax expense would have declined from 7.8 million last year to 4.8 million this year due to lower profitability. I should add that despite the devaluation issue, the Brazilian real depreciation is, of course, a benefit for our cost of production in Brazil. Because of the effect of the Brazilian real devaluation, we typically caution investors to focus on cash taxes. But this quarter, we only paid taxes of $0.9 million in the first quarter. compared to tax payments of $3.9 million in the same period of 2019. This low payment was the result of a tax refund for 2019, as well as the relief available due to international COVID-19 tax measures, which enabled AMG to delay most of its tax payments. Turning to page seven of the presentation, you can see that on the top left, the cash used in operating activities was $3.7 million in Q1 2020, compared to cash generated from operating activities of $6.9 million in Q1 last year. This decrease was mainly due to lower profitability. AMG's annualized return on capital employed was 7.7% for the first quarter of 2020. AMG finished the first quarter of 2020 with $192.4 million of net debt. The increase versus year-end levels was mainly due to the significant investment in growth initiatives during the quarter, especially the Vanadium expansion. AMG's balance sheet is sound, and the company enjoys significant liquidity. As of March 31, 2020, AMG had $208.9 million of unrestricted cash and equivalents and total liquidity of $372 million. That concludes my remarks. I would now like to pass the floor to Eric Jackson, AMG's Chief Operating Officer.

Thank you, Jackson. Prices for all of our products were substantially lower in the first quarter of 2020 compared to the first quarter of 2019. Again, the extent of the decline in prices is most clearly illustrated by Farrow Vanadium, where sales prices fell by more than 70% quarter over quarter. This resulted in compressed margins and lower earnings. However, as Dr. Shumabush has previously stated, All of our operating units are run rate EBITDA positive, even at today's low prices. This underscores our focus on productivity, cost reduction, and risk management in all of our operating units. Operationally, we are responding decisively to the dramatic impact of the global pandemic and the related upheaval in the aerospace and automotive industries and end market demand. We are focusing on things we can control. We are aggressively reducing operating costs, managing working capital, and cutting SG&A expenses across the company. We have implemented a hiring freeze, reduced staffing levels where appropriate, adjusted production levels to meet lower end market demand, and furloughed employees where necessary. We've reduced staffing levels, total short-term and permanent, by approximately 15 percent from year end. We have reduced professional fees and research and development costs and renegotiated supplier and service provider contracts where appropriate. We continue to be focused on driving operating cash flow and have reduced, eliminated, or deferred capital spending on non-strategic capital projects. That being said, we continue to progress our important strategic initiatives in spent catalyst recycling. the expansion in Zanesville, Ohio, and our joint venture with Shell Catalyst and Technologies, as well as our lithium project in Germany. AMG continued basic engineering for its lithium project in Weiss, Germany, and has committed in excess of $140 million to date in engineering contracts, engineering and construction contracts for the Zanesville facility. These projects have not been... significantly impacted by COVID-19 and are on schedule. They are fundamentally sound and will drive AMG's earnings growth in all market conditions. The financial performance of our critical materials business units has been impacted by falling prices, most dramatically in vanadium and chrome. We do believe, however, that these businesses are low-cost producers when compared to our competitors and using publicly available information. We will come out of the other side of today's depressed market in a very strong competitive position. AMG Technologies delivered solid results in the quarter with orders for turbine blade coating and re-melt furnaces being particularly strong. AMG Engineering successfully completed the installation of the first ceramic matrix composite vacuum furnace and passed the final acceptance test at its customer's location. This represents a significant achievement in AMG Engineering's ongoing new product development program. As Dr. Shimabush noted, we're grateful to report that we have no active confirmed COVID-19 cases globally. To protect the health and safety of its employees, AMG continues to implement preventive measures such as practicing social distancing, remote working when possible, and restrictions on travel. I would now like to pass the floor to Dr. Shima Bush, AMG's Chief Executive Officer.

Thank you, Eric. AMG operates with practice business resilience, and we are acutely focused on safeguarding against the potential for future pandemic-related disruptions. Management continues to drive operational efficiency and manage for cash preservation in 2020 to ensure ongoing financial health. One of the COVID-19 problems we deal with is the travel restrictions as regards to the execution of engineering contracts. This is leading to delays in order execution. As previously announced, due to the COVID-19 situation is developing, there is uncertainty around the severity of the economic impact. Therefore, AMG has decided to withdraw its earnings guidance for 2020. A new target will be announced once the global industrial economy begins to stabilize and be predictable. Operator, we would now like to open the line for questions.

Thank you. And if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Please state your name before posing your question. Once again, everyone, please press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. As a reminder, that is star one to ask a question. We'll take our first question. Caller, go ahead. Your line is open.

Can you hear me? Not very well. Okay. It should be better now.

Oh, yep. Now we hear you.

Yeah. Thanks a lot for the presentation and taking my question. This is Krishan Agarwal from City Group. I mean, as you mentioned that most of the divisions are operating below capacity, can you give us a sense as in how much of the decline in the capacity utilization we should think for the critical materials and the technology business, given that we are already halfway through the quarter, that would be helpful?

The majority of our plants are operating. There are few regulatory or demand-related shutdowns, very few. Some of the units are operating full capacity. That includes tantalum, lithium production in Brazil, silicon metal production, antimony production, and others, where we are partially operating on the long-term sales contracts. So in critical materials, there are Very few below capacity may be coming in aluminum a little bit because of automotive in the United States. In technologies, in G technologies, we are, of course, a function of a little bit of the GM closure in the United States and therefore temporarily And in line with that, we reduced our capacity in the U.S. and Mexico.

I understand. And then, I mean, given the capacity closures are there and the operating rates are lower in a few good businesses, would you be able to break down the approximation of the breakdowns for the fixed cost between the critical materials and the technology businesses. I mean, that's just basically to understand the potential impact from the operating leverage in the second quarter.

No, I don't think we do that.

Yeah. I understand. Let me put it in a slightly different way. You've achieved a significant decline in SG&A in the first quarter, mainly in the critical material business. And then Eric mentioned that there's a sort of 15% reduction in the staff versus the end 2019 level. Would it be fair for us to assume that the decline in SG&A cost is proportional to that decline in the staffing level?

Well, the overall staffing level... Partly temporary, partly final, has, I think, declined by about 15% to date. Continuously working on SG&A. That is a continuous program. And I don't think we compare those percentages.

Okay. Final question, or final two questions, if I may. Given that the comment that you have postponed the non-strategic spending, especially on the capital expenditure side, is there any kind of a revision to your full year 2020 CapEx guidance versus the earlier one?

Yeah. Thank you, Krishnan. We had guided originally to $250 million. We would revise that for the full year of 2021. to 200 million, obviously that is dominated by Cambridge 2.

And Cambridge 2 is fully on time and on budget as much as we can state such a statement. And we are not revising in any way our time schedule.

Okay. The final question, if I can ask to Dr. Shamal Bush, There are some incremental news flow about the vanadium supply disruption, particularly in South Africa. I mean, is there any kind of updated view in the balance of the market given the COVID uncertainties and the supply disruption?

Well, as far as we know, the vanadium supply disruptions in South Africa are intended to be or expected to be temporary. Okay. There are also supply reductions expected and happening in China, manifested in the decline of volatility and decline of exports from China. Other primary producers are temporarily under care and maintenance. So the vanadium supply picture is not expanding and the market is stable around a low level, a very low level. It is to be expected that over time that will be corrected.

Okay, okay, I understand. Thanks, guys. That's it for me.

We'll take our next question. Caller, please go ahead. Your line is open.

Yes, good afternoon to you. This is Frank Klaassen of the Grove Petercam. Two questions, please. First of all, on Cambridge 2, given the drop in the oil price, what is the risk that could lead to, let's say, a halt or lower production of the Canadian oil sands? and hence less availability of spent catalysts. So in other words, how secure is your input stream for the new Ohio plant? Some words on that, please. And then secondly, I was surprised to see such a strong order intake at technologies. What is the risk that there will be orders pushed out or canceled given the, let's say, terrible situation where the aerospace industry is in now? Thank you.

But the supply situation for spent catalyst is in a very healthy state and development, irrespective of the oil price. The Canadian operation, which is one of our suppliers, is a very large forward integrated petrochemical producer, which is very profitable. even under the present oil price scenario. The expansion of our operations rests on a whole variety of contracts which are either in place or under progressed negotiation. There are refineries going up, new refineries, state-of-the-art refineries, obviously, in the Middle East. The expectation as a function of that is that the supply of spent catalysts is a growth industry, starting very soon with the startups of those refineries, and we are in negotiations with all of them. And that is, of course, the benefit of our joint venture with Shell, which is a supplier of fresh catalysts. to all these refineries establishing a very close relationship. So our planning for our expansion is secure and that also covers the new plant in Saudi Arabia. The order intake, yeah. The order intake, you know, when we have an order intake, there is no cancellation clause. Otherwise, we book it not as order. An order can only be booked in order backlog when it's legally binding and is being

But is there a risk that it could be, let's say, spread out, that the Airbuses and Boeings of this world ask you to deliver these furnaces later, next year maybe?

But Airbus and Boeing, first of all, are not our customers. Our customers is A, the engine producers, and B, the suppliers of the engine producers. And We don't have any indication that such a thing is happening. And if it happens, we will negotiate customer-by-customer related situations. But it is not happening. And it is, as I said, legally binding contract. So money is owed. Money is owed. And if somebody wants to postpone, then, of course, the appropriate payments are being the cornerstone of any negotiation.

Okay. That sounds clear. Thank you.

And we'll take our next question. Caller, please go ahead. Your line is open.

Yes. Good evening, gentlemen. Good afternoon. Martin Driver, Avian Emerald. The first question is on the dividend which you've maintained. Can you please run us through the full process of maintaining that dividend given the uncertainty generated by COVID-19? That would be my first question. And obviously, not only COVID-19, but the aerospace developments. The second question is, could you perhaps share with regards to a cost reduction program whether there is a target that we should take into account for the next couple of quarters or maybe for 2020. And the third question is on CapEx. I understand there's an updated guidance. Could you maybe perhaps give us some guidance as to the phasing of that CapEx for the next couple of quarters? The fourth question, you haven't specifically mentioned it, but there have been some remarks. Have you resumed supply of lithium to your strategic customer? And then my final question for now, what has been the contribution of ISA, the acquisition of late 2019 in the first quarter in terms of sales and FBA so we can get a proper sense of the performance of AMG Technologies? Thank you.

Our dividend policy has not been changed. Whether later in the year when the next dividend decision comes up, the supervised report will evaluate all these factors which are necessary to be evaluated in making such a decision. As regards cost reduction, There is no target. There is a moving target depending on the developing of the market into which we sell our products, and that is an exercise which is continuously updated on a weekly basis. CapEx, you want to say something, Jackson?

So CapEx, I think the phasing, so we've got about $60 million a quarter for the next three quarters. I would probably phase that more towards the second half, i.e. lighter than 60 in the second quarter and more extensive in the second half. A lot of this, of course, depends upon sub-supplier payments by our vanadium project. So some of the timing is a little bit out of our control, but that would be my guidance.

And on lithium, we have restarted our lithium operation after a temporary shutdown last year. And we are in full production and shipping to three customers our production.

And that was the full production was already at the end of the quarter or during the latter phase of the quarter or only early April?

Just to clarify that. We started, I think, two-thirds of the month. Two-thirds of the quarter was in production full approximately. So we started in the beginning of the quarter. Okay.

Then the final question on the contribution of ISA.

Not material. The ISA is, of course, delivering into the aerospace industry for vanadium aluminum, and those commodities are, of course, not in... in exuberant demand.

Okay. Just one follow-up on the CapEx, just to make sure. The CapEx on Ohio 2 may not always run in conjunction with what the trust sees as a milestone or a certain threshold. What I'm trying to ask is, Is there, for the end of the quarter, perhaps a receivable on the balance sheet of AMG to the trust that's managing the restricted cash?

No. If you look at the balance sheet, there's restricted cash carved out. So you can see it on restricted cash of $295,495,000. That restricted cash is 100% the municipal trust.

Does it ever occur? Is it ever possible that you would have a receivable at the end of a quarter given the different phasing of CapEx?

Certainly. Not necessarily in this quarter, though.

Okay. Thank you. Those were my questions.

Since you have another follow-up question, I have another follow-up answer on ISA. We acquired ISA as a small, extremely strategically important acquisition. And there are integration, there's an integration underway into our operations. And it's an industry consolidation in in two product areas, in vanadium aluminum, which is going to the aerospace industry as a master alloy, and in chromium. ISA is a traditional producer of certain chrome metal products. We, of course, are a metal producer in the U.K. and we are targeting the U.S. market and the combination of those units will be strategically of great importance in this regard.

As an additional reminder, that is star one to ask a question, and we'll hear from our next caller. Please go ahead. Your line is open.

Yes. Good evening. Stan DeMesa from ING. Three questions, if I may. So the first one is on vanadium. You have been vocal in the past about an expected decrease in recycling fees. Can you give a few on when this should be visible in your results? Then a second question on lithium expansion in Germany. Can you give an update on the funding there of that expansion and whether you expect to be successful in obtaining subsidies to fund this project? Then a last question is on COVID-19 and sort of the broader impact on aerospace markets. Do you think this situation can fundamentally change or derail the growth dynamic in the aerospace market? Or in other words, do you think once COVID-19 is behind us, we should see a return to normal, or is there something fundamentally different that you see? These are my questions.

Denedium right down 2021. Okay, that's a clear date. Yeah.

And I don't know the months in 2021, but... It's at the end of 2020, but it takes a while to obviously run through.

But therefore, since I'm a conservative person, I said 2021. And on lithium subsidies, such projects obviously attract subsidies. And on aerospace, we... I'm very hesitant to comment on that, obviously, because of the enormous insecurity. I remind you, in February, we mandated the banking consortium for the IPO. CD Group and ABN AMRO and everybody was aligned to a time schedule. from the present point of view after what's happening with the airlines, starting with the airlines, starting with Airbus, starting with Boeing as a little bit awkward. And obviously nobody does a constructive equity transaction in that market. Nobody knows, but I personally, of course, think that the, and I have talked about this, that the big trend behind the long dated order book of the like eight, 10 years of the aerospace industry, which was making it such an attractive destination for investor capital is of course melting away. And the question is, is the mobility trend which was fueling this attractiveness interrupted? And how long will it take to resume? And that's anybody's guess. And it's also far beyond economics because of the political implications when you think about the with U.S. and China, for example, and the amount of the percentage of Chinese in this mobility trend, Chinese flyers, travelers. So this is a very complex question, and I think we have to wait half a year or a year to be more intelligent in giving an answer.

Okay, thank you. Thank you. This was helpful. Maybe in relation to that, are you already planning to look at other markets than aerospace for growth for the future? Or is it to sort of readdress?

Well, our order intake is resting on a lot of industries, including energy manufacturing, in a big way, including powder metallurgy for a variety of applications, including recycling, which is a big topic for cost, for efficiency, and also for CO2 reduction. We are a leader in circular economy, so a variety of projects in that area. We are also targeting markets which have nothing to do with automotive and aerospace. So that is ongoing. Of course, we will have to reflect postponements of otherwise solid order prospects. in the aerospace industry, that's clear. But diversification is underway, which was a big topic, by the way, in our supervisory board meeting today where we mapped out the strategy how to keep our goals going in the medium and long term despite the aerospace loadout.

Okay. Thank you. Thank you.

And moving on, we'll take our next question. Caller, please go ahead. Your line is open.

Good day. It's Martin of the idea. A couple of questions from my end. First of all, with the postponement of the IPO, you're going to miss certain income from selling shares. Will this endanger your growth plans in the near future?

No, I don't think so.

Okay. Second question, your trade receivable was relatively high. Could you put some color to that? Additionally to that, do you see some changes in your client payment behavior?

Thanks for that, Martin. We, given the situation, are monitoring our trade receivables every week. for current, and I can tell you that we are completely current on all of our receivables today. And the rationale behind the increase is really a certain amount of seasonality. So we do experience a significant amount of working capital inflow in the fourth quarter and a significant amount of working capital outflow in the first quarter. So part of that is seasonal, and part of it is changing payment terms with a specific customer that's going to reverse in the second quarter. So we would expect those numbers to be back down again in the second quarter.

Dan, concerning your order intake at engineering, when presenting the four-year figures, you mentioned that in January you hit a 10-year record in this respect. We have come down a little bit, but still it's at a high level. But could you give some color what has happened in the month of March and April with your order intake?

Actually, we are only commenting on the quarter.

Yeah, the monthly intakes are quite volatile. So the only reason we mentioned the January one was in the context of ongoing strength, not per se that any one month is noteworthy than another.

It would be wrong to draw forward-looking conclusions from water intake in a month or so. I'm not saying that the month of April was low. I'm saying it is wrong to This is a longer-term business, and the volatility between periods is rather high. Right, very high.

And then lastly, could you put some color on your remark stating our financial results reflect the lowest-priced environment we are experiencing?

Hello?

The lowest-priced environment commentary that we had in our... Well, as Eric Jackson has

commented all our, actually it's a good question, all our units, nine units are EBTA positive in 2019 and in 2020 as foreseen now, despite the fact that literally all applicable prices are at their lowest level historically. Not 10 years, historically. That means that we are a low cost producer. And when you are a portfolio of low cost production activities, lowest cost production activities, that's another word for stability. When you are the lowest cost producer in one activity, of course, that's great. But if it's a portfolio of lowest cost, that's another word for stability. And it is interesting. We, of course, follow other producers of single commodity areas, which are not the portfolio, but single, and are listed. And when you do that, you come to the conclusion we are the lowest cost producer. Now, in some areas, that is very clear, and that is the recycling area in Venetian. And that is driven, of course, by the recycling fees which we are getting, which you can address as negative mining costs. But putting this aside, we are Even in areas where we are competing on a one-to-one basis, not having a recycling advantage, we are the low-cost producer.

Thank you. There are no additional questions in the queue. This concludes AMG's conference call. Thank you for your participation. Thank you very much. Thank you, everybody.