Boliden AB (publ)

Ladies and gentlemen, I'd like to welcome you to Boliden's Q1 2023 results presentation. My name is Olof Grenmark and I'm head of investor relations. Today, we will have a results presentation led by our president and CEO, Mikael Staffass, and followed by our CFO, Håkan Gabrielsson. We will also have a Q&A session, which will be led by the operator. Mikael Staffass, welcome.

Thank you, Olof, and good morning to all of you coming here from Garpenberg, where we're going to have our AGM in a few hours as well. It's a classical Swedish spring day today. When I woke up this morning outside Garpenberg here, it was snow on the ground. We thought that hopefully we'd get some warm weather, but it's rainy and snowy this morning. But it feels good to be out here in the operations. Now, the results of today are, you can say, characterized by maybe not the best production quarter that we've had on the mine side. We've had quite a few, or can you say minor, in and of itself, each of them minor production issues, but we've had too many of them in the quarter, and therefore the production there is not what it should be. Now, if we also focus on what has been good in the quarter, we've also had a good production in smelters, where we have really managed to establish the smelters on a level that is quite high. And if you look a few years back on a level that we never thought we were going to be able to have sustainably. We also have a good progress on our big projects in the quarter and they are all on schedule to be able to deliver the way that they're expected to do. So all in all, we've had a profit, an EBIT excluding process inventory valuation of just over 3 billion Swedish krona. We have a cash flow that is close to zero, which is not too bad given the fact that we're investing the way that we are investing. So as you said, maybe the disappointment there is the EVIT in the mines, and I'll come more into the details around that soon, whereas the smelters have had a strong EVIT level throughout the quarter. If we talk about ESG and spend a little bit of time with that, which is also an area where we feel good and feel strong, in terms of LTI frequency, we have had the best quarter ever. By the way, followed by the Q4 last year, which was the best quarter ever at that time. So we've had two very good quarters in a row, which makes us feel very good about that we are doing that one and coming into the right direction. And we're also now up to 15 years of fatality-free operations, which is in itself unique in this industry. The sick leave that we've had problems with during COVID is turning the right direction. The level of 5.8 in the quarter is still a level that is too high, higher than the four that we have as our target, but clearly lower than last year and lower than what we saw in Q4 as well. So hopefully we are now coming out of COVID times and getting back into track again. CO2 emissions is doing really well as well. We've had actually a super quarter in the first quarter in terms of emissions. We are not too obsessed about every individual quarter, but of course, it's good that we're on the right direction to meet the targets that we set for ourselves for 2030. And of course, a good quarter like this makes that we feel even stronger about the ability to be able to reach the targets as we see them coming forward. Prices and terms. Well, prices and terms, as you can all know and all have read about beforehand, are still pretty good. Even though they have been down from what they were a year back, they're still on a decent level. And the currencies are also holding up pretty strongly. And on top of that, we've gotten an improvement compared to last year of both zinc TCs and copper TCs with the benchmarks that now have been settled. If you look into the market around our main metals, you can also see that the prices are holding up very well. And there are, as you can see, also increases in prices, which are increasing cost along the line. the cost curve. And you should also know that this is net here of the cost net of buy credits. And of course, the higher gold price and the higher silver price is helping to keep the cost curve down so that you maybe don't see the exact impact of inflation. But you can say that all the price increases of the precious metals is being eaten up by inflation in this situation. If you then start looking at our production and you start looking with mines, we're not pleased with the production that we've seen in the quarter. We've had disturbances in most of our operations. We've had disturbances in Itik where we've had a failure in a conveyor belt. during the quarter that meant that we had an unplanned maintenance stop that we needed to do we had the same in tara by the way also a conveyor belt that meant that we had to have an unplanned maintenance stop here in garpenberg we had problems early in the quarter with the hoist and then towards the end of the quarter we had problems with the primary mill in the concentrator that caused us problems and we needed to take an extra unplanned maintenance stop for that as well and in the Boliden area we've had an unusual winter in the sense that it's been cold that's not new but it was also warm and when you have warm and cold you get melting snow coming into the ore and that then froze it froze and we had problems getting ore into the mill in the speed that we wanted to and then finally in Kivica we've had problem with the primary crusher the ore production is actually very good and it's been piling up and we have a ROM pad that is well and full now going forward but of course the throughput was not quite what we wanted in the quarter the grades there are some ups and downs I think it's actually better than what we have for the full year, which is good. Here in Garpenberg, the grades are slightly lower, which is linked to the issues that we've had with the production, because it meant that in order for us to keep the production up as much as possible, we had to go to some reserve stoves that had lower grades, but they were more easily available to be able to truck up the ore when we had problems with the hoist. On the smelter side, the situation is much better. The zinc smelters have actually performed very well, as well as the lead smelter in Beisö. The copper smelters have had some issues in the quarter, because in Harjavata we have not had a perfect feed mix, and this is partially due to ourselves, but also due to the transport strike that was in the Finnish ports, which meant that we did not get all the deliveries we wanted to, and we had to to make do what we had available and therefore we had to do this not so perfect feed mix and what we felt feed it into the smelter. But all in all, the production situation in smelters is relatively good. So with that, I'll leave it over to you, Håkan, to get into the financial summary.

Thank you, Mikael, and good morning. So as Michael talked about, we released a quarterly result of just about 3 billion Swedish krona. Compared to last year, we are down about 1.5 billion, mainly due to grades and prices. I'll come back to that. Sequentially, comparing to Q4, We're slightly down on the EBITDA and EBIT excluding process inventories, but slightly up on the EBIT number. Investments are high, 2.9 billion, in line with our annual guiding, and free cash flow slightly negative, which in itself is a bit better than we expected. I'll come back to that as well. Looking by business area, as you can see in the chart to the left here, it is a weaker result in the mining side. And as Michael talked about, we have established a smelting division on a profitability level, on a profit level for five quarters now that we have not seen earlier in the history. If we dive in then to a comparison quarter to quarter and start with a comparison to the same quarter last year. we have a positive price and terms deviations. There is a big negative on the metal prices side, about 1.1 billion. A large part of that is offset by more favorable currencies. But we also have a good development of the treatment charges and the metal premium, which adds up to this number. Volume-wise, looking at the year-over-year perspective, one year back, the main cause behind the negative 6.63 there is lower grades. A big part of that has been guided for. We are mining at lower grades in IT compared to one year back, and we are mining below reserve grades in Kevins as well. In addition, as Michael talked about, there has been some process disturbances in the zinc smelters. That means that we temporarily have been mining in lower grade areas, both when it comes to zinc and silver. Again, in a year-over-year perspective, we see a significant cost increase, one billion, a bit more than one billion. Of this, about 750 is inflation. We look at a 16% cost increase. And in that 16% cost increase, that includes the normal inflation that we see on consumables and other purchases. It includes salary revisions, and it also includes about 250 million higher electricity costs. I mean, that is price related, but also the fact that the Tara mine has a lower hedge rate right now and are more exposed to market prices. We also have invested a bit more in exploration. And as a result of the disturbances we talked about, we have somewhat higher spare parts cost in the quarter. If we then move over to the sequential comparison and look at Q1 compared to Q4, Again, you see a positive price effect here, 266. That is, in fact, primarily metal premiums that are up 240 million Swedish krona compared to Q4. So a continued strong development of the premium and a strong European market primarily in zinc. When it comes to metal prices, It's slightly up. The average prices are clearly up, as I'm sure you have seen. But as many of you know, we are exposed to quarter end prices, especially for metals with long quotational periods, which is a result of our pricing method. And nickel and palladium are down about 20% quarter end compared to quarter end. And that actually adds up to a negative impact of around 400 million kronor between the quarters. Volumes are down 800 million and in the shorter perspective Q4 to Q1, the main reason is the disturbances that Michael talked about and lower mill volume. We've had conveyors in Taranaitic and mill maintenance in Garpenberg and Zahn. The smelters had a fairly good quarter. Volumes are slightly down compared to last quarter for two reasons. One is that last quarter we had some one-off revenues connected to a reduction of gold inventories. We talked about that in a previous call and that has not been repeated in this quarter. Additionally, we didn't have an ideal concentrate mix in the quarter in smelters. This is a result of some logistical disturbances, delayed transports in, and a part of that is the finish strike that has had some impact as well in the quarter. Cash flow. slightly negative which is an effect of the EBTA level and the fact that we're investing this year on record levels. We were expecting slightly higher capital bill. We typically do that in Q1 and as you can see Q1 of last year we tied about 3 billion in working capital. We had some big shipments that were delayed coming in late in the quarter, and that means that they were not paid at the quarter end. So we came in significantly better than our own plans in the working capital side, but we have seen that outflow in the beginning of Q2. Finally then, the capital structure, the balance sheet and the financing, still strong position. Net debt close to zero. We are currently also at about 26 billion in payment capacity, half of that is cash. So we feel that we are in a strong position when it comes to our financials. And with that, Michael, hand over to you again.

Well, thank you, Håkan. I will just very quickly come to the forward-looking page and just say that this is nothing new here. We are reiterating the guidance for the full year at ITIC on the grades and at the throughput. We are reiterating the guidance for Garpenberg regarding grade and throughput. We are reiterating the guidance for Kevitsa, the maintenance shutdown, reiterated as it was before. Inflation is the one that might be more difficult to talk about. We clearly see a tapering off of inflation. Also, as we move forward into the year now, we will get higher quarters from last year to compare with. But exactly the speed of this tapering off and exactly level is actually pretty difficult to have an idea about right now. But we should hopefully be heading back to more normal levels regarding inflation. And on CapEx, there is no new guidance. We have close to 15 billion for the full year, out of which about half is with our three bigger projects. So with that, I will invite you all for questions. And I also invite Håkan to come up to the table here.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Adrian Jelani from ABG Sundal Collier. Please go ahead.

ABG, two questions from my end. First of all, you mentioned the several sort of smaller unplanned stops in the mines. Are you able to say if any of these spilled over into Q2 or were all of them resolved during Q1?

Everything is into Q1. The only one that was still remaining and that will have some minor impact in the beginning of Q2 is the mill here in Garpenberg. We had that maintenance shut down to fix that right in the kind of end of Q1, early Q2.

Okay, thanks. And also you mentioned the small impact from the Finnish strikes in Q1. Have there been any notable effects specifically on Odda from the large Norwegian strikes we've seen in April?

No, we were not affected in any material matter in the operations. Regarding the project, there were some things, but I think we can make up for those small delays that came into the project.

Okay, perfect. Thank you.

The next question comes from Ioannis Mazvoulas from Morgan Stanley. Please go ahead.

Good morning. Thanks for the presentation. A couple of questions from my side. The first on cost inflation and probably one for Håkan. I think for Q1 you had mentioned annual cost inflation of around 10%. And today you were talking about 16%. Is that... those two numbers comparable? And if so, what's driving this additional cost inflation? And maybe some indication for the second quarter, if we think about the annual development, that would be very helpful. And then secondly, on the labor negotiations, I believe for Norway you mentioned a 4.5% increase in 2023 versus 2022. What about the negotiations for 2024? And can you also provide an update across the other regions? And then lastly on TARA. So you talked about the higher energy costs. We've also seen ZINC prices coming under some pressures. Premiums are moderating and PCs have lifted. Where does that leave us when it comes to TARA, CBDINE, and cash generation? And how do you think about the operating run rates in today's margin environment? Thank you.

Shall I start with the inflation side? Okay, so the 16% I talked about was an all-in number, including a significant part of energy. And Tara, for instance, had about 75 million Swedish higher energy costs than usual, or than last year. When it comes to inflation, it is somewhat difficult to predict and it did come in higher than the guidance that we talked about. And one reason is that the market prices have increased a bit more than we expected. But there is also a time lag. We see that between development of the market until it gets into our contracts and until we've actually procured it and taken it out of our stock and used it and charge it to the P&L, there is time lag. And I think we also underestimated that time lag slightly. So it is tapering off. We will not provide a guidance for an exact number, but it is coming down from the current level that we are at. So I guess that answers the first part.

Yeah, and I can just say that it is difficult with the timing effects on these things. So you have to bear with us. But as you said, we're tapering off the inflation. Labour negotiations. We do have a central agreement in Norway in place for the next year. It came in to be slightly more expensive than I think the four and a half we had guided for before. I think we're talking about 24 over 23. It's more like five to five and a half percent rather than four and a half. We have had central negotiations in Sweden and Finland that have all come to an end. In Sweden, it's about 7.5% over two years. So it's about a little bit more than four and then a little bit less than 3.5% for the second year. In Finland, it's about 7% for the same two-year period. We should be clear that those two are the central negotiations in Sweden and in Finland. There is still some local negotiations that needs to be done. We don't know exactly what they will cost, but not so much. On Tara, we do have a suggested agreement with a tentative, we should say, agreement with the unions. That one still needs to go to a member vote, so it's not done yet. Regarding Tara in general, yes, it's right. Tara is being put under pressure in these kind of situations. We are, of course, working hard to make sure that we mitigate the situation as much as possible. And, of course, the question from you was, are we looking into putting tar in care and maintenance? The answer is, like always, that we're always looking at that. But as long as the zinc price stays where they are now, we are not close to a situation like that.

Thanks very much.

The next question comes from Liam Fitzpatrick from DB. Please go ahead.

Good morning, everyone. Two or three questions from me. The first one just, I guess, a general question on the mines. It was clearly not a great quarter. Were you just unlucky in that multiple things happened at the same time? Or could your assets be just at a stage in their life where more sustaining capex is going to be needed going forward? just to handle some of these issues. The second question is just on the zinc TCs, probably for Horkan. Just wanted to understand how much of both the zinc and the copper TCs is reflected in the Q1 numbers for both the mines and the smelters, just to give us a steer on what that could mean for, or what that should mean for Q2. And the final third question, just in terms of the guidance, so you have reiterated it, in terms of throughput and grades. In terms of Kvitsa, just given the Q1, it looks like a stretch to get to that 10 million tonnes. Can you just give us a feel for, I guess, your confidence level and how that can be achieved? And similarly on ITIC, should we forget about 45 million tonnes throughput as a target this year, or could you achieve that later in this year? Thank you.

Okay, let me start with the first question, these kind of general questions. Of course, when we have these kind of failures and so many in a quarter, of course, we've been looking to see if there's some kind of common root cause and if there's some kind of coordination between these, but the only way that we looked at is that these are, you know, unsynchronized events that happen to happen at the same time. Then you can have a question, do we generally have a problem that we are, as you said, and we're hinting that we have an issue that we are would be having a problem that we're under-maintained, that we could look at these kind of things happening more frequently in the future. And the answer is systematically no. We have not seen that, that we have a systematic issue. It doesn't mean that we cannot do maintenance better. Maintenance is a constant thing to deal with. But we don't really have that field. Now, another thing that you should be aware of that, of course, is a little bit of a downside is that We have been extremely successful, especially here in Garpenberg, of being able to expand from 2.5 to 3 to 3.3 million tons with very minor investments. While doing that, we have, of course, stretched the bottlenecks. So something like this that we're talking about right now, about the mill, Had it been two or three years ago, we might never have mentioned it because we had overcapacity to catch up. Now we don't really have overcapacity in that sense in the mill, which means that when we do get a disturbance, it will be felt right away. It will be difficult to be able to catch up. So yes, to that extent, we are stretching it. We don't have as much free capacity in some of these bottlenecks as we used to have. going to give us a throughput i'm not nervous at all we have actually as i said been mining very well so we have a large inventory of war on the ground and as we come going forward here and we get more availability up on the primary crusher that should not be a big issue whatsoever i think throughput at 45 Yes, 45 is always a stretch. We think that had we had normal quarters, that should be quite achievable, and we should be able to achieve the 45 pace going forward in IT as well. And then you had the question on TCs, and I'll leave that to you, Håkan. Sure.

Starting at the mines, we had, if you take Q4, when we had the old TCs as a sort of base period, and we had a negative deviation of 74 in mines. They pay more and that reflects a full quarter of new TCs, so you should expect similar levels next quarter. Smelters had a positive deviation compared to Q4 of about 110, I think it was 111 million. That is about half of the quarter with new TCs and half with old, so you should expect basically twice that amount for next quarter.

Okay, thank you.

The next question comes from Amos Fletcher from Barclays. Please go ahead.

Yeah, morning, guys. Thanks for the opportunity. A couple of questions. The first one was on Kvitsa, just looking at the grades. They were pretty weak, and I think the guidance implies they're supposed to be close to reserve levels this year, which implies quite a step up. Can you just give us an update on what we should be expecting for 2023 in terms of grades? And then also just wondering if there's any updates on the lava permit process? Thanks very much.

Regarding the grades in Kevitsa, we should be able to come back to something that's more close to the reserve grades. So that should not be an issue. Regarding lava, on the formal things, they're not much changing, but there are things happening underground or under the surface, as you say, not underground. Those of you who are in Sweden will know that there is a suggestion from a government investigation to change the Swedish mining code. That one will be out for circulation and the ambition for the government has been stated clearly to change the law by next summer. So by summer of 24, which would fit well. And if that were to happen, we will be able to to move ahead with the mining concession application as well. Now, as things can always happen in these legacy procedures, and maybe we will not get the law changed in time, that means that we need to have plans Bs and Cs. And yes, we're working on plans Bs and Cs as well around how to handle that and how to get a mining concession. We have a time... constraint that is October of 24, but we need to have the new mining concession in place because the exploration rights that we have will expire. So that's the situation now. Those who have been around know that this is just a mining concession. We have not even started and even applying for an environmental permit yet. So that's, of course, a process that needs to start after that. But given what is happening on the European stage, we feel there's a good chance that we could get larvae designated as a strategic asset. So if it were to be so that the European legislation moves ahead with the Critical Role Material Act, we will qualify for that status, which means that we are entitled to get our environmental permit within 24 months of applying. So I don't know if that was a good enough explanation for you or update for you.

Yeah, that's great. Thank you very much.

The next question comes from Danielle Chigumara from Credit Suisse. Please go ahead.

Hi there, thanks for taking my questions. Just a couple from my side. On working capital, you mentioned a lower than expected build in Q1. Could you quantify for us what builds you'd expect in Q2 and then maybe for the balance of the year? And secondly, I think in the text you mentioned 0.2 billion sec additional capex for Christineburg. Will this all hit 2024?

I can take the second one. And the answer is that it will not hit 23. So yes, it will hit 24. That will come in there. And that, by the way, can just mention that is clearly in line with the inflation that we've seen in other sites. We just have waited a little bit longer than we've done with the other projects for this update. Regarding the working capital build, I'll leave that for you, Håkan.

Yeah, if we start with the full year, as you know, there's a seasonality. So I'm not going to give an exact number, but I can say where we stood at the year end. On the inventory side, we had fairly low zinc inventory and low nickel inventory. So there is some build to get back to normal in inventories. We also had... clearly higher payables than what we expected, which is perhaps the big part of the build in Q2. And we were not, I mean, first quarter last year we had a working capital build of 3 billion. That was in connection to, or that was a combination of higher prices and build. But let's say that we were expecting as an order of the magnitude half of that build this quarter. That I think you should now feed into Q2 instead.

Very clear. Thank you.

The next question comes from Daniel Major from UBS. Please go ahead.

Hi, guys. Yeah, thanks for the question. Just first one, a quick clarification, Håkan, on your comment on the earning sensitivity on the treatment charge into the second quarter. Did you say it was an extra 100 million sec delta or 200 million? Just to clarify that, sorry.

I said that in Q1, we had a positive impact of 100. And that was based on half of the concentrate coming with 2022 prices and half with new prices. So I expect 200 in total going forward when you have the full year impact. On the smelting side, then you have a negative, let's say 75 on mines.

Okay, so 100 higher quarter on quarter in smelters. Correct. Great, thanks. And the second question, just on the smelting business more broadly, if we look at the progression in either quarterly or annual EBIT or EBITDA run rates, it's rebased meaningfully higher. If we look 2023, 2024, is there any reason to believe we shouldn't see these similar run rates of quarterly or annual earnings from the smelting business sustained?

I mean, the answer is that if you look at the short term, bearing in mind that we're going to have the annual maintenance shutdowns coming up now, but if you have that one on the side now, you should be able to expect continued delivery on similar levels as we have seen. And then as we come into the later part of 2024, this should, of course, go up as we will start to wind up the investment in ODA.

Super, thanks. And then final one, longer term strategic question, but obviously seeing M&A activity in the space accelerate to an extent, you know, you've historically been, you know, acquisitive at the right times. Can you give us any insight on how M&A fits in the capital allocation sort of framework at the moment? It's got quite a high capex this year, but easing off next year, more zinc smelting capacity to fill with the odour expansion. How are you thinking about M&A in the context of the I guess changing landscape in the sector?

Well, M&A has always been and will continue to be an opportunistic situation for us. We are not driven primarily by the fact that we would have a constraint on cash or have ample of cash. We're looking at doing M&A if we find the right deal that would create value and then we will be interested in doing it. but it's not a major part of our strategy. The major part of our strategy is the organic growth that we can create. And as you said, we are pretty busy. It's not that we need more things to do, but if there were to be an M&A opportunity showing up that would be considered by us to be value creating, we will be looking at that one disregarding of where we are in the cycle.

All right, thanks.

The next question comes from Christian Kopfer from Handelsbanken. Please go ahead.

Thanks for that. Just a follow up from my side. Firstly, do I understand you correctly, considering that you have had so much disturbances in the quarter that you expect more or less all of the mines to have higher production milled-wise in Q2 rescue.

Hello? Yes, did you hear me?

No, I didn't hear you.

Okay, sorry. I think the answer is yes. I think we got some sign here from the technicians. There was something happened with the connection there. But go ahead, Christian. I think now I hear you again.

Okay. So my question, my first question is, if I understood you correctly, that you expect all of the mines to produce stronger volumes milled wise in Q2 versus Q1?

Yes, the answer is yes.

Okay. And then, if you can have some guidance on What do you expect? I think it was Håkan that mentioned that you had a quite big tailwind from a metal beam and single smelters in Q1 versus Q4. Do you still expect some positive numbers there in Q2, or how do you view that?

Well, there is a part of the spot, but most of that is on longer contracts. Not all of them annual contracts, but most of it is on annual contracts. So we should be able to keep a similar level going forward.

When you say similar level, you mean basically zero impact or a big positive impact also for Q2 versus Q1?

Versus Q1, well, we have most of the impact already in Q1, so basically a continued advantage compared to last year, but not necessarily an increase compared to Q1.

And then finally, when it comes to TCRCs, what do you see in terms of impact sequentially in Q2?

I think, yeah, we had that partially on an earlier question. And the net, I mean, part of Q1 is on last year's TCs. And we expect roughly another 100 million on the smelting side from Q2 and onwards to reflect the full quarter impact.

Okay, that's great. Thanks.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. Please state your name and company. Please go ahead.

Hi, this is Krishan from Citigroup. Most of my questions have been answered, but a quick follow-up on Daniel's question on the CAPEX. So you're saying that Krishna Bhai CapEx is going to hit the 2024 cash flow. And then in that context, I mean, I'm not asking for the guidance, but then if you look at the consensus, there is a 25% step down in the CapEx for 2024 to around $10.5 billion. Do you guys feel comfortable with that level of CapEx expectation for next year? Or there is a bit of a bump coming because of the general cost inflation you are flagging?

I think generally regarding the capex levels for 2024, we'll come back to that in the fall. What we have said and what is, of course, true and I think is part of those guidance numbers is that the three big projects that we have are tapering off. They have their maximum year in 2023. And, of course, naturally, if there were to be no other... new projects coming online, we would see a reduction of capex. If it's going to be at that level that UBS mentioned or not, we'll come back to it later.

I think just adding to that, Michael, out of the 7.5 billion that we have for these three big projects, about four is expected to come for next year. So there's a reduction there. But then you're right, on the remaining 7.5 billion, the sort of ongoing mine sustaining capital, there is an inflation component. It remains to be seen how much that inflation is when we get to the later part of the year, but we'll come back to that number.

Okay, so 10.5, 11 will definitely have that inflation component Understand. And then final question, if I can just push you a little bit. So you guided for 16 percent or the actual inflation in Q1 was 16 percent. And you're saying there are a lot of uncertainties. So would it be OK if you were to extrapolate 16 percent cost inflation for Q2 and then kind of a step down in the Q in the second half purely from a cost inflation point of view?

I would put it this way. We had an increase connected to prices that was about 16%. In there, electricity was a pretty significant one. And there it's not only market prices, it's also the fact that we are running out the hedge portfolio in Tara specifically that had an impact. When it comes to... To what we see on the markets, on general purchases, excluding electricity and excluding personnel expenses, it is about 14% in Q1, looking back. And then on the salary side, Michael talked about the various revisions. So that is where we stand. And given the fact that there is a time lag between market developments until it ends up in RP&L, we see it tapering off.

If you look back from last year, also, there was a pretty big uptick in inflation in Q2 of last year. So, of course, we get a higher comparison quarter as we look at Q2 numbers year on year.

Yeah. Okay. That should be helpful. Thank you.

The next question comes from Ioannis Mazvoulas from Morgan Stanley. Please go ahead.

Hi, again. Just a couple of follow-ups from my side. The first one, talking about, again, the operating profit bridge, I see a negative delta from byproduct prices, and I just wanted to check how much of that relates to sulfuric acid and any indication that you could provide for the second quarter on acid. And then secondly, Håkan, you talked about the lower hedge ratio for Tara. Can you talk about where you were in Q1 and how that energy hedge ratio tapers off for the balance of the year?

Thank you. We're starting with the number on byproducts. I don't have the exact part that is sulfuric acid, but it is the main part of this number. And it has come down a bit compared to the higher numbers that we saw last year. I'm not going to be able to give a forecast for the coming quarters, but just confirming that it's mainly sulfuric acid that we're looking at that line. Then the question was about the hedge ratio in Tara. We have been able to lock in some parts. Michael, do you know the exact rate that we are at?

Now, we are building up. Just to be clear on Tara, we had similar situations in Tara with everywhere else where we have a portfolio that is taking us to 80% for the next 24 months. Lots of that was tapering off. And as we came into 22, it was impossible to lock in any kind of prices that were at all interested. So we decided not to go into any hedges during 22. Therefore, we came into 23. basically at the market prices, which was a big problem at the beginning of Q3, has gotten less of a problem over time. And we've also started to build the book again to build up to a normal hedge level as we are now more to normal prices in Ireland. Exactly where we are in that book building, I do not know. But it's coming up again.

Great. Thanks again.

The next question comes from Liam Fitzpatrick from DB. Please go ahead.

Morning again. I guess it's the danger when you let analysts ask too many questions. Two more from my side. On the working capital, I think you're guiding us to an increase in Q2, given there wasn't much of a build in Q1. Can you give us some sort of range at this stage? And the second question is just on disclosure. I'm sure you've had this question before, but what is your latest thinking on reporting quarterly results by mine and by Smelter? You know, it's something that most of your major peers do. Thank you.

When it comes to working capital, I was comparing with Q1 of last year when we built 3 billion. Now, we weren't expecting quite as big build this year because last year also had a price component in there. But let's assume that 1.5 billion would be kind of a normal build in Q1. That is what we've now pushed into Q2. So we should expect another release during the later part of the year.

Yeah, and I will just finish off by saying that we do not have any, at least not for now, any plans to change any of our disclosure or any of our forecast guiding going forward. I think that we, at least for the time being, are going to stick to the formula that we have used so far. With that, I think that we've come to an end. I'm looking at the technicians there just to make sure I haven't missed anything. I think that we're at the end of the line. Thank you all very much for listening. I hope that you will have a very good day. Hopefully better weather where you are compared to where we are, but we're going to enjoy having an AGM here Anyway, I think that we've just passed a quarter where things have been very good regarding the projects and also regarding smelters, but where we had some challenges on the production on the mining side. We look forward to being able to talk to you all guys in a quarter from now with some more better news than this time. Thank you all. Bye-bye.