Aluminium Bahrain B.S.C. (ALBH) Earnings Call Transcript & Summary

Okay. Great. Thank you very much, everyone, for joining us today for Aluminium Bahrain Q2 and H1 Financial Results Conference Call. And I would like as well to thank especially Mr. Ali Tareef and Vahaj Ahmed for suggesting in the last conference call for us to try Zoom. So this is our first attempt with Zoom with external audiences, so please bear with us as we are going through this while we are giving you the presentation. And without further ado, we will proceed with the IR presentation. I hope you all have the IR presentation in front of you. It was released yesterday night by me, and it was also uploaded on our website. If you please move on into Page 3 on the contents of the presentation. We have the first 2 sections on the industry highlights and Alba's highlights. These 2 sections will be covered by me. And Q2 2020 results, this specific section will be covered by our Chief Financial Officer, Bryan Harris. And in the last 2 section, industry perspectives and Alba 2020 priorities, it will be covered by our Chief Executive Officer, Ali Baqali. [Operator Instructions] So if we please go to Page 4 of the presentation -- or, sorry, Page 5, we will be talking about the aluminium industry, and we will start with the global demand. If you note, in the last couple of months, we have seen the global demand in a free fall, and this is mainly due to the spread of COVID-19 pandemic. We all see and experience that this pandemic has disrupted the world's economy. Many of the governments' strategies around the world have been mainly focused to contain the spread of COVID-19, from restricting travels, to closing public services and limiting industrial activity. Commodities have taken the hardest hit, and aluminium supply was not an exception. If we look closely to the world consumption, and the world consumption was down by 9% year-over-year, if we look at the world, excluding China, we have -- the world, excluding China, has seen the largest ever decline in the aluminium consumption of -- a drop of about 30% year-over-year. COVID-19 pandemic has taken its toll on the aluminium demand in major markets. We have seen a drop of 35% in the U.S. market, 30% in the aluminium demand in Europe and 22% in the aluminium demand in MENA. With regard to the Chinese economy, we have started seeing some recovery from the pandemic-driven shutdown, thanks to the government's stimulus measures, which has led to 5% year-over-year growth in the aluminium demand. And this is mainly thanks to the rebound in the construction and the auto sector. Moving now into Page 6 with regard to the global production. The global production has experienced a modest growth of 1% year-over-year. If we look at what has happened in the Middle East and North Africa, we note that the production or the aluminium supply has been up by about 25% year-over-year, owing to Alba's Line 6 production. Many of you remember that Alba has successfully commissioned Line 6 last year in November, and Line 6 will be adding to Alba's production capacity 540,000 metric tonne. With regard to the U.S. manufacturing, it keeps continuing with production in North America up by 5% year-over-year. In terms of China production, the Shanghai Futures Exchange appreciation in prices has led to a supply in China to grow by 2% year-over-year. Now when it comes to Europe, the supply was down by 3% due to COVID disruption to the aluminium downstream. With that in mind, we conclude that the world market was in surplus, with China about 500,000 tonne and without China almost 2 million tonne. With this, we move into page 7 to take you through the LME and premium prices. As you see from the charts below, we see that the premium prices have been going down, and they continue to be under pressure. In terms of the LME inventory, the LME inventory exceeded 1.6 million metric tonne as of end of June 2020, and this is up by 66% from June 30, 2019. In terms of LME cash, the LME cash dropped by 17% year-over-year, in dollar term. It almost went down by $300 from Q2 2019, and it averaged this quarter $1,494. With that, we reach to Page 8 for the first section, wherein we provide you a chart on the LME price trend. And as you will see, you will see that the LME price, if you go to Q2 2019, LME price averaged $1,794 versus $1,494 in this quarter. As for the Alumina Price Index, the Alumina Price Index inched lower from Q1 2020 from 17% to 16% of the LME price. In dollar terms, the Alumina Price Index was $243 per tonne. And please don't forget that for every 1 tonne of aluminum, we require almost 2 tonne of alumina. With that, we go into the Alba's highlights, which is a section wherein we provide Alba's initiatives, which were -- which happened in the quarter itself. So as always, we will start with what we have done in respect to safety. All of you, specifically those who are in Bahrain, they know that Alba is a massive manufacturing company. We do employ about 3,200 employees, and safety is of utmost priority for the management. So with that in mind, we've been liaising diligently with COVID-19 Bahrain national team to ensure our peoples' safety, whether it is our employees and contractors. The management was so kind and has allowed the remote work from home to continue for most of the office and the admin employee, and by that, we mean men and women. We have adopted social distancing, and we have adjusted the shift schedule to minimize exposure risk within the company. We have also restricted travels. So many people -- many of us, who used to travel, haven't been traveling in the last couple of months. We have also embraced virtual meetings in-house and with external visitors. Moving on into Slide 11, with respect to operational highlights and milestones. We have achieved on the 29th of June a 23 million working hours without LTI for the first time in Alba's history of commercial operation. Today, we have exceeded 24.1 million metric tonne. We had a 7-year winning streak with Gold Medal Health & Safety Award from the Royal Society for the Prevention of Accidents. So that's the 7 year in a row we collect this medal. We were also honored with a merit award from the British Safety Council's International Safety. We have successfully set up Fish Farm at Alba Calciner & Marine Operations. In terms of our sales volume, our sales volume topped 390,000 metric tonne. It was up by 25% year-over-year, while our production exceeded 378,000 metric tonne, which was up also by about 25% year-over-year. In terms of our value-added sales, it averaged 35% of the total shipments. We wanted also to advise you that Alba has released its fourth edition of the sustainability report, the 2019 sustainability report based upon global reporting initiatives. This report was sent to you previously, and it was also updated on the website through also the IR section. In terms of the project that we have at the moment, we have provided you an update previously about the Spent Pot Lining Treatment Plant, which is the first plant of its kind in the GCC, due to treat about 30,000 to 35,000 of Spent Pot Lining every year, and the overall progress exceeded 21% as of today. With that, we move to Page 12, just to give you in terms of a chart where we sit in terms of our safety performance. Our LTI, we remain thankful and grateful. We have 0 LTI in the last 2 years, and we keep continuing until to date. In terms of our recordable injury, we have 6 recordable injury in terms of Q2 2020 versus 12 in last year. Moving on into Slide 13, about the financial key performance indicators. I will be giving you a very high level about Alba's financial performance. But for more information, please stay tuned as the CFO will take you through the financial results for the second quarter. In terms of our earnings before interest, tax, depreciation and amortization, this KPI was driven mainly, but our -- by higher sales volume. As I stated earlier, our sales were up by 25%, and they were partially offset by lower LME prices. As noted before, the LME prices dropped by $300 from Q2 2019 to Q2 2020. And with that, we had an EBITDA of $60 million for this quarter, which was up by 15% year-over-year and $193 million for the first half of this year and up by about 230% year-over-year. With regard to the net loss, I'm sure many of the participants today in the call have requested us previously and asked us a couple of questions with respect to the depreciation and the financial charge. And we stated previously that the depreciation and the financial charges were capitalized to Line 6. Now with Line 6 being commissioned, and it's in full commercial operations, the depreciation and the financial charges are no longer capitalized, and that has hit us actually in this quarter. So we have had a net loss, mainly due to higher depreciation and financial charges. In respect to free cash flow, the free cash flow for the quarter and for the first half of this year, it was impacted by the changes in the working capital. More information can be shared within the CFO's section. And with that, we move into Page 14 about the Titan update. As you are aware, we've been giving you diligently updates on our Titan Phase IV. By Q2 2020, we have managed to achieve $74 million versus a target of $100 million by 2020. We believe that the target is achievable, and we are working diligently into meeting the target of this year. And with that, I will leave the floor to our Chief Financial Officer, Bryan Harris, to take you through Section 3 of the presentation.

Good afternoon, all. Pleasure to be with you. Starting with Page 16, I'll take you through the metal sales' bridge analysis. So this is comparing metal sales on the left-hand side from Q2 2019 through to the end Q2 2020. You'll see that sales have increased by 21. This is primarily due to 2 offsetting factors. One, we had the increased volume from Line 6, which added $159 million, so that's a 25% increase in volume. And that was offset, as you would imagine, by the significant reduction in LME price experienced across the globe, that impacted us by $111 million. The product mix, which is there, had a negative impact of $6 million. Pricing power, which is premium of $21 million, so that left us with the metal sales of Q2 for 2020 of $649 million. Moving on to Slide 17, which breaks down the volume change in more detail. From the 2019, we started with 312,000 metric tonnes, value-added dropped by 30,000, liquid metal increased by 2,000, and commodity or our standard ingots increased by 107,000, bringing us to the 391,000. Looking at the premiums, that's -- that dropped from $194 in Q2 2019 to $126 in Q2 of 2020, and that was primarily due to the global markets and regional premiums as well as some drop from the VAT portion. Moving on to page -- Slide 18 and looking at the cost analysis. Total costs for Q2 2019 was $556 million. We had a positive impacts of the raw material prices of $93 million. That was offset by the $59 million for an increase in consumption. That was tied, obviously, to the a significant increase in production that we had versus the comparative period. Energy price of negative $10 million, that's from the standard annual gas price contractual increase. The other raw materials actually reduced in terms of total cost despite the increase in production. And inventory absorption, the impact was $14 million. And plant spending was a $27 million increase, and that was mainly attributed to the increase in production versus the comparative section. So basically, in summary then, there were increases driven by the higher throughput, which were offset by some savings in raw material prices. So the overall increase was only a $10 million increase in our direct cost from last year to this year, despite a 25% increase in production. Moving on to our EBITDA bridge. We -- our EBITDA comparative in 2019 was $53 million. Our metal sales, which we gave you more details on Slide 21, gave us an improvement of $21 million. And again, that was mainly a volume improvement, offset by a reduction in LME. Direct costs increased slightly, as explained in more detail on Slide 18. And again, that was mainly an increase in consumption, offset by some savings in raw material prices, and selling expenses. A slight increase in freights, but that increase was actually very small when you consider the fact that production and sales volumes increased dramatically over the comparative periods. And that brought us to an increase in EBITDA for Q2 of $60 million. Moving on to Slide 20, we'll look at the cash flow bridge. We started Q2 with cash of $196 million. We generated cash from operations of $60 million. Utilized for working capital purposes was $62 million. We spent $22 million on CapEx -- normal CapEx. We had some residual CapEx for our Line 6 project of $16 million. We then drew down $27 million from loans, and that left us with a cash balance at 2Q 2020 of close of $173 million.

Bryan, sorry. Can you go back? You were on -- we were on Page 22. Or what you are talking on Page 21, sorry.

Yes. So that leaves us with the cash balance for Q2 of $173 million, which is obviously a very healthy cash balance from Alba's perspective. So looking then at the overall financial performance, so it was basically the reasonably solid financial performance considering the headwinds that we had, partially offset by lower LME prices. So our average LME dropped, you can see from Q2 last year, $1,793 to $1,494. Average alumina price dropped from $361 to $243. Our total sales increased, despite the drop in LME, it increased from $628 million to $649 million. EBITDA increased over the comparative period from $53 million to $60 million. Our net loss was $44 million for the quarter and $28 million for the year-to-date. So obviously, for the full half year so far, a significant increase in EBITDA from $60 million in our comparative for the first half of 2019 to $193 million for our first half in 2020. So a very strong EBITDA performance. But as Eline mentioned, obviously, depreciation and interest, which are mainly outside our control, had a significant impact on our net income. So with that, I'll hand back over to our CEO, Mr. Ali Al Baqali.

Thank you, Bryan. We are in Section 4 industry perspective. Page #23. The headings is emergence of global market balance. If we look at aluminium, the market outlook will be determined on how soon we are going to recover from COVID-19. If we go to global primary demand, to drop by 6% this year, aluminum production will be higher due to China greenfield project in Yunnan and Guangxi province and also in Taishet in Russia. Physical premium seems to be dropped further due to the weak on physical demand. The global growth to drop below 2% this year due to the lower GDP levels. However, economic activity might see a sharp rebound once the COVID is brought under control. The market forecast for the LME price to be within the range between $1,550 per metric tonne to $1,650. By the way, today, the price is around $1,654 per metric tonne. We move to Slide #24, regarding the major raw materials, and mainly the alumina. Alumina spot price goes slightly higher. This is all because supported of higher LME price and the high net demand because China, they start importing some alumina from the market. However, the rest of the major raw materials, such as green petroleum coke, liquid pitch and aluminium fluoride are priced -- are under downward pressure due to the low demand and weak market sentiment. If we move to last section, which is Alba priorities. Actually, we continue focusing on our safety initiative, which is our theme for this year's Safety Globe And [Foreign Language] we achieved till today above 24 million hours without LTI. This is for the first time in Alba history. We just held our safety campaign, summer safety campaign, which is focusing more on the summer challenges as well as how we are going to protect our people from the COVID-19 impact. Our aims, we have to achieve the planned target of the total production of 1.54 million metric tonnes by the end of this year. And definitely, as you're aware, and already, Eline, she update you previously in the previous slide that we achieved until now $74 million, part of $100 million target Titan project savings by the end of 2020. We're still keeping our eyes for any opportunity for upstream in order to secure our alumina requirements. And we are continuing actually to be qualified our products, mainly slab to produce more value add to the products and target more market segment. We aim to complete the SPL project [Foreign Language] by quarter 2 2021. However, as Eline mentioned earlier, the progress now more than 21%. And the upgrade, the project [Foreign Language] it will be targeted by this year -- end of this year. I guess I will leave the floor to any questions you have. And we have -- thank you very much again for attending.

Okay. Thank you. [Operator Instructions]

Any questions?

Ali Al Tareef has one.

No. Of course, I have questions, but I'm waiting for the international participants to ask, then I will ask because my question will be from a shareholder standpoint. So I will -- [Foreign Language]

I think, Ali, you should start now.

Okay, thank you, Mr. CEO, for this nice presentation, and Eline and Bryan for inviting me. This is my second time to participate with you. And first of all, I would like to wish you happy Eid in advance. As you know, the results -- I will comment on 2 things. First of all, I would like to say the good things of the company, especially in terms of safety. And the security of our people and contractors, it's very important for us and shareholders. Number two that the sustainability report, I read it last night actually. Once I saw the press release that you have released it, I checked it out. It's fantastic. And by all means, the best company in Bahrain to conduct such a report. Number two, about the financials of the company, I have to admit that I am unpleased with these figures. And I feel that this core report is detached from the reality. We have to see, what are you guys doing for the shareholders? You have to, by one way or another, to reflect the share price. Where is the share price going? What are your achievements to maintain and to grow the share price or to do something towards the dividends? And if now you're incurring losses, and I'm sure the losses will be maybe more from now until end of the year. So I wanted to highlight somewhere, what is our position as shareholders? Are we part of the game? Or you are dealing only with the staff, the contractors, safety, other items? I'm not sure. I did not see anything related to us, to shareholders. So I will ask this question first, and then I will go into some numbers to ask you.

Thank you, Ali, for your question. Definitely, our aim is not to please only our employees or our contractors, but the main important also, our shareholders and investors. We are doing a lot of things actually behind the scene. As shareholders, maybe you cannot see it, but, internally, we've got a lot of programs in place to control the cost, cost cuttings. We did a lot of things like freezed hiring, reduced manpower, reduced the CapEx. If you are in the company as an employee, you will feel the heat that everything is cut to the lowest things. If you look at our EBITDA, if you look at our gross margin, you will see that the company is generating money actually, and we are doing a good as a management performance overall. But you know that we just -- we finished some of the big expansions. And you know that as an accounting principle, we have to put in our consideration the depreciations and other things. Maybe, yes, we are just investing $3 billion, and this also, we have now to return it to our lenders. And that's why you will see this, despite we are generating money, despite we are profitable in the EBITDA level or the gross margin level, but you will see our depreciation. And our financial cost is high. That's why we are incurring loss. Otherwise, if you normalize everything, definitely, in H1, it will be profitable for us. Just be patient with us. I know that it will be more pressure on the share price. But if you look at our peers also, you will see we are not separate than them. Because all -- everybody -- all like -- I will not mention their name, but all the biggest smelters, they are impacted more than 52%. This is one giant of aluminum. Their price reduced by 52%. The rest are between 25% to 30%. And if you look our share price drop, we are better than them. But as I said, we always keep everybody in the same basket, in the same balance. And we treat everybody equal, and this is our aim. And [Foreign Language] you will see us, in the future, [Foreign Language], once this COVID-19 over, you will see the company how will perform. And we'll go from this situation [Foreign Language] more stronger.

I would like to add, Ali, if you may allow me, something to what the CEO has stated. As you know, Aluminium Bahrain or any manufacturing company or maybe banks, I mean, everyone around the globe has been impacted by COVID-19. This is something that no one, companies or individuals have accounted for such virus to happen and no one has taken that. I mean, we never assume something with the -- something of this kind will happen and will have a major impact on the businesses, and, for instance, for Alba on our operations. But when it comes to the share price, and I'm sure you -- as an investor, you have -- you even have maybe more better knowledge than we do. You know the story, and we don't want to repeat, what comes first? The chicken or the egg? We have 10% free float. Just to tell you what has happened today in Bahrain Bourse. Today, we had about 25,000 shares, which were sold today, and that has brought the share price from 330 fils today at the opening of the trading session to 319 fils at the close of the trading session. So very minimum volumes have been traded, but that has put lots of pressure on the share price, and the share price have went down. I'm not giving ourselves any kind of excuse by giving you such a justification, but this is the reality. And as the CEO has stated, all primary smelters or, I would say, aluminium producers have seen a similar experience like Alba. The only difference is, in Alba, 1,000 shares being traded a day can have an impact on the share price. It might be looking as a curse and it might be looking as a blessing. If it is somewhat else, 1,000, if you have 50% free float, it's nothing on the share price. When it comes to Alba, 1,000 share transaction, it's affecting the share price. So there are things beyond our control. We want to have bigger liquidity. We want to have a higher free float. But this is not in our hands, and this matter is actually being discussed with our major shareholder. So yes, unfortunately, we are not in a position to give you any guidance on how you -- what would be the share price. But if you tell me, today, the share price is trading at a major discount from the real value of Aluminium Bahrain. If you look at our balance sheet, it's about $3.5 billion. If you look at our assets on the plant, it's about $9 billion. So there is a true disconnection between the share price and the book value of the company and our balance sheet. There are things that the company is doing, and we hope you will see it in the future. And there are things outside our control which we cannot influence ourselves to get things better.

Thank you very much, Eline, for your elaboration. It's just -- I know about this book value and things like that, but I'm worried more, not about the fluctuation of the price. As you know, I'm not a seller anytime soon, but what I wanted to know from you is about dividends. We want to see some kind of cash inflow in our pockets. Once this is coming, I'm sure the share price will adjust. So now we -- so sorry, one second. One second. Sorry, so last year, we have closed and we finished our biggest investment in November 2019. And this year, we are feeling the pain of what we've done. Okay. Somehow, it is helping us in terms of sales volumes, but this is on the top line. But in the bottom line, when we see this depreciation and amortization and interest expense, which is make -- it is killing the profitability of the company. So okay, I know Project Titan, you are more than 75% now in terms of achievement. But this is all not enough. It is still not enough for the company to be profitable. I know the times are difficult now, but what are you guys going to do other than what you have done already? And it is not enough. What are you going to do? So are we going to continuously incur losses? Alba will be a loss-making company?

Okay. I'll have a crack at that question. Thank you, Ali. You're absolutely right. These are unusual times. And rest assured, Alba is being very proactive in terms of managing its cost. As Eline said, behind the scenes, we've been very proactive. We've had a number of initiatives starting a while back. Some of those, you will see starting to impact us in the next presentation positively. We've done, I think, exceptionally well at delivering far above targets for this point in the year on Titan, which is our primary cost reduction program. So we will certainly -- I think if we stay on this course, exceed by far the target for Project Titan. But we're now looking well beyond Project Titan, and we have a number of initiatives as a management team and as an executive team looking at every aspect of costs. So there is nothing that is off the table. We're exploring all options. And we have robust conversations about what can be done. Our primary focus is on delivering value to our investors. And in terms of -- obviously, we would love to get back to a position very shortly where we can return some money to investors by way of dividends. We need to obviously be prudent. We can't do that when we have no profits to distribute. We're all very anxious to get back to that situation. As Ali said, the LME price is starting to improve, which will have a significant positive impact going forward. But we're not simply sitting back and waiting for that to improve. We're actively working to reduce our costs, actively working to improve efficiencies, actively working to expand our revenue base.

Okay. Thank you, Bryan.

[Indiscernible] Yes. My question is on [ figures ]. My question is on value-added sales. So in the past, you had value-added sales of 60% of your total shipments, but now it has declined to 34%. So what is -- one, what is the reason behind this? And secondly, do you see it reversing to 50% or 60% levels in the near term?

Yes. Actually, in the past, the 60% was based on 1 million tonne of production. Yes, less than 1 million tonne of production. Now the value-added product has reached to 34% actually to -- we have 2 reason. One, because we increased the capacity by 50%, of production by 50%. And the second thing, the impact of the COVID, we got some cancellation due to the COVID-19 because of the low demand, and we got also some deferment. However, now the market is a bit improved, and we are getting some confirmation from customers to ship again these value added products. If you look -- I mean, just as a [indiscernible] if you look also at our inventory, inventory, and this also is a little bit high because of some that was produced. But unfortunately, we got some deferment and cancellation at the spot, which were unable for us to sell them. But this, it will be washed by the end of the year. And I hope the percentage -- that the market become more strong, this percentage will go up again.

So can you provide some guidance on how much value added sales are you looking at in the second half of this year?

Actually, based on the plan, it is about 50%. But due the COVID, it's become lower, and we are not expecting to achieve the plan because what's happened -- what went behind, what we not get that it will not come. But hopefully, we are going to achieve a little bit.

This is Anoop. One question on the Power Station 5. Could you please give us some update on where we stand in terms of the commissioning of all the units? What efficiency is the plant running at? And I think, one notable positive in the result seem to be that power costs have fallen reasonably well. So is this the best you think that can be achieved? Or do you expect to see more savings in power consumption as we go forward?

Thank you for this question. Actually, just an update on the power stations. The 3 blocks fully on operations and power machines and handover to Alba. You are right, we are gaining some benefit from the efficiency in the Power Station 5. And the full benefit [Foreign Language], we'll get it by the end of the year because just we hand over that blocks. And you know that in summer, the efficiency becomes lower, but this is already put into consideration, and everybody knows that in summer, the efficiency will be around 54%, but in summer, it's 60%, 62%. But you are right, the efficiency is in the power station play a major role in our cost-cutting program also.

So as you -- so as we now we've obviously ramped up to full commissioning, the power group is every day making tweaks, which is actually increasing the efficiency further. So you can expect further improvements to the overall efficiency as we go further during the year.

Okay. Just on -- one on the aluminium market. I mean, you've mentioned that the demand has really collapsed, and there's a slowdown across the board. Now if I look at this landscape, almost every smelter is -- I mean, Alba, obviously, exports -- is a fully export based model. Even the Indian producers I was listening to an interview, Hindalco has exported about 80%. Now where is all this metal going? Because if demand is also down and everybody is looking to export, which is the industry from where you are seeing -- I mean, for example, Alba, which sort of pockets from the industry are you all seeing some strength in -- because we know that autos and construction. There is weakness. So what is holding this demand together? Because with the kind of demand collapse we have seen, it is also surprising that the aluminium price is still at $1,650 because the cost curve is almost flat. I think last month -- earlier this month, when Alcoa had the presentation, they said that only 1% of Chinese capacity is unprofitable, and it's cash negative at current prices. So that is very discomforting because the price is high, there is no demand, but -- even the cost curve is flat and the producers are still making money. So where is this thing going? I mean, how do you see this thing shaping up? And any other comments on this? Because it is very difficult to reconcile all the 3 things together.

Yes. Thank you. I'll start, and then our CEO can add anything. You're absolutely right. In terms of the automotive, that's been weak, and we're not expecting any rapid recovery on that. However, other industries have been positive. Packaging, in particular, has been positive. Certainly, our local downstream customers' demand has been strong. Globally, China, their demand has been strong. And so that's actually one of the reasons why we've actually seen the LME price recover in recent months as we're seeing a surge led by China. And so, hopefully, that will drive a sustained global improvement economically. Some of the metal that is being bought at the moment is being stored. I think there are many traders that see the low current price as an opportunity. And so they're seeing -- if you look at the forward curve for LME, the -- it's projected to increase. And so I think some traders are getting in as well and buying up with the anticipation of making a profit.

And I would like to add, Anoop, to what our CFO has stated. If you look at the world market demand, so if you -- last year, in 2019, it was almost 67 million tonne. So if you do the math, and we forecast that the global demand will contract by about 6%, it's a reduction of about 4,000 tonne, which is nothing compared 40 -- well, it's about 40,000 tonne, which is not too much when you look at it from the full standpoint of the global market demands. Bear in mind that -- that's the global market demand, including China. And China is actually about 37 million tonne of the global market demand. So although the demand will contract, and we are feeling it, because in the last couple of years, the global consumption was going up about 5% to 6%. Hence, we are -- the industry is feeling the heat, because, usually, the consumption was increasing year-over-year by at least 5% to 6%. And today, what we are seeing that the demand is contracting. And the forecast for 2020 is the contraction will grow by about 6%.

Okay. Okay. Just a follow-up on your -- on the gas, now if you look at the energy landscape, I mean, Alba is actually -- it's -- unfortunately, it's quite uncompetitive because you are paying $3.75 for gas, whereas even coal -- NewCastle Coal is roughly at that level. So are you in talks with the government to have some sort of a different pricing mechanism, maybe as a percentage of LME? Or like Saudi is exploring something as a percentage of the reference price like Henry Hub is at whatever, so you have a price of 70% or 80% of that? Because -- I mean this performance is of no fault of yours. You'll have a very efficient plant and everything in line. All those things are fine. But the gas price, it becomes a deal breaker at -- in this sort of an environment. So is there something that is happening that you guys are optimistic of?

You are absolutely right. We are paying at the moment $3.75 per mmbtu. However, I can tell you that there is a high-level discussions between the Chairman and the Board with the government in order to reconsider the price of the gas again, but there's no assurance, but we are trying because of the COVID and the company impacted, and we are dealing with this situation. I hope there will be some consideration in our case or Bahrain industry against a price also.

Okay. Just one last question, sir. This is on the accounting. Now you had about BHD 12.5 million that was grants from the government, and there was a BHD 3.5 million donation that was made to the government. So I understand that BHD 12.5 million was recorded under cost of sales. But where is the BHD 3.5 million donation recorded? Is it under cost of sales or under SG&A expense?

Under ...

Cost of goods sold.

Plus cost of goods sold.

Cost of goods sold.

Is your question about the donation?

Yes, donation.

Yes, the donation. Because I think that on a net basis, it is about BHD 9 million because it's BHD 12.5 million minus BHD 3 million it's a net loss to -- so I understand BHD 12.5 million in under cost of goods sold, but I was wondering where is the donation accounted for, just from the accounting point of view?

Yes, yes. So the donation is under the general and admin expenses. So if you look at notes 2B.

Bryan, do you allow me to share a screen with you, so I can go to 2B, please?

Do you want to share the screen?

Sure.

Just allow me, I will share the screen with you. Okay. You closed your screen, but you did not allow me to share a my screen. Just enable participant share screen.

Okay, well no problem.