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

Good afternoon, everyone, and for those who have just started their morning, good morning as well. At least accept our deepest apologies for keeping you waiting for about 15 minutes. We had some technical issues, and I trust that everyone can hear us properly. Thank you for connecting. This is Aluminium Bahrain's Q3 and 9 months of 2022 webcast. I hope you see in front of you, the IR presentation. As always, we have the regular section that we will be covering myself, Eline Hilal, I will be covering the first 2 section about the industry highlights as well as Alba's highlights for the period. Post that, we will have our CFO to give us a deep dive into Alba's financials for the first 9 months of 2022 while the last 2 sections about the industry perspective for 2022 as well as Alba's priority for the rest of this year and next year will be covered by our Chief Executive Officer, Mr. Ali Al Baqali. And without further ado, we will start the IR presentation, and we will move to Page 5. So on this page, which is about the industry highlights, we thought ahead of having a deep dive into what has happened in the aluminum industry, we wanted to share some macroeconomic factors, which have impacted the industry at large. So we have seen in the last quarter a falling in the aluminum demand. This is underpinned by a heightened level of volatility and uncertainty. That has had an impact on the growth of aluminum metal in Q3 of 0.5% year-over-year. As we are all aware, we have been navigating throughout the COVID-19 pandemic. Today, the global economy has started to face the prospect of a recession after just finishing from the COVID-19 pandemic. The outbreak between Ukraine and Russia war has led to a steep increase in energy prices in Europe with global inflation rising to unprecedented levels, while interest rates were up sharply as we have all noted. All of these factors have taken the toll on the aluminum industry, specifically in Europe and the States as smelters have not have cut their output against the background of high power rates and a falling demand growth. If we take a closer look at what has happened region-wide, the Middle East demand was up by about 8% year-over-year, supported by higher consumption in United Arab Emirates, which has seen an increase in demand in growth by 17% year-over-year, followed by Bahrain, plus 3% year-over-year. If we take a look at what has happened in the United States, the demand remains under pressure, and that has seen almost a modest increase of 2% year-over-year. As for China and Europe, this has severely -- it was affected by what has happened recently. The China consumption was, of course, impacted by [ increases ] in COVID cases and the lockdowns that the government has enforced and the logistic challenges in the market. These have had its toll on different sectors in China to include construction, packaging and consumer durables. With regards to Europe, we have seen a strong -- slowing economic growth and coupled with higher inflation, it has led to a contraction in the aluminum demand of about 8% year-over-year. Moving forward with the supply side, which is Page 6. The world market supply, unlike the world market demand was up by 3% year-over-year. If we look at China, the China increased production was up by 6% year-over-year following the 2021 supply cuts and delayed ramp-ups. So whatever we have seen back in 2021 in terms of supply costs in respect to shifting to greener power, and the delayed ramp-up has started to see a new dawn in China and the production now has been up. With respect to [indiscernible], Europe has led the world excluding China, and its output cuts going to spikes in energy prices and aluminum demand was down in Europe by 8% year-over-year. In regard With respect to North America supply, it was impacted due to major economic slowdown, and it was down by 5% year-over-year. The same also applies to the Middle East, the production was up by -- so the production in the Middle East was up by 5%, unlike the production in North America, and that would leave the world market in surplus with China and without China. Moving into the slide on the LME prices and the premium. The LME-Cash averaged in the third quarter of this year, $2,354 per tonne, down by about 11% year-over-year. If we take a look at the LME inventories, the LME inventories hit a record low, about 350,000 metric tons, which was down by about 73% year-over-year versus September 30, 2021. Premiums have been spiraling down, owing to weaker demand and bearish market sentiment. As you will note, in the [indiscernible] part for MJP, Major Japanese Ports, U.S. Midwest and DDP Rotterdam. Moving forward into alumina price. Alumina as we are all aware, is one of Alba's major raw material. For every 1 tonne of aluminum, we need about 1.98 tonnes of alumina. So if we take a look at the first chart on the top of the slide, it's about the LME price, the LME price trend, the LME price average has stated $2,554 per tonne in Q3 versus $2,647 per tonne in the last -- in the quarter 3 of 2021. Going into the alumina price index as a percentage of the LME. As you see the alumina as a percentage of LME has spiked from 12% in Q3 of 2021 to 18% in the last quarter. The third quarter of this year, and it averaged about $415 per tonne. Moving now into Alba's highlights for the period. As always, we start with the safety slides, and these are our safety performance in numbers. I'm going to take you first into the ARPU, which you can see on the right side of the slide. We were very pleased that Alba for the first time in its history of commercial operations that we have stated 31 million safe working hours without LTI. This was achieved almost by the end of the third quarter of 2022. However, recently, we have had an unfortunate incident in Alba, which has taken us to reset our safe working hours from 0. Today, we are on course to achieve 2 million safe working hours without LTI. Taking a look at the chart on the left, this is where you see our total injury, the reported injuries and our lost time injuries. As you see, we had 0 LTI as of end of September 2022. We had also 9 recordable injury for the quarter and 7 injuries in total. And with that, we move further into Alba's ESG journey. Sorry for that, it's on Page 11. So Alba has been a proud recipient for 6 major National Safety Council USA Award for the year of 2021. So we have received the Safety Leadership Award, Significant Improvement Award, Perfect Record Award, Occupational Excellence Achievement Award, Milestone Award and Million Work Hours Award. Alba supported Bahrain's ESG initiative, Forever Green, by sponsoring the Ras Sanad Mangrove Nursery Project and by donating about BD134,000. To provide equal opportunity to its female workforce, Alba has given a tailor-made leadership course to further their leadership scale. In regards to our commitment to Bahrain youth development, we have supported 70 students who are undergoing On-The-Job training program across different functions in Alba to better their career and future. And as stated in the previous slide, we have achieved [indiscernible] Moving further, this is the same journey that you have -- the same slide that you have seen previously in our Q2 conference call, we haven't changed it. I personally like this slide because it tells me that -- it tells us and Alba all of us that everything we do is a journey. And day after day, we can improve in our practices. And as stated previously, in Slide 11, we have added over years our endorsement to Ras Sanad Project, which goes in line with Bahrain's objective in terms of afforestation and reforestation. Moving further into Alba's operational highlights for Q3 and 9 months. As you see on the first bullet point for the production for the third quarter of this year, it was almost 405,000 metric tons up by 3% year-over-year. In terms of the first 9 months performance, our production topped about 1,192,000 metric tons, up by 2% year-over-year. With respect to our sales volume for the third quarter, it was about 366,000 tonnes. While for the 9 months, it was almost 1,109,000 tonnes. Both performances in terms of our sales volume had a flat growth for Q3 and for the 9 months of 2022. As for our value-added sales, we had 67% of our shipments were sold to add value-added sales versus 58% back in Q3 2021. And for 9 months, our value-added sales averaged 67% versus 62% for the first 9 months in 2021. Our Chairman has debuted the first complete foundation for the Power Station 5 Block 4, which is Alba's latest expansion project as well as kicked off the construction activities and other site works on projects on Power Station 5 Block 4 site. Mitsubishi Power was awarded the Long Term Service Agreement for Block 4 to ensure efficient and reliable power supply. Moving further into Alba's financial key performance indicators for the third quarter and the 9 months. And just to spend less than imminent on this slide further details will be given by our Chief Financial Officer and the subsequent section on the financials. So for year-to-date or the 9 months, EBITDA has averaged $1.280 million, up by 24% year-over-year, while for Q3 EBITDA was down by about 47% to $234 million. And as stated previously, we have seen about 11% decrease in our LME price. So this is mainly owing to lower LME prices and higher cost as well. For the profit, the profit for year-to-date was $1 billion, up by 39% year-over-year [indiscernible]

Thank you, Eline. Good afternoon, everyone. It's a pleasure to connect with you today. So I'll be taking you through the Q3 and the year-to-date results. I'll be starting on Slide 17 for those following along. And the main theme for this quarter is the global uncertainty and the bearish market sentiment. Despite this volatility, though, Alba managed to secure solid Q3 results. However, you've probably noticed that these are substantially down from Q1 and Q2. Just to remind you that Q1 and Q2 were the best quarters in Alba's 51-year history. So a strong quarter, but obviously down from the prior 2 quarters, and this was mainly because of the drop in global LME and premium prices. So starting with the metal sales bridge on Page 17. So again, this is a bridge that takes you through from the 3 quarters of 2021 and describes the changes -- the sales figure for the 3 quarters of 2022. And you'll see that its increased metal sales has gone from $2,779 million to $3,666 million an absolute increase in sales of $887 million. So a 32% increase. And this is mainly driven by the increase in LME and increase in premiums. So LME by itself contributed $637 million to the increase in sales and what we call the pricing impact, which is the premiums contributed the remainder of the -- or the bulk of the remained of $245 million. Product mix, which is basically the additional VAT contributed $7 million, and there was a slight reduction in volume of negative $2 million. Moving on to Page 18 and looking at the sales by product-line. So the chart on the left-hand side shows the products in metric tonnes. And you'll see that the overall increase in sales or the -- that sales rate is flat overall, but there has been a very positive shift in that value-added has gone up by 60,000 per metric tonnes, which is obviously attracts the highest premiums. Liquid metal has gone up by 4,000 metric tonnes and commodity, which is obviously low premium items like standard ingots and PDS has gone down by 65,000 metric tonnes. The premiums themselves have -- for the year-to-date have gone up from $253 to $480. So that's a 90% increase. That's obviously in dollars per metric ton. And this is mainly driven by [indiscernible] premiums, but also because of the strategic shift by Alba from commodities to that product. Moving on to Page 19. So looking at the -- or from the cost perspective, you'll see that our costs did go up by $513 million, but obviously, that's substantially less than the increase in revenue of $887 million. And the main increases on the raw material side. So you'll see raw material prices for alumina and coke went up by $382 million. Other raw materials by $267 million. So significant increases in raw materials. Energy price also went up for the -- obviously, for the 6 months of the year where the price is higher than the comparative year. So that contributed $21 million. But basically, aside from raw materials and energy prices, all other costs actually went down. So it all went well. Together, all other costs went down. So plant spending, you'll notice there was a positive impact of $50 million. That, however, does include some ForEx benefits that have been recorded during the quarter. But overall, I think an indication that despite the worsening in market, we have been successful at managing costs very well. Looking at the EBITDA then on Page 20. The EBITDA has gone from $1.031 billion to $1.280 billion for the 9 months. So that's an increase of 34% -- sorry, that represents an EBITDA potential of 34.9%. And that's obviously mainly because of the increase in sales that we've discussed that is FX driven, offset by the increase in direct costs. And again, that's mainly raw materials of $512 million as well as an increase in selling expenses. So selling expenses have gone up dramatically this year as we've, I think, explained in the Q1 and Q2 presentations. And this is a global phenomenon where we see global increases in shipping prices. Container costs have gone up. Shipping and trucking costs have gone up. Obviously, oil and gas is a big driver to that, but also, obviously, with Alba's strategy of increasing that, it does mean Alba is paying more to ship goods to final customers rather than simply selling it to traders where those shipping costs are avoided. Moving on then to Page 21, the cash flow bridge. And you can see a significant cash flow from operations of $1.217 billion for the 9 months. So this is a massive flow of cash. And this is obviously in part because we benefited right through this year from the collections when LME prices were very high. So in Q1 and Q2, we're seeing some of those collections from our customers reflected in Q3 as well. Our working capital changes then took about out of that of $383 million, and this is mainly increase in accounts receivable as well as increases in inventory. The accounts receivable is driven by the higher LME prices and premiums. And the inventory is driven by the shift from selling to trader, to selling value-added products, which obviously has to go on onboard ships and get stored in warehouses. So they remain Alba's property for a little bit longer in order to attract the higher premiums. CapEx spend, $108 million. We've split [indiscernible] CapEx that you can see that separately. So that's $49 million. So far by this year on our new Power Station 5 Block 4. Our net debt servicing, so this is obviously debt repaid plus interest paid of $327 million. That's obviously net of any new loans taken out and payment to shareholders. So we had a $200 million final dividend for last year paid in Q1 and then an interim dividend of $120 million in Q3. So that gave us a cash balance at the end of September or October $278 million. So free cash flow actually went up from $278 million to $726 million. So that's over 160% increase in free cash flow. So looking at the income statement on Page 22, a comparative. You will see that for Q3 alone, we made a net profit of $128 million. And for the year-to-date, we just managed to break through the $1 billion mark. So we have $1.002 billion net profit for the 9 months to the end of September. You'll see obviously the downward trend in the LME prices. The year-to-date LME was $2,834, whereas the average cash LME for Q3 by itself it dropped down to $2,354. Likewise, we do see some reduction in alumina prices. And so our total revenue was $3.666 billion compared with -- for the year-to-date and just over $1 billion for the Q3 alone. So EBITDA was $1.28 billion compared with the $234 million for the quarter. So with that, I'll hand over to our CEO, Mr. Ali Al Baqali, to take us through the industry perspectives in 2022.

Thank you, Bryan. Good morning, good afternoon. This is Ali Al Baqali. I would take you to tax report, individual perspective as well as the Section 5, Alba priorities. If we move to Page 24, industry perspective, the uncertainty of the global economy, in particular, the aluminum market, very volatile with -- high inflation, weak demand as well as a slow growth. All these results led to [indiscernible] in the market and maybe building up some inventory in the warehouse. We saw also the demand for packaging and the renewable energy sector is a little bit growing because of this improvement in the market. Fear of recessions, also another factors of uncertainty in the market. And because of that, we saw interest hike in U.S. and Europe while the weak property market continue across the weigh of the China economy. Another reason of uncertainty, which is the high energy cost mainly in Europe. This also bought our customers an uncertainty and they are having problems of cutting some of their production line. This put the pressure on all aluminium producers not to fulfill their sales contract. The freight rate, what we saw that there is like -- as Bryan said as in earlier, we saw a decline in the freight rates. And this trend, as we show that even in quarter 1, the freight rate will be lower. And if you look at our financial, you see that there is some improvement in the freight charges in FY '23. We also noticed that the premium, which was high in quarter 1 and quarter 2 and quarter 3 is declining, and the trend also in the quarter 3, it will be [indiscernible]. As per the market forecast or Market Intelligence. Reported LME price was in the range to $2,000 to $2,100. If you look at today's price, it's between $2,200 to $2,300 for the last 2 weeks. If we move to the major raw material prices. We can classify the major raw materials to 2 categories. One is the white material, which alumina and fluoride. Both the prices of alumina and fluoride are almost soften as stable. However, if we go to the black material, which is Liquid Pitch and CPC and GPC, the price is almost [ doubled ] because of a lot of factors. The oil price is increasing as well as the rush out to not use the carbon for the ESG porters to reduce the carbon emissions. And the market is very tight and the majority of carbon materials come from China. Just for your information. Section 5, the Alba priorities, definitely safety will be always as a sale of priority for Alba. As Eline mentioned that we had unfortunate incident in 4th of October, which lead to one LTI. However, after the LTI, we put a lot of effort campaigns to [indiscernible] the number of employees. And we always believe that if you have a [indiscernible] definitely, this will -- it will reflect in your productivity and efficiency and will achieve your profitability as well. We are embedding the ESG practice in all our activities, any new projects, any financing, always ESG is the top priority for us to achieve the KPIs and to achieve our road map [Foreign Language] by 2060 to achieve net carbon zero by 2060. We are targeting to exceed the production plan of this year, which is about 1,560,000. And with the support of AL HASSALAH fund, definitely this year, it will be ending the program, and we are targeting $100 million for the last 2 years, which is '21 and '22. As every time we are updating the investors that we are still keen and looking to screen the market for any opportunity for upstream. In order to secure at least 1/3 of our requirement. Now at the moment with Line 6, we are buying more than 3 million tonnes of alumina. Again, we are capitalizing on all what we gained in the last few years like Aluminum Stewardship certificate, the Ecovadis certificate, ISO and other certificate in order to increase our market share and increase our VAP percentage in the coming few years. We are going to finalize [Foreign Language], the Solar Farm Project in quarter 4. And we are going to announce [Foreign Language] within coming 2 months that we know and we are going to execute the project as soon as possible. You already heard in the newspaper that Alba and the Board approved to go ahead with Feasibility Study for Line 7. We finished the previous Feasibility Study. The outcomes of the previous Feasibility Study was very good. The Board approved to go ahead with Feasibility Study, and it will take us around maybe 9 months to complete the study. And after that, the Board, they will recommend [Foreign Language] will get the whole inputs positive. Definitely the Board will approve the project to go ahead with Line 7 projects. By this, we are ending the presentation, and I will leave the floor to Eline to handle any questions for our [indiscernible]. Thank you.

Thank you, Ali and Bryan, and thank you, everyone. Now we can start the Q&A session. So I will hand over to Heidi so she can take us to the questions one by one. Heidi?

[Operator Instructions]

So we do have 2 questions from Nour Sherif from Arqaam Capital. The first question is, when can we expect to have a rebound in sales volume in the fourth quarter? And should the cost globalize in the fourth quarter of this year and he's asking us to provide an update on Expansion Line 7 and the security of natural gas for a sizable expansion dual listing and the expected savings from the new power plant. Another question from Nour Sherif to provide him with the reasons behind the higher cost in Q3 when compared to Q2 despite lower alumina prices after the presentation, $413 per tonne in Q3 versus $465 per tonne in Q2.

Eline, I didn't see the questions, but I guess the question was too lengthy [indiscernible] questions and all questions. What's the question you want us to answer.

The first question, if you can go [ back in ] into the control booth, ask [indiscernible], if you can go to control booth, you will see 3 questions. Or if you go even on the same screen that you have to just go on the bottom, you will see questions between brackets 4. Slides speakers' questions, line viewers and action log. So we just have to click on questions.

[indiscernible] Eline, we cannot see that question. If you have -- if you can start with the easy question, we can answer them. Then the difficult ones, we'll answer later.

Okay. The first question I was saying was whether we should expect to have a rebound in sales volume in the fourth quarter of this year.

Because of the market situation now, we don't think that we will have the [indiscernible]. We will meet our sales requirement by the end of the year, but the market is challenging. We are not targeting this, but hopefully, [Foreign Language] we're going to achieve. What is the second question?

[indiscernible] Yes. So I'll take the question on the high cost in Q3 compared with Q2 despite lower alumina prices. So you're right, alumina prices have come down in Q3 versus Q2. However, most other raw material prices have actually continued to rise. So as the CEO mentioned, in particular, the black goods, so Liquid Pitch, CPC, GPC and anode have all increased significantly in price. And that's the main reason for the increase in Q3 versus Q2.

Yes. Regarding Line 7, I sort of -- question about Line 7. Line 7, if I get more information, it will be coking Line 6 in terms of production, this is what we are targeting around 540,000 tons, 560,000 tons. However, our plan is to shut down the inefficient lines, Line 1 and 2 and the 3 and the contribution of [indiscernible] will be around 250,000 metric tons to 280,000 metric tons. The prerequisite study was conducted -- was done with Bechtel. The IRR and all the figures in favor of the project. That's why the Board approved the Feasibility Study. The Feasibility Study awarded was effective. They are the same supplier or vendor who conducted the Feasibility Study of Line 6 of the Feasibility Study. And it will take us or take them around 9 months to complete the Feasibility Study. [indiscernible] Board after looking to all the aspects of the feasibility study in terms of the IRR, [indiscernible] value, the dataset, the contributions, everything and then the Board will take decisions. In terms of the gas, yes, we are working with the government to secure the gas to have a long-term road map with a firm, a price as well also. This is regarding Line 7. Regarding the funding, funding will come at a later stage because once the project is approved. Definitely, we are going to issue the [indiscernible] feasibility study and will assign a bank and international banks or a consultant to develop for us the financing order.

I would like to add here, if you may allow me one thing to everyone in the call. Once we have further details and after the completion of the feasibility study, with respect to Line 7, we will for sure put more announcements. And that -- I mean, these facts would be based upon the conclusion of the Feasibility Study. There was another question on the dual listing. I'm assuming this is the question in relation to the [ Dow ] Stock Exchange. There hasn't been any update. If there are more updates, Alba will be issuing an official press release and everyone should be aware of that. As of now, there is no update.

Regarding the question about ESG. Yes, we are getting a lot of pressure not only from customers but from all the regulators, from suppliers, from the customers. Yes, we have our road map. Eline, I think she discussed it on high-level in the beginning. We have different initiatives. We already did a quick win initiatives and achieved the target Block 4 by the Power Station as well of our pillars in this road map to reduce the carbon emission. For the time being, yes, there will be some impact in long run. However, we didn't see that it will be in next year. But maybe in 2024, 2025, there will be some carbon border tax which is applicable in Europe and U.S. But initially, this it will be passed to the customers, part of the premium. However, but this, it will be for a short period of time, then definitely, once we achieve our road map or to show that we are progressing in our road map for the ESG, this definitely will be only perceived well by our customers.

I see there's a question about -- while you talk about the mine drop, LME inventory is down 74%. How do you compare both. You're right. Normally, when LME inventory goes down, you expect LME to go up. And the reasons why you're seeing a disconnect now is I think the current market circumstances, no one really wants to be holding a lot of inventory because of concerns about global recession and also because one of the reasons why the inventory is down is because supply is also down. So demand has gone down, but supply has also gone down and inventory has remained depressed.

There is one question from Ali Al Tareef about the uncertainty and volatility in the market. And there is one statement I obviously announced it. We have only control on what we can control, safety, production and cost. Can you please list us now what kind of cost that can be miscontrolled. There are many control element, we have already implemented. One of them is the freight, whether that is to reduce the internal costs -- unnecessary costs, for example, we start to reduce over time. We start to -- we already managed to reduce the insurance premium this year, thanks to Eline and her team, AL HASSALAH program is targeting a lot of internal cost control. We achieved out of them. That's why part of the [ BD100 ] on dollar achievement or benefits in our budget is nearly to how we are going to control the cost internally. Another question from Ali is talking about our expected average limit price will be around $2,000 figures [indiscernible] Normally, we're not giving guidance on what will be the impact on quarter 4 in the future. However, if you look at the quarter 3 and compare it to the quarter 2, you will see a big variance. That's why with the market challenge, quarter 4, it will be difficult also for us, but we don't have that one. We cannot disclose that figure. There's another question. [indiscernible]

This is Anoop. I have 3 questions. The first is on the other raw materials. Can you please give us a sense of what are the market prices of Pitch and CPC right now?

The CPC price -- the price or what is your -- end of question?

Yes, the price of Pitch and CPC, what should we assume in the model?

I will give you one example, Anoop, about the GPC price. Before 1 year or I mean for the last 2 years, we purchased the GPC price at $140, for example, to $260. Today price is around $550. See the impact? For the Liquid Pitch, the same thing. The price was around $600 to $800. Now the price is above $1,400, $1,800. This impact in the black material. In alumina price, for example, if you compare the average for last year in the first half, the average was around 12% to 13%. This year, the impact is around 18%. See the impact of the major raw material. That's why when you saw the drop of LME price and there is no drop on the major raw materials. This is the impact in our cost stability. Normally, there is a drop in LME price, there is a same parallel drop in the major raw material. But this year, it was not happening. If you recall that in 2018, when the alumina price was at the range of $1,800 or $1,700 and alumina shoot up to $700 per metric ton. It was the best time for all the aluminium smelters.

Should we -- for the third quarter, was the fixed price close to $1,800? Because in a model, I have around $700 for Pitch -- sorry, for pet coke and about $1,300 for Pitch. So I'm broadly similar to the lower end of what you are saying, but the cost that I get is very different from what you've reported. So I was wondering...

Almost the cost will be similar to quarter 3 because when we closed the deal because we are closing the deal on a quarterly basis in the price, and there is no big different between quarter 3 and quarter 4 prices.

Okay. So for Pitch, we can assume around $1,800. Is that what you think?

For the Pitch, I don't have -- how much. It would be similar to what we agreed on a quarter. If you have an estimated cost for a quarter 3, it be similar to quarter 4. There is no difference.

Okay. The second question is on alumina. I mean, your cost for the quarter was upwards of $400, but I mean, if you look at the average of the alumina prices, I mean there's a big disconnect. So what are we missing here? I mean is there any different index that you use compared to what the spot prices are?

Yes, I think you are looking at it from the API perspective, but we are counting it an average of lended cost, which is the freight included in our...

Plus, obviously, there is also a lag effect. From the time that we order something, it takes a couple of months to come into stock and then obviously, a couple of months for it to be used. So by the time it hits our cost of sales, it's still reflecting the higher prices from 3 or 4 months ago.

Okay. So we can assume that in the fourth quarter, there would be a decline, right? It would sort of converge with what we are seeing in the...

Slight decline. You will see a slight decline.

So you should expect that trend to continue. So you should expect the decline in market prices that we've seen in the last 3 to 6 months to be reflected going forward.

Okay, okay. And this last question on the volumes. So you said that the 4Q volumes will be sort of similar to 3Q, if I heard right. Now what I'm thinking is, I mean, you all are quite a reasonably low-cost producer. And if you are unable to sell those implemented tonnages close to production. Is $2,000 and $2,100 rates for aluminum price on the optimistic side because it's like Alba cannot sell like 400,000 tonnes like what you did last year. Do you expect -- should we assume that the downside to aluminum is more than this $2,000? Because this would be a problem for your customers as well, right? You all are unable to ship tonnages, those incremental tonnages, given your peers would not be able to do that. So if it is like a market-wide problem, is your forecast like too optimistic for the rest of the year?

So just trying to understand your question. Are you asking about Alba's breakeven points in the event that LME prices go down to $2,000 or?

No, no, no. My question was, so you produced close to 400,000 tonnes and sold 366 tonnes in the third quarter. So you're guiding for a similar volume in the fourth quarter. right? And I think last year, we had a similar thing, but I think it was more to do with shipping lags. So your 4Q volumes were almost 440,000 tonnes. So one would assume that the 4Q run rate would be similar to what we saw last year. But if you're expecting volumes to remain flat because you are unable to -- because of the market demand issues and the fact that you are a quite a profitable producer, right? So it's the same pressure that your peers must be facing as well. So do you think that there could be downside to this $2,000 aluminum price that you're expecting for 4Q? Because the demand should be really bad if we cannot sell 100% of our production in these markets.

Yes. I mean, still not 100% sure about the question. But what we can say is, obviously, we are kind of focused on targeting -- setting the maximum. So everything that we produce, we are shipping. So we are targeting a strong Q4. But obviously, everything is subject to the market.

I don't think we have another question. Heidi, can you advise whether you have received anything on the call?

We have no audio questions.

Okay. Thank you, Heidi. I think if we don't have any other questions, I think we can end Alba's webcast for the 3 months -- for Q3 and the 9 months of 2022. Unless if someone else has anything else to add?

Just thanks to Alba management for taking the time out and having the call. Thanks from SICO. Thank you very much.

Well, on behalf of the management, the CEO and the CFO and every employee in Alba, we thank you, SICO, for hosting the webcast, the full -- Alba for the second quarter in the row -- so much appreciated. I also take the opportunity to thank every participant for dialing in and I would like as well to apologize for keeping you waiting for 15 minutes. Thank you very much for your patience. And on this note, I wish you a very good day, and I hope everyone whether it is on the personnel level on the public level, you close the 2022 strong so that we start 2023 stronger. And by that, Alba management and this webcast and if you have any other questions, you're always welcome to drop as our queries on [email protected] and we will attend to it. Otherwise, we will see you again virtually for Alba's full year results for 2022 after we release our financials in February 2023.