ArcelorMittal South Africa Limited (ACL) Earnings Call Transcript & Summary

Good morning, and welcome, ladies and gentlemen. My name is Tami Didiza, and I'll be facilitating the proceedings this morning. Thank you very much for joining us. As we said, announce our financial results for the period ending 31 December 2022. We really appreciate your interest in our company, and we're really glad to be hosting you this morning. Please note that the recording of this event will be accessible on our website at www.arcelormittalsa.com. ArcelorMittal SA in one word please. Let me take this opportunity to introduce to you our panel who will be taking us through the results. We start with our CEO who will be taking us through the overview of the results, which encompasses the operational and market review. Our CEO will be followed by our acting Chief Financial Officer, Suretha van Wyk, who will be zooming in the numbers and also address issues of capital allocation. Ladies and gentlemen, we are not paid equally. The Chief Executive Officer will have to come back and take us through how we're transforming our business for sustainability and growth and also take us through the outlook for the year. It is then that we'll be taking your questions. We should be reading them and responding them. Let me confess I'm not going to respond to the questions today, but out what delegation will prevail. Let me take this opportunity to introduce to you and present our CEO, Kobus Verster.

Thank you, Tami. Good morning, ladies and gentlemen. Thanks for joining this virtual presentation of our full year results for the year ending December 2022. Also welcome to our Board members and some senior members of management joining today as well as the media shareholders. When we announced our half year results in July last year, we've indicated that the second half results would be strongly influenced by the increased economic headwinds at the time. As anticipated at the time, the international price correction in a soft domestic market that, in fact, significantly impact our results. At the time also, however, we indicated that the company know how to manage through these challenging cyclical business environments and thus ArcelorMittal South Africa, with the support of its loyal staff, customers as well as suppliers by and large, delivered against our predicted outcome. Looking at the overview, global steel prices have declined at a faster rate than raw materials. This has led to a negative price cost squeeze with spreads under severe pressure. We could not escape the impact of the years energy crunch as international coking coal prices increased by 62% in dollar terms. On the positive side, though, international steel prices and spreads started to improve towards the latter part of Q4 and into January this year. External factors such as load shedding, the floods in KZN, transport unreliability and labour strikes impacted domestic activities. Despite the sharp weakness in the second half of the year, the financial results are significantly stronger and during other crisis or near crisis environments in the past. Notwithstanding the disruptive events reported to June, the value plan realized improvements of ZAR 1.6 billion. The improvements realized consists of commercial-related initiatives of ZAR 839 million and cost-based ones of ZAR 722 million. The full year's performance of ZAR 1.6 billion was must improve against ZAR 577 million realized in the first half of the year. Fixed costs reduced by 11% to ZAR 6.7 billion in response to lower -- to the lower addressable market demand and also starting to wind down restorative maintenance activities which we have started in 2021. Headline earnings of ZAR 2.6 billion were down 62% as EBITDA of ZAR 4.3 billion fell by 50%. Net finance charges decreased by 18% to ZAR 952 million. A considerable amount of time, resources and CapEx were invested in improving our safety and environmental performance. The spend on environmental projects increased by 428% to ZAR 338 million. Capital expenditure increased by a significant 115% to ZAR 2.1 billion, amounting to a cash outflow of ZAR 1.9 billion. It's worth noting that investment in strategic projects increased from ZAR 243 million to ZAR 658 million targeting an annual incremental EBITDA of around ZAR 270 million when fully implemented. Net working capital increased by ZAR 3.1 billion. This was mainly affected by events directly or indirectly associated with Transnet's performance. In quarter 3, we decided to restore steel inventory levels after the Newcastle blast furnace mid-life repair and also to hold additional raw material stocks to counter the impact of potential oil disruptions. This assisted us during the Transnet labor disruptions in October. In addition to this, in quarter 4, we saw lower dispatches due to extreme load shedding affecting our customers and the lack of road trucks. As trucks were diverted to substitute coal export after the logistics failures in the coal export corridor. And this resulted in more finished stock -- finish steel stock and ultimately higher investment in working capital than our plans. Big working capital investment is likely to start unwinding towards the end of the first half of 2023 as we adopt a more flexible approach regarding asset utilization, and hopefully a better demand environment. As a result of these factors, we ended the year with a net borrowing position of ZAR 2.8 billion which is ZAR 1.6 billion higher compared to December 2021. Sales volumes were 13% down with crude steel production 20% lower compared to the previous year. Against the immediate preceding 6 months, sales volumes in H2 were down 14%, while crude steel production was up by 29%. This clearly reflects the real impact of the slow demand and transport issues in the second half of the year, as I have mentioned earlier. Our average steel prices increased by 17% in rand terms, while the raw material basket increased by 38%. We were pleased to have published our first decarbonisation roadmap last month, targeting a 25% reduction in carbon emissions by 2030 and just less than 90% by 2050. The graph on this slide shows the international steel and key raw material prices over the past 2 years and are there only for information purposes. Looking at safety, environment and social. Safety is the company's higher priority and remains committed to Zero Harm. We, therefore, with deep regret that we reported 2 fatalities in the second half of the year. Despite hard work and improvement in our safety stats, the fatalities and serious injuries remain a cause for concern. More work is required to stamp out this. We start with behavioral change at the top and cascade throughout the organization up to the shop floor. This year, we spent considerable resources and time on accident-proofing of physical infrastructure to improve safety. This is evident in the additional CapEx investment made. The lost time injury frequency rate improved from 0.98 to 0.87, and the total injury frequency rate improved to 5.74%. Total amount of injuries reduced from 215 to 171. Decarbonisation. In January of this year, ArcelorMittal released its first-ever decarbonisation roadmap. We recognize that we operate in a sub-Saharan Africa context with its own pressing challenges. Therefore, flexibility in developing the final decarbonisation solution is very important. We cannot decarbonise our [indiscernible] steel maker anywhere, we will be able to achieve Net Zero by itself. We need a collaborative partnership arrangements. Solid progress has been made in cementing partnership with government, development finance institutions and other corporates. Nonetheless, a great deal of work needs to be done and urgently on securing the funding for the industry to reinvent itself. Clarity is needed, how National Treasury plans to raise carbon tax and at what pace and how the authorities plan to incentivize low carbon behavior. Similarly, certainty is needed on incentives and tax for good and bad carbon behavior as this is the reality faced by steelmakers in those countries with whom we compete. On the social side, we have recently completed memorandum of understandings with Emfuleni Local Municipality and Gauteng Department of Economic Development to make a pragmatic difference to the social economic realities in those regions. As you can see from the photos on the slide, we continue with our 3 Science centres in support of education, providing meals to more than 3,600 less fortunate people on a daily basis. We support various training programs, and we assist local government in fixing bottles and infrastructure. Looking at the global steel environment. Global crude steel production increased -- decreased by 4% to 1.9 billion tonnes affecting slower global economic conditions, mainly due to monetary tightening in response to aggressive inflation, weak demand in China and Asia due to COVID outbreaks and restrictions, low consumer confidence and the spillover and continued effect of the Russian invasion of Ukraine. In China, crude steel production decreased by 2% to 1 billion tonnes with a market share of 54%. Europe's output decreased by 9% while North America was down 6% to 112 million tonnes. Both Russia and Turkey continue the downward trend as production fell by 7% and 13%, respectively, while India succeeded in increasing their output by 6% to 125 million tonnes. Africa's output decreased by 5% to 16 million tonne due to lower production in both South Africa and Egypt. South Africa's crude steel production decreased by 12% to 4.4 million tonnes. On the selling prices side, international hot rolled coil prices decreased by 21% in dollar terms year-on-year, while Rebar prices decreased by 3%. In November last year, China's hot rolled coil prices reached the lowest level since June 2020. Currently, the prices has somewhat recovered, almost about $120 per tonne higher. On the input cost side, the international raw material basket was 3% higher in dollar terms. In absolute terms, coking coal prices increased by 62%, while iron ore and scrap decreased by 26% and 7%, respectively. Returning to our home market. For 2022, the GDP growth is forecast in South Africa to be around 2.5%, down from an actual growth rate of 4.9% in 2021. The forecast for near in sub-Sahara African markets is between 3.6% and 4.7%. In South Africa, Apparent Steel Consumption for 2022 decreased by 12% to 4 million tonnes, reflecting low market activities in key steel consuming sectors, high stock steel market inventory levels necessitating destocking, projects delayed due to rising interest rates and overall weak business confidence. Total steel imports of primary hot rolled coil, galvanized sheet and plates decreased by 13% to 1.2 million tonnes. This volume constitutes some 30% of South Africa's crude steel consumption. Imports increased significantly in the second half of the year by 55% compared to the immediate preceding 6 months aligned with a weaker global market conditions. These conditions create an environment in which foreign steel makers offset their simplest production through exporting to countries such as South Africa with no import duties. It's important to remember that 41% of imports were then steel grades not manufactured in South Africa. Looking at the steel environment, specifically for ArcelorMittal South Africa, crude steel production decreased by 20% from 3 million to 2.4 million tonnes. Total sales volumes decreased by 13% to 2.2 million tonnes due mainly to a fall in domestic sales to 1.9 million tonnes. The regional mix of exports weakened as Africa land fell to 132,000 tonnes meaning a decrease of 40%. Our overall realized steel prices in dollar terms increased by 6% and by 17% in rand terms. There is dollar rand exchange rate we combine, 11%. In the second half of the year, realized dollar steel prices decreased by 15% compared to the immediate preceding 6 months with rand prices down by 4% on the same period. This trend reflects the lag effect of steel price movements, which characterized our order intakes. We are the only primary producer in South Africa which support the downstream industry through a formal export support programme. This industry support amounted to ZAR 149 million in value-added exports as well as strategic rebate assistance during 2022. Input cost over raw material basket, which represent 44% of the cash cost per tonne, was 38% higher in rand terms compared to a 14% increase in international raw material basket. Although 20% lower in rand terms than the international basket, our basket increased substantially more due to a 117% increase in our imported coal prices versus only a 79% increase again in rands term for the international basket. This performance reflected a delay in the consumption of the more expensive coal, especially in the fourth quarter. It is useful to remember that the imported income represents 58% of ArcelorMittal's raw material basket compare to a 47% weighting in the international basket. Consumables and auxiliaries, representing 31% of cash cost per tonne, work in which we saw electricity tariffs increased by 11%, while dollar-denominated commodity-indexed consumables increased by 51%. As mentioned earlier, fixed cost decreased from ZAR 7.4 billion to ZAR 6.7 billion, which is 11% decrease. An increasingly concerning trend is the number of contraventions of import duties by certain steel industry participants. As it is clear from the data released by the South African Revenue Services. Such behavior is eroding the future growth potential of the country and the interest -- short-term interest of only a few participants. In the past 7 years, the countries Apparent Steel Consumption reduced by 20%. South Africa's available steel capacity far outstrip demand. Most Steel producing countries have taken significant steps to protect their steel sector against imports, consistent with internationally agreed WTO rules. Normal custom duties of steel imports are seen in more than 150 countries worldwide, which include almost all major steel producing countries. About 135 countries have an average of 10% duties on South Africa exports to them, including China, which has a duty of 5% on South Africa steel imports. Average capacity utilisation decreased from 60% in 2021 to 47% last year. This reduction will reflect the impact of the Newcastle blast furnace mid-life repair and the effect of rail service and availability, labour disruptions and electricity load shedding. Currently, capacity utilization is about 79%. Operationally, the business is focused on the continuation of the reliability and the restoration programs, improving efficiencies and operating costs. A special focus on reducing energy and other conversion costs and debottlenecking in key rolling mills to target import replacements. Commercial coke production was 51% lower with sales volumes down 43% due to the continuing restoration of coke batteries and more use of coke internally. Plans are progressing to improve the volumes to the important commercial coke market. An improvement is expected in 2023, with a meaningful impact being felt from 2024 onwards. I will now hand over to Suretha to take us through the financial numbers.

Thank you, Kobus. Good morning, ladies and gentlemen. Compared to the corresponding period, revenue was up 3% to [indiscernible] supported by improved realized sales prices of 17%, while shipments decreased by 13%. We report that EBITDA profit of ZAR 4.3 billion, 50% down as negative price/cost effects affected margins. The EBITDA profit consists mainly of ZAR 3.7 billion. EBITDA profit from our steel operations, ZAR 614 million EBITDA profit from our non-steel operations. The waterfall graph tracks the evolution of EBITDA. Total shipments decreased by 13% due to a 14% fall in domestic sales to 1.9 million tonnes, while exports decreased by 14,000 tonnes. Year-on-year, current steel consumption was down 12%. Lower shipments negatively impacted EBITDA by ZAR 2.3 billion. The impact of rail, labor and electricity disruptions was ZAR 1.5 billion. Average net sales prices increased by 6% in dollar terms of which local prices increased 6% and export prices increased 11%, impacting profitability by ZAR 1.5 billion. This excludes the positive exchange rate movements of ZAR 3.3 billion. Higher raw material prices and other factors cost had a negative impact of ZAR 4.8 billion mainly driven by higher import growth, local coal, coke, iron ore, [indiscernible] and transport rates. These were further negatively impacted by exchange rate movements of ZAR 718 million. Our value plan program realized improvements of ZAR 1.6 billion which commercial related initiatives contributed ZAR 839 million and cost-based initiatives, ZAR 722 million, Efficiencies & operating costs negatively impacted EBITDA by ZAR 2.4 billion. This was due to price increases for electricity and gas of 11% and 17%, respectively. An increase of 51% in the dollar-based denominated commodity increase consumables. Rail unavailability, electricity and labour disruptions resulted in intermittent production interruptions, which is less than iron [indiscernible] steel manufacturing. The impact of these disruptions amounted to ZAR 800 million. Fixed costs were well controlled and decreased by ZAR 749 million. Our non-steel operations segment reported an EBITDA profit of ZAR 614 million, lower by ZAR 206 million compared to the corresponding period. Sales volumes of market coke decreased by 43% due to the ongoing restoration of the coke batteries and the use of more coke internally due to intermittent production interruptions and rising of the rail service unavailability and labour disruptions. [ Sale ] prices increased by 37%. All of this resulted in us recording headline earnings of ZAR 2.6 billion, lower by ZAR 4.2 billion compared to the corresponding period. On the back of free cash outflow of ZAR 1.6 billion, net borrowings increased to ZAR 2.8 billion over the 12 months period from December 2021. The free cash flow performance was after capital expenditure of ZAR 1.9 billion, the final settlement of an overdue dollar denominated payable of ZAR 628 million in H1 and the payment of deferred related party fees of ZAR 618 million in H2 as well as payments to the Competition Commission amounting to ZAR 100 million. We generated ZAR 4.3 billion cash from operations before working capital movement. The movement in working capital of ZAR 3.1 billion was driven by business activities and composed of receivables higher by ZAR 865 million due to higher export sales in December. Payables lower by ZAR 1.9 billion due to the payment of the overdue dollar-denominated payable and the payment of deferred related party fees totaling ZAR 1.2 billion, as mentioned earlier. Inventories were in line with the corresponding period. Finished steel stock ended the year on a healthy level of 423,000 tonnes. The incurred ZAR 758 million net finance costs, ZAR 470 million higher than the corresponding period, mainly due to accrued and current interest rate on our group borrowings. Cash management will continue to remain a key priority. Cash generated will be applied to reduce debt and strengthened the balance sheet. Capital expenditure of ZAR 2.1 billion was ZAR 1.1 billion higher with around 44% being spent on sustaining operations, 16% on 2 mid-life campaign restoration of the Newcastle blast furnace, 16% on environmental projects and the balance of projects to enhance quality and product portfolio. Key investments to preserve and increase asset capacity includes the ongoing coke battery rebuild and repair program to maintain the coke-making capacity, structures and infrastructure program, the upgrade of the main drive and the plate mill drive. We successfully completed the mid-life campaign restoration of the blast furnace in Newcastle and the purchase of the Highveld structural mill in the entity of ArcelorMittal Rail and Structures. The coke oven gas cleaning project is on track, having spent ZAR 178 million in 2022. Our future capital expenditure will focus on projects to expand our product range and improved quality offerings to customers as well as our decarbonisation strategy. To this end, we are nearing completion of the feasibility study into a fully funded 200-megawatt renewable energy solution in Vanderbijlpark with early construction to start in the fourth quarter of 2023. Kobus will take us through the strategic initiatives, growth opportunities and the outlook.

Thank you, Suretha. ArcelorMittal's transformation for sustainable growth strategy is being actioned by focusing on 3 priorities: repositioning, restructure and revitalise. We have and will continue to respond effectively to the challenging market conditions by remaining focused on our long-term objectives. On that note, let's turn to some of the key actions which underpin these priorities. Flexible asset utilisation, we are adjusting our production to the addressable market by idling some plants, consolidating production at the most productive facilities and reducing fixed costs. On blast furnace at Vanderbijlpark was idled in early November last year, and we've only restarted in early February once our order book support the additional volumes. In the long business, following the restart of Newcastle blast furnace, Vereeniging electric arc furnace was idled in October as the combined production of Newcastle and Vereeniging is well in excess of the current demand. In 2023, we see further asset footprint optimization within the long business as certain operations in Pretoria and Vereeniging will be consolidated with mills in Newcastle to improve the capacity utilisation. New commodities, aggressive inflation, progressively erode international competitiveness. Good progress was made in reducing and resetting fixed costs for the current year. However, more efforts will be needed. Included in our value plan for the next 5 years of various initiatives to reach a more competitive fixed cost per tonne level. Own hired labour sub-contractors, labor mix, pay rates, productivity, all the important focus areas to achieve that. Equipment reliability has shown progress of the 22 priority plants. 8 have exceeded their reliability baseline measures and 8 has improved on the prior year's performance. The remaining plants with a higher priority given to coke-making and sinter plants will be subject to an initiative to add skills and to leveraging off plant twinning with ArcelorMittal Group benchmark operations. 4 notable Eskom and 4 municipality equipment failures were experienced in the second half of the year. The business was fortunate to have avoided significant damage to each equipment. Extremes in energy inflation necessitate actions to optimize energy consumption and improve our own electricity generation. For ourselves, load shedding is felt in the form of load curtailment. This interrupt production. Through careful inventory management, we remain committed to minimize the impact on our valued customers. A fully funded Feasibility study into a 200-megawatt renewable energy solution is nearing completion. Early-construction work is scheduled to start towards the end of 2023 for the objective of yielding meaningful cost reduction benefits towards 2024, 2025. But as we have previously reported that we planned to build a 100-megawatt plant in Vanderbijlpark as well as one in Saldanha. The more attractive solution is to construct one large 200-megawatt plant at as Vanderbijlpark as this will yield the greatest operational and commercial benefits. We are also pursuing purchase -- power purchasing agreements with third-party renewable providers. Logistics. The year started with plant closures due to the primary impact of rail disruptions and disappointingly, the year ended with a secondary impact of such disruptions affecting sales deliveries. We are doing our best to support and work with Transnet Freight Rail and Port Terminals. We have completed a pre-feasibility study with a specialist rail operator and adviser into the commercial viability of third-party rail access and will advance this into the next stage, which will include exploring the fundability of it. In October, the rebranded ArcelorMittal Rail and Structures business, previously known as Highveld Structural Mill, was well received and supported by our partners and customers. We believe that this asset can meaningfully contribute to government's localization aspirations. From the raw material side, hard work is going into securing regional cost-linked raw material opportunities, which include a competitive priced logistical solution in support thereof. Until the Decarbonisation Roadmap is fully implemented, that business will never be completely free of the need to import premium hard coking coal, which is not regionally available. By enabling Zimbabwe-based supply of lower quality hard coking coal, some of the sharpness of the steep increases in international coking coal prices has been removed. More work remains to be done on sourcing, development and logistics. However, following a meeting between myself and the President of the Republic of Zimbabwe in November, the willingness to progress these opportunities is mutually strong. Fair trade, we all agree that their competition is good for business. However, prevalence of unfair trade practices and less-than rational investment decisions were much more visible during 2022. Localisation of value-added steel production, collaborative value chains and improved customer centricity, our prospects to increase the utilisation of our asset base. Improved building activities, higher demand for materials for truck trailers and increased inquiries stretching from pipelines to wind towers should add momentum to the rebound once the destocking is completed. Our partners agree that our business is best placed to advance these opportunities given our existing asset base. We can all sure you agree that the government growth agenda is now urgently needed to add the necessary momentum. For all our business, strong balance sheet is needed to execute our strategy. On CapEx, like all other businesses, we generally allocate such capital over periods of up to 7 years and longer. These very strategic and often hefty decisions are based first and foremost, on whether is believed that the investment can be affordable. Over the past 6 months, significant efforts have been made in rescheduling some of the major rebuilds and reline plant -- relines planned over the next 5 years to make days. This should also provide space to introduce a large electric arc furnace at Vanderbijlpark will be placed one of the blast furnaces. As also fundamental in terms of our decarbonisation roadmap. Although delayed for reasons noted earlier, we remain firmly committed to reach a meaningful net cash position as soon as possible and developing CapEx funding solutions. We're full contemplating such resumption of dividends. Concluding with the outlook, as I said before, safety remains our #1 priority, and we will not stop before we see substantial step change in our safety performance. Internationally, the world steel organization expects a recovery in steel demand. The price/cost spreads is unsustainable. And consequently, there has been some positive movement in international prices in early 2023. The sustainability of which remains untested. We anticipate a better local trading environment in the first half. We will focus on increasing volumes through targeting import replacement in higher Africa overland volumes, adopt a flexible approach to operating plants and balance that with an available order book. Adjust fixed cost to those levels and have a firm grip on cash management. We are positioned to navigate the immediate and near-term challenges within the market while we remain focused on achieving our long-term objectives. They need to benefit from the upturn when it arrives and leverage after long-term investment case for steel. Ladies and gentlemen, that concludes the formal part of our presentation, and we are happy to take questions.

Thank you very much, Kobus and Suretha for this presentation. I can see that David is taking a first bite for the questions. Let me take at least the first question and read it.

You mentioned the pick up in international prices from the recent lows. Have you responded yet by giving price increase notices to your customers?

David, I think it's twofold. On the first thing, we have reduced prices in December. And in December, we were anticipating forecasting some level of recovery. So our price reduction was not fully back to the international market. So we've retained part of that. So -- and then normally, our price discussions is towards the end of the month. So part of that's already in our starting price. And there's definitely momentum upwards from year forward, but not to the full extent given that we had a bit of a lag coming down. Your next question related to expecting coking coal cost relief in H1, yes, I think the high coking coal prices is behind us. We also ended the year with coking coal stocks down 10% less than normal. So our new shipments will be more at a reduced price. Your third question, you asked what is the forecast CapEx for 2023. David, I don't think we normally give exact numbers on forecast for CapEx. I think 2020, 2021, was substantially lower due to various reasons. And hence, 2022 is abnormally high. I think when I referred to our 5-, 7-year plan, we came to a conclusion that ArcelorMittal cannot spend really more than $100 million per year on CapEx. So we have to navigate within that type of envelope. I think one is the balance sheet issue, cash flow issue. The other one is an executable issue. We can do more. So I think in our plans, we will take that should be type of number. And that excludes the renewables that will be an off-balance sheet funded coming back to us.

There's a question from Thabang. Four questions. The first question, could you please give us color on the fatalities, what happened? And is this something that could have been avoided. How many days were operations shut as a result of this? Second question, beyond the 2-week strike, how has Transnet affected you? The third question, can you give us an indication of loss volumes as a result of no truck availability. And the last question, can you give us an indication of the ramp-up on coke production and sales for 2023 and 2024.

That's a truckload of questions. I think let me come to the fatalities. And not going into the specifics, every fatality in our operations are thoroughly investigated actually in place to avoid that. Normally leased department of labour is involved as well as we have external assistance to make sure that we do whatever we can to prevent it. As a general terms, we have 10 [indiscernible] golden rules that people should not do certain things. And on average, people stick to those rules, 90% of fatalities can be prevented. It bring us back to behavioral issues in organization and organizations. So our focus is very much on changing the behavior of people on a proactive basis. For that, we've employed the [indiscernible] practice, consultant in safety to spend a lot of time with us in operations. They assist us in advance that performance. As you can see from the safety stats and all our other stats, we are making substantial improvements, but we still have this unacceptable -- fatality is serious. Coming to the question about the trucks, I think if we look at the impact for the full year from a disruption perspective, there were 3 events: rail services, Eskom either from Eskom or secondary through the municipality and then the labour strikes we had. The net impact of all of that from a revenue perspective and from a cost perspective, we estimate around ZAR 2.3 billion, with Transnet being ZAR 1.3 billion. Eskom and municipalities, 275 and labour about ZAR 770 million. And why I say we estimate, so we've done to as good as possible calculation because when you have an interruption, you have to stop a furnace because you have a lack of iron ore typically what happens, you will lose dispatches because you don't have the volume. But when you stop, you will lose an amount of steel that was produced, but you can't use and you have to use energy either through coke or gas or whatever to keep the furnace warm for a period of standing while we're not producing and then the first percentage of steel that you produce, you can't use. So to calculate that real impact is very difficult. And while your furnace is standing, we don't produce internal energy or gas to operate some of your other downstream mills. So you can understand the impact is quite big. And I think the numbers I gave should be a reasonable accurate to the level that we can calculate it. And the split between rail, I think the revenue side of rail was 770 in the 1.3 numbers -- did I answer all your questions?

Another one Kobus, if we did shut operations in result of the fatalities. If we did by how many days?

You normally shut the area. So typically, -- the one fatality was actually while they was -- they were cleaning a water pump outside Newcastle, so that area was outside the operations and was not under operations and it was sort of an every 3-year type of cleaning operations. So that part is isolated until the investigation is completed. So no, I think that's the answer. So normally, what we do if we have immediately stop operations, making sure that there's no similar safety risk or any consequential potential. Then there's investigation. And then you get clearance from the authorities, Department of Labour that we need to give you permission to restart your operations. But in our case, this was outside, doesn't impact volumes, if I can say that.

Thank you very much, Kobus.