Befesa S.A. (BFSA) Earnings Call Transcript & Summary

Okay. Let's start. Good morning, everyone. Welcome to the first Capital Markets Day of Befesa. My name is Rafael Perez, I am the Head of Strategy and Investor Relations of Befesa. [Technical Difficulty] and we also are running a virtual event through the webcast. Thank you very much for everybody that is joining us in such an important day for Befesa. Thank you for those that are coming from outside of London and I know many of you are coming from outside of London. So thank you for making it. [Technical Difficulty] happy to present you today the 5-year growth plan of the company. Last week, we celebrated the 5-year anniversary since the IPO. And over that 5-year period, we have been growing the company into a truly global [Technical Difficulty] with presence in the U.S., in Europe and in Asia. We are ready to continue the journey of growth, and we are going to present the details today. The agenda for today, we have put together two hours of presentation and one hour of Q&A. We will start with our Executive Chairman, Javier Molina. We will take you through the Befesa highlights, the business highlights and the current market environment. After that, Asier Zarraonandia, to my right, Chief Executive Officer, will take you through the details of the 5-year growth plan of the company. After that, we will take a break of 15 minutes. After the break, Wolf Lehmann, the CFO, will put everything together in the financial highlights. And finally, I will do the ESG presentation. And finally, Javier will close the presentation with the final remarks. And finally, we will have 1 hour of Q&A session. For those of you joining virtually and you can use your -- a chart on the screen to send questions virtually. Feel free to send the questions any time. Don't wait until the end, okay? And I will make sure that I coordinate the questions. Before starting, I think we wanted to show to all of you in premier, the new corporate video of Befesa. So let's go ahead, please louder. [Presentation]

I hope you like it. I will now hand over to our Executive Chairman, Javier, who will take us through the business highlights, and current market environment.

Thanks, Rafael. Good morning, everyone, and welcome to this first ever Befesa Capital Markets Day. I'm really happy to be here with all of you. As you know, we are celebrating our 5th anniversary in the stock exchange. And at the same time, we are doing this first time Investor Day here in London. We are very excited to explain our growth plan to all of you. And we hope we will be able to, in these turbulent times to convince you that we have a solid company and a great growth opportunity in front of us. So let's -- with no further ado, let's just start sharing with you the presentation. This is a page I like very much. It's an old page that we presented 5 years ago when we did our IPO. And I think that that page is still -- and the message that we have in this page are totally alive. We define Befesa as an environmental company that provides service solutions to the steel and the aluminum industry and favored by a strong environmental megatrend, we have developed a very strong footprint of plants pretty close of our customers. We are the global leader in the three main markets in our business in North America, Europe and Asia. We are -- as I said before, we have a very strong footprint of plants. We are pretty close to our customers. We provide long-term service supported by the environmental regulation. As you know, we need environmental regulation to develop our business. And basing this strong environmental regulation, we provide long-term service. And so thanks to the footprints of our plants, thanks to the long-term service we provide to our customers. We have created high barriers to enter this market. It's really very difficult for any player to enter the market. At the same time, that's happened for us. We have -- we tried before that, we see [indiscernible] of our business in U.S. to enter in the North American market, and that was quite impossible because the market was covered by the local people and the same happened in the other geographies. So based on all these reasons, high barriers to enter long-term service, we enjoy a very profitable business or at least a profitable business. We have a strong cash flow generation, as you know, and which is even more important for us is we have a very resilient business as we will see later in the presentation. And we have been able to grow the company in the past since the IPO we did 5 years ago. We have had a CAGR of more than 6% during the last 5 years, investing, as we will say later on around EUR 500 million. And we have, again, an opportunity to do that in the future. We will like to focus this Investor Day in the growth opportunities. But before to do that, I understand that everybody is concerned with the short term with the turbulent times we are living. I would like to try to convince you that we have a very solid company that will be able to, without any doubt, to overcome this new crisis. I like very much this slide because you can see the evolution of Befesa during the last 15 years. In this period, we have passed at least 2 big crisis. We are now probably leaving the third one. The financial crisis of 2008, 2009 and the COVID crisis of 2020. And if you see the slide, you can see that our EBITDA margin has been always between 19% to 25%. Well, we were able to do that in 2009. We did the same in 2020, and we are going to do the same in this crisis. And no matter how deep is the crisis, our resilient business model permit us to navigate all these turbulent periods successfully. And as I was telling and that case will be the same. We -- in last April, we gave you the guidance for this year from EUR 220 million to EUR 270 million of EBITDA for the whole 2022. I remember, at that time to have big internal discussions about the range of the guidance. some people were recommending us to increase or to reduce the range and hopefully, we decided at that time to provide a wide range. That was based only in the experience. I've been running this company for the last 25 years and I have learned that the year is very long. The volatility of the commodities is very high. And well, this year is a fantastic example of that. But at the end, we provide a guidance between EUR 220 million to EUR 270 million. We will be in the guidance. Clearly, we will be in the lower part of the range. But I think that, again, this year is a good example that Befesa is able to navigate all the crisis we are living. If we -- achieving the lowest part of the range to EUR 220 million, that means -- that will mean a year-on-year growth of 11%. that I think in a period like that is not a bad figure. And we will be able to -- at the same time, we have been able to increase our -- to have some CapEx. As you know, we indeed we closed in summer the acquisition of the refining business in U.S., taking the opportunity of the crisis, we reduced essentially the price we paid. We are generating, again, a strong cash flow, and we will keep our leverage ratio slightly above 2x. And I don't want to spend too much time in the hedging that [Technical Difficulty] buffer in our books that represent around EUR 20 million compared to this year in 2023 and around EUR 35 million compared this year in 2024. This is something that we have in our books. I think that is a very good time to overcome the period we have in front of us. And before we start to talk about growth, which should be the focus of this presentation, what I would like is to remark that we will close which enable in 2022 year. And we are -- and we feel confident looking for the short end, the next year. I don't want to provide a guidance today for sure, it's something that we will do as always at the end of the first quarter of next year once we know the treatment charge and once we have a better view about commodity prices, energy price effect. But today, I would like to send you a message that we feel that we have a solid floor for 2023 in the levels we are going to close the 2022 exercise, a level of EUR 2,020 million, EUR 2,025 million of EBITDA. We feel it's a very solid floor for Befesa for next year. We have some tailwinds, basically the hedging book that we have, and I have explained before and we will explain later with more detail. We have that [indiscernible] the U.S. refining plant that will give us some EBITDA next year. We are working very well in the recycling plants of North America. I think the team is doing an extraordinary work, and we feel very comfortable that we will achieve the synergy that we presented to the market of around EUR 20 million that will start -- we are starting to see some synergies here, but we will see more in the next year. And then we have, at the end, China. As all of you know and we have explained in our previous earning calls 2 weeks ago. We are suffering the COVID situation dramatically in China. And the contribution of our Chinese operation this year will be around close view. And we hope that the situation will change next year, and we will see some contribution from our Chinese operations. So we have all these tailwinds. We have some headwinds, let's see what's happened, especially regarding inflation and energy prices. I would like to highlight regarding energy prices, it's always difficult to -- because it depends which kind of comparison you do. Today, we have done an exercise that I was commenting with some of you before the -- to enter this room. If you think the energy prices in Europe, the price we have today in Germany or in Spain is half of the average price until today of the full year 2022 or only 1/3 of the peak price that we have or even less than 1/3 of the peak price that we have seen in September. So we are leaving higher energy price, but who knows what, which will be the energy price regarding this year. As you know, the gas warehousing in Europe are full. So depending who are you talking about the energy price, you can see some more pessimistic or more optimistic view about that. But anyway, I -- with all the tailwinds that we have, I'm totally sure that we will be able to offset totally the energy pressure we can have in the next year. On top of that, for example, in our aluminum business, we have been able to -- or we are being able to -- and during this year to pass through the increase in the prices to our customers. So then we will have all the question marks about commodity prices, 3 main charts. All in all, I feel -- again, I would like to remark that we feel very confident that -- and again, this is not a guidance, but we have a very solid floor in the level we are going to -- for 2023, in the levels we are closing 2022. Well, this is, again, a very classic page for us, but I would like to remark that we have a very strong financial backbone. Again, I have been managing this company for many years, and we have never been in financial situation as we have today. We have excellent capital structure. We don't have any financial maturity until July 2026. We have a strong cash on hand. We have a reasonable leverage ratio and we are achieving a very strong cash flow every year. So and that will be explained later on with more detail. We will be -- we are in a fantastic position to finance our growth plan without using only our cash and our cash flow. And what we are going to present to all of you is something that we have done in the past. Starting in the IPO 5 years ago, we have invested in this period around EUR 500 million. And we have growth in all the geographies we wanted to grow. We have invested in Europe. We have invested in Asia. We have invested in North America. We have achieved a CAGR of around 6% in the period, no matter the difficult situation we are living this year. And we have been able to lock -- keeping the leverage ratio of the company around 2x or slightly above 2x. And we have -- I think we have compared to Befesa in a good example of circular economy and a good example of ESG leader. And we have -- and this will be part of the most important part of the presentation that our new CEO, Asier is going to do some minutes later. We have, again, for megatrend that will support our growth that like has happened in the past. No matter the turbulent times we are living the Ukraine war, the energy crisis, I think there is not any doubt that climate change is a big challenge the world is facing. And based on that, there are some megatrends regarding the carbonization and electric vehicle that as we will explain later on will support clearly our growth for the next future. So based on that, we are very excited to present to you today what our friend, Wolf has defined us, our sustainable global growth plan, which is a fantastic name. For me, it's easy to say only our growth plan, if you don't mind Wolf. I think we have a fantastic growth plan in front of us. I think when I try to remember the message we were sending to the market 5 years ago, I feel today much more sure, much more comfortable with the plan we have in front of us This is a very strong plan. Later, we will see that we are not talking about theoretical opportunities. We are talking about clear opportunities based in market evolution that are on the top of the table, as we will say -- we'll explain later. We are talking about an investment between EUR 400 million and EUR 450 million. that will permit us to increase our EBITDA between EUR 120 million to EUR 150 million that will represent around 10% CAGR in the next 5 years, and that will represent more than 20% IRR. It's a very well balanced growth plan because we are planning to invest in our 3 main geographies. This is North America, which will be -- or it's been the first market that -- where we are investing. It means to invest in the Asia part of the world, basically in China, and we are planning to invest in Europe. Two years ago, we didn't see growth opportunities in Europe. But today, and we will explain later in more detail, you will see that we have clear growth opportunity in Europe -- in the classic Europe, following the carbonization megatrends. We want to develop this business plan with our own resources, with our own cash and our cash flow. So we don't want to increase our leverage ratio. We want to -- our plan will be to reduce the leverage ratio at the end of this period clearly below 2x. And the last message regarding the growth plan is that we want to manage carefully the timing of the execution of this business plan, adapting the plan to the evolution of the market. I want to -- if there is a delay in -- imagine in Europe in the obligation to implement decarbonization better, we will have the opportunity to adapt our timing to the market evolution. So we are not going to assume weeks regarding timing. We are going to manage carefully the timing of the execution of the plan. And then before to hand over the presentation to Asier, who is going to explain with more detail the plans, a few words regarding ESG. ESG is a key pillar for our company. We are very proud to be an example of circular economy. As you have seen in the video we have presented today, this is in the center of our business model. And what we want to do is to improve the way we are doing that. It's not only to be a good example of circular economy, but we need to do that in the best possible way. Based on that, we have presented in last May in our sustainability report a CO2 reduction plan that will permit us to reduce our CO2 emissions 20% in this period. And we are taking care of all the points regarding ESG. Rafael will later on will explain with more detail our ESG position. And with that, I think I can hand over the presentation to Asier. Thanks, Asier.

Thank you very much, Javier. Thank you, all of you, for attending this meeting, very important for us, of course. Well, let me start with a very important slide, what I think is one of the most important in the presentation because it's summarizing what -- why and what we are thinking is going to happen in the future? The megatrend, which is the decarbonization, which is all around the world, is what is the key aspect for a company like us? All the companies in any industry are working on the -- this decarbonization and process like that, which is very important. In particular, we were of the three industries which are related with our activity starting for the steel production. Obviously, this decarbonization trend is coming or affecting them to move to the possibilities of production with less CO2 emissions. This is something clear. We have repeat many times that there are two ways -- mainly two ways to produce steel. One of those is coming from the route of the concentrates, iron ore, mainly in the blast furnaces. They are well getting this ore, putting together with a lot of coke and so, and they are doing the production on that route. And the other route is the electric arc furnace, which is mainly using the scrap available in the economy and they are using electricity to produce steel. But the fact is that the electric arc furnace route is 7x less or they produce 7x less emissions of CO2 comparing with the blast furnace. So there is a real trend, a real change of the way that the steel makers are going to produce the steel in the future. It's not on our data, but the idea is that for coming in 2021 of the 29% of the global steel production coming from the electrical car furnace route is going to come to the 37%, almost 40% of the production of steel are going to come for the electrical furnace in the year 2030. That for us is an idea that globally, we are in the good part of this change. I mean you know that we are treating the electrical furnace residues in this particular case, the dust which is containing zinc material. And this is something that globally is going to affect us, not only in China but as well, is something that affect into the European market and U.S. market as well. So the steel part of our -- as I say, the three main drivers that we always manage, which is steel production and then zinc production are affecting for this megatrend, right? Decarbonization and energy transition supports us well, the zinc consumption. I mean zinc normally is very well connected to the global GDP growth because it's very well base metal and is in connection with the steel production as well. But on top of this, there are many, many factors that affect to the zinc in the future, which is the energy transition like the offshore wind, the onshore wind and solar panels that are going to need more zinc in the future as well. So from this side as well, steel production, we are in the good side and in the zinc production means that the same materials we are going to produce in the next 5 years are going to be -- the market is going to be able to capture and to use at the end of the day. So basically, the zinc part is well following this trend in the energy transition. And last, but not least, is the aluminum evolution, right? Well, as Javier said before, the growth of Befesa in the last 5 years has been basically in the industry of steel dust recycling and a little bit less in the aluminum, which has been doing plants. And so in Germany, but we see now that there is a real and very important growth in the aluminum business, especially in Europe. And this is mainly driven by the, once again, decarbonization and electrical vehicle production that is expected to be booming in the next years. The electrical vehicles need light vehicles, in order to be more efficient and to increase the life of the batteries. And basically, this is something that cannot be turned off. At the end of the day, it's going to be for numbers of electrical vehicles in the future, which is going to be 5x that the current number that is now, arriving to 11 million in Europe in 2030. But as well, aluminum containing the electric arc is going to be higher than now. The data are coming from 174 in 2019 to more than 250 or 249 in 2030. So that means that they are only in Europe and because of the automation, automotive market is going to be more than 2 million tonnes of volume of aluminum. We will see later how we are going to manage this. Let me turn now to the progress we have in the steel dust recycling, I would like to start by U.S. As Rafael and Javier said a couple of times, you know that we are now present in the U.S. market as we acquired the recycling asset of the Americas in recycling last year. U.S. always has been a very attractive market for us, and the reason is because this is a market for the steel production where the electrical arc furnace route, as I said before, the interesting one for us, is more than 70% of the production of steel is coming from this route in this country. But there are two facts that are supporting our plants there: One is decarbonization as we said before. This is a global trend, and it's something that is happening there, and they are turning off from the electric blast furnace to electrical furnace on U.S. steel and other players are changing blast furnace capacity for electric furnace, but as well and moreover, the infrastructure plan, the government in the U.S. has approved in the range of $1.2 trillion on infrastructure project, supports a lot of already announced and in place projects for increased steel production capacity or steel production in U.S. You can see there that we have identified in the range of EUR 9 million to EUR 10 million CapEx investment with EUR 13 million to EUR 14 million tonnes of steel coming in '24 or '25 production -- new production in U.S. That means for us, in the range of 300,000 tonnes of that available in the market again. So what we want to do here is that to capture this part of this increase, we are estimating that we are able to take in the range of 200,000 tonnes of this increased capacity. We have advanced conversation agreement, letter of intents with players that are announcing this because they are approaching us to if we are able to treat this extra dust that they are coming. And obviously, we are prepared for that. What we tend to invest while including this plan, there are two investments in U.S. One, it will be a surprise, but it's the equation of the recycling -- sorry, the refining facility. That has been the opportunity to be closed in September. We have already done. It was included in the plan. And it is something that was coming from last year, where we have the 7% the option to acquire the rest of the investment at the smelting plant. Well, the opportunity to get with a good discount price that has a rise in September. So we have already done and we talk about later. Second part of the investment is we need -- we are thinking to the refurbish and debottlenecking the capacity we have in an ore plant in U.S., which is Palmerton. So with these two investments in the range of EUR 110 million to EUR 120 million, probably will be in the good position to capture this global 200,000 tonnes of dust, with a state-of-the-art capacity rather than the current all capacity of production that we have there. So here is -- the idea is to refurbish the plant in Palmerton, the 2 kilns to get these 200,000 tonnes of capacity together with the refining of same asset that we have acquired recently. In the case of the U.S. refining asset, well, is more than say that we have explained that we have acquired for the EUR 47 million, which I think is a good price for an asset that we were estimating in the last year in the range of EUR 140 million. So for us, has been a very good achievement because for us, it's strategic to have this asset in the U.S. In North America, there is a lack of smelting capacity and obviously, to have this asset and this attractive price as well make us possible or available to allocate all our WOX production and to put in this refinery and produce green zinc. Well, this is an important concept as well because the green zinc is coming from proper waste of the steelmakers they are generating, and they are going through a recycled like Befesa that is putting back same metal on the route, in this case, coming only for residues, which is something that is the first time what is going to do. So fit very, very well. with our sustainable view and with our sustainable business. This is something that is very welcome from the steelmakers in U.S. Because, once again, they are affected by the decarbonization ideas, and they need to comply and to be sustainable until the plans of doing the things greener. I think that is something that is very welcome to -- for us and for us, became very important in this particular market. As I said before, second part of the investment is going to be in the Palmerton. We are going to do an integral change of this production facility, and we are going to build the 2 kilns with 200,000 tonnes of capacity during the year '23 and '24 to be ready to capture, as we said before, the 300 -- part of these 300,000 tonnes that the project has already announced by the steelmakers in U.S. are going to put in place in '24, '25. So basically, we are going to refurbish the entire plant and probably we are going to increase something theoretical capacity that we have now in place. And what we do hope is that with these changes, we can get more efficiencies, more synergies out of the normal or the initial 20 million that Javier said before. Here, we are going to put a state-of-the-art with the Befesa style in U.S. So probably, we are going to catch up a big part of the efficiencies that are still pending to capture in the U.S. in the next 2, 3 years. So this is from one side is capture the growth of the market. and as well to win efficiency in these operations in U.S. So we are really exciting, and this is really the main target we have, and we are going to start in '23. Let's move to Europe in the steel industry. Well, again, here, it's a little bit different, although the markets seems to be similar in U.S. and Europe. Here in Europe, it's a different market in the steel industry. The electric arc furnace route used current days in Europe is in the range of 45%. 45% of the steel industry or the steel production is coming from the electric arc furnace route. Remember that in the U.S., we talk about 70%. Here in Europe, is the decarbonization and the cutting of the CO2 emissions and the pressure for the politics for the social pressures or whatever is making more and more strong the idea of decarbonization of the reduced emission. So there are a lot of projects coming as you can see in the slide, which are switching blast furnace capacity to electric arc furnace. You can see that they are in the range of EUR 14 billion to EUR 15 billion investment for more than 20 million tonnes of steel production, which are going to come in this case from '25 onwards with a new production for the steel production through the electric arc furnace route. This is very good for us as well and makes us to think in the last years, as Javier said, many questions coming from the financial markets say, why you don't -- well, what is going to happen in Europe is going to decrease the production. It's going to be a problem for you guys in the future. Well, now we can say there is -- really there is a change coming from this factor to decarbonization, meaning that not only is there going to be a decrease in the production of steel production in Europe for the electric arc furnace more than that is going to be a growth. That's why, for the first time in years, we have now particular specific plan to growth in Europe because we understand that for this project is going to be again an increase of that available in the market in the range of 350,000 tonnes. So because we have almost 50% of the market, we have to be -- we are ready to capture half at least of this dust capacity, which is going to come to the market. We are not thinking to sell the idea to -- we are going to capture everything or be part, but at least the 50% of the increase of dust availability in the European market we are ready and as well, we are discussing with the players that we have seen in the previous page about the necessity, they are going to have to treat the residues, and we are ready to organize the construction of a new kiln, basically a big one in the range of 240,000, 260,000 tonnes of capacity. This is going to be something that we will build in the next years. And together with this, we did more washing capacity for the product we are going to produce. So the investment in Europe is going to be in the range of between EUR 100 million, EUR 150 million between the two assets, which will deliver in the range of EUR 30 million to EUR 35 million of incremental EBITDA in terms to the investment we are going to do here. We, of course, as Javier said, we can accommodate when and how we are going to build this. We are planning to construct -- do the construction and ramp-up of the mill during the plan between '25 and '26, to be ready at the end of '26 to be producing new WOX in this plant. And more or less the same time, doing for the WOX washing capacity plan during this period of '25, '26. This is because, once again, we are following the announcement and the investment of the steelmakers are doing with the new capacity. So that's why we have to do the same time, the investment we are planning to do. As Javier said, we can always manage this if there are delays or the announcement of the decarbonization process, which is -- I personally think that this particular turbulent time is not going to affect to the trend because the ideas of reduction emissions are there, the investments are there. All the plants from the European unions to support the big investment -- the industries are doing are there. So we do think that no matter the particular difficult times that we are facing now. In the next year, they're going to -- this is not going to be problems to follow up the trend. So we think that is a realistic time to build, and that's why we are starting to work in the permits and in the locations to start with the furnace and with increased capacity of the washing. So this is the plan for the European market. And we can move to the Chinese market as well. Well, here, decarbonization is a trend that is coming from the last year as well. And the switching to -- from blast furnaces to electric arc furnaces is something that we have been telling you in the past as well. This is coming from environmental reasons in China as well the decarbonization, but as well they have facing a lot of problems with the contamination and with the problems creating, but this big industry, very old fashion industry. So there is a trend which is now reinforcing because the idea of decarbonization, but it's something that China where they are working for the last years. We have identified more than 43 projects. In this case, we are putting here the provinces where the projects are coming. And this means that there's going to be more than 60 million electric arc furnace steel production capacity increase in the next years, which means basically 1 million tonnes of electric arc furnace dust, which basically is like a U.S. or European market, just only with this increase of capacity in China. We are in China already. You obviously know. And despite the fact that the COVID zero policy and the recovery after the COVID zero policy and the current Chinese situation of the economy and the low recovery factor and what Javier said before, that we are having some delay this year for the production in China, we do think that there is still a space for our growth there, probably not a very aggressive growth there, but a very realistic one. And we have -- we can say that now what we have in front of us is after the -- well, they put in place the two plants that we have currently there, one in Jiangsu province and the other one in the Henan province. Well, we have now allocate a new location is [Guangdong] where we have agreements with the authorities to build a new kiln, a new plant there, started for 1 kiln. And this is basically the next step we are going to do in China. The idea, once again, is to come from -- to capture and to get in the range of 15% to 20% of the huge market of the Chinese steel dust market I have to say. And in this case, I think that we can manage and here, we have to do carefully the timing for the investment. I mean we have in front of us '23 to prepare engineering to think and how -- which kind of plant we are going to build there and how the market is back for the current problems they have. The difference of the project we have in front of us in [Guangdong] is that we are now in this province with the hands of the steelmakers there. This is coming and then we have been going to the authorities. I mean they feel different in the past, we were having the green life for the authorities, we were welcome to the Jiangsu province to the Henan province because it's needed because the big production of steel dust in the area. In this case, it's because some of our customers, a group of steelmakers that have facilities in other provinces. In this case, we are going with then and even we are going to sign a letter of intent or even the contracts before even produce or construct the plant. So we are going to -- we have there before start a very high percentage of the steel dust capacity fulfilled with contracts with the steelmakers, which is making us very well excited and supportive of the project. Other thing is when, I mean, probably I don't know if it has sense to start very fast or not until we have a real view welcoming in China. But the idea, obviously, is to work in the -- during the '23 and to see where, when we can start. In any case, what we plan is basically do the design, and do the permits, do the closed acquisition of the land very soon, even now in '22 and then monitoring 2023 when we start to push the construction that we expect to do during '24. This is the first idea. After this, the target is to grow with another 2 kilns. In this case, no new plants, but new capacity in the current plants. You ask me where probably the second one is going to come mainly in [Guangdong] because there is -- as I said before, there is a lot of capacity already in place, and there are plans to grow the capacity for steel production. So probably [Guangdong] could be the second as very one after the other and probably the third one will come more sure in Jiangsu. So we are planning to have 3 new kilns in the Chinese geography, which is basically what we are including in this growth plan. Let me say that in China, we realized that there is a concern about what is going to happen. For us, there is no doubt -- the thing that we have been saying in Europe, decarbonization plan is going to be there no matter the current times. In China, no matter what is happening today, well, is the half of production or the half of consumption of everything. Every metal starting for the steel production, zinc production, aluminum. The half of it is coming in China. So we do think that it's very difficult to live without China in an industry that aspire to be global, which is the case of Befesa. So we are here for long term. So despite the problems in the current moment, we think that the future, it is going to be at least enough to capture these three kilns and later, we will see more. So we are going to do this carefully as we have done in the first two investments. You probably are aware that we are investing with a leverage of 50% with local financing in the country. This is the intention to do for the new investments as well. And the equity that we are delivering in China, we are having an insurance for the German government. So in this case, we are not saying that we are going to go through China like a massive way of basic plan. We have never said that and basically, we are monitoring very carefully the investment in China. But again, we still think that with this particular project in [Guangdong] it is very well on a strong commitment for steelmakers, and we have the visibility that the dust is going to be there. And we, as Javier said, hope that the '23 is a year where the activity there is going to be -- is going to come to normal basis again. So this is on the steel dust service part, which, as I said before, is the main focus of our investment in the past and looks as well now because it's a big part of the business. for the new growth plan that we have in front of us. But it's true that in the aluminum business, in the aluminum salt slag recycling business, there is a real opportunity as well to develop the business further. And this is, as anticipated before, the electrical vehicles and the decarbonization megatrend in the automotive sector. I anticipate that the electrical vehicles are going to be coming from 2 million currently to 2030. This is something that European Union has already approved that for 2030, 2035, there is not going to be more engines of combustion cars. So this is something that is not telling by Befesa. It's like the reality in Europe is coming like this. So there is no doubt that, that means more aluminium of the market, specifically, and we are focusing the European one. For that, because not only the number of the electric vehicles that are going to be in place because of rules, but as well because the need of the aluminium needed on the car I anticipated before is going to be grow a lot which means at the end of the day, that is going to be more than 3 million tonnes of aluminum more in the next 5 to 6 years. So we think in the aluminum sector, normally, we are talking about primary aluminum, which is coming to the cars and the automotive industry. But that means we know that the secondary aluminium, which is an industry around the primary one treating the residuals, producing alloys is going to follow the trend that the primary aluminum is going to have. So basically, the same growth that we see in the aluminum general industry is going to come to recycling or the recycling aluminium, the secondary alloys aluminum production. And then as a consequence of this, because the way of producing these aluminum alloys, they are going to be producing the salt slag residue, which you probably know that is one of the -- our very specific and important business that we are producing that we are running where we have almost 50% of the European market. And what we intend to do is to keep this percentage capturing the growth of the aluminum production, aluminum secondary production and as well the salt slag recycling in the future. That's why we have basically two projects, one project in the aluminum business, meaning First, the expansion of the secondary aluminum plant that we have in Germany, in Bernburg. We are going to increase the capacity of this plant in the 90,000 tonnes of production. We are going to start in '23 with the permitting and the engineering and the process for the construct for -- do this investment that we hope that in '25, we will be ready to put in ramp up and produce these 90,000 tonnes. And in parallel, we will start with the new state of the art salt slag plant cycling in Europe as well to treat mainly part of this salt slags that we internally are going to produce, but as well, the rest of the players are going to produce in the market, which I say, there is going to be an increase of production of aluminum alloys. So with these two assets, we are going to spend in the range of EUR 80 million to EUR 90 million of total investment, with this coming with the EUR 15 million to EUR 20 million total of incremental EBITDA. This is the plan we have for the aluminum business, and we are very happy and proud that we are not growing only in all the geographies, but as well in all the business that we are running. So the growth plan is covering this. I mean it's covering basically and really the full footprint of the activities of Befesa. Starting for a kind of summarizing of what we are doing. This is the picture on a slide that is giving to you an idea of the whole plan, what we are going to do. The U.S. investments with the thin refining and capacity utilization starting in '23 and putting in place for mid second part of '24 or '25 the new capacity with a CapEx in the range of EUR 110 million to EUR 120 million and EBITDA of EUR 35 million to EUR 45 million, meaning a payback 3 to 4 years on IRR of 30%. This is the U.S. project as explained before, and this is the first that we are going to start immediately in 2023. The growth plan in Europe is coming basically with electric arc furnace plant does and the WOX washing capacity enlargement. And as I said before, are going to come for the '25 or '26 period of construction and ramping up capturing it basically in '26, '27 starting the production. We estimate the CapEx in between EUR 105 million to EUR 115 million, EBITDA level of EUR 30 million to EUR 35 million another payback of 3, 4 years with an IRR of 30%. Then we have the China growth plan with the three new kilns, where the construction here tentatively is, as I said before, starting in '23 and mainly '24 for the construction and for '25 onwards start to capture the production of the payback of the investment. And then every 6 months, more or less 6 months later coming the other investment. Total investment of EUR 115 million to EUR 125 million. EBITDA run rate of EUR 30 million, EUR 35 million, payback of 4 to 5 years and IRR of 20% more or less. And last, again, but not least, is the aluminum expansion with the secondary aluminum expansion capacity in Bernburg and the salt slags plant, which we will be -- we're going to be ready for '26 onwards and the CapEx investment will be in the EUR 80 million to EUR 90 million with an EBITDA of EUR 15 million to EUR 20 million, a payback of 5 years more or less, and IRR of 15%. Total, as Javier said before, in the range of EUR 410 million to EUR 450 million with an EBITDA in the range of EUR 110 million to EUR 135 million and a payback in 3, 4 years with an IRR above 20%. This is basically the summary of the plan that we have in front of us. Very exciting period for us, but I agree with Javier that we see this plan very achievable. I mean it's not something like we can say that is our guess or our decide to do here. We really are working basically with all the agents involved here, steelmakers and steel producers and other. And we see really this plan achievable in front of us with a lot of work for sure, but I think that we are going to get despite the fact that the current situation is now. Putting everything together and probably not by causality but this you see we are -- in front of us, we have an investment in a road map, including even the two plants that are going to produce EBITDA finally next year for us. We are having very well balanced among the three big geographies where Befesa is now globally, the growth plan, right? It is in the range of EUR 35 million to EUR 45 million EBITDA growth. I mean for coming in from the U.S. market with the announced investments. And then EUR 45 million to EUR 55 million in Europe with the steel that's recycling investments like the new kiln and WOX washing facility. And as well, the aluminum, salt slags and the aluminum expansion for the secondary aluminum production. And then in China, we will have in front of us in the range of EUR 45 million to EUR 55 million, including the 3 new kilns as well the new -- the two that already are there. So all in all, we have in front of us a future where the three main markets that we are going to have are going to contribute this global plan with a very sustainable and important growth that we have in front of us for the next 5 years. So we'll represent between EUR 120 million to EUR 150 million adjusted EBITDA over the next 5 years. The most important idea as well is we can accommodate the timing. I mean, we have the plans in front of us to follow like we are explaining. But we are not -- we have no commitment, nothing close that we have to be forced to put to construct the new projects. If we see that the things are coming a little bit later than is expected, although we don't think so, but we can accommodate our growth plan to the reality that is going to come in these next years. So basically, I think the main ideas about the growth plan. Rafael, we can do the...

I think we are a little bit ahead of time, but let's take a 15-minute break now, and we will continue after that with Wolf Lehmann, taking us to the financial highlights.

Appreciate it. [Break]

The CFO of Befesa will put everything together in the financial highlights.

Great. Thank you, Rafael. So on this page, we start on the left-hand side with our current EUR 225 million last 12 months trailing EBITDA run rate. Asier walked you through the EUR 125 million to EUR 155 million growth projects. And those growth projects primarily focus on our core businesses. Such, they come with our proven 19% to 23% EBITDA margin, which turns into adding approximately EUR 550 million to EUR 700 million of revenue. Later on, I have a page on leverage and on cash. And I will show you how we can self-fund this growth plan and keeping leverage in the initial years around two and thereafter we deliver. Also on the next page, we'll take a look at energy prices as well as metal prices, which we expect to normalize in the medium term. Now quite frankly, if you look at more than 20 years over the last 20 years, energy prices and metal prices showed a very, very strong correlation. The only exception to that has been the last quarters, the European energy crisis. And even in that very exceptional European energy crisis, when you look at our last 9 months financials, we entirely offset more than EUR 50 million of inflation with prices -- metal prices EUR 51 million. Now on the other hand, Asier and Javier talked about that in the last weeks, energy prices rapidly came down and decreased materially. And this is also what we expect. And in the medium term, the strong correlation we saw over the last 20 years will come back, and we see again a very strong correlation between metal prices and energy prices. Now we cannot forecast energy prices nor metal prices, but on the next page, I will take you through our latest hedge book and also how we manage the variability. Now our zinc, quite frankly, start hit at the bottom, which is our hedging strategy. Our hedging strategy is entirely unchanged, 1 to 3 years in terms of forwards in terms of time, 60% to 75% of zinc equivalent volume. And important, no collaterals, no margin calls. Now when you look at prices, Javier already mentioned, if you go into next year 2023, we've hedged at about EUR 2,500. That is EUR 125 higher than this year, doesn't sell much, but you need to multiply with more than 150,000 tonnes. So that turns into EUR 19 million incremental EBITDA year-over-year. If you do the same math for the following year for 2024, we have hedged on average at EUR 2,600 per tonne, that's EUR 225 per tonne higher than this year, which turns into EUR 34 million incremental EBITDA. Now we don't hedge to increase profits, we hedge to stabilize and ultimately, we lock in our earnings and our cash flow at a much tighter bandwidth. That's why we hedge. Nevertheless, that EUR 34 million incremental EBITDA we got in the pocket, and that will serve us well to offset pressures, headwinds as Asier and Javier mentioned, could be inflation or any other matter. Now on the next page, I would like to take you through and spend some time on how we're going to fund our growth plan, sustainable global growth plan, SGGP and how we self-fund that. Now number one, self fund. Number two, no capital increase. We have not planned that. Now what we have on the page is really an illustrative EBITDA to cash flow walk. On the left-hand side, we start with EBITDA. Our baseline, the actual EUR 225 million, last 12 months trailing EBITDA run rate. Obviously note that over the next years, this will increase by EUR 125 million to EUR 155 million, as explained. The next bucket -- and this is the work that you get every quarter from us, yes. So the next bucket is working capital and other. If you look at what we've done in the last 5 years, we always have a medium and minor working capital usage to fund growth. And this is also what we expect over the next years. If you look at the last 5 years and you normalize for the onetime costs like IPO and also the acquisition, et cetera, then you get to approximately EUR 16 million working capital usage on average per year to fund growth. Now let's talk about the next bucket then is interest cost. On interest, a couple of aspects. Number one, our capital structure is set for the majority of the growth plan period, all the way up to July 2026. Then let's look at the rates. How does it work? It is 3 months Euribor, 0% floor plus a spread. The spread cannot be more than 200 basis points. So for leverage at or above 2.25x, it's 200 basis points, and it cannot go beyond that. That's number one. Now as we delever or, for example, if we are between 2 and 2.25x leverage, that spread becomes 175 basis points. And if we are below 2x leverage, this becomes 150 basis points, et cetera. So we have interest rate ratchets built in. And as we delever, it's beneficial to us. The second very important aspect is that half of our Term Loan B. We have swapped from variable to fixed. So our read about the ECB, European Central Bank increases, they only impact half of our gross debt. And that's EUR 313 million, half of our gross debt. So every 1% or 100 basis points increase by the ECB, ultimately, triggers about EUR 3 million incremental interest cost. Nevertheless, the other aspect is we have cash. For quite some time, we didn't get any interest on our cash deposits. Now we're getting interest again. So -- and if you take that moderately into consideration, I think every 100 basis points or 1% increase by the ECB is not EUR 3 million, it's EUR 2.5 million or so because, obviously, we're getting some cash interest on our deposits. Next bucket, taxes. Quite frankly, on taxes, we continue our tax efficiencies that we've shown in the last years. Please note, we have more than EUR 170 million on and off-book tax credit. That serve us well over the coming years. And if you do the math, over the last 3 years, I believe, on average, a tax rate of 19%, and we don't see any reasons why our tax efficiency would be worse than that. Let's switch over then into the CapEx bucket, maintenance and growth. On maintenance, a normal year with EUR 40 million, we get absolutely done. that suffices and maintenance in a broader sense, it is classic maintenance to maintain all our asset top-notch. It's also IT spend, compliance spend, productivity spread, et cetera. Now if you want, you could take that up a little bit over the next years into the outer years as more and more plants are coming online, but starting point should be somewhere around EUR 40 million maintenance CapEx. Now on growth CapEx, I think we covered that in a lot of detail, yes. So that is the EUR 410 million to EUR 450 million that Asier explained. Over 5-year terms, so we're talking somewhere around EUR 80 million to EUR 90 million growth CapEx per year on average. Dividends. We continue our dividend policy. We distributed or our policy is to distribute between 40% to 50% of our net profit we distribute as a dividend. If you take all the last 5 years, we exactly distributed 52%. So our target is to continue that to pay out 40% to 50% of net profit as a dividend. So overall, we can -- we will continue to manage cash flow very carefully. We see clearly a balanced cash flow over the initial years of our growth plan. And we see that we're going to delever in the outer years rapidly. And we can self-fund this growth plan, continue our dividend policy and are really looking forward to executing this growth plan. On this page, we show the development of our portfolio, capacity utilization rates volume. We will continue to diversify the portfolio and globally. So on capacity, steel dust. We're growing it to more than 2.1 million tonnes of capacity globally. Zinc refining, our new asset, is on top of that. And if you look at aluminum, our aluminum business combined is approaching 0.9 million tonnes of recycling capacity. If you look at our total business, we're talking about more than 3 million tonnes of recycling capacity. This is what we had mentioned some years ago that this is what we're striving for, and this is what we're executing now. On utilization rates, quite frankly, we're using or expecting our proven historical utilization rates. And volume is purely taking capacity times our proven utilization rates and that spits out the volume that we're going to achieve. Now on this one, we're looking at how revenue and EBITDA and margins develop. The pro forma post-SGGP, post our growth plan, EBITDA and revenue is just basically taking simply our current run rate plus the growth plan we just talked to you about, and it gets us to the post-SGGP pro forma numbers. Just the revenue, we see growing to EUR 1.6 billion to EUR 1.8 billion. EBITDA growing to above EUR 350 million. And on the EBITDA margin, we see our proven 19% to 23% EBITDA margin. Here, a little bit more flavor. When you look at our zinc refining as well as secondary aluminum business, which are usually the lower EBITDA margin percentage businesses, we clearly see a solid single-digit EBITDA percent. And on our core business, and this growth plan is centered around our core business, we see continued strong performance like we've done in the past. So you know the EBITDA percent on average we achieved in steel dust and salt slags. Summarizing the financial section before we turn with Rafael to the ESG side. Javier mentioned it already, we are in the strongest shape we've ever been. This is really based on three pillars: It is our long-term capital structure; it is our hedge book; and it is how we manage liquidity and cash flow. With that, we know we can fund this growth plan, self-funded. Secondly, we don't expect a capital increase and we target to continue our distribution approach of 40% to 50% payout of our net profit as a dividend. And three and four kind of combined, our growth plan is organic. And Asier and Javier mentioned it, and it's based on our core business. So it comes with two important aspects: Number one, timing and flexibility. It's an organic growth plan. The timing and flexibility are not fully in our control. We can pull something in 6 months or push it up 6 months based on what is going on in the world. And secondly, from a financial point of view, growing in our core business means the lowest risk and the highest returns we can achieve at Befesa, yes? And in some of our core business, quite frankly, we have waited for 20 years for the situation we're facing now. If you look at Europe, we haven't put a single new plant in Europe for the last 20 years. This is fantastic for us. And this is our home market. This is the lowest, lowest risk and the highest, highest return that we can deliver. And so now next is we're going to take this 5-year growth plan, integrate the SGGP into our budget, into our guidance process, and we'll keep you posted step by step by step over the next quarters to come. But trust us, what is on the pages is what we're executing. So for us, it's really -- these are difficult times, but this is our commitment to grow through the cycle point, yes? This is our commitment. This is what we're going to execute over the next years to come. So next, Rafael, please take us through ESG.

Thank you, Wolf. Although the focus of today is growth, we wanted to include a section about ESG. Because to that extent ESG and sustainability have been pressing during the entire presentation, the growth that Asier has been explaining is driven by decarbonization, decarbonization transition to low carbon economy is probably one of the most important topics within the ESG arena. When we IPO Befesa back 5 years ago, ESG was not in the agenda, the capital markets not in the agenda of Befesa. I remember that we didn't have any single question about ESG. And today, it's a very important topic. And during the last 5 years, we have improved significantly the reporting, the transparency on the non-financial information. Today, we have 7 ratings on ESG. These are external parties that evaluate all environmental [indiscernible], and we have very good scores in these ratings with [indiscernible] reality assessment, we do the internal view and we try to classify all the -- and prioritize all the key ESG topics based on the opinion of the most of internal people. And we also do the external view of our main shareholders and stakeholders. We came to the conclusion that the health and safety was ranking one of the most important topics. It is true. We -- 90% of our people are working in heavy-duty industrial environments. So for serving the health and the safety of these workers is essential for us. We have been able to reduce the lost time injury rate by 85% over the last 7 years. We have done a CO2 holistic analysis. This is a life cycle analysis. Basically, what we have -- we engaged a top management consulting to say what would happen if Befesa wouldn't exist, which is the alternative? We have analyzed business by business, our CO2 footprint versus the alternative. In this case, the alternative is basically a combination of landfill and mining, and we came to the conclusion that with our operations, we are saving around 2.4 million tonnes of CO2 per year. But we also recognized that we are CO2 producers, and we have our own CO2 production plan, which I will take you through in the next pages. On the EU taxonomy, as you know, this is an European regulation, which is still not complete. There is -- we fulfill -- we believe that we fulfill 100% of the objectives around circular economy, according to the opinion of subject matter experts and third parties, 100% of revenue, CapEx and OpEx. And finally, we have put together a sustainability committee, comprising experienced members of the board with a lot of experience on the ESG field, energy transition and technology. And this committee will supervise all the ESG topics within the company with a special focus on the CO2 reduction plan. Well, since the very beginning, sustainability has been at the core of Befesa. We have always been driven for the last [ 30 ] years by environmental regulation. And as Asier has explained, the future growth will be based on another sustainability topic like decarbonization. We are a pure circular economy player, and we basically avoid the landfill of more than 2 million tonnes of hazardous waste. We recovered 1.5 million tonnes of valuable materials that were reintroduced into the economy. Basically, we are avoiding the extraction of primary materials and avoiding the emissions of CO2, but we also have some indirect benefits. As you know, our customers are -- they are steel and aluminum producers that are the less pollutant EAF steel players produce 1/7 of CO2 compared to primary producers. And in the case of aluminum, to produce 1 tonne of secondary aluminum, you need 5% the energy that you need to produce 1 tonne of primary aluminum. So we are clearly enabling the transition to a low economy in the steel and the aluminum industry. But as I say, we recognize that we have our own emissions, and we are committed to reduce our own emissions. This is what we have communicated to the market. Our commitment is to reduce 20% of our emissions by 2030. And we also have the vision or the ambition to reach net zero by 2050. Well, if you look at our CO2 emissions today, 90% is coming from the [indiscernible] business. It makes sense because that is the main business of Befesa. It contributes with around 85% of the total EBITDA of the company. Out of that, around 80% is coming from the use of reductant agents, mainly coke in the [indiscernible] business. 10% coming from the use of fuels, mainly natural gas in the secondary aluminum business. And the other 10% is the use of electricity, what we call Scope 2 emissions. Our CO2 reduction plan is based mainly on 3 levers. The first one is green power sourcing. If you look at our electricity bill today, only 20% is coming from renewable power, okay? We have the opportunity to increase that all the way to 80%. In markets where we have a strong operations, like Spain, like Germany, like the U.S., we are engaging with third parties to sign long-term PPAs. That is the first lever. The second one is operational efficiency on the energy side, okay? And here, we have a bunch of lease that we are -- of initiatives that we are pursuing probably the most obvious one is when you compare the energy intensity or the carbon efficiency of our different plants, you see a big opportunity on the recently acquired American operations, okay? So we are bringing the American plants to the same standard that we have in Europe. And finally, the third lever is around raw material substitution is around looking for what other materials we could use to substitute Coke. For example, we are looking and we are doing trials with biocoke or charcoal to reduce the carbon footprint. We're also looking at green hydrogen to substitute partially this -- the natural gas that we use in our secondary aluminum business. And then we have the vision to the aspiration to achieve net zero by 2050. This is something that will not depend entirely on Befesa. It will depend also on the development of new technologies and carbon capture technologies, new technologies to recycle the waste that we treat and or new technologies to produce coke with low carbon emissions. And finally, what we have here is a nice of selected targets that will strengthen even more our ESG profile. I'm not going to go through all of them. The first two ones: Waste recycle and new materials recovered. This is 100% aligned with the strategy that we have explained to you today. As we grow our capacity, we will fulfill these targets because basically, this is what we do day in and out. On the CO2 emissions, I have already explained. I would say here that we are also aiming at measuring and reporting Scope 3 emissions, which is something that we are not doing at the moment. On the health and safety, we want to keep on improving, and we want to keep the zero fatalities goal as a main target. And finally, other goals on the governance side. So this should be reflected in our ESG ratings. Much of this is coming from the conversations and the engagement that we are having with our shareholders. So thank you for your feedback looking forward, keeping the engagement and the dialogue on the ESG side. Back now to Javier for the closing remarks.

Okay. I hope that this session has been interesting for all of you. And before enter in the Q&A, I would like to summarize and to remark the most relevant message we have been trying to send to all of you. First one is that, we are a very resilient company. I think that is something that everybody agreed. We have been able to pass through the different crisis we have been living in the past. And for sure, we are going to do the same in this crisis. Based on that, we can confirm again that we will finish the year in the guidance for touring the lower part of the range, but we will be on the guidance that we provide to the market 10 months ago, as we have done in all the years since our IPO. The second idea is that we have a solid floor for 2023 in the levels we will achieve in 2022. Again, this is not a guidance. We will provide the guidance in the right time. But well, I would like to send the message to all of you that the company is not in risk. We will overcome this crisis without any doubt and achieving good results, strong cash flow and for sure a strong net profit. And based on that, we will be able to pay as always, the dividend that we have been paying to our investors since our -- since our IPO. And then I think we have been trying to explain during the presentation, the strong mega trends that are supporting our business model. I think everybody will agree that these megatrends are on the top of the table. Decarbonization is something real Electric vehicle in -- especially in Europe, but in all the geographies, is the future of the automotive industry. And based on that, we will have -- we have, again, a very clear growth opportunity in front of us. And it's a growth opportunity, very well balanced in all the geographies we are present. Perhaps 2 years ago or 1.5 years ago, our growth was basically in China. And today, our growth is very well balanced in all the geographies where we are present. We are not talking about new approach, we are not talking about new geographies, we are talking about our core business. The business we have been developing during the last 30 years. So we know very well how to build, how to run, how to manage steel dust recycling plant and salt slags recycling bank. And we are talking about the growth in this business. And in geographies that we know very well. 1/3 of the growth plan is -- or more -- 40% of the growth plan is based on -- in Europe, our natural market where the team feels really comfortable. Another 1/3 of the business is based in North America, which -- where we have a very strong presence, a very strong team. It's a market in -- at reaching our approach very similar to the European market and only 1/3 is based in, let's say, a new market. A new market where we are working on for the last 10 years and where we have built successfully 2 plants and where we have started to manage the plant. Now we are living in the middle of the very difficult situation because COVID because of other reasons, but we are very confident that China will be a clear growth market for Befesa. And Asier has explained our next project in China will be in a new area in the province of Guangdong, where we have -- where we will have signed contracts before to start the construction of the new investment of the plant. This is a new way to approach our growth in this part of the world. And I think we'll be in a more secure way than we have done previously. So all in all, we have a very well-balanced plan. And I would like to highlight just two ideas about this plan, it's the delivery of the plan is totally on our hands. The plan or the investment don't depend on the M&A opportunities on acquisitions or -- we only need to confirm that they announced investments of our industries, steel industrial and aluminum industry, will be done. And then we will follow the execution of the industry. And this is the second idea. This is a modular plan. We can't define the speed of the plan. As Asier has explained, we will start in North America, where we have done the first investment. And what we want to do as soon as possible the bottlenecking of the Palmerton plant because the market is there and we have an opportunity. Then we think Guangdong will be the second step. And especially in Europe, we will define or set up the speed of the execution to the plan to the market situation. So if we see some delay in the implementation or in the execution of the growth plan for the steel industry or for the aluminum industry, we will moderate the speed of our plan. So all in all, I think because we will grow in our core business in a very well-known geography, and we will set up the speed, the timing of the plan is -- I understand it's a very low-risk plan. As Wolf have explained and we are in a very strong financial situation, and we have the possibility. We don't need external funds to -- external capital to fund this plant. We can do the plant clearly with our cash and with our cash flow. And our goal is not only -- not increase the leverage ratio, but to try to decrease doing the investment plan, but at the same time, decrease the leverage ratio. We will take care, as Rafael has explained, and we will take care about ESG. I think we need to do a permanent effort to show the market that we are a fantastic example of circular economy. One year ago, the ESG was in the center of all the investment decision, perhaps today is not happening the same. But I'm sure that ESG will continue to be an important point to define the decisions of our investors. And we will take care of the ESG. I think we have the right team to develop this plan. I'm very happy with the decision we took some months ago to nominate a CEO in Befesa. Now we have more people to do the same. Asier will be 100% focused in the day-to-day and in the delivery of the plan and I think we have a very strong team. Asier has a strong team. We have a very good team in North America. We have a very good team in China. In China, we have created a strong team. And today, we have more than 200 people working there, and we have a cooperative team, which is really strong and that know very well of the market. We have a very strong team in all the geographies, South Korea, Turkey and particularly the classic Europe. This -- in December, we will -- after the COVID period, we will have our first in-person management meeting since 3 years or 4 years and will be a great occasion to present the plan to our people and to start the execution of the plan. Finally, I would like to finish trying to transmit you my confidence in this growth plan. I believe in this plan. We believe in this plan and we are sure that we will be able to deliver it on time and on budget as we have done in the past. Thank you very much. And now let's go to Q&A.

I think for those here in the room, we have a mic that can be moving around. For those on the virtualization. As I said, there is a box in your screen that you come fill in the question. I will try to moderate those. So we have a question here, [indiscernible].

Ingo-Martin Schachel, BNP Paribas. My first question would be on the European steel dust recycling opportunity. I think your chart showed capacity to be added in France, Germany, Scandinavia. When you look at the opportunities for you, would it be fair to say that you are more focused on the countries in which you're already active like France and Germany or Scandinavia and equally likely option for you and you're fully flexible depending on where it pops up. In that context, maybe you can also speak about your competitors' appetite for expansion. As you said, there has not been any greenfield activity in the European market for the last few decades. I think you want to maintain a 50% market share. So I guess that means that you also think one of the competitors will also do greenfield. You already know which one and where?

Well, first of all, about the location. Probably, you are right, I think that we are thinking to grow the capacity around where the steel makers are planning to build the new capacity. So the announcement they are doing is basically there in the area of Germany, France and so. So we are thinking in that area, obviously. It's still early to say, because we are working in a couple of locations, and we will have the delivery of this during the '23, and we will inform you because once the plan is -- set up the plan, we probably follow up with a new things that come to that. So yes, I think that's going to be -- we are not thinking to move for the part of Europe or something like that. It's just in the real area where the steel makers are doing. Regarding competition, I cannot answer for them. I don't know. I mean there are no plants at least public and no public neither no one is announcing or there are no movements. My personal guessing is that we capture half of the production, someone is going to capture the rest, right? We see that the competition is not moving, probably, we can do more things in the future. But at the end of the day, I think that as we are explaining the whole morning is that something that we have to see how is coming, right, more than thinking to grow more, probably thinking step by step [indiscernible]. So we'll see. But I think it's the -- opportunity is there for us and for the rest, we will see what's coming on.

So the investment on the salt slags and secondary aluminum side, I think bank book has always benefited a lot from proximity to clients in the region, of course, you're scaling the plant up. Would that change the business model at all? Will you have to sell more to the export markets to Eastern Europe? Or is it still a business model that can monetize the advantage of proximity to [indiscernible]?

The idea here is clearly -- well, we are open to do the business in many ways, but one of those is the tooling basis with the premier aluminum industry, treating the process and other aluminum containing material putting back there. So we are open to the export. We are open to fill in the market, but we do think that the production and the reality is going to be here in Europe, which is the real growth capacity so that we have to serve the market. So we are thinking to growth there because it's in a good area covering the current European Central and this part and as well covering because it's in the part of the East Germany probably covering the new countries that the automotive industry can cover. So this is the reason why we think that after evaluate all the possibilities we are thinking to enlarge the capacity double rather than build another part. And yes, the idea is to serve the European market.

And just a quick housekeeping on Guangdong, I think the last round of expansion was strongly supported by CapEx subsidies. Do you also expect to receive it at this time? And is it included in your CapEx number?

It's not included, but of course, we are working on that. And the first time you put there, you have the access to the subsidies. Now it is also appear, but we do hope to have part of that.

Just in terms of the CapEx, that EUR 80 million to EUR 90 million that's going on secondary aluminum and salt slags, how much of that is going in the secondary aluminum? And does the anticipation that the margins in secondary aluminum improved with that spending and if so to what extent?

What I think out of the EUR 80 million to EUR 90 million and a small part of that will be around EUR 20 million will be on the -- at the end, will be increased capacity in Bernburg and the rest will be basically a secondary, the investment in a secondary aluminum plant. This is more or less the balance between the 2 investment [indiscernible] Bernburg, 65 in the secondary in the salt slag plant.

And then to the other part of the question, the expansion in Bernburg is a brand-new plant. If you look at our secondary aluminum business, currently, we have 3 plants, 2 in Spain, 1 in Bernburg. Bernburg is the most modern and last build plant. Traditionally, if you look at the last year, secondary aluminum is single-digit EBITDA. Obviously, there have been years where the Bernburg plant was at the upper end of single-digit. And as we intend to build a brand new plant with the highest efficiency we can do that doesn't hurt.

This is in our update that return on the investment in Bernburg has been fantastic because we invest EUR 30 million to EUR 53 million. Out of that, EUR 10 million was a grant from the regional government, and the payback of this investment has been below 3x. So -- and this is what we are trying to do again. I will be, as Asier explaining before, will be linked to long-term contracts with aluminum producers. So very, let's say, secure investment.

At the same time, this increase production [indiscernible] are going to fit partially the salt slags. So a big part of the capacity of the salt slags plan is going to be covered by the salt slags coming from the plant. So I think, once again, that is very strong and very well on the project -- to support the project.

Just to understand what is the reason behind having your [indiscernible] investments? Is it related to uncertainty of CapEx costs coming from inflation? And my second question, more or less the same question about EBITDA and expected incremental EBITDA per annum, what are the main assumptions behind the range of increment that you gave? And my third question is on Slide 44. You mentioned a range of 1.5 to 150. Is it 150 or 155, because it's 155 in other pages.

Yes. Maybe I'll take that one first, if you don't mind, right? My apologies. No, the correct number is 125 to 155. On the electronic version, you saw 155. In the printout, you see 150. So please scratch out the 0, put a big 5 over that. There's 125 to 155. [indiscernible], the one error in that you found it. Incredible.

And the other 2 questions about the CapEx interval. Yes, we are considering now we are out of the U.S. one, which is more advanced, the project I mean, the Palmerton refurbishment. The rest are estimations and then with the current prices that we have, the idea and then plus less 10%, 15%. It is in [indiscernible] they are still in a very basic engineering process, right? So that's why it's more or less the idea, but it's not going to be far from that. Later, we had to run the budget -- sorry, the project going to the [indiscernible] asking for quotations and well, you get the final amount. But I think this range is quite correct by the experience we have and especially by geographies. In terms of the EBITDA, we were waiting for the question. I mean it is how we calculate all the modeling. We intentionally are not putting here how we are getting those figures. And the reason behind is that each of you has your own model about what has seen price is going to be in '23, '24, '25, how are going to be the TCs, what are going to be the energy. So we think that it's not worth or nothing to put here an idea because otherwise, we are going to start discussion what is going to be the price and so. So I think that you can mobilize and see that what we are using behind, Wolf can correct me, is like kind of last 5 years average on more or less all the variables, and that's what is our range as well. But I'm sure you are going to do your own model, and you will see that you're not going to be no far from that because, well, it depends how aggressive you can be or how go positive, you see the same prices or the others. So how negative, you see the energy prices. And so in reality, we are doing this as Javier explained, not like a kind of guidance. But yes, like a kind of idea of the investments and return on investment that we have to present to our Board and to you guys because at the end of the day, the intervals, the range are always affecting our activity. That's why we are putting the guidance on interval and so because there are many variables which are out of our control. So that's like this. But it's -- the idea is get the 5 years average and more other to get the numbers than we had used.

Yes. Sorry, I have one. No, I'm not sure to get the difference between the range in Page 37 of EUR 110 million to EUR 135 million and the consolidated one of EUR 125 million to EUR 150 million.

I can see you looked at all the pages in detail. Yes. The difference is 2 China plans.

Once again, it's golf.

No, this is clearly are done on purpose. The page that Asier presented first is taking the 9 projects and the growth EBITDA and the investment. And so we wanted to be fair in how we calculate the returns. So if you go a little bit [indiscernible] more and more and more.

This. one as well, no?

So this one you're referring to at the bottom, EBITDA run rate, EUR 110 million to EUR 135 million. Then when we talk about for the next 5 years is EUR 125 million to EUR 155 million. The difference is the 2 China plants that are already done, no more investment to do. But as explained in this year, we kind of have a breakeven, and they're going to deliver next year on, et cetera. That's the difference. But we felt it's fair to leave those two out, yes? Because you want to calculate your returns on a like-for-like basis. I have 2 other questions, but we'll get back to you.

Sandeep Peety from Morgan Stanley. I have 3 questions. Firstly, maybe can you highlight what is -- what are the contingencies in your growth plan? Is it 10%, EUR 10 million per plant?

Yes, in the range of 10%. We are always considering this in the contingency plan.

Okay. And secondly, on the AZR acquisition. So at the time of acquisition, you highlighted there are 2 levers. One is synergies the other is increase in the utilization. And I was surprised to see that the first investment is to increase the utilization to 617 kilotons. So at the time of acquisition, this was not highlighted. So I just wanted to understand what's happened now.

Good point. Yes, I think it's -- at the time of acquisition, we explained that the short-term synergies we call like that, its being focused on operating measures, so to say. We are getting this. We have to be ready to do some kind of changes of the current equipments and the main changes have been doing during this '22. So we are ready to capture more synergies during 2023 when we are these small equipment changes in place in all the kilns. This is the first idea. In terms of the utilization capacity, yes, you are right, I think we are mixing something like it's a growth capacity or is a reinforcing on the capacity, I think it's a mixture, right? We know that the capacity of the plants now at the current states could be in the range of 620 or something like that, which always is a theoretical, but it's more or less like that in terms of the design of the kiln, how they are operating. But we want to change the one that we have in Palmerton and do the another 2 kilns with 200,000 capacity to reach something like 640,000 or 650,000 tonnes of capacity. So -- but for us, this is not an important thing. I mean, we are not doing this for search in the increase of capacity of 20,000 or not. For us, the important thing is to be able to capture the growth of the market, which is a different thing. I mean now we are running the plant in the range of 65% to 70% of the plants, 65%, 70% of capacity -- current capacity. And so we say, if we wait and we don't do anything to capture the 200,000 tonnes to bring to 90,000, 95,000 tons of capacity utilization in the future could be very risky because the plants are not in a good state of the art. And probably, we are not going to be as much efficiency we want, because the state of the equipment. So changes that win doing a state-of-the-art kilns, we are going to be, for sure, ready to capture the growth in a good way to capture more synergies than we were planning. So it's a combination of [indiscernible], right?

Okay. And one final question. On China profitability. I see the ranges have been now wide -- narrowed to 10 million to 11 million per 110 kilo tonnes of capacity versus 8 million to 14 million earlier. So what assumptions have changed towards this past?

Well, out of the gains in price and those kind of things that probably you are doing. The main difference is that we realize that the fees for the steel makers are a little bit higher than we were thinking of. I mean this was a brand-new market, and then we were considering that how much would you have to pay. So now on cost because the transport and so. So all in all, you have to reevaluate and we are comfortable in the rates to 8 million to 12 million to 13 million. So no big changes in range. But yes, we were in the past, probably closer to the high part of the range. Now probably we are in the middle, but at the end depends on who is going to be there, the same price treatment charge and the rest of the cost. For me, this range of 10% to 14% or 10% to 12% is more accurate now because we have the knowledge, and we are already running the plant rather than initially because we're on paper, how to say, now it's on the field, and I think it's more acute the range that we are running now.

I think we can confirm that the running of Jiangsu plant has been very [indiscernible] during all the year. Probably October has been the first month of full operations in the plant and the performance of the plant is in line with the figures that Asier is talking about. So this is a good point to -- good starting point.

Andrew Gibbs from Otus Capital. It was really a follow-up. A lot of what he's just asked that last question is what I was trying to look at was obviously on China, what you're intending to do next, there's some reference to what's happened in the past, i.e., when you went out there with China 1 and 2, it was a sort of -- we will build it and they will come. And you hope the contracts would sort of fall in line with what had happened in Europe and perhaps that didn't quite come through. What do you -- in the letter of intent you have here with China, 3. How close are you to where you wanted to be with 1 and 2?

I think I get you. I mean I was explaining this to one of your colleagues before in the break. The fact here is that the 1 and 2 is that situation -- different 1 or 2 because the second 1 is coming with the commissioning now. But the contracts are in place. And what we are really realizing more than feeling is like the deliveries of that are below the expectation because they are simply stopped. I mean the steelmakers are half or running just weekends, running nights because it's an electrical furnace that they can switch off or on. And the fact is that we have a contract in place, but they are not simply producing. We hope that the months of the economy, Chinese economy is strange to say because there are not a lot of information. They come back to normal production, not needed to grow, and we will fill up the 1 and 2 with the contracts in place. In the case of the third has been a different animal, although it's more or less the same, but the difference is that one of the biggest customers we have in Jiangsu is part of a big group using a lot of scrap with more than 30% of zinc-contained in the dust. And this group has a couple of plans already running in Guangdong. And this is the idea of how we have moved there, more than we have find again and we were searching for new province with the steel production. This case was a different because we were hand-to-hand with those guys to the President and then they are inviting us to build, and we are close to the 2 plants. And it is -- again, productional site is 4 million coming to 8 million in one of those, and the other one is 6 million coming to 12 million. If it is true or not, we will see. That's why Guangdong now is becoming the last, but probably is the first when we are going to move for the second kill because if this is -- we check on the field that they are producing at such a level, I think it's quite easy for us to move forward. Having said that, we need to wait a little during '23 to if this is coming back in China, because you have the capacity, you have the production but the economy is like sleeping. I mean it's like COVID zero is the excuse, its not the excuse they are stopping. They are very slow recovery. But again, we see that China population, consumption and construction infrastructure are not going to be stopped for a while. So when it's coming, well, let's see a little bit in '23, and we will move forward, pushing a lot or just managing. But when we say we have flexibility. We have all the flexibility on, but we are not thinking this coming 2 years, waiting for something happening in China. We think that it's going to be in the range of the timing we are putting there. And the reason for Guangdong is this.

Right. And I certainly appreciate the volumes of the main issue. But within the actual contract terms, do they look like you originally wanted? Or have you had to soften any of those or change collection costs?

No. I mean, well, the collection cost, yes, is one thing that we have to recognize that it's a little bit higher than what we were expecting, because the theory, there's no one there. So probably you can get even [indiscernible] and so on, but the Chinese war is Chinese war. And the other guys doing things in other ways start taking some money, so you have to pay whatever, nothing strange. I mean, still doing very good profitable business like the rest of part of the Asia. This is one thing. But the important thing that we are checking not again is realizing is that for 9 contract steelmakers that we have, 8 of them are not currently delivering the best by silo track. What I mean is no return for them. I mean, because they produce in the waste -- and they put a pneumatic silo. So that is not in the air and they are going to a recycler in the area. So it's a matter of how much they produce. It's not a matter of the way they are doing other things. And it's not return where they are going. So -- we are really, really happy with the situation [indiscernible] situation. We are not happy with the level of production they are having. So -- we have to wait a little to see if the economy return and we have the dust they are -- that contracts are there, and they are doing pretty, pretty well and plans are running good.

It's Oscar Ramos from JPMorgan. I have 2 questions going back on the previous questions. The first one on the U.S. So you're debottlenecking Palmerton. Can you comment on how that plant is different to the other 3 plants? Are they similar? Or was Palmerton did it have more issues? That's the first question. Then the second question, going back to China. What's the visibility on plant 1 and 2 expanding into the second and third talked about lower volumes now, do you still see the ability to build that second and third plant in those regions? Or is that now pushed away much further?

Well, going to the first [indiscernible] situation. At the end, [indiscernible] everywhere, right? The question is that there are [indiscernible] coming from the 50s or 40s, and there are not a lot of investment done there, right? So what we can talk about Palmerton is the oldest plant and the [indiscernible] the oldest plant. With a company that passed through the good times in terms of economics, so they have not done a lot of maintenance or changes or whatever. So what we find there is that you can keep running this kilns as they are, but at least it's not the best way to get the efficiencies and even the environmental replacements and so. So at the end, it's a matter will be very old. You can start to change part and try to make a small CapEx, but we have analyzed and realized it's better to scratch it and to put the 2 new ones. This is the reason and probably because we are going to build in U.S. European style with our -- at the end of the day, no changing everything. So I think it's going to be better, too well. We think it's going to be better to build again the plans using warehouse, using the raw material feeding with lot modification. But the kilns itself are very old and all the setting chamber and everything. So the reason is all and probably but [indiscernible] this is the idea. Instead of spending CapEx from [indiscernible], we prefer to do it well. And the China, if I get -- well, the answer is -- again, I think it's the different in the 2 and 3 is that we now are more sure but the best is there with contract in place even when we are going to start the kiln -- the construction of the kiln. This is different from the previous. In the previous one, we are still waiting for the evolution of the market to decide that we build the second kiln in Jiangsu or in Henan or whatever. But in the case of Guangdong if the production of those big guys together with another 6 or 7 in the area, we realized during '23 that is that probably can start the second kiln very soon. But we need to check that is coming back on the production, generally speaking, like we are talking in Jiangsu. I mean they are going to run only by nights only in the weekends for a while in '23, we have to wait a little, right? So this is what the kind of things we have to manage. If China come back to a normal in production, I think that we can speed up in Guangdong, because we have the security of the -- that's more than in the previous plants.

Okay. Just going back to the first question. So the other 3 plants are much newer than [indiscernible].

Yes, absolutely. Yes.

Just additional follow-up on the U.S. In terms of the zinc refining asset, I understand you got a pretty good deal on it in the end. But how does that kind of fit in with kind of the midterm strategy because it's really not a core part of your business. So I'm just wondering how do you think about that because there's probably people in the market that would -- we have to have such an asset. So I'm just wondering how you're thinking about that?

Very good question. It's one of the things that has given me all problems to sleep, right? But well, it's really a different animal. It's a different asset. And if you ask us whoever of the 4 we are here no mistake, we say that we are not going to invest in the refining assets for the zinc in the other areas. The reason is that the U.S. is a very strategic area for the same market. The smelting capacity in the U.S. is very, very low in completion with consumption of thing in this market. The current North America, including Mexico or Canada and U.S. smelting is covering just 80% of the demand of thing. So they are always based on imports and base of a problem that was the premium pay in U.S. or whatever that. It's true that for us, that means nothing because we are wanting to allocate our works produce. But if we produce maximally in U.S., like 150,000 tons of WOX [indiscernible]. And we have to allocate that outside U.S., at the end of the day, it's possible, but probably is not so profitable even. So the fact is that the asset was there, was coming for a big problem in the construction. And the fact it was that last year when we signed the ACR, we told them guys, we are interested in the assets, providing the asset worse. If not -- we have nothing to do there. So that's why we went into that agreement of options to get the things or whatever. Now the situation is the asset is running. We're less 80% to 90% of capacity. But there is a particular problem, which is the inflation. So fully cash if it's 3x than it was 1 year ago, maintenance or energy or whatever. So at the end, the fact -- or the opportunity for us is to advance 1 year the investment was because private equity guys or head funds, they decided to say, "Okay, it's time." but we don't see that in '23 is going to come because this is what happens at the end, we took the opportunity to negotiate to buy the assets. It's true that 2023, probably still the last year for ramping up. So we don't hope that it's going to contribute with a high EBITDA level, but it's going to probably in the range of EUR 10 million or something like that is what we have in mind. And then we'll be back to the idea to 15 million to 25 million, depending on the conditions of the [indiscernible] or whatever. So it's an asset that is not going to give us a bit of profitability, and you are going to start to modelize, probably the margin is like the aluminum, it's not going to be big. But in a quality point of view for us is very important to allocate all the works we have produced. More than that, the green thing is going to allow us to negotiate better with the steelmakers there because we have a strong point that we not have anywhere else. So it's a more need for -- it's like washing plants at the end of the day. We wash because it's more efficient. And for us, it's easy to sell, sending all over the world and getting better margins. Here is a little bit the same, but still washing is going to be directly doing the same metal. Risk. Well, we have a team that with this experience of this business. And then once the plant is running, we probably can spend not many time explaining what is going on there because it's like we are explaining what is going on in the washing plants. We don't -- normally, we don't spend a lot because it's something that is like we sell same units. So for us, it's extremely important asset in this particular market like the U.S. But we are not interested to invest $300 million, $400 million, $500 million in other part of the world to do like that. This is the answer. I mean, so here is a specific with a very specific price, a very specific opportunity. So that for us has been very, very opportunistic acquisition, and we are very happy really.

We came on to have one question from the virtual -- as the macro economy slows, are you seeing decreased volumes to your sites, particularly in Europe but also around the world.

Well, this is a question for the presentation of results. And so we have seen -- we can -- we will like -- we say there is not expectation, especially in Europe because the current situation of the steelmakers. But the reality is that, yes, there is a steel production reduction currently, but doing like this, no closer -- permanent closure, I know one in Spain there is a [indiscernible], the rest are like that, working on weekends, working on night, trying to get better prices of energy. Now even with the prices they have now, they are running. So the deliveries are a little bit or a few less, but we are not suffering a strong reduction in the current deliveries in Europe. This, together with the normal stocks that we are managing at the plants, we are not having problems mainly well, probably we are having lower level of stocks, but we are running without no progress in Europe. Asia, U.S. is different animals. Once again, here, we are running the plants at the 60%, 70% of the capacity in U.S. and things like that. So at the end, the market is affecting the same way, but we are doing in that level with all the progress. And in the case of Korea, Turkey also, I would say, is we can feel that sometimes they are producing much or less. All in all, deliveries are not far from where we expect it to be in '22. So this is the reality. On the zinc side, when we sell, it's very funny because the smelters are closing capacity, but normally are big groups and they say, well, instead of sending the works to the plant, send the works to the port because they're going to take it and put in, I don't know, imagine in Australia, one in from Europe to Australia to U.S. So they don't want to take out the material. So we are not suffering the containment of the capacity of the same site as well. Holon is going to happen, Holon is going to be there. It's going to be affecting us in the future, we see. Nowadays, the main problem we have as Javier is explaining retains the energy costs and uncertainties that is coming. But on deliveries, at least for the next 4, 5 months, we don't see a big change even the current situation of the economy.

There's another one here. How is the European energy crisis impacting your business? Have you changed your hedging strategy? I guess?

Trying to rent energy. And we have recruited, as you know, 2 new board members and both of them are specialized in the energy side. And the first thing we are learning about the energy is that nobody knows anything about energy. And one of the ideas is when the people say, how are the energy price? If I ask now which -- how do you think the energy prices are very high or not? Well, let's do -- this morning in the presence, we did an analysis, which are the energy prices -- the electric prices today and how compared with the energy -- with the electric prices we have had in Europe. And it's amazing because today, the energy price -- the electric prices are more or less around pretty close EUR 100 per megawatts or whatever. The average price in year-to-date has been more than double of that. And the peak price in September has been EUR 370,so near 4x. So are the price electricity price today very high or it depends when you compare with instruction before the crisis are very high. If you compare with the average price in the year-to-date are very low. If you compare with the big price in September are simply low. And then the question is how will be the prices during 2023. Nobody knows, but all the things we know about that is that, the market doesn't expect big price increase until, let's say, summer. Today, all the warehouses are full -- completely full, will depend on how harvest the winter. But apparently, in any case, we are not going to see big energy price increase until solid wing. The warehouse will start to be at a low level and then the market will start to fight again gas effect for the new. So we don't -- we are not very pessimistic with the energy price for 2023. No matter that we are now, as you can imagine, preparing our budget for next year. And we are making assumptions to have and a slight increase of the average price we have seen for the whole 2022. This day what we can say today.

Yes, and it's a headwind that we are suffering. That's why we're in the low part of the range of the results, obviously. But as Javier said, we don't -- you can consider whatever for '23, but I think that is a good consideration to consider that is the same '23 than '22, what will happen, we see that is an idea.

Sorry, I have a follow-up question on the energy side. So do you include the price gap expected in Germany in your assumptions when you say that you expect a slight increase in your...

You mean for the growth...

Yes, Germany will put in place price...

Yes, I know. But for the group, we are not considering the current situation, right? I mean we are considering, as I say, more or less in all the variables are kind of average for the last 5 years because you think in the cap for energy, in Germany, it's going to help. In Sweden, the government probably is going to subsidize part. Every time is going to acting for the short term. But once again, what is going to happen in '24 or '25 when the capacity is going to run, we don't know. So at the end, well, perhaps the payback instead of being 5%, it's going to be 5.5% in 1 year is going to be in this level and the cap is going to help. But if you enter in this world, you can get crazy...

But all the expectations are that after 2024, the energy prices in Europe will be totally different than the one we are living today. I'm sure that we will see again a low energy price in Europe in 3 years or something like that. The problem is to go through this to the next 2 years.

Just one follow-up question on your net working capital. I think both you referenced an average of EUR 16 million as the working capital build up on the last 5 years, I think it was pretty low in the first 3 years. And then in the last 2, it was a bit more 30%-40%. Can you just remind us whether anything has changed in the net working capital intensity over the certain regions like the U.S. or China or more better capital intense rather Spanish customers become a bit tougher on payment terms?

No, we don't see much has changed on working capital usage to fund growth. And the analysis I provided there was look the last 5 years when I look at that. We funded an IPO, we funded a large acquisition, et cetera, et cetera. And so those were clearly some onetime costs, those onetime costs, we always reported in our annual report. If you sum them up, they're around EUR 30 million. And those end up in the EBITDA to cash flow walk and the working capital in other bucket. But it's not operational usage for working capital fund growth, it's really adjusting for these one-timers. And then you come out at that roughly EUR 16 million. So we continue -- there's nothing structurally going on. We think that we will continue to have a minor usage to fund growth, which is completely normal. And this is also part and considered in self-funding our growth plan.

In the ESG section you made a few points on potential, let's say, investment opportunities and innovation opportunities on ESG. In the sustainability report, you also talked a lot about using process heat to generate electricity of other points, but I think that's not part of the growth opportunities you've outlined. Do you not see shorter potential there? Or is that part of the normal maintenance CapEx budget to think about use of process heat -- or is it just too small to...

Well, this is an R&D project that we are analyzing at the moment. And I mean, we -- the CO2 reduction plan that we have in place will not acquire any CapEx. So with the maintenance cap with the recurrent maintenance CapEx, we can achieve those targets. And yes, this is probably like many others that we have in the aluminum space, for example, to recover hydrogen from the gases to use internally, but these are part of the R&D initiatives that will be part of the CO2 reduction point of view.

Anyway, a very interesting project that we expect a lot of this project. We are very motivated with this project.

So one question regarding salt slags. So you presented a project in Europe. But I remember in previous calls, there was also an opportunity to build salt slag plants in China. I would like to know if -- because with all the projects you presented, maybe there is a lot on the table. But I don't know if it could be -- if you can comment on the Chinese salt slags opportunity.

In China, we are sure that we will see opportunities in China, but what has happened is that during the COVID all this -- project has been totally stopped. It has been very difficult to build the plants we were in the middle of the construction but has been totally impossible without the travel to China to keep these contracts, et cetera, cetera. Let's see how the situation evolves in China regarding COVID, restriction, quarantine, et cetera. And we are sure that sooner than later, we will start to work again in this opportunity there.

Yes. We are not including this in the growth plan because we want to do a growth plan tangible. I mean at the end of the day, we think that we are presented something is there. But that not means that is close. If we see the opportunity in this period that China finally deserve a plan there, we will manage. I mean, for sure, China is a target and not only the same business but as well in the aluminum. But it's not in the part of the growth because we don't see now clearly where there very good compression of the plant there.

Very clear. And maybe a last question regarding the treatment charges, which I know you put the visibility right now, it's almost impossible to know. But I mean, if you can provide us any color or [indiscernible]?

Every time you have to say, right? The only thing I can tell you, because it's public, the spot prices in [indiscernible], you see in the range of 260. If this is going to happen in 2 months, I cannot say nothing -- too soon. The LME Week has happened 1 week or a couple of weeks ago. Well, there was no settlement of nothing. Normally in this part, they are -- we are settling quantities. By the way, we are settling quantities in the same way that we have done in 2020, so 2022. So one of the things I can say is that we don't see -- again, the market is now seeing no matter the recession to come or whatever. I think it's no one thinking on a very drop of the production of the transaction and with prices no one wants to talk because it's too early. One is like that. One say that the smelter curtailing production could affect this, the other say that mining is not running as expected.

Another question online about the steel scrap in Europe? How certain are you and there will be enough still scrap to feed all the new EAF in Europe. Can you talk about the impact of hydrogen and DRI on EAF steel making and ultimately for Befesa. Will the process need to be changed?

Yes, good question as well. Yes, it's true that our capacity, which is coming -- switching on to the electric car furnace. In theory, they will run with a scrap, but this is not internally like that. I mean it's like -- it's going to be a combination of DRI as scrap. Probably the scrap availability is not going to be very big affecting because now even the blast furnace addition part of this class for refining, for doing the alloys, so probably this scrap is going to be there, which is true is that the new capacity or the new days coming are going to come with less in containing material because the mixture of the DRI and so. But in the average, we don't hope that it's going to be change in the Europe. So well, it looks a lot, but all the projects are going to use -- are not going to use scrap really. So we don't see that. It's something like U.S. U.S. is a combination of scrap and DRI, it's more -- if you want to shift to the blast furnace, you will go to the [indiscernible] of the steel with automotive sectors and so. So you need more things that properly scrap, which is using normally for the construction. So those capacity to substitute the blast furnace for sure, I'm not going to use so much scrap right, like to affect to the European scrap market. We don't see it like that. I think that the European scrap market can absorb the new capacity of steel production in that route.

The hydrogen at the end is affecting to them in the way they are going to produce that directive action iron more than us. At the end of the day, we are going to use the dust that they are going to produce.

There's another question on China. How is the zinc content in the last [indiscernible]?

Well, a good question. And again, now answering with the reality that we can feel is like it's a little bit better than we were expected. So probably we can say the average in the Jiangsu plan is coming in the range of 23% or something like that. And this is an average. So low in zinc content, but as well, even using scrap steelmaker with above 30%. So it's a good average of 22%, 23% that we are realizing now. So this is a good positive news as well.

There's another question about India. Do you see any regulatory development in India.

Well, India is the next on the portfolio always. We are monitoring somehow the India developing. And there are 2 things there. Not a big change in the regulatory and less in the enforcement of the law there. Unfortunately, these countries not -- despite the fact that looks more developed than China similar, I think here in the residues area is more far from the point that you have to think that you can get there and good contracts and they are not doing very other strange things and so. So the enforcement of the law is not still there. Obviously, it could be the future. Well, we'll see. We have to monetize and to see what is the next stable in the regional area.

We need to leave opportunities for Guangdong for 5 years. And aluminum in China, India could be an opportunity.

Yes. The true is that there are many of you or many people in the market asking for why BFSI is not searching for other kind of metals or things like that or business. But I think that there is steel opportunities in the future, as Javier said, for getting some fun here out of the 5 years, the next 5 years.

I had the same answer on my tongue already because, look, what we presented today means we're going to be extremely busy for the next 5 years. And rest assured, we're going to be extremely busy for the 5 years thereafter. So I can honestly with now a little bit over 8 years with the company, and I was not a single boring day. In the next 5 years, there won't be a single one and after either. So I think in the -- I think the video is great. We're showing this is really regulation goes across the world gets more stringent and stringent. And all of that brings opportunities for us. So I think great 5 years so far, the next 5 years are even more exciting and thereafter, we'll be again. So I think it's -- we just getting into second, third, fourth gears, so to say. So we're ready.

There's a final question. It says, how are you affected by labor shortages and how does it differ between your markets?

Well, it's something like we have to make the difference again among the markets, right? So in Europe, we are not facing those problems, no matter if there is some things in, I don't -- restaurants or things like that, there are a lot of problems with having people in our case, I think it's not that -- and the normal ones, nothing spectacular. In the case of China, for sure, on Asia, we are not facing those problems, there are no problems. And the U.S., which is a real some news coming from the problems of the labor issues. I don't know if it is in the particular cases or particular places where we are located, we are not facing the problems there anyway, to get people working. But yes, this is something that is in the papers on the news all the day, but we are not facing this problem. Again, it is going to affect us a mode will see that we are managing very well there.

Any final question here on the room. Okay. So I think we can finish now. Thank you all for your questions. We will now finish the Capital Market Day. I think for those joining virtually, if there's any question that hasn't been answered, I will make sure that we get back to you with an answer. We will post this presentation in the website later today, and the whole thing has been recorded. So you -- I think tomorrow or the day after tomorrow, you will have the access to the recording. And thank you all for joining in-person and virtually. Thank you for coming. After final remarks, we have a launch ready here in the next room. And one final one today is the birthday of our Executive Chairman. So Javier happy birthday.