Companhia Brasileira de Alumínio (CBAV3) Q3 FY2025 Earnings Call Transcript & Summary

Hello, everyone. For those of you who don't know me, I'm Amabile Silva, the Investor Relations Manager at CBA. Thank you all for your participation in our earnings call. This addition is even more special because besides presenting the main results in the quarter, we're going to revisit some important points in our strategy. And before we begin, I will share the disclaimer of this presentation, which is available on the Investor Relations website at CBA, where we'll also have the recording available. I want to reinforce that some of the information in this presentation, including statements and expectations about future events and results, which depend materially on general economic, political and business conditions in Brazil and in the global markets, as well as other factors. This event is being recorded and all participants are present as listeners only. Then we'll have the Q&A session, wherein participants will raise their hands, to submit questions by audio or send their questions in writing by the Q&A. And before beginning the presentation, I'm going to quickly cover the agenda. So I'll start off with some highlights in the quarter. Then Luciano will come to talk about the CBA strategy and competitive advantages, and provide an overview in the aluminum market. Then I'll come back and talk about the company's financial management and Luciano will come and do the final messages. I want to talk about the highlights in the quarter now. We successfully recovered the production of liquid aluminum in this quarter, which along with the maintenance of the refinery for alumina also improved the KPI of production and the reduction of the alumina costs and the liquid aluminum production. Now we also had the conclusion of the acquisition of wind energy or wind power self-production assets for 2025. This anticipation doesn't generate any additional costs for CBA and the volume of 60 megawatts on average will gradually come into our portfolio. This initiative strengthens our competitiveness, and also expands the diversification of CBA's energy matrix. Another point that's also very important were the movements to improve our debt profile. We performed the second issuance of debentures and anticipated payments reducing the average cost and extending the term of the debt. This action reinforces our financial discipline and contributes also to the continuous improvement in our debt profile. Then finally, we also had important advances in ESG. CBA earned 74 out of 100 points on the S&P Global Corporate Sustainable Assessment, with an increase of 32 points in regard to the average in the industry and 5% higher than the previous year. And besides this for the third consecutive year, we also became part of the IDIVERSA B3 portfolio, recognizing companies that are really committed to diversity, equity and inclusion. These results reflect our focus on growth, competitiveness and also generating a positive impact on transformation, which are pillars that underpin CBA's strategy. Now getting into the details of our results. The volume of sales for aluminum in this quarter had a significant increase of 2% compared to the third quarter of '24, and 10% compared to the second quarter of '25, mainly driven by the significant increase in sales of ingots and primaries. In regards to the liquid aluminum production with the resumption of all the furnaces and the refinery of alumina, we ended the quarter with stabilized production adding up to 93 tonnes -- 90,000 tonnes, which is stable, and an increase of 9% compared to the second quarter of '25. Now the consolidated net revenue reached BRL 2.3 billion, representing an increase of 5% in regards to the third quarter of '24 and 12% compared to the previous quarter. In the aluminum business, our revenue was BRL 2.1 billion, and that reflected the improvement in our sales and better prices. And in the Energy segment, the increase of this was levered by higher volume of exceeding energy available for sale, and also higher energy prices for commercialization of EBITDA. The adjusted EBITDA, we ended with BRL 234 million, a reduction of 43% compared to the same period of the previous quarter, but an increase of 24% compared to year-over-year. And in the second quarter, we have an important highlight of the aluminum production, and energy also had an improvement, reducing the negative EBITDA from BRL 18 million to an EBITDA still negative BRL 6 million due to better prices in energy commercialization. And on the other hand, the other segment went from BRL 7 billion to BRL 22 million negative in this quarter. This is a nonrecurring effect. Now I'm going to talk about costs. The average cost of production of aluminum -- liquid aluminum in the third quarter of '25 was BRL 12,121 per tonne, [ regaining ] stability in regards to the second quarter of '25. The reduction of the cost of alumina was favored mainly by higher production, which reduced the need for purchases in the market, which are normally done at higher prices as well as gains in operational efficiency. And the fixed and variable costs also had a drop due to a higher dilution leading to the increase in production. But then on the other hand, the cost of electricity had a peak influenced by the increase in production, which led to higher energy consumption of the most expensive contracts, given the seasonality of the period and lower of our own generation. Now the COGS reached BRL 2 million in the quarter. And in the comparison with the second quarter, the COGS grew 3%, while the cost per tonne sold had a reduction in regards to the previous quarter. Now I want to invite Luciano to begin a bit of a strategic update, and I'll come back to talk about CBA's financial management.

Thank you, Amabile. Good morning, everyone. Thank you once again for participating in another earnings call here today and also this strategic update. So to start off, we want to just remind you all about our strategy. So historically, in the last years from 2018 to 2024, we've evolved a lot in the execution of the strategy. I could highlight, for example, the work done to strengthen our culture, advances in the American market. And naturally, at this moment, this was impacted by the tariffs, but there was an important advance in the American market historically. And we also integrated sustainability into our strategy. We had the Itapissuma acquisition, the Alux acquisition as well as the [ Novo Mercado ] and [indiscernible]. With that, we were able to consolidate CBA as an issue reference in the market when it comes to low-carbon aluminum production around the world. And then we invested a lot in digitalization. Even though there are smaller gains in the operations, they made a big difference for us over time. And then, of course, always having an important focus on our people as well. So then up ahead, what we can see is what we expect for the future, how we want to develop the strategy in the future. So up until the end of this decade to the end of 2030, our objective is to continue to evolve in capturing synergies and maximizing value for our assets, strengthening our competitive advantage and consolidating our stance in the cost curve, not only through management measures and actions, which is already part of our routine, but also through expansion and modernization projects that we're going to show you up ahead in the material. So many of these projects we have improved our costs and our competitive advantage, and that's something we're going to search for in the next few years. Another important point is we'll expand partnerships and also evolve in capturing different share. So these are important points for us in the next few years, and accelerate innovation and transformation digitally. We've already done a lot, but there's a lot more to be done from now on. And I think this can bring important gains up ahead. Finally, I think what's really important is to say that including the strategy, we want to consolidate our position in ESG practices and the transition to low-carbon aluminum. And so, a big focus on these systems, and also caring for our people. We want to consider this to be a real safe and healthy environment for everyone. And as you can see, there's not big changes, but there is a really well set path. We've already done a lot. We'll do a lot more up ahead, and we need to keep up with this trajectory where we'll be able to really have a potential to improve our assets and improve competitiveness, which is a big point, not only considering management initiatives, but also the projects we have up ahead. So CBA with these assets and all of the projects we're going to be developing, we'll see big potential to differentiate ourselves even more and transform a lot of the challenges we see today, and all the geopolitical movements, the tariffs and everything that's going on, and really bring in stability and volatility in the market. We want to transform this on to opportunities and how we can evolve and improve our competitive advantage in the asset and in the scenario. Well, on the next slide, I'll bring in some updates on the strategic objectives within each portfolio and each business. So in primary, translating a bit of the strategy to each business, for example, we are always going to have to search for excellence and operational stability in a sustainable manner. This is part of life and maybe this is a business that's maybe a little more exposed to volatility in commodity prices. So -- and also stability. And here, it's about improving costs and also having more operational stability. And alongside this will consolidate our position in the first quartile of the cost curve and emissions curve. And the main focus here is to grow our primary aluminum with higher added value products. So today, we already have our portfolio that's very concentrated in products with higher added value, and the [indiscernible] of that will continue to grow and evolve with a portfolio that's mainly focused on these products, and then capture more margins and strengthen our differentiation as well in the market. Besides this, we're going to also continue to increase our resilience in our portfolio when it comes to value creation with mitigation of the different risks we have in our operation. And we also talked about the market issues that we have today in the market and the challenges we have. But it's not only this. It's also about price, currency and everything else that in some way impacts us, and search for initiatives to reduce volatility in our results. So I'm going to talk about recycling as well, but the growth in recycling really helps us to minimize or reduce this volatility in our results. Then the energy business, the objective is to ensure competitiveness in the generation portfolio and also guarantee competitiveness in our primary business and aluminum business, prioritizing high production. We just had 2 deals done with energy generation, which are fundamental for our competitiveness in the future, and also guaranteeing safe supply of energy from diversified sources. We want to have a mix of optimized between hydropower plants and wind power plants. A lot of people already know about this, but there's significant synergy [indiscernible], so hydropower plants when it rains here, in Brazil, normally in the first quarter of the year, December, March and April and the wind power plants are more in the second semester, which is like the dry period of the hydropower plant. So having a portfolio that's balanced among both, generates important synergies here, especially when it comes to [ SHF ], and it also provides the issue with the stability of the synergy over the years. And just as in the primaries, here in energy, we're also going to search for excessive costs and maximizing value. And so this is also part of the business. And from time to time, and actually this year is a great example, you see this in our results, we're also searching for ways to capture these opportunities to commercialize the exceeding amounts we have. So this is a good year where our power costs are higher rates, less than average in the country, and we've been able to capture the opportunities with better power prices in the market with commercialization of our exceeding power. And so that's also why I already mentioned one of the highlights in the quarter is that we've been able to also anticipate one of the projects we have in the wind power plants from '26 to '25 – from '27 to '25, sorry. So we have more wind power in our portfolio. And then finally, in process transform, our focus is on [ self-production ] portfolio and increased productivity. This is something we've been doing ever since 2015. It's really long term, and we search for the production of products that can really bring in more competitive advantage and more margins, working a lot on productivity and competitiveness of these assets. And we want to position ourselves strategically in the segments that are considered high income or high profitability. We want to search for what can really bring in better profitability in the overall portfolio. And in recycling, we've talked about this a lot. But just to remind you, we want to grow in recycling -- but we also want to grow in recycling, and prepare to eventually capture additional value when the market evolves with the green premium concept. So we can differentiate not only low carbon aluminum, but also aluminum with high recyclable carbon. Both things work hand in hand. But these are 2 points that we consider to be very important to emphasize. Also another example of we're experiencing now is, as you mentioned, the green premium or this differentiation in the market is still not a reality or if it is a reality, maybe it's still marginal where they can charge something that's maybe marginal, but we expect in the future that we will have a bit more of a differentiation, right? So, in Europe, we'll start off from January onwards, and other countries are organizing one of the days to have the carbon market. And with this in some way, we can also start having some kind of differentiation in the market. What I was discussing about the current reality that I think is important to mention is that with the tariffs in the U.S. not only CBA, but basically the entire aluminum market has a real hard time to sell products there at this moment. But of course, they continue to buy in smaller volumes. The U.S. is substituting a lot of their volumes for scrap, they're buying a lot of scrap. And we also -- the market estimates that they would be using a lot of the stocks in the supply chain. But at this moment, you have a smaller volume being bought, and this generates competition in the markets we operate in, especially Latin America and Europe, where we feel higher levels of competition. But why am I bringing all of this up? Well, because we have a low carbon product, and a product that is high quality and renowned quality considering CBA's history, right, such as a moment with the higher competition in the market, CBA has been able to sell, and I'd say with good premiums. Of course, it's natural an issue that you have some premium volatility or some marginal drop in premiums of the products, but nothing that would concern us. But volumes are there, and you can see this in our results, right? So a lot of our competitors that have high carbon metal or low quality or both, what we feel in the market is that they're having a real [ shine ], right? And so that's where they have to give up on more of their premium than we do. So that's where we can really feel that our product has really been able to -- we've been able to sell it not only in Brazil, but also in the foreign market, but also a lot of our competitors are having challenges. So with this, you can already see a possible green premium in the future as well. So well, we're already feeling this. So then we also sit down and talk about the stuff ahead. But what's interesting is that the volume is going to come in, in January, but it's still not 100% defined, right? So at this moment, the European market is buying a lot of metal to stock up even before the implementation to them. And so with this, you can have this metal in-house and not generate any impact on production. So I'd say that the biggest concern is may be smaller when it comes to how much you're going to pay for this, and it's a lot more about the uncertainty, right? And so, of course, part of the increase of the exports of the ingots that you've already seen results for in the third quarter, but it still remains till the end of this fourth quarter, and that's where you can see the additional sales of the ingots, especially in the European market. So recycling is all about this, right? How we can stand out in the market with recycling and use, as I mentioned, to be a tool to mitigate our exposure in our portfolio overall. So the risk return ratio is better and you also have more stability for the future, right? So I think that's the biggest advantage, right? Then heading to the next slide, I'm going to talk about our competitive advantages. So we brought in what we consider will be the 6 main competitive advantages, and then after we'll provide more details on each one. And so, we think that these are the advantages that not only guarantee our competitiveness, but also what will take us to the future when we consider even more differentiation. So the first point is the integration vertically in the entire aluminum chain that offers us, of course, the possibility to increase competitiveness, and that's where we manage our assets better over our supply chain, but also more control on costs and emissions, and of course, being able to capture synergies that exist in different stages of the chain. So I think we're a lot more optimized in our chain than other competitors. The second point is that this portfolio with the energy generation guarantees the competitive supply of energy for us in a safe way, but also guarantees possibilities or opportunities to optimize our cost through commercializing [ the schema ]. So that's what we would like to keep from now on, and it's really something important. Then in third place, our positioning with the first quartile of the cost curve. And that varies, of course, from time to time. But at this moment, you have the aluminum price in the market that's really low. Whoever buys alumina has lower cost at the moment. But last year, for example, the price of aluminum was double what it is today. So in practical terms if you are buying alumina, there's a lot of volatility in results and positioning in cost curves. But in our case, we have more stability in costs and more stability also in our positioning. But at moments where you have lower inputs and little bit of competitiveness, but nothing that concerns us too much. We always have our more long-term view and this positioning in the first quarter, and in the end of the first and second quarters are really where we believe should be positioned. And that's the fruit of this integration and also better cost control as well. Then in fourth place, our production of 100% low-carbon aluminum with the aluminum and steel in line with the best practices for sustainability environment disclosing that really make us a market reference. And I just mentioned how this reflects in our results, especially in moments where you have more of a competitive market currently. I didn't mention in the previous slide, but I think it's important to mention that we're living this at this moment. And what we expect is that in the future, this scenario should be more consistent. So the differentiation we're feeling today and the preference for low-carbon aluminum, that's really making us sell more even in a competitive market like what we see today. We hope this preference or this volume or even this differentiation in prices can happen in a more consistent manner and recurring in the future. So what we expect is today temporary could be permanent in the future. Then in fifth place, our portfolio of aluminum products. And I think this is an important differential for CBA, high flexibility in the production mix, so that we can service different markets and that we can also minimize risks in the business with exposure to other market sectors. And finally, a very robust pipeline for projects in the future for expansion of organizations that are modular, and we have flexibility to work on a deployment schedule as we rather -- as we prefer, and that guarantees a sustainable growth in the future, and also the adjustments of this growth and investments that we will be taking in the future with cash generation. And so one thing is going to be really connected to the other. And well, that's great. But moving on to the next slide, I'll provide some details on each of the advantages. So first, about the integration in supply chain and our action in the aluminum portfolio, as a whole, from the production of bauxite all the way to the transformation of the processed and recycled goods as well. We start off with the mining of the process bauxite. We produce alumina hydrate, and we use -- we have better production of [indiscernible] aluminum, more for our production that feed our furnaces and our hot lines and then we produce the primary liquid aluminum. And then so we'll get into the process with the primary products, and the semifinished products as well as the transformed products. And then [ throughout ] the transmission, we have the lamination and the extrusion and that's when we close the cycle of the recycling and final sale of the finished products. So the capacity, as you can see on the slide. But mostly what sets the pace for our production of bauxite and alumina is primary aluminum. So whatever we're producing in primary aluminum will demand of bauxite and alumina, and that's where we operate both of the spaces with possible idle capacity eventually. And what also sets the production of primary products or process products is the demand in the market. Whatever the market is demanding more is what we will produce. And we're self-sufficient when it comes to energy generation as you all know. So, also the production of bauxite and alumina. So these 2 factors guarantee better stability and efficiency in our business as well. So this integration in the process, we have very few companies that have this and this generates a lot of benefits. We have more expertise in any of these phases, more competitive costs, better security and supply with these inputs over the quarter – over the chain. And so we're working to reduce our footprint -- our carbon footprint, and more control, of course, and more flexibility in our production, not only the final products, but also intermediate products ,with the raw materials we use over the supply chain process. And then we have this possibility of really choosing what to produce and how much to produce with a bigger focus on profitability of our global portfolio at CBA. Then this vertical integration also allows us to have more control, more predictability. So we have this close relationship with the customers, which is really valued and more sustainability, which reinforces our position of leadership in the sector. On the next slide, I'm going to talk about this power issue with our integrated portfolio. And what we can say is we have this portfolio that is optimized. It is maybe not completely optimized maybe, but if we put a little more wind power, it will be more optimized even. But I think it's a really competitive moment and really optimized. And for the future, of course, we will have some paid maturities for -- our concessions are going to reach the end for hydroelectric power plant, we're going to substitute for other renewables. So now we have like 21 hydroelectric plants, and about 4 wind power complexes, which are about 20% of our generation. So as I mentioned previously, this diversification is mix between wind power and others have a lot of synergies that we're capturing in the fundamental to mitigate this, and really optimize our investments in production. Then recently, we also decided to integrate with the acquisition of new assets this year. So we have acquired stake in a wind power complex 55 megawatts, that gets into operation '27, and [indiscernible] wind power complex, 60 megawatts, where we anticipated this along with [indiscernible]. And this anticipation as already mentioned, has no additional costs. Basically, it's the same conditions for the contract. So basically, this volume, we expect that in a few months, it will be in full capacity, and then we'll have the 60 megawatts, and we'll be able to get this in our portfolio. One important point at this moment in the market is that these contracts were structured without generation risk for CBA. So we have fixed volumes until the end of the contract, and that guarantees predictability of this power for 15 years. So for CBA, we won't have an impact on the variation of these volumes of generation we hired fixed volumes. And in the graph to the right, you can see the perspective also for our energetic balance in the next few years with the inflow of these new projects and the exit of what we mentioned in 2028. So from 2029 onwards, you would have started [indiscernible] the mix we have from now on. And you can see how we start having from 2029 onwards an average cost of energy that's a lot more competitive than what we have today in self-generation. But also in the exceeding power, which reinforces our competitive stance and the advantages CBA has also to have these assets in portfolio. So to summarize, our strategy is not only about guaranteeing the security and predictability of our supply, but also strengthening our sustainability in the long run, because we guarantee we will have this structure benefiting us for many, many years before we expire the contracts and the concessions we have. On the next slide, I'm going to talk about our competitive positioning in the cost curve. So what positions us at the end of the day in the first and second quartile is the integration with power and aluminum, right? So these are the 2 factors, right? And so of course, besides this, the maximization of value and the synergies that we have throughout our chain, which is also what allows us to have the cash confidence historically below the global average. On the chart on the left, you can see the evolution of our cash cost in relation to the global market with historical average, we cost 80% more than the global average historically. And on the graph on the right, you can also see how it's good that we're consistently positioned. And in the first quartile of the global cost curve, when it comes to energy and alumina, there's more volatility, of course, regardless of how cheap or expensive it is. We don't buy alumina, but our competitors, a lot of them do. And so we become more or less competitive in alumina depending on what goes on in the alumina market. But these are the 2 but they are the most relevant. And this is where we've been guaranteeing our competitiveness. And another -- and so we've also just signed migration to about 100% of our volume in the natural gas market. And so, we had already -- we had already been about 50% of our volume fee, and now we have about 100% from now on. So it's a strategic movement. We're pioneering in the sector and other companies also, but very few made this decision actually. And it was really important to reinforce our competitiveness in the future and an economy that's estimated to be about BRL 30 million per year, just considering the reduction of the natural gas and migration to the free market. And then on the next slide, I'm going to talk about our aluminum carbon emission, that's considered low carbon. So we produced 100% of our aluminum low carbon emissions certified by the [ NCO ]. And so, we use what would bring this competitive advantage is the fact that we use electric power in a process that is going to be traced from end-to-end from [indiscernible] to the projects. And these emissions are almost 4x more than the average. And so our carbon emissions are 2.86 CO2, and the main differential that position us in the first quartile of emissions, not only in the cost curve, but also in the emissions curve. So just to remind you, to be considered low carbon has to be below 4. And so here, we are at 2.87, but we still have reducing this reduction about 40% -- all the way to 40%, let's say. And then what you can see is up 40%, right. So I was at the LME week last month in October, and one of the topics was the green premium issue, and I discussed how it's at this moment. And so, what's interesting is that LME announced they're going to start recognizing this with a differentiated price curve and there's traceability, right? So there's also a possibility of proving this, right? So you start with aluminum, copper, nickel and zinc. So it's an important moment, so recent. However, there's a huge potential for value creation in the next few years and that reinforces our competitive advantage here. We have to be keeping our eyes open in the future with more maturity in the market and changes in the way we do business. The fact that we have the low carbon aluminum production can be transformed into a major competitive advantage in the future. This is what we believe in. Now we're going to work to make this all happen. On the next slide, we're going to talk about our portfolio. We talked about this in the previous slide a lot. But what we can see here is the strength of our portfolio that's complete, right? And so as I mentioned, we service many different sectors in the economy, productive, transportation, consumer goods, transmission, energy, et cetera, and also the packaging sector. And we offer like a full scope of products, right, ingots, billets, sheets and extruded sheets as well. So at this moment, we're seeing this happen in practical terms. So this competitive advantage we have is really being exercised at this point in terms of this full portfolio allows us to adjust production according to market demand. So the market is demanding more one product to the other. We have more flexibility, and we can adjust this quickly, and that guarantees our competitiveness and our growth, we will talk about it. With this we also have great speed in the operation to modulate production and sales and also transform the market, changes into business opportunities, keeping a strategic presence in all chains. So as I mentioned in the last quarter, this migration to ingots -- so a big amount of ingots and billets, because we have lot of European buyers that are anticipating their materials up until December, so that they can work with their stock. And so –- And we were able to capture part of this, and part of this has already impacted the third quarter. And so basically in September, we'll see this based on the sales that will happen from now on, right? So this is what we're experiencing at this moment, and showing you there's a lot of companies that only make ingots, and some only billets. So with this, we can work on the opportunities and the challenges in the world. So our plan is strategically positioned in the state of Sao Paulo, very close to the consumer market. And it also increases our speed and delivery, and also the imports as well and some of these bigger batches, and working capital, and that gives us more flexibility for customers as well that differentiates us in regards to those products. On the next slide, we're going to talk about our pipeline of future projects. And so we have -- these are the same projects, and we're adapting this with -- to our cash generation. And so we have a CapEx that has about BRL 500 million in sustainable -- sustaining and modernization BRL 300 million. Of course, you could adapt a little bit more or a little bit less depending on the year. But this is what we consider to be sustainable over time and what should be recurring. When we have bigger cash generation, it's sometimes possible or probable that will accelerate these projects, right? So that will have a bigger investment as well. And if we see normality in the market, then we'll keep up with this investment and adapt these projects according to our cash generation. But depending on this, as I mentioned initially, we want to reinforce the efficiency, and product competitiveness of the CBA and also work with sustainability. And there's a lot of other projects and really guaranteeing that is sustainable. So we're going to grow in primary and also progressed in sheet as well. And in the short term, one can always have in each phase of the achievement. So when it comes to strategy, that's pretty much it. There's not going to be big changes. And we also really believe in the strategy. Our idea is to continue to have the same pace we've had for a while, it's not about the market. We have some new important things we've captured also some of the LME week. So we want to have an important debate as well during the Q&A session, right? So when we consider the evolution of the prices we've had in the last 2 years, you can see clearly that the impact in this market -- in this macroeconomic market and also the geopolitical issues, wars, and the tariffs, et cetera. And what we've been experiencing day-to-day this, of course, brings volatility. You can see this in the graph. But on the other hand, it's really important to mention that you can also see that the aluminum prices have demonstrated a lot of resilience even with these uncertainties. You can see all of this basically considering the levels of the aluminum price. So it's been a while since we've had an offering that's pretty much controlled of aluminum with a cap of capacity that China has considered about 45 million tonnes. But you can see that these prices despite volatile, if you compare with the historical price of aluminum, they are levels that are a lot higher. So if you consider the market dynamic at the moment, even with a lot of volatility, we've been parking the prices of aluminum at levels that are higher than historical levels. And this is really important, because it reflects a bit of the market dynamics with an offering that I consider is not only controlled, but there's a lot of capacity growth as well, and I'm going to talk about this up ahead. But there's not much more growth of capacity in the next few years if we consider the growth in demand that we're going to have. So now about these points in '22, we have the maximum in our prices. We reached about almost $4,000 per tonne at the moment. But soon after it dropped in '22 to the minimum rate, which is very close to $2,000, migrated from $2,000 to $4,000 on average. And this is the volatility in the year '22, mainly due to the war at the time in Russia and Ukraine. And the growth in the price was due to this uncertainty at the beginning of the war. But then after with China getting back to new capacity, and a drop in consumption, prices got back to lower levels, and reached about $2,080 per tonne. But when we look at '23-'24, the price stabilized in volatility, but pretty much stabilized between $2,100, $2,500, and the stability at this level is a lot greater than the historical price of aluminum. And now we see an important gradual -- and so that's where we consider the rate in March. Now we have more positive perspective. And so now the price is above, which is a pretty high price if you consider this graph that we can see here, but then it's a reflex of this, right, of the world with the offering, and demand that is maybe not that booming, relatively drop – it's dropped – it's growing but dropping too much -- a bit, and always considering a positive perspective for the future, right? So if you consider the [indiscernible] the 2 metals that stood out with more optimistic perspectives or more favorable perspectives in the future, which are basically copper and aluminum. Of course, you have a correlation between both. We know aluminum could substitute copper for energy transition applications and vice versa. But I would say that those are the metals that are going to be demonstrating the most positive perspectives in the sector than the [ others ] were weak. On the next slide, I'm going to talk about the global aluminum offerings and perspectives for the next years. We are always talking about primary aluminum. So here, we also consider this volume of recycling. We're going to talk about this later, but about the growth of the global aluminum offering has been led by China historically. We know about this. It's nothing different than what we see -- what we know already. But because of this limitation on capacity of 45 million in China, I'd say we're almost there. We have very little additional capacity to be reaching the limit of 45 million. So what we expect is that this growth should come from other spots. It could be Chinese investments. It could be -- of course, we can see in Indonesia, but also could happen from other players. But in China, specifically, it's not -- there's not much of a perspective that they're going to have a drop in the furnace. So China is about 60% of the primary aluminum offering, and then from '26 onwards since they have the cap starts gradually dropping. But it is probable that most of this growth out of China will take place through Chinese investments in other countries. Indonesia is this first example, however, we also have Vietnam and other similar examples, and then India as well, which is an important hub for aluminum production. And there's a growth in this market. And as you can also see, this is natural in the situation we're experiencing a -- this drop of almost 3%. And so this should drop to about 1% from '25 to '24. And so there is a lot lower growth through the capacity in China. And then I'd say there's some challenges, and also the fact that a lot of the producers of aluminum around the world don't have projects for expansion at this moment. So it is natural that the supply would grow at a lower pace. And this change in the access of aluminum around the world brings in opportunities, especially for countries that have clear competitive advantages. So in Brazil, we have alumina, we have bauxite, we have renewable energy available, and at least Brazil really stands out and possible growth in the future. And so this is also an important frontier for production in the future. And so we had a sector that's really focused in China and impacted by this production. But from now, we're going to have a lot more production out of China with other dynamics, other costs, and that brings in a change in this competitive advantage from now. Great. So then I'm going to talk about the demand. And so that was already greater in the past, but 1.7, it would be having a side of a correlation of the GDP globally, and that's going to be levered mainly by the new technologies and their applications in the energy transition. This is –- this demand of growing more than the supply is probably what's going to bring a more favorable perspective to the market. So China is still the big consumer with 60% of the demand of primary aluminum. And here, what we didn't bring the information is on the side of the bottom here you can see the total demand of aluminum, but also the demand for recycled aluminum, which is about 100 million tonnes or 102 million tonnes will enable us to go up 118 million tonnes. And so, this is a growth of 16 million tonnes in 4 years. So this is the point we're talking about that brings in perspectives that are positive. And so this should also happen, but we need to have more growth in the primary aluminum to balance off the market. And so if not, we're going to eventually have maybe some impact in prices due to this imbalance we have from now on. And then what's going to make the market grow for [indiscernible]. Well, basically, solar power, wind, hydro, and electric vehicles that take about 40% more than the internal combustion. And as you can see in electric networks around the world, the production not only that we have, but also other customers that are close to the full capacity. So this market should grow. And so, this is considering the energy transition, which grew 54%. Most of this 20 million tonnes comes from these new applications. And so the traditional applications as well that grow in a period of 5 years. It's pretty low, but that is what pushes us downwards. And that continues to grow, but there are, of course, some natural challenges of greater growth. And then in China investments have also become the main factor for growth. And also part of this slowdown in civil construction when we consider the sale, the demand of what the rest of the world is like. And so we want to continue with this standard of consumption, which should be a normalized view. And then the Chinese growth should come from these other applications. And so all of this shows us that when we look at the aluminum market up ahead, we can see clearly that there's a bigger demand towards energy transition or materials that will be more used by this transition, and decarbonization as well in different supply chains. So we're going to emphasize this that this consolidates and makes the importance of aluminum as a material for low carbon strategic material. We really believe in this. There's still space to put it in bauxite and aluminum as well as strategic material, because it's fundamental for the growth. Then I'm going to talk about the balance a little bit. So the balance is really well balanced. So what we have as a growth, that's going to be providing the offering and the supply in a manner. And in the past, we had volatility that was to do with a lot of deficit, but also a lot of surpluses as you can see in 2020 was a pandemic. But in the next few years, what we expect in the past market occasionally depending on the growth of demand, we could have an imbalance, right? But this is a projection. But if you have a growth of demand on the side, we mentioned back then and a growth in supply, and they come in with the same proportion naturally you will have market imbalances. So as you can see, there's also this balance scenario, and they remain pretty much at the same level of days, it goes to about 60. This will, really in the Southeast Asia, we can see there's a lot of Chinese capital as well, which is the consulting firm we use for all of the numbers and projections we have to show you in this last slide. They already consider this. And the project here is that the market is heading towards this with prices that can keep this basically considering the reorganization of international trade, considering the matrix of production to other countries. On the next slide, we're going to talk about price perspectives. And now we're going to understand how this impacts price, right? So here, you can see that the volatility and the potential of the price over next year is pretty big. So you have about -- here we can show the mix, the maximum minimum in the market consensus. And it's all going to depend on this ratio between supply and demand, the market fundamentals, right? So these projections that are maybe higher, that elevate price of aluminum to higher than $3,000 per tonne, that reflects the scenario of if you have a demand that's growing restricted supply, then this could lead to prices that are higher as you can see here. On the other hand, in prices where you have a market more balanced or even a bigger supply you have more pressure as well with the price. But even with this minimum level of pricing, it's going to be greater than the average historically. So it's still pretty high. But what we expect here is stability in the base scenario as you can see at about -- We can see the main factors and new capacity that's going to come into Indonesia, Vietnam and India. Also, so they can have access to energy and that's another challenge of these projects. And so demand will come from these clean energies. But as also mentioned, data centers have an important demand for energy, and they also consume a lot of this – the robots and other applications. But in Indonesia, that's fundamental, right, to understand the price projections. And so if you were to choose one item to monitor, it's going to be what Indonesia is going to bring in the next few years. And that's what also makes us differentiate these scenarios, and how quick this offering of supply from Indonesia will bring into – come into the market, right? And so if the market comes in gradually, which is what we expect in this base scenario, then there's a trend of having higher prices because this supply – this offering won't be sufficient, right? And so if this inflow is quicker, stronger, you'll actually have a scenario with prices that are more pressured. So that's pretty much the dynamic. But in line with the rest of Indonesia, I'd say that most of the projects are Chinese companies investing in Indonesia. Then besides these uncertainties, the consensus, LME will continue to be resilient as we [ probably ] see in the past. Natural volatility you can have throughout time, but this is going to be sustained by the solid fundamentals of supply and demand. And it's a market that really brings in security for us to think about the future projections, right, because you have this balance between supply and demand, and also the strategic role that it has. And so, the strategic demand and additional need, which also brings in the optimism that one can consider. The market is headed into this direction with prices at these levels about 500 to 600. Of course, there could be some higher prices. But at moment, we've been talking about this and we consider the commodities as well. The loss in value of the dollar impacted the price of the commodities and the price of aluminum. So part of this impact is also with a lot of – is also related to the fact that the dollar is weaker, so you value the price of commodities. And so when you consider -- now on the next slide, we're going to show you a bit of the perspectives in this macro global context and potential impact in the aluminum market. So at the alumina, few weeks ago, we had the chance to talk to lot of people, and we had perspectives that were maybe a little deeper in this global context and potential impact for industry. And I wanted to share a bit of what we believe would be important in these market movements, right? So 3 term results shrinks that will in some way change the scenario presently and in the future conflicts and global instability, and competition, and everything in the geopolitical scenario. And so, a lot of uncertainty, and that really increases -- that pretty much increases the uncertainties we have on energy executing global logistics. Conflicts in the Middle East also impacted the flows of global logistics and that can, of course, affect the critical inputs, right? So that should be something to be monitored and prepare for possible impacts ahead. So all of the economic nationalism and disputes we see with the tariffs, et cetera, of course, seem to be something a little different than what was the last decade with growth of trade among countries. And now we have this moment in the market where everyone is looking in-house more and creating other barriers, and we created this market environment with more competition, also more protection of local production and jobs. So it's a scenario that we consider will remain as it is soon ahead of us. And so climate crisis and environmental regulations should continue that pressures governments, but also companies in accelerating decarbonization actions. And also expanding the traceability trends, right? So this is all very positive for CBA. We already have a lot of initiatives like this. We already have low-carbon aluminum traceability and circularity of our products. So in some way, if we have restrictions and regulations, CBA is really prepared to move into this market. But I think it's also important to mention 3 potential impacts that I would say also represent opportunities in the aluminum market. First, energy is a big driver here. That's why I say Brazil is a major driver, right, with this rush for power, self-sufficiency in many countries, and a lot of people investing in renewable energy. And here in Brazil, this is even more competitive. So it levers projects, promotes more generation and transmission and especially considering these renewable sources. So we should see the world heading in this direction. And then restructuring supply, right? So ever since the pandemic and so, where you accelerate more diversification in partners. And so you can see that example with the pace that generated an impact and we were a single supplier, then we had 3 or 4. And so this diversification of suppliers is also really important and we see a lot of countries searching for this. And also regionalization of the production, right, the nearshoring and friendshoring. And so this is also something that brings in major potential impacts for us in the market, but also opportunities as we can really differentiate ourselves. And also finally, the updates on green aluminum, which is the third point. So in the global context, that's a little more uncertain and disputes for more cleaner scraps or better quality scraps and also demand for lower footprint aluminum production. All of this, along with the demand and ESG strategies, naturally, you'll have more value for green aluminum and differentiation of these products. But of course, this is still an issue. But as time goes by, we can understand that this trend is going to become more concrete. So despite all of the geopolitical and regulatory challenges we have, aluminum is positioned as strategic material for the energy transition and for these more sustainable supply chain. So for us, this represents a lot of opportunities, especially for who is prepared to service these demands and requirements, which is our case here at CBA. Then -- very well, moving on, on the next slide, I'm just going to talk about some of the trends we see in the sectors that most influence our operations, right? And especially at this moment when you consider the global market restructuring. And so, on the left side, you can see the energy sector, major increase in demand due to greater energy or power security and digitalization, energy is an important factor here. You have generation and transmission projects, especially for renewable sources, accelerating investments in structures and components. And also you have a growth in consumption in data centers and artificial intelligence. Both of these factors together bring in a lot of demand for energy and also demand for aluminum. And of course, that has an interesting impact and growth perspective up until 2030. So here, you can see a possible opportunity to be captured by the company. Then in transportation, electrification has been advancing, although in different ways, in different regions in Europe subsidies support growth. And in the U.S., the demand is really supported by fiscal incentives. And in India, it's still an emerging movement but potential is relevant due to the size of the country. In packaging, transformation is guided by sustainability. So global demand for cans is growing around many countries. You have a lot of growth and still happening but there's also pressure for weight reduction and innovation to meet regulatory requirements and avoid substitution of aluminum by other materials. And finally, in construction, it's a sector that keeps up a relevant role in the aluminum market and moderate costs due to China, but the certification such as the LED and the BREEAM, they really drive like smarter solutions for construction and Europe and China also have energy efficiency policies that are really important for these new constructions. And then among all the sectors, I mentioned here, I think energy and transportation are the big engines for growth in the future. And so packaging, as you can see, this really guided by sustainability and construction is still searching for adapting, especially with China considering the important impact in volumes. But in all of these cases, aluminum has always been really well positioned as an essential material to meet all of these demands and changes that we just discussed. And then on the next slide, we talk about Brazil. And if we consider the energy sector first, Brazil is already a highlight as a reference also in renewable sources, you know about this a lot. But Brazil has been really reinforcing to this highlighted positions with a need for investments in distribution and electrical infrastructure overall. So solar is advancing, wind is advancing a lot along with the installation of data centers, it's already a reality that also increases the demand for aluminum cables and of course, for the conductors. And CBA is really well positioned in the segment with leadership and market share around sustainable solutions for institutions. And then in transportation, as you can see, the electrification is advancing and there's still room for more efficiency and weight reduction in vehicles that favors, of course, aluminum. CBA is working with major players and its also a pioneer in projects for the agri business sector with products such as battery foil for electric vehicles. It's a recent development and that could be something important in the future. And that reinforces our presence in markets that are very strategic. Then for packaging, the trend is circularity and also how you can -– how the circularity of this products, so recycling of this product and pressure also to remove aluminum. But I think that really concerns us, right? And then the construction. So we want to have more automated construction with more incentives for systems. And so we'll be able to operate more in the sector. And in the high end of civil construction, we can explore more with added value and improvements. And also is the Primora line is the main factor or opportunity we have to capture. And energy and transportation with innovation and packaging as well and also grow in the constructions and align the strategy to the market trends as we all see. So that's what we had to share at this moment. I want to call Amabile back to the stage here to talk about the work in financial management. And I'll come back just for my final remarks and be available for Q&A. Thank you very much.

Well, to wrap up the presentation, I just want to highlight the excellent work we've been done in financial management at the company level. So starting off with the current debt position. We're in a very comfortable situation with robust cash, average cost of debt, very competitive and extended average term. But our average term is 5.5 years. The average cost in dollars is 5.7% a year. And we said this 96% of our debt is dollarized along with the revenue that's also dollarized. This schedule, it does not consider concentration of maturities in the short or long term. And when it comes to leverage after the peak of 7.7x in 2023, we went back to 2.45x on the third quarter of '25 and that's a reflex of our recovery in EBITDA. And then on this slide, we're going to analyze the main actions in our gross debt, right? So in the last 3 years, we have many optimizations for our capital structure. We had more than BRL 1.3 billion in anticipated maturities and payments. We had refinanced older debt with longer terms and more attractive costs. We performed international fundraising with an Italian agency diversifying also funding. We also had a second issuance of debentures, BRL 530 billion as I mentioned at the beginning of the presentation, that was really intended to rescue about BRL 230 million in the present issuance of reinforced cash. We also had the approval from BNDES and FINEP for modernization projects and R&D. With this in our accumulated 12 months, our gross debt reduced 12% with the important assessment of the first quarter of 2025 as an important reflex. Then in the next slide, you can also see a comparison of the schedule we had with the base scenario on September '24 and how we're doing now with the -- after the exclusion of the initiatives related to the debt management plan presented in the previous slide. Then as we extend the average term of [ 466 ] to 5.5 years and reduce the average cost of [ 599 ] to 52% in the graph it's possible to see a healthier curve that's really well planned. And so that matures in the short term and reallocating in the long term between 2030 and '32. And that reflects our strategy for active debt management and really taking advantage of the market conditions. And the operations don't have financial covenants, and they have contractual conditions that are favorable in the market. Now I'm going to quickly talk about our financial policies, which are conservative and focus on capital preservation and our policy has 3 main pillars: maintenance of liquidity, maintenance of market risks and hedges and credit risk management. The first pillar we talk about reducing the liquidity risk with the following targets, keeping leverage at 2x. The average term above 4 years. Today, we're at 5.5 years, as I mentioned previously. We limited annual amortization to the first 3 years between 10% and 15% of the total debt to avoid concentration of our payments in the short and medium terms. We define a minimum necessary cash calculated with a model that simulates scenarios of cost and revenue variations. And thus, even in times of volatility, we have the capacity to honor our commitments. And besides this, we also have a revolving credit facility of $100 million with 10 international banks, which can be accessed at any time. And the second pillar the company is exposed to variations in exchange rates, interest rates, commodity prices in the energy market. In addition to constant monitoring, we use 2 strategies to mitigate risk, financial hedging, which is matching income and expenses in the same coin. As we have revenues in dollars, it also makes sense to have debt and operational contracts, such as energy purchases, also in dollars. And derivatives such as swap contracts, which exchange indexes and currency, transforming a debt that's linked to CDI into a fixed rate in dollars. And the focus of our third pillar, which is credit risk management. And at the minimum allocation of 20% in government securities, when we invest in private securities, we only use private financial institutions that are respected and we define the minimum limits in force, such as the minimum rating of the counterparties. And finally, I'm going to detail our hedge strategy. We currently have 2 main types of hedges, the debt hedges and the operational contract hedges. And in the debt hedges, operations are designated as hedge accounting. These are swaps to convert debt, which originally were dollarized or in euros and especially to provide predictability and not rely on the variation of CDI or the inflation. Besides this, we also have dollarized results adding up to $331 million and they were designated as hedge accounting to cover cash flows related to future revenues and dollars recognized in other broad results. And that's going to be considered in the original maturities of the debt. If we consider the currency at 5.50 in the next 12 months, we should have a reduction of BRL 147 million in revenue, considering the currency variations of these operations and every BRL 0.10 of the currency, we have a currency variation of an additional currency variation of BRL 11 million. And this effect is noncash because part of these loans were refinanced and the maturities will take place in between 2027 and 2032, while the hedge account should be taking place in the original date till the beginning of 2029. And then the energy hedge, we have swap contracts with maturities in 2028, as you all know, that were signed off to reduce risk exposure and lead to fixed values in dollars. And this was considered a hedge accounting to provide protection on a mismatch and also the cost of acquisition in electric power [indiscernible] the inflation. And this is also considered in other broader results and this is going to be considered in the results in the cost until the end of the operation. In 2025, we had an increment in the cost of BRL 60 million about the financial payment of the swaps. Besides the financial insurance, we also have a natural hedge coming from our contracts for power that were already dollarized or priced in dollars in line with our hedge strategy. So even with the dollar variations in the inflation or the interest, we can keep our cash flow stable and our results predictable. With this, we end our presentation. Now Luciano will come back to just go over some final messages, and then we'll be together with him as well for the Q&A.

Thank you, Amabile. Well, guys, heading here to the final messages, just to wrap up on the call and after we can keep up with the conversation. We have 5 main takeaways. Our strategy is focused on sustainable growth and strengthening our competitiveness. But also, we want to balance risk return to maximize the value and guarantee the resilience of our long-term asset portfolio and we're always going to maximize the value of integration, capturing synergies in all of our supply chain, which is one of our main differentials at CBA, and that's what made us who we are over these 70 years. And that's what's also going to take us to the next 70 years. So this integration in our supply chain is one of the biggest differentials. We're really well positioned to capture market opportunities and so taking advantage of more favorable fundamentals and not only because of the differentials you mentioned here, but this portfolio of growth projects for the future as well that will bring even more solidity and resilience to our business. Flexibility in CapEx allocation is really important and we're going to adapt the execution of the CapEx as well, considering our cash generation and there is a pretty stable standard, but it could change if the market is different. And if the market is more optimistic, we can maybe invest a little more of this as well but then financial management as well. And so we went through volatility in the last few years ever since the IPO. And so even before IPO, we were used to this as well. But with financial management, it's more sustainable. We always search for a reduction in costs. That's what's going to allow us to go through this market phase in a less turbulent manner than most of our competitors probably will face up ahead. And so when we look at all these points, it's more differentiated and we can see there's a lot more to do still, but these are clear differentials and really benefit from what's coming up ahead, right? So this is a different presentation. We spoke a little more about the strategy. And now we're open, of course, to Q&A and a more interactive conversation as well.

Great. So we also have some questions here at the queue. Our first question comes from Rafael Barcellos at Bradesco BBI.

Thanks for taking my questions, and congrats to the company and all the IR team for this event. That was very important and great to hear from you guys, especially on the strategic aspects of the business. Now Luciano, I'm just going to focus on the strategy part here of the presentation, especially on your last slide, takeaways up ahead. Maybe I want to hear a little more from you on the flexibility of the CapEx and -- on both sides, right, in the scenario where Indonesia accelerates capacity, which is -- I was also at the LME week, and that was one of the topics that were really discussed. And I really consider it a difficulty, right, to set a scenario. But if you look at this negative scenario, we have more capacity and price environment's a little more restrained or tight. What type of flexibility would you imagine? Do the company have like a pipeline of strategic projects. So understanding a little bit of what type of flexibility on this side and what would be the minimum level of CapEx up ahead? And then on the positive side, what types of [ investments ] makes sense to you? If one of those macro trends you mentioned in the beginning of the presentation really becomes concrete or gains more traction, what type of investment that makes sense to the company?

Thank you very much, Rafael. Well, flexibility here is always related to expansion and modernization projects, right? So sustaining, of course, you obviously have flexibility. But whenever you work on reducing -- sustaining a little bit, you automatically increase the risk of your operation, and we don't want that. So what we consider to be as expected investments of sustaining, which is about BRL 500 million, this year it's going to be a little bit more due to what took place in alumina. I think it could be considered a minimum level, right? If we do below this, then it's because we're searching or facing more risks that we maybe don't want due to market issues there, but that's not what we're expecting, Rafael. In the expansion modernization projects, one of these about BRL 300 million per year, this is one of the cases where we have flexibility and we can work for more for less. But of course, when we already have a project that's under execution, reducing CapEx can be a little more difficult. And so then maybe have like a horizon of just a few months for some of these projects under execution before you can actually perform the investments. So for the projects that have still not been approved or those that are still on the horizon, I'd say this is still integral, right? So we're always going to be considering this level of flexibility about BRL 300 million, which is what we can work on from one side to the other, right? But if we consider your question even in Indonesia, I'd say it's not only a CapEx that we're going to work on, right? We have a lower price scenario. We've already experienced this in 2023. But then, of course, you have all of the cost aspects and some work to be done also and in other projects that come up ahead, right, that reduces our costs or improve competitiveness. And so accelerating these projects whenever the market is pretty stable as it is now or in a more optimistic scenario in the market, that will be really important to increase our resilience and our costs. So then up ahead, if we have a market that's more optimistic with better prices, then we would have some restrictions and maybe probably 1 project, for example, which would depend on us having the reduction of the bottleneck there in the paste room and also in the aluminum, which purifies liquor. So these 2 need to come before. And of course, if I do this without having both products then I have to either buy a case of that market or alumina, so we're going to have lower -- greater cost, right? So we could accelerate that but that depends on the scenario. But what would be normal is we would have to stretch for the paste room and then after return on room 1 -- following room 1. And so this is kind of like our expectation that's going to be the first move, we can accelerate all 3 projects. These are projects that are really ready to be executed, right, because they were already under execution in 2023. We had to stop, a lot of them are already stocked up in the factory. So it was really just a matter of timing to put this on to operation. Then we have the recycling projects as well and capacity projects for the production lines. And this is pretty much moderate but it could be accelerated at any moment and the smaller investments and the allocation of it for the production of recycled material, that's one of our projects in the pipeline in the future that can be accelerated as well as others that are similar, where you can add capacity through the processing of recycled materials. So what we can see and what's in our hands today is this, right? So that's what we can develop as well. And eventually, we could work with different projects and technologies that would accelerate this potential even more. But today, we still work with this on our pipeline.

Okay. Perfect, Luciano. And then as a second question here, although we'd still be focusing on the strategic aspects that we understand are the main topics. I want to ask about bauxite, right? So how do you see CBA positioned strategically? We've seen in the last few years that there were some disruptions in the bauxite market. And we want to understand your vision also on the [ Rondon ] project and get a little more of your input on this aspect of the company?

And on bauxite, we have a system that was conceived and imagined to supply the aluminum factory, which are the 2 factories in Itamarati and Poços de Caldas in Miraí and the second one mine in Palo Alto. These are mines that have resources for long-term, minimum 20 years, but we believe it's a lot more than this. And these are certified here inside of 20 years. But in our view we believe it could be more than this, and we're really comfortable in regard to the fact that it would be CBA in the aluminum side, these 3 mines guarantee long term, and you would continue with this competitive advantage. Of course, the bauxite arrives and maybe transportation is not that cheap, but it's competitive as you can all see on the slide, we showed you the cash cost and our position in the first quarter, we were very close to this also be in the second quartile. So we have pretty good competitiveness and that remains for the long term. And so [ Rondon ] is an additional aspect. And so, it's going to be a project that we're going to do -- to sell in the international market, right? So we have these 3 mines that are sufficient. [ Rondon ] also has challenges. And for projects like this, the logistical challenge is natural. We know -- we talked about this a lot in the market. And what happened in the last year, but the stability that took place in Guinea and what's going on there is kind of already happened in Indonesia. In Indonesia a few years ago, they prohibited the exports of nickel exports and bauxite and their objective was always to encourage more investments in refineries or phases ahead, so that the royalty in the country would be greater, not only exporting the low added value product but to export products with more added value. What Guinea is trying to do is kind of similar. But there were some interruptions of mines in Guinea and that generated a concern in the market. The market today is really depending on Guinea and they lack from a -- being a irrelevant player to [indiscernible] became the biggest player with 70%, 80% of the transition in this market in bauxite coming from Guinea. So it's a big risk for [indiscernible] for the aluminum industry as a whole. If you don't have bauxite coming from there, then you're going to impact the rest of the industry. And so then other players in the industry also that started noticing this search for alternatives, right? And so Rondon is a project that's ready to be developed and then you have a natural increase in interest for this project. Of course, we're going to search for partnerships. Ever since IPO, we've been announcing this and we've been working on this, right? So, so far, nothing new. But I'd say that there's a big interest in this project that is [indiscernible]. And if we do this, we want to make CBA invest more in the system that we have as you've seen in the presentation and possible partners really being responsible for the investments in bauxite. And then of course, we would have a participation that we could maybe take advantage of this project in the future.

Now the next one is from Edgard Souza at Itaú de Val.

Congrats on the results. We see all of this becoming concrete with the improvement in aluminum. I have 2 questions here. First, about the CapEx aspect here with a follow-up on Marcelo's question. But my point is the following, right? I was actually waiting on an update if maybe the schedule that was shared at the CBA Day last year. But if you could maybe mention this differently if we could understand how you're expecting this CapEx modulation up ahead, right? So if we look at maintenance and refurbishing this year, you're operating above BRL 500 million. And you even talked about this [indiscernible]. So it's above BRL 350 million, BRL 400 million as you had been operating in the last few years. But I wanted to understand this BRL 500 million by what I understood, seems to be the new level of maintenance or sustaining CapEx you should operate with. And then the first point is what led to this increase these levels versus what you guys had before? And considering that you don't want to increase your total CapEx, what from the investments that were already decided to take place are maybe being dragged along up ahead? So what are you already modulating to accommodate in maintenance CapEx that's a little bit higher? That's my first question, right? And then the second point is, I wanted to get into costs a bit more. I think the slide you guys showed is really great about the competitiveness of CBA versus the rest of the industry. But when you look at this in '23 and '25, which were the years you had operational problems, we can see CBA's competitiveness versus the average in the industry kind of drops -- closes off a lot. You had 25%, 30% less cost and you're going to maybe go closer to a level of like 10%. So looking ahead, what's this cost trajectory like, right? Is there an expectation for '26 of an additional improvement? Is this something that can be done? Obviously, maybe in the fourth quarter, you won't have the effects of the shutdowns. But I just wanted to understand what's going on in the cost front, right? If you have an objective or a target for cost reduction, something like that.

Okay. Thank you, Edgard. Well, we talked about CapEx here, you're right. First, this year, we had the impact of operational stability of alumina and that generated more sustaining expenses. And we actually take advantage of the fact that we had to stop temporarily some of the top line to also refurbish them that were kind of at the end of their useful life, right? So you have some expenses that are related to this. But actually, you have inflation and this is not only impacting us, but everyone. That's natural. But getting back to your question on products for future growth, we didn't consider this schedule because there's not going to be big changes compared to what we have seen last year and also because it depends on flexibility and how the market is going to look up ahead. So if we have a more optimistic scenario, let's say, that's more favorable, it's natural that we would search for acceleration. But if you see a more restricted scenario, then we could maybe have an additional postponement in the very short term, considering the adequacy of the investments this year. And basically, we're looking at the schedule there and just postponing it over time for a few months. Then I'd say the most short-term project for the paste rooms, which continue in the portfolio with a few months set back. And even performing this postponing in the paste rooms, we have been taking advantage of some shutdowns and maintenance and have already been able to do part of this project in this shutdown. So we're still optimizing this a little bit. So that when it takes place, you'll have a lower impact in the operation. So that's pretty much it without big news. Basically, there's nothing too new, we would like to add here and now we're just going to be working on this pipeline in the best way possible according to our cash generation. And so about costs, right, you mentioned '23 and '25, we had higher costs due to operational problems, but I want to be careful when we compare with the global cost curve. We have 2 factors. First, the currency and then the loss of value of the real or vice versa. So -- and that has what happened recently with the loss of value in the dollar towards all other currencies. So when the real [indiscernible] such, you have an improvement, right? And what we see there is a loss in value. And so that brought us more competitive advantage. But of course, with the dollars maybe a little weaker and the real is a little stronger but of course, you have this movement with a lot more related to the dollar. So maybe we don't have the same competitiveness amidst our other competitors. But most of the operations in the world they'll buy alumina or buy electric power in the market. And so the volatility of the power prices around the world, the volatility of aluminum price also impact our competitiveness, right? So when we compare the rest of the world, this also happen. So alumina is a big example also here due to the rupture in the bauxite chain with Australia, India, China and Guinea alumina reaching $800 per tonne. So if we bought it at that time and worsened their cost curve temporarily. But right now, it's at a really low level, below $400 or even closer to $300, and that also places these producers of aluminum in a more favorable position. So it really depends on the dynamics of these markets. As I mentioned, our costs are more stable than the average in the industry. But from time-to-time, we can have worsening or improvement in our competitive advantage. But heading back to the CBA and your point, we have many different initiatives and that's pretty much recurring, right? And then we have an ambition also having at least in the current market conditions as things are, we would be able to place our average cost, and the aluminum cost of about 9 million to 10 million tonnes. Maybe that's one of the objectives, we will be closer to 11 million and that's because of what took place this year and with the currency above $5 or $5.50, we're going to guarantee more competitiveness in the long term. So this is our work, continuing our efforts in-house to improve our competitiveness and our efficiencies, work better with all of the costs in each phase, so that we can really reduce the cost up ahead and work at this level, that would be a little bit below $1,800 per tonne. And then just to add on here, the improvement for '26 is going to go back to levels in '24, which we consider to be normalized. And this improvement comes from aluminum, right? So we've seen this basically with the recovery of the cash cost of alumina and liquid aluminum. In the next quarter, this is also coming along. So we have space for this up until the first quarter of 2026 where it should get back to the level as normalized in '24. And the other inputs are keeping up with greater stability. So of course, energy has seasonality from 1 quarter to another. But the perspective for 2026 [indiscernible] post and energy is very similar to what we've seen in 2024 and even what we saw this year, reduction is basically from alumina and then to stick around in this level of BRL 10,000 per tonne. And also, we need to remember that these moments of operational stability we had in '23 and '25 are also moments of major lessons learned, right? So the pipeline [indiscernible] of 3 examples, but the operation standards today are a lot better than what they were 2 years ago. So the fact that we had this also brought a lot of lessons learned and a new way to operate this asset that brought in major gains. So we have an expectation that the same thing will happen in alumina now with the instability we have this year. So it's pretty much it. And even though we have this gradually from time-to-time gains here and there, and we have this expense here that in an isolated market could be small. But when you add them up, there is a relevant impact in costs.

The next question comes from Guilherme Nippes at XP.

I have 2 questions here on my side. You talked about the reduction of alumina costs due to the shutdown in the refinery maintenance. If you could provide more details on the evolution and if you're already expecting normalization in the operations? And if you could quantify this, I remember last quarter, you brought in an increase of about BRL 150 million in costs and about [ 5,200 ] [indiscernible] in CapEx. And so if you could mention a little more details, that would help us a lot. Our last question comes from this cash generation aspect. And we see this as a very positive cash generation in the quarter, but part of this comes from the stocks, which is also something you guys are already guiding. And at the current level, we would already see something a little more normalized or if there's something -- or there's still some, let's say, some leeway, right, for this cash and working capital performance, right? Then of course, alumina as I have to the cash generation and working capital.

We're doing better than what we would imagine, right? We had provided news in the last earnings call and the perspective at the time was that until the end of the year, we would have things back to normal in this respect, so the same. But why was it better than expected? Well, can you remember that we had over 50 tonnes aluminum in the hydrolysis and 16 had those crustings we mentioned where alumina kind of stuck on to the tank wall. In our view at that moment, we would have to perform the physical removal of these for all 16 tanks and this is some work. Those are complex. It's physically complex. The big tanks, real bad access and that took a lot longer than what we imagined. So that was a bit of a surprising element we saw in the earnings in the last quarter, mainly because of the challenges we had to perform the recovery of these things, which is why we had this perspective that to the end of the year we solved that. But what happened ever since that we were able to work on improving processes and we had some bypasses as well to chemically clean a lot of these. So I didn't have to go into the pot line and perform the physical removal. We were able to just recirculate the liquid with the temperature, would allow us to perform the chemical removal, right? So we had 16 pot lines and we imagine we would have to work on this removal. And in practical terms, this is actually became 5, because the 11, we were able to perform the cleaning in a chemical manner as it takes about 1.5 weeks that's a lot easier and quicker. And then at the end of the day we had 5, 3 were in a process to generate more load completion. And so we're at the final phases. The cleaning of the tank is ready but the optimization is going to be set back until the end of the first quarter of next year, it's probably where we're actually going to have a full impact of this operating at full capacity. But you would already be able to see this gradual benefit in the results this year. And we spoke back then, as you mentioned, and it's above BRL 200 million and [indiscernible] also in CapEx. But you can see the capacity of the market is gradual. We have another purchase of adding up to about BRL 50 million, which is the same as the purchase performed in the second quarter. The other BRL 50 million are pretty much divided half and that was considering the purchase in the month of September. So then you have a real big impact for the third quarter that's may be lower than BRL 100 million. So that means that you already have BRL 25 million and then, of course, the real -- a bit more from a residual -- marginal residual results, right? So it's gradual and you have this constant drop in the impact where you -- we still have a bit of an impact in the fourth quarter that's a lot lower, but next year, we'll already be able to operate at full capacity. Then maybe I can also talk about the following, right? I just want to say that there's still room to reduce this now in the fourth quarter, especially considering the stock climb as mentioned, we've already performed something in the third quarter but we also have some reductions to be done in the fourth quarter. And so there's still room to reduce our working capital. But what I wanted to say here [indiscernible] concern and to be careful about at the beginning of next year is really the moment for us to reestablish our stocks and not only want to drop this year, but the seasonality that always happens and where we produce more, increase our stocks in the first half to sell that in the second half. This year, that's what happened and next year, last year as well. And did up our numbers historically, you'll see the standard. And this year [indiscernible] we had normal because of the operational guidance and a bit more stock. Alumina is one of these and there's [indiscernible] higher stock that's up ahead. We should see a recovery in some of these stocks or maybe during construction and some resolved in a -- and in the second -- beginning of reduction in stocks. So this is [indiscernible] we will always have.

Our next question comes from [ Pedro Manuel ] from Citibank.

First, I want to congratulate you on this event and for the sequential improvement in your results. First, I want to follow up on the fourth quarter when it comes to costs. Could you give us an outlook on costs including other costs you may have that are considered important as well and also look at the typical seasonality and the recovery of the liquid aluminum production in Q4 to understand the margins and how we can consider the evolution of the margin in the first quarter? And then I want to explore the sales mix strategy you guys have more towards the ingots. We know that this is something that really helped a lot at the last year. And we wanted to understand how you're observing this strategy for the next quarters and especially for the next year, if considering the sales mix, you create some penalties for this and if this should lead to some impact in margins, especially for next year, where we expect a bit of an EBITDA normalization? So those are the 2 points I would like to get some more color on in the fourth quarter and explore a bit of the sales mix for ingots or do you want to talk about the cost?

Well, about the cost, as I mentioned, we saw in this quarter that there was a drop in the aluminum, so the space for a gradual drop up until 2026. But the other lines, the main inputs are [indiscernible] and energy, it's still something similar to what we've seen in the third quarter. So energy has seasonality in the fourth quarter and our base has also been pretty stable. But where we see space to drop is also reflects in the recovery of alumina and maybe closer to normalization, which is a fixed and variable cost, but it's quite marginal, right, what we have to recover. So that's still the first quarter of '26 as I've already mentioned, right? So these are the main lines and in line with what Luciano also discussed in the presentation, we're always looking at improving costs, and that's really what's in our hands, optimizing costs. We always want to dollarize a bit more and what I think Luciano mentioned also is a bit of the contract and that's going to also optimize the cost of aluminum. And then we could maybe get back to the levels mentioned about BRL 10,000 per tonne. This is really dynamic, right? When we consider the flexibility of producing different products, we could change this. And what happened -- and maybe we had an impact on the sales of the billets and the demand of the billets, and that made us search for other markets. So of course, exports of billets and products [indiscernible] and billets in the internal market, but also other products. And if we understand this that ingots we're offering better profitability in exports due to what I mentioned with the buyers anticipating this in regards to [indiscernible], so that happened now. But from now on, what we feel in the market is that the billets market is still good. I'd say that the fourth quarter, just a detail, December is not a good month, normally not very good for sales. So you have a lot of holiday period, et cetera. And just this with this thing but all the rest, the billet sales are doing pretty well, even better than what we imagined initially. So that's something, of course, that we always need to consider, because it provides us a more cautious view. And for the past year, we've had this view on -- due to interest rates in Brazil. They have been growing ever since last year, we had this more cautious view about how the interest rates are may be impacting the marketer too and impacting sales, et cetera. So in practical terms, we have this demand for billets but I'd still say it's a marginal impact, not that relevant. And in the trucks market that also depends a lot on this and they, of course, depend on income to guard themselves. And so -- but in the other markets, this hasn't led to such an impact, right? So I'd say we're getting back to that sales normality that we've always had in the last quarters. But for the premiums, there's an observation also, right? The market at this moment, especially in North America and Europe is a lot more competitive due to those things I mentioned in the presentation, there are a lot pieces that are not being able to sell because tariffs are being implemented. And eventually, you could have an impact in premiums. So it's still marginal and they are interrupted and it's a pretty good reference, but it dropped a lot maybe due to what exists in Europe, et cetera. And -- but now it's closer to $200 per tonne if you look at the reference in June. But I'd say $200 is a normalized level. It could be greater. It's already been $300 in a more optimistic market, but it could be smaller, right? So since it's a pretty good premium, we can see the same behavior as well in billets, et cetera. And then eventually, you can have more competition, some marginal impact in premiums and nothing very relevant, right, like $20, $30 of premium, but nothing that really concerns us, right? But this is the dynamic. And of course, one important point is if you have 2 factors, like an American consumer you have to buy, right, because they haven't bought any big volume so far, because they were either using stock or because they bought a lot of scrap and that turned into big chunk of the scraps and it's going to the U.S. So that's a natural factor, and we have -- and in stocks where American consumers get back to buying. But then the second would be the U.S. signs off some kind of negotiation in another country. So if they have like an agreement with Canada, India or others that's going to be very favorable, right? So the countries that perform negotiations will definitely sell more volumes, because we'll be one of the very few countries in the world that have this. And then they would kind of dry out the other markets, right? So that would open up the possibility for other markets less and it would not be -- and then you would have this impact maybe [indiscernible] dynamic, right? So at this moment, premiums are sort of pressured maybe. But if the situation in the U.S. normalizes, then next year we could get back to a more normalized situation as we discussed in the beginning of this year.

Thank you very much guys. So for the benefit of our time, we've already gone over time, and we're going to wrap up with our presentation here today. Our IR department is always available. So if you have any questions that are not answered, me and the IR team will be available. And I want to thank you all for your participation. And Luciano, you have a final word. Thank you all.

Thank you so much for participating. I want to thank you all for your feedback as well about the format and how we did things. But I think that was important to give a global view on the company, and we're available and very optimistic also with what we can deliver on behalf of CBA and what's coming ahead for the company. Thank you very much, guys.