Imerys S.A. (NK) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Imerys Webcast Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Alessandro Dazza. Please go ahead.

Thank you. Good morning, everybody. Thank you for joining us this morning with a very short notice. On the call with me is Sébastien Rouge, our CFO; as well as the Investor Relations team of Imerys. This morning, we want to shed some light on one of our businesses around energy, and especially energy transition. And why are we doing this? Because the importance of this business for the Imerys Group has become such that we have reorganized ourselves around it to dedicate energy resources and focus, and also to reflect the importance and the size this business is reaching. Mainly 2 businesses, The Quartz Corporation, a joint venture, and I will go in details on both businesses later on. A joint venture, 50-50 with our Norwegian partners, Imerys controls 50% and Graphite & Carbon and historical business of the group, controlled at 100%. You see on the bottom of this page, the 2023 key financials. If you consider we control TQC at 80%, it means that this business in '23 represented close to EUR 400 million in sales and around EUR 150 million potentially of EBITDA. It means it has reached more than 10% of the group, and that's why we want to give the proper relevance and importance to this important business. We have called the new business area we have created, Solutions for Energy Transition, because that's what it is about. It's around energy. It's green energy. It's the energy transition. And when I will describe the businesses and what they do, you will understand well about what I mean. How we are going to report it? We are going to report it within our normal portfolio, Performance Minerals, Refractory, Abrasives and Construction and Solutions for Energy Transition in the future. And since the joint venture is not consolidated, The Quartz Corporation, it's controlled at 50%. We will utilize the share of net income coming from this business to be included in our future reporting. For this reason, we have adjusted the definition of EBITDA. As a reminder, in the past, 2023, the EBITDA of the group included the dividend distributed, and you will see the comparisons as we move on. But the dividends distributed by the joint venture, in the future, we will report the net income of the Imerys part, because it's a better reflection of the ongoing level of the business rather than [ peaks ] the moment the Board decides to distribute the EBITDA. Nothing changes for graphite and carbon, as it is fully consolidated. Then, on a half year basis, we will disclose the entire KPIs -- the financial KPIs of The Quartz Corporation, including, of course, sales, revenues, EBITDA and so on. But more important than that, how you put numbers together what are these businesses? So first, The Quartz Corporation. It's a joint venture created in 2011 with Norsk Minerals, the family controlled industrial group of Norway. And it's a real joint venture. Both partners brought assets to the joint venture. Imerys control an unique mine of silica quartz in the U.S. Our partner in Norway had a fantastic state-of-the-art processing unit to treat the sand. So both contributed key elements to the joint venture. So we're very happy today -- after many years of building up, even struggling, very happy today to share this fantastic business. 50-50, as I said, EUR 330 million revenue last year, around 350 employees. Two big plants, and you will see a picture on the next slide, one in the U.S., North Carolina and one in Norway. Main markets, 3 -- I would say, 3 top markets and they are probably in order of importance on this slide, solar, so photovoltaic typically, semiconductors and optical fibers. What do we produce? We produce a high purity quartz, so high purity raw material to start with and a great processing to reach up to five nines, so 99.999% SiO2 purity, which allow us to be a leader in this market. We are either #1 or #2 in everything we do. And we do share all top crucible makers in the world. On this slide, you see a nice picture of the 2 big operations. As I said, Spruce Pine in North Carolina, really the world-class, high-purity deposit. And our beautiful plant in Drag, in the northern part of Norway, green area, hydrolytical power, 100% renewable energy used at this plant. So fundamentally, a very green product that will help the energy transition. So what is high-purity quartz used for? On this slide, you have a very nice, simple and clear picture of the use. We sell it to producers of crucibles. Crucible is, to make it simple, a big cup about, I would say, a meter of diameter, 1 meter tall. This big cup is used to grow silicon ingots -- high-purity silicon ingots that you see in the middle of the picture, that are then sliced to create a silicon wafer. And the silica wafer is the basic, either to make a solar cell on the top of these pictures or multiple steps to become a semiconductor or microchip. so here is in really the core of our activity in TQC. So the 2 underlying markets, the most important, clearly solar and semiconductor. If -- to deep dive on solar, you can see on the left of this graph, incredible growth of this industry. It's -- in 2023, we are talking about around 400 or it's slightly above 400 gigawatts of capacity created. Very high growth in the past, 27% CAGR, starting from a low point. The cap that is slowing, we have assumed at 10% and we are probably conservative. There are studies that show much higher numbers. But when you start from a much larger base, 400, the growth is still impressive. It is expected to double over the next 7 years. Why? Solar is the cheapest, the easiest way to produce renewable energy, as simple as that. Fast growing in all regions, I can tell you, Imerys is investing in power purchasing agreement to source green electricity, most of the plants, the projects we are working on are all based on solar. Quick permitting, cheap installation, very reliable, technology is good. Unfortunately, all the technologies currently available and, we do expect for the many years to come, use and need crucibles. So we'll need a high-purity quartz as basis for the future. The higher purity, the better the crucible, and especially the more performing cleaner will be the ingots and the wafers that we follow. So it's a very critical element in the value chain, in the production chain of this market. Second market, maybe more known to the world, the semiconductor. As you can see, we're talking about larger numbers, seems a long time, maybe with an acceleration differently from the slide we saw before. Studies expect the production of semiconductor to grow faster in the coming years on the back of AI, clearly, but also let's not forget it all the electrification, which is not only vehicle, a vehicle will need many more chips when it's electric than a combustion. But we are moving in general towards electrification. I look at my plans, one of the ways to reduce our CO2 footprint is to go electric, move away from burning, from other sources of energy, because electricity can be produced in a greener way. All of this will require electronic controls and, therefore, semiconductors. So I'm not surprised to see an acceleration of the semiconductor market going forward. Again, for semiconductor, highest purity required of the wafer and, therefore, the raw material to start with where you grow your ingots would be even more crucial going forward. Our high-purity quartz will be the answer. The next page, a few numbers that if you have studied our Universal Registration Document should be known. On the left, what we have been reporting until today in terms of net income and its contribution in the current operating income of the company. On the right, I think more easy to use is sales and EBITDA, so that we can compare it to the group, and especially the impact this business have and will have in the Imerys Group in the future. Over the year '22, '23, the business almost doubled in size. I remind you that it's always 100%, and even more grew our EBITDA so great performance of the business in terms of volume growth, price discipline, new products development, I think a great job done by the team. By the way, the team led from Norway from [indiscernible] manager of this business. And I think after turning the business around, getting approval from all main users in the world has built a great business, of which those partners are very proud of. To close on these part, great underlying markets, solar, semiconductor, a unique product, because it starts with the unique deposits of high purity and then it is processed in a real state-of-the-art highly technological plant in Norway. We have been investing in this business over the last 2 years. We will continue to invest in the coming years to follow and accompany end market growth, and this business will continue to deliver great contribution, meaning profitability and cash flow to the Imerys Group. If we now move to the second business, Imerys Graphite and Carbon. I think you know it a bit better because it's been with us since a long time, a strong growth with the lithium-ion battery world over time. Last year, around EUR 220 million sales, 24% EBITDA, 400 people, 4 locations. The 2 big ones are Willebroek in Belgium and Bodio in Switzerland, one dedicated to carbon black and one dedicated to synthetic graphite. The unit in Canada produces -- processes national -- natural graphite. And the unit in Japan, it's rather a technology center with coating technology that are used by us as well as for third parties to -- mostly to work on anode material for batteries. Underlying markets, many applications for these products. For sure, by far the largest is lithium-ion batteries. It is conductive additives, so not the anode material but rather the salt and pepper that makes a battery work. And there is a picture better explaining the use. Fuel cells, a growing market, is an alternative to lithium-ion batteries. It needs just as much synthetic graphite and carbon black, strong growth because it's a new business. And conducted polymers, again, very often related to electronics so solid growth as well. Let's not forget that there are some other normal applications, like engineering material, alkaline batteries so the batteries of everyday use at home. So we are -- they remain very important because they contribute to the development of this business. In the next slide, you see 2 pictures. These are the main plants where we have invested heavily. On the left is carbon black. As you remember, we have built LV 3 commissioned last year. We're finalizing new line 4. So we are ready for future growth. And we have also signed an agreement with E.ON of Germany to build on-site energy recovery unit that will dramatically cut our CO2 emissions in the future, operational, hopefully, by 2025 at the latest. On the right, our Bodio plant, synthetic graphite. There as well, we have invested healthy with 2 new lines to serve growing demand in lithium-ion batteries. 100% hydrolytical energy, green -- great development here. What is it used mostly? You see on the left, the typical battery, you have the cathode, which is fundamentally lithium plus something else, depending on the chemistry of your battery. It can be nickel and manganese. It can be phosphate ion. Lithium is always the basis. We have an anode on the other side, which is typically graphite. We make sure that the electricity flows between the cathode particles and the anode particles, if you want to fill the void between the single particles. And that's what an additive does. It fills the small voids and it allows a good perfect flow, I would almost say, of energy -- of electricity throughout the battery. These additives is what we own. It is synthetic graphite. It is high-purity carbon. Graphite, we are the only one in Europe. Lower CO2 footprint, as I said before, 100% green energy behind. In carbon black, we are the reference, really consider the reference product in the industry everywhere in the world, heavily in Asia where, still today, batteries are largely produced. We do look forward to all the gigafactories coming to Europe, because with our 2 assets here, I think we are the predetermined supplier of this value chain. Last but not least, our technology center in Japan. We coat. We have a chemical vapor deposition to be technical, coating on graphite particles then are used for anode applications typically in Imerys. We spoke about this business -- on the next slide, we spoke about this business during the Capital Market Day. If you remember, next to significant investments in the business, we have announced a very fast growth. If I look back before '21, this business was EUR 100 million, it became EUR 200 million. We want it to bring it to EUR 400 million by '25. Well, we are late -- we are a bit late. I have no doubt on the long-term direction and opportunities, but the second half of last year and the beginning of this year have been slow. For many reasons, you see them on the right. First of all, the adoption of EVs has been a bit slower than expected. And we all read newspapers and statistics in the U.S. and in Europe, especially, Because of the hype in '21 and the beginning of '22, there was maybe an over production, and therefore, high inventory. So we have lived through destocking. And the general economic situation, especially Europe has been also slow, therefore, also other applications at the same time has been slow. This being said, I have no doubt on the trajectory. The fundamentals are strong. EV production penetration use will continue to grow. We have the capacity -- we have expanded our capacity. We have the products, the R&D. The long-term prospects for me, absolutely unchanged, just delayed over time a little bit. And I know that the team here, led by Frank Wittchen in Germany, the team here is committed and will deliver the business plan in the medium term. And we are the global leader. That's important. We are the market leader in these applications in both carbon black and synthetic graphite. We have heavily invested in innovation. We've built an R&D reactor that copies in a small scale, exactly the production process, so we can really test many different raw materials, finished products, customers applications. So innovation is key in a fast developing industry, like the lithium-ion battery, and we are the leader in terms of sustainability. We will be the preferred partner of our customers because there is no energy transition if we also do not look at how our raw materials, our cars are produced and therefore, our battery. So well, we remain committed, and I have no doubt that with a bit of delay, we will deliver. To closing, before I open to questions, I think it was important to give proper evidence to this business. We are a market leader supplier in the world of this critical minerals, high-purity quartz, carbon black, maybe 1 day, tomorrow, lithium. We are key for the energy transition. It's a business that is growing rapidly and it has not finished its growth and development. So the future is ahead of us. It is profitable. And it will contribute to the Imerys value proposition in the future, and that's why we have finger-pointing to this business. Thank you for listening, and we're now open to questions.

[Operator Instructions] Our first question is coming from the line of Sven Edelfelt from ODDO.

Yes. Congratulation for this new split. I guess we would more see the potential for quartz. So I have 2 questions. My question about the quartz growth. Do we have a bit more flavor or have an idea of your volume in the quartz? You mentioned in one of your slides that you're #1 or #2. I just would like to reconcile, when compared to Sibelco, I think Sibelco is having an increased capacity. So that would be my second question. Would we have an idea -- or could we have an idea of your capacity on -- would like as well to know if you are expanding capacity as well like your competitor?

Thank you, Sven. We do not publish volumes. As you rightly say, it's a small market, and therefore, I think we don't want to necessarily to help our competitors. So we will be confidential, with volumes or concerns. I think what is important to know is Sibelco has announced or has published a quite detailed image of their business. With information provided today, I think you can run comparisons. They are slightly bigger than The Quartz Corporation. They are the largest in the world, #1. So then this might change from application to application. But in general terms, the numbers are there. Sibelco is today the largest followed right behind by our joint venture. There is a third producer of size called Pacific -- Pacific Quartz, sorry, in China, and then a few very small ones. So quite consolidated market. In terms of capacity, yes, Sibelco has made clear announcements on their increase. Again, we prefer to do rather than say. As I mentioned, we've been investing since 2 years, and we will see the fruits of the ongoing investments fully, I believe, within the next 1 to 2 years. For your information, the company is investing EUR 200 million over this period, throughout its plans from the mine, the processing, the treatments and processing in Norway. It is debottlenecking. It is quality. It is R&D. It's logistics. So we are preparing to accompany our end markets and their growth, and something that the company can finance easily on its own. We will follow our customers. They need us. They want us to follow them, and I'm very glad that our partner and Imerys are very aligned on accompanying this business and securing that our customers are happy with us.

Okay. So just to sum up, you have invested over 2 years and you will get the benefit of your investment in the quartz in the next 2 years, right?

We have started investing...

Is it the right way to look at it?

Yes. We've started early enough, and we are still investing to secure the future. Let's say, the full appreciation of our efforts will probably come within 1, 2 years when everything is really implemented. But the growth you see is partly due to more volumes. So we have been debottlenecking. We have been doing a better job and -- that made volumes available for the growing market. So it's a continuous process, I would say, full impact within 1 to 2 years.

[Operator Instructions] Next question is coming from the line of Mourad Lahmidi from BNPPE.

Yes. Alessandro, my question is just on the reporting of the TQC. So I remember that you account for the dividend in the EBITDA, and then the net profit contribution in the EBIT. Is it going to remain that way? Or are you going to amend that?

As we've published in the -- first of all, Mourad, thank you for the question. As we have published in the press release and you can see here, you're right, in the past the share of net income was included in what we call current operating income or EBIT. But in EBITDA, we included the dividends. And to do numbers, dividends 2023 were around EUR 50 million. If you look at the net income, it was around EUR 80 million. So the net income was slightly higher than dividends, which is normal especially when the business is growing and it's growing fast. The change we will do is around EBITDA. So the EBITDA in the future will not include the dividends, but will include the net income. The same net income we booked in EBIT or in current operating income, we will use it for the EBITDA. Why? The main reason is it gives you a fair image of what the business is doing because it comes every quarter, it reflects the performance of the business, and therefore, you can track it properly. When you use the dividends, because they are really disconnected from the business, because it's a decision the Board takes, we can decide for 5 or 50 today or tomorrow. So I don't think it was a proper way to reflect. If it's a small number, it doesn't matter. But since The Quartz Corp has become a significant pillar for Imerys, we believe that it is much better to give continuity, stability and real connection to performance to growth and that's why we have decided to change. We have restated numbers, you find in the appendix in the press release. Last year, the definition we had is the one you find in the URD and what it looks like if you put net income instead of dividend. So fundamentally, you reported business since either before you do something more, let's say, closer to the business every quarter, and you can really track the performance. And Sébastien, do you want to add something? Or do you think it is...

Nothing to add. I think you were very clear...

Yes, sorry, by the way, there were many companies. And I look at Rio Tinto being a big miner, many companies do the same for the very same reason. It's much better to track performance based on net income than the dividend, which is an arbitrary decision of the Board at a certain time. So there are really -- most of the companies track joint ventures in this way. Sorry, go ahead.

No, just a question about operations at the quartz business. I'm just wondering where are you in terms of capacity utilization in your plant at the moment? And maybe a word on what you expect in terms of expansion?

Let me start with the second part. We are expanding, as I said before. We started already a couple of ago, with the easy moves, debottlenecking, improvements in our lines and on to new lines to follow demand. So we are continuously investing. And I would say, for the next 2 years, I think we are busy. We are at a good capacity level because the market is growing fast. It requires materials. So I would say we are running at very high capacity utilization. But as you can see, we have been growing, and I believe we will grow 2024 as well. And I hope for a few years to come when the new -- all the new investments come on stream.

[Operator Instructions] We will now take the next question from the line of Sven Edelfelt from ODDO.

Can you hear me?

Yes.

So it's 3 questions. It's not from my side, it's from Sebastian, who could not join the call, just couldn't connect. So the first question, could you have an idea of a normalized CapEx of the quartz going forward to get -- to deliver 7% to 10% growth on an annual basis? And then the second question is on the Graphite and Carbon. How long does it take to cover the cost of capital for this business? So these are the questions. And that's 2 questions, if I'm not mistaken. The third question, it's -- he would like to better understand why this release has been published today and why it couldn't wait for the results -- for the upcoming Q1 results?

Okay. I will, let's say, Sébastien answer the one Graphite and Carbon. I start with the last one, which is easy. During Q1, we will look -- sorry, during the call around the results of the first quarter, I think we shall focus on numbers, on performance. [Technical Difficulty]

Please remain on the line your conference will resume shortly.

Up until he comes back, I can answer to -- or rephrase. So in terms of release today, so yes, the idea was mostly to focus on this new business area and not to be squeezed by time in the normal release of Q1. I think there was no real more -- no real different rationale than this one. On Graphite and Carbon, I think you have known that we are increasing the level of visibility on the business, the different elements. You remember that the ballpark number we gave is that for the brownfield CapEx, EUR 1 investment drives EUR 1 of sales, more or less, when it's at full capacity. So you see that with the profitability that exceeded 25% and that we hope down the road actually we'll take advantage of operational leverage. I think that's a very fast return on investment that we can compile as soon as the business, I would say, renormalizes on the upward trends and that we can use properly the capacity that we have put in place. I will remind that in '21, we could have sold way more than what we produced. And now, we are a little bit ahead of the current market need with a lot of confidence in terms of our ability to fulfill this new production capacity in the next months and years. On the last one on TQC, I don't think we'll give a normalized CapEx number right now. We are still in a business that grows a lot. So it's probably a little bit early with this growing pattern to give normalizing figures. What will remind is that, right now, there is a real good self-funding scheme with the company. So with the return that we have as well, I don't think there is a big risk on the additional investments that have been launched by the company.

Can we check if we can hear Alessandro again, please? Alessandro?

Shannon, I have a question from Jason from Bank of America. I will ask the question to Sébastien. The question is, could you please discuss the stability of the quartz business? Is there a resource limitation to your ability to continue exponential growth? How should we think about the revenue growth rate over the next few years? Is high margin sustainable?

So a lot of questions that we are not really in a position to answer right now. As you remember with this specific market, we are very, very cautious about any type of direct relationship between sales margin and projections. I would say there are 2 things that we think are the strongest pillars. The underlying demand is important and will continue. That's the first point. The technology is evolving, but there is a very large confidence that for the foreseeable future, actually, high-purity quartz is the key enabler in the latest solar panel technologies so very confident on that. Even though there are some, also at the solar panel production level, economies of scales that are being made and also that we can see in the use of ingots. But so very solid growth down the road. And a very unique mine, as we said, both in quality and size. So from this angle, we are really secure about our ability to progressively accompany this growth down the road.

Next question is coming from the line of Matthias Kubli from Tiger Asset Management.

I would have 2 on the carbon, graphite -- carbon black and graphite business. Just could you maybe give us some color on your market share and how you stack up against the competition in China, especially since you're producing in Europe and how you fend off maybe cheaper Chinese competitors? And then also, what do you see in the EV market in China? How fast can this bounce back? Or do you see some signs of this normalizing?

Matthias, maybe I can...

Sébastien, I'm back.

Okay. So if you got Matthias' question...

Okay. Yes, I did. And thank you for taking over, there were some technical issues. Yes, the question is simple, we are the largest producer of these additives in the world, and we are the market leader. Then we don't comment on market shares. It's a small market. But our super LIP -- super PLI, sorry, the way we call our product, is the definition of carbon black for conductive additives. That's the way everybody calls the product. Competition is -- in China, has always been there. It is growing and it's growing as well in quality. But I would say a couple of important topics. First, getting the right level of quality in a constant way is not easy. The technology to produce this carbon black, it's very unique and proprietary in our case. So a copy and paste will not happen so easy. Second, as you know well, in approval in the automotive industry, it does not happen overnight, if ever. So yes, there are cheaper products in the market. Yes, rather than Chinese, there are very aggressive, large competitors. The biggest producer of carbon black for other application is Cabot or Orion, the big listed companies with heavy R&D investments in the industry with great products. So there is competition, still. We believe we'll be able to defend our market share. Our products will remain the leader in this field. And we are investing as well in R&D and innovation, because it is a very dynamic market. The battery of today is very different to the battery of 5 years ago. And I'm sure in terms of performance, it will be different from the one in 5 years, intensity of electricity, rapidity of recharging and so on and so on. So you will go more and more towards special products, high-purity products. If you look for rapidity, it might be different than the durability. So I think having the knowledge, the know-how, the R&D will be key, and we will defend our position going forward. In terms of markets, I think China is the healthiest still. It is not growing as fast as in the past, but the Chinese government has confirmed its subsidies and is pushing for electrification, which is understandable. They have an advantage compared to the rest of the world. So it is, I think, understandable that they put a lot of effort in this market, in this value chain, which starts with the raw materials and it ends with an EV car. The rest of the world is slow -- has been slower than expected, effectively. So I would say good news coming from China. We see after long destocking phase, readjustments of inventories. We see finally the business picking up again, and I'm sure driven mostly by China and China exports. The China has become also a big exporter of EVs. Europe, U.S. has slowed down a bit. I think the adoption will take longer, but I don't doubt -- and I don't even think about the 2035 prohibition of selling combustion engine. It doesn't matter if you will be confirmed or delayed. The trend is launched. Cars are becoming cheaper, EVs, and we all want to decarbonize. So I think it's a matter of slowdown EV cars, but the direction the trend midterm is not at risk.

Shannon, I have 3 questions from Aron Ceccarelli from Berenberg. Alessandro, the first one, may you provide more color around the difference in the manufacturing process between TQC and Chinese produce, first question. Second one, what are the bottlenecks from a production technology standard that will allow you and Sibelco to grow faster than peers? Third one, on synthetic graphite, what is a competitive advantage of synthetic versus natural graphite? We saw Tesla seeking contracts with natural graphite producers.

Aron, thank you. We will not disclose our secret in terms of technology so -- but, anything, in general, I think producing five nines quartz, so 99.999% is not easy, believe me. And the fact that our own company, you see took a few years to fine-tune the product, to get where we are today and to get the approval from such a demanding industry like the semiconductor or the photovoltaic industry is the best proof. So first, you need really a very high-purity deposit. And today, I believe the Spruce Pine deposit, which is the basis for the -- our main competitor production and our production is probably [indiscernible]. So you start already with a big, big advantage against any other competitor. Second, you have to process it. And the processing in Drag, in Norway, is a very high-tech plant. So I think the barrier to entry is high. I think our main Chinese competitor is sourcing sand everywhere in the world. They are not integrated. They don't have their mine. Not only we have the American, we also some very good deposits in Norway, which is a second advantage. So we have diversified. They have to source. So they are limited, by definition, finding the proper. And then we don't know we kind of process they use, frankly, being a competitor. But what I know is the finished products, our product is top of the class, top of the range as well as our main competitor, we really compete on quality and service at a very, very high level. Having control on your raw materials in Norway and in the United States, we have the levers necessary to grow because we have our own mine and I can tell you we are not limited in terms of reserves for many years to come. So we are -- we can invest in our mining activities, we can invest in our processing activities and we can grow this business with the market, and that's another big advantage compared to a typical competitor. They don't have the source. And the third on Graphite and Carbon, let's say, to give you a number, natural graphite cost $1. If you refine it, to use it for batteries in anode, it might go up to $3 or $4. Our graphite is twice as much. Our synthetic graphite is not comparable to natural graphite. The use is not the same. We're talking about an additive of extremely high purity, with a specific size and form compared to a bulk material, natural or synthetically made, that is used for making a big piece, which is the anode. So 2 very -- and when you -- Tesla talks about graphite, normally they talk about the anode, the main raw material in anode, like lithium would be for the cathode. So 2 completely different worlds, nothing to do with one or the other. So natural graphite competing with synthetic graphite in this application, but it's a different product than ours. And I think I answered. Thank you.

We will now take the next question coming from the line of Ebrahim Homani from CIC. Next question comes from the of Jason Fairclough from Bank of America.

I'm just going to come back to the resource question. You said that there's no limitation here on the resource. Again, I'm trying to think about that in the context of the exponential growth that we're seeing here. And put another way, how much of this is about resource and how much of it is just being able to supply the product that the market needs now? Is this actually a resource-constrained commodity?

Jason, I will try to answer the complex question. I believe for the size of this market in absolute terms, in thousands of tons, it's still a small market. The quartz or the silica sand market is millions and millions of tons in the world. For this very unique specialty application, we are talking about few tens of thousands of tons. So when you have a silica mine, the tens of thousands of tons are fundamentally small. That's why we are confident to say we will be able to accompany the growth of this market over many years with the reserves we have. So I don't think it is a resource constraint. It is indirectly, because it's so unique. So you cannot use any sand available, but you really have to start with a good raw material. So that's -- in this way, you can interpret it as a bit resource-constrained because there are not so many deposits that offer, to start with, such a good purity, but at the end, they would be enough to supply the market going forward. And then processing is a matter of CapEx, so I would say it's easier to implement with a bit of timing to build plans and lines. So that's the way I would see it. So we will be there to accompany this market, if that's the question. We will not make it constrained. And I believe our competitor, I think, feels the same way.

Okay. That's helpful color. The other question was just back to sort of how you're accounting for the quartz business, right? And you mentioned Rio Tinto as an example. I'm just going to throw it out there for you. What we do see with some of the big mining companies is that they will actually give a group revenue number and a group EBITDA number, and ultimately these are not IFRS measures, but you can define them any way you want. And it's really helpful in terms of thinking about the pieces of businesses that these companies own. So I guess my question to you is, you've taken a step of going from dividends to share of net income, why not show share of revenue and share of EBITDA from the quartz company, right? And I guess, while we're at it, is there any chance that you could buy 1 extra share in The Quartz Company so you can consolidate it?

Jason, thank you for the question. Number one, I start with the end. We have built this company together with our partner. We have been loyal to each other for many years, especially when the business was tough, and we're very happy to be their partners. So I think this JV is the right thing to do. We are happy to be comanaging it. We have been supportive each on the side. So I don't see, today, either the need or will to change it. We're very happy and proud. On your first part, I understand what you mean. It is clear, we believe that a disclosure of full revenues, full EBITDA every quarter is not in our interest because the market is so small. I think we would give too much trackability to competitors that we prefer not to do and therefore I simplified presentation using the net income, which is IFRS number, so it's anyway public. We will disclose a complete set of accounts in June and in December so that you can do exactly what you're saying. You can take about 50% share and consider it as in revenues, in EBITDA and so on. So it would be very easy to do this exercise if you saw, but taking the decision not to go full scope from day 1 for confidentiality reasons, very simply. And that's agreed with our partner.

Okay. Last question...

You will have to wait for June.

Yes. Okay, fair enough. Look, last question, if I could. Just in terms of the margins, I mean the margins actually are very high, right? And I'm just wondering if there's anything at the moment that is special. And in particular, I'm looking at the net income margin. I mean we got a very low tax rate because of some tax loss carryforwards. Is there any reason we should expect to see that normalize a bit in the medium term?

I would say there are no special items, neither in the U.S. nor in Norway, so it is just business as usual. I think what is unique is the product. It is a great product with great underlying markets that offers an incredible value to our customers. We were capable to increase volumes to the market as well as an adequate pricing. So I think it's just what it is. And it's going to grow before it goes up because there are no exceptional items hidden in these numbers. It's just a good business.

Okay. Pretty nice business as usual.

Thank you.

Next question comes from the line of Ebrahim Homani from CIC.

So maybe one question on the next step to expect. So now the -- maybe the CapEx and the acquisition will be only focused on critical mineral branch. That's my first question. And the second question about the lithium activity. What will be the place of this activity in the new organization of Imerys?

I disagree on the first part, Ebrahim. I think Imerys has -- as I said, this business represents slightly above EUR 400 million for Imerys, including the 50% -- our 50% share in TQC, growing very fast. But it still represents, let's say, 10% to 15%. So there is another 85% to 90% which is profitable and it's our bread and butter. So acquisition will continue and are currently in discussions for the rest of the business as well. On the contrary, I think this market is very niche with very few players so probably not so easy to make big moves. We would love to in both Graphite and Carbon and Quartz, but it's small, so we expect acquisitions in the other side as well. And in terms of lithium, we published a sentence in the press release. We didn't discuss it today in the presentation. But one day, if lithium is up and running and producing, it's a natural housing to put it here because it's again, a critical mineral for the energy transition. So potentially, 1 day, yes, we are a few years away from producing and selling lithium, as you know. So for the time being, lithium will be run as a project, and the project management strict overview. You know that we consider inviting a partner. We will need to discuss the proper financing. So we are a bit far away yet from a full integration.

Maybe one last question about the graphite quality. Is there a big difference between the quality of your assets and the Chinese graphite in terms maybe of efficiency or...

Yes. Definitely, yes. I think the Chinese world has focused on the bulk, on the volume for the anode material, as I said, everything between $1 and $4 per kilo. There is much less interest to produce niche products with very high purity, different shape, different BET and so on, that it might cost $6, $7, $8, $10 per kilo easily. So it's really -- I would say we are below the radar screen, if you want to say so very big difference the bulk of production in China and our very high special. For example, we are a small part of a huge market. By the way, like in carbon black, carbon black main application, as you know, is for car tires. We are talking about hundreds, if not millions, of tons. And here is a small niche market, very different.

There are no further questions at this time. I would now like to turn the conference back to Alessandro Dazza for closing remarks.

Thank you very much. And I think we took an hour of your Friday morning. Thank you very much for listening. I think it was important because I believe the value of these businesses was not very clear. And I remember the many questions you have posed during our financial results in February, the full year financial results presentation, that's why we got putting clarity, putting numbers to these businesses, bringing the right organization will help you understand the value, what they represent and what they are and what they mean for Imerys. And I'm sure more question will follow because we assure these businesses will continue to grow and represent the pillar for the energy transition and polymers. Thank you very much and -- to all of you. Have a good weekend. Bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.