Metro Mining Limited (MMI) Earnings Call Transcript & Summary

Good afternoon, everybody. Thank you for joining us. We are looking forward to a very insightful presentation here on aluminum and bauxite in the global economy presented by the CEO and Managing Director of Metro Mining, Mr. Simon Wensley. There will be some tougher questions at the end of this presentation. We look forward to taking those questions then. I'll now hand it over to Simon.

Well, good afternoon, everybody. I hope everyone is well. In that context, I just wanted to just highlight something we do in the mining industry every year, which is the Are You Okay program. Today is the Are You Okay day. It's a reminder to check in on your family and friends and colleagues around their mental health and just to be asking whether they're doing okay. There's a lot of stress around in the economy at the moment and in our lives. So it's always good to check in. So I thought I would just start that with a safety share. So look, today, I'm going to be talking mainly about the market, particularly about the drivers of growth in our sector. And also why you shouldn't be too worried about construction declines in places like China and indeed steel and iron ore pricing, maybe not being a good indicator of how the aluminum value chain and bauxite in particular, is faring. So we'll do a bit of compare and contrast with that and other minerals and other metals in the energy transition. We'll end with a bit of pricing news and update and also talk a little bit about the Australian aluminum industry and what we're talking to the Australian government and the Queensland government about in terms of support and the things that we want in terms of policies. So I'll sort of end up on that. So look, I'm not just trying to share my screen. The presentation is on the ASX today. So if you want to follow that in your own time, you can do, and it will be there on our website as well. So the title of this presentation and indeed, it's a program that the Australian Aluminum Council is running is called aluminum can. Obviously, it's a play on words around one of the more traditional uses of aluminum in beverage containers. But obviously, aluminum is an extremely versatile metal. It's got so many diverse uses. And indeed, that's the reason why the aluminum is a sector that we are going to say that you need to be in. And of course, aluminum has a bauxite inside and my shameless stealing of the logo from Intel, with all credit to their marketing people, very, very relevant to this in the fact that bauxite is the only way that you can make primary aluminum. But we will touch a little bit also on the recycling of aluminum as well. Look, I'll draw your attention to the disclosure statement as we always do. And this will be the agenda for today. So in particular, why should bauxite be one of the upstream critical or battery mineral products that you should have in your portfolio? Why you need to be long in bauxite and why you need to be long in bauxite now? And we'll cover all of these items during the presentation. So firstly, look, aluminum is already essential. It's been used for decades and decades, almost all of the last century and this century in things like food wrapping, in containers, in construction materials, but that's not the story moving forward. This is a list of critical mineral needs for elements of clean energy. And what you see here are things like transportation, EVs, the batteries that power those EVs and then you have networks -- electricity networks, grids, poles and wires, then all of the different low or zero carbon technologies that are under rapid development. Now right away from solar through to nuclear and all of those, everything in between, including hydrogen, what you'll see on the right-hand side here is that probably along with copper, it is the most important element. But the difference, say, between copper and aluminum is the intensity of the use of aluminum in these end uses. So what does that mean? Well, the growth in aluminum is not coming from construction. It's not coming from so much oil stock or things like that. You'll see here that we're getting 60% growth in transportation. So planes, trains and in particular, automobiles, so EVs. We're getting 50% growth in the areas of electrical, solar, renewable energy, et cetera, et cetera. So this is a very diverse demand profile. And what that means is that we're going to see 40% growth in aluminum over this current decade. And so that's about 3% to 4% per annum. And most likely, that will be higher than global GDP growth through this decade. And as I said, construction is not the major story here. So let's have a look at the scenarios for growth. So the World Bank has done quite an in-depth study of technology growth through the next few years. And this is focused here only on energy generation. So let's look at a bit of a deep dive on energy generation. So here, we're just talking about how to generate electrons through technology. So what you can see here then is the mineral use. And you can see here that aluminum, and these are scenarios, so you've got the base case, which is -- base case still contains growth for aluminum, obviously, in all of its traditional uses, and that's what you call a 4-degree scenario. And there's a bunch of different technology scenarios. And the 2 most important ones, what are called, the 2 degree, the B2DS scenario, which is the 2-degree scenario. And then you've got this high growth, which is called the remap or the renewable energy road map scenario. And so in those 2 cases, what you see is about 120% growth in that 2-degree scenario and then a significant 300-plus degree growth in aluminum demand from that remap scenario. So let's just take that middle -- mid-case 2-degree scenario. Let's just draw out one this -- what does this actually mean for aluminum. So total aluminum demand from an energy generation alone is likely to be an additional 40 million tonnes cumulative until 2050. So over the next sort of 35 years. So that mainly is coming from solar. You can see the yellow there, but a significant chunk from wind and a bit from the other. So that's just an example when you drill down into 1 sector within this demand growth. And if you look at that in a different way, you look at how that compares, just in this sort of energy, sort of space, well, aluminum demand, if you annualize that, it's, say, about [ 60 ] million tonnes per annum or around about 30 million to 40 million tonnes of bauxite per year. So that's roughly 5 to 6 or 7x the size of Metro Mining's output every single year and incremental growth of that demand. Well, that's greater than all of the copper, all of the nickel and all of the lithium combined into one. So aluminum outpaces all of those 3 elements combined. Let's have another deep dive into another sector. So let's look at transportation and in particular, electric vehicles. So here, we've got the EV car industry. Obviously, aluminum is lightweight, corrosion resistant, it's durable, high strength, low cost certainly compared to other lightweight metals and it's also electrically conductive so for about 70% of the connectivity of copper. When you look at the intensity of use of aluminum and here's some numbers for the Europe, you can see on average, across all cars in Europe that you're going to see almost a doubling of intensity of use over the next -- even the next 10 years. And so -- and within that across the globe, we're going to see probably 40 million electric vehicles. And what's driving that growth is that electric vehicles have about 30% more aluminum intensity than an internal combustion engine vehicle. So -- and there's an example there. Tesla Model S, which has got a completely aluminum chassis. We know that Jaguar and others are also doing the same thing. But that's not the whole story. The battery of which there are sort of hundreds of kilograms of batteries within each of these EVs has aluminum as the second most important element. So here's a typical EV battery. And you can see aluminum here, roughly about 20% of the total materials of a battery and it's housing. So that comes from enclosures, casings, cathodes and current collectors within the battery itself. Then additionally, you've got electric vehicle charging infrastructure. So particularly around the cables, the housing, heat sinks and the screw parts for the charging. So within that industry, what we're seeing is a 60% increase in that aluminum consumption from the transportation sector just to 2030, right? So let's just go back to basics. We're talking here about aluminum, but of course, aluminum is made from alumina and alumina is made from bauxite. This is the only way that you can make primary aluminum. And it takes roughly 4 to 6 tonnes of bauxite to make alumina and almost exactly 2 tonnes of alumina to smelt into pure aluminum. And then aluminum is energy intensive. And of course, if you say, well, hang on, it's energy intensive to make aluminum, well, you'd be right. And that obviously is something that the aluminum industry is facing head on in terms of how it's going to reduce its carbon intensity. But one of the great things about aluminum is it is extremely recyclable. So -- and recycling saves about 95% of the energy compared to primary aluminum. So you still need primary aluminum in many end users to get the quality that you need. But once it's there, it can be recycled and recycled. So about 75% of the aluminum ever produced is still in use today through the recycling of it. So it's got a green circular economy aspect to it as well as all the other aspects that we've been talking about in terms of its use in that decarbonization story. So let's have a look at this comparison. So I talked a bit at the beginning, there's been a lot of negativity, and I obviously seen our share price get hit over the last few months through some wobbles about the Chinese economy and about construction and about all of the things that are going on in that sector. So what you can see here over the last 12 months, and this is 12 months until the beginning of this week, you can see that steel and iron ore prices have dropped by over 20% over this last 12 months. But when you look at aluminum and you look at alumina and bauxite, you can see that between 10% and almost 40% rise in those prices over the last 12 months. So at the same time that steel and iron ore are dropping, you should not assume that the same dynamics are affecting the aluminum sector. So in fact, indeed, whilst weakness in the construction industry, is likely to persist for a bit longer, actually, aluminum is partly driving the replacement of steel. So construction, as I showed earlier, is only about 25% of aluminum demand in 2020, and that's really declining as a proportion. So it's likely to be only 15% to 20% of the total demand profile for aluminum by the end of this decade. And so aluminum is actually replacing steel in many applications. Aluminum is replacing copper in many applications. And you can see that, that sector, as I said -- and so our customers have seen about a 40% rise in their end-use price in the last 12 months and bauxite is following along in that trend. Let's just look at bauxite in a bit more detail. So here's the sort of proxy for the trade in bauxite market in Asia Pacific. This is the imports into China over the last 10 years and looking forward to 2030 and you can see Australia on the bottom of that graph. And you can see there -- obviously, from a demand perspective, these rates over the last few years, you can see the rapid rise in bauxite over the last few years after the COVID sort of drop. That's been 13% year-on-year last year and about 8%. So that's obviously higher than aluminum is growing. So there must be something else going on here that's allowing bauxite to grow -- bauxite trade to grow, and I'll talk a bit about that in a second. But obviously, the underpinning is this growth in aluminum, the growth therefore in demand for alumina and therefore, the growth in demand for bauxite. But we were talking about 3% to 4% growth. So why has bauxite been growing at double digits? So 13%, and this year, we may hit double digits. Again, it's already about 8% up on last year's record. So firstly, Chinese bauxite is under pressure. So China has been a significant producer of bauxite used to produce over 100 million tonnes of bauxite. And that's been under pressure, mainly from grade. So they're running out of resource effectively. It's getting deeper, so it's going to become more costly, becoming more difficult to extract, more difficult longer distances to transport. So cost is a major issue. But one of the major ones is regulation. So safety and environmental regulation in China has been really ramping up, not just in bauxite but in iron ore production, in coal production, in all of the different mining sectors. And this is something that is not going to go away. It's an inexorable trend as China tries to meet Western World standards in its mining sector. Look, Guinea, you can see there, has been growing as a supply into this demand. It's been growing significantly. It's now almost by itself 100 million tonne producer. But the new entrants that are coming in -- it will continue to grow, but the new entrants coming in are lower grade. They're further in land so therefore, trucks and trains, et cetera. They're mainly relying on contractors to do the work. And so they're quite high cost. So they're coming in at the right-hand side of our cost curve, which will actually -- they're meeting demand, but they're actually increasing the marginal price of -- at that 90 percentile of the cost curve. So that's actually, in my world, a welcome thing since we're reducing our costs, but the cost curve is actually rising on to the right. There is actually a short-term issues every year like Metro and the Northern Queensland suppliers. We do suffer monsoonal interruptions. That's currently happening in Guinea. They're having one of their biggest monsoons over the last sort of decade or so. So we're seeing exports out of Indonesia dropped by about 25% to 30% over the last sort of month or 2. You can see Indonesia here as sort of in the light gray, is coming -- it's come out. Look, there's been -- it came out of the mix in 2023, been a few rumors around about bauxite exports being reconsidered. Look, I personally think that's unlikely to happen. However, if it does occur, it will have not very much impact. So look, prior to the ban, Indonesia exported about 20 million tonnes. About 15 million tonnes, the gray portion here was going into China. The reason that they banned the exports was to incentivize the construction of refinery capacity inside Indonesia. That has worked. They -- there is about 3 million tonnes of new alumina refinery capacity under construction now and under commissioning. In fact, the first of those plants commissioned this quarter. That will absorb about 10 million tonnes, which we can see the endpoint of those refineries in the next 18 months to 2 years. So over the next couple of years, 10 million tonnes of bauxite will be absorbed. There's a further 3 million to 6 million tonnes per annum of refinery capacity in the planning phase. Some of those are expansions of existing refineries, so brownfield, so likely to be implemented. If the exports relaxed out of Indonesia, then I think that's going to risk multibillion-dollar refinery investment. So these are not like little nickel smelters off the shelf. These are large pieces of equipment. The normal ready regular is about 1 million tonnes of refinery capacity, is about USD 1 billion of investment. So Indonesia will be risking the investment of another $3 billion to $6 billion in their own refinery capacity in Indonesia, if they don't stick to their guns here. Look, however, nothing is impossible. If Indonesia does relax that ban, the Asia Pacific market now, if I look at these imports to China, plus the Chinese own market plus what goes to India and the Middle East, we're talking about north of 250 million tonnes of this market. Even if that remaining 10 million tonnes was to come back in, we're talking about less than 5% of the total market here, probably more like 2% or 3% or so. So this isn't likely to be a major impact on the medium- to long-term market dynamics. So let's look at price. Look, this is a timely presentation. So this week, we've seen another 3% -- sorry, another $3 rise in that Australian bauxite price. You can see here, this tick up this week. That's taken. That's about 5% rise over the last week so that takes the Australian spot price benchmark as produced by the CM Group to about USD 63.5 per dry tonne delivered into China. So that's up almost 60% over the last -- or since the beginning of 2022. What that tells you is, look, and you can see that rise over the last 6 months or so, probably the strongest rise that we've seen -- been over the last sort of couple of years. Obviously, bauxite's in short supply, both contract and spot. With an indicator of that before this most recent rise back in this sort of period around here, we negotiated a cargo into China, which is part of a contract, but they were single cargo negotiations as part of that. It was a $53 delivered into China outcome. So that gives you a sense of where Metro's prices are coming relative to this benchmark, which is the effectively Rio Tinto's high-grade bauxite equivalent grade. So look, spot prices -- these kind of spot prices will take 1 to 2 quarters to flow through into long-term contracts. So that will depend on the contract structure that we've got, but they will flow through eventually to all of these contracts. And in the next couple of weeks, in fact, about 10 days' time, I'll be heading off to China to conduct the negotiations for the open contracts in China -- to our Chinese customers for the fourth quarter. So obviously, this will be playing a significant role in those negotiations. Look, a quick chat about the Australian industry. And I know that we are an exporter of bauxite that may not always be the case. But look, we benefit -- Australia benefits from the vertically integrated nature of the aluminum industry, over $15 billion -- sorry, I don't know why this is going forward. So over $15 billion in export revenue, $50 billion of effectively capital replacement, and we spend about $5 billion locally in the market. The -- sorry, I don't know why these slides are automatically moving forward. It seems to be some sort of automatic flip here. Anyway, so there's about 20,000 direct jobs in -- that come out of the aluminum industry in Australia. About 75,000 total jobs that includes indirect induced, et cetera. And our average wage is about 160% of the average manufacturing wage in Australia. And you can see as an example there, obviously, Metro being in the far North Queensland, most of these aluminum jobs are in the regions. So indeed, our 400 employees, we have over 30% indigenous employees and about 80% of our total wage spend is in the North Queensland region. So it's a very important industry. What we're talking to government about is that, look, with the right policy settings, we think that the aluminum can and can do more for Australia. We think that -- we have already almost a unique vertically integrated aluminum value chain that, that value adds here and also provides a big export revenue source and almost all of these jobs are in the regional areas of Australia. We need the government to step up and play an important role in prioritizing the aluminum chain as a green metal in terms of all of the end users that we talked about and its recyclability and in particular, to give us a critical mineral status. Bauxite is a critical mineral and most of our -- most of the countries around the world in terms of Europe and the U.S. And so this is not so much about kind of local grants or other things. It's all about the global pool of capital being assigned to critical minerals. So us seeking equal status to be able to get U.S. funding, European funding, et cetera, with that profile. We're obviously also looking at trying to stay competitive as we transform our business from -- into a lower carbon economy and into a lower carbon output. And we're looking also -- so bauxite, in particular, requires a balanced and rapid process of approvals. And so we're going to need that as we move forward to expand our business in the future. So Bauxite is a critical part of a vertical -- vertically integrated value chain. So look -- that's where we've ended up a quick snapshot of the company, as we are at the moment. It's -- we obviously made tremendous progress over the last year, seen a bit of weakness over the last sort of 3 or 4 months. As I said, some of that, I think, has been due to this sort of global resources, uncertainty, maybe China uncertainty and indeed led by some steel and iron ore uncertainty. But I think that given our ramp up, given that that's going as well as we might have expected after a slightly delayed start, I think that -- Metro, I think, is looking pretty good value at the moment for you as investors. So anyway, look, that's the end of the presentation, but I'm very happy to take any questions.

Thanks, Simon. It's a quite comprehensive and some great insights there. I'm going to start off with this first question. Higher prices incentivize more production. Are there any other major global projects expected to come on in stream in the short to medium term? And I was going to add to that, why isn't being more genius in Australia exploring for bauxite deposits?

Well, it's a great question. So the answer is yes, and I did touch on it in terms of the growth. So we can see here in the forecast for -- these are imports into China, but it goes for, I think, the wider Asia Pacific and even globally. West Africa has been a place where barriers to entry have been a bit lower in terms of the approvals required. It's been fairly quick to get projects online. But the -- as I said, the quality -- there's -- aluminum, I think -- is, I think, either the first or second most common element in the earth's crust, but finding it in sufficient grade to actually put it on a ship and move it around is actually -- it's pretty rare. So particularly when you look -- so if you look at a grade like we've got up on the Weipa plateau of 50%-plus AL203, so aluminum oxide. That is almost unique. You've got some deposits in the middle of Europe and China have some higher alumina, but they're hard rock deposits, and they've also got extremely high levels of other deleterious elements. So getting the right mix of alumina and bauxite is not -- sorry alumina with other things like silica and iron oxide and even some poisonous elements, things like sort of the small minority elements is not easy. And so the -- there are some projects, and you can see this other -- this dark trend at the top here, there are some other projects outside Guinea are growing, Ghana, Cameroon, a couple of small projects. Vietnam's project coming there that maybe in Laos. There might be a small project. But these projects, if they've been high-grade and easy to develop, they would have happened already. And I think that from my point of view -- and so even in Australia where we see good conditions. So we've obviously had production out of Northern Australia for a long time out of gov and out of Weipa. There aren't that many other projects that are -- and it's taken -- back in the days when those projects were developed, so capital costs were much, much lower. And so these days, with capital costs significantly higher, it's a rare combination that allows you to get an economic project even at the prices that we're talking about. So there is exploration going on in Australia, but the number of projects that are there are very few. I think only -- I can think only 2 export-oriented projects that are potentially coming on, but are still stuck in that sort of environmental assessment and feasibility status.

And following from that question, this one suggests Slide 9 shows Guinea production has risen from nothing to 100 million tonnes per annum in 9 years, why can't Guinea continue to increase production at a similar rate moving forward?

I think the answer to that is -- one is resources. So we're seeing the newest projects that have come on in the last couple of years have been significantly lower grade. So in terms of alumina levels and silica levels, they're still reasonable and can compete, but they're not -- they're certainly not as good as the projects that have been commissioned in the earlier years. I think the other part is that I think in these early -- certainly since 2015, so over the last 10 years, there hasn't been a great deal of regulation over the Guinean production. The government there at the moment is starting to cotton on to the fact that one work is not being paid properly; two, there are environmental issues occurring around the mining and also the transshipping; three, the exporters are not paying the proper income tax. So they're actually transfer pricing at low prices so that the government and the economy of Guinea is not reaping its fair share of royalties or taxes, in terms of those -- the exports that are going out. And so these are all significantly adding to cost. And then, of course, they are also going through their own -- they're looking at Indonesia saying, well, okay, why shouldn't we have refineries inside Guinea. And so they're putting a lot of pressure on the exporters in Guinea to come up with projects -- multibillion-dollar projects to bring refineries onshore. So these are all factors in probably slowing the growth there in terms of the ability for that to stay at the same sort of rate. We've seen -- you see that in a lot of other locations where you have rapid growth, and then there's a period of stagnation as some of these other factors come up to weigh down on that growth profile.

And Simon, is refining capacity currently maxed out? Is there extra capacity? Is there a planned capacity for planned production to be met?

There is a bit of extra capacity. I mean China had been running at about 85%. I think low 80s, 85% utilization. What you can see with this price rise over the last 12 months is there's quite a bit of alumina capacity coming back on. So we look at -- our customers had been idling capacity because of lower prices in alumina. Now that's changed, and they're starting to turn back on the alumina lines. The aluminum capacity is higher utilized and that tends to be limited by electricity supply and pricing. So as we get to more variable supply of electricity -- so for example, if you're looking at hydro-powered electricity, where a grid that has a hydro, then there are seasonality aspects of that. And more and more, even in China, we're seeing variable electricity pricing, which is potentially constraining the output in aluminum. But effectively, it's running, I think, at that 90% level. So we're seeing increasing utilization in alumina. And in particular, what we're seeing in China is closure of inland refineries and opening of coastal refineries. So higher cost refineries that have been reliant on older Chinese bauxite mines are now closing because they can't get the bauxite and it's expensive -- they're expensive to run their old technology, are being replaced by new alumina refineries on the coast, which is great for us, as we are obviously seaborne suppliers. They're being built next to big ports. So those are the new refineries. There's probably, I'd say, 15 million tonnes of new refinery capacity on the books in coastal China as we talk, plus those sort of 3 million to 6 million tonnes in Indonesia. So there's a few -- a couple of million tonnes in India. So alumina refining capacity is still growing, and that's obviously our key target market.

And Simon, is there a price scenario where aluminum start to see replacement or -- with steel or vice versa? Is there a price where aluminum manufacturers end users will look for other materials? Or is there plenty of room in that structure?

Yes. So I think it's a good question. And I think the price is 1 factor. I think what you saw -- what you see in that discussion at the start is that all of the other factors also in particular, the lightness and the natural corrosion resistance. I mean, with steel, you have to add, a whole bunch of other alloying materials to get -- so steel might seem cheap when you look at hot-rolled coil or rebar. But when you've added the alloying material into that to create a galvanized or a lighter weight, you're not far off the price of aluminum. So the pricing is only 1 factor, the lightness, the durability, the conductivity. All of these other aspects are factors. So look, aluminum prices are still -- despite these rises, still sitting in the sort of mid 2,000s per tonne. So when you look at copper probably 3 to 4x the price of it, nickel even further, you really are still a long way away from getting price parity here.

So we're looking a little bit more closely with Metro's business. Can you comment on the stated margin of AUD 15 tonnes for 2024? Is this looking on the low side given the pricing increases?

Yes. Look, I think we're in the ramp-ups that we've seen in the last couple of months, then we're pretty much -- we're now pretty much getting to that level of margin. So I would be hoping that as we continue to ramp up in the fourth quarter that we do see a little bit -- we're going to get to see a bit more price coming through to our contract book and also economies of scale continuing to go. So I'm expecting us to continue to touch wood hit monthly records right the way through to certainly November this year, and that should also continue to drive the cost down. So look, we're already -- we announced at the beginning of this month that August has been a record in the sort of 730,000 tonnes. We should be -- I'm hoping that we're going to be around about that 750,000 to 800,000 tonnes for this month, and that will continue to drive our cost down. So look, for this quarter, certainly, that's where we're aiming, and I'm hoping that in the fourth quarter with some of these prices coming through and further economies of scale, that will look like it's -- we'll be above that number, but, look, that's yet to come.

And Simon, are you seeing a premium for the product that's coming out of that Bauxite Hills?

Look, we -- I guess it's all relative. I mean we see the pricing -- as I mentioned here, this is, obviously, a consultant sort of view of the market using trading statistics and et cetera. This is sort of a spot -- effectively a sort of spot price for the highest grade material coming out of Australia with Rio Tinto's Amrun grade. So we trade at a discount to that. I mean it's not -- as you can see there -- as I said, we did a $53 cargo when the Amrun price -- spot price was roughly at that high 50s, $60 sort of level. So that gives you a sense of what our kind of price relativity is to this. The Guinea price, you can see, is a bit higher again. And that -- what we can see and we -- I've been flagging this for the last 18 months that this Guinea price and Australian price has been -- the difference has been way too high in terms of roughly $20 difference. We're now getting to a more sustainable $8 to $10 difference between that Australia high-temperature benchmark and the Guinea benchmark. So there's a bit more upward. There's a bit more of that to come. Even if Guinea bauxite stays the same, there's still a bit of upper movement there. I expect Guinea price to go up, by the way, still over the next 3 to 6 months again, but there's still a bit more of closure of that gap. So look, it's all relative. There's a value in use for all of these bauxites, and there's also a contract book that sort of lags the spot price. So obviously, you never have a 100% of your book at spot. In fact, we've had very little maybe 3 cargoes or 4 cargoes, if you like, on spot this year. Now my intention is to get -- as we get through this contracting period, have a bit more spot material open as we go forward into 2025 and 2026. So hopefully, we can get a bit more of a rapid sort of price transparency through to the contract book. So yes, look, it is all relative. And Metro's quality is up there, but it does trade at a discount to this high-grade Rio Tinto's Amrun grade.

And a bit more Metro focus, the company strategy to pay down the debt.

Yes, sure. So generating cash is the first core to arms. That is what's going on at the moment. We are steadily paying down the debt. I expect all of that to be paid through this year. We're also looking to obviously build some cash reserves for the back end of the year to go into an important sort of wet season maintenance period for our assets. So look, the junior debt will be paid down. We don't start amortizing senior debt until next year. So that's -- and that will be part of next year's strategy as well. So yes, look, that's the idea. I'm hoping that by the end of next year that we've started to pay down, obviously, that debt, but actually, we're in a surplus net debt cash position to actually do -- be able to return something to shareholders that have been on this journey with us. So look, I think that's certainly the plan over the next sort of 18 months.

We might round this out with a question on the operations through the ramp-up to where we are today, new equipment that's been on site. We've seen some videos around some of the loaders. We've seen some footage of the Ikamba and [indiscernible] the operations on-site matching your ramp-up plans?

Yes. Look, the ramp-up itself is going pretty much, as we had planned and I had expected. I think we have been a bit too aggressive at the start of the year, maybe with everything coming on in that April period and starting to ramp up. So as I flagged to the market already, we're probably about -- if I look at that ramp-up profile, it's actually happening pretty much as we had planned, but it's just happened displaced by about 6 weeks. So we're now in the green zone. We're now operating in that sort of target zone of between sort of 26,000 to 28,000 tonnes per day. That's where we targeted operations for this year -- for this period. That's where we were hoping to get to -- that would have -- that delivers the 7 million tonne run rate. We won't hit 7 million tonnes in total shipments for this year, but my expectation is that the run rate now we're in that zone. So yes, look, the ramp-up other than the delay at the start for various reasons, which we've gone into in the various quarterlies and announcements before the ramp-up itself is going as I had hoped. There's always going to be little swings and roundabouts there. And there's still a few more improvement things that we're factoring in, but I'm very happy with that profile, and we still have an upward trend.

All right, that completes the questions we've got here today, Simon, I'd like to thank you for that presentation and some really good information for our audience. Thank you, everybody, for joining us. Simon is always happy to respond to any e-mails on questions that come through. So please to send those through to either himself or [email protected]. I'll make sure you get some. Simon, thank you very much for this afternoon.

Great. Okay. Thanks for your time, everybody.