SSAB AB (publ) (SSABA) Earnings Call Transcript & Summary

Welcome to SSAB Capital Markets Days of 2023. My name is Karen [indiscernible], and I'm going to be your host today. It's great to see so many people here in Stockholm. And there are also several attendees online, a very warm welcome to you as well. We have an interesting and hopefully inspiring day ahead of us. So let's have a look at the agenda. We're starting with transforming the future of steel and introduction by the CEO, Martin Lindqvist. Then we'll have a steel industry outlook by Viktor Strömberg. Moving on to the divisions, starting with global leader in high strength steels by Johnny Sjöström, Nordic leader in premium steels presented by Olavi Huhtala. And then moving on to North -- market leader in North American plate by Chuck Schmitt. After that, you'll have the opportunity to ask your questions. There will be a Q&A and then a coffee break, approximately around 02:45. After that, it will be mostly all about sustainability, leading sustainable product offering by Tony Harris, future production footprint by Carl Orrling and sustainable raw materials, Viktor Strömberg is coming back, followed by a Q&A. And then Leena Craelius will present a more profitable SSAB. And then Martin is coming back, followed by Q&A with Leena and Martin and then a summary in the end. So I think there's going to be lots of interesting and as I said, hopefully, inspiring information. But I'd like to start by welcoming the CEO of SSAB, Martin Linvist. Give him a warm welcome. We've been waiting quite a long for this day, but finally, we're here. How does it feel?

We are here. It feels great. I mean to see all of you here and that you took the chance to come to Stockholm to our big surprise, we have winter this year as well, but the room is full. So I think that's great.

That's great. Wll let's not waste any more time. Please, Martin, the floor is yours.

Thank you very much. My starting point would be where we are today, and then I will try to describe the journey we have ahead of us. And we will deep dive into most of the areas. I'm going to present by the divisions or by Tony and Carl and Viktor. But Last year, we delivered 3 million tonnes of Q&T and premium steel, which was a record. We also delivered 500 tonnes of fossil-free pilot shipments to customers. And we saw the first Commercial vehicles produced by fossil-free steel on the market. We kept the market share, the important Nordic market share at or above 40%. And if we take the core markets in the Nordics, Sweden and Finland, it is well above 50% better market share in U.S. at or above 30% when it comes to commercial plate. So I would claim that we have a strong starting position. If we look at profitability, last year was obviously a record year, almost SEK 33 billion in EBITDA. And that was the second year in a row with record profit, and we were able to already 2021 close the year with a net cash position. And last year, the net cash position ended up at 14.3%, and we will come back and discuss cash conversion possibilities and future cash flow development later today. Another important part or a target that we did not fully reach was to become the safest steel company in the world. I would though say and claim that the progress we have seen, especially since 2018, when we started to work with this in a more structured way has been very positive. We closed last year, and this is lost time injury frequence per million hour at 1.1%. And so far this year, we're at 0.9%. So clearly, a good development, but not yet the safest steel company in the world, but well on our way to reach that target. And why is that target so important? And this is a KPI also including contractors and sub-suppliers. First of all, we are in an industry where you can hurt yourself every day if you don't pay attention. So it is very important. And then secondly, the correlation between a safe company and a well-run company and a profitable company is very, very high. So that's why this, for many obvious reasons is a very important KPI for SSAB. What have we then been focusing on the last couple of years as part of the plan of keeping or putting SSAB in shape to take the next step on our transformation journey. We have focused on resilience. And with resilient, I mean, lift low point profits to make sure that we don't only earn a lot of money when the business cycle is strong. but we also lift the low point profit points. We have focused mainly in 4 areas, mix improvement, channel development, structural synergies and continuous improvements. And the good thing with these areas are that we can focus and work within these areas independent of business cycle. And sometimes, it's even easier in a tough cycle to do changes. But these are the areas we have been focusing on. And if we start with channel development, I'll give you some examples. We know that when we sell our steel directly to end users and skipping the middleman or the many in between. And especially when we do that, to the small and fragmented market of small and fragmented segments, we earn more money per tonne, and we have less volatility in our earnings. We have been selling and closing Ruukki construction in Russia. We have been selling Ruukki building systems. We have been closing businesses that were not core within other parts of Ruukki. We have been investing in outlets. We have been investing in a broader product portfolio in Ruukki Construction. We have in Tibnor bought the second biggest distributor in Denmark Sunystore, which is now fully integrated into Tibnor. And the last years, we have opened in the Nordic regions more than 20 outlets under the umbrella of handelsstals [indiscernible]. We bought Abraservice, and we are building out the service and aftermarket network within special steels, and I know that Johnny will come back to that. And we have today, well over 500 Hardox Wareparts suppliers on our network. So this is a way of having control of the channels to mainly the small and fragmented market. Structure synergies, very important. I mean, the cost saving programs that we are running in the group. We do that in Ruukki construction. We have done it in SSAB Europe. We have done it in Tibnor. And then continuous improvement or what we call internally SSAB One, the way we work with continuous improvement, but we set the target from group level with the ambition of reaching SEK 1 billion per year, break it down to the divisions. The division breaks it down all the way down to shift teams. And then we work with it bottom-up in order to achieve those targets. We have a small group of controllers following this up and tracking it to the P&L because if it's not visible in the P&L, we don't deem it as existing. So this is also a way of building a culture of doing things slightly better today than yesterday and better next week compared to this week, and I will give you some examples. If we start with mix improvement, and this is starting 2016, then we had 2/3 of our volumes to the market was standard steel. And if you look at the outcome of 2022, roughly or a bit more than 50% of the volumes to the market was standard steel. And if we look at the average gross margin indexed, and these are our gross margins, 2016 to 2022 and put standard steel at SEK 100, then premium steel would be at least SEK 120 and special steel would be at least SEK 200. So every kilo we can move from this gray area into this area or even into this area makes a huge difference when it comes to profitability. So that's very important. The second important part is that this also reduces volatility. The standard products or the most volatile products we have in our portfolio. If we take the premium products, they are less volatile and also over a business cycle on a higher level. And if we take special steel products, they are, if not flat of the business cycle, but much less volatile and always on a higher level. So every kilo we can move from standard products into premium or special steels makes a big difference in profitability and makes a big difference in volatility. Two real examples. This is standard hot-rolled coils outside the Nordic region. I would claim our least profitable product in the portfolio with over a business cycle close to 0 in gross margin and in tough business conditions, negative gross margins. In 2016, we had 400,000 tonnes or a bit more than 400,000 tonnes of these volumes in our portfolio. 2022 we had just below 200,000 tonnes makes also a big difference when it comes to profitability but also volatility. Another example is sales channel or sales model in U.S.. Back in 2016, we sold 1.2 million tonnes of steel via service centers. Last year, we sold 1 million tonnes. And you could claim that well, 200,000 tonnes is not a big difference. It is 17%. And the good thing is that when we sell it directly to end user, instead of going through steel service centers, we have better profitability and less volatility. And the funny thing with steel service centers segment, they also speculate with the stocks. So when prices are moving up, they are restocking and when they expect prices to move down or when prices are moving down, they are destocking. So this segment actually adds to volatility. So every kilo we can move directly to end users, gives better profitability and less volatility. So I would claim, if we look at this, what we structurally have achieved and using 2015 as a starting point. We have structurally with the cost programs, with the channel development, with the continuous improvements with the mix improvement and here using 2015 prices and margins, we have structurally lifted our profitability with more than SEK 5 billion per year. And this is, of course, a never-ending journey. This job is far from done. We will continue to focus in these areas and develop the profitability and reduce the volatility. If we then look into the future and look what we are aiming to do and start to discuss that. I would like to use this picture and clearly say and state that the strategy of SSAB clearly remains. We will continue to focus on global leadership in high-strength steels, improving the mix, develop new products, and you will hear a lot of examples from the division heads today. Keep focus on the very important Nordic market. The North American home market continue to develop channels and sales models in order to have a better penetration within our core segments. And to that, we will add the transformation into fossil-free steelmaking. And I will give you a number of KPIs and examples, and we will deep dive into this later today. But this transformation, everything else equal, will give us a lower cost per tonne, better efficiency, shorter lead times, improved flexibility and also higher capacity or capability of advanced high-strength steels and premium products than we have today, and I will come back to that. So one way of looking at the transformation plan and looking how we develop the portfolio is this one. We are here today. We have started with the pilot shipments for fossil-free steel from sponge iron. We are today introducing SSAB, and I'll come back to that on the next slide. And then you can see how we gradually plan to take away the production system and meeting carbon dioxide, coke oven batteries, blast furnaces and so on. And we plan to be fossil-free somewhere around 2030. And that journey, as I said, started in the film, started already 2021 with the first shipments to customers. And today, we are launching SSAB Zero, which is a steel produced in Iowa from scrap using fossil free electricity, biocarbon and zero emissions, Scope 1 and 2, 0.0 kilo carbon dioxide emission per kilo produced steel. And this is third-party verified. So no allocations, no mass balancing, nothing, just taking away the emissions. And we have produced the first batches. Our ambition is to produce at least 40,000 tonnes this year. The interest from the market is very big, and we have actually sold the first volumes of the first tonnes. And this is important because we have also established a premium for these kind of products of EUR 300 per tonne. And you could say EUR 300 per tonne. That's a lot of money. Yes, it is a lot of money. But to put it in perspective, if you would take just as an example, a typical car in Europe that consists of roughly 1.5 tonnes of steel and put these margins on in order to cover the increased cost for the OEM for this steel, you actually only have to increase the price with 1%. So in the big scheme of it, EUR 300 per tonne might sound like a big premium. But for the end user and for the consumer, the end consumer, it's not that big. So this is important and as said, available from Q2 on the market. Tony will come back to it, but a lot of orders on it for those kind of volumes already today. And this is an important part of our journey towards fossil-free steel production and fossil free products. So then moving into that journey. I use this picture and call it a step-wise transformation until 2030. With that said, the production of 0 steel in Iowa already today were actually during Q1. And continue with pilot shipments of fossil-free steel from the HYBRIT demo plant and available now. Next step Oxelösund, where we will replace the current blast furnaces and the current coke oven batteries with electric arc furnaces, where we will be able to melt scrap and or sponge iron. That step by itself will take away roughly 1.5 million tonnes of our carbon dioxide emissions as a company. We plan to have it up and running 2026, and the formal decision of the EAF investment will be taken during second quarter of 2023. We have already started the investments. We're doing some prework, but the decision will be taken Q2 2023. The next important step is the first mini-mill, and that mini-mill will be either in Luleå or in Raahe, where we have the best conditions to start. And we will, with the mini mills, build them in parallel with the existing blast furnace based system, and we will invest in them, ramp them up. And when they are up and running, we will close the existing systems. We plan to have the first mini-mill operational 2028. And in order to have that we need to take the decision, the investment decision during 2024. And that first step will take away another 4 million tonnes of our carbon dioxide emissions. And then the last step or the next step is the second mini-mill, either in Luleå or Raahe, the same idea, close to current coal-based system, invest in a state-of-the-art mini-mill, take away another 4 million tonnes of carbon dioxide emissions and have that up and running operationally around 2030. In order for that to happen, we need to take the decision sometime during 2026. So we will do this step-wise. We will learn from every step, and we will bring that knowledge into the coming step. And we already have a lot of knowledge because we are running mills or at least mini mills, not strip mills, but plate mills in U.S. already today. This is a picture how it will look in Luleå and Raahe, and Carl will deep dive into this during his presentation. but we are building them on our own land on our existing facility with existing -- with a lot of existing infrastructure, very close to the sea and close to the harbors. And as I said, the good thing is that we will build them as we are running the current system. And when these are qualified up and running, we will close down and tear down the existing systems. What will this give us then? Well, we see several benefits. But if we look at the mini-mills as such, we see the possibility to reduce the total cost of around 12%. And we see the possibility to move a lot of the fixed cost of 50% of the fixed cost into variable costs. We're going to build the mills at similar size or installed capacity as we have today, but with the difference that we can build them for much better volumes and much better capabilities for quench and temper and advanced high-strength steels. That's why we also set the target of the mix for 2030 being 2/3 special steels shipments and premium shipments, and that will be possible. So as one example, and I guess, Johnny will come back to that, but we will be able to produce meter wide, very thin Q&T in these mills, which we don't have today and which is asked for by the market. One key to this and a prerequisite to invest in these mini mills is, of course, the HYBRIT project and sponge iron production. So Oxelösund, we can do regardless because that we could can fuel with scrap as we do in U.S. today. And we have already qualified a lot of the products we produce in Oxelösund today already in mobile. So that we know is possible. But in order to Build the mini mills, we need to continue to develop the hybrid project. We are now together with our partners planning for, call it, a demonstration plant with an installed capacity of 1.3 million tonnes of sponge iron. We do that in the HYBRIT JV company and HYBRIT JV company is also the owner of all the intellectual property and all the patents we have applied for and gotten. So that will be important. And we are pretty confident. We're very confident that this will work because we have tried it in pilot scale. We have tried it with customers, and we see the first as said, applications out on the market using this kind of steel. But of course, there is always a step change when you go from a pilot scale to big scale production plant. But we are very confident that, that will work. So to summarize it, we feel confident of the things that we can control ourselves. But there are some areas where we don't have full on control of where we need help in order to make this happen. I've divided it into 3 parts: environmental permits, grid connections and electricity. And if we start with environmental permits, we have the environmental permit already in place for the Oxelösund transformation. In Luleå and Raahe, it is well on its way. When it comes to grid connection, we have the decision from energimarknadsinspektionen in Sweden that we will get the grid connection in Oxelösund. That is appealed to Mark Milooverdomstolen, but the process is ongoing and moving on. In Luleå, we still have a question mark when it comes to grid connection. And this one, we are working hard with to get the decisions for the grid connection in place. In Raahe, grid connection is not finalized, but well on its way. Then we need not only grid connection, we need electricity in these grid connections as well. That means power allocation. In Oxelösund, we have the -- and in total, to do this transformation, excluding the HYBRIT demo plant, we need 4.5 terawatt hours more than we consumed today. If you include the demonstration plant, it goes up with 5 more terawatt hours to 9.5 terawatt hours. But in Oxelösund, we have the electricity. In Raahe, it is well on its way. And in Luleå, it's still a question mark that we are working with. So all in all, Oxelösund seems to be on track. We need to see what happens in Mark Milooverdomstolen and see if that is even further appeal to Mark Milooverdomstolen. And Raahe, well on its way. Luleå,some question marks that we have to continue to work with. And then of course, another important factor, which is also still the question mark is what we call level playing field. And we see now -- the competitors in Europe are getting funding, state aid to technology. We also see the movement in U.S. so that we need to continue to work with and also remind the political system of the importance of a level playing field. So when we look at this and do the math and start with where we are today and the structural improvements that we still can do and then add on the benefits we see with the transformation, net cost benefits, the potential of producing more advanced high-strength steels and Quench and Temper and also some kind of premium even in the future for fossil-free steel. We see the possibility that we can increase profitability, everything else equal with around SEK 10 billion per year from 2030. In order also to do this journey and to mirror SSAB where we are today. We have updated our financial targets. We have updated the dividend target where we used to have a dividend of 30% to 50% of net profit. We have qualified that and say we should have a dividend target of 40% of profit after tax. We used to have a capital structure target of not normally above 35% in net gearing. We have qualified that and said that we will allow ourselves to have a net gearing ratio between minus 20% and 20%, meaning a net cash position of 20% or a net debt of 20%. And with today's equity, this is roughly plus/minus SEK 13 billion. And we have kept the target of industry-leading profitability. So I think this is maybe not a huge game change, but it -- it reflects and mirrors SSAB today and what we are aiming for in the future. So if I would sum this up and give my view of SSAB, I would say that the strategic direction not only remains, it continues with focus on advanced high-strength steels and Q&T, the important home markets. To that, we add the green transition and have the ambition to build superior portfolio of 0 steel products. I think we have a good starting point not only financially, but when we look at our mills because the size of the 2 systems, the Swedish and the Finnish systems are roughly 2.5 million tonnes each, which is perfect for the mini mills that are today being built. They are typically at 2.5 million tonnes. We have the synergies and the knowledge from running mini-mills and electric arc furnaces in U.S. since many, many years. And we have being part of developing this new technique within hydrogen-based DRI production in hybrid. So if I would look at SSAB 2030, I would say that we will be a company with even a better cost position than today. of the volumes being premium and high-strength steels, reduced volatility and much better low point profit performance. If I would look at the investment plan, I would describe it as a step-wise investment program with decision points this year, 2024, 2026, and the ability and flexibility to adapt to changing conditions, whatever that could be. And if I would look at the starting point, I would say that we are a company with a strong balance sheet, with a good historical cash flow generation and good prospects for future cash flow generation, no goodwill in the balance sheet and new targets for capital structure and dividend that better reflects. So I would say and claim that we have a very good chance to achieve this because we have the knowledge, we have the competence, we have the raw material supply. We have the customer, we have the segments, we have the perfect size, and we have a good starting point. So with that, my introduction, [ Karen ].

Thank you, Martin. You'll be back to take questions in a little while. But right now, we'll zoom out and get some insights from the steel industry, and I'm happy to welcome Viktor Strömberg, Head of Strategy and Digitalization. Welcome.

Thank you, [ Karen ]

Just one question before you do your presentation. What would you say are the most significant or the most important development in the steel industry in the last, say, 5, 10 years?

Well, if I go back to when I joined this company in 2011, when I joined this industry as well, we were still suffering from the fallout from the financial crisis. Things were not so hot. And China was still going live with big plans of 10 million tonnes, and the world markets were flooded with cheap steel being exported at cost. And I think there was a sense, is this going to be a healthy industry going forward? Is this an industry that will earn its cost of capital and attract people. And I'm happy to say that the developments we've seen over the last 10 years now leads me to believe that, in fact, this is a healthy industry and will so remain and only increasing and important.

We'd love to hear more about that. So please take it away, Viktor.

All right. To start with is why I'm optimistic about this being a healthy industry going forward, lets see -- there we go. I look at 4 things that I think determine the healthiness of this industry. The demand side, the supply side with the capacity, what's happening on global trade and what -- in the raw material space. And in all these areas, I am quite actually good things. First of all, demand is not bad. Demand is actually -- global demand is on an all-time high and has been so for the number of a couple of years now. were 1.8 billion tonnes globally. And we see especially good demand in our product range when it comes to driven by infrastructure, given by defense spending and others. So in high-strength steel, but also in Green steel, a very positive outlook. And this is despite automotive not firing on all cylinders in recent years. On the supply side, capacity is now in check. Global steelmaking capacity has not grown for the last few years. In fact, it has been in some regions, reducing quite a bit. And also the recent conflict in Ukraine, so of that kept Russia and unfortunately, also Ukraine out of the world steel market, which gives a favorable outlook at least for Europe. But more importantly, we also see CO2 cost really impacting now how companies think about the global output. And I'll come back to that. Trade, we've been on a path of regionalizing the world steel markets for some years. Global trade is falling year-over-year and has been doing so for many, many years now. partly driven by better situation in each region, but also because of the introduction of trade barriers with perhaps the U.S. leading the way, but also in Europe, we've taken a different stance towards this on the policy side. Raw material, we saw a bit of a surge last year driven by the Ukraine situation, but that is now stabilizing are slowly getting more manageable around that. And I think we will return to a more sort of traditional split in the value chain in the sort of the balance of power. So all in all, I think this provides for a positive industry contract for SSAB and just to illustrate with a few facts here. I talked about world steel demand being at an all-time high around SEK 1.8 billion here for a number of years. And yes, China has been dropping, but it has been picked up by other regions in Asia. So all in all, not a bad situation. On the supply side, on the capacity, we produced plot 3 lines, the demand, the capacity and the division between the 2. We are now operating as a global industry above 75% utilization, which is not bad, which is not bad at all. And that is a very clear difference to when we were in the 60s for a number of years. So the rise in demand has not been -- has been met by a rather modest increase in global capacity. And an industry steel industry being above 75% utilization is some industry with some pricing power in the market, I would say. So a very good job. And why is this? Well, we have seen, and I want to -- a lot in this industry is driven by China. So let's have a look at China. What has happened in China in recent years, comparing 2015 with today. Before 2015, they had a very impressive journey to build up this almost 1.2 million tonnes of steelmaking capacity, a remarkable achievement over 20 years. But as impressive as that was, I think it's equally impressive that, in fact, we're able to take away more than 150 million tonnes in recent years, closing down obsolete capacity. And the plan to do more of it. And that sort of change the dynamics, I think, on the world steel market. They've also consolidated. We used to have a situation where the top 10 companies in China produced some 270-plus million tonnes. The largest top 10 companies in China today produce almost half of what China produces in total, which is not too bad of an industry structure, I would argue. This has also contributed to a very reasonable trade pattern out of China. They used to export more than 100 million tonnes because 98% is not even the peak. Today or sort of rather last year, they were at plus 38%, which is not an unreasonable trade balance, I would argue, for China. So the world markets are no longer flooded with cheap Chinese steel. So very good development from that side. Closer to home, if we look at Europe, I also think we've done things in Europe. If you compare with the situation after the financial crisis, steel demand is up some 10% and capacity is down with also about 10%. So just the split between the 2 has moved in the right direction also in Europe. And there isn't any more, a lot of talk in Europe around overcapacity, which was the talk of the town a number of years ago. But the thing now in Europe is a lot about the policy angle when it comes to the green steel and the CO2. We now have a clarity on this new directive from the EU on the termination of the free ETS allocation. That will be phased out starting in 2026 to be fully phased out by 2034. They have now agreed the commission and the parliament around this proposal. Obviously, and as all your analysts know, it's combined with this CBAM cross-border adjustment mechanism to avoid that this whole routing leaks into imports. I think everybody is sort of eager to see how this is going to work in practice. But at least the ambition is there. And as all of you know, the ETS price is now no longer cheap. We're -- and you could easily see a situation where it is at EUR 100 per tonne. And this would mean with SSAB emitting 10 million tonnes per year, that we would have a bill every year for SEK 10 billion to pay for our CO2 emission, SEK 10 billion. And that obviously helps any investment case to get rid of that bill. So no surprise that everybody is now running and thinking about how to get rid of this cost going forward. But I would say that CO2 has an impact already today, and I apologize for being a bit theoretical here, but bear with me. If you look at the typical cost for an EU blast furnace-based producer, the average cost, if you spread it out overall volumes, the CO2 cost is not that big today. We have a lot of fixed cost, and you have some variable costs. But the last tonne you produce, you have to buy a full emission right for that emission. So if you ignore the fixed cost, it means that the last tonne produce is more expensive to produce than the average. This used to not be the case for any steel company. It used to be that the more we produce, the cheaper it got. This leads to a steeper industry cost curve. It leads to a situation where it is no longer profitable to grow with the existing technology. Taking that last volume does not help you if you're a blast furnace-based producer. And as anybody who remembers the are macroeconomics class from university. A steeper cost curve is good for the industry because it supports healthier dynamics. So I think this is already taking place in Europe today. Everybody is then thinking about how to get -- how to decarbonize, and we will talk more about this. And I think it's no surprise that more and more are coming to our corner of the world here. If you think about the simplicity, the carbon capture and storage, a lot of talk about that a number of years ago. The plan that is still for natural gas direct reduction as was the solution as still is for many players. And then we have the hydrogen-based direct reduction which we sort of were when we announced this 2016, I think we were considered naive at best. What we now see is more and more people are starting to see hydrogen as the solution to decarbonize. Why is that? Well, some of the disadvantages of the others are becoming very apparent. If you look at CCS, yes, you can keep everything you have today and you don't have to invest in new technology. But keeping what you have today is expensive. And in addition, you have to add a lot of CapEx and OpEx to just do the CCS. And nobody has really sort of proven this at scale in the steel industry. I don't say that it can be a solution for some industries, but I think fewer and fewer in the steel industry is now looking at CCS as the solution. Natural gas, yes, that is a technically mature process. It's been around for quite a while. Recently, the whole sort of topic of natural gas is taking a bit of a hit. The cost and the availability of it and sustainability aspects of it. And it also does not eliminate all CO2. It does not create a fossil-free product or with 0 emissions. So your ability to charge a premium for that is not as strong as if you can go the full elimination, which is the promise of the hydrogen reduction. You get the full reduction, the shortcomings hydrogen is still expensive. And it is a process that still needs to be industrialized, and we are working with our partners to achieve that. And it is a new technology. We need to scale this up. But I'm happy to say that more and more are running into our part of the. So [ Karen ], that was a little bit of an introduction.

Before you leave the stage, you've chosen the path going towards hydrogen, as you say, many of your peers are following along your footsteps. What would you say is the big advantage of doing that in Sweden, especially?

Well, producing hydrogen is electricity intensive, and we have a competitive advantage in the Nordics when it comes to electricity. We have a fossil-free electricity system, I think, decades ahead of many other geographies. and also the cost levels, even though they are high, this is a relative game, the cost level for electricity in this country is lower. So I think we'll come back to that very well.

Yes, we will. Thank you so much for now Viktor and see you later on today. It's now time to look deeper into the steel divisions, and we'll start with special steel, and I'd like to welcome Johnny Sjöström, Head of SSAB Special Steels. Welcome.

Thank you very much.

One initial question, how would you describe your market position globally today?

Well, humbly, I would say we're a market leader. We're quite unique, and I was sitting there in the chair of thinking what message do I want to commit. And it's -- for me, it's clearly how special we are, how different we are and also explain why we are a market leader in what we do.

We'd like to hear everything about that. Please, Johnny, go ahead.

Thank you very much. Thank you. All right. So good afternoon, everyone. I'm Johnny. I'm the Head of Special Steel. I've been with the company now for 4 years in this role. And one of the things that surprised me when I joined SSAB in this role is how unique we are, how different we are and actually how good we are. And I'm going to try to explain that to you during my presentation today because we are not just another steel company, and I hope that you will understand that during my presentation today. All right. So this is just an overview of special steel. We have 2 main production sites for plates and one is Mobile, Alabama and one is Oxelösund, Sweden. And then when you look at the number of employees, 4,100, you will start to think. That's a lot of people. Why do you have so many people? Well, because this map does not contain, for example, the G&G production site here in Perth, where we do trades and buckets. It does not include the tipper manufacturing that we do together with Scania in India. It doesn't include the train manufacturers we do in South Africa. It doesn't include the pieces and parts that we supply to Metso in Chile. It doesn't include sort of the carbon chromium mobiles that we do in North Port, and all other subsidiaries we have all over the world because we are different. We are not just a steel manufacturer, they supply the distributors. We developed the market, we grow the market, and we also do the downstream activities. And hence, the reason why we have that many employees. So we are selling all over the world. We have 90 stock locations around the world ourselves, and we sell into 150 different countries. Last year, we had a turnover of SEK 34 billion, and we have been growing with 6% to 8% year-over-year. And the majority of the material that we sell is quench and tempered. So what is this quench and temper because I'm going to say that a couple of times during my presentation. But what it really is, and if you look back in history, you could see this, smith working on an iron and it's growing and you put it into a bucket of water. That's actually quenching. It's not that simple, but I hope you understand what we mean. So what we do is that we quench water at a very high rate, and that makes it very unique. And the uniqueness of my division is something I want to emphasize because we do -- we developed unique production processes. We've developed unique products, and we also sell it in a very unique way. And the main segment that we operate is trailer and body builders, raw material handling and yellow goods. I would say roughly 50% to 55% of our market goes into the mining one way or another. So as long as mining is going well, we are doing well as well. We talked about market leadership in the beginning. And we are truly a market leader, and I will show that to you in a slide further on. And the reason for us being a market leader is because we have these unique rates, but we also have developed the market. We have grown the market we teach our customers how they can benefit from our grades and hence, the reason why we become the market leader. We developed new grades every year, and we launch new grades every year. Even though they're called Hardox, it could be a different type of Hardox. It's a Hardox 450 or 500, 500 Tuf, et cetera. And now we developed the high ace. So we do develop new grades all the times, which are advanced, and we developed these channels to the market. This is 1 example. This is the next more bucket. We have designed it, we have built it and we have sold it. We want to demonstrate to the market our value proposition. What you can do with our advanced high-strength materials with our Q&T material and the benefit of it. And of course, the green transition that Martin Lindqvist has initiated actually, this was way before I started. He's been pushing this all along. And I'm really happy to see the progress we're doing in this. So this green transition will not impact only our production but also our products, and of course, our customers' value proposition to the market. Yes. So Martin also presented in one of his slides, volatility. And he had in his slides saying that we have higher margins in the specialty gas and that's actually true. And if you look at the EBITDA development we've had through the years, you can see it's pretty much stable. And especially if you look at the EBITDA per ton, the development, it has been stable. Even during 2020 when we had the pandemic, where most of the steel companies actually were making a loss, we were not. We were stable, mainly because we are very unique. The customer needs are material. And if you look at our revenues, you can see that clearly, 2022 was a unique year. It's not likely we will maintain, but it's going to maintain on a very good level. And we have also had a very good development when it comes to shipments. And I'll come back to that in my slide later on. So we are a global market leader, and I will try now roughly to explain the different segments we're working in because we do operate in a lot of different segments. And our most important segment is the war Q&T. This is the where [ Quentin ] Tempered material. This is our biggest segment and our strongest brand name is Hardox. But in the Hardox family, we have a lot of different grades. It's not only -- we have the Hardox high ace, the high temp, the 500 Tuf, et cetera. It's like Volvo name, but then you have different types of Volvos. So this is our strongest brand name. And if you go to an exhibition, like [ Ibama ], you will see our brand name pretty much everywhere. And it mainly goes into dumpers, tippers, trays, et cetera, everywhere where you need wear resistance. So I would say this is roughly 60% of our sales. And then we have the structure of QT. This market size is roughly 30%, 34% of our market. And here, we do extreme high-strength materials. So we do more high-strength material than all our competitors. So if they want to have a strength 1,300, there's only one supplier in the market, it's us. And the customers are trying to catch up, but we're way ahead of them. So we supply to lifting industry, and we're quite unique in that area as well. And also forestry and agriculture is another area where we're pretty strong. Then we have a segment that has been growing a lot lately, it's protection. And on these 2 pictures, you see civil applications. This is the Swedish Embassy in Washington, D.C., and this is for a car. But everywhere where you need armored steel, you would buy it from us. If you are in Europe, you want to buy an armed vehicle this deal is guaranteed from us because our competitors do not stand the testing from the impact, the explosion. And here, I dare to say that we are roughly at 80% market share. We hardly have any competitors. Tucson was one of our competitors in the past, but they've stopped producing it. Tucson heavy plate doesn't exist anymore. So here, we are in a very unique position. And when Russia attacked Ukraine, we delivered plates for body armor and even the one that Zelensky is wearing, one of the picture is actually Body Armor from us. And they're using our material because I'm sure it's so strong and so good that you can have lower thickness. So it's heavy to walk around with. But you can use our material lower thickness and it has better properties than the competitors. And this segment has almost doubled in the last few years. And then we have the tooling. And here, we also try to be unique. We try to do pre hardened material, Maybe that doesn't say anything to you. But most of the times, you need to do after you've done the machining, you have to do a new heat treatment. But in our case, you don't. And this material is almost as clean as the ESR melted material from Udahome. So we have a very unique material here as well. And then finally, we have the newest segment to our family is the additive manufacturing. And this is something which I am very interested in myself. And I believe -- I strongly believe that the future of manufacturing is going to be in additive manufacturing. And for those of you who doesn't know what it means is we're -- we actually -- in this case, we're using laser printing. And you take powder and you center together with the laser beam and they put another layer on and then you build another structure, another layer of powder and then you laser it together. And you build you build layer by layer, the structure you want. And that's why it's called editing manufacturing. We have been working on this for 3 years now, and we have been patenting materials. And now in May, the patent will go through, and we will start selling a bit more aggressively done before. We couldn't sell it when the patent wasn't approved, but in May, it will be, and then we will start selling it. And we're aiming for the tooling business, the automotive industry. And the truth is that we can produce any type of part completely fossil-free even today using additive manufacturing. But there are a lot of companies in Sweden working with additive manufacturing, but we're focusing on the high-strength material side of this, and we're going to do it much cheaper than our competitors, which means that we think it's going to attract automotive as well. because we've seen in trials and tests that it's superior to all other production techniques, but also the properties are superior. So this is something we expect is going to grow in the future. and we're on top of that. All right. I spoke about market leadership, uniqueness. And this is something I really want to emphasize, and I hope I can do that by showing this slide. This is the Q2 where I talked about Hardox. This is this market, the Hardox market, the Q&T wear market. And this is mainly played there are some stripper as well, but mainly plate. And what you can see here that this is what the market looked like 2006, I hope you can see in the back there. But back then, the market size was 800,000 tonnes. And back then, we had 30% market share. And here were the competitors we had were Algoma, Cleveland Cliffs, they are both in North America. Dillinger and Tyson, both in Germany, those were sort of the main competitors back then. Now looking at the market 2021, the market size is much, much bigger. It's 2,100 roughly -- 2.1 million tonnes roughly. We have roughly a market share of 40%. But look at the number of competitors. They have increased by 2.5x. And these competitors are mainly from Asia, mainly from China. But if you would look at where is Algoma and Cleveland? Well, they've actually decreased their market share. If you look at Dillinger, they also decreased their market share and Tyson is even gone. So it means that if from the sense of looking at who's our biggest competitors, it's really hard to say. You can't really tell just by looking at this. And if you take North America as an example, there, we have 53% market share. And I hope you're starting to understand how good we are when we talk about market leadership, 53% market share. And here, you have -- what was it, Algoma, they were back here, they were like 80,000 tons, but they're actually lower now. They're not producing that much anymore. So we have actually grown our market size and defended our market position. And this is a market that we have developed, and I will explain that later on in my presentation. And then we have South America. South America is pretty far away from Sweden and Mobile Alabama. But we have 57% market share in South America. So all these mines, they want to have Hardox. They want to buy our material because they know that they can rely on it, they can depend on it, and it actually saves them money. And then we have Europe. Here, we have 59% market share. And so the question is, who is our biggest competitor because I don't really know. I can't see from this slide who is our biggest competitor. That's how good we are. And then we have Middle East and Africa, 53% market share. then to the question, how come you say you have only 40% market share. Well, the reason is China has grown significantly. This is mainly China. It has grown significantly. And here, you have a lot of new Chinese competitors coming out on the market. And here, we only have 21% market share. China is a very special market. And we've been active there for years, but the problem is if -- if the government recommends to the companies producing yellow goods in China to use Chinese materials is difficult to compete. It's difficult, if that's the case. I hope this gives you a better understanding of our market leadership and how good we are. We do have a unique business model. And I have I'm an associate professor of material science. I get a little bit excited about stuff like this, and I clearly understand if you don't. But anyway, so to produce something hard is easy. Hardness, anyone can do that. It's like this here is also very, very hard. But when I drop, but it's going to crack. It doesn't have any impact toughness at all. The problem is how do you produce something hard that's tough at the same time. Because what you want to achieve is something that can withstand an impact. If you have a bucket, drop a rock on it, it's not going to crack. If you have an armored vehicle and there's a project that hits the vehicle, you wanted to absorb energy and not crack. So it's the impact toughness which becomes the most important property combined with the hardness. And this is measured in minus 40 degrees Celsius. And for us -- so what is the sustainable competitive advantage of special steel? It's right here. It's right here. It's because we can combine the toughness, the impact toughness with the hardness much better than all our competitors by far. So we started off developing this 400 grade in the 1990s. And then we developed the 450 beginning of 2000, and then we replaced the 400 with the 450. Now we have developed a 500 TUf that's going to replace the 450. But no one else can do this. No one else in the market can do the 500 Tuf. If someone else supplies a 500 [indiscernible] hardness plate, it's going to crack. Ours is not. And this material you can actually bend anyway you want to, and it's not going to track. And that's where you have the difference. And these are my friends, this is where we are unique. And it's because the way we produce it and the way it has been developed. We talk about being unique. None of our competitors are global as we are. And here, you can see our stock sales location. So all these orange circles shows where we have stock locations. And the door blue shows where we have our own sales representative. And then the lighter blue shows where we are selling, but we don't have our own sales offices. We used to sell a lot into Russia and Belarus, but we're not selling anything there anymore for natural reasons. But it shows how global we are. We sell 40% in Europe. We sell 30% in this part of the world, and then we sell 30% to the rest of the world. So we're spread out that makes us less vulnerable. We also do downstream activities. So why do we do that? What's the benefit of doing downstream activities? Well, we want to demonstrate to the market the benefits of our material -- of our advanced high-strength steel. So -- and also, it generates more value. So if we sell a director from the mill, we get maybe 1 time. If we sell on the stock, we get more paid for it. If we sell it as a part, we get even more paid for it. If we sell it as a solution, we got even more paid for it. So one illustration of this is, this is 25 tonnes of Hardox 500 Tuf. If we would sell it like this, we will get a certain amount of money for it. But if we would sell it like this, we'll get 5x more. And don't get me wrong. We're not doing this to compete with our customers because that wouldn't turn out too well. We're doing this to demonstrate to the market you can actually do with our material. And in this case, we reduced the weight of this trade by 40%. And then now the market is thinking 40%, if you decrease the trade by 40%, I can actually load a lot more on that tray. And that's the end user benefit. And that's how you create end-user value. And here, I'll try to give you one explanation, and we do a lot more applications than this. But I'll try to explain to you the value proposition that we do for our customers. So what's the value proposition of a steel plate or a ware-resistant played Well, I'll try to explain it to you. The value proposition is, this is the way a tipper was produced in the 1990s. It's a box-shaped tipper with a lot of stiffeners. And this would weigh roughly 4.5 tonnes and the thickness you would use in the walls 8 to 10 millimeter. SSAB back then developed a new design together with a customer called the U-shape design. And this one has fewer stiffeners, and it has a completely different design. And this one is lighter, it's stronger and it's more sustainable. You recognize those 3 words is our vision of SSAB. And we were able to reduce it to 3 tonnes. That means we saved 1.5 tonnes per tipper and we can reduce the weight of the walls. This is a value proposition. So not only the manufacturer of this, he can weld together 30 pieces and then he gets a tipper body. Here, it was 267 pieces needed well together. Here's only 30 pieces. The manufacturing time is much, much faster. But for the end user, he gets to carry around less weight, 1.5 tonnes. Now recently, we have now the Hardox 500 Tuf, which is even stronger, it's more wear resistant. And by doing that, we can actually reduce the weight further to 2.3 tonnes. So there's a lot of savings on this. And we have an app that you can download if you want to, it's is called SSAB Eco upgraded. You can download this and you can then see how much you will save. And in this case, we're looking at the carbon dioxide. So we have supplied 620,000 tippers since the year 2000. And if they would have used this design, it would have been roughly 1 million tippers. But by saving -- but selling it to this design, we saved 3.4 million tonnes of CO2 -- but the biggest CO2 saving is actually in the carbon dioxide for the fuel savings. Here, we have seen 54 million tonnes of carbon dioxide because we've made it so much lighter. So even here, as we have been working on a sustainable approach for a very long time. And this amount here is equal to 1.2 million cars on the street that we actually reduced, which is a significant amount. All right. So we have a very aggressive growth strategy. So we started the year 2000, selling roughly 300,000 tonnes and look at the growth. And this is a growth that we have developed this market. We have trained our customers. We showed them the benefits, and we redesigned for them. And we've grown the market and we continue to grow the market. And the truth is we've been sold out from the plate side in the last 3 years. We've been sold out. So now we need to increase our capacity to continue to defend our market share. And when we talk about market position, I said, how are we unique? We are unique in the way we produce. And these are the quenching lines, not only the quenching lines, we have a clean steel practice as well that I will not talk about so much. But here are the quenching lines that we have. And these quenching lines are unique. No one else in the world can do build a quenching line like this. companies have tried, but it cannot. And we have our own Q&T center that develops technique and further refine it. But if you look at the number of quenching lines that we have, you see we have 9 of them. Most of our competitors have maybe 1 or 2, but they're not so good. These ones are unique. In order for us to continue to grow the market, we need to continue to invest in this kind of capacity because this makes us very unique. And I did not -- during my presentation today, I did not talk about digitalization. I did not talk about operational excellence. I did not talk about commercial excellence, but these are things that we also do, and we're very good at it. I think I wanted to just communicate to you the essence, the fundament of special steel and SSAB and what we're really good at. And I hope you -- I hope you get the bigger frame, the bigger picture of it. I think that was -- this is my final slide. The objective we have is to reach 2.2 million tonnes in sales by 2030. It's a very aggressive growth. And this is sort of the plan we have for it. But as I see it, the demand is there, the customer wants it. It's just make sure that we can produce it and have the capacity to produce it. I think that was pretty much the end of my presentation.

Thank you so much, Johnny, a unique market position, unique products. That's what we should summary. And you'll be back to take questions in a little while. Yes. So thank you for now. And we're moving on to SSAB's main market, the Nordics and welcome, Olavi Huhtala, Head of SSAB Europe. Welcome, Olavi.

Thank you. Thank you.

A starting question to you as well. You've made Strong performance compared to your competitors in the recent years. In a few words, how would you describe the reason of this success?

Well, quite often, the answer is combination and also in this case, I'd like to say combination, it's a combination about good product mix, strong in home markets. And then I would say that we have really good customers and really good segment mix from the customers. And I would not forget, for example, what Martin already mentioned, is continuous improvement inside the company. We have the last 3 years achieve the targets. So it is a combination of many things.

Okay. And you were going to tell us a little bit more about that. Please go ahead.

Yes. Good afternoon, everybody, and the most -- Hello, everybody. New start. What's our contribution -- sorry, it's too technical for me. But the market leadership in Nordic really important. And I would highlight also that work together with Tibnor and Ruukki construction. That's the strength of what we have and what is our role to take care about the whole markets. We all know that if you don't have a strong home market, it's quite tough to expand the business. So the key is home market, but also what I'm going to touch today is the premium mix change, what we have been doing the last couple of years. And then, of course, the real big project, if I say that way to transforming our Nordic strip assets to focal free. It is Luleå and Raahe, as Martin always say. So that is really the big project. So that's what we have as our contribution. What are we? About SEK 50 billion, 6,700 and about 5 million tonnes of steel production. What I like with this picture is that we are not only one product or one segment. If you look about the customer segments, automotive, heavy transportation, construction, industrial applications, it's quite nicely divided. Of course, the service centers are still a bit high, but we have to keep in mind that quite many of those service centers, they are more like partners. We create the business together. They are stockholding our materials for certain customers, et cetera. So -- so quite good combination. The same from the product mix. We have tubes, coated cold rolled, hot rolled plate and hot rolled strip. Okay, once more, somebody can say that. Why do you say that it is good if we have 42% of hot rolled coils. The thing is that quite a big part of that is landed in Nordic countries where we have the strong home market. But also, we have quite many premium products for hot-rolled products like laser, vectoring, boron steel, et cetera. So I would say that we are quite good in balance in many areas, customer segments and products. Last 2 years has been really good. And if I look about the profitability the last 2 years record after record, it has been a volatile market, really tough one. If you look at the noncore, they are nice. But if you look about all the work that has been done, first of all, the COVID came end of 2019. then it was really collapsing or more or less difficult market at the first half of '20. And then after that, it was ramping up. And I would like to say thanks for everybody in the Europe's organization that. The question is how fast you react because if you missed the price increase, then you miss the price increase, if you missed to ramp up the production at the right time all over the production at the right time. And I think that if you look about this volatility and now, of course, the high interest rate in the end of last year and of course, impacting and there was a lot of destocking. So I would say that in this volatile market, to make profit about SEK 10 billion each year, it's a really good result. And if I go further one picture tells more than what I maybe say because if you look about SSAB Europe compared to our main peers, we are on top of the peers. So last 2 years, clearly, about 8% best [indiscernible] -- second best. And then also in this time, all the time, we have been more or less beating our peers. Why we are successful in home markets, trusted partner? I would underline long-term relationships working together, not just going in and delivery products and then go out when the market is tougher or the demand is better in Europe. We still allocate the volumes to Nordic because we want to take care about our home markets. So we are a trusted partner. We have good offering for the market. We are offering all the products. And of course, we are close by, which means that the sales model together with Tibnor and Ruukki construction and logistics is more or less I would say, unbeatable on that part. So very important that we take care about this market. Our share is about 40%. You see here by some of our competitors who are delivering the Nordic markets. So strong in the home market, which is the base. And then when you go to the other side, how to grow in the premium. If I go back, as Martin already mentioned, 2015, we make a decision that we have too much standard grades in our product portfolio. And then we made a decision that we need to increase the premium share, not only automotive but other premium products to like color coated, boron steel, whatever that is. If I look about now, the trend has been good the last couple of years. Of course, there are some years that the market has been really difficult as in 2020 with COVID. But I would say that it is a steady growth what we have now in our premium products, and that's what we are going to continue. At the same time, you see that the volatility. It's not that strong, as I already said today, like in special steel, what Johnny was explaining. And then we have, of course, I would say, time after the war started that it was really a strange situation in standard steel grade markets. For me, that is logical because Russia, Ukraine and Belarus was out on the market. And they are the ones who are delivering the standard grades. There were a lot of supply chains, which were empty in a minute, which means that it was a lack of supply. But overall, as you look about last year, so we can say that the profitability for premium products is better. What we have been doing that is successful. There are a couple of things. First of all, product developed together with our customers. Of course, for automotive, that's really essential that you started as early as possible. So many times, we work years before the SOP is going to happen. But it's also we have learned and done the same for other segments than automotive. So earlier you go and talk with the customers, you have this product development projects together, then you find the best way with the best product and best manufacturing system. Then working hard to get this one systematic. We have on call organization business development. So it is a really systematic way to look about what products customers, what segments, so not bouncing all over the place. So it has to be a systematic and structural way to look about to whom and what and then build up that project together. It is something that is not often seen in the companies, but you need to have this, I say, the structural way to operate. Then we have been investing from the premium products like continuous high-end line in Borlange more or less call to automotive, and then metal coated. So galvanizing line #3 in Hämeenlinna, which is, I would say, almost automotive and then color coated, which is the premium. And then, of course, we are reducing all the time capacity from the standard grade to the premium. If I then go to automotive, the fundaments are quite clear. So weight reduction and better safety. What we are working for automotive is the safety is the word. So I'm always saying that if our products are used in the car, something bad has happened because we are in the safety side impact beams, crash boxes, AMP pillars. And now the last one is the battery protection for the EVs. So we are in a passive safety. We are concentrating the market what we have is maybe 5% from the whole automotive. So really nice player, advanced high strength steel is having is strong position, and then we have well-known products all over the places. I would say that we are not that strong as Johnny is with Hardox, but Docol is well known in automotive when we talk about high-strength steels. And the market is helping us to grow because if you look about what's happening in the market. And first of all, the miles deal in the next years is going to reduce and then the advanced high strength steel is going to increase. And the others are more like aluminum and carbon fiber and things like that. So they are more or less a bit higher. And also what you can see that inside in the [indiscernible] party, it's going to be changed for mild to advanced high-strength steels. So together that with a good project with good customers and also with the market. So we have a solid growth. And if I add that steel compared to many other materials is already today. So I'm repeating, it's already today way better with the carbon intensity than the others. It's something what many don't realize, but that is the case. Okay, carbon fiber, maybe Formula 1 is the good one for that one. But if you look about steel, it's way located, 100% recyclable. We know that more than of the steel is recycled, and it's recycled more than all the others together. So steel is having -- is good, I would say, position. And then when we get, but Tony going to explain later today. So SSAB Zero, it's even going to set a new benchmark. A couple of examples. Shape Corporation, U.S. roof rail, 1,700 martensitic steel I'd highlight here, it's not only the steel, it's also the shape and how they build it because the driver is having a better visibility. And this is something which is very interesting that we need to work together and find a way, and it's not just the weight or the strength of the steel is also how do you manufacture that the same as [indiscernible] to lower control arm. Earlier, this was 2 pieces when together now with single cell. And by the way, this is a finalist for Swedish steel price, which is going to be announced in middle of May. But what I want to say here is that there's a lot of things. It's not only the product. It is how do we develop things together? How do we work together? Is it welding manufacturing? How is the steel used. And then we have a new area what I'm myself expecting to be a good one and expanding quite much is the EV related like battery protection things like that. That's going to be the new one. Today, we know that from Europe about 9 million, 10 million vehicles, about 10%, 12% is EVs. That's going to increase the battery protection part is going to be bigger and bigger. And this is what I mean that we need to be early enough to develop the products together with our customers. So when we get this when we get our food on the EVs, then it looks even better. Growth targets. 2030, automotive almost 3x higher than we are today. Is that doable? Yes, we have good products, we have good customers, and we are going to have more new products and more new customers from the premium products, a little bit more steady growth. But all in all, if you look about today, premium 0.8% and 0.5% compared to 2.6 million tonnes. It is a huge change. And in the end, Nordic leader as a home market is important. And until we have the wide product portfolio, allocate more capacity to premium and advanced high-strength steels and then reduce shipment from the standard products. The picture is telling it all. So if you look about the premium 2016, '22, '25 and '30, you're looking about almost 60% of our sales is it a premium outside and including automotive. And then standard outside Nordic, it was 31% in '16. We are aiming something less than 10%. So it is a big change. And then we take care about our home markets. So something that I want you to remember is that strong in Nordic, we have the mix change. And then, of course, we have the transformation to get the blast furnace to hear effective EFs and mini-mill integrated.

Thank you so much, Olavi. You will also be back and take questions. But now we have the third division, the last one for the day. We'll dig into North Americas and what can be expected from the future there. Please welcome Chuck Schmitt, Head of SSAB Americas. All right. Chuck, what would you like to tell us about the development the last few years?

Well, I think in short order, it's a very good time to be part of SSAB in the North American plate business. I'll discuss why with a number of success and leadership examples we have going on.

Okay. Please take it away, Chuck.

Okay. Thank you. Good afternoon, everyone, and good morning for anyone in the U.S. and early morning. as I get started, I do have this little signage thing going on. I may have cut. So I apologize ahead of time if spare me with a little cough or so I'll get through it and I have some water here. But I'll start with discussing our contribution to strategy. The framework looks a lot like what Olavi discussed. But our content is a bit different. And when we talk about market leadership, I think Martin kicked it off very well. It has led by a 30% market share that we've had over time. We've been traveling at or over 30% for the past few years. We don't see that changing anytime soon. But then there are the other KPIs and fundamentals that we measure within SSAB and also in the industry, and he's also covered safety and the Americas, as measured by Steel Manufacturers Association, we led the industry with 0 lost times and an excellent recordable as well as the severity of injuries. Also, we talk about an other KPIs, how we take care of our customers. I'll touch on that in just a bit with third-party survey information. And then finally and most importantly here, in recent years, we've been recognized quite well for our stewardship and environmental sustainability, both by customer groups as well as industry associations. As we talk about product mix improvement, more detail on that. But we have a very inspired group, motivated group of technical experts, application engineers who are developing, working with customers, working with the universities on new applications, on new steel grades that contribute to our growing premium portfolio, developing channels to the market here. And I'll talk about these market segments. But as Martin described, we are constantly adapting and actively managing these channels. Clearly, we have always ambitions of direct relationships with OEMs and the end users. But also, we have a very strong downstream group that represents a little over 10% of our shipments where we also work with the end users. And then we have a fair bit of exposure to service centers, but then we balance that out between what is actually truly transactional and reducing the transactional business, as Martin described, for more of the contractual. And then lastly, the green transition. Everything is on the table right now. I think for us, for our competitors. But in Americas, right now, it is more than just EAF technology steelmaking right now. It is more than just about recycling. And I'll talk about that success. We're not nearly done there. And it certainly complements everything else we're doing at the group level. So if I talk about just quickly a overview of the company, SEK 32 billion that's driving in 2022, a 40% -- almost a 40% EBITDA. We operate with a very strong lean mini-mill culture in the U.S. with 600 people. We make a little over 2 million tonnes. Added to that is about 300,000 tonnes of downstream processing as well. And as we talk about these segments and these channels here, it certainly represents and looks like traditional plate market. led by energy. Energy has 2 components to the old traditional oil and gas now complemented by the renewables with a great deal of activity in wind towers, onshore, offshore as well as transmission towers that is expanding the grid in the U.S. Heavy transport barges, shipbuilding, including military shipbuilding, construction equipment the Volvos, the Caterpillars and -- in agriculture like -- such as John Deere. Then we have the transactional business that, again, we manage actively and also developing sort of some avenues where end users require certain services and geographical areas. And so we manage, although it's within service center business, it has a clear line of sight to a certain application if not specific customer. And then I'll touch on it in just a bit. But as far as in plate is considered in North America, hands down the quality leader at SSAB for quite a number of years. As we look at earnings here, we have delivered on steady profitability here, interrupted somewhat by the COVID pandemic. And then likewise, in the earlier years. represent a period where there were record high level of imports to the United States. When we talk about pricing, particularly over the last couple of years, where we saw these historical peaks being reached. Right now, we're in a bit of normalizing, if you will. But it, in fact, does look like a new normal. And that even in recent months here, you may have seen that both on hot-rolled coil as well as plate in the U.S., there have been recent price increases and hot-rolled coil now moving up a bit rapidly plate as well as finding a bit more stability. And we're seeing that in our own order book right now, driven a lot by restocking. Leading margins and within our plate business right now, we are outperforming our hot-rolled coil peers as well as our plate peers right now. And for us, this is exactly as Martin described now at this point in a cycle right now, we have a huge demand for our products. And so where are we going to move our products for the long term, where are we going to move our products for the best return. And we're doing that through managing these channels and how we're looking long term with short-term contracts, midterm contracts, particularly focused on the energy segment right now, which is quite active as well as construction equipment. And then likewise, as we bring on more of these products around 0 steel and fossil-free steel adding to our portfolio of premium products will also provide us a stable market, stable pricing level, if not continuing on an upward trend. When we talk about sort of our culture, our mini-mill culture it certainly begins with a very competitive cost position. We start with a very modern EAF, but it certainly doesn't stop there. We have done recent investments in digitalization capabilities to also be an EAF of the future and compete with some of these newer mills that coming on, these digital capabilities are bringing on and showing us more reliability in performance in production stability and increase productivity. We also combined as we ship product, get product out in the market and between our mills and our downstream process sort of provides a 1-2 punch, if you will, and that allows us to be not only flexible, but we can actually optimize how we get products to smaller customers in some of our local markets. And then the last one is our DC furnace design in the Iowa mill allows us a great deal of flexibility in the raw materials that we use, anything from DRI, but particularly where we can balance between low-cost scrap or low-grade scrap or high-grade scrap depending on the products that we make and also depending on given a particular month or quarter where some scrap grades are more costly than others. And we have that flexibility in delivering most all of the products that we make. In addition to our cost position, we have a very long history of taking care of our customers certainly better than our peers here. And this is a benchmark study that's been provided by Jacobson over the past 30 years. And I'm extremely proud to say within that period of time, we have been second to none in terms of quality. And our performance on customers' overall satisfaction has also received very high marks through that period. Outside of this study, and despite showing outperformance and on-time delivery, we're coming through these 2 years of a very strong order book, very strong demand which has also challenged us with very high backlogs at times. And so while it's nice to outperform the competition when it comes to delivery, internally, we have our own measurements and most importantly, our customers' demands on delivery is becoming more sensitive and more urgent. And so our priority for this year and next year is to become even much better than that. So as we talk about the home market dynamics right now, what is driving plate demand. I probably don't need to explain it to too many of you in here. But with the recent U.S. federal legislation, i.e., the infrastructure bill that is passed and now more recently the Inflation Reduction Act. What this boils down to is a much needed lift in spending on highway construction, much more and needed bridge building and then the component for renewables. As I've described, the boom expected and conversations we're already having today for the next -- at least the next several years of supply to offshore wind tower projects as well as expansion of onshore wind in the U.S. And so you combine that demand scenario now with a supply picture on a regional basis where tariffs are still in place for a number of countries right now, even though quotas have increased, but also a component of these projects at the -- both the federal and state level that have a requirement for melted in port in the U.S. So the demand also has a very strong component for Made in America. The question on -- and appropriate question at that is what's going on with the new capacity coming online, both in hot-rolled coil and plate eventually. Well, as we see this demand scenario picking up and whether you choose a plate market it to historically 10 million tons, and what we're seeing from new programs over the next several years, it is fairly comfortable that this consumption partly with the lack of imports and partly with new demand would be easily consumed in the marketplace. And this is just one example as calculated from coming out of the infrastructure bill by the American Iron and Steel Institute of generating as much as 40 million to 45 million tonnes of new steel demand over the next 10 years. And the numbers around the inflation Reduction Act aren't terribly different than these. And so you can really get an idea of being somewhat excited in the steel business, looking at the demand pictures over the next 5 to 10 years. As I mentioned, imports have really not been a factor of recent years, even seeing a slight increase tariffs being dropped in some of the quotas being renegotiated, but there certainly is no expectation that it would factor an imbalance what we see as the current supply and demand ratios right now in North America. This is CRU's forecast. I'm not going to go through this blow-by-blow, but it's a -- while a tough picture on the eyes, it breaks down these segments here even further. And then likewise, the consumption numbers between mill plate as well as coil plate. My key point here is that we are the #1 or #2 supplier in virtually all of the growth segments that you see represented here through relationships with the largest and some of the most successful companies that serve each one of these segments. As I described within our configuration that we make both coil plate as well as cut the lent mill plate off of our operations and then further downstream. And we have the ability to balance this, as I described in how we serve certain local markets, how we serve certain customers, whether a customer is -- requires a 2-week delivery or a customer is certainly okay with large quantities that are delivered off the mill in 2 months. And we certainly can outmaneuver a number of our competitors that we can offer that flexibility through a number of different channels and getting the plate, what plate they want and when they want it. So let's talk about something new and unique for us. And that is the start of SSAB Zero as was announced here recently and Martin described. As I said, it begins with an EAF operation, but through our partner in Mid-America that we have the luxury of operating in one of the biggest states in the United States for wind energy. And with that good fortune that right now, we have renewable electricity, almost up to 90% with expectations by later this year at the end of this year that, that will be close to 100%. But it doesn't start there. And of course, we use about 98%, 99% recycled product, but it's more than just recycling and full credit to our operators and supply chain, the people that in jumping into this opportunity really being driven not only by customers, the vision that SSAB had even back in 2016 and Martin pay's work on HYBRIT and fossil-free steelmaking to come up with a product that we could bring to market even sooner with the technical work that we had. And so the operators engaged and in a number of external partners to look at where do we and how do we move natural gas out of primary steelmaking, which is an easy task. Not only that and certain products that charge carbon is required and both through our reputation and people around North America and around the world that not only heard about our journey, wanted to be part of our journey to come and partner up in finding biogas amounts of biogas, right, is a neighbor partner coming from corn stocks and agriculture is, as you might imagine, and finding sources of biocoal for charge carbon to really bring to fruition what we were able to do just a month ago and putting in temporary delivery systems and literally bringing some of this product in by their truckloads Wow, we were operating in order to get to this first ever product that has been made at zero mission. So we're very excited about that and being part of the journey. But it doesn't just stop in Iowa by any means or even with North America customers. This system is intended certainly in the short term and working with our other divisions in Special Steels and Europe offering 0 plates down to Johnny's Q&T line, zero slabs that will go to Europe and support all of and their needs for automotive and heavy equipment and so forth. So that transformation, this collaboration that's going on as well as Martin described, the technical exchange between our mills, between our people and so forth. And Carl Orrling is going to talk about that here in just a minute, is pretty exciting times and it's a great activity. So in terms of our discussions with customers right now and their demand for lowering the carbon footprint, the companies here are within the targeted segments that I've shown and strong relationships that we have today, we're talking about truck manufacturers. We're talking about heavy equipment. These are railcar manufacturers, the largest transmission tower fabricators that operate in the U.S., all sharing the same ambition that we have on decarbonization and eliminating greenhouse gases in our product and ultimately their products. Okay. Got a stall here. That's the last one.

I'm sorry, Chuck, no more slides when you stay on stage. -- stay on stage, please, Chuck. And welcome back, Olavi, Johnny and Martin because this is the time for Q&A. So I hope you are taking the opportunity to ask your questions to the head of the divisions and Martin as well. We're going to pass microphones around, so that our audience as following in the webcast can hear you. Is anyone care to start? Yes, we have a question here in the front row. And please take one question at a time. You'll get much better answers.

It's Tristan Gresser from BNP Paribas Exane. And one question for Chuck immediately. Just on the, we talked about the green steel premium in Europe being quite high. When you look at the U.S. market, obviously, there is demand, but is there some willingness as well to pay for green steel with a premium?

No doubt, I mean a willingness and an expectation. But to be clear, and you'll be hearing from Tony Harris and so forth, I mean, we have a very well-aligned marketing as we bring 0 steel into the market and through the partnerships that have already been announced. So clearly, at this early stage, we have far more demand than we have supplies, as Martin described, I mean, just the in trial quantities and so forth. And so the short answer is absolutely yes, that our premium would be consistent within the different markets, and that's what Tony is going to talk about.

Okay. Another question? Please?

It's Christian Kopfer from Handelsbanken. Also a follow-up for Chuck, I think on your slides, it seemed like you have a little bit higher earnings volatility than the best peer, I guess, new Nucor. My question is, are you fine with that a little bit higher volatility? Or are you considering or are you trying to get that down? and if so how well will you do?

No, that is I'm not and more importantly, Martin is not. I think he made that clear. But that is to work because of our historical exposure to just basic carbon plate. And we've also -- although I didn't have a slide for it, we have been ramping up our volumes of premium plate to provide that stability Martin described. And I think our volume is now pursuing 30% of that as well as how we manage that or reduce that transactional business should also improve the earnings stability.

If you want to add something, please feel free or otherwise ...

I think the answer so far quite good. So far, so good.

So far so good. That sounds great. Another question please. I have -- where is the microphone? Can you pass it around? Over there, perfect, there you go.

I have the microphone. Yes. So Martin and the team, thanks for the presentations. My first question is on the volumes you are now talking about SSAB Zero. So what is happening on the competition? Are you the first one being out with a product like this?

Yes.

You are. And when do you see any competition coming out?

Well, you have to ask them, but we have ambitions this year to deliver 400-ton and ramp it up until 2020. And as Jacques said, I mean, we see huge interest and the more we can do, the quicker, the better. It is a unique product, and that's why we can also sell it with the premium. And as I said, the demand is there. So it's more about our own capabilities.

And then I have a question on the premium. How did you come up with that? Was that in discussions with clients? And should we see this as an established premium for sort of this type of product? Or how should we view it?

Yes, on both questions. So it's like a fixed premium going forward for the years to come. That's how we are it was important for us to establish a premium for a unique product. And as I said, I mean, it could sound a lot or a little. But mean if you look at the end products, it's not a huge -- it's not a game changer. So it is a unique product. It's -- we are first on the market with it, and that's how we decided to price it in discussions with customers. .

Okay. Great. Let's move on. Next question. we have it there in the middle, please.

It's Bastian Synagowitz from Deutsche Bank. I actually I also wanted to follow up just on net price premium, if that's okay. Could you give us maybe a little bit more color as to what the end markets are, where you're selling this into -- are these like niche grades and niche end markets because I think the feedback we're hearing from at least some of the end markets is that depending obviously on which group, there is not yet a very clear consensus and willingness to really pay up for it. I think that really differentiates customer by customer. So maybe if you could talk about that.

I think the majority of the products will go into the broader mobility segment. So it will be, as Jack showed on this picture, it will be heavy equipment, it will be trucks. It will be automotive. So we have that flexibility. But as I said, I mean, the 40,000 ton we are aiming for this year is already spoken for. But it is from different segments, yes.

And then with the EUR 300 per tonne, you're being really precise, you I've got to say I'm impressed by that. This is what you're seeing today. How do you think that, how that will evolve over time, particularly as the -- there are more volumes pushing into the market. And quite clearly, initially, the market is likely going to be very tight, but I guess we've seen first projects from companies, for example, even such as [ Baowu ] in China now aiming for full decarbonization. So how do you expect that to develop and ...

No. I think that will, of course, develop and evolve over time. And what will be the premium in 5 to 10 years, I don't really know. But I think it was important for us to establish some kind of premium on the premium and word unique product and then how that develops over time with different competitors. So I mean, as I said in the beginning, we are not changing strategy here. We are aiming to continue with the current strategy and continue to produce advanced high-strength steels and Q&T, but in a different way without emitting any carbon dioxide. So we establish a premium now. It is important also for what is to come 2026, when we move into electric arc furnaces in Oxelösund. But then how that will involve -- evolve over time will be very dependent on how the industry evolves or develops.

I have the question over there, I think, yes.

Rochus Brauneiser from Kepler Cheuvreux. First question is for Martin. I think you made clear today that you want to go further in your premium niches as one of your targets. You're still reiterating the old qualitative margin target. So what is keeping you away from getting more specific or numerical and what you're aiming for in the next couple of years?

I mean we -- I mean margins differ over time because this is -- we are in a very cyclical industry, and we need to recognize that, and that's a fact. So whatever we can do to lift low point profits and stabilize margins over time, we will try to do. And that's what I tried to describe at least in the beginning of my presentation. But it is still a cyclical industry and with cyclical margins, and that will be the case even going forward. So we are aiming for these niche products because they are higher priced and have less volatility. So I mean, we want to be a stable company in a very cyclical industry.

On the cyclicality -- yes ...

Okay. Yes, I think -- shall we stick one question in between? So all right. Just pass the microphone on.

It's Patrick Mann from Bank of America. I had a question for you, Martin. You said you see a cost advantage to the minimal EAF process. And I think that's probably a little bit different to what some of your peers are saying in Europe that they think it will cost a little bit more per tonne. Can you maybe unpack that a little bit more? Is it around -- are you taking into account the carbon emissions costs in that? Or is there -- if you exclude those, what do you think the cost is? And then I also had a question for Johnny, sorry ...

Could you -- if you hold that, so we take the first question.

No. But part of it is cost avoidance for future carbon dioxide emission costs, of course. So that's part of the equation.

And excluding that, would you think that how would you compare the costs between your integrated route today and the mini-mills?

That will be very dependent on electricity prices, raw material prices and so on. So we have used external figures, prognosis for the future, and then we will see. But for us, I mean, the alternative, we will come back to that later today in the presentation, there is no alternative for us to build new cocoa and batteries or realign blast furnaces. We are convinced, and I think Viktor showed a slide on that as well, that it will continue to cost money to emit carbon dioxide. And that's part of the equation. So for us, it's not an alternative to continue with the current production system.

Okay. And one question for Johnny, I think. Should we take that right away?

Okay. I just saw the emergence of the Asian players in the Q&T. What -- I mean, what makes you confident that they can't ultimately copy your process and commoditize the industry?

That was actually my concern, I think, 7, 8 years ago when I was working there in China. We had one of our employees actually active in China, putting up a quenching line. It turns out it didn't work. They never got it to fly. And that makes me less concerned. And I mean quenching line is one technology that we have where we are unique, and we continuously develop it because we have a cut center with our researchers that continue to develop this. But you also need to have a good material going into the quenching line. so we've looked at -- I don't want force looked at investing in China many times. But the thing is the only way to benefit from it is we get green plate from a Chinese supplier, but then they need to have good quality, and that wasn't really the case. So then it doesn't really matter if you have a good quenching line if the material is bad when it goes in there. So -- and until now, they have not been able to produce a quenching line that actually is equal to ours. So maybe they will in the future, you never know.

Okay. Thank you. Yes, please go ahead. .

I'm Dominic O'Kane, JPMorgan. We've seen from some of your competitors in Europe in recent days, big increases on decarbonization CapEx numbers, and that's clearly not the case with SSAB. So as we think about your long-term targets out to 2030, how should we think about the risk to the numbers that you've laid out in terms of the SEK 50 billion? And are there any obvious sort of challenges for things like permitting or that might delay the timetable that you've set out?

I think we are sticking to our prognosis of around SEK 50 billion for the full transformation. The challenges is electricity supply and grid connection, and I would say, especially in Luleå, in Oxelösund, as I showed on one of my slides, we are well on our way. In Raahe, we are well on our way. then we need to continue to work with the external factors for Luleå. So we need also to decide. I talked about mini-mill #1 and mini-mill #2 in what sequence we do it, and that will be very much dependent on the external factors. And then, of course, it's something spectacular would happen the closest number of years. We might come back then with an updated investment figure. But so far, we stick to the 50% because we think it is in line with what it would cost. And when we came out with the figure, we took around number with some headroom.

Okay. Thank you. Another question, please?

I'm Tom from Barclays. Maybe just a quick follow-upon the 2 questions. For the first one, just on the electricity issues. You mentioned on that slide, Luleå was probably one of the ones that there are external issues. And you also mentioned hybrid is going to basically double the amount of electricity you need, and it's in the same area. Would you say electricity issues for HYBRIT is a green tick? Or is that also sort of orange question mark?

What I mean today in that area of Sweden, we have a surplus or 15 terawatt hours. As a country, we were exporting last year more than 33 terawatt hours. So there is electricity is more a matter of deciding how to use it. And then, I mean, we don't need all this electricity day one. We will also gradually in the Nordic region build out power generation and grid connection. So I'm just showing a picture how it looks exactly today. And we don't know how exactly it will look 2030, 2028 because this is work in progress. So I was more trying to point in areas where we still have work to do. and some areas that are already green or almost green or soon to be green.

And then the other question was just on the -- going back to. It looks like the volumes are ramping up pretty gradually out to 2028, which is, I suppose, when your new EAFs would potentially be coming on. The initial plan, it seems is produced out of Iowa and ship across to Europe. If the profitability, this premium is so strong, EUR 300 per tonne, what's the bottleneck to producing more than 40,000 tonnes now and maybe taking production out of U.S. plate?

First of all -- sorry. We need to make sure that we get biocarbon and biogas, and we are working with that. We have -- during this fall, we have been investing quite a lot in our Iowa facility in order to be able to use biocarbon and biocoal. So that is one bottleneck we need to continue to work with. As you said, Chuck, we are having partners, and we are increasing the volumes. And I've said to Chuck, it's not given that we need to stop at 40,000 tonnes this year. It could be more, but that will be dependent on how we can ramp up biocarbon and biogas. When it comes to electricity, we have more than 90% of the electricity in Iowa today being fossil free. We had a meeting a couple of weeks ago with the governor of Iowa, and she was promising that they will be pretty soon at 100%. So that will be helpful. So it's more about the availability of biocarbon and biocoal.

Okay. One last question before the coffee break. Maybe you want to come back. I took away one of your second question there, just ahead. Okay. Maybe it was already answered. Yes.

I had one question for Special Steel. I think you showed about the market structure in China or in Asia, where you have a relatively smaller share because there's such a growing amount of [indiscernible] there. So you just said there are more competitors, but not competing in terms of quality to what you do. So how do you see this new competition evolving in the global marketplace. Will this be a local competition for the Asian market? Or what do we expect that those can come also become also global players and being more present in your core markets? .

It's a relevant question. I mean, first of all, we do test our competitors material from coming out of China all the time. And so far, we haven't seen anyone which is near our qualities. That's the first thing that we need to do is improve the quality. If they manage should do that, we've seen a lot of competitors trying to establish around the world, never been able to do that. I think the stock locations we have is a very good entry barriers for a lot of competitors because there's a lot of costs related to establishing this stock locations and the service network that we have. And if we look at Quebec, for example, where they've tried to establish in South America, never really succeeded. So I'm not saying it will not happen. But so far, we haven't seen -- I'm not concerned. That's, I think, the short answer.

Okay. There will be 2 more Q&As after [indiscernible] you take one last.

Yes, please. We have received 2 questions on line as well, of course. So the first one is what's the progress with hybrid? We haven't heard anything on that for some time.

But as I tried to explain, I mean, we are now in the phase of planning the demonstration plant. The pilot plant is working. We are -- and Martin and his team, they are constantly finding new opportunities, and we have decided to patent all of that, and we are sending in patent applications, receiving patents and developing that process in a very interesting way. And then the next big step will be the demonstration plant that we will build together. And that will be up and running around '26. And to be said as well and the shipments of the pilot volumes continues to our customers and partners.

Excellent. And the second question is it's easy to build an EAF. Access to the sponge iron is the scarce source resource. Where do you plan to source this material if the 1.3 million tonne HYBRIT plan doesn't happen?

No. But we plan for the 1.3 million tonne HYBRIT demonstration plant to happen, and that is a prerequisite to do the minimums we can do anyway because we can run that out of scrap. And we have, as I said already earlier, already qualified the majority of the products we produce in Oxelösund, today, we are able to produce in the mill in Mobile. There is still a small number of specifications that we need to continue to qualify. But that work already started back in 2016, '17. So in order to transform into the mini mills, we need the demonstration plant, but Oxelösund, can be done anyway.

Okay. As I said, there will be 2 more opportunities for Q&As later on, but now I think we all are in some sort of need for a nice coffee break. So the webcast will take a course for 20 minutes. Please be back here at 3 o'clock where then the program will continue. Thank you. [Break]

All right. Welcome back. I hope you all had a nice break and some coffee here in Stockholm and hopefully, even for you following the webcast. We'll start the afternoon with focusing a bit on seal and fossil-free steel in particular. The demand, as you know, is increasing, not least from trucks and car manufacturers. And now we hear Martin Lindqvist, President and CEO of Volvo Group, sharing his opinion of the advantage of steel.

Steel, of course, has a lot of advantages. First and foremost, well-known and very competitive and good properties. It's about wear and tear, it is about durability. It is about flexibility. It is about strength and torsion qualities. And it's, of course, also about different methods to do assembly or to make it come together with other materials. But in addition to that, it is also very competitive when it comes to cost. And maybe today, the most important property for future benefits, and that is 100% recyclability. First and foremost, it is a must for us in order to achieve our sustainability targets. So we are already now getting started. We have a very good cooperation with not at least SSAB on this. So number one, really achieving our own sustainability target. But as I said, we are part of different, very important value chains that need to be decarbonized. And I like this combination that what the world are perceiving that 2 of the hard-to-abate sectors when it comes to decarbonization, both steel and transportation by young enforces, we can show the way that it is possible for this value chain, but also further downstream then when it comes to the use of our products in transportation, in infrastructure, in logistics and thereby making sure that these value chains will be decarbonized. That is the priority, and we see also that customers are ready to invest in this also from a product and solution perspective.

Yes, the availability of fossil-free steel is crucial for other businesses to enable the reducement of their carbon footprint and to stay profitable. So is SSAB able to ramp up to meet this demand? Here to reassure us about this is Tony Harris, Head of Sales and Business Development. Please welcome up on stage, Tony. Well, we heard Martin Lindqvist describing their view on this. How would you describe the demand for fossil-free steel?

Well, I think Martin put it really well that -- I think he said at the end there, consumers are prepared to invest in this. And this is what we see now. They're investing in their own future. And we see that all the time now that the demand from the market is higher and higher, and they want it sooner and sooner in greater and greater quantities. And that's why we looked at is 2026 soon enough for us? Or do we need to do something quicker than that? And that's why we come to market with Zero today because we know that there is a demand from it and the customers want it.

We'd love you to elaborate a bit on that, please.

Thank you. Good afternoon, everyone. Just before I start, a little admission, I'm 56 years old. Today is the first day I've ever worn makeup. And yes, there's a 61-year-old in there with the same problem, but it's quite liberating actually. But no. So I came yesterday for a rehearse. And then as soon as I left, they said, "we think you need to come and have some makeup" which I thought was a bit of an insult, but it's -- necessity is the mother of invention. And when you get to 56 and you have a face like this, you need to cover it up a little bit. But if you think about necessity being the mother of invention, I'd just like to take you back 1 week to the IPCC report on climate change. What they said was that global greenhouse gas emissions must peak on or before 2025 and must reduce from the 2019 level by 60%, 60% by 2035. And if we can do that, that will limit global warming to 1.5 degrees C. Just think about that. If we decide to wait to introduce new products for another 10 years or so, if the market isn't pushing us to introduce new products in the next 10 years, what future does this planet have? What future do we have? And maybe when you hear that and you think that people are reading it, and people are prepared to invest in it, you understand why there's a demand for this product that we are taking to market now. So as I said, I think in the past, the division had talked about it really well. We have a vision of a stronger, lighter, more sustainable world. And how do we get there? In the past, we had the most efficient blast furnaces. We were better than the peers in Europe. We were better than the competition from Americas. We are better than the competition from Asia. We emitted less CO2 from our blast furnaces than all of our competitors and that was great. We were 1%, 2%, 5%, 10% better and that was great. That was delivering something. That was producing better steel. At the same time, we went to the market and we -- the guys talked about it earlier on today, and they talked about mix enrichment strategy, how we can take more special and premium products to market, more high-strength steels, how do we introduce customers and upgrade customers to stronger and lighter materials so they get more benefit in the use phase? Johnny sort of cheated my statistics by using this huge million tons of CO2 savings. But what I wanted to say was that we had -- we've been working on that for the last 20 years. We've been working on that for the last 20 years, and that is the way that we've been delivering a stronger, light and more sustainable world. But in the last half of the last decade, we recognize marginal benefits will not deliver what the planet needs. And I think great credit to the people who saw this well before I did, but we came with the idea and the initiative of hybrid. And now we're in a situation where we have hybrid as a concept, and we have a pilot plant that is producing steel. That pilot plant has enabled us to deliver plates of material to Volvo construction already, and it's allowed us to trial products with a lot of our customers through pilot shipments of 500 tonnes in 2022. So we're getting product to market quite quickly, but probably not quickly enough. But while we talk about fossil-free steel, the opportunity for us to take those 500 tonnes to market gives us the chance to create stronger relationships with our customers, be their partner of choice on their decarbonization journey, and that's been really good for us. And what it's meant is that we've been able to secure volume commitments going forward, supply agreements in place. And then also in terms of product qualification, we've been working with customers to upgrade projects so that what they buy in the future will match what we want to sell because they want to be part of the fossil-free journey. As already showed earlier, we will not be selling exactly the same product mix in the future that we sold in the past. So the customers need to upgrade, and we have a lot of projects ongoing with customers where we're upgrading that product already. And then, of course, synergies, marketing benefits. We're raising awareness in the market together for our mutual benefit of how we can take CO2 out of the value chain. This picture here is a 30-tonne dump truck produced by Volvo from fossil-free steel. I think many of you may have seen this picture before. And it was sold to NCC, a Swedish construction company. This picture was taken in June last year at the UN Environmental Conference in Stockholm, Stockholm 50. And on the picture, you can see various dignitaries. We've got the CEO, Martin Lindqvist, who you just heard, from Volvo; the CEO, Thomas Carlson from NCC; [ Melker Jernberg ] from Volvo and Martin as well. And then we have a UN special climate change Envoy, John Kerry, and then the Swedish Minister for Climate. Now I apologize for anybody Swedish here, but [indiscernible]. Not bad. Okay. And I was sitting trying to think of how I could incorporate a joke in this, really, and I couldn't do it very well. But this truck -- this vehicle, I think, has probably been photographed with more dignitaries than Lewis Hamilton's Formula One car because there are people visiting this truck all the time. That's how we're managing to raise awareness. And do we see just awareness from mobility, just automotive? No, we don't. It's very true to say that when we started this outset, we're constantly assessing our customers' demands and needs and what they're trying to -- how mature they are in their own sustainability journey. And automotive, we're very much at the forefront of that progression and still are. So they are the ones with the toughest decarbonization. But as this slide shows, and this is pier from construction, cargo tech lifting and handling equipment as well. And what we see is that all segments now are moving along this decarbonization journey at one place or another, and they're all setting themselves very ambitious decarbonization targets that you can see there. Daimler, Mercedes-Benz is a great case of ours. We -- this is how we leverage fossil-free steel to grow our customer base with selected partners. In the past, I think it's fair to say that we were too small. We weren't important enough for Mercedes-Benz to be a partner. Now we're in a situation where they really recognize the value of what we're bringing to them. And in order for us to increase the volumes of the products that we supply to them, we are now trialing and validating multiple parts for future platforms. As Olavi said earlier, we're getting in at the design phase so that when they go to serial production, we'll be in a position to supply Mercedes-Benz with a very large volume of steel. And here's just some automotive, some industrial and some construction companies that are partners with us. These are the ones that are our strategic partners, up to this point, I would say. We are signing up many more customers as partners for distribution. And I can say there's a huge queue of customers who want to partner with us for supply from 2026 onwards. The problem we're going to have is not about a demand from the marketplace. The problem we're going to have is the limitation of our supply, as Martin has shown you as we progress as we go forward. The demand from the market is greater than our ability to supply. So if we think about what we can do to bring the product to market a little bit quicker. And here we look -- we project forward that by 2050, the global market for steel will grow by 1 billion tonnes. Not all of that can be produced through recycling. So we need a solution that involves both recycled material and iron ore. And SSAB, we want to be part of that solution in both parts. So fossil-free steel hybrid that gives us that virgin iron ore material in 2026 but we want something sooner in 2023, and that's why we're going with recycled material with the Zero product that you've heard about already today. And this is what it looks like. From today, SSAB Zero will be commercially available for ordering. We will supply that to the market during quarter 2. From today, we're able to supply, as Martin already said, we're able to supply pilot shipments of fossil-free steel. But that will not be commercially available before 2026. So we've got 2 offers, one available now, one available for trialing for use for piloting, but not commercially available. Each of those products will have 0.0 CO2 equivalent emissions per tonne -- 0.0 equivalent CO2 emissions per tonne. And they will be produced in slightly different ways or using slightly different raw materials that will be produced in the same way, but the raw material base will be different. So Zero will be produced from high-quality recycled material where a fossil free will be produced from fossil-free sponge iron based on hybrid technology. So what makes SSAB Zero unique? Zero carbon emissions in our own operations. Not -- we're not just claiming it. We're not just giving you a certificate that says it. This will be third-party verified by DNV. There will be -- we will be using fossil-free electricity and fossil-free fuels. We will be transporting internally with fossil-free diesel. There will be no carbon emissions -- there will be no carbon offsetting and no mass allocation to achieve Zero. When you buy a tonne of -- or a plate or a sheet or a coil of SSAB Zero, you can know that when you receive that coil or sheet or plate that it has been produced with 0.0 CO2 per tonne. It's not going to be benefiting from planting trees in the Amazon. It's not going to be benefiting from allocation of marginal benefits spread over a whole volume. It will have 0.0 kilos per kilo. And the route, I think this has already been touched upon, but it will be melted in our arc furnace in Iowa and cast slabs there. If it's testing for the U.S. markets, it will be rolled and finished. The accumulated CO2, there will be some residual elements still, but will be below 0.05 kilos per kilo of steel. So you're all better with numbers than me. But I do remember from my school days, the principle of rounding. So we're below 0.05. If it's testing for European markets, it will be shipped across the Atlantic using biodiesel as a fuel, and it will be rolled and finished in our European plants. Again, accumulative CO2 output of below 0.05. And I'm very proud to say today that no coincidence that Martin Lindqvist was the customer that we took the video with, but I'm very proud to say today that our first customer has been -- has signed a purchase agreement with us, and that means Volvo. They're going to buy a substantial volume of SSAB Zero product from us. They're going to start receiving material during quarter 2. And we're very, very proud that they're on this journey together with us, and we're helping them to achieve their targets. But they are by no means the only customer that we're talking to and it's by no means the only segment. So we have other partners that we are currently talking to who are specifying volumes for Zero in quarter 2. I think it's really important for you. I know I heard the questions before, and I guess I'll probably get some more questions. How much demand is out there? There is more demand than we can meet. And I think Martin already showed this a little bit earlier, but how does it look now, between 40,000 tonnes this year at Zero, 100,000 in 2025. Then once Oxelösund is converted, we will have a mix of products that we can sell from there that will be either fossil-free steel or Zero. By 2030, when the blast furnaces are transformed into mini mills in Luleå and Raahe, we will stop blast furnace production and everything will be produced with our furnaces. Thereafter -- and this is an illustrative guide. Thereafter, we will have the flexibility, depending upon market demand and the cost base and the access to biofuels and biogases. We'll be able to make a choice about how we supply in what proportions to green steel that we're offering. But after 2030, nothing through a blast furnace, everything will be green. So I think my final slide. From today, SSAB Zero is available. From 2026, SSAB fossil-free is available. We see a need for SSAB to embrace both steelmaking processes. One from virgin iron ore because there won't be enough recycled material available for the challenges that the industry faces. And also then from recycled material. And with both products, 0.0 emissions, we will have the greenest steel offer in the world. That's it.

Thank you so much, Tony. Do you mind if I ask you a personal question. It's not about the makeup. How does it feel to present SSAB Zero today?

I think -- maybe I don't answer -- well, I will answer it, but I'd just say that in 2015, 2014 -- when 2014, I was working for a different company, and we merged with SSAB and I remember I went to the Swedish steel price. And I remember thinking how is it possible I could be working for a company that could put on an event like this. And it was such a great event. And I thought how was it possible I could be working for a customer -- a company that could put on an event like this. That was 2014. 2016, I'm introduced a hybrid and I'm just a stupid salesman from England. And I sit there and think, well, that's a lot of money for nothing. I didn't have the vision to see it. So I'm very proud to work for a company that has individuals in it that are, first of all, competent to sort of reinvent the whole steel production process, but then also to understand and to be such a good global citizen, that they are taking upon themselves to solve some of the challenges that much bigger companies than us could have been at the forefront of. But no, we did it, and I couldn't be more proud.

So great to hear, Tony, and you'll be back to take questions a bit later on. So thank you for now. And we are moving on to the production footprint, the opportunities and the challenges ahead. Please welcome Carl Orrling, Head of Transformation Office. So Carl, speaking about challenges in a short way, how would you describe them?

Well, of course, we have to be humble. SSAB, we haven't built a factory or plant of this scale in the last 50 years. So we really have to have good control and manage all the full scope of this transformation project. And as all of you know, the devil is in the details.

But you sleep well at night?

Yes, I do. And if I have some concern, there's great AI tools that you consult nowadays.

Of course, leave the AIs. There you go, Carl, please.

So I will take you through a tour of our future production footprint and we'll start with introducing the existing SSAB production system. SSAB today, we operate steel mills in Sweden, Finland and the U.S. And if we start in the U.S., we have very cost-efficient and relatively modern scrap-based electric arc furnace mills, one here in Iowa and one in Alabama. If we then move on to the Nordics and starting in Oxelösund, roughly 1.5 hours south of here, we have integrated plate mill. And as Jon already explained, this plate mill is 100% focusing on quenched and tempered product, and I would say they are religiously devoted to this type of products here. Then if the strip production system in Sweden is consisting of slab production in Luleå by blast furnace, and then we have rolling and finishing in Borlänge. And then in Finland, we have an integrated mill in Raahe that ships its hot-rolled coils down to a cold-mill complex in Hamlin where we make cold-rolled, galvanized and also tubular products. If we look now ahead and SSAB's transformation to fossil-free steelmaking, based on electric arc furnace, we have a very good starting position. We have vast experience of operating electrical furnaces in the U.S. and also in the last decade, we've introduced some of the most advanced quenched and tempered products into this production system. We have also starting last year with pilot shipment of fossil-free sponge iron into the system, and what it allows us to do is already ahead of the Nordic transmission to qualify the product by this production route in combination with electric arc furnace, and that gives SSAB a unique starting position when we're now transforming the Nordic production system. And speaking about the transmission, we will start with Oxelösund. Oxelösund, the conversion of Oxelösund is the first transformation project of the 3 ones. And Oxelösund conversion will basically be taking place by closing down the existing coke plant and the 2 blast furnaces, and it maybe -- it's noteworthy that this coking plant is the world's oldest operating coking plant from the 1950s. We will construct a new electric arc furnace that will be placed outside the existing steel plant. And because we have such a big site, we will then be able to run the old facility, the old production route in combination with the new one during the transition period and those we can minimize any disruption to delivery of supplies. We will also expand the infrastructure for biofuels, and we will also build a more efficient scrap and material logistics. But the world-class rolling mill and our quenched and tempered line that is based on proprietary know-how will remain on this side. Also, I just want to point out that you can see where the harbor is located and how close it is to the new electric arc furnace shop, which allows for a very efficient material handling from delivery of sponge iron and scrap into the melt shop. This is another view of the Oxelösund site. And you can see in the red building the new electric arc furnace shop. And although we consider this to be the small transformation project, you can still see it's a relatively large building that will be built here outside of the existing steel plant. A further way to illustrate what we will do in Oxelösund and how we will convert the site is this production chart. This production chart starts with metallurgy and then it goes through the rolling process all the way to the delivery. And what will happen here is basically, we will decommission the coking mill, we will close the blast furnaces. We will take away the hot metal handling. We will take away the oxygen steelmaking. And then we will put in a new electric arc furnace that will replace these. These electric arc furnace will be powered by a new power line that is also being in planning for being built. And then we will also add an infrastructure for biofuel and also handling steel and scrap and sponge iron. And that basically illustrates the conversion of Oxelösund. But as I said, we will keep very powerful rolling mill and all the quenching lines that Johnny already presented. If we go to the mini mills, we were thinking that in order to explain the SSAB mini mill and the new concept, we will show a short movie that will take you through the new production and production flow. [Presentation]

Thank you. And of course, our production in the real world operates as slowly as seen on the movie. But the mini mill concept, as we see it, it's an electricity-based process. It's well integrated. It's under one roof. It's very short lead time, basically 3 hours from starting of the smelting process of the raw material until we have a hot-rolled coil on the ground. We also have a very high energy efficiency because we preserve the temperature or the high temperature from the casting into the rolling. And also by building a new facilities, SSAB can achieve the highest degree of digitalization and automation without considering any legacy. And also -- we are also building the mills to be designed to handle a variety of raw material scenarios. So basically 0% to 100% sponge iron or scrap. We have also decided to build the new mills on our existing sites. And why is that? Well, it turns out that we have relatively large sites in both Luleå and Raahe, and we can actually, on the existing site, sit in a new plant without interrupting or disrupting the existing operations. And that means that SSAB will be able during the transition period to run the new and old facilities in parallel. And of course, if you look from a disruption point of view or delivery point of view, this minimize the risk. The other thing which we have an advantage to our projects is that on these sites, we already have established logistics. We already have direct access to harbors, railways, road transportation that is the necessary infrastructure to feed the mills. We also have existing raw material handling capability that we can utilize today. We also, as presented before, are designing the mill in line with existing capacity and we're targeting in the first phase of the transformation to have a nominal capacity of 2.5 million tonnes for each mill. And actually turns out that this size is relatively ideally suited for the mini mill concept, both from an OpEx point of view and a CapEx point of view. And actually, the current relatively small size of SSAB works in our advantage in this case. Then, of course, when you're building new mills, you have to think about future opportunities. So we will, of course, add potential for further additions. We will add more advanced processing opportunities as well to integrate these facilities with local DRI production. This is a beautiful area shot of our Raahe site. And in the Raahe, we -- today, we have -- here, we have the hardware area. We have the existing coal plant over here, existing blast furnaces over here, steelmaking rolling mill. This mill was taken into operation in 1964, and the hot strip mill was, I think, started in the 1970s. What we will do at the Raahe site is basically close all of these old existing facilities and replace them with a new mill that you can see here in the yellow area. It will be an integrated process with a melt shop over here, the hot strip mill and the finishing and shipping day here. So very high efficiency, and we will basically eliminate all of these internal material movements that we have in the existing facility. In the Raahe project, also a bit unique maybe from European perspective, but we are managing our own 400-kilowatt power line project. So that's an SSAB project that is approved, and we also have the set allocation. And there is plenty of effect available for further expansion at the site beyond this first investment. Moving on to Luleå. Basically, what we will do in Luleå is close all of the existing facilities, the coal plant, the blast furnace and the steel plant. And we will, similar to Raahe, replace them with a melt shop and hot strip mill, but we have also added a new cold-mill complex to the Luleå facility. And why is that? Because we see we want to take a bigger part in the automotive market and the mobility market, but we needed to expand our product offer. And with this new facility, we will be able to be producing further generation of advanced high-strength steel products for the automotive sector, but also expand the dimensional offer of both ASSS deals, but also Quenched & Tempered Steels products up to 2 meters wide. And of course, with new facilities, comes new abilities and therefore, we will also be able to expand our offer in terms of improved tolerances but also new type of coatings. And also, this facility will deliver products for further downstream processing. Just to show you a little bit on the layout and how -- I would say it's a relatively large mill. I think it's roughly 1.5 kilometer long, but you have the melt shop, the strip mill, finishing, shipping bay and the cold mill complex in one line basically. So extremely high efficiency, short lead time. And in the lower picture, you can see the placement of the Luleå future mill in location to the harbor, and it's roughly 700 meters of bringing in scrap by vessel, and then we saw we will have train coming in, and then there's roughly the equivalent distance of the shipment of the finished product. So there will be a very high material flow efficiency of incoming raw material and outgoing finished products. And maybe we are -- of course, we are SSAB, but we think that these 2 sites, Raahe and Luleå, they are probably when you take all these factors into account, the best places in Europe to build new efficient fossil-free steel mills. Also, the new mills will give us a new level of operational flexibility. And if we take lead time in the mini mill, basically when you turn on the furnace, you will roughly 3 -- 2 hours later start rolling. And that means that you will have the first coil on the ground within roughly 2.5 hours. And we will be able to produce hot strip coils at a rate of roughly 240 tonnes per hour. And this lead time reduction in the production, we estimate we'll be able to reduce the delivery time to customer from 6 weeks to 2 weeks, and that will be a game changer. Now the game changer is the time it takes to adjust to production. Today, in the current system, with the blast furnace, if you want to stop the blast furnace 2 or 3 days, you need 2 ships to prepare. If you want to stop it for a longer period, you need 2 weeks for preparations. In an electric arc furnace shop, you can stop it with a one heat within 4 hours. So our future ability to adjust to market demand or, for instance, or if business cycles will be much more flexible than what it is today. Maybe the most important contribution to society and to the reduction of climate greenhouse gases is to reduction of CO2 emission. And as stated before, we will, by this transformation, reduce the emissions of CO2 from Raahe and Luleå by over 90%. And I think it's fair to say that this will be the single biggest contribution to the climate targets of Sweden and Finland as Nations. Also, if we look at the energy consumption by this mill, just the internal mill, it will also reduce the mill consumption if we exclude sponge iron production by over 75%. And it's fair to say that we will replace 4 equivalent terawatt hours of carbon energy with 1 terawatt hours of fossil-free electricity. Even if we add the sponge iron production, I think Martin said 5 terawatt hours, you can still see how much more energy-efficient this process is versus the existing one. Cost structure is, of course, also an important part of the business case. And if we take 2030 scenario, where we also have the impact of cost of CO2 emission, we estimate internally in SSAB that we will have roughly 12% lower cost of the new production system versus continue with the blast furnace [indiscernible]. But maybe more important is also the reduction of the fixed cost proportion down to 12% and less. So with this change of production setup, SSAB will be effectively moving its cost structure out of the carbon economy, we will have more flexibility, and we will also have an improved cost position in relationship to our European peers. So to summarize. With the U.S. mills, we are in a very good starting position. We can almost -- we have, I would say, a continuous exchange of information, technology, experience with our U.S. operations. So we are sort of experiencing a second wave of synergy from the IPSCO acquisition that we did in 2007. As stated, we have very good site. They're well suited for the U.S. mills. There's plenty of fossil-free electricity in both areas. We have hardware access, railways, everything is existing, and we have a skilled workforce also in place. The new mills will lead to a step change in efficiency. We will build them from fossil free from the start and in addition, with more capacity for high strength and premium steel supporting SSAB's strategic growth targets.

Thank you so much, Carl. You will be back in a short while to take questions. And now we look into a concrete existing example of the transformation of SSAB. Let's go to Mobile, Alabama. [Presentation]

Inspiring images from Mobile, Alabama, for sure. Well, this is, of course, one of the most radical changes in producing fossil-free steel, the use of sustainable raw materials. And we'll dig into the SSAB strategy around this. And I'd like to welcome back Viktor Strömberg back on stage. Welcome, Viktor. All right. We'll do this a bit together. So let's start with the major changes if you were to describe them.

Well, it has been mentioned on and off here during the presentation what we're shifting out. And essentially, it's a big shift from what we buy today, what we're going to buy in the future and just to illustrate it, if we can get that on screen. So at the higher level of simplicity, we're going to go from buying iron ore and meth coal in very large amounts to a combination where we use sponge iron, recycled scrap, electricity, biogas and bio carbon. Those are the most important changes then. And it's an important one. It has to be mentioned the sort of value-based starting because we burn about 2.5 million tonnes of meth coal. We're not a large steel company, but it's that a lot? There is quite a lot. We burn 5 tonnes every minute around the clock every year in our blast furnaces or coal. And we don't want to continue doing that for the next 40 years.

But to be flexible, you will need to use both sponge iron and scrap. So please explain a little bit about your strategy around this.

Yes. So we are combining with the commercial elements that you've seen as well as with the sourcing study. So let's dive in a little bit to the sponge iron-scrap balance. So today, we buy 3.5 million tonnes of scrap, including the U.S. and about 7 million tonnes of iron ore and this sequential transformation will phase out the iron ore and in this step, we will introduce a mix of sponge iron and recycle scrap. And where this line is. We are a little bit flexible around. And we want to increase both of them. I think both will have to go out. But I want to just show that -- the -- our strategy around sponge iron revolves around sort of 3 avenues, you could say. The first one is the hybrid pilot and demonstration plant that fantastic corporation that we have together with our partners. And now we're in full speed planning for the 1.35 million tonne hybrid demo plant. And of course, we have the exclusive right to source that material from these plants. But beyond that, we have a fantastic, very rewarding, unique partnership with LKAB, the mining company. That is -- it goes back decades. We have together optimized the value chain for many, many, many years. And LKAB has made their strategy to transition into sponge iron, which is very helpful for the whole transformation of SSAB. And they're planning to start by converting what they call their southern system, which is the one rolling [indiscernible] to 5.4 million tonnes of sponge iron. And that is essentially we take all that out for today to our blast furnaces. So they're simply -- they're intending for that to be used in our electric arc furnaces, which is very helpful. But then as was also been mentioned, we still have the option to build on DRI plants. Based on the hyper technology that we have to get developed, everybody has that option in the partnership. And that could be relevant as well for SSAB, for instance, in other geographies like in the U.S. and/or depending on what happens with the sort of LKAB road map going forward.

And that's about the sponge iron strategy. Let's talk a bit about scrap because as we've heard, there are different kinds of scrap. So please elaborate a bit on that.

Yes. Let's talk about scrapping. And there's a difference between scrap and scrap. And if you -- and there are many, many different classifications of scrap. But if you were to simplify that the highest level, which I intended to do here, let's call it, high-quality scrap and lower-quality scrap. And what do we mean with high-quality scrap? Well, high-quality scrap is essentially when we know what it is. And it is pure and not so many residual elements in it that we don't want, a little bit more expensive, a little bit rarer, not fully available on the market in the same quantities. Lower-quality scrap can be anything, bicycles, different car parts, train wheels, you name it. That is generally available. And if you look at what we have on the Nordic market, but before I want to go into this, I also want to make a point around sponge iron and how it relates to the quality of scrap that you need. This is just one example. When we produce in mobile today, one of our sort of high-end products, we have to use high-quality scrap. We cannot use very much low-quality scrap because of the quality elements of the product. In fact, we have to use some pig iron maybe sometimes to complement that. But the more you get sponge iron into the equation, the cheaper scrap you can buy. So we can see, if we are to have 50% sponge iron, which is a pure iron, then we don't need very much high-quality scrap at all. So that's another value element of sponge iron that it enables the purchasing of cheaper scrap on the market. And is there -- and our strategy around scrap then we're in a good position here also with sort of 3 sources. And the first one is the scrap that we generate ourselves. In our global production network, we actually generate a whole lot of scrap, about 1 million tonnes. And this is high-quality scrap. We know exactly what it is. It hasn't been out there circulating. This is just coming out of our own processing. This will, of course, circulate back. We also have partnership with customers, where we ship this steel to them, they do some stamping on it or whatever, and we get it back. That's also about 0.5 million tonnes of that type of high-quality scrap. So the remainder, depending on the level of sponge iron we have in the system, we will then partner up with scrap collection companies to source on the open market. And it could be -- assuming we have a very little sponge iron that will be up to 6 million tonnes, including the U.S. whereas if we are fully industrialized, the LKAB succeeds with the road map, it could be not so much.

But the crucial question has been mentioned before is, of course, the availability of fossil-free energy. Will there be enough? Sort of NOK 10,000 question.

I should be able to talk a little bit about that. Let me just start by on the electricity side of this equation, but it's obvious maybe too many people in the room, but we have very favorable conditions in Nordic. As I said earlier, we have a fossil-free energy generation about decades before some of our other competitor companies in Europe. And this is also typically lower priced in the Nordics region. And even though we have high prices at the moment, this is still a relative game versus Continental Europe especially. So let me clear up a little bit what we need, and that has been lots of newspaper articles around it and people like to throw around big numbers when they want to throw a ranch into our sort of transformation agenda. So just to be explicit, we need, including hybrid, about 9.5 terawatt hours, 4.5 for our own operations and 5 for the first hybrid demo plant. We don't need it tomorrow. We need it sequentially over in the coming years. And in our base plan, the main part is 2026, around 3 years from now when we will have converted Oxelösund and starting to ramp up a hybrid demo plant. Then the second jump in this picture comes when the first mini mill which needs 2 million tonnes -- 2 terawatt hours more around 2020. And then the last mini mill or the second mini mill need another 2 terawatt hours more than what we buy today. So forget the numbers, this is what we're talking about, 4.5 plus 5 terawatt hours.

Okay. Great. Thank you so much, Viktor. And please, anything more you'd like to add before we go to the Q&A.

Just you asked also, will this electricity exist? And I think Martin mentioned that there are -- we need to build our electricity generation in the Nordics for sure, if we're going to succeed in decarbonizing our society. And in the end, it is a regulatory and a political issue on how do we allocate this sort of resource. And I don't want to proceed that discussion whatever, but let me just offer 2 observations that I sort of picked up here. The first one is Sweden is a net exporter of electricity. And in fact, it peaked last year at 33 terawatt hours of exports to content has been growing over the years. Another observation that I picked up a few months ago was the huge projects that exist for offshore wind in Northern Sweden and Finland, there are a number of wind parks being planned with the total capacity of over 70 terawatt hours for offshore wind. Maybe not all of these will materialize, but there are certainly big ambitions over the coming sort of decade for building out electricity generation in our part of the world as well.

Thank you for adding that, Viktor. And please stay on stage. And I'd like to welcome back Carl and Tony for another opportunity of questions and answers. And as before we'll pass microphones around, we have a question there by client, please, or in the middle sort of, yes. Just see if it's on, try again, please. I think it works now.

I am Maxim Close from ODDO. You have a number of your competitors who have their own internal scrap collection abilities and they have made some M&A in that direction too recently like a [indiscernible]. So can you perhaps first spell out what are your internal capabilities? And whether you plan to make M&A in that direction to secure scrap, especially high-quality scrap that you highlighted was necessary for your processes?

As I pointed out, we have these 3 avenues, our internal, our customer [indiscernible] and then partnership with scrap companies. And we have -- we did -- part of our distribution business, Tibnor in the Nordics, we have some sort of scrap collection capabilities there, but we are working actively with sort of scrap collection companies to [indiscernible] who wants to be part of this fossil-free road map together. There are -- that's all I have to say about that.

Okay. Great. You can step up a bit in the light. That will be perfect. Okay. Next question.

This is Alain Gabriel at Morgan Stanley. I guess from the slide -- the area slide that you showed, looking at the scrap versus sponge iron needs, should we infer that around 70% of your needs would be from the scrap? And then if I put a more skeptical hat on, it looks like the key bottleneck or one of the key bottlenecks will be the availability of metallics, whether it was scrap, high-quality scrap or sponge iron. Do you see this as a key source of value leakage that will probably force you to invest more upstream in DRI or scrap collection?

I don't think it's going to be about value leakage. I think everybody -- every participant in the value chain will earn their sort of fair share and I would expect in the end. That has certainly been the case until now. There were a few slides I didn't show now, but one is sponge iron will, I think, eventually be a liquid market. There are big plans over the world to build out a sponsor capacity, both captive but also from the mining companies. So I imagine over the coming years, a little more liquid market will emerge around that. Scrap will obviously and that scrap has been very volatile, and that sort of had historically followed the sort of steel prices in that sense. The other thing I want to point out is that the Europe is already today the world's largest exporter of scrap outside of the region. And I think scrap will eventually become more of a regional market, and a critical resource that will be seen as such in the transformation of our industries.

And if you would like to add something, please do so. Otherwise, we'll continue Okay. Next question over there. And then we have one upfront. Here we go.

Rochus Brauneiser, Kepler Cheuvreux. The one question is on for Tony. I think you talked about the great interest of your customers in the green steel product. Can you give us a very high-level view of what the clients really think? To what extent are these clients really into the green steel, the true offering like you have? And how much are the clients just looking at the CO2 reduction and would take everything with a certificate bundled product, as you mentioned? And how do the green steel premier differ for that kind of 2 buckets of products? And the other question...

Can we start with just one, and I promise you'll take another one afterwards.

I think -- it's a good question. And I think that's we are going to great length, so I've just been to great length to say that if you buy a sheet or a plate or a coil from us, it is absolutely with 0 CO2 footprint. I think as we're at sort of this outset of decarbonization, as we're at the starting point, people have been taking whatever they can get. So if you can buy a certificate that is -- that has -- that is brought about through an allocation process, it's a great interest to you at the start because you can buy it and it can contribute to your decarbonization target. In the fullness of time, I think what's really going to be important to people, consumers, customers, the people that own those companies is really what the CO2 associated with that material is, over time when there is a differentiation. And I think that's why we went to the market, the question was said earlier, why do you go with EUR 300? As far as I'm aware, nobody has gone with a number as high as EUR 300 yet, but we're not offering what other people are offering. And we think it has a value.

Okay. Great. And your second question?

Yes. The second question is on the -- for Viktor on the production system. I think you are boldly talking about EIF rollout. What we see in the last couple of years, there's a growing discussion about using a melting furnace as an alternative approach to deal with all kind of steel grades. Obviously, this has not been a discussion at SSAB so far. Can you maybe give a bit of color why this is like this? And why you don't need kind of other melting technologies?

Well, I can say we have actually also looked into that option. But -- and I think that -- the main difference between us and some of our European colleagues are that we already have existing electric arc furnaces within our company, and we have tested them and we have all that experience and that has made us quite comfortable. And then also we see that there's a great flexibility and, I would say, opportunity for future growth with this route.

Okay. Thank you. We have a question over here, just pass the microphone or someone just have the microphone already. This second row has been waiting for a while. So afterwards, take that. Okay. Please go ahead.

It's Patrick Mann from Bank of America again. Can you just talk a little bit about the sponge iron with LKAB. The southern system doing sponge iron outside of hybrid. Are they using the hybrid technology for that? It just wasn't 100% clear on that. And then does that take up all the capacity to potentially scale up sponge iron production within hybrid later? If you know what I mean.

I think I know what you mean, but yes, LKAB is also fully committed to the hybrid technology. And as far as you should ask them, but this sort of initial transformation is around the hybrid technology. LKAB also has a long-term plan to convert what they call the Northern system, which is the [ Kirona ] system going out there, and that's further ahead, so to say. So they will still even after have converted the southern system, sell pellets to the market.

Maybe another...

Did that answer your question? I hope so.

I mean, maybe another way to ask it is, what's after the demonstration plant at hybrid? Does LKAB going on its own to make sponge iron on the southern system mean we're going to pause at 1.3 million tonnes on hybrid? And they're going to make sponge iron themself?

The initial hybrid agreement, so to say, is a 3-step rocket where we first did the R&D, then we did the pilot plant, and then we're going to do a demonstration plant, and that's sort of what we have agreed as [ Roma ]. Whether there's a continuation after that, we will have to then agree on, so to say.

Okay. Thank you. I think guy in second row. He's been waiting for a while, please.

Tristan Gresser from BNP Paribas. Maybe a follow-up on that. Can you tell us when do you expect to make a decision on what's happened after the demonstration plant? And also, do I understand correctly, as other peers, you would be looking potentially at buying externally in countries that have natural gas resources to procure your sponge iron needs and [indiscernible].

We don't have that in our sort of base case that we will go out and buy natural gas produced sponge iron. We are committed to our sort of fossil-free journey here, if you want. The -- our immediate focus now is to get the demonstration plant. The investment case is sort of locked up for that, including who invest them and how that is going to work. And then eventually, there will be more investments by, I think, what is the next step after that, but we'll have to revert on that.

All right. Over there, yes, please go ahead.

I guess this is to you, Viktor or anyone else. But you mentioned that you have the exclusive right for the iron sponge in the demonstration plant. I was just curious about have you talked about the pricing model. Are you seeing -- I mean, you and hybrid will you have arm's-length distance on the pricing? You mentioned also that there might be a pricing for iron sponge to emerge. So will your pricing follow that?

Yes. I mean we have -- at the moment, we are convinced we're going to build the most efficient value chain. When you look at all the way from the iron ore and all the way to the finish. And that's what we're working together with as a sort of a partnership. Yes, we need to agree on the transfer pricing and it needs to be a win-win for everybody. But it also determines who, in the end, sort of invests in the end. Who contributes to the sort of the demonstration plant. So we are, yes, in discussion, but nothing to be announced yet.

All right. Another question over there. All right.

It's Christian from SMBC. A question to Viktor and I appreciate it's early days, but switching your discussion from sponge iron to scrap metal. You're going to be expecting to source between 2 million and 6 million tonnes of scrap metal in the future, if I understood your chart correctly. What's the sort of recyclable scrap metal capacity per year in the Nordics? And how much of it you would source from Europe or Turkey even depending on the quality of the scrap?

Yes, the Nordics is still a net exporter of scrap as well as is all of Northern Europe, in fact. So there is scrap around but if you -- if every initiative out in Europe succeeds, then obviously, the scrap will be more in tight supply, so to say. And that's why. But we still think we're in a relatively good terms with our sort of internally falling scrap, with our customer partnerships and with the sort of partnership we're establishing with scrap collection companies.

Let me push you a little bit there, Viktor, but you might be short, and therefore, have to reach out to outside the Nordics for purchasing scrap. And I appreciate it's early days. Where would you go?

Well, I think Northern Europe is a very big area, right? But I don't actually see it as a problem. I mean, we export more than 20 million tonnes out of Europe today, outside of Europe. And the total scrap generation in all of EU is more than 100 million tonnes.

Okay. Thank you. Do we have someone else who didn't have -- yes, please? Julia, did you ask anything?

[ Mathias Garbella from Lombardodier ]. A question on hybrid. So you sell at the agreement today is to do the R&D than to do the pilot of the demonstration. But just to be clear, all the patents, they will stay within hybrid, right? So if LKAB then scales up, plants elsewhere, you will get the share of the economics.

The IP sits with hybrid and then it needs to be licensed to whoever uses it. And of course, as an owner of hybrid, we have the right to license it.

Okay. And then secondly, you mentioned particularly in Finland, you have quite a lot of space. So if you dream like now 10, 15 years down the line, if hybrid is successful, what would be like the technical limit you think that your sites would have in terms of, say, 1 million tonnes of production? We think 2040, it's not a forecast, just what will be a technical limit?

We are targeting, I would say, an expansion of maybe plus 40% above the first phase. And what that would be exactly, I mean, you can see some of the U.S. projects where they are targeting, say, 4 million tonnes in the second phase. But it all depends on the product mix and also on the configuration.

Okay. Thank you. There will be a third Q&A. So don't be so disappointed right now. I'll thank you. And as I said, it will be a possibility again to ask questions. But now we have the final section of the presentation and we're looking into SSAB's financials and the outlook to reach industry-leading profitability. Very welcome, Leena Craelius, CFO. A warm welcome, I guess, yes. There is an exciting future ahead and a lot of questions and curiosity how you will manage this. But -- how would you describe the journey looking backwards that sort of make this possible -- in a short word because you're going to elaborate on that.

I'm going to elaborate definitely. We've been hearing fascinating storage by the divisions. And as Martin said, that the strategy we have, it's not changing. It will actually continue. And we have proven that the strategy is working. When I look at the figures on a group level, I can see that it truly is working, and I will also show you guys.

Great. Please do.

Thank you. Good afternoon. It's been a long day. And I already apologize, I have no pictures. It's only graphs and figures. But if you only get kicks out of these [ megapixel ] or whatever thickness measures, I do get kicks from figures, and I hope that you as well after this presentation. Yes, let's have a look a bit backwards, where we started. 2014 Ruukki SSAB merged. And I have been throughout the whole journey, so I have sort of some credibility of telling the story as well. First few years, focus on the synergies delivering. Martin already mentioned today that there was around 2 billion synergies reached after the merger. At the time, as Viktor already elaborated, global overcapacity that has actually changed. And the regionalization has been ongoing, and we can tell that the steel market supply/demand balance is much healthier today. At the time around 2016, we have been discussing a lot today about this continuous improvement program. That's when we started the program, target to get SEK 1 billion, SEK 1.5 billion saving every year. And we have proven to do that. We have a lot of activities, projects ongoing still today. Just to mention few, we have the raw material mix improvement, raw material utilization improvement, energy efficiency, logistics savings, yield improvement, reduction of waste, preventive maintenance, just to name a few. It is kind of part of the DNA of the SSAB that we are seeking for improvement. And also the innovations that we have been discussing today. Tony has been discussing about the innovations. So it is part of the sort of the daily operative way we think. And of course, the stronger product mix, all the divisions are striving to improve the premium product mix. Because we know that it is more resilient in this volatile steel market that we have been discussing today. Already, Viktor touched the topic of tariffs and quotas. First started in U.S. with tariffs, EU import quotas, restructuring in China. And then following this COVID lockdown, we can see that all the divisions were hit and suffering from this. And then we had the time for the recovery. And also mentioned here, Ruukki Construction Tibnor went through some structural changes to gain some cost savings. Maybe to mention that during '22, these divisions were more acquiring, they were acquiring small entities in the Nordic market to support their growth strategy. And yes, recovery, 2 exceptionally good years. One could claim that this is only market impact, but we know that it is not only that. We know that the activities and the strategy we started here is working, and it's also embedded in these figures. Few more financial KPIs. These are very familiar for some of you who are following us on a regular basis. Earnings per share improving, 2 good, very good years. The number of shares has remained the same here. EBITDA per tonne, yes, improving. And if we compare year '22 versus '21 million, we can see that the sales price was well compensating the increase in raw material cost, energy cost. We were also producing less during '22 versus '21, so we were even compensating for the lower capacity utilization and also higher fixed cost. So good year. Return on capital employed '21, exceptionally good; '22, still on a good level. Here, we can see that, yes, COVID. And then here, we, of course, yes, we had somewhat claim a bit too low inventory levels even. And yes, sales was developing heavily upwards. And here, I think it was Viktor already mentioning that the war in Ukraine caused this unbalance in the raw material market. We were also, like many others, securing raw material supplies to secure our production. So we were buying a substantial amount of PCI coal. So that's partially impacting the inventory levels even still going forward. All these good financial performance led us to the situation that we were able to pay the debt. Martin set the target to be debt-free end of '21. We actually exceeded that with SEK 2.3 billion and continued very strong cash generation during '22, ending up on a level of SEK 14.3 billion. Good performance. Net working capital over net sales, this is one of the KPIs that we follow together with the divisions. A lot of activities around inventories. We are, let's say, heavy with the inventories. We have a lot of raw material inventories, partially due to our location up north, we need to do winter stocking. We are buying from long distance, coal from U.S., Canada, Australia. So we need to be really good with the inventory efficiency. We know that. We started on the level of 26.2 million and we have started to trend in a good direction. Here, we can see the impact of COVID. Here, we actually see that the recovery started to -- took place. And here, we can see the impact of the unbalanced raw material market situation when we were piling up the raw materials. We continue to work with this. It is part of the continuous improvement program. And as Carl mentioned, when the transformation has to take place, this will also improve, much shorter lead times with the new mini-mill production program. And also as Viktor was showing, the raw material base will also change. So this will improve with the transformation implementation as discussed today. Are we good in cash generation? We claim that, yes, we are. We have done comparison. We have done cash conversion, which is actually in a formula operating cash flow over EBITDA. We took cumulative reported figures with our peers. And we put together from 2017 onwards up until end of '22, cash conversion. And we are here right behind the best in peers. And we can see that we are actually much better than the worst in this peer group. How does it then look going forward? Here, we can see our performance looking backwards since 2014, merger and as we discussed, in the previous slides, exceptionally good years. But then we know that we have, as a company, become stronger. We have grown the premium mix. We have done a lot of efficiency improvements and all the innovations to be mentioned as well. We are better. And then the industry has changed, as Viktor illustrated. So we estimate to be on the level of 10.4 going forward. That's what we believe. So it is a really good starting point for the transformation journey or actually, we need to continue the journey we have already started. This is illustrating from CapEx need point of view, the 3 different options. We had option, and this is the analysis done around '21, to continue with the current technology. We could have started to rebuild coke ovens, continue realigning blast furnaces, maintain our rolling mills. We would have been burdened with the CO2 emission allowance cost that we've been discussing today quite many times. And if we then look at this CapEx need for the time period of '21 to [ '45 ], the estimate is that we need to do this R&C, maintaining the current setup investments around SEK 70 billion. We would have been very limited with the improvement in the earnings, actually turning eventually to the negative directions with the limited product portfolio as such. Then the other option was to replace the blast furnaces with electric arc furnaces and then modernize a bit the existing rolling mills. Yes, we would have limited the R&C CapEx and done some strategic investments. And then looking at the same time period and the CapEx need, it ended up being on level of SEK 80 billion. But at the same time, we would have been limited with the potential for the improved earnings. Then the analysis was done on this minimal setup with fully integrated production process with a broader product portfolio. And on a total level, SEK 85 billion, split between strategic and R&C, a bit different, but then the opportunity to gain with this earnings improvements. Obviously, I could say no brainer. This one makes sense. And at that time, Board actually did the decision, we call it the policy decision to go for the minimal setup. And that is where we are going today. Sequencing already discussed. Oxelösund, this project has started, but still to highlight that we are needing the Board approval for the EAF investment, and we plan to have that during the spring, and then we can continue the implementation. Plan is to be ready around '26. Then the mini-mill programs, 2 Raahe-Lulea, Lulea-Raahe, we haven't decided which one goes first. Similar kind of projects and our plan is to have the decision done for the first project next year, in the middle of next year. And then to sequence the other project, this is a needed '26. Financial risk profile, we consider to be in a good position. We have very strong healthy balance sheet. We recognize that there is opportunity for financing with sustainability and green financing options. We are able to adapt the road map if -- when -- if needed, and the financial framework that we launched today is supporting this strategy going forward. If we still take the look where we landed with our financial targets, end of '22 in our newly published annual report, profitability compared to peers, we can see here that the SSAB is in the middle here. And end of '22, we were #2, right behind the best one, and clearly higher than the worst peer. The capital structure, the target to be normally not exceeding 35. Actually, as already illustrated before, we were cash positive at the end of '21, and continued the same during '22. Dividend, financial target to be providing dividend between 30% to 50% of the net profit. '21 dividend, which was SEK 5.25 per share. It's representing 37% that was paid out this year. And now the proposal to be approved in the AGM, is to pay out SEK 8.70 per share, which is then representing 36%. And then the new targets. Martin already presented this. But maybe just to repeat that we want to be the industry leader when it comes to profitability among our peers, which are listed here at the bottom of the slide, that we want to keep. We don't want to change this. This we keep unchanged. With the dividend, we had the frame between 30% to 50%. We define it now in the middle. Straight in the middle, we want to be providing dividend with 40%. And then the capital structure, there, we want to do an update, which is more supporting and illustrating the current strategy. We are setting the frame to be plus/minus 20% when it comes to net debt to equity. And already mentioned, it is monetary terms, it's around SEK 13 billion. And of course, all these decisions when it comes to dividend and capital structure, management and the Board of Directors will evaluate those when it comes to the investment CapEx needs for coming years and, of course, the market outlook. So I hope that I conveyed the message that we are really strong when it comes to financial position.

I think you did, Leena. Otherwise, we'll have some questions. So please stay on stage and welcome back, Martin for our third and last, you can just stay here in the middle, Q&A.

Tristan Gresser from BNP Paribas. One question. I haven't seen a mention of the buyback. Can you tell us a little bit how you think about it from a strategic perspective as you have updated your capital allocation strategy? And maybe following up to that, why not coming out with a free cash flow payout ratio after dividend like other peers have done?

No, the thinking, we are asking now the AGM for a mandate to buy back shares. I think that makes a lot of sense, and that's why we are asking for it. And with the frame we gave when it comes to the capital structure, we also say that we want to be in the range of minus 20 to plus 20. So we will allow ourselves to be in that frame. And if you are above that frame having a stronger position or net cash position, meaning outside that frame, we have then shown that we are willing to take measures to adjust the capital structure or the balance sheet. . And then I think what we clarify also with the dividend target is that it is always a lot of speculation. Will it be 30%, 35%, 40%, 45%, 50%. Now we say it will be 40%. So I think we try to clarify the dividend target, and we try to update, as I see it an obsolete capital target with not normally above 35%. So I don't see a possibility for SSAB to go back to the net debt levels we had historically.

Okay. Thank you. Another question, we'll pass the microphone, can start over there. Yes.

I have a follow-up on the share buyback. I think, I fully appreciate that you're considering our share buyback as one of the tools to give money back to shareholders. When it comes to the timing after the AGM approval, what is your thinking about the relative return on your different ways to consider investments? And the share has re-rated significantly. And would you consider buying back shares even though the stock looks more fairly valued compared to maybe back it October times when there was probably a good opportunity. What is your thinking about when to use such tools?

That we need, of course, to determine. I mean, the most important part is to have a mandate, and we need to ask the AGM for such a mandate. And I can foresee that we will have that mandate. And then we can, in a smart way, decide how much of that mandate we are actually using. So we're asking for a mandate to buy up to 10% of the shares. But that's step 1. And that will be hopefully decided now at the AGM in April, and then we'll take it from there. . But this is also showing that we are committed to our financial targets, and we don't want to either become a company with a huge net debt or a company with a net -- strong net cash position. So we'll take that into consideration. And as Leena showed, we are fairly good at -- not perfect, but fairly good at cash conversion. And going into 2023, we did during '22 for the reasons you described, piled up a lot of working capital and that we need now to sweat out. But that we know how to do. We have set the plans in action and we will do that. So you should expect, as I have said for many, many years to continue to generate strong operating cash flows over the cycle. And we focus a lot on what we call cash conversion and what you showed, how can we make sure that the EBITDA ends up in operative cash flow. And then we decide what do we do with that operative cash flow. Well, strategic investments, part of it and then taking care of the balance sheet as well.

Do you want to add anything or...

No, no, no. But like you said, that we continue to focus on the cash generation. The investments are not yet sort of the big investments that we need to wait with. But we focus still to generate the cash and be ready for the money need.

So we have internals for each division on a group level, internal cash conversion targets that we follow at the weekly meetings, at the monthly meetings to follow that every Monday. We have the operational call me and Leena the division heads 4:00 every Monday.

And to remind that this year, we also need to pay out the dividend. And if it's approved, it is around SEK 9 billion. So -- it is also a big amount of money.

For sure. All right. Do we have a microphone can pass away further on.

Bastian from Deutsche. I just wanted to come back on the decarbonization budget. I guess most of us will be probably pretty surprised just from listening to the competitors, obviously, and seeing the expansion of the decarbonization budgets, which have been announced in the last 2 weeks, basically, between like 30% to 50%. And obviously, you're telling us the cap budget remains stable. So just wanted to check how much of the first phase have you already been contracting? And are you -- how closely are you in discussion with your suppliers? Or are you basically just telling us, bear with us and we'll be firming up the budget, obviously, once we get closer to signing for the really keep up of the equipment? I guess the big difference for you obviously is that you have part of the transition budget basically sitting within hybrid, so that's actually not included, which is obviously alleviating it. That's a big difference. But maybe you could still comment on how much you have contracted and how we really should be thinking about it?

We are in constant dialogue with the suppliers. We have not yet firmly any firm contracts. I mean the first decision point will be in during Q2 '23 for the electric arc furnace in Oxelösund. We have in all fairness, already spent more than SEK 1 billion in Oxelösund in preparation. So we know we have built the media whatever it is in English Media. We have done a lot of investments already. So we are fairly -- we are very confident that the Oxelösund calculation will stick. When we came out with the SEK 45 billion for the mini-mills, we allowed ourselves some headroom. Then of course, if something extreme happens on the market, if World War III breaks out, I mean you never know, predicting the future is always hard. And then that might change. But what we know today is that we stick to that target of around SEK 50 billion.

Maybe a quick one for Leena, you showed that chart on just the phasing of the CapEx. Could you give us a better sense for when do you expect CapEx to peak? And where you expect CapEx to be peak, seems to be 2026 when you have the overlay of the 3 phases, but maybe you could give us a bit more color, every time we speak to Per, he's telling CapEx go up a little, but the budget seems to suggest there is more to come.

I think it then depends on the final technical solutions and then the contracts with the suppliers, how the CapEx will actually behave. So unfortunately, I don't have a good answer for you at this stage. We will get back to that.

But a good guesstimate would be then after 2026 because then Oxelösund is finalized '26 and then we start with the first mini-mills around there. And then we'll finish the first mini-mill and then start with the third. So I would say maybe not evenly spread, but increasing from 26.

Okay. A question the next to you? Or do we have a microphone anywhere else. Yes, please go ahead.

Do you mind commenting a bit on the policy support for the 3 different projects you have? Is it fair to assume that the Nordic system will get limited grants that it's purely an investment in the mini-mill? And what about the OpEx policy support grants toward OpEx?

I think the mini-mills and the OpEx for the mini-mills, we have not applied for any support. We have applied for support on EU level for developing the next phase of the hybrid technology and the demonstration plant. But apart from that, we haven't applied for anything. What we discussed though is the importance of a level playing field, and we see that some others get -- some competitors get support. But I think it's -- first of all, I mean you can't create competitiveness with support that is typically over time back firing. And then secondly, I think we need as a society also be aware of the importance of a level playing field and the inner market in Europe. So I had that as a question mark on my first presentation as one of the issues we are working with. But in these calculations and what we have shown, there is no government support for the mini-mills, either for investments or OpEx.

Okay. I think it's you in the middle.

It's Grant Sporre from Bloomberg Intelligence. Could you -- are you able to share a little bit more in terms of the assumptions that you've used for the 12% OpEx reduction? So in terms of what are you assuming in terms of coking coal prices, et cetera, if you can.

We are using external figures, we have our internal view. But for the simplicity, we have used external figures and figures in the market for coking coal electricity in Sweden, electricity in Finland and so on.

Yes, one question for Leena. On your working capital chart you were showing earlier on. So we've seen recently working capital requirements went up. I think you have a few maybe structural things like change in the supply chain away from Russia. Maybe you have some longer-term buffer stocks here and there. Then maybe some higher requirements because of the Oxelösund conversion. So what do -- what shall we think about the working capital to sales ratio, let's say, for the next 2 to 3 years before you have this cap change into a lower level that would be quite interesting.

You're absolutely right that the raw material inventory is on a high level. It continues to be, but target is to make it normal. And I would say that there's a target we should be around 20%. That should be sort of a healthy level for net working capital over net sales. Yes. Okay. Any more questions? You asked -- you answered all the questions there is -- but there's a dinner ahead, so you might get...

You're not off the hook yet.

You're not off the hook yet. That's perfectly too. So there's no more questions in the room. I'll take it as it's not. And thank you so much, Leena and Martin. It's been a long day, lots of information, but you promised to summarize it up. So we know what to remember, right?

Did I?

Yes, you did.

Okay. Then I try to do that. And repetition is the mother of knowledge of whatever you say in English, but in Swedish [Foreign Language]. So we will use some slides. I think we have built a more resilient SSAB. And that has been and will continue to be a very strong focus to lift low point profit because we are not -- I mean, making money on the top of the cycle is, of course, easier than at the bottom of the cycle. And we are not as a company valued on top cycle performance. We are valued at peak or downturn performance or average performance. So it is so important to lift low point profit as we call it internally. And we are even internally saying that we are, from time to time, willing to suffer an extra Q1 on the top of the cycle, and then gain that Q1 on the bottom of the cycle. So moving as much as possible from fixed cost into variable cost makes a lot of sense for our company and our industry. And this is an illustration of what we have achieved so far, and this is our ambitions where we will continue. And we have ambitious targets for growing special steels, premium products and advanced high-strength steels to the automotive sector. And as Johnny and Chuck and Olavi has described, this we can do, not fully independent on business cycle, but we can do this because we have this shift on mix, shift of efficiency, shift of fixed cost into variable cost to a large extent in our own hands. So this is an important part that we will continue. We will continue to set ambitious targets, deliver on them and then set even more ambitious targets. And we are aiming, as I said, for 2/3 of the volumes being premium and advanced high-strength steels and Q&T. And you remember the slide I showed with the difference in profitability and the difference in volatility, and that's what it's all about. Another important takeaway from this way this day is the launch of SSAB Zero. We have been talking a lot about it. And the reason is that we are extremely proud to be first on the market with this steel without any emissions from operations, and this is a third-party verified. We are also happy that we have been establishing a premium for these kind of products, and we are now focusing on delivering at least 40,000 tonnes this year of SSAB Zero products. As Tony said, the market is there. The interest is there, the willingness to have these products and pay the premium is there. So the more we can get out to the market, the better and the quicker, the better. What is the bottleneck? Of course, biocarbon to get that in -- get enough biocarbon enough biogas. But this is an important milestone, I would say, on our journey to move into fossil-free steelmaking. We talked about the potential earnings uplift and the main components. Carl went through how we see the cost benefits, so moving into mini-mills, but also the benefits of reducing fixed costs and go more into variable costs. We talked about the commercial strategy and the possibilities within newer mills the ambition to have 2/3 into premium and advanced high strength steel and Q&T. And continue to reduce the standard volumes, but keeping a strong focus on our 2 important home markets and do this in the future without any carbon dioxide emissions. And when we sum this up, everything is equal and compare it to the existing system using external figures for carbon dioxide -- cost for carbon dioxide emission, coking coal costs, electricity costs and so on, we see the possibility with this transformation to lift profitability with SEK 10 million or more than SEK 10 billion per year, which is very appealing in a transformation like this. On top of that, we will reduce the lead tonnes, we'll improve efficiency, we will reduce the need of working capital. We talked a lot about the future production footprint. And to be honest, Carl and I haven't seen that before. I think it was quite interesting. But we are starting from a good point -- starting point. We have built the foundation. We have the knowledge and the experience of running these mills in U.S. We know how to run mini-mills with flexibility and cost efficiency. We have the European sites, as Carl explained, very well suited for this transformation in scale, in location, in size. We have the possibility to see a real step change in flexibility, efficiency and cost improvements. They will be built fossil-free from the start, and give us capacity for a lot of new interesting products that we lack today. As one good example, which I usually mention is that to meet a wide very thin Hardox. And Johnny, you talked a lot about the demand for abrasive resistant steel in the world, and this is smack in the middle where now the demand is developing quite rapidly. This is an illustrative picture of what we are aiming for. So after 2030, some time we will not produce any steel anymore emitting carbon dioxide. We will have a product range of environmental-friendly products, both from SSAB Zero, recycled scrap with no added emissions, Scope 1 and Scope 2. We will also have hybrid steel or fossil-free steel produced out of fossil-free sponge iron to the market, which is very important. And to sum it up and to be once again shortly mentioned the main as I see it for some of the main points. We have built a more resilient SSAB. We are far from done. Still a lot of opportunities to lift profitability and reduce volatility and reducing volatility as the main topic. The mix improvement continues. We have set new ambitious growth targets, both for '25 and also for 2030. We are launching SSAB Zero. We've shown you the road map and the benefits and the cost of transforming SSAB into a fully sustainable steel portfolio. And we have talked a lot about the future production footprint and the benefits and the costs and the risks with that footprint. So with that, I think we have filled the day. And hopefully, this was interesting. You got a lot more to think about. Hopefully, we were able to answer some of your questions, probably not all of them. And as I said in the beginning, it's always hard to predict the future, but we have at least tried to the best of our knowledge to do that and show you our road map and our ideas and the benefits of that.

Thank you so much, Martin, and thanks to the rest of the management team. And with that, the webcast ends. So thank you so much to the one who has been following us online and goodbye from Stockholm to you. The presentation of today is finished, but as you may know, there's still something happening tomorrow in Lulea.