Voestalpine AG (VOE) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. A very warm welcome from the Voestalpine site in Linz. Last year, the Supervisory Board gave the okay for the first measures regarding the transformation in Linz and Donawitz. Yesterday, we got the approval from the Supervisory Board for the EUR 1.5 billion budget to complete the whole transformation process for the first stage. Next to me is our CEO, Herbert Eibensteiner, who will present details for the first step as well as will give insights for the full decarbonization path, which will take place by latest 2050.

Thank you. Good afternoon. Good morning, ladies and gentlemen. A very warm welcome to our webcast. Let me start with the introduction for the first slide. As a starting point, I would like to mention that climate change is the major task of our generation. And you know that Voestalpine is fully committed to the Paris Treaty. And we are also a member of the science-based target initiative. And I'm sure many of you are quite familiar with this initiative, and it ensures a systematic derivation of corporate targets from the Paris Climate Agreement. And therefore, all efforts in improving our carbon footprints are so far in line with the Paris Treaty and the goals of Europe's Fit for 55 Program. Speaking about decarbonization, it's important to take a look at production processes in the Voestalpine Group. We run industrial businesses which play no significant role in the decarbonization efforts. This is the right part of the slide and those consists of the entire Metal Forming division, Tubes, Sections, Automotive parts, hyper-warehouses, specialty steels and so on. So this is not really a CO2-intensive business. And I would say around the half of the Metal Engineering division, same approach, welding, it's low CO2 carbon footprint and also Railway infrastructure when it comes to turn out and services and so on. So I would say the Industrial business is not really affected by CO2 measures and the other side is the Metals business, and we run -- the left-hand side, we run melting units with electro arc furnace processes in the high-performance metals, which is by the way, not very CO2-intensive. And we have recently -- or we will recently start in our new Steel Mill and this is most state-of-the-art of technology and also emissions. And the -- this is more a focus on Scope 2 and Scope 3 emissions. And on the left-hand side, Steel division and Metal Engineering, at least blast furnace part. This is -- also they are very efficient, and we are very low emissions globally, but it has the biggest Tier 2 footprint. And considering these 2 divisions, Steel division, Metal Engineering division, when you see this blast furnace, altogether, 5 blast furnace. This is our program, and this is called greentec steel. So to give you an overview of the size of the various businesses, when we look at the revenue of last business year, counting around EUR 15 billion on group level. As you can see, the Industrial business, it's 35% and the Metal business is 65%. So you can, I would say, deduct the high-performance Metals business having a lower CO2 footprint. This is -- and then the remaining part is this 45% in Steel Division and Metal Forming. And this is the part where we have to decarbonize and where we have to invest huge CapEx, and -- to put it in a nutshell, so we have less of half of our business is high carbon -- has a high carbon footprint and more than half of our business has by far lower CO2 footprint. So this -- what is our decarbonization strategy? As I mentioned before, low minor, only a minor relevance is our Industrial business. Although there are some issues to do in the metal parts especially the metal parts portion with blast furnace technology. This is where we focus, and this is less than half of the group's revenues. So what are our basic principles? So we think that -- and that's clear, we are privately owned stock-listed company and we say a global footprint and our strategy is very clear. This means that the implementation of decarbonization must balance greenhouse gas emissions reduction and also economy -- economic efficiency. And therefore, like for all our investment projects, the starting point of our considerations is the market. In this case, the market for green steel. This market is currently developing, and we increase our green steel capacity step-by-step according to expected market volume and second important point is technology. Currently, there is a great effort in development of green production technologies all over the globe and we have to ensure to decide for the best available technology regarding emissions, OpEx, CapEx and product quality requirements to be successful on the long run. And the third point is green energy and because green energy is the precondition of -- and also the major OpEx element for green steel production availability and cost for green energy differs significantly across the globe and, therefore, we have to ensure to decide for the best location for different stages of production, especially when it comes to pre-materials and raw materials. As of today, we have many political statements of intent but only little visibility to realistic assets developments and also availability and cost of green hydrogen. Maybe we can touch this later on a little bit and I'm sure you will ask about that, but it's -- this is decisive for the completely -- to completely decarbonize steel production. And as a result, Voestalpine's decarbonization strategy consists of step-by-step implementation plan in order to minimize economic risk and maximize impact on reduction of green gas -- greenhouse gas emissions. So what is our step-by-step approach? And our decarbonization strategy consists of 3 major phases. Let me first start with the status quo. We run 5 blast furnaces and we own a 20% stake of HBI DRI plant in the U.S., which ensures us access to 420,000 tonnes of HBI per year long term. And already with the current production setup with blast furnaces, we produce at the moment and some of you know that with a synthetic green steel model, and this is a banking model to develop the market. With yesterday's approval by the Supervisory Board, we can enter Phase 1, where we will replace 2 blast furnaces by 2 EAFs and the start of production of the EAFs is planned in 2027. In this phase, we will then learn to produce our today's high-quality steel portfolio on different production routes and in this setup, Phase 1, we will be able to produce up to 2.5 million tonnes of green steel, and we can reduce our CO2 emissions by around 30%. The CapEx is the mentioned EUR 1.5 billion, which contains already parts or, I would even say, significant parts for the second step because we have decided to make the building sizes is also capable to take the second step. Energy supply is also planned for the next step and a couple of other topics as well. So then Phase 2 after 2030. At this time, we will replace another blast furnace by an additional EAF in the Steel division and also metal engineering, will shut down the last remaining blast furnace and open the complete capacity of the EAF, that means also in this division is the first step planned and for the second step, only minor adaption or minor CapEx is necessary to make this step in Phase 2. This is one of the reasons to make some preparations for the second step is that the CapEx for Phase 1 was increased to EUR 1.5 billion. Inflation is another topic, but this was the main decision we took in our project scope. After Phase 2 is completed, we will produce around 4 million tonnes of green steel, and we have a CO2 reduction of CO2 emissions by around 50% compared to today's figure. And a topic which is not yet to decide is to what extent we need additional HBI DRI or similar input material and whether we can source it or we can take a stake of a DRI operation or we have to build DRI or similar capacity on our own because we have already for this first phase this HBI available. You can imagine that to build a hydrogen DRI plant, is the least preferred option, but if it's necessary, we will do it from a risk perspective, buying through the market would be the best options. And we look at long and short list of potential HBI DRI plants in the world, and we can expect that in 7, 8, 9 years, we will see a reasonable market for that in at least from our perspective. An additional possibility, especially for this Phase 2 -- Phase 3 is that we have taken into account that there is a development of new technologies for the production of green input material in -- for what we see is HYFOR an example of such input material. When you look at this green box in this Phase 3 area. There is the possibility of hydrogen DRI, yes, but HYFOR is also a technology we want to develop sustainable steel is also a hydrogen topic and CCU, CCS is. Interesting wise, now more discussed on European level. But I'm -- I think I was too quick. I'm still at the Phase 2 and maybe we should say that with the bigger investment in Step 1, only the blast furnace would cost around EUR 500 million. So it's -- the investment is substantially smaller than in Phase 1 because, as I mentioned before, Phase 1 already includes major CapEx elements for Phase 2. So this final phase, I have touched it after 2030. In this phase, the last blast furnace in the Voestalpine group will be shut down and replaced by a hydrogen-based production technology and the most common technology we talked about today is the classical DRI plant where the reduction of the iron ore pellets is performed by hydrogen, input material is DRI and HBI and which is then fed in an EAF and then transformed into steel, but the input materials are CO2 free. And -- but I mentioned before, also this HYFOR technology, where Voestalpine recently signed an MOU together with Primetal and Fortescue. This is HYFOR. This is a hydrogen-based production process like DRI, but uses iron ore fines instead of DRI pellets. So that's everybody will build DRI plants and HBI plants. So maybe this is also a interesting option because we can use lower-grade iron ore input material and this is part of our R&D projects. So we will implement a pilot plant in Linz to see how this system or this technology can work on a continuous base and sustainable steel is a process where iron ore is reduced and made it in a single step with hydrogen plasma, and we run a small test plant in mechanical engineering, but please consider this is a topic between 2035 and 2050, where -- which is a long way to go. And last but not least, we also have CCU, CCS technology on our radar screen. And for the last remaining to touch the last remaining CO2 emissions as well. And I think it's a high strategic value to keep open several different technology routes with potential, especially when we have a mature, at this time, a mature technology where we can always take into account, this is a hydrogen DRI plant. So I think the decision on technology is decisive for the cost structure and therefore, the economics of future green steel production. For this reason, I would say, we will take these decisions, especially when it comes to Phase 3 at due times according to the development of technologies, but also according to the development of the levy framework like CBAM and the economic framework conditions as well. And I think the availability and cost of green hydrogen in Europe will be decisive or is that a topic for production of this input material [ HDI ], HYFOR, name it outside of Europe? Or is it not? So what we can decide is we have now the approval of Phase 1. We have a clear plan for Phase 2 and Phase 3. We let, I would say, the final technology decisions yet open knowing that we have to make a decision right before 2030 and I think that's important to mention. Now coming back to yesterday's Supervisory Board approval and entering Phase 1, which is what we are talking today. The increased CapEx I explained. I will -- I explained at the previous charts, it's a pull forward of investment for Phase 2 to leverage economics and the next step to be taken and now the final negotiation on subsidies. In Phase 1, we follow a low-risk approach by using well-established technologies and I think this is the reason why we can only expect subsidy to be of minor size, I would say, between 5 or 5 to -- when we take this HYFOR pilot plant into consideration as well, then we can talk about 5% to 10% of the total CapEx. So that means that the biggest portion of the CapEx we have to carry and as I mentioned before, in the later stage when we enter hydrogen-based technology, we think that subsidies will play a bigger role as we can see now in other investments of some peers. So I think after that, we enter the interface of requests and offers on project allocation and the start of the installation of the EAF's plant at the beginning of '24 and start of production is planned for '27. So just to give you a figure, how does that look and what -- and how the setup will change the Linz plant. All these ray buildings is either existing -- in the existing company, the biggest building is this steel mill and even the steel mill where there are EAFs, the part of the steel mill where the EAFs are implemented will be a reasonable building. And then we have to adapt this raw material supply, HBI supply, power supply, scrapyard, recycling is the topic and some other things to do and the same in Donawitz, which is a smaller steel production company, but even there, I think this EAF is very big building. You have everything, this scrap warehouse and have the buildings for the EAF and also for the electricity. So I mentioned before, I mentioned our hydrogen activities. And for the Phase 3, that means the final decarbonization of our steel making process. So, as you are well aware, we run in Voestalpine, a PEM electrolyzer for the production of green hydrogen for our steel plant in Linz. And the hydrogen from the plant is used in our existing operations to learn how to handle hydrogen in steel producing plants but this is a pilot plant, and, as I mentioned before, we signed the MOU with Primetal and Fortescue to build a prototype pilot plant of an industrial scale HYFOR plant with a smelter using hydrogen from this H2 future plant in Linz. And this is beginning is 2023, and we want to build it '24, '25 and start, this test production in 2027. And I think this can give you -- and this is a continuous -- can do a continuous operation. And I would say, after that, and this is exactly the time before 2030, we can then see is that a relevant technology for us after 2035. Or do we have to switch to or stay with HDI and also our hydrogen plasma-based steel -- susteel process is performed in a test location in Donawitz and for -- from my perspective, I think it's -- this is the less mature technology we are working on. And apart from the hydrogen-based production process, we -- that also several partnerships for the development of sector coupling projects. That means we are linking our production process which produces CO2 to other industry, which are used carbon in their production and also carbon capture and usage technologies on our radar. And as I mentioned before, more for the Step 3 technologies to avoid spending the remaining CO2 emissions. And I think altogether with this relatively clear 2 steps and open way in -- after 2030 to 2050, I think you get an impression about what we are doing to achieve this net zero goal. And I'm happy to answer your questions.

Yes Sir, so far, the presentation from our CEO, now we would like to proceed with the Q&A, and we will be very happy to answer your questions.

[Operator Instructions] We'll take the first caller from Krishan Agarwal from Citibank.

Hi, can you hear me?

Yes. Yes, we can hear you.

The strategy looks comprehensive and calibrated to me. The one question or the 2 questions I have, I can take one by one. The first one is on the raw material strategy. I mean it is quite open ended in terms of buying from the market or building by yourself. In that context, I mean, have you tested the market in terms of sourcing the hydrogen-based merchant DRI volumes? I mean are there enough volumes available by the time your production come on stream? And then in the worst case, if you were to go and decide to make your own hydrogen DRI, what are the implication in terms of sourcing of the hydrogen, green electricity and the CapEx? Because I guess that is going to be the bigger part of the decision making in terms of not reducing the emissions. And then if you were to make it by yourself, does it delay the entire process by some years? That's my first question.

Yes, that's the key questions. What we think from today's perspective, I think it's -- we have this HBI supply long term for the first step. I think we -- we have to add a little bit for the second step, and I think we are talking about volumes, which are available on the market, not yet with hydrogen, but HBI, DRI produced by gas. I think -- and what we think that the hydrogen market is developing. It's where you have enough renewable energy and I think there are -- and I'm sure you know all these projects in the Northern part of Africa and also in the Arab countries to produce hydrogen by wind and PV and the question will be, is this then coming to Europe and -- or is there an additional forward integration to build input material, HBI, DRI produced by hydrogen? And then there is a open market, you can buy that or you make a partnership to follow this step by step approach. We have what we think of today, I think it's to get competitive hydrogen prices in Europe or to produce hydrogen in Europe is, at the moment, very expensive, and there was some service that come to the conclusion that even when hydrogen comes to Europe, it's not produced directly in Europe. So that's the -- our view on that topic. And I think its hydrogen supply and DRI supply will develop in the next decade and then in the next 5, 6 years, we get a better view on that. But as I mentioned before, we have all options, but I think it's too early to make a final decision where such a plant, HBI, DRI, HYFOR, name it, is to put at the moment for a step after 2030 or 2035.

I understand. Yes. I mean the second question is this basically focusing on the EUR 2 billion investment which you're going to make. I mean, what sort of ROICs you have in your own spreadsheets when you run these calculations for the Phase 1 and the Phase 2 investment combined. My sense is that the cost savings on the carbon certificate which you are currently buying from the market, is the primary source of the value addition for incremental returns on this EUR 2 billion investment. Is that a fair way to think?

Yes, it's clear that the first thing is that we think that green steel is more expensive than today's steel. And then we have less certificates to buy. And this is more or less the metrics of the system. And that's also a topic with this step-by-step approach. First thing is the market. We think that we have -- we will have an undersupply of the -- for green steel. I would say, starting '25, '26, '27, and we will see undersupply even in 2030 or even beyond 2030. I think this is the key. Do we have a green market? From our perspective, yes. And then it's important that we get this surcharge for green steel products, which is, by the way, also developing at the moment and then this only a calculation topic, how do you save money by this reduced CO2 footprint? And we think that that's a key topic in this approach.

Understand. So even including the green premiums and the certificate cost savings, are you targeting somewhere around like 15% ROICs on these investments? Or there is some kind of upside to that number?

You talk about return on capital employed?

Yes. Yes.

There is a bit upside potential, I would say.

Okay, understood.

What is the figure you said?

15%.

10%.

You mentioned 15% return on capital employed. Is it the right...

No. 10%.

Okay. Okay. 10% is this your in-house calculation?

No, you ask me what is the return on capital employed. And you mentioned a figure?

Yes, 15%.

Okay. Yes, this is a bit high. It is a bit lower.

We'll move next to [Ned] Patrick Mann from Bank of America.

Just around the raw material strategy. I'm just trying to understand the decision to sell the stake in the Texas HBI plant and then potentially now be looking to develop or source HBI for Phase 2, Phase 3, I mean, was this really just a funding decision and in a better -- with a better balance sheet, you maybe wouldn't have sold the stake in that HBI plant? Or just help us understand why we're now looking for more HBI capacity for the further phases of the plan. And then the second thing is, can you just talk maybe about the regulatory environment. So you're saying there's higher OpEx, but the green premium and the savings on the emissions mean that this still makes sense. Do you feel that you're protected enough from imports, which under CBAM, that this makes sense? Or does this just make you more cost competitive versus European production, but still not versus imports? Thank you.

Yes. Yes, this is a question I got very frequently. We have built the HBI plant and the problem was that it was too early, I would say. So we, as I mentioned before, so we really need HBI in 2027, this 400,000 tonnes, 500,000 tonnes. And in the meantime, we -- the HBI plant is 2 million tonnes capacity. So we would be a merchant HBI player. And this business is, at the moment, not very profitable under certain conditions. And this was the topic -- and this was the reason why we decided to do it by keeping a share for this first step and sell the rest to a partner who is also in need of HBI for their own production. And I think this is the only thing what makes sense to use this HBI for their own production. And we were not very successful in this merchant HBI business model. This was the reason why we sell off 80% of this HBI plant and only consider or, I would say, focus on the exact need for these different steps. And...

Sorry. Go ahead.

Okay. I think it's very clear. And I think, yes, we think that we get this green premiums in -- for greentec steel. And then we -- with the reduction, that's clear, we lower the CO2 costs. And this should lead to a positive result at least in our calculations and you are right, this can only work in an environment where you are protecting from imports with lower carbon burden, I would say. And what we know from today, we have exact figures how the free alliances will develop until 2034. And CBAM is now in the test phase or will be coming on stream in the next year, I think. And then CBAM will be the test, how high should be this order adjustment that European player are protected against these imports. So far, the -- this is the environment we are in. We think and what we hear that the CBAM in the range of our CO2 costs that would help and together with all the other measures, antidumping and this safeguard measures, I think this is all those 3 things together, I think, can work.

We'll move to the next caller in the queue. Dominic O'Kane from JPMorgan.

Just a quick question on the funding strategy. So you give us the EUR 1.5 billion for Phase 1, what's the scheduling of that spend? And then how should we think about that in the context of the balance sheet? Do you lay out any thresholds that we should consider in terms of how you think that the optimal leverage for your balance sheet through this capital-intensive phase?

Yes, so you have this -- it's very roughly. You have this EUR 1.5 billion, already EUR 200 million are spent for the pre-preparation, this is already digested. So let's assume we get EUR 100 million subsidies, then we are at EUR 1.2 billion. And then divided by 4 years of implementation, then we have this EUR 300 million to distribute over these 3 years, maybe in 2026 and maybe in '25 a bit more and the other years a bit less. So -- and considering our depreciation of, I would say, EUR 850 million or EUR 800 million that let's start with EUR 850 million. So you can get a rough figure, how this CapEx is distributed and for the time being, we stick to our rules that gearing should not exceed this 50% and we are working on that, that Net Debt-to-EBITDA should not exceed too. That's in brief what we -- the framework where we work.

Moving next to Bastian from Deutsche Bank.

I've got a couple of questions. Maybe just firstly to clarify the timeline for the second phase. Could you please let us know whether you aim to have the additional EAF and the infrastructure related to the second phase up and running in 2030 already. That's my first question. Like will you start with Phase 2 [ building ] in 2030, will you start construction? Or will the infrastructure be in place already by then?

I would say that we have the bigger buildings, and there is a lot of infrastructure already available in Phase 2. From our perspective, it will '31, '32, we can implement this or even earlier, we can implement the second EAF in Linz and this upgrade of the EAF in Donawitz. So for me, should be the time 2032 that we phase out the second 2 blast furnaces. So that means that we have to begin in the -- or should be in the implementation phase in 2030.

Okay. Then my second question is, again, on I guess, your choice of like how you operate in terms of DRI being on your plant or basically being procured outside. And in contrast to obviously, many of your European peers, at least you've been deciding against having a DRI operation next to your steelworks. And I guess that's also an active decision against hot charging from the DRI mill into the electric arc. So in other words, you're basically suggesting that producing in a location with really good conditions for green hydrogen will be cost-wise more favorable for you than producing DRI on your side and then hot charge it into the EAF. Could you just confirm whether we caught you correct on that point? And then maybe also explain a little bit more why you think different versus what most of your peers are doing, i.e., do you believe there's just potentially still the big step change on DRI OpEx coming with some of these new technologies you're looking into? Or why exactly are you really going a different route versus what at least most of your European peers are doing?

So the positive thing is that we have already HBI for the first step and all the others not. So they have to make a decision how can they get HBI as input material, and this is at least from my perspective, the reason why they have to decide now to invest in an HBI plant. And we have the choice, the possibility to wait another couple of years to make this final decision. And because of this unclear situation about where should we place HBI plant and where is hydrogen coming from. So at least this is for us -- or I consider that as a positive topic for us that we have not -- there is no reason to make this decision now. And you are totally to the point to say, what is the key point? Is it OpEx? You know that most of this HBI plants are highly subsidized at the moment. And I think it's -- OpEx is really that most important part, it's not to get a subsidy for CapEx. I think it's the most important part of this whole transformation is to come through this transformation part and staying profitable. And the key point is supply, but that's clear. And -- but will be OpEx and the OpEx for us, it's not fully visible where this hydrogen prices are going, and where is the right play -- the right place -- -- to place HBI, DRI plant.

Okay thanks for sharing your thoughts on that. Then just -- then following up also on the Green Steel premium. And I guess you're being very precisely, actually. My understanding is you hosted the call with some of your clients in terms of the marketing of your new green products a couple of weeks ago. So wondering how the customer feedback has been on that front and whether this 10% to 20% Green Steel premium, which you're putting out here, is basically based on the feedback, which you received from your customers at that point? Because my understanding was that the range of potential green premiums is actually still very wide, but you're being very precise here.

This is what we are seeing at the moment for this time of 2027. I would say that the Green Steel premium now is even a bit higher, I would say, but we are considering that over the years, we see a certain reduction. Also, as I mentioned before, we are sure that at least till 2030 or beyond 2030, there will be an undersupply for Green Steel. So that's for us, I think we are investing in a positive market environment.

Next [indiscernible].

So I would have a first question on basically your procurement of raw materials in the first phase. So I understand that you will not use a very little DRI reduced with hydrogen. So you will use either scrap or DRI reduced with gas in the first phase. So given that DRI reduced with gas does not come with a massive CO2 savings versus blast furnaces, I mean, should we understand that I mean, basically, you will see your [ 3 EAFs ] predominantly with scrap in this first phase? So that's my first question. Actually, you -- I understand that your procurement from the [ ArcelorMittal ] HBI plant covers only a limited fraction of your needs during this first phase.

You're right, for this first phase, we follow a hybrid, I would say, a hybrid model, so we use scrap. We use HBI. And we use also crude steel from the remaining blast furnaces. And saying that, we have the chance to reduce a little bit the CO2 footprint even on the blast furnace production and all these things together, the mix in scrap HBI and also a little bit input from crude steel or even crude steel is stand the CO2 reduction of this 30% of our emissions because it has to do with the special features of our blast furnace.

Okay. So the 30% of [electricity] or so -- that will also come from optimization efforts from the blast furnace route, the remaining blast furnace route during the period.

The blast furnace route, HBI scrap, this is despite the 30%.

Okay. Okay. And now coming to electricity, is it possible to quantify very approximately your additional electricity needs by 2027 -- from 2027 onwards. And what will be the mix actually of this additional electricity? Will it be 100% clean -- predominantly clean or just only to a certain extent clean i.e., renewable?

So the figure is very easy. It's roughly 1 terawatt hour additional electricity for this first step, and it's 100% green steel. In Austria, we have 80% green energy production because of our water power. And we have also even now secured green steel from wind plants and -- mostly wind plants, but also some [indiscernible]. So the mix is clear for us. And I think that the whole transformation makes only sense when we switch to green energy...

Okay. So the related Scope 2 emissions will be basically 0.

Yes, will go directly to the wind plants and buy energy.

Okay. And just last question. I mean, starting 2027, will there be a period when both the 4 blast furnaces and the new EAFs will run in parallel, how long will it last?

As always, when you build such a plant, EAF, you have to do this start-up work, I would say, a couple of months, half a year, I would say, it will run in parallel and then because also of the cost topic, we should be -- stop the blast furnaces relatively early. So our expectation is that blast furnace will be when the EAF is up and running and everything is okay, the blast furnace will be idle relatively quickly.

Okay. Okay. But this means that probably 2027 will be -- I mean, there will be some transaction costs, I mean, in terms of OpEx that will be quite material. I mean, it's too far.

You have the chance to reduce the production of the blast furnace. I think, yes, it will be additional costs but you cannot add the cost.

[Operator Instructions] We'll hear from Christian Obst from Baader Bank.

So most of the questions, of course, now answered. Just a few left. Do you see or are there any plans to change the HBI production in Texas to hydrogen currently? That's the first question.

You should ask this question to the ultimate owner. But yes, we know that there are plans for testing hydrogen in the plant or at least we had this plans, but as we are a minor shareholder, we are not in the driver seat. From my perspective, hydrogen will play a role in HBI production in the future.

Of course. Okay. And do you expect any kind of OpEx support in the coming years, be it from the EU or from Austria, not only CapEx, but also OpEx support besides CBAM.

I would say, at the moment, we see a mix of everything. So CBAM is a protection tool, from my perspective. CapEx lowers -- CapEx subsidies lowers the exposure, I would say, and the risk. And OpEx support is on the long run, I would say, is only a sign for a -- for no market for this product, that's why we think it's always good to get subsidies. And I think that the higher the OpEx subsidies are, I think the risk of an investment is very high. And when you get less maybe CapEx support, the risk is lower. This is, by the way, also the deeper sense of their rules and regulations for the European Union because from our understanding of this versus subsidies are generally not allowed with the exemption of and one exemption is that there is no market and there is a high risk of an investment and then you get OpEx subsidies as well. And what we expect in -- for our project is CapEx support not very high, as I mentioned before, between 5%, 6%, 7%, but this will be CapEx support.

Okay. Then on energy security or energy supply for your plants in Linz and Donawitz, do you see any kind of problems that you get the right connection until the date when you like to start your new plants there? Or is everything there on time, on budget, more or less?

Yes. It's really -- it was a concern to be very honest. So at the moment, we see everything is tight but right on the schedule, especially in Donawitz, it's totally clear that everything will be right. And even in Linz, where we had some concerns, we have now got the approval from the government to build this grid and we do expect that they are right on time when we want -- when we will start up our plant.

Okay. And the last one is on CO2 costs. And what is your underlying assumption how CO2 emission, right? The cost of CO2 emission rights will develop until the end of this decade.

CO2 costs are higher. I think that -- I think that's clear, but I'm not sure that I have the right figure. I would say, it's 3x -- 2x to 3x compared to today's figures.

Yes, Christian, in our internal calculation figures, we foresee clearly a reduced amount of free allowances for CO2 emissions. Clearly, after -- starting from 2026. On the other hand, this will lead, in our opinion, to a much higher price level for CO2 costs and for the certificate for the CO2 certificates in the future.

But you said at the end of 2030.

Until that time. Yes.

Until this time, okay. That will be higher. I can only -- this is just above 100.

At this time, there are no further questions in the queue. I'd like to turn the conference back over to your host for any concluding remarks.

So I think we have reached the end of our presentation and of our Q&A sessions regarding our decarbonization strategy. Thank you very much for the interesting questions you had. And if further questions will come up during this presentation or in the afternoon, please feel free to contact me on the phone. So far, goodbye from Linz.

Thank you very much again, and I hope we will hear and see you soon again. And I assume you have also in the future, a lot of and more of these interesting questions. Thank you very much.

That does conclude today's teleconference. We thank you all for your participation.