Good day everyone and welcome to today's AMG Q3 2024 earnings conference call. At this time all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. Please note this call is being recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Michele Fischer. Please go ahead.
Welcome to AMG's third quarter 2024 earnings call. Thank you for joining so late in the day. Joining me on this call are Dr. Heinz Schimmelbusch, the Chairman of the Management Board and Chief Executive Officer, Mr. Jackson Dunckel, the Chief Financial Officer, Mr. Eric Jackson, the Chief Operating Officer, and Mr. Michael Connor, the Chief Corporate Development Officer. AMG's third quarter 2024 earnings press release issued today is on AMG's website. Today's call will begin with a review of the third quarter 2024 business highlights by Dr. Schimmelbusch. Mr. Connor will comment on strategy. Mr. Dunckel will comment on AMG's financial results, and Mr. Jackson will discuss operations. At the completion of Mr. Jackson's remarks, Dr. Schimmelbusch will comment on outlook. We will then open the call to take your questions.
Before I pass the call to Dr. Schimmelbusch, I would like to expressly refer you to our statement on forward-looking statements and the meaning thereof as we have used at all previous occasions and we will use at this earnings call and which explanatory statement has been published as part of our financial presentation and on our website. All in connection with this earnings call. I will now pass the floor to Dr. Schimmelbusch, AMG's Chairman of the Management Board and Chief Executive Officer.
Thank you, Michele. AMG's EBITDA continued on a steady growth trend in Q3 during which we achieved $40 million of EBITDA. AMG Technologies delivered a strong performance compared to Q3 2023 with excellent results in a growing market. Our engineering unit secured $131 million of order intake and had an order backlog as of September 30th of $367 million, the highest in AMG's history. This result continues to support the rationale of AMG's diversified portfolio by demonstrating our earnings power despite the challenging market conditions and depressed price levels in our lithium and vanadium segments. I will hand it over to Mike to speak about our growth initiatives. Mike,
Thank you, Heinz. In terms of our growth projects, we are now in the finalization stage for our major lithium projects. Our Brazilian lithium concentrate plant expansion is complete and ramping. We expect to produce a full 130,000-ton annualized capacity before the end of the year. On September 18th in Bitterfeld, Germany, we hosted the grand opening of Europe's first lithium hydroxide refinery. Overall, the lithium industry is still in its infancy and experiencing the type of volatility inherent in the advent of new markets.
Despite these short-term challenges, we are confident in our current position and remain enthusiastic about the opportunities presented by the evolving market dynamics. The industry's future looks bright as lithium is poised to play a crucial role in the transition to a cleaner, greener future. The lithium industry continues to experience remarkable growth driven by the global shift toward renewable energy and electric vehicles.
As countries prioritize sustainable energy solutions, lithium-i on batteries are becoming more and more essential to everyday life. Conversely, on the supply side, there are substantial delays and interruptions in not only new investments, but also contraction in the existing supply chain because of current unsustainable price levels. Specifically, it is estimated that over 6% of the existing global lithium production available for 2025 has already been impacted due to curtailments associated with the low market prices. With Australian producers being hit the hardest, short term fluctuations are impossible to predict. However, these supply demand dynamics have a relatively predictable outcome. The production cost curve for existing and potential producers indicate that a higher long term price level than the current position is required for a sustainable lithium industry.
Consistent with our progress in the lithium space, we have completed our major capital investments in the vanadium segment, including doubling our production capacity in Ohio and completing the construction of our vanadium electrolyte plant in Nuremberg, Germany. In our vanadium business, we are also experiencing what we consider to be unsustainable long-term supply-demand dynamics. At current price levels, many of the existing vanadium producers are unable to maintain their production. Global steel production is on an upward trend, especially in developing economies. This traditional demand will continue to support the vanadium market. Additionally, increased investment in infrastructure and renewable energy products, especially energy storage, is expected to boost demand for vanadium, particularly in regions focused on energy transition and sustainability.
As with the lithium space, the production cost curve for existing and potential producers indicates that a higher long-term price level than the current position is required for a sustainable vanadium industry. Our technology segment is benefiting from the current strength in the aerospace sector. Overall, the aerospace sector is on a steady upward trajectory driven by a combination of recovery efforts, technological advancements and a focus on sustainability. As these trends continue to evolve, they are likely to shape the future landscape of the industry. Innovations in aerospace technology such as our advanced technologies and materials are creating new opportunities for aircraft manufacturers and suppliers. The industry is rebounding from the impacts of COVID-19 with increasing passenger air travel and cargo demands. Airlines are ramping up operations leading to higher aircraft orders.
Additionally, there is a growth emphasis on sustainability driving demand for fuel efficient and environmentally friendly aircraft, directly impacting the demand for our products and services. Also within the technology segment, AMG LIVA is engaged in the execution of several battery projects to optimize the energy management industrial plants and incorporate renewable energy sources.
AMG LIVA's first third party commercial hybrid energy storage system is now operational at Wipotec GmbH, a leading global provider of intelligent weighing and inspection technology located in southern Germany. LIVA's energy storage system integrates lithium-ion and vanadium redox flow batteries with AI-driven efficiency enhancing the power system at Wipotec's facility. In summary, we have completed transformational expansions across our critical materials portfolio. We remain a low-cost producer and have maintained a diversified portfolio which allows us to mitigate the most significant risk associated with market fluctuations.
As a result, we are well positioned to capitalize dramatically as our markets align with the anticipated outcomes of the global energy transition. I will now pass the floor to Jackson Dunckel, AMG's Chief Financial Officer. Jackson,
Thank you, Mike. I will be referring to the third quarter 2024 investor presentation posted today on our website. Starting on page five of the presentation, I'd like to reiterate Heinz's comments about the strength of the EBITDA performance this quarter. Given the low lithium and vanadium prices, the rest of AMG's portfolio demonstrated significant strength. Net loss attributable to shareholders for Q3.24 was $13 million. This net loss figure was the result of an inventory cost adjustment in our lithium segment which accounted for $18 million of pre-tax earnings deduction. Moving on to page six, you can see the price and volume movements for the key products represented by arrows, which I will go into in more detail as we review the segmental slides. On page seven you'll see our leverage and valuation figures for the current quarter compared to the year-end 2023.
It's important to note that we've invested over $650 million over the last four years for our lithium and vanadium expansion projects, which has impacted the return on capital metrics displayed here. Nevertheless, we have significant liquidity to support our future growth opportunities. Now I'm going to review our three segments and I'll start with AMG Lithium, which is shown on page eight of the presentation. On the top left you can see that Q3 2024 revenues decreased 22% versus Q3 2023 to $49 million. This is driven mainly by the 67% decline in lithium market prices versus Q3 2023, but was offset by a 42% increase in lithium concentrate production as our new processing plant in Brazil continues to ramp up. Adjusted EBITDA for the third quarter 2024 came in at $10 million, down 65% from Q3 of last year due to the decline in lithium prices.
The quarterly CapEx shown at the bottom left at $19 million was driven by our two expansion projects in Bitterfeld, Germany and Brazil. Turning now to page nine of the presentation, which shows the AMG Vanadium segment, AMG Vanadium's revenue for the quarter decreased 13% to $151 million compared to Q3 2023 due to lower sales prices across the segment and lower volumes of ferrovanadium, partially offset by increased volumes in chrome metal. Q3 2024 gross profit decreased by 34% compared to Q3 2023 largely due to the decline in revenues. Q3 2024 adjusted EBITDA of $11 million decreased 29% compared to Q3 2023.
This was primarily driven by the 21% decrease in market prices for ferrovanadium compared to Q3 2023 in terms of the sequential drop in EBITDA versus Q2 2024. AMG Vanadium sold fewer tons of ferrovanadium in the current quarter as the production facilities had a number of planned maintenance outages.
In addition, our chrome and alumina businesses were affected by our normal lower August production volumes. Moving on to AMG Technologies on page 10 starting on the top left, you can see that Q3 2024 revenue increased by $24 million or 19% versus Q3 2023. This improvement was driven by higher sales volumes of antimony and silicon and higher net sales prices of antimony. Adjusted EBITDA of $19 million during the third quarter was more than double the same period last year. The increase was primarily due to higher profitability in antimony and graphite. AMG Engineering signed $131 million in new orders during Q3, driven by exceptionally strong orders of remelting furnaces. Order backlog was $367 million as of September 30, a record high. AMG Silicon began operating two of its four furnaces in March of 2024.
As we plan to run two or four furnaces for the remainder of the year, the results of AMG Silicon remain excluded from EBITDA. Turning now to page 11 of the presentation, on the top left you can see that AMG's Q3.24 SG&A expenses were $47 million versus $43 million in Q3.23. The increase was largely driven by the increase in headcount in our Lithium, Engineering, and LIVA, the businesses associated with our strategic expansion projects and higher professional fees relating to additional regulatory requirements. AMG's net finance cost was $8 million in Q3.24 compared to the $9 million in the prior period due to higher non-cash intercompany foreign exchange gains in the current quarter, partially offset by increased interest costs associated with the new $100 million incremental term loan issued in April 2024. AMG recorded an income tax expense of $2 million in Q3.24.
This expense was mainly due to $7 million of deferred tax expenses in our German businesses related to losses that do not qualify for recognition as deferred tax assets. This expense is offset by the $3 million tax benefit related to the statutory tax rates applied to AMG's negative profit before tax. In addition, there was a $2 million deferred tax benefit related to a favorable foreign exchange impact on a Brazilian tax positions. AMG paid taxes of $5 million in Q3 2024 compared to tax payments of $33 million in Q3 2023. The reduced cash payments in the current period were largely a result of the decrease in profitability year- over- year.
Turning to page 12 of the presentation, you can see on the top left that cash used in operating activities was $2 million in Q3 2024 compared to cash from operating activities of $25 million in the same period of 2023. This is primarily due to lower profitability in the current quarter. AMG ended the quarter with $490 million of net debt and as of September 30, 2024 we had $272 million in unrestricted cash and $200 million available on a revolving credit facility. As such, we had $472 million of total liquidity at the end of the quarter. That concludes my remarks. Eric.
thank you, Jackson. Lithium and vanadium prices weakened quarter over quarter and sequentially. However, due to our low-cost position in both segments, AMG Lithium and AMG Vanadium delivered positive EBITDA in the third quarter. Our third segment, AMG Technologies, reported exceptional results driven by our market-leading position in our engineering businesses and strong results in our diversified mineral operations. Our Brazil lithium operation produced in excess of 26,000 metric tons of lithium concentrate in the third quarter and delivered 22,000 metric tons CIF China.
The average realized sales price was $870 per metric ton and the average cost of production was $450 per metric ton. Both CIF China production consistently increased during the quarter and our expansion is successfully proceeding on our previously announced schedule. We expect to reach full 130,000 metric ton annualized commercial capacity by year-end.
AMG Vanadium's Zanesville and Cambridge spent catalyst processing facilities lead the industry in terms of cost structure and environmental performance. Our Q3 Vanadium results for the third quarter however negatively impacted by average prices being lower by more than 20% quarter over quarter and unabsorbed operating costs. Cambridge relating to the relining of our secondary furnace and completion of a number of melt shop maintenance projects. It's worth noting however that the relevant ferrovanadium index price has increased by 10% in the month of October. Boeing's work stoppage, which has been recently resolved, impacted AMG Titanium's titanium aluminide sales volumes during the quarter. However, this was offset by increased sales volumes for the rest of the unit's titanium alloy production.
In our technology segment, AMG Engineering signed $131 million in new orders during the quarter, driven by very strong orders for remelting furnaces and, as mentioned, had a record order backlog of $367 million at the end of the quarter. Our other operating units under the AMG Technologies umbrella, especially antimony, also performed extremely well in the quarter and made a significant contribution to the $10 million quarter over quarter increase in AMG Technologies' EBITDA. As always, our overriding operational objectives are to be the low cost, highest quality and most environmentally responsible producer of all of our products. This enables us to produce positive financial results even in the trough of our various end markets. I'd now like to pass the floor to Dr. Schimmelbusch, AMG's Chief Executive Officer.
Thank you Eric. Due to the strong operating results to date, including exceptional results from our Antimony operation, we are increasing our EBITDA guidance for 2024 from quote exceed $130 million EBITDA unquote to exceed $150 million EBITDA unquote as the lithium prices have weakened further and AMG's antimony contributions normalize. We expect AMG's adjusted EBITDA to exceed $130 million into 2025. Due to the uncertainty related to the commissioning and ramp-up process as well as the impact of the write-downs in the value of our inventory to the current low market prices. We have excluded any expected contribution from our lithium hydroxide refinery in Bitterfeld, Germany from our 2025 guidance Operator. We would now like to open the line for question.
At this time we will open the question and answer session. If you would like to ask a question, please press star one on your telephone keypad and you'll be placed into the queue in the order received. You may remove yourself from the queue at any time by pressing star one once again. To ask a question press star one on your phone now. And our first question comes from Ephrem Ravi of Citigroup.
Thank you. I've got three questions but this is on three different businesses. So if I may, I may take it in turn. Firstly, can you give a sense of price sensitivity to earnings on antimony? I understand that you've got about 10,000 tons of antimony trioxide production. And so is it as simple as every thousand dollars per ton change in the antimony trioxide prices, you know, $10 million to gross profit or is there a different scale that we should use?
We have a very stable antimony business with free cash flow contributions year- over- year. But in this year, due to significant rises in the antimony price, antimony price for all the antimony products, we have more than double our normal EBITDA contribution from that business. We expect that to normalize, but that's a thing of the future. We assume this not to continue.
However, Ephrem , it is a processing business, so it's not a conversion business. It's a conversion business. So you can't take a thousand, you know, there's no scale. We make a margin over what we buy it for.
Okay, so a lot of the price or the earnings increases, essentially low cost inventory that you have, which then you sell at a higher price as prices rise, would that be a fair way?
To think about, you replace low-cost inventory as time goes by with higher-cost inventory.
Okay. Okay, thank you. And, secondly, on the engineering orders increasing very substantially and record order backlog, I mean, the auto industry, especially in Europe, is quite weak. So, is it entirely aerospace that is kind of leading to that big increase in the vacuum furnaces business?
This is true. It is, it is totally automotive plays no role here significantly other than service businesses for heat treatment services, which are very predictable, and the aerospace is the customer and in particular the aerospace engine industry. We are critical suppliers to the engine, to the aerospace engine.
Okay, thank you. And thirdly, on the Bitterfeld expansion, obviously you have both taken down your CapEx guidance for next year, $200 million. And also, you've said that you're not including Bitterfeld contribution in your EBITDA guidance for next year. So is it fair to assume that the step up from 20,000 tonnes to 100,000 tonnes has been put on hold for now or is it still kind of in place at the right time, which probably is not in the near term?
It was never put on hold formerly. There was never an investment decision more than the 20,000 tonne first module, so we didn't have to correct the decision because it was never taken. We are focused on the first module to complete the commissioning and qualification and ramp up of the first module. That's our priority, and we of course would consider expansion of adding other modules if the market demands that.
Okay, thank you.
Those were not questions.
Thank you. Our next question comes from Martijn den Drijver of ABN AMRO.
Good evening, gentlemen. ABN AMRO. Although my first question would be with regards to the lithium hydroxide plant, you mentioned uncertainty relating to the commissioning and ramp up process. What's changed? Because previously you were quite confident about both the processing, the stepping up, the ramping up of the process, but also the commissioning and the acceptance of clients. So what has changed and in relation to that? So that would be question two. Can you provide some guidance about the profitability of the lithium hydroxide conversion plants based on today's market circumstances?
Mike?
Yeah, thanks. Thanks, Martin. Appreciate the question. So with the successful construction of the plant, we're very happy where we stand and we're transitioning to the next phase, which is the commissioning phase. That'll be complemented by the qualification of our customers and the final ramp up of the plant. Following our latest assessment, we've adjusted the commissioning and ramp up schedule to now expect to reach full capacity in the second half of the year. I would say, as with any construction phase, the commissioning ramp up phase of a new plant always faces challenges in a certain degree of timing uncertainty. We're experienced in this process from commissioning and ramp ups from our recent successful plant deliveries, including SP1 , SP1+, the $325 million plant in Ohio. As with those projects, we're progressing through this and typical startup procedures.
We're confident in establishing Bitterfeld as a cornerstone of our growth strategy. Switching to the second part of that question, not to get too deep into the accounting technicalities, but we had purchased a significant amount of inventory to ramp up the plant because the price drop in that inventory. What we do is we write that inventory to what's called net realizable value. When you go to net realizable value, you leave a margin in the value of the inventory so that when in 2025 we sell that inventory, we won't recognize a margin because the product, the inventory that we have was only written down to the cost plus margin.
So even though we continue on a confident schedule for commissioning, qualification and ramp up, once we do that, because of the price drop and the inventory write-downs that we've incurred, we won't see a significant amount of profitability from that inventory in 2025.
Just to follow up. So the customers are still there, your MOUs and offtake agreements are in place. It's just a ramp up phase that is now taking a little bit more longer than you expected because did I understand you correctly that you said commissioning in the first half of 2025?
Yeah. So to answer your question, customers are still there, we're highly confident in the market and we're commissioning, qualification and ramp up and expect to reach full capacity at some point in the second half of 2025.
Okay, I have another accounting question, but I'll take that offline with Jackson if I may. My second question would be on the Brazilian conversion plans. My question would be, given the low lithium pricing environment and the uncertainty about what that price may do, what are your current thoughts on that Brazilian conversion plan? Should we still take that as a near term reality into account or is that now more of a let's wait and see a little bit how the market evolves type of project?
We have. As you know, we have prepared the Brazilian conversion plant in a very advanced way. We have completed the FEL3 feasibility study which leads us to the gate of basic engineering. We have also advanced the financing, the financing structure, the architecture of project financing for this plant with the banking institutions in Germany, which imply a government guarantee. We have done work on site selection and presently we are considering to expand the plant eventually to make room for other spodumene suppliers in Brazil, which is logical. And that implies the work on additional site selection and feasibility work not directly related to the market. But we are in no rush to start here. The heavy investment work as this optimization feasibility study is underway. I think we don't want to make a mistake here and therefore we go through this in a very systematic way.
I understand. Thank you. And just a small follow up on this one. If you do decide to take the decision to move forward with this plan, I'm still counting on then a two year construction period, would that be correct?
That's about right. Please don't think that we are reconsidering this plant. This plant is a firm strategic cornerstone of our future development of our lithium value chain. It is very important. And so don't think that we are, you know, delaying or considering. We're just optimizing right now. Clear.
Then my final question is on AMG Vanadium. I'm not quite sure whether I understood it correctly, but there have been some maintenance outages. Would it be fair to assume then, now that the Boeing strike is over, although that's on the 6th of November again and those maintenance outages will not reoccur in Q4, that the Q4 performance will go back to normal levels? In terms of EBITDA.
We had planned maintenance in our ferrovanadium production. The Boeing we sell with an end market of the aerospace primarily from our Nuremberg operation, which is vanadium aluminum and titanium aluminides. But our ferrovanadium operation has regular maintenance. In this low market, we take some opportunity to extend that a little bit and make sure we do everything correctly. We are essentially running close to back at normal run rate levels.
Okay, so that applies to both.
Cambridge one and two and the Nuremberg facilities.
Yeah, there might be a little delay on some of the aerospace. Titanium aluminides catching up.
But yes, it's both of them.
All right, thank you very much. Those were my questions.
Our next question comes from Stijn van Ewijk of ING.
Yes, Stijn van Ewijk, ING. Thanks for taking the question. I also have a couple. So we'll ask them one by one. The first one is a clarification on the 2025 guidance and the rationale for not including Bitterfeld because I still don't fully understand. Pardon me, I may be too slow, but there's a delay in ramp up to reach full capacity in the second half. Is that due to uncertainty over the customer qualification process or are there other internal issues that lead to this delay?
Yeah, sorry. So just to reiterate that maybe I went through a little quick. It's w e consider, you know, we've ramped up three very large projects. We're very familiar with the process and, you know, commissioning. The nature of commissioning is uncertain from a timing perspective. You turn the plan on and then you have to respond to what happens. The schedule that we've most recently updated results in, you know, we've looked at the qualification, the commissioning, and based on where we're at today, we believe that we'll reach full production in the second half of the year.
Okay. And if the qualification process is successful sooner, there's no way to expedite that.
Again, like I said, there is a certain amount of uncertainty with this and we build that into our schedule. So theoretically, if everything were perfectly, things. Could get done faster. But you know, having done this a few times, that's generally not the way it works.
The qualification process has several stages which includes that you temporarily run full production, you stop production because you want to use the production for large scale sampling within the qualification process in order to optimize the learning process from that feedback and then you run continuously. So it's a very disciplined schedule which has its own time schedule and it has its uncertainties, which you don't believe are large because we are operating this very experienced engineering company which are partly doing this under an EPC contract structure. So there is no, it's just going through that process in a very disciplined way and that you don't extend it, you don't make it slower very closely with your customers.
Okay, good, that's fully understood. Now, on another one on the guidance, the plus $130 million for 2025, I mean assuming a decent run rate in vanadium and looking at earnings in lithium in Q3 on also depressed prices, and then also take into account some normalization in vanadium, the $130 million seems to me quite low. So even when you don't include any Bitterfeld contribution. But is there a negative contribution for Bitterfeld implied in this $130 million startup cost, etc. And if so, what's the quantum?
No, there's no negative element implied.
Can you help me understand it's?
Part of our strategic, you can see it in our strategic project costs.
Okay, but can you then help me understand sort of the hypotheses behind +130 looking at this quarter's earnings? I mean, lithium prices are also very low. Vanadium prices are also very low. So I don't get where you come from a run rate of $40 million in Q3 to $130 million annualized on 25. So can you help me a bit bridge that q uantum?
First, by nature, we are cautious or we are not overly optimistic in guidance setting. We actually don't like the guidance process, but we don't want to be long in guidance. So far we have never been. So when you start with the guidance of 2,430, remember there was a guidance and then in a very abbreviated way, lithium and vanadium prices further deteriorated and then there were positive elements. The positive element very prominently include antimony. The negative price impacts of further falling vis-à-vis the guidance timing, date of the giving of the guidance, further falling lithium tantalum prices were compensated by positive elements very prominently, including antimony.
Now. We don't believe that the antimony spike will continue for reasons stated. So if you take that away, we end up at 130 again. So it's very simple.
Maybe average. You have to look at the average prices as well. Right So the price that we disclosed for Q3 was $870 per ton delivered China. If you look at our price list, you can see that, you know, spodumene is now listed at $750. Our 1Q is at constant prices today. Right. So there's an implicit decrease in the lithium price baked into our 1Q versus the Q3.
Yeah, but do you also then take a stance on antimony prices or It doesn't work that way because that's a processing business.
We believe that the antimony profit was a one time affair.
Okay, there you do take a stance. Okay, fully understood. Final question.
That has nothing to do with Tajikistan.
No, no, no, you do take a stand, i.e. We are saying that it's not repeatable in 2025. Correct.
I see.
Okay.
You know we're sending.
[Uncertain/Garbled]
Let's keep those out of here. Final question is maybe more philosophical, but there has been a lot of negative news flow from the European EV supply chain in recent months. Notably, as all these auto OEMs are backtracking on their EV roadmaps or are shifting to LFP over NMC. Given all that is happening today, which role do you see carved out for AMG to play in the European battery supply chain in the coming three to five years? Because increasingly one could ask whether there is room for a viable supply chain here in Europe.
Well, we don't see fundamental changes. If you want to see into the future, we always said traditionally that the consensus of the EV demand will be in 2030 will be 600,000 tons. That hasn't been revoked. This consensus estimate, maybe it's 500,000 tonnes, we don't know. Definitely our product in the first model with 20,000 tonnes is a very small. It's a very small market share in that predicted demand. So even if there are massive corrections, we are presently the only refinery in Europe and the local refinery, of course regionally local refinery has tremendous advantages vis-à-vis imports from China or Australia. So I think this is. The demand is not an issue.
The issue is, h ow large will the market actually grow and we will react accordingly. So we wait until we see patterns. Recently as we know more than 50% of all lithium producers are below c ash. And you need in our view $25,000 per ton of carbonate equivalent to make investment decisions for the lithium value chain. So I think the supply chain is waiting for a correction in order to consider investment.
Stijn , on Heinz's last comment, you can find that on the last page of our investor presentation, page 29, which shows that 50% of the capacities underwater right now.
Yeah, got it. Thank you. These were my questions.
As a reminder, if you do have a question, please press star and one on your telephone keypad now. And our next question comes from Martijn Verbeek from The Idea.
Good evening, it's Martijn Verbeek. I have a couple of questions from my side, please. Firstly, will AMG have completed or most of your lithium investments have been done but still you expect a hefty EUR 100 million CapEx for next year. Could you provide some color where you will spend this money on?
So in that $100 million and we'd probably characterize it more as a range $75-$100 million. I know it says $100 million in our slides. There's $25 million of residual CapEx associated with our battery grade hydroxide plant. So that's a significant piece in the overall capital.
I don't hear you yet talk about this LIVA investment, when will that kick in?
Sorry, which investment?
The Supercenter in Saudi Arabia.
Oh, oh, SARBV.
Yeah, the Supercenter in SA operated through SARBV. The Shell & AMG Recycling B.V. joint venture has completed its FEL3 feasibility work substantially and therefore we are approaching the gate of financing and investment decisions.
That is to be expected still this year or will it be first half next year?
We are not commenting on joint venture operations.
Okay. And then lastly I read an article just recently that one European OEM has taken a step to accelerate future electric vehicles with solid-state battery technology. Is that something which, with your technology, also can be implemented?
The solid-state battery technology is a very broad global development effort where we are having a significant position in the solid-state battery materials. We are, as you know, operating a pilot operation. We are expanding that. We are going into the engineering of enlarged pilot operations in this commercialization process. So it is very important part of our development expenditures. And we are participating in a prominent role in that. In that development.
Okay, but then you mentioned you are in the materials, but can your materials for these solid-state batteries be used for automotive? For battery electric vehicles? Of course. Okay.
Yeah, of course.
Okay, thank you.
Our next question comes from Stijn van Ewijk of ING.
Yes, me again. Sorry. One follow up, if I may. An investor has pointed out to me that under the final Section 45X guidelines, Vanadium business may be eligible for an increased tax credit. Is that the case? And could you if so, provide the quantum of this increased benefit? My understanding it was $10 million annually to date.
Yeah. So that will likely increase because as your investor noted, we have been allowed to include raw materials. Still working through with our accountants and our tax advisors what that means in terms of quantum, but it will likely increase over the 10.
Okay. All right. Thanks.
Thank you. It appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.
This concludes our third quarter 2024 earnings call. Thanks everyone for joining.
Thank you. This does conclude today's AMG Q3 2024 earnings conference call. Thank you for your participation. You may disconnect at any time.