Good day, and welcome to the AMG Q2 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Michele Fischer, Vice President of Investor Relations. Please go ahead.
Welcome to AMG's Q2 2022 earnings call. 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, and Mr. Eric Jackson, the Chief Operating Officer. AMG's Q2 2022 earnings press release issued earlier today is on AMG's website. Today's call will begin with a review of the Q2 2022 business highlights by Dr. Schimmelbusch. 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 strategy and outlook. We will then open the call to take your questions. Before I pass the call to Dr. Schimmelbusch, I would like to comment on forward-looking statements. This conference call could contain forward-looking statements about AMG Advanced Metallurgical Group.
Forward-looking statements are not historical facts, but may include statements concerning AMG's plans, expectations, future revenues or performance, financing needs, plans and intentions related to acquisitions, AMG's competitive strengths and weaknesses, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and political and legal environment in which it operates, and other similar or different information that is not historical information. When used in this conference call, the words expect, believe, anticipate, plan, may, will, should, and similar expressions, and the negative thereof, are intended to identify forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that any predictions, forecasts or similar projections contained by such forward-looking statements will not be achieved. These forward-looking statements speak only as of the date of this conference.
AMG expressly disclaims any obligation or revisions to any forward-looking statements contained herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. I will now pass the floor to Dr. Schimmelbusch, AMG's Chairman of the Management Board and Chief Executive Officer.
Thank you, Michelle. I'm very pleased to announce that AMG generated the highest quarterly EBITDA in our history in the Q2 of 2022. EBITDA for Q2 2022 was $81 million, up 156% from Q2 2021, and 48% higher than Q1 in 2022. This outstanding result is mainly driven by our AMG Clean Energy Materials segment. Very strong lithium prices led to the improved profitability in AMG Brazil, as well as by increased aerospace activity within our AMG Critical Materials Technologies segment. AMG's major strategic projects cluster in our AMG Clean Energy Materials segment, and all of these projects are proceeding as planned. Each of these projects is oriented towards growing our production of electricity storage materials or increasing our footprint in the circular economy. Commissioning has started at the Zanesville, Ohio spent catalyst recycling facility.
The roasting plant has reached its design capacity and is undergoing the final performance test. Actually, since this was written, it has now completed its performance test. The melt shop is starting the commissioning process and the entire facility is expected to be fully operational this year. The expansion of AMG Brazil lithium concentrate production is proceeding as planned, and the production is fully sold at market price long-term contracts. AMG has begun construction of the first European lithium battery grade hydroxide refinery for the first module of that upgrader, and the commissioning will commence in the H2 of 2023. AMG's first lithium vanadium battery, or LIVA, for industrial power management application has begun commissioning. This revolutionary technology represents a substantial market opportunity for the company.
SARBV and UCI, meaning Shell & AMG Recycling B.V. and United Company for Industry, recently signed agreements in the Kingdom of Saudi Arabia. This joint venture plans to execute four distinct projects under an entity currently being formed. That is, the company is named in Saudi Arabia, Advanced Circular Materials Company, ACMC. One, build, own and operate a conversion plant for vanadium-containing gasification ash into vanadium oxide and vanadium electrolyte for redox flow batteries. Two, a spent catalyst recycling facility. Three, a fresh catalyst R&D facility. Four, mass energy storage facilities, vanadium redox flow battery manufacturing base. Basic engineering for the first project has begun and we lay the foundation for all other projects with the Supercenter. It will produce and sell high purity vanadium oxide and vanadium electrolyte.
This is the largest such project in the world and is under long-term market-based supply contracts with Aramco. The materials this project will produce are destined to feed the emerging vanadium redox flow battery market. We are extremely pleased to announce the accomplishments of these strategic projects along with the best quarterly financial results in the history of the company. I would now like to pass the floor to Jackson Dunckel, AMG's Chief Financial Officer. Jackson.
Thank you, Heinz. I'll be referring to the Q2 2022 investor presentation posted today on our website. Starting on page three, this shows an overview of the financial highlights of the quarter. Revenue for the quarter increased by 42% to $424 million. This increase was mainly driven by the improved price environment relative to Q2 2021, which led to higher sales prices across all three of our segments, particularly AMG Clean Energy Materials. Q2 2022 EBITDA was $81 million, a 158% increase versus the prior year. As you can see in the lower left corner, AMG continues to sequentially increase EBITDA each quarter, which we have done since the Q2 of 2020. Net income to shareholders increased substantially to $29.6 million compared to 3.6 million in Q2 2021.
Net income was adversely affected by two non-cash items. One, a $3.8 million increase in our Brazilian tax expense. Two, a $7.5 million foreign exchange loss due to an intergroup debt balance. Without these two non-cash effects, net income would have been $38.7 million. Now I'm gonna turn to a review of our three segments. Let's start with AMG Clean Energy Materials, which is shown on page four of our presentation. On the top left, you can see that Q2 2022 revenues increased 77% versus Q2 2021 from $90 million to 160 million. This increase was driven mainly by higher prices in vanadium, tantalum, and lithium concentrate. Sales volumes were down due to shipping schedule variances from AMG Brazil and maintenance downtime at our Cambridge facility.
Gross profit before non-recurring items increased 282% compared to Q2 2021, mostly due to the improved price environment. Likewise, Q2 2022 EBITDA increased by $46 million to 58 million. Clean Energy Materials is the segment which is and will continue receiving the most capital investment within AMG. The CapEx shown at the bottom left of $33 million mainly reflects our investments into the Zanesville vanadium facility, our lithium hydroxide plant in Bitterfeld, Germany, and the expansion of our spodumene capacity in Brazil. Turning now to page five of our presentation, which shows AMG Critical Minerals. AMG Critical Minerals revenue increased 35% to $103 million compared to Q2 2021, driven by strong sales volumes of antimony and graphite, as well as higher sales prices in silicon and antimony.
Gross profit before non-recurring items of $14 million was 5% higher than Q2 2021. The higher gross profit was due to improved pricing and higher sales volume, and was offset by increased raw material prices, as well as the ongoing rise in energy and shipping costs. EBITDA during the quarter was consistent with Q2 2021, despite ongoing inflationary pressures, including the noted energy and shipping cost increases. Moving on to AMG Critical Materials Technologies on page six. Starting on the top left, you can see that Q2 2022 revenue increased by $30 million or 22% versus Q2 2021. This improvement was due to higher sales volumes of titanium alloys and higher chrome metal pricing, both of which were associated with improving conditions in the recovering aerospace sector. As a result, Q2 2022 gross profit before non-recurring items increased by 30% to $27 million.
This increase drove AMG Critical Materials Technologies' Q2 EBITDA to $13.8 million compared to $9.6 million in Q2 last year. AMG Engineering signed $60 million in new orders during Q2 2022, driven by strong orders of induction furnaces, representing a 1.1 times book-to-bill ratio. Order backlog was $181 million as of June 30, 2022, slightly lower than the $183 million last quarter. Turning now to page seven of the presentation. On the top left, you can see that AMG's Q2 2022 SG&A expenses were $37 million versus $33 million in Q2 2021. This variance was driven largely by higher compensation expense due to improved profitability forecasted for the year. Increased professional fees associated with strategic projects.
AMG's Q2 2022 net finance costs were $12 million compared to $4.8 million in Q2 2021. This increase, as previously mentioned, was driven mainly by non-cash intergroup related foreign exchange losses of $7.5 million during the quarter associated with the strengthening US dollar versus the euro. AMG capitalized $2.1 million of interest costs in Q2 2022 versus $3.8 million in Q2 2021, driven by interest associated with the company's tax-exempt municipal bond supporting the vanadium expansion in Ohio. This decrease is due to a portion of the municipal bond interest costs which are no longer being capitalized due to the ramp-up of production at our Zanesville facility. AMG recorded an income tax expense of $23 million in the Q2 of 2022, compared to a benefit of $6 million in Q2 2021.
This variance was mainly driven by improved financial performance and movements in the Brazilian real versus the US dollar. The effects of the Brazilian real caused a $3.8 million non-cash tax expense in the Q2 of 2022, compared to a $12 million non-cash tax benefit in Q2 2021. Movements in the Brazilian real exchange rate impact the valuation of the company's net deferred tax positions related to our operations in Brazil. AMG paid taxes of $9.1 million in Q2 2022 compared to $2.5 million in Q2 2021. Turning to page eight of the presentation, you can see in the top left that cash from operating activities was $39.5 million in the Q2 of 2022, compared to $23 million in the same period in 2021. This increase in operating cash flow was due to higher pre-tax income.
AMG's return on capital employed for the first six months of 2022 was 25.5%, more than double the 10% achieved in the same period in 2021 due to significantly higher profitability in the current period. It bears noting that this level of return on capital employed for an industrial company is exceptional. AMG ended the quarter with $365 million of net debt, with the increase versus year-end due to the significant investment in growth initiatives. AMG's pension liabilities have declined by $55 million during the year to $108 million, largely due to rising discount rates. In today's rising rate environment, it is important to note that a majority of the company's outstanding debt facilities are either fixed rate facilities or fixed due to interest rate swaps for the next several years.
As such, AMG has an average interest rate charge across its two main debt instruments of 5%. Our advantageous long-term fixed borrowing, combined with substantial operating cash flow generation, is a key competitive advantage. AMG's low-cost interest rate allows the company to continue to invest in transformational strategic projects while maintaining a strong balance sheet. We'd also like to note that our current equity attributable shareholders has increased 33% to $357 million, another key sign of our balance sheet strength. As of June 30, 2022, AMG had $300 million of unrestricted cash and total liquidity of $476 million. Before I conclude my remarks, allow me to point you to two new slides in the appendix.
The first is on page 14, excuse me, shows the development of the spot lithium carbonate price versus the spot spodumene price. I would like to remind everyone that we have a 3- to 4-month revenue recognition lag in our contracts, so Q1 pricing was realized in Q2. We'd also like to remind everyone that our price is tied to the Asian Metal market spot lithium carbonate price and not to the spodumene price. Slide 15 shows AMG's EBITDA by origin and destination for 2022. Given the current energy shortage in Germany, we thought it was important to emphasize that only 12% of our projected 2022 EBITDA originates in Germany and only 6% is destined there.
Geographic spread of our EBITDA shown on this chart underpins our guidance, namely 70% originates in the Americas and 83% is sold to Asia and North America. That concludes my remarks. Eric?
Thank you, Jackson. AMG's operations performed exceptionally well during the Q2. Demand for our products remained strong, driven by their criticality in the global transition to a low carbon economy. We also, as you know, have offtake agreements at indexed market prices in place for many of our products, most significantly ferrovanadium and spodumene. Our risk management and hedging programs are, to a significant extent, covering additional costs, although energy prices and costs in Europe remain volatile and challenging, especially in Europe. Market prices were strong in the Q2 across our entire portfolio. However, there has been some weakening in the last 45 days, with the notable exception of lithium, which remains exceptionally strong. As noted, our spodumene production in AMG Brazil continues to operate at full capacity and our cost of production is at or below our initial estimates at the time of our investment decision.
Lithium prices increased significantly in the Q2 and remain exceptionally strong. As previously stated, our production is operating at full capacity and we are selling at index prices. As Dr. Schimmelbusch mentioned, the expansion project of AMG Brazil's spodumene and lithium concentrate production is proceeding as planned and the production is sold at index market prices. Our spent catalyst processing business is performing very well and is the global environmental leader in this space. The relevant market price index for ferrovanadium increased in the Q2 to just above $30 per pound. Spot index prices have now fallen to about $24.50 per pound. It's important to note that AMG's vanadium catalyst recycling business model is highly profitable at all vanadium prices. Our Zanesville facility is progressing as planned. As Heinz just mentioned, the roaster has completed its long-term performance test.
It was operational since April, and the melt shop is expected to start up in late Q3. AMG Engineering's diversified portfolio enabled the business unit to sign $59.8 million in new orders in the quarter, 1.1 times book-to-bill, and as it continues to benefit from improved aerospace markets. The chrome metal and titanium aluminide businesses are starting to benefit from improvements in aerospace, and in the case of chrome especially, its diversified end market position. High-purity chrome metal spot prices have recently declined slightly. However, they increased by 139% in Q2 2022 versus Q2 2021, and demand continues to be strong, especially in the U.S. market. The three business units in AMG Critical Minerals continue to operate at full capacity. However, spiking energy costs had an adverse impact on our Q2 results.
AMG experienced significant increases in gas and electricity costs in the quarter, with total energy costs being $9.9 million higher than Q2 2021. We do believe, however, that these businesses are low cost and highly competitive when compared to our peers. We continue to focus on safety, operational improvement, risk management, and delivering our strategic projects on time and on budget, with the overriding operational and commercial objective to be the lowest cost producer and sell at market prices. All of our business units operate with the highest priority on safety and continue to deliver safety performance far superior to our relevant peer group. I'd like to pass the floor to Dr. Schimmelbusch, AMG's Chief Executive Officer.
Thank you, Eric. Now let me conclude with our earnings guidance. AMG continues to provide strong and consistent results despite the global economic fallout from the geopolitical turbulences in the recent months. We are continuing to focus on the things we can control, and are extremely pleased with the noted achievements in our strategic initiatives, which will drive long-term value creation. EBITDA was $81 million in Q2 2022, the highest quarterly EBITDA in AMG's history. As mentioned, it was the eighth straight quarter of sequential improvement. As the year has progressed, AMG is increasing its EBITDA guidance for the full year 2022 to a range of between $280 million and 300 million. The range is supported by AMG's geographic diversification and the strength of the global lithium market.
Operator, we would now like to open the line for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Once again, that is star one. We take our first question from Stijn Demeester with ING. Please go ahead. Your line is open.
Yes. Yes, good morning to you, and thanks for taking my questions. three questions, if I may, and I will ask them one by one. The first question is indeed on the guidance. I know that you don't like to discuss price assumptions here, but could you, in a broad sense, discuss what is baked into the guidance on a per quarter basis? My assumption is that you have good visibility on Q3 prices, given the 3-month lag in revenue recognition of the market price. Q4 should benefit from the first contribution of Cambridge II. Does that imply that your lithium price assumption for Q4 is on the conservative side, even though peers such as Albemarle, Allkem, have stated that they see the strong price momentum continuing in the H2?
Any color here on what you see for Q3 and Q4 for lithium prices would be very helpful. That's my first-
If I understand you correctly, your implication on our conservativeness in price assumption is correct.
Could you elaborate on what you see in the market or?
What we see in the market, we, you know, the three-four months time lag is a general statement on average statistical statement. We touch into the Q4 already a little bit, and despite of that, we are not aggressive in our price assumptions for the Q4.
For the Q4.
And that-
Yes.
The fourth. That has led to our guidance adjustment to the shifting of the range. As I have indicated many times, we really go through guidance in a scrutinizing process. When we do so, then we are conservative.
Understood. That's helpful. The second question is on the JV with Shell. Congratulations here on the progress made in recent weeks. Now my question is, what timetables and capital outlay should we sort of start taking into account? I assume that is for the first two elements of the Supercenter, i.e., the gasification plant and the spent catalyst facility, because my assumption is that this is sort of more prevalent for AMG. Any color here on what to expect?
The strongest indication of the timetable of the first and most important project is that we, for this project, are under basic engineering. We have been working on this for quite some time, assuming that we would successfully sign this contract. The contract with Aramco, and I'm very careful in commenting on this because we are proud of that, and we are privileged of that relationship, and we are building that relationship. We are expressing ourselves within the restrictions we are operating under this partnership atmosphere. The whole thing is based on a long-term contract with high purity vanadium containing gasification ash from a very large gasification project. That is really the basic background for this building of this world-class facility.
It's a unique source of raw material in the world. I think it's the largest of such sources by far. It is a unique opportunity on the end market side because in my understanding, Saudi Arabia has very ambitious solar energy expansion plans. Given the electricity structure in Saudi Arabia and the backup necessity in many ways of solar energy- by- energy storage, we believe that is an extremely good profit opportunity for all parties involved. Once we have high purity vanadium extracted from that plant, and the basic engineering doesn't allow us to give investment figures of extremely detailed nature because basic engineering is basic engineering. The feasibility study definition in this case is FEL-3, if you know what that means.
It will be an investment of $170 million-200 million under our present calculations.
Is that the AMG project?
No, no, that's the project part. Of course, there are three partners of this project. Shell & AMG Recycling is two-thirds, and UCI, our partner in Saudi Arabia, is the third. It is fairly well underway, and we are building infrastructure and resources on the human resources side in an expeditious fashion. The second thing is, once you have this material, to turn it into electrolytes. We of course have been producing electrolytes in AMG forever, so we know that technology. We also have processed gasification ash forever. It's a marriage between a very large resource, high content with vanadium, and market leadership technology for converting that material first into high purity vanadium and then in electrolytes.
Of course, that logically leads to the end market. The end market is batteries, and we are recently having our first commissioning of our own battery, industrial application battery, large scale. We have several such projects underway, and we hope to commission the first battery in September. Now, in order to complete the picture, the Shell participation in this. The Supercenter is the providing of technology for fresh catalysts. The fresh catalyst, of course, is a very important part of all of this because without fresh catalyst, you don't have spent catalyst. There's an elaborate communication and collaboration are ongoing between Shell and Aramco in the development of these catalysts. But we are not the leadership in that.
We are learning what that is, and Shell is in the leadership.
Do you partake in the investment of the fresh catalyst center in the fresh catalyst facility?
We take part in the whole whatever this Supercenter is doing, we are partner.
Okay.
We are actually very happy to be partner in fresh catalysts. It's an interesting business to be in.
Your interest is 50%, even though you bring in most of the know-how for the first two, however.
There are elaborate license fees. Look, this is a broadcast structure. There are elaborate license fees and technology is being compensated at arm's length in every way.
Okay, helpful. My last question is for Jackson. On CapEx, you seem to be running below the low end of the $75-200 million guidance based on the H1. Is there an update needed for the guidance, or is it simply phasing? Could you provide some direction for 2023?
No, there's no update. You know, we will have CapEx acceleration as we conclude our Cambridge two CapEx. Also we're going to start spending more heavily both in Bitterfeld as well as in Brazil. We should be able to hit the guidance.
Okay. The low end or the high end?
Probably in the middle.
Okay. Thanks. We'll put myself back in the queue. Thanks.
Thank you. We take our next question from Henk Veerman with Kempen. Please go ahead, your line is open.
Hi. Good day, all. Thank you for taking my questions. I have three, if I may. First question is on the impact of the shipping schedule variances in the Clean Energy Materials business unit, which sort of resulted in a delayed revenue recognition in the H1 of this year into the H2. What is your estimate on the impact of that effect on EBITDA? That's my first question.
Well, if you're looking at the H1 or the H2, there was no impact at all. We actually shipped way more in the Q1 than we did in the Q2. On a H1 basis, it's actually equal. There was no effect in the H1.
Yeah.
There was an effect in the Q2, but I'm not gonna say how big it was. It was not very big.
Okay. Second question is on your guidance, a follow-up on the question that Stijn asked. Because, yeah, you already mentioned you're very conservative with regards to the full year EBITDA guidance. My question would be, what if spot prices for lithium would stay where they are today for the next two months, so in August and September, am i correct to assume that EBITDA guidance with all other factors constant would rather be around $350-339?
No, I'm not going into this. Please. What my philosophical comment here is, the guidance in itself, namely the 280-300 guidance, is conservative.
Okay.
That is based on our best estimate of the prices which are happening, determining the EBITDA in the Q4. The prices appear to have flattened out, and we then have debated what could happen to those prices, and we took a conservative line, and the rest of that led to the $280-300. By the way, we are not modeling in between $280 and 300, because that's the remaining uncertainty which always. This range reflects the uncertainty which in our time and in every time is always there. We are not saying that we modeling that certain prices lead to $325, $285 and then other. We are not doing this.
We came to a conclusion that the scenario planning which we are in, and the cloud of outcomes of EBITDAs, when you look at that, they cluster between 280 and 300, and therefore we have that as a guidance.
Right. Okay, that's clear. I guess it ties into my third question. I guess I'm just trying to understand all the moving parts into the H2 of this year. Another topic related to that is the energy costs, and you chose to elaborate a bit on that in today's press release. My question would be, with the current sort of elevated energy prices in Europe and around the world, does that materially impact your business in the H2 of this year, predominantly in the critical minerals and the critical material technologies business? Is that something that we should take into account for the H2 of this year or, will you-
This is no-
Uh, be a-
No. The answer is we're confident that we don't have any material risk in the energy price sector for this year. Let me mention, we of course know and have for many years studied the energy prices and sites and opportunities regionally around the globe. That's why we have projects now, in addition to the ones which we have mentioned in Saudi Arabia and in other countries in the Middle East, where you have an availability of energy in abundance. Where the electricity prices are not 35 cents like in Germany per kWh, but less than 5 cents.
We saw that. I don't want to say that we are in any way know the future, but it was obvious for everybody. That when you shut down the basic production of energy in a country like Germany with nuclear and coal, that would have a multiplication effect on the energy price. That's why we have prepared platforms for doing our strategic projects in a differentiated site strategy.
We should assume no material impact into the H2.
Correct.
These long-term electricity contracts remain in place, and otherwise you'll be able to offset it in the pricing as far as you can see.
Exactly. Yes.
Okay. Thank you. Those were my questions.
Thank you. As a reminder, ladies and gentlemen, please press star one to ask a question. We will take our next question from Martijn den Drijver with ABN AMRO. Please go ahead, your line is open.
Yes. Good, sir. Good afternoon, gentlemen. My first question would actually go back to the Supercenter. Would it, in summary, be fair to say that profitability, once it's up and running, is at the high end of the range, EBITDA range, that you initially provided for Cambridge two? No numbers asked, just would that be a fair assessment?
It certainly meets comfortably our investment criteria. It happens to be that also the investment criteria of Shell and of UCI. It is of course a relationship where the three operating and bidding and owning partners have that material and share the benefit of this material with the supplier, which is Aramco. When we analyze these, we always look, as you know, at the criterion, which is the annualized EBITDA divided by. The annualized EBITDA is most important, and we take the CapEx and divide it by the annualized EBITDA, and that multiple has to be below four. You can take it from that it's below four.
Now, of course, it is a market price situation where it's lower or higher within this range, depending on the vanadium price. It's profitable. The profitability is satisfactory in meeting all our criteria and the criteria of our partners.
That's more than helpful. Moving on to the German lithium conversion plant. Now that construction has started, you obviously have a much better idea of the OPEX elements. Could you perhaps share with us what your current expectations are for EBITDA for that plant? Should we just assume the same type of guideline that you've just outlined for the Supercenter or is it slightly different?
You can. That's. It's correct. It falls into that category.
Okay. Just to follow up on that, because when you first used this type of return metric, there was a particular delta between the lithium hydroxide technical grade and the lithium hydroxide battery grade. Now I understand that that delta has increased. Shouldn't that be reflected in this metric that we just discussed?
Look, let me explain, and I don't wanna cover too much time here. The profitability of a battery grade hydroxide plant constitutes as a combination of two sets of contracts. The one type of contract is the supply contracts. As you know, we start in our lithium by spodumene converted to technical grade hydroxide, outside Germany, delivered to Bitterfeld and then converted into battery grade. There are contracts involved. Those contracts are not, it's not one standard contract, so this is a variety of contracts. Then you have a variety of contracts with the end customer, probably five for the first module. five or less. Presently under negotiation. Those negotiations will intensify in the next months.
Mm-hmm.
These contracts take more definitive forms, and we make considerable progress in this. The margin of a module like that is the difference between the conditions which you negotiate with your customers that's underway. That's a myriad of parameters. It is not. You can't. It's not like a method. I would warn you to make a model here because that's a moving situation. In our judgment, when we run through these things and as these contracts are becoming more clear, the profitability is very satisfactory.
Okay. Okay, got it. I'll move on to another subject. With regards to critical materials technology, at the year-end Q4 results presentation, you provided some guidance. You basically said that in the H1 there would be an improvement, but there would be a more material improvement in the H2 of 2022. Would that still be your guidance today?
Yes, absolutely. The aerospace market continues to improve quarter by quarter. You know, in particular, the U.S. aerospace market looks very strong.
Okay, got it. With regards to critical minerals, high EBITDA in the quarter, despite what I understand from Jackson, the higher energy impact. Should we then take this type, this level as the you know, some sort of a base level going forward? Or is there some sort of one-off elements due to Chinese competition not being able to compete because of the lockdowns?
I think it is. You can take this as a basis going forward. However, the volatility, of course, in the silicon metal market is relatively high. This has proven to be over time a very stable business. Presently the silicon metal market, for example, by the CRU index, is more than 100% higher than in the past. Energy prices are also higher. This is, again, a very moving situation. One can assume that the past, despite of this volatilities, will somehow progress into the future.
Got it. Then my final question on Clean Energy Materials. You mentioned in the press release that there will be overseas waste being recycled. That's a new one for us. Does that have any impact on the economics of the spent catalyst recycling facilities?
Yeah. Positive. You have a very substantial change here in the market, in our interpretation. When we built Cambridge in Ohio, it was a first. It was the first large-scale pyrometallurgical facility, meaning no wastewater. We staked it to a 30,000+ tons throughput. Incidentally, the competition went from 30,000 to zero in that process. We built a second plant, and the second plant took all the experience and technological learning curves, which we had in the first plant. I think it's fair to say that this is now the world standard in circular economy excellence.
The key decision makers of key refineries overseas have been our guests in Ohio. It is now so that many people are aware that this is hazardous waste and it has to be treated in an extremely circumspect way. We never in Ohio, in Cambridge, Ohio, but now in Zanesville treated overseas spent catalyst materials, and for the first time, we do. World-class refineries overseas have contracted substantial amounts into Ohio. That is now happening for the first time. It is these materials which otherwise were directed into less than world-class operations are now starting to be directed to us. You know, we welcomed the first multi-thousand ton shipments, and some other shipments are on the ship.
One follow-up for a question for Eric Jackson. The wording with regards to the contribution from Cambridge two are a bit, in my opinion, confusing. You mentioned in your previous releases that it would be up and running, so full contributions for Q4. Now you say it's at full contributions as of the end of Q4, or am I misreading it, and there's just a full quarter of EBITDA contributions in the Q4?
No, what we have said, I believe, is that Zanesville will be fully operational by the end of the Q4.
Mm-hmm.
That's consistent with what we have said. It will not be fully contributing to EBITDA for the Q4.
Got it. Thank you very much.
That depends, of course, on the commissioning process.
Yeah.
The commissioning process starts realistically in September. The commissioning process, as we have said, of the roasting plant, has been successfully finished. We are running right now over design capacity in the roasting plant. Depending on how we account for that already will be a contribution.
Yes.
to the Q4. We don't expect any big things from the melting plant, which is the other plant. When Eric says that that will not be fully operational because, you know, it's a plant which we are extremely used to operate because next door we operate such a plant, so we don't expect any big surprises. However, such new plants, which cost over $300 million, don't necessarily start up when you press a button to go to 100%. You don't even want to go to 100%, because that would be an extremely foolish risky strategy. You go to a certain percentage, you learn the stability on that percentage, then you go to the next percentage.
In the roasting plant, for example, our first thing was to go to 60 tons per day. We are now at over 100 tons per day, which design capacity is 100 tons per day. The complexity of the roaster is comparable to the complexity of the melting plant. These are things which take a few weeks, and therefore we are saying it might even take to the end of December and in order for the melting plant to be full.
Yes.
I personally believe it will be faster.
Thank you for those clarifications.
Thank you. As a reminder, ladies and gentlemen, to ask a question, please press star one. That is star one on your telephone keypad. As it seems we have no further questions, I would like to turn the call back over to you. Oh, we have a follow-up question from Stijn Demeester with ING. Please go ahead. Your line is open, sir.
Yes. Maybe last question from my end is on the sort of desire to unlock the value of the lithium business. The IPO and potential minority stake sale has been sort of delayed, but could you update us here on what the ambition is? Perhaps, yeah, give some timetable on when do you expect to realize that ambition to unlock the value of the lithium business? Because right now, if you look at the valuation of AMG versus lithium peers, there's quite a large discount. Yeah, any input here would be helpful.
Yeah. Rest assured that we are aware of that, discrepancy. We had a supervisory board meeting today, and we debated that subject, as we always do, because it's the number one subject we debate. We have made a decision to now complete the process, including audits for forming a new AMG Lithium, which will be the parent company of all entities which presently are involved in lithium, in AMG upstream into Brazil and downstream into Germany, and will also be the parent company of the acquisitions and corporations which are underway in the resource sector of the lithium industry.
Of course, our mining development successes continuing into now the expansion of the resource base in Brazil have attracted predictably so the attention of resource owners who are in negotiations and cooperative structures with us to jointly develop those resources which would then be an elegant way of complementing Brazil as a supplier. We are then going into a longer term scenario, a five-year plan in which we then can comfortably say how many modules will be resourced by these additional projects. Now this, of course, is a value creation process. The separation of lithium will take some time. Mr.
Mr. uncertain, what do you think is the timing of the completion of AMG Lithium as a separate legal entity in auditable form? It will be completed this year. In the supervisory report, we have indicated that by September, by December, and end of December, this lithium company will be separated. That implies also that has implications for segmentation because we will publish those results as a next step. The financial results then once they are audited, and that will lead to much more information to the market of how that works. We of course also continue to be in all sorts of discussion as regards to interested parties. Okay. Thank you. These are very helpful comments.
Thank you. That concludes today's question and answer session. I would now like to turn the call back over to our speakers for any additional and closing remarks.
Thank you everyone for joining our call and asking questions today. This concludes our Q2 earnings call.