Good afternoon, ladies and gentlemen, and welcome to the Aurubis AG conference call on the occasion of the publication of the quarterly report first three months, 2021/ 2022. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation. Now I hand over to Elke Brinkmann.
Good afternoon, everyone, and welcome to our first quarter conference call. With us today are our CEO, Roland Harings, and our CFO, Rainer Verhoeven. They will share some highlights of our strong Q1 results and will explain the quarter's financials. After this, we have time for Q&A. With that, I hand over to Roland Harings.
Yes. Thanks, Elke. Good afternoon from my side. Pleasure to be here with you, talking about the Q1 results. After presenting you with the best results in the company history in December, I'm pleased to present today to you the best Q1 quarter results ever. Based on this performance, we took the decision to raise our forecast also for the full year 2021/2022. A strong ongoing demand for all Aurubis products and a good supply situation for copper concentrates and for most recycling materials have caused us to raise the forecast already after the first three months. As already announced in the Ad Hoc release, the operating EBT of Q1 amounted to EUR 152 million, 85% above the quarter of the previous year.
The corresponding ROCE of 16.6% underlines the strong development compared to Q1 2021, where ROCE stood at 9.6%. Although net cash flow is negative at -EUR 85 million due to higher inventories and receivables, it is clearly better than the first quarter of last year, mainly due to the very good Q1 results. As an energy-intensive company, we are exposed to rising electricity and gas prices, yet we have measures in place to actively counteract this, and we will come to this in more detail later. On this slide, you can see a quick overview of our key operating year-to-date figures. Revenues increased by 27%, driven by significantly higher industrial metal prices, higher sales of copper products, and higher sulfuric acid revenues. Gross profits increased by 22% due to very strong market conditions and a solid performance.
We come to the details of our earnings drivers in a minute. Despite certain cost increases, we achieved an 85% increase in our operating EBT overall compared to last year. Again, last but not least, our ROCE at 16.6% exceeds our target figure of 15%. Let's dive into last quarter's market conditions. The copper price remained at a level of around $9,700 per ton, well above Q1 of the past fiscal year. The other industrial metals, such as tin, lead, and zinc, equally showed a very positive market development. Let's have a quick look at the concentrate markets. Aurubis saw a good supply situation during the course of Q1 and was able to fully supply the primary production sites with a good mix of input materials.
The international market for copper concentrates saw the new benchmark for clean concentrates being set at $65 per ton and $0.065 per pound in December 2021. This corresponds to an increase of 9% year-over-year. The benchmark increase is well supported by expectations of strong mine output over the course of the year. The latest update of Wood Mackenzie shows an expected increase of mine output by around 7% in 2022 year-over-year. Spot term levels for copper concentrates showed no major movements during the reporting period and remained around benchmark levels.
One important point to mention, the Chinese smelter purchase team has set the buying floor for this quarter, Q1 of the calendar year, at $70 per ton and $0.07 per pound above benchmark levels, indicating the positive momentum on the concentrate market. As we always state in this call, Aurubis is well supplied with concentrates beyond the actual period, and this is in line with our long-term supply strategy and long-term contracts. Moving now to the recycling markets. During Q1 of the current fiscal year, we saw sufficient availability of copper scrap, blister copper, and other complex recycling materials on a global sourcing basis. Aurubis benefited in the first quarter from good RCs for complex recycling materials, as well as good RCs for copper scrap for smelting from purchased inventory materials. The availability of copper scrap number two during Q1 were sufficient but below previous years' availability.
Consequently, RCs remained at lower levels than the previous year. CRU estimates the average RC of scrap number two at around EUR 275 per ton in Europe. The availability of complex recycling materials remains more stable during the first quarter, with RCs at stable levels versus previous year. Looking forward, our production sites are already significantly supplied with material well into the second quarter of this current fiscal year 2021/2022. Coming to the market of sulfuric acid. The sulfuric market showed strong ongoing demand, combined with a subdued temporary supply situation in the last quarter. This resulted in higher prices for acid. The strong market performance coincided with a very good throughput and strong asset production at Aurubis. Additional capacities of acid were sold at currently very stable spot market terms.
ICIS reported new Q4 contracts for NW Europe at EUR 205-EUR 240 FOB. It remains that global markets are tight, and we expect that this situation will continue to stay well into the first half of 2022. The current outlook for this fiscal year remains very positive for sulfuric acid. Coming now to the ACP, the Aurubis copper premium for this year. We set the number for last calendar year at $96 per ton, reflecting the stable demand throughout the year 2020. For 2022, for this calendar year, we have increased the number to $123 per ton. This is due to the strong demand and continued high take off for our products in Europe.
The spot premium levels in both Europe and Asia stayed constant during the reporting period, indicating and underlining that there is a strong demand for refined copper globally. Last point here is the US dollar. And as you know, we have a long position of approximately $500 million in fiscal year 2021/ 2022. Within the scope of our hedging strategy, we have for this fiscal year hedged 70% at a rate of 1.147, and have hedged 34% at a rate of 1.159 for the coming fiscal year. Talking about energy, which has been addressed in various discussions that we had already. Here, we wanna share some of the data, how we see energy in the total context of our cost.
What is clear, inflation, the topic of inflation is being broadly discussed at this moment. Aurubis is also facing some cost increases, however, mainly arising from the current energy prices and the peaks of these prices on the energy market. The good news is, today, all other cost components at group level stayed rather stable quarter-over-quarter, and the cost reduction measures that we have taken show effect. Specifically, the effects from the PIP program continue to contribute to significant cost reductions, hence also positively affecting and benefiting to the bottom line. In the current fiscal year, 2021/2022, we expect the cost savings of about EUR 90 million arising only from the PIP program. All in all, the very positive developments on the earnings drivers market could more than compensate for the energy cost inflation we were facing during quarter one of the current fiscal year.
Now, having talked about the overall cost situation, let's dig a bit more into the energy cost of the Aurubis group. In Q1 of this fiscal year, we saw a significant price increase for energy prices quarter- over- quarter, mainly driven by higher prices for coal and CO2, resulting in increased electricity prices and also natural gas, which also increased considerably. In order to provide you a more detailed overview of the real energy cost on group level, we have reduced our energy costs by the received compensation for the first time. For example, indirect CO2 electricity compensation and state refunds in this overview. Our goal with this is to provide the financial markets a better insight in the actual cost exposure to energy markets of Aurubis.
Current high energy costs remain a cost inflation factor for the current fiscal year, despite our high hedging rate of 2/3 of the energy consumption. However, the very positive earnings side more than compensates for the current energy cost inflation. To summarize, energy prices, so electricity and other energy components, remain a very relevant topic for Aurubis. The risks and opportunities from energy markets, however, are effectively mitigated with energy efficiency as well as hedging measures. With this, I would like to hand over to Rainer with more view slides into the pensions.
Thanks, Roland, and good afternoon from my side. Let's have a look at the financial KPIs. Aurubis key performance indicators continue to show a very stable and robust picture. Our ROCE improved to 16.6% as a result of a very good earnings situation. The equity ratio of 49% and the debt coverage ratio remain very strong. Net cash flow was -EUR 85 million, better than expected in the first quarter due to the inventory buildup, but please bear in mind that we had last year an extraordinary high cash flow towards the end of the last financial year. All in all, this good financial position provides significant room for the implementation of our strategy. Going to the segmentation, as a reminder, since October 1st, 2021, we are reporting in two revised segments.
Our new segments are now Multi-Metal Recycling on the one hand, and Custom Smelting and Products on the other. The focus of our business lies on securing the most profitable input materials for our smelter network. Therefore, we have decided to separate our reporting segments along the main input material streams. Segment Multi-Metal Recycling comprises the four secondary smelters of the group. Our new project, the Multi-Metal Recycling facility in the U.S., will be part of this segment as well. With our long-standing and very successful plant in Germany, Belgium and Spain, the segment Multi-Metal Recycling offers a wide range of recycling services to our customers and covers most of the metals that form the basis for all kinds of industrial applications. Another equally important pillar in our segmentation is the segment Custom Smelting and Products.
Here, we report about our integrated flash smelters in Hamburg and Pirdop, which we operate with concentrates as the main input materials. The copper ores originate from mines all over the world. Based on the input material, as well as the related production equipment, there is a clear differentiation from our recycling business. In this segment, we also report on the product business. The copper wire rod produced in our rod plants, the shapes business with copper cakes and billets, as well as the flat rolled business are reported in this segment. Further products included in this segment are sulfuric acid, all iron silicate products, and our precious metal production. As already stated in December, we are convinced that this new segmentation gives you a more transparent and balanced view of our business, reflects our updated strategy appropriately, and will create a better understanding of our future growth path.
Let me highlight some financial and production figures from the MMR segment. The operating EBT was at EUR 77 million, and thus 64% above the previous year's figures. Good operating performance, the significantly higher refining charges for recycling materials, and high metal gains led to this extraordinary result. Especially the price increases for the industrial metals, tin, zinc, nickel, and copper, in particular, had strong positive effects here. With an outstanding ROCE of 38.9%, the target level of 15% was more than doubled in this first quarter 2021/2022. The consumption of recycling materials and the cathode production increased due to the strong operational performance of the plant. The input of copper scrap and blister copper was slightly reduced compared to Q1 last year. Have a look at CSP.
In the CSP segment, too, the operating EBT increased significantly by 83% to EUR 88 million as compared to last year. The very strong performance of the smelters in Hamburg and Pirdop led to higher concentrate throughput and thus higher sulfuric acid production. The high demand on sulfuric acid markets, combined with a low supply, led to another considerable price increase, which had a very positive effect on the results. The high prices of industrial metals led to higher metal gains in this segment as well. Operating ROCE was at 9.5% at the end of this first quarter. On the product side, demand was stable at a high level for rod and shapes, even increased further as compared to Q1 last year. Higher energy prices had a slightly negative impact in both segments. Let's move to the outlook for our earnings drivers, starting with the concentrates markets.
The expected concentrate production rates from both CRU and WoodMac show a significant increase of production volumes. WoodMac expects global mine production to increase in calendar year 2022 by 7%, while additional smelting capacity is expected to grow at only 2%. In summary, WoodMac expects the additional supply to keep up with the rising demand and that should result in a well-balanced global custom smelter concentrate market. Aurubis was able to fully supply its production plants with concentrates throughout Q1 2022, and based on our expected stock levels, our smelters are already well supplied beyond the end of Q2 this financial year.
Moving on to the scrap RCs, our core markets, Europe and the U.S., have seen a normalization of RC levels from record highs during last fiscal year. Availability of input materials for copper scrap for smelting was sufficient during Q1, and we expect a sufficient supply situation for the rest of the financial year 2021/ 2022. CRU estimates an average of around EUR 275 per ton for scrap number two during the reporting period, with the first expected price increase in January 2022. The availability of complex recycling materials like shredder materials, PCBs, residues, slags and ashes was more stable than the availability of scrap number two. Accordingly, the RCs for complex recycling stayed at beneficial levels for Aurubis. We foresee a stable market with good RCs as these markets are less volatile and our contracts are based on longer terms.
Our production plants are well supplied with recycling materials at good refining charges until the end of Q2 2021/2022. On the sulfuric acid side, the positive momentum in the global spot pricing for sulfuric acid keeps going or kept going during Q1 2021/2022. ICIS foresees an ongoing strong demand in our core market in Europe as well as overseas, with limited availability in the markets. This positive trend is expected to continue to the second half of the calendar year 2022. Longer term contracts are expected to be closed with an increase in price levels. All in all, a very positive outlook for the acid market for Aurubis during this fiscal year.
As briefly mentioned before, on the copper premium side for calendar year 2022, this has been set at $123, which reflects the positive demand for refined copper with a tighter market expectation. Coming to our copper products, rod, shapes and FRP. We see strong ongoing demand for all our copper products and expects positive contributions from the product business. We saw ongoing demand from all customer segments during Q1, with the trend expected to continue in the whole fiscal year 2021/2022. Both product demand for rod and demand for shapes remain at high levels, and we expect this trend to continue during the fiscal year. Also, FRP is doing fine. Our Stolberg plant should be back to full production by the end of Q3 of our fiscal year.
With the very positive preliminary figures for Q1, we informed the capital markets on January 19th about the increase in our forecast range for 2021/2022. Based on the latest assumptions, we now expect an operating EBT between EUR 400 million and EUR 500 million, up from EUR 320 million-EUR 380 million, and an operating ROCE of 15%-19%, previously 12%-16%. Accordingly, we updated the forecast range for the multi-metal recycling segment. We expect an operating EBT between EUR 190 million and EUR 250 million, up from EUR 140 million-EUR 200 million, and an operating ROCE between 22% and 26%, previously 16% and 20%.
For the Custom Smelting and Products segment, we now expect an operating EBT between EUR 280 million and EUR 340 million, up from EUR 210 million - EUR 270 million, and an operating ROCE between 14% and 18%. I'd like to inform you about the renewal of our syndicated credit facility. At the beginning of February 2022, Aurubis signed a new EUR 350 million syndicated credit facility with the option of increasing it by up to EUR 150 million. The new credit facility has a term of five years and can be extended twice by one year. The purpose of the credit facility is general company financing, particularly as a reserve for potential liquidity fluctuations. With this facility, Aurubis is prematurely replacing the syndicated facility that had a term until 2023.
This new financing instrument is linked to the rating of EcoVadis, so our sustainability rating. Currently, Aurubis holds a platinum status with 73 out of 100 points, and thus belongs to the top 1% of companies in the global non-ferrous metals industry. The ESG-linked syndicated loan emphasizes that the sustainability continues to extend into financing structures at Aurubis. As the most sustainable smelter network worldwide, we connect our financing conditions to our strategic business activities. In June 2020, Aurubis was the first company in this industrial sector to successfully place a Schuldschein loan of EUR 400 million with a sustainability component. The current ESG-linked syndicated credit facility is a confirmation of our ambition to expanding our industry leadership in sustainability. With that, I'm back to Roland.
Okay, thanks, Rainer. Coming to the last slide now, talking about the dividend. As a result of a very successful fiscal year 2021, we would like our shareholders to share in our success in an appropriate form. Therefore, in line with our dividend policy, the executive and the supervisory board are recommending a dividend of EUR 1.60 to the shareholders at the annual general meeting on February 17th. So in the next week already. This would lead to a dividend yield of 2.5% based on the closing price of EUR 65.38 on September 30th of the year 2021. This corresponds then to a dividend payout ratio of 26% of the group's operating results. With this, I think after presenting our results in a very good market environment, we delivered very good results.
I will hand back to Elke for the Q&As. Thanks for your attention.
Yes. Thank you, Roland. With this, we start the Q&A session, and I ask the operator to release the line for the first participant.
Yes, thank you very much. We have the first questioner in the line, and it is [Tindar Korogone] from Exane BNP Paribas. The floor is yours.
Thank you, operator. Good afternoon. Good couple of questions. First one, back to your guidance. The company got forced to raise guidance within six weeks of establishing it, for the second time in a row. We appreciate the new divisional disclosure, but do you think it's still an easy to forecast business? Or how would you recommend modeling this business? Or is there a steady-state EBT number that you can put on this business without including any growth optionalities that you are pursuing? If you input all mid-cycle inputs, where would your EBT be for the current business as it stands?
Yeah. Thanks for the question, [Tinda]. Rainer here. We had a new normal couple of Capital Markets Days ago, which was at EUR 300. Now, with the acquisition of Metallo, of course, it will be a bit higher. Nonetheless, with the asset prices, which were unpredictable and, let's say, the surge in metal in pretty much all industrial metal prices. If you look at tin, which let's say more than doubled year-over-year, that is something that we couldn't forecast, that we couldn't put into our guidance before. We now see clearer, and therefore we had to adjust our guidance. That's why we have this, let's say, extraordinary situation, which is clearly driven by the metal prices here and by the acid.
Though we also had a good operating performance of our plant, which is also quite important topic, which then all in all very much overcompensated the negative impact from the energy.
Understood. Thank you. Just another one. Are you able to provide any indication on gross profit for the new divisions, MMR and CSP? Are those quite aligned to the EBIT or EBT levels? Just to get some sense, or if you could provide depreciation split, that will be helpful as well.
I mean, you see on the ROCE levels that we are running quite different capital employed in the different segments, and therefore you see this also extraordinary high ROCE in the MMR segment, which has to do with much lower or let's say half the capital employed. That is not only from the fixed assets, but it's of course also from the working capital because all the product business is in the CSP segment. Therefore, you can in principle say it's double, it's always double the capital employed in the CSP compared to the MMR.
The gross profit of these businesses is aligned with the EBIT that you've reported for these two as well?
Yes, absolutely.
Thank you.
At the moment, there are no further questions, so please press nine and star to register for a question. Next up is Bastian Synagowitz from Deutsche Bank. Over to you.
Yes. Good afternoon, all, and thanks for taking my question as well here. I have a few ones. Maybe first of all on sulfuric acid, where you seem to be getting a decent tailwind already in the fourth quarter. I have to say I mentally parked that always as an annual pricing mechanism with annual contracts. Could you maybe let us know whether there has been anything which changed in the contract structure, or whether you're basically just seeing the price volatility in sulfuric acid a bit more quickly here now? That is my first question.
Yeah. Roland speaking here. Thanks for your question. Sulfuric acid, perhaps one point, and you see this in our documentation. We had a very strong production in the first quarter of our fiscal year, which leads to more spot opportunities. So there are two things came together, extra tonnage and I'd say, very high demand on the market side. So this helps to improve the prices. We haven't changed overall our policy that a certain baseload of long-term contracts is being taken year-over-year with our, let's say, specifically with our customers served from the Hamburg plant. Pirdop, we also said in the last calls, we have a higher ratio of spot business there. But overall, as we showed with the official available numbers, sulfuric acid market has been characterized by strong demand with very good pricing.
Thanks. Thanks for the color. Just to follow up briefly, could you maybe give us the split roughly between annual and spot? Basically just to get a sense for the annual share, because I guess with the price volatility we're currently seeing, there's definitely a very big price step-up coming in the course of the first calendar quarter.
If you take as a guidance 80% long-term, 20% spot. However, again, we lock in contracts at a conservative production level. If we have a very strong production like we saw in the first quarter, then the spot ratio goes pro rata, slightly up. Let's say in our planning, we assume this 80/20 rule.
Okay. Excellent. That's good color. Thanks for that. Just moving on to zinc, where I saw that the volumes as a percent of your throughput has basically never been as high as they were this quarter. I think they were up even by 50% over the fourth quarter. Of course, this is probably also due to Metallo, but is there any other extraordinary in there where you maybe sold off inventory? Or is this basically just the new normal because of the additional metallurgical capabilities which you onboarded with your Metallo deal?
Yeah. I think we need to differentiate concentrate throughput. If we refer to this number, we had a very strong Q1 in our fiscal year, compared also year-over-year, with 12% more concentrate throughput, which reached a level of 679,000 tons, which is truly a very strong quarter. This concentrate throughput is disconnected from the addition of Beerse and Berango to our portfolio. This is really the recycling system. And here, as we announced with the integration of the two plants, we have achieved now recycling material throughput of around one million tons or exceeded already one million tons last year in total. But again, concentrate is really the two plants, Hamburg and Bulgaria, and then we have the recycling network which are the other plants.
Okay, perfect. Thanks. Thanks for that. Just one last question, if I may, on energy costs as well. Here I was just wondering in terms of the time lag, which you have here for the CO2 certificates, which you're getting compensation for, if I work it out correctly here, I think you're receiving a payback for roughly EUR 40 per ton. Is it fair to assume that there is now less than a 12-month time lag on this? Also, maybe could you even give us the mark-to-market number of the EUR 62 million energy cost? If you look at the position, basically, how would it look like at current spot conditions?
To the compensation we have, as we discussed also in this call, we are eligible for the CO2 compensation in the framework of the ETS. Here we receive different ratios in the countries depending on their energy mix. It's not easy to make a direct one-to-one comparison here. This eligibility is now decided until 2030, so for the actual trading period of the ETS. To make a real comparison or to give you a real number, what's the impact of energy cost or electricity cost increases, which is also highly driven by the CO2 cost increases, we decided to put this compensation mechanism into our energy cost. That's really the net cost, the energy cost that we see bottom line.
There is one point, you're right, there is a certain, let's say, time lag in how the compensation, the indirect CO2 compensation is being paid to us. This is something which again makes it not a very simple equation, how this is calculated.
Okay. The time lag, I mean, is this broadly a year or is it even much longer than that? Because I basically just took the delta between the number you're now showing versus the number you've been showing for the same quarter a year ago. I think that's roughly EUR 10 million or so. I just worked it backwards with the quarterly Scope two emissions of like 250,000 that got me to imply EUR 40 per ton of CO2. I just looked at the CO2 chart and thought that means it has to be less than a year time lag.
Yeah. The time lag for this indirect compensation is two years. This compensation that we receive in the actual period, the money that we receive as compensation is taken into account in the energy cost that we show. Which means, let's say we will get a higher compensation for this fiscal year, but just in two years' time, and we show it then really in the two years' time period only. That's the timing, the way how we have put this into our equation there. We really show the net cost of what is really hitting our P&L.
Okay. Very clear. If we were to mark to market the EUR 62 million number, to today's conditions, how would that look like?
That's a bit different or difficult question, Bastian, because it is electricity, it's natural gas, it's other fuels. It's a mixture of different prices of electricity prices, gas prices and so forth, in different legislations. So therefore, there is not only one figure that we can mention here. Also perhaps one additional point. This compensation is a payout, so we are not receiving any certificates or anything which is on the accounts. It's really calculated after, let's say, or paid out and calculated two years after the calendar year is really over, and then we get a straight payment. There is no certificates or no rights or anything issued. Therefore, there's also not a mark-to-market evaluation there.
I was really just more referring to just the overall energy bill. You'll see, I think in the last quarter, you always said you basically have roughly 2/3 of that hedged, and I guess these hedges are rolling. Maybe you are not hedging any longer as much at current energy prices because maybe they're high. I was just like keen to understand, obviously, how the EUR 62 million number moves basically when we're moving closer to what the current conditions are. Without obviously, like, getting to cent and penny, but just to get like a broad sense. I understand it's obviously like a complex exercise, but I'm still sure you've been looking into this.
I think what is important just to underline that we as eligible sector and company, we are being mostly compensated for the CO2 cost increase in the electricity production, and this will last. Which means today we see a CO2 certificate prices of, let's say above EUR 90 per ton, which means we are not getting this compensation actually in this fiscal year, not to the P&L, but we will get it in two years' time. I think it's important that our energy bill and the electricity bill is kind of disconnected from the CO2 price increase or certificate price increases. Again, with this time lag of about two years.
Yeah. Overall, please bear in mind that energy cost in total is 14% or 15%, or is it today 16% or whatever. Yeah. It is not that much. This factor then moves up by one-third due to spot market conditions, no? That reflects here in the EUR 62 million that you see.
Okay. Thank you. That is helpful.
Next up is Christian Obst from Baader Bank. Over to you.
Thank you. Good afternoon. I have three questions. One is also on the cost side. You are looking for additional employees, as I have seen. Can you give us some kind of your expectation about personnel cost increase going forward? New personnel coming in and also the inflation issues there. The second one is on battery recycling, where you stand currently, what is your timetable, and what is your main question mark for you? Because before you decide to invest into some kind of a bigger plant there. The last one, more a strategic one, or, remind us what the main investments in Europe are, when it comes to capacity and renewables, something like that.
What kind of amount of scrap are you targeting to get at as a throughput when you have all of these investments done? Thank you.
Okay, thanks. Thanks, Mr. Obst. Roland speaking here. To your first question regarding increase in headcount, the people we are hiring. There are two areas. We are strengthening our IT organization-wide, our digital department, and also our group engineering organization. In line with our strategy, we are strengthening this engineering group in order to focus and deliver on the investments that we have planned for the coming years. And the total cost increase that we see, if everybody is on board, which we are doing as we speak, will be in the magnitude of ±EUR 10 million , depending on what we find. That gives you.
Mm-hmm.
If you translate it's about, let's say 80-100 people in this range, depending on also where we place them, because we have options to bring people into different sites of Aurubis, like Sofia, Pirdop, Spain, Belgium, or also in Germany. That's the number regarding increase. And your question regarding battery recycling. The status is that we are building up our pilot plant. It's more a demo plant. It's quite an impressive setup that we are finally installing these days. And we will go into this demo production in March. That's when we're going to start. And we will see hopefully the full confirmation of what we have developed in the lab pilot scale in early summer timeframe.
And in parallel, we are investigating or we are working on the feasibility to go the next step in order to see what this investment in battery recycling, black mass recycling would look like on an industrial scale.
Do you still have some kind of a partner there or looking for a partner?
If you see, there is an amazing dynamic in this market, and there is not a day without a press release or any news. I'm not in a position to disclose with whom we are discussing what, but we are, let's say, in the midst of the discussion with OEMs, battery producers and other companies who are setting up or thinking about setting up collection schemes and dismantling schemes for used batteries coming from the vehicles' end of life.
Okay.
I think you understand I cannot drop names here.
Oh, yeah.
In the ongoing discussion that we have.
Not yet. Last question was on the main invest and the scrap targets. Scrap target, as announced, we want to go to 50% recycling quota by the year 2030. That is far from easy. It sounds easy as we already have achieved quite a lot. Please bear in mind that one of the Richmond.
The recycling modules add only 90,000 tons of recycling materials, while we are currently using some 2.3 million tons, 2.4 million tons to the maximum concentrates on the primary side. It's very difficult to step up the ladder on the recycling part here. As you know, and that already has been announced, we are looking for, let's say, further recycling modules. We say it's a modular concept. We want to roll it out further if we see that it's working fine and it's working well. This would add an increment of that same amount of, let's say, 90,000 tons of recycling material. What are the main investments? We have been talking about the Richmond project, of course. We have been talking about the anode sludge processing, so our ASPA project here.
We have been talking about the industrial heats that are projects which are announced already. And then we have further projects in the pipeline midterm, which are approximately to the same extent, mainly focusing on our capabilities of, let's say, further multi-metal processing. It's about the nickel processing capabilities of Aurubis here in Europe. Of course, further recycling modules. For sure, as Roland has already mentioned, once we are ready with the pilot, hopefully it will work out fine. For sure, we don't do that just to keep us busy here. We want to build that on an industrial scale as soon as possible.
Okay, thank you. I have one last question. Given the current high inflation in the U.S., how high do you see the risk that you have to invest more to erect a plant there in the U.S.? Are you still in a process to offer some kind of recalculation given the fact that we have 10% personnel cost increases, material price increases, and so on and so forth?
Yeah. We announced the investment in Richmond on November 10th, and shortly after, we also published the signing. There's a signature of a contract with our main equipment supplier, SMS. This is a fixed price contract. For the, let's say, the equipment, more or less the whole equipment, we have already locked in the pricing at fixed terms during the execution. And we have also, in our business case, taken very, I would say, conservative, high assumptions for steel and building materials. Today, we see that steel prices, also in the U.S., despite inflation, are not going up, but rather compared to what we took into our assumption, are even, say, from a trend, a bit softer.
We believe we have made here, we put enough security in our business plan and also in contracting already the services, so that we will not see any deviation from our planned figure, which means we will build this plant at a CapEx of max EUR 300 million.
Okay. Thank you very much.
At the moment, there are no further questions. Please press nine and star if you would like to ask a question. We have a question coming from Ioannis Masvoulas from Morgan Stanley. The floor is yours.
Hello. Good afternoon, and thanks for the presentation. A few questions left from my side. Three, actually, and I'll take them one at a time, if that's okay. The first is around the scrap markets. We've seen Asian countries, especially China and more recently Malaysia, looking to restrict or have already restricted low-grade scrap imports. Hence, demand for high-grade material has increased, as seen by the narrowing scrap discounts for copper grade number two. Are you seeing a bifurcation of the copper scrap market where you may be losing out due to competition on the high-grade part of the market, but you are benefiting from the low-grade material that is more abundant in Europe and the US?
Do you see these overall developments as a tailwind for fiscal year 2022 relative to last year? I'll stop here for the first one.
Yeah. Ioannis, Roland speaking. No, scrap markets, you're right. But you have to take into account that last calendar year, we had some exceptional situation of the scrap market where supplies to Asia were at an extremely low level. This is now, to what we see, normalized. We have also regarding our RCs, what CRU number I quoted in my short presentation. And you see the CRU numbers are on a known level. This is not a surprise level, and this is an attractive level for us. So therefore, put in perspective that last year we were benefiting by very, very high RCs for specifically for scrap number two.
And again, Aurubis, we have the capabilities in our company to process all kind of scraps from low metal content, low organic, to high metal and high organic, so the full range. Therefore, we can always optimize our input mix to the best. Therefore, we see that Asia is more active on the purchasing market, but also within a, let's say, a reasonable range. We, as we stated also, do supply our plants with the right quality and the right mix at good pricing.
Okay. Thank you. The second question is around CapEx. I think you've guided to north of EUR 400 million for this year, but I was looking at the fiscal Q1 run rate. It was pretty low. Can you talk about the sequencing for the next few quarters, please?
Sequencing, I wouldn't see that low. We had EUR 50-some million in the first quarter, if I'm not mistaken. We will have, let's say now with the upcoming projects, it will accelerate. We will guess that by the end of the year, we will achieve EUR 400 million. This is still a considerable right figure here.
Okay, great. One last question from me, and apologies if you have already commented on that. Going back to energy costs, could you give us an indication on your assumption for energy cost inflation year over year that is baked into your revised guidance? Hello?
Sorry, we're on mute. Sorry, we didn't put on the switch. No, we don't give. You know, again, as we stated already, given the different countries, the different dynamics, and the different energy sources and how electricity is produced in different countries, there is not this one number, how we are assuming going forward the energy price increases. On top, as I also explained, we have this compensation mechanism for CO2 costs, which is today a very important cost driver in the electricity production. This is also different by country. There is not, I have to apologize, but there is not this one number that can explain what energy prices are, what assumption we have in our energy price calculations going forward.
Still some uncertainty to add-ons. There is some uncertainty, but again, please bear in mind, we are talking about the cost factor of 16% or 15% of the overall cost of Aurubis, and therefore, thereof, 2/3 are hedged, and that holds true for pretty much the whole fiscal year. It's 1/3 out of this, what do we see? 15%, which then is exposed to fuel prices.
Yeah.
As you see in the markets.
Yeah. There's also one aspect on the product side, not, unfortunately not for copper, but we have increased our copper premium for market demand. You could also argue there is a bit of a, let's say, cost component in the premium that we're asking in the market. We have really asked our customer base for wire rod and for shapes for participation in the energy cost increase. That's also in the premium that we get additional to our pricing.
We have factored in the energy cost that we see currently in December, January. We have factored that in into our forecast going forward.
Understood. That's very clear. Thank you.
There are no further questions. With this, I hand it back to Elke Brinkmann.
Yes. Thank you. Finally, I would like to draw your attention again to our next event, our virtual annual general meeting on February 17th, which you can follow via webcast. Our next conference call on the occasion of the publication of the half year report will take place on May 10th. We would be happy to welcome you again, and with that, we say thank you and have a nice day.