Good morning to the U.S., good morning here in Europe. A warm welcome from my side to the Aurubis Capital Market Day 2023, here from London. Last time we saw each other, it was in 2021, we did a recap of our strategy, a lot of things have happened during that time, also on Aurubis. I think geopolitically, the war in Ukraine had, of course, also an impact on Aurubis. We were faced with disrupting supply chains, we had a major energy crisis in Germany, especially, we were facing a cyberattack on our systems, just to name a few of them. Aurubis has managed all of these crises and challenges in a very successful way. We were even able to show a record year earning last fiscal year.
More than that, during that time, we were working on our strategy. Our strategy we presented to you last December, Metals for Progress: Driving Sustainable Growth, and we are now delivering. That is exactly what today's agenda is about. Our CEO, Roland Harings, will start with a brief recap. Inge Hofkens, our COO, Multim etal Recycling, will explain our strategy, implementation, and achievement, and how that fits into our smelter network. David Schultheis, from the 1st of July onwards, our President, Aurubis Richmond, will report on the progress we have achieved in Augusta, in Georgia, which is the biggest growth project for Aurubis. After then, Jürgen Jestrabek, our Project Manager, Complex Recycling Hamburg, will show you how CRH will fill the gap in our smelter network and what that means to our earnings and sustainability.
Finally, our colleague, Thomas Sturm, Senior Vice President, Corporate Development, will report on the tank house expansion in Pirdop, our answer to the growing demand of copper in Europe. After a Q&A session and a short break, our colleague, Christian Hein, Head of Sustainability at Aurubis, will report our industry leadership in sustainability and the progress we have made so far. Roland Harings, after then, will report on our major decarbonization projects. Then Ken Nagayama, Head of Business Development, Battery Recycling, will present our innovative process for battery recycling and how the future Aurubis is going to position in that market. Last but not least, our CFO, Rainer Verhoeven, will summarize the profitability of all these growth projects, the impact on the balance sheet, and of course, how we're going to finance it.
Finally, we can look forward to an outlook of Roland Harings. A tight program, which will lead around 5:30 P.M. Just a short technical note for all our virtual participants, you will find a Q&A function, and you can enter your questions at any time. Yeah, now I would like to give the stage to Roland. Please.
Yes. Okay. Thank you, Angela. Also for me, warm welcome here to London, to our Capital Market Day. It was December 2021 when we had our last meeting and updated and informed you about our strategy. The three pillars that we have shared at this point in time, securing and strengthening the core business, pursue growth opportunities, specifically in the recycling area, and continue and expand our industry leadership in sustainability, have remained firm and have been confirmed. Despite a real challenging environment that we have been faced with, we all have been faced with since 2021, we have really worked hard and successfully executed these three pillars of our strategy. As Angela mentioned, we will have some more deep dives in some specific and probably the most important projects that are in execution today.
Clearly, our mission is clear. We are delivering on this mission to deliver sustainable growth with our metals. What we are doing is, and you have seen, also Angela mentioned our financials, and you are very familiar with our financials, we can build and have built this strategy on a very, very solid foundation. Financially, for sure, also based on our integrated smelter network, as we always call it, which is with no, I think, question mark, the most sustainable and efficient smelter network in our industry around the world. It's also quite amazing, just now, after we have more personal meetings again, I have been in the CESCO week in Chile-...
As a CEO and as a manager, although my board colleagues, we always have probably, like you in your jobs, you have always this to-do list, things which are not perfect, things you still have to accomplish. Therefore, it was very rewarding to have an exchange with most of the players in the copper industry during this one week in Chile, and just receive some feedback, some reflection on how the industry sees our company, and how we are, I would say, appreciated for the progress and the direction we have taken since a couple of years. We have come a long way in the last two years, many projects, and I hope you will be impressed by the progress that we can witness in videos and also in documents during this afternoon.
We will also talk about the even more exciting opportunities beside the very impressive projects we have already launched. Also about the very exciting opportunities that we have in front of us, in Europe, for sure, but also, and very much focused in North America, in the United States, but not excluding other regions, because circular economy, recycling, and the technology that we bring to close loops, to bring very important raw materials back into the industry, is of increasing importance in the whole framework of decarbonization. Talking now about the challenging environment. I think I have to press this. The global environment and also geopolitical environment, has really changed rapidly, and in my view, not to the better. It's much more difficult to do business.
What's happening in the between the big economic regions, Europe, Asia, and North America. Inflation has been extremely strong and frightening in many regions, and interest rates moved up, and so on. However, despite this difficult environment we are operating in, we have seen very strong trends supporting our industry. We talked, in many of our meetings, we talked about the decarbonization, and you heard me saying several times, decarbonization means electrification. If you want to use less fuel energy, you probably need other forms of energy, which is typically electricity. Electricity means, due to the excellent properties of the metal copper, means the use and intensive use of copper. I will show later some slides, how we project the demand in the different regions for copper, and the trend is clearly set to move up. This is the one side.
The other side is that we see also a strong push to regionalize recycling. Nations like North America, but also within Europe, there is more and more the notion that these important raw materials, which are already in the countries, in the regions, they should stay in the regions by closing the loops, by establishing really a circular economy. What we have seen in U.S., was an extreme positive reception with our decision to go there with the recycling plant, and also today, an even more encouraging support to even go further.
You saw, you heard, that after the decision on the phase one investment, we already, last year in December, decided to pull the phase two enrichment already forward because the feedback from the markets in the U.S., the feedback from the regulators, from the politicians, from every stakeholder, was so overwhelmingly positive that we said, "Let's really accelerate and go already the second step." What's also changing is regulatory framework. Shipments and exports to Asia, which had been for many years, specifically for the U.S., the outlet for many recycling materials and also for low metal containing, so more difficult, complex recycling materials. This outlet is more and more limited with regulation that countries like China, but also other countries like Malaysia, like Indonesia, they are limiting the quality of material which can be imported.
Which leads to the fact that this material is not leaving regions anymore, like the U.S., and as the material is there, it sadly ends, in many cases, on landfill. There's also now an even more accelerated need for recycling, for closing the loop in regions like the U.S. The decarbonization, looking here specifically from a European perspective, but what's happening in the U.S. with IRA and the move, and the huge increase of industrial activity in the U.S., of plants being built, of E-mobility being raised, we also see here significant additional demand for our metals.
Even if we are not directly impacted or supported by the IRA incentive scheme, I always say it's a bit of a secondary effect, because the industrial activity, the electrification, the new energy activity, is significantly rising in the U.S., which means more metal, more industrial activity, which really falls again in our camp. Really secondary effects that we see there. If I go on to the next slide, what does it mean in numbers? In Europe, we see a supply-demand gap growing to close to 1 million tons of copper demand in the next 10 years. The expansion of cathode production in Europe to support the transformation, the energy and mobility transformation, is really relevant and really led us to the decision to expand our tank house capacity in the plant in Bulgaria, which Thomas will talk about in a minute.
With this activity, moving our capacity of cathode production by adding 120,000 tons of capacity, we are contributing significantly to this additional demand in Europe, and the market is just here asking for more of Aurubis cathodes. Looking at the timeline, and by the way, the same as you see in the graph, and it's in your documents, the same is for the U.S. There is copper deficit in all regions going forward. The timeline and the key projects we have listed here is for many of you, well-known, and we will dive into some of the key projects today. Eight key strategic projects are in execution, and by the end of this calendar year, 2023, all of them will be in construction. We will be building equipment, buildings, infrastructure, and so on.
We are really in full execution after we have announced one and a half years ago, our strategy and these projects. The remaining projects, we will talk about later, what we have in the pipeline. These will be step by step, gradually, according to governance and a very strict regime that we have put in place to execute the projects, will be put and will be decided until 2026. What does it mean financially, and what is the overall scheme, cash flow, and KPIs, where you are also, I think, interested in detail? This will be covered by Rainer later about EBITDA and contributions coming from there.
There were certainly, I have been asked, and our management team has been asked, is Aurubis, with the history that we have, which is not building greenfield plants, which is not doing large growth investments, being excellent in maintenance and keeping our asset base at a very good standard, very high-performing assets. The question was rightly asked: Do you have the capabilities, the strengths, also the governance to execute projects of this magnitude and also of this number? As we knew, we don't have it really completely in place. We have defined a real management governance system for transforming this company to a different level. It's very refined, very precise, and also very detailed. If you look at this kind of agenda here, that's how we run our company.
We have, for example, I don't go into all the details, but we have a strategy committee. This includes the responsible leaders from the strategy function, from the legal function, from financial, from technology, from the business. All key people who are working on the progress and on the future of the company. This strategy committee is meeting frequently. There is a so-called, we call it StratCo, which is more the operational part of the strategy deployment. This meets frequently to check in detail, single projects, and have an in-depth discussion with the responsible project leader, with people who are the sponsors, the drivers for these projects, in order to make the overall portfolio fit, inform everybody about what's going on, given our integrated smelter network.
It's also very important that we really see all the dependencies and how things are connected, and they are in charge to prepare the decision-making that's being taken place, first in the executive board and then secondly, in the supervisory board. A very clear governance and structure, and very important, what I always see, also the right rhythm, so that we have really a kind of fixed agenda. Everybody has these meetings in its agenda. There are clear participants. There are clear tasks to be conducted. This is now something, I would say, a well-oiled machine that we have installed in the governance, which is working since we launched the strategy. For sure, very important are the project steering committees.
That's where project management, key stakeholders, the project team itself, comes together, and depending on the project, regularly reviews in depth, in detail, what's going on the project. This has really been the enabler for first launching all these very demanding projects. Eight are already in execution. Growth projects, beside the project that we do as a company, as large maintenance projects anyway. It has really enabled us to launch this project and also to steer, manage, and also counteract in case of deviation. Today, I can say all projects, and I hope we can convince you today, and we have some key people here, that all projects, despite the environment we are dealing in, with inflation, with supply chain issues, with...
You know, all what's going on, that we can prove and show that all our key projects, all the eight strategic projects, are well on track, and we are going to deliver our promise. Also with this executive board meeting, strategy board meeting that we have on a regular basis. Also, my fellow, the two of them, Inge and Rainer, but also Haiko, is not here today. We are, and I can just ensure you, we are very close to the business. We know exactly what's going on in the project. We are working with the teams, and we see ourselves as a strong element and partner in the project to help the teams in this challenging environment to move projects forward. Quick decision-making, sound, quick decision-making in order to ensure that projects keep on track, keep on working. That's very important.
Looking now, and I think that's just a summary slide here. Looking now at the early warning, so that's one thing, how we execute, govern our project, landscape, and more projects to come. What we also do, as we are living in a changing world, we have established what we call an early warning radar. You see here some of the, of the points. What are we doing there? It's not just you see some signposts, but it's not just the signpost, but we are looking really holistically in the environment, in the markets, in everything which is important for our business and for our decision-making. It's not about short-term data, it's just have trends, have assumptions that we have built the foundation for our strategy work. Have they really changed?
Has there something developed in a different direction, significant different direction than before? This is something that we do on an annual basis and review holistically, everything which is important for our business. If something changes, we have two kind of escalation. One is a, what we say, a yellow flag, which means let's watch out. Something we need to put a special focus on and check if something is deteriorating, or we have also a red alert. There is an imminent risk, something is very different to what we took as assumption that what we thought is really needed. To give you one practical example, let's say geopolitical. Angela mentioned the attack of Russia on Ukraine. This clearly, in the geopolitical dimension, was something we really looked at. Does it change something for our strategy?
Is this an event that really brings us back to the drawing board? We have to think about, is there a change in our direction, our strategy? Clearly, conclusion was, no, we were not dependent or involved in any, of any significance in business dealings with Russia nor with Ukraine. There was no really impact on the immediate effect. Also our strategy, the expansion, the three pillars, which I explained, they are rather, let's say, strengthened and supported by what's happening now in the geopolitical world than being challenged. Just to show you the idea that we are permanently looking into this area by this early warning system, and it's part of our planning process.
Again, I'm a big fan of a rhythm in a company, that people have really this kind of structure with the business planning, with the governance of the projects, then with however you market. To have a very solid and strong fact base, everything looked at, and then from there, take decisions, move forward, and execute. I'm with the company since now four years, and I can really say we have come a long way. We have really established a very different organization and governance and also a management team with a different mindset than what I have, let's say, experienced when I joined the company. Clearly, this is how we operate, how we do, and I'm sure in the Q&A and also perhaps at the dinner discussion, I hope most of you have the time to join.
We can elaborate a bit on how we are doing this on a day-to-day business. With our strategy and through the realization of our growth projects, we're aiming for two main goals. We will increase our earnings by optimizing our smelter network. You will see today, it's for non-metallurgists, it will be, I would say, a bit challenging today, because my colleagues will really try to explain this technology that we own, this really kind of, network and how many different metallurgical, hydro, pyro, metallurgical streams are being connected, one to each other and everything. It's quite fascinating. I have to admit, I don't understand it, but I know we have the experts who are really fully in line there, and they are very convincing and excellent in what they are doing.
What we also put in our main goal is that all of our processes across the network are generating even more value. It's a bit like no surprise, this statement, but what does it really mean? It means that we are extracting, that we are expanding our already excellent extraction capabilities. That we take all the important ingredients out of the different input streams that we receive in recycling, but also in primary, and that we take, I'll always say, all the PPMs out, all the metals out, everything out, which is of relevance for the industry. Therefore, I much more say we are a multi-metal company because we are producing more than 20 or exactly 20 different metals today, some other side products.
To enhance this, to get even more out of the streams, that is also, one of our pillars and important for the earnings. Also here, Rainer will have some say about some statements about this later. Let's say, what's the also important geopolitical. I mentioned that, reduce the exposure or, formulated differently, have more pillars on which Aurubis stands. With this expansion in the North American market, in the U.S. market, as you know, today, we are still a very much European play. With this expansion in North America, this is already a significant step, and we will also talk later, and David will give you some idea. This is, as we always said, the first step that we do enrichment.
Our technology, our scalability, our standardization that we have established with this first step enrichment, and also with the quick addition of a phase 2 without significant additional engineering, because we copy-paste the technology that we have launched in the phase 1. This is just a starting point. Markets are there, demands are there. This will lead to a important North American business for the company, which means we are not just dependent on the well-being of one region, that we have more, let's say, support from other regions there. Coming to this page here, although something that we are going to elaborate in more detail during today. We have launched, decided, and in execution, growth projects in the magnitude of EUR 1.1 billion, with these eight large projects. This is unprecedented for Aurubis.
This is a journey we have not had in our history. We were very successful with M&A. Metallo is one of the last very successful examples of acquisition that we did, and integration that we did even more successfully. Really, organic growth, adding significant capacity in this pace and in this, let's say, broadness, is not part of our history so far. These EUR 1.1 billion of CapEx will deliver EUR 260 million of EBITDA by 2026, 2027. This is, and Rainer, again, will talk later about what's the return, what's in it for our stakeholders, for our investors, what's the return on this capital invested? Our investments are highly attractive. They are very much demanded and needed by the markets, and hence, we are very confident that these numbers will be delivered.
Those who are working with Aurubis since many years, they know that we tend to be a bit conservative in our estimation, and without hinting anything, but this is something, a number that we will definitely deliver. Then also today, we will just briefly touch on the other investment projects. What we have here in the medium pillar, EUR 280 million, which are in final feasibility or basic engineering phase. Things which will come on the table for decision in the coming quarters. Nothing decided yet. Everything has to go through a very, as I explained with the governance, everything has to go through a very rigorous approval process. These projects are not there yet, but maturity is already at a good stage, so we will review them relatively quickly.
I'm very pleased today to have Ken here, Ken Nagayama, who will give you some more insights in our very good progress in black mass battery recycling. I know a topic I received a lot of questions, a lot of requests to explain where are we going, where do we stand? I'm sure we will have a very, very interesting exchange and Q&A about this there today. To sum up, we are in full execution. We deliver our promise. We explained one and a half years ago, the three pillars. What are we doing today? We are standing here, and we are showing, we are in full swing. Large growth projects are in execution and are progressing as we speak.
With this, I would like to hand back to Angela, and, you will see me later then on stage. Thank you.
Thank you. Yes, thank you, Roland. Next, I would like to welcome Inge. Inge is the expert in recycling. She's responsible in the board for recycling since first of January, and she will explain you maybe the first time, at Aurubis. We are talking a lot about the efficiency of our smelter network, and she's now explaining to you what that really means for us and how that makes it different compared to the other players in the market.
Thank you so much, Angela. As Angela said, I'm very new to the board, only since January this year, but I am having just, or just past three decades of experience in metal recycling. Metallo was acquired, I kind of was acquired alongside, and also on board as a group, Aurubis group, two years ago. Which has been really a nice journey because I think there was great opportunity for integration and a great opportunity for sharing know-how and knowledge in the field. For today, as Roland already mentioned, I try to walk you through a bit to what we are actually doing in our smelter network.
I will not explain you everything, what we do in terms of each and every detail, because that would lead us I think, for another week or so to kind of understand. We are using our flow sheet to help you guide to where we are having these eight projects, which Roland talked about, where they are in our landscape and how they fit all together in that integrated smelter network. I'm not sure whether this works or whether I was too fast. Voilà. Okay. We start with just a brief overview.
It is really a very simplified view of our total operations and everything we do, but at least it gives you a bit of a framework and some guidance to where we are. I start with the status quo, with two of our projects, which are in this pipeline of eight projects, then we have three of our colleagues deep diving in some of those that we are actually taking on this exciting route. What we are doing in the integrated smelter network, we're actually leveraging on our existing assets, on M&A assets, like the Metallo acquisition was, and on newly to-be-built assets. All of that, of course, in following or supporting our Driving Sustainable Growth strategy.
What is so interesting on the fact that we are interconnected, and we are even doing that more and more going forward is that it gives us the chance to really leverage on the core expertise and the metallurgical know-how we have in each of our operational sites. As we come from a long history of separate sites with a lot of know-how in there, both from a technological perspective, but also from a market and business perspective, when you get all that interesting expertise together, you can create really, really nice things. We have done so by choosing also forwards for our projects in that strategy pipeline, and we have not explored all of them yet.
What we are doing there in not only using the expertise, but it's really all about how to understand where our profitability can be really tapped into at a max. We cover the metal where we can. You know that we are, in principle, seen or mostly as a copper processor and producer. As Roland said, there is so many more metals that are hosted by our entry materials, both from a primary as well as from a secondary perspective, that we want to get them all out wherever we can. That is what we are doing with our projects in there, as you may see, and maybe I start first with quickly taking you through to how the process really works.
We have really three big important steps in the value chain, which is smelting, refining, and multi-metal recovery. The first one and the second one are maybe the most obvious one. The last one is the most complex, and I'll have to make that one in a wrap-up, because that is otherwise would lead us really, as I said, too far. The smelting and converting stage, the first stage, is really there, where we extract the copper from our raw materials, whether it's concentrates in our primary sites or whether it is a secondary raw materials. And the extraction we do up to a level where we get into what we call blister copper or copper anodes, where the copper content is about 98%, 99% of copper.
We don't forget about the rest of them, of the metals and the elements in there, that's the first step where we take the copper out of the raw materials. In the second step, which is a refining stage, we do that by electrolysis in a tank house. That's basically baths filled with sulfuric acid, you run electricity through them, which makes that the copper ions can go from the anode to a stainless steel blank, where they then create a copper cathode, which is the raw material, copper, again, as we know in the commodity world, the copper cathodes. That has a purity of 99.999%. Why not 100%? That's just metallurgically not possible.
Which makes that in that tank house moment, in the refining stage, we actually separate 98%-99% of copper away from the 1%, which is still there. That 1% is actually a very valuable part of the 1%, because that entails everything that is more precious than copper, like precious metals, gold and silver, but also Platinum group metals and other metals. That's what we take out in that second step, and then the last part, and it's not 1 single step, because that's really an entire part of activities where we recover all the rest of the bits and the pieces, the PPMs, like Roland said, or the percentages of all the other base metals like tin, zinc, nickel, and lead.
Where we also do the further refining stages for precious metals, platinum-group metals. Of course, what we try to do in the whole system is recover everything that is there, as I said before. We also recover sulfuric acid, which then becomes a valuable product for selling. We also recover iron silicate, which we bring into the construction industry, mainly. Everything that is there, we are really focusing in minimizing waste to the fullest potential. We have in our operations two major pillars, let's say, which I indicated before. We have two major primary plants, one in Hamburg and one in Pirdop in Bulgaria, that treat clean and complex copper concentrates.
They go through the chain, smelting and converting, refining, the copper into the copper cathodes. Everything that contains the precious metals, which is basically the bottom layer in the tank houses, where the precious metals and platinum-group metals find themselves back, they are all treated in our Hamburg plant. We concentrate all the material there in order to have an optimal and the best recovery of those precious metals in the operational activities there. Five of our plants are taking secondary raw materials, that's really across our Lünen plant in Germany, the Beerse plants in Belgium, Olen in Belgium. We have Berango in Spain. We are building it. We also have our Richmond plant in the U.S. there.
Also in Hamburg, we are dealing with secondary raw materials that are relatively high in precious metal content, or any material that can be also treated in our processes there. Our main focus in the recycling part, and I think where really we have an advantage to the market as a whole, is that we are actually very good in treating low-grade materials, and low-grade means low in metal content in those materials. Typically, you could say that if you have a concentrate running at average at 25% of copper, we can even go a bit lower on the recycling raw materials, having copper contents of only 10%-15%, or having a mix.
Low grade also because we are not only treating metallic materials, like basically scrap coming from demolition or recovery or the collection chain, as you have seen in the film in the beginning, but also a lot of oxidic materials, from all kind of co-products or products generated during the manufacturing process when metal-contained material is being manufactured. We are also dealing with a huge amount of complex materials. When we say complex materials, then we talk about materials where all these base elements or these base metals and precious metals and platinum-group metals, everything comes together in one single material. Because the extraction of all of that one, that's exactly what we can do very well in our integrated smelter network. Also electronic waste materials.
We have just to highlight a bit maybe where our focus is in our Lünen plant in Germany, we mainly treat these electronic waste materials or printed, mainly a focus on printed circuit boards, what that we all know from all our electronic devices. We deal there also with a lot of shredder materials. What we call shredder materials is mainly coming from the pre-processing, mechanical pre-processing of cars and electronic waste, but all types of household devices and so on, and it's coming also quite a lot from the treatment of household and industrial waste in general. In Lünen, we would therefore not only recover copper, but also focus there on the recovery of mainly nickel as a base metal hosted in our raw materials.
Some of our materials, or all of those materials also contain some tin and some lead, which we then also treat further in our plant in Belgium, in Beerse. On our Olen site, I can also connect it to our project, BOB. In Olen, in Belgium, we focus rather on high-grade scrap materials, which is typically coming from the waste collection through the trades, traders or collectors, like we call them. Here we saw really a nice opportunity when Metallo was acquired. There is actually a lot of nickel in our flows. In Olen, we have the second biggest tank house that we have in our smelter network today, where nickel actually is also recovered in our tank house.
Set aside of the precious metals contained in the bottom, which is typically called the anode slime, the nickel in that process will be dissolved in the solution, and we can recover that nickel again over a process where actually we do crystallization, and we come to a nickel sulfate. We have studied that opportunity, and we came to the conclusion that there was a big opportunity to combine all the flows from the Belgian plants into one, and that is how we came to the BOB project, which stands for Bleed Olen Beerse, and Bleed treatment. Bleed is actually this nickel solution that comes from the tank house. That project has kicked off last year.
We started the demolition, or demolishing a building, which we needed to take away before we could build a new building, and the new building is fully in, or started to be fully in erection now. We have our Beerse plant. I say Beerse in Belgium, connected also very much to the Berango plant in Spain, because they came from the former Metallo acquisition, and they were tied in as an integrated smelter, small smelter network already before beforehand. There, we have really a big focus on everything that is related to tin and lead. Where we try to, not try to, where we actually manage very well to recover the tin and the lead from our copper raw materials.
We produce there a pure tin and also pure lead for selling it to the market again. We have also in Belgium some zinc recovery through the fuming process that we operate there. Coming back to the tin side, and that is actually how our ASPA project came to life, we have in Beerse, as we treat a lot of complexity of the five base metals together, we don't have really a very pure copper anode, which we are producing there. Well, we have a pure copper anode, sorry, which we produce there, which is being treated further in the tank house in Olen. That has always been the case. We have also a production of a copper anode, which is much more impure than a classical copper anode.
With such a kind of anode, you cannot make really the highest grade of quality of copper cathodes. It is a process where we manage really these impurities that are in our systems. Actually, one of the elements that we have in that material is tin. We didn't want really to lose the tin. This material was always sold in the past. We saw here a really nice opportunity together also with the materials that we produce in our other recycling plant in Germany, in Lünen. To bring materials together and to actually set up a process where we are capable of extracting the tin at the fullest, and then also recover tin at 100% in our own flows.
That has turned into Project ASPA, which also was decided in 2021, I think, at the end of 2021. There we are also in full construction. The building is erected, we are now, I think, about to bring the walls around the building. As you can see, everywhere where we can leverage on understanding what is a potential to add profitability into the network, we will use each and every opportunity. Of course, this is not a static thing, because our raw materials in the entry point, and surely those from the recycling part, they are constantly changing. The composition in terms of all the elements together is never the same. Even though on the film, you saw some variety of the raw materials we are having.
We can put them into groups, like we can say, shredder materials, or we can call them copper ferrous materials, or we can call them alloyed materials. The presence of all the elements in these materials will always change, and that is, of course, a consequence of product design changes constantly. Any change in the market, you think of a car, the car is maybe composed out of similar elements today than in the past, but the proportions of all the metals in there are changing, and hence also our raw materials are constantly changing. That is actually one of the real benefits of our smelter network.
We can react very agile to those market dynamics and use the materials at best, optimizing them in the logistics to where we are closest by with our plants and getting the full material recovered out of these raw materials. As said, today, we will also present where we are with three of our other projects: our Richmond projects in the States, the Complex Recycling in Hamburg, and also the Tank House expansion, which Thomas will talk about later on. Let's talk first about where we find our U.S. project in Richmond in there. As Roland said, really good market response, a very strong market response. Our suppliers are really waiting until we start, and also in line with our ambition to grow the recycling part.
In response to that one, as we decided in late 2021, for the first phase, we did approve already in December 2022 to go for the second phase 2, because we strongly believe that we have synergies in the construction phase for both together, but also can respond faster to the markets and be there where the market needs us to be. It gives us also this great advantage of being locally present in a market that is also searching more for getting locally sourced material. The impact of where it is, you can see on the left-hand side, this is really a recycling site. Yeah. Like we have also our European recycling sites.
That is also where really our core competence is in treating these materials and extracting the copper from it, but also being capable of leveraging on all the other elements and all the other metals throughout our whole smelter network. The whole project is thought through. Set aside from the material we are going to produce there, it's a blister copper, the blister copper will, of course, have not only copper, but also all the other elements: base metals, precious metals, and platinum-group metals. We are, of course, capable of just processing them in our smelter network in Europe.
Whether we will do at full force or whether we decide to do it differently, we can just use all the opportunities we have, and we will do also in function of profitability, where we think the profitability will bring us most. I think the rest follows just the rest of the network there. David Schultheis will, of course, deep dive in there to explain you more. We will have the CRH project or the Complex Recycling Hamburg. This you will find in the flow sheets rather at the bottom here on the slide.
We will there be in the capability to actually treat a very complex combination of copper, lead, and sulfur, and are able to better process intermediates throughout the smelter network and also use the opportunity to open up for other intermediates in the market, where others are stuck with this combination of materials. I will speed up a bit so that my colleagues can tell you more about that one. Jürgen Jestrabek will do so in a minute. We will have the last one, which is the Tank House in Pirdop. Needless to say, where you can find it back on the flow sheet. Of course, this will bring also more capability to the smelter network to put even more metals through.
Not even copper, of course, because we always start with copper-bearing materials, but copper-bearing materials hosting a lot of other base metals and precious and platinum-group metals as mentioned. You see, I think, a lot of, a lot of these materials, wherever they go in...
into our metal flow sheet, we will bring them in there where our, where they are best placed, there where we have the capacities, there where we can bring them best to life in terms of profitability. I think Roland has mentioned it already, we are not caring so much always about volume, but we do care about the profitability and bringing our business model into a very robust and a very resilient model, which we have been proving over the past and which we continue to prove by the projects we are up to deliver. With that, I hand over to David on giving you more details about our Richmond project.
Hello, everyone, also a warm welcome from my side. My name is David Schultheis. I'm the incoming Managing Director and President of Aurubis Richmond, LLC. Today, I have the honor and pleasure to present to you for one, the current status of the project, as well as share an outlook on the larger vision of Aurubis for the North American market. Thank you. Inge explained how the project fits into the overall flow sheet. I think for our ambition for the North American market, it's clear that the project is the cornerstone of our growth plan, well positioned here on the smelting side. The project itself is conceived as a modular concept, a repeatable model. With the recent approval in December of module 2, we're already in the process of implementing two instances of this model.
When we look at the overall flow sheet, I think it's very important to take away that the overall combination of plants is very flexible and is indeed capable of sustaining more and additional instances of this repeatable model, be it in the U.S. or in Europe, for future growth. The North American market, which we'll also touch on later today, also has the potential for further growth, well beyond the current plans and activities that we have initiated with the two instances that are already work in progress. Consequently, we are engaging on a growth plan that may easily convert into something significantly larger. All the more important that we keep strong focus and exert reliable controls to convert this first project into a success for us as Aurubis, as well as for our investors.
Before we start out into the extended presentation, I would like to start with some visual impressions that are very recent, in the form of a video that we have shot together with from the project, as well as with the team on the ground, so you can get a first-hand impression of where we're at at the moment.
At this facility, we'll be able to capture important resources locally. This means less landfills and more energy resilience. It also means Aurubis Richmond is going to become a leader in multi-metals recycling in the U.S. We have already made significant progress meeting construction deadlines. Now, we are committed to following a schedule for achieving our operational goals.
We are laying the groundwork to successfully launch our operation next year, including the accounting system, the IT infrastructure, and all the processes and procedures. The Aurubis Richmond team is dedicated to responsibly managing the budget and the investment here in Augusta, Georgia.
I am very excited to be a part of the Aurubis team and bring Aurubis here and grow the family here in the U.S. There are many advantages to being here in the Augusta area. We have Augusta Technical College and the military base close by, we're very excited to hire local people to join Aurubis and become part of the Aurubis family, and we know they're gonna come with a great skill set. We're gonna work with these people to really train them on the jobs and offer additional educational opportunities.
Aurubis has stood out to us as a key investor. The way they've engaged the community, the way they have underpromised and overdelivered, the speed of which they're trying to move, the engagements they've had with educational institutions on training, not only for themselves, but for others that help the community, help the workforce, help those that need a skill set, need jobs. They have engaged themselves, they've pushed forward, and they have stood out as one of the best investors Augusta could have ever hoped for.
We see a common understanding that recycling is a key factor in making our lifestyle sustainable for the future. With our capabilities as Aurubis, with a particular focus on low-grade materials, that is, materials that are very difficult to recycle, we are capturing a value that is otherwise very difficult to extract. It is our goal to deliver this project in time, in scope, and in budget, and thereby expanding and strengthening the network of Aurubis. Let us first turn to the market and have a look at its expected development. It's very clear the North American market is large, and it holds great potential for what we have in mind, and for us as Aurubis.
As a front runner in our industry, we are the first to build significant capacity for these relevant recycling markets on the U.S. ground, which is currently estimated at slightly over 6 million tons of relevant materials every year that are available to us for our recycling plants. These materials generally fall into three categories. We can see there's the precious metal materials, we have the complex recycling, and the copper scrap and alloys. Our new recycling plant in Georgia, Aurubis Richmond, will target all three of these market segments. Its target feed is composed of printed circuit boards, which fall into the PGM material segment, metal shredder or heavies, as they're called in the U.S., from complex recycling, and insulated copper wire from copper scrap and alloys. Well noted, the technical setup of the plant in Augusta is designed for flexibility.
As Inge highlighted, we know that recycling markets and the materials that we will process going forward will change over time, hence, the setup that we have are putting in place is also flexible. In case the markets evolve, we will be able to process other materials as well. On average, the recycling market is expected to grow by 5% over the next, so to speak, 10 years until 2030. When we look at the individual segments, growth varies etween 4%-7%. One aspect that we would like to highlight in this context is for the future growth, we have indicated light blue boxes, which indicate the required feed for each segment for one instance of our repeatable model.
This is the feed that one module of Aurubis Richmond will require, which indicate clearly shows that the growth that we expect for the years to come holds plenty of potential for our instances and further instances in the U.S. market. The growth continues to be driven by strong growth drivers. On the one hand, we have the collection rates. Roland Harings mentioned a few regulatory changes, both on the European as well as on the North American side. I think it's a very clear, wider adoption of legislation that introduces recycling requirements and that try to avoid landfills going forward, will drive collection rates of these relevant materials to us going forward. Taking one key statistic out as an example, we see that the E-waste and PCB collection rates right now in the U.S. are roughly at around 30%.
When we contrast that to where we are already today in Europe, at 40%-45%, that by itself already shows the potential that lies in this driver for our markets. Declining exports, also mentioned by Roland earlier. The steady decline in the offtake from China and Southeast Asia, the regionalization, is driving availabilities of such materials in the markets of origin, in our case, in North America. This ties in very well with the increasing strong endeavors to be better able to process such end-of-life materials. In this regard, it's very clear our solution is a very important puzzle piece to enable the circular economy that everyone is striving for. Ultimately, incremental growth.
Industrial growth continues to drive the availabilities of the materials, either in the form of production scrap, so right at the beginning of the journey, or with a certain delay in the availability of end-of-life materials. The continuous growth of industrial activity and consumption of electronics lead to a solid growth base, which is here, really under, is really supporting the growth that we see. In brief, the market is attractive, it is large, and it will continue to grow. Consequently, we have ideal prerequisites for our growth ambitions on the American soil. Let's have a look at the progress made. The initial investment decision was taken in November 2021, and since then, we have come a long way.
We already poured over 24,700 square meters of concrete, erected over 17,500 sq m of pre-engineered metal buildings. We contracted EUR 290 million and spent EUR 87 million in CapEx just for module one alone. For module two, we have signed contracts with the original equipment manufacturer and the crane manufacturer and intend to sign the construction and equipment installation contracts in due course, very shortly. The construction started about one year ago with the groundbreaking, which took place in June 2022.
Aurubis used the opportunity to invite strong supporters of our project, so we had Governor Brian Kemp of the state of Georgia, the Georgia Commissioner for Economic Development, Pat Wilson, Congressman Rick Allen, Jasjit Singh from the U.S. Department of Commerce, Hardy Boeckle from the German Embassy in Washington, D.C., and Cal Wray, we just saw on the video, from the Augusta Economic Development Authority, to join our executive board and our project team on-site to celebrate what was only the beginning of an exciting journey. Since then, the pulse of the construction site has been strong and steady. In fact, when you come to the site, and I've had the pleasure to do that since February, the change is actually visible day to day, which just shows this pulse....
The status today, and we have here also a visual impression of that, is has clearly shown the advancement of the project. The pre-processing and sampling preparation buildings, which are up here in the front, are already fully cladded. The bunker and furnace bay, which are further towards the back, we can see the metal structures taking shape nicely. All in all, the project, as it stands, is in according to time, and we have reached another very important milestone in May 2023, when we received the first equipment from our OEM on site. Also, this shipment arrived fully according to schedule and well in time for the plant commissioning of that area, the pre-processing and sampling preparation area, which is scheduled for September 2023. Shifting the attention to the team, we have grown significantly over time.
At this point in time, we have roughly 60 people on the ground running, including the senior management of the future operations, which is now fully staffed and quickly setting up the extended organization that we will ultimately need to run the operations successfully. Over the past couple of months, we have made significant progress in the details and the robustness of our planning, and as it stands today, we can confirm that the forecast of roughly EUR 390 million in CapEx and the project schedule have been substantiated and will hold. Furthermore, it's the clear priority and ongoing focus of us as the project team to proactively engage in value engineering and other means of risk mitigation, and pursue cost savings opportunities to ensure project completion in time, scope, and budget. Now, join me for a short glimpse into the future.
Aurubis Richmond is intended to be just the first step in what can become the extended North American success story. Our ambition is to become the largest, fully integrated copper producer from recycling materials for the North American market. The current investment in Georgia enables us to grow beyond copper recycling. By adding an anode furnace and a tank house in the U.S., processes just described by Inge, we will be able to produce copper cathodes for the U.S. market. Thereby, we will be able to retain the recycled copper locally and make them available to the industry in the U.S. An important step, again, for the circular economy within the United States. A further downstream expansion into copper products would allow us to convert the copper cathodes into a product, wire rod.
Wire rod is strongly demanded by many industries that are currently in the center of many major trends, such as electric mobility, renewable energies, and electrification in general. Aurubis would contribute to making the U.S. economy significantly less dependent on foreign copper supply, support the realization of these critical trends with local and low-carbon copper for a more sustainable future. We're clearly on track for profitable growth in North America. Our strategy, as conceived in 2021, focus on growth in the North American recycling market, as well as the underlying considerations, the reasons for our investment decisions, are right and accurate. The U.S. market, which we're targeting, is growing rapidly and attractively. Launching the second module, as we decided in December of last year, was the right decision.
It allows us to capture synergies in the construction process and target the additional growth that we see in the market. Aurubis Richmond is well on track. We have a strong team on the ground, dedicated to delivering the project in time, in scope, and within budget. The facility will be state-of-the-art. It will be competitive, and thus provides a strong foundation to build on. In fact, we want to convert Aurubis Richmond, as just shown, as the home base for further expansions along the copper value chain for the U.S. Aurubis Richmond is, thus, a strong foundation for a profitable future and sustainable growth in North America. With that, I would like to hand over to Jürgen Jestrabek for more details on the Complex Recycling Hamburg project. Thank you very much.
Thank you, David. I have the great pleasure and honor of being able to present the CRH project to you today. First, you see a recap slide from Inge with Aurubis smelter network, supplemented by the CRH project. The CRH project retains much more value creation in-house. We are supplementing or expanding our flow sheet with an additional furnace in the multi-metal area to drive our growth strategy. It also impressively highlights our research and development expertise. No other project is as closely integrated into our smelter network and optimizes so many value streams at the same time. With this unit, we will be able to separate copper lead sulfur compounds in the future and recover the valuable materials contained in them, such as copper, lead, and precious metals. In addition, the lead refining capacity can be increased-... due to the additional intake of lead-bearing material into the network.
This slide shows the current metal flow sheet of the lower branch of the previous slide without CRH. About 135,000 tons per year of recycling material, containing intermediates from primary and secondary smelting, are melted in the electric furnace, treated metallurgically, and separated into three metal phases during final casting. One of the three metal phases, lead bullion, a kind of raw lead, is refined into fine lead and rich bullion for precious metal recovery in the existing production in unit in Hamburg. Two out of three valuable intermediates, speiss and copper-lead matte, are not currently being leveraged in the existing smelter network, and this is exactly where the CRH project comes in.
Here, in contrast, is the metal flow sheet optimized with CRH as follows: With the new CRH converter, all internally produced copper lead matte can be further processed and valorized into saleable products. The copper lead matte is processed into blister copper and sulfur dioxide, captured during off-gas treatment, which is part of the project. The high precious metal-bearing blister copper is further processed in the existing production assets into copper cathodes at the primary site, while the sulfur dioxide is further processed into sulfuric acid in the existing sulfuric acid plant. This technical concept sustainably implements and underlines our zero-waste approach, clearly underscoring our ambition to strengthen and maintain our position as the most sustainable smelter network worldwide. In addition, 25% more valuable intermediates can be processed.
With CRH, our flow sheet can be optimized so that, depending on metal content, the input material is either charged into the electric furnace as usual or directly into the CRH furnace. This saves processing steps and makes the entire recycling process more efficient. The still unleveraged speiss metal phase is one of the potential follow-up projects. CRH leveraged our unique strengths. The separation of the three elements, copper, lead, and sulfur, is another prime example of the metallurgical know-how of Aurubis and expertise. While the separation of two of the three elements is being done in the competitive landscape, the separation of complex copper-lead-sulfur components is unique in the market environment.
Aurubis offers an efficient solution for recycling material from both our own primary and secondary copper smelters, as well as from external lead smelters in Europe and globally, reducing global waste treatments with global waste streams. While primary copper smelters are strong in copper and lead separation, and lead smelters in lead and sulfur, respectively, copper secondary smelters are strong in copper and lead separation. Aurubis has the metallurgical expertise to combine the combination and processing of copper, lead, and sulfur, and with CRH, will offer the missing solution for all elements from a single source in the future. Third-party input materials. Let's dive into the availability of the relevant third-party input materials. The efficient CRH process opens significant market opportunities and provides a solution for different intermediate products arising from the zinc and lead industry, as well as for internal intermediate products.
Examples for three input materials for this project are shown here. lead sulfate as an intermediate of the zinc industry, copper-lead dross, and copper-lead matte as intermediates of the lead industry. The availability of materials from the market analysis shown here clearly indicates an abundant availability of materials for intake into the CRH production assets. The large gap between the anticipated CRH intake and the quantities available on the market illustrates the project conservative approach to input and hence profitability. Summary with the most important KPIs. Along with the technical concept, the financial implications are most likely one of the key points of interest to you as the investor community. This slide is not new to you, but it summarizes and highlights the profitability of the CRH project again.
The key profitability drivers of the CRH project come from the treatment and refining charge for input material. Additionally, we expect to generate additional metal yield, especially for precious metals, with shorter processing times via CRH. As of March 31st, so according to our half-year figures, we have invested approximately EUR 5 million in the project, with an additional EUR 32 million already committed for additional equipment for the project. The project is moving forward well, and major construction steps are progressing as we speak. Last but not least, CRH creates a foundation for additional important strategic projects. I want to thank you for your attention, and with this, I'll hand over to Dr. Thomas Sturm, who will explain the tank house expansion in more detail.
Hello to everybody on screen and here in the audience. My name is Thomas. I'm responsible for Corporate Development. That includes in Aurubis strategy development, strategy deployment, and also business development, like entering into battery materials. I'm sure you can all imagine how happy I am to be here today. Following up on what Inge has explained before, I would like to highlight some additional relevant facts. First of all, just came to my mind when watching the presentation. Up to now, I think you have seen that all of these boxes have been highlighted minimum once, which means that the excerpts of projects that we are presenting here are embedded in the full flow sheet, leveraging the strength of the individual sites, consistent and fitting very well together in the setup, in flow, process, and time. Very happy to see that.
The blue box highlighted here, capacity increase in Pirdop, is a little bit in the middle of the flow sheet, and let me show you a little bit more what happens outside and inside of that blue box. That means that also in the following frames, and maybe, Ferdinand, you can go show from the capacity increase in Pirdop, not only cathodes are coming out, but also anode slime from the additional refining capacity. That goes then further into the precious metals refining in Hamburg, and therefore, also increases the output and the profitability of our process step in Hamburg. You also see that we are better using our copper nickel capacity in Pirdop. That's the direct box next to it.
Using the optimization potential that is opened up by that, we also have impact on the other flows. First of all, it's contributing to a better flow of anodes within the group. Speak about more of that in the next slide. Finally, it's opening up further opportunities at the other sites. Let me explain again quickly, the rationale and the input, and the impact. The rationale is very easy. We are not optimizing for the sake of optimization. We are first and foremost, fulfilling on our purpose, on our role and value chain, and answering to market demands. What we see in Europe, Roland has already touched upon it, is an increasing demand for high-quality refined copper and a widening supply gap.
One very easy conclusion is of out of that, Europe needs more cathode, more refined copper, and who, if not us, with this flow sheet capabilities, should deliver it? Our capacity increase responds to a market demand, and I think it further shows the role that we play and want to play into securing critical raw material supply to the European industry. There's more than the market logic to that project. I think the key financial numbers you can read here, and also the key elements and impacts. With this project, we are fully utilizing the anode capacity, and we produce additional cathodes in Bulgaria on-site without additional transport, increasing also the local nickel throughput. We are fully leveraging the asset base.
It goes without saying that we are installing new equipment, so we are using the opportunity to install technical upgrades, for example, related to automation or robotics. Secondly, optimizing flows. We are eliminating structural transport of high volumes of anodes to Olen and Lünen that have been or are currently transported from Pirdop on a regular basis in order to feed the tank houses over there, and also because we didn't have enough capacity. That, in turn, allows us to make better use of the specific strength in Olen, Lünen, and Beerse.
... taking in additional raw materials or intermediates there, where we can leverage the specific capabilities in terms of metal recovery of critical elements in the feed than before, because Pirdop anodes are reasonably plain, easy to treat, not fully needing or leveraging these capabilities. In other words, we are producing additional cathodes for the market, leveraging the asset in Pirdop and strengthening our multi-metal business in the other sites. Let me summarize in the next slide. In a nutshell, it's a highly attractive project. It's totally in line with market needs. It's further strengthening our core business in the best sense, still having an impact of expansion and growth, and also performance improvement of our powerhouse in Southeastern Europe, in Pirdop.
It's effectively embedded in our smelter network, opening up even more opportunities in the other sites, all together, enabling us even better to drive sustainable growth. With this, I would end here, and I'm happy to hand back to Angela for the next session.
Yeah. Thank you. Thank you very much, Inge, David, Jürgen, and Thomas. I think this was a technical part of the Capital Market Day. I think impressive projects, where we hopefully convinced all of you that we are delivering on our strategy. Now I would like to ask David, Roland, Jürgen, Thomas, on stage for first Q&A. Inge, yes, please. I would, again, encourage all the virtual participants, please use your tool to type your questions. We will take them in a minute, and I would love to ask first the audience here in London to raise your hands. Jason, please say your name and where you're coming from, your company, for the virtual participants as well. Thank you.
Yep. Thanks very much for those opening presentations. I like the flow sheets. It's fun. The just in terms of the flow sheets, like, is there anything proprietary there should we think about? How should we think about intellectual property, something that uniquely belongs to Aurubis?
Inge, is that a question for you?
We do have. We do have some, and we might have more. I think even with whatever you could have as a propriety, it's really understanding how to work those assets through. Even though you have the best assets, which is at best, let's say, covered, it's really about understanding how we have the materials going through our assets and how to get the metal out.
Mm-hmm.
That depends really on the type of materials we are getting from the market, as well as, what we have in our stocks and as well, of what is available.
As I've add adjacent to what Inge said, this is a very high-level view.
Mm-hmm.
With this chart, we are not disclosing anything. If you would have seen the first version, which our people have prepared, we would have lost you immediately.
Yeah.
It's really, it's a very complex flow of all kind of intermediates and products and different processes connected to each other, and that's really the proprietary technology that we have. That we know exactly how to leverage and how to run this kind of, let's say, spaghetti bowl...
Mm-hmm
-system of metallurgy in the most efficient way, and as I mentioned in my, short introduction, extracting all the values, all the attractive ingredients, metals out of this in the most efficient and cost-efficient way.
Just to follow up.
Yeah.
Is there any kind of an opportunity here for licensing? I know that's probably a little bit of a dirty word, 'cause we've seen people try to license technologies.
Yeah
Never make any money.
Mm-hmm.
Is it more about it's worth what it's worth because you have it and you're running it?
Clearly, licensing is not on our agenda, because it's so much proprietary, also knowledge, something which is in various systems. It would be very difficult to license, because in the end, we would have to run really something, and we are there to grow. We see growth potential in many areas, not excluding any region, just focusing on some region at this point in time. We want to leverage our technology ourselves.
Thank you.
Questions, please. Go ahead.
Thank you. Bastian Synagowitz from Deutsche Bank. My question is just on your flow sheets. Clearly, you're basically filling a couple of gaps there. How balanced will your flow sheet be once you have actually completed those projects? Or will there be any further excess material somewhere in your system? I think you mentioned speiss, which you're still selling.
Mm-hmm.
somewhere outside your company. Maybe as an add-on to that, then what would be the next obvious steps, once you've been completing those projects, even those are quite many?
Yeah. No, I think you've perfectly pointed to some gaps there, and I think we highlighted, too, that we are working on this. I mentioned that we have now eight strategic projects in execution. You saw them here on the flow sheet, but there are others in the making, and they will be exactly addressing these kind of missing blocks, where we see, again, based on steps that we have taken, some additional opportunities to extract even more value in our flow sheet and the bottleneck or kind of fill missing links in our flow sheet. That's exactly what we're working on as we speak with these projects....
Our ambition is clearly to, at the end, not every single product, but that we go to the max, which makes economically sense, and extract products that are sellable to the market. They don't need any other metallurgical processing thereafter, but that we are dealing with another customer base, with another buyer base, than selling it to our peers in the metal processing industry. That's our clear ambition, to become independent from that.
Maybe just again, as a follow-up. What are the actual excess products which you still have, which are, which you basically can't process, which would those be at this stage?
I think Inge.
Yes. I don't know if we have to go into each of them, but I think it's clearly there where the complexity starts. I think Roland said it very, very clearly. It comes always up to the point where economically it makes sense. For some materials, you just need also a certain base load of quantity in order to make it valuable. I think that would answer most to your question.
Yeah. If I add, there are some. It depends a bit on what is the process step thereafter. If something, for example, is in solution, like a PGM, Platinum group solution, that's a good starter stock for others. It wouldn't make sense really to step into what others have to do anyway. If it's something like a solid metal combination of different metals, then it probably makes sense for us to go in the next step, and that's what we're exactly addressing here. Like the one speiss example that is shown here. Here, it makes a lot of sense to really go into a continuation of the process to some more, I would say, clear product or metal that we are going to sell to the market.
Okay, last quick one, quick one from me, please. Just on the utilization rate, so if you once you're basically loading the material from, I guess, from the expanded tank house over to Lünen, Olen, and Beerse, what is the capacity you'll be running it at those sites? Because obviously, those are still existing businesses, now you're loading on more capacity, so how far, basically, have you exhausting the capabilities there?
Yeah. Is this okay to answer?
Yes.
I don't see, I don't think that is a question of exhausting the capabilities. We will fill those capacities with materials that bring us the most profitability. There is still a huge way to go in collection rates, as David mentioned, even in Europe. In a lot of our collection rates and recycling rates, there is still more to come, and that is where we'll be there to take the materials when they are coming to market.
Have you-
We perhaps also to add here to Inge, we are running our system always at capacity.
Mm-hmm.
We are debottlenecking, we are adding certain elements. What we are doing is changing the input mix, optimizing the input mix. For example, we mentioned that we are going to, at least that's one option, that we take blister from the Richmond plant into Europe. This would replace third-party blister that we are buying today from the market. There we have always a bit flexibility, really our ambition and looking at the market dynamics is really to grow our capacity and add more metal units from the input side, specifically also to the output side.
Yeah.
Growing in volume.
I'm not sure whether the question was referring to the copper tank house project in Pirdop. We are not planning to have a full capacity utilization in Pirdop at the expense of utilization rate of the other units in Lünen and in Olen. The target is to keep, of course, that utilization rate at the same level.
Yeah
... more optimized,
Exactly.
If that was maybe the question mark.
Tank houses, of course, if you take today, our cathode production capacity is 1.1 million tons. We will add 120,000 tons, and it's really additional. We will take other metal units, let's say, blister of Richmond is one hint. That could be one of the element, adding copper units into our flow sheet, but our total output of copper cathodes will grow to 1.2 million, 1.22 million tons of cathodes with the ramp-up of the Pirdop expansion.
Thank you.
Thank you. Thank you very much, especially for your questions on the integrated smelter network. I think it is really important to understand what really we are doing with our growth projects here. Thank you for that. Ioannis?
Ioannis Masvoulas from Morgan Stanley. Thanks for the presentation. Couple of questions from my side. Again, thinking about closing any gaps in the smelter network, is there any scope for further M&A? Clearly, Metallo has been very successful for the company, or is it more all organic from now on, given the eight strategic projects and more to come?
Mm.
in the following years?
Yeah. If there, if there would be 3 Metallos, we would go for it. This is, was a very unique and the perfect opportunity, and the integration and the everything. Now, what you see here in the flow sheet, I think, has even more improved our statements when we announced the acquisition. We are working on some M&A deals, but they are relatively small. In the moment, let's say, within our regions, I take China or Asia out for a second. In North America, in Europe, in South America, we don't see really, with our growth, direction in recycling, we don't see really, large or significant targets. We are also looking at things where we adjacent, in line with our filling the gaps in some of our flow sheets and some of our metal.
Here we are looking at some additional, but smaller size equities, not of the size of Metallo.
Yeah.
Unfortunately. We would like to do it, but there is really, therefore, the focus on organic growth. That's why we have built up this governance, this capability in Aurubis to execute this project. As I always say, this drum beat, that we really continue to execute this project and also the rigor to add additional projects to our pipeline, because in the end, it's about organic growth. The world needs more processing capabilities and capacities of Aurubis.
Yes.
That's very clear. One more question for me on the Europe versus U.S. Clearly, the growth now is coming via Richmond. Even on the EV battery recycling plant, you haven't made up your mind whether it's going to be in Germany or elsewhere. Interested to know if you're, if you think that Germany could present opportunities for greenfield projects, either in metal recycling or EV battery recycling, or policy or energy costs are not?
Yeah.
they need to be.
That's a tough question. Thanks for that, Ioannis. Germany in the moment is a difficult case, you could even enlarge this into Europe. Germany is a very difficult case for energy-intensive industry, full stop. You have to come up with a very good solution, long-term, where you get affordable, available, and sustainable clean energy from. In the moment, there is no real conviction that this is being set up. On the other side, I'm convinced it will come because a solution will be possible, certain political steps still have to be taken. Therefore, if I pick specifically on the battery recycling, we are very openly looking into what's the best location.
We have clearly defined, and Ken will talk about this later, we have clearly defined our catalog of criteria. They are very clear, very precise. With this, we are going now in the first step in all European countries and look, what's the best location, which is offering the best conditions for an investment. U.S. is something which we will do in the second step and look also if and when U.S. could be on the agenda. We are now open. To be very, very open here, initially, we said, for our first plant, battery recycling, Hamburg is the prime location. With today's political and energy situation, we have to make a question mark.
We are in discussion with politicians and clearly give them our requirements, what it takes to make such an investment, profitable and sustainable in Germany. The positive thing is they are really listening to us. They want this technology to happen in Germany, but we are not there yet. Therefore, we are looking in various areas of alternatives.
Any further questions? Christian Obst.
Christian Obst, Baader Bank. First, why haven't you directly started with the planning of a tank house and a wire rod plant in Richmond, in the U.S.? It makes perfectly sense. You will make it now or in the future. Why not planning it at a fully integrated plant directly?
Yeah. Have we said we haven't started with this? No, seriously, let's also be realistic. It's a big move for Aurubis to make this investment in U.S. in the phase 1, and then to accelerate phase 2, as David also explained. Trust us, we are working intensively on the next phase here. Nothing is decided at this point in time, but it's obvious we are building such a strong base. The Richmond site has such a potential. Let's say, first location, there is more than enough space to build everything. We have perfect utilities. Also, to Ioannis ' question, if you look for the perfect location for expanding energy-intensive industry, it's the U.S., it's Georgia, perhaps even more Georgia than the total U.S. Logistically, it's perfect.
We will have a rail head, so we have also railway connection there. For also shipping goods to some other region. It's the perfect site, and Christian, trust us, it's around the corner. We are working on it, but nothing is decided until it's decided.
Okay, next one is on. You are expecting more metal and more precious metal going forward. How are the discussion with your suppliers are going on? Because I think they will also a share of that kind of profit. You are showing some interesting profit increase going forward, what you expect. How are your suppliers discussions are working?
Mm-hmm.
I think, I think that is obvious that whatever a material entails, that the value expected from it, from the supplier will be the start of the discussions. Clearly, when precious metals are there, then they also want to participate in that or want to have a share in that in that rewarding.
Yeah, if you have, if you are the only one able to extract as you do, so yes, then you can say, "Okay, you cannot give it to any other kind of smelter network, and therefore I take 100%." Do you have these kind of situation currently in certain metals?
I'm not 100% sure whether I understood the question really well. I think there is a competitive market out there anyhow, whatever we do, wherever we are. I think the fact that we can take those decisions to continue investing means that we are right in our setting of the way on how we set our or how we come across to our suppliers. There will always be competition, and I think that's also fair to have that competition. It's good. It keeps us on our toes.
Of course, what is the main or what are the main competitors? for your enlarged smelter network?
The main competitor for the size of the smelter network as we have it, I don't really know any of that one. I think the competition goes a lot of times, certainly when you look at recycled materials on different levels, you have hydrometallurgical processes, you have pyrometallurgical processes. You have small, very small operations as well. Sometimes just someone around the corner can be a competitor for a certain type of material. I think in the sense of coping with all the metals in there together, and also bringing all the metals back to the market in terms of a raw material, I think there lies a difference.
There are so many intermediate steps that can be done and so many small processes, but in the end, there will always be also some intermediate product standstill that needs further treatment, and that often also come to us.
I think-
Thomas, please.
I think overall in this smelter network, and also with the project that we have been shown, we are increasing our internal efficiency or recovery rates and what we can further process into different projects, but it's not a structural change.
Yes.
The materials traded-
Yeah
Market with our suppliers are still the same, there is competition out there, we are not saying that nobody else can treat that, but we are working on that. We can treat it in the best possible way. That maybe is also again, if I recur to the flow sheet, you have been asking: "Why didn't you build the full thing in Richmond in the first place?" I think we have the opportunity with this smelter network in the backbone in Europe, that we can build it step by step without having an isolated asset. It's part of a network, it can be further developed. That's why we are saying you can maybe replicate or duplicate individual assets, but to rebuild this flow sheet is-
If I can make some addition there. I think, yeah, something that you don't see in the flow sheet as we have presented, but a skill that is also very much needed in all this, is a good sampling of raw material.
Mm-hmm.
As recycled material is not a fixed product with a very clear set of ingredients, but with a very volatile ingredient composition, the let's say, I really call it an art. The art of sampling these kind of materials and understanding what is in there before you actually introduce them also into the process, is, I think, a really key benefit of the knowledge of the network.
I have the last one. As you are the only one in the U.S. able to make what you are doing there, can you dictate in some kind of way the refining charges then? Because there is no other smelter there.
Every material always finds its markets, and whether that is inside the country, inside the region, or outside of that region, it will find its way.
For a different price, of course.
Yeah.
Whatever the supplier accepts as a right price, I would say.
Yeah, I think, we wouldn't officially state something in this direction, you know, antitrust.
Mm-hmm
is always
Inefficient
... a critical one. Clearly, to your point, there is limited competition. There is very limited competition in the local market in U.S., we are more than competing with players-
Mm-hmm
... outside of the U.S.
Mm-hmm.
One thing is also, there is a strong industry, not exactly set up like Aurubis, in Japan and also in Korea, and they are pretty hungry for raw materials, too. They are also importing all the raw materials. There is this kind of, I would say, the correcting element is more coming from Asia.
Mm
than from within the U.S.
Okay. Thank you very much.
Yeah.
I think we got another question here in the audience.
Hi, this is Sylvia from UBS. Thank you for the presentation first. For me, I have a few questions relating to CapEx. The first one is, within the EUR 1.1 billion gross CapEx planned, I know there are EUR 325 million spent in Richmond. Can I have the breakdown for the others? Like, what's the situation for all the other projects?
Mm.
That's my first question.
I think we come to that point...
Mm-hmm
... in the presentation in the next slot.
So the financial-
Can we please move on?
Financial presentation is going to come, yeah.
Thanks. For the next one, is more general. Will there be an increase in sustaining CapEx going forward?
I think also to that.
Yeah, we.
Give us-
After the financial section.
Yeah.
Yeah.
We will have the financial and then Q&A and so on.
Yeah.
Okay.
Mm.
I got a virtual question here. I'm going to read it, and I think it is for Jürgen. Thank you. Thank you. Let's talk about the competitive landscape of CRH. Is there already a competitor operating a similar site as your, to your CRH? Who is the competitor, and what is your competitive advantage?
Yeah. As far as we are aware, our unique smelter network is unique, and that is our competitive edge.
Yeah.
Yeah.
There's one special, I think one thing that needs to be also explained, that we are able, with our integrated site in Hamburg, that we are able to connect this CRH with the sulfuric acid plant, so that we can treat sulfuric acid-containing materials with the synergies of already running and operating large sulfuric acid plant.
Mm-hmm.
Therefore, if somebody doesn't have this, and you know, there are very few, there is hardly any site in Europe at least, who can handle these kind of materials. There is one site, yeah, I think Canada, Horne Smelter, would be probably one location we are aware of, that is taking some of the materials.
Mm
comparable to what we're going to take.
Okay, thank you. Before we come to the last question of this Q&A, it's one for David: considering the upcoming changes in the U.S. regulation, the expected annual growth rate of only 5% in the U.S. market seems quite conservative. Shouldn't we expect double-digit growth at least until 2030?
At the end of the day, if it's 5% or double-digit growth, we're gonna be happy with the outcome. I think we're on a very good position, and I think our growth strategy is very clear and spot on. What would it change if it was 10%, 15%? I mean, this double digit. Ultimately, what we're doing is we're implementing the first two instances, module one and two, with our given time set. This is the first step to enter the North American market. At the same time, we told you today, we're working on extended plans for growth in North America, which means, potential downstream expansion, but there are multiple vectors in which you can think this growth story. We will have a close look as at the developments.
Roland Harings presented the early warning radar, which is looking into market drivers and how they change since the point of strategy conception. Is it still the same view? If we find that there are strong indications and we see changes, the Inflation Reduction Act, et cetera, can potentially accelerate that growth. That's a very spot-on comment. Might be faster growing than we expect today. We are in a good position to make the required changes to address that growth. As it stands today, we have our clear projects, we have our focus, we'll implement as planned, and if the future turns out slightly different from what we expect in a more-
Mm-hmm
-positive way, we're very happy and we'll adjust accordingly.
Yeah. Perhaps also to reiterate, when we announced the investment in Richmond, we said our first location is in the southeast of the States, as we detected this as a highly attractive area, also logistically, with the idea of also connecting the blister shipments with our European base. Thinking now in the next phase, that we build up an integrated system in the U.S., this will be in Richmond, but this will be then the new hub for the U.S. activities. Again, the idea of our modular recycling design is that we go then with our modules into the other regions in the U.S., and we have identified regions which would be the second and the third region for us to go in with this scalable, repeatable model going forward.
That's clearly our ambition, to not stop there, but really continue, also with this growing market, with additional investments and offering the capacity for recycling in the U.S.
Thank you. Thank you very much for your questions. Thank you all here on stage for your detailed answers. We will now have a break until five minutes past 4, U.K. time. 15 minutes break. See you in 15 minutes. Thank you very much.
Mm-hmm. Good.
Thank you. We are going this way?
Hello, how are you doing today? I hope you're having a wonderful day filled with joy and inspiration.
Hello again. The second part of our Capital Market Day is about sustainability, decarbonization projects, and battery recycling. Last but not least, our financial strengths. Three more important topics on our growth course. Christian, what progress did we made to even improve our sustainability role? Here you go.
Thank you, Angela. After this short break, also a warm welcome from my side. You have received today a full package of information, so I'm very happy to keep you now awake and give you an overview of our sustainability initiatives and also our targets. Coming to the first slide. As a Global Leader in the Multi-metal Production industry, our commitment to efficiency and sustainability sets us apart. Our clear target is to minimize emissions and costs throughout our operation, placing sustainability at the forefront of our business strategy. We strive to maintain our position as a preferred choice for sustainable metal production through continuous improvement in our operations and processes. By integrating sustainability in our strategy, as we already heard today, we ensure a holistic approach that balance the three pillars of sustainability: economic growth, environmental stewardship, and for sure, social responsibility.
We recognize the interconnectedness of these three pillars and work towards sustainable solutions that benefit to all stakeholders. Environmental stewardship is also a big driver for new business opportunities, as it supports our circular economy and recycling business. A comprehensive framework of nine environmental, social, and governance action areas, targets, and specific measures has been established to drive our sustainability efforts. You can see them, all the action areas, on the left side here on this slide. These actions ensure that we address the key sustainability challenges and make tangible progress towards our goals. I will show that later on by showing you our current status of the KPIs. Looking ahead, we have set ambitious targets for 2030, encompassing various sustainability targets. On this slide, you can see our main six KPIs dealing with sustainability.
They demonstrate that we have progressed with our sustainability ambitions. There's a clear momentum. The first of these KPIs are dealing with CO2 emissions. We have reduced our absolute Scope 1 and 2 emissions by almost 20% between our base year, 2018, and the year end, 2022, and we are on a very good path towards our 2030 targets. Our Scope 3 emissions, so dealing with our CO2 emissions from our suppliers, show also a positive trend, decreasing to just under 6,200 kilotons in the year 2020, on our way to our target, well below 5,000 kilotons of CO2. We've made a great progress in reducing also our air emissions, you can see that on the top on the right side, by making faster and more ambition progress than originally expected.
This is also due to our large investment in the air purification at the plant in Hamburg that we have set up in 2021, thereby already undercutting our 2030 target. Our goal is now to keep this very low level of emissions to further improve through technical measures, in due course, we will review that target 2030. Our efforts to reduce metals emissions to water, showing here on the bottom of the left side, are also showing very successful improvements. Coming from 0.87 in the year 2018, we are now at 0.76 in the year 2022, we are looking ahead to further reduce that by 2030 to 0.65. Another important topic is our supply chain integrity. It is key, especially for our sector.
We take this very seriously and have made significant progress over the past several years. We want to take our efforts even further. We now have a brand new and optimized business partner screening process, and also a due diligence tool, which we are currently systematically screening all our global business partners. As you can imagine, this process is very complex, we are screening all business partners, commercial and also procurement alike. This amounts to a few thousands of suppliers who have to undergo an exhaustive screening process. This takes time, for sure, but we are on a very good path. We will fulfill all the legal requirements, especially coming from the German law, the so-called Lieferkettensorgfaltspflichtengesetz. Currently, we can say that only a small percentage of our suppliers will be at a high risk, and our clear motto is to stay and improve.
That means for the ones we know are at high risk, especially in the raw material sector, we are in a very close contact with these suppliers and are defining together action plans for improvement. Now, coming to the last but not least KPI. We already talked today about our recycling investments, so our commitment to recycling is to demonstrate by the increasing recycling rate of copper cathodes. Starting from 24% in the year 2018, we achieved already a recycling rate of 44% in the year 2022, and we are on a track to reach our target of 50% by 2030. How that will we work? We already heard about, for example, for our project Richmond, that will for sure higher up this percentage. Now coming to our carbon footprint.
On the right side, you see that footprint dealing with our copper cathodes. In the area of sustainability, we have set the objective of achieving carbon neutral production well before 2050. Roland Harings will talk on that later on, showing you the main projects and ideas that are behind that. We are now well on track. In just eight years, the carbon footprint of copper cathodes from Aurubis has decreased by more than 35%, while the industry average of the carbon footprint of copper cathode has only been reduced by 5% from 2013 to 2019, based on global data. How does it work? Aurubis evaluated the environmental profile of our core products, copper cathodes, by carrying out a life cycle assessment, which was just updated recently. The recent figures you can see here on this slide.
Here we are considering all activities involved in the production of the copper cathodes, from cradle to gate, meaning such as core ore extractions, smelting, refining, transportation, also energy consumption and auxiliary materials. In a worldwide comparison, the carbon footprint of our cathodes is a full 60% below the global average for all copper smelters and refiners. On the right side of this slide, you also see some carbon footprints for other metals, for example, tin, silver, and gold. Our carbon footprints are substantially lower than the industry average. For instance, less than one quarter of the average for tin, you see at the bottom, less than one half of the average for silver in the middle, and less of one half for the industry average for gold. Aurubis is thus making a real contribution to the global challenge of environmental and climate protection.
I would like to highlight the Copper Mark initiatives. Most of you already know them. Since the launch in March 2022, the Copper Mark has become a significant endorsement for sustainable production processes for copper producers, as it is based on the UN SDGs and specific risk readiness assessment. Our focus was on steady improvement, ensuring sustainability and responsible operations. As part of the Copper Mark certification process, 32 sustainability criteria are being reviewed. Our facilities in Bulgaria, Pirdop, Hamburg, and Lünen, have already been certified, demonstrating their compliance with the standard. I can give you some brand news. Last week, our site in Essen has already been successfully audited according to the standard. We are now expecting the formal confirmation of the Copper Mark in the next weeks.
By actively promoting and driving the industry initiative, Copper Mark, we are demonstrating our responsible and contributing to the growing momentum for a more sustainable copper value chain. We work, as you can imagine, with a number of global partners to achieve sustainability along the entire copper value chain. These two examples showing here on these slides. In November last year, Anglo American Aurubis announced closer cooperation on sustainability initiatives. Both companies show a very clear commitment in line with our Aurubis Tomorrow Metals program and Anglo American with their sustainable mining plan. Anglo and Aurubis want to develop copper products that meet the increasing expectations for future enabling metals that are sustainably sourced and supplied. We have already established the first tangible results of this cooperation. Anglo American has already committed to use the Copper Mark Chain of Custody Standard.
In January this year, we signed an agreement to cooperate on more sustainable practices with Codelco. The MoU identified potential areas of cooperation with respect to smelter operations, with the aim of reducing emissions, ensuring health and safety, and strengthening decarbonization. At the same time, potential areas of cooperation regarding circular economy projects in Chile, as well as training development initiatives, will be evaluated. Our future cooperation with Codelco has the potential to make an immense contribution to advance the sustainability of the supply chain. Both agreements contain an accord that stipulates a concerted effort to promote The Copper Mark, which we see as the gold standard for sustainability and supply chain integrity in the copper industry. Thanks a lot for your attention. Now I would like to hand over to Roland, who will provide you with details regarding our decarbonization projects.
Yep. Thank you, Christian. Perhaps one before we start with that one word regarding the MoU with Codelco and Anglo American. I think what's really changing in the copper industry is also very much initiated by Aurubis, is thinking across the whole value chain, from mining down to the final product, going to the OEMs, to the customers. There's a high receptiveness and also requests from the final customer base to understand how raw materials are sourced and what is the footprint they are coming with. It's also, in this context, very interesting to see that also the mining companies do care more and more about where their concentrate is going, who is dealing with their concentrate.
There was really something with these two large companies which Aurubis and Anglo and Codelco came together, and we are very successfully joining forces here to build this integrated, sustainable, and responsible supply chain for copper. In the same context, Christian mentioned this, we have clearly stated, repeatedly stated, that our ambition is to be carbon neutral well before 2050. We are on the way. You saw the numbers that we have impressively reduced, Scope 1 and 2, compared to 2018, again, significantly in percentage and also in absolute terms. We are really on track to deliver this promise well before 2050.
If you look at our numbers, they were shown, Scope 1 and 2 together, the majority of our emissions in Scope 1 and 2 comes from the electricity production. Here we are putting huge efforts in. One, you have seen on the pictures before, also producing own renewable energy by investing into PV plants. Bulgaria is the perfect location to do so, but also other activities to decarbonize. One of them, that here you see this nice container we received last year in October. We have sourced and are in intensive trials and discussion with Abu Dhabi, with ADNOC, to receive blue ammonia, so ammonia, where we have CCS technology.
The CO2 has been separated, it's being used as pressure gas in the oil wells that they're having, after a certain lifespan, to put anyway, gas in, and it's from a technical point of view, the CO2 is then carbonizing in these wells and is being captured for forever. I think it's a very robust and very needed technology to reduce our CO2 emission. What does it mean for us? We will expand renewable energies in Europe. That's for sure. This is set. Nevertheless, given the size of our economy, the size of our industry, we need molecules, we need energy to be imported into Europe. It's not foreseeable that we can generate all the energy demands ourselves, given the, let's say, the land space, the resources that we have here.
Therefore, we as Aurubis, we are exploiting and developing and try to get all the technologies ready. One of them is the use of blue ammonia. We are testing this hydrogen derivative today in our shaft furnace, so that's where we melt copper cathodes, and copper scrap to produce, in this case, wire rod. We have successfully conducted these trials now, and we are working with ADNOC, but also ammonia is a worldwide commodity. There's also more blue ammonia to come, also important to have alternative sources and lack or no dependencies. We are now in discussion with other potential suppliers to see if we can build up this value chain, this supply chain, into our plants in Europe. Here we are, we are doing some really good progress.
As we, and I think we shared this already with you before, as we have also invested in industrial trials of using hydrogen in our anode furnaces as a reduction agent, oxygen reduction agent, successfully. Also here, we will invest in our next standstill in Hamburg in replacing the existing anode furnace with two new anode furnaces, which are, as we would call this today, H2-ready. Also here, we are preparing for the decarbonization going forward. Therefore, again, to what Christian said, we are very confident with our roadmap, which is very detailed, that we will be well before 2050 on this target. There's 1 element which is also new technology, so we're also open to something very different to our business.
I don't know if anybody has heard about this technology of ultra-high temperature hydrolysis. It's a technology in which you can, specifically from recycling materials, which come with organics, where you can decarbonize, in this process, the material. To a material which is then more or less metal-containing material, and you produce synthetic gas and also carbon flakes, which can be stored. You take the CO2, which you would otherwise emit, have as an emission, you are taking this out in this pre-step here. We have built a pilot plant in Lünen, with this technology, it's being commissioned as we speak. It's a technology that we have developed jointly with a technology partner.
We have secured the technology for our kind of processes with this partner, and we see if this could be one additional element to reduce CO2 footprint of PCBs or organic-containing materials. Also here we are doing more, and we will, with the first results, are going to announce something to the market there. Something else, a very, very large project that we are executing since 2018 in Hamburg. It's district heating, and it's interesting to see how beneficial it can be to be with a large production site, a large smelter, close to a city, because there is demand for heat. Interesting, not just heat in wintertime, there's also demand for heat in summertime. Now, with new air conditioning systems using absorption technology, you can also use the heat to cool in summertime.
There are some first buildings are being erected in Hamburg, which will provide then a demand for heat, because our heat is available 365 days per year, as our smelters are running. Also there will be an increasing demand for heat also during the summertime. The project, as stated, started in 2018, and we are heating now the HafenCity, which is, those who have been to Hamburg, where the Elbphilharmonie. If you're sitting there, it's heated by Aurubis heat. Think about this when you listen to a concert there. This is, was the first phase, very successful. We have built the pipelines to the city, jointly with the city, and now we are adding a second phase, which is being installed next May. Preparation work is ongoing.
Today, we are already saving 20,000 tons of CO2 on the Hamburg side because it's replacing, fossil fuels, for the heating purpose by sulfuric CO2-free produced heat from Aurubis. In the second phase, we will add another 100,000 tons of reduction to this, because we are more than doubling the capacity, and we'll replace some coal-fired, heat plants there. A very, very interesting project, and it will represent another source of income for our plant in Hamburg. Beneficial. We are doing good things, and we are also making some money with it, which always likes. You see our CEO, CFO is nodding, so he likes this probably most.
We are doing these things, and to put it in a perspective, being so close with the city and doing this joint decarbonization projects gives us also a very positive image and support from all stakeholders, because it's really good, and it shows the importance and the benefits of having an industrial company like Aurubis close to the city. 20,000 tons, I think I talked about this already, and here, referring to what Christian also showed, in 2018, we had 1,000 or 1,600 kilotons of CO2 emissions, and in 2022, we reduced the Scope 2 emissions by new contracts, PPA contracts, especially in Belgium, where we embarked on a contract. Sorry, this is only starting this year, starting 1st of January.
In 2022, we had first contracts in Germany to replace fossil-based energy by water-based, so hydroelectric contract. It's with the certificates of origin, but very clearly defined which plant is delivering to us the electricity with the clear CO2 footprint that we have. Also here we are moving into PPAs, and we have signed a contract last year. We also announced for the supply of electricity, our Belgian plant to Ulm, and this is based on a wind park, the Mermaid Offshore Wind Farm in the North Sea, which will supply then 90% of the electricity demand of our Belgian plant, which has the second-largest tank house in our company. Also here, we will have significant reduction again this year compared to the starting year of 2018.
That means we are on track. We are addressing Scope 1 with hydrogen, with ammonia, with reducing the CO2 emissions from the recycling process. On Scope 2, by adding own PV and renewable energy to where it makes sense, where it's also economically reasonable to do so. By buying more and more green electricity from the grid going forward. With this, again, we are on track to deliver our target of just 800 kilotons by 2030. Again, very confident that we will be carbon neutral well before 2050. With this, I hand back to Angela. Right?
Yeah. Thank you very much, Christian and Roland. Next presentation is about battery recycling. Last time in December 2021, Ken explained what the markets looks like and what kind of role we want to play. Now we moved significant steps forward, and as you hopefully today learned, we have a certain metallurgical expertise and, well, we can say, who, if not us? I think, Ken, we start first with a video, right? Okay, thank you.
Well, thanks a lot, Angela. First of all, good afternoon to everyone here in London, and good afternoon to everyone on the screens. I'm very excited to again have the opportunity to give you an update about lithium-ion battery recycling. As Angela just said, before we dive into the presentation, let's watch a short video.
Smartphones, laptops, electric cars, they all share one central component: batteries. It is impossible to imagine our daily lives without batteries. Their performance keeps us moving forward. They are key to a climate-neutral future. No wonder that the demand for the raw materials they use is growing exponentially, but these are limited by nature. One solution to this challenge is sustainable metal recycling. Recovering the metals from batteries for reuse is challenging. It takes extensive research know-how and a deep understanding of metallurgy. When batteries are shredded, a very complex and at the same time, very valuable powder is produced: the black mass. At Aurubis, we have developed a hydrometallurgical process with which we can recover the valuable metals from this black mass. This way, we efficiently bring scarce resources back into the cycle, including lithium, nickel, graphite, and cobalt, and can close the battery value chain.
Recycling was identified as an important growth area in our Driving Sustainable Growth strategy. Expanding our smelter network with a battery recycling plant would be the next milestone. The first steps have already been taken. We have extensively tested and scaled the process up from a lab to a pilot plant. The logical next step would be the construction of a demo plant for further testing on an industrial scale. Our lithium-first battery recycling process allows us to recover more than 95% of the valuable metal. It is integrated into our smelter network. We also separate out the graphite needed to make batteries. Aurubis' hydrometallurgical process is designed for simplicity and operability. We do not use any complex specialty chemicals, which lowers production costs. With this unique process, we have taken the first ambitious steps towards recovering large amounts of valuable metals, in keeping with our strategy.
Together with our partners, we are making a significant contribution to protecting our resources and to progress.
Thank you. As already shown on various occasions before, lithium-ion batteries are very complex products that consists of a wide range of different elements. The outer layers are made of aluminum, and as you all know, this is of very limited interest to us. Everything that's between the aluminum, that's really our core interest. You've got copper wires, you've got busbars that we can recycle already today. If you look at the battery management system, basically an electronic component that controls the performance of the battery, there we have precious metals, tin, and also copper, something of great interest in the future. Inside the battery cells, we find copper foils and the so-called battery metals. From crushing the battery metals, we get two complex raw material streams. One is mixed foil scrap, and this basically contains the copper from the foils and the black mass.
The black mass content of a battery varies because it depends on the kind of battery you're getting, but on average, we can expect to have something around 40% of black mass in a lithium-ion battery. Now, if you look at the right-hand side of the chart in the middle, you will see that the value of black mass with $12,000 a ton is very high. Looking at now the distribution of these valuable metals, it draws a very, very clear picture, meaning that nickel, cobalt, and in particular, lithium, account for almost the whole value in the black mass. Now, what does that mean?
Lithium is a major driver of the black mass, and in light of the complexity of these products, you've seen it, the different components, and the high value of the metals like lithium, nickel, and cobalt, you require great metallurgical capabilities to recover all these metals, and this will be key to success. In late 2019, we began investigating the recycling of black mass. We based our research on samples of black mass that we actually purchased on the market, so we didn't start with geological resources. We started with recycling raw materials, and this allowed us to tailor a process to black mass. During this period, we poured all the metallurgical know-how from our different hydrometallurgical plants and operation into the process development.
The result of this intensive work is a patent-pending process that has been designed exactly for this material, and which accounts for one of the biggest challenges in black mass processing, and that is the recovery of lithium. By utilizing ozone, we're able to extract the lithium in the first process step. This has multiple benefits. First, the avoidance of lithium loss is further down the line. Lithium is not dragged through an entire process chain before it can be recovered, which bottom line means higher metal recoveries. Second, for this process step, we don't need any specialty chemicals that we need to purchase on the market, but we can make this reaction on our own, by ourselves. This reduces our dependence on external suppliers and their respective supply chains. We've heard about supply chain disruptions earlier today.
Third, the production of ozone basically only requires electrical power. This means that this process can be quickly decarbonized by using green energy. Our lithium-first process provides us with the ability to also process other kinds of black mass. For instance, look at black mass from lithium iron phosphate batteries. Because we get to the lithium first and don't have to work around other metals, like, for instance, iron, we're able to process this and extract the value. Other recyclers don't really take a particular interest in this material because of the absence of nickel and cobalt. Furthermore, we've also heard about this today, we've developed this process with the mindset of a metal recycler. We understand that no material is identical to the next. It comes as it comes in.
This is why we need to be able to adapt our processes to the incoming feed, and accordingly, we will be able to adapt our process to the raw material we will get. Finally, we heard about modularity today as well. This process is set up in a modular fashion. After recovering lithium, we can embark on different product routes, and we can add further refining steps when we see the right framework conditions and the necessity to do so. With the hydrometallurgical process, which we have developed, we continue to apply our recycling mindset as well as the modularity principle, in order to integrate it well into our smelter network. The Aurubis smelter work network, and you heard about it, I think, quite some time today already, is the foundation of our battery battery recycling activities.
In the previous presentations, which my colleagues have given you a glimpse into the additions, as one can see, we are optimizing the flows and thereby capturing additional value. This is exactly the reason why the metallurgical extraction and recovery of metals also marks our sweet spot in the battery value chain. In this particular part of the value chain, we benefit not only from the vast know-how of a multitude of metallurgical concepts, which we employ in our group. We also draw from the expertise and the experience in starting up and operating these metallurgical facilities. These strengths will support us, in particular, in the process of achieving higher operational efficiencies, as well as in further optimizing metallurgical processes. We understand well where in this value chain we're able to, Sorry, add value in this business.
We are also mindful that we need to integrate into this battery loop and have therefore acquired a stake in Librec, a Swiss battery pretreatment specialist, with the aim to gain a deep understanding in the black mass production and the qualities of black mass, to which we will then want to optimize our hydrometallurgical process, because these processes need to be adapted to one another. In the long term and medium term, we do expect to get supply from Librec as well. In the near term, the focus lies on understanding and optimizing processes. Besides our own capabilities, and our investment in the pretreatment, we also see partners in our environment who have great potential to add value in the adjacent upstream as well as downstream steps of this value chain.
We are convinced that it is important to bring all these capabilities together in order to efficiently close the loop in this business. To give you a very practical example, the business model and the set of capabilities of a collection and pretreatment company is completely different from the, for instance, the capabilities a metallurgical recycler needs. We, as metallurgical experts, we build facilities in few spots, scale them up, and create synergies by utilizing the infrastructure. At the same time, if you look at a pretreatment company, they need to build a network of facilities in order to optimize logistic costs, because they can't transport batteries over the whole continent. Similarly, this also is true for the production of specialty chemicals, because there you need another set of distinct capabilities.
This is exactly also the reason why we're in intensive discussions with potential partners, upstream as well as downstream, to build an ecosystem that will be able to effectively close the loop in this fast-growing market. As discussed earlier, we started developing the process on black mass, meaning the actual raw material. However, that doesn't mean that we started at zero. As depicted in the chart, we based the process on our existing expertise, and we were therefore able to design a solution for black mass within a rather short period of time. To substantiate this process, we moved into a piloting phase, where in 2022, the chemistry of our process was confirmed with technical scale equipment. Meaning not any more lab-scale equipment, but equipment that is connected and with sensors, et cetera, et cetera.
We will still operate this pilot plant this year, mainly to do further test work to test other raw materials and to produce product samples, but the process was confirmed already last year. Looking ahead, we are working on the engineering of the first commercial facility and are keeping an eye out for the technological risks that are associated with scaling of production processes. In order to address and counter these risks, we are currently designing a demo plant, as mentioned in the video before, which we plan to commission in Q1 of the next calendar year. Although the process and the chemistry has been confirmed, we are very mindful that this technology has only been built once before, and that is our pilot plant in Hamburg. With the pilot plant, we're scaling up one more time before we build a commercial-scale facility.
This demo plant will also mark our first commercial activities in the area of black mass recycling, because with the demo plant, we will be able to process tonnages, not any more kilos, and we will, at the same time, generate operating data that will be helpful when we start commissioning a commercial-scale plant in the second half of this decade. As illustrated in the chart, in every stage of the technology development, we draw on our expertise from our existing operations, and at the same time, we have also taken a very agile technology development approach. This is reflected in the rather short period of time between the certain, the different development steps.
By combining this very rigorous technology development approach, that we won't take any risks in terms of the technology and how it needs to operate, and combining this with the agility, we safeguard that what we build is also going to work when the time is there, when the market will need it. Looking into the future, what are our next steps? What are the expectations? What is the outlook? Generally speaking, it is expected that the scrap quantities will increase in the second half of this decade, this is mainly for two reasons. Number 1, the SOP of more gigafactories. Number 2, because more end-of-life vehicles or end-of-life electric vehicles will come back to the market.
We can certainly argue about the figures on the chart, and they will certainly change over the next months and years, and so on and so forth, but the general picture remains the same, and we're convinced of that electric mobility will come, and that in the second half of this decade, there will be a substantial demand for the recycling of lithium-ion batteries. In line with these market expectations, we are also working towards implementing the first commercial recycling plant in the second half of this decade. This means also that we will be maturing such a project through our different stage gates. As Roland said this morning, we're moving it through this governance system to ensure that the quality and the robustness of such an investment will be there when we take the decision.
As we speak, our team is working on the feasibility engineering of the first commercial plant, and this engineering is supposed to deliver more accurate cost estimates and layouts of such a plant. In parallel, we're also running a site selection process, which takes into consideration different internal options, but is also open for the possibility of external brownfield and greenfield sites. We talked about it in the Q&A earlier. To give you some idea of the relevant criteria which we apply in this process, first, we need secured availability of sustainable and affordable energy. In addition to this factor, we're also looking for favorable permitting environments and the regulatory framework conditions that allow us to operate a metallurgical facility that processes hazardous waste. Finally, we also require good infrastructure connectivity to move raw material in and products out.
With this, we expect that by the end of the year, we will have a clear picture of feasible site options and the path forward so we can step into the market in 2026, 2027. Now at this point, I would like to wrap up and summarize the key takeaways. First, we expect that the need to secure battery metals and to sustainably close these loops will create a growing demand for efficient lithium-ion battery recycling in the second half of this decade. This presents another relevant growth opportunity for Aurubis.
Second, our metallurgical expertise in connection with the capabilities and capacities of our smelter network, which we continue to expand, and our understanding of multi-metal recycling, also the understanding of the raw materials we get in, the sampling Inge mentioned earlier today, all this gives a competitive edge and the right to play in this market. Battery recycling is not an isolated business, and it's strongly linked to other raw, valuable raw material streams that emerge from battery scrap. As mentioned before, cables, connectors, printed circuit boards from battery management systems, copper foils in the battery cells, they all need resource-efficient recycling solutions as well, just as much as the black mass does. Thereby, you see that our core business and the new business, they both amplify each other.
While we acknowledge that battery recycling is a really, really hot topic right now in the market, we are also maintaining our discipline when it comes to ensuring that technology is robust and the quality of the investment is actually going to be there. In all cases, our decisions will at all times be based on the profitability of such a new business field. With this, we're gearing ourselves up to make a valuable contribution in this emerging value chain and to capture the growth potential of this market. Thank you very much for giving me the opportunity to talk to you once again about this very exciting project and market. With this, I would like to hand back over to Angela.
Thank you. Thank you very much, Ken. I hope that we all convinced you now that in battery recycling, who, if not us? Ladies and gentlemen, Aurubis is financially strong. We have a very strong balance sheet. We have strong cash flows. I think you all familiar with the fluctuation in cash flows. We can see it, at the end, we are very cash flow strong. We are financing our projects and the main projects we've presented here, our first eight, which are part of our strategic path. Rainer Verhoeven do it in a stakeholder-friendly way, paying dividends. Besides the fact that we are on a strong growth path here, as we said, we earn money, we are going to pay dividends as well. Rainer, the floor is yours.
Thank you very much, Angela. Ladies and gentlemen, good afternoon also from my side. Lots of technical details today, which I think that's what the capital market is for. Still, you probably want to know, what's in for us? What's in for the investors, for the shareholders of the company? I have brought with me four, five topics here that will show the implications of what you've seen today, give you a bit an outline where we stand and where we wanna go.
If we start on the first point here, due to our business model, let's say you have heard about the governance, the prudent investment decisions that we have been taking in the past, Aurubis has been able to weather the crises that we have seen quite well and shows a track record of converting our operating EBT also into cash flows. We'll see that in one side. Second, as a consequence, Aurubis has created quite a solid balance sheet, free of net financial debt still today, and stable equity ratio, which hovers around the 50%. This is a very strong starting point to embark on our strategic journey, a solid balance sheet gives the continuation of our profitability, the necessary, let's say, starting point, allows for the implementation of our strategy.
We will be able to finance pretty much all of the projects that you've seen here, all of our own cash flows, all from our operating cash flows. With, of course, some dips here and there in financing the one or the other CapEx needs. Our framework of continuing to have an equity ratio of at least 40% and a maximum indebtedness of 3x EBITDA delivers the necessary freedom to finance this growth ambitions. The projects which are currently already in implementation will create EBITDA contributions over the coming years, which makes them pay back the initial invests by 2030. We're talking the eight investment projects will pay back the investments by 2030, at the latest.
In addition, a significantly higher gross margin and the diversification into different regions, different products, as we have heard today, will make us more resilient to potential future crises or negative external market factors. As a result, our shareholders will benefit from our strategic investments in profitable growth with an ROCE of higher than 15%. That is clearly above our weighted average cost of capital and a balanced capital allocation. With our strategy, we create value for all shareholders. Let's have a closer look at some more details, starting with our ability to generate or to translate the operating EBT really into a net cash flow. Since 2017 2018, our operating EBT has grown with a growth rate of 13%.
After last year's extraordinary results, we expect the current financial year to achieve an operating EBT also in that range of EUR 450 million-EUR 550 million. The result of the first six months, which you can see on this slide here, gives us quite some confidence in getting there. The net cash flow has continuously grown over the past years. We managed to repay the Metallo acquisition pretty much within less than two years. The cash flows of 2021 and 2021, 2022 need to be viewed in conjunction. We discussed it already, Jason, outside.
While we had an extraordinary low inventory level in September 2021 due to operational outages, we have rebuilt part of that net working capital now in September 2022, which leads to an average net cash flow of EUR 550 million for those two years together. As discussed in several analyst calls and conferences, our six months net cash flow this year is still burdened by the temporary increase in our net working capital due to the standstill in Pirdop that we are currently undergoing, with a scheduled standstill. At the same time, we have built up quite some finished goods also to deliver the strong market demand that we see, especially in the rock business today.
Over the summer months, this net working capital we will use, and we will be back at something like EUR 450 million-EUR 550 million net cash flow at the end of the current fiscal year. Going to the next slide, let's have a look at our main KPIs, the equity ratio and the debt coverage. On the back of our strong financials, we have been able to grow our equity by more than 40%. 40% over the last just four years. The equity ratio has been hovering around the 50% level and remains a solid foundation to finance our strategic growth path. Even the Metallo acquisition, as already mentioned, only led to a short dip in the equity ratio below the 50s, but was still well above the self-set target of 40%.
Based on the current midterm plan, the eight projects included, and the base CapEx that you will see in a moment, we will stay with a debt coverage ratio, for sure, not at that level, but we will go something around a one, because currently we are still negative, which means we are net having financial investment as banks. We will go into indebtedness, logically, but we will hover around one and not go further up. At the same time, we expect our equity ratio to stay in the range of 45%. At the end of March 2023, we were still holding an investment position. I already mentioned that earlier, we're still, despite...
I mean, we have been investing already quite something in Richmond, for instance, in the project. We're still debt-free. Now we have a specific look at these eight projects that we have been talking about, the CapEx disbursements. Probably that answers a bit your question from earlier today, and what do we expect? We embarked on our growth path last year with the projects BOB, ASPA, and we expect to peak our investments from those eight projects next year and the year thereafter, with about EUR 350 million for this strategic projects. Please, again, bear in mind, I'm just talking those eight projects here on that slide.
In total, we'll be investing something like EUR 1.1 billion. We will get back, as I said, by 2030, something around that, EUR 1.3 billion. In other words, we assume that our current strategy will pay off already in the fifth financial year after ramp-up. Also for, let's say, introducing what Roland will tell you, contrary to the usual timeline that you would see between the investment and the expected returns, we'll be able to fund some of the projects with the returns of the other new strategic projects, which we are or which are already starting and creating funds.
According to our current planning, we expect to continue with an operating ROCE on group level above our WACC, that's for sure, and after the implementation phase of those projects, we will be coming, for sure, back to the 15%. I'll come to that in a moment. Now, to the strategic projects we've just mentioned, we add the baseline CapEx, and that's what you see here. In dark blue, we have the baseline CapEx. In light blue, on top, you have the strategic projects, and the gray lines below is the depreciation. The chart provides a more detailed view on our expected investments in the baseline and the strategic projects, as already mentioned. Total CapEx, thus baseline and the strategic CapEx, will peak in 2023, 2024. As a result, the free cash flow will, for sure, in this year, be negative.
Strategic CapEx only includes, I cannot, let's say, repeat it often enough, only those eight projects. We'll continue on our strategic growth plan, and we will have many more projects, probably, to come in the pipeline. I have to say you need to take that with a bit care. We did not consider yet, for instance, the gross CapEx in the midterm of EUR 280 million. That is not included here, which has been shown by Roland earlier today.
Baseline CapEx is the running CapEx for our existing assets, this is expected to come down after 2025, 2026, and that is a, I would say, quite special thing that I would like to highlight a bit here, because from then on, we will be able to extend the maintenance cycles in our primary smelters from every two years to every three years. Today, over the last, over the past years, the smelters in Hamburg and the smelters in Pirdop have always taken turns in shutdowns. We had, every year, one primary smelter in shutdown. From 2025, 2026 onwards, we will always have years in between where there is neither Hamburg nor Pirdop in shutdown.
Another, I would say, quite impressive number: by the end of 2025, 2026, we expect to have the total fixed assets to stand at around EUR 3.5 billion, up from around EUR 2 billion at the end of last fiscal year. We are increasing our asset base in just four years by 75%. Let's come back to the equity ratio and the debt coverage. As mentioned earlier, we'll finance the strategic growth from our own resources, mostly from operating cash flows, but for sure, with using existing credit facilities and financing options. Being net debt free, having an equity ratio of currently 54%, that's forming the basis for it.
Even in an increasing interest environment, we have attractive financing opportunities. We have been talking also about the promissory notes, the so-called Schuldscheindarlehen, that are carrying interest rates of 1.3%-2% currently. Possible net debt coverage by 3 times the EBITDA, creates the opportunity and the chance to go up to EUR 1.8 billion into indebtedness. We are not planning to do that, there is plenty of headroom to finance our strategic growth. Whenever we talk about growth, we talk about profitable growth, of course, for Aurubis and for our shareholders. One of the KPIs is the operating ROCE, where we clearly have the target to stay above 15% on the return of capital employed.
It goes without saying that we select our strategic projects exactly on that basis, so you can be sure that each of that project, that we have shown and that we are implementing now, will create an ROCE, which is for sure higher than the 15% that I've been talking about. According to our current planning, we even expect the ROCE, on the group level at least, to stay above the target rate over the coming years. Over the implementation of the projects, we expect on group level to stay above the 15%. Now, you have seen that slide earlier, just going, let's say, to the actuals, but extend it a bit. I think it provides two key messages here.
First of all, we've been able to increase our gross margin quite significantly over the past years, and our strategic projects will, for sure, make further significant contributions to increase this gross margin. Mainly driven, of course, by, and you see that here on the further outside, on the metal results or the metal gains, how we call it. Secondly, our business portfolio remains well-balanced, so it's not only the metal gains, it's not one earnings component. It's a mixture of these components, which makes the Aurubis business model quite resilient towards any external effects, detrimental external effects that we could see in the market. You could say our business model is quite waterproof and weatherproof to negative effects.
Last not least, looking to the capital allocation, over the past, but also going forward, on the left-hand side here, you see the build-up and the cash flow generation over the past four years, since 2018, 2019. We were able to generate some EUR 1.8 billion in total of net cash flow over that period. About 55%, over there on the right-hand side, 55% was reinvested into our existing businesses as baseline invest. 15% was used to strengthen our balance sheet, so we reduced our financing, and 17% was paid out to the shareholders of the company, while only a meager 3% was used for strategic growth. Well, it took some time to implement and to really prepare and implement the strategy. Going forward, that picture will look completely different.
You see that the investment in strategic growth will increase until 2025, 2026, and our baseline investments will decline, especially by the effect that I've mentioned on the primary smelter side. We are pretty much through with the needed investments, I would say, for quite some years, so we can extend the maintenance or the standstill cycles in the primary smelters. We have informed you about the adjustment of our dividend policy in view of our strategic growth part. We'll continue to have our shareholders, of course, participating in the profitable growth of our company, and we will, as Angela said already, we will for sure continue paying out dividends to our shareholders. Bottom line, we expect our strategic projects to make a significant contribution to our future profitability once the investment phase is completed.
Even in the meantime, we will expect, and we can expect, to cover the cost of capital for the group. Just reiterating, this slide is known to pretty much all of you, so we continue to stay with our guidance for this fiscal year between EUR 450 million and EUR 550 million. Last not least, a summary: We continue to be well-positioned with our business model in this market, and bank on a rock solid balance sheet. We'll use these benefits to sustainably grow the company into a considerably bigger company in the future, in the coming years. We are well on track with our strategic projects. I hope that this message could be conveyed and that was received positively today. We expect to amortize those strategic projects within just five years.
We confirm for sure our ROCE target to stay at 15% or be above. We will continue to earn a premium on our weighted average cost of capital throughout the investment phase of the projects. Our earnings power, measured by the gross margin, but also by our operating EBT, will continue to increase as the projects come online. It will make our company more robust and resilient going forward. Roland will talk later on about, let's say, the future, further ideas. Thanks for your attention for the moment. I'll hand back to Angela for the Q&A.
Exactly. Thank you very much, Rainer, for the very detailed explanations. For the next Q&A session, I wanna have Roland, Ken, and Christian on stage. Jason, you were first.
Jason Fairclough, Bank of America. I've got a question for Ken, then I've got a question for Rainer. Ken, just in terms of the competitive environment for battery recycling, lots of people seem to be getting into this, right? I'd say Umicore is getting into it, Norsk Hydro is getting into it, Glencore is getting into it. There's some company in Morocco that's getting into it. If not you, then who? I get it. Everybody's getting into it, I'm interested in your thoughts on that. Rainer, my question for you is, you've got a very neat chart, it's very sort of symmetric, where the CapEx goes out, then you've got this perfectly steady stream of future EBITDA from those investments.
How do you assess how the volatility of the earnings of Aurubis changes as a result of those investments?
Okay.
We start with Ken?
In this order? All right.
That us.
Good point. Maybe to start with the investment in Morocco. We, we do see that there are a fair number of Asian companies looking at the European market. When it comes to competition from there, we also see that there is a great deal of respect for European environmental legislation, which is a lot tougher than what they encounter in their home countries. This actually leads to several conversations we're having with some market players on, isn't there potential to collaborate with each other because they just can't handle the environmental legislations in Europe.
If you look at Umicore and Norsk Hydro, et cetera, et cetera, these companies, there are different technologies being employed, and you have to look at the overall picture also in the context of the EU Battery Directive, because this directive stipulates what needs to be achieved at a certain point of time. If you look at the overall recycling efficiency, for example, of a lithium-ion battery, meaning 70% by 2030, you got to recover almost everything, because parts of it is already difficult. If you look at plastics, et cetera, there is no way to recycle that. You need to have robust technologies on that, and we think we're a very good way here, to get also these recycling efficiencies in addition to the recoveries.
If you look at our lithium-first process, in the lab, in the dem pilot plant, we've demonstrated that we can recover 95% of the lithium. Currently, the Battery Directive only wants you to get 50% in the first step and 80% in the second step. I think there is still some room to go beyond that. These are the thoughts on competitors, technologies. I wouldn't be surprised that the strategic positioning of even the majors in this market may shift over the next couple of years, that there will be focus areas along this value chain, where certain companies actually excel and where they put their focus on.
Like, for example, the production of cathode active materials, because if you look at the morphology of crystals, et cetera, et cetera, this is super complicated, and you need to be very good at that. At the same time, I do believe that some companies will also acknowledge that they may not want to try to solve the metallurgical conundrum just as much as the chemical production.
If I just add one, what's always interesting to get also the feedback from some of the companies you have mentioned. We have been not very outspoken about our technology in the media, in public, we have very intensive dialogue and exchange with many key players in the industry. I think what we learned from all of them is a really appreciation and a kind of an eye-opener about the technology and the key elements of the technology that we have developed. We believe from today's view that we have really something neat there, something which will deliver really sustainable, competitive advantage going forward. This market will be a competitive market because there are players entering, there is automotive behind, and you know, in the automotive industry, they don't take prisoners.
If you have a better technology, if you have a better OpEx position, you probably will prevail. Therefore, we are really based on the technology. We are quite confident we have something. We have something to leverage. Coming back on the second question, which was about the earnings volatility going forward with implementing those eight projects that we are currently talking about, I would say, we would even further flatten out the volatility. Why? Currently, and I hope that I could convince that message over the past years, Aurubis has been moving like a train on rails. Going forward, this projects enable to benefit from intermediaries, from complex materials. What creates volatility and what creates stability in our business model?
The product side, wire rod shapes a bit more, but wire rod is a quite stable business at this point in time, so we are pretty fine there. Also, on other products, they don't move too much the needle. On the input side, the concentrates are going towards, in favor of Aurubis. On the complex recycling side, we have longer-term contracts, thus more stability also in the terms and conditions that we can achieve with our business partners. What creates volatility is scrap number 2, so the clean scrap that we need for cooling, for instance, but also in the old plant, that creates quite some volatility. With the projects that we are just showing, we reduce that a bit. Well, we need some cooling scrap here and there, but in principle, the dependency on that is reduced, and sulfuric acid creates volatility as well.
We can't take that off because with the primary smelters comes the sulfur, and comes the volatility to sulfuric acid world market prices. Nonetheless, all the projects that you have just seen are going into the direction, more complex recycling, which should and will stabilize the profitability of Aurubis going forward.
Thank you very much. Ioannis . Oh, yes. Bastian, you first. Ioannis.
Thank you. A few questions from me. The first one on the energy transition strategy around Scope 2. I think in the past, in the last CMDA, we talked about the Vattenfall contract.
Mm-hmm.
the prospect of you somehow, over time, exiting. I guess now with coal prices where they are, maybe it's a bit easier. Interested to hear your thoughts and also around captive renewable investments like the one you've done in Bulgaria.
Mm.
Is there scope for more, or are you gonna lean more on PBAs, which are more capital efficient?
First, on the Vattenfall contract, we have an electricity supply contract. It was the starting point, was the investment of a coal-fired power plant in Hamburg. That's where it all started. The contract itself is an energy supply contract. Nothing to do with the power plant, not connected to any kind of electricity production. The contract has pricing formulas with two main components. One is the coal price, the second is CO2 price. Today, with coal prices and also the possibility to secure, hedge by derivatives for coal, we are able to manage here a very competitive electricity price for Germany, because all the supply, or let's say, the full supply of electricity in Germany, is covered by the contract.
Therefore, we have, in the moment, we have no pain, no kind of urgency to change this contract, because as it's just a supply contract from the grid, we can mirror this with certificates of origin. It's just a pricing formula. We are buying now electricity from clean, renewable sources like hydro. I mentioned this in my short speech, like hydroelectric supply, and we will continue to look after attractive other, let's say, sources of electricity. What we're not going to do, just buy some, I would say, some disconnected certificates of origin, which you can find in the market. We want really to know and to be sure that electricity is produced and it's being made available for our plants, so that we are not being subject to any kind of greenwashing criticism there.
Electricity needs to produce, and Vattenfall is just a trader here. They are not producing the electricity that we consume. That's the first point. We are fine with the contract so far. If there is some willingness on the Vattenfall to move this to a different type of contract, to a PPA based on renewables, we are fine, too, but we are happy with what we have today. Your second question regarding PV. We have built the first PV plant in Bulgaria, and we are very positive about the results that we have seen. The output, the electricity output is higher, 15% higher than we originally planned. From a cost point of view, from a return point of view, it's a attractive investment, which triggered the next two investments. We are adding to this 10-MW peak, now 17-MW peak.
We are adding additional capacity, and we are looking even in a further expansion, given the plot of land, the large plot of land, and what we have there. That's one pillar. Given the size of our, let's say, the amount of electricity that we need, we can, and that's our plan in Bulgaria, we envisage to produce 20% by 2030 of our electricity by own resources, but it means we have 80% to purchase.
In other sites, we have some opportunities in Olen where we have some windmills, but the majority of our electricity needs to be procured from the grid via PPAs, or via this kind of supply contracts.
Great, thank you for that. Second question around, I guess, for Rainer, going back to this, indeed, the nice EBITDA chart. What I'm trying to figure out, you are always talking about individual EBITDA contribution by project.
Mm-hmm.
Today you show that EUR 260 million. In the past, you talked about the normalized profitability of the existing footprint. Is there a case to be made that you can combine the two, existing footprint and new projects, to come up with a overall EBITDA target by, I guess, 2025, 2026? I would guess the number would be somewhere in the order of EUR 800 million-EUR 900 million.
Mm-hmm.
interested to hear your views on that.
I'm also interested to hear his views.
I'm actually also interested to know exactly where we would be going there. I mean, we are embarking and initiating this strategic path, not because just we want to be a better citizen of the world, right? We want to earn money here. We have been several times talking about can we double the profitability of the company? I mean, you have seen how in, hopefully, only four years, we will grow our asset base. We will, let's say, we have grown our balance sheet quite substantially, and with that, still kept the 50% equity ratio. We also know that this comes from the profitability that this company has generated over the path. If you ask me, where do you want to be in a couple of years from now?
If you listen to what Roland will be talking about later, it is an equation with some unknowns. It's an equation with some unknowns, but for sure, we will considerably grow this company going forward. Yeah.
Growth means also earnings growth.
Yeah, clearly.
Good. Bastian.
Yeah, sorry.
Yeah.
I had first question, maybe also for Rainer, actually, on one of the charts, I think it was chart 72, which you've been showing us. It's been the future CapEx profile, and I guess how you aim to amortize it. One thing I think you said was that you're basically able to extend the... So what's really allowing you to do so? Generally, I mean, you're spending EUR 1.1 billion in CapEx. It's a big number. I would have thought maybe 20-25 years of plant lifetime. I would have put probably another EUR 50 million on top for maintenance, but doesn't seem like you're basically reflecting that, and maybe you don't need it, but that's my question.
We have been putting quite some maintenance CapEx, let's call it this way, especially for the primary smelters, which is the big chunk of the CapEx, of the baseline CapEx here, every year, over the past, I would say, several years. Why is that so? Because there, we did undergo an intensive asset life cycle management to see what is the lifetime of the specific assets in that very primary smelter, in that plant. There is cranes, there is, I mean, the refractories things that are easy stuff, yeah? From the sheer refractory position, we would be able to also extend maintenances also today, or maybe also in the past.
There is certain things in the assets, in the primary smelters, that had to be renewed because they were at the end of the lifetime or even exceeding the lifetime. I would say we have caught up there quite good, and we have now, with the asset life cycle management in place, a clear view on what do we need to do in order to really have those gaps in between, where we don't have a standstill. That is a, I would say, heavy burden on the profitability on the one side, because if the smelter is not operating, it will not generate profitability. On the other side, there is high CapEx involved, high investment involved, so it hurts 2 times, if you want to say so, if we have to stand.
Which is also normal for in the copper industry, you will see that in the competition also. Therefore, with the asset management, asset life cycle management, we have been able to, I would say, really get a feeling on what do we need to do in order to extend that and to generate profitability, which then allows us also to invest into the strategic growth CapEx.
Thank you. Thank you, Rainer.
To be very clear, there's no additional CapEx or maintenance CapEx, which comes on top. As you say, like these nice charts, which Angela and the team are always providing with the, I guess, with the maintenance cost in your P&L, there's also going to be a saving on that. Is this component included in the EUR 260 million number?
Well, there is no additional CapEx going forward, other than what we have been showing here, that in 2025, 2026, the numbers will go down. The maintenance CapEx, for sure, will go up, or not the maintenance CapEx, the maintenance cost will go up because the asset base is enlarged. Going forward, for sure, we will have more maintenance, which are, of course, the costs included in the profitability analysis for the specific projects that we will be implementing.
One more question, actually, on the CO2 side, actually, where you obviously have very clear targets out there. I've got to say, for your business model, given the complexity, it's always very difficult to really work out what are the incremental costs for you to take out a ton of CO2. I was wondering, can you give us maybe a number here? What does it take you? How much does it cost you to take out one ton of CO2, the last marginal ton? I would have thought you probably have looked at that, this is an important number. Then also, what I was wondering is there any impact for you from the German concept of implementing Carbon Contracts for Difference?
As first question, there is not this one number. As I try to explain, we are looking in the moment in very different options. We haven't really taken a decision. If I take, for example, the replacement of natural gas, which would be the main reduction for our Scope 1 emissions, what is the right technology? We are enabling and we are developing the technology. I mentioned hydrogen, I mentioned ammonia. We're looking also in plasma burners. We are trying to span the whole technology to generate this large amount of energy, fossil-free. In the moment, the ranking is not complete. Hence, also if I ask you, what's the price for blue ammonia in the future? That's a difficult one.
Here, this Carbon Contracts for Difference will kick in, because this will now bring the producer or incentivize the producers of these kind of new energy sources and the industry, who needs a certain price level to be competitive together, which is the idea of this double contract system. As this has not been formulated yet, it's still, I would say, in the making. Important is we are preparing ourselves for various options, and when things settle, when things become clear, we will be able to pick the best solution that the market will offer, hence, the lowest CO2 reduction price that will be doable for the industry.
Yeah. Maybe if you allow me to add, Roland, here, there needs to be a couple of more components to the equation put in there. For instance, today, as energy-intensive industry, we get the reimbursement of the CO2 component in our electricity price. This doesn't go forever, which means also we have to factor in, going forward for our strategy.
Mm.
At one point in time, this game will be over, let's call it this way, and we would have to fully fund this CO2 component in the electricity price. Therefore, we are doomed to really move forward here in this process. That is one part. Second part, of course, we have some free CO2 certificates available for the CO2 that we are emitting. This is the free contribution that we are getting is diminishing, is going to zero. There also, the future CO2 that we are emitting comes at a cost. That is, let's say, the cost that we have to weigh and to balance when we embark, and we clearly embark without any detailed calculations on it, on a free CO2 path. We have to.
Yeah.
And-
I think if I add, what we are benefiting from is that we have been early decarbonizing our production. That means we are better than the benchmark, which is applied in the ETS scheme in Europe, so we get more allocation, CO2 certificate allocation, than we have to hand in due to the emissions that we definitely do. We have built up a nice buffer of certificates, and it continue to build up. You know, ETS will be changed. There will be a new period after 2031. Things are still out there, but we are coming here, at least for this decade, from a very strong position. As Rainer pointed, we are not exposed to CO2 certificate price. It's rather the opposite. We are benefiting from high CO2 certificate prices.
Thank you. Thank you very much. As the time is running, I would like to present one question from the virtual audience for Christian. Given the growth of your recycling business and big investments like Aurubis Richmond, why is your recycling target in 2030 not higher than 50%?
Yeah. First of all, for sure, it's needed, the Aurubis Richmond investment, to higher up our recycling quota up to 50%, we also will need some more ideas and projects to reach this target. As presented today, we have a very successful business model that covers also the primary and secondary sector, for sure. If you look at the whole copper demand, it's not possible to cover this Copper Mark, sorry, copper demand by recycling material, because there's not so much available for that.
If I may add.
Please.
It's also we are growing our throughput in the smelting site at the same point in time, so permanent productivity increases. It's a bit of a, let's say, a catch up that we are doing in recycling. One comment, we are also working intensively for an even better supply chain on the primary side. You saw the examples about The Copper Mark, the examples about that we engage with mining companies. It needs both. It needs recycling, and it needs primary copper. Otherwise, the demand that the world has for copper cannot be met. Therefore, we show this result because of the this target value, but it's not really something which we would take to an extreme.
It's a reporting. We are improving, recycling content. Primary has to grow, too.
Thank you. Thank you very much. Thank you for your questions. Thank you for your detailed answers. Before I hand over to you back,
It was okay, now.
Um, I-
... What? Can we take this one question? I think it's interesting for you.
Otherwise
Unless you want to skip there.
No, because the time is running.
I will quickly. Sorry,
No, we can do it.
Yeah. That's, that's an interesting one for you, because it, I think on the battery recycling, it's a good one.
Okay, we take it?
Yes.
Otherwise, I can say, if you have any further questions, please ask it to Ferdinand, to Eike, or myself. We will be happy to answer it. Now, the last question is: Can you define more clearly the site decision process criteria? Which are those? Given your ozone technology, does that mean that the electricity price is a main criteria? Yes.
One, one-word answer to make it short.
Easy one.
Yeah. Well, look, yes, ozone is basically electricity, so in order to produce ozone, you need electrical power. If you look at the OEMs and the cell manufacturers, who in turn have the requirements from the OEMs, product carbon footprint plays a huge role in the material they get into their supply chain. If you produce all your metals with high carbon-intensive processes, then you will, in the long run or medium run, have issues to get the material into the supply chain of the OEMs. Yes, electricity is one major topic, but we're also looking at the price, how green it's being produced, those two. Again, we, as I outlined, the regulatory framework conditions are also something.
Of course, if you look at the subsidy landscape here in Europe as well as the U.S. The U.S. is certainly also a very interesting market if you look at the benefits of the Inflation Reduction Act. These are also factors that play into our site selection activities in order to find really the right place to build this first-of-its-kind technology.
Thank you. Good.
Good.
You move over?
I move over. Do a bit of a wrap up. Okay, that's good. Now we're coming to the final, but I'm sure we will have some more discussion, hopefully during dinner and/or some drinks outside. You have seen financial guidance, and I started this morning or this afternoon with talking about how we started our strategy, which key pillars in December, announced the strategy in December 2021. I hope by now, we have really convinced you that we are in full execution of the strategy, that we are able, as a company, within the very strong financial framework that we have, to execute these very important growth projects in time, in full, in everything that is absolutely crucial here to supplement our flowsheet and the growth in the market.
We have specifically brought some key members of our teams, David and Jürgen, and also Thomas, to show from the horse mouth how we are doing this project, share the governance. Also, I want to emphasize again the point, it's really a transformation of whole Aurubis that we are going through. Let's say, announcing a strategy is one thing, seeing market opportunities is another. Really bringing a company to this kind of project culture, this kind of execution culture, with this, I would say, the beat drum that we have now installed in the company, that there is now a rhythm, there is now a clear sequence, there is now absolutely clear governance, responsibilities, documentation, and so on.
This is absolutely crucial to transform a company like Aurubis, which, as some know the company for quite a while, which was a bit like a sleeping beauty. We were doing okay, but there was not really a growth agenda. There was, let's face it, there was some complacency that we saw in Aurubis. This has completely changed. This is not what you will find today in Aurubis, and the agenda, hopefully, and this massive growth CapEx probably underpins what we are doing, what we're going for. We think big. Also, to Christian's comment about North America, we think big. Don't take any timing that we do, because we don't have to rush. We have the strengths and also the rigor to execute projects at the right point in time.
That doesn't mean that we don't think big and that we don't put them rightly in sequence and one after the other. Always reflecting the secure and successful execution of the projects, because nothing, whom I'm telling this, is worse if you, if you really, if a project is jeopardized or something goes wrong, because then all management attention goes there, and the whole company is distracted. Therefore, absolutely, let's say, maturity of projects, execution projects, and also very important, build up the necessary resources. One thing that we did from the beginning, we said: If we are going down this avenue of growth, of running eight large strategic projects, there has to be the right people, the talent, and enough people in place to execute. Often the mistake is done.
Key people, they have already a full daytime job, they get some additional responsibility on top to deal with some very important strategic. We didn't do this mistake. We really have dedicated teams, absolutely capable teams, with the right number of people in place to execute these projects. Based on this, we will do more. We have other projects in the pipeline. If I go to this list here, you get some idea. We are not disclosing the names and the subject of the project, but this is real number of projects. This is not just a chart, this is really what we are working on in our pipeline of projects.
You see at the right side, the eight ones that are in execution, strategic growth projects, and you see that there are nine already marked as being part of our four-year MTP midterm planning, which we are just doing as we speak, starting then with the next fiscal year. You see basic engineering from our gateway process means they are very well advanced. They will come for a final decision in a few quarters. Basic engineering is already a well-advanced step in the project maturation process. We have four highly attractive projects in feasibility, and we have one, still a bit early, in concept development, but we believe this will come into execution in the timeframe of the MTP plan. You see, we have, despite already eight, and we are only talking about growth projects here.
We are not talking about normal, sustainable, or kind of process improvement projects. This is all growth projects that we are dealing on. What is also important, we are not running out of ideas. You see that the idea box, again, these are real behind. It's not that we wrote in ideas, but we cannot disclose these projects to the public at this point in time. We have a very effective pipeline of high interesting projects in different regions, fully in line with our strategy that we have explained today and also in the bilateral meetings that we have. If we take this today, we will add about EUR 280 million of CapEx.
That's what we discussed, also, Rainer also shared this. We will continue to deliver additional EBITDA in a relatively short timeframe, given the high return projects that we have here in the pipeline. Again, I can re-emphasize what Rainer said: We have a very sound financial balance sheet. We will not kind of go completely different here. We have our guidance will be 45% equity ratio. That's where we maximum see we are going to. We believe we still have potential to be even better. That's the guidance, also this a bit of debt ratio of, let's say, 1 maximum, is something that we are targeting for. Within this kind of framework, we are able to deliver this additional agenda going forward.
This is the business, and I hope you have heard today that it's not just about the three pillars, but also we are talking potentially about, you can say it, a new pillar with battery recycling. This is something, and with the feedback, with the discussions that we have had so far, we are pretty confident that this can be a next big business for Aurubis going forward. Again, as we do the other projects, we will do this from a position of strength. We will not make a hype or join the hype here about battery recycling. We are just executing. We are building a demo plant, which is scale 50 compared to the pilot plant. We are working on the engineering. We are doing site selection.
We are just executing according to our governance, the projects, and we don't let us be pushed or rushed into something which we might regret or will not be the, I would say, the necessary due diligence that you need for these significant investments. This means we are up for even more, and I also hope that today we shared this, I would say, relatively complex flow sheet.
Relatively, because the next level is much more, which shows that we are so much more in technology, and we would also, let's say, hint that some of you might rethink our metal and mining evaluation if we are not more and more becoming a very different play as Aurubis with what we are investing, what we are growing in. Also to your point, Jason, about cycle, cyclicality of our business. With what we are doing here in recycling is less and less exposed to the cycles of a primary business, of a sulfuric acid business, and so on. We are building here not additional pillars with our investments, but we are building also very solid and less cyclical pillars in our business. With this, summarizing, we are accelerating our sustainable growth.
We have significant projects successfully in execution. All the projects, also with our early warning system, all the projects and everything, what we are doing, have been more than confirmed. Our decision in 2021, December 2021 or November 2021, to go into the Yes, looking back, it was the absolute right decision to go there. It was also the absolute right decision to accelerate phase 2. It will be the right decision to think about the next steps there earlier than you might think. With this, I would like to close. I think the other points we have raised already, I don't think we need to repeat them. Aurubis is a very strong player, a highly respected player in our field. We have the advantage, or call it disadvantage, we are a unique play.
A company like Aurubis doesn't exist, not in Europe, not in North America, and also not in Asia, to our knowledge. It's always very difficult to benchmark. If I look at our performance, if I look at our growth agenda, if I look at the market opportunities that we have, and also the political environment in which we are dealing with additional demand on the metals that we are producing, with a strong push in circular economy, with our sustainability record leading in the CO2 footprint in the copper world, we are extremely well-positioned, and we have a management team, you have seen only some of the colleagues here, we have really a management team which is there and capable to execute. With this, thank you very much for participating today in the Capital Market Day.
To people here being online and sitting there in front of the screen, thanks for joining us today, and happy to continue this dialogue with you. Any question, please, you know the teams. You can also talk to me directly, to Rainer, to Inge, whomever you have a question for. Thanks for coming.