Ladies and gentlemen, good morning and good afternoon to the Aurubis Capital Market Day. I would like to welcome you very warmly here from Hamburg. Aurubis started the new fiscal year, first of October, with a very extraordinary successful year behind, as you've just seen into the, in the film and during the analyst call last Friday.
This gives us a lot of tailwind for all our strategic future projects which we wanna talk about this afternoon. Actually, we'd love to welcome you personally at our new site in Beerse, in Belgium, but unfortunately the coronavirus didn't make it possible for us. At very short notice we switched and tried to prepare for you a very interesting program for this afternoon. What can you expect from today?
In the first two hours, we will talk a lot about the strategy on our review and the process behind, about the recycling markets, and we will give you a deeper dive into the battery recycling markets because battery recycling is definitely in the focus of Aurubis growth story.
To fill the whole thing with life, we already want to talk about very concrete and precise projects already today coming in for the new strategy. We, as I said, actually love to welcome you in Beerse. We put together a five-minute, very short site visit in Beerse for you this afternoon because we want to show you what we are actually doing in Beerse and how the Beerse smelter fits into our international smelter network.
After a Q&A session and a short break, the second part of the Capital Market Day will focus on sustainability, energy, and decarbonization projects at Aurubis. Finally, but nevertheless, no less important, we will explain our new segmentation that will be in place and effect from the first of October onwards. Hopefully, this will be an interesting afternoon for you where we can show you and maybe you already also learn a lot from Aurubis. Now I would like to welcome our CEO, Roland Harings. Welcome, Roland.
Thanks, Angela. Also for me, good evening, good afternoon, good morning to wherever you are. It's the pleasure of the team and personally also for me to welcome you today to our virtual Capital Market Day, and I'm really looking forward to share our views, how we are going ahead into the future, and also what we have achieved, what we have planned this afternoon with you in the next couple of hours. I'm looking forward also for your challenging question later in the Q&A session. With this, let's get started.
Roland, a strategy does not only have to fit to a company, it has also to fit into the broader picture of society. Please be so kind and share your view on that with us.
I think we all have seen that society and the economy are going through the most challenging transformation in a very short timeframe that probably we have seen at all. If you just look at the summit, the climate summit in Glasgow, or just, the recent coalition agreement between the German parties here, which will start this week officially.
These are just two example among many to show we are now very seriously as a society, as an economy, doing this transformation, and it will be fast, and it will be without any kind of slowing down in the time to come. We as Aurubis, we see ourselves as a company transforming raw materials, transforming and producing important metals for this transformation. I see ourselves much more as a very integral part as a solution provider to what we all achieve, which means Aurubis is there today with a long history, and it has an even longer and more important future to come.
Thank you very much for this, Roland, and I'm sure this is what really motivates a lot of colleagues at Aurubis to come to work every day. Now a few short technical notes. On your screen, all the registered guests can see on the right-hand side a Q&A function. You can put in your questions in this function during the whole sessions. Well, we have three Q&A session parts, then we are going to answer all your questions in detail. Now, Roland, the floor is yours.
Thank you, Angela. The past three years were very eventful years, and a lot was accomplished during this time. Just to name a couple of highlights during this period, the acquisition of the sites Beerse and Berango was an initial milestone in the recycling growth story of Aurubis. Also, to finance this acquisition, we very successfully placed our ESG-linked Schuldscheindarlehen. Our Science Based Targets were validated and approved.
We announced the partial sale of FRP. Of course, just recently, a great highlight, our new U.S. recycling plant, Aurubis Richmond in Augusta, Georgia, which we announced on the tenth of November. During this entire time, we managed to improve our cost side due to the performance improvement program. From this program, we were able to accomplish cost savings of up to EUR 80 million. These were all first steps and important projects for Aurubis.
Of course, all of this only works with a great management team and excellent employees. I'm grateful for what a fantastic team I can work with here at Aurubis. This eventful time leads us to our strategic review event today. The future is made from metals. At Aurubis, this understanding has driven us for more than 150 years, and it drives us today more than ever.
From the executive board to the management team, to our 7,135 employees worldwide, we share one common belief. It's our mission and purpose to responsibly transform raw materials into metals for an innovative and sustainable world. We are firmly convinced of this, and we will be measured against it by you today and by future generations. The foundation for this is our shared values. Performance is at the heart of this.
For us, this means commitment, always and everywhere. We take responsibility by actively making decisions and rely on full integrity. We can be trusted, and we want to be trusted. There is no other way. This requires us to be open and remain curious and thus appreciate ourselves and our diversity. Only in this way we can shape the future. With a strong purpose and living values as guiding principles, I'm now looking forward to presenting our roadmap for the coming decade to you together with my team.
The Aurubis strategy: Metals for progress, driving sustainable growth. Aurubis' previous strategic alignment was based on three pillars, responsibility, growth, efficiency. This strong strategic foundation has been implemented over the past several years. With continued diversification and implementation of our multi-metal strategy, Aurubis took the next steps.
With the acquisition of Beerse and Berango, Aurubis pursued its multi-metal strategy even further. Now, we have looked at where we are coming from and what was achieved since our last strategic review. Let's have a look into our strategy on a page and discuss some initial details. The updated Aurubis strategy is a precise and defined plan for sustainable growth based on three pillars, secure and strengthen the core business, pursue growth options, industry leadership in sustainability.
The strategy reflects internal as well as external factors. Digitalization in the production processes and collaboration with business partners are equally reflected, as is the strategic priority of personnel management. We are recruiting and developing employees for the future.
Responsibilities, resources, and projects are clearly defined. They build the strong foundations of Aurubis objectives of responsibly transforming raw material into value to provide metals for an innovative world. With that, I will hand back over to Angela, who will guide us through today's event.
Thank you very much, Roland. The next presenter today will be my colleague, Thomas Sturm. He will explain the strategy in detail, in more detail and the process behind. Thomas is heading the corporate development department and was the responsible head for this whole project.
After Thomas, our CFO, Rainer Verhoeven, will tell you in more detail the financial guidance behind the strategy. What does it mean in short, medium, and long term? What is the financial impact, and what will Aurubis earn from the new strategy projects? Thomas and Rainer, the floor is yours.
Thank you, Angela. Welcome to everybody, also from my side. I'm very happy to present to you approach, process, and results of our strategy work in the next approximately 20-30 minutes. We have not started from scratch, but we followed a comprehensive but also very structured and focused approach.
Roland has already referred to the major steps since the last strategy update in 2017, and I would like to emphasize that before the start of our current strategy process, we have done important groundwork. We have driven implementation of our multi-metal strategy with the acquisition of Metallo, and we have established a sound, updated fact base covering our markets, customers, suppliers, competitors, operations, and the regulatory framework that we are living in and doing business with.
We are able to start in phase one already with a clear focus on key strategic areas and the respective key strategic questions in order to define the overall strategic direction. Let me briefly explain the main findings of phase one. Details of phase two will follow in the next slides.
Our primary business. In phase one, we focused on the following points: the long-term availability of concentrates, our competitiveness on a global level, and the viability of our custom smelting business model. We came to clear and sound conclusions.
We are highly competitive as an independent smelter with highest sustainability standards, and our supply and our business model are not at risk over the strategic horizon. Primary copper is a strong and profitable part of our core business that we will further protect and strengthen both in our capabilities and our competitiveness.
For our recycling business, the focus laid on the following topics. The main trends and drivers per material groups in our key supply markets, but also on future industry and business partner requirements, and finally, also on evaluating options upstream the value chain. David will tell you more about the market details later on, so let me just state the key results here.
Demand for capabilities and capacities to process, especially complex secondary raw materials, will increase in order to achieve regulatory stakeholder and ultimately customer requirements, such as increasing recycling quotas, closing and reducing emissions, I'm sorry, along the recycling loop. Aurubis is in a very strong position to capture these growth opportunities, especially in North America and Europe.
With a frog leap from strategic analysis to implementation, we can state today the decision to build the first state-of-the-art recycling plant in North America is strong proof for the sound analysis, the concrete operationalization, and ultimately the commitment for implementation of our strategy. Now, the third major block for strategic analysis was sustainability, which we tackled across all businesses, sites, and functions.
We focused on main trends and drivers and resulting future requirements and impacts on our products, processes, operations, but also the way we work. As we will hear more about our sustainability, ambition, and agenda later, I can cut the conclusion very short. Sustainability is one of our strategic pillars, driving and guiding our future way of doing business, as well as how we develop and implement projects in the future.
I just mentioned the most important content work related to the main topics on today's agenda. Of course, we have also addressed impact and conclusions on our products and co-products business, underscoring the focus on optimizing our distribution channels and applications and, of course, our sustainable product offering, which means producing Tomorrow Metals for tomorrow's world.
Now, I'm happy to move forward to phase two of our strategy work, which actually ends today with the communication of the results of our review to you. You may ask why we communicate so late, while elements of the strategy were ready earlier. Well, the answer is easy. We wanted to communicate when we do not only have a clear strategy, but when we can provide you with sound proof that we are also implementing it.
We are not limited in our communication by the confidentiality requirements of a project with the strategic importance of our new plant in the U.S. Looking at this slide, in phase two, we detailed, applied, and translated the vectors of our strategic directions in a set of defined projects and actions.
On the top line of the metrics, you see the five main work streams: smelting of copper and precious metal concentrates, processing of intermediates, precious and minor metals, nickel-containing materials, secondary materials or recycling, and finally, sustainability going across all dimensions and areas.
On the left side, you see the five dimensions of the analysis conducted to define the master plan of strategic projects. We have collected, developed, and evaluated more than 50 projects along the different dimensions, scoring the strategic fit and contribution with regards to the strategic direction we want to take.
Assessing the financial attractivity, assessing the impact on sustainability targets, measuring the resource intensity for implementation, and finally, also assessing the benefits or impacts for our overall flow sheet, changes in flows, potential bottlenecks, impacts or requirements for other projects. In course of that process, we developed a short list of approximately 20, or to be precise, 21 strategic projects that are consistent and compatible in terms of flows and capacities, but also in timing.
Let me highlight that we have paid special attention to this flow sheet analysis to ensure consistency, mitigate costs, and implementation risks. These projects fit to each other, anticipating or being adjustable to future changes, strengthening our flow sheet, but not depending on a succeeding or subsequent project. Every project has its own business case.
On top, the projects are also distributed over a timeline and over different sites, including Georgia in the USA. As a result, we will develop these projects now along our stage-gated process until meeting our strict quality requirements for an investment approval. As with our Aurubis enrichment, we will communicate when we are ready.
From the resource analysis, that's also mentioned on the slide in one dimension. We have a clear view on the resource requirements per stage gate, timing, and function. That is key for our strategic resource management and ability to execute in future. Finally, we have the key financials per project and the development over the plan stages and timeline. We have a sound basis for the financial guidance that Rainer will share with you later.
This is our strategy on a page, linking our purpose, you see on the bottom of the slide, as the basis of what we are doing to our strategy to drive sustainable growth, providing metals for progress, here at the top of the picture. Before speaking about the three big pillars of our core business growth options and our sustainability ambition, let me address a key enabler here in the middle of the chart.
Without people, we cannot achieve anything, nor defend our current leading position, and even less growing our business in future. The development of a strategic resource management was a top priority deliverable of the strategy work in phase two. Not as a one-time demand assessment, but as a system that we can operate ourselves going forward. How did we do this?
Well, first, we have mapped our existing resources in key areas, such as engineering. In parallel, we have developed a capability grid with 23 defined specific project roles and 20 roles in support functions. We have identified the resource need by strategic project, by role, and per stage gate, and time, to have the overview about our specific hiring need over the project pipeline and the horizon of our strategy.
An exercise that inter alia also makes very transparent that the roles and profiles to implement our strategic agenda are different than the roles addressed by our performance improvement program. Under the working name of Fit for Projects, we have set up a comprehensive system covering the stages from talent demand, nomination and application process, all the way to transparency over the talent pipeline, down to the operational processes from deployment, staffing, down to onboarding and training of new colleagues.
Internal and external recruitment is pursued with strong focus and using all different channels. UIRs are in, and more are coming. That example should underline our approach again. We define not only strategic targets and projects, we also establish enabling systems to make sure that we can implement. We make sure that we are on track. We are monitoring our recruitment status for strategic projects on Board level on a regular basis, and agree on additional measures if required on short notice.
After this deep dive in the machine room of our talent engine, let's look in a bit more detail at our three strategic pillars, starting with our strategic actions in the area of our core business. Well, first, let's make clear that our core business includes primary smelting, recycling, multi-metal processing and refining, as well as the production of copper products and co-products, such as copper wire rod, iron silicate or sulfuric acid.
While we have a strong competitive position and outstanding capabilities in our core business, we are not complacent. We have a clear action plan to defend and strengthen that business going forward. We have already improved our cost base by implementing further our performance improvement program. Now we are focusing on measures improving not only cost efficiency, but also productivity.
On additional measures regarding continuous improvement and operational excellence, such as availability-focused maintenance, asset lifecycle management process, or automation and digitalization of specific production processes. For example, related to condition monitoring, supporting predictive maintenance or automated data processing, enabling database decision-making.
We are working on new digital communication channels and platforms that improve the effectiveness of our procurement, sales, and distribution, the way how we interact with our business partners. As part of our strategy work, we have fostered the technical exchange between the sites and the transparency about the flows and flow sheet in our network.
That allows us to optimize the investment programs in line with our overall strategic agenda, with optimized replacement investments and focused projects to improve our capabilities. One example being ASPA, and Heiko Arnold will give more details about that project later on.
also other projects in our pipeline are worth mentioning, for example, regarding the processing of intermediates, precious metals containing materials, or the increase of our throughput of nickel-bearing materials. Last but not least, we are making harmonized best practices available, unlocking even more synergies in our growing smelter network for the benefit of the individual sites. our core business is strong and healthy, and we will take care that this basis for our success remains and becomes even more solid.
I'm sure you share the conclusion Aurubis is ready for further growth. We have a high-performing smelter network operating all key processes and equipment required for sustainable recycling. after the acquisition of Metallo, with its sites in Beerse and Berango, we have successfully strengthened our flow sheet, but even more important, broadened and deepened our resource base with new colleagues and their knowledge, experience, and ideas.
We are able to process a very broad variety of complex secondary materials already now. Now, the second point I would like to mention, the market needs us to grow. Key supply markets in Europe, and especially in North America, will need more high-performing sustainable recycling capacity in future.
Exporting high volumes of end-of-life material to Asia at the cost of a higher CO2 footprint, breaking the loop of a circular economy in the making, and losing valuable raw materials for European, North American industries, will not be sustainable in future.
We have a sound strategic growth plan to capture these opportunities in our existing business. There's a straightforward technical concept based on proven technology and equipment that we are operating already. It is based on modular elements that allow implementation on a greenfield site, but also built on brownfield capacity expansions.
We have a strong partner for engineering and execution. Our strategic partnership with SMS mitigates risks in project execution. Now, combining all these factors makes our investment project enrichment strategically, technically, and financially extremely robust. We are the right company to realize it. Who, if not us? The plant enrichment will be the first project deploying that concept.
More recycling modules and respective projects will follow. Our growth opportunities are not limited to our existing business. We know how to recycle complex high-value materials in a sustainable way already. We have leveraged our research and development capabilities, as well as our process know-how in hydrometallurgical processes, to tap into the growing field of battery recycling.
Yes, we are not the only ones communicating plans to build battery recycling capacities, but different than many others, we are already operating large-scale recycling plants in reality. We have developed a highly efficient process, patent application already submitted.
My colleague, Ken Nagayama, will tell you more about our plans in this field later on. You can be sure we are serious about sustainability. It is a dominant building block in our strategy across all project sites and businesses. We have reviewed and defined our sustainability targets, clear, measurable, and ambitious.
We have evaluated all strategic projects against six sustainability criteria. Decarbonization, recycling quota, emission reduction, efficiency increase, waste reduction, and responsible supply chain. Sustainability is embedded in our processes.
Just one example, our new CapEx approval process includes a sustainability assessment for relevant projects already from an early project stage on. We are measuring our sustainability performance, and we invite others to measure it. EcoVadis Platinum rating is the most prominent example, but later today, you see many more.
Well, we are reflecting the increasing importance of sustainability also in our organization, but Angela will give you a full picture about our sustainability strategy later. In summary, I think it becomes very clear we are serious about sustainability and the implementation in our way of doing business, and even our mindset. In this respect, our sustainability approach is representative for the Aurubis strategy 2030.
You can be sure we are serious about our strategy. We will follow, act, and deliver on our strategy. We will measure our progress and let us be measured against our plans. With this, I hand over to Rainer Verhoeven to give you an outlook what financial implications our strategic roadmap will have for investors.
Thanks, Thomas. Now, how does our strategy translate into the coming years? In the following, I will give you an outlook onto our revised strategy and the financial implications. We can split the activities into three time intervals. The short term tackles the already approved projects. The medium term covers our midterm planning horizon until 2025, 26. The long term lasts until the end of this decade, so until 2030.
For the short term, we have announced already concrete projects which have been approved by the bodies of our company and are being implemented in the coming years. All three pillars of our strategy are reflected here. First, the advanced sludge processing by Aurubis, or in short, ASPA, in our plant in Beerse for the pillar secure and strengthen the core business.
Second, our new recycling plant, Aurubis Richmond, in the U.S. for the pillar recycling. Third, our phase number two for the industrial heating project here in Hamburg for the pillar sustainability. Aurubis is going to invest an amount of some EUR 350 million over the coming years and expects an additional earnings contribution of around EUR 100 million EBITDA from 2025, 2026 onwards.
My colleague, Heiko Arnold, will present those projects in more detail later in today's session. When looking at the medium term, we have further projects in the pipeline with an additional amount of CapEx of some EUR 250 million. In those projects, the focus lies again on strengthening the core business and sustainability.
The CapEx for all projects has been included in our midterm planning until 2025, 2026, which is an indicator for the level of maturity that those projects have already achieved. All our projects run through an internal stage gate process. At this point, these medium-term projects are, for example, in the feasibility phase, or, as with one of the projects, have already reached the basic engineering phase.
Only after basic engineering, we will put the projects up for approval of the respective bodies of our company, the executive board and the supervisory board. Please understand that only thereafter we will be able to talk about the projects in public and lay out further details to the investor community.
However, what we can already say right now is that with those medium-term projects, we expect to further increase our EBITDA by an estimated EUR 70 million by the end of this decade. If we then turn to the long term, which is projects that have not yet reached the maturity levels as explained before, we are yet in a completely different ballgame altogether.
Those projects are either in a research and ideation phase, or we have interdependencies on projects which are currently being built. One example is our modular recycling system, where Aurubis will enter into new markets like the U.S. and provide a sustainable solution to treat recycling materials with attractive RCs. Further growth can be expected here. However, we have to do one step at a time and make sure that we will deliver on our promises before we enter into further expansion projects.
Another important growth area for Aurubis will be the battery recycling market. Only here, Aurubis is planning to invest some EUR 200 million in the coming years. The prospects and outlook on battery recycling will be explained to you by my colleague Ken Nagayama in one of the upcoming presentations. Our strategic roadmap goes well beyond the medium term until the end of this decade.
The volume and project pipeline significantly exceed the approved short-term and medium-term investments. However, they are still at an early stage. Please bear in mind that we are talking about growth projects here, which will be invested in parallel to our ongoing investment into our core business. We will therefore be doubling our investment cash flow over the coming years and reach levels beyond EUR 400 million.
With a net financial position of almost EUR 400 million and an equity ratio of close to 50%, Aurubis has the financial firepower to deliver on those projects, which we plan to fund completely from our operating cash flow. We are confident to reach our growth targets. Let me now invite you onto a journey of the Aurubis strategy.
The future is made from metals. With this knowledge, we set global standards and drive innovations for a modern world at Aurubis. The economy and society are now facing what is possibly their biggest endeavor, sustainable carbon-neutral transformation. With the Aurubis strategy, we're providing a clear answer about how we're shaping this future and how we're consistently developing ourselves in the process.
In a world that needs more metals than ever, we will continue solidifying and expanding our position as the most efficient and sustainable multi-metal producer worldwide as a high-performing smelter network with a strong core business and, in the future, new growth engines in recycling. Sustainability is one essential aspect that determines our growth course. Our smelters are among the cleanest worldwide.
Today, Aurubis already produces copper with less than half the CO2 per ton compared to international competitors. For us, that's not enough. We want to be carbon neutral well before 2050, and we rely on the highest standards in energy efficiency and environmental protection for this purpose. We're securing and strengthening our core business, improving it even more. Producing metals from concentrates and recycling materials remains a strong foundation for us.
We're making targeted investments in skills and sites for this purpose. An initial example is the ASPA project, which enables us to recover metals from the resources we use even more efficiently. Recycling is a growth engine for us. Today, our copper cathodes contain more than 40% recycling material already. North America and Europe, in particular, provide us with significant growth opportunities that we will leverage with our scalable Aurubis Modular Recycling System.
This will kick off with our new recycling plant in the U.S. state of Georgia. Others will follow. The Aurubis strategy is a precisely defined roadmap outlining how we will secure and expand our core business and take advantage of clear growth opportunities. Because now and in the future, we will responsibly transform raw materials into metals for an innovative and sustainable world.
Thank you very much, Thomas and Rainer. An important part of any strategy work is, of course, the markets behind. Our colleague, David Schultheis, will now give you a deeper insight into the recycling markets. As head of strategy in the corporate development team, David was, of course, an integral part of the whole strategy working team, and he was responsible for doing so. David, the floor is yours now.
Thank you, Angela. What a compelling and exciting visual summary of our strategy. As Thomas, Rainer, and the strategy movie just explained, we are determined to specifically pursue growth opportunities in recycling for very good reasons. Our analysis clearly shows that recycling markets will see a very attractive development going forward and that Aurubis is particularly well-positioned to successfully pursue growth in these markets.
In short, first of all, global macro trends will continue to drive the availability of recycling materials going forward. Secondly, rising collection rates and continued miniaturization trends will steadily increase the complexity of available recycling materials. Thirdly, specific metallurgical expertise, flow sheet capabilities, and experience are required for the processing of such low-grade materials.
Here, Aurubis has a long-standing track record in Europe as a frontrunner in the industry and, as recently announced, is determined to expand the footprint to the U.S., where such low-grade recycling capacity is still very limited. Lastly, we highly esteem our strong relationships with our diversified supplier base, which will be a valuable and reliable foundation to our growth ambitions.
Let's have a look at the global macro trends that drive availability of recycling materials. Sustainability is on everyone's mind, and we at Aurubis take it very seriously. In fact, we have taken it very seriously already for the last thirty-plus years. Just recently, we were awarded platinum status by EcoVadis. This means we are among the best 1% in sustainability, which is the result of our long-standing focus on sustainability.
Together, public sentiment and public officials, industry, and consumers all show a strong consensus in the need to act fast. Correspondingly, regulatory frameworks, industry guidelines, and consumer behavior are adapting quickly to the pressing needs of our time. Recycling is sustainable. Consequently, the focus of many legislative changes lies on promoting recycling activities.
One of the most tangible effects in this regard are rising collection rates to recuperate valuable materials and avoid landfilling. Especially the lower-grade materials will become increasingly available as collection rates are raised. The sustainability mindset is also one of the triggers for the reconsideration of export-import regulation around the world, which have a persistent impact on the way that recycling materials circulate globally. The Chinese waste import ban, which came into effect in early 2018, is the most tangible example of such regulation, which continues to strongly impact the industry.
China clearly sent the signal that the countries of origin need to start recycling their own waste. Aurubis is able to play a critical role, especially in the recycling of lower-grade copper-based recycling materials, and we are determined to do so. Steady economic growth and the shortening of product life cycles drive the overall generation of waste to be recycled, while electrification and digitalization are trends leading to higher metal content in waste.
Together, they account for steady growth in the availability of relevant recycling materials from Aurubis' perspective. The outlook is compelling. We anticipate 4%-5% annual growth in the relevant European and North American recycling markets between 2019 and 2035. Bear with me. In a few minutes, we will have a closer look at each of these markets.
Today, Aurubis processes approximately one million tons of recycling materials each year. Already, 45% of the copper contained in our copper cathodes is derived from secondary sources. For other metals in our portfolio, this share is even higher. At Aurubis, we are able to process a wide range of recycling materials. We classify these materials into three main categories.
First of all, copper scrap and alloys. That's the recycling material category with the most significant volume share and gross revenue contribution for Aurubis. The common denominator of the different materials in this category is a high copper content, while the form of the material and the content besides copper can differ somewhat between the individual material groups.
Secondly, complex recycling is a more heterogeneous material category composed of four material groups with a generally complex and varying composition. The composition of these materials not only varies across lots, but also over time.
The trend from landfill to waste incineration, for example, is a reason for the anticipated rise of complexity in residues and sludges going forward. This is only one example to showcase the developments across the materials within this category. The successful processing of these materials clearly requires state-of-the-art lab and sampling capabilities and specific metallurgical know-how.
Thirdly, PM recycling materials. They have a higher precious metal content, which explains the comparatively high average gross revenue potential per ton across these five material groups in the category. Clearly, a sophisticated integrated precious metal flow sheet, strong lab and sampling capabilities, and a careful composition of the feed mix at all times are prerequisites to successfully process these materials.
We see growth in most of the recycling material categories, yet some material categories are more attractive to us than others. To differentiate and prioritize, we assess each of the material groups along two dimensions, market attractiveness and ability to win. For the evaluation of market attractiveness, we consider three main factors, market size, market growth, and gross revenue potential.
The ability to win was determined by evaluating the fit of required expertise with the Aurubis capability set, supplier fragmentation in these respective markets, and the competitive intensity. When combining the two dimensions, three material groups clearly stand out, PCB, metal shredder, and copper less than 90%
. They each score high across both market attractiveness and ability to win from Aurubis perspective. These materials are at the heart of our growth ambitions and thus also constitute the main feed of the recently announced Aurubis Richmond recycling plant in Augusta, Georgia, U.S.A. As you can see, we highlighted one more material in the two by two.
While the current availability of electric vehicle battery material is still limited, it is without doubt that it will develop very attractively over the next years to come. Consequently, we are intensively working on further developing our particular capabilities by setting up a hydrometallurgical pilot plant in order to be well-positioned for the recycling of electric vehicle battery materials going forward.
Let's now have a closer look at the relevant European recycling markets. On the left-hand side, you can see the market composition and its expected development from 2019 until 2035. The presented market structure follows Aurubis segmentation based on the three material categories, copper scrap and alloys, complex recycling, and PM material, as just introduced.
While Aurubis' main input of recycling materials is in copper scrap and low alloys, the bulk of the relevant recycling material market actually falls into the category of complex recycling at approximately 75% of the overall market volume. We anticipate a 4% annual growth of the relevant recycling market in Europe between 2019 and 2035, which, as you can see in the chart, is mainly driven by a strong increase of the complex recycling segment.
Underlying factors of growth are the described global trends, namely steady GDP growth, a steady increase of collection rates, especially for WEEE, that is waste electrical and electronic equipment, from currently 40%-45% towards the EU target of 65%. Thirdly, a continued decline in exports to destinations outside of Europe, such as China.
The overall growth of the European recycling markets is strongly driven by complex recycling materials, and within this material category, particularly by bulk E-scrap. Since bulk E-scrap is a material group derived from WEEE, it is helpful to look at the WEEE market and regulation to better understand specific market dynamics. Increasing recycling rates are expected to play an important role in the anticipated growth for complex recycling materials.
The chart on the left-hand side shows the European WEEE market volumes and respective recycling rates as of 2015. The EU is firmly dedicated to avoid landfilling and thus stipulated a WEEE collection rate target of 65% for 2018 in the following years. This is highlighted also in the chart above the bar in 2018. With an actual collection rate of 45% in 2018, there is clearly a gap.
Given the EU's strong dedication to accelerate the sustainability agenda, for example, via the Green Deal, we believe it's only a short matter of time that collection rates, not only for WEEE, will increase considerably. Higher collection rates will directly impact the availability, especially of complex recycling materials.
To better understand the implications of collection rates for expected growth, also regarding geographic differences, it is worthwhile taking a more granular look at individual countries. When looking at the WEEE collection rates across European countries, we can see that they generally fall within the range of 40%-60%.
Clearly, some countries are more advanced than others. At 62%, Austria is in fact already very close to achieving the EU target of 65%. A simple and compelling exercise is to assess the impact of higher collection rates on future volumes.
We therefore calculated the potential market sizes by triangulating the individual volume effects if actual collection rates in the specific European countries corresponded to the 65% EU target level. In absolute terms, Germany, U.K., and France show the highest potential for additional recycling material volumes going forward. Clearly, population size is a critical factor in this equation.
Italy also shows significant potential for additional recycling material availability, for example, which is mainly driven by its comparatively low collection rate of 39% in 2018. In general, we can conclude that Western Europe holds substantial growth potential for the years to come.
Based on Aurubis' production footprint today, with recycling plants in Germany, Belgium, and Spain, Aurubis is therefore geographically well-positioned to capture future growth in Europe. The attractiveness of Western European recycling markets is also confirmed by a second perspective.
A deeper analysis of copper scrap exports shows that particularly the U.K., Spain, and Italy are strong exporters to destinations outside of Europe. For all three countries, China was the main destination in 2019. In the discussion on global trends, we observed that material flows are changing and that particularly China is carefully evaluating which recycling materials to import going forward.
The fact that significant volumes were still being exported to destinations outside of Europe in 2019 clearly underlines the further potential that lies within Europe, even at today's collection rates. The development of the North American recycling markets follows very similar patterns to Europe. There are, however, a few nuanced differences. First of all, there is a difference in market size.
At 5.6 million tons, the relevant North American market is slightly smaller than the European market at 7.3 million tons. Also, the composition of the two markets differ slightly. Copper scrap and alloys constitute approximately 30% of the relevant North American recycling market, while the same material category only accounts for 20% in Europe.
Both effects are directly linked to differences in WEEE collection rates. While we saw an average collection rate of 40%-45% in Europe, the U.S. falls slightly short at 30%. Lower collection rates imply lower availabilities, and since WEEE recycling rates directly impact the size of the material category complex recycling, it also affects market composition. However, today's lag can quickly convert into a factor driving market attractiveness tomorrow. The notion that landfilling can no longer be the standard approach to waste handling is growing.
In the U.S., 19 states and Washington, D.C. have already introduced landfill or disposal bans for electronic devices. An even larger number of states has established e-waste legislation. Within this decade, a unified regulatory framework is expected. The introduction and enforcement of such regulation will lead to higher collection rates and will thus drive market growth going forward.
The regulatory environment is thus clearly a favorable factor supporting the expected U.S. recycling market growth of approximately 5% annually until 2035. The second factor impacting U.S. market growth are the dynamics in global recycling material flows. As of today, the U.S. is still largely exporting especially lower grade copper materials to China, Canada, and Germany, among others.
Since 2017, so coinciding with the introduction of the Chinese waste import ban, U.S. exports of copper scrap started to decrease as new outlets had to be identified. This change in material flows has a tangible impact. As of 2019, China is no longer heading the list of destination countries for the U.S. as it fell to third position.
The trend of declining exports is expected to continue as the awareness of the need for sustainable business models and the willingness to enforce them, including local recycling schemes, grows worldwide. Consequently, the export-import dynamics has a second significant factor supporting the 5% long-term growth of the relevant U.S. recycling markets. A particularity of the U.S. market is the scarcity of recycling capacity for materials that are attractive for Aurubis.
As of today, there are three primary copper smelters across Arizona and Utah, which predominantly use copper scrap mainly for cooling purposes. For the lower grade materials, there is still only 1 sizable secondary smelter in Quebec, Canada. The change in global recycling material flows requires finding new outlets.
Such outlets, however, are hard to find because the additional required recycling capacities in North America simply do not exist yet. This is a concern. In this regard, we clearly see an attractive window of opportunity for Aurubis in North America and decided to act on that. Our decision to build a recycling plant in Richmond, Georgia, was therefore recently announced.
Aurubis Richmond will create direly needed low-grade capacity in North America to provide an outlet for the lower grade materials that we see in the market today and the additional feed that we clearly anticipate for the near future. A great strategic decision based on sound market analysis. With this, I would like to hand over to Angela Seidler again. Thank you very much.
Thank you very much, David. There's another strategic growth area for us where we want to grow in future. It's battery recycling. We want to play a leading role in this market and are currently testing the technology on a pilot plant here at our Hamburg site. My colleague, Ken Nagayama, is working on this topic for quite a while.
As head of the business development, battery materials in the corporate development team, he will now give you some market background information, and will give you an insight what is interesting in recycling materials, battery recycling materials, and what is exactly the content of the batteries, what we are going to recycle in future. Ken, the stage is now yours.
Thank you, Angela. Good afternoon to Europe and good morning to the United States from my side. Now, I'm excited to provide you with an overview of our lithium-ion battery recycling activities. All around the globe, countries are implementing measures to promote climate change abatement. For instance, as part of the Fit for 55 program, the EU plans to phase out internal combustion engines by 2035.
The U.K. has communicated similar plans, and so has Canada. Some countries are eyeing even earlier dates, and for diesel-powered vehicles, several cities have already imposed bans. At the same time, an increasing number of car manufacturers have set specific targets for electric vehicle sales. BMW and Stellantis, for instance, have announced that by 2030, their electric vehicle sales will reach a share of 50%. Volkswagen has indicated that their last ICE vehicles will be sold between 2033 and 2035.
Companies like Jaguar, Alfa Romeo, Volvo, Ford, and Fiat, just to name a few, have communicated plans to become pure EV players. Overall, it is expected that in 2030, every second vehicle that will be sold in the EU will be an EV, and every EV needs a battery. Consequently, with the increasing sales of EVs, demand for lithium-ion batteries, in short, Libs, increases as well.
By the end of the decade, a global Lib demand of almost three terawatt-hours is being forecast. The most recent studies even project an increase to seven terawatt-hours by 2040. Already today, EVs are the largest source of demand for Libs, and in the future, this demand is expected to increase even further. While energy storage systems and consumer electronics will also require Libs, their demand is clearly dwarfed by the Lib demand from electric vehicles.
This means that during the course of this decade, an increasing number of sizable lithium-ion batteries will be in circulation, and every battery that is sold today will return after approximately 8-15 years. Hence, we are looking at a future recycling market that is starting to take shape already today. Today, the majority of LIB production takes place in Asia.
However, in an effort to localize their production, OEMs and battery manufacturers are racing to establish gigafactories in Europe and North America, too. In order to satisfy the increasing LIB demand, OEMs and battery manufacturers have either already set up manufacturing capacities, are currently building them, or have announced gigafactories that still need to be constructed. The overall gigafactory landscape is still developing, and as you can see, as of today, there are few capacities in operation.
Now looking at the number of factories under construction, we already see a sizable three-digit gigawatt hour addition to the capacity already in operation. Finally, there are many announced capacities, and the likelihood and the timeframe of these becoming operational will certainly depend on many aspects, like the maturity of the manufacturer or the availability of the equipment.
Summing all of this up, operating capacities, those under construction and those that have been announced amount to more than one terawatt-hour of LIB supply. Of course, the announced capacities in particular need to be taken with a grain of salt, and we should expect shifts in the overall battery manufacturing landscape.
However, regardless of how the picture might change in the coming years, it is clear that there will be substantial capacities that will produce complex recycling raw materials. Looking at the United States, a similar picture can be drawn.
As in Europe, production capacities for part of the local demand have already been installed. Further capacities of renowned manufacturers are under construction, and a large number of gigafactories have been announced. The bottom line is the steep increase in battery production capacities is being forecast for the U.S. as well.
Now, you may ask yourself, why is it so important how many gigafactories are being built? Isn't the number of EVs the proxy for battery scrap? And you have right. End-of-life batteries will be a large portion of the future market. Nevertheless, the development of gigafactory capacities is so important to monitor because they are also a source of battery scrap, since gigafactories are expected to produce an average of 5%-10% production scrap in the early phases, likely even more.
As previously outlined, battery scrap is a raw material stream that is already available today, and it can be split into two categories, end-of-life scrap and production scrap. Because production scrap is linked to the manufacturing of batteries, it becomes available earlier and consequently makes up a majority of the overall scrap quantity.
We expect that until the second half of this decade, production scrap will remain the predominant scrap type. However, with more and more EVs reaching their end of life, more end-of-life batteries will need to be recycled. When we shift our focus to the regional distribution, most scrap is expected to be generated in China. This is due to two reasons.
First, because vast battery manufacturing capacities are installed in China, which results in large quantities of production scrap. Second, because in China, electric vehicles have been adopted early on in commercial areas, but also by households.
Still, Europe and North America will gain in significance, presumably even more post-2030. Apart from the demand for EVs and the production of batteries, which will certainly determine the quantities of battery scrap, regulatory frameworks will also play a critical role in the recycling of these scraps.
In the EU, for instance, tight regulations for the recycling of battery scrap are being put in place. The amendment of the EU Battery Directive will impose a collection rate for lithium-ion batteries of minimum 45%. This rate will further increase to 65% and later again to 70%. Furthermore, the directive requires the recycling of 65% of the battery's mass, and this threshold will be increased to 70%. Finally, recycling must recover a minimum amount of metals.
For nickel and cobalt, the directive requires a minimum recovery of 90% by 2026. By 2030, a minimum of 95% nickel and cobalt must be recovered. For lithium, a minimum of 35% must be recovered, and from 2030 on, it's going to be 70% of the lithium in a battery that needs to be recovered. All in all, we are seeing the development of a huge market that is supported by regulatory frameworks.
Because lithium-ion batteries are complex products and regulations prescribe recycling quotas and require the recovery of metals, specialized recycling processes need to be applied to lithium-ion batteries. In particular, because the recovery of separate metal fractions is becoming more and more important to ensure recycling efficiency. It all starts with the end-of-life battery.
When returned, it is usually tested in order to determine its so-called state of health, meaning to what degree can I still charge it? If it still has a decent charging capacity, it might be given a second life, for example, in energy storage systems. After serving its purpose there, it will ultimately become an end-of-life battery again. If the battery is deemed unfit for further use, it will be discharged.
This is mainly done to reduce the risk of fires, but also electric shocks, because in the next step, the whole battery is being dismantled. This is done manually, although there are also projects exploring the use of robotics in dismantling. Faulty batteries from the manufacturing stage will also be processed in this stage. Here, the battery is stripped from all auxiliary parts like casings, wirings, the battery management system, until the cell level is reached.
The cells that contain most of the valuable elements are then crushed in a shredder. Off-spec production scrap is added here as well. The shredding process then separates larger parts like foils from the fine powder, which is called black mass. The black mass is the final product from this pre-processing stage, and it is the material of focus for Aurubis in battery recycling.
As mentioned before, lithium-ion batteries are complex devices that consist of the battery cells, wirings, semiconductors, cooling systems, and casings. Accordingly, many different metals and compounds can be found in the battery. The chart on the left-hand side gives you an impression of how many different elements can be found in a lithium-ion battery. Some elements may only represent a small share of the weight. However, when it comes to value, the picture differs.
Black mass is to a large degree the content of the battery cell itself, meaning the cathode and anode active material. Because this example shows an NCM-type battery, the cathode material consists of nickel, cobalt, manganese, and lithium. Depending on the cell chemistry, the metals in the cathode will differ, but the anode material is made of graphite.
A look to the right-hand side gives an impression of the range of elements that can be found in black mass from nickel-based cell chemistries. As you can see, this is a rather exotic mixture of elements. The best way to think of black mass is to compare it to complex concentrates or ashes and sludges from incinerators. One thing these raw materials have in common is that the content and value cannot be determined by merely looking at the material.
Therefore, it is fair to say that processing this kind of material requires specific technical solutions. By the same token, it also requires special know-how and capabilities, for instance, in sampling and assaying. Because if you look at the value distribution, which of course is dependent on the development of metal prices, it is important to determine the exact contents, in particular if you consider that the value of one ton of black mass easily exceeds $10,000.
As touched upon before, lithium-ion battery scrap is expected to increase in the next several years. Globally, by the end of this decade, the equivalent of approximately 400 GWh is expected to be generated as scrap. This is the equivalent of six million cars with a 65 kWh battery. Translated into quantities of black mass, we're potentially looking at 1 million tons globally.
As China is so far still the predominant market for EVs, the largest share will be generated there. However, until the end of the 2020s, it is expected that in our target markets in North America and Europe, black mass volumes will reach six-digit figures too. Production scrap and end-of-life scrap are each projected to account for approximately half of the market.
In the U.S., we still expect a higher share of production scrap, basically because EV adoption rates for the U.S. are assumed to be lower, which results in fewer end-of-life batteries being returned. Taking a glimpse into the future, post-2030, it is fair to assume that overall quantities of battery scrap as well as the share of end-of-life scrap will increase further, as the adoption of electric mobility will only take place during the course of this decade, during the 2020s.
Considering the size and growth of the black mass market and the complexity of the raw materials, it is clear this requires industrial-scale recycling solutions paired with the necessary know-how and infrastructure. Aurubis possesses these assets and the infrastructure in which black mass recycling will be integrated.
In the last two years, the Aurubis R&D has intensively worked on developing a recycling solution for battery scrap, and more specifically for black mass. Although there is also the possibility to process black mass pyrometallurgically, this process route comes with some challenges as lithium is hard to recover and the graphite gets burned. Therefore, we quickly focused on a hydrometallurgical route and developed a hydrometallurgical process that recovers lithium, nickel, cobalt, manganese, and also the graphite.
However, this does not mean that Aurubis is disregarding pyrometallurgy overall, as pyrometallurgy, for example, excels in aggregating metals from intermediates that the hydrometallurgical process might produce. Hence, we will combine hydrometallurgy and pyrometallurgy in a manner that leverages the advantages of each process route in order to promote resource efficiency and a zero-waste approach.
Our bench scale test work showed very promising results, and we're currently piloting the process. This means we're scaling it up by approximately a factor of 100 in order to generate data from a technical scale plant. In 2022, we'll run pilot campaigns and gather more data that is important for the process and plant design. When enough information has been gathered, we will move forward with the engineering of the first commercial plant. With this technology, we are promoting a circular economy, even in the battery supply chain.
We are following an integrated approach with our existing assets and infrastructure to minimize losses and avoid waste generation. Our test work has shown that our process can recover and reintegrate more metals than future regulations require. We have the ability to further refine and provide metals for battery production. Of course, we are keeping a focus on cost efficiency.
Finally, we have filed a patent application for the technology that we have developed. With this package, we're planning to make a meaningful contribution to sustainability in the battery supply chain. As you know, it is our mission to responsibly transform raw materials into value. As just outlined, we will contribute to a circular economy by closing the loop in the LIB supply chain.
Because black mass is a complex recycling raw material, and recycling raw materials, these particular complex ones, are daily business, and we have metallurgical solutions for it. We are clearly targeting a market entry on the grounds of our metallurgical capabilities, but we will keep an eye out for adjacent vertical steps in the value chain in order to be able, if needed, to provide a comprehensive service offering.
Overall, we want to play a leading role in this market because we are the experts in processing complex raw materials from sampling to products. Multi Metal is what we do. Our raw materials contain a large variety of metals, and we handle it. Last, we are capable of commercializing technology, and we have the know-how and the capacity for the investments.
To wrap it all up, we have shown you expectations of how the market will develop, and we are convinced that battery recycling is a growth area for Aurubis. We want to play a leading role in this market, and we want a sizable market share. We are currently testing our technology on a pilot scale, and we'll move forward after the test work.
We have filed a patent application for our process, since we are convinced that the combination of the process features has a novel character, and we want to run a commercial-scale black mass recycling facility within the next five years. With this, I would like to thank you very much for your attention and hand back to you, Angela.
Thank you very much, Ken, for this very convincing presentation and details. Once again, I would like to remind you that all the registered guests have, on the right side of their screen, the Q&A part. Please type in your questions, which we are going to answer in the next Q&A session, which will follow after the presentation of our Chief Operating Officer, Heiko Arnold. Heiko, welcome.
Yeah. A warm welcome also from my side to the stream.
Heiko, after the presentation from Ken, I would like to ask you as the COO, what is the technical path from a pilot plant to a production on a standard industrial scale? What does it mean, and what kind of challenges do we have to face?
Valid question, Angela, because a pilot plant requires time and resources, so why are we doing that? On every scale-up of a new innovative process, we need to eliminate the risks that go when scaling up from lab scale to full industrial scale, and that's what we're gonna do here with the pilot plant. We're gonna eliminate the risk of by-products accumulating and not having an outlet, just to name one example here.
Thank you very much. Now we'd like to come to the very concrete projects which are already in place and which we are going to develop further under the strategy. Heiko, the floor is now yours.
Thanks, Angela. Dear all, we just introduced one element of the Aurubis growth story to you, battery recycling. In the next several minutes, I will give you some insights regarding how Aurubis plans to pursue the growth options at the production sites. Let's start with the Modular Recycling System in secondary copper generation. Aurubis is determined to provide the solution for the rising copper demand stemming from the abundant availability of recycling material.
Aurubis Richmond is the first example for the setup of our Modular Recycling System. Let's now have a deeper look into the different components. The preparation module takes care of shredding the various raw materials and analyzing the metal content to determine its value. The smelter module contains the smelting and converting equipment using a Top-Blown Rotary Converter, where we separate a metal and a slag fraction.
This will also be shown in our video of the Beerse and Berango sites later during today's event. The off-gas module filters and cleans process off-gas from various pollutants in several steps. This step can be upgraded by using waste heat to generate steam or electricity. The slag module granulates the slag produced to sell it in its solidified form.
Last but not least, the lead tin module transforms the lead tin-rich conversion slag into a valuable metal fraction and metal-depleted slag, similar to the smelting slag of the first step in the TBRC. As you can see, thanks to the possibility of scaling, the standardization of equipment, and tailoring towards the targeted products, the modular recycling system is a highly efficient and flexible way of expanding the recycling footprint of Aurubis at a low risk.
With the existing knowledge and expertise from our recycling activities, Aurubis will be able to provide a tailored solution for the growing demand to recycle materials where they arise. With the German SMS group, we found a strong and reliable partner to implement these future growth projects together, leveraging their individual expertise, which is complementary to our process knowledge.
Let's move forward and have a look into the currently approved projects from our strategy. Aurubis Richmond is the next milestone for Aurubis in our growth story in the recycling market. We were very proud to announce this project to you on November 10, 2021.
In the first ever dedicated secondary smelter for multi-metal recycling in the United States, circuit boards, insulated copper wire, and other recycling materials containing metals will be processed by Aurubis. We will process the intermediate blister copper and the mixed lead tin alloy into various industrial and precious metals at our European smelter sites, but also sell some blister directly in the U.S. market.
Let me remind you of some of the financials from this project. The capital expenditure will be EUR 300 million, fully financed from the group's operating cash flow. After ramp-up to full capacity in 2025, 2026, we anticipate an EBITDA of EUR 80 million and a return of, on capital employed of 20% or above. With these new U.S. activities, we will of course face a higher U.S. dollar exposure, which will ultimately be part of our strategic hedging policy.
This project is fully in line with Aurubis' sustainability targets and our ambition to strengthen and expand our position as the most efficient integrated smelter network worldwide. Aurubis will also continue to secure and strengthen our core business. We are proud of the achievements already accomplished with the renovation of the tank house in Lünen.
Let me share with you some details from our renovation of the tank house. The renovation includes the demolition and reconstruction of the tank house basins and other extensive improvements to the production facility. At the end of the overall, the capacity of the tank house, where the most energy-intensive part of the copper production process takes place, will be expanded by roughly 10%, thanks to an increase in efficiency. The gradual renovation process is scheduled to be completed by 2024 and is being executed while production continues uninterrupted.
After the modernization, the new capacity will reach up to 210,000 tons annually. With Advanced Sludge Processing by Aurubis, or ASPA for short, we will strengthen our core business and take the next step towards becoming the most efficient and sustainable integrated smelter network worldwide. ASPA is a prime example of the synergies created by the Metallo acquisition and how the whole company benefits in developing new, innovative solutions together.
In the video at the end of my presentation, you can see the 3-D model and how this plant will look once it is fully built at our site in Beerse, Belgium. With this project, Aurubis will strengthen its core business and invest in a state-of-the-art recycling facility at the Beerse site. With the investment of EUR 27 million, we will generate an annual EUR 7 million EBITDA contribution to the group.
This newly developed hydrometallurgical process will extract more valuable metals such as tin and precious metals from the anode sludge in a shorter timeframe. The recycling facility proves Aurubis' drive to innovate and to reach the goal of an independent production process while demonstrating the circular economy at its best. Since this is a virtual format, we aren't able to show you our new sites, Beerse and Berango, but we managed to provide you with a virtual site visit.
We would like to welcome you to our new Aurubis sites in Beerse and Berango. After Olen and Lünen, Aurubis expanded its number of recycling plants in Europe to four sites. The new Beerse and Berango sites fit in perfectly with Aurubis' strategy, growth with a strong focus on the recycling business.
With these new Aurubis sites, we are able to process copper scrap and various complex metal-bearing recycling raw materials, industrial residues, and bought-in metallurgical intermediates as feed material in the integrated smelter network. In total, the number of recycled input materials in Europe has now increased to one million tons.
These input materials can be classified into different categories. Copper scrap, copper alloy scrap, low-grade copper-bearing scrap, tin and lead-bearing scrap, and silica-based products. Berango produces a black copper from low-grade copper-bearing materials, which is further processed in Beerse.
With the integration of the sites Beerse and Berango into the existing flow sheet of Aurubis' smelter network, we're now able to use low-grade scrap materials and even more complex residues and extract all valuable metals from their sources. All materials are delivered by truck. Trucks are weighed and visually inspected before deliveries are stored. All materials pass a quality evaluation process to determine chemical composition and relevant quality aspects.
Quality control is carried out by a team of skilled personnel, extensively trained and advised by chemists and metallurgists. When the quality evaluation is confirmed by the supplier, it is released for collection into homogenous stockpiles. The smelting furnace processes all copper-bearing raw materials. The feed material is continuously charged to a molten bath of slag, where it reacts exothermically. This heat-sensitive process is well controlled and monitored.
At the end of the smelting process, metals are transported to the TBRCs for further refining. The sites Beerse and Berango follow a clear zero-waste strategy, and even extract products from smelting iron silicate slag in a fuming process in Beerse. These valuable metals from this process are collected and returned to the value chain.
The majority of the non-ferrous metals are collected in a copper bath underneath the slag. This first metal phase is an impure copper metal called black copper. The black copper from the smelting is further processed in the refining furnace in Beerse, together with copper scrap. In this process, less precious impurities than copper, such as tin, lead, nickel, and zinc, are trapped in the slag, which is further processed in slag furnaces similar to TBRCs.
The copper metal is refined to liquid copper with a content of above 99% and cast into anode molds. The slags from the refining furnace are treated further in slag furnaces called TBRCs. In a multi-stage process, the impurities are regained step by step. The recovered copper metal is partially tapped in the refining furnace and partially converted into impure copper anodes, which will be consumed in the tank house in Beerse.
The Berango site also delivers intermediates processed in Beerse to extract and refine tin and lead. Beerse and Berango's furnaces are equipped with highly efficient off-gas cleaning systems to prevent dust emissions. The integrated cleaning systems perfectly fit into the high environmental and sustainability standards of Aurubis. The impure copper anodes from the processes are consumed in the Beerse tank house and transformed into copper cathodes.
Anode slimes arising from the electrolysis process are extracted from the process and sold for metal valorization. With ASPA, Aurubis will further secure the core business of the group. This new facility is a prime example of the synergies created by the acquisition of Metallo, and how the whole company benefits in developing new, innovative solutions together. Recycling is an ongoing mega-trend, and the worldwide recycling volume is continuously growing.
Society is delivering on this trend with ongoing consumption. Regulators are also focusing on this, especially with the continuous implementation of the European Green Deal. With the integration of the sites Beerse and Berango, Aurubis has taken the next step towards a circular economy.
Aurubis' capabilities for processing all kinds of complex input materials are already well advanced. Aurubis focuses on recycling as a growth market and has developed a repeatable modular system for a recycling plant. This is just the first step of many in our growth projects for the recycling market.
We are, of course, aware that a virtual tour can't replace the real thing, but we hope that you at least get a first impression of our new site in Beerse and Berango. Now, first Q&A session. Again, during the whole time, you can all the registered guests, on the right-hand side of your screen, there's this Q&A tool.
Please type in your questions, but now we are going to start to answer the first questions. Well, first question is coming from Christian Obst, Baader Helvea. Yeah, Roland, I think it is one for you. What are the main requirements for a possible decision to build an additional recycling plant in Europe?
Okay, thanks, Angela. If you look at our announcement today. Sorry, there's the camera. We have defined that we have a modular system, which we can implement with a standardized approach in other sites. Regarding Europe, yes, it's an attractive market, and you have heard David talking about our market perspective there.
Regarding Europe, we have advanced in our decision-making process, so it will be a brownfield investment, and we have already decided the potential site and are in the feasibility study. We are advancing the decision-making and the engineering of this project as we speak, and you know we are a company who announces when we are ready. As soon as we are moving into the next maturation phase of the project, we will inform what is exactly going to happen in which site.
Next question is coming from Bastian Synagowitz, Deutsche Bank. Your announced projects have a decent ROE, and to some extent, the question is if they are profitable. Why is it no one else doing this? Could you please talk about how much of the return roughly comes from internal rerouting? Lastly, and in that context, what are the barriers of entry? Maybe it goes to Heiko.
Well, in general, we don't want to comment on the behavior of our competitors as this is hardly predictable. Let me re-emphasize on how, for example, the projects ASPA and Richmond fit uniquely into our flow sheet. The product of Richmond, the blister copper, can be processed without any additional investment in our flow sheet, so that is our competitive advantage. Each and every project runs through a rigorous stage gate process and will meet our clearly set profitability and sustainability targets. In doing so, I think we have an edge here.
Thank you, Heiko. Next question, again from Bastian Synagowitz, Deutsche Bank: Is EUR 1.225 billion the correct number for strategic CapEx until the end of the decade? And how much more CapEx should be budgeted for license to operate type of projects on top of the PIP-pipeline you have announced? And I think Rainer is the right person to answer this question.
Mm-hmm.
If we look to the CapEx overall, we have stated that we will be doubling our CapEx figures to EUR 400 million or clearly above EUR 400 million per year now. We have a running CapEx for the current operation of EUR 200 million to EUR 250 million. All that can be added up. We have announced for the short term, EUR 350 million; for the midterm, currently EUR 250 million.
Of course, not including the battery recycling, not including further expansion projects. Hard to tell right now. It depends on a lot of, let's say, resource availabilities and others, which is not the financial resource that leads us to how much CapEx we will spend until the end of this decade. That's the only information I can give to that.
Thank you, Rainer. Next question is coming again from Christian Obst, and I think it should go to Roland, please. How do you think about closer cooperation with bigger companies to develop closer loop recycling solutions like with OEM or other big industrial names?
Okay. Thanks, Angela. Yeah, Christian, a good question. I think we have been quite successful already with closing the loop partnerships with many industrial companies. Actually, we are running more than 50 active plants with companies recycling materials back into our system and take out the raw materials then back into metals or into products.
So I think we have a strong track record here. In the subject of battery recycling, we are permanently now discussing with big players, battery producer, but also with OEMs, what's the right interface, what's the right positioning of Aurubis. One thing is clear, black mass will be our business to recycle black mass, as Ken has explained today.
How far we go then upstream, what's exactly the interface in this industry still is in discussion, and we will be an active player in setting up the most efficient processing route and also the best, the most efficient interfaces in the whole production process of batteries and also in the recycling streams of batteries.
Thank you, Roland. The next question from Ioannis Masvoulas from Morgan Stanley should be asked by Thomas. On the battery recycling opportunity, are you working on a partnership with other major players across the value chain that would help de-risk the initiative?
Well, thanks for the question, and I think Roland has already introduced the topic also for that part. When it's about battery recycling, this is going to be the shaping of a solution over the whole value chain for that specific application. We have defined our core competence, our core business in that chain, and now we are speaking upstream and also in other areas of this supply chain with large scale industrial companies that may be potential partners also in having the best possible service offering. Clearly we are thinking and we are in discussion with prospective partners.
Mm-hmm.
Thank you, Thomas. The next question is from Jatinder Goel from Exane BNP Paribas, and it should be answered by Ken because it is about battery recycling. There might be aggressive competition for end-of-life batteries. What would be your competitive advantages given it's a new business for you? Are you primarily banking on your ability to superior recoveries?
Well, it's an excellent question. Thomas just mentioned the fact that there's an overall service offering that needs to be put to the market. It's not just about recoveries, but they're at least one part of the competitive offering or the competitive landscape. We also look at operating costs. We look at the overall sustainability footprint, where we also need to provide a service on product quality.
Technical competencies will overall play a role. I mentioned in my presentation the importance of sampling and assaying and to determine the right value in the raw material. Looking at the overall package, it's not just about recoveries, and that's where we think we can play this game very, very well.
Thank you very much, Ken. Next question again from Jatinder, which should be answered by Thomas. Are you looking to enter into both European and the U.S. markets for battery recycling?
Well, it's clear that the search for a battery recycling solution that is sustainable, functional, and economical is not only a European question, it is a global and also an American question. Our current focus is on piloting and further developing that project and later business in Europe, and we are going to take that step by step.
Thank you for this, Thomas. Next question from Bastian Synagowitz, again for Ken on battery recycling. Who do you see as the main competitors in the black mass market, and how do you go about your commercial approach, given that auto companies may aim to keep a role and possible control over the battery recycling?
Again, an excellent question. First of all, looking at the competitive landscape, there are companies like Umicore, BASF, Northvolt in Europe who wanna play a substantial role. In North America, we see companies like Redwood or Li-Cycle who've made announcements that they want to make a big entrance into this market.
Now looking at, again, what I said earlier, it's not just about the announcement about the money and the stepping into the market. In the end, you need to actually scale technology up. You need to provide a comprehensive service offering, and this is exactly how we're going to look at this also from a commercial perspective.
With the integration with the OEMs, we do understand that the OEMs have a genuine interest in keeping their hands on the raw material because these metals are scarce, and this is certainly something where we can provide a product offering that will meet OEMs' demands.
Thank you, Ken. Next question is from Rochus Brauneiser from Kepler Cheuvreux, and it goes to Heiko, I would say. Why are further modular recycling systems expected lower versus Richmond, U.S.? Because we said the modular recycling systems will have a CapEx of roughly EUR 250 million, and for Richmond, we announced EUR 300 million.
Well, there are two elements to be considered. First and foremost, Richmond is a greenfield, so we will have to build the whole infrastructure, which obviously at a brownfield investment location is already established and thereby has not to be financed again. Second, also the U.S. is not really known to be the cheapest investment market, so even at the same scope, I would expect a European investment to be slightly less expensive than a U.S. investment.
Another question from Rochus to Heiko. At what level is the Lünen plant expected to operate until completion of renovation work in 2024?
During this renovation process where we put one section step-by-step out of production and renovate, the capacity will be around about 80% as compared to the former nameplate capacity.
Thank you, Heiko. Our next question from Rochus to maybe, Roland or Rainer. I don't know. How are the Richmond CapEx expected to split in the years ahead?
Okay. Yeah, I'll do it. For this fiscal year, we plan EUR 85 million. For the next fiscal year, it's around EUR 130 million, and then the rest subsequently in 2025, our fiscal year 2024-25.
Thank you. Another question from Ioannis Masvoulas from Morgan Stanley to Roland. Please can you explain the difference between Metallo and Richmond operating mode, model? Both are set to generate EBITDA of around EUR 80 million, including synergies, though Metallo has three times the throughput capacity of Richmond. Roland?
If you compare the slides right, we announced to process around 90,000 tons of input material in Richmond, and if you take the combination of Beerse and Berango, which are joint plants, and here we process around 300,000 tons. The difference in Richmond is the mix of materials, so we do significant portion of electronic recycling there and some other also precious metal-containing materials.
This leads to a different input mix. Also organic, we will have significant capabilities to treat organic-containing raw materials and input materials. Therefore, it's really a different input mix and therefore also a different profitability in the per ton equation that we have in these plants.
Thank you, Roland. Next one is from Ioannis Masvoulas to Rainer Verhoeven, I would say. Custom Smelting and Products ROCE has remained below the target of 15%, sorry, in the past two years, and this will also be the case in financial year 2022 based on your guidance. Is there potential for additional cost reduction or rationalization measures to improve its performance?
Yeah, well, first of all, let's be also clear here, the whole company has achieved the ROCE target for the last financial year with well over 15%. Secondly, we are still working on our PIP program. It's not yet finalized, so it will be finalized by 2022, 2023. Till then, there is some measures still in place.
As you see, we are pursuing a growth path. We are building up FTEs, and so forth, so you can't do both things at the same time. First of all, we are growing here. We are developing our strategy, and in parallel, also working on our digitization, automation projects, SAP S/4HANA, for instance, but also MES system and others. That will definitely lead to further efficiency gains going forward.
Thank you very much. Another one from Rochus to Rainer. Can you please give us a sense of what level of net working capital will be required for Richmond investment?
Yeah. We expect some EUR 40 million roughly in 2024-2025 when we ramped up the plant. That will be the net working capital demand, EUR 40 million roughly.
Very clear. Next one is from Rochus, and I would go, yeah, maybe to Heiko. It is concerning ASPA. Why it is still taking quite some time for the construction start in first half 2022, and why it is seemingly delayed from Q2 to first half?
Well, let me assure you that the project is not delayed. We will put that project in operation as foreseen. There are a couple of administrative steps that need to be taken. There are a couple of negotiations still going on, and that's why the startup in terms of construction takes place in the first half of next year and not in the first quarter.
Thank you very much. The last question in this Q&A session, we will have two more additional Q&A sessions, is from Christian Obst, Baader, to Heiko. Where do you see the main risk to build and sent-
And, and.
Sorry. Operate the recycling plant in the U.S.? Where do you see the main risk to build and operate the recycling plant in the U.S.?
Now, there's always the risk of investment cost, which we have covered in contingencies, and we have enough contingency to be sure to execute that project within the financial framework we have provided to you. The operational side is de-risked by the fact that we have ample experience in processing and have gone through all stage gate processes, so we have eliminated all those risks.
With that, I would like to go for a five-minute break now, and after the break, we'll start with the topic of sustainability. Hope to see you all back.
Yep.
Welcome to the second block of our Capital Market Day. In this part, I'll start by giving you an insight into sustainability at Aurubis. Specifically, what we have done here as part of the strategy review work. Afterwards, Roland will give you insights into the topic of energy at Aurubis, which is so key for us. Heiko will then present some of our most important projects that contribute to sustainability.
First, sustainability at Aurubis, a subject in which we are the clear forerunner in our industry. We have taken this very seriously at Aurubis for decades, because based on our smelter here in Hamburg, very close to the city center, environmental protection is extremely important for this site. Of course, today, we make no distinctions in the sustainability standards we set for our worldwide smelter network. We all know that sustainability is far more than environmental protection.
We can also prove our successes. Based on the sustainability strategy we have in place, we have earned very successful ratings, which you can see on this slide. We are particularly proud of our Platinum status with EcoVadis, which is also linked to the terms of one of our financing instruments. This example shows that sustainability runs through all areas at Aurubis.
The Copper Mark is an assurance framework in the copper industry that assures that copper has been produced responsibly throughout the value chain. It was developed by the International Copper Association with the cooperation of 25 companies, including Aurubis.
Today, the Copper Mark is operating as an independent initiative. Aurubis Bulgaria was the company's first primary smelter to complete the Copper Mark assessment process and earn this distinction. Aurubis in Hamburg and the recycling smelter in Lünen are currently in the auditing process.
This audited certificate for individual smelter sites underlines our commitment to responsible copper production. As a sustainable multi-metal company, Aurubis takes responsibility for the global challenges of climate change, environmental protection, and resource conservation.
We have therefore set the objective of achieving carbon neutral production well before 2050, and we are well on our way. Within just six years, the carbon footprint of copper cathodes from Aurubis has decreased by 25%. Even before that, the carbon footprint of our cathode copper was more than 40% below the global average for all copper smelters and refiners.
The main reasons for the improvement are lower direct emissions, higher energy efficiency, higher input of secondary materials, and increased use of green electricity. Projects like the power to steam plant, industrial heat, and the innovative gas cleaning system in Pirdop show a positive impact on our environmental footprint.
The European Union has an ambitious goal for 2050: a carbon neutral society and economy, and Aurubis is committed. Carbon neutral well before 2050, as I already said. Already in late 2019, we committed to the Business Ambition for 1.5 Degrees Celsius, an initiative of the United Nations Global Compact, committing the group to setting science-based targets to reduce the greenhouse gas CO2.
Our ambitious targets have been validated in the meantime. Reduction of direct and indirect emissions by 50% and reduction of upstream and downstream emissions by 24% until 2030 compared to 2018. The targets cover the company's greenhouse gas emissions as defined by the Greenhouse Gas Protocol corporate standard. By taking part in this initiative, we are contributing to achieving the 1.5 degree Celsius target of the Paris Agreement. We take our responsibility seriously.
To make our achievements in environmental protection and our carbon footprints transparent, we publish our own reporting, and we participate in sustainability ratings and rankings, such as the Carbon Disclosure Project. How have we taken the issue of sustainability into account in our strategy review process? Sustainability was one of seven work streams already described by Thomas.
The task was to define sustainability key performance indicators, set smart sustainability targets, assess project contributions according to these defined KPIs, and identifying potential gaps. At the same time, it was clear to us that the current setup of the sustainability department no longer corresponds to the degree of development that this topic now has within the group. We have worked out how we will organize ourselves in the group in the future in order to integrate sustainability into the full organization in the best possible way.
It must be ensured that the defined sustainability targets are considered and practiced in every part of the group. In order to give this an area an even stronger impact, we will establish a separate CO department for sustainability. As probably the most important result of sustainability part of the strategy review process, we defined six ambitious targets based on the sustainability strategy already in place since 2018.
We adjusted and supplemented some of the targets already in place and added new ones. The timeframe for achieving these targets are now 2030. In detail and concretely, this means for Scope 1 and 2 CO2 emissions, we want to achieve a 50% reduction. The improvements will be driven by lower direct emissions, higher energy efficiency, higher input of secondary materials, and an increased use of green electricity.
Projects with a positive impact on our environmental footprint include our power to steam plant, the industrial heat project, and our innovative gas cleaning system in Pirdop. The second target relates to Scope 3 emissions. Here, we are aiming for a 24% reduction. The improvements here will be mainly driven by future growth project in recycling and engagement of our primary suppliers.
The third target is a 15% reduction in emissions to air, and we will reduce our metal emissions to water by 25%. On the subject of supply chain integrity, we will aim for 100% compliant suppliers by 2030. Last but not least, we want to increase our recycling content measured as a share of recycling in our copper cathodes to 50% by 2030.
We already today have a recycling rate of 45% of our total cathode output of over one million tons, which is absolutely at the forefront of the industry. Aurubis aims to be carbon neutral well before 2050. With our decarbonization projects, we are already demonstrating that we set global standards. We see ourselves as part of the solution and as a front runner in our industry.
We insist on the highest standards in energy efficiency and environmental protection, always and everywhere. We already operate one of the most sustainable smelter networks, which is reflected in various renowned ratings. We allow ourselves to be assessed. Last but not least, we have set six strong targets that underline our commitment to further implementing sustainability in our project evaluations and our operations. With that said, I want to hand over to the next presenter, Roland again, on the topic of energy.
Thank you. Aurubis has a strong track record on sustainability, and our future ambition to become carbon neutral well before 2050 is clearly defined. Our leading position in environmental protection today arises from early investments into our production plants. Projects like the switch to cleaner fuels, measures for higher energy efficiency, increase of recycling input and heat recovery form the foundation for Aurubis' very low carbon footprint.
We produce with less than half the global average our copper, and we still have potential for further reduction. With the second phase of our industrial heat project, we can further reduce our footprint by an additional 300 kilograms of CO2 per ton of copper. Our carbon footprint would then be only a third of the global average. This shows the strong track record of Aurubis today and underlines our ambition going forward.
On this slide, we want to provide a deeper insight into the split of Aurubis' energy sources. Electricity accounts for the biggest share of the energy in the Aurubis Group due to our highly electrified production processes. Electrification is the key to a sustainable decarbonization well before 2050. Going forward, our electricity share will increase even further due to the investments for the replacement of fossil fuel in the production processes.
With this said, we have reduced our Scope 1 emissions from the successful implementation of electrification projects. A good example is our power to heat plant in Hamburg, where we replaced the natural gas boilers by electrified boilers. Within our decarbonization roadmap, we will work further on electrification projects to reduce our Scope 1 emissions.
The second biggest energy source of Aurubis is natural gas, with 1.2 TWh in the calendar year 2020. Natural gas is the cleanest of the fossil fuels, and it emits significantly lower CO2 emissions per unit of energy. Our downstream production, for example, the rod plants, operate with highly energy-efficient assets. These plants are our largest standalone gas consumers in the group.
In line with our decarbonization targets, we are working on electrifying these processes and reducing our Scope 1 emissions with these investments even further. Based on the design and availability of alternative energy sources, we still require oil for parts of the production processes. However, that being said, we also intensively work on project to switch to cleaner energy sources like natural gas, for example.
Our site in Bulgaria will replace its oil consumption and switch to natural gas once the pipeline is completed. This fuel switch alone will reduce the Scope 1 CO2 emissions from the site by an additional 5,000 tons per year. Having said this, let's have a deeper look into how these energy sources are reflected on the cost side of Aurubis.
Electricity costs, including requirements for oxygen production, make up the biggest share of energy cost, followed by natural gas. Other energy sources make only a small part of these costs. During the past fiscal year, we have seen significant price increases on the futures market, which we will investigate in a couple of minutes. Comparing our fiscal year 2021 with fiscal year 2020, the group-wide energy costs rose significantly by almost EUR 50 million or 25%. This cost increase was due to two main factors.
Firstly, we had a higher energy consumption due to the inclusion of the sites Beerse and Berango, as well as a good operating performance across the group. Secondly, we have seen significant price increases for electricity and natural gas. Finally, the previous year's figures were very much affected by COVID-19 related lockdowns. More on this in a minute.
On the right side of this chart, you can see the CO2 emissions for calendar year 2020. The good operating performance and inclusion of the sites Beerse and Berango correspond to higher total CO2 emissions from Scope 1 and 2 year-over-year. We have just briefly discussed our reduction path for Scope 1 emissions. With the switch to green electricity via short- or long-term PPAs, Aurubis will reduce its Scope 2 emissions going forward. More on this also in a couple of minutes.
Let's look a bit deeper into other energy cost components. In addition to the pure commodity prices, additional cost components are bound in the total electricity costs. These consists of distribution costs, other fees for energy transition, excise duties, and the indirect CO2 costs in the electricity price.
These additional indirect CO2 costs arise from electricity producers passing on their costs for the purchase of CO2 certificates. Depending on the national legislation, electricity-intensive industries receive some subsidies due to their price taking characteristics.
Copper is a globally produced and priced product, and as a group, we are unable to pass on additional state-imposed costs to our customers. Going into comparison of these initial additional surcharges, the majority of the additional surcharges were on a stable level in comparison to the fiscal year 2019 and 2020.
The rise in indirect CO₂ costs was mainly driven by an increase in the CO₂ prices. On group level, approximately 50% of these indirect CO₂ costs are compensated with an outlook of additional compensation going forward. With this slide, I want to give you some more information on the compensation scheme for indirect CO₂ costs. Let's start by walking through how the mechanism works.
Electricity producers have to buy CO₂ certificates for every ton of carbon they emit by producing electricity. Electricity producers then pass on these additional costs to their consumers, for example, Aurubis. This accounts for additional electricity costs for EU companies that competitors in other parts of the world do not have. To support energy-intensive industry, like Aurubis, the EU and policymaker developed a carbon leakage protection mechanism and arranged a partial compensation of these costs.
Most EU member states provide a compensation of at least 50% of the indirect CO₂ costs in power prices. Due to new regulations, the financial burden for indirect CO₂ costs in power prices will be reduced. Very importantly, the copper sector, which delivers products that are crucial for the energy transition, will be eligible for the compensation of indirect CO₂ costs for 2021 until 2030.
During the past fiscal year 2020/2021, we faced significant energy price volatilities, with the futures market conditions peaking by 200%-300% due to energy supply shocks from the strong economic recovery post COVID-19. In contrast to price peaks in the past, this is and was a global phenomenon. During this period, the electricity supply of our production plants was stable and secure in contrast to other parts of the world.
Not only electricity prices showed significant price increases. Gas price levels were driven by lower storage levels in Europe and Russia in comparison with previous years. In addition, the dispute over the Nord Stream 2 pipeline added concerns about Europe's gas supply.
We at Aurubis have an appropriate mix of risks and opportunities through the mix of hedging measures, a long-term power contract with a high fixed part that mitigates this price risk with additional hedges of gas, coal, and power for the non-German sites.
With these measures, two-thirds of the energy commodity cost increase for 2021-2022 are fixed, and we face only a partial risk from the rising energy costs. Aurubis already has highly electrified production processes, which can be seen in the split of the total CO₂ emissions. 25% of Aurubis CO₂ emissions fall under Scope 2 emissions and can be assigned to electricity.
The sites in Germany, Bulgaria, and Belgium are responsible for the majority of Aurubis CO₂ emissions in Scope 2. In addition to the Scope 1 reduction measures mentioned, we are also intensively working with electricity producers on solutions to reduce Scope 2 emissions. Aurubis aims to achieve this by converting the current electricity supply to green electricity via so-called PPAs, Power Purchase Agreements.
By changing the electricity supply, Aurubis has the potential to significantly reduce the carbon footprint without additional investments and directly contribute to the targets established for the Science Based Targets initiative. This can be conducted via two options, short-term or long-term PPAs. Short-term PPAs usually allow existing plants to extend their operating lives. The prices are oriented to the futures market. Long-term PPAs focus on the financing of new plants and long-term price hedging.
We are in an intensive dialogue with several suppliers to ensure the best possibility for Aurubis to switch our electricity supply, and we are confident to come to a solution within the next calendar year. I would like to leave with a couple of key takeaways. Aurubis has invested early in the electrification of its production processes and operates with a high level of electrification.
With this, we keep fossil fuel use to a minimum and already have a very low level of Scope 1 emissions. Due to very energy-efficient production processes, as well as early and proactive additional purchases and savings of CO₂ certificates, the Scope 1 emissions until 2030 are covered. We constantly review options to further improve energy efficiency, to reduce electricity consumption, and to remain globally competitive. With that, I would like to close my remarks on the topic of energy and hand over to Angela.
Thank you very much, Roland. The next agenda point will be taken over by Heiko Arnold again. He will give you an insight into all the projects at Aurubis, which are currently or are already running under decarbonization and are important energy projects to us. Because I think the global transformation for carbon neutralization will be definitely one of the most important topic. Heiko, the floor is yours again.
The economy and society are now facing what is possibly their biggest endeavor, a sustainable carbon-neutral transformation. Aurubis has a long track record when it comes to environmental protection and the sustainable treatment of raw material. Our sustainability aspirations determine our growth course. Our smelters are among the cleanest worldwide already, but this is not enough for us.
Let's have a look into some environmental protection and decarbonization projects. The project Reducing Diffuse Emissions, or RDE for short, is the largest single investment in environmental protection in Hamburg since the 1980s. Aurubis has continuously reduced particulate emissions since 2000. With an investment of EUR 85 million, the RDE project enables us to further reduce the emissions to air by capturing the diffuse portion.
The specially developed, fully automated, and therefore energy-efficient suction and filtering system delivers an environmental protection standard that is unique in our industry. The project was successfully completed in October 2021 and significantly reduces the diffuse emissions arising from the primary copper smelter. The roof openings or ridge turrets on the building of the smelter have been encapsulated and connected to a high-performance suction system.
The ridge turret ventilation is controlled in sync with the production process, ensuring that at any time diffuse emissions from the process are expected, the exhaust air in the smelter building will be vented only through the suction and filtering system. The ridge turrets are connected to a central pipeline through which a maximum volume of up to 540,000 norm cubic meters of air can be suctioned off, a volume sufficient to fill three hot air balloons per minute.
The suctioned off air is now conducted through the exhaust system to the actual filter unit and cleaned there in over 6,300 individual filter elements. The clean exhaust air is then discharged through a 110-meter-high chimney, and the collected ultra-fine particles are returned to the production cycle. Let's have a look into how this project was developed.
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The first step of our industrial heating project, implemented in 2018, delivered CO2-free heat to Hamburg's HafenCity District. With this project, 20,000 tons of carbon dioxide emissions can be avoided annually. This flagship project has received several awards. The second phase could save five times more carbon dioxide emissions compared to the first step by using process waste heat for the huge district heating network of Hamburg.
Aurubis plans to invest roughly EUR 100 million for the second phase of the industrial heat project. This innovative extraction and usage of CO2-free industrial heat supports Aurubis' sustainability ambition through a further reduction of the carbon dioxide footprint, as indicated before by our CEO Roland during his presentation. In addition to the positive climate impact, a financial contribution of EUR 3 million EBITDA per annum is expected once the project is in full operation.
With the second phase of the industrial heat project, Aurubis will contribute significantly to Hamburg's goal of reducing its heat grid carbon dioxide emissions by 55% until 2030 and making it carbon neutral by 2050. Aurubis was the first company in the copper industry to test the use of hydrogen on an industrial scale.
In a pilot trial extending over several weeks at the Hamburg plant, we used a gaseous mixture of hydrogen and nitrogen in place of natural gas to treat copper melt in the anode furnace during full production. With this project, we established the foundation for a future with hydrogen usage in the copper industry. With this successful start of the hydrogen pilot, Aurubis shows how the carbon neutral future can be achieved with innovative solutions.
With our investment in this pilot trial, we were able to verify the concept of replacing natural gas, which emits carbon dioxide, with hydrogen. We were able to successfully and smoothly test this step in our industrial scale anode furnace during full production and without negative impact on the subsequent process steps. During this pilot test series, the site in Hamburg produced over 2,000 tons of anodes.
When in place, the additional CO2 saving potential from using hydrogen in the anode furnace rises to 6,200 tons annually and even 15,000 tons annually across the entire group. With this successful industrial scale trial, Aurubis has laid the foundation for additional decarbonization potential through hydrogen use. With this solar project, Aurubis is taking the next step towards sustainable multi-metal production.
The Aurubis Phase One solar plant is the largest company solar plant for in-house electricity generation in Bulgaria. The project comprises the installation of 20,000 solar panels on a remediated and recultivated landfill, with a total area of 104,000 sq m. Let's have a closer look at some of the project's details. Once in full production, the Aurubis Phase One Solar Plant will reduce annual external electricity consumption by approximately 11,000 MWh.
This is equivalent to 2.5% of the site's electricity needs and contributes to the site's goal to decarbonize 20% of the current electricity needed. Aurubis Bulgaria can save 15,000 tons of carbon dioxide each year with the project compared to the use of coal-generated power, or over 225,000 tons of CO2 over the operating period. Our ambition is to be carbon neutral well before 2050, and we rely on the highest standards in energy efficiency and environmental protection for this purpose. Let's have a deeper look at how this milestone project was executed at the Pirdop site.
Thank you very much, Heiko, and especially for this very interesting two films. For the next Q&A session, I would like to welcome again Rainer, Roland, and Heiko here on stage. First question on this block is again from Rochus Brauneiser, Kepler Cheuvreux, to Roland Harings. When does Aurubis expect to run the German sites on green electricity? Roland.
Thank you, Rochus, for this question. We are not disclosing the details here, but we are in very intense negotiation with our energy provider, and you know that we have a long-term contract with Vattenfall in place. I'm optimistic that we will announce in the next calendar year the solution going forward, how we are going to switch to green electricity in Germany.
Thank you for that. Next question is from Bastian Synagowitz, Deutsche Bank, again to Roland. You are leading edge among your peers and have now sharpened your ESG targets further. Could you please talk about how you are able to capitalize on this and how far clients are willing to pay a direct premium for having the best-in-class supply chain with companies like yourself on the upstream side?
Yeah. I know my background is the aluminum industry, and I worked many years there, and I know this debate from really the past. It's very difficult to have a structural long-term premium for let's say ESG for an advancement in ESG.
What I see more as a point here is that we are the even more preferred partner with our customers and our suppliers because we can offer, also with the claim of Tomorrow Metals and our clear way forward to decarbonize to make our company and the whole supply chain more sustainable, that we will be the preferred partner of choice. Hence, we will have better business condition, better availabilities of the materials, and also more and stronger demand for our products. I do not expect a permanent premium.
We might have temporary premiums from some customers, but our agenda is not based on a premium, but we want to remain also competitive in pricing and with the raw materials that we supply, despite decarbonization and going very aggressively ESG route.
Yeah. Thank you, Roland. Next question again for you from Rochus. What are the factors preventing Aurubis to provide a fixed date for carbon neutrality yet?
Okay. We made quite a bold statement for an industry like ours, a raw material industry, that we will be carbon neutral by well before 2050. We have the idea, we have the roadmap to decarbonize. It's about the boundary conditions, at which pricing long-term and reliable we can source green energy, electricity, and also in the future, some green hydrogen for our metal processing.
It's a discussion that we have with the policymakers, with the energy providers, and the better, the clearer the conditions are, the faster we can accelerate. Again, Aurubis is a company. We are not making statements and announcements if we are not able to really deliver on those. It's a bit, Rochus, as you know the company very well, it's under-promise, over-deliver. Our ambition is clear, well before 2050, and as soon as things are really tangible or concrete, we are going to announce the exact date.
Thank you, Roland. Next question comes from Ioannis Masvoulas, from Morgan Stanley to Heiko. What is the prospect of further electrifying your operations and switch away from natural gas in the next 1-2 years? Have you set any explicit targets, Heiko?
Well, all our projects will be evaluated towards how they fulfill and contribute to our sustainability targets. We've already explained, we are technically ready to replace the natural gas in the anode furnace, and we are technically, with concepts, ready to replace the natural gas used in our five shaft furnaces around Aurubis. We've set ourselves ambitious targets by which we will guarantee that we reduce our CO2 emissions by at least 50% by 2030 at the latest. All, again, depends on the availability of green electricity or green hydrogen.
Thank you, Heiko, for that. Next one is from Ioannis, again, for Roland. As you transition to green PPAs, do you anticipate to exit the long-term contract with Vattenfall in Germany? If so, how much would it cost to exit the contract? Roland, good question.
Good question, yes. We have engaged in 2010 with Vattenfall on a long-term contract. Without disclosing, because it's confidential discussion that we have today, we are going to find a solution with Vattenfall, how we move this contract, which comes from a different period.
If you see, the triggering point for this contract was the investment in a coal-fired power plant, something hardly to imagine that this is happening in Germany these days anymore. The world has changed, and that's all recognized in the discussion that we have with Vattenfall. I'm very confident, although with a constructive discussion, that we will find a solution without a penalty to Aurubis.
Thank you, and a follow-up question from Jatinder to this topic. Will there be a significant one-off cost in switching your existing PPA to renewables, or do you think you can reflect it through power tariffs over time?
Yeah. Okay, this question is quite similar, same context that was asked before. Again, at this point, we are not disclosing any details of the ongoing negotiations. Again, we are producing raw materials at world market prices, or we buy input materials, and we sell our materials at world market prices. Our energy supply has to be competitive in a world standard, and that's our overarching objective. Any contract, any PPA that we're going to renew or enter into has to meet these thresholds and these criteria.
Yeah. Thank you very much. The next one from Jatinder goes to Rainer Verhoeven, please. Out of your EUR 200 million-EUR 250 million ongoing CapEx, how much would you attribute to ESG-related projects to achieve your 2030 targets?
Well, that's very difficult to stipulate. For sure, we have a clear roadmap for the 2030 targets. You know, we have invested quite heavily also in environmental protection. Take, for instance, the plant in Augusta in the U.S. Also there, for sure, environmental protection is key, is an element, the filter systems and so forth. It is very difficult to stipulate between what is now ESG and what is other investment.
Thank you.
Perhaps to add here one point, Rainer, if you allow. We are today running, by all means, probably the cleanest and most sustainable smelter network already today. It's important that we don't have really a backlog in all the ESG-related projects.
However, we continue to further improve even beyond the requirements that we see from the policymakers, so that we see the improvement potential, and we apply best available technology, or we even create and are the first to demonstrate best available technology. Again, we are starting from a very sound, very strong basis in all ESG-related topics.
Thank you very much. Next one is again from Bastian, a follow-up question to Heiko. Does Pirdop in Bulgaria have the same standards for RDE versus Hamburg, or are there plans to replicate both RDE or heat recovery in places like Pirdop or Aurubis sites?
Well, we come from different levels in both plants and. Of course, ultimately, the target will be the same, but the technical setup in Pirdop is slightly different. We'll find a solution that is similar.
To the solution we have applied in Hamburg, but it's not identical. For heat recovery, of course, heat recovery is one of the most important elements to further decarbonize, and we will pursue all possible goals where we have investment economics in heat recovery.
Here, if I may add, there is a special situation that we are in Hamburg with our large plant so close to the town center, so close to a very populated area, with an established district heating system. There are some ingredients which you don't find in other plants. If you look at Pirdop, there are only some very, let's say, smaller villages nearby, with not the infrastructure of district heating.
Even if we would like to implement a similar solution, which is very CO2 reduction, but with the significant CO2 reduction potential like in Hamburg, it's a bit difficult to really make this a viable financial case to use this district heating, industrial heating idea in Pirdop.
Yeah, thank you very much. Next one is coming from Ioannis Masvoulas again, for Roland again. Can you provide a rough split of your dual CO2 reduction targets across the various levels? To remind you, Scope 1 and 2 by 50%, and Scope 3 by 24%. Roland.
Ioannis Masvoulas, if I understand the question correctly, you want a split between the one and two, which we added up as a 50% target by 2030, which is the Science Based Targets initiative which we joined, and then Scope 3. I don't have here at my fingertips exactly the split between one and two, but as we are, we have already significantly replaced from 2020 till today our CO2 footprint by around 40% as a company, and we are producing our copper with less than half of the CO2 footprint than the rest of the world.
The majority of our CO2 comes today in Scope 2, which means from the electricity production, mainly in Germany and Bulgaria, where still coal-fired power plants and gas-fired power plants are a significant contributor to the electricity production. That's exactly where the discussions about a PPA clean energy for the electricity supply will make the difference.
To the point, majority today is in Scope 1 and 2, is in Scope 2, and then a significant part is in Scope 3, where our, let's say, mining partners, supply partners, have started, as I mentioned already today, significant initiatives to decarbonize the mining and the supply chain in the supply of raw materials and input materials for our smelters.
Yeah. If you allow me to add, Roland, a couple of figures here, because you asked for them. Scope 1 and 2 should be 1.6 million tons of CO2, whereof one million tons is from electricity. We are already quite far in the electrification of our plants, which also explains why the step towards then a green and CO2 neutral is an easier one on that part.
Thank you very much. Now the last question is a follow-up question from the first Q&A session from Rochus Brauneiser. As a follow-up on my U.S. net working capital question, why is the net working capital EUR 40 million so low as Aurubis usually runs total net working capital of 70% of PPE levels? Rainer, maybe one for you.
Yeah. Yeah. Well, not really fully comparable. On the one side. It's the same as with the Custom Smelting and Products business, whether it's the Multi Metal Recycling business. The one bears the whole product business with payment terms, with 30, 45 days of payment terms. While the other, for instance, here, the same holds true for the Augusta plant, the payment of blister copper will happen immediately on delivery.
There is no payment terms. That's why the working capital is lower. Part of the blister products will be sold in the U.S. Also there, of course, it is a bit lower. Don't forget, of course, the CapEx here, so the investment will be quite high. It's not a depreciated plant while we at the other sites look at depreciated sites. It's not really comparable. Well, at the moment, we calculate with EUR 40 million.
Mm-hmm. Yep.
Yeah. Thank you very much, gentlemen, for this very detailed answers. The next agenda point will be our new segmentation, which will be presented by our CFO, Rainer Verhoeven. Rainer, a new segmentation always raises the expectations for more transparency. Do you think, first of all, we will get this transparency? Second is, do you think this might also lead to the fact that investors, analysts will have a different view on Aurubis?
Well, I would say I'm pretty sure that there is more transparency, and you can see that also over the recent days, we have explained to you our targets for the coming fiscal year or for the existing fiscal year, and you see already where the ROCE lies and where the results lie.
This new segmentation stems a bit from also the feedback that we got from the capital market about kind of intransparency with the flat roll business is quite small business while we have the multi-metal business altogether, and there was some intransparency, which we try and get more clarity into going forward.
Thank you very much, Rainer. I would like to remind you that after the presentation of Rainer, we will have a last Q&A session. Rainer, the floor is yours again.
Ladies and gentlemen, let me now introduce you to another important subject, which in part reflects the discussions and interaction we had over the past couple of years with you, our investor community. Aurubis currently reports to the capital market and all other stakeholders of the company in two segments: metal refining and processing on the one side, and flat rolled products on the other.
The MRP segment comprises all our smelting and refining activities, all by-product sales, and big parts of the product business, while only the flat rolled business is reported separately. This leads to an imbalanced reporting and is quite intransparent about the capabilities of our company. In the course of our strategy review, we have therefore decided on a new segmentation that is closer to our core business, the Multi-Metal Recycling and the Custom Smelting and Products.
Not only will we create more transparency on the profitability of our main businesses, we will also allow for a better view on the future development of Aurubis. Last but not least, with the envisaged sale of parts of our FRP segment, the continuation of a separate reporting of this segment will not be meaningful anymore. Therefore, from October 1, 2021 onwards, we will report in our new segment structure.
Our new segments will be Multi-Metal Recycling on the one hand, and Custom Smelting and Products on the other. The focus of our business lies on securing the most profitable input materials for our smelter network. Therefore, we have decided to separate our reporting segments based on the main input materials. The segment Multi-Metal Recycling uses a broad range of recycling materials. This includes all kinds of scrap materials, but also blister copper, shredder, and further attractive materials.
In this segment, we also consume end-of-life materials such as printed circuit boards and other electronic scrap. Already today, Aurubis plays an important role in the European recycling industry and is a strong partner in the circular economy. The segment comprises the four secondary smelters of our group, but also our new project, the multimetal recycling facility in Augusta, Georgia, will be part of this segment.
The two recently acquired plants in Beerse and Berango are part of this segment as well. They extend the focus on materials like tin, zinc, and nickel. Together with our long-standing and very successful plants in Lünen and Olen, the Multi Metal Recycling segment offers a wide range of recycling services to our customers and covers already today most of the metals that form the basis for all kinds of industrial applications.
Another likewise important pillar in our strategy is the segment Custom Smelting and Products. Here, we report about our integrated flash smelters in Hamburg and Pirdop, which we operate with concentrates as a main input material. Those copper ores originate from mines all over the world. Based on the input material, as well as the related production equipment, there is a clear differentiation from our recycling business.
In this segment, we also report about our product business, starting with the copper wire rod produced in our rod plants, but also the shapes business with copper cakes and pellets, as well as the whole flat rolled business, are reported under this segment. Further products included in this segment are the sulfuric acid, a highly attractive by-product of the concentrates smelting process, all iron silicate products, and for sure, our precious metal production.
We're convinced that this new segmentation gives you a more balanced view on our business, reflects our revised strategy appropriately, and will create a better understanding of our future growth path. Having a look at comparable numbers for the old and the new segmentation, we notice a more balanced view when looking at the new segments.
We also see that the Custom Smelting and Products business has performed somewhat weaker than the Multi Metal Recycling segment over the last year. Main reasons were the extraordinary high scrap and recycling markets, which benefited the MMR segment.
In addition, the segment harnessed the successful integration of the smelters in Beerse and Berango, with leveraging the synergy potentials, while we also capitalized on exceptionally high tin prices. On the other side, the higher energy prices predominantly impacted the CSP segment.
Let me again explain the main drivers for each segment. The Multi Metal Recycling segment comprises the production facilities for processing secondary raw materials, such as copper scrap and electronic waste. The focus here lies on the optimization of the input mix and achieving the highest gross margins as a combination of refining charges and free metal gains, combined with a stable equipment availability.
The Custom Smelting and Products segment includes the production facilities for processing primary raw materials or copper concentrates. At the same time, this segment carries the production and sale of our products like copper cathodes, wire rod, shapes, the flat rolled products, as well as sulfuric acid and iron silicate. Also, the production and sale of all other fine metals finds their home in this segment. Here, equipment availability is key.
Besides this, the input mix and an optimized sale of standardized products in large quantities plays a key role. When comparing the capital employed, one can say that the Multi Metal Recycling segment carries less than half the capital than the Custom Smelting and Products segment. While we are having a capital employed of below EUR 800 million in MMR, we carry a capital employed of EUR 1.7 billion in CSP.
The main reasons for this significant difference in the capital employed is the lower overall investment requirement in the recycling business. Here, the complexity of the installations is comparatively less, while at the same time, the net working capital demands in the CSP segment is significantly higher, as this segment is the home of our product business, which comes together with longer payment terms of up to 30 days.
The main product in the MMR segment is the copper cathode, which typically is paid upon delivery. Let me now show you the forecast for the current fiscal year, 2021/22. This forecast for the current fiscal year was already presented during the analyst call last Friday. Let me reiterate on the positive outlook of our business for the current fiscal year.
The segment Multi Metal Recycling will reach an operating EBT of EUR 140 million-EUR 200 million, with an ROCE between 16%-20%. The decrease in EBT and ROCE as compared to the last year is mainly driven by lower scrap RCs and recycling charges, as well as lower overall metal prices, which result in a lower metal result.
In the first months of this new financial year, we can see that especially the scrap RCs have come down substantially from levels of above EUR 600 per ton in summer, to now just above EUR 300 per ton. For the segment Custom Smelting and Products, we expect an operating EBT of EUR 210 million-EUR 270 million, with an ROCE between 10%-14%.
Compared to last year, the CSP segment will benefit not only from an expectedly higher benchmark DCRC for copper concentrates, but also price increases in our product businesses, like the ACP or higher prices for sulfuric acid. For the Aurubis Group, we forecast an operating EBT range of EUR 320 million-EUR 380 million, with an ROCE between 12%-16%.
Due to the considerable investment activities that we see over the next couple of years, we will not be able to reach our ROCE target of 15% for at least three years. Only after the ramp up of the Aurubis Richmond plant, we are expecting to come back to higher ROCE levels. Thank you for your attention. With that, I'd like to hand back to Angela.
Yeah. Thank you very much, Rainer, and especially for your very detailed explanations. Now we are facing the last Q&A round before we going to hear the closing remarks from Roland. First question in this, I think very short Q&A session is from Christian Obst, Baader Helvea, to Rainer Verhoeven. Why is Products part of Custom Smelting? Rainer.
Yeah, Christian, I would put it a bit different. I would say important was that we have the recycling business separately, because the recycling business is what we see a huge growth chance also for Aurubis going forward and where we want to use our growth potentials. On the other side, we didn't want to complicate the whole thing too much and thus have the product segment somewhere. Don't forget that also the product business, if we look to copper wire rod, is also an outlet for our smelters and allows to distribute the copper.
we said we'll keep it as simple as possible, also with regards to internal cost allocations and report in two segments, which is on the one side, the recycling business, so Multi Metal Recycling, and on the other side, Custom Smelting and Products, where the whole product business is in. It's not only talking about the wire rod, it's also talking about the iron silicate products, it's talking about the sulfuric acid, acids which belong to the primary smelters, and it's also about the precious metal plant and the precious metal output.
Yeah, thank you. Next one from Jatinder Goel from Exane BNP Paribas. Are you able to provide indicative gross profit allocation of key earnings drivers for both segments over time?
Well, of course we have considered about that and we have calculated those things, but we don't want to distribute it, as you know. The split also depends on the input materials that we can receive. There is so much interdependencies also between the segments.
Don't forget that all the anode slimes finally end up in the precious metal plant in Hamburg, which belongs to the Custom Smelting and Products, and those anode slimes also come from the Multi Metal Recycling business. There is so much interdependencies between each other, and again, the product mix that we don't want to distribute here any clear rules because they will definitely vary over time.
Thank you very much. Next question comes from Ioannis Masvoulas from Morgan Stanley again, to Roland. You've mentioned that 2/3 of financial year 2022 energy costs are hedged and only 1/3 is exposed to spot. Are you willing to continue hedging on a 12 months forward basis, even as electricity prices remain exceptionally high? Roland?
No, we don't have this policy that we only hedge 12 months forward. We have also more longer term hedges and also some derivatives shorter term in place. We are reviewing very regularly our positions, and it's not just energy, but also other risk positions, if it's currency where we are very transparent in detail what we do with U.S. dollar and energy is one part of that.
For this year or for the fiscal year, actual fiscal year, we have secured two-thirds by derivatives, and we have also some more in place for the years to come. It's something which is a permanent process, reviewing the market and taking decisions there at the point of when we look at our demands and also what's the situation in the marketplace and take the right decision in going forward.
A follow-up question from Jatinder again to Roland. Excluding future projects, would these two new segments keep financial year 2022 guidance EBT mix on a long-term basis, while recognizing short-term volatility year by year?
Sorry, I have to read it again. Just one second, Jatinder, please. Excluding future projects, would these two new segments keep? I know we specifically, if you look at the Multi Metal Recycling market and the Custom Smelting and Products, there are different drivers behind.
If you look at the earnings drivers, each of the segments has its strong pillars and there are some movements there. I think from a magnitude point of view that we have a more capital-intensive segment with Custom Smelting and Products than we have under Multi Metal Recycling. I think that's something which will last also for the foreseeable future.
However, the change on TC/RCs on the smelting side, the prices for sulfuric acid, some other drivers for co-products, and so on, will have also a very determining factor for the profitability in Custom Smelting and Products. I think in principle, there will be this kind of pattern, but within variations over the years to come.
Thank you very much. Well, there is of course another segment at Aurubis segmentation as well, and a question related to this segment from Christian Obst to Rainer Verhoeven. What could be the main delta between a low and a high EBT expectations for others?
Well, I would say figures around EUR 60-EUR 65 million, as we had it over the last years, is quite reasonable. It's all the R&D costs, it's the non-allocated IT costs, the corporate costs, so also the board salaries. Don't mix that up, it's not our salaries that drive this figure so high. In principle, it's the corporate costs which are not allocated and distributed to the segments. I would say EUR 60-EUR 65 million going forward is a reasonable figure.
Thank you once again for your detailed answers. Well, there's another question coming in, another final one from Jatinder again. Are you able to indicate the trajectory of corporate elimination line by financial year 2025, 2026, with the growth project coming on stream versus EUR 30 million-EUR 90 million range for financial year 2022?
Rainer, could you.
I just don't understand the question, I have to admit.
Jatinder, I mean
Are you able to indicate the trajectory of corporate elimination line? We are talking about, again, the EUR 60 million, I think, that we just had. I think it's about the other segment, it's about the corporate cost, it's about the EUR 60-65 million. If not, Jatinder, please let us know. I would say this question is already answered. Yeah.
Exactly. If you have any further questions, and we are always online, as you know, and willing and-
Yeah
answering your question also after this capital markets day. Now I would like to hand over to Roland again for his final presentation. Roland.
Okay.
Again, please.
Thanks, Angela. I want to thank my colleagues on the executive board, the management team, and all the employees of Aurubis for the intensive work they have invested in the strategy review process and today's event. Before we close our capital market day, I want to repeat the most important remarks of our revised strategy for you today.
Our strategy and underlying growth initiatives address global mega trends such as electrification, economic progress, and sustainability. We will consistently capitalize on our core business while pursuing new, highly attractive growth carriers.
Aurubis is a leader in multi metals and a front runner in the largely untapped recycling market. We will further expand our lead and increase our competitive advantage. Sustainability has always been part of our actions and will continue to influence our operations. We hold ourselves accountable and make ourselves measurable by clearly defined KPIs.
We will be part of the solution and strive to be carbon neutral well before 2050. You have seen this slide twice before, but I want to emphasize this once more because it highlights the path forward for Aurubis simply and clearly on just one page. We are securing and strengthening our core business, improving it even more.
Producing metals from concentrates and recycling materials remains a strong foundation for us. Recycling is a growth engine for us. North America and Europe provide us with significant growth opportunities that will leverage our scalable Aurubis Modular Recycling System. This will kick off with our new recycling plant in U.S. state of Georgia. Others will follow. Our sustainability aspirations determine our growth course. Our smelters are already among the cleanest worldwide, but for us, that's not enough.
My executive board colleague, Rainer, has shown you our financial guidance, and Heiko presented the underlying projects in detail. Let me recap the most important highlights here. From approved projects in the short term, we expect an additional EBITDA of EUR 100 million annually by 2025/26, and to invest additional CapEx for strengthening the core business, growth, and sustainability.
In the medium term, we have five additional strategic projects that are under development and should lead to EUR 70 million of EBITDA annually by 2029/30. Our long-term growth and project pipeline significantly exceeds our short-term and medium-term investment amount. Battery recycling is a high-priority growth area for us. Our hydrometallurgical pilot plant is currently underway, and a corresponding patent application has been submitted.
Thank you, Roland. Ladies and gentlemen, I hope you all experienced and possibly even learned a lot today. I personally really looking forward to meet you all in person in 2022, but let's wait and see. Until then, stay healthy, and the whole team here and I wish you a wonderful holiday season and all the best for the new year. Roland.
Thanks, Angela. Yeah, also from my side, thanks a lot for your interest into Aurubis today, that you spent the time with us in front of your screens this afternoon, for all the very good and detailed questions that you have raised. Again, like Angela said, please, there will be certainly with all the material, everything which we have shared today with you, there will be more questions to come. Please refer to our investor relationship team or also directly to the board if you have any more follow-up questions there for clarification.
With this, I would like to thank the team, Angela and his team, but also my board colleagues and everybody who worked on the strategy for this, at least from my perspective, and I hope you can share this from your view into this today's event, for this very perfect execution of our capital market day in the virtual world.
Which is again only second best because it would have been so different to welcome you in our Hamburg site to show you this really interesting and large plant in our new smelter network now since more than one year. Time will come. I'm an optimist. We will get this pandemic behind us. We will get back to our normal lives. In some countries, it might take a bit longer than others. Again, we're optimists.
With this also, with an optimistic tune, Aurubis is on its way. I hope we got this impression across today. With this, on the sixth of December, I think let's enjoy the time before Christmas, spend time with families and friends, take a time off, over the turn of the, I'd say, during the holidays, stay healthy, and looking forward to meet you all in person hopefully soon. Thanks a lot for your attention today.