Good afternoon, London, and b ecause we're streaming this event also through the web, we're also wishing a good morning to all our participants from the U.S. Welcome to the Aurubis Capital Market Day 2025. Thank you very much for coming. I hope you all had safe travels here, and I hope you're also as excited as I am about today's presentations. My name is Ken Nagayama, and since the beginning of the year, I'm heading the Investor Relations department at Aurubis, after having had several other positions in the company for the last 17 years. Actually, I started out my career in IR at Aurubis in 2008, and I see some familiar faces here in the audience, which is great to see, that you're sticking around with this great company and the industry.
In that capacity, I'm delighted to be your host today. I'll guide you through the next couple of hours , and moderate the sessions throughout the day. Before we dive into the agenda, some organizational remarks. Safety first, i n case of an emergency, we'll follow the illuminated green signs out the ceiling through that door and exit through the staircase through one of the exits on the ground floor. Don't take the elevators. Number two, a ll registered participants here in the web can ask questions throughout the whole event. You just have to click the Q and A button at the top of the screen, and then you can enter your questions.
Number three, w e have released the press release for today's Capital Market Day on the web. A s we speak, the presentation slides for the event should also be on the web, so you can download them, read them while you listen to the feed. Just as a reminder, Q and A sessions throughout the day will be there, and of course whoever is here in the auditorium will have the opportunity to raise questions just normally. Now let's go straight into the agenda. Our full Executive Board is here, and we'll kick it off with a panel discussion where the board will talk about their priorities and their focus areas.
We will continue with a view on the markets and the competitive positioning of Aurubis. A fter that, we will update you on our revised strategy before we will give you a first opportunity to ask questions here in the auditorium or virtually. After the break, we will dive deeper into the U.S. growth story, and we'll have a session where we will welcome two guests from two esteemed business partners for a panel discussion here on stage, to discuss working with Aurubis and the value we create in partnerships. The final presentation of the day will be an update and a deep dive into our financials, our midterm outlook, and our updated capital allocation policy. We will follow that presentation with another round of questions. Our CEO, Toralf Haag, will then close the day and our dense program with a couple of reflections.
With no further ado, let's jump right into the first point of our agenda. For a bit more than a year, this Aurubis leadership team has been in office. Today we would like to use the first 45 minutes to give you, within the scope of an interactive panel discussion, the opportunity to learn more about the team, their priorities, and why they are excited about the future of Aurubis. Therefore, I would like to welcome our Executive Board to the stage. First, with more than 30 years of experience in metals and the process industry, and now having returned to Aurubis after 20 years, please join me on stage, Toralf Haag. Welcome, Toralf.
Thank you.
To move on, with a great passion for metals recycling, she's been part of this industry for three decades, with a focus on circularity and commercial innovation. Welcome, Inge Hofkens, COO, Multim etal Recycling.
Thank you, Ken.
Great to have you here, Inge. Up next, I would like to introduce you to a colleague with a strong record in operational excellence, who as I've learned over lunch, was not just 10 years at the helm of Aurubis Bulgaria, but 11 years and two months, as I'm correct. Welcome to the stage, Tim Kurth, COO, Custom Smelting & -roducts. Finally, I would like to introduce you to a gentleman who has gained intense international experience in corporate finance in a very global and very process driven industry. Let's welcome to the stage Steffen Hoffmann, CFO at Aurubis. Thanks for joining us. While many in the audience will have had several interactions, one- on- one with you guys before, I'm sure we're all excited to learn about you and your priorities in this discussion.
I'd like to kick it off with you, Toralf, and ask you, you rejoined Aurubis more or less a year ago and completed your first year at the end of August. Very simply, how has it been returning to Aurubis, what have you learned and is there any difference between the Aurubis now and the Aurubis you knew from 20 years ago?
Luckily, there is a difference. After 20 years, the company has developed quite significantly. I must say I met a lot of people who were there 20 years ago, so this was nice to come back. 20 years ago, we only had two smelters. We had the first steps into recycling. We were focused on Europe and we had some multi-metal portfolio, but it was limited. Now, 20 years later, Aurubis is much bigger. We have a network of different smelters and different plants. We are more international. We're going not only in Europe, but also now into the U.S. I think we have now a very good portfolio with 20 different metals. Yeah, I think we are much better positioned now than 20 years ago. What has always been the case back then and now is that the people were very loyal to the company. We have great metallurgical expertise, the employees. It was 20 years ago and is now also. Now, we also always were a financially stable company. This has kept over the last 20 years, and that's what we are today also.
Thank you, Toralf. Steffen, moving over to you, yo u also joined more or less a year ago, but other than Toralf, you didn't have the experience of working at Aurubis before, so you didn't really know what you were getting into. What was it that convinced you to take this plunge and join us? What surprised you since joining the company? Was there any specific moment where you realized,, "I really took the right decision?"
Yeah. Thanks Ken for that intro. Obviously, having been in automotive for quite some time, we learned it the hard way, what it means when supply chains don't work. The importance of critical supply chains, the importance of raw mats hit the automotive industry the hard way. When I was heading treasury and investor relations of the other company, I experienced what it means when factories stand still because supply is not working. Let's say my fascination for metals and mining industry in the forefront of driving the transformation of other industries, has been grown intensively. Obviously, I was intrigued by the offer to join Aurubis, i ntrigued by the offer for the role, being part of this newly built board and excited about the prospects of the company. As a finance guy, you do your personal due diligence when you're in a process of thinking whether you change the team.
My due diligence was very clear. Aurubis is counting on super important megatrends, recycling, regionalization, metals, multi- metals for transformation. There were many tick marks. I always jokingly say I'm one of the few guys who was reading the annual report from first page to last page, and obviously seeing the financial health of the balance sheet, seeing the good underlying profitability and also the growth potential was comforting me, and giving me great support to go for this assignment. On your question, what impressed me? Definitely the quality of the team and the organization. Has there been a specific moment where I realized that it's the right thing to join the team? Actually, it's every day, not only yesterday, with a certain share price movement, but every day. A lso today, I'm super happy being part of this wonderful team.
Great to hear that. I'd like to move over to you, Inge. On that note, you've been around in the industry and you know it inside out. You had various functions around purchasing, sales, you managed large- scale operations. You've also been with Metallo for 27 years. With your experience, can you share with us what excites you about metal recycling and how has Aurubis also evolved over time, how you perceived it?
Okay, very exciting industry which we are in. I'm super happy to be actually this long in this industry because it's exciting every single day. It's highly dynamic, very volatile, and so constant change. It is also a business which is highly competitive. That means that you have to always keep on the top of your toes, which is great from that perspective. As the communities, as we in life are also bringing a lot of new products to life, a lot of new applications to life, w ith every new application, every new product coming to life, you get also new waste streams and new type of materials that come into the recycling chain. That of course brings a lot of challenges because there is a lot of different compositions of all these materials.
At the same time, it gives also great opportunities to find new ways to treat it or to treat these kind of materials with existing equipment and trying to reshape what you have at hand. Very exciting from that side because on one hand, we also have to take care of the past, whatever the past has been bringing on to life from products. We have to take care of what is presently there, and we have to think of what might come in the future. That dynamic between those different types is really what excites me most.
What is also really nice is that being in this business means that you have to tie up, understand your partners really well in the respect of, what are their needs, what are their ways of going? T o just go through the thinking process altogether, so that you can be a reliable partner in both directions. When you come to the question of Aurubis, how did Aurubis evolve? For many years, I was a customer and a supplier to Aurubis. Super happy I think that we did onboard Aurubis Group because Aurubis has really made a fantastic evolvement. I think Toralf, you said it also in 20 years that you have been also in and then out and then back into the company, a lot has changed.
Where Aurubis in the past was really like a primary smelter, it really evolved to becoming a multi-metal and recycling dealer, which is really great to see. We really have an edge when it comes to processing, complex processing, where all these metals come together and separating them. I think this is really what stands out for Aurubis Group. We have also a real good focus in the group on value delivery.
Looking to, where is the value in our materials that we get? N ot only from the materials, but mainly also with those we work, whether it's the suppliers, whether it's the customers and everyone involved there. With that, I think Aurubis today has evolved into a true partner and also recognized as an industry leader, while setting standards for the industry. I think the fact that we have grown or homegrown as a German company today, we also grew into a real true international organization.
Wow, quite some evolution you've witnessed there. Tim, I'd like to turn to you, and of all the board members, you've served the longest time at Aurubis. Inge just spoke about these multi-metal capabilities. In your experience, what is it that enables these capabilities? Is there some most memorable moment from your time in Bulgaria where you would say that reflects this expertise for you?
Yeah. Thanks, Ken. Yeah, definitely the most competitive advantage is for sure our smelter network. What proves it every day, and as Steffen said, that he's happy every day to work with us here on the team, f or us, Inge and me, it's also very important to have all these days because we always would like to beat yesterday, right? Therefore, in operation, I think this is the goal we would like to achieve. Therefore, you need as well, let's say different metallurgical capabilities which we do have on board. We have a great team on board. W e have a great network over there, and then also the capabilities to run our network. You need also a certain reliability in our network with our smelters and with all our plants. I think this is what we are striving every day.
What is also important for a network is that the network is supporting always each other. Every site is always supporting the other site, which is first of all important for the sites, but as well also important for all our suppliers, our partners, and also our customers. At the end, what I said already two times, is that we are striving for very high utilization rate. Luckily for us, not for the others, is that it's very hard to replicate. Therefore, we do believe that we are always one, two steps ahead over here. Coming to your second part of the question, what is the highlight from these 11 years and two months? As I said earlier, every day counts. Therefore, I'm so picky on that.
We developed together with my team Pirdop 2, a plant which is still able to cast all, let's say, anodes for all the tank houses. We do have five in the group for all the group tank houses, with two casting wheels and that's quite an achievement and to p oint out and support again the message , what we are understanding, how our networks should run. Also, I would say it is also a two- side metal, as all metals have two sides, that during this time, we also developed Aurubis Bulgaria to become one of the largest taxpayers in the region, which then also points out how important Aurubis Bulgaria is at least for Bulgaria and also the region.
Wow, pretty impressive. Now, Toralf, I would like to get back to you, and ask you whether you could speak a bit about your three to five top priorities within your first year. What was that and where have you made progress?
It's no secret that two years ago, the company Aurubis went through some rough times. We had some adverse effects which affected the mood internally, but also the trust externally. Our top priorities were number one, health and safety, to get our health and safety track record back on track and also to take care of the people. Priority number two was plant security, that these events don't happen again, that happened two years ago. There, we invested a lot of money and a lot of efforts to increase the security in our plants. Luckily, in the last year, there have not been any serious incident in this respect. I'm quite happy with the progress we're making in health and safety and also in plant security.
Priority number three was gaining back the trust from our stakeholders from the capital markets, but also from the supplier side, from the customer side, from the banking side, from the government. Here we are not stopping where we are, but we continue to build trust with our stakeholders because it's very important, not only because we are a public company, but because we are, as we think, an important player in the whole metals industry. The other two priorities I want to mention are first to get the return on our CapEx. We've , as you've seen, as you know, through a high CapEx phase over the last years. Now it's time to cash in to get the returns of this CapEx.
We are very diligently following up on the milestones to finish these large CapEx projects, but then also to get the return to increase the return on capital employed. Last but not least, one other priority is to further develop our culture in our company, to develop more towards a performance culture. This is one thing which hasn't changed a t most 20 years ago, the culture is still a little bit technology- driven and German- driven. We're trying to get more into a performance- oriented culture. We have a lot of activities going on there, also leadership programs. Those are the top five priorities from my standpoint.
Okay, thank you. Just to follow up on that, I know we have a separate session later on the outlook, but could you just briefly state, what is your priority for the priorities for the next couple of years? If you look back, that was last year, but now looking ahead.
The top priority for the next year is to get the CapEx return, to get the cash out of the significant investments we have. That's what we stand here as a team to deliver, the return, the cash return on the CapEx. We are also focused in the next year on free cash flow. We will get to that later, but we want to get back into a phase where we produce significant free cash flow, in order to give return to the shareholders, but also to do some more investments. Thirdly, is further strengthen our multi-metal portfolio. Like I said, we've gone a long way, but I think we can still do more to focus not only on copper, but also on the metals, other metals we are extracting from the concentrates and recycled materials to get them onto market, and also to expand our market power here.
Last but not least, priority is regional expansion. We'll also get to that later, but our focus right now is to further increase our capacities at our European networks and also now to expand into the North American market, which we are very convinced o, t his market is very attractive for us from a market standpoint, but where we can also bring our expertise to the market. Those are the top priorities for the next years.
Very good. I'd like to follow up with you, Inge. Just following up on Toralf's points and speaking now to the metals expert, Inge Hofkens, what is, in your view, Aurubis' role in multi-metal and what is our right to win in this game versus our peers? Where do you see the biggest opportunities for Aurubis in the next couple of years?
Okay, so for us, as Aurubis, definitely this whole value potential in our raw materials, whether it's primary, whether it's secondary materials, that is definitely what is standing out. As I said, getting more complexity into the product side of things coming to life on markets, we have to deal with a lso when it comes to the processing of these materials. F or sure, demand and specifically for copper is very much increasing. W ith all the megatrends happening, c opper is highly in demand. We expect 20% of growth or more on that matter. Tin demand, just to name another one, will grow about 40%. We have all of these other metals that are around there that have similar growth opportunity. On the one hand, we have real big demands, scarcity of material on the other hand, and at the same time, raw material complexity all coming together.
That is where Aurubis also has its point, where we can bring in really our value, because we are capable of dealing with that complexity. We are able to recover those metals. T here is about 20 different metals in the portfolio, and really focusing on each and every of those elements to get them out of the raw materials and bringing them back in the cycle. T hat is really where the edge goes, and then translating that into, where is some more opportunity? For sure, there is a lot of talk also about circularity and what circularity can bring to life. Circularity is a concept, it's a big word and it always covers a lot. Thinking it in truly profitable business models and trying to bring them to life, that's really where there is a huge opportunity that lies ahead for us.
Also, a push for local production, I mean, we hear it every day everywhere, that this wants to have strategic material and metal available in local regions. That is of course giving another opportunity. With that, the fact that we are already very much into this recovery, w e cannot do this without our expertise, without our people that bring the expertise. T his, both combination of the expertise and our people, I think this is for Aurubis absolutely an unmatched advantage.
Great, thank you. Steffen, back to you. You mentioned before, yo u've joined us from a process-driven industry and you worked a lot on international context. From a CFO's perspective, what are your priorities for Aurubis and how do you and the team contribute to us achieving our ambitious targets?
One of my priorities is obviously helping installing a performance culture and a bottom line orientation. I think after strong, important, and meaningful strategic CapEx program, we are now to enter a phase of payback. It's now payback time in the next two to three years. With regards to payback, I would primarily obviously refer then to the cash flow. I live a bit the philosophy that EBIT is an opinion, but cash is reality. We as a team, we really want to see cash improving significantly in the next years to come, starting with this fiscal year where it's our ambition to reach the free cash flow break even before dividend. We'll talk about that in more detail. That's the overarching goal. Obviously, what are enablers for that? Ensuring that the projects pay off.
If things would develop on some premise in a more difficult way, we need to find ways to counter, steer, to act, to maneuver in order to bring the things home in time and in budget. It's good in those volatile times to work on self-help measures, being it on the cost side, being it on the network and capital optimizations side. We'll talk about that. Obviously, working with you, working with the capital market on the appropriate return, on the appropriate participation and on the right level of capital allocation. W orking with you with regards to the equity story, in the sense of explaining our company even better, making it more transparent and thereby still being able to safeguard legal boundaries and so on and so forth.
Okay, thank you. Tim, t he priorities that Toralf just mentioned included, operational excellence, health and safety, plant security, and b ecause you've been managing large-scale operations for more than a decade, I'd like to ask you, how do you make operations better and stronger? What was your secret ingredient in Bulgaria?
Yeah, thanks for that question. F or sure, t he secret is not just to name and to list these ingredients. The secret is more to execute and to live those ingredients, right? For sure, you have to have a strong team. Steffen mentioned that, that he was happy that when he came first, that he really realized that he has already a strong team. We do believe that we have also in the other areas, these kind of strong teams with whom we can really execute what is on our list to be executed. We need for sure, also the same level of trust. We should live the same values, we should have shared goals, and at the end of the day, this is still hard work to execute.
What is very important for me, and I mentioned that at the beginning, is really the collaboration across all the sites, including the smelter network. I mentioned already that we have got several tank houses. The tank houses are for sure an integrated part of the single plant. W e created a kind of smelter tank house network where all the five tank houses are really talking to each other, and they have got the same challenges and the same task . R egarding automation and so on and so forth, t hey can just work much closer together, develop great ideas and also compete a little bit, so that we can really get every day better.
The same is for sure also, and you mentioned that explicitly and Toralf as well, the topic with safety and security. Also, over the re, this is really a core point for all o f us. I t's also very important that we are learning from each other, that we are challenging each other, and that we are really getting better each and every day. The secret, let's say, ingredients or sauce, who's just binding everything together, is for sure the collaboration we are living and that we are learning from each other. This is more or less the foundation of our success.
Okay, very well. Th ank you. Tora lf, back to you. In one of your previous answers, you mentioned leadership and you're very vocal about leadership within our organization. Can you share how you think about the concept of leadership, and what are your leadership principles? Maybe just to add to that, how do you get an average or a good company to become a great company? Maybe to hear your thoughts on that one.
Like you said, leadership is close to my heart. I think we have huge potential at Aurubis to develop more leadership skills and also to develop our culture. In my opinion, the best is if you have a combination of the European or German traits like reliability, quality, and so on, and combine that with an Anglo American team-oriented cultural approach, l ike I said, this is one of our top priorities in the company. We started that right a year ago. We're making some good progress, but this doesn't happen overnight. It's a multi-year program, but we are working on that to have more feedback culture, to have more open discussion, also to have a failure culture, and to talk not only about each other, but with each other and for each other. This is very important for us. We have launched a program which is called Power for Performance.
Of course, all these programs also have to result in improved KPIs in our cash flow and earnings. There's only one KPI which is more important, and that is health and safety. We want to bring down the LTIs that we have. Everything else, also the cultural program has to end up in performance. That's why we call it Powerful Performance . I think we're making good progress there. There's huge potential. I think there's still more to come, and I'm quite happy how the organization is accepting these programs , how they're dealing with it. Of course, we are promoting only leaders who share this thought of performance culture. If they don't share it, then we find other ways for them. We're quite consequent and disciplined on this.
Okay, good to hear that. Tim, but just t o follow quickly up on what Toralf just said, the leadership and performance culture that was just elaborated on, how does that impact operations?
Yeah. First of all, we have to face the truth, that every site and every operation is quite different, r ight? We are acting in not so many, but we are acting in quite different countries, from Finland to Italy, from Spain to Bulgaria, and now as well in the U.S. I lso am absolutely convinced that every site needs as well its own specific vision on its own. This means that it's not excluding that we are working together and that we are sharing best practices, ?r ight?
This is for me really the key success factor. When I started witnessing 11 years, where we have worked a little bit in a different way, that this is really a key factor. Just to give you one example, we had the last financial year, that means this calendar year, a very big shutdown in Bulgaria, 60 days, $150 million investment into this shutdown. Afterwards, we have heard nothing from it. This is how we would like to execute shutdowns, right? We do not want to go into a shutdown and afterwards, either they are the same or the trouble is becoming a different way, right?
We are now taking really the lessons we learned from these shutdowns to the other sites and to the other plants, and working much more closer together. T hat this is a kind of benchmark and shutdowns then really back to their core, that they should stabilize the operation and that we are going then forward in much better shape. This is one example. To be a little bit more, let's say specific over here, we are now exchanging also operation teams in this case, between the primary smelters in Hamburg and also in Bulgaria in operations, but also in maintenance, because we do believe and we do see now already we are harvesting these weeks and days the effects of this collaboration.
It's really great to see how the teams are challenging each other and that the results are coming much better, so that we are at the end, having a much more stable operation with also much lower costs. The same is for sure coming to, let's say the recycling plants, where we are also going into the direction that we are gaining much more knowledge of management of impurities, so that we can also there, how to say? F ree up a lot of operational opportunities. This is what is really making us and me personally very happy, that there is much more to come.
Inge, speaking about performance culture and the role that it plays for us at Aurubis, could you share one aspect that is particularly important to you?
I think my colleagues already said a lot of them, but it stands without a doubt that no culture goes without the actors in it, without the people. In Aurubis, there are great people. T hey are exceptional not only in the expertise as mentioned, but also super passionate about what they bring to the table, what they can do, but also what it means working within our Aurubis organization and to recognize that strength that we have in all and each of our colleagues around. This needs some working because it's not just if you have passionate people that it works as a whole. I think Tim said it also, collaboration is really key. The way on how we collaborate together is absolutely a part of getting that culture all together in the right way, to get that motivation out.
Now, how do we do that? It sounds and can be maybe really logic that we need to do some active listening here. This is something we might have not done always the best in the past, but i t's really something where we want to put a great effort into. That w e use also the maximum out of each and every one to bring that to the table. What can we do on the other side of course, is really share very precise information that everybody can also use in that collaborating together, so that we can get the results and get really performant on all the angles that we want. With collaboration, obviously we bring in all these different perspectives.
As Tim said, culture- wise, we do have very much different cultures, not only anymore let's say the origin culture we started off as compan y, but that is actually making us stronger. It is better to have very tough discussions than half- baked discussions, because those will bring us really to our next steps. It does not only bring new ideas to the table, but it drives also a lot of efficiency in the way on how we work. The more efficient we become in the way on how we work, the more time we have also for new innovation and new things to happen, not only within our own organization, what we do internally, but also how we can spread at that with all our partners that we are working with.
Okay. T o round this up on the performance culture part, Steffen, how do you define performance culture and is there a particular stance you would take from the finance angle?
Yeah. Try to be brief. We need a good mix of hard facts and soft facts. Hard facts, obviously KPI driven. I've talked about cash, cash conversion, cash generation. It's just an example on the project side, p aybacks, IRRs. It's much more than the hard stuff. It's also the soft factors. I think for a company like ours, risk management is crucial. Anticipating risks, mitigating risks, having a backup plan, thinking in scenarios, encouraging that people talk about potential risks early. The earlier we talk about risks, the better. Speak up c ulture is an issue. Toralf alluded to that one. Finally, it's all about trust. Trust in each other. Without trust, there's no performance.
Very good. I'd like to round up this whole session here now with the question to the four of you, and I'll start again with you, Toralf. The question is, Aurubis has a bright future because, it's not actually a question, but please complete that sentence.
Aurubis has a bright culture because we power the world with sustainable metals, which are indispensable for all the megatrends.
Great. Inge, same question for you. Aurubis has a bright future because?
We have exceptional people. We create unrivaled solutions for our business partners and shareholders, and it embeds us even more strongly so going forward in the ecosystem.
Okay. Tim, I think by now we've got the gist. Aurubis has a bright future because?
Yeah, because we are going to unlock our full, let's say, potential not only in operations, but also the entire organization. As I said earlier, we are going to continue to be two steps at least ahead of our competition.
Very good. Steffen, do you want me to read the question?
I think Aurubis has a bright future because we have a resilient business model, a healthy financial situation and it's in the DNA of Aurubis to seize the opportunities in the decade of many metals.
Great. Thank you very much for this very interactive panel here. Toralf, Inge, Tim, Steffen, I believe we're going to continue with Toralf. We will see Tim, Inge, and Steffen later today again. Thanks a lot for this first session, and some of the aspects that we just heard, we will certainly hear throughout the presentations of the day. Now we're going to turn to the second or the first presentation, but the second session of today's Capital Market D ay. W e will provide an update on the markets and our competitive positioning. For this presentation, we have Toralf here on stage, and Toralf will be joined by Seonag Doherty, who has joined Aurubis as Head of Strategy and since August, she's also heading our Corporate Development team.
She brings along a decade of experience in corporate development, transformation, and has had leadership roles in consulting, energy sectors, and other industrial areas. It's really great to have you here, Seonag. I believe you've had a particularly intensive program that you pushed through over the last couple of months. Thank you very much for joining us here. Toralf, Seonag, I believe the floor is yours.
Yeah. T hank you, Ken. Let's talk about the market. You see here some quotes. I strongly believe that we are entering a new era for copper, a nd also for the other metals that we produce. A way from being commodities or just input per material, a ll the metals we produce are going to be essential for infrastructure, for energy transition, for transformation, but also for managing geopolitical risks. I think we are just well positioned in these new megatrends. We are at the epicenter with our metals. First, the AI, artificial intelligence and digitization will drive a lot of demand for our copper, energy, and infrastructure. There's going to be big investment programs over the next years where we will benefit from. Geopo litical realignment, w e see this geopolitical risk and everybody is looking to keep the metals in their country or in their continent. This will also boost the demand.
Critical raw materials are in focus, and they become more and more in focus. I see that when I talk to politicians in Berlin, Brussels or in [Washington]. It's coming on the top of the agenda of the governments. Every government sees the need to secure raw materials for their respective countries or continents. Here we see the six megatrends or the six sectors where our metals will have an increased demand. It's of course the area of electrification. It's the area of artificial intelligence and advanced technology. It's also the defense and security. A lot of copper goes into the defense industry, renewable energy of course, wind and solar, mobility and transport, but also urbanization and infrastructure. You see at the bottom, the metals we produce, many of them go into these different sectors.
I think this is also one of the strengths of Aurubis, that we supply many sectors, many industries. We have a good diversification. If automotive is going that well, infrastructure and energy is going well. We have a nice balance here. Overall, the megatrends play into these industries. Here are some facts which some of you might know, but some of you might not know. Until 2035, there's going to be 200,000 new wind turbines.
In these big wind turbines, there's up to 40 t of copper, so a lot of copper demand. Another big market demand that we see is the new data centers. Up to 30,000 t of copper are in these data centers, and a lot of data centers are being built in Europe, but also in the U.S. and in the other parts of the world. W e see an increase of new electrical vehicles, 50+ million .
Of course, electrical vehicles have much more copper content than the combustion vehicles. It's 2x or 3 x fold in an electrical vehicle. We have an increased demand of gold, which you see from the copper price because people see this as a safe haven. Not only the dollar anymore. I ncrease in solar panels, where we have increased demand for silver, but also for tellurium. Last but not least, significant increase in the electronics industry. These are also supported by the government programs like $600 billion, which was just announced in Europe in infrastructure and modernization of the industry. We will benefit from that, and also the investments in the tech industry. All these factors, this will come, this will drive demand, this will drive demand for copper, but also for the other metals that we are producing.
Here you see some selected metals with their expected growth rates. Copper is expected to grow by over 20% over the next 10 years. Gold by 26%, silver by 10% and tellurium, because of the large demand in solar panels but also in other applications, even by 80%. Tin, which is becoming a more and more important metal for us by around 40%. The demand side, the market side for us is very strong. That's why we invest so much in the increase of our capacity, because the market is there and it's a structural growth. It's not a short-term growth. I t's a long-term growth which is structural, which is very important for us when we make these huge CapEx investment, because we would only do them if we are sure that this long-term structural growth is there and it's there for all the metals we produce.
Of course, it's not all shiny and great. The market demand side is very, very strong, and I'm 100% convinced it will stay strong over the next years and decade. We also have some headwinds. O n the concentrate market, a s you know, it's pretty tight. We'll get to that later. TCRCs are under pressure, especially from Asian competitors. Also, the recycling materials, the markets, the availability of recycling mater is under pressure because of competition from the Asian markets. Battery metals, we'll get to the topic of battery recycling later. There has been a slowdown in the market development and the question is, where is going to be the market for battery recycling? Is it going to be in Europe or is it going to be in Asia? We have supply chain disruptions which we have to manage, and o f course the global competition.
China, they have 55 smelters. I n Europe, we have 15 smelters and in the U.S., we have three smelters. There's big competition not only in China, but also in India. These are the major challenges that we face. We are very confident that we will manage them, because we have a resilient business model and we have our answers to these challenges. We'll get to that later. Why are we convinced that we will manage these challenges, and why we continue to play a very important role in the multi-metal market, o ur business model has a lot of USPs, competitive advantages. The five most important one is number one, the multi-metal excellence. We are not only excellent, since over 150 years in producing copper, but we also have the excellence to extract other metals like gold, silver, tellurium, tin, zinc, nickel, and so on.
We are getting better and better there. We have a robust and resilient business model, which shows that also the TCRCs are at a bottom right now, but we are still able to generate cash flow with our business model. We have authentic sustainable leadership. We don't focus on sustainability, not only since the last year, where it's become en vogue, but we've been doing it for many, many years. We produce much less CO2 per ton of copper than our competitors. We do that at our Hamburg site, but also in Bulgaria and also at our new center site in Richmond, U.S. We put the highest environmental standards in our facility. We invest in this, number one because we think it's important, but number two also because the customers more and more ask for it, that we produce sustainably.
That's also one important factor why the mines like to work together with us, because we work together on programs, how to make the whole value chain more sustainable and more environmentally friendly. We work with Circle Solutions with our business partners. We are a very service-oriented company. We constantly try to find new ways to get the whole metal flow in the circle, going with recycling, with input materials, with getting it back into the cycle.
There's a lot of optimization possible not only within our own network and with our network, with our customers and suppliers, but also in the whole industry. Last but not least, we are fully integrated copper producers. We cover a lot of parts of the value chain, which is also a USP that Aurubis has. This is an overview, and now I'd like to hand over to Seonag who will dive a little bit deeper in these USPs that we have.
Thanks a lot, Toralf. Very happy to elaborate a little bit further on those. As Ken alluded to earlier, we've been quite busy in the past months updating our strategy, and we're very happy to share some details around that with you today. Of course, we've built our strategy on our competitive strengths. Let's go through each of these five. I'd just like to talk a little bit more about each of them, so you can understand what's really behind the taglines. The first is our multi-metal excellence. Really, only together do our individual smelters realize their full potential. That's why our smelter network is at the heart of our multi-metal excellence. Our network, as you know, is unique in our scale and its capabilities, and it's the interconnectedness of these capabilities and really deploying the individual strengths of the network to maximize the full potential of it.
Let's just take a few of our sites as examples. Hamburg, which is specialized in precious metals refining, or Beza, which can treat very low grade materials, separating complex alloys that not many have the capabilities to separate, like lead and tin, or our recycling facility in Lünen, which can treat a whole range of different recycling materials. It's because of the unique capabilities of each of these sites working together and our internal metallurgical expertise to really get the most out of the raw materials we're working with, and route that to the right facility where we can optimize the metal gains that we get out of that in total. That's why we have benchmark metal recovery.
Together with that high metal recovery rates, we also have a very low waste approach. Me aning that we produce very low waste in our production processes, and we seek to turn all of the input materials into valuable and sellable products. One example that we've recently done as well, just looking to our Hamburg site, taking the residual industrial heat and turning that into district heating for the City of Hamburg. We, also as a company, we have a real affinity for complexity. No one else can handle complexity like we do. We can process different combinations of complex materials that contain copper, tin, nickel, precious metals, but also very high levels of other impurities. These are streams also that many other players can't handle effectively. When we talk later about the commercial expertise and tapping into new material streams, this is really key for us.
We do this flexibly, adapting to different shifts in markets and customer requirements and supply flows. Bringing that all together, we're able to leverage that network to the best of its ability. Looking at our second competitive strength here, we have our fully integrated copper producer. While we pride ourselves on being a multi-metal company, frankly the only company with the ability to process so many different complex materials, one of our competitive strengths of course, is the fact that we are an integrated copper producer. We're involved at every step of the value chain, so from raw materials down to fabricated products. Just looking around the circle that you see on the screen here, our supply base is built on this powerful duo of primary raw material, but also secondary recycling materials and that gives us a lot of flexibility.
When there are fluctuations and variations in the market, we're able to make the best combination and leverage the synergies out of the processing capabilities that we have for both. With our integrated network, we also are able to recover, as Toralf mentioned earlier, 20 different metals and elements. Beyond copper, that covers other elements and co-products like nickel, tin, zinc, selenium, sulfuric acid, and iron silicate, to name a few. We then look also to our breadth of fabricated products, from wire rods to continuous cast shapes, to flat rolled products, as well as a number of other specialized minor metal applications. We're really a one-stop shop to serve multiple different customers and industry needs.
It's this strong ownership that we have across the full value chain, again from sourcing raw materials down to the fabrication of products, where we have strong internal capabilities, don't have to rely excessively on third parties for any individual step along the way. That builds in a certain downside protection, protects our operations from disruption, and it also ensures this reliable, sustainable supply for our customers. Another unique strength of our company is a business model which is robust in its breadth and also resilient in its earnings diversification. That didn't happen by chance, and Steffen has alluded to that. That's been a process of nearly 160 years. We've been purposefully building and strengthening our portfolio, and adapting our business model to what it is today. There's a few aspects of that. The first one is that we're not dependent on a single market or product.
By serving a broad range of different end industries, it's a certain built-in diversification that our portfolio benefits from multiple different underlying macro trends and economic drivers that are linked to the different segments that we serve. We've also made, on the other hand, a very wide range of different strategic investments in our portfolio to grow that multi-metal portfolio, increasing capacity, expanding geographically, and continuously strengthening also internally, our technical capabilities. If we look to the supply side, there we also built in quite some diversification. We've got an expansive long-term global supplier base with over 1,000 business partners, and that builds also a certain supply reliability even in volatile markets. Finally, all of this is underpinned by a solid balance sheet and strong net cash flow, where we've been able to finance a number of our strategic investments in the past years from that cash flow.
As Steffen also indicated, a financial discipline where we carefully invest where we see the most value. Taken all together, these different elements make Aurubis' s business model resilient through market challenges and also capable to deliver on our strategy even in uncertain times. Another key strength of ours, we pride ourselves in the fact that we are a leader in sustainability. When we talk about sustainability, we mean sustainability in a way which is tangible for our customers and for our business partners. It's not an add-on for us. It's truly embedded at the heart of what we do and how we operate. We turn that leadership into impact in three distinct ways. The first one is through stronger relationships. We're setting standards and we play a significant role in the value chain, connecting suppliers to OEMs, so b uilding a certain amount of trust through that value chain is as well.
Second is shared standards. We make our sustainability transparent, both by implementing but also by advocating for certain standards across the industry, such as the Copper Mark, where today about 95% of our cathodes are also Copper Mark certified. The third aspect is in better products. Our products have, as mentioned previously, below industry average, environmental and carbon footprints. Looking at gold, silver, and tin, we're more than 50% better than the global average. For copper, it's even higher, more than 60% below global average. This combined with our high quality helps to meet the rising expectations both of regulators and our end customers. For us, it's not just an obligation, but it really is a source of competitive differentiation and strength. We regularly hear that also from our business partners.
Perhaps we will do so later today as well. To talk about the last component of our competitive strength, that's the ability to create circular solutions together with our business partners. Today we have more than 150 closing the loop collaborations across copper, but also other metals. These partnerships ensure that production residues and scrap get returned to our network, so collected and returned. We can transform them back into the high- quality metals that are needed to serve a broad range of industries, and also the megatrends that we saw earlier. What differentiates us in our offering are two aspects. One, we can accept what we offer to our business partners, we can accept mixed recycling materials, so handling complex refinery scrap, and we can even work with small scrap quantities. It opens up the door for a number of partners to be able to join.
On top of that, the second aspect is, we're able to provide customized logistics solutions as well as flexible financial arrangements. We make it also convenient in order to participate in that. It makes the cooperation with Aurubis not only technically attractive, but also commercially efficient and reliable. In essence, by doing this, we can strengthen long term partnerships, we can secure critical metal supplies that we and the broader ineustries require.
We can also demonstrate through that how circular solutions are not just an environmental benefit, but a true strategic and commercial advantage for us and for our customers. Taking that all together, the five competitive advantages, it's not one individual that sets Aurubis apart, but it's the combination of these five that we've carefully curated and strengthened over time and continue to build up that create our USP, so to speak. It secures our role as a partner of choice, particularly in an increasingly resource-constrained world.
Thank you, Seonag. Let me wrap this section up b y underlying our ambition. St arting from a position of strength, as just presented, Aurubis is committed to further strengthening our position as a leading copper and multi-metal producer, setting industry standards in sustainable and efficient production. Our goal is not only to maintain leadership, but to set the best benchmark, creating value through sustainable practices, efficient operations and a continued focus on innovation. This ambition captures the essence of what we stand for, turning complexity into value, responsibility, reliability, and shaping the industry for the future.
Thank you, Toralf and Shenag, for these insights. That was quite an outlook you provided. I must say the first future is truly made of metals. Sounds at least like that when you look at the figures. To keep us in time and because it also perfectly ties in with the presentation we've just seen, I would like to now continue with our presentation on the revised strategy. For that purpose, Toralf and Seonag will stay on stage, but I would like to invite Inge and Tim back to the floor. Warm welcome again. In the next part, we will dive deeper into how we're planning to capitalize on this market outlook, and to use our competitive positioning within the scope of our strategy. I believe you will kick us off with a small recap video on strategic projects, Toralf, am I right?
Yes.
Very well [crosstalk].
Before we dive into the future, let's recap what we have done in our strategic initiatives so far. Just to give a little bit more details on what we have achieved so far, here you see the projects we have realized. When we set our strategy in 2021, we said we are going to implement all these CapEx projects. Here you see the CapEx projects that we have completed. We have completed the industrial heat in Hamburg. About over 20,000 households in Hamburg benefit from our industrial heat. This is also a pilot project for the whole of Germany and it's win-win. We make some money, and we have some sustainable and efficient energy supply for the households in Hamburg. We've invested in the anode furnace 2.2, so we are hydrogen- ready.
If hydrogen becomes available at competitive prices in a certain form, we can use it and we can have our main elements of our plant use the hydrogen instead of gas. We have done the ASPA investment in Beerse. W e'll get to that. We have invested in a solar park to also use renewable energy in Pirdop. We have completed the BOB investment, the bleed treatment in Olen. We have completed phase I in Aurubis Richmond, where we just had our first smelt ceremony there. We had another solar park in Pirdop. In this year, this started fiscal year and i n the next fiscal year, we will complete our complex recycling new plant in Hamburg. We will complete phase II in Aurubis Richmond. We have another tankhouse expansion in Pirdop, another solar park, and then in the following year, some slag processing optimization and our big precious metals refinery operation in Hamburg.
By the way, you're all certainly invited to look at these new plants. If you want to travel to Hamburg or Beerse or Olen or Richmond, you're invited, you have to look at it. It's really impressive. Everybody wants to see Richmond. At the moment, we don't let anybody in, especially not competitors. For you, we would make an exception and give you a plant tour here. Talking about Richmond, David Schultheis will elaborate on that later. Here you see it's the first greenfield smelter in the U.S. Like I said before, there are 55 smelters in China, there are 15 in Europe, and there are now just three in the U.S., two primary smelters and one recycling smelter. We are the first recycling smelter. Of course, we asked the question, why didn't anybody do it before?
The answer was either the money but not the technology, or the technology and not the money. Now we bring both the technology and investment. We are very proud that we achieved this. You see a picture of it here. Investment over €740 million, 240 new jobs. We confirm our EBITDA here, a return of €170 million. The other projects which have been completed, you see here ASPA, we completed in Beerse. It's a newly developed hydrometallurgical process where we can have quicker recovery of precious metals. In Olen, the bleed treatment is more efficient, and we can recover through that process better copper and nickel. The complex recycling in Hamburg will be starting up beginning of next year, where we further optimize the smelting process and will have an additional 30,000 t of recycled material as inpu h ere. A s Seonag alluded to, t,hat we're able to process complex material.
This is another plant where we will be able to process very complex recycling materials, and also get a nice return out of this facility. Last but not least, the completed tankhouse expansion in Pirdop is on the way. With this, we will increase the capacity by 50%. These are the major milestones which we will have completed or will complete in the next years, in order to get our cash returns. Coming to the subject of battery recycling, we have invested quite some money in battery recycling. We have a good recycling process for the Black Mass. We have a demo plant in Hamburg which is working. We have a network, but we have realized that the market is still at a very early stage.
Like I said earlier, we're not sure yet if the market for battery recycling will evolve very strong in Europe or in Asia. That is why we decided in the Executive Board to make no further investments in battery recycling. Once we targeted to invest in a huge plant, we decided not to do this, but we are now in discussion with partners in joint venture or other collaborations where we can bring in our technology, and still realize the value that we have generated. Like I said, no major further investment in this field, which will also help our free cash flow generation in the next years. Let us now show a video going forward, how we see the strategy going forward for Aurubis.
The future is built on metals. Megatrends define tomorrow's world and are driving forces behind business, electrification, energy infrastructure, artificial intelligence, and global security. This is the world that challenges us and inspires us. Metals are our business. They are the basis of growth and resilience. We build on our strengths and are r eady to forge the future. Our strategy program, Aurubis Performance 2030 will lead us. W ith impact, w e deliver performance and gaining synergies from every investment. Through commercial excellence, we deepen our market access and sharpen our competitiveness. Wi ith efficiency, we optimize operations for peak performance. Through innovation, we maximize multi-metal yields, unlocking new opportunities .
With focused growth, w e pursue value-creating growth where we lead. Aurubis Performance 2030, tha t's how we will forge our resilience. That's how we will lead i n multi-metal. W e are a sustainability l eader driven by performance culture, guided by financial strength. The future is built on metals, and w, e are building it.
As you just saw in the short preview there, I'm very pleased to be able to share with you today our updated strategy, Aurubis Performance 2030, where we have a clear focus and that's to forge resilience and to lead in multi-metal. Looking at the five areas that you see across the page, these are the core action fields that we'll be focusing on. With impact, we're moving from a phase of, heavy investment into a phase of generating the cash and delivering on those investments that we've made, integrating those in the best way into our network and really generating the synergies from them. With commercial excellence, we're deepening our market access, we are improving our competitiveness by getting closer to suppliers, by broadening our sourcing footprint and also investing in service levels, for example, in the areas of lab and sampling for faster automated solutions.
That's going to allow us to tap into, and secure new and existing material streams which are growing. W ith efficiency. We're doubling down on operational efficiency to optimize the different material flows in our network, and really get the most out of our existing asset base. With innovation, we are applying best-in-class technologies and process know-how, and putting our own metallurgical expertise to best use in order to be able to handle more complex materials in our network and expand thereby our portfolio and our multi-metal production. Finally, with the fifth aspect of focused growth, we are targeting growth where Aurubis has clear advantages. For example, in North America, Richmond is just the start. We'll hear about that further. Let me be very clear here. Our strategy is not about growth everywhere. It's about focused growth in areas where Aurubis has a clear advantage and where we lead.
All of this is underpinned by three enablers that will be core and that will be essential, and our tools, so to speak, and our toolkit that will help bring our strategy to life and make that successful. The first is our sustainability leadership. The second is our performance culture. We heard a lot about that in the focus, and how we're leveraging those best skills and capabilities that we have internally. The third of course is our financial strength. This will allow us to deliver responsibly, but also to invest in future opportunities. All of this is built on a foundation of megatrends. We heard a lot about the various megatrends from electrification of everything, the investments in energy infrastructure, significant growth in artificial intelligence and advanced technology, but also global security and defense, which is growing. These form the foundation which drive demand for our metals.
Very clearly, we are also powering or we are enabling those megatrends in the coming decades. In short, Aurubis' Performance 2030 is about turning our strengths, our competitive advantages into long-term resilience, delivering impact, driving competitiveness, improving efficiency, innovating for the future, and growing where it makes the most sense. I'd like to ask our COOs, Inge and Tim, to take us through each of these, and elaborate in a little bit more detail on some of the areas and projects that will be coming out of these five areas.
Okay, thank you. Seonag. I'll start with impact. A s already mentioned a couple of times, harvesting the invests, what that means for us and how we turn that to life, I'll walk you through a couple of things that we decided together with this new board. We sharpened our strategy execution philosophy, and that means that we are doubling down on our core business and deprioritize activities that have little synergies with our core business. It means also that we select projects or that we are more selective in the way on how we prioritize projects and investors who are most compelling in the value creation, and that are of course a strategic fit with what we do.
We raise the bar when it comes to overall thresholds and have decided to go for higher thresholds when it comes to new strategic projects, as well as raise the bar in our way on how we view risk f or each and every new strategic project proposal that comes to the table. W e follow an asset-light orientation that has also been set already before, and in general also with a CapEx or a very strict CapEx discipline. W e apply greater execution discipline as a whole. That means that we have more focused resource allocation, best practice, project experience and management.
Bringing in all the lessons learned from all these projects that we are currently driving in this roadmap, to bring them in a structured manner into play . O bviously, across the asset and the portfolio and the project portfolio, we continuously look at it and optimize it, and to continuously sharpen our competitive edge here. We streamlined our pipeline, and this is just giving you a reflection of how we do that without mentioning each and every project.
What we did here is really go in each and every idea, in each and every way of turning that into projects, live initiative or project or whatsoever, that we truly focus on the growth on multi-metal. N ot only copper, also all the other elements that are in there. We significantly reduce the CapEx intensity. We have taken the decision, as Toralf mentioned, not to further invest in better recycling. F or our projects in implementation, w e are fully committed to deliver its full value of what we intended it to be. We have ensured also that the pipeline is robust enough to maximize synergies, and to optimize the flows across the network and for all those coming online. Once we fully have ramped up, this investment of €1.67 billion program will get us to a contribution of €260 million of additional EBITDA per year.
Going to the second pillar, this is really all about commercial excellence. Of course, when we are not commercially excellent, it is very difficult to be a good reliable partner. What we are doing here? T he focus here is threefold. It' s really to secure a stable supply and diversified supply. Diversification across our portfolio in terms of supply is super important. We improve our service levels that we bring into life for our suppliers, as well as strengthen partnerships with the ones that know us already, and also for new partners to come to life. We develop also new outlets for our products and co-products, so that we build resilience on that side.
Just to give you a couple of ideas on how we are bringing that commercial excellence way more to life, is that we have decided also to expand our geographical sourcing footprint. We have already a first active office in the Middle East, with our Dubai office. This is a way also to grow and to get closer to markets that are a bit further away from our classical and typical European markets. We are currently developing, as mentioned already before, solutions with our customers to better understand the dynamics that are happening also in the organizations with our customers and what we can bring to the table i n closing the loop, bringing all the metals that are being found in our materials also back, either directly to them or to their suppliers for that matter.
We also want to tap here very clearly more and more in this urban mining, something we do already today. As said earlier, we have way more type of materials coming to market, w ith also bringing in new elements, which are also sometimes not so easy. Just to name one, g raphite comes into our flows, but also tackling those elements, w e are very much focused on that one. Highly important for our business is a proper sampling and assaying, understanding what is the value in the materials and what contents of metals we do have. For that, we are very much focused on being faster, to get faster through the process and also bringing in automation, so that we can do things that helps us a lso, fastening that one, so that we can get to faster settlement and faster payment a lso turned around.
We tap into new material sources. I kind of said it also before already, graphite coated copper foils, typically from battery production. This is a field which we are looking into and turning this initiative into life, so that we can treat those materials and all of the type of [feedstock] that brings something new, w e really tap into it, looking into it, and try to translate it into something we can also process in our flows. Last but not least, also the way on how we communicate with our business partners. All of the communication that is needed in terms of, you name it, deliveries, exchanging assays, fixations on contracts and whatsoever, to be very transparent with them in a very easy communicating way. That is what we are bringing forward, by bringing in some extra automation here. I'll hand over to Tim.
Yeah. T hank you, Inge. Coming to the third area again, a little bit deeper, e fficiency. What do we mean with efficiency? W e do mean that we are extracting the most value from our existing assets and from the network setup. What it means, unlocking next- level operational excellence, t his means that we are placing high priority on debottlenecking.
M eaning also, removing constraints in our production steps, streamlining processes, and applying also new technologies, so that we can increase our throughput and also stabilize our production further. One concrete example over here is our converter operations. Currently, we are developing a new process model and technology to run a more efficient converter process with shorter cycles. What does it mean? That means for sure higher output, and ultimately also increase the anode production we are really based on, without the need, as I said earlier, for large new capacity investments.
Digitalization, also Inge mentioned that it plays a critical role in increasing our efficiency. We are using it by advanced analytics, with automation, and also with digitalization of our monitoring systems, so that we can further improve our material flows, minimizing downtimes, and ensure again, stable and also predictable operations across all our smelter network. This combination of process optimization and also digital tools allows us to do much more with our assets we do have in place. Again, increasing our efficiency, reducing the costs per unit, and also strengthening our competitive position. Another example over here would be the material flow optimization for efficient processing. If you are having a closer look at how we are going to optimize the existing material flows, we can look into our primary precious metal- bearing intermediates.
Today we are working on implementing a process to streamline these intermediates by debottlenecking an accelerated treatment route, which is these days at full capacity. That means the overflow intermediates will follow, or have to follow a longer and higher cost route. After implementing this project, we will be able to treat a larger share of the intermediates via the accelerated route. This means again that instead of having two process pathways, we consolidate both flows into the faster and more efficient route. This is resulting then into shorter processing times, has also positive impact on networking capital, and is also reducing the processing costs and also improving then the profitability. Coming to the next and fourth block, that's innovation. Innovation is for sure a buzzword, but we understand in Aurubis, that we are focusing on measures which will help us to maximize our multi-metal yields.
One example, we would like to leverage our technical expertise, to unlock additional values from increasingly complex and high- margin materials. Our primary and secondary raw materials as well as our intermediates contain impurities, which include as well valuable minor metals and also elements. In running our smelting and refining processes, we're facing limitations. There's only a certain amount of impurity capacity within our different products, especially in our anodes. By optimizing the treatment of intermediates, we can free up the capacity for impurities within the anodes. This gives us at least two advantages. One, the first one is that this will allow us to process more complex and higher margin impurity containing raw materials. Secondly, it enables us as well to increase production of minor metals, because of the increased capacity for minor metals containing input materials.
Another and last example for improved product quality through innovative process enhancement, is that we are going to work on our quality of the sulfuric acid. Today, Aurubis is producing one product in standard and one product in premium quality. The premium product has a lower level of impurities, and we can achieve through an additional cleaning process that we are going to process the entire volume in the more attractive way, and this will make us also much more attractive for our industrial clients. That means in future, we will produce 100% premium quality of these produced volumes. A gain, this will enable us to play in the level of the higher margin market segments, and also generate higher value and added value for our customers.
Thank you, Inge and Tim, for explanations. I will wrap it up with the last pillar with the focus growth, where we are going to invest and how much. You saw this slide before, but it's playing also a role here in our growth. We will only focus in areas where we lead, and we will only focus our investments in the areas where we have a competitive advantage. It will be a very focused investment program here over the next years. From the regional standpoint, we looked at many regions in the world. Of course, we looked at the Middle East, we looked at India, we looked at Asia, but we also looked at South America and Africa. We came to the conclusion we are going to invest further in our capacities in Europe, and we are going to significantly invest in North America.
Those are the two markets that will focus our investment program in the future. If you look at the megatrends and in the metals that we produce, our CapEx program, our growth will be in increasing the capacity for these metals, but not only for copper but also for the other metals. Everything we'll do will be driven by megatrends, but investing in these capacities because the market demand there, we are 100% convinced, will be there. We invest in increasing the capacities for all these materials, and benefit from the high growth rates in the various areas. Let me summarize our strategy, Performance 2030. It's driven by performance, by resilience, but also by multi-metal. We have five pillars of our strategy. We're going to focus on the impact of our investment of the high CapEx cycle that we have experienced in the past. This is where we finish up.
We will invest heavily in commercial excellence to be closer to our customers, but also suppliers to be faster, more professional and gain more value out of the value chain. We'll focus on efficiency, making our existing assets more efficient. There's still room for improvement, to gain more cash out of here. We will continue to invest in innovation also to be ahead of our competition, and we'll focus our growth on the capacities for the metals that we produce right now .
Regional, w e will focus on Europe and on North America. W ith our enablers of sustainability, performance, culture, and financial strengths, w e are very convinced that in 2030, Aurubis will be a much stronger company, much more resilient and a better performing company than it is today. This concludes our strategy session. Now you have listened a lot. Maybe we do a break here with the presentations and open up for your questions. Ken, you can moderate it, please.
You're just taking away my part, so maybe we just continue with you as a moderator.
[crosstalk]
Thank you very much, Inge, Seonag, Toralf, and Tim. I think this was really insightful regarding how we want to proceed in the next couple of years. Now that we've spent a lot of time presenting, now we're turning the floor over to you guys in order to get some questions and answers. We've got Steffen back here on the stage as well.
Just as a reminder, whoever is dialing in virtually, you have to click the Q&A button at the top. You won't be able to ask questions through the chat function. There is a moderated Q&A button there, so please use that one if you want to ask questions virtually. I saw that here, right in the front, we have Jason Fairclough from Bank ofA . Just as an organizational remark, please also state your name and company in case I may not recognize you from 17 years ago.
Nice to see you again, Ken. It's Jason Fairclough from Bank of America . Can you talk a little bit about the projects? I think it's €1.7 billion around the world. We look at projects and they're late, they're over budget and then they're not performing the way they're supposed to. How are things going? Are you on time? Are you on budget? Is that €1.7 billion number still good?
Yes, that number is still good. We are on time and budget, largely. There have been some delays, but no major delays. We have completed now Richmond. We think we are going to be on time and budget also for Richmond, phase number two. We finished ASPA and BOB on time, an [ crosstalk] and Olen. We are very confident that the complex recycling new plant in Hamburg will finish on time. That is so far on track and even a little bit below budget. Also, the precious metal plant in Hamburg is a little bit below budget and on time. So far, so good. I think here we still have some more potential to improve, to be even more disciplined. From the $1.7 billion we have spent, like we shown before, 70% spent so far. We are confident that we'll also spend the rest on time, on a budget.
Just as a follow-up, how do we think about the plan in terms of refining copper in the U.S., right? The rules seem to be changing a little bit. Fro m memory, your plan is to send the anodes back to Germany for refining. Is that really going to work on a go-forward basis, or do you need to think about building a copper refinery?
This is working. I mean, right now we're making blister copper there. Part of this, the beginning, the majority of is, we will ship back to European plants and make cathodes out of it. Part of it, we can also sell in the U.S. to other cathodes producer. One of the options, we'll get to that later, is to expand further downstream to also have an anode and a cathode production in the U.S. That's one of the options. The decision we will make next summer, we're right now calculating the business plan. First, we want to of course see that Richmond is running, and producing the tons that we anticipate. This is one of the options. The business plan is also working with where we stop right now with blister copper.
Okay, thank you.
Yeah. Okay, we have the next question over there. Before you go ahead, Boris, just one remark. We will have a session on U.S. and financials in the afternoon. If there are specific questions to guidance financials, please keep them for the afternoon. Steffen will be more than happy to give you some more color on that one, just as a heads up. Over to you, Boris.
Thank you. Okay, I had to push [crosstalk]. Hi, I'm Boris Bourdet from Kepler Cheuvreux. You've provided your vision to 2030. Obviously, the growth is mainly on multi-metal recycling. How do you look at the split of earnings contribution by divisions between the customary supply products, and smelting products and the multi-metal recycling part?
Yeah, it's Steffen. Boris, I will come to t hat later in my presentation, and we'll also give some additional further transparency that we have not yet given. Without spoiling that, I would want to make the point that let's say we stand on various legs. We stand on three healthy legs being at the TCRC side, as one leg, being at the products and premium side as another leg and being at th,e metal balance side as the third leg.
Within the two legs we even give more granularity later, in probably 45 minutes or so. In tendency, the metal balance piece will further increase. As we see it now and later, you'll see it on the chart, the impact of the TCRC lag has gone a little bit less important. Obviously with TCRC s going down, m etal balance getting more important and product and premium also being very healthy, and having a lot of upside. Some of you commented yesterday. We have not commented yesterday, but we've seen what you've commented yesterday, which also goes in the same direction that product and premiums is a healthy business for us.
Just as a follow up on t he premiums, w hen you build your vision t o 2030, what is the kind of premium that you embed in your calculations?
We will not give single figures on a premium. A s you know, it's the resultant of bilateral discussions between us and customers. Once again, we think we are very well positioned. If I recall it right, there are nine rod plants in Europe, there are five being part of the Aurubis family, so that should give us a certain weight in the market. In all subsegments of the world, copper seems to be needed, seems to be growing. There's a scarcity of copper, copper prices increase. I think all traffic lights are green, that also in the future copper products and premium can play a healthy role for us.
Okay, thank you. I think we have one question over here from Bastian.
Bastian Synagowitz, Deutsche Bank. My question is just on the $260 million EBITDA number which you've been putting out for the strategic expansion, and I guess you've been underwriting this today. From memory, this has been around for quite some time and we've seen a significant degree of volatility in some of the drivers. I guess a very large component of that is free metals, and particularly the prices of the metals out there which you're processing and selling has been going up significantly. Could you give us any sense for where that number actually stands if you were to reality check that today? There must have been obviously some movements in the numbers. If you could give us just any sense where that stands, because from memory again, I think all of that budget has been done on reasonably conservative mid- cycle assumptions.
I believe that would be one for you, Steffen, but you may want to come back to it in the afternoon.
Just a short fast forward is, we are stating the same figure as the former management has stated. It's not that we would not have done a health check to this . W e did a significant health check on each project with regards to the question of budget, EBITDA contribution, and timing. The composition has changed slightly, but not meaningfully, but the sum is the same. We confirmed the same figure, but not by repeating what has been said earlier, some years ago. J ust by being convinced that it's the right figure that went through our health check, especially obviously on the largest project among the 260, which is Richmond, €170 million. Charles alluded to that one. Here, the composition really has changed a bit, but we can enjoy the overall same contribution in a similar timing that was initially targeted for.
It's true that obviously metal price improvements help us here. It's also true for the U.S., that on the cost side we probably at the beginning would not have included everything. I said in one-on-ones with you that obviously Richmond one was a learning field for us. It was the first greenfield investment for Aurubis. It was after COVID. It was in a high- inflationary environment. I would say that's probably the biggest change that I could outline, that we were not cautious enough on the cost piece in Richmond. However, we could well compensate with metal prices in Richmond. Later in my section, I talk a bit about the contribution more qualitatively of the strategic projects to the three clusters of our profit pools being a TCRC, being IT products and premium, and being at the metal balance. Our health check confirms the 260.
Our health check confirms that the 260 will be fully seen in the bottom line in 2028-2029. You will see later a chart from me, that basically says in 2026-2027, or starting with 2026, 2027, a majority of the 260 should arrive in the bottom line. 2025, 2026, with regards to contribution of those programs, is still a transition year with a positive but minor impact. I would leave the rest for later in the afternoon.
Thank you. Hello, Maxime Kogge from ODDO BHF Corporate & Markets. Actually, looking at the presentation, I'm quite surprised that there is no new project announcement because up to one year ago, I mean, Aurubis did an announcement of a major project every couple of months. That could give the impression that the company was very aggressive, over aggressive.
Now I feel that the company has totally reverted its stance, and it seems to be perhaps very conservative. Can you shed some color on that and perhaps can you tell us regarding your objectives? I feel that you're very happy with Europe. It's mature. Does it mean that the bulk of gross CapEx now will go to the U.S. with Europe only being invested for maintenance? That's my first question.
I think that's one for you, Toralf.
Yeah, I mean we continue to invest, but like we said, we are coming out of a very high CapEx cycle, and the main target for this management team is now to consolidate, you know, to focus on the priorities that we laid out to bring stability and confidence, and trust into the company and its stakeholders. We want to produce free cash flow this year and also the next years. That doesn't mean that we don't continue to invest. I mean, we have a baseline investment, but we will continue to do strategic investments. One, of course, is further investments in U.S., but the other one is also further investments in our European facilities. We also said for last year and for this year, we're not going to do any M&A because we have refocused our resources in bringing these big projects.
I mean, the complex recycling program in Hamburg and the new precious metal hut, they are huge projects. W to bring them home, but we are very confident that we will bring them home. I think we also have to manage the engineering resources that we have, you know that we not try to do everything at once. We are a company with 7,000 employees, we're not like a huge company. Like I said, we also looked at Middle East.
There's large opportunities there for recycling smelters, India, but there we also have to focus our resources. If we would be a larger company, we could do this. Being a company with 7,000 employees, I think we have to focus on the return, and this is our target right now. This doesn't include strategic projects. , We have a lot of strategic projects in the pipeline which we don't announce today, but there will be announcements in the course of this fiscal year, where we continue to invest. We couldn't time it today. Sorry about that.
Thank you. That's clear.
Yeah, [crosstalk].
If I just can add to what Toralf has said, I mean, what is strategy? Strategy is about saying what you do, but strategy is also about saying what you don't do. On the what we do, I think Toralf has said everything. Bring home the strategic projects and then also with smart investments, work on improving, debottlenecking and then getting more out of the assets. Toralf has just said there will be further investments coming . W hen we look at one of my charts later on, we will see that f or that, we see, let's say, a mid-million euro digit figure annually for those further smart investments. We have clearly said, Toralf has clearly said, that a major potential strategic decision could be on the U.S., but it's too early to talk about it. What is the strategy is about what we don't do?
I think a major decision of our board has been that we will not engage with further capital allocation on the battery recycling. Okay, and just a second, and last one is on your recycling input sourcing rate, which is 44% currently. I think in the past, there was an objective to bring that up to 50% by 2030. That's still the case. Where do you see the ultimate rate that could be possible for Aurubis? Because the more recycling you have, I guess, the more profitable you as well.
Yeah, I think that's one for you, Inge.
Yeah. I think the goal of getting to 50% in 2030 is still there, and it still followed through. At the same time, demand for copper is high, and that means also that primary resources are needed to fill that demand. Most probably, balancing out 50-50, I think we will see for a while.
All right, I think we have some questions from the web. Apparently, the announcement that you need to use the Q and A button worked. I think one is for you, Steffen, which was, would you please give an approximate IRR of the projects we talked about? Could you elaborate a little bit on what is the threshold there?
I would stay with the KPIs that we disclosed publicly. The threshold for everything we decide from now on is that the projects have to pay into the ROCE target of 15%. Internally, we also look at IRRs and we look at paybacks. Internally, we have been more ambitious on paybacks. We want to bring the paybacks down, first of all in the single year phase, and then the lower, the better. We favor obviously also digital projects with a very low, single-digit year figure. I would not want to single it out now on a project base. The key message is, everything we are doing has in the mid-term be accretive to the 15% ROCE target.
Okay, and then we have another one which I believe is something for you, Toralf. The statement not to invest any further money in battery recycling. Is this a recent decision? What stands behind this? Are there any additional motives or findings which contribute to that decision?
We made this decision as an Executive Board, and also in coordination with the Supervisory Board in the last month. The main driver for that is the market, because the market has been delaying. Like I said before, we are not sure where the market is going to play. What we have developed from a technological standpoint is really good and it's really validating. The only motive is the timing of the market and the location of the market, where the market will be. Those are the two reasons why we decided not to invest right now further.
Okay, thank you. I believe there is one more for you, Steffen. Toralf just mentioned that there will be no major M&A in the medium term. Regarding the treasury shares that Aurubis holds, what is the plan for these right now?
The treasury shares have been acquired some years ago, with kind of a clear prescription title by the authorization of the AGM, which is linked to M&A and potential refinancing needs. We have a super helpful balance sheet. I think we could bear more leverage. I'm not excluding that at one point in time, we could use it on a refinancing side. At the moment, I don't see the necessity. Toralf did not exclude M&A forever. He was talking about priorities. We were talking about our ambition and energy for doing more in the U.S. Perhaps at one point in time, we could use treasury shares for a potential thing. Once again, nothing is decided and nothing is on the table at the moment. I don't think it makes sense to cancel them now, because our intention is not to limit the free float.
We also do not want to bring our largest shareholder in a difficult situation. If we were canceling shares, we would lift them up above 30%. At the moment, they are there. They are a cushion. Admittedly, it's a bit ineffective. It will not stay there forever, either refinancing or M&A, let's say. I personally would think in a two to three years time period, we will find a meaningful way. Perhaps l ast message on that one. The company bought the shares at a relatively low price in the $40s, so at least it has been a relatively decent investment. I don't want to carry them around for the next 10 years. I also would not think that something happens this year.
All right, I think we have another question from the audience.
Hi, Dan Major from UBS. Most of my questions are for the finance segment, but just one on the kind of product premiums and pricing in the market. The narrative seems to have moved away from the customer wanting to pay premiums for low- carbon or green materials, to resource security at a kind of regional or national level. Are you seeing any appetite for green premiums in any of your products, o r indeed, are you seeing any appetite for strategic buyers to step in and pay a premium for locally sourced material either in the U.S. or in Europe?
Inge, do you want to take that one?
Yeah, I think low carbon footprint is appreciated still. In that sense, I think customers do want to see that. In general, it's all about also diversification. O f course, we cannot talk for the customer, but a customer in itself also wants to have diversification in the portfolio. O ften, as much as securing raw material supply and being a reliable supplier on that one, I think is key in that matter.
Okay. J ust to follow on that, I mean, customers might appreciate the low carbon nature, but are they willing to pay for it?
Always difficult to say it when you are not on the customer side, I would say.
Okay, thanks.
Okay, we've got another one from the Internet. That's f rom our clients on the call, and I think that's probably one for you. Seonag, could you shine a bit more light on the battery recycling deal with the Swedish company Talga? I believe that has been something your team has been working on.
Yeah, you may have seen the recent press release from Talga. We also alluded to that when we spoke about the commercial excellence pillar. We've signed an MoU with Talga, and that's related to supplying graphite from graphite-coated copper foils. We're developing some capabilities there. There are going to be increasing volumes of that material in the European market coming from a range of batteries, and we have the capability to separate the copper from the graphite and we'd be supplying that to Talga. That would be the recent announcement that you've seen there.
Okay. Seems like we don't have anything from the net right now. Any further questions from the audience? Audience at this stage? Jason.
Just a follow-up on the problems that you inherited from the previous management team. There was the security issue or the fraud issue, or the controls issue or whatever we want to call it. Do you feel comfortable that you've put systems and processes in place that we won't have a repeat of that?
Yes, we are confident about that. Of course, w e started our plant in Hamburg. Just to give you some figures. We installed 1,100 cameras in Hamburg. We have drones controlling the area. We have new security companies engaged. We control all the entrances. We have started an insider campaign. It was also my personal focus and Tim Kurth's personal focus in this first year. Now we're rolling out these security project measures on the other plants.
We are confident that we put enough CapEx in there, but also enough personal commitment. It's also of course, a cultural thing to get the people here on board. We feel comfortable that this is now under good control, p lant security. O f course, you're never 100% sure. With these high copper and gold and silver prices, you jump over the fence and steal some rod. That happens, but w e are confident that this will not happen in a major organized way.
Tim, any additions on the health and safety side here?
No. I mean, Toralf mentioned most of them regarding security, and there's also again the network working and helping a lot, r ight? W hat has been experienced by Hamburg, and you politely, let's say, phrased it, we are also rolling it out to the other plants and see if we do have certain gaps as well in the other plants. We are going to improve it immediately. What we have seen also lately is that other peers are already confirming that we are one step ahead of them. We really made a lot of progress and a lot of speed.
Unfortunately, with these events, the last couple of two years, regarding health and safety, it's the same also there. We have now a complete new team on board on the start. We are also working very much together. We do have one of the Porsches o f the a dvisor regarding safety on board. This is also a program which is going to run another year, with a clear message that after that one year, t his will enable us then to work also on our own.
All right, very well then. Time flies. We're a bit ahead of schedule. I regard that as a personal achievement here. On this note, I would like to give everyone a break until, let's say, roughly 3:05 P.M., so that we can all grab something to drink, something to bite, which will be all set up outside of this auditorium. Thanks a lot for this first session. Thanks for your answers. T hanks for your questions, and see you back here. 3:05 P.M.
You're ready? [crosstalk]
Okay. Hello again. Welcome back. I think it's such a great video with such a great beat. You can't watch it enough, right? Thanks again for c oming back here in time. Now we dive into the second part of our Capital Market Day, where first of all, we'd like to expand on our latest developments in the U.S. Thereafter, I'd like to talk a little bit with two various team partners on the commercial side, about how we create value in partnerships.
Before then, Steffen will give us a roundup on the financial outlook, mid-term guidance, and capital allocation. David Schultheis, who you certainly all remember from two years ago, is our President and Managing Director of Aurubis Richmond. David, come join me on stage. David, I believe you had some very particularly busy days over the last couple of weeks and months, and we're all happy to hear about that. Floor is yours.
Thank you very much, Ken. Hello everyone. As you just heard from my colleagues, Toralf and Shona, the U.S. growth story as part of focused growth is a key pillar of the Aurubis strategy. Since the inception of Aurubis Richmond, we have seen significant progress and dynamic developments. We've seen significant progress in the construction and commissioning of the facility, leading to the recent first melt and start of operations of Aurubis Richmond. We also saw dynamic developments in markets, international trade flows, and the investment environment in the United States. Clearly, Aurubis Richmond is strategically attuned and well timed as the United States prevails as a very attractive market with great opportunity for sustained growth. Let us now have a look at the individual developments.
Addressable markets for metal shredders, insulated copper wire, and printed circuit boards in North America are expected to grow approximately 25% over the next 10 years. In other words, our U.S. recycling market remains large, attractive, and growing. The underlying growth drivers are strong and enduring. Breakthroughs in artificial intelligence and the substantial build out of data centers in the United States are powerful tailwinds for our business. Atlanta, Charlotte, North Virginia, these are examples of key clusters of data center deployments in the United States. All of these areas are only a few hours away from Augusta, and thus well within the catchment area of our Aurubis Richmond plant. Additionally, Augusta lies in the heart of what is called the Battery Belt. As per public reports, Georgia and South Carolina alone have attracted $30 billion- $40 billion in electric vehicle and battery manufacturing investments since 2018.
These trends demand increased investments in energy production and infrastructure, which in turn feed our target recycling markets. Next, let's narrow on import and export, by taking a closer look at the refined copper import statistics. For the United States, copper is officially classified as a critical mineral, and for a good reason. First, copper is an indispensable input for strategic technologies and industries, as Sheonag and Toralf already highlighted earlier in the presentation. Secondly, the United States remains highly dependent on imports. Each year, approximately 1 million MT of refined copper must be imported, covering nearly half of America's total demand. T his dependence, as you can see, is set to grow. Industry projections indicate that the supply gap could widen by 50%, rea ching around 1.5 million t by 2035. That makes supply chain resilience a strategic imperative. Closing that supply gap isn't optional. It's essential.
The U.S. will need additional capacity from both primary production, new copper mines, and secondary production, advanced recycling facilities. N ew mining projects often take a decade or more to realize, the near-term solution must come primarily from recycling. This is where Aurubis Richmond comes in. Our investment is perfectly timed. It is the largest and most technologically advanced multi-metal recycling plant ever built in the United States, and casts a bright light on Aurubis and its contribution to keeping recycling materials inside the United States. Under the authority of Section 232 of the Trade Expansion Act, the U.S. administration recently concluded that a heavy reliance on copper imports poses a significant risk to national security, opening the door to tariffs and trade restrictions. In August 2025, a presidential proclamation introduced new measures to regulate the imports and exports of copper-based materials, impacting the U.S. copper market.
The restrictions aim to secure domestic supply, while encouraging greater investment in primary and secondary smelting, refining, and fabrication capacity. The ultimate goal is a more resilient supply chain in the U.S., and providing American industry with critical metals. Looking ahead, these tariffs and trade restrictions also create a favorable investment climate, providing Aurubis with a strong platform to further pursue and expand its U.S. growth ambitions. In anticipation of the start of operations, preparations for the ramp-up steadily intensified over the past months.
Early in 2025, the local commercial team started buying smaller volumes across all three material categories, to build an initial inventory for Aurubis Richmond. In this regard, Aurubis is able to leverage its long-term presence in North America and to use the existing supplier relationships for the volumes that we will need. We have even earmarked key suppliers for first-year volumes. I n the summer of 2025, w e then significantly increased our commercial activities and were able to quickly secure several attractive annual contracts with key suppliers. Accordingly, inventory levels have risen steadily over the past couple of months, and are expected to increase tenfold between June and t he end of this year.
Now we get to the highlight. I n September, t wo weeks ago, we reached a very important milestone for Aurubis Richmond. Together with our partners, we celebrated the first melt. An important precursor of that event is the official receipt of our Certificate of Occupancy, which we received in early August. The Certificate of Occupancy confirms that the site is ready for operations. This milestone is based on significant construction and commissioning advancements. Let me share some numbers with you. We invested about 2 million man hours to build and commission our new facility. That's the equivalent of about 1,000 people working for an entire year. We used 3,500 MT of steel, about half the amount used for the Eiffel Tower. We installed 25 m of pipes and 28 m of electric cables, each about the distance of a marathon.
I'm especially proud that all of this was achieved with an excellent safety record. It reflects the dedication and professionalism of our teams and our partners. With phase I now underway, Aurubis Richmond is firmly positioned at the forefront of the U.S. multi-metal industry as the first of its kind state-of-the-art secondary smelter for complex recycling materials in the United States. Given the successful start of operations in September, the team and I are now fully dedicated and focused on working towards the ramp- up. The planned ramp- up profile for Aurubis Richmond is shown here, applying a 12-month rolling window. While this perspective understates the actual run rate in terms of throughput that we will achieve in every single month, it does highly correlate with the realization of our facility's full potential described by the business case and our budget.
Having realized first melt in September, we're off to a great start and on schedule for the ramp- up of Aurubis Richmond. Before handing over to Toralf Haag, for our perspective on Aurubis Richmond's attractiveness as an investment and platform for continued growth, we would like to share with you a visual impression of Aurubis Richmond's facility in operation.
Aurubis Richmond is a subsidiary of t he Aurubis Group, a global leader in n on-ferrous metals and copper recycling. At our Richmond site, we process complex r ecycling materials into metals for America. Our input materials arrive by truck. They are weighed at the access gate. We process copper-rich electronic waste like c ircuit boards and wires. Our logistics team unloads, registers, and stores t he materials for inspection. Next, the materials are shredded and sampled. A representative portion is analyzed in a l ab to determine its metal content. Short throughput times, maximum transparency, and h ighest sampling quality is of the utmost importance for us.
The prepared material is blended and loaded i nto the material handling system, along with slag forming agents like sand. T he material handling system transports everything to b unkers, which feed the top blown rotary c onverters, the heart of our metallurgical process. In the top blown rotary converters, electronic waste is melted and converted into blister copper and slag. Slag from melting goes to the slag holding furnace, where remaining copper is recovered. The low copper slag is granulated and discharged. Slag from converters, rich in tin is processed in the lead-tin furnace with additives like iron. This concentrates the tin, which is recovered a s a lead-tin alloy.
Blister c opper is transported by crane to the casting plant. It's cored into molds, cooled, stacked, and packaged for shipment. Aurubis is leading in sustainability. Therefore, environmental protection is central to us. Our exhaust gas system captures and cleans gases from the furnaces. Zinc oxide collected during filtration contributes to zinc recycling. Aurubis Richmond, your U.S. home for multi-metal rich recycling.
Yeah. T hank you, David. I want to thank you again and your team for the great achievement. I want to emphasize again that this is the first recycling smelter in the U.S. of this kind. We think we have a substantial first- mover advantage here. We also can confirm our return here, that we will return out of this investment, $170 million in EBITDA in the fiscal year 2028-2029. Of course, there are certain milestones that we have to achieve until then. Right now, we are on track to achieve these milestones. This is the foundation for further growth in North America, our first big investment. If we look at further investments that we will potentially do in North America, there are a lot of funding schemes right now developing in the U.S.
We didn't get any funding from the government for Aurubis Richmond, but we are quite confident that with the variable funding schemes that are developing right now and critical materials becoming high on the agenda of also the U.S. Government, thatt there will be possibilities to fund some further investment. What are our options? We are looking at different options right now. The first one of course, is a vertical expansion that we multiply our Richmond facility and move to the West Coast, where there is also a big market and also a lot of scrap available. The second option we're looking at is a vertical expansion, that we go further downstream, build an anode furnace and also a tank house, and potentially also a rod plant at our facility. We have the site available, we have the land. This is another option we're looking at.
The third option is strategic partnerships. There are a lot of players in the U.S. who are there present already, and there are some other players who are coming to the U.S. market right now. There are a lot of opportunities to join forces and join risks for further investment. All options are on the table, investment in the secondary side, in the downstream side, but potentially also on the primary side if we get the funding from the U.S. Government. We'll keep you updated on what we decide on here. Yeah, t his concludes our presentation on the North America side. Thank you, David. Again, thank you.
Thank you to both of you, Toralf and David. I think it's a very great overview about what you and your team have achieved over there. Congratulations also from my end. I believe the video gives a really, really lively impression of how it looks there, and what the size and the magnitude of the site actually is. Now, I would like to turn to a bit of a different topic, but that links back to the competitive advantages that Seonag spoke about before and the commercial excellence pillar that Inge explained earlier today. Aurubis sits right at the center between resource development, generation of recycling, raw materials, and downstream products which are essential for these advanced technologies. Collaboration along the value chain characterizes the interaction between our business partners and us. We're happy to have two important partners here with us today.
It is my pleasure to announce and welcome Laura Colli here to me on the stage. Welcome, Laura. This is your podium, which you will be at. Laura is Chief Procurement Officer at Prysmian Group, the world's leading cable and systems company, specializing in energy and telecommunications infrastructure. I hope that was, in a simplified way, concise enough, but you're also leading the global purchasing with a very strong emphasis on sustainability and supply partnerships ,as well as strategic supply chain resilience. Again, very, very warm welcome .
Now let's turn upstream. Strong relationships further upstream in the value chain ensure that we can reliably supply our partners on the product side. For this reason, I'm happy to have Colin Hamilton from Teck Resources with us here today. Colin is part of the commercial leadership team at Teck and is, amongst others, responsible for marketing research. I think many of you may know Colin from his more than two decades in the metals and mining sector. Warm welcome to you and I believe similar to Laura, you're also one of our key contacts when it comes to discussing potential options to create more resilience along the whole value chain. Last but not least, and not just because only three is a party, I would like to welcome Martin Sjöberg to the stage. Welcome, Martin.
Martin is our Head of Commercial and has the responsibility for all our commercial activities on the primary side, as well as on product marketing and sales. With more than 20 years of commercial experience under his belt, I think he's a great partner to have this discussion with today. Therefore, welcome Martin. I'll take a slot over here or take the spot over here so that we can stand very nicely around the table. I would like to start with you Martin, and before we turn to Laura and Colin, I would like to ask you to give us a brief overview on Aurubis customer and partner landscape more broadly and as well on the partnerships with Prysmian and Teck in particular.
Okay, thanks Ken. I can certainly do that. Maybe the first thing to mention is that we have a truly global footprint when it comes to our suppliers as well as our sales, sales for our sourcing and sales activities. We have suppliers on several different continents and a healthy mix between traders and miners. The same is valid for our downstream business. As you heard before, our end products and raw refined metals go into various different segments. That's part of creating the resilient business model that you heard more about earlier today. One thing to mention also is when it comes to new mining projects, we often involve ourselves very early on. Thanks to our, I would say, vast experience as well as our financial strength and most of all our capability to process complex material, we're often viewed as a partner of choice.
From that we can get steady supplies. What I also like to highlight is our long term view with business partners, meaning that for many, many of them we are in business for decades and we also have a big volume, healthy volume of long term supplies and that gives us the reliability that our operations need in terms of getting the feed. It also gives us very limited spot market exposure. I think having Prysmian and Teck with me on stage is great. Two leading examples of the long term collaboration. Thanks again for coming.
Thank you very much. It's really my pleasure and an honor to be here today.
Thank you, Martin. J ust sticking with you just f or a minute and to follow up on what you just said about the long-term partnership, if you put yourself in the shoes of our customers and suppliers, what would you say the main reasons that these bonds are so strong?
I think the first thing that comes into my mind is reliability, meaning that our smelter tank house and product foundry networks give us a lot of possibilities to continuously be an off- taker from our suppliers, whether that's mining feed or the recycling feed. This of course also gives a stable production or makes us a stable supplier to our customers, so the r efined metals and products.
O ur metallurgical and process technology knowledge also allow us to work very closely with our partners, whether that's finding solutions for more complex material to process or on the downstream side, to develop new products or manage the volume growth. This is also backed by our financial strength and, as you heard, the willingness from our top management to continuously invest. The final thing that I like to mention, and you'll hear more of that later, is our strong sustainability standing.
We are continuously investing in a responsible and sustainable way, process raw material. As an outcome, we will have a big volume of refined metals and products with a carbon footprint clearly below the industry average. That resonates very well with our business partners. Taking Prysmian here on stage, it's a leading example of this. We have summarized all of this under our Tomorrow Metal sustainability promise. As a market participant of scale in the center of the value chain, I believe that Aurubis can take the leading flag of transforming the whole industry. Again, this resonates very well with Teck and Prysmian. I think here we can collectively cooperate to improve the whole value chain from mine all the way to final products.
Okay, wow. T hanks a lot. I would like to move over to you, Laura, and thanks again for being here with us today. Could you first of all provide us with a brief introduction to Prysmian and explain from your perspective also, where Aurubis comes into play and what role we play in your business.
Yeah, okay. Just you introduce Prysmian. Prysmian is a global leader in the energy and telecommunication cable system industry. This is an Italian company, headquarters in Milano, Italy. We design, manufacture and supply a wide range of cable. Our portfolio include high voltage, submarine cable, fiber optic, medium and low voltage cable in all the industries, the energy transition and power grid and telecom. Saying that, our global position put us in a condition that probably we are the larger consumer of copper worldwide. In this position for sure, the partnership with our supply chain is absolutely crucial and is fundamental. We are approaching a new journey, coming from cable manufacturer to a world class solution provider in a world which is extremely challenging.
The importance of the quality of product, the quality of copper that you can provide, the reliability of supply, as you mentioned, reliability is a key word to build up together a resilient supply chain and to approach the growth in the market as the best we can, and to give and to provide value to our customer. In short, so reliability, sustainability, the same innovation for new product, which is extremely important, is one of the pillar of our strategy, represent really the values that Aurubis can provide to us over decades o f collaboration with us.
Okay, thank you very much. Colin, n ow over to you. I suppose most of our audience knows who Teck Resources is. Could you still briefly introduce your company and also highlight, what are the most critical topics that you expect from a partner like Aurubis?
Absolutely, th ank you. Thank you, Ken. Thank you to my fellow panelists. Great to be up here with you. Teck is a Canadian headquartered mining company, and we focus on base metals and critical minerals and things that are crucial to that fuel to materials transition. As part of that, when we think about, what do we need from a partner? T here's two words, and my fellow panelists have mentioned them. Resilience is definitely one. Resilience is about being there. Who is that first call that you make when you want to sell something? Who, when you have a problem, do you go to? Who can form that solution? I would say for us, when we were setting out our LME schedule for next week, Aurubis is the first meeting in the calendar. That is very important. Resilience is one, reliability is the other.
Just like you say, doing what you say you're going to do and having a vision. We know that when we talk to Aurubis and that we say, "W e want to be here and this is why we're all here today," I think that's actually absolutely crucial. When you think about planning your busines, f or us, building a mine is a long- term commitment and we need a partner that has that long- term commitment to the industry as well.
I imagine that ore bodies are not all the same. You always need someone who understands what is going to come along with the product you may be producing. Back to you, Laura, you alluded to the topics reliability, product quality, sustainability. What are the most critical topics for Prysmian where Aurubis can provide a solution? Can you maybe also share an example how we collaborated in the past and have supported each other through challenging times and market volatility?
Yeah, it's quite easy to answer this question since we all lived together through the COVID time. For sure, during the COVID pandemic when all the global supply chains were under unprecedented stress, Aurubis continued to deliver with high quality of product and guarantee continuity of business for us, and respecting our commitment to our final customers. On top of that, thanks to Aurubis, we truly created and strengthened trust with our customers because of reliability of supply. An additional topic which is extremely important, is even the responsiveness and the transparency in the communication that our business always demonstrated to us, which is extremely important in a time where communication and information are truly fragmented or delayed.
Finally, the technical capability that even in challenging times, you always demonstrated, just to guarantee, as I said, a high level of quality and even in a challenging project, to demonstrate the right level of agility, the right level of flexibility to serve our customer best. Finally, what Auru bis did over the COVID time is not only helped us to overcome challenges, but even to build together a stronger supply chain, a resilient supply chain.
Okay, great to hear. I must imagine you have very challenging and demanding customers yourself. Happy that we can be a part of the solutions you need. Colin, this was just a lot about the long-term partnerships. Can you, from Teck Resources' perspective, also elaborate a little bit on the value of long-term partnerships in particular, particularly for a mining company?
Yeah, it's a great question. When we think about partnerships, we have to think of life and mine partnerships. We want someone who's there when we produce that first door, and someone who's there when we close and rehabilitate that operation at the end of life. As you alluded to before, Ken, I mean it's not like ore bodies are the same, things change constantly and we're always having to engage with our partner to say, L ook, this is what's coming." Having that shared view of where we might be in three to five years' time and what might be coming, and how that plays into the wider value chain that we're talking here today is absolutely crucial.
When we're thinking about planning projects, when we're thinking about executing projects, when we're thinking about what we should do and even how we should do it, because it's very easy to be siloed and say we're going to just sell this into the market. That is not a great business strategy. You need people who are there and you know will be there to answer the phone, to talk you through solutions, through the life of a project.
Okay, and Martin, now having heard these two perspectives from upstream and downstream, when you think about working with Prysmian and Teck, what is it that comes to your mind first, what stands out to you?
First of all, thank you for the nice words and I can just say that also echo that. It's very mutually understood that we have great collaboration also with our commercial teams, and the alikes on your side, both. This is truly an example of an excellent, let's say, partnership that we had, that spans for decades already. Fo r Prysmian, I mean, Laura, you mentioned already how we are intensively working to find new products, as well as improving quality and manage the volume growth that you are ahead of. Maybe to add just one more thing, is that we are also trying to find very creative solutions when it comes to recycling, meaning how do we collect and utilize the production scrap that is falling in your processes? This is something that really we're exploring more and more intensively.
For Teck, I think that's mainly two things that stand out. One is the resource development for new mines, and the other is technical solutions. For developing mining assets, I would mention Quebrada Blanca 2 , as a perfect example of how we, in a very early stage, engaged ourselves in the process and how we also backed that up by a government-backed anti-loan facility to finance this. Also, for technical collaboration, we have jointly and very close collaboration established a metallurgical solution to process high arsenic ore bodies, which is another good example on how we can find solutions by working closely together. Again, I would also like to highlight again our sustainability collaboration. Again, that really resonates very well with us, and something that we want to do jointly. Again, this is really strengthening our tomorrow metals position even more, having you on board for this.
I'm also excited to announce that not long ago, we had signed an MoU with Teck, which includes strategic operation on traceability technology, as well as improving the transparency on carbon footprint, which I know that the downstream customers really are asking for and also other improvements when it comes to ESG metrics and responsible sourcing.
Thanks, Martin. Now, let's look a little bit further down along the value chain. Prysmian serves fast-growing sectors. We just had the topic of having quite demanding customers. When you evaluate your suppliers, Laura, in particular also for future capacity expansions, what criteria make Aurubis stand out versus other peers?
Yeah, thanks for the question. I can even mention the journey that we're start ing Prysmian accelerating growth, w e mentioned over the Capital Market Day , the last March. The ambition to growth in EBITDA to achieving €3.15 billion in 2028 and even continue to grow in organic way, thanks to transmission segment, but even continue to grow in U.S. It's important, the last acquisition of Encore Wire and then we became the leader in wiring cable in U.S. as well, the [wire belting]. Basically, the trend that we are following right now in terms of growth, need solid partnership . T alking about reliability for sure, talking about a commitment, a mutual commitment to grow together. I mentioned U.S. U.S. is extremely important for us. 40% of the total revenue of Prysmian is in U.S.
For sure, we are looking for a very solid and very reliable supply base in U.S., guaranteed to ensure the growth, considering even the trend of data center boosting and electrification, and the new infrastructure needed in U.S. [crosstalk], you mentioned sustainability. Sustainability is one of the pillars of our strategy across the globe. This is exactly what our customer is asking to us. To be focused on sustainable product, to be focused on sustainable supply chain, sustainable sourcing. Thanks to low carbon copper, thanks to all the alignment on ESG target that we run together, we can guarantee even test required to [crosstalk] customer.
You just mentioned the topic of the U.S. You want to grow in the U.S. 40% of your revenue comes from the U.S. Given we have these supply chain realignments globally, how critical is our footprint in Europe and the U.S. for your business?
Okay, I already mentioned the growth in U.S. market, driven by data center electrification, renewable energy, and as well as Europe is continuing to be a very important region for us. The organic growth in Europe is driven by transmission segment, and we have a very strong pipeline over the next year. For sure, the two main geographies for Prysmian are U.S. and Europe. We operate globally in all the other regions.
However, the core business is in the two regions. We are looking for having a strong supply base in both, as Aurubis can provide to us. Regionalization is something that is becoming more strategic over the years. The global trading policy of Trump and then we are producing locally, so that we are producing U.S. and then the acquisition of Encore Wire strengthened our position in U.S. in a consistent way, as well as we have a very strong position in Europe across all the segments.
Okay, very clear focus in Europe and North America. Colin, back to you. How would you describe the collaboration cooperation with Aurubis, and how has it evolved over time, and what sticks out today?
I think the key to any partnership is trust, whether that's personal, whether that's business. Trust takes a long time to build, but can be destroyed very quickly. Trust makes everything easier. It makes everything easier for administration, for just saying, "Look, this will happen." N ow, I would say, I mean, we've had a 20+ year relationship with Aurubis, and probably started out as a transactional relationship. We sold you, we said, "W e produce this. Here you are, have some copper concentrate." Over time, we realized we had a lot more shared values, particularly around sustainability and just basically how to operate in the world. With that, that has then become the strategic relationship where we say, "W hat would our customers think, and what would their customers' customers think?" It's actually very important. We don't have a direct line to it, Laura.
We rely on people like Aurubis to give us that insight as well, to allow us to plan our business. Again, it's this more holistic value chain- based approach,, and it's much more important. Laura mentioned the fact that governments are so much more interested in what we do these days. As part of that, you need to have those reliable partners both upstream and downstream, wherever you are in that value chain.
You mentioned the fact about learning about your customers' customers' requirements. How does that actually impact how you start approaching new mining, new resource development projects? How does that come into play when you look at a new asset?
Of course, I mean, we have a portfolio of assets. We're looking at, what's the demand going to be? We need that feed through on what demand will be. We also think about the economic viability of it. What else will we get with it? Can there be other opportunities? Multi-metal companies like Aurubis offer a lot more options in that regard than perhaps some of our other more standard custom smelter partners. That's quite crucial to us.
Okay, thank you. We've talked a little bit about global megatrends, Laura, but maybe to drill a little bit deeper into that topic, what are the trends that are influencing your business currently t he most, where you see the most pull, so to say, for high quality copper? M aybe to add on to that, how can we support to deliver on these requests?
Yeah, first, the energy transition is a major driver, especially in Europe, which remains our most relevant market for transmission. As I said, U.S., I mention again, is growing a lot, is driven by upgrade of the expanded power grid. The data center digitalization, rollout of AI, so many drivers even in U.S. creating demand growth. For sure, Aurubis can support by continuing to supply in a reliable way, and ensuring the continuity of business for us. Considering even the rise of electric car and vehicle, which accelerated a lot, even the growth worldwide and particularly in U.S. We really need to have a continuity of our supply and mainly partner, embrace the same commitment to grow. As I mentioned before, regionalization of supply chain is still extremely important for us, and re- shaping how we operate completely. Finally, the geopolitical and supply chain turmoil continue to add complexity.
It's extremely important that our partner continue to be flexible, agile, and follow us on a quick reaction in front of turmoil, in front of new challenges. At the moment, what I could say, and thanks Aurubis for the cooperation, is you are helping us to stay ahead of global trends, and then it's my chance to thank you for that.
Colin, would you concur? If you look from Teck's perspective, are these the trends which you follow as well? I mean, amongst others, being responsible for market research, a nything to add here or [crosstalk]?
[crosstalk] I think to me, what is really interesting is that I don't worry so much about demand. I mean, I think we're in this interesting space . If I think of my career in metals and mining, China has basically driven 100% of copper growth. You look at what China's done in terms of moving to basically an electro state, you could say China's the world's first electro state. I look at the resilience that has driven geopolitically. I f you went in China, t here's a lot of debate over it, but there's no doubt that China's less reliant on oil than it was before.
As you go through this global shift from petro states to electrostates, that means a lot more copper demand, a lot more electrification. People talk about metal super cycles. I'm a believer in an electricity demand super cycle, and metals just feed into that.
My worry is not on the demand side. My worry is in supply, and those of us in the mine side trying to keep up with the pace of growth we're seeing. I do think that it's generally appreciated even at the government area, now that grids are the one thing you need for global economic resilience, particularly in a world where artificial intelligence is quickly becoming a geopolitical battleground.
I'm not worried about demand. I think that's a positive news for you as well, Laura. Martin, now, we've heard that from Prysmian and from Teck. Is that consistent with the conversations you're having in the broader industry? Any additional color you could provide to this outlook?
I would just say that it's certainly of importance, everything that you mentioned for us also. W hen I engage with my commercial team, regardless if our primary suppliers, recyclers or end customers, we're working very closely to our customers and trying to find new solutions to this. Very often, we also involve our R&D colleagues. A s an outcome of this, of course this could be that we find new reliable supply reliability, whether that's being this steady off-taker material that you said, Colin, is of great importance for you or for that matter, being able to deliver a volume of size with the right quality to our bouncing partners that you highlighted here, Laura. Just to mention something more, I think in many areas also, fast sampling and value estimation is of great importance.
Also, it requires us to work very closely to our partners to develop this together. I think also there we have multiple examples where we have successfully done this, going from a pure transactional basis to more like a partnership and trust that you were highlighting, Colin. I think that being in business with Teck, for example, for the last two decades, even though we are not a miner, we start to get a quite good understanding of what is important for a business partner like a mine. We work very closely together, and we can then ensure a smooth offtake and jointly, let's say enable each other's growth, which also drips down all the way to our downstream partners eventually to manage this growth of metal demand that we are seeing.
Okay. We've touched the topic of sustainability before, but I'd still like to go one level deeper and try to get a better grasp of how important sustainability is in your industry, Laura. Where would you rate the value? I mean, we had a lot of discussions over probably the last 12 months. What is it still worth ? What is still the relevance? I think in this room, we're convinced that there is a huge relevance to it, but I'd still like to get a better understanding there. Where would you also rate Aurubis on a global scale?
Yeah, okay. Thanks for the question. Sustainability for us is a key pillar of our strategy, and is central to our industry as well. At Prysmian, sustainability is not just our responsibility. It' s a driver of innovation and growth. We challenge ourselves to reach target, a very ambitious target in sustainability. We announced the reduction by 60% of scope 1 and 2 within 2030 and net zero - 90% in 2035. We decided really to accelerate the net zero from 2050 to 2035, and we are the only one or the first one at least in the industry, in the sector. On top of that, we commit even to deliver more than 55% of our total revenues as a sustainable product.
A combination of things driven by our internal challenge, but even what the customer is requesting to us to provide more sustainable product, as well as to foster sustainability mindset inside of the supply chain in the supply base . Providing low carbon copper to us with high level of quality, but mainly embracing same ambition in sustainability on the ESG target for the future is absolutely pivotal and fundamental for us, to continue to build up this partnership with Aurubis .
Really d riving it through the supply chain.
Absolutely, yes.
Colin, same question to you. What's Teck's stance or your view on the sustainability angle in the mining industry?
Sustainability is a prerequisite to doing business. I mean, even if you think financially, the companies with a focus on sustainability tend to have the best financial results. T[hat's because they run their] businesses better and in the right way. The mining industry historically has had a bad reputation for sustainability. I do think that's changing, and I'm a firm believer that as we push towards a more responsible sourcing future and the MOU that we recently signed is kind of testament to that, we can change that opinion over time.
What the mining industry, I think is doing better and we as a company try to do is listen. We listen to our communities, we listen to our customers. W e say, "What do you want?" We change our business to that. When Aurubis buys copper concentrate from Quebrada Blanca, they know it's not content of w ater that's gone into that.
When we come towards the end of a mine life, you know that that'll be rehabilitated. We look to nature, positive future. To us, it's absolutely core at what we do, and it's become less of a sexy topic, if you want, over the past year. That does not mean it's not more important. This is why we are delighted to have signed that MOU through Aurubis, around say, traceability in supply chains . M aking sure that when Laura gets our copper when it's come from the primary supply source, you can trace all the way to the system. You know the carbon footprint, and you know when you're selling it to your customers, what's going in there is done in the right way.
Exactly.
Thank you, Colin. I would like to switch a bit the topic now to another aspect that you mentioned before about innovation and also try to grasp the value of innovation within such a partnership, because it is a very, very dynamic industry. Could you maybe elaborate a little bit more on the value of innovation?
Okay. Innovation is a cornerstone of our relationship with our customer, and we believe that it's not innovation without partnership, which is upstream and downstream. We started since years, to cooperate with our suppliers, with Aurubis, to develop a new product, to think about a new solution that can serve the best our final customer. Sustainability, as I said, is part of the innovation journey for sure, but not only to identify new processes, more efficient, try to provide a new solution to our customer and then in this way, create value for all the value chain. Innovation, for Prysmian is not only an effort, it's a network of collaboration, of cooperation, which is extremely important and is like a co-designing together with our suppliers, with our customer as well, to shape the future.
I suppose Circular Solutions fall right into this department. Colin, the same question also for you. How are you thinking about innovation, and how innovative would you say is the relationship with Aurubis?
Yeah. I nnovation and a mining company doesn't necessarily go hand in hand, but what I would s,ay is there's a couple of things that I think there. We're in a world where we move a lot of material around the world between us, and that is something that we're starting to see new solutions come through on. Sometimes that's just simple engineering, sometimes it really is proper, how can we change things? Also, I mean, we've talked a lot about people are asking us for different types of metals than before, and maybe we had something in our ore body that, well, it was previously going to waste. We can talk to Aurubis to go look, "Can we possibly recover this? Because the world needs it," and I think that's very important.
Okay. Speaking about these minor metals like bismuth, etc., which come along in the ore body and sometimes they're a nuisance and sometimes they have value. I would like to take a step towards the final questions in this panel discussion before we wrap it up. I would like to ask all three of you, when you look ahead now, let's say five to 10 years, what role do you see for Aurubis and what role does Aurubis play in your future business success? Maybe we can start with you again, Laura.
Okay, for sure. Continuing to play a strategic role in Prysmian 's business, to continue to provide reliable product and then build up a trust and long-term relationship. High quality, so sustainable products, so w orking in a circular economy, giving us value on this aspect, which is extremely important for our final customer. Continuing to rely on supply across geographies. For us, it's extremely important to have local presence in the region where we are growing. We are committing to grow with our final customer, so then helping us to build up a resilient supply chain, value chain. H igh quality, I already said and continue to work in a transparent, very responsive way to guarantee and to build up value altogether to the entire value chain.
Okay, thank you. Colin, your thoughts on that.
We're at a time in the world where you need leaders, and this industry needs leaders. We want to be a leader in the mining side. I would say Aurubis is the natural leader of the smelting community, particularly as we look to build greater optionality in supply chains, more resilient supply chains, as we mentioned before. I think that leadership will come through interactions with government and then putting through a common front, because when you get governments involved in industries, and as I mentioned before, we've never seen that in the state we have now, y ou need strong leadership to say , "This is the right thing to do here," because there's a lot of noise that comes along with it. You need the companies that know what they're doing, and Aurubis is certainly number one on that list.
That's what you need to be able to have those interactions. As we mentioned before, we're in a world where we're looking towards more circular economy behavior, getting that behavioral shift. Sustainability, as I said before, it's maybe less sexy than it was before, but still Europe is the leader there and the business practices that come through there. On the mining side, we're looking at things like the consolidated Mining Standard initiative, so that when a customer gets product, they know it's come the right way. Aurubis and ourselves are very good partners in the Copper Mark, which will flow into that over time. Just a strong leader in a changing global world.
Wow. Thank you. Martin, now you've heard the voices of your business partners. I'd also like to close this discussion with your final reflections on where you see the business relationships in five to 10 years from now.
Maybe just to repeat that as you heard, the trust is there, the good relation is there. We have an excellent foundation to continue to build on, in my view. Again, a robust SD really being in the center of this value chain, w e are ready to take that leadership and I believe that we already are also. We would need also to jointly work together on the full value chain. I think we have started this off now, especially when it comes to the initiative on sustainability, all the way from mine through us for the responsibly smelting and refining the material that comes from the mine and finding more circularity, more recycling solution and in the end, provide end products to your customers, Laura, of the highest quality.
I think that we have more to set there . I think for the new, let's say, assets that you will be developing, f or sure, Aurubis will stand there and be prepared to be the off- taker of choice for this material. Also to you, Laura, I mean with your vast expansion plans that you have, we want to say, mirror that and work next to you and also going into different geographical areas, selling more products and so on. I think that we have an excellent base to continue to build on.
Very good words to close this session. Thank you very much everyone. This was really fun.
Thank you.
That's all your applause. Thank you very much. As mentioned before, it was a lot of fun having you here on stage, discussing the topic together with you. Once again, it was great that you could make the time. Now, heading to the last presentation of the day. Ladies and gentlemen, after this glimpse into our commercial boiler room, I would now like to hand over the final presentation of the day to Steffen Hoffmann, who will now join me here on the stage. Welcome again, Steffen. You will now dive into some interesting details on our business model and provide you with some more color on the financial outlook for the next couple of years, as well as our updated capital allocation policy. Before you start, Steffen, just one last reminder.
If you are dialed in virtually and you want to raise a question for the second Q&A session that we'll have right after Steffen's presentation, please send your messages, your questions through the Q&A tool in our streaming tool. With no further ado, over to you, Steffen.
Yeah, thank you, Ken. You basically laid out the agenda for my section here. Insights on the business model, guidance for the new fiscal year and midterm, and then obviously also on capital allocation. Since I joined Aurubis,, a bit more than 12 months ago, I've had many conversations with many of you, but also with many colleagues who join us virtually today. There have been a number of questions that usually came up, and I wanted to take the first few minutes to address some of these questions and try to shed some light on three frequently asked questions. One on o ur dependency on certain earning drivers, the other one on TCRCs and if or how they can be approximated, and the last one on the returns of the important strategic CapEx program.
I'll start with our earnings drivers, and we've alluded to it already a bit in the first Q and A. These are the earnings drivers that are the major focus in many of the conversations. You may recognize that the inner circle here of this chart, you recognize that from the reporting, we show that on a quarterly basis with the three dimensions. You also realize that the outer circle has now six dimensions. We give a bit more of transparency, and let me allude a bit here. Obviously, also as we show a development over time over the last four years, I think the important message is that our earnings profile is much more diversified than often assumed.
Sometimes in the quarterly calls, we spend a lot of time on TCRCs and we're always trying to get across that there's a bit more that's relevant for our bottom line than just the TCRCs. Important message, diversified earnings profile. Secondly, no earnings driver is significantly overweight. You see that the three clusters being TCRCs, RCs, products premiums and the metal balance, all of them have their importance in the share. If we look at the development over time, obviously the weight of TCRCs and on the recycling side, the RCs, lost importance. I mean it's somehow a no brainer, as TCRCs were significantly under pressure and are under pressure. It's also less of an earnings driver. I think there was some noise yesterday in the market, y ou also see on premiums and products that this is an attractive and a growing contributor.
Half of the increase comes in our case from sulfuric acid. The other half of the increase is obviously from the product premiums. O n the metal result, y ou see here that we give a bit more granularity because we separate copper, gold, and silver from the other metals. You see that copper, gold, and silver in the metal result are of growing importance, quite visibly, and they account for more than a quarter of the total gross margin, which is roughly the same share as TCs and RCs together. Another question that we often get is, can you give us more granularity on the level of the earnings drivers? What's the impact of the earnings drivers? You don't see euro figures, but you see qualitatively categories, three categories.
The lower bubble, the smaller bubble, ranging or accounting for a low double-digit million euro impact, the large ones for the mid to high double-digit million one, and the one in between, low to mid double-digit million euro. What's the message here? Obviously, we show the sensitivity to a change in the price, for example, of ±1 0% in line with what we've outlined on the previous slide. The sensitivities to all individual earnings drivers are manageable. Not one of them is in magnitude that it would overweight, overshadow everything. That's why I'm saying, all of them are manageable. Just taking or walking them through quickly TCRCs and recycling RCS, for instance, lead to a low double-digit million euro impact. All of that is calculated on the basis of this new fiscal year.
H ow we look at EBT for 2025-2026, if TCRCs increase or decrease by 10%, we would think that this would have a low double-digit million euro impact on our bottom line. If we go on, look at sulfuric acid, it's a similar sensitivity, the smaller bucket. Although the gross margin share is comparably low, I would say that any change translates directly into the bottom line. That's why it's still a good contributor f rom sulfuric acid side. G o into the medium category, FX and copper premium impact earnings by a low to mid double-digit million euro figure. I think it's not a surprise, the highest sensitivity is visible in the metal result. A 10% price change across the entire metal portfolio translates into mid to high double-digit million euro.
Here , I would want to add that, let's say, in the calculation, in the sensitivity, we have taken account of the exposure we have. Here, we have taken into account, the sensitivity applies only to the open exposure, so not to 100% of the free metal, but just to that share that is open. Obviously, besides sensitivities and ups and downs, it's also important for us as a management team to manage that and to mitigate sensitivities. For TCRCs, for sulfuric acid and for product premiums, we run the business via diversified contractual portfolios with limited exposure to spot markets. We've heard that from you, Martin, and I think in the conference calls, we often refer to the point that usually we try that we are at least 90% secured contractually and less than or maximum 10% only being exposed to the spot market.
That's obviously a way of mitigation of short term impacts. O n FX and on the metal result, w e use to a certain amount hedging. W ith that, I mean forward sales to gain planning security and manage volatility. Another frequently discussed topic is the TCRC level, especially in this year and the question whether it can be approximated. As you know, for contractual reasons, we do not provide exact figures. I think the good news is that they can be approximated using publicly available data. I don't want to lead you now in all details through the algorithm, but the IR team is prepared for follow- up questions. Just briefly, how do we think the algorithm is looking like?
From our disclosure, take the throughput volume and the TCRC gross margin of the CSP segment, then deduct the RCP, so the scrap, the blister, and the other throughput. D ivide the result in the euro value by the total concentrate throughput, and then convert euros into dollars and then you get approximately the blue line . I t works quite well and it even works with ChatGPT and Kai, and AI. When you have the blue line and the brown line is publicly available data from CIU spot price, we see a gap. What does this gap tell us? It obviously tells us that we are not doing so much on the spot price or on the spot market. Secondly, it tells us that there's a value for long-, term contracts.
It goes in both directions and it also tells us that the higher complexity of the raw mats that we are able to deal with, and we heard that in the last hours quite often, and the leading role in sustainability that we can play, help us here differentiating the blue line from the brownish line. We also see, when the brown line goes down, the blue line also goes down. In other words, this year also for us is not a good year from a TCRC perspective, but still a year where we can smelt in a profitable way. We are not fully immune, but we are able to shield ourselves from those short-term fluctuations.
I hope this gives a bit of transparency, and I hope this can help us in the future exchange, to get a bit more and closer together with the models and what we think we are describing. Another topic that has been often discussed obviously in our exchange also today, is this question. I t's an important question on the CapEx program, and when will it deliver the returns. The blue line obviously is showing the CapEx line. We have heard several times today that we've surpassed the inflection point on CapEx spend. The overall envelope is the €1.7 billion. The last official data point we gave was that as of end of June 2025, out of the €1.7 billion, €1.1 billion, 70%, has been spent. We have further spending since then, but the new figure will be disclosed with disclosure of the annual results.
You can see it from the line here, w e are well aware in spending. S pending is well controlled. €1.7 billion is the figure. We don't see the necessity to overrun, and o bviously w e are working and having all hands on deck to ensure the brown line. On the brown line, the EBITDA contribution of the projects starts kicking in. We have a low double-digit million EBITDA contribution in the new fiscal year 2025-2026, low double-digit, and we expect a strong sequential increase in the following years, definitely starting in 2026-2027. I think we can assume that from the line, that between 2025-2026 and 2026-2027, this is really when the returns should kick in visibly. We expect the €260 million, being fully there annually in 2028-2029, 2027-2028 already being very close to the 260 s, and from there on, we o bviously see the €260 million contribution as a run rate with those figures.
I referred to discussions I had over coffee. We have not included premises on metal prices to the most bullish scenarios. If the currently discussed bullish scenarios being on gold or on copper, would materialize, there could be upsides. F or us, a s the new management team, it was important to ensure that we feel comfortable with the 260 s, more coming from a risk-averse approach. Upside is possible if gold and copper go wherever Goldman or Bank of America or other experts see it, but we have not included all this potential fantasy here. I wanted to address those three frequently asked question before I would jump into the guidance, and before I come to the concrete guidance for the new fiscal year. Perhaps first kind of a traffic light summary, how we look at key levers, key drivers that describe the macro picture.
On the raw mat side, obviously the raw material supply is not ideal. Thanks to the long-term relationships, the long-term contracts, and the fruitful exchange between the parties and with the market position we enjoy, we think it's manageable to get the supply. Obviously, we also need to do something and are eager to continue ensuring that. T here's a red traffic light here. Very clearly, TCRCs for this year. The concentrate supply is tight, and TCRCs have come down. That's not a new phenomenon. I would say in this fiscal year, it hits us significantly more than last fiscal year. I mean, that's obvious. This fiscal year, we have four quarters of depressed TCRCs. Last fiscal year, we had two and a half quarters of depressed TCRCs. That's a clear negative for RCs,.
The last two quarters have also not been very favorable and let's say versus that not favorable level, we see a continuation. That's why it's yellow. O n a full- year perspective, I also could have painted it red because overall RCs in the new fiscal year versus overall RCs in the last fiscal year is lower. Let's say here, it's a yellow with a tendency to a bit of red. O n the foreign exchange, and h ere for us, the U.S. dollar is important. Last fiscal year, we were a bit stronger in the dollar than 1.10. This year, we are somewhere between 1.15 and 1.20. We have a bit of a downside on the FX side. Sulfuric acid, it's a yellow that feels a bit for me still as a green.
Martin would highlight that i t's always a short-term business and we can never be sure, but it's not a yellow that concerns me. It's a good and stable situation I would say. C ome our two greens. The metal price, don't need to educate you on that one. The high demand for our products, where global supply and refined products has become tighter, which obviously means that there's some revenue potential for us. On the product side, there has been some noise in the market and I hope you appreciate that w e cannot comment on individual exchange with customers, but the green figure or the green traffic light should tell you something. The guidance, that has been discussed already to a certain degree today on the coffee break.
Despite the somewhat mixed macro picture, we expect for 2025-2026 to be a year with many important opportunities, operational milestones, and a year at least from our perspective, with solid financials. On the EBITDA, we see the range from €580 million - €680 million reflecting the positive business fundamentals as well as first modest contributions from the strategic CEpex program. We've seen the curve before. O n EBT, I would want to be a bit more ex plicit. You see we guide EBT approximately on par with the 2024-2025 level. Considering that we still have 12 months to go in the new fiscal year 2025-2026, we guide the EBT in the range of €300 million- €400 million, having the midpoint of €350 million in mind. Which levers do we see more favorable than last year?
Just talked about that, copper products contribution and metal result, and obviously the first contributions from strategic projects. Which levers are less favorable than last fiscal year? TCRC concentrates, RC scrap on a full- year basis, foreign exchange, so the weaker U.S. dolla. I would want to note that the EBT this fiscal year is impacted by higher depreciation in order of approximately €50 million due to investments made. In other words, Richmond now being in action obviously changes something on the depreciation side versus last year. Also, important to note that despite the geo and macro uncertainties, we are confident that 2025-2026 will be a good year for Aurubis . The upper end of the €300 million - €400 million range is not excluded. As of today, we shoot for the midpoint. There's still 12 months to go.
Net cash flow, traditionally we have a high conversion rate and you've heard about our efforts to reduce working capital. That should translate in a net cash flow of €640 million- €740 million. This is more than the EBITDA level, which underlines our focus on efficient capital usage. Free cash flow, I really would like to highlight that because as a management team, delivering healthy free cash flows is really a priority for us and we want to manifest that in this fiscal year, with the ambition to reach break- even for the free cash flow before dividend for the full 12 months in fiscal year 2025-2026. On the ROCE, obviously the increased capital employed related to the strategic projects and the stable earnings will lead to a ROCE between 7% and 9%. It's just a momentary snapshot.
We are targeting for steep ROCE improvements in the years thereafter, and I'll come to that. A s macro and geopolitically, it's a mixed picture. It's important to work on self- help measures, to be prepared to be ahead of the curve. We've talked about that in conference calls. We have laid out an efficiency program that will result in a €50 million annually, €50 million cost saving in the midterm. We are working on net working capital reduction in the vicinity of around €500 million in the mid-term. On the cost- saving sides, it's a marathon on various dimensions. Consultancy, G&A, travel, obviously on the G&A side, h ere we talk about dozens or more hundreds of measures in the functions. Has to do with IT. It has to do with preparing the company for digitization.
Has to do with the question of, how much corporate center do we want to have or can we afford? Has to do with the question central versus decentral, where's the optimum? Does everything need to be done in Hamburg? Obviously, the answer is no. To what degree can we go to best cost countries? Here, we have quite some potential to improve. On the working capital side, one of the key attack points is that we really prioritize the intermediates that we have in our asset base, prioritize them over the raw mat that's coming in. Historically, raw mats came in, everybody was working on the raw mats, intermediates that are within the company, okay, we can take them later. Now, first work on the intermediates. There's a lot of value in it.
Another axis of attack is that we need to increase the delivery frequency due to the price increases of metal prices. It now really makes sense to shorten the frequency of our product sales. On the midterm picture, it's a bit slightly better because there's no red, but still quite some yellow and the same level of green that we've alluded to before. If we look into the midterm on the raw mat supply, we expect some of the short- term tightness to be alleviated by performance measures on the mining side, as well as improvement in the overall economic development. Mid-term, we expect concentrate TCRCs to gradually improve, kind of improve from the low levels and higher copper prices in particular, to provide an incentive to expand mine production.
RC for recycling, so we see consistent availability of recycling materials and we expect the RCS for recycling to return to healthy levels. On the foreign exchange, we see the picture not so much changing, probably a U.S. dollar around 1.20 is a prudent assumption and that's where we would look at. Sulfuric acid is an attractive market, and we only have a short-term visibility, but we also have no intelligence that now the pricing level or revenue potential would be underwater. We would say it's a flattish development on a good base, and once again, metal prices, I don't need to educate you, this should be green and same should be true for the product side. Where could an EBITDA be in the year 2028-2029? I mean, take whatever your assumption is for the EBITDA of the year that we've just closed, and we don't have the result yet.
Starting point 2024-2025. Obviously, we stand here to say that we should add the $260 million for the CapEx projects. Obviously, also coming from a year 2024-2025 where ramp-up costs accounting to roughly - $50 million were included in the bottom line, they should be reversed. I would reverse the $50 million, I would add the $260 million and then I would add in a nutshell, the $50 million that we are working on the cost side and this can give us a certain indication with a few ups and downs where we could imagine 2028-2029 being. You see the three light blue areas. What we are trying to say here is that the CapEx program, the strategic initiatives, they should help improving the three key levers of our EBT bridge, TCRCs products and metal result. What do I mean with that?
Obviously, Richmond will help to increase the proceeds out of TCRCs and RCs, through more processed volumes. The tank house expansion in PDOP will contribute to higher earnings from products and premiums, more cathodes, more earnings from products and premiums. CRH, BOB, and ASPA are designed to increase the profitability of the metals business, and also additional metal volumes from Richmond. On the other side, the reddish line, a part of the $260 million is obviously the expansion of the footprint with a fully fledged plant in Richmond being now live. This is a part of the $260 million . I n the reddish column of the cost for the footprint enlargement, w e also need to counter, add or to add positively the self-help measures that I outlined on the cost side. Overall, we are very confident that the business will perform well.
We are very confident that we will deliver on those tailwinds from the megatrends, both through the existing platforms, as well as through the additional investments made in the U.S. A gainst this background, we expect significant growth as this chart tries to suggest and a strong potential for EBITDA expansion. On CapEx, we've touched already a bit in the Q and A. It's fair to assume that with yearly maintenance CapEx of $300 tmillion-$ 400 million, this range reflects the shift in our maintenance schedule of major shutdowns in the primary smelters. You do know that we are changing from every second year of a major shutdown to now every third year. This should help lower this maintenance CapEx piece. Obviously, be assured that the CapEx discipline is a major priority for us.
As mentioned earlier, a lot of the $1.7 billion is behind us, and we have a clear plan how much is left and needed. We are happy with the envelope. This should work out well going forward. The CapEx outlook includes new strategic CapEx in the order of low to mid double-digit million euros. Those were things that you heard today, ideas that you heard today, y ou heard things on expanding the commercial footprint. You heard about intelligent, smart investments of de bottlenecking. You heard about intelligent approaches of getting more complex material or using assets in a more effective way. All of that is baked in the gray line. We have decided for today not to put figures on the gray line. What is not baked in the gray line?
If we were to do another big thing in the U.S., obviously it cannot be in because nothing is decided and it's not even on the table. With a lot of energy, we are working and thinking about that one. Free cash flow, I think you heard the word from the whole management team today. The focus is really there. It's obviously a metric that I personally value very highly. Internally, we've been talking about the strong emphasis we want to place on being a cash flow driven company. That's definitely something you can and you should expect from us. The ambition is to reach the break even this fiscal year for the free cash flow before dividend, and we target to achieve that via three levels. The first is obviously increased cash inflow from higher EBITDA.
The second is the self-help measure that I've mentioned, and the third one is reduced investment-related cash outflows. We will pursue this trend in the following years and accelerate healthy free cash flow generation in the midterm. O n return on capital employed, w e have touched on that briefly . Let me reiterate here that managing capital responsibly is obviously key for us. We are confident that by 2028-2029, so fiscal year 2028-2029, we will reach this target of 15%, given that the Eapex profile shows gradually decreasing amounts and the peak is behind us. Additionally, we've seen that our assumption is that the inflection point on return is close. In line with the sketched increase of the ROCE in the next several years, both segments CSP and MMR will contribute to the 15% group ROCE.
CSP is already close to it or if you look at some quarters beyond it, MMR historically has achieved that, is now going through an investment phase. With our conviction on Richmond, we are sure that we will get there again in the midterm. Once again, 2028-2029, we go for the 15% ROCE. O n capital allocation, y ou have seen our short talk release yesterday evening
Yeah, c ash generating and free cash flow is important. We' ve reviewed the capital allocation policy. We are committed to a structured and disciplined approach. First priority is to keep the operations running, and to comply with environmental standards. Obviously, we would rather try to be at $300 million than $400 million, but that's the range we are giving. Once this first criteria is fulfilled, we then take care of the balance sheet. You know our healthy equity ratio, and you know that we are obviously staying below the maximum leverage target after this, and that's important for us. We want to participate. We want you to participate in the company's success. Success via , I would call it, a basic dividend, as part of a clear policy. Regarding the remaining capital, we have thought of two options.
One option is to expand the asset base to pursue organic or inorganic growth. Another option is to increase shareholder remuneration by paying a special dividend. With that said, I'd like to translate the framework into concrete KPIs that obviously can be tracked consistently. We are clearly committed to maintaining a strong balance sheet, with a maximum net debt to EBITDA leverage of 3.0 x at fiscal year end and a minimum operating equity ratio of 40%. On the non-discretionary end, we will execute the communicated strategic CapEx program. These projects will contribute to the 15% ROCE target in the long term. We have the stay-in-business CapEx of this $300 million-$ 400 million annually, and that was the news of yesterday evening. For the dividend policy, our intention is to lift the payout ratio to up to 30% in the mid-term.
Starting for the fiscal year 2025-2026, we intend for the dividend payout ratio to be at 30%. This dividend level would be paid out in early 2027 after AGM approval. For the fiscal year 2024-2025 that has just closed, which we would consider having been a transition year with high investment activities, we intend to propose to the governance bodies that have to decide on that, a dividend payout ratio of 25%. That would be paid out in early 2026 after the AGM approval. Last three years on average, we were at 20% paid payout ratio. For this next decision, we suggested 25%, and for this fiscal year that has just started, then to be paid out in 2027, we target for the 30%.
For remaining capital, I think it's also important we intend to allocate it selectively to either additional growth projects, if they meet the 15% long-term ROCE target or acquisitions. I f they meet the 15% long-term target or distribution of a special dividend. With that, Ken, I think I would leave it here, and I'm sure we are ready for another Q and A.
Absolutely. Thank you very much, Steffen, for all these valuable insights. As we will now have a second opportunity to ask questions, now it's in particular around Richmond and the financial updates Steffen just gave, I would like to ask the Executive Board back to the stage for the final round of questions and answers. Warm welcome again, Tim, Inge, Toralf, Steffen was here all the time. I don't know if I have to remind again, for the virtual participants, press the Q and A button if you want to ask questions. Feel like the moderator on these conference calls, press star, one. Having said that, I'd like to hand it over to the audience first. I think you had the first one, Jason. Let's start with Daniel over there.
Thanks, Dan Major from UBS. First question is just going on your sensitivities slide. Was it slide 60? Yeah. In terms of your sensitivity to concentrate tr treatment charge, you've shown a 10% change. What is that based off? O bviously, the treatment charge is close to zero. What is the base for that 10%? 10% of not very much is obviously not very much.
The base is obviously, if we now look at the slide 61, the one with the chart, our base would be our blue line and not the brown line. Obviously, for competitive reasons, we would not give our figure, but it would not be zero. It would be more than zero. The 10% of this figure would be, as we say, a lower double-digit million amount. Call it roughly $10 million. I think that's everything I can say. Okay, so 10% of $10 million.
Sure, t hat's useful. Thank you. Just a second couple. 10% equaling [crosstalk].
[crosstalk] . Sorry,
Just a couple of clarifications on the parameters used to set this year's fiscal goals guidance. What assumptions have you made for the benchmark? I think the consensus probably sits sub- $10 a tonne in terms of the benchmark treatment charge. Similarly, I'm assuming your financial guidance factor is in a premium, relatively close to the numbers that were communicated in the market yesterday.
On the TCRC stats, you want to take first, Toralf?
No, you go ahead.
Okay. I will not give you the figure you broadly search for. I can say that 10 weeks ago, we would have thought that the market environment develops a bit more favorable on TCRCs than we think it is now. That is why we are a bit more cautious on TCRC development. That is why it is important that there are other elements in the equation that are green in our language. Obviously, we cannot comment on the agency news from yesterday, but we can comment that we think obviously that as refined copper is a scarce thing, it is important that this has the right value. What I could add is that we somehow see an interdependency for this year between TCRCs being under pressure and premium products being a bit more green, and so there is a compensating effect for us.
Okay, thanks. Just one other less financial question. You spin the great narrative of Richmond being close to data centers and EV production facilities, etc . To kind of Jay's question earlier, you do not actually produce cathode in the U.S. E ffectively, the product from Richmond is being imported into the U.S. from somewhere else. What actual advantage do you get from being close to these strong thematics? Are they paying a premium f or your product because it's produced in North America, shipped to somewhere else to be refined, and then sent back to the U.S.? I mean, what is the actual financial advantage of being located in the region you're located?
I think, Toralf .
There are many advantages. There are many indirect advantages. I mean, we have the direct advantage of course, if we go further downstream. We have the indirect advantage that we get some funding for further investments that we have there. We have the advantage that with our plant there, the availability of scrap is right next to us.
The scrap has been exported before, now it has to stay in the country or it will stay more in the country. We have access to various sources of recycling material which we can process. We are also collaborating, you know, we're starting to collaborate with these people who invest in these things, so we can start discussing also models of circular economy. Of course, the people who invest in these infrastructures and data centers also have a big topic with sustainability, where we can help them with circular economy.
I would add that we have an advantage on the cost side with regards to energy costs. Energy costs in the U.S. for us are 1/3 than in Germany.
Okay. I'm not a data center specialist, but I suspect data centers are not going to generate a huge amount of scrap for you anytime soon unless they have extremely short shelf life. It being located close to those industries doesn't improve your availability of scrap particularly or get you a premium product.
There are parts of the data center which get renewed every two, three years, so there's scrap availability, y es.
Okay, thanks. I'll pass on to someone else.
All right, Jason.
It's Jason Fairclough, Bank of America. Two questions. First one's just on reporting. You've talked about this €260 million, and I guess the concern as an analyst would be that it just disappears into the ether and we can't actually see it. From a reporting point of view, for example, will you be reporting a separate result for Richmond so that we can look at the profitability from the asset?
Jason, that's a good point. We have not thought that through yet. It's in our interest that w e w ork with you on the transparency, that together we can follow that. Let's take it with us. I could imagine, w e definitely will report something. I'm rather thinking of the frequency just from my gut. I would probably not do it now on a quarterly basis, but on a yearly basis. Let's take it with us. It's our obligation to keep it to a certain degree traceable for you guys.
Okay. S econd question's a bit maybe of a philosophical one, but you talk about the gearing to the metal effect. T o me it feels like that's something that your commercial team has to play with, r ight? At the end of the day, you're trying to get these raw materials. The raw materials are scarce. Again, if I think about history, over time you just pay away more and more stuff to get the raw material that you need. I guess my question is, is that metal effect permanent or do we actually just see that being chipped away and eaten away over time?
Our assumption is that this metal effect is permanent. Our assumption is that in absolute euro or dollar terms, it's increasing, obviously also with metal prices increasing. Why do we think that it's permanent? Because we think that this is one of the USPs and one of the USPs that we really do a lot, that they stay a USP in the future, being able to work better than others with complexity. If it's true that also in the future we will have and keep that as a USP, obviously we invest a lot of money with CRH and all BOB and ASPA and so on, so we should be able to stay ahead of the curve.
That's why we think there is a reason, and we continue building up that reason, that we can treat complexity better than others, which then in a consequence, means that we can get a decent amount of metal out of it, free metal out of it.
Do you think there's an ongoing capital cost then associated with maintaining that leadership in treating the most complex concentrates?
I would say in the €1.7 billion package, there's a lot of euros that safeguard the next years, the next X years. I'm now not seeing the next big investment within the three, four, five year time frame that we need to do to be able to hold it up. I think we have just done it or are about to be doing it. We now should harvest this for the next decade or so.
Especially with the new investments in the complex recycling center in Hamburg and with the precious metal sites, I agree. You know, we will be able to secure that [crosstalk] for a decade.
Okay, thank you.
We have a question from Bastian. Just need to decide who gives the microphone.
Thanks. Bastian Synagowitz, Deutsche Ban. M aybe just one follow-up on your plans in the U.S. I guess you've stated a number of times that to basically take the next step, you need some government support. Now, what's the concept here? Do you aim to hit the 15% ROCE target for such a project pre-government support, or do you actually need the government support to basically hit that target? Just from the, I would say, early stage budgets you're looking at, is there just any sense for the timing on such a decision? That's my first question.
On the U.S. investment, we would need government support if we go into the primary smelting site because that would be a huge investment for us. The other option is to have a recycling plant on the other side of the United States or to go downstream into a tank house, anode furnace, and into a rod plant. We can do that out of our own cash flow. Of course, we would in addition apply for government subsidies, but we don't need it. We can do it out of our own cash flow. The return assumptions, they we have apply without government funding because we want to do that without [crosstalk] not on the primary side, but on the secondary side and on the downstream side.
Okay, thank you. Just maybe also coming back to shareholder returns, I guess buybacks is something which doesn't appear to be on the slide . I guess you briefly touched on it earlier, but maybe can you just spend a few seconds maybe talking about it? I think you mentioned that liquidity is an aspect, maybe shareholder structure is an aspect, but is this something which would be in your toolbox in principle?
I mean, in principle a buyback should be in the toolbox. I worked in a company that's doing a lot of buybacks and I had the pleasure to prepare that. I love buybacks generally. I think in our case we need to look at it a bit differently. First of all, we have not the highest free float, right, so why reducing it? Secondly, we have a shareholder that's super close to 30%.
Why bring that shareholder in an awkward situation? I mean, there's always workarounds. I think the special dividend in that case would be the more logical case. Before we would come into such a decision, we would want to talk to the market anyway and understand, what's the preference of the market? Just out of those two points that I was making, we felt that the special dividend would be the easier and more obvious route to go. Who knows what is in X years, righ Okay, we have one question back there. We'll take you first and then hand it over to Alan.
Hi, this is Adano Cokie from Morgan Stanley. My question on Richmond and the input mix, I think the plan here has been t o use low grade scrap as a k ind of large proportion of the mix. On your slides, you kind of show the inventory build and some rough proportions here. Can we take that as your targeted input mix, and maybe related to this, will you provide any kind of color on byproduct volumes as well?
I suppose on the input side there could be one for you, Inge, and on the byproduct , David.
Yes, the overview that you saw on the slide for the buildup of the inventory roughly represents the target input mix. I mean, Richmond as any recycling facility in the Aurubis network is built for flexibility. We can adjust it going forward, but this is really the material stream of the mix that we're aiming for. The second part of the question was in terms of volume output. I think we've shared indications on blister copper. We're going to take in about 180,000 t of recycling materials. In order to be top- notch in the recycling world, you have to make sure that you're close to zero waste. 180,000 t of input material normally equates to about 180,000 t of product.
The main products within Aurubis Richmond in order of magnitude is iron silicate to begin with, then our blister copper, and then we have the lead tin solder and zinc oxides. With the iron silicates and the blister copper, we have the two main, just volume- wise, the two main fractions.
Thank you.
Thank you, David. O ver here to Alan.
Yeah, thanks. Alan Spence, BNP Paribas. On TCRCs, h ow do you manage the book there in terms of mines versus traders? Would you look to shift that mix around?
Tim.
The mix between?
TCRCs, the mix between mines and traders.
I mean, we don't expect that there will be, let's say, a different mix in the future. We do have, let's say, our portfolio, what we have today, that we do have big trading houses with whom we are working with. We do have small mining projects we are working directly with. I think this is our strategy. We are going forward, and there's no intention to change that. As we said earlier, we really would like to stay on these different legs let's say, to be diversified also on the market and to be attractive as well for both.
Okay, thanks. Steffen. In your comment earlier about the kind o f counterbalance between the product premium and t he TCRCs, the developments over the last five weeks in the market where Freeport, you know, taken some expectations of concentrate out, and conceptually that may be moving your product premium higher. Do you think that has been a net benefit or net negative to the profitability?
A net benefit?
Oh yeah, thanks.
Okay, back to the audience over there.
Thank you for the presentation and all the transparency. That's very helpful. I have one question on the free cash flow. Back to the numbers you presented, the EBITDA according to consensus figures is around $600 million. I f we add that, 2 t imes 50 plus 260, we are close to €1 billion. It's €960 million EBITDA on top. Maybe there will be a bit of working capital improvement within the envelope of €500 million. We have to deduct €300 million- €400 million of maintenance CapEx plus a low to mid double-digit figure for growth CapEx. Is it the right number, is it around €500 million- €600 million free cash flow that we would reach? Is it the right way to look at it in 2028, 2029? Sorry. A second financial question would be , I know that EBIT is an o pinion and cash is a fact, but what would be the associated depreciation that we would have to add to the long-term increment of €260 million EBITDA, and then I will have a strategic question on the U.S
In the U.S., on the first one, I see the logic of your calculation. The first one being your EBITDA and free cash flow calculation, I see a logic there. It's not my figure. I mean, we are not giving a figure, but I think we have a similar logic here.
Okay.
Ken, you want to help out on the depreciation, so on?
On the depreciation for the next fiscal year, as Steffen Hoffmann mentioned.
280, right?
Exactly. We're looking at 280, but we can certainly take that offline if you want to discuss it more in the medium term, w hat ranges we would have to look at there.
Okay, thank you. Just on the U.S., you were m entioning some potential partnerships. What could be the form of those partnerships? What are you thinking of as examples? Would it be a JV or something i mplying some equity or more like a commercial partnership, industrial?
Here, we're looking at all range of options, but one most likely scenario is a JV with a local partner or with a foreign partner also going to the U.S. in order to share the risk and dimension of the investment. That is one side. The one side is the equity or investment partnership. The other side is the partnership on the offtake of the blister copper and working on circular models to gain also some traction here on the circular flow of the copper in the United States without equity investments, just partnerships. There's a lot of people knocking on our doors.
Maxime Kogge from ODDO BHF. The first question is regarding the split of gross margin between TCRCs, metal result, and premiums and sulfuric acid. Traditionally, you guided for each of these three drivers to represent approximately 1/3 of the gross margin. Is that still a split that we should keep in mind, o r given the downtrend in TCRCs, we'll s ee that evolve?
I mean, with the current TCRC level, I would think it's less than 1/3 . Perspectively, the metal balance, free metal result should be more than 1/3 , and product and premium is a healthy piece. TCRC less than 1/3 , product premium with a potential for upgrade, and metal result also with the potential for being more than 1/3 .
Okay, thank you. T he second question is on the commodity hedging. Y ou typically hedge the paid metal content, but you also hedge part of the free metal content, and somehow that's preventing you from cashing in on the strong rise in copper and precious metals. Is that something you're going to change? A t the end of the day, investors, they want to buy Aurubis for its exposure to copper and precious metals. If you hedge that, that also decreases your sensitivity to the uptrending prices.
You're right. Everything we pay for, everything that has a price tag, with it contractually, being it on the copper side or on other materials, we hedge in the very second that it arrives and we know how much it is in. There is no chance and no risk. That's why we talk about that piece that's free. On the piece that's free, we take weekly decisions.
Every Monday morning at 10:00 A.M., we reflect whether we hedge something, meaning forward sales or not. Sometimes we make good decisions, and sometimes decisions could have been better with more knowledge afterwards. Obviously, with precious metal prices being where they are and going where everybody predicts, we don't really see an incentive to do more. We will keep the open position we have. T o a certain degree, we have hedged at historic highs, but we have had so many historic highs in the last weeks. We are of the position that for that piece that is open for the fiscal year 2025-2026, we leave it open.
Okay, and just the last one. What is the current scope of the collaboration with Salzgitter in terms of scrap procurement, notably? Do you see scope to expand that further, given that Salzgitter will use more and more scrap in its sourcing mix with its decarbonization?
I would say limited cooperation with Salzgitter on this and we're looking to expand that. Other scrap suppliers are much bigger than Salzgitter. We work more closely with the larger scrap suppliers. It's a partnership, but it's limited.
Okay. Looking into the audience, Daniel, there you go.
Where is the microphone? Yeah. Hi. A couple of follow- up questions. I guess at the start of the year, there's some focus on U.S. companies producing critical minerals receiving 45x tax credits, and it seems to have gone quiet. With copper now classified as a critical mineral, is there any discussion on Richmond potentially receiving 45x tax credits?
David, w e have discussions, but nothing concrete yet. [Pam]
Okay, t hanks. The second one on the scrap market, you mentioned some downward pressure on scrap refining charges. If we look at the global market, I think Chinese refined copper output is up more than 10% year to date, and mine supply is probably going to be 0% growth. There's a scenario where the scrap market continues to tighten globally. Do you see that as a risk in terms of further downward pressure on those margins? How do you see the raw materials market rebalancing, b ecause there's no concentrate supply? China's not cutting smelting output. What's going to give?
It seems like it's a bit of a twofold question. Maybe the first part of the question regarding the recycling markets, that's something for you, Inge.
I think definitely one answer to your question is that within China, there is also a growing domestic scrap market. I think we should not underestimate that. Look at the development that China has been undergoing over the last couple of decades, then clearly the domestic scrap market should be growing there. I think that is also clearly the path forward that they are taking, which automatically should rebalance scrap markets overall. In global markets, availability of scrap in general will remain. You will see it everywhere. Volumes are definitely there and available. It's all about what the overall competition is looking at, and the markets will go there where the recovery rates will be best.
Okay, thanks.
Okay, there's one last question from the virtual audience, which is, I think it goes a bit in the direction that Boris just asked. Steffen, I suppose that's one for you. It's from Klaus Schilling at MM Warburg, and he asks, "I'd like to get some more color on the EBITDA bridge, 2024-2025 on route to 2028-2029." I suppose it's more along the lines of how to conceptually think about that bridge. You elaborated on the slide, but maybe you can reiterate there.
Yeah, on the bridge. I mean, this is a simplified bridge. I tried to make the point that between those two data points, we see the €260 million kicking in. We see the reversal of, let's say, the initial startup costs for the strategic projects and we see the cost self-help measures kicking in. As I read the question here, there's a reference. Basically, I think Klaus, what you are saying is, you shoot for €170 million EBITDA from Richmond and around €80 million from cathode premiums. Stable precious metal contribution. Sounds like there's nothing to be expected from TCRCs. That's at least the question we got. Yes, the €170 million are part of the €260 million. I have not mentioned €80 million from cathode premium, so that's not my data point.
I did mention, and you see it on the chart that the three blue buckets, there's blue in TCRCs, blue in products, and blue in metals. I think a part of this question is, do you really see a positive contribution out of the strategic project for TCRCs? The answer is yes, because with Richmond, we will have more material in the system that finally ends in copper products and obviously here TC and RC. On the RC side, we have, with Richmond potential for TCRCs. What I have not said on that bridge, because it's a simplified bridge, is that independent of the strategic projects between now and 2028-2029, we count on TCRCs increasing to a certain degree. That's what was in the mid-term outlook. If that materializes, that could be another argument why also TCRCs would be improving.
All right, since there are no more questions from the audience and we don't have any more from the virtual pipeline, I would like to say thank you for your questions. Thank you for your detailed answers. I believe Toralf will remain on stage together with me. Before I hand over to Toralf for your closing remarks, I would like to first of all say thank you again for coming here today, for joining us, for all the active participation.
I hope we kept it interesting for you and that you learned a lot. Got a clearer picture of how Aurubis is shaping the metals industry and the future of sustainable metals. If there are any other questions, then please feel free to reach out to the IR team after this event or in a couple of next days. Toralf, with that over to you. The floor is yours for closing remarks.
Thank you very much, Ken, and thanks for listening. Half a day we heard a lot about omega trends, strategy, execution, and about our financial profile that we have at Aurubis. What are the main takeaways we wanted to deliver? First, one, strong market outlook. We all believe there's a very strong market outlook for all the metals we produce. We see double-digit growth for all our metals until the end of 2035. We have pretty good visibility here, not only led by infrastructure and electrification, but also by AI and other developments. The energy transition. Second takeaway, we have a leading position in Europe, and we are building that position in the U.S. We are number one in Europe when it comes to primary smelting, but also to secondary smelting. We are the number one copper recycler in Europe.
We have a lot of measures underway to defend this position and to further build on this position. We will remain the leading copper producer in Europe and also among the leading copper producers worldwide. Third takeaway, with our strategy, we continue to grow and to build on our resilience. I was very happy that our corporation partners here mentioned this as one of our USP, resilience. We think this is very important and we will further build on this in our business model to strengthen this. We have strong financials, like our CFO Steffen Hoffmann has said. We have a strong balance sheet. We are a trusted business partner, and we are of the opinion we've been in place for 150 years. We'll be in place for another 150 years. Last but not least, we're committed to create shareholder value.
We continue to drive the trust with the capital markets. We continue to invest. We will focus our investment on capital projects that give the return. We will focus on free cash flow generation in order to be able to give the returns to the shareholders that we think they deserve. All in all, these are the main takeaways we wanted to deliver to you. Thank you again for coming and for sharing. Thanks to Laura and Colin again for coming. Was very insightful to see that from our business partners. T hanks to the other presenters and maybe Ken and your team, you can briefly come up, and Troy's][ Team, thanks to the team that organized the day. A s you know, is a lot of preparation. Big thank you for organizing this day.
Thank you.
They will have nothing to do starting tomorrow. Bombard them with questions and you know, I'm sure you'll get the answers. Thanks for coming. Hope you can join us all for dinner tonight, and looking forward to meeting all of you in the near future and continuing the dialogue. You have the most exciting company in front of you, so let's continue the discussion. Thank you very much. Thank you.