Ladies and gentlemen, I'd like to welcome you to Boliden's Q1 2024 results presentation. My name is Olof Grenmark, and I'm Head of Investor Relations. Today, we will have a results presentation led by our President and CEO, Mikael Staffas, and our CFO, Håkan Gabrielsson. Mikael, welcome.
Thank you, Olof, and good morning to all of you out there. We are today broadcasting this from the city or the town of Boliden. We're doing that as part of our 100-year celebrations. We will later today have our AGM, and in connection with this AGM, we have had a full week here of activities, all commemorating our 100 years of history. So it's good to have all of you here as well, even though it's in an electronic form. Now, when we look into the quarter that we've just had, it's been, in one sense, a tough quarter, but it's also been a kind of difficult quarter for you all to be calculating on.
If you look on the positive side and start on, we've had an important steps happening during the quarter regarding the future-proofing of the business. As you know from the Capital Market Day, we have gone ahead with the new investment in a tank house in Rönnskär. We've also gone ahead with the extension of the Boliden Area, as was talked about then. Also, the Odda, the Aitik and the Kristineberg projects, the big projects we've been doing for the last couple years, are approaching completion, and that's still going on well. The autonomous hauling trucks in Aitik have been inaugurated during the quarter and have worked out fine so far. And we also continued to develop our portfolio of low CO2 products, and we have launched our low CO2 nickel in this quarter.
A large part of what's happened to us during the quarter has been political strikes in Finland. These strikes have been, number one, not part of our discussion. It's been not us who has been a part of these negotiations. It's been other people, and we have only been the consequences of it. We have first had two relatively short strikes, but that hit us very hard and meant that we lost maybe up to seven days from those two strikes together, as Finland was closing down for officially two days at a time. But for us, ramping down and ramping up took more time.
And then, towards the end of the quarter, we had an almost 4-week-long blockage and strike in the ports and the railroad system in Finland, which made it difficult for us to operate, but we managed to produce through it, but we had problems delivering, and we'll get back to the numbers around that. In the beginning of January, sometimes you lose when you're going into a spring, you'll forget about that it's just about a month ago, it was real winter, and the winter in northern Sweden and northern Finland was, even for our own conditions, very severe. We had minus 35 degrees for a long time, and we had problems in the mines, but maybe even more in Rönnskär, that was linked to this, which also was you know, caused power outages and other problems that we had to get production going.
Generally speaking, for the quarter, the production in mines has been stable. You know, it's been very good, and we have even a production record in Garpenberg in the quarter. The prices, if you look in the quarter, and here you have to be careful about your timing, in the quarter, were actually negative, going quite negative in January and February. They picked up a little bit in March, but still ended, as an average for the quarter, ended on a negative note. Then, after that, now in April, we all know already that we've had a very good run on the base metal prices, especially copper, and also to some extent on the precious metal prices in April, but that's, of course, not reflected in the numbers from Q1.
Regarding Tara, we have worked intensively with our unions to work on a rescue plan to get going, and we have, in April, come to an agreement with the unions regarding a rescue plan. But in the Irish context, this agreement needs to be voted on by the union members, and that vote in itself is not in our control, it's in the control of the unions. We expect that to happen shortly, in the next few weeks, and we will get an answer on that vote then, and then we can tell you more about the actual agreement once it's been cleared and done into a done deal. The financial performance in the quarter is SEK 1.2 billion. We've had a free cash flow of negative SEK 1.5 billion.
The negative cash flow, Håkan, will come back to that, has, of course, been influenced, for example, by the Finnish strikes. The CapEx went according to the plans that we've had at about SEK 3.5 billion for the quarter. On the key projects, we talked about this at the Capital Market Day, but for those who did not listen then, we did, at that time, announce an increase in the CapEx for the Odda project. Based on that new baseline, we're doing quite fine, and we're working hard for the ramp-up to happen in the end of this year. The Aitik dam project is working well. We have already gotten part of the project operational and working, and the completion is expected towards the end of this year.
The Kristineberg mine expansion, we're already mining from the Rävliden, the Rävliden ore body. The underground trolley truck tests have worked very well, and we are working hard to get commissioning of the full electric system by early 2025. The Rönnskär tank house, we announced a month ago, not that much has happened. We're getting ready to start construction in a few weeks. And regarding the Boliden Area extension, we have now gotten all the environmental application documentation and in for the environmental permits. They have been sent in, and we're quite hopeful that that will be a quick process and get the permits that we need to be able to move ahead with that project. On ESG, we did not have the best of quarters regarding ESG in total.
The CO2 emissions were down. That was relatively good, and it's worked according to plan, compared to the comparison periods. The LTI frequency was higher than it's been in the previous quarters, and thus we, yeah, we did not have a perfect quarter. This is partially linked to the cold weather, but also we've had lots of small things happening. The sick leave is slightly going down compared to the quarter last year, even though in this comparison here with the rolling twelve months, it's still a little bit up. But we have a sense that maybe we have turned a corner and start getting the sick leave numbers down a little bit. The market development, and this, of course, something where you could talk a long time because lots of things are happening right now.
We have had, during the quarter, a lower zinc, nickel, and lead prices going down. The copper improved a little bit in the quarter, but is clearly down year-on-year. Then, remember now, these are data for Q1. Then, as I said, in Q2, in early April, all these numbers have gone up quite a lot. The precious metals worked well with an all-time high gold in the quarter, improved silver, however, weaker PGM numbers. The zinc benchmark came out and was established, and we have in our numbers a much lower zinc TC, which is, of course, negative for us, especially for our zinc smelters. The zinc benchmark TC has been established at $165 versus the $274 last year.
The exchange rates, not big movements, but if you add it up totally for Boliden, actually slightly negative exchange rate adjustment comparing to the previous quarter. If you look at the prices and terms, you can say here that the copper prices are, especially with the latest kind of uptick, actually on a quite healthy level. And you can see in the copper industry, most people should make money with prices much higher than the cost. In zinc, yes, the zinc prices have come up, but which means that there's a little bit of air. And you can also see that the cost level for zinc miners have gone down, and it's of course, linked at least partially to the lower TCs that are coming across here.
And you can see that in the nickel situation, even though actually here also prices have come up slightly, it's still a very dire situation for many nickel miners around, and with the prices being lower than the cash cost for many operators in the nickel space. If you then look into Boliden and look into our mine production, as I said, Aitik has had, despite, you can say, having tough weather conditions in early part of January, it produced well. That's 10.6 million tonnes, you know, toppling those extreme conditions that we had early part of the year. The grades are, you could say, record low at 0.15.
We have guided for 0.17 for the year, and we still guide for 0.17 for the year, and the variance around that, I would say, is a normal variance that you get in individual quarters. But it's a little bit safe to tell you and everybody else that this might be the lowest quarter that we will see of the grades in Aitik. In Garpenberg, we actually have a new record in terms of mill production, and especially, we have gotten some increased efficiencies in the ore hoisting, which is the bottleneck right now in the Garpenberg system. This is working all fine, and the grades are, and interesting enough, exactly what they were last year, and very well, included in the guidance we have done.
Kevitsa, 2.5 million tonnes in the quarter, that's on a 10 million base, pace for the year, which is exactly where the permit is, and that's despite having lost 7 days to the strike actions around there. So also, the production in Kevitsa is moving ahead, and the copper grades and zinc and nickel grades are moving up, and are now in line with the guidance, and the issues that we had last year should now be the history for us. The Boliden Area was also caught by the very cold conditions and had a 7-day mill stop during the quarter, but an otherwise good production, and Tara has been in care and maintenance during the quarter. On the smelter side, it's been a little bit more struggling.
Rönnskär has had the issues with weak production, hard hit by the winter conditions, and then a little bit difficult getting it fully up to speed. In Harjavalta, also weak production coming partially from the political strike that hit Harjavalta pretty hard, but also some other process disturbances. In Kokkola, actually very good and stable production. If it wouldn't have been for the political strikes, we could have had a very good quarter in Kokkola.
In Odda, we are having the first full quarter with the cell house number 4 permanently closed, which is part of the extension project, that it will go down. So we have a little bit of a different baseline, but according to that one, it's been producing relatively well, and our small lead smelter in Bergsöe has been producing quite well. If we then look over to the financial summary, I will give it over to you, Håkan, to go through the financial numbers.
Thank you, Mikael, and good morning. Well, just to recapitulate, recapitulate the numbers a bit, we have reported an EBIT excluding process inventories of SEK 1.2 billion, CapEx of SEK 3.4 billion, and a cash flow of -SEK 1.5 billion. Looking by business areas and comparing to the previous quarter, Q4, Mines are on a similar level. We had grades a bit on the low side in Aitik this quarter within normal variations. But on the other hand, we had very strong throughput, for example, in Garpenberg. Smelters are down SEK 505 million compared to SEK 998.5 million last quarter. Smelters is where we've seen most of the impact from the political strikes and the cold weather in the start of the quarter.
And then finally, other, and eliminations, a negative SEK 241 million. This varies over time, but this is also where we see quite a bit of impact from the strikes as material material have piled up. Looking at the profit deviation year-on-year, comparing Q1 of this year to Q1 of last year, we are down. Prices and terms are down by about SEK 1 billion. In there, metal prices explain roughly SEK 700 million kronor, and this is primarily zinc and nickel coming, that has decreased compared to last year. We also see lower currencies, lower premiums, and byproduct prices, each about SEK 100 million negative on this change, and then lower treatment charges.
When it comes to the TCs, the treatment charges, we do not have the full effect yet in this quarter. When looking at volumes and costs and so on, the care and maintenance of Tara, of course, is a very important part. So looking at the volume, which is 1.379 down, and backing out the effect of Tara and care and maintenance, we have about SEK 700 million volume decline left. The political strikes and the cold weather add up to about SEK 500 million altogether in the quarter. And then we have a significant effect from the lack of a tank house after the fire in Rönnskär.
As you recall, we have guided for about SEK 1 billion lost profit per quarter as a result of that, and this is, of course, a part in this comparison. Also, we have slightly lower grades in Aitik. Costs are lower than last year. Again, Tara being in care and maintenance explains a big part of it, but we have also seen lower costs for energy and consumables in this quarter. Moving on to the next comparison, comparing Q1 of this year with Q4 of last year, the sequential comparison. Again, prices are down. We have about SEK 100 million negative impact from currencies and about SEK 150 million negative impact from lower premiums. TCs also has a negative impact, but again, we haven't seen the full impact this quarter yet.
Volumes are down SEK 600 million. Out of that, SEK 500 million is what we've communicated around cold weather and strikes. In addition, we have a negative impact of about SEK 150 million connected to the lower grades this quarter in Aitik. Again, on the cost side, slightly lower costs than last quarter. We had some one-off maintenance cost in Aitik last quarter. In addition, we see slightly lower cost for energy and consumables. Moving on then to the cash flow. It's a negative SEK 1.5 billion. We are in a peak spend in the Odda project, which is visible in these numbers, and I think there are two parts of this cash flow that I would like to comment a bit more on. One is the cash flow from working capital.
That came out clearly better than we expected and clearly better than what we have indicated in previous calls. First of all, the strike was well managed by our Finnish units, which meant that we tied less capital than expected. We also had delays in incoming vessels, which meant that some concentrate payments that we expected to do before the quarter end has been pushed over to April. And that means that we have been tying a bit more working capital in the earlier parts of April. The second part that stands out here is the paid tax.
As we talked about in the previous web calls, connected to after the Q4 closing, we had an unusually low tax paid in Q4, and we talked about a significant amount in catching up now in Q1, and that is exactly what has happened. As you can see, the taxes paid this quarter is on the same level as last year, in spite of lower earnings, and that will, of course, normalize as we go forward in the year. Finally, on the balance sheet and capital structure, we are at a gearing of around 20%, and the net payment capacity is just short of 15 billion SEK, so a robust balance sheet and a robust financing supporting us going forward. So with that, I hand over again to Mikael.
Thank you, Håkan. You can stay here. I only have one slide, and then, you'll get to be part of the questions. Anyway, we, regarding the guidance going forward, it's relatively straightforward. Regarding the CapEx, SEK 15.5 billion, we said on the Capital Markets Day, SEK 15.5 billion, we say again. We're reiterating the guidance that we gave then. Regarding the maintenance stop smelter effect, for 2024, it's SEK 400 million. It's a relatively, by our standards, relatively small maintenance years. This is also in line with previous guidance. And then we are a little bit in a new format, providing you guidance for the year on grades.
And there is no update here, apart from the fact that we're adding the Boliden area that we've never really guided for before, and not more than the kind of general one that it should be in line with what is in the R&R statement. But now we have a guidance for the two main metals, for zinc and for gold, in the Boliden area as well, coming to this here. And as I said, there's no change in the guidance we've given before, and in our mind, there's also no change in the internal budgets that we've had for the Boliden area. So with that, I'm reminding you all of our purpose, our vision, and our values, and I'm getting ready to take questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Adrian Gilani, from ABG Sundal Collier. Please go ahead.
Yes, hello and good morning. A couple of questions from my end. First of all, on Tara, you mentioned that there was an agreement in place that the union now has to vote on. I guess, can you give us a timeline for how that process looks like? And if the agreement then does go through, is finalized, then when could Tara be back to producing again?
Regarding the timeline of the actual vote, it is shortly within the next week or two. Although we don't control it, this is, of course, up to the unions, but what they have told us, they will try to manage this within the next week or two. Regarding the actual content of the agreement that we have done, I will, of respect to the unions, not go into any details. The unions are actually today informing their own shop stewards, and I think the members will get informed on the content of the agreement later in this week, and then they will vote. And as I said, I don't want to be the one who kind of leaks out the information beforehand. I want to respect the unions, and they get to inform, their people in their own fashion around that.
Okay. That, that's very fair. I understand. And then on the key grades, both in Aitik and in Garpenberg, were both below the 2024 guidance. I guess, was there anything unexpected, like a change in the mine plan, or were lower grades in Q1 something you had accounted for already?
There is always a little bit of going up and down. Put it this way, this is not unexpected. We knew that, but we don't really want to guide for individual quarters. And when it looks at the plans for the whole year, it looks very much in line with what we had guided for before.
Okay. And a final one from me. There were a lot of things impacting earnings in the quarter, but if we just take, if we take the SEK 400 million from the strikes, you say SEK 165 million from lower grades, and then SEK 100 million from the winter conditions, we get sort of, that EBIT would have been around SEK 1.8 billion, excluding revaluations. Would you say that's a fair starting point for coming quarters before then also factoring in, of course, higher prices and things like that? Have we gotten the main effects there?
I think, yes. I'm looking at my CFO, but I think the answer is yes.
I think, yes. We had some revenue from royalties as well. But it's in that area that we are. Yes.
Okay, perfect. And, in that case, that's all for me. So thank you.
The next question comes from Ioannis Masvoulas from Morgan Stanley. Please go ahead.
Hello, good morning, and thank you very much for the presentation. First question from my side, can you remind us what proportion of copper and zinc TCs are booked in Q1 based on 2024 terms? For the first one.
Without having the exact number, order of magnitude, roughly half of the TCs in Q1 will be based on deliveries that were made according to last year's deal, which would have... So about half would be last year, and about half would be this year's.
Good. Thank you very much. And quick question on the better working capital development in Q1. Is there any catch-up effect in Q2? You mentioned that some timing on paying for concentrate deliveries, but yeah, could you give us a sense on what sort of magnitude we should be expecting if there is a bill to come in the quarter?
I can put it like this, from the quarter end to where we stand now and to the end of April, I expect a working capital build of about SEK 1.5 billion-SEK 2 billion. Then we expect a decrease in working capital in June. So hopefully, that should be, you know, not too much of a build in this quarter, but it is, as always, quite, there is some uncertainty exactly what happens at around the quarter end. But a build in April and then coming down towards the later part of the quarter.
Thanks a lot. And last question-
I'll just- You mentioned that, Håkan, but just also so everybody knows that in reality, when prices go up, of course, we tie more working capital into our inventory, which is this one. So, that one should also be taken into account. I don't know exactly how much money it is.
No, but that's true. I was more referring to at constant prices, but you're right. The price increases does have a negative impact on working capital as well.
Sorry for breaking up you, Ioannis . Go ahead.
Very clear. Thanks. Thank you, both. And last question on Tara. You mentioned the preliminary agreement you have with the unions, but I wanted to ask around other aspects of the cost base. Is there any progress on power, on freight, or any taxation, any other parts of the cost structure that you're looking to improve?
Let us do the following, that we will announce all these things as we hopefully will have a kind of signed agreement with the unions, which is the path to opening Tara. We will be, then once that's clear, be much clearer about the total situation and what the impact will be on costs and on volumes, and so on.
Very clear. Thanks so much.
The next question comes from Liam Fitzpatrick from DB. Please go ahead.
Hi. Good morning, everyone. Just two or three follow-up ones. Firstly, on Aitik, I just wanted to clarify how we should interpret this SEK 150 million grade impact. So if you recover from the low grade that we saw in Q1 to the 0.17 guidance for the year, we should roughly assume around a SEK 150 million quarterly pickup. That's the first question. Then just, Mikael, you mentioned something about negative provisional pricing through Q1 that was, you know, poor in January, February, and then got better in March. Can you quantify that in any way for us? And then lastly, just on the project front, on Kevitsa, the phase V, when do you think we'll get an update on the timing and your plans there? Thank you.
Let me take the last one, and I'll leave the other two ones for Håkan to answer. But regarding timing on a Stage V in Kevitsa, I will say that we're probably talking either late this year, but more likely early next year for a decision. But as has been said many times regarding Kevitsa, it is not that we have to make a decision or we kind of lose a deadline. We can postpone that decision if we feel there's genuine insecurity. That might make it a little bit more jumpy ride in Kevitsa, because we will then let go of resources that could be used for stripping, that would then, if there will be a later decision, would have to be taken in back for an accelerated stripping. But we'll see.
I mean, you understand, everybody will understand that what is happening right now in the nickel market is, of course, not really good for a Kevitsa Stage V, and we'll have to see where the nickel market will go, and so on, before we take a decision there. Now, I'll leave the other two ones regarding the grading, the grades and the provisional pricing to you, Håkan.
Well, provisional pricing, let's see if I recall that number right. I, I believe we had about minus 50 in the quarter. I'm looking at Olof to see if he's correcting me, and he is not correcting me, so let's go for that. You know, quarter to quarter, we had $ -50. That, of course, means that we're going to mine at higher grades than what we've guided for in the remaining quarters to catch up those 150. I'm not sure if I understood your question right, but that's... It's correct. We're going to mine above 0.17 for the remainder of the year.
Okay. All right. Thank you.
The next question comes from Viktor Trollsten from Danske. Please go ahead.
Thank you, operator, and good morning, Mikael and Håkan. Just if you could help us with, you know, how much volume do you expect to come from Liikavaara in 2024?
That's a good question. I can't remember right now exactly what the tonnage is. It's a relatively small percent, 'cause right now we're stripping, and we will get ore towards the end of the year coming out of there. I'm looking at you. Do you, do you recall exactly what the-
I don't think-
amount of tonnage is?
I don't recall exact tonnage, but it is included in the grade guide, and it is included in the normal throughput.
It's SEK 2 million-
Yeah
A couple of million SEK
Yeah
It's a couple of million tons, but I don't know exactly.
Okay, super, super. Now, that helps. And, is it still fair to say that at, you know, sort of full run rate, you could do 8 million-10 million tons from there, or?
We said that, about 20% of the total feed is expected to come from Liikavaara over time, and that's about 9 million tons.
Okay, okay. That's super. And sorry for pushing on this, but would that be possible already in 2025, or is it anything, you know, in terms of ramp up, that sort of hinders that?
The answer is, I think it's possible. Whether it's gonna be exactly that way is gonna be a decision as we kind of optimize the mine planning towards the end of the year as we start looking at that. But I think it will be possible. It will be open for that kind of volume.
Okay. That's, that's super. And then secondly, just on, perhaps your thoughts on, you know, global smelting with, you know, spot TCs at, at these levels. I guess if you could first just remind us, I guess your contract structure is still around 15% spot, if I'm not mistaken, both on copper and, and zinc. But how does it look for the, you know, overall global smelter? And are we now in a situation where we should see, you know, more curtailment or? Just your thoughts, on current spot TCs, I guess.
Yeah, well, the current spot TCs, for those of you who don't know, you know, the copper spot TC is basically close to zero. There's also rumors that there have been deals done at negative TCs for copper. For zinc, they're not negative, but they're very low. This, of course, is a sign that right now, it is a tough business to be in smelting.
And yes, the question is, I would expect that we will see curtailments in different parts of both copper and zinc smelting, but exactly when and where and by whom, I do not know. Having said all this, we should also remember that especially for copper smelters, TCs are not the major part of the total returns for a smelter. You know, the free metals is a more important part, and as I just said, we are now right looking at record gold prices, which means that the free metal part is big. So when you look at the totality, it is not as bad as you could think, just looking at the spot TCs, but it is tough.
Okay. No, that's, that's clear. That's all from me. Thank you very much.
The next question comes from Jason Fairclough from Bank of America. Please go ahead.
Yep. Good morning, gentlemen. Thanks for the update. Look, a couple quick ones from me, and just to confirm, actually, the Platts TC this morning is actually -$0.50, so we are in a world of negative treatment charges for copper. Look, first, just on the strikes in Finland, obviously Q1 impacted. How do we think about this into Q2? Are there some lingering impacts, or should we not see too much impact from the strikes? And then just a second one was on Tara. As and when you get to the decision to restart, it. How should we think about potential capital outlay to get it restarted? Is it zero because it's been on care and maintenance, or is there actually some costs associated with getting that restarted?
Let me start with the strikes in Finland. Just to be very clear, the risk of political strikes in Finland is not over, even though as we speak, there are none. But the unions have threatened that it might come back. I don't know if it will or not. If we assume that it will not, then we should see no additional impact in Q2, and we will have a reversal of around SEK 200 million that was stuck into inventory that will be released during Q2. So you would have a one-off positive effect of SEK 200 million, assuming that there will be no more strikes, which we pray for every morning.
Regarding Tara and the startup cost, once again, I don't wanna get in too much detail because it's linked to what is written in this contract proposal that's now going to be voted on. In terms of startup cost, in terms of CapEx, kind of normal CapEx is going to be very low. We have the equipment that we have. We don't need any real CapEx for that. But there will be ramp-up costs linked to the fact that we need to get people in, and we will most likely need to do training with people and other things to get going. So there will be some ramp-up costs regarding that. And then we will see whether there will also be some redundancy costs. So yes, there could be some one-offs linked to those two types of costs.
Okay. Thanks very much. Could I just follow up on the TCRCs? So if you look, we've had the CEO of Aurubis in the press, basically calling for protection for the metals industry because he says that there's market forces here that are just not fair, that are not normal, and the industry needs protection. How do you think about that?
I would rather wish not really to comment on that. I think you can, of course, always, when you get tough prices and terms, you might want some protection, but of course, this is a part of a bigger game. I would say that, even if Roland is, of course, talking about the copper industry, I am more concerned about another value chain, and partially because of Boliden, but maybe more because of all of Europe, and that's nickel. If Europe really wants to have some kind of nickel industry left, they're gonna have to think about those kind of discussions as well.
Okay. All right. Appreciate the color. Thank you very much.
The next question comes from Amos Fletcher from Barclays. Please go ahead.
Yeah, morning, gentlemen. I have three questions. First one, just following up a little bit from Jason's question on the second quarter impacts from the strikes. Obviously, the strike carried on for another week into Q2. You were saying there would be SEK 200 million release from internal profits, but what would be the quarter-on-quarter delta on the sort of operational side? Is what the first question.
The second question is just on the Boliden Area guidance for grades for zinc is pretty low versus reserve levels. You know, what sort of timeline should we expect, kind of grade trajectory to get back to reserve at Boliden Area in future years? And then the final question is basically the same question, but for Kevitsa. I was just wondering if you could give us some updated thinking on, you know, when we should expect Kevitsa grades to reach reserve levels as well. Thanks.
Boliden Area is regarding... There is a reason why we have not guided for grades before, and that is that the Boliden Area will have jumping grades. And as we're now starting to guide for grades, we will have deviations both up and down for every quarter. And one of the reasons is that there are certain areas that are, you know, has almost no zinc, other areas have a lot more zinc. There are certain areas that have lots of gold, and others have not so much gold. And all this mixture makes it very difficult to kind of predict, especially if you look at individual grades.
I'm looking a little bit at Håkan, but I think when we look at the total package of the Boliden Area, with all the grades involved, we're actually in value pretty close to the R&R statement. So I wouldn't look individually into specifically zinc. I'm not quite sure about that. And as I said, this will jump up and down as we move forward. On Kevitsa, we're quite pleased that we've gotten further up, but we are in a natural way right now moving over to our pushback number 4. The pushback number 4 is coming down, and as you know, you always have the best grades as you get down towards the bottom. So we will nudge up towards, towards the average and then beyond the average, to make sure that the average works out as we move forward. And then we had-
The strikes.
The strike, the impact, I'll give it to you.
Yeah. We had in Q1 a total of SEK 400 million negative impact from the strikes. Out of that, about half, about SEK 200 million, was a direct impact on production. And the remainder was lost revenue in terms of not being able to deliver an invoice material. So a negative SEK 400 million in Q1, and in Q2, we expect a positive SEK 200 million when that material tied is released. And that will appear both as internal profit, a positive impact on that, and also in the smelter results. The operational impact in Q2, I expect to be very, very small.
Yeah, we can say if that was a question. I don't know if that was, but the first week that where the strike was still going on was once again the ports and the railroad system, and we were producing. Given that that strike then ended, we have or are in the process of being able to ship out the excess finished metal inventory that we had. So that particular one week of strike should not impact the results much at all.
Okay, got it. I get, I guess just a very brief follow-up just on the Boliden Area side. So looking at your R&R, the total reserve grade for zinc is 3.8%. And as I said, guidance for this year is 3.0. So it was just really a question of, yeah, what timeline can we expect?
As I said, this will be jumping over time, depending on which parts we're in. It will always be that. And as I said, when we have less zinc, it usually doesn't mean that we have zinc ore of lower grade. It means that we have less zinc ore going into concentrator and rather ore that is rich in copper and in gold.
Yeah. Okay, understood. Thank you.
The next question comes from Christian Kopfer from Handelsbanken. Please go ahead.
Thanks for that, good morning. Two quick questions from my side. Firstly, on metal premiums, I see you reported quite a big negative number here, quarter-over-quarter, I think it was. Yeah, it was minus SEK 150 million versus the fourth quarter of last year. How do you see, how do you see metal premiums for Q2 versus Q1?
The largest part of our premiums are on annual contracts, which means that. Maybe we should spoke a little bit more about that, but you're absolutely right, Christian, that the annual levels or premiums for 2024 is much lower than 2023, which means that you should expect a similar level in Q2 as we saw in Q1.
Okay, good to know. Then finally, on costs for the mines, typically, at least what I see historically, unit costs in the mines are heading upwards in Q1 versus Q4, but it seems a little bit like the opposite this quarter. The question is, in Q2, do you think unit costs will, you know, more or less stay at these levels for the mines, or should they come down a bit for Q2, as Q2 is typically lower cost versus Q1?
That's a little bit of a good question. I think that Håkan pointed out that if you do the Q1 over Q4 comparisons, we did have a couple of, you know, extra costs linked to those maintenance issues that we had in Q4, that we have not seen in Q1, that has helped us and so on. And going into Q2, I don't know if we have any real kind of guidance around that.
No, I don't think we can provide guidance with that granularity, but I can say that there is a very strong cost focus in mines at this time. It has been when prices came down, and on top of that, we see market prices on consumables coming down. The cost side is looking good. I don't think I'm prepared to promise an exact number for unit cost for Q2, but as a general comment, it is looking good.
Yeah, I can just recognize what, how it looks historically, and historically, costs are, if you look per ton of, you know, milled ore, Q2 is typically lower.
And that's right, and we typically have a bit lower throughput in Q1 due to winter conditions and so on, and that is, as such, not different this year, so.
Yeah. Okay. Okay. That, that's very good. Thank you very much.
The next question comes from Johannes Grunselius from DNB Markets. Please go ahead.
Yes, good morning, gentlemen, Johannes here. I have two questions. The first one is on the ramp-up of Odda, if you can provide some color, how we should look at the ramp-up? Will it sort of be an immediate positive for you, or do you expect the first few quarters to sort of be quarters where you take extra cost and the actual impact is sort of negative? That would be very helpful if you can provide some insight there, please.
Well, I can say that we expect ramp-up to be relatively quick and relatively smooth. And of course, once I said that, of course, there is, of course, always a risk that there could be something else. And as we have guided for the ramp-up is expected to happen during Q4, and basically as of Q1, we should be able to produce relatively full.
Okay, good to know. And then maybe, maybe I missed this, but what's the latest regarding the insurance compensation for the Rönnskär, is it? Anything new there to be said?
But I'm afraid not so much news. There is a lot of technical work that the insurers need to do, and I have respect for that work. We have the feeling, and that is a feeling that is throughout our organization that this is working well. So we're confident in the outcome, but I cannot give a timeline at this point.
You should maybe point out-
I agree
Just to be a little bit, if you, if you're now the insurance company, just to give you a little bit of kind of flavor on this one, they are looking at us a little bit saying, "What, what's the big hurry? We're not really gonna pay you much money in terms of anything until you actually start investing. That's when we'll start doing the payments. And in the meantime, we have a whole set of reinsurers in the background that we need to manage and everything else, and we have a big investigation, and we're, you know, have to remember that we're an insurance company.
We do things really slow, and therefore, this takes the time." Whereas we would like to have 100% clarity, saying that, "You sign on the bottom line, you will pay." That's not really their mode of working. But I would say, as Håkan said, we have a very good general climate of discussion, and we are not really, you know. It's more for us a kind of frustration because of the accounting rules, that we need to have a certain piece of paper. When we have it, something happens, and when we don't have it, nothing happens, and the insurance companies are not really so focused on that piece of paper.
Okay, I understood. But what you've indicated before, I think you talked about plus SEK 4 billion as a floor of what you can get from the insurance companies, this is still relevant, right?
3.4 ceiling, that is for sure a, a ceiling. We're not gonna go beyond that.
3, 3.4. Okay, okay, got you. Got you.
Three-
Thank you.
That's it.
Yeah?
Yes, go ahead.
Yeah, my final question is then on the headwind from the thesis, and this has been discussed in the call, but just to be a little bit certain here, how should we think about the incremental headwind in the second quarter versus the first quarter? My feeling is that we're talking about relatively small numbers, right? Sort of less than SEK 100 million in negative headwind from lower TC thesis. Can you confirm that?
If I recall it correctly, the in the EBIT bridge in smelters, I think they reported about SEK 130-140 negative quarter-over-quarter, and that reflects about half of the volume. So I think you should add about SEK 130-140 more to get the full impact.
Okay. Right. Very clear. Thank you so much.
The next question comes from Ola Södermark from Kepler Cheuvreux. Please go ahead.
Yes, hello and good morning. Just a follow-up question on the other line. It was a little bit bigger negative deviation there than we had expected, and I know that it's a volatile number and a lot of moving parts, but are any of the kind of inventory you hold for related to Finnish strike included on there or any other moving parts from the Finnish strike that are including there?
We talked about other in the EBIT bridge, right?
Yeah.
Yeah, okay. Now, what goes in there are typically balance sheet revaluations of account receivables and such things, so nothing in particular related to the strikes. Then it might be one-offs that we, for some reason, do not include under items affecting comparability. So no, there is nothing really connected to the strikes in there. Mm.
Okay, and you expect it to swing back-
Yes
... during the second quarter?
Yeah.
Thank you.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Richard Hatch from Berenberg. Please go ahead.
Yeah, morning. Thanks for the call. I'm just trying to work out on working capital. I wonder if you can help us. So if I look at the balance sheet, inventories built by about SEK 1.4 billion krona, receivables came down a little bit, and then payables came down a little bit too. So on my math, you should have recorded a working capital build of SEK 1.4 billion Swedish krona, based on just the basic simple working cap calculation, which I think should be fairly easy to look through. But you've reported a SEK 187 million release. So can you-
The main difference between the two is that if you look at the balance sheet, you look at exchange rate at the last day of the quarter, and when I talk about the cash flow impact, that's on average rates through the quarter, and that has a fairly big impact. So that would be the main difference.
Okay. Right, understood. Okay, thank you. And then can I just ask on the throughput of Garpenberg, you've kind of talked to a record mill volume there. Can you just help us kind of think about how we should model that for the rest of this year and then in future years? Thanks.
I think that you should model it at 3.3 million throughput at an annual pace. That's what we have guided for.
Helpful. All right, thanks very much.
The next question comes from Igor Tubic from Carnegie. Please go ahead.
Good morning, gentlemen. Thank you for your time. I just have one additional question, and that's with regards to the smelters. You mentioned in the report that you had some failure with the electric arc furnace and with the dryer in Harjavalta. Is that solved now, or should we expect that that will impact Q2 as well? Thank you.
That is solved, so that should not in itself impact Q2.
Okay. Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Okay. Well, thank you, everybody, for bearing with us during this, this hour or short hour. As I said, we are in Boliden, we are getting ready ourselves now to have the, the AGM of the Boliden company, and we're doing that in the, in the spirit of a hundred-year celebration. And I hope that you will all be able to, in some way, also feel that spirit. Thank you, everybody.