At Boliden, we know that the metals we mine and provide, like copper, zinc, and nickel, will continue to play a pivotal role in the future. We are drillers and drivers, geologists and engineers, project managers and operators. Our backgrounds and experiences are different, but we are all striving towards the same vision: we want to be the most climate-friendly and respected metal provider in the world, with the courage to drive technological development, with a care that creates the safest workplaces, and with consistent acceptance of responsibility to minimize our impact on nature and to restore the land we leave behind. Our metals are needed for Europe's green transition. They are central to new technologies that reduce society's climate footprint, and they can be fully recycled over and over again.
For a century, our work has been part of the value chains that shaped modern society: 100 years of experience and knowledge that we carry into the future. We have many challenges ahead of us. We don't have all the answers yet. That's how it is when aiming to be a role model in the world of mining and smelting. Metals and minerals have an undeniable role in the society of tomorrow. It's how we make them that matters.
Ladies and gentlemen, I'd like to welcome you to Boliden's 2024 Capital Markets Update. My name is Olof Grenmark, and I'm Head of Investor Relations. Today we will have a presentation led by our President and CEO, Mikael Staffas, and our CFO, Håkan Gabrielsson. We will also have a Q&A session where you will have the opportunity to ask questions throughout the conference call, but you can also ask questions via our chat. We have many people on the line today, and I would like you to ask maximum two questions per person at a time. Mikael, welcome. The stage is yours.
Thank you, Olof. Good day to all of you out there, or maybe good morning to those of you who are on the other side of the Atlantic. I hope you're having as good a day there as we're having here in Stockholm with bright, sunny weather. We're going to talk today a lot about the future and what we're doing now to secure the future. But let me first just reflect a little bit on 2023. 2023 was a year that meant a lot of work to us who were here. We knew already in the beginning of the year that this was going to be a constrained year, you could say. We knew that we were going to have low grades in Aitik , well communicated, well in advance.
We also knew that we had record investments coming up because of decisions that had been made far earlier. Then early in the year, things got more constrained to us because of the lower prices of metals in general, but zinc and nickel in particular, which led to us that the Tara operations became very clearly negative cash flow-wise, which meant that we put Tara into care and maintenance. On top of that came the fire in Rönnskär that not only was a fire that needed to be handled, but also changing the whole business model around that in order to sell anodes rather than cathodes and setting up the whole thing around that. So far we could, to some extent, blame outside things towards happening to us, but we also have one thing where we're clearly to blame ourselves, which had to do with the grades in Kevitsa.
We have had to, during the year, update our mining plan in Kevitsa to reflect that we were not able to fulfill the old plan, and the new plan that we have now in stage does have lower grades into it. That was communicated in part during the year and was, you could say, finalized in terms of communication at the update of the resource statement in February. So we had all these tough things, but we've also, on top of that, been able to work on other sustainability topics. We have been able to work on sustainability targets. We have been able to work on Science Based Targets initiative. We have also worked with global tailings standards and so on. So it's been a very tough year with lots of things that happened.
Today I will go through and spend time looking at how we are now moving forward from this and how we are now taking our next steps in this. The first thing, and you've seen this all in the press release, we are now today announcing that we are building a new tankhouse in Rönnskär. We've had lots of discussions internally around exactly how to do a reinvestment regarding this one. We have thought about making it larger than the old one was to allow for future expansion, to make it slightly smaller, to save CapEx, but at the same time maybe have some anode sales going on in parallel. We have thought about location.
Rönnskär was, of course, in some way the natural location, but we have not been able to build it in the same place as the old one because the old one is still being demolished, and that work is going to take another year or so. We have been able to find another useful surface on the Rönnskär industrial area that we will now be able to use. The total CapEx is close to SEK 5 billion, SEK 4.8 billion . It is mainly going to be in 2025 and 2026, but some CapEx, about SEK 1 billion, that is happening already this year in 2024. This is partially funded by insurance money, and Håkan will come back to talk more about the update on the insurance situation.
On the timeline, we will start in May of this year with the groundwork, and there's quite a lot of groundwork to be done because this is not from you can put it this way. This is a place where there was never intended to build any building. So there is quite a lot of reinforcement work that has to be done, which is part of the CapEx that has been announced. We will ramp this one up during the second half of 2026 and hope to have full production in 2027. We have put it up in a sense that it's scalable. Even though today it's built to match the capacity of Rönnskär, it can be if we sometime in the future decide that we want to increase the capacity of Rönnskär, this new facility can be increased, and that's part of it, up to about 280.
It's going to be a state-of-the-art production facility taking into whatever new there is. Now, the basic chemistry hasn't changed. It's all the same basic chemistry as before, but we will take things like automation and other things into account, including, of course, fire safety and other things. The annual EBIT increases by SEK 1 billion compared to anode sales, which is what we have kind of had as a loss now when we cannot sell cathodes as of right now. And this gives a strong financial return around these things. The IRR is significantly above our hurdle rate, which is the reason why we have done this investment. We have also coming out today with an investment in prolonged lifespan of the Boliden Area.
Before I talk about the Boliden Area, which I will do just in a moment, just to remember, and most of you will notice very well, that the slag that comes out of Rönnskär is also taken care of and is deposited together with the tailings from the Boliden Area. If we would not have had this in place, it would have been very difficult to make the investment in Rönnskär, as just announced, had we not been 100% sure that we have all the things in place in order to handle the operations in Rönnskär going forward. Today, as we speak, we have tailings capacity in the Boliden Area until the late 2020s. With this investment that we're doing, we're expanding that for close to 10 years until the late 2030s.
We are doing that by using paste fill as a backfill, both in existing underground mines, but also using that as a paste fill in some decommissioned mines that we have. This gives an improved environmental performance, and we have put in, or we will, I would say, very shortly put in an application for a new environmental permit. The whole setup requires a new permit, but we're not really worried about that when we've had lots of discussions with the authorities in planning this one, so we are not nervous about that. The CapEx altogether is SEK 2.5 billion. Also, once again, focus on 2025 and 2026, but with about SEK 500 million or a little bit less than SEK 500 million coming through in this year. So what is this?
Well, we're going to use the existing concentrator, and there we're going to build a new facility for dewatering or filtration plant. From there, we're going to use the return haulage from the trucks to get the sand back to the Renström mine, the Kristineberg mine, into the Maurliden decommissioned mine, where we're going to build smaller paste plants where we will use this sand together with some kind of binder and water to do filling underground. And this is both improving the mining conditions in the two underground mines. Also, they have so far been able to use waste rock backfill to a large extent, but the waste rock is not so prevalent anymore, and we need to get other refill material coming into place.
We should also say that this solution, we say that now it's for a little bit less than 10 years, but the equipment that we are putting in place is also the foundation for continuation way beyond that. We have more decommissioned mines that we could potentially use, and this also forms the foundation for a potential dry stacking after the late 2030s. For those who have been around and those who know the situation, this is a very good environmental solution, but it's also potentially the only solution. To get a permit for a new wet deposit in a dam would have taken lots of effort and would have been much more expensive than these kinds of investments have been historically, given the developments in the tailings space.
Let me then briefly touch upon the existing projects and start with the one that is maybe not so perfect news from today. All three projects, by the way, I'm coming to the other ones later, are all moving ahead according to time plan, which is good. The ramp-up of the Odda project is still going to be during the last quarter of this year. We are, however, announcing today that we have an overrun, and the overrun is basically due to two things. We've had quite a lot of delay of some key equipment. We've been a little bit unlucky. Some of our suppliers have been late due to all kinds of different reasons with some of the key components and key material that we need. It doesn't affect the overall time plan.
We've been able to plan around that, but it is costing money because we will have people around that we did not expect to have around for a longer time into the project. The second thing is on us. It's an underestimation. We have seen as we're coming to the close that especially the piping and the wiring that is needed to integrate this new part of the smelter to the old smelter has been severely underestimated. There's also been underestimations previously that has caught up lots of the continuity that we had regarding the ground situation and all the civil work that needed to be done in order to get the whole thing stabilized.
We are, however, today going out that we do see an incremental EBITDA of about SEK 150 million per year at what we consider long-term prices and terms in terms of metals, but also long-term TCs, and that this will come into play basically full speed as of 2025. And as you know, those who have been around for a while, this is about getting economies of scale and much more cost-efficient as we move on. But we're also going to get the Odda leach product out where we're going to be able to leach silver, gold, and lead out of the concentrates that go in there. We're also saving on maintenance CapEx. It doesn't show in terms of a higher EBITDA, but it is a cost avoidance that we would have had to do had we not done this.
The next project that we're going to talk a little bit about today, and I'm actually going to spend a little time to go through it with you in detail, is the Aitik dam project. The Aitik dam project, the SEK 5 billion that we're spending there, we are on time and we are on budget, which is very good. Just a reminder of the background, we had to announce this project two years back pretty quickly as we had gotten indication of instability in two of the dam sections, which meant that we could not deposit any tailings anymore in those sections. We thought that we had about a 24-month time period that we could work with in order to secure this. That has turned out to be better than 36 months. Just to get a start of that, you can see here what is number one.
You see these red small arrows in this part of the picture. Those are internal barriers in the tailings pond that we have built so that we can deposit from the right in this picture without the sand pushing too much on the dam walls, which are to the left. This is what we've done so that we can then deposit for 36 months without jeopardizing anything around the dams. This has then been very successfully and worked better than we thought and gave us 36 months rather than 24. The second thing that we've done is that we have built quite a lot of new infrastructure, and it has to do with water management, a lot of it. Number one, all the water management, dig, piping, and so on, were, of course, all right on the outside of the existing dams.
That's where you naturally put them when you have these kinds of dams as we have here for collecting the water and the drainage and everything else. Now, we're going to need that space 50 m-100 m outside of the dams in order to be able to reinforce them. So first thing, we had to move all these things around. Over at the left two out of these two tubes that you see here is where we have today the clearing pond and the major water storage facility. There, the existing pump station ended up having to be decommissioned because it ended up under where the wall came in, and we had to build a brand new one. That one is done and commissioned.
Also, the two that you see to the right is a new second water storage that we need to put in place, and we have pump stations and everything else related to that in order to be able to do the water management. So it's a totally new setup of infrastructure regarding the water management in the Aitik mine. This is roughly SEK 2 billion out of the total SEK 5 billion. Now, then we have the actual dam reinforcement work, and if you look at these three Ds that you see here, if you take the one to the right that is like a boomerang shape, that is what we call dam A, B, and C, D. That is completed already. The reinforcement needs to be done there. EF is the dam that is to the very left in here towards the clearing pond.
That one is roughly 70% completed as we're speaking to now. The three in the middle is the GH dam. That's the one that has been needs to be done, most critical one. That's where we had lots of infrastructure that we need to move before we could start it. We have now started along the wall to get the material in place there, and we have, as we speak today, moved roughly 21 million out of the 39 million tons that need to be moved. They are in place already. So we are now in the plan that we hope to be able to get this all completed by the end of this year, which is well in due time before the spring of next year, Q2 2025, when we would have run out of space.
We feel very good that we then, based on this, can start raising the dams on these sections, especially this GH section, which is the critical one where we need to get up in order to be able to lift these barriers that we have inside the tailings pond to get the sand flowing all the way through to that side. So all in all, you can see there's quite a lot of things to be done here, but it's a SEK 5 billion project. It's about SEK 2 billion in new infrastructure and SEK 3 billion actually working on the dams as such. Kristineberg, out of the three big projects we're doing, this is the smallest one. The project is on time and on budget. The ore production has already started in Q4 of 2023.
We are still using the old infrastructure for the trucking and haulage of the ore from there, but we are well advanced, and by Q1 of 2025, in about a year's time from now, we should have all the infrastructure in place to be able to haul the whole new electric route that we're putting in place and to make this mine potentially fully electrical, that there will be no diesel used at all. There are also side parts of this project. The ventilation and heat exchanger is already in operation. The water treatment plant linked to this one has already been commissioned. So many of these things are already up and running, but as I said, the main electrical part of this still has about 12 months until it's going to be completed.
So with that and a little bit of that, and maybe I should say one thing here that I forgot to say, I should have said regarding Aitik that—no, sorry, regarding the Boliden Area—is that now we are already creating tailings facilities that we have until the late 2030s. Those of you who read more in detail know that we have a clear ore defined till 2031. We have a mine plan that goes to 2035 that we're also scheduling some of the resources that we have around. Given the leads that we have and given what we're looking at, we are not nervous that we should be able to fill this new life of mine with capacity and with ore as well. But it's, of course, up to proof to do that going forward, but it feels very well, and we feel quite secure about that.
So with that little extra point regarding the Boliden Area, I will hand over to Håkan, who is going to focus on finances.
Thank you, Mikael, and good afternoon. Well, as Mikael talked about in the opening remarks, 2023 has been a challenging year with lower metal prices, lower grades, and on top of that, a fire in Rönnskär. However, the financial performance during the year resulted in returns at a healthy level even in a difficult year, and we ended the year with a robust balance sheet, a net debt to equity or gearing slightly below 20%. Looking at the next slide, you can see the return on capital employed over the last 10 years. Our average return on invested capital is 17%. I think that is a strong number in a capital-intense sector like we are in.
Also, in a fairly difficult year like 2023, we generated a healthy return of 12% on capital employed, which is below the 10-year average but still above our 10% hurdle rate for IRR. So I think this demonstrates our ability to generate a healthy return over cycles. On the right, you can also see the performance of our two divisions, two business areas, mines and smelters. We've often commented that the combination stabilizes the group's return on capital employed, and I think this is visible also on this slide. Now, we have been talking about investments and announced two new ones. We have updated our full-year guidance for 2024 to SEK 15.5 billion, and I would like to give a little bit more transparency to put some color on the details on that spend.
Those of you that took part in the Capital Markets Day a couple of years ago will recognize the format of this section. First of all, we have mine-sustaining investments of SEK 4.5 billion in 2024. This excludes the big dam project in Aitik. Mine-sustaining is waste rock stripping, underground development, and the successive raising of tailings dams. In many ways, this is similar to what we would categorize as OpEx in the P&L in that it is a direct prerequisite to continue producing in our mines. The second heading is replacement investments. They amount to SEK 2.5 billion in 2024, excluding then the big project to build a new tankhouse in Rönnskär. We have fixed assets on our balance sheet to a value of roughly SEK 65 billion. This category is the investments we do to keep that asset base in good shape.
It has been stable at roughly these levels for the last few years, even if there is some flexibility in timing in case, for example, of a deep downturn. Of this number, we spend about half in each business area. I'd also like to remind you that this is an important area for our CO2 performance. Facing out old fossil-based equipment and replacing it with new electric equipment drives down the CO2 emissions in the company. Continuing to the next heading, we talked at the last Capital Markets stage quite a lot about sustaining business CapEx, which is basically a foundation to extend and develop the business in efficiency investments, debottlenecking, capabilities to treat complex raw materials, and so on. We are spending this year about SEK 500 million in this category, and that is clearly lower than what we spent over the recent years.
Then finally, expansions and strategic projects. They are up to SEK 8 billion in 2024, and it's basically five projects that are of high importance to the group. We have Odda, the Aitik dam, and Kristineberg that we've been talking about for a while that are up to SEK 6.5 billion. We have announced two new projects in Rönnskär and Boliden, adding up to SEK 1.5 billion this year. And this is then a foundation for long-term sustainable profitability. And in two cases, the Aitik dam and the Boliden area tailings, it's a direct prerequisite to continue to produce. Summing this up and looking at these strategic projects, they are peaking in 2024, these five projects. This year, as I said, Odda, Aitik, and Kristineberg adds up to SEK 6.5 billion.
This is an increase of SEK 500 million to what we have talked about earlier, and that is because half of Odda's cost overrun was taken already back in 2023, so the part that is left is about SEK 500 million. Next year, these projects are moving into completion and turning from cash flow negative to cash flow positive. There will be some remaining spend next year as well, but we're looking at less than SEK 500 million for the sum of those three projects. Of the new projects we have announced, they are up to SEK 1.5 billion this year, and they are ramping up during the year. Next year will be the main spend with SEK 3.5 billion in total. As you can see, the sum of these projects is coming down for 2025.
We'll come back to full guidance on the CapEx for 2025 in connection to the Q3 report. One area I'd like to highlight already now is that we expect a higher mine-sustaining CapEx in Aitik connected to dam raises. During the time with this larger dam project, we have not raised the dams as we typically do, so there is some catching up to do. We've also talked about a part of the Rönnskär project being funded by insurance. And a brief update, we have an insurance that covers equipment and business interruption, which is capped at SEK 3.4 billion. We've talked about this before. We have good progress in the discussion with insurance, so we feel good about that entire process. And when we have a firm agreement, all things sorted out, the insurance revenues will be recorded in the income statement.
We're looking at larger lump sums, and it should also be mentioned that it's taxable income. We're not in a position to book revenues to the P&L in Q1 this year, but we're getting closer to that situation, and I hope at least in the next quarterly call we'll be able to provide some more detail on the timing of this. The cash flow will be distributed over time. Most likely, it will not be a larger lump sum payment, but that is something we'll have to come back to once we have the agreement in place with our insurers. And then for those of you that are modeling our quarterly results, I just wanted to highlight a few items around the Q4 2023 and the Q1 2024. To be clear, there is no new information in this slide.
This is some of what has been announced. Sorry. This is amounts that have been communicated earlier. In Q4 2023, we had a number of one-offs. We had a positive effect from inventory release, mainly gold in the Boliden Area and Harjavalta plant that added up to SEK 200 million that we won't be able to repeat every quarter. We had a positive impact from insurance in Tara to a value of SEK 180 million. And then on the negative side, we had some restructuring costs in smelters, and we had disturbances in one of the mill lines in Aitik.
Looking at Q1 of this year, at the time of the last quarterly call, we talked about severe winter conditions in the northern part of Sweden and Finland with a profit and loss impact of SEK 100 million. At that time, we were also aware of two political strikes in Finland, short strikes with a combined impact of SEK 100 million. Now, since then, we've press-released information about an additional strike, a longer strike that is actually currently ongoing with a total impact of SEK 300 million. So all in all, the effect of the political strikes in Finland on Q1 adds up to SEK 400 million. Much of this is connected to inventory build. As we cannot load metal on ships, on trains, etc., we cannot send it to the customers, and we cannot record it on the income statement as profits.
So a big part of this we expect to catch up in Q2. And then a final reminder, going back to the press release we issued in November of last year about increased depreciation, or sorry, increased reclamation reserves and assets, that also means an increased depreciation of about SEK 50 million compared to previous years.
Moving on then to the outlook for the full-year of 2024, apart from the CapEx that we've already discussed, there is no new information in this slide, so we reiterate the guidance we gave on the previous call. Now, finally, I just want to emphasize the strong commitment to our capital allocation framework. It has been crucial to be able to deliver healthy return over business cycles over the last 10 years. It has served us well in the past, and I am confident that it will serve us well going into the future as well. Thank you. So, Mikael.
Thank you, Håkan. I will, with this, talk about the next part that we're having here regarding how we're expanding our low-carbon product portfolio and talk about what we're doing in sustainability. As we were preparing internally, I got lots of questions about what is this kind of slide you're showing and what is this black thing that you tried to say is so good. Well, what you're seeing is nickel matte. To be more exact, it's electro-furnace nickel matte from Harjavalta. I'll come back to that in a little while, but this is the product that we are now announcing that's going to be the low-carbon nickel matte. This and also the flash furnace matte. Both of them will go into this definition. And so even things that look black can be very green in its content.
But before I go into that, let's start with what we're also today announcing, that's new, which has to do with cement replacing products that we have worked on for a long time. And just to put in context, we have about 1.5 million tons per year coming out of our smelters of iron-containing residues. The European cement market is really facing lots of increased costs of the CO2. It has to do with the European regulation that comes with that. And thus, these kinds of replacement materials for, if you want to call it normal cement, are expected to get a very strong demand for them. Well, we've had these residues for a long time, but we haven't been able to make a product out of them. But we have gotten to some technical breakthrough that we're very pleased with, that we've gotten through.
We are, as we're speaking, we have filed patents for a couple of the steps that are involved in turning these residues into these SCM, Supplementary Cementitious Materials. So that's all in place. We have also done lab scales, and we've gotten a product out that has very good product specifications. Even though there's still more testing to be done and still more confirmation to be done with potential customers, already what we have gotten so far looks very promising. And of course, there's a profitability by increased resource utilization. Exact numbers for profitability we have to get back to. As you understand, as this is brand new technology, there will be some time to figure out exactly how much we can charge for it and also exactly what the CapEx will be and OpEx contained in this one.
But we do have a product in place, as we said, and it reduces CO2 compared to kind of normal cement with about 95%. So this is a real low CO2 product that can be used and used as a supplement in very many applications. This technology that we have developed and gotten patent on also recovers metal recovery or improves metal recovery, I should say. So that is also a plus in the financial model. And as I said, there is a significant market for this. I think that we could potentially place all this material just in Sweden, but even if we have to move into larger markets, then so we can do that because there seems to be a good market for these kinds of materials. We could also, by the way, very clearly use some of this material for our own needs.
We are also ourselves a pretty big cement buyer in our especially underground applications where we are both using it for building underground and also for the shotcreting. So the next steps regarding this low-carbon SCM is that we have initiated and we will aim to finish a feasibility study in a year from now. This one will be covering both the commercial aspects of feasibility as well as the production and product aspects. We're also currently having an ongoing test with larger volumes in our own Garpenberg mine to see exactly how it works. As you know, cement is an area full of standards or building with cement is an area full of standards. We, of course, have an advantage that when we work in our own mines, we can order without having to be adhering to these specific certifications.
It's up to ourselves to make sure that what we're using is safe and applicable. We are looking at a production facility at 250,000 tons. As I said, we believe that we have about 1.5 million tons worth of residues coming out every year, but this is deemed to be a relatively good size for a first kind of commercial-scale production. And if that one works out fine, we could, of course, see more coming further. I would say that the best case of having commercial deliveries is in 2027 based around this. We have had a strong development on the sustainability side during the year, and I think it's important to point out that as well.
We have, in the year, recorded record low lost time injury frequency, and we also have completed our 15th year, 15 years of fatality-free operations, which is more or less unique in this industry of any company of any size. We have also gotten our targets by SBTi ratified so that we are working according to the Paris Agreement, and we are well underway with the action needed in order to fulfill these plans up until 2030. We have also, during the year, implemented or started implementation. I don't know if you ever finish it. There's still more to be done, but we have done a large step forward towards the GISTM or Global Industry Standard on Tailings Management, where we have announced in the summer for both the Aitik and the Kevitsa dam structure what we're doing, how we're moving ahead, and what actions we're taking.
We are looking at completion during this year of the actions in both of these cases to be fully compliant with that. As you know, that was initially set for the big dams. As we move into 2025, this will also be covering smaller dams, but our work on covering all our dams is working very well, and that's what worked very well during the year. We've also announced targets to improve biodiversity in all active regions by 2030 to be not just net zero but also as a net positive in terms of biodiversity. On top of that, we have step by step introduced several low-carbon products during the previous year and also during this year as we moved on. So, as I said, we are having the actions in place to fulfill the full GISTM conformance in Aitik and Kevitsa by this year.
We've also, which I pointed out before, we have had tests with nitrogen-free explosives, and now we have signed a contract to build a facility or somebody else will build a facility at our Kankberg mine, which will produce roughly enough what we need for Kankberg to make the Kankberg mine then fully utilizing nitrogen-free explosives. This test looks very well, and if it continues to perform as well as we think it's going to do, this, of course, you have the ambition to roll out into other mines where probably Aitik and Garpenberg will be the first one coming. Apart from being nitrogen-free, it is also much lower CO2. So when we look at our total Scope 3 CO2, this will reduce things further.
We have also, as many other companies, worked very hard to make sure that we will be able to report according to CSRD during the year. Now, the latest we heard is that the whole implementation might be pushed one year forward. We are anyway ready to start to report already as of this year, 2024. We talked about the green transition metals that we have introduced. We have introduced them during the year. We have low-carbon zinc. We have low-carbon copper. We have low-carbon lead. We also have low-carbon sulfuric acid that has been launched during the year with all with third-party verification around them. Today, we are also launching the last member of this family as we are introducing low-carbon nickel. Here, the methodology is that we have looked into a couple of nickel refineries. We don't have a nickel refinery.
We've looked into a couple of nickel refineries and looked at the total CO2 emission, including all the Scope 3 from our operation with the nickel in Kevitsa, our operation with nickel smelting in Harjavalta, and through to one out of we've done three parallel nickel refineries in Europe. We will get a CO2 footprint for our nickel, the finished nickel, of a little bit less than 5 tons of CO2 per ton of nickel or kilos of CO2 per kilo of nickel. This is comparing to some kind of average global average of closer to 35 kg of CO2. So it's about 15% of what's there. There is nothing new in terms of product or how we produce things, and there's also nothing new in terms of investments at this stage around here.
This is just getting certification of what we have done in previous periods that work very well as we're moving on. But as you know, this thing about nickel is particularly interesting right now as there are lots of discussions in the EU around how does it really work, and is there a risk that the European climate action will actually lead to carbon leakage coming out in many different areas. And nickel is one of these areas, and we'll see whether there could also potentially be some kind of mechanisms enforced that will help us charge a premium going forward. But as of right now, we can short-term not charge a premium on this nickel. So with that, we'll move into the Q&A session. And Olof.
Thank you, Mikael. Ladies and gentlemen, that opens up our Q&A session.
And if you want to raise a question on the phone, please dial star five. I repeat, star five. We also have a system where you can ask questions via the chat function. I think we will warm up, gentlemen, with a question over the chat which come in here. And it's from Viktor Trollsten, Danske Bank. And it's for Mikael. You did not mention anything about Tara being in care and maintenance. What is the latest regarding that situation, please?
Thank you, Olof, for the question. And thank you, Viktor. Regarding Tara, we are in, I would say, very intense discussions with many parties, but especially with the unions. I am quite hopeful that we'll come to a conclusion of this, but you never know. We are not negotiating with ourselves. We're negotiating with a third party. But we have hopes that we'll be able to conclude these negotiations, and then hopefully, we'll find a cost base where Tara can open again.
Okay. We also have another warm-up question here for Håkan. And it is from Ola Södermark, Kepler Cheuvreux. And it's a technical one. It is, "By how much will depreciation increase with the Odda expansion?"
Okay. Thank you, Ola. Good question. We will see an increase in Odda. And by the way, we'll also see an increase in depreciation in the other big projects that go from cash negative to cash positive. In Odda, we're talking about a number of roughly SEK 600 million that will come in. And we'll come back to the exact timing in which pace that will be ramped up during next year, but the number is SEK 600 million.
Excellent. Well, then we'll start taking questions over the phone. Once again, I please remind you that we have many people in line here, so a maximum of two questions at a time from each person, please. The first question comes from Adrian Gilani, and he works for ABG Sundal Collier.
Yes. Hello. Yeah. I'll use my two questions, I think, both on Rönnskär. First of all, what was the main reason for not going with a bigger tankhouse, especially given that you mentioned the IRR is significantly above your hurdle rate?
Well, it is that for this project now, if we were to build a bigger tankhouse, that extra volume would, of course, initially be idle because we don't have enough anodes to fill it. That one would only be active once we've been able to expand other parts of Rönnskär. We are not in a position at this stage to talk about expanding the rest of Rönnskär. So therefore, we have built or decided to build a tankhouse that has the corresponding capacity. But as I said, we have built it in a way so that it could be possible later to expand it.
Okay. That's clear. And then also, given that the prior tankhouse was quite old, are there any efficiency improvements in the new one that you expect should lead to a higher cash margin, or should we assume it's more or less the same as the one you had before?
There will be certain efficiencies. There will not be as many people working in the tankhouse, the new one, as there was in the old one. We will get efficiency on that side. There might be some small but very small efficiencies on power and other things, but it was very well optimized, the old tankhouse as well. I said that assuming improved cost situation, it's going to be not that much money.
Okay. Perfect. Thank you.
Thank you, Adrian. The next question comes from Ioannis Masvoulas, Morgan Stanley. Go ahead, please. Ioannis, are you there?
Hello. Yes. I'm here now. Can you hear me?
Yes. We hear you.
Perfect. Perfect. Thank you for the presentation. The first question for me is just another topic we didn't see on the slides, the Kevitsa pushback 5. Can you share with us your latest thoughts on prospects of this expansion going ahead and what sort of time frame and CapEx we should have in mind? Thank you.
Yeah. I cannot answer. We said many times before, and we don't really have any new information. If you're the kind of mining engineer who wants to do a perfect mine plan, you'll like to have the decision this year because otherwise, if you don't decide this year, we will start reducing stripping basically as of next year. That means that you have to get rid of some equipment and maybe some people as you're scaling down the cost. If you then, at a later stage, get the order that now we're going to go for pushback number 5, you will not only have to get those equipment and those people back, but you might need some more equipment and some more people, which makes things a little bit more difficult for you. We will see where we come. It is, of course, not a big secret.
Everybody can figure out that this one with a nickel price of $18,000 is more difficult than a nickel price of $22,000. And it's a pretty long discussion about exactly what we could use in our calculations around this. I will not put a percentage number on this one. We will see where we'll stand later in the year, whether we're ready to move ahead or whether we will push it out a little bit.
Okay. Very clear. Thank you for that. And the second question, one point to clarify on the CapEx outlook. We show sustained business CapEx for 2024 at SEK 0.5 billion. I think last year, that was around SEK 1.5 billion. What shall we assume on a more normalized basis in 2025, 2026? Is SEK 1.5 billion a good number, or is 2024 a better level to keep in mind?
Well, looking back at what we have spent, we've typically been around SEK 1 billion-SEK 1.5 billion. So I think that is likely to be a good number over time. Having said that, we will come back to the exact planning for 2025. I mean, we will have a lot of focus on the key projects that we have announced. And once we have done our detailed mining plans, replacement CapEx plans, mine-sustaining plans, we will come back with a number overall on the 2025 CapEx levels.
Thanks very much.
Okay. Then we go ahead with Daniel Major working for UBS, please.
Hi. Can you hear me okay?
Yes, we can.
Great. Thanks. Yeah. First question on Odda. I think when we look at the initial CapEx, it was about EUR 700 million. That's up 35%. Last time you revised the CapEx up, you said that the project still achieved your hurdle rate because of improvement in other variables. When we look at the situation now, the spot zinc TC is lower. You don't have the feed from Tara across your broader system. Does this project still achieve your hurdle rate after the latest upward revision to CapEx?
I would say it this way that, of course, when you look at this, it's not going to be what it is going to be exactly when we start. Neither you nor I will know what the TCs will look like in 2025. So we're looking at it with our long-term assumptions. And there, it looks good. It would, of course, have looked even a little bit better could you have done this with EUR 100 million less of euro. There's no doubt about that. But even with the extra SEK 100 million, it still looks like a project that is going to meet our hurdle rate. I mean, we basically announced the EBITDA effect of 1.5 or, yeah, EUR 150 million, SEK 1.5 billion. And that gives a pretty good return.
Okay. And so what's your long-term TC?
It's 230, I think, right?
I think in general, to get the full picture of long-term assumption, please have a look in our latest annual report. It is printed in connection to the Ore Reserves . Then you see both the TCs and metal prices.
Okay. And then second question, if I may. You funded the dividend out of debt last year and looks to be the same again in 2024. And we'll see where things land on commodity prices in 2025. Is it wise to continue to fund the dividend out of debt during this period of high CapEx and continue to see net debt drift up?
Well, I can say that, of course, we don't know what the things will look like when we come till the end of the year and where metal prices will go. I will say that it's going to be a much tougher situation than today and maybe even a more tough situation that we can even imagine for us to step away from our dividend policy. It has served us very well over the years, and we really like it.
Okay. Thank you very much.
Okay. Then we go on with a question from the chat. And it's from Johannes Grunselius, Den n orske Bank. And it's for Mikael. The new Boliden Area, will new investments in the tailings facility provide you with any other benefits than just prolonging the life of mine?"
Well, first of all, and I mentioned this, that it's not just for the life of mine of the Boliden Area. It's also for the, if you want to say so, life of mine of Rönnskär or life of Rönnskär because we're using the same facility for slag handling. Apart from that, yes, there are environmental improvements in this setup compared to the existing setup, which means that we are more likely to get permits and so on. I would have said that it was more probably almost impossible to get another permit for another wet deposit in the Boliden Area. So it has those advantages.
We haven't really guided for, but I would say in terms of OpEx, it's about the same as with this present setup. For those who have been around for a while, yes, this is a more expensive CapEx than it was when we built the Hötjärn tailings facility 10 years ago or eight years ago, whatever it was. But that is water under bridges, in the sense of that opportunity doesn't exist going forward.
Okay. We take another one from the chat. Then it's to Håkan. And it's regarding the Odda EBITDA run rate of EUR 150 million that you're guiding for. Is that for the entire asset or just what you're building new, so to say?
That's the incremental EBITDA that we're looking at from this investment. So that is added on top of what we already have.
Excellent. Thank you. Then we go over to the phone again. And next gentleman is Richard Hatch from Berenberg. Go ahead, please.
Yeah. Thanks very much, guys. Thanks for your time. I've just got two questions. The first one is just on the Boliden grade as we go out to the end of the next decade. Can you give us any kind of steer as to what kind of grade you're expecting the mine to perform at as we go out into the late 2030s? I'm just sort of conscious that your resources are lower grade than your reserves, which isn't a massive surprise, but any help there would be useful. And then secondly, I'm just trying to square this SEK 1 billion increase in EBIT from the Rönnskär tankhouse.
I think if I cast my mind back at the last Q2 results from last year, you talked to a SEK 300 million-SEK 500 million impact. So can you just help me work out where that billions come from, please? Thank you.
I'll leave that one for Håkan. But let me take first the grades. The grades in the Boliden Area, you're right, and you can prove that in almost any mining operation anywhere, that the resources tend to have lower grades than the reserves. But if you look over time, when we have been able to replace, we've also found new in the Boliden Area, and the grades have been relatively stable over time. So I do not suspect that we should get a substantially lower grade as we move into the second half of the 2030s than what we have today. But this is, of course, speculation.
It's built a little bit around the kind of initial finds that we have on certain things that we're looking at that are not yet in either reserves nor resources. But you can, of course, never be entirely sure. But we have had a long history in the Boliden Area around not just replenishing a year for every year but also doing that at similar ore values than that we had before. You can say that if you want to make a little bit of a joke around it, the Boliden Area has been around for 100 years, as long as the company's been around. And it has never really had much more than 15 years in the early years and then in the later years, never really more than six years of life of mine.
But because of the geology and because of the kind of geometry of those ore bodies that you have there, it is very difficult to motivate to spend exploration money until you have come close enough in the underground mine so that you can do the drilling relatively cheap. And so far, we have been able to find where we think we're going to be able to find the continuations.
Yeah. And then the EBIT impact of Rönnskär. What we have communicated is that the long-term run rate with anode business is about SEK 1 billion per year lower than what it was before the fire in profit. And that is mainly due to lower free metal. We had good gold recoveries, and we can capture a lower part of that value in the anode business model. And secondly, we lose the refinement charge without the tankhouse.
There are a few more components, but it adds up to SEK 1 billion. And then the numbers you mentioned, I mean, maybe we had some one-off charges last year. We took charges for cleanup. We took charges for write-downs of some assets and some early retirements, etc. So that might be what resulted in a different number some of the quarters last year. But SEK 1 billion per year is what we said.
Okay. Understood. Thank you.
Next question comes from Jason Fairclough, Bank of America. Go ahead, please.
Yeah. So good afternoon, gentlemen. Thanks for the presentation. Just a couple of quick ones from me. The first one is just on the accident itself at Rönnskär. I'm just wondering if there's any more color that you can share about why the accident happened. We've seen the photos. I mean, it looks more like an explosion than a fire. I guess, is there any learnings you can share here for the business and the wider industry? So that's the first question. Why don't I stop there and ask that second one afterwards?
Okay. Well, I could take on that one. Whatever you call that in English, the official investigation is not yet published. It is done, of course, mainly by the insurance companies that are working around this. But I can say as much that we're talking about an electrical fault, electrical short circuit. And then that happened in a very unfortunate way. And it happened in part of the tanks that were empty that managed to get them very hot and get them burning. That then took off. And actually, there's some I don't know exactly once again.
The asphalt or tarmac that was used in some of the walkways we were right beside there, they caught on fire. Then cables caught on fire. And the big thing happened when this reached the ceiling. And this is in Arctic climate. There is quite a lot of insulation in the ceiling. And once it hit the insulation in the ceiling, then everything was lost. That's the kind of simple story, not validated and not yet official, but just to get a sense of what happened.
Okay. All right. That's helpful color. The other question I had for you and maybe for you, Mikael, maybe for Håkan, but just on long-term CapEx, right? I mean, if I look at your mine-sustaining CapEx plus your replacement plus the other SIB, I get to about SEK 7.5 billion a year. And then we have these strategic projects, which this year, it's about SEK 8 billion. But it seems like more often than not, you're kind of doing these projects, right? So I guess for me, it keeps Boliden, if you like, flat for the long term. Is it actually SEK 15 billion rather than, say, SEK 8 billion?
Well, I can say that, of course, the 15 gives us growth. It just doesn't keep us sustained. I mean, in the 15, you have a tankhouse. God forbid that they start burning again. You have the Odda expansion, which is a clear expansion. It's not just staying around. You could argue that the Aitik is more about staying around because of the but hopefully, we will have the dams stable and certified according to GISTM, all of them now. So that should not happen again.
You could argue that what we're doing in Kristineberg is actually not really an expansion but a prolongation part of making sure that the Boliden Area will be around for many years. I don't have a number. I don't think we're going to be able to give a number. I can say with 15, as we're having right now, that clearly involves taking care of big accidents as well as growth. You're right that the 7.5 will also lead over time to a smaller Boliden Area because there will be some depletion. I don't know exactly what the number is.
I think that on the top of the 7.5, if you add every now and then I mean, there will be a few years between them, investment in dams and prolongations. You add up to something that is reasonable. I think that this year's number is probably higher than average. I mean, we're taking a big cost for Aitik related to a weakness that is more related to when the company was when the mine was founded back in the 1960s. And that, I don't think, should be counted as something that is recurring every year, so.
So without putting your sort of words in your mouth. 10-12 or nine to 10? How do we think about it?
No, you'll have to make your own guess.
Okay. Thanks, gentlemen.
Thank you, Jason. Then we go ahead to Christian Kopfer, Handelsbanken. Go ahead, please.
Yeah. Thanks for that. So two questions from my side as well. Firstly, clarification or putting the question in another way on the Odda incremental EBITDA that you assumed at EUR 150 million. So if I put the question like this, then if the current call it external factors, everything remains as they are today and also assuming that you are fully ramped up, what is then the incremental EBITDA?
Well, Christian, the benchmark TC for 2024 is not out yet. So it's a little bit of a difficult to have a statement on that one. And maybe you know what it is going to be, but I don't. So we don't even know.
You take last year, though.
Yeah. If we take last year's TC and we take last year many things, I think we were relatively close to the long-term assumptions for a smelter. The TCs were above, but some of the byproducts were below. So I would say that just guessing, Christian, 2023 was fairly close to an average smelter terms year.
Right. All right. Thanks. Then a question on Garpenberg. You didn't talk about Garpenberg today, but you have a really long mine life there on the current production. So yeah, the question is basically, are you considering are you looking at a potential expansion in Garpenberg?
The answer there is yes, but it's way too early to say anything. We are on a conceptual study that we're doing. This is what I've said before. So the conceptual study for a potential expansion of Garpenberg is ongoing. It's good, as you're pointing out, that there's lots of ore and lots of resources on top of that around. And that's what we're looking at. But exactly how to do an expansion with all the or put it as how to do an expansion in a CapEx-smart way without having to double all the infrastructure is the challenge that we're having there. And that's what they're looking at in the conceptual study is to see whether we can do that in some smart way. So the answer is that we will continue with the conceptual study and see whether we can find some way to move forward.
All right. Okay. Maybe just we'll have a very quick follow-up on Garpenberg then. I mean, when do you expect when they expect to take the decision? Is it several years out or?
Yes. I would say just on top if we have during this year the conceptual study done, it will be good. But we then need to have a feasibility if the conceptual study finds some kind of profitable path forward, we need to have a conceptual sorry, a feasibility study done. It will require a new permit as well, which is also part of all these things that we need to work around how to do the permit. So I would say that a decision on expanding Garpenberg is not for 2024, and it's probably not for 2025 either.
Yeah. Thank you very m uch.
Okay. We switch to the chat. We have a question for Håkan coming from Srivathsan Manoharan, working for Royal Bank of Canada. The question is, how much buffer is built into the Rönnskär CapEx estimate that you've given us today?
Well, that's a good question. A good question that I'm not going to answer with a number. I mean, there are buffers in different forms. There are buffers in terms of specifications that is normally changed in the course of the project. We, of course, have a margin based on experience from previous projects. So I can say that there are some buffers that you always build into a project. But I don't want to go into a detail on exactly how much that is.
We also have a question from the chat from a gentleman named Krishan Agarwal from Citi. And it's regarding the SCM technology. And it's for you, Mikael. And it is, can you elaborate about potential CapEx? That's the first one. And the second one is, how much of Boliden's own cement need could possibly be replaced by this new invention?
I can start with the second question because that's the easy one because it's 100%. We could theoretically be fully self-sufficient on cement. We will be oversupplying just by this first investment.
Regarding CapEx, we have on purpose not set any number because this is brand new technology. We have a conceptual study done on what it should look like. This is one of these areas when you really need a feasibility study to really know what you're going to do. It's going to take, as I said, about a year to try to get that feasibility study together as it is a new process. Some of the process has, you can say, standard components, but they're also part of the process that has brand new components. We're not afraid of this. I'll just make the point around the leach plant in Rönnskär, which was also fully developed by ourselves, by our own R&D, where we also took on some brand new not just brand new process but also brand new equipment to fit into this process.
Those of you who know us more in detail know that that project was very successful in the sense that we got it built in terms of getting it up on CapEx. But we've had a very long ramp-up of a couple of years because there have been certain equipment that has not worked out the way it should have. And therefore, I will be very cautious on the cement one until we have a detailed feasibility in place.
Okay. Then we switch over to the phone again. And we have a question from Mr. Yehuda. He works at S&P Global Market Intelligence. Please go ahead. David Yehuda, third one on the line there. Hold on, David. Your turn will come.
David, you should be on line. Do you hear us? May I have to come back to him?
Okay. Okay. Well, you're welcome to come back to us. Then we go further down the list here. Then I take Laura Chan working for RBC Capital Markets. Laura, go ahead, please. We seem to have some kind of technical issues. But that doesn't matter because we have plenty of questions on the chat. We can take a question from a broad question from a gentleman called Joachim Hedlund. And could you just give us the key components in the outlook for demand, how it looks like as of today? And it's for Mikael.
And which demand, as you say?
Copper, of course.
Copper.
The big shiny metal.
The big shiny metal of copper. I mean, if you talk about what is going to increase, it is, of course, electrification that's driving the increase of copper demand together with the urbanization and industrialization of the Global South, to call it in another word, around that. Those are the two main components, both of the present demand increase and also, as we look forward, the demand increase that we see.
Excellent. Operator, should we now try with David Yehuda from S&P? Are you on with us? Please go ahead. Okay. I have plenty of people here in the line that want to ask questions, operator, but they don't say active. So if you could please give me some directions. Otherwise, I don't really know how to handle this. Should I give his on mute on his phone? Okay. Maybe we can take another one then.
We have a gentleman called Garnett Griffin working for a company called SIG. Are you there, Garnet? Can you take a question? Well, I'm sorry, ladies and gentlemen. We seem to have some major technical issue here. I have people wanting to ask questions. And I raised their hands, so to say. I asked them to say something, but they cannot get through. So that's a bit difficult. I have one person here, though, saying which is active. I hope that then works. And that is Daniel Major from UBS. Can you ask a question again then, Daniel?
Hi, Olof. Can you hear me okay?
Yes. We can hear you. Wow. We can hear you.
Looks like I'm the lucky one. Okay. Thanks. Yeah. Just, I guess, a couple of follow-up questions. Just focusing on the CapEx guidance you've given for this year and the indications for next year, can you just confirm that that is assuming the receipt of any insurance payment, all that flow through the P&L and offset this CapEx? This is a gross or a net CapEx number, just to be clear on that.
If I should take the numbers that we have provided on CapEx, that is sort of the CapEx element. It's not sort of it's not reduced by insurance revenues. So the insurance revenues is a plus at the side of that, if that makes sense. So we haven't netted the CapEx numbers with insurance. That's a different flow, so to speak.
Understand. Yeah. I thought it was the case. And then, yeah, the next question, you talk a little bit about some of the challenges with the tie-in of the new expansion order, etc. Can you give us any steer on working capital implications of this in the next calendar year during the ramp-up? Would you expect to build working capital in the second half of this year or next year ahead of the ramp-up of order?
In order, we will build working capital during the second half of this year. I should, however, point out that the working capital tied in a zinc smelter is clearly lower than what we see in a copper smelter. So the number is not equivalent to what you would expect in, for example, Rönnskär or Harjavalta.
Ladies and sorry, Daniel. Go ahead. Yes.
No, that's what I was going to say. Thank you. Thank you.
Thank you.
Thank you. It was good to hear someone. Ladies and gentlemen, as I understand it, our technical problems have been solved. So if you have a question, please dial five and star. And we will make that work again. In the meantime, we take questions from the chat. And it's for Mikael. And it's from Johannes Grunselius again. And it goes like this, Mikael. For the Aitik mine, you're reiterating a copper grade for 2024 of 0.17% copper. When in time do you think that this is going to move upwards? And that's the first question. And then I take the second one from Johannes.
And Johannes, you were there. And you've seen this famous thick line graph that we had on the last Capital Markets Day. And if you look into that, you can basically figure out that we have a severe trough of about three years, so 2023, 2024, and 2025. And then as of 2026, this should be starting moving north. It's not going to jump very high very quickly. There's a little bit of a build-up. Then you saw that later in the 2020s, we're moving up above the average grade of the mine. I'm not going to be more specific than that. At this time, you know that mine plans are being reevaluated for many different purposes as you move along. But that's the best guess that we still have.
A follow-up, Mikael, is you've had some challenges producing at an annual run rate of 45 million tons. Can you elaborate on that one, please?
Yeah. It's turned out that 45 million tons in Aitik is a challenge for different reasons. We don't maybe have an overcapacity in that sense. But we're working towards that. And we're working with the ambitions to get there. You know that we have produced at 45 million on a couple of quarters. But then when we have a little bit of a shortcoming, then we cannot really compensate in that by having more than a run rate of 45 in other quarters. At least the way it has been. But the ambition is clear to get up towards the 45 as an average for the year.
Before we go over to the phone again, we have a question for Håkan. It is from Amos Fletcher, Barclays. It is, Kevitsa pushback 5 was not mentioned, that possible CapEx decision. Can you please elaborate how that fits into your overall financial landscape?
Yeah. Thank you, Amos. I think we covered that partially in a separate question. With this fifth pushback, we have some more flexibility in the timing of the investment, I should say. The first thing that happens if we do not take a decision is that we start scaling down the stripping. In order to get a seamless transition, it would be preferable to take a decision perhaps this year. But at the same time, there is a good deal of uncertainty around zinc prices. We need to make sure that we get our arms around market development in nickel before we take any such decisions. It's not time-critical in that sense.
Okay. Then we'll go over to the phone again. It's a follow-up question from Jason Fairclough, Bank of America. Please go ahead again, Jason.
Yep. Thanks, guys. So just going a little bit off-piste here. I think at your smelters at Rönnskär, you do a little bit of e-waste recycling. And one of your peers had a problem, this is Aurubis where there was some fraud related to some of the raw materials that they were buying. And so I'm just wondering, has that caused you to take another look at how you control the e-waste that's coming into your smelting system?
The answer is yes. When we found out about Aurubis or around the same time as everybody else found out about Aurubis, we initiated an overview of our own commercial dealings on waste, especially waste, but basically all raw material coming in. We had external forensic consultants coming in and looking at it. And I can be quite honest and frank in saying that even with that push, both from ourselves internally and outside, people looking at it, we cannot see that we have been affected in the same way as Aurubis have.
Now, you should be careful to say this because it is tricky sometimes to make sure that you have control over all your intermediary inventories. But we cannot find any evidence that we have had the same issues. Having said that, we have also gotten quite a lot of improvement suggestions from the same consultants. And we're working, of course, to make this thing even tighter going forward to make sure that it's going to be more difficult, that we will be affected in a similar way as Aurubis.
Mikael, can you just remind us how much of the total copper output of Rönnskär is going to come from e-waste? It's still a pretty small fraction overall, right?
Yeah. It's a small fraction overall. I'm getting some numbers. The total recycled part of Rönnskär, I think, is about 20%. But the majority of that is not e-scrap. The majority of that is other types of scrap. If I remember right on top of my head, it's about 5%-6% that comes through e-scrap or what we define as e-scrap. Having said that, as always, when you know about a copper smelter, copper is actually not the most important thing. It's all about the stuff that's not copper. E-scrap tends to be pretty rich in gold and other precious metals. And that's where it hit Aurubis, not the copper as such.
Okay. Very clear. Thanks for the follow-up.
Well, once again, it's star five if you want to ask questions over the telephone. We've had some technical issues here. Some questions may have disappeared. So once again, if you want to ask questions over the phone, take star five. But we have several of them on the chat. And this one is for Mikael. And it's from Igor Tubic. He works for Carnegie. Have you started to see any positive signs in terms of demand for zinc?
Just to remind everybody, as you understand, that, of course, the price that we get for the zinc is set by global demand and global supply. We, of course, know our own supply. And we also know the demand from our direct customers that are mainly in Northern Europe. And I've been very open. And I said that we've seen during the fall and the winter a clear kind of reduction in demand from our direct industrial customers. It doesn't really matter to us in the sense that we cannot sell our product. We can always sell our product. It's starting to look a little bit better.
We can see that our direct customers are more prone to start ordering zinc and zinc products than they have been before. Exactly if that is because they see a bigger demand or whether it's just replenishing of their own working capital, we don't know.
Then I have a follow-up from Igor Tubic from Carnegie. It's for Håkan. Can you please tell us what to believe regarding cash flow and the seasonal cash flow effect in the first quarter, please?
Yeah. That will be similar to first quarters in general. We typically tie working capital in Q1. I think looking back at last year or some kind of longer average, it's been about SEK 1.5 billion in working capital build-up during Q1. On top of that, we have the effect of the political strikes in Finland, which doesn't affect the direct production so much. But it affects our possibilities to ship and invoice and so on. And we estimated in a press release recently that that would have an additional impact on cash flow, negative then, of about SEK 500 million. And then that is reversed in Q2.
From Johannes Grunselius, Den norske Bank, to Mikael. Tell us, how is it going getting premiums for your low-carbon products? How is that developing?
The answer is very similar to what has been before. We're selling all of our low-carbon products. That's good. We're selling them all at a premium. That's good. The premiums are still very small, which is the bad side of the story. It is clear that we have customers who are not willing to pay very much at this stage, or at least not enough customers are willing to pay a significant premium.
We could have close to 1% of extra premium for the green zinc on top of the kind of normal premium. For copper, it's clearly less, less than 0.5% of extra premium compared to the premium that is already in the market. The question, of course, what's going to happen with this forward. And I am personally convinced that we will get higher premiums at some stage. Or put it the other way around, those who are not green will get some kind of penalty so that there will be an advantage in this. But the timing of that is a little bit unclear.
We have a chat question from Ioannis Masvoulas, Morgan Stanley, for Håkan. And it is, could you please quantify the targeted maintenance savings at Odda?
I think that is thank you for the question, Ioannis. I think that is actually a bit difficult to quantify. I'm not sure if you're referring to the maintenance CapEx reduction because that is something that is quite long-term. We would have to incur additional spend later on. If you're referring to the short-term maintenance, I mean the annual maintenance cost, that will come down a bit. The only thing I can say is that is included in the incremental EUR 150 million that we talked about.
In my system here, I can see that we have one more question from the telephone system. I'm a bit worried that we might have lost someone there out there that wants to raise a question on the phone. Please, once again, if you have a question on the phone, that is star five. But Richard Hatch, Berenberg, please go ahead with your question.
Thanks. Yeah. Thanks, guys. Håkan, just one for you. Just on the insurance proceeds for Rönnskär, can you just tell us, remind us where it's going to go in the income statement? I take it it's excluded from EBIT, right? Does it say that it's financial income? Or how does it work?
It will be included in EBIT as kind of another revenue. So it's a part of EBIT. And then it's taxed. And then it's a part of net profit as well.
Okay. So I'll have to put so we have to model it in our top line as a revenue, do we?
Yeah. I mean, it will most likely we'll have to come back on that. But it will most likely be recorded under other operating revenues, so other revenues, which is a separate line above EBIT. And then, as I said, we are not expecting any income in Q1. And then I'll come ba ck to the exact timing later on.
Helpful. Thanks.
Question to Mikael from the chat again. So it is Ola Södermark, Kepler Cheuvreux. Can you please repeat the expected timeline of the startup of the Odda expansion?
The Odda expansion, the expected timeline is a ramp-up during Q4 and basically full production as of January 25.
Excellent. I have room for two more questions if you want to over the phone. But according to my line, there isn't anyone right now. It's star five. But I have plenty of them over the chat. So let me go with another one. And it is for Mikael. It is from Johannes Grunselius, Den norske Bank again. And it is, is there any recent exploration success that is behind the decision to invest in this Boliden Area?
Well, there are maybe two things.
Number one, those of you who have read a little bit more detail on our statement, we have a long history of replacing one year every year. Well, this year, we actually replaced the one-year production of Boliden Area with two years, which is, of course, very good and very kind of helpful in getting maybe an even stronger self-confidence that we will be able to maybe not do two years every year but continue to one year every year. And as I said also before and here, I have to be careful because I'm not allowed to say too much about it. But we have interesting leads, if I want to put it that way, interesting kind of hits that doesn't qualify for any resource yet but that we continue to drill right now and looking into. And we'll see how quickly we can get our arms around those.
And hopefully, they will also contribute with meaningful volume.
Excellent. There seem to be no more people wanting to ask questions over the phone. And I don't think it's the right time just for me to read up all these questions. We can take them afterwards. And we'll for sure get back to you. Mikael, I think it's a good time for you to take this opportunity to wrap up today's session. And I give the word to you for some final words. Please.
Thank you, Olof. And we'll move over to this final slide. And as you can tell, of course, we were looking at these two guys from the back when we started. Now, we're taking the photo from the front as we're looking into forward. Today, we have been looking about what is happening going forward.
We have hopefully been able to convey a message that we are both in terms of innovation, in terms of sustainability, but also in terms of real projects coming onto the ground, we are making very good headway. We are full of confidence. We feel that hopefully, 2023 will be a parenthesis in our history once we look at this. You've seen behind me the whole time as we've been speaking the 100-year symbol. This is the year that we are celebrating 100 years of operations. What we've talked about today, in my mind, is a solid foundation to make sure that we're talking about the next 100 years as well of continued operations in Boliden. I would also like to thank you all for having taken part of this update that we've done today. I ask for forgiveness for the technical challenges that there were.
As Olof pointed out, those of you who did not get your questions through, you're very welcome to send them. We will work around them separately. I hope that you will have a very good day either in sunny Stockholm or wherever you are. Thank you all.