Good morning, and a warm welcome to the presentation of Boliden's Q3 2017 Results. My name is Sophie Jarnius, and I'm Head of Investor Relations. Our CEO and President, Lena Tevriel, will, together with our CFO, Hakan Gabrielsson, give their comments on the Q3 report. After that, we will open up for questions, both from our audience here in Stockholm and also via the telephone conference. So with that, Lennart, please.
Thank you, Sophie. The Q2 when we released that, it was surprising the market positively. And I got a question, are there any one offs here, which are any particular that made this very good result? And I said, no, there is nothing. Well, maybe one thing.
Everything went better. Everything went very well and that is unusual. I'm saying this because today we have a report which was on the negative side, and I can very much repeat what I said last time. Nothing very particular, but most of the units had deviations on the negative side and the combined effect is quite significant. We had revenues of SEK11.6 billion compared to SEK97 1,000,000,000 a year earlier.
We had EBIT before process inventory revaluation of SEK1.7 billion. That's up from SEK1.3 billion a year earlier, but it's below the Q2. The free cash flow was continuing to be very strong and we have reduced our gearing more on that later. The reason for somewhat disappointing result is lower production in the mines and it's predominantly it's basically a question of relinings of the mills. So maintenance, but we also had some production disturbances.
We also had continued somewhat production process issues in Kockola and we had a breakdown in Oda at the same time. So it was a little bit too many of the negatives. Nothing very particular, but still. We had the planned maintenance, which was minus 50 compared to the same level a year ago. Metal prices went up, but the terms for the smelters went negative.
The market in general is very positive. The industrial production is going very well in the world. This time, it's more driven by the old world and as a consequence, we have a little less positive development on the metals metal demands compared to the industrial production. We had high growth in China, but lower than in the Q2. We had a good growth in Europe and this is a difference from what we're used to seeing.
The construction market, in particular, is moving well. The base metals had the normal growths between 1% 2%, strong nickel demand growth. And on the supply side, we see the copper market being in balance or in line with the positive demand. The zinc smelters are suffering from a lack of zinc concentrates. The zinc is tight and we see closures coming in China, both because of fundamentals, but also because of environmental situations.
We are seeing a surprisingly strong development supply from Indonesia and the Philippines, which are coming very strong. So it's not directly competing with refined nickel, which is sort of the value chain we are in, but still it's having an impact on that market. If we look at the prices and inventories, I would like to drill into this one a little bit more than we usually do. If we start with the copper to the upper left here, we see that metal prices have or copper prices have been going up quite a bit. They are now on around our long term price levels.
So I would say that copper is not very cheap. It's not very expensive. It's somewhere in the middle where we think the long term prices should be. And the inventories are low and it means that supply balances demand quite well. This is a great contrast to the zinc market, which you see on the upper right here.
Inventories have been going down, down, down and are down on very low levels, 2% of global supply approximately, and the zinc prices are now considerably higher than our long term price. The macro is still looking positive. We don't see a lot of start ups. There are still some mines being in care and maintenance, which basically should start at these prices and they don't. We don't know why.
But basically, the zinc fundamentals is not looking alarming. We don't see a flow of new output coming. But of course, zinc is more exposed in that way. Nickel is the opposite. There we see very low prices continuing and we see the inventories being very high as 20% or over 20% of the global supply.
So in our portfolio, we have the high priced zinc for fundamental reasons. And we see the high zinc price and we see the very low nickel prices and in between we have copper somewhere in the middle. If we continue to look at this picture, which is showing the volatilities for the zinc copper and nickel, you can also see another illustration where the prices on the vertical line, the maximum and minimum prices we have seen in the different years, and the line is showing the cost level of the industry. The highest of the three lines are is the 90th percentile cost level. In the middle, we see copper, clearly also a profitable industry where prices are clearly higher than the average of the 90 or the 90th percentiles and the other percentiles.
And to the right, we see nickel, which is clearly depressed, where a lot of people are making loss and is not a profitable place to be. And given this, we're very proud of Kevitsa. We're coming back to that later. If we combine the prices and we have the prices in the light gray here, the line, we see the positive development of the portfolio and then we have a weighted average with the combination of prices relevant for Boliden. And we see the darker blue line, which is the currency index going opposite direction.
So again, now we are seeing that metal prices and currencies or the Swedish krona particularly is going opposite directions. The combined effect in any case is very positive. So it's the strongest period we have in recent history. If we then go into our business areas, we start with the mines. Earnings were good, SEK1.4 billion, but the negative was that it should probably have been higher.
Previous quarter was 1.5%. But then in the 1.5%, we have basically very few disturbances, very little maintenance, no realinings of mills. And this quarter, we had. We had almost all the mines or concentrators had realigning programs. And that takes away 4, 5, 6 days.
And if that happens in the same quarter, of course, the combined effect is there. CapEx was $800,000 a little higher than last year. The production, again, maintenance in the concentrators, production disturbances and lower grades. And there I should also comment that we had rock stability in Garpenberg. And Garpenberg's production plan is in Lappeijt, high grades.
We're taking room after room after room, but then we have rock instabilities. And then we have to do extra reinforcements and we have to work on those instability. And when we do that, of course, we have to mine somewhere else and it means lower grades. This is a business typical. It's not unusual.
It happens time to time and now it happened at the same time we had maintenance in a lot of concentrators. So we think that it is more bad luck than anything else. The cost has been well managed and under control and we have seen a clear positive price impact here. If we then go to the production of copper, zinc and nickel, we have the bars which are the throughput in the concentrators and the line is showing the contained or the metal content. If we start with the copper, we can see that it's not a good quarter.
It's not a very bad quarter, but it's clearly bad compared to the previous. And we have seen the metal content is coming up and we are going into higher grade areas in Aitik, even though it was slightly less than before. Nothing to worry about there, I would say. On the zinc side, a similar pattern and there we can say we probably have a more negative development and it is due to the Garpenberg situation, as I said, both on the volume and the grade there. Nickel is, on the other hand, a strong positive.
We're extremely pleased with Kevitsa. We've set a new production record and Kevitsa is really doing very well. And then you have some more comments on the other mines, but this is the main things. Well, I should also say Boliden, it's a big drop quarter to quarter because we had such an extraordinary second quarter and that we announced clearly when we announced the Q2 that Boliden is on extraordinary good mix of different concentrates. Going over to smelters.
We have 1st of all, we have lower market terms. So the combined effect of TC premium and currencies is negative here compared to mines which went the other way around. Earnings were €5.68 compared to €6.13 a year earlier and €5.60 basically at the same level in the Q2, which is not good. We had a big maintenance program going on in the Q2. And despite that, we are just repeating the same level.
We had continued stability problems in Kokola. That has been going on, on and off for a few years now. So this is disturbing. We have extensive action programs going to figure out the root cause. We are slightly positive at this point, but it's far too early to give an indication if it's over.
But I think I'm slightly hopeful right now. We have put in tremendous resources to sort it. And then Oda, you remember probably that we put in or announced an additional shutdown in Q4 because we saw that the brick in the lining of 1 of the furnaces had to change earlier than previously planned. It was planned for the spring. So we moved it forward and we do this repair in or this maintenance in Q4 and that very furnace broke only weeks before this sort of earlier than planned maintenance was decided.
So we really had an unfortunate situation there with the breakdown of Oda. We have lower free metals volumes. We have good cost control and the market terms, as I said, is lower than before. If we look at the production data here, in copper, it doesn't look very alarming, but it's a quite soft quarter. In zinc, we see a similar picture.
So we don't see it so much here, but on the margin, it's having an impact obviously. And now over to you, Hakan, the financials. Thank you.
Yes, as Lennox said, we had a quarter with a lot of maintenance in mines and with some production disturbances, which was different then from Q2. And that is also visible in the P and L. EBIT, excluding process inventory evaluations, was SEK 1.7 billion compared to SEK 2.2 billion last quarter, up though compared to Q3 of last year, SEK 1.3 percent. Free cash flow was strong in the quarter, SEK 1,700,000,000, which resulted in a net debt to equity ratio of just below 19%, which is below our long term target. Earnings per share slightly up compared to Q2, dollars 5.40 compared to $5.34 and a fairly big increase to Q3 of last year.
If we then move over to the analysis of EBIT comparing with Q3 of last year. We have an improvement of just about SEK 400,000,000 and the analysis is quite simple. In this case, it's entirely explained by better metal prices. We had some we had a bit higher volumes and a bit higher costs, both mainly related to Aitik and copper mines. The deviations are bigger if we compare Q3 to Q2.
Q2 was a very strong quarter, and we're SEK 450,000,000 down on that. Looking at then on the volume side, SEK 650,000,000 negative impact is in mines. The 2 big deviations to Q2 are Aitik and Buliden area. Aitik, as Lennox said, we had some crusher issues leading to lower mill volume and that also had an impact on grades. In the Boling area, it's maintenance, it's a less favorable ore mix than Q3, and it's the rock instability issues that we talk about in the report.
Smelters is neutral to Q2 when it comes to volume. We would have liked to see a more positive deviation considering the higher amount of planned maintenance in Q2. We had lower free metals, and we had some process disturbances in the zinc smelters, which had a negative impact. Furthermore, we had a negative volume impact coming from the internal profit elimination. We tied up some more internal stocks, primarily in zinc and comparing them to Q2, which had a stock reduction.
Prices and terms. The main impact of internal profit comes in prices and terms due to higher metal prices, and that, together with currencies, offset the positive effect we had on stronger market prices on metal. Costs were lower. A number of reasons, lower production in mines, less maintenance in smelters, but also seasonality that we typically have in Q3 with lower costs than the other quarters, all in all, adding up to a negative effect of SEK 450,000,000. Moving over to cash flow, SEK 1,700,000,000 in the quarter, primarily due to development in working capital where both inventories and payables contributed positively.
It's slightly down compared to Q2, but significantly better than the Q3 of last year. This all adds up to a strong balance sheet. We have a net debt now of SEK6 1,000,000,000. We have a gearing of 18.6 percent below the long term target and clearly deleverage compared to the 40% we had last year at this time after the Kevits acquisition. And also the financial key ratios are strong.
We have a good payment capacity, good duration and a healthy level of interest rates. So we're in good shape. And with that, I hand over to you, Lennart, for some concluding remarks.
So if we look at going forward, what in this report should you bear in mind when you model the future here? Well, 1st of all, Kevitsa and Aitik, we do guidance on grades and we don't have any news there. In Garpenberg, because of the replanning, because of the rock stability, we are not going to be able to recover fully what we lost in Q3. So it's slightly lower than indicated for 2017. I would say this is normal.
This is nothing dramatic. It happens, but it's a bit sad that it's coming together with the maintenance situations. In Smelters, we are doing the are going to do the or we are actually as we speak standing still with a roaster in Oda and we're going to have it repaired and maintained in a proper way. This quarter is going to have an impact of SEK135,000,000 and last year we didn't have any maintenance in the smelters. The CapEx is revised positively.
We are not delayed in the projects, but we have a slightly sort of later scheduling of the payments. Nothing is I wouldn't say there is nothing dramatic in this, but we are going to have a better cash flow than from investments than previously guided for. Most of there is no cuts in the spending we're seeing here. So it's a rollover into next year. And if we summarize, I think bull industry stands strong.
We have a good situation with mines and smelters. We can be disappointed now that in this positive space of our industry that our smelters are facing lower terms, slightly lower terms than before, but that of course is the strength of our models that smelters and mines often go opposite directions. Base metals are going well and precious metals are sometimes supporting when and going also opposite direction of the base metals. I would say right now the pressures are standing still where the base metals are going up. The productivity in the group is amongst the highest or several units are having the highest productivity in the industry, and we're continuing to work very hard with technology development together with all the industrial partners supplying us with equipment and technology.
We had it's not the best quarter we have announced obviously, low production in the mines, but it's equally much a question of an extraordinary second quarter, which we said was extraordinary and then this one was also quite extraordinary, but going in the opposite direction. We had some disturbances. We had some grade issues. I would say that nothing is very particular of this. In the zinc smelters, the Kokola situation has been going on and it escalated to sort of a worst case of this process stability in June, July or June, July, a bit August.
We have extensive programs to improve and we're slightly hopeful that we are going in the right direction. So this will be an interesting one after next quarter. Metal prices are continuing, but then there I showed or demonstrated nickel is nothing to be very proud or happy about. Zinc is to be very happy about and copper is somewhere in the middle and the precious metals are also somewhere in the middle. So I think the situation is quite balanced.
And then we have a favorable currency situation, no doubt. And with that, Sophie, do you take over now?
Yes. Thank you, Lennart. Before we open up for questions, we just want to highlight that we have our Capital Markets Day coming up. It's 21st November here in Stockholm. And then we are going to our to Kevitsa for a site visit on the 22nd.
So let's open up for questions Ulla, we have a microphone on the way.
Yes. Ulla Sodermaier, Kepler Cheuvreux. Is it possible to quantify the extensive maintenance in mines that I suppose were more extensive than we have expected?
I think you get a very good grip on what the magnitude is if you look if you just look at the difference in earnings and you adjust it for volumes and the other factors. So it's significant for it's significant and in particular between the quarters. It's a minus now, which is approximately as much as it's a plus in the previous if you level out the maintenance as an average over the year. And normally normal quarter, they are coming well sooner, more frequent than once a year and we have 6 mines and we have several smelters. So normally they even out and now it's a quite big difference between 2nd and third quarter.
But am I wrong if it could be in the range of SEK100 1,000,000 to SEK200 1,000,000?
It could be in actually the upper level of that kind of ballpark.
And on the other hand, you're below your gearing target and we have 1 quarter left and the outlook is not that bad metal price wise at least. How should we view the upcoming Q4 end of Q4, should I say?
What it's going to be is if it continues and nothing particular happens in the global markets, I mean, we are on the right track and we are below the target. And obviously, this is going to be a significant or a very important discussion on the Board. And the outcome of that, I cannot go or comment that too much. But I mean the guidance or the targets are clear. The direction is very positive.
So the likelihood of some kind of return is high, I would say.
And on CapEx for next year, you're saying that there are some spillover to 2018. Can you remind us of the CapEx for 2018?
We haven't talked about the levels for 2018, and we'll have to come back to that in our Capital Markets Day coming up shortly in November.
But it should be lower than 2017? Cannot comment that at this time.
Okay. Thank you.
Olof Gjermars, ABG Sundal Collier. You mentioned this low process stability in Kokkola and you also said that you were slightly more positive and you said that there is an indication that it might be over. Without going into the details too much, the technical details, could you please elaborate on that one and try to explain that further, please?
When something is happening, you're looking for a root cause and you rectify something and you're back on track. We tried that. And we tried it and we were hopeful, but it hasn't worked. So it was obvious for us. It's something that happens here.
It's giving an impact over time and probably it's a combined of several. We have installed this sort of big data systems. Correlations between different factors and from different times. Very complex. We have had the best sort of people from universities.
We have had previous from ex competitors. We have the world has been involved here and it's not in Q3. It has been going on for a while even though it escalated in Q3. And we have put in place a number of things and it's well, it's a lot of different things. Probably we take that on the Capital Market Days, but it's a list of tangible, clear activities we have done.
It looks as if things are moving in the right direction. We continue with the action plans, but gee, we have been hopeful before. So I'm very prudent to give any clear indications that it's over. We don't know if it is over, but it's looking quite positive, we hope. Cross fingers.
Okay. So then we open up for questions via the telephone conference. Operator, please go ahead.
Thank you. Our first question is from the line of Jitinder Gol at Citigroup. Please go ahead, Jitinder. Your line is now open.
Good morning. Thanks for taking questions. Two questions from my side. Firstly, on Leonard, on your decision to move on, anything you can comment around the timing and how you arrived at that decision? Is it just a decision to move on or anything that has driven that in terms of your journey with Boluiden?
And secondly, on smelting, there is a comment about increased percentage of spot transactions on terms. Are you talking about just zinc here or copper as well? And can you indicate how much spot exposure can we expect going forward and what it was in the Q3 just from the concentrate book visibility that you have at the moment? Thank you.
Well, on the spot sales, it's a normal seasonal. We are doing in the summer breaks and we have sort of normal movements, and it's not an indication of going forward. So that's a normal thing in the summer period. Yes, I decided to leave. It's a hard one and but I'm totally focused on this company as me.
I cannot think of leaving, but and I'm not doing it 9 months or almost 9 months until I have told the Board that I would like to step down. But I think what has triggered it is obviously that age is developing. I don't like this to happen, but we have little to do about that and I have been offered 2 very nice jobs or Board assignments. Epiroc, the spin off of Atlas Copco and SCA, the resulting or which was also a spin off in a large SCA group. And of course, it's a privilege to have that opportunity and it's a natural time.
Boliden is in good shape, been here 10 years. No, nothing dramatic with that for you, but certainly very dramatic for me. It's a tough decision. It's a difficult decision, but nothing else. It's a while until then, and I'm going to work like normal to the last hour, I promise that.
Okay. Thank you very much. Very clear.
We are now over to the line of Liam Fitzpatrick at Deutsche Bank. Please go ahead. Your line is open.
Morning. I've got three questions. First, on just your growth options in zinc. Could you just comment on some of the longer term options that you have and particularly around Tara in terms of potential timing when we may hear more about the longer term developments of that mine? Secondly, on shareholder returns, I'm not trying to ask you how much or when you may announce anything, but can you comment on any preference you may have between dividends compared to buybacks?
And then 3rd and final question, just on zinc TC terms or overall smelting terms. There was a lot of talk earlier this year about an increase in the payability levels from 85% to a higher level, potentially above 90%. Do you think that will return as an issue as we move forward to next year's contract negotiations? Thank you.
Well, the growth options in zinc, we're obviously continuing to do exploration around Tara in the near term. And near term is through 2025 or 2026. We will we are trying to get mine in the old mine and in the areas we have discovered without the new deposit, Tara Deep. But then we have the long term option of Tara Deep and we're constructing we're doing the drift over to Tara Deep area for cheaper and faster exploration of that deposit. So that will have the long term potential.
And the short term is basically what we have said before, we have prolonged the Tara life of mine through 2023. We have a tailings dam through 2026. So we're well equipped for the near term and with an optionality or with hopes for a much longer life depending on exploration. But we also have Rhev Liden in Kristina Bay. We should also mention that it's an important one and the longer or the bigger resource in Garpenberg.
So we have growth options in zinc mining in every area and on zinc smelters, we have struggled, as I mentioned earlier. So there are longer term opportunities in oil here. Number 2, we looked at or you were asking about returns to shareholders. Do we have a preference? And no, I think we should be prudent.
And first question is to return and how much and if that happens and what the board resolution will be on that. And then what the preference will be, I think we will take advice from a lot of people to see what seems to be the best one, but we don't have any comment right now. On ZincTC and the level of payables, well, that's a very interesting question. We are going next week to have the LME week and the negotiations are starting slowly now, and they will probably go on until next year. I do not believe that we're going to have a change, but what should I say?
It doesn't matter what I'm saying because the negotiations basically haven't started, so I don't know.
Okay. Could I just a quick follow-up on those longer term growth options in zinc, maybe around Garpenberg. I mean, what would be the earliest you would say you could potentially look to expand production? Are we talking sort of more than 2, 3 years out from today in terms of starting those projects?
Right now, we're working hard with rock stability. We are looking at options as we always do. I think we're going to have some indications of that on the Capital Market Day coming up now. So at this point, we don't have any information on that.
Okay. Thank you.
We are now over to the line of Alan Gabriel at Morgan Stanley. Please go ahead. Your line is open.
Good morning, everyone. A couple of questions, if I may, on the grades at Garpenberg again. Now we're 1 month into Q4. How do you see the progress developing on the rock stability issues? And how quickly should we go back to the 4.5% guidance?
And the second question is on the working capital. Again, in the face of rising commodity prices, you still managed to release working capital. Do you mind giving us a good picture of where you see working capital developing by the end of this year? Thank you.
On grades in Garpenberg, the rock stability is something we are looking into. We have a short term situation. Of course, we lose some high grade ore, which we will take back at a later time and now we have to balance and reduce the stress in the rock by mining more or a bit further away from and not do it so intensively. We are looking at the mine plans there and we are not seeing this as a major thing. But longer term, we have the low grade in the reserve.
So also in Alpenberg, we're going to give detailed information on it on the Capital Market Day. And on working capital
Working capital, yes, you're right in that prices tends to tie working capital. Currently, inventory levels, which is the perhaps most significant part, are quite low. We're a bit high on zinc metal, but the main the bulk of it, the concentrate inventories are fairly low. So I wouldn't expect further reductions in the next quarter.
We're now over to the line of Daniel Major at UBS.
Hi, James. Two questions. Firstly, on tax. You've consistently paid less cash tax than it's gone through the P and L for the best part of 2 years. And you've continued, I guess, to guide that this is going catch up at some point, and it hasn't as yet.
Can you give us some guidance on when you would expect that transition sort of to occur? The second is on your CapEx guidance. You expect to come in below the previous guidance of SEK 6,000,000,000 this year. Can you give us any more sort of definitive guidance on how much below the SEK 6,000,000,000? Also, you said you would expect FY 'eighteen CapEx to be lower than FY 'seventeen.
Is that lower than the SEK 6,000,000,000 guidance or lower than the actual spend?
You take this first.
Okay. I can take tax. Well, the thing with taxes is that there is a time lag between paying tax and charging tax to the income statement. And in a period with increasing prices and gradually stronger results, We pay tax that is related to last year, which had a lower profit, and we charge tax related to this year on the income statement, which is then a higher profit level. So primarily, I would say it's a matter of the development of our bottom line.
And in that sense, any catch up depends on how prices develop going forward. I think that's the main thing. Then there are other timing differences due to tax regulations, but that's the main thing. And CapEx?
Well, we
have the big the crusher in Aitik, which will be mostly will be paid next year. We're going to have some dam programs. We're going to do a lot of stripping in Kevitsa, which is a stripping intense mine. Nothing of this is new. So we are in a quite heavy sort of investment and in particular stripping in both Aitik and Kamitsa kind of situation.
But nothing is what we say today is only we reduce it this year. We take that money. We do that in next year, so it's a rollover situation. And then we're going to guide you on the CapEx outlook also at the Capital Market Day. We have to save some news to the Capital Market Day, right?
Okay. Thanks so much.
We are now over to the line of Oskar Lindstrom at Stasco Bank. Please go ahead. Your line is open.
Yes. Two questions. One you've touched on already, but if you could maybe clarify that. The impact of the Cocoa and Oda production problems in Q3, you said that in a question to if it was in the DKK 100,000,000 to DKK 200,000,000 range that it was in the upper end of that range perhaps. Do you mean sort of quarter on quarter or year on year?
That was my first question. And the second question is the rock instability at Garpenberg. Did you say that you were going to that, that would have an impact on the mine plan? Or should we expect things to go back to the previous guidance, let's say, for 2018? That was my second question.
Yes. On the quarter over quarter, it was a maintenance in the mines. It was and it was referring to 2nd quarter and third quarter. That was the reference I gave and the numbers we spoke about earlier. On the mine plan in Garpenberg, I think that replanning, short term replanning is not unusual.
What we are saying is when we have rock stability, we have to consider the situation and see if we should modify the sequencing a bit. But I'm at this point not aware of any major changes. So and then we are going over time into the lower grades because the reserve grade is lower than at present. So nothing else on that we can inform on today.
Maybe I can come back to the question on Kockel and Oda. Yes, please. In the EBIT analysis there, volume is pretty much neutral compared to Q2. We would have hoped to see an increase as we had much more planned maintenance for Q2. We had SEK 200,000,000 more maintenance in Q2 than Q3, and that should have been visible in the EBIT bridge.
Now I'd say roughly a bit more than half of that is volume related and mainly then covering Ode and Kockle. So just over EUR 100,000,000.
Roughly half of the lost volume that you should have gotten but didn't get is due to
EUR 100,000,000.
So just over EUR 100,000,000.
Okay. Thank you very much.
We're now over to the line of Johannes Grunselius at Handelsbanken. Please go ahead. Your line is open.
Yes. Hi, everyone. It's Johannes here, Handelsbanken. I have two questions. First, more of a market question on Zinc Smelters.
Mean, we know that the market for concentrates are extremely tight at the moment. But you're also saying in the presentation material here that there is also smelter production cuts in China. I mean, is that something that have prompted you prompted new materials to come to you, the flows to China that are now diverted into Europe and to your smelters? Are you getting more business proposal because China is shutting down production? That's my first question.
Okay. If I take that first, no, the market is tight. So the fact that some smelters are stopping, well, obviously, volume would be visible somewhere in the market, but I would say the market is tight and it's not something which is moving or rocking the boat. It's a tight market and we are well supplied. We have most of the zinc we need is from our own mines.
So and we have long term agreements on the rest. So we're okay with the supply and this is not having any major impact on our production. It has an impact on the price, which is obvious to us all.
Okay. Okay. Thank you. And then maybe another question. You mentioned in the report that you took more volumes, external zinc concentrate or zinc feed from that you bought that in the spot market.
But you also said on a previous question that it's normal for the quarter in the Q3. Did you buy more in the spot market than usually? Was that just a normal Q3 pattern?
Yes. It's a normal Q3 pattern.
Okay. Okay. Then I also have a question on IT.
I could also comment on that, that also the spot market is often from business partners you have. So it's ongoing relations, which you tend to use or you use at times to level your fluctuations. So it's not that we're out in the world market and asking for if there is anyone preparing to sell us some zinc on. So this is a quite typical and quite controlled and normal pattern. Yes.
And maybe you can also say something about what kind of grades at Aitik we could expect for the Q4 and possibly also if you can give us some insights into next year. But maybe you want to save the later one for the Capital Markets Day. But yes, if you have something there, it will be very much appreciated.
Well, it's looking good. We were slightly low probably on compared to the Q2, now in 3rd. We have not changed our guidance. So it looks good. We don't have any discovery of we have misjudged the grades or any material change in production areas or something.
The deviations we have is are typical typically from the sort of low availability of the crushers. When we are doing short term adjustments of the crushers, obviously,
has a bigger tolerance than
we would wish, but we have a higher or lower grade. And therefore, the
grade guidance is a bit has a bigger tolerance than we would wish, but we have explained this for many quarters and actually for several years. We soon have the new crushers in production and we hope to be more predictable. But we are quite predictable as it is. Having 0.2 or 0.02 of difference or something is normal. So nothing to worry about.
But for the Q4, should I more look at what you had in the Q2, in other words, 0.29? Or should I more look at the Q3, in other words, 0.27?
You should look at the guidance we're doing, and I think it looks good for the Q4.
Okay. Thank you very much.
Thank you.
We now go to the line of Robert Reddin at Carnegie. Please go ahead. Your line is open.
Yes. Hi. My question was on Garfin Bayer. Maybe it's been covered more or less, but the replanning, I mean, when I read the comment for full year rates to be slightly below the 4.5% previously guided for, I mean, even if grades were 4.5% in Q4, they would be slightly below that for the full year. So should we read that comment as you're guiding for sub 4.5% for Q4?
I think we should be what we're saying is that we're not recovering the lost sort of the lost zinc production from Q3. That's all we're saying. We're not doing any other adjustment of than that.
Okay, thanks.
Next question is from the line of Christian Kopfer at Nordea. Please go ahead. Your line is open.
All right. Thank you, operator. And just a follow-up question on the smelter side. Just I can see that you had a positive quarter over quarter impact on the cost side of SEK170,000,000. However, if we we know that you had SEK 210,000,000 cost from maintenance in the smelters and also I think you have previously mentioned that you have some €50,000,000 tailwind from cost also in the smelter seasonally in the 3rd quarter.
So if you adjust for that, it seems that underlying, so to speak, costs have come up quite dramatically in the Q3. What was that is this because of the production disturbances or what? Well,
it's correct that the production disturbances has a negative impact on costs. However, you mentioned 2 items there. The roughly SEK 50,000,000 seasonality is correct. When we talk about the SEK 200,000,000 connected to planned maintenance difference between the quarters. It's the bigger part of that is volume and the smaller part on that is cost.
That's correct. But volumes also decreased in the Q3. So you should I mean, it's possible to quantify what was the total I mean, what would you have like to see the result in the smelter side if everything went according to plan, so to speak?
That's difficult to say if everything went according to the plan. But what I do think is that typically, we would see costs coming down between these two quarters of a bit over SEK 100,000,000, SEK 50,000,000 due to seasonality and a bit less than SEK 100,000,000 due to maintenance. Then we commented earlier on the impact of these production disturbances, and I think that adds up to where we should
be.
We have a further question from Daniel Major at UBS.
A quick follow-up. You said in the statement that with respect to succession of the CEO position recruitment will begin immediately. Do you or can you give us any color on whether you have a preference or are looking internally or externally for the position?
No. I don't comment. Obviously, I'm on the Board, so I'm part of this, but I am going to step aside and let the other members be driving the succession planning. So I don't have any comments on this.
Okay, thanks.
Are there any further questions from the audience?
Thank you. So Leonard, do you want to wrap up with a few concluding words?
Yes. I can conclude the quarter, but I guarantee you, I'm not going to conclude my career in Bulidin. It's going to take a while still, I guarantee that. No, I think that it's not a strong quarter we had behind us. Obviously, it came after a very strong quarter.
We have some changes in the rock stability situation. I don't think that's a major thing. The situations in Kokola, which has been going on for a while, I think we are slightly positive. Too early to say, but hopeful we are. And with that, I think our model is good.
Mines and smelters, fantastic combination, good shape and a little bit too much too many negatives and too few positives. And the positives are Kevitsa and the cash flow in the quarter, which was again very strong. So with that, we thank you for attending and we look forward to seeing you on the Capital Market Day.