Good morning. A warm welcome to Boliden's presentation of the Q2 2017 results. My name is Sophie Arnius, and I'm Head of Investor Relations here at Boliden. Our CEO and President, Lennart Evrell, will comment on the results together with our CFO, Håkan Gabrielsson. After their presentations, there will be an opportunity to ask questions via the telephone conference. Lennart, please go ahead.
Good morning. We are extremely proud of this quarter. Everyone knew that we had big maintenance shutdowns, SEK 260 million in earnings impact. Also, we have seen the terms in the market declining. We actually have around SEK 700 million, or almost SEK 700 million in negative effect from prices and terms. Adding those two together, of course, it's a challenge with the quarter comparing with the first. We are so happy with the fact that we have delivered a higher profit than in Q1. It is, of course, because of very strong production. Aitik has been doing a major step in production volumes and also in high grades. Revenues were up from SEK 9.5 million to SEK 11.5 million, and EBIT, excluding process inventory, was SEK 2.2 billion. That's over double of the year before and higher than Q1.
The free cash flow of over SEK 2 billion is also a number I'm extremely proud of. In addition to the production in Aitik, which was the effect of volume and grades, we have had a very strong production in the Boliden Area, also there with a higher proportion of ore from underground mines boosting the grades and also very smooth production. Also, Boliden Area has been contributing heavily, significantly in the strong production data here. Also, the smelters have had a very good quarter considering that we had SEK 260 million in maintenance shutdowns. That given, I would say that all the smelters have also been doing a good result. If we look at the macro picture, Boliden's main markets are developing well. We have a momentum in the global industrial production.
We have a slower situation in the automotive industry. A higher share of Chinese cars are galvanized, so we're still seeing a good momentum in construction and automotive. Base metals have had an average growth of between 1% and 2%, copper and zinc growth. nickel demand has been declining, is lower than in Q1, but it's still lower than the demand. We see the big inventories of nickel going down. We are seeing some cuts in smelters production of zinc in China. In general, I would say that the metal markets have been developing well.
If we look at this picture, we demonstrate the average of our metal prices and the currencies to the left, and they are going opposite direction in the big picture, but lately we have seen both negative trends on currencies and prices, and the combined effect is a quarter with significant negative impact compared to the previous quarter, but still on a good level. We often refer to prices as being high or low, and that's of course subjective, but when we do that, we normally refer to the cost structure of the industry. These three graphs are showing the line graphs or the development of cash cost of the industry average. The 90th percentile, the upper line, indicates where 90% are EBITDA positive and 10% are doing EBITDA loss. Then you have the vertical lines with the min and max price.
We can see clearly that we have good prices in zinc. We have reasonable prices but not very high in copper and extremely low in nickel to the right. If we then go through our operations and starting with the mines. Well, these graphs on earnings and the quarterly earnings and rolling 12 months or four quarters is of course showing a tremendous momentum we are in despite negative impact from the markets. EBIT SEK 1.5 billion and SEK 1.55 billion is more than double the profit a year ago, and higher than the previous quarter despite the negative impacts from terms. CapEx was SEK 800 million, which is up from the previous year and well in line or below the guidance we have done. Record production in Aitik, both the volume has been going well, less problems with equipment than normal and very good grades.
Here we have been saying that we are in areas with at the bottom of the pit, where the grades are high, and we are going to continue in those areas, so we can expect the second half of this year also to be on a higher level than the average of 0.25 we have guided for the period 2017 through 2019. We have a cost component coming with higher volumes, of course, but I would say that the costs are under control, well under control, and so we're very happy with the mine's production. If we go into the different parts, we can see the line, which is contained copper to the upper left of the slide eight here. We can also see the bars, which is the tonnage through the mills, and also the mill production is high.
Zinc was suffering a little bit from a not so good quarter in Tara, and Garpenberg continues to do the normal thing, just continuing on a very good level. nickel in Kevitsa was good in grades, but not terrific in volumes, but okay. If we then move over to the smelters, I think the general remark is a very good quarter given the maintenance shutdowns. We did SEK 560 million in earnings compared to SEK 397 million a year ago, and this is down from the previous year. As we have known, the market terms are going negative for the smelters and positive for the mines, the longer term or the general picture. We have good production in copper despite or given the maintenance shutdowns.
We have some disturbances in zinc smelters. We are a bit disappointed that the previously sort of discussed process problems in Kokkola have not been resolved. We are really struggling with something we don't understand. Therefore, we think this will continue because we don't have the root cause yet. The financial impact is, however, limited. Given the big picture, it's nothing to really bring up as a major problem, but more of a remark. We have compared to the previous year metal prices coming with us. We have the full impact of the lower TC this year compared to last year. Copper smelters, we can see the volume, which is considerably down compared to the previous quarter. That's due to the maintenance shutdowns. The contained metal is in consequence of that.
Zinc smelters had a good quarter compared to the previous year. It's less maintenance here. The Odda expansion, of course. With that, Håkan, could you continue with the financials?
Thank you, Lennart. Let's spend a few minutes then on the financials. We're happy to present another quarter with stable earnings. We have now the 3rd consecutive quarters with EBIT above SEK 2 billion, excluding process inventory, that is. EBITDA reached SEK 3 billion. CapEx SEK 1.4 billion, which is a very normal level given the guidance we've given on slightly less than SEK 6 billion for the full year. Good earnings together with better working capital development gave cash flow SEK 2 billion. You should also remember that we paid the dividends in the quarter, which has an impact on the gearing. That reduced to 25%. Looking into Q2 of this year compared to Q2 of last year, I think the big story, of course, is the recovery we've seen in metal prices compared to a year ago.
We have an improvement of SEK 1.3 billion in profits. Out of that, SEK 1.1 billion comes from better prices and terms and a stronger dollar. The prices contributed a lot. Volumes also give a great contribution. We have SEK 600 million additional profit due to better volumes. The main part, two-thirds, is Aitik. In addition to Aitik, we've also had a good development in Kevitsa compared to a year ago. On the cost side, costs and depreciation altogether increased by SEK 200 million. A big part of that is volume related. As you know, depreciation correlates strongly to volume. In addition to that, we've had normal inflations on salaries and a bigger cost for variable pay connected to the good result. Last year, we also had some positive items affecting comparability, one-offs that hasn't repeated this year. That gives a minus in this analysis.
Moving on to a comparison Q2 compared to the previous quarter, Q1 of 2017. As Lennart said, we had lower terms, and we've had maintenance shutdowns. Shutdowns influencing the EBIT with SEK 260 million, and in addition to that, lower term. The high production we've seen has compensated for that drop, and the net effect is a positive deviation of SEK 100 million. Volumes are up nearly SEK 800 million, and more than half of that comes from Aitik. In Aitik we've had good grades, we've had slightly better recoveries, and we've had good mill production. In addition, Boliden Area has improved a lot, SEK 200 million. This is a combination of a very favorable ore mix and also a good mill production. On the smelter side, we've had a negative impact from the maintenance shutdowns that we've had in the quarter.
During the remainder of the quarter, the production has been good, basically compensating the loss of the maintenance stops. In addition to that, we've released the internal stock and been able to realize the profit on those, and that has also had a good contribution in this volume amount. The impact of prices is negative, close to SEK 500 million. Costs, SEK 145 million higher. SEK 100 of that is related to the maintenance stops, and the remainder is related to volumes. Good quarter with high production offsetting some known negatives, and a plus SEK 135 result in the end. Cash flow. Of course, the starting point is the EBITDA, which is just about SEK 3 billion, fairly similar to that of Q1 of 2017. What is different to Q1 of 2017 is that we've released working capital, contributing a bit more than half a billion SEK to the cash flow.
Out of that, the main part is related to prices, but there is also roughly a third that is volume decreases in inventory. Where we stand now, inventory levels are normal. They are normal on concentrates, and they are below normal on finished metals. Again, a good free cash flow, roughly double the levels of the comparison periods if we take out the consideration of the Kevitsa acquisition. That leaves us with a strong balance sheet when we leave the second quarter. Equity, more or less unchanged. The profits that we've added have been dividended out. Net debt, down due to the good cash flow and gearing 2% down in the quarter. If you look back to the year-end position, we've actually reduced gearing with 7 percentage points. That also is in a 6-month period where we've had SEK 1.4 billion in dividend.
A good development in gearing. Still a strong interest rate, 1.3% average on the total financing and still a good payment capacity. We're in good shape financially. The last slide, I'm not going to go into any detail. We have added a sensitivity analysis by business area. Last time we gave a breakdown by business area was at the Capital Markets Day in early 2016. We wanted to give you an update for your reference. With that, I'll hand back to Lennart.
After Q4, the question came up with a very strong result that we have done. Is there anything extraordinary? I said, "No, there is nothing extraordinary." Well, probably there is one. Everything went well, and that's unusual. I think we can repeat that this time too, but we have an exceptional, and that is both the Boliden Area and Aitik are exceptional and on levels we will not be able to hold, but they are still giving indications of the underlying qualities of production. I'm very pleased with the quarters. I think there are a few things to point at. The volatile production is due to the volatility there, to the low trust we have in the crushers. They are breaking down. We have very frequent maintenance, and some of them are many times unplanned.
Therefore, we are mining different areas, and we cannot tell in advance where we are going to mine, and therefore, we are going to have an uncertainty on the grades. However, we have good precision on what the grades are in the rock, and therefore we can say with a lot of confidence that we're going to be around 0.25, 2017 through 2019. This is a long time we were on these grades. Since 2012, we have been higher up in the pits, and we have a positive grade profile here. It's not a surprise to anyone that we are on 0.26 now in the first half year. The mine plan for 2017 has been slightly adjusted.
We think that we are going to, if the crusher 285 is working reasonably well, we are going to take more of the higher grade stuff in the second half, so slightly higher than the 0.25, which is a long-term indication. It does not change the guidance, but more of the timing of it. Garpenberg, we have announced earlier, very big increases in the ore reserve. Since we're normally saying that the guidance on grade is to look at the ore reserve, but this is not true in Garpenberg. The bigger additions are after 2030 or after 2025 or something, and therefore we are going to be on the average grades of the reserve before the big additions we did earlier on this year. Kevitsa is basically continuing. We're very pleased with Kevitsa and nothing much to talk about there.
Boliden Area, exceptional ore grades because a lot of underground, more than normal and long-term underground percentage from underground mines with high grades. Then we are going to stop the main conveyor belt in Aitik, which we don't use very often. We are going to have a week of standstill of the main conveyor and quite a lot of maintenance in the mines. It's coincidence, and therefore, when they are coming together, we say that Q3 will have more than normal kind of stops. Smelters have been through the big maintenance of this year, but we have some remaining. We're going to have an impact in Q3 of about SEK 50 million, much less than the SEK 260 we had this quarter. We have unfortunately discovered a problem in the dome of the roaster in Odda.
That's the roof or the top part of the big roaster furnace. We have to take that in Q4, and it will have an impact of SEK 135 million, which has not been reported earlier. CapEx 2017, no change of the guidance. If we summarize, I think what we're seeing here is a stable company with mines and smelters, base metals and precious. We are in it at a time when SEK 680 million of negative terms could be compensated by mines and smelters, and of course, the work on operational efficiency. I think the grades in Aitik are impressive, and there we have the long-term development to better grades, which has been communicated with 0.25 in the three years. We have sort of a trend now where we take a bit more of the high-grade stuff in the second half of this year and Q2.
Maintenance shutdowns, you know all about. Another one in Odda. I regret that. I would say even if the negatives are compared to Q1 in terms, the general macro is looking quite good, and we are on a reasonable level or a quite good level in the combined picture of market terms. With that, Sophie, could you tell something about future planning and then take us into the Q&A session?
Yes. Thank you, Lennart. We are very pleased to invite you to our Capital Markets Day. We will have it in Stockholm on 21st of November, and then going to Kevitsa and look at our newest mine on 22nd of November. We will post more information on this on our website. With that, we will open up for questions from our telephone conference. Please, operator.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial 01 on your telephone keypads now. Our first question comes from Alain Gabriel of Morgan Stanley. Please go ahead, your line is open.
Yes. Good morning, ladies and gentlemen. Two questions, if I may. The first one on Aitik. Lennart, is it possible to give us a trajectory of the grades? Where do we go from 29 basis points in Q2 for Q3, Q4? Does it mean that 2018 and 2019, we're going to be in the 23 basis point range? Do you have visibility that far out? The second question is on capital allocation. Clearly, your net debt is coming down much quicker than what we in the market are expecting. How would you prioritize now between cash returns to shareholders and growth, i.e., organic and M&A? I'll leave it there. Thank you.
First on Aitik, I think I was quite elaborate on it. We have an average grade of 0.25 for the three years. We have had a high grade in Q2. We are indicating a high grade in Q3 and Q4. If that happens, it will be sort of mathematical, it will be lower in the years after. However, and I am repeating this all the time, it was a surprise with the strong grades in the second quarter, and we will have both negative and positive surprises also going forward. I think the volatility is for natural reasons. I think you all got it, and it's difficult to be more precise than that. We're trying to give you the full picture, and then we will see what happens.
On the capital allocation, we have a big cash flow, and we have a big CapEx program running, as you know, and we are slightly late with the CapEx. Nevertheless, continuing on the pace we have right now, we are going to be at the level of 0.20 or 20% gearing quite soon if this continues, and we have a gearing target of 0.20. What we do then is a question for the board. We have not been discussing it much. We are alerted, or we are very well aware of it, but I think what we will do will come in the report after Q4. Additional dividends is a possibility, obviously.
Thank you.
Thank you. Our next question comes from Connor Rowley of Credit Suisse. Please go ahead, your line is open.
Hi. I just had one question on Kevitsa. You've had the mine in your operation now for almost a year, or over a year now. Is there anything that you've seen in the quarters that has sort of changed your perception of it, or when do you really think you're going to be able to give us sort of a longer-term outlook on anything you're going to change or sort of longer-term grade and production outlooks?
I think you know Boliden's culture and operational focus. I think buying Kevitsa at a time with very low nickel prices, significant issues and a lot of money, even though we think we paid the right price. I think that what we are focusing on now is not to change plans or to look at other scenarios. We want to stabilize, we want to learn. We have several issues we're dealing with. Everything seems to be under control, and we're extremely pleased with what we have done. Basically, more of the same and being careful with downside risk is the focus right now. When we do that, we're going to look at options over time, but it's not really on the table right now. We try to refrain from doing that. We try to focus only on stability, get our stability going.
That is the fundament for creating value in this industry. If we can do that for a longer period of time, we have a big resource there, and there are potentials, but we're not working on them, so it's going to take time.
Okay, thanks.
Thank you. Our next question comes from Daniel Major of UBS. Please go ahead, your line is open.
Hello. Two questions. Firstly, on the smelting business. You mentioned you released some external stock that flowed through the P&L this quarter. How much of a positive impact did that have in this quarter? Secondly, I'm just trying to get a sense for the run rate in smelter earnings going forward. If you net out the maintenance this quarter, you get to about SEK 825 of EBIT. Assuming we net out the guided impact of smelter maintenance going forward based on the current benchmark terms in the market, et cetera, is that kind of run rate on a quarterly basis in terms of smelter earnings, as far as you can see, sustainable? Or are we at an elevated level versus where you expect to be going forward? The second question is on CapEx. You obviously provided the guidance for this year.
Can you give us any steer on the trajectory into next year in terms of the delta on CapEx at a group level?
Shall I take it, Lennart?
Yeah. If we start with the reduced inventory and the profit we released, I am assuming you refer to the internal profits that have had a positive impact of roughly SEK 180 million. With prices coming down and with volumes of stock coming down, you would see a positive impact there. The effect is a combination both of prices and stocks coming out. Above all, we reduced the tonnage of some precious metal-rich material. That was it. Apart from that, on the run rate of smelters, it has been a good quarter in the copper side. It has been not a problem-free quarter in the zinc side, as Lennart mentioned. We have had some issues in Kokkola. Pricing-wise, this quarter will have the full impact of the lower TC fees.
If you back out the stock movements and the effect of the internal profits, or, sorry, the effect of the maintenance stops, that should be a comparable run rate. I think we had about SEK 80 million reduction in finished metals, which has an impact on the sales numbers. Backing out that, then it will be on a normal run rate.
Thanks. Just to follow up on that very quickly. Just trying to decipher between the profit impacts for this release of external stock. Was there any positive impact that flowed through your reported EBIT from smelters line, or does that all go through the internal profit elimination?
There is a little bit of stock reduction also in the smelter side.
You can also say we had the ore stocks, ore piles in Boliden. If you dig really deep into the stock impacts, well, we have a little bit there, too. Basically, when we report an internal profit SEK 260 million, which has not been delivered to the market, obviously those profits are very real numbers. It's a timing effect, and they will eventually end up on the bottom line. Then, of course, if metal prices are going down, we invoice them at a lower price, the value is something else. Basically, it's showing that the internal profit is a solid number, and if it is negative, it's coming positive another time.
Okay, thanks. The question on CapEx.
Yeah, the question on CapEx. We have not yet given any guidance on numbers beyond this year, we'll have to come back on that. What we can say is that we have a maintenance CapEx of SEK 3.3 billion-SEK 3.5 billion. In addition to that, we have a number of the big projects that we're running continue also into next year. We'll have to come back on a number of that. Several of the heavy projects are not finalizing until in the middle of next year. I think you should plan for a continuation of those at least.
Okay, thanks a lot.
Thank you. Our next question comes from Christian Kofler of Nordea. Please go ahead. Your line is open.
All right. Thanks operator. Just a question on the price effect that you report on the mines. It's around SEK 400 million negative. A little bit surprised to see that big impact. Was it something special in there? Because if you look historically, I have to go back to, I think Q3 2015 to see that big of an impact, and by then prices were 15% down on both copper and zinc, and we have not seen that big drops in the third quarter here.
Okay, let's take that because it's a little bit more than just sensitivities, and it's the MAMA effects. You can go deeper into that.
As you said, we had a negative MAMA effect. I mean, the big part obviously is normal price changes. On top of that, we had a negative MAMA effect, in this quarter, now I am talking about the P&L of this quarter and not the bridge, of roughly SEK 75 million. If you then go into the bridge, and compare two quarters, we had a positive MAMA effect last quarter of around SEK 100 million. All in all, the positive MAMA in Q1 compared to the negative MAMA in Q2, adds SEK 175 million to the change in EBIT. That is a part of that.
MAMA is month after month of arrival, the typical clause we have in most of the deliveries, it means that you have final pricing or the price is set a month after delivery. In a declining market, well, we have to adjust the profit we did last month, have to be adjusted down with a month later kind of pricing. It is having a delaying impact.
Yeah. Then on working capital, I think Håkan, you mentioned that you were a little bit below normal on finished metals. Does that mean that underlying, call it, working capital, will you expect that to increase, over the course of Q3, or?
It is right that we are a bit lower on metal. If we take the big picture, we released roughly SEK 500 million in working capital. Most of that inventory, that is part related to prices coming down and part related to volumes coming down. Then if we zoom in on the inventory volumes, the concentrate stock is on normal level and the finished metal is on lower level. The finished metal is perhaps 15%-20% of the total stock. It will not have a huge impact going forward. I think the main thing as for now is that we have had a contribution of prices and of volumes, we are now down to normal levels. The fact that we are below normal on a very small portion of the stock will not have a huge impact going forward.
Thanks for that. Finally from me on Aitik. Maybe Lennart can fill in a bit on the stability of the crushers. Was that a positive surprise for you? Have you done something structurally with the crushers in Q2?
You said, have we done something? I am surprised, and we have done something with the crushers, I can guarantee it. We have probably some of the most talented teams in the group working on the crushers now to deal with a fundamentally poor working machinery piece of equipment, which is sort of the key to so much profits and so much cash. It's still fundamental for the performance to live with something which is not operating well. We're doing a lot there. Yes, I am surprised. I'm surprised about the quarter, but we have said all the time, we're going to see good quarters, we're going to see bad quarters. We're repeating it now. We're building a new crusher. Yes and no, but in any case, it was a great quarter.
For Q3, can you just comment a little bit how the crushers have performed so far during this quarter?
We're standing still quite a bit right now because we're maintaining a lot of equipment. The volumes are low. We are hoping to have 285 crusher, the one at the bottom or the lowest one, to do a lot of work in Q3. We're going to be in similar areas as in the second quarter. That's the basis of that sort of information. If 285 is not working well, we're going to work on the higher crushers, and we're going to be at lower levels. These are the uncertainties that you're well aware of, and no one can do much about it else than working very hard. This time it worked out well. Could be a trend. I don't think we should count on it, though.
Okay. Thank you very much.
Thank you. Our next question comes from Daniel Lösch of Exane BNP Paribas. Please go ahead. Your line is open.
Thanks so much for taking my question. Just a couple of quick questions on your maintenance plans. First of all, on the shutdown in Odda in Q4, could you explain whether that's related to the issues experienced in Q2? Is that sort of unexpected that you need to shut that smelter down? The second question on the maintenance in the mines this quarter, could you give us a bit more detail on where that's happening, which operations will be most impacted? Maybe lastly on Kokkola, could you outline a bit more what the process instabilities are that you are seeing and how long you're expecting that to impact the smelter? Thank you.
On Odda, we had this unexpected stop earlier this year. What we discovered is that the dome, the top of the roaster is not in good shape. We had it for maintenance later on, we said, "Should we, should we not do it?" We look at the zinc TCs, we look at the risks, we look at the NPVs, we look at all kinds of probabilities of problems going forward. It's one of those where you never know is this the right decision or not? We have been really the way we do. We are calculating, we are using a lot of Excels, working with probabilities and stuff, we have arrived at this is the right decision to take.
Therefore, we are going to open it up or close it down, opening it up, change the brickwork in the dome and then be done with it. It's going to take time.
If I just make shipping regarding a comment earlier on. The guiding we give now in Q4, the SEK 135 million, that's the total maintenance stops for Q4. We had some amounts earlier, there is an increase up to SEK 135 with the stop in Odda. Just to clarify that.
Yes.
Sorry for that.
On Kokkola disturbances, it's pretty strange. We have something which is creating instabilities, and whether that is materials. We had a fire in Kokkola, a small fire, but we had to extinguish that fire, and maybe there are some chemicals that have contaminated the process. We have doctors, we have technical doctors, we have international expertise. We have everybody working on it. When we talk about this, I'm nervous that someone is saying they're sort of warning for a major thing. No, I don't think so. On the top, on the margin, we are not going as well as we should. We have a negative deviation from our plans, and we cannot find the root cause. I'm dead sure we're going to find it, but we haven't found it yet, therefore, it's the kind of situation we're informing about.
Thank you. Just lastly on the mining and maintenance for [inaudible] .
Okay, on maintenance there, basically we have re-linings for, and we have conveyor belts changing. We have a lot of things that is the normal procedures. Normally, we don't guide about them because they are each one normally quite limited, and they are randomly spread. The reason we talk about maintenance now is that we have a quite big one on the main conveyor in Aitik. We have several smaller things, and they coincide in time, and therefore, we're going to have a lower production throughput in the mines than a normal situation because of that in Q3.
Great. Thank you.
Thank you. Our next question comes from Alex Hales of Liberum. Please go ahead, your line is open.
Hi, thank you very much. Good morning. Just building up on the Kokkola question. Do you have an estimate of financial impact or by how much production could come down because of these process disturbances? Still on smelters, in terms of lack of concentrate availability that you mentioned in the report. If I'm not mistaken, you previously mentioned that 70% of your feed is internal, how does it affect the remaining 30? Does it affect you at all, or how does that play? Thank you very much.
We are not having a problem with concentrate feed to our smelters, first of all. The question-- What was the question?
The second question, I think, was about the magnitude of the Kokkola-
Yeah. The financial impact there. We wouldn't have been talking about it if it wasn't noticeable. We are saying it's not major, so it's not going to have a major impact on the group, but it's something that will probably be in the comments on Kokkola. I should not scare you more than necessary. It's important for Kokkola, it's not that important for the group. It's visible, but not major. I think that's the kind of guidance I can give. We don't have a number.
I think you could just say that we talked in Q1, and we talked in Q4 about disturbances in the zinc smelting side, and that has been largely Kokkola. We would have expected to see an improvement in Q2 and going forward. As of now, we see that a few of the problems are remaining. That's what we're saying now then.
Okay, thank you very much.
Thank you. Our next question comes from Johannes Grunselius of Handelsbanken. Please go ahead, your line is open.
Yes. Hi, everyone. My first question is on Kevitsa. The copper grade has been stable, so has the nickel grade here, and also stable milled ore volumes. How should we look at the coming quarters? Is this very representative, would you argue, for the coming quarters? Looking forward to Q2.
If you take the average, if you draw out the line, you can average it out, and I think that we do not expect any major ups or downs in Kevitsa compared to what you have seen lately.
Right. Can you just remind us about the capacity when it comes to milled ore throughput?
I think you should look at where we are now, and then we have a plan which has been communicated earlier, and I do not have any additional information on that.
Okay. On Tara, you had some disturbances here in the second quarter, and some rock instability, I suppose. You mentioned this in the report. Could you give us an update on how you see Tara for the second half?
Yeah, I think the second quarter was a bit disappointing. We have had a very strong momentum, I think we're still in that positive momentum. We are going into the periods of union negotiations we had, let's say, in the second quarter. Some degree of uncertainty there. I would say in general, we should have an improvement in EBITDA compared to where we were in Q2.
Okay. My final question is on paid tax, because your paid tax rate, your paid tax has been substantially below the book tax. Is this something you can continue with for the next few quarters, or should we expect the normal Swedish and Finnish and Irish tax and so on?
The paid tax, there's always a time lag. We're in a phase now of improving profits on Harjavalta, if you look over the last number of years.
That gives a time lag. You charge the tax for the actual year in the P&L, you pay it normally the following year.
Right.
Over time, that will even out. As for now, you're right, it's a bit lower. For your calculation and so on, I would certainly use the normal tax rates that we have in the income statement.
Okay. That's all. Thank you very much.
Thank you. The last question in the queue so far comes from Oscar Thornell from Swedbank. Please go ahead, your line is open.
Yes. I have a question on your drilling programs and exploration projects to fill up the pipeline there. What's the progress in Kilpisjärvi in particular? If you could talk a little bit about the projects that you have in the pipeline or the potential projects that are in the pipeline.
The bigger trend here, we're spending more money than ever in exploration. We have more areas to explore on. We're excited about North Finland, and we have the big potentials in Tara Deep and Rävliden in the Boliden Area. I think we have had over a year, a good return on resources compared to money spent or exploration spent. If you benchmark that to other companies, I think we are successful, we are efficient. We have own equipment and, in general, we're spending a lot of money in the area. We have nothing in particular to report about at this point.
All right. Thank you.
Thank you. As there are no further questions, I'll hand back to our speakers for the closing comments.
What shall we say? It's vacation time. We're leaving a bit exhausted, very hectic times. We're extremely proud. We think Boliden is a great company, compensating SEK 680 million in negative market terms and SEK 260 million in maintenance and do a better profit than given. Of course, it's something we're very proud of. On the other hand, we're saying that we have a couple of exceptionals in there. Nevertheless, the longer-term picture with mines and smelters, precious and base metals together, and with our new Boliden Way productivity programs which we have been pumping year after year after year with a lot of involvement from, I could say, every employee of this firm. It's a strong team. With that, I thank you for attending and wish you all a good summer. Thank you.