Warm welcome to Boliden's Q2 Earnings Call. My name is Sophie Jarnius, and I am Head of Investor Relations. Today's presenters are our CEO and President, Lena Tebrel and CFO, Hakan Gabrielsson. After their presentations, there will be an opportunity to ask questions via the phone. Let me now hand over to Lennard.
Good morning, everybody, and welcome to this conference call about the Q2 of Boliden. The headlines, as you can see, is high production by mines. And it's quite amazing actually that we can put this headline given that Aitik is struggling with crusher availability and we have actually low production in Aitik, but that is more than compensated by the other mines and excluding the Kevitsa acquisition. Revenues were SEK 9,500,000,000 down from last year. EBIT excluding profit inventory revaluation, SEK 900,000,000, which is a very good number, but it includes several one time items, including a big plus from pensions in Tara.
Mines were doing good, as I said. We had big maintenance shutdowns, even exceeding the anticipated profit impact. And we see the market improving towards the end of the quarter and we come back more on that later on. The special items are several. We have the benefits pension benefits from Tara where we change from a defined benefit to a defined contribution system, which gave a €240,000,000 positive.
And then we have minuses, acquisition related cost in Kevitsa. We had increased provision in enclosed mines, reclamation provisions. And then, of course, we have the smelter breakdown or smelters maintenance shutdowns. So several big numbers and what you prefer to see, well, they are 1 or all of them quite special. Some of them are definitely not recurring, some are coming back regularly like the maintenance.
The Kevitsa impact in the Q2 is mainly on the balance sheet, the acquisition value and the debt, more on that later. The market in general had growth in the metal markets even though it's soft. On base metals, we have a different reaction to the market demand due to the supply side, where zinc is demonstrating strength with weak supply, where copper is a bit oversupplied as well as nickel, but nickel rebounds a bit with basically from what I would call impossible low levels. So it's still on very low levels, but not quite as bad as a few months ago. And we have seen better development after the quarter.
On next slide, you see the zinc price where we have seen a long horizontal for several years. It has been around the 2,000. It was dipping down a bit. And now we're back up on over 2,000. Copper has a different pattern where the long term trend has been negative and Nickel on the long term is lower than in the year Nickel on the long term is lower than in the years demonstrated here in the 10 years, but we see the short term movement up.
And I would say this is not a sign of a good macro. It's just that the prices cannot be as low down into the cash cost as it has been. So, 10, I would regard as a worst case scenario and we are now slightly above that level. Gold and silver are good. Land is looking a bit like
zinc.
And I think gold and precious metals are all quite normal that they are strong in the sort of market turmoil in or political turmoil in the world. On next slide, we can see the volatilities on copper and zinc. We can see that zinc has been is clearly higher than the low points if you compare with historic lows. Copper is still around the 90th percentile, slightly above. So I would say copper is still low, but for a natural reason.
It's too many big copper mines were built. If you compare the prices and the currencies, we have seen a positive currency movement and negative price movement. And one of the strengths of Boliden is that it's quite common that we see the 2 going opposite direction between basin pressures or pressures and basemelts and mines and smelters. So I think look at earnings, it look good, but there we have the positive Amphora and several minuses as explained earlier. I would say that mines demonstrated very, very strong development in most of the mines.
If we look at the production, we can see on copper the lighter colored line on top that is pro form a including the production or the metal content in Kevitsa. The mill throughput is on the bars and we put all the Kevitsa down on the nickel bars below. We can see there that the solid line on copper is higher than the historic numbers and we're close to all time high and certainly including 1 month of Kevitsa we are. The zinc on the right also very good and Tara developed well. Garpenberg continues to be very stable.
And at the bottom, we see Kevitsa. And we have the historic performance there. And as you can see, after a weak Q1, we see improvements and also slightly higher grades. So you can see the metal content came up. And in darker blue at the bottom is the June result, the June month where we owned the mine.
The Kevitsa slide is for reference. The acquisition came through on June 1. The result was a slight EBIT minus €12,000,000 and an EBITDA plus €40,000,000 in the month. And the rest is well known to you, I
think. If we then
turn to the smelters, I think considering the shutdowns, which were a bit more costly than planned, it was an okay month or a quarter. The reason for the increased cost of shutdowns is when you open up the furnaces or equipment, you sometimes see things that you decide on short notice, no case. We don't put this together before we have repaired what we see here. And therefore, we had a longer than planned shutdowns in a few units. This is not anything alarming at all.
As things happens, we have been free from cost overruns in most of the shutdowns for several years. And I regret that we have this one, but there is nothing worrying in it. Else on that, we can say that the TC is lower this year than last year and we have a full impact in the Q2. And we see like in mines a positive impact towards the end of the quarter. Looking at the production numbers, you see the relative well certainly quarter by quarter, but that's normally it's a bleak quarter.
But also if you look at the typical maintenance quarter of Q2, it's a rather low production in copper. It's a rather low production in think so. I would say a so so quarter, but given the increased shutdowns or maintenance, it's okay. And then Hakan, I turn to you to take us through the financials.
Okay. Thank you, Lennart, and good morning to all. So I'd like to continue with a few slides on the financial performance in the quarter. Lennart already covered a few of the items, but we reached an EBIT excluding process inventory valuations of just over €900,000,000 which is €130,000,000 up from Q1. Looking further down on this slide, the free cash flow and the gearing is very much influenced by the Kevits acquisition, and I'll come back to that later on.
But let me go into some more detail on Q2 compared to Q1. As Lennart mentioned, metal production has been very good in mines in the quarter, and this explains most of the €300,000,000 positive volume effect that you can see on this slide. Fact, you have to go back quite a few years to see the same levels of metal production, both when it comes to zinc, copper and silver. And that is also true when excluding Kevitsa. We had a positive impact of prices where metal prices have been stronger, partially offset by lower TCs that have a full impact in this quarter.
Regarding costs, there are some items mentioned here. Kevitsa is included, reclamation reserves, which Leerat mentioned and also the maintenance, and that explains the cost increase of just over €300,000,000 And then think the rest have been covered and adding up to a positive deviation of €133,000,000 If we instead look at Q2 compared to the same quarter last year, again, you can see the effect of the very good metal production in mines. Compared to last year though, we had a significantly lower price level with metal and TCs moving in the same direction and having a negative impact of close to €600,000,000 Going further on costs, depreciation and items affecting comparability are the same as has been mentioned previously, adding up to a net effect of minus €350,000,000 If we then move over to the balance sheet, there are a few things that have happened compared to Q1 that has happened in this quarter. First of all, of course, the Kevitsa acquisition has been completed. Secondly, we have done a refinancing of parts of our debt and also the dividend has been paid in the quarter.
Gearing has increased to 43% and this is in line with the 20% that we talked about in the press release related to the acquisition and financing. It's slightly higher than the 2013 levels, as you can see on the graph on the right hand side of the picture, but well within our comfort zone. The loan duration has increased to 3.6 years as a result of the refinancing. And you can also see the average interest rate, which has come down from 1.3% to 1.2%. Now the new financing is included only with 1 month in this number, but we're happy with the terms and I think that will be more evident in the next quarter.
Moving over to cash flow. For reference, I think we've been through most of this. So we talked about the earnings. I'd like to draw your attention that we've had a positive development of working capital compared to previous quarters, especially with regards to inventories and payables. Now there are some natural variations quarter to quarter, but there is also a structural part in the payables side where we've been focusing payment terms quite hard over the last few quarters.
Free cash flow, however, is of course negative with the acquisition of Kevitsa. Finally, we have also added a slide on the process inventory volumes. We review that on a regular basis, and here are some updated numbers. I'm not going through that in details, but you have it for reference to use in your modeling. So with that, I hand back to Lennart for some concluding remarks.
Well, I think it's a very special quarter with the acquisition and a big debt coming in and not so much impact on the profit and loss. But we are seeing mines Aitik negative, all the other mines very positive. We have seen metal prices having very strong momentum certainly after the half year break. And we, of course, hope that continues. But we have low macro visibility, that's clear.
And I still continue to be nervous about copper, less nervous about zinc. Nickel turned up a little bit from the impossible levels. And the fact that precious metals are good is also surprising. So I think this is very much in line with what we have of been talking about the metal macro for several years actually. On mines, we have volatile production.
I think it is great that we could compensate Aitik and we continue to guide for 0.21% to in the total year. We have Gartnerberg guidance there. As you can see, we are in the quarters, we have seen a very strong profit in the Wolliden area, because we have been running a lot of reinstrom ore and we have produced Maraleedon stockpiles. And Maraleedon is a lot lower grade. It's the lowest grade in the stockpile.
It's the highest grade we have produced. So in next quarter, we're going to see a trend going opposite direction in Bulidern. And certainly, I hope that Aitik will be doing something better at the same time. Kevitsa will have a full quarter effect and only compared to only 1 month in the quarter. Smelters will not have the big shutdowns and the planned maintenance is only €50,000,000 in Q3 and then no maintenance in Q1 next year and Q4 of this year.
So and Oda, the P200 project, expansion project has been continuing to go very, very well. So we have actually done some test runs in the already in the early days of Q3 and a little and we are going to do some more and the ramp up is starting in Q4. So we are ahead of plan as we have said before. CapEx guidance is impacted of course, by Kevitsa. And the difference here from what we have seen before is the Kevitsa impact and nothing else.
So slightly above SEK 4,000,000,000 this year and SEK 5,000,000,000 next year. I think my conclusion is, we are demonstrating again a strong cash flow capability. We are seeing a very balanced mix of metals, mines and smelters and currencies. And we hope that Kevitsa will be a good acquisition. I hope that we will see nickel prices coming up later on and that we are not going below 10,000.
But of course, time will come. With that, I think we're prepared to take your questions.
So let's open up for questions. Operator, please go ahead.
We have a first question from Liam Fitzpatrick from Credit Suisse. Sir, please go ahead.
Morning, everyone. A couple of questions, firstly on production and then on working capital. Just on the mining production, could you just give us a little bit more color on the main mines in terms of throughput for the rest of the year? So I think Aitik, in the past, you loosely guided to 36,000,000 to 39,000,000 Garpenberg around 2,500,000 tonnes. Tara, you suggested we shouldn't read too much into the strong Q1 performance, but it's continued into Q2.
So, good guidance on that. And then on working capital, yet, but just whether this is a normalized level or whether we should expect to build later in the year?
I think on copper, obviously, there's a big, big disappointment. And we have one of the crushers still on maintenance a couple of weeks into the quarter or actually, I think 3 weeks of July or even in no, I say even into August it's going to stand still. We are struggling in Aitik and no doubt this is the one disappointment we have in the quarter. Everything else has been going well. Cullelakte very, very strong.
And we see Kevitsa coming in with a reasonably good or with a good copper production. In zinc, as you're saying, we were we didn't dare to believe that the high production volume in Tara would continue, but we have changed the organization. We have a number of long term actions a year back, and we think that that is sort of coming through. So it's a good development, but still we are probably over the normal and we are going to have a realigning in Tara in the Q3. So I can almost guarantee that Q3 will not be on the same high level, but it's going well in Tara.
I have to say Tara is good. Garpenberg, very stable, no surprises either up or down. I think the guiding is very good. Finally, nickel, I think 1 month is nothing that we can judge too much from. We have seen rebounds or an improvement from the soft Q1 where an open pit in the Arctic climate just like Aitik, we're not surprised that the Q1 is soft and you can see it on some of the historic numbers that we have provided that Q1 is soft.
So those are some of the favorites I can put on the mines. And then on the cash on the working capital, working capitals are going up and down. And basically, we have a well managed balance sheet. So I don't think that a quarter good will be automatically sort of something which is holding over time. It's coming back and it's positive now, it's negative next time kind of.
But we have a few things which probably are more of a recurring or a long term impact. As Hakan said, we are working very hard on with our suppliers. And some of the improvements, I think, is sort of an ongoing nature. I think those are the comments on the working capital.
Can I just follow-up on Garpenberg? Would it be a sort of internal goal that you can actually keep production above the 2.5 nameplates or would you suggest that we stick to 2.5?
We always have internal targets, which are slightly higher than communicated. But what we communicate is what we see with the normal variation is normal. I think the guidance for gulpamay 2.5 is what you should stick to and with a great comfort. So it is going very well for us. But I think 2.5 is fine.
The following question is from Daniel Major from UBS. Please go ahead,
sir. Two questions for me. Firstly, I just wanted to be absolutely clear on the one off items that you disclosed sort of within the mining component of this result. Can you just confirm that EUR 350,000,000 of one off items? And if you adjusted the of mining EBIT for that, it'd be about $270,000,000 and the group EBIT would be about $550,000,000 Is that
correct? No. I think if you look at the slide set, we have a positive of $248,000,000 which you could obviously or that is definitely a one off. So you should take that off. But then you should add back depending on how you see it.
But the acquisition cost is €39,000,000 So that should, I think, be regarded as a one off. And we have increased provisions for close mine of minus 87. That is also a quite clear unusual item. Even if it happens that we are looking at closed mines and we realize as a good citizen, we should be doing improvements and they are not cheap. In this quarter, we posted an $87,000,000 If we take all the 3 together there, plus $248,000,000 minus €39,000,000 for Kevitsa acquisition and minus €87,000,000 is 122,000,000 positive.
So that should be taken off the mines and the group in my opinion. You can have different views on the 87 if you like. That's how I would look at it.
Okay. Thanks for that. And then the second question on Kibbit. So you gave some detail obviously, on the breakdown of operating profit and cost, etcetera, in the quarter, which suggests that the EBITDA has improved substantially versus what First Quantum suggested in Q1. Can you give us a sense of what commodity prices you would expect this asset to be cash flow neutral in the remainder of 2016 and into 2017?
I think again, now we have posted sort of a metal price sensitivity in the sensitivity tables. And you have the June results. But there I tell you, a June a single month result is a very, very difficult one to extrapolate to a quarter or a year. But still as you look at the quarter and the month, we had a MAMA effect there. So we had a sort of final pricing effect that with the improved nickel price, we also could get some impact from the previous month.
And that would only continue if the price continues to move upwards. But it's a €12,000,000 negative EBIT and a €40,000,000 positive EBITDA and depreciations are approximately €30,000,000 the normalized or the sort of normalized depreciation. So we are hovering somewhere on I would say that we are cash flow neutral somewhere here. If we keep the good production level we have right now and again what we have said is we are going to give you more guidance and more flavor of the acquisition after like 6 months or something like that when we have the plans together. But I would say this quarter and this month demonstrating we have the situation well under control and we are happy with what we bought.
And yes, so that's my comments on it. So just
to be clear, at these kind of levels, prices exit sort of rate of Q2, you think the asset is broadly speaking sort of cash flow neutral after any CapEx?
I think so. And I really stress think we are 1 month into it. So yes, ballpark here, yes.
Great. Thank you very much. Thank you.
The following question is from Frank Anganou from Deutsche Bank. Please go ahead, sir.
Good morning, Sophie. Good morning, gents. Most of my questions have been answered. Just two quick follow-up ones from me. On the treatment charges, can you give us a sense in terms of whether the impact was coming mainly from the zinc treatment charges or the corporate treatment charges?
We have seen both coming down zinc more than copper. And I don't have the breakdown by heart, but I'm sure that if you call Sophie, she can give you a little bit more information. These are public data, so you should be able to probably get a good fix on it. But I don't have it by heart.
Okay. And so would you expect as we move as we go forward in the year, would you expect the zinc treatment charges to get better, given that we will have
Yes, absolutely. I mean, we are now into the terms of 2016 and the variable part are according to the market data. So yes, the escalation well, the price escalators are in place. Yes, absolutely. Increased price, increased TC, yes.
Okay.
And the my second question is on your silver production, which went up during the quarter.
Do you have discretion
in terms of whether you can pull a lot more silver out of the mines? Or this was really mainly random in nature?
We had great silver in Garpenberg. And we tried to optimize the mine on sort of logistics and on combined grade. We had we knew we would have slightly higher silver, but it came in very, very strong. So no, I don't think you should look at the reserve grade average and it's very difficult with the after all tiny grades even though they are for silver very high, but they are varying quite a bit. So be careful in extrapolating that one.
Okay. Thank you. Thank you.
We now have a question from Philippe Van Goerzer from ADM. Please go ahead, sir.
Yes, good morning. Thank you for taking my questions. I have two questions. First of all, on the kilo Lotti mine, can you indicate how I don't know if you mentioned at the start of presentation, but I might have missed it otherwise. But can you indicate how sustainable you believe the current levels of our production are that we saw in Q2?
And also the copper grades, which has significantly increased quarter on quarter. That's my first question. And then my second question is the impact of the Renstrom mine and the shutdown, you indicated there will be a deterioration in the ore mix. Are you able to give any guidance on what we should be thinking of maybe in terms of grades going forward? Because you do quantify a bit of the impact for the smelters as a maintenance shutdown, but I'm just wondering what it would be for the mines.
So my questions for now.
Yes. On the grades in the bullet narratives, it's clearly going to be quite a very well, I would say, a significant drop in grades from Q2 to Q3. We have a maintenance of the shaft in Ryenstrom. It's going to take many weeks. So we have sort of stockpiled in order to run the concentrator on a good level, but the concentrator will run low grades.
So it's going to be a quite significant change, but this is the smallest mine area. So but the impact is there and wood, for example, Aitikko as poorly as it does today. This will have a material impact on the profit. Now I hope that we can compensate some from Itik. When it comes to And the life of mine is quite short.
So what we need to see is positive results from exploration. And we are going to talk about that after this year. The short term, I think that you should be a bit careful because clearly left it was really excelling. Nothing else on that. Okay.
Maybe my last question, the rest is clear. On the recommendation provision, can you just give a bit more background on the provision? So what triggered it? Which mine decommissioned mine does it relate to? And I expect that you don't expect any further increase in provisions.
I'm looking for a bit more background to get a bit of view on that.
Boliden has many historic small mines spread around in Sweden. And we are monitoring them with very well with rigor and see what happens. We try to accrue for what we know. Sometimes we know that sort of the reclamation done sort of 20, 30 years ago is not of the quality of our own ambition, but also sometimes for the sort of the legislation or the rules we have. And sometimes when we build a new mine like Garpenberg, we have in the conditions that we have to clean up something old.
Of course, we accrue as soon as we know something or as soon as we have sort of a decision which impacts. But it also happens that we are just reviewing our minds and we're saying, guys, we are having a liability here that we have to deal with. And when we have those sort of feasibility for those reports done as soon as they are there, we accrue for it. So that we are a bit conservative on or we are not sort of at least not the opposite. We try to be a bit conservative on the accounting.
Will it happen again? Yes, I think so. Will it happen often? No, I certainly hope not. But it has happened before.
It will happen in the future. How often? I cannot tell. Yes. Okay.
Thank you very much. Thank you.
The following question is from Christian Kopzer from Nordea. Please go ahead, sir.
All right. Thanks, operator. Good morning, everyone. A few follow ups for me. Firstly, on the grade in Aitik, you mentioned under that you say guide for 0.21%.
Should we still interpret that as the uncertainty of that guidance is plus minus 10%? Or should it come down dramatically for
the second half of this year? Thanks. The problem with Aitik right now, it's evident if you look at the numbers that we have a continued problem there. And with the problem in the crushers, we have a problem to forecast which area we're going to mine. And therefore, I think the variations, the volatility on production is unfortunately also in grade.
Now with the present setup, we have the crushers in the pit going and on the surface not. So sometimes we have a tendency that low volume can be compensated by slightly higher grades. But that is nothing I'm going to promise, absolutely not. But the tendency is there. But it's when you're not in good control, you're not in good control.
So sometimes we have to drive long distances.
And about volumes, you hope for those in IT to come up in Q3, obviously, can you mention from how? I can tell
you one thing. I hope they will come up. And I think that this is a low point. If it is not a low point, then we have a serious, serious problem. But we have a lot of short term actions here with so I think that we shouldn't be lower than what we have seen, absolutely not.
Right. And can you mention something, Leonard, what the crusher availability has been so far in July?
No, they have not been good in July either because one is still standing. But we're working hard and we have good people better than more staffing and more focus than ever before.
Right. On depreciation charges, those came up partly due to that you mined in capitalized intensive areas. Is that set to remain also in the second half of this year?
Same answer as grades and volume, depends on where we are mining. All right. So I cannot tell. I think no, it depends on the volatility basically.
Thanks. Finally for me on maintenance CapEx. Previously, you have mentioned that the maintenance CapEx level is in the region of SEK 2,500,000,000 annually. Is that relevant also after Kebitsa? Or how do
you see that? Hakan, what do we say about maintenance CapEx level?
Why is that number to SEK3 1,000,000,000 going forward with inclusion of Kevitsa?
SEK3 €3,000,000,000
annually in maintenance.
On the CapEx, that's correct.
All right.
Thank you very much.
The following question is from Oscar Lindstrom from Danske Bank. Please go ahead, sir.
Yes. Good morning, everyone. I have three questions. The first two about Aitik. And you talk in the report about the impact of a new crushing organization in Aitik, and you mentioned it here in your previous answer.
And obviously, you're hoping to improve the performance of the crushers. But will this new organization also lead to higher costs going forward?
Margin? No, it will be well, you can put it this way. 1 of the guys or the guy we have put in charge, I'm calling him the most expensive guy in the company because he is going to spend money on getting our act together. But that has a shortest payback you could think of. So I would say, no, it has a very positive cost impact, even though short term, maybe.
But I think on your sort of models, no, I don't think you need to take any special cost for it.
Okay. And the second question around ITEC is, you talked about the new crushing station, which will be in place in 2018 sometime. First of all, when in 2018? And has the has that investment decision has been approved already? And is it included in your 2017 CapEx guidance?
It is included. It is approved and the project is on plan.
And when during 2018 do you expect it to be operational?
We are going to ramp it up 2018. So it will be, if I recall right, maybe in the Q2, we are starting it slowly, if I remember right. We are certainly going to give more accuracy on that timing in 1 or 2 quarters.
My third and final question is around your balance sheet. And I mean, you know how you're back at 40% gearing. You're increasing your CapEx guidance. And meanwhile, the smelting profits are down quite significantly. How do you feel about that sort of combination?
Is that something we should be worried about?
I think we did EBIT in the smelters of 400,000,000 and we had over 200,000,000 in maintenance CapEx. I think it's not too dramatic. And no, I think we're feeling quite comfortable. We have mines developing very well considering that Aitik is bad and Aitik will not continue to be bad forever. I mean, we have action plans there and it's going to take a while before we get stability back.
But I think the general picture is, no, we're confident. No, it looks good.
Is your focus going to be sort of debt reduction going forward or
Yes, absolutely. No, we're going to yes, absolutely.
All right. Thank you very much.
Those were my questions. Thank you.
So now we have a question from the analyst Fletcher from Barclays. Please go ahead.
Just one question really. I was just asking if you can clarify the increase in the CapEx guidance for 2017. Is this entirely down to the Kvitsa acquisition? Or is there inflation in any other areas? It just seems that when you compare the DKK 500,000,000 increase, it's roughly double what was in the most recent COVID-nineteen report.
Yes. I think we might be more prudent than in the technical reports. We are this is primarily we have to speed stripping in or contain speed, I shouldn't say, because we are in a high strip year and for several years, we're going to have a lot of stripping to do. So most of the CapEx is not equipment acquisitions, it's stripping. And else on that, it's smaller things.
So
it's stripping basically. Okay.
The following question is from Olofgrenmark from ADG. Go ahead.
Yes, good morning. You gave us some extra details regarding the outlook for zinc treatment charges. Is it possible to elaborate how you look upon the equivalent area for copper treatment charges, please?
Yes. We have like 90 percent or 95% of the volumes contracted at benchmark levels or benchmark levels plusminus. So unless there is very big sort of mix changes between different suppliers or different concentrates, we are on a stable level through this year and into the Q1 of next year when the stocks are sort of expiring or consumed. So I think copper will be stable from the Q2 and onwards. Okay.
Thank you. And also regarding the upcoming maintenance cost that you guide for $50,000,000 in the smelters in Q3, how difficult is that maintenance stop from an historical point of view if you could scale it somehow?
Well, we have been very accurate in our maintenance stops and the Q2 of this year the Q2 we present now is a cost overrun. Your question is, are we going to see another cost overrun on the 50? No, I don't think so.
Okay, fair enough. Thank you very much. We
have a new question from Daniel Major from UBS. Go ahead, sir.
Hi, there. Very quick follow-up question. Just wanted to elaborate a little bit on the provisions that you accounted for this quarter, the EUR 87,000,000 How much of that is a cash component? And if there is a cash component associated, when would you expect to actually spend the money with the relation to that provision or is it a non cash item?
No, it's a cash item. And it's going to be spent in the next, I'm guessing now, 24 months.
Excellent. Thank you so much.
We have no further questions at the moment. We now have a question from Daniel Lerch from Exane BNP Paribas. Go ahead, sir.
Hi, Sander. This is Bruno speaking from Exane. Thanks very much for taking my question. Just a quick follow-up on corporate treatment charges. Treatment charges are holding up quite well in the spot market right now.
You're seeing a concentrate deficit in Q2. What do you expect in corporate TCI in the next couple of months? And do you think the current highest spot rates can be sustained? Maybe a quick question also on the market, this time on copper scrap. Is this something where you see tightness here?
Is this in any way influencing your view on cost?
Thank you very much. No, I think that we it's a surprising strong spot level. And I think that we don't have a different view than metal analysts in the market. I think it is of short term nature. I think the tendency is low or is that these are going to be under pressure in copper.
But of course, it's good when it's that this is our high. We're in that smelter and we enjoy it. But we have very little of spot deals. So the impact on us is not so good or is not so big. So no, we don't draw any particular conclusion.
We're slightly surprised, but there are reasons behind it, but no other comment.
Great. And in terms of copper scrap, is that something where you see any type of that impacting your
No. We have from our suppliers and for our needs of scrap, we have a quite good situation. Thank you.
We now have a question from Eileen Hong from Bloomberg. Please go ahead. Hello. Good morning, Lena and everyone. Thank you for taking my questions.
I have three questions. The first is on nickel. So, Lena, you mentioned that you hope you don't see nickel prices below $9,000 Can I imply that, that is the breakeven price, nickel price assumption for Boliden's Nichols business? Also, what do you see as the key threat that may drive nickel prices down to $9,000
I see the low point not being 9, but rather 10. I think that 10 is already deep into the cash cost curves. I was extremely surprised to see 8,500, 9,000 for a period of time. And I have repeatedly said that these are impossible levels. The low points for any kind of length of time is probably around 10.
And around 10 is our breakeven point ballpark, as I said before.
The second question is on zinc. Now you mentioned that you're less nervous about zinc. Could you kind of expand your forecast? Would that be on the demand side or on the supply side?
The reason for my positive view on zinc is that the supply is squeezed. We have seen very few new mines. We have seen few new discoveries and several mines have depleted. And therefore, the supply is scarce. We see the official numbers for zinc production is going down in a world where there is a small positive growth in demand.
So the zinc is a scarce metal right now, which is supporting the positive price and our sort of attitude or anticipation of what we have in front of us.
Thank you. And the final question is on CapEx. With today's CapEx forecast for 2016 over SEK 4,000,000,000, Could I just ask if there's any changes to the 2017 target that was mentioned earlier about DKK 4,500,000,000? Thank you.
Yes, the increase is that we had we have bought the Kevitsa mine and the added or the increased value is due to the acquisition only.
Thank you very much. Thank you. We have no further questions.
Okay. Thank you for joining us today. Bouyguesn's Q3 report will be published on 20th October. Thank you.