The importance of 2013. Today's presenters, Lennart Evrell and Mikael Staffas, as usual, we'll wrap up with a Q&A session and be finished within the hour. Lennart, please.
Good afternoon, and welcome to this presentation on our third quarter results. I got a question from a journalist, what do you like the most with your report? I said, "Well, probably that we don't have much of specific news." Everything is really moving on very well. No big surprises on our own production, no big surprises on cost. I would say that we have had a smooth ride in the third quarter in general. If there is one thing to point out from that general positive view is the copper smelters. We had one good news. Oops, sorry. We had one good news with Harjavalta, which had some exceptionally good results, and Rönnskär with a lower than expected result. Those two are evening out, so the copper smelters in total are okay.
Looking at the general numbers for SEK 8.5 billion in sales compared to SEK 9.1 billion a year ago. EBIT and before the process inventory revaluation was SEK 603 million as compared to SEK 988 million a year ago, and SEK 681 million in the previous quarter. Compared to the second quarter, we had smelters improving. We had mines on flat results. The smelter improvement was of course due to the shutdowns in the quarter, primarily. The cash flow was SEK 436 million compared to SEK 310 million a year ago. That was, of course, influenced by the capital expenditures of SEK 1.1 billion compared to just short of SEK 1 billion the previous year. We are on lower levels than we were in the previous quarter. We are fading a bit on the Garpenberg project, in the second quarter, we had all the maintenance jobs that we did. All the projects are continuing to be on plan.
If we look at the market, I would say that you can go through the different diagrams and graphs here, what you see is very much looking the same as our production. Not much to say about it. It's going sideways. China is driving the markets, regardless of what you're looking at. Behind China is the U.S. economy, which is not continuing to improve, but it's daily growth in the economy. Europe, flat on low or even negative levels. That is what you see on GDP growth. That's what you see here on industrial growth. The yellow lines are the global total, which is the demand number, which is important to follow. We are in a flat general demand period. If we look at the two important sectors for base metals demand, it's construction number 1 and automotive the 2nd.
Here is automotive. You see the same pattern basically. Going sideways with the same China on top, Europe at the bottom. If we look at the construction numbers, the same also there. We highlighted, however, the housing starts and the sentiment in the U.S. construction market, which is clearly coming up on early indicators, coming up very strong. I'm not sure this is reflecting the latest development in the U.S. economy, but certainly we see an improvement here. Else than that, very much the same as before. What does this summarize to? Well, China drives the metal demand as always, and the global macro is reflected by the graphs I showed. The metal and concentrate supply, the mine and smelter industry. Basically, we see after a period of lower results that CapEx spending are cut in most of the companies.
We know that most of the mining companies have been dismissing their CEOs, and there have been a lot of strategy talks, management changes and so on. All of this hampering the level of CapEx and basically the headlines is that. The junior companies are having increasingly difficult to finance new projects. Same consequence or same driver as the first one. In copper, we have seen a general long-term strong supply coming out, which have been reduced by continued problems, mine strikes, and disruptions. Grasberg, Escondida had strikes, and the trend continues from before. Difficulties in the old big open pit mines compared to the forecasts. However, we are seeing that the metal or the mine supply will increase over time. We think that the copper thesis will enjoy this better supply situation. It should be reasonably good to be a copper smelter going forward.
In zinc, basically the same demand pattern as copper, here we see that there are several large mines which will close in the next couple of years. Even if we are also going to see a couple of zinc mines coming to the market, we're starting production in near term. I have showed I cannot do it every quarter, but basically this global macro with new mines coming in, not so much in zinc and many large disappearing and therefore the output or the supply side is very weak in zinc. That remains the same. On TC, it's the opposite. Even if short term, we're seeing TCs developing relatively well. I think there is a risk that TCs will have a less favorable development going forward. If we look at the zinc price, how fun is it to comment all of this?
They are looking like the GDP growth and all the other graphs. Everything is going relatively flat. Everybody, 50% believe it's going up and some believe it's going down. The fact of the matter is that we are going very much on a stable level where we are. This is zinc. Well, I should comment of course, on the inventory levels here that we are seeing after the long period of increase in official inventories, that they are trading downwards since the beginning of this year. TCs, I mentioned already this, in zinc, we are having the benchmark levels are going down, the spot is going up. Contradictory you can say, it is below the benchmark level, it's closing the gap between the long term and the spot terms. Premiums are developing favorably.
In copper, we see more of a negative trend also that in consequence to the macro description I gave. Over the past few quarters, also here very flat. Inventories in copper are also going down. TCs are going up, a slight turn upwards, and we see the spot terms coming up very strong from the early 2012. Premiums have the same pattern as the zinc in zinc. Precious metals, gold and silver are very important for us, and they are going clearly negative, even though if you blow up the last two quarters, also here we see a relatively flat picture. Over more of a couple of years trends, it has been clear negative. Lead is mirroring very much the whole story of zinc. We have enclosed the demand supply, mine supply, smelter supply, numbers and balances for your information in the package.
I think I have mentioned or commented this already. If we go into our operations now, mines did SEK 372, which is way below of last year. It is basically impacted by the price and currency effects, but also that our hedge programs largely expired at the end of the first half year in the end of June. The production was very stable. We had a few surprises, if anything. Of course, you have seen that Aitik was on good grades. Also, Garpenberg was operating good grades. Cost control, no surprises. I would say that we have kept mine and smelter inflation or cost increases on a very low level, and most of the changes are more a question of or a matter of volume effect than inflation or the opposite. The CapEx was SEK 947, continues to be high.
It was higher than last year of SEK 798, the expansion projects are on plan. The Garpenberg project, I will mention a little bit later. The production numbers, strong in copper, driven primarily by good mine output or ore production and with good grades. In zinc, we see good ore production and lower contained metal, and that is due to slightly lower grades in Tara. In smelters, we saw basically a flat earnings before interest and tax and before the process inventory revaluation. A lot better than in the second quarter. We announced that we would have shutdown effects of SEK 300. That's exactly sort of making up the balance. Nothing else on that basically, you can say in one way. We had some maintenance stop also this quarter. We had SEK 25 in the quarter, and that was basically Bergsöe.
We had a little work in Odda as well. We had SEK 305, as I mentioned in the second quarter. The sulfuric acid market is lower or is weaker. We see lower price levels, we also see that the Nordic market is very soft, therefore we have to send the acid longer distances. It's quite expensive to move the sulfuric acid in chemical tankers or special tanks, and so on. We are seeing a clear negative impact from the sulfuric acid. The CapEx was SEK 203 compared to SEK 172 a year earlier. Also here the big project is the silver plant in Kokkola, it's running on plan. The production looks good in copper, it was good. We came back from the big, the very unusually or uniquely large maintenance shutdown in the second quarter, we came back both with feed and with copper production.
Rönnskär being on the bad news and Harjavalta on the good news. In sync. Basically, it was a good quarter. Now, can you take over?
Thank you, Lennart. Just some brief comments on the numbers as well. The summary here, I'll come into most of these numbers as we move on to the further exhibits, I'll just point out the SEK 603, the profit before process inventory revaluation. You've seen that number before. There was a positive revaluation of the inventory of SEK 78, given a total EBIT of SEK 681. You also see here the investment of SEK 1,151. The investment continues to be on a high level, just as we have said previously. We had a positive free cash flow of SEK 436. If you start looking into the bridges on the EBIT side, if we start comparing to the second quarter, this is a difficult quarter to compare with, as we said before, with there being maintenance stops in the last quarter. We have a positive volume effect of SEK 56.
There is a larger than that positive effect from the fact that we don't have maintenance stops. On the other hand, we always have a negative volume effect comparing Q2 and Q3, because we do take vacation periods in Q3, especially in some of the mines. The net effect was a positive SEK 56. Prices and terms, minus SEK 4. That's another number very close to zero, which actually has two pretty big numbers involved in it. You have positive prices and terms as such between these two quarters, as the prices were actually moving positive. On the other hand, as you all very well know, we have expired the hedge program that we had connected with the Garpenberg investment at the end of June, therefore we have a negative hedge effect. These two numbers basically cancel each other out, and you get a number of minus SEK 4.
Currency effects, minus SEK 58. The strong Swedish krona is continuing to hurt us. Everybody could read that in the paper before, we'll just make the statement again. The cost situation much better than Q2, once again, this is related to the maintenance stops, therefore not really comparable. If you then rather look year-on-year and see what you did compared to a year ago, the volume that we're presenting this quarter are very close to the volume that we had a year ago. Very small effect. We do have a negative SEK 400 million in the prices and terms. This is both lower prices and terms, once again, the difference of not having the hedges in place that we had a year ago. We have a negative currency effect of minus SEK 79.
Those of you who've been in this business for a while know that these numbers tend to have opposite signs. They tend to be a negative correlation. We're now in a position where we actually have these two going both negative at the same time, which is a little bit unusual. It's worrying for us with the strong Swedish krona again. Costs, minus SEK 73. They are, I think also to you not worrying, and I think to ourselves, if we compare internal numbers and looking at the activities we're doing, we feel that we have a good cost control. The depreciation, once again, two numbers that meet each other. We have higher depreciations because we're taking new equipment and new investments are putting into action. At the same time, we had a write-down last year in the third quarter in Tara around SEK 70 million.
These two effects cancel out. You get a number that's very close to zero, SEK 6 million. Looking at the cash flow, we had a positive cash flow, as I said before, at SEK 436. The big number that points out here to you is the tax line in the bottom. It shouldn't be a surprise, I think we were very clear a quarter ago that we were paying more tax in preliminary taxes than was the real tax burden. We're now has corrected that, and we've gotten money back from the tax authorities, as you can see, with a positive cash flow of SEK 283 on the tax paid line. Apart from that, the investments of SEK 1,152 we talked about before. These are also in line, I think, with what we have communicated beforehand. On the capital structure, not really much changed.
When you have a positive cash flow of close to half a billion, you typically reduce your debt with half a billion. We've done that. When you have a profit of half a billion, you tend to increase your shareholders' equity by half a billion. You can see that as well. We continue to enjoy a favorable position in terms of interest rate with 1.8% interest rate within the quarter. The payment capacity is also sufficient. With that, I'll give it back to you, Lennart, to comment on our projects.
Thank you. They are going well. First one is, of course, Aitik. We're on a good pace in the third quarter. We had a super second quarter. I think it is important to say that, okay, are you now already on the 36 pace and so on? We clearly have, and you have seen it, those of you following us carefully, that the winter, the Q4 and Q1 are normally softer than the second and third quarters. What we're saying is that it feels as if this time we're probably slightly above the plan. We're very confident that we're going to make the 36 million tons next year. We had a very good couple of quarters now. The silver recovery project in Kokkola, it's really a concentrator plant. We are grinding some residues.
We are doing flotation cells in very small, if you compare with Aitik or something like that. It's a small concentrator plant, and it's a beautiful piece of engineering. It's coming together, and I think that we have a lot of technology in how to operate that. We think we're going to make it on plan. It's going according to cost as well. It's going to be a good addition to Kokkola. It will be start up after the mid-year 2014. Garpenberg, as you all know, the big investment we're doing right now. We are in really critical time. Most of the deliveries are, I should say, but all of the big deliveries are there. We are putting them all together. We're starting running all the piping, all the electrical installations.
We are going to continue to do the installation of all the bits and pieces and controls and all of that. It will take another six months before we start operating it. We are on plan, and we think we're going to do it on the cost or the CapEx budget. Aitik 45 is moving on. I think as we have said before, with small investments in the concentrator plant, we will be able to do this kind of, or this production volume. What we are now looking at are the different life of mine plans. How shall we now define the ore body? How shall we optimize the whole mine? It's starting to be very big, as you know. We have a lot of more lower-grade areas. How shall we go about them, and how shall we put this all together?
We have some environmental, what should we say, the permitting. We have a permit coming up, and we hope that will pass swiftly through 2025. I mean, they're always 10 years at the time. Beyond 2025, we have some discussions going on how to do with the tailing dams, how to do with some of the emissions and some process equipment. That is already coming into the life of mine plan when we start to ramp up, or if we start to ramp up to 45 million tons a year. It's very long term, the things we're going through right now, but they are also very important when it comes to how to do the detailed planning now. It feels like Aitik is more long-term planning than ever before. Laver, we continue with the conceptual study.
We have done some test milling as part of this feasibility or pre-feasibility or not even the conceptual study, and we are going on as planned, and this is a longer-term project, and we continue to work on it. This is a graph showing where we have the ramp-up periods and when we are into full production. This is no news, but it's just another illustration of what you already know when it comes to timing, which year is what coming in production. If we summarize, and these are summaries of where we are right now, but with a focus on aspects which have a longer term or an impact on the business going forward. The market, as we're seeing right now, it is very much going sideways. It's all the lines, regardless of what you're looking at, is looking just like horizontal lines.
What is growing continues to grow. What is not growing continues not to grow, whatever else metal prices are remaining the same so far. We don't give any forecast, and it would be awfully difficult to do so. When it comes to our own operations, Aitik is in low grades through 2014. We're looking at Aitik 45, and we are going to remodel that sometime whenever we are ready. We are doing many iterations now to figure out exactly the best strategy to move forward. Before we take any other decision, this is the guidance we give. Garpenberg is now in lower grade positions than we were as an average or in the Q3. We are sitting now and mining lower grades than in the third quarter. I think based on that, we should assume slightly lower grades in the fourth quarter.
Rönnskär stability remains an issue. I got a question before, how long is this going to take? Obviously, we don't know. We're working hard on it. I think that it will take a while before we are through there. Same time we have Harjavalta going opposite direction, I also think there that we are on temporarily higher than normal sort of performance. Hopefully this will balance somehow each other. The hedges are expired after the first half of this year, we only have the gold hedges we took in connection with the Garpenberg investment. All of that is published in the report, you can read it, be aware that you cannot just extrapolate the previous year when we had a lot of hedges, which we took around the Garpenberg projects. Those are expired by now.
Finally, we have a very interesting 2014 with two big investments starting production. It's good we are in balance right now. We have a very, very exciting period ahead of us. Thank you. I think that, well, if I said something about the future, be careful. With that, we are prepared for your questions. Let's open up for questions here in the room. We have one there. If you pick up the microphone, please.
Yes, Ola Södermark, Swedbank. Some question about Garpenberg. You are guiding for lower rates at the mine. Is it just for Q4 or are you going to spill over in Q1 as well?
What we have been specific about is that Q4 is on a slightly lower level. Again, you know that we have said for a long time that we are working a lot down in the mine, and we are mining areas around the expansion areas. Depending on what we do, we try to be flexible. However, that means it's also for us a bit hard to be too precise. What we are guiding for is Q4.
Okay. Just timing wise with the expansion, when are we going to see it in the P&L? I know that it's hard. If it's Q2 or Q3 or I think you have said sometime that you are guided for 2 million tons ore milled in 2014. Is this still the case?
I will take, Hans, you are the expert to answer. What is normally our answer on that question?
Exactly what will happen in 2014.
We have said 2 million tons previously, we have never changed that figure, it's still out there.
Timing wise? Q1, Q2, Q3 in the P&L?
I think that the plan is to be in production in the first half-year, I think that in the second quarter we're going to start. Exactly as with Aitik, you start with water, you continue with waste rock. We don't want to spoil any valuable ore. Depending on how things are going, we start to process ore. I think there is a fair degree of flexibility there, it's an on/off. I'm always expressing it like this. When you start a project, you have a date to start production. When you are 10 years away after start, you know exactly when you started. When you're standing there, you have six months, nine months, you don't know, have we started or not? It's a question of definition.
You cannot even tell when you're standing right in the middle of it because you're running a little, you have to stop, you have to rebuild, you have to trim, you have to do a lot of things. I think that in the end of the second quarter, we're going to be in strong production, otherwise we will not make the 2 million. That's the guidance we give as of now.
Okay. Thank you.
Operator, do we have any questions on the phone call?
We have a question from Mr. Thomas Timmermann from HSBC. Please go ahead.
Good afternoon. I have a question on the smelting side, if I may. Compared to the second quarter, the TCRC terms dropped by SEK 51 million. I just wonder how that is possible given that you have a much higher throughput. You had a maintenance in the previous quarter. Even if TCRCs on a SEK 0.01 per pound basis have declined on an absolute level, they should have gone up. Maybe you could give some explanation to that.
Hans, you are again, the expert on the. I think it is a good question. It looks a bit odd.
It's three parts, actually. One is the slag milled in Boliden, so it actually increases the mine's EBIT and decreases smelter EBIT. There is the internal transfer between one part of the company and the other, Boliden commercial and our marketing organization and the smelter organization, which unfortunately sort of fogs the TCRC line in the profit bridge. The third part is a reevaluation component in the process stock that also ends up on that line. It looks a bit odd, but the underlying TC figure is positive, but it's sort of a one-off in this quarter.
Thank you.
I remind you to press zero one if you'd like to ask a question. We have a question from Mr. Alain Gabriel from Morgan Stanley. Please go ahead.
Yes. Hi, good afternoon, gentlemen. Just a quick question on the working capital. Do you expect a reversal of the working capital in Q4? I believe it's fairly high relative to current commodity prices where we stand today. My second question is on the CapEx providers. Are you seeing any more favorable pricing from your equipment providers? Should we expect any improvement in the terms that you're obtaining at the moment? Thank you.
Do you want to take the working capital?
I'll take the working capital just very quickly. It's a true observation that we are relatively high on working capital given the present metal prices. A pretty large part of that is actually the problems in Rönnskär where we're having process inventory and not just process inventory, but also other intermediate products which are higher than ever, and that will come down in the same pace as we can sort out the production problems in Rönnskär. Yes, it should revert, but I cannot say how quickly that will happen.
On CapEx prices, we see all over the place that CapEx suppliers or equipment suppliers will have hard times. I think it is more on volume so far than on price. Obviously it's easier to make a good deal now than it was two years ago, but it's stiffer than probably some would have anticipated. At the same time, I think we have Boliden, we're working much more professional on procurement, we are trying to bundle contracts and we are doing a lot of other things. I think we are coming out relatively strong. If that is a market phenomenon or if it is our own work, I couldn't say, but it's definitely a better situation than we used to have.
Okay. Thank you.
Our next question comes from Mr. Christian Kopfer from Nordea Markets. Please go ahead.
Okay, thanks operator. Just some two quick follow-ups. Firstly, I think you mentioned that you see impact from lower sulfuric acid prices. Have you already seen some impact on earnings from that in the second quarter, or will it come continuously during the following quarters?
We have it in the third quarter, and it's quite a big component. When I'm saying big, it's not one of the biggest. If you look at it on the byproducts, the byproducts are clearly negative depending on compared to previous periods and sulfuric acid is playing a role. It is not something which is changing the group, but it's a fairly significant value hitting us negatively in the third quarter.
If the sulfuric acid prices stay where they are, will you see additional negative impact in the fourth quarter on this?
Well, I don't think so. I think that it's taking a time to things to filter through. If it stays where it is, probably we would have additional slide because we are on a slide, maybe a slight negative development still, but most of it I think is basically there.
Okay. That's fair.
I'm not 100% how that, but ballpark, I think it is true.
Okay. On Aitik, I think you previously had talked about that the grade for the full year is around 0.20. I guess you hit quite high grades in the third quarter, will that mean that you will go into lower grades again in fourth quarter, in Aitik?
Well, if you're indicating a level and you are high for a time, you should be low at another time. Basically, yes, you're right. I also will say that we are on small change. First of all, we were aware that we were mining slightly higher grades than indicated before, it's also a natural variation. We don't have that accuracy in our own estimations. I think that we have a dual effect. We knew it was going to be a little better, it came a little better still. I think be a little bit prudent, I don't think we 0.21 quarter means 0.18 next. I don't think that's exactly what you should read into it. It seems like we've lost it. Operator, are you still there?
Yes, we have Christian Kopfer's line open.
Yep. My questions have been answered. Thank you.
Okay. I'm sorry. Our next question comes from Mr. Johannes Gruselius, ABG. Please go ahead.
Hello, everyone. My question was just taken here, so, I'm happy with that. Can you perhaps elaborate a bit on your thoughts on dividend here, Lennart? I know this is a question for the board, but should we read in that your dividend policy is one third of the EPS and this is a sort of a mechanical policy, or can you elaborate on that, please?
Well, let's put it this way. We have phrased our policy more firm than most companies. It's a policy which I think we will follow very strict, unless we take some kind of a different stand or direction on it. I wouldn't say so. For a guiding and for simulating, I think you should just plug it in.
Okay. Thank you very much.
Our next question comes from Mr. Nick Pease from Exane BNP Paribas. Please go ahead.
Hi, gentlemen. Nick Pease from Exane BNP Paribas. One question, if I may, with regards to CapEx. Looking at the trend over the first nine months, seems that you're running slightly higher, above the SEK 4 billion you've been guiding so far. Should we therefore put into our model something closer to SEK 4.5 billion or in between, I guess? Thank you.
Just to correct you there, we've been guiding that we're going to be between SEK 4 billion and SEK 5 billion and for 2013, closer to SEK 5 billion. I think we're running quite exactly where we've been guiding, and it's just been sitting close to SEK 5 billion.
Okay. Thank you.
Our next question comes from Mr. Rob Clifford from Deutsche Bank. Please go ahead.
Yeah. Hi, gents. Two questions. One, just on CapEx as well. Can you give us a bit of a steer on your maintenance CapEx for where that's falling out at the moment as a split of the total? Secondly, Lennart, at risk of getting the answer, it's all flat again. Can you comment a bit about what you're seeing in the scrap markets for E-scrap in particular, but also the others?
Yeah, what did you ask about maintenance? Was it maintenance CapEx?
Yeah, just sustaining CapEx level.
Yeah, the sustaining CapEx. It hasn't really changed from before, apart from, I think we talked about this already a quarter back about the accounting rules and with [IFRS 20-]
Sure
coming into account. The previous truth, which was somewhere just south of SEK 2 billion, has then become slightly north of SEK 2 billion. We said a sustaining CapEx is somewhere
SEK 2 billion-SEK 2.5 billion, not being more exact than that. That's our sustaining CapEx.
Great. Thanks.
On the scrap market, with economy in the world, which is lower than anticipated, with expansions which have been going on by us and by others, I would say that the scrap market is balanced. What we are seeing, however, is that the quality of the electronics to be recycled is now lower quality than before, and we think that is primarily due to a shortage of returns in the primary recycling, where consumers are turning in their cell phones and computers. We see a slightly negative material mix, but not necessarily a shortage of material. It's a slight negative development, as compared to what we have probably said before, a slight negative on quality.
Lennart, when you're talking about quality there, you talking purely about contained metal, or are you talking about deleterious elements or processing issues with the quality of the scrap?
We talk about two things. One is metal content, which is not the big concern. It's more that we have more impurities and more difficult materials coming with the electronics, which is sort of reducing the quality.
Okay, great. Thanks for that.
Our next question comes from Mr. Amit Haksar from Société Générale.
Hi, this is Amit from Société Générale. I have a question on exploration expenditure. If I understand correctly, the expenditure has been cut down in the third quarter. Do you think you will be able to sustain this level of expenditure going forward, or you will need to increase depending on metal price movement? Thank you.
Well, on CapEx, I'd say that first of all, we have the sustaining or maintenance CapEx, as Mikael commented on, I misunderstood your question. Was it on exploration?
Yeah. On exploration expenditure, yeah.
Oh, okay. Sorry. I misunderstood your question. On exploration, we are reducing our drilling programs. We are in a very heavy investment period with Garpenberg, and we have a somewhat hesitant general market and lower metal prices. In that price environment and earnings environment, we take it somewhat easy. What we do is we reduce our drill programs short term. We work more with the drill data we have and work with the modeling, which is a normal, very nice flexibility we have, which is not over time reducing our exploration potential. It is a way to balance the cash flows. We do that, and we are continuing to do so for a time. The market situation and of course, the result of our exploration will guide us whether we continue to grow the exploration spend or not.
We are in a little bit of a careful situation without risking the long-term potential, and we can do that for at least several quarters before we need to accelerate again, or we take a lower ambition on exploration. We are not there yet.
All right. I have a follow-up on that. Assuming that metal prices go down from here, will you further cut down the expenditure or will it remain at the current level?
If the metal prices are going down from this level, we have a different or we have a new situation, and we have contingency plans which we can put in place. Some of them will include, or partly they will probably include exploration, but it will include everything else, too.
Okay
sort of what happens if I think we have actions available to defend a stable, ongoing business for Boliden in a wide variety of situations, and that's what we try to do. We try to avoid to do too much of a desperate jumps left to right. I think we're going to trim or expand or maneuver with the market situations as they are coming, whether it's up or down.
Thanks. Thanks a lot for that.
A reminder that if you'd like to ask a question on the telephone, please press 01 on your keypad. We have a question from Mr. Gustav Sandström from Erik Penser Bank. Please go ahead.
Thank you, operator. Just two quick follow-ups. First, regarding Aitik. Do you expect increased production out of the satellite deposit in Aitik in Q4 as compared to Q3?
We really look at it as one super pit, if you like, made up of several mining areas. One of them is in Salmijärvi satellite, then we have aa few in the main pit. We are balancing that in order to maximize the output, given where we are doing maintenance on crushers, where we have the loaders, and what kind of truck fleet we have available, what kind of waste rock programs we're running at individual times. We have a sort of a function called a dispatcher. It's like a control room for all the trucks and the shovels and loaders. Crushes. We have an overview and we go along sort of day by day, month by month, week, and so on, quarter by quarter. Of course, the one, 10, and 20-year plans and put that all together.
We are not looking at Salmi area as being a separate mine, which we are expanding separately. We have a capacity in the fleet and the drills and the trucks and whatever. We manage that as good as we can to maximize value and to keep grades, which are varying a lot in different parts here, on relatively stable levels and in line with the guidance we have given.
All right. Thank you. Just one question regarding Boliden area. What appears just from the numbers to be very weak recoveries, is that purely a result of the increased smelter slag? If so, what should one expect going forward in regards of the amount of smelter slag?
Yeah. It's a bit of an odd quarter with the additional or with the unusual mix of slag and ore. I don't think we have anything else than that of importance.
All right. Great. Thank you.
I'll remind you to press zero one on your telephone keypad to ask a question. We have a follow-up question from Mr. Amit Haksar from Société Générale. Please go ahead.
I have a question on, I think, diesel tax liability. I'm not sure if I've missed you on that. As I remember, we paid some amount to tax authorities last quarter. Could you please share the current status on that? Thank you.
Yes, you're exactly right. We did pay into the tax authorities last quarter. We have appealed the ruling. The ruling is now in the which is the lower Swedish Administrative Court, where we can expect a judgment sometime before the end of the year in best case. I think because if we lose, we will appeal. If the tax authorities lose, they will also appeal because this is, for them, a matter of principal interest, how to handle these kind of situations. We are very likely to end up in the first half of next year in the Swedish Appeal Court on the Administrative side. That's the status.
Okay. Thank you.
Our next question comes from Mr. Owen Garrett from Goldman Sachs. Please go ahead.
Hi Lennart . Just a quick question on M&A. It's been discussed in the past and looking forward towards 2015 after you finish this CapEx, it's not really clear what you're going to use the cash for if you're keeping to your original dividend policy. It'd be great if you could just give an overview of whether that's something you'd still consider in the long run. Thanks.
We are interested in buying mines, but we are not interested to overpay. I think that the markets, the company or asset market for projects and mines are easing up. More objects are probably going to be available. The problem is that it seems like the sellers are not going to give up any assets cheap. As of now, we have seen the M&A activity has increased. The number of deals have not moved much. We continue to be actively looking. If we are going to do something, I have no comment on that. I have no idea, really. We have the cash available or the funding, the financial muscle to do something. It depends on if there are opportunities, we might do something. It could happen.
Got it. Thank you.
There are no further questions on the telephone.
Neither in the room, so I guess it's time to wrap this up. Any final words, Mats?
No. A good quarter, but a bit boring. We have no big surprises, either positive or negative, and the markets are looking quite stable and flat. Of course, there are big macro changes happening around us, both risks to the negative and opportunities to the plus. We have a lot of new mines coming, but we are also seeing a lot of mines closing. We're seeing TC changing as a result of those changes. I think we, as always, are in interesting times, and I think Boliden is in good shape. I think next year will be very exciting.