Ladies and gentlemen, good afternoon. It's time to present our 2nd quarterly report for this year. And today's presenters will be Lena Teprell, our CEO and Mikael Staphras, our CFO. So welcome. It will take about 30 minutes and then we'll have a Q and A session.
Thanks.
Thank you and welcome to this presentation. We are quite happy to see Bulidin performing well. I think production numbers have been convincing. I think maybe the results could have been expected to be a little bit higher, but we have been on lower grades in Aitik. We have been also a little bit unfortunate that we have had this tremendous or tremendous but strong performance.
We have shipped more when the metal prices have been a little bit lower and less when it is a little bit higher, something that you are unable to do but has had some effect. In any case, we are very happy with the performance, and we have taken a couple of important steps, we feel, in the quarter. If we look at the summary, revenues were SEK 10,300,000,000 or SEK 4,000,000,000 compared to SEK 9,800,000,000 which is up, which is driven, of course, by the production, but also of the combined effect of metal prices going negative, but also currencies going positive. Earnings before revaluation of process inventory were €931,000,000 which is slightly lower than the Q1 and predominantly driven by the market terms and helped that was supported by strong production. The cash flow was around 0 compared to a quite big negative cash flow last year.
And in the month sorry, in the quarter, we have had good production all over. Basically, all the smelters, all the mines have been doing good. Extraordinary production in ore production in Aitik and contained metal production in Garpenberg. The recycling plant in Rundsjar, I thought it was overly or should we say optimistic or bullish to say that we are going to be on full production in the Q2, the Q1 in full or possible production because we started inaugurating or had the first product being produced on the 18th January, but we actually did. So we did as good as it could have gone actually in Rundshall.
We have seen the market being in continued uncertainties. Of course, we are I guess, we are all living in Europe and we know the difficulties here in the South. But the metal markets are much more tilted towards the growing economies and to where wealth is being developed. And the metal market has been in spite of lower growth rate in the general economy in China and positive but somewhat hesitant development in the U. S, very negative in the south of Europe and strong here.
All in all, we have a very stable and good demand situation for the base metals. We had in the quarter, which was well communicated and maintenance stops in the quarter and they have been on the level anticipated. All the expansion projects are on plan. If we go a little bit deeper on the market, we are looking at industrial production and then we're looking at construction and automotive. As we can see, of course, very different levels of year on year growth with China being on top and Europe falling down on negative growth rate when it comes to industrial production, But all the lines are negative.
The brick countries to the right, Brazil, Russia, India, China and brick total are on different levels. And one of them, Brazil, going in on negative growth. So I guess the tendency is the same all over the place. We have a negative general economic development in the world, but that is balanced to an extent by the mines in the world, which are having difficulties to meet the demand that there is. The construction industry is looking similar with Europe on negative growth with U.
S. Hesitating on the strong development we saw in the beginning of the year and with China with very strong growth numbers, but lower than previous. The car production, this is a year on year development in China, we saw no growth in the car industry in the Q1 and we had a saw a 15% growth of car production in the 2nd quarter. And if we see Germany is going down from 0 to negative, South Korea being as big as Japan or if not bigger, is going to a lower growth rate. Japan on the other hand is showing very strong growth numbers because of the difficulties Japan had a year earlier and U.
S. Is going well. The reflection of this is stable demand, even though it's lower than it has been previously. It is putting some pressure on the metals, but it's not a very dramatic development. Zinc has been going down 8% from the previous quarter.
And copper on next page has a similar. We have, of course, a continued concern that inventories, the official inventories in zinc is continuing up. And I think you see the rest slight negative price pressure there. In copper, we had not 8%, but 10% lower copper price in the quarter. But here it is combined with lower inventory levels.
The treatment charges are the spot terms of zinc. They have been historic very, very low, but have turned up a little, but still on very low levels. The benchmark terms are in line with what we said before. In copper, we have seen the benchmark TCs going up to the level as we indicated or said in the previous quarter. And the spot terms are low and if anything, a little indication of an improvement, but basically stable.
The premiums are in Europe. That's the middle curve there, stable. And also here, I think you can see a confirmation of what I'm saying is that the demand is reasonably good. And in the North of Europe where we are, we are seeing an okay demand situation. We see some declines in some of our customers, but we have little difficulty to replace those lost volumes to some to other industrial customers elsewhere or still in Europe.
So what we're seeing is that our industrial supplies are parallel or same as in the Q1. We cannot see any factual deviation. Everybody this time as well as after Q1 are talking about the uncertainties, but we don't see it in the numbers. The precious metals on top here are on very high levels, certainly gold, but with a slight negative trend. And lead is looking very much like the zinc development.
If we then go in on different areas. Earnings in the mines were SEK 726,000,000 compared to SEK 1,100,000,000 almost in the previous year, €822,000,000 in Q1. Very high production in certainly in Aitik and we had high grades in Garpenberg. The cost is high on the high side. It's driven by the general cost increases in the world, which is also supporting the cash cost and the prices to an extent.
And in the case of Boliden, we also have quite a lot of production related bonuses, which are increasing the cost this time. We also have somewhat a bit of an unbalance and we have a little too many people, but it's not a big deviation. On CapEx, we invested $7.53 compared to $600,000,000 a year earlier. And the projects are on plan. And of course, the strong thing of this report is of course, Aitik, 38,000,000 tons annualized production rate.
And one of your question is will of course be can you keep this trend? And the answer is, of course, not because we have our plans and we have to take away waste rock and we have capacity. It doesn't work that way that you for long periods suddenly can go in a different direction than your mine plans. You simply don't have the capacity for it. But what it does, it is to reconfirm very, very strongly that we are on plan for our expansion of Aitik and the probability of continuing if we have the permitting and the pre feasibilities and feasibilities on further expansions, The concentrator is prepared for it.
That's pretty evident or that is evident. The other projects are also on plan. The production, while we see how the Q2 copper ore production went high that the contained metal is not following because we are on now on the low side on 0.20, 0.20 copper grade, which is very low. We are on the zinc side seeing another good quarter. Tara is doing very well.
Garpenberg is doing very well. And then we have the Buliden area, which is doing less in zinc now and more copper. It will reverse when we come into next year. I will say a few words about that later. On the smelter side, everything has been going well or everything, but also the smelters have had good production.
Earnings were SEK 240,000,000 compared to SEK 143,000,000 a year earlier. We had more in the Q1, but we announced, of course, all the maintenance stops with an announced effect of SEK 130,000,000 and we came to that. I think the real number is slightly over, but basically on plan there. CapEx was €2.74,000,000
If we look
at the bar chart and the metal chart, we see a similar development here that we had good processing capacity or processing volumes, the bar. And we see that the metal supplied is slightly lower. So we are seeing the tendency here that copper concentrates are a little less rich. And this is what you can see and read from a lot of other companies too in the world. On the zinc side, similar situation.
I think we have good news here is that Oda was stable in production and has been doing a very, very good job when it comes to stabilize the process control. And we had some disturbances in Kocula. That isn't usual. You normally have the opposite around. And Kockola is always performing and all that have issues.
But this time, it was the other way around. The big thing, of course, in smelters is, again, the droneshare, the electronics recycling, which have been going very, very well. It started in the Q1. At the end of the Q1, we already saw very big volumes. If you break it down and look at the new equipment versus the old equipment, we are not exactly up to the full capacity in the new.
We're close and we are producing a little more than sort of the normal level in the old Kaldorf furnace. That will be evening out if things are going to plan. We're going to increase production volume in the new equipment a little more. We're going to produce more lead in the old equipment. So those are mix changes, but they are perfect on plan.
And the financials Mikael? Thank you, Leonard. Thank you.
Just a few highlights on the financial side. You've seen these numbers and Lennart has already spoken a little bit about them. We had a EBITDAX profits inventory revaluation of €931,000,000 which is slightly less than we had in previous quarters. We had a free cash flow at €79,000,000 or just above 0,000,000 compared to a quite negative last year or a quite positive number in Q1. And as you all know, having Faltas, you know that this has to do with the inventory and how inventory levels go up and down.
And we've had a stable development on that side in the quarter. CapEx might be a number you haven't seen before, a little more than €1,000,000,000 in the quarter of CapEx, very similar to the quarter before. And we have a gearing of 29% at the end of the period. I'll come back to that. Now how did the bridge how does it look for the development of the profit?
The volume, as you can see here, when we're comparing to the Q1 this year, you have an increase of the volume factor of EUR 168,000,000 And this is important to remember. This is despite the fact that the grades are going down in Aitik, which of course contributes negatively to the volume growth. So despite that there is an increase of €168,000,000 This comes mainly from mines because of the increased number of tonnes coming out of Aitik and also the good grades in Garfimberingatara. But also smelters are contributing positively, which is also very positive in this time. If you then look at the price and terms and currencies, you can see that one is negative and the other one is positive.
It has been like that for the last few years that there is a clear negative correlation, which is good for us that when metal prices go down, we tend to get a help on the Swedish krona side. And it's been true here as well. So the net effect is about €238,000,000 negative on the terms. Now costs are up €137,000,000 In this, you should remember that we had maintenance stops. And maintenance stops that we did not have in Q1 that comes into play here.
The EBIT effect was €130,000,000 That's not a cost effect, but there is a clear cost component of the maintenance stop that comes into this. I will talk a little bit more cost when we come to comparing year on year. Then just a quick comment on the internal profit elimination. I want to say discussion is obviously going on and why we're doing worse there. Well, we're at $18,000,000 which is basically close to 0 which is what it will be over time.
We just had a very positive contribution from there in Q1 that comes into play here. If we then start looking on comparing year on year, we once again see a positive volume contribution of about €167,000,000 this time around increased production both in mines and in smelters. We once again seen the negative correlation between the development of the currency and the metal prices. Here the net is shut out and that is a negative effect of SEK 180 1,000,000. And here we have a cost effect of about SEK 160 1,000,000 and we can think a little about where does €160,000,000 come from.
Well, that's roughly a 6% increase of costs year on year comparison. And to the best that we can analyze our cost, we have roughly a 3% inflation that works in our system, which is much better than it was last year and it's coming down to maybe slightly normal levels. And then we have an increased usage of roughly 3%, which is still something that we care about and it's still something that we need to monitor. But comparing also to the volume growth that we've had, put in that perspective, it is not unexplainable. The cost increase has been at 3% in natural usage.
Then I've also highlighted down there the realized hedges. Somebody might ask why is it being realized this year at a lower level than last year given that you have lower prices. Well, as you know that you've been following us, we do not have exactly the same strike price in our strategic hedges. They were much better or they were better last year than they are this year. And that's the reason for that difference.
If we then move on to the cash flow, as I said before the cash flow is at €79,000,000 which is to say close to 0. And you can basically say that at this pace and at this earnings, we managed to fund our investment. The contribution from changing in working capital is also relatively low compared to what it can be. And that's also part of why it's a number that is relatively close to 0. With this kind of earning, we can fund our own investments.
The capital structure, while the total assets are up, the capital employed is also up. That's not strange given our investment program. The shareholders' equity is down. That's not strange either. We had $1,000,000,000 or $1,000,000,000 plus of dividend in this quarter.
And that's also why the net debt is up about $1,000,000,000 and also linked to the dividend that we've had. Otherwise, you can also see here that the loan duration has stepped up from 3.1 to 3.8 years. Thanks to the new syndication that we did in May that also came into this quarter. The net debt to equity 29% as mentioned before. With that, Lennart, I will leave it over to you to talk about our projects.
Yes. Okay. So SEK 38,000,000 in Aitik is not an indication that we have now a new plan, which is not SEK 36,000,000 any longer and we're going to do something completely different. I think instead you should look at it as a very solid confirmation of the capacity of the concentrator. We have been having a lot of difficulties with different parts of the mine transportation or transportation equipment predominantly the crushers.
We have been doing a lot of repairs. We have been doing a lot of improvements. And before we have seen that, oh, that is wonderful, not as good as this wonderful results. But of course, we need 1 or 2 or 3 or 4 quarters to see that everything is working. It's looking good.
It's looking good. But also we cannot we can produce 38,000,000 tonnes when everything is going well if we were on say 31,000,000 a quarter before because then we have more ore to process if everything else would allow it. So it's not a new plan, but I think that we can be very, very certain that Boliden is on delivering strongly in Aitik. When it comes to Kankeberg, we started the ore production already in well, the first little things were done in the Q1. But basically we have been ramping up ore production and we are stockpiling it in Bouleyden today.
So the mine is in production. We are going to process some of that. We are doing campaigns in leaching in the leaching plant in the Bulleitin concentrator. We have long lead times. It's long process times.
And once it's out of the mines, it's delivered to run share. In run share, we have another quite long lead time. So it will be sort of profit in mines and then group eliminations and the results are taking quite a while until it's exercised to our external customers and ultimately taking the full profit off. So given the lead times here, this is just to say that the profit of Crankeberg will not be seen in any major way this year, but we are on plan. We are seeing Tellurium leaching to start in the end of the year or in Q4.
Garpenberg is on plan, and we have done well quite extraordinary steps forward there. We are far into the or in the construction of the buildings of the new concentrator. We have the fundamentals for or the basements for the grinders. So some of the most heavy construction works are way advanced now. We actually started to put roof on the concentrator building the day before yesterday.
I showed it to the board at the board meeting today. And I think that it looks like it's going fast now. You know how it is when you build. You have a lot of people nothing is happening. But suddenly when you start to raise walls and put roof on, well, you see that, oh, this is a lot.
We have sunk the personnel shaft to 12 100 meters and to the full diameter. So there we are in the process of doing the lining and all the equipment for well, the old equipment for the hoist itself. On the mine side or the mine hoist, it's done all the way down on pilot holes, and we are up to full diameter on part of the distances. We're a little bit late there, but it's nothing to worry about. We are well within the framework of the entire time plan.
So Garpenberg is on plan, and it's going really well. Groundscherr, we have been talking about already. We had the Minister of Environment, Lena Eek, doing the inauguration. Some of you were there. And the production has been going real well.
Silver recovery in Kokola was just started, which is the next strategic project, which will go in production in 2014. Here we have some picture. This is from 1.1 kilometers down under mine. This is or under Earth or under the surface. This is the place where the crusher is going to be on 1087 meters minus.
These are the foundations for the headframe of the hoist, the mine hoist. This is the mill basements for the mill. This is flotation building itself. And here we have the roof panels coming on. And also the picture I showed before was also showing that one of the walls is starting to be shaping up.
As a summary, I think that it's quite evident. We are pleased. We have taken some very big sort of steps in some of the project plans. We have for the first time been over 36,000,000 tonnes right in Aitik, big thing. We have full production in Rundsjerg, big thing.
We are starting to produce gold ore from Kankeberg, that's big. We are going to see the tellurium and full production of that, the impact by the end of the year. We have a couple of guidance to give here. In the Boliden area, you will probably struggle to get your models together because we have a lot of things happening at the same time here. Krankeberg mine is started and we will see the effect coming in mines, but we eliminated, I suppose, probably in Q4.
So the group result will be limited in 2012. Marlinen East is essentially doing copper. It's a copper zinc satellite pit that will deplete and go down by year end when Maurelinen, which is predominantly zinc, is going up. So we're going to see copper going to zinc here. And at the same time, we are seeing gold tellurium coming here.
And it's we try to get that to happen. And but there will be, of course, big mix changes because of that. Garpenberg was on very high grades in the 2nd quarter. And as we always say, if we if you for a period are below or above, you will be going down. And if you are below, you will go up.
And the indication here is that we have to be careful. We are not going to maintain the grades we have seen in the second quarter in the second half. There will be a focus on cost. Of course, production bonuses, which are giving high cost, is something we regret at all. It's giving the effect we planned for.
But we have slightly higher costs than we think we should. So we have some adjustments to do there. It's nothing dramatic, but it's going to be a focus here. Maintenance shutdowns are not going to be as big in Q3, and it's not going to be anything in Q4. So compared with SEK 130,000,000 in Q2, we're going to have something like SEK 50,000,000 in maintenance stop effect in the 3rd quarter.
And our guidance on CapEx remains the same. So it's not changed. And no, we haven't said anything in particular today, so nothing too much to do a disclaimer on. So we're happy. Cost is maybe a little too high.
But else on that, we're pretty happy with the development. Thank you.
And with that, we open up for questions. And I think we start off here in the room where we have a small crowd. And would you please wait for a microphone? You can take this, Julian Biarist.
Thank you very much. It's Julian Bier from SEB and Sfilde. Questions on Aitik. Do you expect any change in the costs you incur at Aitik during the second half compared to the second quarter assuming that there are no new unexpected problems? And if so, how much could the cost reduce as you normalize the process?
The answer is clearly that if we have seen we are doing sort of volatilities on daily production rate in Aitik, and it's converging to a more sort of process control environment. That is a good situation to see production coming up, cost not going up. So basically you have a unit cost improvement there. There might also be cost reductions possible there. So I think you should expect some improvements.
But that is again on the assumption you did. We are a bit cautious about we have had issues left and right, and now it has been going very, very well. But on the assumption that it's going is continuing under very good process control, I think you should see some improvements on the cost situation. How much, I would not like to speculate on.
Okay. Good. And then in terms of a normal mill rate for Aitik in 2012, would that be somewhere near the midpoint of this 31,000,000 and 38,000,000 tonnes per year figures you talked about?
I think 38,000,000 is not in the plans. And consequently, I don't think it is a possible it is not a possible level to have in the mindset. We are working in the direction of 36%. And would everything go perfect? Might be that we have been a little bit behind plan.
We can be a little bit above. But I wouldn't draw the too long conclusions. Your precise question was, if the mill would allow it and the mill produced 38,000,000 tonnes or processed. And if it would have been more copper or less or something else, it wouldn't have it doesn't change. You know and I know this mill is capable of 38,000,000 tonnes.
It did it for a full quarter and then it can be done again. The mine is not capable of bringing so much ore. So that's Okay. Great.
And then finally, what sort of copper grade head grade would you expect for the second half?
The guidance we had at the Capital Market Day, which we are continuously referring back to and which is available on our homepage is that we have a low point for quite a stretch in time here, which is approaching the 0.20 level. I think we are on the low points and maybe somewhat higher, but we are going to be in this area. I certainly hope we're not going to be below, but I think that we have a period now where we're going to be on low levels. Will it be better? Maybe, but it depends.
We I wouldn't count on too much more for a while to go now.
Thank you. Not
lower on the other hand.
That's great. Thanks.
Ula Sodermaier, Swedbank. Follow-up on the cost side for mines. In general, for your business area mines, do we have any possibility to improve the costs there, not only Aitik, but the other mines as well?
We have shall we take a bit of well, you should probably take or slide it on. Yes, well, I can go on. I think that in Tara, we have too much we have for a number of reasons sort of a threshold situation where we are paying out a little bit more bonus than what should be normal. We have other situations where we are ramping up our own share. We are ramping up Cangpai and we have had a summer break.
We have to educate more people and it's giving some kind of an effect in the summer months. There is we should be able to fine tune cost here. But predominantly, we have sort of a cost structure in our industry with spare parts, with external services. When we are producing more, we produce also consume more spare parts. So I don't think you should expect a big step in cost.
It's a stable cost from now. It's a fair assumption.
I said that in last quarter and it was not a clever move to say that because we didn't exactly do it. So but I think it shouldn't be maybe yes, maybe on this level.
And a question on expansion in Aitik by 20% to 30%. What's the timetable there? And what's the obstacles or the thresholds?
Well, when we spoke about ITIG45, we had a plan that now we shall surprise the market because if everything is going as good as we saw it coming, we shall try to do over EUR 36,000,000 which we did. I think the mill is today not enough to do the EUR 45,000,000, but I think we have a serious production capacity there. And with quite small additional investments, we should be on this level. It's more a question of the waste rock. If you want to produce 45,000,000 tonnes, we have a hell lot of waste rock to take away in order to support that kind of ore tonnage.
And that means a lot of well, it's trucks, it's drill rigs, it's a number of things there. On the crusher side, we would like to see the stability coming. But we think that we are definitely on the right track now. And right now, we are almost not using the crusher in the bottom of the pit because we're very high up now. So again, we have a if the equipment is working well, we have a substantial overcapacity, which is in the plants.
What is then the limitation? Well, we have to get the permits. And permitting is not a very simple task. It's always difficult to forecast, but we are charging on very fast now with the permitting procedures. But it will take a long time until everything is ready, both when it comes to the physical mine things with waste rock, but also the permitting.
So I would say 5.1 maybe permits today, maybe permits. Would we have the permits? Will we do it very quickly? No, it will still take a lot of time because we need some more trucks and drill rigs. So it's not that easy.
But the timetable, it's 2 years or best guess?
I think we cannot be as fast as that. No, no, no, no. That's too fast. We cannot be at 45. No way can we be at 45 in 2 years.
That's impossible. That cannot be done. 3, 4 years, I think. I'm not we're doing the feasibility. So we shall come back when we have an answer to it.
And why did I answer so much on this one?
I think what we can say is we aim to put in the application for the permit by the end of this year. That is the kind of planning we really have.
I think we stopped here. Otherwise, I mean they are taking us too far now. Yes. Okay. Thank you.
All right. Do we have any questions from the participants on the phone?
We have a question from Mr. Mark Burton from Metall Bulletin. Please go ahead,
sir. Hello. I just had a quick question regarding the Kankberg tellurium output and price. Firstly, should we still work on the assumption that you'll be producing 41 tons per year? And secondly, how long is the price of $2.80 per kilo fixed for?
We were as an assumption of the tellurium circuit here, we were as you're correctly saying, we were fixing the price with 1 of our customers at $280,000,000 That extends through 2018, I think. And the production volumes are not being changed. And as a background to your question for the rest of the audience is that the spot price for Tellurium has been going down very much, but we have secured in this long term agreement the majority of the tonnage produced.
Okay. Thank you. What sort of majority?
Say again?
What sort of majority in percentage terms? What kind of And how
Okay.
The majority of the tonnage. Have we communicated that? I think it is maybe 70%, 80%. I'm not exactly sure, but it's I think we have communicated that number. And I think and if we have not, I believe it is in that range in any case.
Okay. Okay. Thank you. Thank you.
Next question comes from Mr. Christian Kopfer from Nordea Markets.
Thanks, operator. Just some quick follow ups. So firstly, I think you, Mikael, mentioned that you had some SEK 64,000,000 of internal profit elimination in the quarter. Just to be clear on this, if you hadn't any eliminations of this kind in the quarter, does that mean simply that the result would have been €64,000,000 higher for this quarter?
That it was €64,000,000 less this quarter than previous quarter. It was actually positive EUR 18,000,000 this quarter as well. So it was a positive contribution from me this quarter.
Okay. I see. Good. And finally for me on SG and A costs, we saw that we saw a quite huge increase in the Q2. Looking going forward, is it more reasonable to look at, first off, at the Q1 levels in terms of SG and A costs?
Yes. I would say that Q1 will be more appropriate there. We have been overly busy on our exploration side in Q2 that comes into that category.
Okay. Thanks.
Next question comes from Ms. Nicola Tang from Bank of America Merrill Lynch. Please go ahead ma'am. Hello everyone. Thanks for taking my question.
I just had a quick one on sulfuric acid. I was wondering whether you could talk about trends that are going on there in terms of pricing and what you expect going forward?
Sulfuric acid market is quite stable right now. We are not complaining too much about the price. I think that the sulfuric acid market is always a volatile and difficult market to judge. But so far and at this point, we are doing fine. We actually had a presentation to our Board earlier today about sulfuric acid and how dependent we are on a relative high level of concentration with customers.
But we are also moving our positions in order to try to improve flexibility if that market would be going well, drying up. So I think that in general, prices are stable and our situation is good.
Thank you. There are no further questions from the telephone. Please go ahead speakers.
Yeah. We have one question coming in through the web here and it's from Thorsten Fischer from Natura Finance and he has some questions regarding eSquap. And I'll just read them out. Do you think that you can keep the run rate of the run of share facility of 32,000 tonnes in Q2 also in Q3 and Q4? Do you have enough feedstock to the annual production of 120 ks for this year?
And do you see a potential bottleneck in feedstock going forward?
The first question of our ability to continue on this level, I mean, we, of course, are bullish when we have done it. It was quite a job to get it up on this level and we did well in the quarter. But we have all seen it before. This kind of equipment, you have corrosion happening. You have things which are breaking immediately when you start.
Other things are coming with time. I think you need 1 or 2 or 3 quarters more before you draw the very long term conclusion about your stability. It's looking good. I'm not announcing any issues, but I'm just saying that we shouldn't be too relaxed at this point. We should I think it's a good chance and a good possibility that we are.
But there are always some uncertainties so early in new technology when you have just started it up. When it comes to our production and our relation with suppliers, I think that we are seeing that we have secured the majority of our needs with long term prices or long term agreements. But we are, of course, nervous when we start up an equipment to book fixed agreements for the full volumes because what would happen if we have startup issues? We would just drown in any material. So we have some uncertainties on sort of the marginal volumes, but we think that it's not going to be an issue.
But we don't have it fixed. And therefore, I cannot say that we are dead serious on the last ton.
While I'm on the air, I just post another question coming through the webcast and that's from Owen Skowrott at Goldman Sachs in London. And the question is, do you see potential for bolt on M and A in this market? Or is organic growth such as Aitik the key to your strategy going forward?
Since we have tried and been very or very, but we have been active in looking at different investment opportunities external to the businesses we have or Bulin is Merapo. And we haven't been seeing anything that is challenging our organic growth projects. And we have also been very successful in the projects or organic growth projects we have been sort of investing in. And therefore, our focus is on one side, we have internal projects to sort of support our growth going forward. At the same time, lower prices will open up for acquisition opportunities.
So there are opportunities probably coming up if certainly if the market turns very negative. But yet again, we are looking at what should we use our cash flows for. And right now, it's pretty much used for the growth projects. So I think we would be open for external acquisitions, but we would like to see good terms on something very tempting before we would go on given the internal portfolio we have and we are developing.
Thank you. We have another question from Robert, if Ola can handle the mic. Thanks.
All right. Robert Reddin from ABG Sundal Collier. I just had a quick question on the East CapEx running at full capacity this quarter. Were there also sort of a full contribution in terms of EBIT or EBITDA this quarter? Or were there still some, let's say, ramp up or temporary cost in
Some ramping up, but basically we have it there. And then you can say that, okay, then we have to did the electronics recycling deliver the results expected? Basically, yes. And we have seen in more difficult terms some in we have produced a little bit less of lead. We have sacrificed in some other areas.
There are combined probably improvement possibilities, but the terms are okay. All right. Thanks.
Another question here. I must confess that I'm somewhat ignorant to the details of the scrap business. Is Bolin is earning a sort of a smelter's fee on the scrap? Or are you actually buying the scrap from sources and Bolin is taking the upside and the downsides of what you produce? And if so, can the scrap material vary much in its metal content?
The price system is looking like a zinc treatment charge, you can say, to do a draw a parallel. It means that we have a treatment we have we are measuring the metal content in the electronics, and we pay a certain part of that metal. So it's like a treatment charge. In addition to it, we have or not a price participation, but we have free metals. So we are not paying for all of it.
So we have high metal prices will give us better earnings. Low metal prices will give us less earnings. But a volume to feed through will give us a fixed sort of feed compensation treatment charge. So it's a combination of the 2.
And does the content in the scrap vary a lot from March to March?
Yes, yes, yes, very, very much. But that is also reflected in the price. Anyone we have been through this a lot. Anyone all the copper smelters can take very, very rich electronics. Just they can be just put into the smelter feed.
But if you have something which is a lot of the printed circuit board plastics, the board itself, then very few can take what we do. So there we have a very unique situation to take a lot of plastic rich material, metal low in metals. And there we have our best terms. That's where we have the most exciting and the most unique feature in Wuhlenberg. And the variations are huge.
Then just a briefly question on all the waste rock and other mining scrap that you produce. Is that something that you in some regard could sell as an infrastructure component for road building and things like that?
We have some that is a spot market, which when a lot of things are happening, when you're building railroads in Norland, for example, we do sell a lot of the rock to infrastructure build. Most of it is not sellable. It's not carrying the transportation cost, and therefore, it has to be
stockpiled.
Three short questions. Can you say how much of your second quarter mine output was priced provisionally at quarter end prices?
Roughly onethree. We are roughly at always at about a month. That is provisionally priced.
Right. And it was LME prices?
Yes. At LME prices, yes. Okay.
Which took down the good prices in April.
Absolutely. So that's probably the main reason why your realized average price was so much lower than the LME average for the quarter?
Yes. That is absolutely part of it.
Okay. I just thought it was important to clarify that because I think if people had got that right then you'd have delivered on target earnings. The second question working capital. You had an outflow of DKK 500,000,000 so far this year. How do you see working capital movements for the rest of the year?
Well, this is the most difficult question to always answer because it is difficult to have a very good grip on it. I would say that the best of their hope is that we'll be able to stay at the level that we have now, but it might fluctuate. It could go up and it could down, but the level that we have now is an appropriate level.
And by year end, we're going to give it another push. Then we're probably going to be back again where you are. So but it's an effect of the day of the closing. And we are shipload or getting shiploads. And if they're coming one day late or early that it has pretty significant effect.
But the base plan is you're where you should be?
Yes. Put it that way, we are right now stocked roughly on our targets where we want to be stocked, but that does move around that target.
And then finally, sorry if I missed this, have you corrected the instability issues at Kokola?
Yes.
Thank you very much. Gustaf Sandstrom, from Pencil Bank. Just one short question regarding Ada, which experienced stable production this quarter. Do you foresee a significantly better result from Ada for the full year 2012 compared to previous 2 years?
Oda. Oda. Oda. Oda. Oda.
Well, Oda, do we have remind me now, do we have something called Oda? Well, Oda, we Oda is one to Oda and Tara are the 2 least profitable units in smelter and mines. We have a very, very strong push to improve the situation in Oda because we have fundamentally low electricity prices there, but we have fundamentally high tailing costs there. And we are working with that fundamental. We have to drive cost out of order and the best way of doing it is to get better process stability.
We think we are on a very good track
there. Thank you. Do we
have any further questions from the participants on the phone conference?
No, there are no questions registered. Please go ahead.
So with no further questions in the auditorium here, no further questions on the phone conference and no further questions on the webcast, please any final remarks?
Thank you very much. We wish you a good summer and thank