Ladies and gentlemen, good afternoon. It is time to present our second quarterly report for this year. Today's presenters will be Lennart Evrell, our CEO, and Mikael Staffas, our CFO. Welcome. It will take about 30 minutes, then we will have a Q&A session. Thanks.
Thank you, welcome to this presentation. We are quite happy to see Boliden 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 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 you look at the summary, revenues were SEK 10.3 billion or SEK 4, compared to SEK 9.8, which is up, which is driven, of course, by the production, also of the combined effect of metal prices going negative, also currencies going positive. Earnings before revaluation of process inventory were SEK 931, which is slightly lower than the first quarter, predominantly driven by the market terms, helped and supported by strong production. The cash flow was around zero compared to a quite big negative cash flow last year. In the quarter, we have had good production all over. Basically, all the smelters, all the mines have been doing good. Extraordinary ore production in Aitik and contained metal production in Garpenberg.
The recycling plant in Rönnskär, 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 second quarter, the first quarter in possible production, because we started inaugurating or had the first product being produced on the 18th of January, we actually did. We did as good as it could have gone, actually, in Rönnskär. We have seen the market being in continued uncertainty. Of course, 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.
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, maintenance stops in the quarter. 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. 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. All the lines are negative.
The BRIC countries to the right, Brazil, Russia, India, China, BRIC total, are on different levels. One of them, Brazil, going in on negative growth. 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, 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 first quarter. We saw a 15% growth of car production in the second quarter.
If we see Germany is going down from zero to negative, South Korea being as big as Japan, 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. 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. Copper on the next page has a similar. We have, of course, a continued concern that inventories, the official inventories in zinc is continuing up. 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. Here it is combined with lower inventory levels. The treatment charges are the spot terms of zinc. They have been historic, very low, but have turned up a little, 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. The spot terms are low, if anything, a little indication of an improvement, basically stable. The premiums are in Europe. That's the middle curve there, stable. Also here, I think you can see a confirmation of what I'm saying is that the demand is reasonably good. In the north of Europe, where we are, we are seeing an okay demand situation.
We see some declines in some of our customers, we have little difficulty to replace those lost volumes to other industrial customers elsewhere or still in Europe. What we're seeing is that our industrial supplies are parallel or the same as in the first quarter. We cannot see any factual deviation. Everybody this time, as well as after Q1, are talking about the uncertainties, we don't see it in the numbers. The precious metals on top here are on very high levels, certainly gold, with a slight negative trend, lead is looking very much like the zinc development. We then go in on different areas. Earnings in the mines were SEK 726 million compared to SEK 1.1 billion almost in the previous year, SEK 822 million in Q1. Very high production certainly in Aitik, we had high grades in Garpenberg. The cost is on the high side.
It's driven by the general cost increases in the world, which is also supporting the cash costs and the prices to an extent. 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, we have a little too many people, it's not a big deviation. On CapEx, we invested SEK 753 million compared to SEK 600 million a year earlier, the projects are on plan. Of course, the strong thing of this report is, of course, Aitik, 38 million tons annualized production rate. One of your question will, of course, be can you keep this trend? The answer is, of course, not because we have our plans, we have to take away waste rock, 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. What it does, it is to reconfirm very strongly that we are on plan for our expansion of Aitik. 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, well, we see how the Q2 copper ore production went high, that the contained metal is not following because we are now on the low side on 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.
We then have the Boliden area, which is doing less in zinc now and more in 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. Also the smelters have had good production. Earnings were SEK 240 million compared to SEK 143 million a year earlier. We had more in the first quarter, we announced, of course, all the maintenance stops with an announced effect of SEK 130 million, we came to that. I think the real number is slightly over, basically on plan there. CapEx was SEK 274 million. 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, we see that the metal supplied is slightly lower.
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 Odda was stable in production and has been doing a very good job when it comes to stabilize the process control. We had some disturbances in Kokkola. That is unusual. You normally have the opposite around, that Kokkola is always performing and Odda have issues, but this time it was the other way around. The big thing, of course, in smelters is, again, the Rönnskär, the electronics recycling, which has been going very well. It started in the first quarter. At the end of the first quarter, 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 are close, and we are producing a little more than the normal level in the old Kaldo furnace. That will be evening out if things are going to plan. We are going to increase production volume in the new equipment a little more. We are going to produce more lead in the old equipment. Those are mixed changes, but they are perfect on plan. The financials, Mikael.
Thank you, Lennart. Thank you. Just a few highlights on the financial side. You have seen these numbers, and Lennart has already spoken a little bit about them. We had an EBIT ex profit inventory revaluation of SEK 931, which is slightly less than we had the previous quarters. We had a free cash flow at SEK 79, or just about zero, compared to a quite negative last year or a quite positive number in Q1. As you all know, having followed this, you know that this has to do with the inventory and how inventory levels go up and down, and we have had a stable development on that side in the quarter. CapEx might be a number you haven't seen before, a little more than SEK 1 billion in the quarter of CapEx. Very similar to the quarter before. We have a gearing of 29% at the end of the period.
I will come back to that. Now, how did the bridge look for the development of the profit? The volume, as you can see here, when we are comparing to the first quarter of this year, you have an increase of the volume factor of SEK 168 million. This is important to remember, this is in spite the fact that the grades are going down in Aitik, which, of course, contributes negatively to the volume growth. Despite that, there is an increase of SEK 168 million. This comes mainly from mines because of the increased number of tons coming out of Aitik and also the good grades in Garpenberg and Tara. Also smelters are contributing positively, which is also very positive in this time. You 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. It's been true here as well. The net effect is about SEK 238 million negative on the terms. Costs are up SEK 137 million. 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 SEK 130 million. 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-over-year. Just a quick comment on the internal profit elimination.
That was a discussion that's always been going on and why we're doing worse there, but we're at SEK 18 million, which is basically close to zero, which is where it'll be over time. We just had a very positive contribution from there in Q1 that comes into play here. If we start looking on comparing year-over-year, we once again see a positive volume contribution of about SEK 167 million this time around, increased production both in mines and in smelters. We once again see the negative correlation between the development of the currency and the metal prices. Here, they net each other out, and that is a negative effect of SEK 180 million. Here we have a cost effect of about SEK 160 million, and we can think a little about where that SEK 160 million come from. That's roughly a 6% increase of cost year-over-year comparison.
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. 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. 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 actual usage. 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? 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 move on to the cash flow, as I said before, the cash flow is at SEK 79 million, which is close to zero, and you can visit it at this pace and at these earnings, we managed to fund our investment. The contribution from changing in working capital was 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 zero. With this kind of earning, we can fund our own investment. The capital structure, 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 SEK 1 billion or SEK 1 billion plus of dividend in this quarter. That's also why the net debt is up about SEK 1 billion, also linked to the dividend that we've had. 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.
38 millions in Aitik is not an indication that we have now a new plan, which is not 36 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. Before we have seen that is wonderful. Not as good as these wonderful results, but of course we need one or two or three or four quarters to see that everything is working. It's looking good. It's looking good, but also we can produce 38 million tons when everything is going well.
If we were on, say, 31 a quarter before, because then we have more ore to process, if everything else would allow it. It's not a new plan, but I think that we can be very certain that Boliden is on delivering strongly in Aitik. When it comes to Kankberg, we started the ore production already in, well, the first little things were done in the first quarter, but basically we have been ramping up ore production, and we are stockpiling it in Boliden today. The mine is in production. We are going to process. We are doing campaigns in the leaching plant in the Boliden concentrator. We have long lead times. It's long process times, once it's out of the mines, it's delivered to Rönnskär. In Rönnskär, we have another quite long lead time.
It will be sort of profit in mines. 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 on. Given the lead times here, this is just to say that the profit of Kankberg 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, we have done quite extraordinary steps forward there. We are far in the construction of the buildings of the new concentrator. We have the basements for the grinders. 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, 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 1,200 meters and to the full diameter. There we are in the process of doing the lining and all the 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, it's nothing to worry about. We are well within the framework of the entire time plan.
Garpenberg is on plan, and it's going really well. Rönnskär we have been talking about already. We had the Minister of Environment, Lena Ek, doing the inauguration. Some of you were there. The production has been going real well. Silver recovery in Kokkola was just started, which is the next strategic project which will go in production 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 1,087 meters minus. These are the foundations for the head frame of the hoist, the mine hoist. This is the mill basements for the mill.
This is the flotation building itself, and here we have the roof panels coming on, 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 in over 36 million tons, rate in Aitik. Big thing. We have full production in Rönnskär. Big thing. We are starting to produce gold ore from Kankberg. That's big. We are going to see the tellurium in full production of that, the impact by the end of the year. We have a couple of guidings 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. Kankberg mine is started and we will see the effect coming in mines, but be eliminated, I suppose, probably in Q4. The group result will be limited in 2012. Marliden East is essentially doing copper. It's a copper zinc satellite pit that will deplete and go down by year-end, when Marliden, which is predominantly zinc, is going up. We're going to see copper going to zinc here, and at the same time we are seeing gold tellurium coming here. We try to get that to happen but there will be, of course, big mix changes because of that.
Garpenberg was on very high grades in the second quarter, as we always say, if you for a period are below or above, you will be going down, if you are below, you will go up. 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 plan for. We have slightly higher costs than we think we should. 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, it's not going to be anything in Q4.
Compared with SEK 130 in Q2, we're going to have something like SEK 50 million in maintenance stock effect in the third quarter. Our guidance on CapEx remains the same. It's not changed. No, we haven't said anything in particular today, nothing too much to a disclaimer on. We're happy. Cost is maybe a little too high, but else than that, we're pretty happy with the development. Thank you.
With that, we open up for questions. I think we start off here in the room where we have a small crowd, would you please wait for a microphone? You can take this, Julian Beer.
Thank you very much. It's Julian Beer from SEB and Enskilda. 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? If so, how much could the cost reduce as you normalize the process?
The answer is clearly that we are doing sort of volatilities on daily production rate in Aitik, it's converging to a more process control environment. That is a good situation to see production coming up, cost not going up. Basically you have a unit cost improvement there. There might also be cost reductions possible there. I think you should expect some improvements. 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 well. On the assumption that it's 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. Then, in terms of a normal mill rate for Aitik in 2012, would that be somewhere near the midpoint of this 31 and 38 million tons per year figures you talked about?
I think 38 is not in the plans, consequently, I don't think it is not a possible level to have in the mindset. We are working in the direction of 36, would everything go perfect, might be that we have been a little bit behind plan. We can be a little bit above, I wouldn't draw two long conclusions. Your precise question was if the mill would allow it, the mill produced 38 million tons or processed, if would there be more copper or less or something else? It doesn't change. You know, I know this mill is capable of 38 million tons. It did it for a full quarter, then it can be done again. The mine is not capable of bringing so much ore. That's the answer.
Okay, great. Then finally, what sort of copper grade, head grade would you expect for the second half?
The guidance we had at the Capital Markets Day , which we are continuously referring back to and which is available on our homepage, is that we have a low point for a quite stretch in time here, which is approaching the point 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. 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. I wouldn't count on too much more for a while to go now.
Thank you.
Lower on the other hand.
That's great. Thanks.
Ola Södermark, 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.
Shall we take a bit of You should probably take, or shall I do it? Yeah, 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 Rönnskär, we are ramping up Kankberg. We have had a summer break. It's giving some kind of an effect in the summer months. We have to educate more people. We should be able to fine-tune cost here, 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. I don't think you should expect a big step in cost.
Sustainable cost from now it's a fair assumption.
I said that last quarter, it was not a clever move to say that because we didn't exactly do it. I think it shouldn't be Maybe, yes, maybe on this level.
A question on expansion in Aitik by 20% to 30%. What's the timetable there? What's the obstacles or the thresholds?
Well, when we spoke about Aitik 45, 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 36 millions, which we did. I think the mill is today not enough to do the 45, 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 million tons, we have a hell lot of waste rock to take away in order to support that kind of ore tonnage. 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.
We think that we are definitely on the right track now. Right now we are almost not using the crusher in the bottom of the pit because we're very high up now. Again, if the equipment is working well, we have a substantial overcapacity, which is in the plans. What is then the limitation? Well, we have to get the permits. 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. I would say my point one, maybe permits today. Maybe permits. Would we have the permits? Would we do it very quickly?
No, it would still take a lot of time because we need some more trucks and drill rigs, it's not that easy.
The timetable, it's two years or best guess?
I think we cannot be as fast as that. No, that's too fast. We cannot be at 45. No way can we be at 45 in two years. That's impossible. That cannot be done. Three, four years, I think. We're doing the feasibility, so we shall come back when we have an answer to it. 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 stop here. Otherwise, they are taking us too far now.
Yeah. Okay, thank you.
All right. Do we have any questions from the participants on the phone?
I remind you, if you have a question for the speakers, you need to press 01 on your telephone keypad. We have a question from Mr. Mark Burton from Metal 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? Secondly, how long is the price of SEK 280 per kilo fixed for?
As an assumption of the tellurium circuit here, as you're correctly saying, we were fixing the price with one of our customers at SEK 280. That extends through 2018, I think. The production volumes are not being changed. 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.
What sort of majority?
Say again.
What sort of majority in percentage terms?
What kind of?
How-
Oh, okay. The majority of the tonnage.
Yes.
Have we communicated that? I think it is maybe 70%-80%. I am not exactly sure, but I think we have communicated that number.
Yes.
I think if we have not, I believe it is in that range in any case.
Okay. Thank you.
Thank you.
Next question comes from Mr. Christian Kopfer from Nordea Markets.
Thanks, operator. Just some quick follow-ups. First, I think you, Mikael, mentioned that you had some 64 million SEK 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 million higher for this quarter?
It was SEK 64 million less this quarter than previous quarter. It was actually positive SEK 18 million this quarter as well. It was a positive contribution from it this quarter.
Okay. I see. Good. Finally from me, on SG&A costs, we saw a quite huge increase in the second quarter. Going forward, is it more reasonable to look at, for example, the first quarter levels, in terms of SG&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. Fine. 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. So far, and at this point, we're 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. We are also moving our positions in order to try to improve flexibility if that market would be going, well, drying up. I think that in general, prices are stable and our situation is good.
Thank you.
I remind you that if you want to ask a question, you need to press zero one on your telephone keypad. That is zero one. There are no further questions from the telephone. Please go ahead, speakers.
Yeah, we have one question coming in through the web here. It's from Thorsten Fischer from Natureo Finance, and he has some questions regarding e-scrap. I just read them out. Do you think that you can keep the run rate of the Rönnskär facility of 32,000 tons in Q2, also in Q3 and Q4? Do you have enough feedstock to the annual production of 120Ks for this year? Do you see a potential bottleneck in feedstock going forward?
The first question of our ability to continue on this level, 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. 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 one or two or three 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. 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. 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 material. We have some uncertainties on sort of the marginal volumes, but we think that it's not going to be an issue. 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 posed another question coming through the webcast. That's from Owen West at Goldman Sachs in London. The question is, do you see potential for bolt-on M&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 active in looking at different investment opportunities external to the businesses we have, or Boliden is made up of. We haven't been seeing anything that is challenging our organic growth projects. We have also been very successful in the projects or organic growth projects we have been investing in. Therefore, our focus is on one side, we have internal projects to support our growth going forward. At the same time, lower prices will open up for acquisition opportunities. There are opportunities probably coming up, certainly if the market turns very negative. Yet again, we are looking at what shall we use our cash flows for, and right now it's pretty much used for the growth projects.
I think we would be open for external acquisitions. We would like to see good terms and 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, Olof, you can handle the mic? Thanks.
All right. This on. Okay, Robert Redin from ABG Sundal Collier. I just had a quick question on the e-scrap expansion. 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, say, ramp-up or temporary cost?
Some ramping up, but basically we have it there. You can say that, okay, then did the electronics recycling deliver the results expected? Basically, yes. We have seen more difficult terms. 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 e-scrap business. Is Boliden earning a sort of a smelter fee on the e-scrap, or are you actually buying the e-scrap from sources and Boliden is taking the upside and the downsides of what you produce? 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 draw a parallel. It means that we are measuring the metal content in the electronics, and we pay a certain part of that metal. It's like a treatment charge. In addition to it, we have, not a price participation, but we have free metal. We are not paying for all of it. We have high metal prices will give us better earnings. Low metal prices will give us less earnings. Volume to feed through will give us a fixed sort of feed compensation, a treatment charge. It's a combination of the two.
Does the content in the scrap vary a lot from batch to batch?
Yeah. Very much. That is also reflected in the price. We have been through this a lot. Anyone, all the copper smelters can take very rich electronics. If you take a mechanical separation of the components, which are heavy in metals, they can be just put into the smelter feed. 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. There we have a very unique situation to take a lot of plastic-rich material, low in metals. There we have our best terms. That's where we have the most exciting and the most unique feature in Boliden. The variation are huge.
Just a peripheral 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?
That is a spot market, which when a lot of things are happening, when they are building railroads in Norrland, 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 a third. We are roughly at always at about a month. That is provisionally priced.
Right. It was LME prices?
Yeah, at LME prices, yes.
Okay.
Which took down the good prices in April.
Absolutely. 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 SEK 500 million 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 our 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.
By year-end, we're going to give it another push so then we're probably going to be back again where you are. It's an effect of the day of the closing, and we are getting shiploads, and if they're coming one day late or earlier, it has pretty significant effect.
The base plan is you where you should be?
Yeah. 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.
Finally, sorry if I missed this, have you corrected the instability issues at Kokkola?
Yes.
Thank you very much.
Thank you.
Hi, Gustav Sandström, Swedbank. Just one short question regarding Odda, which experienced stable production this quarter. Do you foresee a significantly better result from Odda for the full year 2012 compared to the previous two years?
Odda ?
Odda .
Odda .
Odda . Well, Odda . Remind me now, do we have something called Odda ? Well, Odda is one to Tara. Odda and Tara are the two least profitable units in smelter and mines. We have a very strong push to improve the situation in Odda because we have fundamentally low electricity prices there, but we have fundamentally high tailing costs there. We are working with that fundamental. We have to drive costs out of Odda, 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.
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.