Quantafuel ASA

OSE:QFUEL

Earnings Call Transcript

[Terje U. Eiken, Interim CEO & COO]

Good morning, and welcome to Quantafuel's second quarter presentation. My name is Terje Eiken, and I am the interim CEO and COO. After the presentation today, we will have a Q&A session. So please submit your questions as we go along. The next slide is a disclaimer that I assume that everybody reads carefully, so I don't use time to present that. Together with me, Chris Lach, our Chief Commercial Officer; and Kristian Flaten, our Chief Financial Officer, will present status and outlook today. Before going through the quarter 2 highlights, I would like to focus on another important issue. The UN recently released a report concerning environmental and sustainability with a very, very clear conclusion. The time to act is now. When Danish Broadcasting covered this report they focused on Danish companies already acting. And they chose to do an interview with our Managing Director in Skive Rasmus Kærsgaard who explained how we act now by processing household plastic into chemical products that are used for making new plastic with highest quality requirements. In Norway, a great example of acting now is our operation in Kristiansund, where we turn landfill or energy plastic into pellets that are used to make new products. So Quantafuel is not only Skive and chemical recycling. We are present in a broader value chain. We aim for the highest possible percentage of recycling with the lowest possible CO2 footprint by focusing on upstream logistics and combining mechanical and chemical recycling. We do it in Kristiansund, at Skive in cooperation with Geminor and are developing a similar facility in Esbjerg. Our target is to reduce the oil consumption and prevent plastic to get out of the cycle and end up in nature. We act now. The fundament for any sustainable business is a healthy HSE culture. And I'm very happy to report that we have another quarter without recordable incidents. We fully appreciate the market's focus on Skive, expecting confirmation of full production capability. As I will explain later, we need to install some equipment during Q4 turnaround to get to the long-term stable production, enabling this full production capability. Nevertheless, Skive operation continues to make progress. We are producing 7 days in a row at each line at high load with mixed post-consumer plastic. We have been testing and changing out components to create a robust, reliable system and subsystems. We increased the ownership to 100%, and I would like to thank the minority shareholders for their support during the development. Due to the extended duration of the project or the installation and the need for new equipment, the CapEx has increased to EUR 610 million. BASF showed their continued support by converting the loan into shares, and therethrough, they became the largest shareholder in Quantafuel. In Esbjerg, we have purchased the land or the property, and we are now preparing for EPC start-up. In Kristiansund, we are increasing both our capacity and capability within mechanical recycling. And in Aalborg, we are building mechanical capacity in cooperation with Geminor. The CEO search is ongoing, and our Board will inform you as soon as they have concluded. It has been a very seamless transfer from Kjetil Bøhn to the management team and Kjetil continues as a strategic adviser. As I already said, Skive is making good progress. But we cannot report proof of concept yet. We are developing a new industry, but we fully understand the investors in patience. We are 100% convinced that -- and committed that we will get there. On the slide, I have listed some operational highlights like we are producing chemicals within the specification. We are producing at high load for 3 to 5 days at each of the 2 operational lines. We are producing at design capacity. We are processing a large span of plastic qualities, and we have delivered products to BASF. I could also add a list of technical items we have worked on and sold, like we have created a stable and robust plastic feeding system. We have tuned the control system, especially focused on the pressure control. We have implemented online regeneration of catalysts. We have solved issues related to clogging of process equipment. And last, but not least, we have processed 355 tons of plastic during 1,400 running hours. Still, we have 1 known obstacle preventing the long-term stable production at the high load. We have now concluded on which equipment we need to solve this issue. We have ordered equipment, and it will be installed in the Q4 turnaround. There is a stretch in the supply chains, and this stretch has caused the turnaround to move slightly to the right compared with our original plans. We are sorry for that. And we are now in close dialogue with the key suppliers to maintain the Q4 schedule. As we all know, process equipment is always designed and installed with a certain surplus capacity. However, during testing and tuning, we have seen that there are some bottlenecks or systems where we actually need a little bit more capacity during some operations. To cope with that, we have now borrowed capacity from line 1 and 4 to make line 2 and 3 operational. So -- and that is the reason why we've been running 2 lines up to now. After a turnaround in Q4, we will upgrade all the systems so that we have enough capacity in each subsystem to support each of the 4 lines. And thereafter, we can run all the 4 lines. For this turnaround in Q4, we have a dedicated team, planning the installation, following up the subsuppliers, planning commissioning, start-up, operational procedures. And with these changes installed, we are fully confident in reaching proof of concept around year-end, and then we have the capacity to reach full production. Then I will turn the focus to Kristiansund. Here, we are developing a plant with a unique capability. EU targets 55% recycling within 2025, but we aim higher. Expansion of the mechanical capacity and capability is on track. We are moving now into a new facility providing more space for better integration and future expansions and testing of the pilot reactor for chemical recycling is ongoing. After we adjusted some equipment and the operating procedures, we now produce pyrolysis oil with high quality. The testing continues with a total program to ensure that we have the correct design basis. Let me start on rolling out the permanent chemical plant in Kristiansund. On the picture, you see a smiling Erik Fareid, looking at an oil sample from this pilot reactor. And for those who don't know Erik, he is one of the main reasons why we have Quantafuel today. Now I would like to hand over the word to Chris, who will talk about technology, sustainability and growth. So please, Chris.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Thank you very much, Terje. I'm very glad to be here. Very glad to present this. And I will be talking -- saying a few words about the positioning of Quantafuel in the circular plastics economy. Many of you have probably seen this logo. It's a very good one, but it's deceptively simple because it shows or doesn't show or hides the complexity we're dealing with. Because if you know what we're talking about, then reduce and recycle are actually in conflict with each other. Why do I say they're in conflict, that's because some of the most efficient plastic materials in use, are not the most easy ones to recycle. If you look, for example, at a multilayer film, it will save around about 25% of packaging weight, yet it is difficult to recycle in mechanical recycling. So in order to build a successful effective circular economy, what, in our mind, needs to happen is that we take the materials that are most suitable in the application and then find the right suitable recycling methodology for that. So there is no one-size-fit-all -- sorry, there is no one-size-fits-all for the application, but different approaches are preferred also when it comes to recycling. And that's why Quantafuel is looking at the bigger picture and building up our presence and why we are looking at both mechanical and chemical recycling and the sorting strategies behind that. I will now take you through the value chain we are building up in Denmark for the Aalborg pretreatment plant as well as the plant at Skive and the R&D work we're doing. A significant step in this is the decision we made in quarter 2 to build a pretreatment or sorting plant in Aalborg. What that plant will be doing is it will be taking in homeless waste from the Nordics mainly with a target to put it into our chemical recycling plant in Skive. But there are some fractions in that waste which is coming in, which we don't want to put into that plant.For one hand, we see here on the upper end, there is some material which can be recycled mechanically. That is sorted out in this plant and put into mechanical recycling, which is ecologically and economically more effective. Then we are taking some material that we don't want to have in our chemical recycling plant such as drink cartons, tetra packs or metals that is sorted out and taken off by Geminor, some plastic fractions for incineration. The mainstream then goes into our Skive plant and then is forwarded as the pyrolysis oil as chemical raw material to our partners at BASF. And that is proceeding, as Terje was talking about. We have achieved sufficient stability in our Skive plant to now be testing material from different suppliers so that we can correlate what the resulting oil is with the input rather than any operational issues, which we might have. So we are now actually testing the materials supplied by our contractual partners such as Geminor and Grønt Punkt. But we do not stop there. Today, the plastic waste that we're using is desperately looking for a home, and the material we produce is in short supply. So it's easy to find offtakers. But going forward, as volumes increase, the plastic waste that is priced attractively will be harder to get, and the specifications we have to deliver to our customers will be more narrow because the dilution effect will be less. And this is why we are today developing the technology to deal with these future challenges. We are today working to improve our technology to be ready for what's coming. And for that, we are working with our own teams in Sweden, Denmark and Norway, but we're also working with our partners at NTNU in Trondheim and with BASF and their partners, which is a cooperation that we think is very good and helpful. But just don't take our word for us being ready and doing this. We are keenly aware that we have to be able to prove that what we're doing is true and with downstream and third-party providers, ISCC PLUS and REDcert2 for the certification that we can actually track our document of our -- sorry, product, the full chain from waste collection towards the production of new materials. In Q2, we have achieved certification by REDcert2 and ISCC Plus. We're also aware that there's a discussion about the environmental footprint of chemical recycling. In Quantafuel, we are working with an external party, NorSus to do a detailed life cycle analysis, both to be transparent, but also to use the right levers for optimization going forward. And this optimization, we will then implement in our future plans and our future setup, which I will talk about in the next slide. when we talk about the growth. We have mentioned Esbjerg. Esbjerg is our first mega plant in Denmark and one of the biggest in the European Union. This is the first time we are developing an integrated plant with all capabilities, achieving recycling rates second to none. Because in one site, we are combining the sorting line, the pretreatment line and then the chemical treatment line, which is Phase 2. And we have today purchased the land and are very grateful for the very good cooperation we have with the Esbjerg community. So Esbjerg continues as communicated and as planned. Currently, both industrial and commercial partnerships are being evaluated, and we will communicate any developments there as they are ready for communication. This is one part of the slide that you've seen before, and we've taken some liberty in adjusting that slide, updating it, modernizing it. We have talked about Kristiansund, we have talked about Esbjerg. The only additional project I want to talk about in any detail is the Amsterdam plant because we have made steps forward on that one that are significant. We're working here with VTTI and VITOL, and we have agreed the site and scope of the plant and are getting ready to submit the permit applications. A number of other projects that we have communicated previously are proceeding as planned, and we will, of course, inform whenever we pass a significant milestone. The main thing that is required to maintain this broad effort and fund these projects is cash. And that's why now is a very good time to hand over to Kristian. Kristian, the stage is yours. Thank you.

[Kristian Flaten, Chief Financial Officer]

Thank you, Chris. Our full financial figures are included in the first half year 2021 report, but I want to highlight a few key items for the year so far. Quantafuel has total assets of NOK 1.55 billion with a total equity of NOK 933 million at the end of second quarter. We had NOK 495 million in cash, and we are pleased to see that we're getting closer to the end of our project CapEx for Skive and Kristiansund. Remaining CapEx for the 2 plants is NOK 70 million, including the additional costs described by Terje. Gradually, this means that we are shifting focus towards operational cash flow from Skive and Kristiansund. Further, I would like to highlight the completion and integration of important M&A transactions like Geminor, Replast, Skive minorities and Hulteberg licenses, which means that we are also streamlining the financial and operational performance within Quantafuel. During this process, we have a tight follow-up on all costs, SG&A and OpEx to ensure lean and cost-efficient day-to-day operations. By the end of second quarter, we had debt of NOK 80 million adjusting for the conversion of the BASF convertible loan in July. BASF now has an ownership of 10.6% and is our largest shareholder. We are grateful to see the continued high interest in our company and our share. 650,000 shares trade on average per day, and we have more than 6,000 shareholders where 60% are non-Norwegian. In addition to our major industrial and strategic shareholders, we have an increasingly broader interest from institutional and private investors across Europe and in the U.S. We get a lot of investor calls and comments, and we acknowledge our investors' need for information. We can ensure you that we will always communicate important information to the full market. And by this, I'm handing back to Terje for the summary.

[Terje U. Eiken, Interim CEO & COO]

Thank you, Chris, and thank you, Kristian. As a closing remark, I would like to say that we strive every day for zero accidents, allowing everyone to walk home safely. We are committed to acting now, creating a sustainable business, attacking one of the major environmental threats. And there are 3 takeaways I would like you to remember from this presentation: one, we are confident that we will reach our goals in Skive; two, we are making significant steps towards a combined mechanical and chemical recycling setup; and three, we have a robust financial position. Thank you. That ends the presentation. So then I would like to invite Chris and Kristian back together with myself. And then we open up the question log.

[Terje U. Eiken, Interim CEO & COO]

This is on the fly. So you just have to excuse me that I have to read first before we can answer. The new pyrolysis technology in Kristiansund is probably more important than Skive as first generation, and it will probably be the basis for a big scale rollout.I would say the reactor in our processes is very important, but it's not the core part of Quantafuel technology. We will always search for the best possible reactors, creating the best possible pyrolysis gas, suitable for the downstream purification process, which is the Quantafuel. Is there anything you would like to add from the R&D chemistry point of view, Chris?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I like what you sometimes say. Sometimes it's better to have a Toyota that's running very well and reliable rather than the -- I'm not going to name any brand now, the car that's very fancy, but always sitting in the garage. So I think one of the key points we should mention here is that the Kristiansund reactor is driven electrically. So that, from a CO2 point of view, make -- may make sense in certain applications. In other applications, the Skive reactor, which uses the gas produced in running the pyrolysis reaction may be the better solution. So in general, I think, as I also talked about the R&D work we do, the key thing is to have the right setup for the right location and the right partners. And I think that's the best answer we can give. We look at what's given in a project and what do we want to build there. Like the Amsterdam plant is going to look different from the Esbjerg plant, but that's because Amsterdam is a different location from Esbjerg. I hope that answers the question.

[Terje U. Eiken, Interim CEO & COO]

The same person is asking a follow-up question, so we can take that also. Isn't proof of concept or commercialization more important to achieving Kristiansund than in Skive since this is more, let's say, newer technology? To that point, I will say, in Skive, we are proving that we are able to run for a long time with a high percentage of uptime, producing the right yield and the right quality. That is based on a reactor which is continuously running and producing this gas flow with pyrolysis gas. That will be the same in Kristiansund. So if we can prove it in Skive, yes, of course, we have to commission also a new test or a new plant in Kristiansund, but the proof is given is key to show it to ourselves and to everybody that this technology is capable of long-term stable operation. And we will have the same in Kristiansund, but it's not more important than in Skive, yes. Agree? Yes?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I fully agree, as always, Terje.

[Terje U. Eiken, Interim CEO & COO]

Thank you. I think this one goes to you, Kristian. How would you like to build the trust of shareholders in the future?

[Kristian Flaten, Chief Financial Officer]

Thank you, Terje. First of all, it's about for us to deliver on the technology on projects and operation, and from a communication perspective, also as I underscored in the main presentation, we will make sure, of course, always to communicate what we have all the important information to the full stock market at the same time. So this first is just to kind of continue to deliver and putting on all the best resources on all levels.

[Terje U. Eiken, Interim CEO & COO]

Yes. Another one, which is touching into both finance and technology and sustainability. Do you still expect a net positive income on receiving plastic waste, including disposal of the plastic you cannot use in your plant?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I can talk about this for many hours. You know that. So to give a short answer, if we do recycle the plastic, yes, indeed, I do. And that's why we are entering the sorting step in or Aalborg, in Kristiansund and in Esbjerg because the recycling rate, especially in Denmark and the Nordic countries is key for taking in the waste. So if we can confirm that we do recycle the material, and that goes back to everything I talked about with certification and Geminor and the integration into the ecosystem, then we will be getting paid for the waste we're taking in, and we will be getting paid for the material we produce. However, if you look at for example, we told there is always discussion whether some of the material will also be used for fuels. In that case, we will, I assume, not be paid for the material we take in. So the payment is very clearly tied to being able to transparently and trustworthingly -- I'm looking for the right word, I'll tell you, show that you are recycling this in a meaningful way. I hope that answers the question.

[Terje U. Eiken, Interim CEO & COO]

I trust that will, yes. Kristian, the same person has a follow-up question. Can you try to put some words on the pricing for the output you produce? What is the average price per ton? And how do you see the pricing going forward? Okay?

[Kristian Flaten, Chief Financial Officer]

Yes. We have guided for that on the long term, we have a guiding, and we maintain guiding that the offtake price is $1,000. But we have also indicated there is upside potential but no change to guiding. Currently, we have an agreement for somewhat lower than $1,000 per ton, but we find that the market remains still very supportive to our products.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

And if I may jump in...

[Kristian Flaten, Chief Financial Officer]

Yes.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Because I think there may be a certain uncertainty about what I said and what you said. And I think the key point is, if you today look at the price for chemical feedstock, that price is below the price for fuel. So what we see is that probably going forward, maybe not short term, but going forward, the price for chemical feedstock will be below the price for fuel. But then we get the payment, as I said before, for the plastic waste. So we assume that the overall profitability between supplying to fuel, no payment upfront, but higher price or into chemical recycling, into plastics or other materials, lower price, but upfront payment will, in the end, remain the same. That's why we are working with the figures that Kristian just mentioned. I just thought it helps if I tried to explain this.

[Terje U. Eiken, Interim CEO & COO]

The same person is also asking about do we see any differences in CapEx and OpEx going forward based on what we have learned in Skive?And if I take that myself, if we were to build Skive again, it will be at a lower price or lower cost. I think the key learnings from Skive are continuously brought into our engineering organization. And of course, we base every new project on these learnings. So the focus in Quantafuel now is to do it right the first time. Skive is built kind of a couple of times. So -- and what we do is Skive now is not more expensive than -- if we will do it right first time. But if you do it right first time, we wouldn't need to go through the intermediate steps. And that is the reason why we also have to increase the cost that we have to add equipment, replacing existing equipment, which is, of course, is a cost factor. So going forward, I wouldn't say that the Skive experience is driving the CapEx nor the OpEx upwards but make us able to do it right first time. On a general basis, there is a constraint in the market and an increase in steel prices, for instance. So what we see today is that the prices are at a higher level than they were, let's say, 6 months ago. But that's not driven by our experiences, but more about -- also driven by the general market condition. And that could go down again, we never know. That is out of our control.

[Kristian Flaten, Chief Financial Officer]

And just also to add to that, we also increased guiding already in the previous quarters, that has already been communicated as well.

[Terje U. Eiken, Interim CEO & COO]

Yes. So in terms of Kristiansund, when do you expect the first production and the revenue? Kristiansund is an existing plant where we have a mechanical line. This line is now being expanded to increase both capacity and capability, and this line is already generating revenue. With respect to the chemical pilot, we are producing oil. We still have to ship the first container to Germany, but that's not a significant volume. The significant volume will be when we have concluded the pilot testing and are building the permanent plant where we are aiming for a capacity of around 10,000 tons per year of plastic in [indiscernible] .Yes. The same person is asking also about partnership in Esbjerg. Is it industrial or financial or value chain? I think that is very close to your slide, Chris, so you should grab that one.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Okay. So elaborate, I don't want to do that much at the moment. But I will say that as we are still entering new fields, and if you look at the waste landscape -- recycling landscape, I shouldn't say waste, I should say, recycling, then it's a very complicated setup with a lot of players and a lot of different streams that you look at. So I would be happy and am discussing with players who have experience in the industry. And I would hope that any outcome will also include a financial investment because if both parties have a financial stake in the investment, then I think both are really committed. I think that is a fair way -- anything you'd like to add, Kristian?

[Kristian Flaten, Chief Financial Officer]

No. Just supporting that we are kind of carefully and selectively pursuing partnership opportunities for Esbjerg, both industrial and financial.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

And we have done that for the past many months or so.

[Terje U. Eiken, Interim CEO & COO]

So I'll try to keep up with the questions here. This is kind of online exercise. So I have to try to concentrate on 2 things at the same time. Can you please elaborate around the timeline for proof of concept and the timeline for stable production?As I tried to explain, after this turnaround, mid-Q4, we have been installing new equipment. We have stated that we expect to be in a state where we get long-term stable production, which will then enable this proof of concept. And we have written in our report that we expect it to take place around end of the year. We cannot totally, let's say disregard a possibility of the proof of concepts that happened even before, but the likelihood is not very high. After the upgrade, after the turnaround, we will be in a position to do it. But of course, when you install new equipment, you will always need some time to tune it to stabilize the production, to stabilize the whole process. So we aim for end of the year. It might slip into next quarter. But of course, the target is to do it as quickly as possible after the turnaround. With respect to stable production, we will gradually ramp up the production in Skive. This is not about switching on the power, then you are running on 4 lines of 100 production -- 100% production. This is about taking in one line by the other and gradually ramp up the production so that the run rate at the end of the year will be at the plateau production or the full production. But from the turnaround and during 2022, we will gradually ramp up the production. But the important thing is that it is very early through that we have the capability to run it at a high level. But we will not produce at 100% from day 1. I think everybody who has worked with a chemical plant, and then you can probably elaborate more on that Chris, has that knowledge that it takes time to introduce this new equipment and to tune a factory. Anything you want to add, Chris?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I think you've said it very well. Thank you.

[Terje U. Eiken, Interim CEO & COO]

Thank you. Then a follow-up question on the turnaround. What kind of modification work will be performed during Q4? We -- as I said, we have 1 remaining obstacle, which is preventing us from reaching this stable production at the high load. We have concluded on the equipment we need to create that stable condition. We have ordered it, and we are following that closely up. In previous presentations and discussion with investors, we have always stated that we are reluctant to dig into the details because it's a high shareholder value, what we have, let's say, found out in Skive. So when we have concluded now that we need to take out something to put something else in, that is a part of our IP, and it's a part of the shareholder value. If we disclose all the details, which we, of course, could do, that will help potential competitors to do it quicker and at a lower cost. And that's the reason why we don't want to go into detail. So you have to trust me, there is today, one known obstacle preventing us to reach this long-term stable production at high load. We have concluded with our partners on the right equipment to solve it. We have ordered it, and we will install it in Q4.Next question is about when it's reasonable to reach full capacity. I believe I have already elaborated on that one. Then I mentioned that Skive has managed to reach high load for 3 to 5 days at a time. Does that mean 90% to 100% utilization on the line? Would you like to take that, Chris, so that I can take some water?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Okay. We are targeting -- of course, we have said that we have reached 100% utilization on the line. So we have shown that the lines can reach full utilization. On a longer term, we talk about 3 to 5 days, it will not be 100%. It will probably be on average around 90% or below. If you do the calculation on the figures we have communicated in this discussion, it is 1,400 hours and roughly 350 tonnes that we have consumed overall, including startup and shutdown. And that figure calculates to about 40% average utilization over that time span, including the ramp-up and shutdown. So you can say that if we are running stably, then it will be around about that utilization. That is a -- have I disclosed too much?

[Terje U. Eiken, Interim CEO & COO]

No.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Nothing that somebody with a calculator couldn't have done.

[Terje U. Eiken, Interim CEO & COO]

And I guess that quite a few of our listeners, they are very clever with the calculator. So yes. Next one, what is the energy consumption per kilogram produced per -- kilogram product produced? I would like to try to install if your technology will be competitive with other PtL in the market. So this one is important. If you look at Skive and you do this pyrolysis of plastic, you will always have a certain percentage of the production, which is converted into very light gases, which are the typical methane, ethane, propane. These gases, they are not fluid at ambient pressure or temperature. So if you want to use them to something, you either have to -- you can burn them and create electricity or you could cool them down, and you can have that as a barbecue gas or as we do in Skive, we use them to -- in the burners to heat the process. What we have disclosed earlier is that approximately 10% of the plastic put into the process is converted into these noncondensable gases, which we then use to heat the process. So when you're talking about consumed energy, you can think about the 10%. And other kind of external energies is very limited if you look at the process.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I would like to jump on this. You would like to calculate whether our technology can be competitive with other technology. I can talk a long time about this, but there are 2 parts to our CO2 footprint that are significant. One is logistics of supplying the plastics to our plant and then taking away the products. The other one is the heat energy needed to generate the oil. However, it is much more important that you use the right kind of energy and take the right kind of application for what you produce than what kind of thing you do. Like in Norway, Kristiansund, all the electricity is CO2-neutral, and it's cheap. So an electrically driven reactor makes sense. In other regions, electricity is generated from burning coal and also very expensive. So it doesn't make sense to do an electrically run reactor there versus using the gas you produce. Then again, sometimes maybe you have a good use for the gas, so you want to do something else. So I think this kind of thinking is much more important for your competitiveness than what is the specific consumption per kilogram of plastic waste pyrolysed.

[Terje U. Eiken, Interim CEO & COO]

Yes. Thank you. I have one on finance, Kristian. Do you have a financial partner for the plot in Esbjerg, and will it be 50-50 ownership?

[Kristian Flaten, Chief Financial Officer]

Yes, we partly answered that together with Chris previously, but currently, no, but we are doing and finalizing a number of discussions, both early stage and partly also late-stage discussions, industrial and financial.

[Terje U. Eiken, Interim CEO & COO]

There is a question also about if we can explain the development of the stock exchange and why the -- our share price has negative development?

[Kristian Flaten, Chief Financial Officer]

Yes. Of course, we are not happy, of course, to see what we have kind of delivered. We have not -- are not happy to kind of see the performance of the share price. We are here to create also shareholder value to all investors. And we are, of course, focused on this in our everyday business. It's important for us to underscore that we understand the frustration. We also feel the same. We are also invested both directly and indirectly. We do everything we can on technology projects, operation as earlier stated, and then kind of the downmarket will kind of decide on the price going forward.

[Terje U. Eiken, Interim CEO & COO]

Yes. A person is asking how certainly we are in percent that we will reach a proof-of-concept without further obstacles than those already identified? It's very hard to talk about what you don't know. But what you need to believe is that we have disclosed everything we know. So we have one known obstacle. We have the solution, and we are confident that, that will solve it. To speculate about what we don't know, I think I can leave out for the dinner chat tonight. But we have disclosed everything we know, and there is nothing hidden in Skive today, which we are not attacking and solving in the Q4 turnaround. One person is asking about is there any interest in the market about the licensee parties with our technology?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Yes, indeed, we have. The reply is that at this point in time, because it's not just about building the plant, it's also about how we sought the waste, how we set the whole thing up. What we do with the product, we don't think it is the right time to talk about licensing our technology at this point in time.

[Terje U. Eiken, Interim CEO & COO]

Yes. Then we have some questions about Skive again. First one is the conversion rates. How much plastic you need to make 1 ton of offtake? Maybe we can turn it around and say, if you take 1 ton of plastic, the offtake is 800-kilo of product. That is still our target and what we are aiming for. Of course, during the start-up, when we have been tuning the factory, let's say, the yield has been lower. But what we see is that when we get off to the right load that we are running at high load, the yield is where it should be. So during testing, it has been partially lower when we get to the high load, the yield is where it should be. I think that's a fair statement. Same person is asking, there have been adjustments of CapEx at Skive almost every quarter. Why has there been so difficult for you to forecast CapEx? And is this the final CapEx forecast? As I said, we have taken into consideration everything we know. And based on that, we have adjusted the CapEx, both because we need new equipment and that we prolong the time for the project team to work on Skive. So based on what we know today, there will be no further adjustment to CapEx in Skive. Why it has been so difficult to be stable on CapEx? As I said, this is about creating a new industry. Of course, if we have built Skive right the first time, the CapEx has been different. But we have to adjust as we learn. And with these new learnings, there are some adjustments. The project is prolonged, and that has driven the CapEx up. Last quarter, we didn't adjust the CapEx, and we were proud of that. This quarter, we had to do it. And I really hope that this is the last one. The last quarter, we needed to adjust the CapEx. Then a person is talking about when we are operational, what will be the regularity of the lines? So it is right to assume that there will be almost never before lines operational at the same time due to maintenance tuned on future issues. I think it's fair to say that every plant where I worked, there is a planned turnaround every year for doing maintenance tasks. We are planning with a very high degree of uptime. So most of the year, all 4 lines will work in parallel. That is also part of the concept that we are using the NCG, the noncondensable gases, from the lines to feed back to the burners to heat the lines. So we rely on stable production, and we rely on stable production from 4 lines. And most of the year, they are supposed to work in parallel. But you have to expect the turnaround once a year for maintenance, that's fair, I think.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I would like to turn that question around and say, if we have the assumption that almost never we'd have 4 lines running at the same time, then we would not have set the benchmark for proof of concept as high as we have done. We are expecting a very high reliability of these plants -- of these lines when the plant is operational. I think that's a fair statement, yes.

[Terje U. Eiken, Interim CEO & COO]

There's a question about FID and Esbjerg and when. Sorry, but we cannot comment on that. But as soon as we have concluded, we will let everybody know at the same time, of course. There's a question about the BASF. Is BASF still fully committed and involved in details and development?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

The first part, you have to ask somebody else. I can talk about my feeling. I am working -- sorry, I just covered the microphone. My feeling is that we are working together very closely. We are fully open. BASF have all the details in development. They are closely involved. They have people on site, both in Kristiansund and Skive this month. So from our point of view, I say, yes, I judge the fact that they are now the biggest shareholder as a statement from their side that they see this the same way. That's, I think, all I can say about that.

[Terje U. Eiken, Interim CEO & COO]

A person is asking, why can you say you are 100% confident that your technology works as assumed? Isn't there a certain possibility that it will run for some days and that you will then need to stop and clean the system before starting again? This is what we do today that we are running for some days, we are cooling down a line. We open it, inspect it, and clean when necessary, reassemble it, inspecting, heating and running. The whole thing with this equipment we are installing is that we removed this obstacle, which is preventing us from the long-term stability, which also means that we don't need to stop it and clean it. So based on what we know, we are confident that, that will work and that we don't need to stop it, inspect it and clean it with the high frequency we need to do today. So that's the whole thing with the new equipment that we do not need to do that. Another question about details about the technology we will plan to install in the Q4 turnaround. As I said, we think it's the right thing for our shareholders that we don't disclose the details. Of course, it's a part of what we have learned and a part of our IP. So sorry, but we will not do that. There is a question for you, Chris. What is the quality of the pyrolysis output? And does BASF need to refine the product afterwards?

[Christian Lach, Deputy CEO & Chief Commercial Officer]

I think that is a somewhat confidential question, also a difficult one, because as I said, the quality of the product is variable according to the way the plant is running and the feedstock we are putting in. We are working very closely with BASF to align the quality of the product that we have to their needs. I said before, I think as the volumes increase, we expect the specifications will be more strict. But beyond that, I do not want to go into any details today. Same reason, sorry, but I think this is really IP within Quantafuel and BASF in this case.

[Terje U. Eiken, Interim CEO & COO]

I combine 2 questions here about revenue in Skive and shipment of products. The question is, are we booking revenue in the same quarter as we are shipping the products?

[Kristian Flaten, Chief Financial Officer]

No. So we have also kind of produced for, I would say, inventories. We -- in addition to 1 large holding tanks, we also have 3 kind of storage tanks for products.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

It goes back also to the relationship with BASF maybe. They are paying us, and we have a very good relationship with our partners, both upstream and downstream.

[Terje U. Eiken, Interim CEO & COO]

Yes. There's a question about when we expect to issue new shares for finance future projects. And I think this is the same as the [indiscernible] day if we decide to do that. Of course, we have to inform everybody at the same time. And we will inform as soon as we have taken such a decision, if taken. So that is nothing we can disclose here. But we will do it in accordance with the governance, let's say rules of the stock exchange.

[Kristian Flaten, Chief Financial Officer]

And we have multiple avenues as we partly have indicated as well.

[Terje U. Eiken, Interim CEO & COO]

A question about the future selling price in dollar per ton from the [indiscernible] from Skive. I guess that was already covered.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

One thing I usually say that I haven't said today is I would assume that it will always be based on a benchmark, be it fuel or be it chemical recycling. So NAFTA benchmark plus a sustainability premium minus a quality penalty. The quality penalty depends on the way the plant is run and the sustainability premium depends on the availability of recycled feedstock. So anybody can play with models based on that, I think.

[Terje U. Eiken, Interim CEO & COO]

And here, Kristian, is a question you cannot answer, but I will still ask you. Any projection on when we will move from Euronext Growth to Oslo Stock Exchange?

[Kristian Flaten, Chief Financial Officer]

Yes. We are very happy kind of with our current listing on Euronext Growth. And of course, we have also communicated that on the long term. We have an ambition and a plan to go for the full listing on the main Board. But currently, we are happy kind of with the current listing, and there's no current plans or anything on that, and that will be kind of decisioned by the Board in due course.

[Terje U. Eiken, Interim CEO & COO]

Do you expect firm commitment during 2021 from an investment partner to start to build a new factory? Or would it be reasonable to expect such commitment after Skive has been running full capacity? I can say that we have a portfolio of projects. Chris talked about some of them today. Of course, behind that portfolio, there's a lot of prospects. There are a lot of companies, persons interested in developing projects together with ourselves. When we get to the stage where we have passed a final investment decision with our Board, we will, of course, inform everybody, but we cannot talk today about when we believe that will happen. We will always inform you when it has happened. Okay. I struggle to see the new questions here coming up. So either we have run out of questions. I think so. You are nodding. The support team is nodding that we have gone through most of the questions. So together with Kristian and Chris, I would like to thank you for participating. Thank you for a lot of good questions. We have done our best to present the status and the outlook to answer your questions. We are transparent. We disclose what we can disclose. And we are happy that so many persons are interested in Quantafuel, in our technology. What we do know to act, and we are really acting now. And we trust that this interest will keep on, and we will do our very best to not disappoint you on what we have presented today. So thank you very much, and have a nice day.

[Christian Lach, Deputy CEO & Chief Commercial Officer]

Thank you.

[Kristian Flaten, Chief Financial Officer]

Thank you.