Boliden AB

STO:BOL

Q3-2025 Earnings Call

[Olof Grenmark, executive]

Ladies and gentlemen, I'd like to welcome you to Boliden's Q3 2025 Results Presentation. My name is Olof Grenmark, and I'm Head of Investor Relations. Today, we will have a results presentation led by our President and CEO, Mikael Staffas; and our CFO, Håkan Gabrielsson. We will have a Q&A session, which we will start here in Stockholm. Mikael, welcome.

[Mikael Staffas, executive]

Thank you, Olof, and welcome to all of you as well. There, the camera is coming along, so welcome to all of you as well. I'd say welcome from a very rainy Stockholm this morning. I hope that hopefully, some of you will have a little bit better weather where you're standing than we have right here.

Now having said that, I think we have a positive results presentation ahead of us. If we just take a quick summary, I think it's no news to anybody that it's been very good prices and terms during this quarter. And as you know, those of you who have been with us for a long time know that what is most important for us regarding our results is maybe not the average price and terms in the quarter, but the price and terms at the end of the quarter because of our definitive pricing model that we have.

And we had good prices in the end of the quarter, which is important. Now having said that, price and terms are not everything going the right way. Currencies are going against us, but less than the positive development of metal prices. And also metal prices is a mixed bag where gold and silver has had an enormous rally in the quarter. Copper also strong development, where zinc more neutral and nickel quite an appalling development.

From our side, we've had good production, solid production in our mines in general. We've had record mine production in Aitik. That's not ore production, but mine production. The stripping has been very good and very successful, and it's giving us more opportunities as we move forward to have flexibility in Aitik as we will be approaching more interesting ores and better grades coming in future quarters. We also have record mill volume in Garpenberg in the quarter. The integration of the new -- 2 new units, the Lundin units in Zinkgruvan and Somincor is working very well.

It's working so well that we have more or less formally stopped our integration project, and these 2 units are now operating as an integrated part of Boliden more or less in all aspects. And then we did get regarding our new potential projects, we also, during the quarter, got the mining concession for the Laver mine. This has been appealed. So there's going to still be a process ahead of us until we can move forward and move towards an environmental impact assessment around Laver.

I should also say that key projects are progressing well as well. I'm coming back to that a little bit in a later slide. So the financial performance to start there. We have an EBIT, excluding the process inventory revaluation of SEK 2,752 million. I suppose we'll round that off to SEK 2.8 billion. There are some items regarding one-off item in there. Håkan will talk a little bit more about that. Cash flow was strong at SEK 1.3 billion. Part of that is still we're getting some insurance money, but we also had a strong underlying earnings and with a favorable working capital development has been helping us to get this positive cash flow.

That also means that we have net debt to equity down to 25%, which is actually similar to what it was a year ago, but now we have bought in the meantime, 2 new mines. CapEx in the quarter, SEK 3.8 billion, which is more or less in line with expectations. On the key projects, Odda, I suppose is the one should be talked most about. Hot commissioning is underway. Cold commissioning is in the finishing, hot commissioning underway.

This is, of course, where it's very interesting to make sure that all these new units not only work by themselves, but also work integrated with each other. We have started -- the leaching comes a little bit before, the Odda Leach Product. We actually had the first production just a week ago coming out, and that one seems to be working well. The main part is when we fire up the new roaster, and that's expected to happen in about, say, 2 or 3 weeks from now, and we will start feeding this one late November or early December.

The Rönnskär tankhouse on track, not really any news ramp-up during the second half of next year. The Boliden Area tailings sand and recycling is on track and moving on fine. And the Garpenberg expansion to 4.5 million tonnes, we're still pending a permit here, which is important for the project, also important for production this year. But the PACE project that we have started and announced in the Capital Markets Day is moving along according to plan.

On the ESG side, we also had a very good quarter. Greenhouse gas emissions, you might think when you see this, that this is a bad development. It's higher than last year. But you have to remember that we have not restated last year here for the 2 new units. So when you look at this on an equal basis comparing apples-to-apples, we are continuing very well on our greenhouse gas plan to reach our science-based targets.

The LTI frequency is down. It's down significantly compared to last year. It's down also compared to previous quarters. And if you add it up and look at the last 12 months, we're coming down quite significantly, which is good. The sick leave is also lower. It's the lowest number we've ever seen since COVID. And this is also tracking in the right direction. And hopefully, we'll continue to do that to develop even further.

On the market side, as we said, if we start with the negative, yes, there has been a negative development in the U.S. dollar for us, which is clearly negative, but that's clearly compensated well by both higher copper and zinc prices with a strong performance towards the end of the quarter, as I said before, and then a gold and silver rally, which has been very strong this quarter. There are some weak spots on copper TCs, zinc, spot copper TCs, while actually the zinc spot TCs have come up quite significantly during the quarter.

If you look in the world of our 3 main metals, you can see that it looks here like the costs are coming down in the copper sector to the left and also in the zinc sector in the middle. In reality, this is a lot about gold as a byproduct driving down cost and silver as a byproduct driving down costs. You can also see that the copper price is significantly above the cost curve in the industry, which, of course, indicates that there is a downside risk in the copper price, especially given the increases that we've had recently.

On the zinc side, yes, zinc price is clearly above the cost curve as well, not as much as in copper, which also limits the downside risk of zinc looking forward. A totally different story is nickel. You can see nickel, lots of cost cutting here. Part of this cost cutting is also by metals in terms of PGMs and maybe some gold or silver that's in nickel mines around the world. But it's also very hard cost cutting in some high-cost mines being pushed out of the business, which means that the quartiles come down.

But as you can see, there is absolutely no margin whatsoever for the typical nickel miner and the stress or the ability to take lower prices is very low, and that's why we see that there's actually some capacity already coming offline. If we look at ourselves and our production, as I hinted before, the mine production, total mine production was really high in Aitik, record stripping, which is good for the future. The actual mill production was in line with what we said we're going to be able to do this year.

We've had low copper grades but nothing new, but it's -- they were maybe lower than ever in this quarter, which is a way to say that we're coming closer to the higher grades. Boliden Area, very stable production, strong gold production, even though it was slightly lower than Q3 of last year, but that was, on the other hand, a very strong gold production quarter. Garpenberg, record mill volume. You can see that we already -- with the small investments that we've done in the mill, you can see that the 4 million pace is almost doable already today.

But as we said, going forward, we are constrained by the environmental permit, which is at 3.5 million tonnes. We have hopes that we will get a new permit before early enough in the quarter so that we don't have to slow down, but we don't know until we get it. In Kevitsa, we have now mined out Stage 3. We had a good production of 2.7 million, which is more than last year. And as you also know, the situation there is higher than the kind of pro rata pace that we can have because 10 million tonnes is our environmental permit there. So 2.5 -- 2.7 million in quarter, we cannot have sustained on that level.

Somincor, first full quarter within Boliden, so now fully integrated, improved operationally versus the previous quarter, the first quarter we have had. I would say, generally, Somincor is performing roughly according to our expectations that we had when we did our due diligence. Zinkgruvan, also first full quarter with Boliden, smooth production along the value chain within Zinkgruvan. We're actually very pleased with those 2 acquisitions as they come.

On the smelter side, maybe not perfect production, but still good production. Rönnskär had planned maintenance and had some unfavorable feed mix, which meant that we were a little bit constrained on production there. Harjavalta, as you remember, had a very big problem with the nickel line in Q2 that has been reversed. So the nickel line has been operating normally in the quarter. And also generally, you can say, stable production. In Kokkola, also stable production, good feed mix, by the way. Odda is, of course, impacted by the project, which means that you're not fully able to reach all the capabilities you normally have.

So we've had a somewhat constrained production compared to previous quarter. We've had a lack of intermediaries that have made it a little difficult to get the balance right there. And then Bergsöe, our smaller smelter that we don't talk too much about since it's a relatively small one, but they also had record production. It's the maximum production of lead alloys that they've ever had. And basically, it's a small unit, so you can talk about it, but sometimes you need to give a credit. They've had an outstanding overall equipment effectiveness in the quarter.

On the financial side, Håkan, I'll leave it over to you.

[Håkan Gabrielsson, executive]

Thank you. Thank you, and good morning. Well, as Mikael said, we have delivered an EBIT excluding process inventory of just about SEK 2.750 billion. That is significantly up to the previous quarter, Q3. But a little bit lower than what we saw 1 year ago. I think on this slide, it's also worthwhile highlighting the EBITDA, the operating profit before depreciation, which is up 16% year-on-year. So a good number there. And also the operating profit when we include the process inventory is up compared to both comparison periods.

Investments are in line with plan, and the free cash flow is strong. And I'm, of course, happy about that. I will come back to that slightly in a later slide. Looking by business area, you can see that mines had a solid quarter, a very good performance and an EBIT of SEK 2.4 billion. Mikael talked about good production. It was also helped by good gold deliveries out of the Boliden Area, where they emptied some tanks and shipped gold to the Rönnskär smelter. That boosted that profit a little bit, a couple of hundred. But as long as it's still in the group, we have to eliminate it.

So that is also the reason why the Other and Elimination is a pretty big negative number. But good anyway, and we'll, of course, release that profit once it has passed through the smelting process. Smelters, up compared to Q2 of this year. We had significantly less maintenance, but also slightly lower free metals and Mikael talked about some unfavorable feed mix in Rönnskär among other things. But all in all, a strong result. If we then move on to the EBIT bridges, starting with a comparison year-on-year, Q3 of this year compared to Q3 of last year, we have a price impact of plus SEK 270 million.

In there, there are things moving in different directions. The contribution from gold and silver is close to SEK 1 billion in terms of the improved profit, but it's then partly offset by a weaker dollar, where we've seen a sort of rebalancing between gold and dollar and lower TCs. But net effect positive on the price side. On the volumes, of course, the new mines, the acquired mines, Somincor and Zinkgruvan and the restart of Tara contributes positively. But we do have year-on-year a negative impact in Aitik, both regarding grades, but also the diorite intrusion and oxidized ore.

We also have -- even if I -- in the previous slide talked about strong performance in Boliden Area, last year was exceptionally good in Boliden Area, and we also have slightly weaker in Garpenberg. So there are a few things offsetting the addition of the new mines, but all in all, a good improvement. Costs, again, ramp-up of Tara and the acquired mines drives up the cost. Apart from that, we do see a good cost control in the system. If I take away the new mines in Tara, we have a cost reduction of about 3%. And our assessment is that it's a mix of basically flat inflation and a good cost control in our units.

Depreciation, well, Somincor and Zinkgruvan and Tara contributes. And then we have started to depreciate the dam project in Aitik, and we have some increase in Odda. On the items affecting comparability, as you might recall, we had a complete -- a total insurance coverage of SEK 3.4 billion. And we have been discussing the final SEK 65 million of those for about a year. We have reached an agreement on that right now. So therefore, we can recognize that on the P&L. And that means that from a P&L perspective, the full SEK 3.4 billion has been recognized.

Sequentially, comparing the profit development, prices are up about SEK 550 million. It's roughly equal parts zinc, gold and silver, all performing well. I can also remind you that the system with definitive -- preliminary definitive pricing contributes. The open positions that we had at the end of last quarter that has then been valued finally contributed by about SEK 100 million.

But then on top of that, as you know, we have -- we price gold and silver on 2 months MAMA, meaning that gold delivered in October, for example, gets its final pricing in December. And that means that a big part of the production of precious metals was priced in this closing at the prices as of the last day in the quarter. And since we had a good run with gold and silver that had a fairly big impact on the result.

Volumes, well, it's the full effect on the acquired mines that you can see here, partly offset by a little bit lower volumes, free metals in smelters. Costs, even though we add the full quarter of Somincor and Zinkgruvan, we have lower costs, and that is because we have less planned maintenance in smelters, but we also have seasonally lower cost, as many of you know, in Q3 every year.

Then moving on the items affecting comparability, that's the plus SEK 191 million. We had a cost last quarter related to the transaction cost for the acquisition. And this quarter, we have a positive insurance revenue and the SEK 190 million is the combined difference between those.

Moving on then to cash flow. We've talked about the earnings and EBITDA. We talked about investment, but I think what I'd like to highlight here is the strong development in working capital. We have been successful to get inventories out after the maintenance stop. Normally, when prices increase, we see a negative amount here, but this has been a successful quarter in working capital development.

And I'm happy also that it's the second consecutive very good quarter when it comes to working capital. So that's good to have that cash generation. You also know perhaps that from a working capital perspective, Q4 tends to be the strongest quarter of the year. Last year, we released about SEK 3 billion, SEK 3.5 billion. I think given the successful Q2 and Q3, it might be a bit less released this year, though, but still, we're on a good trend with working capital.

So finally, the balance sheet, the capital structure. Mikael mentioned that we have a net debt to equity of 25%. We're happy about that number. The strong cash flow, of course, contributes, but also the process inventory revaluations, the unhedged inventory where we have good development of metal prices contributes to net profit and also to equity, which also improves this number. We're happy about that, and we have a strong payment capacity and a robust funding all in all. So Mikael, care to continue?

[Mikael Staffas, executive]

Thank you, Håkan. Thank you. So looking for 2025, we are not changing any guidance at all with one exception. We are reducing the guidance for throughput in Tara from 2.8 million to 2.6 million. That's more in line with what we have produced. We have not been able to get the productivity in Tara up to the levels that we want it to be, and we'll continue to work on that, but we will not be able to get it quickly enough to correct what we have lost earlier in terms of throughput in Tara.

Otherwise, as I said, there are no changes in the guidance whatsoever, which means also that -- which somebody of you will figure out pretty quickly that the grades in Aitik will be higher in Q4 than they were in Q3. Otherwise, the math does not work out. One more thing that we are pointing out in the report, and I just want to make sure that it's clear to everybody is the situation in Finland with Finnish tax levels. It is not a pleasant discussion at all.

We can have all kind of discussions about what states should or should not do regarding taxation and when it can be changed. We -- in the budget proposal that's on the table in the Finnish Parliament, formally not decided, will be decided in December, but the likelihood of it not going through is very low. This -- depending a little bit on which year you're looking at and depending a little bit exactly how you're going to interpret some of these pieces, it's around EUR 20 million to EUR 30 million per year of an annual cost and cash flow to Kevitsa.

And just to be very clear, we also said that we will, because of this need to reassess some future potentials in Finland because with a higher tax rate, there might be certain -- or every investment decision in Finland will be less interesting, if we put it that way. The good thing, if you want to have any good thing around it is that Harjavalta and Kokkola are not directly affected by this change. And in the short term, also not indirectly affected. The indirect effect will come over time.

So with that, we -- by the way, we talked a little bit about the calendar here, and you can see it behind you. What is here, which is new is the next thing that's happening is December 5, where we will have a guidance release with an audiocast. We are changing the way -- and we talked about this before, we're changing the way how we how we'll communicate guidance for next year.

We will do that at one time and do it for all the things together, what has formally been piecemealed out a little bit. So we'll do that early December. And this year is a little bit special since we will, for the first time, provide some more details around Somincor and Zinkgruvan that we haven't really spoken much at all about up until now. And so we were happy to do that at that time as well.

With that, Olof, over to you.

[Olof Grenmark, executive]

Thank you, Mikael. Ladies and gentlemen, that opens up our Q3 2025 Q&A session, and we will start here in Stockholm. Who has the first question?

Johannes Grunselius, please state your company name as well.

[Johannes Grunselius, analyst]

So it's Johannes Grunselius here, SB1 Markets. I'd like to -- I have 2 questions, but I'd like to start with a question here that you ended with, Mikael. Mathematically, grades will move up in Aitik fourth quarter, but you guide for sort of the full year. Could you perhaps be a little bit more precise because the sort of outcomes are very broad really for the fourth quarter?

[Mikael Staffas, executive]

Yes, they are. And I will not be more specific than that. They are, but we will be heading north from where we were in Q3.

[Johannes Grunselius, analyst]

Okay. And then you obviously had a very favorable stripping, which is, I guess, the background for very good ore volumes. Any sort of unusual stuff that happened or extra favorable conditions or something? Or can you sort of elaborate on why?

[Mikael Staffas, executive]

No, I think that we have, for quite some time over the years, been a little bit slow on stripping in Aitik, which has caused that we're in a position is not quite as good as we would have liked to be in. Part of that was due to the dam project. When you had the big dam project in place that for different reasons, impacted stripping. Now the dam project is over. So the mine is not affected by this big project, which means that the mine can focus on what it's doing.

And we have been working for a long time to get the productivity of our mining equipment up. And yes, we've been successful. So the total mine production ore plus waste rock has been good. We're also helped by the fact that we are right now in terms of waste in a good position logistically, relatively short driving distances, which, of course, also helps.

[Johannes Grunselius, analyst]

Okay. That's helpful. And my second question is more broad on CapEx because you obviously report in Swedish krona, you report your CapEx in Swedish krona. Now we have a much, much stronger SEK versus euro, particularly dollar. Will this have any impact on your CapEx budgets in SEK for the coming years? Or is it more not visible?

[Mikael Staffas, executive]

Håkan?

[Håkan Gabrielsson, executive]

Well, there is -- I think we need to put together the full effect on the inflation of CapEx, and we'll come back to that because it's domestic factors and international factors. We have quite a few purchases that are directly done in dollars. But then, for example, stripping is recorded as CapEx and diesel is one part of stripping. So diesel prices are, of course, influenced by dollar. So a lower dollar helps, but let us come back to how much.

[Olof Grenmark, executive]

The next question.

[Christian Kopfer, analyst]

It's Christian Kopfer from Handelsbanken. A few questions from my side. Firstly, the permission that you expect in Garpenberg, I think, Mikael, you said that you expect it to come during the quarter. If it's not coming during the quarter, are you very confident that it will come. It's just a matter of time?

[Mikael Staffas, executive]

We are quite confident it'll come. It's a matter of time. We're also very confident that we will get a ruling during the quarter. We even have a date when it's supposed to be released. The big unknown is will it be appealed or not? You never know. And the other one is whether you're allowed to use the permit during the appeal process or not. You never know.

[Christian Kopfer, analyst]

How has it been historically on that?

[Mikael Staffas, executive]

We've seen all of them. We've seen that we've been allowed to use a new permit during the appeal process, and we've also seen that we've not been. So that can go either way. [indiscernible].

[Christian Kopfer, analyst]

Right. On the smelters, you saw a pretty big negative volume impact in Q3 sequentially. Do you expect that to rebound Q4?

[Håkan Gabrielsson, executive]

To normalize at least.

[Christian Kopfer, analyst]

And the free metals in the smelter, are those on a, say, normal level now? Or how do you see it?

[Håkan Gabrielsson, executive]

They were a little bit weak in the quarter. I mean, Q2 was a quarter where we had maintenance stop, which brought down the level. But for the units that didn't have a stop, free metals was actually really, really good. And this time, I would describe it as a little bit lower than normal, but we should come up a little bit.

[Christian Kopfer, analyst]

Right. And finally, we hear from some of your competitors that they expect pretty more meaningfully higher metal premiums for European customers for next year. I mean you are a big player in Europe. So do you share that view or...

[Mikael Staffas, executive]

I would say that it's already announced, right? Both Aurubis and Codelco have announced their suggested premiums for next year. We do not announce our premiums, but of course, our premiums will in some way be reflected by that.

[Christian Kopfer, analyst]

So it's -- can you just remind us how much of smelter contracts are on annual contracts that are affected from this hike in premiums?

[Mikael Staffas, executive]

Everything is affected by the hike in premiums because that's the -- on the sales side. So that affects every tonne.

[Olof Grenmark, executive]

Any other questions in Stockholm? Okay. Operator, please go ahead with the international questions.

[Operator]

[Operator Instructions] The next question comes from Adrian Gilani from ABG Sundal Collier.

[Adrian Gilani Göransson, analyst]

Just 2 questions from my end. First of all, on Aitik, when the throughput issues in Aitik were first announced earlier this year, if I remember correctly, at the time you said that the issues should be isolated to this year. Can you just give us an update on that, whether you are sort of close to fixing those?

[Mikael Staffas, executive]

Without going too much into the topic of what's going to be discussed in December, I will say that the throughput issues -- or put it this way, we said that the recovery issues was more kind of a first half year thing, and that's proved right. You see that the recoveries are now back to normal, and we did say that the throughput is more this year thing, but we'll come back to the details regarding '26 as we go to December.

[Adrian Gilani Göransson, analyst]

Okay. Understood. And then one question as well on Odda. The concentrate feed and zinc production was down versus Q2. So can you just explain why that is given that the asset should be ramping up and also perhaps whether you're still confident to reach the full run rate production before year-end?

[Mikael Staffas, executive]

It was not supposed to ramp up during the quarter. The new capacity, which is limited by the roaster and also limited by the leaching part did not come up at all during the quarter, so it was totally unaffected. Then you could say it should be about the same. But you can also say that the ongoing production is negatively affected by the fact that there's a project ongoing, lots of activities around, which has made things a little bit more difficult. But there has been no impact of the new investment in the quarter compared to Q2.

[Adrian Gilani Göransson, analyst]

Okay. And just to be clear, was that -- is everything now in place for Q4? Or is that still not -- still not fully ramped up?

[Mikael Staffas, executive]

Odda, it's the following, and I think I said it, but I'll just repeat it and be clear on it. The Odda expansion is as of right now, when we're talking October 20, what is it 21st today, 22nd today, mechanically complete. That means that basically the things stands at the way it should. It doesn't mean that it's 100% mechanic complete because what happens then is the commissioning phase. And we are right now in what we call cold commissioning, where you're testing all the different circuits more or less by themselves.

That could, in certain instances, lead that you need to rebuild something that you discover something during this cold commissioning. Cold commissioning is coming to an end. And as we come to early November, we will start what's called hot commissioning. Hot commissioning, number one, means that the temperatures go up, that's the name of the hot commissioning, but also means that we will start testing systems integrated. We will pump from one system to another, making sure that everything works around that. And then we will -- somewhere around very early December is the plan right now, we will actually start feeding concentrate into the new roaster and the new roaster will start operating.

That's where we are right now. That means that we will get some production during December actually because then you will, of course, be testing the new roaster. But while you test it, you actually produce. And then we should see actually pretty decent production in Q1. But exactly how much we will produce during next year in Odda, we will come back to you in December again.

[Operator]

The next question comes from Marina Calero from RBC Capital Markets.

[Marina Calero Ródenas, analyst]

I just have 2 questions on my side. The first one on Tara. Can you comment a bit more on the productivity challenges you're having and what actions you're putting in place to resolve them? And my second question is on one of your projects. At this year's CMD, you mentioned you were studying the possibility of producing cement from waste materials at your smelters. Without from running the guidance release in December, is that -- have you progressed enough with this project that you will be able to -- do you think you will be able to make an investment decision this year?

[Mikael Staffas, executive]

If we start by the second one, yes, we're progressing. We're going ahead. Investment decision this year, I know that we were alluring to that at the Capital Markets Day. I would -- my best assessment is that, that investment decision is maybe falling over to Q1, although we're working on the issue. And one of the reasons why it's taking a little bit longer is that we are partially also cooperating with the authorities around certain things with this, and that takes a little bit longer than we thought. But the project is still very -- if you want to use the word hot or is still very much on. It's not because it is less interesting that it's being pushed later or is slightly sliding later.

On Tara, it's always difficult to say exactly what is it with productivity that is problematic, but because people do different things. And if one activity is not productive enough, it might be that actually shows up in another activity because the same person is supposed to be 2, but spends too much time on 1 and it's the other one that doesn't get done. The problem that -- what hasn't been done has been development. Development is behind schedule. We have put in a contractor -- external contractor to speed up development, if you want to talk about what the action is to get Tara up to speed.

[Operator]

The next question comes from Liam Fitzpatrick from Deutsche Bank.

[Liam Fitzpatrick, analyst]

First question is on Garpenberg. Can you just outline, given your comment there, what the typical length of an appeals process could be? And do you need that permit fully secured before you would actually start spending on that longer-term expansion project that you outlined back in March?

[Mikael Staffas, executive]

Regarding spending, as we did say already back in March when we announced the PACE project, you could say that, that was partially a replacement. We needed to replace the existing PACE station anyway, but -- which is a very old one. It was actually one of the few things that was not replaced during the big project 15 years ago when we expanded Garpenberg last time. So it's a partial replacement, but we did it bigger in order to be prepared for 4.5. And of course, to that, you can say that there is some part of a bet on 4.5 in that.

Otherwise, I think that we will be relatively calm and not do much more investment towards 4.5 before we have the permit in hand, just prudent to make sure you get it. We still think there's a good chance you'll get it. We've had all the court hearings. That's a little bit kind of second guessing exactly what the ruling will be, but we have a good sense that we will get the permit for 4.5. What is time critical right now is to get it because of the production in '25.

And then the question is, as I said before, will it be appealed? And will the ruling be such that you're allowed to produce higher during the appeals process or whether you're not. And a typical appeal process, 6 to 12 months. So I would say that if it's appealed and we don't get this permit to start in -- while the appeal process is ongoing, of course, '25 is gone. '26 might still be possible to get higher production at 3.5, but something like that.

[Liam Fitzpatrick, analyst]

And would you start the project during the appeals process? Or would you just have to remain cautious until you got through that?

[Mikael Staffas, executive]

There is not really so much project to start apart from the PACE project. And the PACE project, we will run its course. Then we said there are more things that need to be done. We need to do some debottlenecking in the mill, and that will probably wait until we have the permit. And there are also some debottlenecking and, more importantly, some development that needs to be speeded up to be able to get to 4.5. And that might also be then delayed if we don't get the permit.

[Liam Fitzpatrick, analyst]

Okay. And then perhaps one for Håkan, just on CapEx. Back in March, I think you outlined that if there were no projects approved that a baseline for 2026 would be in the region of SEK 15 billion, including the new assets. Does that still hold as a reasonable baseline for next year?

[Håkan Gabrielsson, executive]

Can you repeat that question so I get it right. The -- if we don't decide anything new, would it be SEK 15 billion? Is that what you're saying?

[Liam Fitzpatrick, analyst]

Well, I believe that's what you told us in March, so I'm just -- yes, does that figure still hold?

[Håkan Gabrielsson, executive]

I'd rather not comment that because we're coming back to that number in a bit more than a month's time. So in general, the message at the Capital Markets Day still holds. We have the new units that we need to integrate in our guidance for next year. And we need to look at inflation and then fine-tune the plans that we have. But we'll come back to that in December.

[Liam Fitzpatrick, analyst]

Okay. My very last question, just on Håkan and your comments on the gold and silver. Could you just repeat how much of the gold and silver output in the quarter is booked at the quarter end price? And do you have any rough number for us in terms of what the positive delta was versus sort of average pricing for the quarter?

[Håkan Gabrielsson, executive]

When it comes to gold and silver, what happens is that -- if we deliver something in October, it's definitive price would correspond to the average in December. And at that time, it's hedged once it goes to the smelters. So it's 2 months MAMA, if you like, 2 months of revaluation. So that means that 2/3 of the production this quarter were priced preliminary with the prices at the last date of the quarter. So 2 months of 3.

[Mikael Staffas, executive]

1/3 was priced -- sorry, 1/3 was priced at the September price. So it's a strong weight, what was the price in the end of the quarter.

[Håkan Gabrielsson, executive]

And just to give a feeling for the size of it all, if you compare -- I mean, the end of period price, the price of the last day of the quarter for gold was 11% higher than the average price. For silver, it was 18% higher than the average price. And that difference for the value of gold we produce from mines is about SEK 175 million.

And for silver, that's roughly twice that amount, SEK 350 million. But that is an indication. But then that is an example if we would compare the full quarter on average to the full quarter end of period. So I'd say a bit more than half or 2/3 of that amount should give an indication on how much we've been held in the quarter compared to the kind of theoretical situation of charging to average prices all through the quarter.

[Liam Fitzpatrick, analyst]

Do you have a figure, Håkan, just because I think there's quite a lot of interest in what that delta is. But if you don't, I'll try and work it out. But I was just curious if you have a figure.

[Håkan Gabrielsson, executive]

Well, let me put it this way. For a full quarter, the difference is SEK 175 million and SEK 350 million for gold and silver, respectively. Take 2/3 of that amount, then I think it will be fairly close.

[Operator]

The next question comes from Daniel Major from UBS.

[Daniel Major, analyst]

So the first one, just on Odda. It sounds from your commentary that effectively you'll be at exit rate of this year, not quite at full normalized production, but getting reasonably close to it. Is it therefore sensible for next year to assume the majority of your previously guided EUR 150 million delta on EBIT would be accrued in 2026?

[Mikael Staffas, executive]

Without kind of going to details, I would say, yes. And then we'll talk more about it in December, but I'll say, yes.

[Daniel Major, analyst]

Okay. That's clear. Then yes, the second question on the Swedish -- sorry, Finnish tax ruling and that debate. So 2 parts to the question. If the ruling progresses in the way that it appears it might be, when would you start incurring the 20 million to 30 million negative tax delta at Kevitsa? And then the second part of the question, if the tax is ruled in that way, would it -- we should just assume that Pushback 5 is shelved and the mine closes in 2034, but you don't incur the roughly 10 billion of CapEx associated with Pushback 5?

[Mikael Staffas, executive]

First part of it, it is January 1, 2026, so it's happening very soon. Regarding Pushback 5, I think you're having an intelligent conclusion, although we'll come back to that more in detail, but Pushback 5 economics get severely hurt by this one in 2 ways. Number one, by the tax itself, which is clearly, of course, doing all kind of calculations worse. But what is even more problematic from, I think, the Finnish point of view and our point of view is that once the government allows itself to change the games of the rule in the long-term game like mining is in the middle of the play, what makes us sure they won't do it again?

What makes us sure that they -- when they have some short-term issue with the state finances, won't do the same thing again. And even further increase the taxes in 3 or 5 years from now. So with that in hindsight, I think that Pushback 5 is unlikely at this stage.

[Daniel Major, analyst]

Got it. And then the last one, just maybe a follow-up on Liam's question, just hitting on a few bridge items to the fourth quarter. The provisional pricing impact is somewhat confusing, but can you just tell us what the positive impact over the whole group was in Q3? I believe it -- was it somewhere close to SEK 90 million, SEK 100 million relative to a net positive this quarter relative to a negative roughly SEK 300 million last quarter. If you could just let us know overall group, what was the positive provisional pricing delta on Q3?

[Håkan Gabrielsson, executive]

Yes. Okay. But just to be clear then that there are 2 parts that we're talking about. The first one is the open positions that we had in the beginning of the quarter, what has been the impact of getting final prices for those. That is a plus SEK 100 million. That is what we typically refer to as MAMA. So that is clear, SEK 100 million.

Then there is a second part, and that is that we don't sell to average prices in the quarter. There are things that are priced preliminary at the last day of the quarter and so on. So this quarter, we've gotten a significant boost from the gold development towards the end of the quarter. And that is not a number that we track internally, but that's the one that I tried to give to a previous caller. But that is a couple of hundred millions as well.

[Daniel Major, analyst]

All right. Okay. So if we took a scenario that the provisional pricing was 0 next quarter, it would be a negative delta of around SEK 300 million. Is that a fact?

[Håkan Gabrielsson, executive]

Yes.

[Operator]

The next question comes from Amos Fletcher from Barclays.

[Amos Fletcher, analyst]

A couple of questions. First one, just going back to Kevitsa, this Pushback. I just wanted to clarify, are you intimating that if the Finnish government were to give you guarantees over tax stability that you would consider going ahead with the project? Is that something that's being discussed with the government at the moment?

[Mikael Staffas, executive]

I think the only discussions with the government at the moment is that this whole idea of changing tax is in the middle of the game is detrimental to the investment climate in the country as is and that they should not do it. Our -- the likelihood of us being successful in changing the proposed budget for '26 is very low, even though it's not 0 because it's still open, but it's very low. That's where we are right now.

When these things come through, of course, we've been very clear that it's not just impacting the kind of what you call the use fairness of all the investments that we've done into Pushback 4 that will now yield a lower return, but it's also going to impact future decisions and future investments where Pushback 5 is an obvious victim. We have not come to any kind of discussions about what kind of tax agreement will we need in order to do that. We're not there at all.

[Amos Fletcher, analyst]

Okay. Yes. Understood. And then second question was just on the Odda expansion. When do you expect to get commercial volumes from the project, i.e., positive P&L contribution from the project ramping up?

[Mikael Staffas, executive]

Some very limited in Q4 and quite substantial in Q1.

[Amos Fletcher, analyst]

Okay. And then the final question was just on -- for Håkan really, was just on working capital. Can you give us a bit more detail on expectations for Q4 versus, let's say, a kind of normal seasonal Q4?

[Håkan Gabrielsson, executive]

Well, first of all, with the caveat that it all depends on prices because prices coming up has a negative impact. But Q4 has typically been a good quarter when it comes to releasing working capital. And as I said, I think we did SEK 3 billion, SEK 3.5 billion last year. But then what we also typically see is that Q2 and Q3 are roughly flat, and we've been very successful in releasing working capital these 2 quarters. So there is not that much left to do on the working capital front in Q4. I still expect it to be positive, but a fairly small number positive in that sense.

[Mikael Staffas, executive]

And we have the Odda builds.

[Håkan Gabrielsson, executive]

Yes, exactly. And that's a part of that. We also put roughly SEK 0.5 billion working capital into Odda when we tie the inventory in there.

[Mikael Staffas, executive]

And that might happen actually during Q4.

[Håkan Gabrielsson, executive]

Yes.

[Operator]

The next question comes from Alain Gabriel from Morgan Stanley.

[Alain Gabriel, analyst]

next question comes from Alain Gabriel from Morgan Stanley.

I just have one question left is on the Somincor and Zinkgruvan. Mikael, you mentioned that you sounded quite positive and constructive on the way and the pace at which the integration is going ahead. Do you now have a clearer idea on the -- what is the opportunity for cost savings and/or productivity gains that you can quantify from the 2 assets as we head into 2026?

[Mikael Staffas, executive]

I'm getting there, but that's something that we will talk about in December as we start talking about next year. And we will specifically make a little bit of a deep dive in December on the 2 assets as they are then the first time we want to say, so presented to you guys.

And we will be sharing more of what we actually had in our own due diligence numbers and so on, everything of that has been a little bit hided so far. But I can say in general, and that's what we also said that Q2 was okay, but was maybe not quite there where we had hoped. Q3 is quite in line with our own kind of due diligence numbers or even a little bit better than so.

[Operator]

The next question comes from Alain Gabriel from Morgan Stanley. [Operator Instructions] The next question comes from Pavel Kirjanovs from Bank of America.

[Pavel Kirjanovs, analyst]

I had a bit of a different question for you today. Can you talk perhaps of any plans or ambitions you have around rare earth? Is that something that Boliden is looking to get involved in? It seems like an area that's increasingly gaining importance.

[Mikael Staffas, executive]

The quick answer, Pavel, is no. And just to be clear about that, we don't really have any rare earth project. So if you were to get involved in rare earth, we would have to buy a project. And we don't think that, that's a priority for us. It's also not right in line with our capabilities. So that's on the mining side.

On the smelting side, we do have a potential project around getting rare earth out of already existing flows, especially in our zinc smelters, where that could happen. But we do not have any active project, not expecting to have an active project around that either. Even though it's kind of conventional technology, how to get germanium and gallium out of flows in the zinc smelters, it is quite CapEx heavy.

And if you put this way, you're leaving the returns in the hands of Beijing, which is maybe not so interesting. So that would happen to be -- need to be something else in place. Then there's also an added complexity, especially in the European context around the fact that those established technologies are very CO2 intensive, adding CO2 is not in fashion.

[Operator]

The next question comes from Daniel Major from UBS.

[Daniel Major, analyst]

Yes, sorry for the follow-up. I just had a bit of incoming on the provisional pricing and the delta quarter-on-quarter. Just to be clear, so SEK 100 million positive from open positions. And then was it SEK 200 million or SEK 350 million impact from the gold and silver pricing? So that is the total delta quarter-on-quarter, SEK 350 million or SEK 550 million if the provisional pricing was 0 in 4Q?

[Håkan Gabrielsson, executive]

For the 2 numbers that you quote.

[Daniel Major, analyst]

Sorry. Which one? Is it...

[Håkan Gabrielsson, executive]

Around SEK 300 million.

[Daniel Major, analyst]

Around SEK 300 million. Okay. Then yes, that's super clear. And then the -- yes, the next one you mentioned SEK 200 million positive delta on precious metal deliveries in the mining business that was offset by internal elimination. Yes, I'm assuming that would -- the base case should be that would reverse in 4Q, so SEK 200 million less on mining, but a reversal of the SEK 200 million negative on internal eliminations as we stand today. Is that a reasonable assumption?

[Håkan Gabrielsson, executive]

Exactly. When that is released, you will get a plus SEK 200 million on the internal profit elimination line, assuming constant prices and so on.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Mikael Staffas, executive]

Well, I'll make the closing comment, and I'll make it very short. Thank you all for listening in. And once again, we'll reiterate, I hope that you have nicer weather where you are compared to where we are. We are about to leave this building and go outside. And when I look outside, it's not really where I want to go in Stockholm today. But it's been nice to have you all in here for this time. Thank you all. Have a good day.