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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Good afternoon, ladies and gentlemen, and welcome to the Aurubis AG conference call on the occasion of the publication of the quarterly report first 3 months 2021, '22. [Operator Instructions]. Now I hand over to Elke Brinkmann.
Good afternoon, everyone, and welcome to our first quarter conference call. With us today are our CEO, Roland Harings; and our CFO, Reiner Verhoeven. They will share some highlights of our strong Q1 results and will explain the quarter's financials. After this, we have time for Q&A. With that, I hand over to Roland Harings.
Yes. Thanks, Elke. Good afternoon from my side. Pleasure to be here with you talking about the Q1 results. After presenting you with the best results in the company history in December, I'm pleased to present today to you the best Q1 quarter results ever. Based on this performance, we took the decision to raise our forecast also for the full year 2021, '22. A strong ongoing demand for all Aurubis products and a good supply situation for copper concentrates and for most recycling materials have caused us to raise the forecast already after the first 3 months. As already announced in the Ad hoc release, the operating EBT of Q1 amounted to EUR 152 million, 85% above the quarter of the previous year. The corresponding ROCE of 16.6% underlines the strong development compared to Q1 2021, where ROCE stood at 9.6%. Also, net cash flow is negative at minus EUR 85 million due to higher inventories and receivables, it is clearly better than the first quarter of last year to the -- mainly due to the very good Q1 results. As energy-intensive company, we are exposed to rising electricity and gas prices, yet we have measures in place to actively counteract this, and we will come to this in more detail later. On this slide, you can see a quick overview of our key operating year-to-date figures. Revenues increased by 27%, driven by significantly higher industrial metal prices, higher sales of copper products and higher sulfuric acid revenues. Gross profit increased by 22% due to very strong market conditions and a solid performance. We'll come to the details of our earnings drivers in a minute. Despite certain cost increases, we achieved an 85% increase in our operating EBT overall compared to last year. And again, last but not least, our ROCE at 16.6% exceeds our target figure of 15%. Let's dive into last quarter's market conditions. The copper price remains at a level of around USD 9,700 per ton, well above Q1 of the past fiscal year. The other industrial metals such as tin, lead and zinc equally showed a very positive market development. Let's have a quick look at the concentrate markets. Aurubis saw a good supply situation during the course of Q1 and was able to fully supply the primary production sites with a good mix of input materials. The international market for copper concentrates saw the new benchmark for clean concentrates being set at USD 65 per ton and $0.065 per pound in December '21. This corresponds to an increase of 9% year-over-year. The benchmark increase is well supported by expectations of strong mine output over the course of the year. The latest update of Wood Mackenzie shows an unexpected -- I'm sorry, an expected increase of mine output by around 7% in '22 year-over-year. Spot term levels for copper concentrates showed no major movements during the reporting period and have remained around benchmark levels. One important point to mention, the Chinese smelter purchase team has set the buying floor for this quarter, Q1 of the calendar year, at USD 70 per ton and $0.07 per pound above benchmark levels, indicating the positive momentum on the concentrate market. As we always state in this call, Aurubis is well supplied with concentrates beyond the actual period, and this is in line with our long-term supply strategy and long-term contracts. Moving now to the recycling market. During Q1 of the current fiscal year, we saw sufficient availability of copper scrap, blister copper and other complex recycling materials on a global sourcing basis. Aurubis benefited in the first quarter from good RCs for complex recycling materials as well as good RCs for copper scrap for smelting from purchased inventory materials. The availability of copper scrap #2 during Q1 were sufficient but below previous year's availability. Consequently, our fees remained at lower levels than the previous year. CRU estimates the average RC of scrap #2 at around EUR 275 per ton in Europe. Availability of complex recycling materials remained more stable during the first quarter with RCs at stable levels versus previous year. Looking forward, our production sites are already significantly supplied with material well into the second quarter of this current fiscal year '21, '22. Coming to the market of sulfuric assets. The sulfuric market showed strong ongoing demand, combined with a subdued temporary supply situation in the last quarter. This resulted into higher prices for acids. The strong market performance coincident with a very good throughput and strong asset production at Aurubis. Additional capacities of acids were sold at currently very stable spot market terms. ICIS reported new Q4 contracts for NW Europe at EUR 205 to EUR 240 FOB. It remains that global markets are tight, and we expect that this situation will continue to stay well into the first half of '22. So the current outlook for this fiscal year remains very positive for sulfuric acid. Coming now to the ACP, the Aurubis copper premium for this year. We set the number for last calendar year at USD 96 per ton, reflecting the stable demand throughout the year 2020. For 2022, for this calendar year, we have increased the number to USD 123 per ton. This is due to the strong demand and continued high takeoff for our products in Europe. Also, the spot premium levels in both Europe and Asia stayed constant during the reporting period, indicating and underlining that there is a strong demand for refined copper globally. Last point here is the U.S. dollar. And as you know, we have a long position of approximately USD 500 -- USD 500 million in fiscal year '21, '22. And within the scope of our hedging strategy, we have for this fiscal year, hedged 70% at a rate of 1.147 and have hedged 35% at a rate of 1.159 for the coming fiscal year. Talking about energy, which has been addressed in various discussions that we had already, here we want to share some of the data -- how we see energy in the total context of our cost. What is clear, inflation -- the topic of inflation is being broadly discussed at this moment. Aurubis is also facing some cost increases, however, mainly arising from the current energy prices and the peaks of these prices on the energy market. The good news is, today, all other cost components at group level stayed rather stable quarter-over-quarter and the cost reduction measures that we have taken show effect. And specifically, the effects from the PIP program continued to contribute to significant cost reductions, hence also positively affecting and benefiting to the bottom line. In the current fiscal year, '21, '22, we expect the cost savings of about EUR 90 million arising only from the PIP program. All in all, the very positive developments on the earnings drivers market could more than compensate for the energy cost inflation we were facing during quarter 1 of the current fiscal year. Now having talked about the overall cost situation, let's dig a bit more into the energy cost of the Aurubis Group. In Q1 of this fiscal year, we saw a significant price increase for energy prices quarter-over-quarter, mainly driven by higher prices for coal and CO2, resulting in increased electricity prices and also natural gas, which also increased considerably. In order to provide you a more detailed overview of the real energy cost on group level, we have reduced our energy costs by the received compensation for the first time, for example, indirect CO2 electricity compensation and state refunds in this overview. Our goal with this is to provide the financial markets a better insight in the actual cost exposure to energy markets of Aurubis. Current high energy costs remain a cost inflation factor for the current fiscal year, despite our high hedging rate of 2/3 of the energy consumption. However, the very positive earnings side more than compensates for the current energy cost inflation. To summarize, energy prices, so electricity and other energy components remain a very relevant topic for Aurubis. The risks and opportunities from energy markets, however, are effectively mitigated with energy efficiency as well as hedging measures. And with this, I would like to hand over to Reiner with more view on Aurubis' financials.
Thanks, Roland, and good afternoon from my side. Let's have a look at the financial KPIs. Aurubis' key performance indicators continue to show a very stable and robust picture. ROCE improved to 16.6% as a result of a very good earnings situation, the equity ratio of 49% and the debt coverage ratio remained very strong. Net cash flow was with minus EUR 85 million, better than expected in the first quarter due to the inventory buildup, but please bear in mind that we had last year an extraordinary high cash flow towards the end of the last financial year. All in all, this good financial position provides significant room for the implementation of our strategy. Going to the segmentation. As a reminder, since October 1, 2021, we are reporting in 2 revised segments. Our new segments are now Multimetal Recycling on the one hand and Custom Smelting & Products on the other. The focus of our business lies on securing the most profitable input materials for our smelter network. Therefore, we have decided to separate our reporting segments along the main input material streams. Segment Multimetal Recycling comprises the 4 secondary smelters of the group. Our new project, the Multimetal Recycling facility in the U.S. will be part of this segment as well. With our long-standing and very successful plants in Germany, Belgium and Spain, the segment Multimetal Recycling offers a wide range of recycling services to our customers and covers most of the metals that form the basis for all kinds of industrial applications. Another equally important pillar in our segmentation is the Custom Smelting & Products. Here, we report about our integrated flash smelters in Hamburg and Pirdop, which we operate with concentrate as the main input material. The copper ores originated from mines all over the world. Based on the input material as well as the related production equipment, there is a clear differentiation from our recycling business. In this segment, we also report on the product business, the copper wire rod we produced in our ore plants, the shaped business with copper cakes and billets as well as the flat rolled business are reported in this segment. Further products included in this segment are sulfuric acid, all iron silicate products and our precious metal production. As already stated in December, we are convinced that this new segmentation gives you a more transparent and balanced view of our business, reflects our updated strategy appropriately and will create a better understanding of our future growth. Let me highlight some financial and production figures from the MMR segment. The operating EBT was at EUR 77 million and thus 64% above the previous year's figures. Good operating performance, significantly higher refining charges for recycling materials and high metal gains led to this extraordinary result, especially the price increases for the industrial metals, tin, zinc, nickel and copper and particularly had strong positive effects here. With an outstanding ROCE of 38.9%, the target level of 15% was more than doubled in this first quarter '21, '22. The consumption of recycling materials and the cathode production increased due to the strong operative performance of the plant. The input of copper scrap and blister copper was slightly reduced compared to Q1 last year. Have a look at CSP. In the CSP segment, too, the operating EBT increased significantly by 83% to EUR 88 million as compared to last year. The very strong performance of the smelters in Hamburg and Pirdop led to higher concentrate throughput and thus higher sulfuric acid production. The high demand on sulfuric acid market, combined with a low supply led to another considerable price increase, which had a very positive effect on the results. The high prices of industrial metals led to higher metal gains in this segment as well. Operating ROCE was at 9.5% at the end of this first quarter. On the product side, demand was stable at a high level for rod and shapes even increased further as compared to Q1 last year. Higher energy prices had a slightly negative impact in both segments. Let's move to the outlook for our earnings drivers, starting with the concentrates markets. The expected concentrate production rates from both CRU and Wood Mac show a significant increase of production volumes. Wood Mac expects global mine production to increase in calendar year 2022 by 7%, while additional smelting capacity is expected to grow at only 2%. In summary, Wood Mac expects the additional supply to keep up with the rising demand, and that should result in a well-balanced global custom smelter concentrate market. Aurubis was able to fully supply its production -- to supply production plants with concentrates throughout Q1 '21, '22. And based on our expected stock levels, our smelters are already well supplied beyond the end of Q2 this financial year. Moving on to the scrap RCs. Our core markets, Europe and the U.S. have seen a normalization of RC levels from record highs during last fiscal year. Availability of input materials for copper scrap for smelting was sufficient during Q1, and we expect a sufficient supply situation for the rest of the financial year '21-'22. CRU estimates an average of around EUR 275 per ton for scrap #2 during the reporting period, with the first expected price increase in January 2022. The availability of complex recycling materials like shredder materials, PCBs, residues, slacks and dashes was more stable than the availability of scrap #2. Accordingly, the RCs for complex recycling stayed at beneficial levels for Aurubis. We foresee a stable market with good RCs as these markets are less volatile and our contracts are based on longer terms. Our production plants are well supplied with recycling materials at good refining charges until the end of Q2 '21, '22. On the sulfuric acid side, the positive momentum in the global spot pricing for sulfuric acid keeps going or kept going during Q1 '21, '22. ICIS foresees an ongoing strong demand in our core markets in Europe as well as overseas with limited availability in the markets. This positive trend is expected to continue to the second half of the calendar year 2022. Longer-term contracts are expected to be closed with an increase in price levels. All in all, a very positive outlook for the asset market for Aurubis during this fiscal year. As briefly mentioned before, on the copper premium side, for calendar year '22, this has been set at $123, which reflects the positive demand for refined copper with a tighter market expectation. Coming to our corporate products, rod shapes and FRP, we see strong ongoing demand for all our copper products and expect positive contributions from the product business. We saw ongoing demand from all customer segments during Q1, with the trend expected to continue in the whole fiscal year '21-'22. Both product demand for rod and demand for shapes remain at high levels, and we expect this trend to continue during the fiscal year. Also, FRP is doing fine. Our Stolberg plant should be back to full production by the end of Q3 of our fiscal year. With a very positive preliminary figures for Q1, we informed the Capital Markets on January 19, about the increase in our forecast range for '21, '22. Based on the latest assumptions, we now expect an operating EBT between EUR 400 million and EUR 500 million, up from EUR 320 million to EUR 380 million; and an operating ROCE of 15% to 19%, previously 12% to 16%. Accordingly, we updated the forecast range for the Multimetal Recycling segment. We expect an operating EBT between EUR 190 million and EUR 250 million, up from EUR 140 million to EUR 200 million; and an operating ROCE between 22% and 26% previously, 16% and 20%. For the Custom Smelting & Products segment, we now expect an operating EBT between EUR 280 million and EUR 340 million, up from EUR 210 million to EUR 270 million; and an operating ROCE between 14% and 18%. Last but not least, I'd like to inform you about the renewal of our syndicated credit facility. At the beginning of February 2022, Aurubis signed a new EUR 350 million syndicated credit facility with the option of increasing it by up to EUR 150 million. The new credit facility has a term of 5 years and can be extended twice by 1 year. The purpose of the credit facility is general company financing, particularly as a reserve for potential liquidity fluctuations. With this facility, Aurubis is prematurely replacing the syndicated facility that had a term until 2023. This new financing instrument is linked to the rating of EcoVadis, so our sustainability rating. Currently, Aurubis holds a platinum status with 73 out of 100 points and thus belongs to the top 1% of companies in the global nonferrous metals industry. The ESG-linked syndicated loan emphasizes that the sustainability continues to extend into financing structures at Aurubis. As the most sustainable smelter network worldwide, we connect our financing conditions to our strategic business activities. In June 2020, Aurubis was the first company in this industrial sector to successfully place a Schuldschein loan of EUR 400 million with a sustainability component. The current ESG-linked syndicated credit facility is a confirmation of our ambition to expanding our industry leadership in sustainability. With that, I'll hand back to Roland.
Okay. Thanks, Reiner. So coming to the last slide now, talking about the dividend. And as a result of a very successful fiscal year 2021, we would like our shareholders to share in our success in an appropriate form. Therefore, in line with our dividend policy, the Executive and the Supervisory Board are recommending a dividend of EUR 1.60 to the shareholders at the Annual General Meeting on February 17, so in the next week already, yes. This would lead to a dividend yield of 2.5% based on the closing price of EUR 65.38 on September 30 of year '21. This corresponds then to a dividend payout ratio of 26% of the group's operating results. And with this, I think after presenting our results with a, let's say, in a very good market environment, we delivered very good results. I will hand back to Elke for the Q&A. Thanks for your attention.
Yes. Thank you, Roland. With this, we start the Q&A session, and I'll ask the operator to release the line for the first participant.
So we have the first questioner in the line, and it is Jatinder Goel from Exane BNP Paribas.
Good couple of questions. First one, back to your guidance, the company got forced to raise guidance within 6 weeks of establishing it for a second time in a row. We appreciate the new divisional disclosure, but do you think it's still an easy-to-forecast business? Or how would you recommend modeling this business? Or is there a steady state EBT number that you can put on this business without including any growth optionalities that you are pursuing? If you input all mid-cycle inputs, where would your EBT be for the current business as it stands?
Yes. Thanks for the question, Jatinder. Reiner here. So we had a new normal couple of Capital Markets days ago, which was at 300. So now we -- with the acquisition of Metallo, of course, it will be a bit higher. Nonetheless with the asset prices, which were unpredictable. And let's say, the surge in metal in pretty much all industrial metal prices. If you look at tin, which let's say more than doubled year-over-year, that is something that we couldn't forecast that we couldn't put into our guidance before. We now see clearer and therefore, we had to adjust our guidance. That's why we have this, let's say, extraordinary situation, which is clearly driven by the metal prices here and by the acid though we also had a good operating performance of our plant, which is also a quite important topic, which then all in all, very much overcompensated the negative impact from the energy.
Understood. Just another one, are you able to provide any indication on gross profit for the new divisions, the MMR and CSP. Are those quite aligned to the EBIT or EBT levels, just to get some sense? Or if you could provide depreciation split, that will be helpful as well.
Yes. I mean you see on the ROCE levels that we are running quite different capital employed in the different segments. And therefore, you see this also extraordinary high ROCE in the MMR segment, which has to do with much lower or, let's say, half the capital employed. That is not only from the fixed assets, but it's, of course, also from the net working capital. Because all the product business is in the CSP segment. So therefore, you can, in principle, say it's double -- it always double the capital employed in the CSP compared to the MMR.
But the gross profit of these businesses is aligned with the EBIT that you've reported for these 2 as well? .
Yes, absolutely.
[Operator Instructions] And next up is Bastian Synagowitz from Deutsche Bank.
I ask a few ones. Just maybe first of all, on sulfuric acid, where you seem to be getting a decent tailwind already in the fourth quarter, after they are mentally packed that always as an annual pricing mechanism with annual contracts. Could you maybe let us know whether there's been anything which changed in the contract structure or whether you're basically just seeing the price volatility in sulfuric acid a bit more quickly here now? That is my first question.
Yes, Roland speaking here. Thanks for your question. Sulfuric acid, perhaps one point, and you see this in our documentation, we had a very strong production in the first quarter of our fiscal year, which leads to more spot opportunities. So there are 2 things came together, extra tonnage and a very -- I'd say, very high demand on the market side. So this helps to improve the prices. We haven't changed overall our policy that a certain baseload of long-term contracts is being taken year-over-year with our, let's say, specifically with our customers served from the Hamburg plant. Pirdop, we also said in the last calls, we have a higher ratio of spot business there. But overall, as we showed with the official available numbers, sulfuric acid market has been characterized by strong demand with very good pricing.
Just to follow up briefly. Could you maybe give us the split roughly between annual and spot? So basically, just to get a sense for the annual share because, I guess, with the price volatility we're currently seeing, there's definitely a very big price step-up coming in the course of the first calendar quarter.
Yes. Yes, we -- if you take as a guidance, 80% long term, 20% spot, however, again, we lock in contracts at a conservative production level. So if we have a very strong production like we saw in the first quarter, then the spot ratio goes pro rata slightly up. But let's say, in our planning, we assume this 80-20 rule.
Okay. Excellent. That's good color. Then just moving on to zinc where I saw that the volumes as a percentage of your throughput has basically never been as high as they were this quarter. I think they were up even by 50% over the fourth quarter. Of course, this is probably also due to Metallo. But is there any other extraordinary in there where you may be sold off inventory? Or is this basically just the new normal because of the additional metallurgical capabilities, which you onboarded with your Metallo deal?
Yes. I think we need to differentiate concentrate throughput. And if we refer to this number, we had a very strong Q1 in our fiscal year compared to year-over-year with 12% more concentrate throughput which reached a level of 679,000 tons, which is truly a very strong quarter. But this concentrate throughput is disconnected from the addition of Beerse and Berango to our portfolio. This is really the recycling system. And here, as we announced with the integration of the 2 plants, we have achieved now recycling material throughput of around 1 million tons or exceeded already 1 million tons last year in total. But again, concentrate is really the 2 plants, Hamburg and Bulgaria, and then we have the recycling network, which are the other plants.
Okay. Perfect. And then just one last question, if I may, on energy costs as well. Here, I was just wondering, in terms of the time lag, which you have here for the CO2 certificates, which you are getting compensation for. If I work it out correctly here, I think you're receiving, I think, payback for roughly, I think, EUR 40 per ton. So is it fair to assume that there is now less than a 12-month time lag on this? .And then also maybe could you even give us the mark-to-market number of the EUR 62 million energy cost, if you look at the position, basically, how would it look like at current spot conditions?
So to the compensation, we have, as we discussed also in this call, we are eligible for the CO2 compensation in the framework of the ETS. And here, we receive different ratios in the countries, depending on their energy mix. So it's not easy to make a direct one-to-one comparison here. And this eligibility is now decided until 2030. So for the actual trading period of the ETS.This for -- to make a real comparison or to give you a real number, what's the impact of energy cost or electricity cost increases, which is also highly driven by the CO2 cost increases, we decided to put this compensation mechanism into our energy cost. So that's really the net cost, the energy cost that we see bottom line. There is one point, you're right, there is a certain, let's say, time lag in the -- how the compensation -- the indirect CO2 compensation is being paid to us. So this is something which, again, makes it not a very simple equation how this is calculated.
Okay. And the time lag, I mean, is this broadly a year? Or is it even much longer than that? Because I basically just took the delta between the number you're now showing versus the number you've been showing for the same quarter a year ago. I think that's roughly EUR 10 million or so. And then I just work it backwards with the quarterly Scope 2 emissions of like 250,000, that cap to implied EUR 40 per ton of CO2. And I just looked at the CO2 chart and thought that means that it has to be less than a year time lag?
Yes. The time lag for this indirect compensation is 2 years. And this compensation that we receive in the actual period, the money that we received as compensation is taken into account in the energy cost that we show, which means we have a -- let's say, we will get a higher compensation for this fiscal year, but just in 2 years' time. And we show it then really in the 2 years' time period only. So that's the timing, the way how we have put this into our equation there. So we really show the net cost of what is really hitting our P&L.
Okay. Very clear. And then if we were to mark-to-market the EUR 62 million number to today's conditions, how would that look like?
Yes. But that's a bit different or difficult question, Bastian, because it is electricity, it's natural gas, it's other fuels. It's a mixture of different prices of electricity prices, gas prices and so forth in different legislations. So therefore, there is not only one figure that we can mention here.
Yes. And also perhaps one additional point, this compensation is a payout. So we are not receiving any certificates or anything which is on the accounts. So it's really calculated after, let's say, or paid out and calculated 2 years after the calendar year is really over, and then we get a straight payment. So there is no certificates or no rights or anything issued. So therefore, there is also not a mark-to-market evaluation there.
But I was really just more referring to just the overall energy bill. Obviously, I think in the last quarter, you always said you basically have roughly 2/3 of that hedged. And I guess these hedges are rolling -- maybe you're not hedging any longer as much as current energy prices because maybe they are high. But I would have -- I was just keen to understand, obviously how the EUR 62 million number moves basically when we're moving closer to what the current conditions are or without obviously like getting to spend a penny but just to get like a broad sense. But I understand it's obviously like a complex exercise, but I'm still sure you've been looking into this.
Yes. But I think what is important, just to underline that we, as eligible sector and company, we are being mostly compensated for the CO2 cost increase in the electricity production. And this will last, which means today, we see a CO2 certificate prices of, let's say, above EUR 90 per ton, which means we are not getting this compensation. And actually in this fiscal year, not to the P&L, but we will get it in 2 years' time. So -- and I think it's important that our energy bill and the electricity bill is kind of disconnected from the CO2 price increase or certificate price increases, but again, with this time lag of about 2 years.
And overall, please bear in mind that energy cost in total is 14% or 15% or -- is it today, 16% or whatever. So it is not that much. And this factor then moves up by 1/3 due to spot market conditions. And that reflects here in the EUR 62 million that you see.
And next up is Christian Obst from Baader Bank.
So I have 3 questions. One is also on the cost side, you are looking for additional employees. As I have seen, can you give us some kind of your expectation about personnel cost increase going forward? So new personnel coming in and also the inflationary issues there. The second one is on battery recycling, where you stand currently. What is your time table, and what is the main question mark for you before you decide to invest into some kind of a bigger plant there? And the last one, more strategic one or -- what are the main -- remind us, what are the main investments in Europe when it comes to capacity and renewables, something like that? And what kind of amount of scrap are you targeting to get at a throughput when you have all of these investments done?
Okay. Thanks, Christian. Roland speaking here. So to your first question regarding increase in head count, the people we are hiring. So there are 2 areas we are strengthening: our IT or widen our digital department and also our group engineering organization in line with our strategy. We are strengthening this engineering group in order to focus and deliver on the investments that we have planned for the coming years. And the total cost increase that we see if everybody is on board, which we are doing as we speak, the total cost increase will be in the magnitude of EUR 10 million plus/minus, depending on what we find. So that gives you -- so since you translate it, it's about, let's say, 80 to 100 people in this range, depending on also where we place them because we have options to bring people into different sites of Aurubis, like Sofia, Pirdop, Spain, Belgium or also in Germany. So that's the number regarding increase. And your question regarding battery recycling, the status is that we are building up our pilot plant. It's more a demo plant. It's quite an impressive setup that we are finally installing these days, and we will go into this demo production in March. That's when we're going to start. And we will see the -- hopefully, the full confirmation of what we have developed in the lab pilot scale, in early summer time frame. And in parallel, we are investigating or we are working on the feasibility to go the next step in order to see what the recycling, what is investment in battery recycling, black mass recycling would look like in an industrial scale.
Do you still have some kind over partners there, or looking for a partner?
We are in -- if you see there is an amazing dynamic in this market, and there is not a day without a press release or any news. And I'm not in a position to disclose with whom we are discussing what. But we are, let's say, in the midst of the discussion with OEMs, battery producers and other companies who are setting up or thinking about setting up collection schemes and dismantling schemes for used batteries coming from the vehicle's end of life. But I think you understand I cannot drop here names on the persons that we have.
Not yet. And last question was on the main invest and the scrap targets. So in scrap target, as announced, we want to go to 50% recycling quarter by the year 2030. That is far from easy. It sounds easy as we already have achieved quite a lot. But please bear in mind that one of the Richmond recycling modules, it's only 90,000 tons of recycling materials, while we are currently using some 2.3 million, 2.4 million tons to the maximum concentrate on the primary side. So it's very difficult to step up the ladder on the recycling part here. But as you know, and as already has been announced, we are looking for, let's say, further recycling modules. We say it's a modular concept. We want to roll it out further if we see that it's working fine and it's working well. But this would add an increment of that same amount of, let's say, 90,000 tons of recycling material. What are the main investors? We have been talking about the Richmond project. Of course, we have been talking about the [indiscernible] processing to our ASPA project here, we have been talking about the industrial heat that are projects which are announced already. And then we have further projects in the pipeline midterm, which are approximately to the same extent, mainly focusing on our capabilities of, let's say, further multimetal processing. So it's about the nickel processing capabilities of Aurubis here in Europe. Of course, further recycling modules and, for sure, as Roland has already mentioned, once we are ready with a pilot hopefully, it will work out fine. And for sure, we don't do that just to keep us busy here. We want to build that on an industrial scale as soon as possible.
Okay. And then I have one last question. Given the current high inflation in the U.S., how high do you see the risk that you have to invest more to erect a plant there in the U.S.? Are you still in the process of some kind of recalculation given the sites that we have, so 10% personnel cost increases, material price increases and so on and so forth?
Yes. We announced the investment in Richmond on November 10. And shortly after, we also published the signing -- as a signature of a contract with our main equipment supplier, SMS. And this is a fixed price contract. So for the, let's say, the equipment, more or less the whole equipment, we have already locked in the pricing at fixed terms during the execution. And we have also, in our business case, taken very, I would say, conservative high assumptions for steel and building materials. And today, we see that steel prices also in the U.S. despite inflation are not going up, but rather compared to what we took into our assumption even, say, from a trend a bit softer. So we believe we have made here -- we put enough security in our business plan and also in contracting already the services so that we will not see any deviation from our planned figure, which means we will build this plant at a CapEx of max EUR 300 million.
At the moment, there are no further questions. [Operator Instructions]And we have a question coming from Ioannis Masvoulas from Morgan Stanley.
A few questions left from my side. Three, actually, and I'll take them one at a time, if that's okay. So the first is around the scrap markets. We've seen Asian countries, especially China and more recently, Malaysia, looking to restrict, or have already restricted low-grade scrap imports and hence, demand for high-grade material has increased, are seen by the narrowing scrap discounts for copper grade #2. Are you seeing a bifurcation of the copper scrap market where you may be losing out due to competition on the high-grade part of the market, but you are benefiting from the low-grade material that is more abundant in Europe and the U.S.? And do you see this overall development as a tailwind for fiscal year '22 relative to last year? And I'll stop here for the first one.
Yes, Ioannis. Roland speaking. No, scrap markets, you're right. But you have to take into account that last calendar year, we had some exceptional situation of the scrap market where supplies to Asia were at an extremely low level. This is now to what we see normalized. And we have also regarding RCs, what CRU number I quoted in my short presentation. And you see the CRU numbers are on, I would say, on a no level. This is not a surprise level and this isn't an attractive level for us. So therefore, put it in perspective that last year, we were benefiting by very, very high RCs for -- specifically for scrap #2. And again, Aurubis, we have the capabilities in our company to process all kinds of scraps from low metal content, low organic to high metal and high organic. So the full range, so therefore, we can always optimize our input mix to the best. And therefore, we see that Asia is more active on the purchasing market but also within, let's say, a reasonable range. And we, as we stated, also, do supply our plants with the right quality and the right mix at good pricing.
Okay. The second question is around CapEx. I think you've guided to north of EUR 400 million for this year. But I was looking at the fiscal Q1 run rate, it was pretty low. Can you talk about the sequencing for the next few quarters, please?
So sequencing, I wouldn't see that low. We had EUR 50-some million in the first quarter, if I'm not mistaken. We will have -- let's say, now with the upcoming project, it will accelerate. We will guess that by the end of the year, we will achieve the EUR 400 million. This is still a considerable right figure here.
Okay. Great. And one last question from me, and apologies if you have already commented on that. But going back to energy costs, could you give us an indication on your assumption for energy cost inflation year-over-year that is baked into your revised guidance? Hello?
Sorry, we're on mute, sorry, we didn't put on the switch. No, we don't give -- again, as we stated already, given the different countries, the different dynamics, and the different energy sources and how electricity is produced in different countries. There is not just this one number, how we are assuming going forward the energy price increases. And on top, as I also explained, we have this compensation mechanism for CO2 cost, which is today a very important cost driver in the electricity production. This is also different by country. So there is not -- I have to apologize, but there is not this one number that can explain what energy prices are, what assumption we have in our energy price calculations going forward.
And still, some uncertainty to -- as you see here. There is some uncertainty. But again, please bear in mind, we are talking about a cost factor of 16% or 15% of the overall cost of Aurubis. And therefore, thereof 2/3 are hedged, and that holds true for pretty much the whole fiscal year. So it's 1/3 out of this -- what do we see 15%, which then is exposed to full prices that you see in the market.
Yes. And there's also one aspect on the product side, not -- unfortunately not for copper, but we have increased our copper premium for market demand, but you could also argue there is a bit of a say, cost component in the premium that we are asking in the market. And we have really asked our customer base for wire rod and for shapes, for participation in the energy cost increase. So that's also in the premium that we get additional to our pricing.
And we have factored in the energy cost that we see currently in December, January, we have factored that into our forecast going forward.
There are no further questions. And with this, I hand it back to Elke Brinkmann.
Yes. Thank you. Finally, I would like to draw your attention again to our next event, our Virtual Annual General Meeting on February 17, which you can follow via webcast. Our next conference call on the occasion of the publication of the half year report will take place on May 10. We would be happy to welcome you again. And with that, we say thank you, and have a nice day.