Alex Hacking

Alex Hacking asked about Vale's interpretation of recent changes to nickel mining licenses in Indonesia and whether these changes could represent a structural shift for the nickel market in terms of supply and price.

Answer

Shaun Usmar, CEO of Vale Base Metals, expressed cautious optimism regarding the Indonesian government's actions to address significant oversupply and environmental concerns. He noted that Vale is still on its journey to improve its cost curve and does not wish to rely on external factors for business resilience. Usmar highlighted the writedowns taken on nickel as a focus on disciplined capital allocation for legacy assets, emphasizing the goal to run the business lean, efficient, and cost-competitive. He concluded that if more rational participation and supply occur in Indonesia and elsewhere, Vale's shareholders would be the net beneficiaries, but the company's focus remains on controllable factors.

Alex Hacking asked Shaun Usmar for his interpretation of the recent changes to nickel licenses in Indonesia, given Vale's operational experience there. He also inquired whether these changes represent a structural shift for the nickel market in terms of supply and price dynamics.

Answer

Shaun Usmar, CEO of Vale Base Metals, expressed cautious optimism regarding the Indonesian government's actions to address oversupply and environmental concerns. However, he emphasized that Vale's nickel business is still on a journey to improve its cost curve position and does not wish to rely on external factors for resilience. He reiterated the focus on running the business lean, efficient, and cost-competitive, noting that shareholders would benefit if more rational supply participation occurs in Indonesia and elsewhere.

Alex Hacking asked for a quantification of Stelco's negative impact on Cleveland-Cliffs' earnings in recent quarters and the potential upside for Stelco in 2026 as Canadian markets improve. He also sought comments on where Canadian prices should be with the new tariff policy compared to current levels.

Answer

CFO Celso Goncalves acknowledged that Stelco was disappointing in 2025 but is now expected to be a significant contributor to EBITDA in 2026 due to recent improvements. He emphasized that Stelco's acquisition also positively impacted the U.S. market dynamics, benefiting the overall business. CEO Lourenco Goncalves added that Cliffs repositioned Stelco to serve the Canadian market, unlike its previous business model. He explained that the Canadian government's recent, albeit limited, restrictions on steel imports have changed the market dynamics, leading to a 'completely different 2026' for Stelco compared to 2025, which suffered from an 'avalanche of imports.' While specific Stelco results are not disclosed, both executives indicated a substantial improvement.

Alex Hacking asked for quantification of Stelco's drag on earnings in recent quarters and the potential upside from the turnaround in Canadian markets. He also sought insights into the 2026 outlook for Stelco, particularly regarding Canadian steel prices under the new tariff policy.

Answer

EVP and CFO Celso Goncalves acknowledged Stelco's disappointing performance in 2025 but stated it is now a contributor, expecting a significant EBITDA increase in 2026. He emphasized viewing Stelco as integral to the overall business, noting its positive impact on U.S. market dynamics. Chairman, President, and CEO Lourenco Goncalves added that Cliffs repositioned Stelco to focus on the Canadian market and benefited from its made-in-Canada coke. He attributed Stelco's 2025 challenges to an influx of imports into Canada, which has since been addressed by the Canadian government, leading to a significantly improved outlook for 2026.

Alex Hacking from Citigroup requested more color on CEO Lourenco Goncalves's comment that 'foreign investment in Cliffs could be an attractive opportunity,' asking what types of transactions the company might potentially explore.

Answer

CEO Lourenco Goncalves responded that Cleveland-Cliffs is an asset-rich company that he believes is undervalued, making the sum-of-the-parts more valuable than the current stock price. He confirmed the company is in active conversations regarding the sale of non-core assets to generate cash for debt reduction and is also entertaining inbound interest from credible suitors for other potential endeavors.

Alexander Hacking from Citigroup asked about the company's debt covenants in the context of potential asset sales, inquiring about the potential magnitude and timing of any such transactions.

Answer

CFO Celso Goncalves confirmed they have received unsolicited interest for assets that could yield 'several billion dollars.' He noted that debt covenants are springing and not a concern, and that any cash proceeds would be used for debt reduction. He indicated some deals are in advanced stages and could be announced within the year, though nothing is guaranteed.

Alexander Hacking from Citigroup requested clarification on the Q4 volume forecast, noting that a flattish shipment level seemed low given the inclusion of two months of volume from the newly acquired Stelco.

Answer

Executive Celso Goncalves reiterated that the volume contribution from Stelco would essentially make up for the volume loss from the idled C6 blast furnace, resulting in a similar overall shipment level from Q3 to Q4. Executive Lourenco Goncalves added context, noting Q4 is a seasonally slower quarter and that 'around the same' could potentially mean slightly higher.

Alex Hacking asked about the expected cadence of Southern Copper's copper production for 2026, specifically whether Q1 would be the strongest and Q4 the weakest due to falling ore grades in Peru, or if production would be more evenly distributed throughout the year.

Answer

Raul Jacob, Vice President, Finance, Treasurer, and CFO, stated that copper production for 2026 is expected to be more even. He noted that Toquepala is entering a temporary low ore grade patch, while Cuajone's production is relatively stable at a lower structural ore grade, prompting consideration for an expansion at that operation.

Alex Hacking asked about the expected cadence of Southern Copper's copper production for 2026, specifically whether Q1 would be the strongest and Q4 the weakest due to falling ore grades in Peru, or if production would be more evenly distributed throughout the year.

Answer

Raul Jacob, VP of Finance, Treasurer, and CFO, indicated that copper production for 2026 would be more even. He mentioned that Toquepala is entering a temporary patch of low ore grades, while Cuajone's production is relatively stable at its current level due to a new, lower structural ore grade, for which an expansion is being considered.

Alex Hacking from Citi questioned the safety confidence in resuming mining operations before full mud zone remediation, the extent of mud zone mitigation possible, and whether improved water management could reduce material accumulation. He also asked for reassurance regarding the prevention of a similar high-velocity zone in PB2.

Answer

Kathleen Quirk, President and CEO, and Mark Johnson, President and COO of Freeport-McMoRan Indonesia, emphasized that cement plugs in PB1C panels will isolate the area, ensuring no surface connection before PB2 restarts. They explained that while water drainage is efficient, surface rainfall moves material into the pit bottom, forming mud, which they aim to intercept with drilling. Mark Johnson assured that PB2's conditions differ, preventing a similar high-velocity zone, and Muon technology will be used for verification.

Alex Hacking asked about the safety confidence in resuming mining operations before full mud zone remediation, the extent of mud zone mitigation possible with current methods, and if improved water management could reduce material accumulation. He also followed up on how the company ensures a similar high-velocity zone won't occur in PB2.

Answer

Kathleen Quirk (President and CEO) and Mark Johnson (President and COO, Freeport-McMoRan Indonesia) explained that cement plugs in PB1C panels will isolate the area before PB2 restarts, ensuring no surface connection. Mark Johnson stated that PB2 has no mud risk after isolation and that the specific inclined cave back and adjacent mature cave conditions that caused the high-velocity zone in PB1C will not be present in PB2. He also mentioned the reinstallation of Muon technology for verification.

Asked for details on the 2025 discretionary CapEx, specifically if the Bagdad tailings spending is tied to the expansion and if Kucing Liar production will increase Grasberg's output or just replace depleting ore.

Answer

The Bagdad tailings spending is discretionary and can be deferred if the expansion doesn't proceed; it is not part of the main expansion capital. The Kucing Liar project is designed to sustain Grasberg's long-term, large-scale production by replacing ore from other depleting bodies, ensuring high output rates through 2041 and beyond.

Alexander Hacking sought clarification on the 2025 discretionary CapEx, asking if the Bagdad tailings infrastructure spending is tied to the expansion and if the Kucing Liar project will increase Grasberg's total production or sustain it.

Answer

President and CEO Kathleen Quirk clarified that the Bagdad tailings spending is discretionary and could be deferred if the expansion doesn't proceed, though it would be needed eventually. She explained that the Kucing Liar ore body is part of the long-range plan to sustain Grasberg's large-scale production as other ore bodies decline over time.

Alex Hacking, Equity Research Analyst at Citi, inquired whether Ternium's automotive customers have begun rebalancing production from Mexico back to the U.S. He also asked for an update on Mexico's proposed steel tariff increases, including the current proposals and expected implementation timeline. Finally, Mr. Hacking sought confirmation on Ternium's stance regarding the creation of a "Fortress North America" for steel, characterized by aligned import policies and free trade within the USMCA region.

Answer

Máximo Vedoya, Ternium's Chief Executive Officer, clarified that automotive customers have not yet rebalanced production from Mexico to the U.S., with current discussions focusing on shifting steel sourcing from Asian countries to Mexico. He emphasized that increased U.S. vehicle production should aim to substitute imports from outside the region, not from Mexico, given Mexico's significant U.S. content in its automotive exports. Regarding Mexican tariffs, Mr. Vedoya detailed a proposal in Congress to raise tariffs on approximately 1,500 products, including steel and its derivatives, from 25% to 35%, with expected approval in November, as part of the "Plan Mexico" to boost local value-added content. He unequivocally affirmed Ternium's strong support for a "North American fortress" concept, advocating for aligned steel import and tariff policies among USMCA members while promoting free trade within the bloc.

Alex Hacking asked if any auto customers have begun rebalancing production from Mexico back to the U.S. He also sought an update on Mexico's proposed steel tariff increases, including the current proposal and implementation timeline. Finally, he asked about Ternium's stance on a 'Fortress North America' concept for steel trade.

Answer

Máximo Vedoya, Ternium's CEO, stated that auto customers have not yet rebalanced production but are discussing sourcing more steel from Mexico instead of Asia. He highlighted that Mexican auto exports to the U.S. already contain significant U.S. content. Regarding Mexican tariffs, Mr. Vedoya mentioned a proposal to increase tariffs on 1,500 products, including steel, from 25% to 35%, expected to be approved in November. He confirmed Ternium's strong support for a 'Fortress North America' approach, advocating for aligned steel import and tariff policies among USMCA members.

Alex Hacking asked about Nucor's market share gains and specific products driving growth, particularly in the context of data center construction.

Answer

Leon Topalian (Chair, President, and CEO) highlighted Nucor's safety record, the ramp-up of Brandenburg in the plate group, growth in long products, and the comprehensive capabilities of the commercial and construction solutions group, especially for data centers, where Nucor supplies 95% of steel components. John Hollatz (Executive Vice President) confirmed that joist and deck shipments are significant beneficiaries, with backlogs extending into 2026.

Alex Hacking of Citigroup asked for confirmation of the full-year capital expenditure guidance, its implication for second-half spending, and a list of major growth projects beyond those nearing immediate completion.

Answer

CEO Leon Topalian confirmed the project pipeline, adding two new galvanizing lines and a third towers plant. COO David Sumoski confirmed that CapEx will be lower in the second half, which, along with lower working capital use, is expected to drive a significant increase in free cash flow compared to the first half.

Alex Hacking of Citigroup Inc. confirmed the full-year CapEx guidance of $3 billion, which implies a second-half slowdown, and asked about major growth projects planned beyond those already nearing completion.

Answer

President and CEO Leon Topalian and COO David Sumoski confirmed the major project pipeline, adding two galvanizing lines, a third towers plant, and the CSI galvanizing line to the list of future investments. Mr. Sumoski also affirmed that capital spending will be lower in the second half, which, combined with lower working capital use, is expected to cause a 'pronounced change' in free cash flow generation.

Alexander Hacking of Citigroup Inc. asked if Nucor has quantified the benefits from Section 232 tariffs being extended to downstream products and sought clarification on the outlook for steel products margins.

Answer

CEO Leon Topalian explained that while the impact of downstream tariffs is consequential, the company has not shared a public quantification. EVP John Hollatz clarified that while price increases were implemented in Q1, a lag in realization for products like joist and deck will lead to some normal margin compression. However, he noted that tubular products will see an immediate benefit in Q2.

Alex Hacking inquired about the extension of Section 232 tariffs to downstream products and the pricing outlook for steel products.

Answer

CEO Leon Topalian discussed the impact of tariffs. EVP John Hollatz explained the pricing dynamics in the steel products segment.

Alexander Hacking asked for a breakdown of the $168 million in quarterly start-up costs, specifically how much was related to the Brandenburg mill. He also inquired about a breakeven target for Brandenburg and the demand outlook from the wind energy sector.

Answer

CFO Steve Laxton confirmed the vast majority of start-up costs were in the Steelmaking segment, with Brandenburg and West Virginia accounting for over 75% of the total. CEO Leon Topalian and executive Brad Ford stated that Brandenburg achieved an EBITDA breakeven run rate in September. They also noted rising activity for onshore wind and new orders from European offshore wind producers for their Elcyon plate.

Alex Hacking asked if the geographic mix of aluminum shipments from Alcoa's Canadian smelters, which were previously redirected away from the U.S. due to tariffs, has returned to normal with the recent increase in the Midwest Premium.

Answer

William Oplinger, CEO, confirmed that Alcoa had redirected approximately 135,000 tons of aluminum during the year. However, with the Midwest premium now at a sufficiently high level, shipments from Canadian smelters to the United States would be returning to normal volumes.

Alex Hacking asked if the geographic mix of shipments from Alcoa's Canadian smelters, which had been rerouted away from the U.S., has returned to normal given the current Midwest premium levels.

Answer

William Oplinger, CEO, confirmed that approximately 135,000 tons had been redirected earlier in the year, but with the Midwest premium now at its current high level, shipments to the United States have returned to normal.

Alex Hacking followed up on the Western Australia mine delays, asking about the sustainability of mining lower-grade areas, and sought clarification on whether higher Midwest premiums were fully offsetting the increased Section 232 tariff costs.

Answer

President, CEO & Director William Oplinger stated that contingency plans cover up to a 15-month delay in Western Australia. EVP & CFO Molly Beerman clarified that while there was margin compression in Q2, at current prices the overall tariff impact is near neutral to slightly positive for Alcoa due to the benefit on its U.S. tons, though the Midwest premium has not fully adjusted to cover all costs.

Alexander Hacking asked for clarification on the company's deleveraging options and whether the San Ciprián smelter and refinery's fates are interconnected.

Answer

EVP and CFO Molly Beerman affirmed that deleveraging is a key focus to restore the balance sheet. President and CEO William Oplinger clarified that 'options' refers to deciding which debt to repay, not potential asset sales. Regarding San Ciprián, he stated that selling the units separately is difficult due to their operational integration and the capital needed for separation, though no options are off the table.

Alex Hacking inquired about the significant margin difference between Foley and CPMP, seeking color on the driving factors and potential opportunities to increase CPMP's margins by leveraging Foley's best practices. He also asked for a breakdown of the $600 million CapEx guidance for the next fiscal year, specifically how much is allocated to precast and the split between sustaining and growth capital.

Answer

President and CEO Peter Matt explained that Foley and CPMP have different operating models, and CPMP's recent acquisitions are 'works in progress' with lower initial margins, impacting the overall average. He noted that Foley's margins stand out, but CPMP's mature plants also have attractive margins. Peter Matt clarified that precast maintenance CapEx is much lower, estimating $8-10 million for CPMP and $10-15 million for Foley annually. He added that CPMP's spending might be higher in the first couple of years due to investments in acquired businesses, all with attractive returns. SVP and CFO Paul Lawrence noted that the CapEx numbers for precast would be lower in the current fiscal year as the transactions are expected to close by calendar year-end.

Alexander Hacking questioned how much of the 1 million tons of new capacity from Arizona 2 and West Virginia represents net growth versus replacement, and if the company could grow into this new capacity.

Answer

Executive Peter Matt clarified that the Arizona 2 micro mill is considered a replacement for the previously idled California plant. The West Virginia mill represents some expansion in the Northeast, a market where CMC is underrepresented. He stressed that while they expect the market to grow, the company's primary focus is on "value over volume," and it will flex its production system to meet market demand rather than chasing volume.

Alex Hacking from Citigroup questioned the tangible progress on the long-discussed anode material opportunity and sought clarity on whether GrafTech is in active partnership discussions with the U.S. government.

Answer

CEO Timothy Flanagan acknowledged the long timeline but highlighted recent government actions, like the MP Materials deal, as a potential "game changer" creating a new model for public-private partnerships. He stated GrafTech is well-positioned to be an attractive partner but did not comment directly on active discussions, emphasizing the company will continue to explore all avenues.

Alexander Hacking inquired about the percentage of sales now coming from the U.S. and Western Europe, the supply chain balance for the U.S. market between Monterrey and European facilities, and the market's acceptance of the announced 15% price hike.

Answer

CEO Timothy Flanagan confirmed that the U.S. and Europe now represent "well over 50%" of volume and revenue combined. He described the supply chain as an integrated system, with a substantial portion for the U.S. coming from Monterrey but also supplemented by European facilities. Regarding the price hike, he noted that while many customers understand the need for a healthier industry, some pushback is expected, but he remains optimistic about driving pricing higher in the second half of the year.

Alexander Hacking from Citigroup Inc. sought confirmation on whether the 60% of 2025 volume committed is firmly priced, asked for color on pricing trends, and requested a forecast for 2025 interest expense.

Answer

CEO Timothy Flanagan confirmed that the 60% of volume committed for 2025 is firm on both price and volume. While declining to give specific forward guidance on pricing, he noted that Q4 2024 spot prices were lower than Q4 2023, which will impact year-over-year comparisons. COO Jeremy Halford provided guidance for 2025 interest expense, estimating it to be approximately $90 million.

Alexander Hacking of Citigroup Inc. asked about the current tenor of contract negotiations for the first half of 2025 and how a competitor's recently announced 20% price increase has affected the dynamic. He also inquired about any dialogue between GrafTech and HEG regarding their investment.

Answer

CEO Timothy Flanagan confirmed that GrafTech is in its key negotiation season and views the competitor's price increase as a positive and necessary step for the industry's health, although the ultimate realization of such an increase will vary by region and starting price point. Regarding HEG's investment, Flanagan stated it is a passive stake and that GrafTech views it as a strong endorsement of the company's assets and unique vertical integration.

Alex Hacking of Citigroup asked about customer acceptance of significantly higher domestic aluminum prices, which have risen sharply in 2025. He also questioned whether customers are delaying purchases to await a potential resolution of Section 232 tariffs with Canada.

Answer

Executive VP & COO Stephen Koch stated that while the rapid price hikes are a shock for some customers, they are generally accepting them. He noted this leads customers to buy smaller quantities more frequently, a trend that benefits Reliance's next-day delivery model. President and CEO Karla Lewis added that Reliance prices based on an "all-in cost," which includes factors like the Midwest premium. Koch concluded that customers who need aluminum for manufacturing will continue to buy, even at higher prices, to meet their business requirements.

Alexander Hacking from Citigroup asked about Reliance's exposure to materials from Canada and Mexico in the context of potential tariffs. He also questioned the accounting for the first quarter, asking if rising metal prices would create a LIFO headwind that might contradict the expected FIFO margin improvement.

Answer

Executive Karla Lewis noted that international business is a small part of Reliance's operations. Executive Stephen Koch specified that the company is 95-96% domestically sourced, and while some cross-border disruptions are possible, the overall effect of higher domestic prices from tariffs is viewed as a net positive. Executive Arthur Ajemyan clarified that the guided LIFO income for 2025 is not based on an expectation of falling prices but is a timing-related carryover of income from 2024 due to specialty product inventory.

Alex Hacking of Citigroup asked about the drivers behind the expected inflection point in the steel fabrication business and questioned the potential for the company to increase its use of domestic aluminum scrap with new sorting technologies.

Answer

EVP & CFO Theresa Wagler identified higher volume as the primary driver for the fabrication segment's improvement, supported by stable pricing. President & COO Barry Schneider and Chairman & CEO Mark Millett elaborated on the aluminum scrap opportunity, highlighting the value created by their OmniSource subsidiary and the enhanced financial incentive from high primary aluminum tariffs.

Alex Hacking of Citigroup asked whether the expected inflection in the steel fabrication business would be driven by price or volume, and inquired about the opportunity to utilize more domestic aluminum scrap with advanced sorting technologies.

Answer

CFO Theresa Wagler stated that the fabrication inflection is primarily driven by higher volume, supported by price stability. COO Barry Schneider discussed how their OmniSource division is focused on extracting more value from scrap streams. CEO Mark Millett added that high primary aluminum prices enhance the economic advantage of using more recycled content.

Alex Hacking of Citigroup asked whether the anticipated inflection point in the steel fabrication business would be driven by price, volume, or both. He also inquired about the potential to increase domestic aluminum scrap usage given new sourcing technologies and high tariffs.

Answer

EVP & CFO Theresa Wagler stated that the primary driver for the fabrication segment's inflection is increased volume, which is supported by price stability. On scrap, President & COO Barry Schneider highlighted the value of their integrated model, while Chairman & CEO Mark Millett noted that high tariffs on primary aluminum enhance the economic advantage of using recycled content.

Alex Hacking of Citigroup inquired about the drivers behind the expected inflection point in the steel fabrication business, asking if it was due to price, volume, or both. He also asked about the potential for enhanced aluminum scrap sourcing technology to materially increase the use of domestic scrap.

Answer

EVP & CFO Theresa Wagler stated the fabrication inflection point is primarily driven by volume, with price stability also being supportive. President & COO Barry Schneider explained that their scrap subsidiary, OmniSource, provides a competitive advantage through advanced separation technologies and a captive loop, allowing them to maximize the value of recycled content.

Alex Hacking of Citigroup asked whether the expected inflection point in the fabrication business is driven by price or volume. He also inquired about the potential to increase the use of domestically sourced aluminum scrap.

Answer

EVP & CFO Theresa Wagler stated that the primary driver for the fabrication segment's inflection point is volume, supported by price stability. President & COO Barry Schneider explained that their scrap subsidiary, OmniSource, continuously invests in technology to extract more value from the scrap stream. Chairman & CEO Mark Millett added that higher primary aluminum costs amplify the benefit of using more recycled content.

Alexander Hacking from Citigroup Inc. sought clarification on the aluminum mill's production ramp, asking if the 50% and 75% utilization targets were exit rates or annual averages. He also asked if the stable, elevated margins in the steel fabrication segment represent a 'new normal'.

Answer

CEO Mark Millett clarified the aluminum production targets are exit rates for the respective years. CFO Theresa Wagler explained that fabrication margins reflect a structural commercial shift in the industry, recognizing the value of engineering, and she expects margins to remain higher than historical pre-COVID levels, supported by future demand.

Alexander Hacking from Citigroup sought to clarify the 2025 production assumption for Nevada Gold Mines, given the outlook for flattish Tier 1 output. He also asked if the long-term target of 6 million ounces of gold production remains a valid midterm goal.

Answer

Executive Tom Palmer did not provide a specific figure for Nevada Gold Mines, stating that the assumption is for run rates from 2024 to continue into 2025 for the broader portfolio. He confirmed that he views the go-forward portfolio as capable of producing an average of around 6 million ounces of gold and 150,000 tonnes of copper over the long term, with a primary focus on expanding margins.

The analyst asked about the market impact of recent competitor mine outages, particularly the Longview fire, and whether current market conditions indicate that Asian steel mills are destocking.

Answer

Management confirmed that recent competitor outages, like the Longview fire, have removed significant volume (2-3% of seaborne supply) from the market for an extended period. They agreed that the current market dynamics, with falling prices despite solid demand indicators, suggest a period of destocking by Asian mills, but noted that customers are still taking all their contracted volumes, indicating a relatively balanced market.