Carlos de Alba

Carlos de Alba requested clarification on the "$1.25 billion plus" CapEx for the 10X facility, asking for quantification of the "plus" component, and sought confirmation that 100% of the light and heavy rare earth needs for 10X and Independence would be met by Mountain Pass operations, without reliance on third-party heavy rare earths.

Answer

CFO Ryan Corbett confirmed that all heavy and light feedstock for both facilities is intended to come from Mountain Pass, supplemented by various initiatives with the Department of War and Apple for incremental heavy rare earth feedstock. He explained that the "plus" in the 10X capital investment reflects potential growth or shrinkage of facility portions, with annual guidance provided, and the $500 million-$600 million 2026 CapEx reflects a significant initial investment.

Carlos de Alba sought clarification on the 'plus' in the $1.25 billion+ CapEx announcement for 10X and confirmed if 100% of 10X and Independence's light and heavy rare earth needs would be met by Mountain Pass operations, reducing reliance on third-party heavy rare earths.

Answer

CFO Ryan Corbett confirmed that all heavy and light feedstock for both facilities will come from Mountain Pass, with various initiatives in place to source incremental heavy rare earth feedstock. He noted that the 10X CapEx figure may grow or shrink, and annual guidance will be provided, with $500M-$600M expected for 2026.

Carlos de Alba sought clarification on whether MP Materials will have capacity for recycled material beyond the 2,000 tons contracted with Apple, specifically if it will be a separate processing line. He also asked for insights into the expected ramp-up of dysprosium (Dy) and terbium (Tb) output post-commissioning.

Answer

Michael Rosenthal (Chief Operating Officer) clarified that a dedicated line is being built for Apple's material, and MP Materials will also have modular capability to process its own swerf and additional feedstocks as that market grows, leveraging existing infrastructure. Regarding Dy and Tb ramp-up, Michael Rosenthal (Chief Operating Officer) stated the initial focus is on meeting customer needs for Independence/GM. The existing stockpile allows for production volumes greater than initial ore-based supply, with the ramp-up pace depending on comfort with pushing volumes while maintaining high quality requirements.

Carlos de Alba sought clarification on whether MP Materials will have recycled material capacity beyond the 2,000 tons contracted with Apple. He also asked about the ramp-up expectations for dysprosium (DY) and terbium (TB) output post-commissioning.

Answer

Michael Rosenthal (Founder and COO) clarified that a dedicated line is being built for Apple's material, and MP Materials will also have modular capability to process their own swerf and additional feedstocks as that market grows, leveraging existing infrastructure. Regarding DY and TB ramp-up, he stated the initial focus is on meeting customer needs for Independence and GM, noting that their stockpile allows for production volumes greater than initial ore-based material, with ramp-up depending on comfort with pushing volumes while maintaining high quality.

Carlos de Alba asked for details on the milestones for Apple's $200 million prepayment and the status of the $1 billion financing for the 10x facility. He also inquired about the scalability of the new recycling line.

Answer

CFO Ryan Corbett declined to share specific contract milestones but noted Apple's prepayments will occur ahead of the mid-2027 production start. CEO James Litinsky emphasized the company's '$2 billion fortress balance sheet,' making the prior bridge facility less relevant. COO Michael Rosenthal described the recycling facility as modular, initially serving Apple and internal needs, but designed to grow with the market to process third-party feedstocks.

Carlos de Alba inquired about the progression of production and costs in the Midstream segment, asking if costs would decline linearly with production or more dramatically after a certain threshold. He also asked about the potential cost reduction benefits from the Upstream 60K project.

Answer

COO Michael Rosenthal noted the Midstream ramp will likely see step-change improvements rather than linear progress. CFO Ryan Corbett added that it is largely a fixed cost absorption issue, and costs will come down as throughput increases. For the Upstream 60K project, Corbett explained that production growth from improved recovery has a nearly full drop-through to the bottom line, and further growth will leverage fixed costs, resulting in a significant positive cost benefit.

Carlos de Alba asked for an explanation of the fundamental technology breakthrough in the new carbochlorination flow sheet, given its use in the titanium industry, the level of confidence in this approach, and the independent laboratories involved in initial testing. He also inquired about the economics and cost advantage of extracting gallium compared to red mud refining operations.

Answer

Michael Woloschuk, EVP of Critical Mineral Operations, explained that the breakthrough lies in applying carbochlorination to the Brook Mine's specific geology and aluminosilicate clays, which allows for the production of high purity quartz and alumina, and efficient volatilization of gallium. He expressed high confidence, citing Element USA and Kingston Process Metallurgy as consultants. He highlighted that gallium's volatility as a chloride makes this process uniquely efficient for primary gallium production, offering a significant cost advantage over extraction from red muds or zinc residues.

Carlos de Alba from Morgan Stanley requested clarification on the 'novel' aspect of the new carbochlorination flow sheet, given its use in the titanium industry, asking for details on Ramaco's specific technological breakthrough, confidence levels, and independent labs involved. He also inquired about the economic and cost advantages of extracting gallium via this new approach compared to traditional methods like red mud refining.

Answer

Michael Woloschuk, EVP of Critical Mineral Operations, explained that the breakthrough lies in applying carbochlorination to the Brook Mine's unique aluminosilicate clays, enabling efficient production of high-purity quartz, alumina, and gallium. He cited Element USA and Kingston Process Metallurgy as collaborators and highlighted the proprietary operating conditions and de-risked reagent logistics. For gallium, he noted that its volatility as a chloride in their process leads to double-digit recovery increases and higher purities, positioning them as a primary producer with a significant cost advantage over red mud or zinc residue extraction.

Carlos de Alba inquired about Gerdau's strategy for shareholder returns, including the dividend payout policy and the rationale behind the share buyback program, particularly concerning foreign shareholders. He also asked about the intended use of any proceeds from non-core asset divestments and the company's CapEx guidance and strategy beyond 2026, focusing on growth versus competitiveness and maintenance.

Answer

CFO Rafael Japur explained that Gerdau maintains a dividend payout slightly above its 45-50% policy, and the buyback program is favored due to shares being below intrinsic value and tax implications for foreign shareholders. Japur stated that proceeds from non-core asset sales would be returned to shareholders, noting that Q4 cash generation was used to reduce net debt for future flexibility. CEO Gustavo Werneck clarified there is no CapEx guidance beyond 2026, but future disbursements will be diligent and aligned with cash generation, prioritizing competitiveness and cost reduction over capacity growth. He also mentioned potential future investments in the Ouro Branco mill for lifespan, which would be offset by reductions elsewhere to maintain a disciplined balance sheet.

Carlos de Alba asked about Gerdau's strategy for shareholder returns, particularly the balance between dividends and buybacks given tax implications for foreign shareholders, and how proceeds from non-core asset divestments would be used. He also sought guidance on CapEx for 2027 onwards and the nature of future investments.

Answer

CFO Rafael Japur explained that Gerdau maintains a dividend payout slightly above policy (45-50%) and uses buybacks, which are not subject to foreign shareholder withholding taxes, to return value. He noted that while net debt increased in 2025 due to shareholder remuneration, Q4's strong cash generation allowed for debt reduction, providing flexibility. Regarding non-core asset proceeds, he stated they would likely be returned to shareholders. For CapEx, CEO Gustavo Werneck confirmed the BRL 4.7 billion guidance for 2026 and emphasized diligence, aligning CapEx with cash generation capacity without compromising financial health. Future investments are expected to focus on competitiveness and cost reductions rather than significant capacity growth, with a long-term need for investment in the Ouro Branco mill.

Carlos de Alba asked about Gerdau's working capital management, noting that current levels are higher than in the pre-2020 period and inquiring about any structural initiatives to permanently reduce them and boost free cash flow.

Answer

CFO Rafael Japur acknowledged that working capital days have increased due to a strategic shift towards higher-value products. However, he stated there is still room for improvement and that the company is actively working to reduce its cash conversion cycle from the current 84-85 days to a target closer to 80 days.

Carlos de Alba requested an update on the EBITDA ramp-up timeline for the new HRC line and the mining project. He also asked what Gerdau believes would be the most effective trade defense measures and how the current rebar supply-demand imbalance in Brazil could be resolved.

Answer

CFO Rafael Japur detailed that the HRC line will add 150k-200k tonnes of production in 2025, while the mining project is on track for a late 2025 completion with benefits materializing in 2026. CEO Gustavo Werneck opined that effective trade defense requires closing tax loopholes and implementing 'hard quotas' on imports. He suggested the rebar market imbalance will be resolved through a combination of factors, including competitive pressure on weaker players, which Gerdau's strong balance sheet can withstand.

Carlos De Alba requested more details on the potential SBQ investment in Mexico, the performance outlook for the second half of 2024, working capital expectations, and whether the company intends to launch a new share buyback program.

Answer

CFO Rafael Japur reiterated the strategic rationale for exploring an SBQ investment in Mexico, driven by near-shoring and automotive growth. For the second half of the year, he expects a margin recovery in the Brazil division as cost optimizations take effect and anticipates further working capital release. He stated that a new share buyback program would be evaluated once there is more visibility on the company's cash generation throughout the year.

Carlos De Alba sought clarification on CANACERO's 2026 demand forecast for Mexico. He then asked about Ternium's plan B if the USMCA agreement is not renewed and Mexico fails to reach a standalone commercial agreement with the U.S., especially concerning the automotive sector. He also requested an outlook on Ternium's volume performance expectations for 2026 across its operating countries.

Answer

Máximo Vedoya (CEO, Ternium) clarified that CANACERO expects Mexican demand to be up 4% in 2026. Regarding a USMCA plan B, he noted that Ternium operated in 2025 under similar conditions due to Section 232. Pablo Brizzio (CFO, Ternium) provided a volume outlook, anticipating increased Mexican shipments above market forecasts due to new facilities. South American volumes are seasonally lowest in Q1, with Argentina recovering in H2 2026, and Brazil maintaining moderate growth.

Carlos De Alba sought clarification on CANACERO's 2026 Mexican demand forecast and asked about Ternium's 'Plan B' strategy if the USMCA is not renewed or if Mexico fails to reach a standalone agreement with the US, particularly concerning the auto sector. He also requested an outlook on Ternium's volume performance across its different operating countries for 2026.

Answer

Máximo Vedoya (CEO, Ternium) clarified that CANACERO forecasts a 4% increase in Mexican demand for 2026. He stated that Ternium's 'Plan B' involves operating under current premises, similar to 2025, with Section 232 measures in place. Pablo Brizzio (CFO, Ternium) provided the 2026 volume outlook: Mexico shipments are expected to increase above market growth due to new facilities, South America's Q1 is traditionally low with Argentina recovering from Q2, and Brazil is expected to see moderate growth aligned with GDP.

Carlos De Alba of Morgan Stanley inquired about strategic opportunities to streamline Ternium's ownership structure in Argentina and Mexico following the Argentine midterm elections. He also asked about Ternium's contingency plans if the U.S. maintains melt and pour conditions for steel-using products imported into the U.S.

Answer

Máximo Vedoya, Ternium's Chief Executive Officer, stated that the Argentine elections, while not immediately changing plans for ownership simplification, are expected to usher in structural reforms that will enhance industry competitiveness and growth for Ternium Argentina. Pablo Brizzio, the company's Chief Financial Officer, added that while simplifying the corporate structure remains a long-term goal, its feasibility depends on external factors like government reforms and the status of ANSES's holdings. Regarding U.S. melt and pour conditions, Mr. Vedoya explained that Ternium's significant investments in new steel production capacity were made with the expectation that regional melt and pour requirements would become standard. He emphasized that any USMCA renegotiation should include melt and pour in the entire North American region, not just the U.S., and that Ternium is actively supporting affected customers to mitigate volume loss.

Carlos De Alba inquired about strategic opportunities to enhance the company's ownership structure efficiency in Argentina and Mexico, particularly in light of recent midterm election results. He also asked about Ternium's contingency plans if the U.S. maintains 'melt and pour' conditions for steel-using products imported into the U.S.

Answer

Máximo Vedoya, Ternium's CEO, stated that the Argentine election results do not alter existing projects but anticipate structural reforms that could boost industry competitiveness and growth for Ternium Argentina. Pablo Brizzio, CFO, added that simplifying the corporate structure remains a long-term goal, contingent on future government reforms. Regarding 'melt and pour' conditions, Mr. Vedoya clarified that Ternium's investments in new steelmaking capacity in Mexico are aligned with a regional 'melt and pour' vision, and the company is working with affected customers to mitigate impacts of current U.S. policies.

Carlos de Alba of Morgan Stanley asked for guidance on the magnitude of the expected sequential EBITDA improvement and a long-term quantification of the EBITDA contribution from new investments in Mexico. He also requested an update on the CSN/Usiminas litigation and the company's strategy for its U.S. Schiphol facility under a 50% tariff.

Answer

CFO Pablo Brizzio indicated the company aims to reach an average EBITDA margin of around 15% by Q4 2025, with Q3 showing continued improvement. CEO Máximo Vedoya quantified the long-term impact of the Pesqueria expansion, noting the new capacity will have a long ramp-up but will add significant EBITDA per ton. Regarding the Usiminas litigation, he stated there were no significant developments since Q4 2024 and an appeal is pending. For the Schiphol facility, he confirmed they are now sourcing most supply from local U.S. suppliers.

Carlos de Alba from Morgan Stanley asked for clarification on the magnitude of the expected sequential EBITDA improvement and a long-term quantification of the EBITDA boost from new investments in Mexico. He also requested an update on the Usiminas litigation status and the company's strategy for its Shreveport facility given the 50% import tariff.

Answer

CFO Pablo Brizzio indicated that EBITDA margins are expected to continue improving, targeting around 15% by Q4 2025. CEO Máximo Vedoya added that new Mexican capacity would add $150-$200 EBITDA per ton for new volumes and $30-$40 per ton in efficiency gains on replaced volumes, following a long ramp-up period. Vedoya also stated that the Shreveport facility now sources locally due to tariffs and that there were no new significant developments in the Usiminas litigation since the last update.

Carlos de Alba of Morgan Stanley asked for more specific details on the Q1 2025 EBITDA outlook and requested an updated timeline for the ramp-up of the Pesqueria expansion projects, including the finishing lines, cold roll mill, and hot dip galvanizing line.

Answer

CEO Maximo Vedoya confirmed the Pesqueria finishing lines are ahead of schedule and will reach full capacity within 2-3 months. The cold roll mill's start has been advanced to December 2025, with a 9-12 month ramp-up to full capacity. CFO Pablo Brizzio added that the Q1 EBITDA increase is expected from stable shipment volumes and a significant decline in costs that will outweigh a slight decrease in realized prices, leading to margin improvement.

Carlos De Alba asked about Vale's capital allocation strategy, specifically the company's view on returning excess cash to shareholders through potential buybacks or special dividends, given the strong share price rally and current position within the expanded net debt range.

Answer

Marcelo Bacci, EVP of Finance and Investor Relations, Vale S.A., stated that favorable market conditions for cash flow generation mean there's a chance for additional shareholder returns if expanded net debt falls below the midpoint of the $10 billion-$20 billion target range. He noted that dividends were favored last year due to taxation changes. For future allocations, Bacci indicated that Vale would assess the situation, aiming for a more balanced approach between dividends and buybacks, depending on relative valuation.

Carlos De Alba asked Marcelo Bacci about Vale's capital allocation strategy, specifically regarding returning excess cash to shareholders through potential buybacks or special dividends, given the strong share price rally and the company's position within its expanded net debt range.

Answer

Marcelo Bacci, EVP of Finance and Investor Relations, Vale, stated that favorable market conditions for cash flow generation could lead to additional shareholder returns if expanded net debt falls below the midpoint of the $10 billion-$20 billion target range. He noted that dividends were favored last year due to taxation changes, but for future allocations, the company will assess the situation, aiming for a balanced approach and considering both dividends and buybacks based on relative valuation.

Carlos de Alba requested an update on customer acceptance and the production ramp-up of Vale's new iron ore briquettes, and asked for color on the expected sequential copper cost performance for the second half of the year.

Answer

Carlos Medeiros, EVP of Operations, noted the briquette line is stabilizing, hitting a record 40,000 tons in July. Rogério Nogueira, EVP of Commercial & Development, added that customer trials have been excellent. Shaun Usmar, CEO of Vale Base Metals Ltd, cautioned that H2 copper costs will be impacted by planned maintenance, making performance 'back-end loaded,' and that current guidance already factors in ramp-up risks.

Carlos de Alba asked for an update on the ramp-up of the Tubarão briquette plant and client acceptance of the new product. He also posed a strategic question about whether market shifts, like the new Simandou supply, might compel Vale to increase its iron ore exposure in Brazil.

Answer

Executive Rogério Nogueira confirmed strong client interest in briquettes, with successful industrial trials underway. Executive Carlos Medeiros added that the plant is ramping up as expected, targeting 600,000 tons by year-end. Executive Gustavo Duarte Pimenta responded that Vale is focused on developing its own unique mineral endowment, like the 'Novo Carajas' initiative, which holds the most significant opportunities.

Carlos de Alba asked for more details on the progress within the Base Metals division, specifically regarding cost improvements and production outlook. He also questioned Vale's strategy concerning the Mariana accident reparations, given the upcoming deadline for municipalities to either join the Brazilian agreement or pursue a UK lawsuit.

Answer

Executive Shaun Usmar of Vale Base Metals detailed significant progress, including a nearly $200 million annual run rate in overhead reduction and productivity gains at Salobo and Sossego. On the Mariana issue, Executive Gustavo Duarte Pimenta stated that Vale believes the comprehensive Brazilian settlement is the fairest and best path for all parties and that the company is seeing good traction on its implementation.

Carlos de Alba of Morgan Stanley requested an update on the railway concession agreement negotiations and asked for the specific iron ore cash cost figure for June 2024.

Answer

Executive Gustavo Duarte Pimenta revealed that the iron ore cash cost in June was $22 per ton, supporting confidence in the full-year guidance. He also stated that while the railway concession renewal discussions are highly advanced, a final resolution is still pending but expected in the next couple of months.

Carlos De Alba asked about the expected financial benefits from the cancellation of the slab contract, including the EBITDA impact and the timing of when these improvements would be realized. He also inquired about the CapEx projections beyond 2026, specifically for 2027, given the planned relining.

Answer

CEO Lourenco Goncalves explained that the slab contract, which became onerous in its final year due to a disconnect between Brazilian slab prices and U.S. finished steel prices, is expected to yield an EBITDA gain of approximately $500 million. He noted the impact would begin in Q1 2026, becoming more significant in Q2 and Q3. CFO Celso Goncalves clarified that this represents about a $700 million improvement in revenue at current market prices, offset by approximately $150 million in conversion costs. For CapEx, Celso projected $700 million for 2026, increasing to $900 million in 2027 primarily due to the Burns Harbor Furnace C Reline, and then returning to $700 million in 2028.

Carlos de Alba asked about the expected financial benefits from the cancellation of the slab contract and the projected capital expenditures beyond 2026, specifically for 2027.

Answer

Chairman, President, and CEO Lourenco Goncalves stated that the slab contract cancellation is expected to generate approximately $500 million in EBITDA gain for 2026, with the impact gradually flowing through from Q1. EVP and CFO Celso Goncalves added that this represents a $700 million revenue improvement at current market prices, offset by about $150 million in conversion costs. For CapEx, Celso Goncalves projected $700 million for 2026, $900 million for 2027 (due to the Burns Harbor blast furnace reline), and $700 million for 2028.

Carlos Alba inquired about the implicit volume growth and potential pricing changes within the new automotive contracts, and also asked for early details on the type of rare earth mineralization and a timetable for feasibility studies.

Answer

Chairman, President, and CEO Lourenco Goncalves stated new auto contracts would generate 'a lot more margin' and highlighted Cleveland-Cliffs' extensive capacity across nine plants to support growing automotive demand in North America. Regarding rare earths, he confirmed the presence of minerals but declined to discuss specific elements or a feasibility timetable at this early stage.

Carlos de Alba of Morgan Stanley questioned why the full-year cost reduction guidance remained at $50/ton despite the strong Q2 outperformance. He also asked for confirmation on the operational status of the Dearborn and Cleveland #6 facilities and for more color on the non-core assets potentially for sale.

Answer

EVP & CFO Celso Goncalves explained that the full-year guidance was kept out of conservatism, as some cost reductions were pulled forward into Q2, but acknowledged there is potential to exceed the target. CEO Lourenco Goncalves confirmed that Cleveland #6 is running while Dearborn is going down. He humorously declined to provide specific details on the non-core assets for sale.

Carlos de Alba from Morgan Stanley asked for an update on the status of DOE-supported strategic projects and questioned the effectiveness of Section 232 tariffs if foreign producers are simply selling through them.

Answer

CFO Celso Goncalves reiterated that CapEx for DOE projects will be significantly lower, highlighting the delay of the Burns Harbor reline to 2027 as evidence. CEO Lourenco Goncalves expressed frustration with countries like Vietnam and Japan selling through the 25% tariff, calling it dumping and citing it as the direct cause for idling the Steelton rail mill.

Carlos de Alba sought clarification on the Q1 working capital outlook, 2025 automotive pricing trends, the possibility of an equity issuance, and whether the balance sheet constrains further M&A activity.

Answer

CFO Celso Goncalves stated Q1 working capital would be 'relatively neutral' before generating cash later in the year. CEO Lourenco Goncalves noted auto prices were down 'slightly' but far better than competitor pricing. Both executives firmly ruled out an equity issuance, asserting the balance sheet is not a constraint for potential M&A, as they can raise capital quickly when needed.

Carlos de Alba of Morgan Stanley sought clarification on Q4 pricing given the new product mix with Stelco, asked about the direction of 2025 auto contract prices, and inquired about the drivers behind the projected $70 million cost savings from coal contracts in 2025.

Answer

Executive Celso Goncalves confirmed that Q4 average selling prices would likely be down slightly due to the mix shift from the Stelco acquisition. Executive Lourenco Goncalves affirmed that 2025 auto contract prices were slightly lower, with the focus now on volume. Regarding coal costs, Lourenco highlighted that spare capacity at Stelco will significantly reduce outside coal purchases in the future, with a more pronounced impact in 2026. Celso Goncalves added that while coal costs will decrease in 2025, this will be partially offset by increases in labor and alloys.

Carlos De Alba asked about the expected movement of working capital throughout the year, considering the ramp-up of the aluminum business, and inquired about capital expenditures beyond 2026.

Answer

Theresa Wagler, EVP and CFO, explained that most of the working capital build for aluminum was captured in 2025, with only slight, non-material fluctuations expected for 2026, aside from the Q1 profit-sharing payment. For CapEx beyond 2026, she noted sustaining capital is around $250M-$300M, with no specific material projects named yet.

Carlos de Alba of Morgan Stanley inquired about the new aluminum business, seeking clarity on the revised utilization rate guidance for 2025-2026 and the specific timing for achieving EBITDA positive results, which now seems targeted for the end of the year.

Answer

Chairman & CEO Mark Millett stated there is no material change in their view or thought process regarding the aluminum mill's capability. EVP & CFO Theresa Wagler affirmed their confidence in achieving EBITDA positivity in the second half of the year, clarifying that specifying the fourth quarter was not meant to signal a significant delay.

Carlos de Alba of Morgan Stanley inquired about the aluminum business, seeking clarity on the slightly revised utilization rate guidance for 2025-2026 and the specific timing for achieving EBITDA positivity.

Answer

CEO Mark Millett stated there was no material change in the company's outlook for the aluminum facility. CFO Theresa Wagler reaffirmed their confidence in achieving EBITDA positive results in the second half of 2025, clarifying that mentioning Q4 was not intended to signal a significant delay but to provide more specific color.

Carlos de Alba of Morgan Stanley inquired about the new aluminum business, seeking clarity on the reasons for slightly lower utilization rate guidance for 2025 and 2026 and the specific timing for achieving EBITDA positive results.

Answer

Chairman & CEO Mark Millett stated there was no material change in their view or thought process regarding the aluminum mill's capability or ramp-up schedule. EVP & CFO Theresa Wagler reinforced this, confirming their confidence in achieving EBITDA positivity in the second half of the year, specifically in the fourth quarter, but clarified this was not a significant change in messaging.

Carlos de Alba of Morgan Stanley inquired about the aluminum business ramp-up, seeking clarity on the slightly adjusted utilization rate guidance for 2025-2026 and the timing for achieving positive EBITDA, which appeared to be guided toward the end of 2025.

Answer

Chairman & CEO Mark Millett responded that there has been no material change in the company's outlook for the aluminum facility's ramp-up. EVP & CFO Theresa Wagler added that the company remains confident in achieving positive EBITDA during the second half of the year, likely in the fourth quarter, and that this was not intended to signal a significant delay.

Carlos de Alba of Morgan Stanley inquired about the aluminum business, seeking clarity on the slightly adjusted utilization rate guidance for 2025-2026 and the timing for achieving positive EBITDA, which appeared to be guided toward the end of the year.

Answer

Chairman & CEO Mark Millett confirmed there was no material change in their outlook for the aluminum project. EVP & CFO Theresa Wagler added that the company remains confident in achieving positive EBITDA in the second half of 2025, likely in the fourth quarter, and that this was not intended to signal a significant delay.

Carlos de Alba of Morgan Stanley questioned if the strong March order entry in the fabrication business, the highest in two years, indicates that Q1 volumes marked a cyclical bottom and should be expected to increase.

Answer

EVP & CFO Theresa Wagler acknowledged some customer hesitancy in Q1 but confirmed that momentum seen in March and April points to strength in the second half of the year. President & COO Barry Schneider supported this, stating that project activity is robust, previously stalled projects are now moving forward, and he anticipates volume growth through Q2 and into the second half of 2025.

Carlos de Alba from Morgan Stanley asked about the company's strategy to improve depressed galvanized-to-cold-rolled spreads if the trade case is unsuccessful, and requested more detail on the steel fabrication business outlook.

Answer

COO Barry Schneider expressed confidence in the trade case but noted they consistently optimize production to favor higher-margin products. CEO Mark Millett added that the company's core strategy is to innovate and diversify its value-add mix, not rely on trade policy. CFO Theresa Wagler reiterated the fabrication outlook, expecting normal Q4 seasonality followed by stronger volumes and price support in 2025.

Carlos de Alba inquired about Alcoa's plans to reduce costs, improve productivity, and enhance profitability in the alumina segment, given current price pressures and potential breakeven profitability. He also sought more color on the monetization of idle sites, specifically the timing and number of sites involved.

Answer

William Oplinger, Alcoa Corporation President and Chief Executive Officer, acknowledged the cyclical nature of alumina and stated Alcoa's ability to be aggressive on costs without jeopardizing future plant viability, highlighting their low-cost position. Molly Beerman, Executive Vice President and Chief Financial Officer, explained that negotiations for the primary monetization site are complex, involving multi-year payment streams and value-sharing, leading to extended timing. She confirmed 10 priority sites are targeted to meet the $500 million-$1 billion goal over five years.

Carlos De Alba questioned Alcoa's plans to enhance alumina segment profitability amidst current price pressures, focusing on cost reduction and productivity initiatives. He also sought more details and a timeline update on the monetization of idle sites.

Answer

William Oplinger, President and CEO, acknowledged the alumina cycle and Alcoa's past aggressive cost actions, emphasizing their low-cost position relative to global competitors. Molly Beerman, EVP and CFO, explained that negotiations for a primary monetization site are taking longer due to complex multi-year payment and value-sharing structures, confirming 10 priority sites for the $500M-$1B target over five years.

Carlos de Alba asked for details on the economics of the gallium project, including the timeline for a technical report, and whether it impacts the ongoing mining permitting process in Western Australia. He also asked if Alcoa intends to re-enter the rolling business.

Answer

William Oplinger, CEO, confirmed the gallium project would not impact current or future WA mining approvals. He noted it's not a large investment, financed primarily by Japanese, U.S., and Australian governments, with Alcoa having a small financial stake. The project's critical importance is establishing a non-China gallium supply chain, with governments taking offtake. Molly Beerman, CFO, added that the offtake structure is cost-plus-margin, still under negotiation. William Oplinger unequivocally stated Alcoa has no interest in re-entering the rolling business.

Carlos de Alba inquired about the economics of the gallium project, the timeline for a technical report, and any potential impact on the ongoing mining permitting process in Western Australia. He also asked if Alcoa intends to re-enter the rolling business.

Answer

William Oplinger, CEO, clarified the gallium project will not impact current Australian mining approvals. He noted it's a small, government-financed investment with Alcoa having a minor financial role, and Molly Beerman, CFO, added that the offtake structure is a cost-plus-margin model under negotiation. Oplinger unequivocally stated Alcoa has no interest in re-entering the rolling business.

Carlos de Alba asked about the timeline for renegotiating the 70% of Canadian production sold under contract to the U.S. and inquired about the operational progress and current capacity utilization at the Alumar smelter restart in Brazil.

Answer

EVP & CFO Molly Beerman noted that while contracts are annual, Alcoa will balance margin optimization with maintaining strong customer relationships. President, CEO & Director William Oplinger reported that the Alumar restart remains a challenge, operating at about 92% capacity due to pot failures, with a target for a full restart by year-end.

Carlos de Alba questioned the higher-than-expected working capital build in Q1 and its expected trajectory for the year. He also sought to confirm if the Q2 tax benefit guidance implied an anticipated pre-tax loss for the quarter.

Answer

EVP and CFO Molly Beerman projected a significant working capital reduction throughout the year after the Q1 build, which was driven by shipment timing and raw material prices. Both she and President and CEO William Oplinger clarified the tax guidance does not imply a Q2 loss but is a 'catch-up' adjustment due to a lower full-year profit forecast, which impacts the annualized tax rate calculation.

Carlos de Alba from Morgan Stanley inquired about Alcoa's strategy and timeline for monetizing idle industrial sites for data centers, and asked about the potential worst-case financial impact if the San Ciprián restart fails.

Answer

President and CEO William Oplinger highlighted Alcoa's track record, citing the past sales of the Rockdale and Intalco sites for significant value. He named Point Comfort and Wenatchee as potential assets but declined to set a timeline to ensure maximum value. For San Ciprián, EVP and CFO Molly Beerman outlined potential cash closure costs of $40-$50M for the smelter and ~$200M for the refinery (excluding severance), payable over 5-7 years.

Carlos de Alba pressed for a specific timetable for resolving the San Ciprian negotiations and asked for details on the expected returns from the increased return-seeking capital expenditures.

Answer

CEO William Oplinger reiterated that the company is pushing for a resolution at San Ciprian before the entity is expected to run out of cash around year-end, but provided no new timetable. He also stated that the incremental impact from the current slate of smaller return-seeking CapEx projects would not be notable.

Carlos de Alba inquired about the expected pace of realizing synergies from the Alumina Limited acquisition and the company's rationale for not participating in the funding of the ELYSIS industrial plant.

Answer

EVP and CFO Molly Beerman stated that the $12 million in overhead synergies will begin immediately upon closing, while capital allocation improvements will take more time. President and CEO William Oplinger described the ELYSIS arrangement as a 'smart construct,' allowing Alcoa to supply anodes and cathodes while retaining a 40% offtake right for the ultra-low-carbon metal, balancing partner contributions effectively.

Carlos de Alba asked about the company's guidance for outer years, specifically whether it incorporates the leach opportunity reaching 800 million pounds by 2028.

Answer

Kathleen Quirk, President and CEO, clarified that the current outlook includes $250-$300 million for leach in 2026, with potential to scale to $427 million, but the 800 million pounds target, which includes the Bagdad expansion and incremental leach volumes, is not yet fully integrated into the 2027-2028 guidance.

Carlos de Alba inquired about the inclusion of the North American leaching opportunity, specifically reaching $800 million by 2028, in the company's official guidance for the outer years.

Answer

Kathleen Quirk, President and CEO, clarified that the current outlook includes $250-$300 million from leach initiatives in 2026, but does not yet incorporate further expansion beyond that. She noted the potential to scale to $427 million and eventually $2 billion in the U.S., including the Bagdad expansion, but these are not in the 2027-2028 guidance.

Carlos de Alba of Morgan Stanley asked if a potential Miami smelter expansion could handle concentrate from the Baghdad and Lone Star expansions and whether government discussions covered the challenges of adding U.S. smelting capacity.

Answer

President & CEO Kathleen Quirk stated they are studying a potential 30% capacity increase at the Miami smelter. She noted the Lone Star project would have a significant leach component, offering processing flexibility. She clarified that discussions with the government have focused on Freeport's near-term initiatives, like the leach program, rather than government support for new smelters.

Carlos de Alba of Morgan Stanley inquired if a potential expansion of the Miami smelter could handle future concentrate from the Baghdad and Lone Star projects and if government discussions addressed the challenges of adding U.S. smelting capacity.

Answer

President & CEO Kathleen Quirk stated they are studying a roughly 30% expansion at the Miami smelter. She noted that future projects like Lone Star will have a significant leach component, providing processing flexibility. She clarified that discussions with the government have focused on Freeport-McMoRan's near-term initiatives to boost domestic supply, not on potential government support for new smelter construction.

Carlos de Alba followed up on the margin discussion, asking how quickly CPMP's margins, particularly from recent acquisitions, could align with Foley's and core CPMP levels. He also sought clarification on the $5-10 million incremental EBITDA for CPMP and the company's outlook for dividends and buybacks given strong free cash flow generation and reduced cash taxes.

Answer

President and CEO Peter Matt advised caution on specific timeframes for CPMP margin improvement until transactions close, but suggested a three to five-year horizon for synergy realization. He clarified that the $5-10 million synergy was for the initial CPMP acquisition, with an additional $25-30 million expected from the Foley transaction over three to five years. Regarding capital allocation, Peter Matt stated no plans to change the dividend and that the long-term capital allocation strategy remains unchanged. He indicated a temporary slowdown in share repurchases to offset employee share grants while delevering, with plans to ramp up repurchases once net leverage is below two times. SVP and CFO Paul Lawrence expressed confidence in delevering quickly due to strong cash flow, lack of U.S. cash taxes, reduced CapEx, and strong expected EBITDA.

Carlos de Alba of Morgan Stanley sought a product-level breakdown of the expected Q3 margin compression in the steel mills segment and asked if margins for bars and beams might expand.

Answer

CEO Leon Topalian indicated potential pressure in flat sheet but highlighted offsetting strength and strong backlogs in plate, beams, and bar products. EVP Randy Spicer confirmed that the bar business has very strong momentum, multi-year high backlogs, and extending lead times, supporting a confident outlook for the second half.

Carlos de Alba of Morgan Stanley requested a product-level breakdown of the expected Q3 margin compression in steel mills and asked if margin expansion is anticipated for the bar and beam businesses following recent price hikes.

Answer

President and CEO Leon Topalian identified potential pressure in flat-rolled sheet, partly due to slab tariffs, as the main driver of the Q3 outlook. However, he and EVP Randy Spicer expressed strong confidence in the long products businesses, citing robust demand, multi-year high backlogs for bars, and near-historic backlogs for beams, suggesting margin strength and potential expansion in those areas.

Carlos de Alba of Morgan Stanley inquired about expectations for capacity utilization in the second quarter and asked how current inventory levels across Nucor's segments compare to historical norms.

Answer

CEO Leon Topalian declined to predict a specific Q2 utilization rate but suggested rates could slightly improve from Q1's 80% level due to encouraging demand. CFO Stephen Laxton stated that Nucor's inventories are roughly in line with historical levels when adjusted for seasonality and current backlogs.

Carlos de Alba asked about capacity utilization expectations and inventory levels across Nucor's operating segments.

Answer

CEO Leon Topalian discussed capacity utilization trends. EVP John Hollatz commented on inventory levels relative to backlog.

Carlos de Alba asked for clarification on the direct impact of potential tariffs on Mexican materials, given Nucor's slab imports and U.S. net exports of flat steel to Mexico. He also inquired about the company's appetite for M&A, particularly for existing EAF assets.

Answer

CEO Leon Topalian stated that Nucor's volumes into Mexico are small and high-value. Executive Noah Hanners added that the company has flexibility in sourcing substrate for its CSI mill, mitigating import risks. Regarding M&A, Topalian confirmed Nucor is always looking for opportunities but will remain highly disciplined on valuation and focused on executing its current slate of major capital projects.

Carlos De Alba requested more detail on the Q4 steel mill guidance, specifically whether softness was more pronounced in long or flat products. He also asked for qualitative comments on the volume, pricing, and margin levels within the Steel Products backlog, which extends into Q1 2025.

Answer

CEO Leon Topalian and executive Brad Ford identified high import levels as a key pressure point on long products, though underlying demand remains resilient. CFO Steve Laxton noted the lag effect in sheet pricing due to contracts. For Steel Products, executive John Hollatz confirmed backlogs are stable, carrying into Q1 2025, but projected seasonal shipment declines and some margin compression in Q4.

Asked for details on the San Gabriel project, including the status of pending permits, remaining CapEx for 2025 and 2026, the expected ramp-up timeline to full capacity, and the progress on ore stockpiling.

Answer

The company is confident in receiving the final permit for San Gabriel on time for a Q4 2025 start. The total CapEx remains between $720M-$750M, with $130M-$160M left to spend in H2 2025. The ramp-up will occur throughout 2026, limited initially by the tailings facility's geography, with stabilization expected after that period. An ore stockpile of 100,000 tons is already available for commissioning.

Carlos de Alba of Morgan Stanley inquired about the San Gabriel project, focusing on the status of pending permits, the remaining CapEx for 2025 and 2026, the expected ramp-up timeline to full capacity, and the current ore stockpile levels.

Answer

CEO Leandro García stated that authorities have been invited to the site in September and he does not foresee significant risks with the final operating permit. He confirmed the total CapEx remains between $720M and $750M. CFO Daniel Dominguez added that $130M to $160M in CapEx is expected to be disbursed in the second half of 2025. VP of Operations Juan Carlos Ortiz explained the ramp-up will extend through 2026, with a cautious approach on the tailings facility due to the valley's shape. He also confirmed a current ore stockpile of 100,000 tons.

Carlos de Alba of Morgan Stanley inquired about the San Gabriel project, focusing on the status of pending permits, the remaining CapEx for the second half of 2025 and 2026, and the expected timeline for the production ramp-up to full capacity. He also asked a follow-up question about the current ore stockpile.

Answer

CEO Leandro García stated that the company does not foresee significant risks with the final operating permit for San Gabriel. CFO Daniel Dominguez Vera confirmed the total project CapEx remains between $720M and $750M, with $130M to $160M to be disbursed in the second half of 2025. VP of Operations Juan Carlos Ortiz detailed the ramp-up plan, explaining it would extend through 2026, with the initial phase constrained by the narrow shape of the tailings facility. He also confirmed a current ore stockpile of approximately 100,000 tons.

Carlos de Alba of Morgan Stanley inquired about the QB ship loader repairs, asking for a timeline and potential CapEx impact. He also asked about the development sequence for the Zafranal and San Nicolas projects.

Answer

President & CEO Jonathan Price explained that the ship loader repair is expected to extend into the first half of 2026 due to thorough assessment and permitting requirements, but it is not impacting production thanks to alternative trucking arrangements. Regarding project sequencing, he noted that while Zafranal is more advanced, both are considered valuable options and no decision on their order has been made.

Carlos de Alba from Morgan Stanley asked for more details on the QB ship loader repairs, including the timeline and potential capital impact. He also inquired about the likely development sequence for the Zafranal and San Nicolas growth projects.

Answer

President & CEO Jonathan Price explained the ship loader repair is complex, requiring permits and a full damage assessment, with an expected outage into H1 2026. A final capital cost is not yet determined, but production is unaffected due to alternative logistics. Regarding growth projects, he noted Zafranal is more advanced in permitting but stated both are considered options, and no decision on sequencing has been made.

Carlos de Alba from Morgan Stanley asked for details on the QB ship loader repairs, including the timeline and potential CapEx impact, and also inquired about the likely development sequence for the Zafranal and San Nicolas projects.

Answer

President & CEO Jonathan Price explained the ship loader repair is expected to extend into H1 2026 due to a brake failure, with a final capital cost yet to be determined. He assured that production is not impacted due to alternative trucking arrangements. Regarding growth projects, Price noted Zafranal is more advanced in permitting but stated no decision has been made on sequencing.

Carlos de Alba from Morgan Stanley asked for more details on the QB ship loader repairs, including the timeline and any material CapEx impact. He also inquired about the likely development sequence for the Zafranal and San Nicolas projects.

Answer

President & CEO Jonathan Price explained the ship loader repair is expected to extend into the first half of 2026 due to a brake failure and the need for thorough assessment and permitting. A final capital cost is not yet determined. He emphasized that production is not impacted due to alternative trucking arrangements. Regarding project sequencing, Price noted that while Zafranal is more advanced in permitting, both are considered options, and no decision on their sequence has been made.

Carlos de Alba of Morgan Stanley inquired if the recently completed independent testing at QB2 provided any suggestions for improvement and asked for a more precise duration of the shutdown caused by the power outage.

Answer

CEO Jonathan Price explained that the independent testing is a pass/fail validation against performance criteria and not a process designed to provide improvement suggestions. He specified that the power outage resulted in a direct shutdown of about two days, with another two days required to ramp back up to full rates, for a total impact of roughly four days.

Carlos de Alba inquired about Teck's capital allocation strategy, asking how the company reconciles its strong balance sheet and shareholder return framework with potential M&A, given its robust organic project pipeline. He also asked if the Zafranal project is next in line for development.

Answer

CEO Jonathan Price emphasized that the primary focus is on shareholder value creation through organic growth, which he described as the most value-accretive path. He highlighted the strong balance sheet and the ongoing $1.8 billion share buyback authorization. While aware of M&A activity in the sector, Teck's priority remains its internal projects like HVC, Zafranal, and San Nicolas. Regarding Zafranal, he confirmed it is in a very strong position and close to a sanction decision, but the final sequencing of projects depends on economics, permitting, and engineering readiness.

Carlos de Alba of Morgan Stanley asked for clarification on San Nicolas's concession status and inquired about the specifics of QB2's operational downtime in September and the first half of 2025.

Answer

CEO Jonathan Price stated that Teck believes its existing concession for San Nicolas provides protection, but whether that translates into a development permit is still an open question. COO Sherhzad Bharmal explained that QB2 had about three extra days of downtime in September, and the planned downtime in H1 2025 is for minor reliability improvements, not due to any 'fatal flaw' in the plant.

Carlos de Alba followed up on the significant $265 million negative working capital change in Q1, asking if it would fully reverse by year-end. He also posed a scenario asking if Nexa would be disadvantaged if TCs improved but zinc prices did not.

Answer

CFO José Carlos del Valle Castro explained that the working capital outflow is expected to reverse, with a goal of being flat for the full year. He attributed the large Q1 figure to higher tax payments and a one-off $61 million payment for tax contingencies. CEO Ignacio Rosado confirmed that Nexa benefits more from higher zinc prices than higher TCs in the current year due to its fixed contracts, but noted that strong copper and silver prices are providing a partial hedge.

Carlos de Alba sought confirmation on the 2025 EBITDA outlook for Aripuana, clarification on the new dividend policy's calculation, the expected sustaining CapEx for 2025, and the outlook for working capital trends.

Answer

CEO Ignacio Rosado confirmed the expectation for Aripuana's EBITDA and cash flow to be higher in 2025. CFO José Carlos del Valle Castro clarified the dividend policy is 20% of free cash flow (cash from operations minus sustaining CapEx) with a minimum of $0.08/share. Executive Rodrigo Cammarosano specified the 2025 sustaining CapEx guidance is $316 million. CEO Ignacio Rosado added that working capital should be near neutral annually but will retain quarterly volatility.

Carlos de Alba from Morgan Stanley asked about the financial impact of negative Treatment and Refining Charges (TC/RCs) on Nexa's smelting business and its level of vertical integration for 2025.

Answer

CEO Ignacio Rosado acknowledged that negative TCs are creating a challenging environment for smelters and that Nexa is evaluating production cuts if purchasing concentrate becomes unprofitable. He emphasized that Nexa's high vertical integration (50% at Cajamarquilla, 80-90% in Brazil) provides a significant advantage over peers.

Carlos de Alba, on for Doug Leggate, asked how the company's decade of high-return inventory would change if screened using the current commodity strip price. He also inquired about the cadence at which the capital benefit from the DUC drawdown is expected to revert to normal levels in 2026.

Answer

President Kaes Van't Hof stated the 'decade' reference is based on sub-$40 breakeven wells, which is the industry gold standard. While inventory expands at higher prices, the strategy is to be the last to drill lower-return wells. He explained the DUC drawdown is level-loaded, but if operations are efficient, the company may opt to drill more wells to maintain a high DUC balance for operational flexibility rather than realize the full capital benefit immediately.

Speaking for Doug Leggate, Carlos De Alba asked for an update on Antero's liquids-rich inventory runway and midstream outlook. He also requested a reconciliation of the 2025 completions plan, which involves more wells but shorter laterals than 2024, and the amount of capital pre-spent in 2024 for these wells.

Answer

CFO Michael Kennedy stated that Antero has over a decade of liquids drilling inventory, which it replaces annually through its organic leasing program, followed by another decade-plus of dry gas inventory. He clarified that the 16 wells turned to sales in January had the vast majority of their capital spent in 2024. He noted that while average lateral length varies annually, the company's typical length is around 13,000-14,000 feet, among the longest in the basin.

Carlos de Alba asked for guidance on cash costs before by-products for 2024 and 2025. He also inquired about the potential for future dividends to continue as a mix of cash and shares, and the number of treasury shares post-dividend.

Answer

Executive Raul Jacob stated that cash cost before by-products should remain around $2.00 per pound for 2024, with potential improvement in 2025 from higher by-product output. He confirmed the dividend policy is a Board decision but the cash/stock split preserves liquidity for projects and a $500M bond payment in 2025. He also noted the company holds 99 million shares in treasury.

Carlos de Alba from Morgan Stanley questioned the rationale for pursuing a new environmental study for a water dam at the Tia Maria project instead of using the approved desalination plant, asking about the potential complications and the comparative CapEx and OpEx. He also requested an outlook for cash costs before by-product credits.

Answer

Executive Raul Jacob clarified that Southern Copper is proceeding with the approved desalination plant for Tia Maria but may consider a dam in the future. He stated the project's $1.4 billion CapEx is being revised to include a new road and technology updates, with a new budget expected by year-end. He projected the cash cost before by-products to be approximately $2 per pound for the year.

Carlos de Alba of Morgan Stanley inquired about the rationale for switching the dividend from cash to shares, the company's appetite for M&A versus organic growth, and the expected trend for operating costs.

Answer

Executive Raul Jacob explained that the stock dividend utilizes treasury shares, providing shareholders with flexibility while conserving cash for potential future needs, such as the Tia Maria project. He stated that while the company monitors M&A, its primary focus remains on its strong organic growth pipeline. Regarding costs, Mr. Jacob anticipates costs before by-products to remain stable, with increased by-product credits from the new zinc concentrator expected to benefit the overall cash cost.

Asked for confirmation of a recent price increase, the rationale behind it, the potential timing for future capital return decisions, and an update on the timing of the strategic alternatives review process.

Answer

The company confirmed a $100/ton price increase, citing a strong order book and low inventories. They stated that decisions on future capital returns (dividends, buybacks) are on hold pending the completion of the ongoing strategic review. They declined to provide any details or a timeline for the strategic review process, emphasizing the focus is on maximizing shareholder value.