Ferroglobe - Q1 2024
May 15, 2024
Transcript
Operator (participant)
Good morning, ladies and gentlemen, and welcome to Ferroglobe's Q1 2024 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct Q&A session, and instructions will be given at the time. As a reminder, this conference call may be recorded. I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.
Alex Rotonen (VP of Investor Relations)
Thanks, Sharon. Good morning, everyone, and thank you for joining Ferroglobe's Q1 2024 earnings conference call. Joining me today Marco Levi, our Chief Executive Officer, Beatriz García-Cos, our Chief Financial Officer. Before we get started with some prepared remarks, I'm going to read a brief statement. Please turn to slide two at this time. Statements made by management during this conference call that are forward-looking are based on current expectations. Factors that could cause actual results to differ materially from these forward-looking statements can be found in Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available on our website at ferroglobe.com. In addition, this discussion includes reference to EBITDA, Adjusted EBITDA, adjusted gross debt, net debt, and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliation of non-IFRS measures may be found in our most recent SEC filings.
Before I turn the call over Marco Levi, our Chief Executive Officer, excuse me, I want to announce that we'll be participating in B. Riley's 24th Annual Investor Conference in Los Angeles on May 22nd and May 23rd. We hope to see you there. Marco Levi?
Marco Levi (CEO)
Thank you, Alex Rotonen, and good morning, good day, and good evening to everyone. Thanks for joining us on the call today. We appreciate your interest in Ferroglobe. Let me start from operations. On April 3rd, we successfully restarted operations in France, with all furnaces running efficiently. In addition to France, we are currently running all three silicon metal furnaces in Sabón and an additional manganese alloy furnace in Boo, due to competitive energy prices in Spain, resulting from strong renewable energy generation. As you recall, last October, we acquired a high-quality quartz mine in South Carolina to secure a reliable supply source of quartz to support our expected increased production of high-quality silicon metal in the U.S. We are on track to begin mining in the Q3. This was a strategic purchase that will provide a competitive advantage as demand begins to materialize.
To further support our growth plans, we are in the process of applying for a permit to expand our silicon metal production in North America. The additional capacity will be a brownfield expansion, requiring a significantly smaller investment versus a greenfield and faster to develop. This investment will allow us to meet the significant growth opportunity ahead of us in solar and EV batteries. Strategically, we continue to position the company to take advantage of big secular trends occurring in the market. Solar and batteries for electric vehicles are large markets that will drive strong growth for the foreseeable future. As the leading producer of high-quality silicon metal in the West, Ferroglobe is well positioned to be a significant beneficiary of this strong demand.
In March, we announced the signing of an MOU with Coreshell, a U.S.-based advanced battery solution company focused on driving battery transformation in the electric vehicle market. This relationship will enable us to advance the industry migration of battery anodes from graphite to silicon metal, producing various benefits, including lower cost, longer range, and faster charging time. For the past several months, we have been testing at our lab Coreshell nano-coatings technology using silicon-rich anodes with very promising results. As a result of this early success, and to further solidify our commitment to this effort, we recently made a strategic investment in Coreshell. Improving the characteristics of battery performance in EVs is an important endeavor, and it will accelerate EV adoption, and we want to be at the forefront of this technological innovation.
Turning to markets, the indexes across all our businesses are up from the lows, with demand trends beginning to diverge between Europe and the U.S. We are encouraged by the sustaining increase in silicon metal prices, especially in North America. Some of the factors contributing to the recent price trend are the result of supply-related factors. However, we are also seeing signs of incremental improvement in U.S. demand, while demand in the European market remains stagnant. European price increases have lagged behind the U.S. market, which has seen an improvement in demand, especially in the aluminum sector. I'm also pleased to announce that on May 10th, the U.S. International Trade Commission voted in our favor in the trade case against ferrosilicon imports from Russia, Kazakhstan, Malaysia, and Brazil. The commission preliminarily determined that these ferrosilicon imports are causing material injury to the U.S. industry.
Here is some background on this trade action. On May 28th, together with CC Metals and Alloys, we filed a petition with the U.S. Department of Commerce and the International Trade Commission, asking them to investigate unfairly traded imports of ferrosilicon from Russia, Kazakhstan, Malaysia, and Brazil. These imports are receiving significant subsidies from their government, resulting in predatory pricing practices, which have forced American ferrosilicon producers to idle some of their operations, negatively impacting American domestic production and employment. The Commerce Department will continue its investigation to decide whether further action is needed. It is expected that the preliminary countervailing duty determination could take place in June, and the AD determination in September. We expect a positive outcome.
At the same time, we continue to work with both houses of Congress to pass the Bipartisan Bill Increasing American Ferrosilicon Production Act, which was introduced in September of last year. If passed, this bill would enact a 35% tariff on imports of Russian and Belarusian ferrosilicon. As mentioned in our previous call related to Q4, we redeemed the remainder of the senior secured notes in February and ended the quarter with a stronger financial position in the company's history. For the first time ever, Ferroglobe is net cash positive. Last quarter, we initiated our first dividend in the amount of $0.013 per share, which was paid on March 28th. We are declaring our Q2ly dividend of $0.013 per share, payable on June 27th.
In an effort to continue developing our capital allocation policy, our board of directors has approved a share buyback program, which will be included in the notice of the June annual general meeting. Once approved by the shareholders, as required, we will begin to execute opportunistic buyback. The authorization request is to repurchase up to $200 million of shares over a five year period, using both discretionary and non-discretionary methods. While we're still cautious about end market demand, we are adjusting our guidance to reflect a stronger pricing environment. Accordingly, we are raising the low end of our guidance from $100 million-$130 million, while maintaining the high end at $170 million. Next slide, please. Let's start from silicon metal. Revenue in Q1 was $168 million, flat versus the Q4.
Adjusted EBITDA declined $6 million to $16 million, a 28% decline over the previous quarter. The decline in EBITDA was primarily driven by lower realized prices, which were down 6% in the quarter. Our average realized price for silicon metal increased by 2% in Europe and decreased 12% in the Americas compared to the previous quarter. During the Q1, index prices increased approximately 17%. The difference between the index and the realized price was the result of the three month lag on price realization for contracted volumes. We expect, sorry, to benefit in the Q2 from the higher index price in Q1. Overall, volume shipped were up 7%, driven by Europe, which was up 30% from the Q4.
The silicon metal outlook is quite different in North America compared to Europe, where demand remains quite weak, with prices being impacted by incremental imports from China and easing supply tightness. ... The U.S. markets continue to be firm, with prices increasing into the Q2. Asian demand for our products remains solid, as we are shipping traceable, high-quality silicon metal to the solar segments in China and Korea. Next slide, please. In our silicon-based alloy segment, Adjusted EBITDA for Q1 was $40 million, down from $35 million in the Q4. This was mainly due to higher costs, driven primarily by lower energy compensation in France relative to the prior-quarter. Overall average realized prices were down 5% versus the prior-quarter due to weakness in the Americas, which continued to be lower pricing for imports from Russia, Kazakhstan, Malaysia, and Brazil.
As was the case in silicon metal, the difference between the index and the realized price was the result of the two-month lag on price realization for contracted volumes. Again, the U.S. market is showing more strength, with prices increasing, while industrial activity in Europe is more muted. In its latest April short range outlook, the World Steel Association cuts its E.U. steel production forecast growth by half to 2.9%, with the Americas remaining essentially flat, with their October forecast at 1.4%. We expect Europe to be more challenging, while the U.S. market is expected to benefit from potential antidumping action and stronger economic outlook. Next slide, please. Turning now to manganese-based alloys. Revenue increased 10% to $66 million in Q1, driven by increased prices and volumes, up 8% and 2% respectively, over the prior-quarter.
Volumes in North America increased by 426%. However, these volumes are off a low base and therefore not meaningful. While prices in Europe are up 13% since year-end, they have stagnated over the past three months due to weak steel production. The shutdown in late March of South32's GEMCO manganese ore mine in Australia has tight supply, resulting in a meaningful increase in ore prices. As a result, the manganese alloy indexes have also increased. Given the weak steel production in Europe, the European indices have not improved as much as the U.S. We anticipate that the demand will improve in the H2 of this year. I would now like to turn the call over Beatriz García-Cos, our Chief Financial Officer, to review the financial results in our market.
Beatriz García-Cos (CFO)
Thank you, Marco Levi. Please tell-
Marco Levi (CEO)
Yeah, quick check if the sound, the sound is not very good. Can you check?
Beatriz García-Cos (CFO)
Thank you, Marco Levi. Please turn to slide 10 for a review of the income statement. Sales increased 4% in the Q1 to $392 million, up from $376 million in the prior-quarter. During Q1, we saw increased volumes across all three segments, while weaker prices for silicon metal and ferrosilicon offset some of the volume gains. Raw materials and energy consumption for production increased as a percentage of sales from 53% to 66% in Q1, primarily driven by lower energy compensation in France and CO2. The staff cost decreased by $9 million in the Q1 to $71 million, driven mainly by profit sharing arrangements in Europe. Adjusted EBITDA in the Q1 was $26 million, versus $60 million in the prior-quarter.
During the quarter, we earned approximately $8 million from our 2024 French Energy agreement, which boosted our EBITDA by the same amount. As a reminder, these benefits will be collected early in 2025. Net finance expenses for the quarter declined 38% to $8 million, due to the full redemption of the senior secured notes. The full benefit of the debt repayment will be fully realized from the Q2 onwards. Next slide, please. I'm on slide 11. Our Adjusted EBITDA margins declined from 60% in the prior-quarter to 7% in the Q1, primarily due to higher costs, which impacted EBITDA by $39 million relative to the Q4.
The higher costs were driven by lower energy compensation in France and CO2 compensation, partially offset by lower raw materials and energy prices in Spain. Silicon metal and silicon-based alloys also contributed to lower Adjusted EBITDA, with prices declining 6% and 5%, respectively... Overall, realized prices declined by 2% from the Q4, impacting Adjusted EBITDA by roughly $9 million. Total volume increased by 6% with a small $2 million positive impact on EBITDA compared to the prior-quarter. Head office and non-core business contributed approximately $11 million, driven by improved performance of the mine, of our mine operations in the Q1, and Thaba Chueu in the Q4. Slide 12, please.
During the Q1, we generated strong free cash flow of $180 million, driven by the $155 million rebate for French Energy, and $17 million through the working capital, primarily due to $90 million reduction in inventories that has been partially offset by accounts payables. CapEx outflows in the Q1 were $18 million versus $26 million in the prior-quarter. We used the strong cash inflow to pay off the remaining $150 million of senior secured notes, paving the way for us to begin our share buyback program once the shareholders approve it in the June annual general meeting. In March, we paid $0.013 dividend per share, which we will pay again on June 27th. Next slide, please. I'm on slide 13.
We end the Q4 with a cash balance of $160 million, up from $138 million in the Q4. Our financial position improved from net debt of $101 million to a net cash positive position of $79 million, with adjusted gross debt declining from $239 million at the end of the Q4 to $81 million, due to the redemption of the remaining $150 million of senior secured notes. At this time, I will turn the call back over to Marco Levi.
Marco Levi (CEO)
Thank you, Beatriz García-Cos. Next slide, please. Thank you, Beatriz García-Cos. Moving to the key takeaways on slide 15. Our enhanced capital return policy is entering the second phase as we wait for the shareholder vote to approve the share buyback. The phase I, quarterly dividend, was paid in March, with the Q2ly dividend of $0.013 per share declared, payable on June 27th. We are in a good position to take full advantage of the exciting development in the silicon-rich EV battery market. Combined with the robust growth expected in the solar market, we are very pleased with our position as the leading western silicon metal producer. Finally, to meet the growing demand, we are applying for a permit to expand our silicon metal production in the U.S. Operator, we are ready for questions.
Operator (participant)
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to your first question. Oh, one moment, please. We will now go to your first question. Your first question comes from the line Martin Englert from Seaport Research Partners. Please go ahead.
Martin Englert (Steels and Metal Analyst)
Hello, good afternoon, everyone.
Marco Levi (CEO)
Hi, Martin Englert.
Beatriz García-Cos (CFO)
Good afternoon.
Martin Englert (Steels and Metal Analyst)
Could you provide, if available, some more detail on the potential U.S. brownfield expansion, where it might be planned, at what facility, what type of capacity, timing, the CapEx associated with it?
Marco Levi (CEO)
Yeah. At this stage, it is a bit premature to provide more details about that. Of course, the first thing we're gonna do to satisfy the demand pickup in U.S. is to restart our capacity in Selma, that is ready to be restarted with two furnaces. But as mentioned in the previous call, we expect a significant growth in the West for silicon metal demand of about 200,000 tons minimum of silicon metal in the next five years. And in order to satisfy this additional demand, we will need to be part of the suppliers and have enough capacity to satisfy this demand. This is why we started the process to apply for a permit in the United States of America.
Looking at financing, we already mentioned that we do not intend to go back, being a company, very leveraged. So we will look at all the options to finance this expansion with our own cash, with subsidies that are getting available in the United States, and also exploiting some of the partnerships that we have already in place in the United States.
Martin Englert (Steels and Metal Analyst)
When you're referencing U.S. or partnerships, are you referencing partnerships to the degree that you have JVs, or more so some of the recent partnerships that you've been establishing in the kind of batteries market?
Marco Levi (CEO)
Well, all kinds of partnerships, of course. It's no secret that we have a partnership with Dow Chemical at two of our plant. And, you know, that the overall growth in silicon metal is impacting both Dow Chemical and Ferroglobe. But then we are talking about partnerships that may mature in the solar supply chain or the battery supply chain, too. And there, as you know, we have announced our partnership with Coreshell. But as previously declared, being the main player in the West, we have been approached by also other players in this supply chain. So I think we have different opportunities here.
Martin Englert (Steels and Metal Analyst)
You mentioned that the costs would be significantly lower for brownfield expansion versus greenfield, which intuitively makes sense. But any framework as to what you... I mean, any framework or goalposts as to what you think it would cost to build a greenfield facility, today in the U.S. or North American market, and what that capacity might look like?
Marco Levi (CEO)
Well, let's say a meaningful silicon metal plant would have a capacity of 50 maximum nameplate, 60,000 tons of silicon metal. Greenfield, we estimate that you would require about $400 million or north of this number. When you build brownfield, you know, you take a big fraction of this cost out for the same capacity. And on top, you can build much faster. And you know, when you start, and this is why we're applying for the permit, because then we can, when things materialize in the supply chain of new markets, then we were gonna be much faster, we think, in executing what we want to execute.
Martin Englert (Steels and Metal Analyst)
Okay. And you noted a big fraction of the cost is taken out. Is that something like 25% of the cost is reduced versus greenfield, 50%?
Marco Levi (CEO)
More than, more than 1/3.
Martin Englert (Steels and Metal Analyst)
Okay, that's extremely helpful. Thank you for that. I wanted to pivot and talk about the raw materials. Energy costs increased 29% sequentially at the group level to $257 million. Then there were some puts and takes on cash costs within the businesses. Within silicon metal, cash costs per ton, I think, was about $2,853. That was actually a bit lower by about $70 a ton. Silicon-based alloys stepped up for about $360 a ton sequentially. The question is, looking ahead at 2Q, could you touch on unit cost expectations across the businesses based on how you see things transpiring to date?
Beatriz García-Cos (CFO)
Yeah, Martin Englert, this is Beatriz García-Cos speaking. So looking ahead in the H2 of the year, there is a main difference versus 2023. As you remember, because this a huge credit on energy, as we discussed, of $186 million, right, in our P&L in 2023. Now, in 2024, our estimation, as we were discussing on the previous quarter, it's around $14 million, right? So this could be a big driver to see the gap, right, in terms of cost. That's number one. And then as well, on the CO2, the indirect CO2, I think on the H2 of the year, gonna be a little bit higher, the compensation versus the H1.
So this gonna be the offset. On the other side, raw materials will be offsetting partially this increase of the energy pricing. So this is a kind of a mix that for 2024 in terms of cost. Last but not least, I think Marco Levi will talk to you about that later, is if you remember that we mentioned this cost reduction program, that we are working on it at the moment, and hopefully will crystallize before the end of the year. I think the amount that we mentioned was around $40 million.
Marco Levi (CEO)
Yeah, there is another element, if you allow me to add, which is more short term, because Martin Englert was asking this about the Q2. The cost of manganese ore is going up significantly as a consequence of the Australian shutdown. This doesn't have a big impact on us in the Q2, but it will start having a significant impact on manganese alloys cost starting the Q3. This is why we are reacting, increasing prices of alloys as much as we can in order to reestablish the delta between manganese ore and final manganese alloy pricing.
Martin Englert (Steels and Metal Analyst)
Okay. So several puts and takes moving through the course of the year. And it seems certainly year-on-year lower energy credit from the French power agreement, and then it sounds like there's maybe some higher raw materials in the back half, but forgetting manganese for a second, but silicon-based alloys and silicon. Still some elevated raw materials, but you're gonna get some more favorable, what, essentially credits regarding CO2. So maybe they should— Is it correct to think of it as H2 silicon metal and silicon-based alloys unit costs maybe see some relief and step down marginally to modestly?
Marco Levi (CEO)
Well, there is an... It's difficult to give you a picture here. Let me pause for a second. When we look at the European situation, we expect also some pressure from energy market. As you know, we are gonna buy still most of our energy in Spain at market, and we expect a rise of energy cost in Spain in the H2 of the year. So this will impact mainly our operation in Sabón. Looking at the other critical geographic areas for silicon metal, I expect a rather flat energy cost as in the H1.
Martin Englert (Steels and Metal Analyst)
Okay, understood. If I could one last one. The silicon metal volumes were quite, quite strong for the quarter, and you had called out strength in EMEA as a contributing factor. How do we think about the volume trend now, given that seemingly incremental contribution when we proceed through the year? Do you have any targeted goalposts for silicon metal volumes for the year, or, at a minimum, maybe what you're seeing with 2Q?
Marco Levi (CEO)
Well, you know, clearly, we are, we have restarted our plants in France in the Q2. And so we expect to sell more higher volumes. The point is the following: I go back to the market dynamics. U.S. demand is pretty stronger, I would say, because silicon's demand of our customers is better. Aluminum demand from the aluminum players is better. So U.S. we expect to become more and more robust at this stage. While Europe, while we have our productions up and running, we don't see an improvement in demand. On the contrary, aluminum market seems to be even weaker than in the previous quarters. So I would be very cautious on volume expectations in Europe.
Martin Englert (Steels and Metal Analyst)
Okay. I appreciate all that detail. I'll pass it along for others that have their questions. Thanks, and good luck.
Operator (participant)
Thank you. We will now go to the next question. Your next question comes from the line of Lucas Pipes from B. Riley Securities. Please go ahead.
Lucas Pipes (Managing Director)
Thank you very much, operator. Good day, everyone. Marco Levi, I wanna ask you kind of a higher level question. Kind of looking back over the last few years, you improved the operations, improved the commercial side, fixed the balance sheet, and now obviously, you're in a net cash position. Congratulations to you and the team on that accomplishment. So it appears you have a lot more opportunities strategically to maybe do what you wanna do, and I wondered if you could maybe lay out the priorities for the company over the next couple of years. Thank you very much.
Marco Levi (CEO)
Thank you for the question, Lucas Pipes. Of course, you stimulate my ambition. I want to underline that most of our business has not changed. We are still playing in commodities, and as a consequence, our performance short term is still linked to the market dynamics that I commented before. Of course, we are extremely bullish about the future because we are involved in a lot of strategic discussions with different partners for batteries, particularly in U.S., but also in Europe, that we're sure will drive to a major uptick of silicon metal consumption in the world. I think we have never been so close to solve the famous swelling problem of silicon metal for batteries, and this is why we believe in what we are doing with Coreshell.
We have invested in Coreshell, and we think that we the Coreshell solution will speed up the introduction of a massive introduction of silicon metal in batteries. Looking at solar, there are different new supply chains that are getting established from the traditional markets, China and Southeast Asia. And we are ready to exploit these opportunities. So growth is there for sure in silicon metal. Now, we need to look at profitable growth and one key element, key component that we are looking at is the polysilicon market situation. Because there is a tremendous excess of capacity of polysilicon in China. There is...
The Chinese have difficulties to place volumes, and as a consequence, polysilicon price in China has dropped further, a little bit more than $6 per kg when it was at $35, about one year, one year and 1/2 ago. This is causing a lot of dynamics in China. The polysilicon market outside of China is around, still around $21-$22 per kg. We'll see how it develops with the new supply chains set up for solar, mainly in the Middle East. But our position is very good because we have the assets at the right place. We are strongly back integrated with the right quality of quartz. So my aspiration, Lucas Pipes, is to dramatically grow this company by growing the silicon metal envelope.
Lucas Pipes (Managing Director)
Thank you. And a quick follow-up on Coreshell. Sorry if I missed it, but what is approximately the investment or the terms of the investment? And-
Marco Levi (CEO)
Yeah.
Lucas Pipes (Managing Director)
What percentage of the company which you maybe own today or eventually own? And also, not familiar with their specific technology. Maybe you can comment quickly on why you think this is the right horse to bet on in the-
Marco Levi (CEO)
Yeah.
Lucas Pipes (Managing Director)
in the battery market. Thank you very much.
Marco Levi (CEO)
Yeah. No, no. Thank you, Lucas Pipes. The first thing, investment is a few million dollars, but we have the right to further invest in the next round of capitalize for the company. The beauty of this thing at this stage is that all our tests look extremely promising, and these tests are being made on cell samples, right? Reproducing the same test that Coreshell has made, and they're all based on our silicon produced in Europe. The key is to go through the charging, discharging cycles, and basically, the property of the battery don't change. This means that you can charge and recharge these batteries faster and guarantee a longer tenure to the battery.
The beauty, I think, of this opportunity is that at the beginning of next year, together with Coreshell, we will sample directly the automotive industry with 60 amp batteries. And this basically is a leapfrog move because you -- we don't need to go through battery element manufacturer or battery manufacturer. We will have a pilot plant that produces more quantities of batteries that will represent our technology, that based on our assessment with Coreshell, don't require any change in terms of layout of the gigafactories. And we'll have the opportunity to be validated directly by the automotive OEM. I consider this a breakthrough. Of course, it has to be validated, right? You know that a new solution in battery takes time. So, we are talking about significant growth, if successful, in a time range of three years from now.
At this stage, everything seems to be working fine, and we are aggressively making progress on this development line.
Lucas Pipes (Managing Director)
Thank you. Thank you, Marco Levi. This is helpful. Beatriz García-Cos, so a quick one for you. In terms of working capital, anything major to be aware of for the balance of the year? I know it can be lumpy, so if you could maybe flag anything that might stick out from a working capital perspective, I would appreciate that. And then, with the updated guidance range, what's been holding back increasing the high end of the guidance? Obviously, good to see the low end of the guidance come in here, but would appreciate your comment as to why not the whole range shifted, but just the low end. Thank you for any additional comment there.
Marco Levi (CEO)
Maybe I start from the second part of the question-
Beatriz García-Cos (CFO)
Yeah.
Marco Levi (CEO)
Lucas Pipes, if you don't mind, on the guidance.
Lucas Pipes (Managing Director)
Sure.
Marco Levi (CEO)
The reality is that there are a number of factors, and there are opposite factors, meaning we're facing a salad of different trends in our view at the moment. As I mentioned, let's start from Europe, the demand is very weak. Prices were being stabilizing in the Q1, are trending down now in the Q2, and I refer mainly to silicon metal and ferrosilicon, right? In U.S., we have the opposite trend. In U.S., you have demand going up in silicon metal, price reinforcing. Aluminum is rather balanced. Ferrosilicon is reinforcing on pricing in view of what I mentioned before during my speech. Then you have another element, which is manganese ore.
As I mentioned before, manganese ore price is skyrocketing, and this is very difficult for us because we sell in Europe, where steel demand, as I mentioned before, is reduced by those expectations. So demand is not there, and the ore price is going up. As I mentioned before, energy market price in Europe in the H2 of the year is expected to go up. So-
Lucas Pipes (Managing Director)
Mm-hmm.
Marco Levi (CEO)
There, there is, you know, we have increased the bottom of our guidance because we see slightly better price and because we trust in our capabilities to reduce cost. Beatriz García-Cos has mentioned the cost program. But there are also a lot of challenges, particularly in Europe. So, this is why at the end, we ended up increasing the bottom, and so you—this is where we feel comfortable. I think, then, Beatriz García-Cos, if you can.
Beatriz García-Cos (CFO)
Yeah, thank you, Marco Levi. Maybe I jump into the, just on the, on the working capital. So, as you remember, we built up inventories at the end of last quarter, Q4 last year, where in preparation of the idling of our plants in Q1 in France, as it's happening. Now in Q1, we have been releasing working capital, as you have been seeing, but we have some hiccups as well in Q1 that we are fixing now. So we have a relatively increase of working capital in our plant in South Africa, right? Due to ramp up and, you know, that we are ramping-up our Polokwane plant, so we face some issues there.
And then, as well in our one of our plants in France, Pierrefitte that is located in the south of France. So at the end, this has been allowing us to release $20 million, but could have been a little bit bigger if we would not be facing these issues in South Africa and in France, as I mentioned. Now, for the rest of the year, we are bumping up our production in our plants in the U.S. and in Spain, right?
So when you look at the overall picture of the working capital, I would say that we should expect a balanced picture, but because as you said, looking at it is a little bit bumpy. So I would expect maybe a small additional consumption of working capital going forward. And this is gonna be as well favorable because of what Marco Levi mentioned on the manganese ore prices, right? So the prices of the ore has been increasing, so this would affect directly, not in the number of tons, of course, but it's pricing to our working capital to be safe. Yeah.
Lucas Pipes (Managing Director)
Thank you very much for all the color, Marco Levi and team. Continued best of luck.
Marco Levi (CEO)
Thank you.
Beatriz García-Cos (CFO)
Thank you.
Operator (participant)
Thank you. Once again, if you would like to ask a question, please press star one and one on your telephone keypad. We will now go to our next question. Your next question comes from the line of John Valtz from Crescent Rock Capital. Please go ahead.
John Valtz (Analyst)
Hi, good afternoon. Most of my questions have been answered. I did have one. I noticed, in the most recent 20-F, Marco Levi, that the number of shares that you beneficially own, as well as the number of shares that Mr. Javier Madrid owns, had increased substantially, from the prior 20-F. And I was just wondering, is that due to grants or to open market purchases or some combination of both?
Marco Levi (CEO)
Well, if you ask Marco Levi, both. Exactly. Sorry, Mr. Javier Madrid is also here, is due to both.
John Valtz (Analyst)
Okay, great. Well, it's good to see you. Thanks very much.
Marco Levi (CEO)
Thank you. Thank you.
Operator (participant)
Thank you. There are currently no further questions. I will hand the call back for closing remarks.
Marco Levi (CEO)
Thank you. So let's go to the closing. In a nutshell, I have really to say that we are excited about our prospects in solar and lithium-ion battery markets, and are well positioned to take advantage of improving the fundamentals that we expect in our core markets. I want to thank you, all of you, for your participation, and we look forward to hearing from you on the next call. Have a great day.
Operator (participant)
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.