Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Corporate Update (September 2024)
43 slides from Outokumpu Oyj's corporate update, Sep 10, 2024
Slide 1: Leveraging ferrochrome
Leveraging ferrochrome Site visit to Kemi mine Marc-Simon Schaar – CFO Martti Sassi – President, business area Ferrochrome September 10, 2024
Slide 2: Contents
2 Site visit to Kemi mine Contents Outokumpu’s recent financial development 3 Ensuring ferrochrome supply through own integrated production 9 Sustainability at Outokumpu 17 Global ferrochrome market 21 Ferrochrome is a core business 26 Sustainability in BA Ferrochrome 31 Mineral resources and reserv
Slide 3: Outokumpu's recent financial development
3 Outokumpu’s recent financial development Marc-Simon Schaar – CFO
Slide 4: Outokumpu is the global leader in sustainable stainless steel
4 Outokumpu is the global leader in sustainable stainless steel Year 2023 Sales Stainless steel Adjusted First in the industry deliveries EBITDA 7 1.9 517 EUR billion million tonnes EUR million 100% stainless steel. 95% 75% 8,469 Up to 93% lower carbon footprint compared to Record-high Up to 75% low
Slide 5: Adjusted EBITDA amounted to EUR 56 million in Q2
5 Adjusted EBITDA amounted to EUR 56 million in Q2 • Market environment in Europe remains challenging despite continued gradual recovery since Q3 2023 • Stainless steel deliveries increased from the Gradual market previous quarter in both business areas recovery in Europe continued in Q2 while • Tem
Slide 6: We are the market leader in Europe, and accelerate actions to strengthen our position
6 We are the market leader in Europe, and accelerate actions to strengthen our position Challenging market situation in Europe requires accelerated efforts to strengthen cost competitiveness Targeting cost savings and optimization of the commodity stainless steel production in Tornio, Finland and Kr
Slide 7: Normalized adjusted EBITDA level remains at EUR 500–600 million with own profit improvement actions
7 Normalized adjusted EBITDA level remains at EUR 500–600 million with own profit improvement actions EUR million Potential recovery from the current exceptionally weak market Gross impact from inflation and Successful margin Not reflecting the full environment other headwinds (e.g. political manage
Slide 8: Outlook for Q3 2024
8 August 8, 2024 Outlook for Q3 2024 • Group stainless steel deliveries in the third quarter are expected to remain stable compared to the second quarter. • Slow market recovery in Europe is expected to continue while the market environment for business area Americas is expected to remain soft. • Th
Slide 9: Ensuring ferrochrome supply through own integrated production
9 Ensuring ferrochrome supply through own integrated production Marc-Simon Schaar – CFO
Slide 10: The industry leader in low-emission stainless steel – captive ferrochrome production is pivotal
10 The industry leader in low-emission stainless steel – captive ferrochrome production is pivotal Lowest Circular economy at the Low-emission ferrochrome carbon footprint core of business production in Finland Carbon footprint up to 75% lower Highest-recycled material Carbon footprint 67% lower tha
Slide 11: Full transparency to drive change in the industry
Full transparency to drive change in the industry Emissions per scope in 2023 Scope 1 Total: 1,013 ktCO2 Scope 2 Total: 142 ktCO2 Scope 3 Total: 2,309 ktCO2 15% Propane, light fuel 33% 43% oil and other 5% Other Local grid Nickel 52% electricity Coke and internal CO gas 33% 95% Natural gas Low CO2 e
Slide 12: Scrap is our main raw material – primaries also important
12 Scrap is our main raw material – primaries also important Stainless production Target composition of a standard 304 stainless steel grade melt: Recycled Chrome Nickel Cr 18%, Ni 8% Emission content 95% driver Secondary raw materials Primary raw materials Composition of scrap varies: Melt analysis
Slide 13: Actions to ensure supply of critical raw materials with a low carbon footprint
Actions to ensure supply of critical raw materials with a low carbon footprint Scrap Nickel 10% share acquired of 9.9% share acquired in CRONIMET North-East GmbH in FPX Nickel junior mine Europe to strengthen partnership and accelerate circularity Wind power Biocarbon Ownership of Rajakiiri wind 20%
Slide 14: Own low CO2 ferrochrome production is a competitive advantage
14 Own low CO2 ferrochrome production is a competitive advantage Outokumpu’s chrome mine in Kemi and ferrochrome operations in Tornio, Finland. • Ferrochrome makes stainless steel stainless (on • Fully integrated ferrochrome and stainless steel average 18% chrome content) operations in Finland provi
Slide 15: Outokumpu's position expected to strengthen within ferrochrome
15 Outokumpu's position expected to strengthen within ferrochrome • Imports into Europe expected to decrease South Africa HC FeCr exports to EU 27 due to CBAM and reduced capacity in South-Africa • Strong position within CBAM is due to our own ferrochrome production with → 67% lower carbon footprint
Slide 16: We are well positioned towards CBAM
16 We are well positioned towards CBAM As the EU is raising its climate ambition, there is a risk of carbon leakage. Carbon Border Adjustment Mechanism or CBAM is set to prevent that. Outokumpu forecasts to have an adequate quantity of the EU emission allowances until the end of this decade if the p
Slide 17: Towards a world that lasts forever
Towards a world that lasts forever Marc-Simon Schaar – CFO
Slide 18: Sustainability at the core of our strategy
18 Sustainability at the core of our strategy Climate Commitment to reduce emission intensity across Scope 1, 2 and 3 by 42% by 2030*. Circularity Target to achieve over 90% recycled material content. Energy efficiency Improve energy efficiency by 8% by the end of 2024. People & safety Long-term vis
Slide 19: People are our most valuable asset
People are our most valuable asset World-class safety performance TRIFR* 8.7 4.4 4.1 3.2 2.4 2.0 1.8 1,5 1,3 2016 2017 2018 2019 2020 2021 2022 2023 2024/H1 Increase in Improving diverse leaders pay equity +26% 0.99 women’s euro with from 2022 baseline an external verification *TRIFR = Number of tot
Slide 20: Continue our climate strategy to further reduce our emissions aligned with 1.5 degrees
Continue our climate strategy to further reduce our emissions aligned with 1.5 degrees – circularity and innovation at the core 2016–2023 2023 results High recycled material content, low-emission -27% tCO2/ton CS energy, energy efficiency and incremental process improvements 2023–2030 Replacing
Slide 21: Global ferrochrome market
21 Global ferrochrome market Martti Sassi – President, business area Ferrochrome
Slide 22: The biggest ferrochrome producer in the western world
22 The biggest ferrochrome producer in the western world Chrome ore production by country, 2023 South Africa 63% Kazakhstan 10% India 9% Finland Turkey 4% 38Mt Russia Zimbabwe 3% Sweden Finland 2% Brazil 2% Kazakhstan Albania 1% Albania ROW 5% China FeCr production Turkey by country, 2023 China 48%
Slide 23: Global ferrochrome supply-demand balance forecasted to change for Outokumpu's benefit
23 Global ferrochrome supply-demand balance forecasted to change for Outokumpu’s benefit Ferrochrome supply forecast Green (low CO2) ferrochrome market expected to grow faster (kt FeCr55 equivalent) than average market in Europe and North America Demand CAGR +2% 2023-2034 20 000 CAGR +1% 15 000 1 54
Slide 24: Growing interest towards low CO2 ferrochrome in the European and North American markets
24 Growing interest towards low CO2 ferrochrome in the European and North American markets Request for low CO2 FeCr. Russian FeCr blocked from CBAM accelerating EU and USA moves to India transition and China Kazakhstan continues as the largest producer in HC FeCr China is revamping and increasing ca
Slide 25: Our ferrochrome operating cost in the lowest quartile
25 Our ferrochrome operating cost in the lowest quartile Russia Indonesia Zimbabwe Brazil China Sweden Turkey Finland Kazakhstan South Africa India Operating cost US¢/lbs Cr Weighted average Production volume Source: Operating Cost US¢/lbs Cr, CRU July 2024. The country-specific average is calculate
Slide 26: Ferrochrome is a core business
26 Ferrochrome is a core business Martti Sassi – President, business area Ferrochrome
Slide 27: Business area Ferrochrome
27 Business area Ferrochrome Year 2023 Sales Adjusted Ferrochrome Ferrochrome EBITDA deliveries production 467 96 355 390 Personnel EUR million EUR million Kilotonnes Kilotonnes 65% 455 Safety Customer base 30km Own employees 0 35% Distance between Stainless and Share between internal Kemi chrome mi
Slide 28: Kemi mine - The first carbon-neutral mine in the world by 2025
28 Kemi mine - The first carbon-neutral mine in the world by 2025 The only Annual ore Ore supply Underground Concentration Committed production secured to mine with process to Towards chrome capacity minimal gravity-based, Sustainable mine in the EU 2,7 2050’ environmental impact not using chemicals
Slide 29: Expansion of Kemi mine successfully completed
Expansion of Kemi mine successfully completed EUR 280 million expansion into new production area 2017-2023 • New main level built at 1,000 meters depth • New ore handling and hoisting system to enable cost-efficient mining in 500-1000 m depth • Highly automated with remote operations
Slide 30: Ferrochrome plant in Tornio - Integrated and efficient
30 Ferrochrome plant in Tornio - Integrated and efficient 3 submerged Annual Furnace 3 arc furnaces capacity largest and the with best most efficient available furnace globally technology 530 kt Liquid FeCr Carbon All side streams deliveries to Monoxide gas CE marked own melt shop utilized and utili
Slide 31: Sustainability in BA Ferrochrome
31 Sustainability in BA Ferrochrome Martti Sassi – President, business area Ferrochrome
Slide 32: Outokumpu - ESG leader in ferrochrome industry
32 Outokumpu - ESG leader in ferrochrome industry Environmental performance According to Environmental Performance Index by Yale University, Finland was found to be an environmental leader compared to other Chrome ore and Ferrochrome production countries. Social performance According to The United N
Slide 33: Key drivers behind the lowest carbon footprint of our ferrochrome
33 Key drivers behind the lowest carbon footprint of our ferrochrome Tonnes 12 of CO2 equivalent per tonne of chromium Low CO2 electricity 10 10 t 67% Best available technology 8 smaller carbon footprint High utilization rate of produced 6 CO gas in the plant 4 Short distance from the mine to ferroc
Slide 34: Sustainability development with high ambition
34 Sustainability development with high ambition Decarbonization Carbon neutral Improving of FeCr production Kemi Mine 2025 material efficiency • Target to replace fossil coke with • Low-carbon energy • Higher ore yield by changing biocoke • Renewable fuels in mining mining method from Sub Level • O
Slide 35: Improved safety and efficiency through innovations
35 Improved safety and efficiency through innovations Remote controlled and automated AI supported decision making operations at Kemi Mine and monitoring at FeCr Plant • 100% blastings done • AI in electrode management decision support centralized and remotely • ANYmal “Jokkeri” safety robot • Over
Slide 36: Rich biodiversity with 185 different bird species
36 Rich biodiversity with 185 different bird species
Slide 37: Mineral resources and reserves
37 Mineral resources and reserves Martti Sassi – President, business area Ferrochrome
Slide 38: Stable mineral reserves enable long-term mine planning and secure reliable mining in the future
38 Stable mineral reserves enable long-term mine planning and secure reliable mining in the future Kemi Mine mineral reserves and additional mineral resources 2015–2024 Proven & Probable Mineral Reserves Measured/Indicated Mineral Resources Inferred Mineral resources Production x15 Terms and relatio
Slide 39: Signs of chromite layer extending to 3,5 km depth
39 Signs of chromite layer extending to 3,5 km depth Mineral resources of Current 0-500 Kemi mine have been Next 500-1000 estimated down to 1200 meters. In future 1000-3500 Seismic reflection (red) indicates, that the chromite layer extends down to 3,5 km. Depth (m)
Slide 40: Summary
40 Summary
Slide 41: Leveraging ferrochrome
41 Leveraging ferrochrome Ferrochrome Demand for Outokumpu is the market is growing sustainable and global leader in globally low CO2 sustainable and ferrochrome is low CO2 growing, especially ferrochrome in Western world Our operating cost Chrome ore is Part of the most level is in the secured unti
Slide 42: Disclaimer
42 Disclaimer This presentation contains, or may be deemed to contain, statements that are not historical facts but forward-looking statements. Such forward-looking statements are based on the current plans, estimates and expectations of Outokumpu’s management based on information available to it on
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