Chris LaFemina: Understood. I’m just trying to figure out the different scenarios that might ultimately materialize there. But thank you for that. I appreciate it.
William Oplinger: Good. Thanks.
Operator: The next question is from Alex Hacking with Citi. Please go ahead.
Alex Hacking: Yeah. Thanks for the call and the question. I guess, firstly, on working capital, any guidance there for the rest of the year? And then secondly, you mentioned that with raw material cost trending as they are, you might be able to exceed your savings targets. Is there any way of quantifying that? And how would that trade off against potentially higher energy costs that are linked to higher LME prices? Thank you.
Molly Beerman: So, Alex, on the working capital, for 2024, we are targeting $1 billion level by the end of the year. We closed the quarter at $1.4 billion, and we are working aggressively down toward that $1 billion mark by the end of the year. In terms of raw materials, we don’t have another number above the $310 million year-over-year that we committed to. But we are seeing favorable results coming in now, and we do expect to exceed that. If you look at caustic prices, we are definitely recognizing the benefits of the lower purchase prices from the second half of ’23 into the first half of ’24 and current purchase prices are just very slightly elevated, but — and very comparable to pre-pandemic levels. We are still seeing declines on coke and pitch. And while we have the 3 month lag in inventory there, we expect that to continue throughout 2024 with those coming down.
Alex Hacking: Okay. Thank you very much. And then just quickly on LMR. It sounds like kind of a switching over to EBITDA positive there is probably something that’s more likely to happen now in 2025 and 2024. Is that fair or am I being too pessimistic? Thanks.
William Oplinger: I think it will depend on what metal prices and as metal prices gone up, that’s benefited the site. So, it’s going to depend there and really in the case of Alumar, that site had been curtailed for about eight years. And I think we just fundamentally underestimated how hard it was going to be to get that site back up and running, especially from a mechanical perspective from the condition of some of the equipment there. So, continue to work it and it’s delayed from where we thought it was going to be.
Alex Hacking: Okay. Thank you so much.
Operator: The next question is from Lawson Winder with Bank of America. Please go ahead.
Lawson Winder: Hey, thank you very much, operator, and thank you all for taking my question. I might just follow-up on Alumar and just position it from the point of view of several years ago, eight years ago, as you mentioned, when you took the decision to close it, I mean it was among some of the higher cost smelters in the world. I mean is there any questioning now at this point whether it might make sense to abandon the restart? And then — and looking at it from another way, is there any thought to that asset potentially being sold? Thank you.
William Oplinger: So, as far as consideration of abandoning the restart, Lawson, as you can imagine in our jobs, both Molly and I, we constantly need to be revisiting the decisions that we’ve made and make sure that on a go-forward basis the actions that we take make sense. And so, with that statement, we have looked at what are our options in Alumar. We still believe given the power contracts that we have, the fact that it’s co located with the refinery, the fact that it’s in a part of the world where it needs aluminum, the business case still soft on a go-forward basis to continue with the restart. We are disappointed with the pace and the execution that we’ve seen on the restart and there’s really a couple of different areas.
I mentioned the mechanical condition of some of the equipment. We continue to work through that. And then, the other one is really around the technical expertise of the people that we have there. It has taken some time to make sure that the folks that we have there are able to effectively work through the restart. We’ve doubled down on some of the resources that we’ve provided out of the Center of Excellence and also some external resources. So, at this point, we continue to work through the restart.
Lawson Winder: Okay. That answers my questions. Thank you very much.
William Oplinger: Thanks, Lawson.
Operator: The next question is from Bill Peterson with JPMorgan. Please go ahead.
Bill Peterson: Yeah. Hi. Thanks for taking the questions. So, I guess maybe sticking on Alumar, but maybe also related to Warrick, because it sounds like you’re facing some challenges in both and then there’s some IRA things you’re still trying to work out. Are the $75 million and $70 million for Warrick and full — Kwinana still the right way to think about it, albeit more later in 2025, or the challenge you spoke to more likely to take the savings level down?
Molly Beerman: So, we are still working towards those stated targets. And we do believe that they can be achieved by the end of ’25. For Warrick, we did have a successful restart there. Now, I don’t expect to see considerable improvement in the second quarter. They have identified additional actions. Those will need to be implemented before we get to profitability. I think we indicated on the last call, we have about $30 million in IRA opportunity. We’re waiting for a decision from the government on if direct materials can be included there. So that was part of, Warrick. They had $60 million related to the operations and $30 million between Warrick and Massena on the IRA. On Alumar, we’re still committed. Again, as Bill mentioned, we still expect to get through the issues that we’re facing.
We’re knocking down items one by one in a very day-to-day focus there, and fortunately have enough expertise now on hand to trying to make progress there. And on Kwinana, I’ll say that we had guided to a $70 million improvement there in the — we will not see that. It’ll start to ramp in, say, in the second half of ’24, but we should be in good shape for realization of Kwinana, the $70 million in ’25.
