William Oplinger: Yeah, so let me, let me give you an update. We continue to work toward really achieving the long-term economic viability of the site in Spain. And that — and in the case of the smelter that allows for a restart in 2024. However, as basically the question that you just asked, we are starting — we see significant challenges that need to be overcome for that site to be viable, including soft demand for the value-add products, that site makes slab and billet, low aluminum prices in this — in the case of Europe high power costs and delay in permitting, and construction of some of the alternative power supplies that we had been looking at. We hope to overcome these challenges to allow for a progressive restart through the end of 2025, but it’s been and it remains very difficult. So that’s the situation in Spain.
Bill Peterson: Okay, thanks again, and best wishes here moving forward.
William Oplinger: Thank you.
Operator: The next question is from John Tumazos with John Tumazos Independent Research. Please go ahead.
John Tumazos: Thank you very much for taking my question. Comparing to the containerboard market today, International Paper announced they were shutting 900,000 tons or about 2.5% of US supply. In the world of aluminum market, obviously, China is 59% of output and some of the other continents don’t have very much production left. The bigger other regions are Russia which is hydro, Canada which is hydro, India which is coal, and the Persian Gulf which is gas. Do you think it’s possible to have a 2.5% supply reduction event in the world of aluminum industry the way it’s structured today?
William Oplinger: John, that’s a hard question and give me just a second to formulate an answer.
John Tumazos: Sure. I’m sorry to compare, there’s never been a 10% non-recessionary fall in the containerboard industry before. It took that industry a long time to get a grip on it and aluminum isn’t down 10%, it’s just not growing the way would be normal.
William Oplinger: So let me give you and you and I have known each other a long time and we’ve both been around this industry for a long time. So, let me give you a qualitative historical perspective. This industry has not had a problem on the demand side with the exception of the global financial crisis where we saw demand fall off and then inventories build. This year we’ve seen demand fall off and yet inventories have not built — been built significantly. So inventories and whether they’re — whether they’re on the LME or on the market or off-market inventories remain historically pretty low. As we look forward, we see a rebound of demand going into 2024 and really see strong demand trends that are driven by the mega-trends going out into the future.
The question has historically been, will the Chinese maintain the 45 million metric ton cap? We are seeing indications that we believe that they will maintain that cap. If they do maintain that cap and demand continues to grow, that should assist the fundamentals of the industry. As far as a significant and to address your question on 2.5% cut in supply, the areas around the world where supply is under — is under pressure, specifically is in Europe and we know that there are some plants that have hedged, that those hedges will be rolling off over time. We have our own challenged plant in Europe and so, you know, it remains to be seen whether the industry takes 2.5% cut out or not.
John Tumazos: Thank you. We’re all looking for demand, Bill.
William Oplinger: Yeah, thanks. Thanks, John, and it was good to talk with you.
John Tumazos: Thank you.
Operator: The next question is from Alex Hacking with Citi. Please go ahead.
Alexander Hacking: Yeah. Thanks, Jim, Bill and Molly and let me add my congratulations, Bill, on the new role.
William Oplinger: Thanks, Alex.
Alexander Hacking: Just following up on WA right, so it seems like we’re in the low grades now until 2027. As we think about, you know, the mine moves north that are going to start, you know, producing or mining in 2027, what are the major risk factors around that, how should we think about that and how should we think about the timeline, because if you’re going to be mining in 2027, I assume you need, you know, infrastructure, pre-stripping all kinds of things that are going need to be done ahead of that. So I guess, how should we think about the risks and timelines? Thanks.
William Oplinger: So, Molly and I are going to team up on this one a little bit. The permitting process that we have undertaken for the Myara North move is what’s called a part four permitting process. It is a modernized recognized permitting process within Western Australia for starting a new mine site and it requires a lot of information, and so we made that choice going back, I think it was in 2020 to move that modernized process for Myara North. We made that choice because we recognized that the customized process that we have currently really needed to be modernized and our stakeholders wanted the more modernized process. So the risk that I see is around that permitting process. Now, we’re doing everything that we can to mitigate that risk and when we get closer to that time period, we will have line of sight.
I can tell you we are very energized around reducing the time between when we get that permit to go and when we open up the mine phase. And given the fact that we’ve had some delays in permitting, we’re really trying to focus our efforts on making sure that we minimize that time between getting the permit and actually getting bauxite out of the ground. So Molly anything you want to add to that?
Molly Beerman: No, I’ll just add as far as our guidance on the about $45 million impact that we’re currently seeing in the quarter, we have plans to continue to mitigate that number, you saw the first action announced this quarter with Kwinana’s severence program there, so that, that will save $10 million, and it’s just the first bit of announcement. But we will keep moving through and finding productivity enhancements or portfolio changes to work that number down.
Alexander Hacking: Hi. Thanks, that’s helpful. I guess when you talk about, you know, the permits obviously being the key risk. You know, if I remember correctly, there are some, you know, potential issues with proximity to local communities. You know, are there other, you know, major permitting hurdles that you could foresee, I know this is a very kind of generic question, but, you know, any more color would be helpful. Thanks.
