Celso Goncalves: Yeah. Sure. Hey, Lucas. Yeah, I mean, we expect further cost reductions next year, as we will see benefit from this new coal contract and lower natural gas prices for the hedge portion. We have lower inventory starting points in 2024 as well. Specifically as it relates to Q4, the $15 a ton quarter-over-quarter reduction that we guided to, that’s going to be largely driven by mix with less automotive and higher volume of less value added product, driven by more service center demand, that’s going to have an impact on costs. And this impact will ultimately run through inventory. So as we look forward, you can kind of see how we’ll have continued cost reductions here in Q4 and into next year.
Lucas Pipes: So, that’s helpful. So would it be reasonable to kind of take a Q4 starting point and then for the reduced energy cost, gas and coal off of that base?
Celso Goncalves: Yeah. That’s the right way to think about it.
Lucas Pipes: Thank you very much, Lorenzo and Celso. So again, best of luck.
Lourenco Goncalves: Thanks Lucas.
Celso Goncalves: Thanks Lucas.
Operator: Thank you. Our next question come from the line of Carlos De Alba with Morgan Stanley. Please proceed with your question.
Carlos De Alba: Yeah. Thanks. Also staying on cost. So beyond the very, very large savings on coal and natural gas next year. I don’t know, Celso or Lorenzo, can you talk about other initiatives that you may have more on productivity or more efficient labor deployment, or any other changes on how you do — how you make steel besides the savings on raw materials that you can point to? And if you have any quantification of those that would be really interesting to get any color.
Lourenco Goncalves: Yeah. Look, well, our work done back in the second half of 2022 when we deliberately reduced throughput in order to fix the equipment that we bought from ArcelorMittal USA, that was in much worse shape than the equipment that we bought from AK Steel. We did that knowing that our results would take a hit, the results took a hit. And since then, we are demonstrating that good equipment and good people, good union labor force can produce a lot of steel. So three quarters in a row, in an environment that’s not the most vibrant I have ever seen, for sure, we have seen better than that. We are delivering more than 4 million, shipping more than 4 million net tons of steel three quarters in a row. So, so far, so good.
Productivity has been achieved and it’s not productivity, just producing commodity hot roll. We produce all kinds of very sophisticated products for a very demanding customer base that is primarily automotive and other OEMs. So we are very satisfied with our level of productivity. So other cost initiatives are all related to the fact that we are a big buyer of everything like we did with coal, big buyers tend to have a good treatment from the suppliers, particularly if the big buyer knows how to buy. We nailed with coal. Let’s face it. We close our deal at the perfect timing, because remember this was a mining company before we understand commodities, so we know how to negotiate these things. So I’m not going to elaborate beyond that, Carlos, but that’s basically what we do.
Celso wants to complement something.
Celso Goncalves: No, just to quantify it a little bit right, Carlos? So when you take everything into account, the normalized repair and maintenance, the lower input costs, the higher productivity, these lower costs that are going to bleed into 2024 will more than offset any kind of increase we see in labor. And if we had to put a number on it, cost should return to that thousand dollars a ton range for 2024.
Carlos De Alba: All right. Thank you very much. I appreciate the color.
Celso Goncalves: Thank you.
Lourenco Goncalves: Thanks Carlos.
Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Lorenzo Goncalves for any closing comments.
End of Q&A:
Lourenco Goncalves: Thanks Daryl. As always, great pleasure discussing Cleveland-Cliffs with you. Now we’re going to take the longest gap in our sequence of conference calls because the next quarter to discuss will be Q4. It will be the end of the year, so we’ll probably only be talking with you in February. And we’re going to have a lots of things to discuss in February, so stay tuned and keep paying attention, because we move fast, even though not everybody does the same, but we still keep pushing. I really appreciate your interest in Cleveland-Cliffs, and I wish you guys have a happy Thanksgiving and because we’re not going to be talking between now and then, Merry Christmas. All the best. Bye now.
Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
