Ferroglobe PLC (NASDAQ:GSM) Q3 2022 Earnings Call Transcript

Martin Englert: Okay. Understood. So kind of comparable from a volume perspective year-on-year, remainder of the year, that’s when we’ll see more opportunity for net gains of constant based on the demand environment. Okay. And essentially thinking about the cost per megawatt going into the French assets, a comparable level as to what it was with the legacy contract, yes.

Unidentified Company Representative: That’s correct.

Martin Englert: Okay. Understood. So we discussed the South Africa restart maybe in a little bit more detail. And where the volumes are going to be going, maybe a split between the Middle East and North American market and the euro market. And I imagine based on modulating the production in France, that will probably evolve a bit as we move through ’23.

Benjamin Crespy: I think — It’s Benjamin. I might start on commenting that Polokwane is maybe our most flexible assets in the platform. It can fill any markets. And so I think it’s — as the markets evolve and as the opportunity comes, we will manage the volume and where we allocate them. But I will let Craig comment on the market aspect, but Polokwane is really a flexible platform that can go to most of the geography in the world.

Craig Arnold: Yes. Martin, as we look at how we plan to go to market with the Polokwane assets has been highlighted, as a global asset, originally designed around the high-performance polysilicon area targeting Asia Pacific. But since it has been planned to be restarted during the course of the coming quarters, the idea is to service a variety of regions. And looking at Asia, looking at the Middle East and looking — of course, looking at Europe and the U.S. I can’t give too much detail on the level of those contracts. But certainly, as we scale up the 3 furnace operations over the coming quarters, we’ll certainly be able to give a little bit more highlights and updates on the performance of that assets in those particular target markets.

Martin Englert: Okay, understood. That’s helpful. And when we think about where it sits on the cost curve, accounting for contracts and everything else is — I think historically, this has been a bit of a lower cost production facility. Is that kind of where it will remain once it gets restarted?

Unidentified Company Representative: Yes, that’s correct.

Martin Englert: Understood. Just for modeling purposes and given the South Africa restart and maybe taking a step back and looking at coming from 2021 to 2022, there was a pivot within the company away from — and this is specifically for silicon metal that I’m discussing not the other business lines but a pivot away from fixed annual contract prices where it’s a fairly de minimis amount of the contract structure in 2022. Is that expected to remain so in 2023? Or is there anything changing that we should expect a larger mix of fixed annual price silicon metal contracts in 2023 versus 2022?

Unidentified Company Representative: Yes. Thanks, Martin. Thanks for the question. Fixed price contracts are almost a thing of the past at the moment. So we hardly have any fixed price contracts. Certainly, it would not be wise if you’re in a fixed price contract mechanism during today’s volatility because going out there and trying to embed all that volatility in one single fixed price at a higher price is not something that a consumer would lock itself into. The strategies we’ve chosen right now are multiyear strategies and have a combination between market related and other related aspects into that. So yes, we’re very happy to have retired all of our fixed price contracts.