We have started 2024 on the front foot in all parameters of the business and all things permitting, you will see us moving down the global cost curve through the year.
Grant Stuart: It has been a cause for concern. PGMs from recycle totaled just over 310,000 3E ounces, 48% down on 2022 and influenced by a relentless and complex set of factors within the U.S. auto industry. Towards the end of 2022, a notable dip in the U.S. auto sales became apparent, driven by compressed disposable income levels, heightened financing costs and near record vehicle prices that deterred potential new vehicle purchases. Today, buyers grapple with the same impact of interest rates on car loans with average vehicle prices hovering around $48,000. These factors have no doubt contributing to various recyclers in the value chain. Beyond the macroeconomic complexities, lifestyle changes post-COVID, including increased remote work and reduced driving have led to a shortage of end-of-life vehicles.
Consumers are running their vehicles for longer periods and our customers are confirming average scrappage rates moving from averages of 12 to 15 years to beyond 20 years. In 2022, our adjusted EBITDA stood at $78 million whereas in the current period, it’s been adjusted to $33 million following a 24% drop in the average realized 3E dollar price received and a 45% decrease in the volume fed. Despite encountering volume challenges over the past three years, we maintain an optimistic outlook grounded in the resilience of our recycling platform to facilitate sustained growth within the circular economy. Several factors bolster our confidence, including palladium and rhodium in the short term. Additionally, the dissipation of China’s destocking cycle downgrades in battery electric vehicle sales, potential Fed rate drops, recategorization of hybrid sales as ICE vehicles, and IRA credits applicable to both battery electric vehicles and plug in hybrid electric vehicles, all contributing to this positive outlook.
Moreover heightened auto catalyst loadings to mitigate emissions and supply cutbacks further reinforce this position. Our outlook is underpinned by a comprehensive assessment of the order catalyst recycling landscape, with upside potential anticipated following Reldan’s integration as we explore consolidation opportunities, the integration of collector and logistics networks and anticipated resurgence in volumes. Over to you, Mika.
Mika Seitovirta: Thank you, Grant and hello, everybody. In Europe, we continued to implement our battery metals strategy during 2023 and our battery metals strategy is concentrated actually to two ecosystems for the time being. One of them being in France and the other one being in Finland. And when we talk about what we have achieved so far, we talk about mainly two assets, which are the Sandouville nickel refinery in Sandouville, France and then the Keliber project in Finland, in Kokkola and in Kaustin. If we start what was positive in Sandouville last year was actually the safety development. So in recordable incidents, we did better than ’22. That tells a lot about the employee’s discipline, and I’m really happy about that trend, what we have there.
Operationally, it was a big disappointment, Sandouville last year. We were badly hit by the decline. We started our hedging only in the mid of the year and also related bad market conditions when it comes to product pricing. We also had a big impact in our variable cost mainly due to inflation in the post war market. And also, we had a lot more maintenance than we thought we would need in order to stabilize the production during last year. However, we decided already in the beginning of the year to do a strategic review of the asset and the different options we have. So we have been doing a lot of work with the different visions for Sandouville including the current business model which we didn’t find long-term viable. Also we have been looking into a possible closure of Sandouville and then we have been looking into alternatives where we have a different feed and different end products for Sandouville.
What has been encouraging is that, we decided that the most preferred outcome for Sandouville is actually to start to transform it towards precursor market as a peak and producer. That’s very much in line with our strategy. It is exactly what the ecosystem in France and Europe needs. And we think that we can do it as a brownfield project, capitalizing on the asset we already have. And the scoping study what we finalized in the beginning of this year shows encouraging results. It’s a market where there is a huge deficit between the supply and demand and it’s a value chain position which we believe is going to be very profitable. We are going to use the chlorine route and not as usually the sulfate route. And that has many benefits. And we believe also that we can have less CapEx, less OpEx through this kind of a solution and the CO2 profile is going to be extremely good in comparison with the conventional processes.
Right now we have started the prefeasibility study and we expect to finalize that by the end of the year, including also a transition plan if the results of the feasibility studies are as encouraging as the scoping study results. Then let’s move to Keliber. Keliber safety development was also positive between ’22 and ’23. So we had less recordable incidents than the year before. And I’m happy about this safety trend as well. We achieved a lot during 2023 at Keliber. We started the construction of the refinery. We started the construction of the concentrator and we also started the construction of the mine, which means that we are construction for the time being in three different places. We are on budget and we are on time with that construction aspect today.
Keliber has also recruited a lot of people, and it has been really nice to see how attractive employer this project actually is. So we can attract good talents from the region, outside the region, and that has to do obviously that we are dealing with battery materials in the future, but also that we are now as Sibanye Stillwater, we are an international player and we can offer long-term development opportunities for the people who join us. After successful recruitments, let’s talk about permitting. We got the decision 23rd February, a court ruling concerning Rapasaar mine and Päiväneva concentrator. As you might remember, we had three appeals. One of them was our own and two private persons on top. Now the court upheld the permit, but referred certain permit conditions back to the permitting authority for a further review.
This is not unusual in these processes. That means that construction of the concentrator can proceed as planned on the environmental permit that remains valid. Commencement of production at the concentrator is subject to the permitting authority’s review and the issuing of enforceable permit decisions. Our current expectation for the review process timeline is that the concentrator operations can commence exactly as we have planned. Based on the preliminary analysis, we accept the process will delay the commencement of the Rapasaar mine. We are now in the process of assessing the overall impact, if any to timing of the Keliber project and we will keep the market updated accordingly. Thank you very much and over to you, Robert.
