AMG Critical Materials N.V.

Welcome to AMG's Fourth Quarter 2021 Earnings Call. Joining me on this call are Dr.

Heinz Schimmelbusch, the Chairman of the Management Board and Chief Executive Officer; Mr. Jackson Dunckel, the Chief Financial Officer; and Mr.

Eric Jackson, the Chief Operating Officer. AMG's fourth quarter and full year 2021 earnings press release issued yesterday is on AMG's website.

Today's call will begin with a review of the fourth quarter 2021 business highlights by Dr. Schimmelbusch.

Mr. Dunckel will comment on AMG's financial results, and Mr.

Jackson will discuss operations. At the completion of Mr.

Jackson's remarks, Dr. Schimmelbusch will comment on strategy and outlook.

We will then open the call to take your questions. Before I pass the call to Dr.

Schimmelbusch, I would like to comment on forward-looking statements. This conference call could contain forward-looking statements about AMG Advanced Metallurgical Group.

Forward-looking statements are not historical facts but may include statements concerning AMG's plans, expectations, future revenues or performance, financing needs, plans and intentions relating to acquisitions, AMG's competitive strengths and weaknesses, reserves, financial position and future operations and development, AMG's business strategy and the trends AMG anticipates in the industries and the political and legal environment in which it operates and other similar or different information that is not historical information. When used in this conference call, the words expect, believes, anticipate, plan, may, will, should and similar expressions and the negatives thereof are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that any predictions, forecasts or similar projections contained by such forward-looking statements will not be achieved. These forward-looking statements speak only as of the date of this conference call.

AMG expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements herein to reflect any change in AMG's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based. I would now like to pass the floor to Dr.

Schimmelbusch, AMG's Chairman of the Management Board and Chief Executive Officer.

Thank you, Michele. With regards to COVID, we continue to apply all safety measures at our disposal, with the highest degree of attention in order to ensure our employees are working in the lowest risk environment possible.

Fortunately, AMG has not experienced a facility closure or operational interruption. AMG continued to sequentially improve EBITDA in the fourth quarter.

All segments performed well during 2021 relative to the prior year, most notably, our Clean Energy Materials segment, where presently our major strategic projects are casted. This segment continues to deliver strong EBITDA, which increased more than 3x over the prior year.

Our Critical Materials Technologies segment was up 77% relative to prior year as aerospace began its recovery. We continue to progress our key strategic projects.

The construction of AMG's AMG Vanadium's second ferrovanadium plant in Ohio, which will essentially double our recycling capacity for refinery residues is nearly complete. Shell and AMG Recycling BV continues to pursue secular refinery residue opportunities globally as project advances because of circular economy.

To close the loop between fresh and spent, catalyst is another building block for achieving the societal benefits for reducing global CO2 emissions compared to the mining of vanadium. At AMG Brazil, we are under construction, expanding the lithium concentrate voluming production from 90,000 tonnes per annum to 130,000 tonnes per annum.

Our products are sold under long-term contracts with index-related price formulas. AMG's first lithium hydroxide production facility in Germany will have its groundbreaking ceremony in May.

The design capacity is 20,000 tonnes of battery-grade lithium hydroxide, the first of 5 such modules. AMG's first LIVA, lithium vanadium, battery for industrial power management applications is proceeding as planned.

The first AMG industrial battery has a power of 0.6 megawatts and will flatten the electricity demand curve of our catalyst processing operations. The second LIVA battery is planned for Ohio with 4x the power.

These innovative LIVA batteries will be turned into a product line to compete with diesel engine power units for industrial applications. The environmental advantages are obvious.

During AMG's Capital Markets Day on January 11, we explained our full lithium value chain. Several lithium resource projects are under valuation, leveraging our mining and processing expertise in Brazil.

We have indicated that as regards to the expansion of AMG's lithium business, we are studying a partial sale to a complementary partner or alternatively an IPO. Obviously, any such dilution has to be justified by an increase of AMG's long-term shareholder value.

I would now like to pass the floor to Jackson Dunckel, AMG's Chief Financial Officer. Jackson?

Thank you, Heinz. I'll be referring to the fourth quarter 2021 investor presentation posted yesterday on our website.

Starting on Page 3, this shows an overview of the financial highlights of the quarter. Revenue for the quarter increased by 30% to $330 million.

This increase was mainly driven by the improving price environment, which led to higher sales prices across all 3 of our segments, particularly in AMG Clean Energy Materials. On a full year basis, revenue increased by 29% to $1.2 billion in 2021, driven by higher demand across the business, positively impacting both prices and volumes.

Q4 2021 EBITDA was $44 million, a 95% increase versus prior year. As you can see in the lower left corner, AMG continues to sequentially increase EBITDA each quarter, which we have done since Q2 2020.

On a full year basis, EBITDA in 2021 of $137 million was more than double the full year 2020 EBITDA. This increase was driven by increases in all 3 of our segments.

Net income to shareholders for the fourth quarter of '21 was $5.7 million compared to a loss of $2.8 million in 2020. Earnings in the fourth quarter of 2021 were impacted on a net of tax basis by 3 large noncash charges.

First, a $3.7 million write-off of unamortized financing expenses from the 2018 financing. Second, a $4.7 million charge related to 2019 share-based compensation awards, which I will explain later in my remarks.

And third, a $2 million foreign exchange charge due primarily to intercompany debt balances. Excluding these noncash charges, AMG would have had net income to shareholders of $16.1 million or $0.50 diluted earnings per share in the fourth quarter and $24.2 million or $0.77 per share on a full year basis.

Now I'll turn to a review of our 3 segments. Starting with AMG Clean Energy Materials on Page 4.

On the top left, you can see that Q4 revenues increased by 72% versus the prior year. This increase was driven mainly by higher prices in vanadium, tantalum and lithium concentrates, offset by lower sales volumes which are mainly due to the timing of shipments of each product.

Gross profit before nonrecurring items more than tripled compared to Q4 2020, mostly due to the improved price environment. Q4 2021 EBITDA increased by $18.7 million versus the prior year due to the improved gross profit and the $25.8 million result represented Clean Energy Materials' seventh straight sequential quarterly increase.

Clean Energy Materials is the segment, which is, and will continue receiving the most capital investment within AMG. And the capital expenditures shown on the bottom left of $31.5 million mainly reflect our investment into the Zanesville vanadium facility as well as our lithium hydroxide plant in Bitterfeld, Germany.

Turning to Page 5 and Critical Minerals. AMG Critical Minerals revenue increased 43% to $79.4 million, driven by strong sales volumes of antimony and improved sales prices across all 3 business units.

Gross profit before nonrecurring items decreased by 2% in Q4 due to the continuing rise in energy and shipping costs. The segment was only able to partially pass these increased costs through to its customers.

EBITDA during the quarter was $2.4 million lower than Q4 2020 due to higher SG&A costs, timing of shipments and lower profitability driven by the higher energy and shipping costs. Moving on to AMG Critical Materials Technologies on Page 6.

Starting on the top left, you can see that Q4 2021 revenue increased by $4.5 million or 3% versus Q4 2020. This increase was due to higher sales volumes of titanium alloys and higher prices of titanium alloys and chrome metal, driven by stronger demand from our aerospace customers.

As a result, Q4 2020 -- 2021 gross profit before nonrecurring items increased by 46% to $22.4 million. AMG Critical Materials Technologies Q4 EBITDA of $11.7 million increased $5.1 million from Q4 last year, primarily due to higher profitability in chrome metal and titanium alloys.

The company signed $85 million in new orders during the fourth quarter of '21, driven by strong orders in remelting, induction and heat treatment furnaces from China, representing a 1.6x book-to-bill ratio. This represents the strongest order intake since Q1 2020 when engineering received very strong aerospace furnace orders.

In contrast, the current order intake is broad-based across engineering's product range. Order backlog was $188 million as of December 31, '21, 21% higher than $155 million as of September 30.

On a full year basis, the company signed $227 million in new orders, representing a balanced 1x book-to-bill ratio. Turning to Page 7 on the presentation.

On the top left, you can see that AMG's Q4 '21 SG&A expenses were $39.5 million versus $26.1 million in Q4 2020. This increase was mainly driven by the reinstatement of the 2019 PSUs that I'll explain in a minute as well as increased strategic project costs and higher share-based and variable compensation expense.

On a full year basis, '21 SG&A expenses were $139.6 million. This was an increase of $21.8 million versus the prior year, but it was 3% lower than 2019.

$10 million of the $22 million increase in SG&A from 2020 is due to expenses associated with the 2019 PSU awards. AMG's PSU awards vest over a 3-year period.

And as a result, the company expenses the awards over that 3-year period. However, in 2020, AMG did not believe the 2019 PSUs, which vest in March 2022, would pass the ROCE hurdle due to the low performance of that year.

As a result, in 2020, the company reversed the expense, reducing SG&A by $4 million. The company's exceptional performance in '21 caused AMG to meet the ROCE hurdle.

And therefore, in '21, we reinstated those 2019 PSU awards, creating a $6 million expense. Removing these 2 effects would have reduced the year-on-year SG&A change to $12 million, which is a 10% increase versus 2020.

Importantly, AMG's adjusted '21 full year SG&A expense is 7% lower than 2019. That 10% adjusted annual increase in SG&A from 2020 was due to higher variable compensation expense, travel and entertainment and higher insurance costs.

AMG's Q4 '21 net finance costs were $12.6 million compared to $4.9 million in Q4 2020. This increase was mainly driven by the write-off of prior unamortized debt issuance fees during the quarter associated with the November refinancing and foreign exchange losses during the quarter.

AMG recorded an income tax expense of $8.7 million in 2021 compared to $11.2 million in 2020. This variance was mainly driven by improved financial performance, offset by movements in the Brazilian real versus the U.S.

dollar. The effects of the Brazilian real caused a $3.5 million noncash deferred tax benefit in '21.

Movements in the Brazilian real exchange rate impact the valuation of the company's net deferred tax positions related to our operations in Brazil. AMG paid taxes of $9.9 million in '21 compared to $12.9 million of cash tax payments, net of $3 million of refunds.

In 2020, AMG paid $8.6 million in taxes, which was comprised of $18.5 million of cash payments, net of $9.9 million of refunds. The higher cash payments in 2020 were largely a result of payments of taxes owed from profitable prior years, and the refunds in both years resulted from overpayments in prior years.

Turning to Page 8 of the presentation. You can see that on the top left that cash from operating activities was $30.2 million in Q4 '21 compared to $11.4 million in the same period of 2020.

Moreover, cash from operating activities was $90.8 million on a year-to-date basis, more than 4x the total cash from operating activities for all of 2020. This underscores AMG's continued focus on cash generation as well as the increased profitability during 2021.

AMG's return on capital employed for Q4 was 11.9% compared to 3.5% in Q4 2020 due to significantly higher profitability in the current period as the global economy continues to recover from the coronavirus pandemic. AMG ended 21 with $284 million of net debt.

And as of December 31, '21, AMG had $338 million of unrestricted cash and total liquidity of $508 million. In January 2022, AMG entered into $140 million of long-term bilateral unsecured performance-based guarantee facility agreements.

These guarantee agreements support expected customer advanced payments and replace the existing guarantee arrangements. In November, AMG entered into a new $350 million 7-year senior secured Term Loan B facility and a $200 million 5-year senior secured revolving credit facility, which together replaced AMG's prior credit facility and extended the term loan maturity from 2025 to 2028 and revolver maturity from 2023 to 2026.

Further strengthening AMG's commitment to environmental, social and governance principles, we incorporated annual CO2 intensity reduction targets into the revolving credit facility, making it a sustainability-linked loan. We expect capital expenditures for '22 to be between $175 million and $200 million, mainly driven by the finalization of construction for the vanadium expansion in Ohio and expenditures related to the construction of the lithium hydroxide plant in Germany.

That concludes my remarks. Eric?

Thank you, Jackson. Demand and prices of our products are fundamentally strong, driven by their criticality in the global transition to a lower carbon economy.

Global logistics and energy costs are challenging. However, our hedging programs, contract terms and end market price increases are, to a very large extent, covering these additional costs.

We continue to focus on safety, operational improvement, risk management and delivering our strategic investments on time and on budget with the overriding operational and commercial objective to be the low-cost producer and sell at indexed market prices. Our spodumene production in Brazil continues to operate at full capacity and at costs below our initial estimates at the time of our investment decision.

We delivered more than 91,000 tonnes of spodumene in 2021. Market index prices moved up in the fourth quarter and continued to do so in 2022 even more sharply.

As we have stated, our spodumene production is fully sold at market index prices, with a 3- to 4-month revenue recognition time lag due to contract and delivery terms. We are working to expedite the expansion of our annual capacity from 90,000 tonnes to 130,000 tonnes of spodumene.

Our ferrovanadium spent catalyst processing business continues to perform very well and is the global environmental leader in this space. Ferrovanadium prices weakened in the fourth quarter due to year-end inventory positioning.

However, index prices have increased by more than 25% since year-end and are presently $18.98 per pound in the United States. Our Zanesville facility is progressing as planned and commissioning has begun.

The plant is forecast to achieve full run rate capacity in the fourth quarter of this year. The impact of the coronavirus was most significantly felt in the end markets for AMG Critical Materials Technologies.

However, the aerospace market continues to improve, illustrated by Airbus' recently projected 20% increase in deliveries in 2022. AMG Engineering's diversified portfolio enabled the business unit to sign $84.9 million in new orders in the quarter, 1.6x book to bill.

The chrome metal and titanium aluminide businesses are also benefiting from improvements in aerospace. And in the case of chrome, its diversified end market position.

The 3 business units in AMG Critical Minerals continued to perform consistently well, although year-end seasonality and energy costs had a minor impact on our fourth quarter results. AMG anticipates the company will increase overall staffing by approximately 5% to 10% in 2022 from 3,300 employees at year-end, with the full ramp-up of the vanadium expansion in Ohio and continued progress in our lithium investments in Brazil and Germany.

All of our businesses continue to operate with the highest focus on safety and without interruption from COVID. And in 2021, continued to deliver safety performance far superior to our relevant peer groups.

I would now like to pass the floor to Dr. Schimmelbusch, AMG's Chief Executive Officer.

Thank you, Eric. In October 2021, we announced that we expected to exceed $150 million for full EBITDA for full year 2022.

In December '21, we increased EBITDA guidance for full year 2022 to a range between $150 million and $200 million. At the beginning of February, AMG increased its EBITDA guidance for full year 2022 to $225 million or higher, based on significantly improved market conditions in this year.

We today reaffirm this guidance. At our coming Annual General Meeting, we will comment on the update of our 5-year EBITDA guidance.

In addition to our comments on future profitability, let me comment on our environmental ambitions. On our version of E in ESG, we are pleased with our ECORP segment in 2021, enabling 79 million tonnes of CO2 reductions, 40% more than the 56.6 million tonnes of enabled CO2 reductions in 2020.

Our CO2 reduction commitments, our long-term direct Scope 1 and Scope 2 CO2 reduction targets are twofold. One, AMG commits to reduce its direct CO2 emissions 20% by 2030 from the baseline of 2019, that's before COVID, adjusted for the startup of our Zanesville facility.

This is a total reduction of 125,000 tonnes of CO2. Two, AMG committed to increase its enabled CO2 reduction by 10% per year on 2021 levels through 2030.

Substantive contribution will come from what we refer to as circular economy projects. Operator, we would like now to open the line for questions.

I have 3, if I may. The first one is on spodumene pricing.

What visibility do you currently have with regard to spodumene pricing? Can I try and ask what kind of pricing scenario is currently baked into the guidance or the lower end of the guidance being the $225 million.

And secondly is on the German hydroxide conversion facility, to what extent to the current dynamics in the lithium market alter the return expectations of this facility? In other words, if you would do a return assessment on current pricing, would it substantially differ from your base case scenario that you are forecasting or that you have been forecasting so far?

And then third question, maybe a bit premature, but so far, do you see an impact of the current geopolitical situation on any of your metals? I'm thinking of, for example, vanadium.

Russia has a sizable position in the supply chain. That's it for now.

On spodumene pricing, I want to refer to our traditional policy not to comment on future commodity prices. But the visibility question element in your question, we, of course, have delayed price implementation in our content.

So we look forward pretty safely 3 months. From then on, we have to make assumptions.

So that's a general statement. It's not exactly right because those contracts are different and not identical, but that's a general statement.

The profitability of our hydroxide project -- for our hydroxide project is significantly positively enhanced by the recent price developments. And of course, recent price developments have to be continuing or stabilizing on that level in order to realize those positive calculations.

As regard to vanadium or as regard to Russia in general, Russia is a very large exporter of raw materials, metal containing raw materials and Russia-related areas to -- so vanadium, of course, is, I would say, estimated 15% of the world production is originating from Russia. So vanadium is a big item.

Titanium is a very big item. Nickel, this is same thing, but we don't see any interruption here.

I'm not a sanction expert, but sanctions rarely touch physical streams.

If I may follow up on the first question. Can I assume that you have applied your typical conservatism to the $225 million?

For example, for the second half?

We, as an organization and in principle, never deviate from conservative principles.

So I think maybe just to raise Stijn's question in a different way. So your prior guidance of $175 million at the time was assuming a -- I think, as you disclosed lithium price -- spodumene price of $1,600 per tonne.

So I mean, do you think now that you would be conservatively assuming, let's say, somewhat higher than that, but not in line with the current spot prices? Then I think the second question I had was, given where spodumene prices are now, are you seeing any elements of cost inflation?

And also, will you invest a lot of -- or any working capital this year, given rising prices and given the fact that you released working capital last year?

When you mentioned $175 million, let me just simply make the correction and say $175 million to $200 million was the guidance at that time. So it was a range.

And now we replaced that range, but a number puts an addendum of or higher. Now our formula pricing, our contractual pricings have several elements, which include a minimum price and improved index elements.

And it's a rather complicated calculation and competitive. How do we do that?

So when you look at the spot prices of carbonate or hydroxide, for example, which are, of course, very divergent. And they worked themselves, go to our formula and end up with the spodumene price.

So we will benefit from, to a certain extent, of course, from those pricing increases. As regard to the working capital, I would refer to Jackson, please.

Thank you, Heinz. And I'd also like to make the point, we've never tied guidance to a lithium price, so I'm not sure where you've got that information from.

On working capital, we will have investments in working capital associated with the start-up of our Cambridge 2 facility, so in vanadium. But we will not have significant working capital investments because we're already shipping and producing, et cetera, in our spodumene, other than price increases, of course.

But we'd expect to catch up on that over the year. So the only significant working capital investment really is in vanadium.

My first question is on the second vanadium recycling facility. You state that you plan to achieve full production run rate in Q4.

Can you provide some more color on how this ramp-up will look throughout the year? And can you help us maybe a bit like around the contribution of that second facility already to your results this year?

Will that be a loss also given that you are hiring people? Or how should we think about that?

Eric, do you want to take this?

Sure. Well, I think we just simply said that we will be capable of producing at full capacity by the end of the first quarter.

We are in the commissioning phase right now, so it's difficult to give you specific numbers. But I don't believe we will have any losses.

With regard to the start-up, we've completed a significant amount of the hiring. So we look for it to -- we look for Zanesville to be a very significant contributor primarily in 2023, but near the end as we achieve close to full capacity in the fourth quarter.

And you might also remember that the plant has 2 complexes. The one is the roasting facility and then the melting facility.

And the roasting facility will be commissioned first. Subsequently, the melting facility.

So the whole commissioning is a sequential procedure, as usual, in such situations.

Okay. And then on the Critical Minerals segment, are you booked substantially higher revenue in that segment, but your gross profit basically is flat year-on-year in Q4.

And you state that, that relates to higher shipping and energy prices. Given that energy prices have only moved up in 2022 and I think I've not checked for shipping costs, but I assume that they remain quite high, do you expect this segment to maybe report results flattish or maybe do you expect a decline in gross profit in 2022?

Jackson?

Yes. So Henk, I'd point you to our revenue and EBITDA graph that we have on Page 5, which shows that despite the drop in gross profit versus Q4 of last year, it's flat versus Q3.

So we think this is roughly the operating environment that we're going to be in. We're passing through increased pricing on shipping and energy.

But our expectation is basically flattish quarter-by-quarter, around $7 million.

Okay, clear. My third question is on your lithium.

Yes, you stated again that you plan to -- at least, you are looking to potentially sell part of your lithium operations either to a third party or via an IPO. And in your comments, you stated that this might -- under all conditions, it should benefit shareholder value creation.

Could you maybe provide some more color on how such a sale of a minority stake could or potentially could create shareholder value creation?

We have our 5-year plan, which is very ambitious. But given our cash flow generation is well financed without any outside infusion, that's partly true for increasing cash flow contributions.

Now as we have stated, we have modules to go through, to build in the hydroxide area given the demand in Europe for hydroxide. And there are 5.

And we are prospecting the first, and that is 20,000 tonnes each. And therefore, the execution of that exercise is very much dependent on resource availability.

And consequently, we are involved in various stages of negotiations and evaluation, exploration activities in the area of lithium resources. And these projects require partly substantial investments.

And as we add those investments to our otherwise balanced 5-year plan, it is logical to think about how to finance those. We have reduced our debt level, and we are not intending to increase our debt level strategically.

And therefore, the question is, is there a very attractive expansion possibilities defined how you finance them, and logically, one alternative or the main alternative is to dilute on the lithium side and invest that money into the lithium side. And that investment -- that strategy can only be done or should only be done if the value created by those investments out on -- out-dilute the dilution or overcompensate the dilution which you incur when you sell a portion.

And that is the complicated evaluation which we are in. We approach this now on a very focused basis because we want to have this question behind us rather quickly in order to focus on execution and not be tied up into diligence and alternative organizational models.

That's why we said we would announce that relatively quickly. Presently, we are discussing this with several financial institutions.

Okay. So just so I understand it, 100% understand it is, so you -- I mean, you raised capital last year.

And now you've refinanced the debt. And you stated in your press release that you, with your current financial -- with your current liquidity, you can finance all the approved extension projects.

So the way we should think about it is that when you -- if you decide to, let's say, sell part of your Lithium business, it would be to pursue or to finance, let's say, new lithium projects and possibly related to more, let's say, capacity on the supply side or, yes, on the factory input side?

Exactly.

Yes. Two follow-ups, if I may.

First one is maybe to give us a little bit more color on Bitterfeld and the nature of the price exposure that, that operation will have. Will it be exposed to sort of the naked lithium price or will the operation be sort of hedged to the margin between technical and battery-grade lithium?

And my final question is more sort of philosophically and partly catches up on Henk's question on the partial sale of a lithium stake. You will agree with me that AMG's current valuation is not in line with lithium peers who are often more junior.

And this, in my view, might be partially linked to the complexity of the group. When you mentioned a partial sale of a lithium stake, is it not an option to monetize other business units, for example, in Critical Minerals, which, yes, by the way, could also enhance our CO2 footprint?

These are my 2 follow-ups.

Yes. The difference between storage materials and energy storage or electricity storage or battery materials and other materials is that there's a tendency to value those storage materials high, highly -- relatively high.

The reason for that is obvious. It is, one, as regard to lithium, the energy transition in the car industry, but also beyond the car industry, in the energy storage area, in the stationary field, which is a huge area.

And that relates to vanadium. And that ultimately also relates to vanadium and lithium in combination.

And so here, you have a price discrepancy because there is a huge continuing sustainable demand shift because many, in my view, many environmental policies have forgotten above storage in the stationary area. So we -- so the multiples, if you want to shortcut this, the multiples applicable in lithium, for example, are much higher than the market is applicable to certain other critical materials areas.

And that is, of course, an interesting observation as regards to allocation of capital. The sale of other portfolio elements is not on our strategic priority because they are very balanced producers of cash flow, and it is rather difficult to think that we would sell excellent low-cost industry-leading niche producers at suddenly at a very high price, which would then be justified by cash flow, which would outperform the cash flow you get from those portfolio members.

So it will be, in a way, financially silly. So that is not on our priority list.

Should there be an extraordinary opportunity, we never say never. But that's not a very logical route.

In the lithium area, of course, there's a very high price scenario happening, as you have stated. And therefore, it is a legitimate question if you have attractive acquisition opportunities to raise money in the lithium space in order to increase the lithium space and enjoy the high-priced lithium area by additional lithium assets.

So that's what we are doing. That's what we are studying.

And on the nature of the German exposure to lithium prices or to the margin?

I forgot that, I'm sorry. Our input and output contractual arrangements, we have a high priority to match those and to, as far as possible, have a conversion philosophy where you stabilize converters by the contractual arrangements being linked to certain index elements so that you reduce your long or short exposure.

Firstly, I'd like to briefly back to AMG Lithium. During the CMD, you mentioned that there were 3 strategic alternatives.

During this call, in the presentation, I only hear 2. So does that imply that maintaining 100% ownership is off the table?

And then attached to that, you mentioned that you would like to make a decision before the AGM. Is that still what we should expect?

Yes, yes. We want to be able, at the AGM, to clearly indicate where this journey -- where the destination is and alternatives are not off the table.

Okay. Then secondly, in the press release, you also mentioned that you and Shell have opportunities globally.

According to me, you are still outstanding. Could you inform us about the status?

Very active.

And that means?

The project which we are pursuing are high-intensity projects, which will lead to focus it time. And we have -- there's a lot of activity ongoing in terms of preliminary feasibility studies, engineering work levels, negotiations because the market for spent catalysts and the interest to link fresh catalysts to spent catalysts as the closed loop as a circular concept, it's the future of this refining industry.

Essentially, the refining industry is centered around catalysts because catalysts are a part of a refinery. So if the fresh catalysts appear in the refinery 8 months, 18 months later, where we ever expected.

But 18 months later, you have spent catalysts. Spent catalysts typically act as waste.

So it's logical to have a loop. The idea that you take the materials which you have in the spent catalysts such as vanadium, molybdenum and nickel back -- molybdenum and nickel back, for example, to take back into the production of fresh catalysts by refining those products accordingly and then be making them able to be reused.

Now vanadium, that's different because vanadium originates from the oil, not from the catalysts. But vanadium, again, is an upcoming key material for the future of the renewable energy because the stationary battery alternative, the vanadium battery as a stationary battery route is a very competitive route.

And it enables them this renewable energy, in particular, the solar energy to double its capacity utilization. Because the -- one of the major limiting factors of a low capacity utilization is, of course, the intermittency because the sun is not shining at night.

But the battery can bridge that. And therefore -- and it's a long story, but the pump hydro, better storage, the traditional storage alternatives, namely the pump hydro power plants out of various reasons -- out of -- are not anymore very competitive.

So therefore, the battery-based storage is a big future growth area. And nobody doubts when you look at statistics and predictions and so on that the vanadium battery plays a key role here.

So this other words, that is an interesting observation that the oil industry, by the very nature of vanadium appearing in oil in commercial quantities, by recovering that oil and producing better than materials helps the renewable energy to be more efficient. And that is a very big trend.

And therefore, we are very active negotiating such structures with the refining industry.

So it's a matter of when these final investment decisions will be signed. But is it because you have announced the initial talks for quite a while.

Is it something we should expect in the next 6 months that you will sign one of those contracts for an FID?

My personal judgment is yes.

Two from me. The first one is, can you comment on your hedging policies and how much of your energy costs are actually hedged in 2022?

And the second one is on aerospace. I think that's probably a topic we haven't spoken a lot today even though the technology division result was actually quite good, but also the intake of new orders.

Can you comment on the outlook for FY '22? And if the order intake for Q4 was more of a one-off rather than continuation.

There was the -- the first question, if you -- I didn't hear it quite well. Can you -- what was the first question?

Yes. So on your hedging policy, so how much of your energy costs are actually hedged today?

Well, our energy, our electricity costs in Germany are hedged in '22.

But at group level?

But the major consumers of electricity we have bought the electricity forward. Aerospace, we are very happy to announce and we were also happy to announce that we are hedged.

We are actually happy to announce to answer both of those questions. We are happy that we are hedged because of the obvious movements in the electricity market.

We are also happy that -- as Eric has touched on. The capacity utilization of our aerospace deliveries are creeping up rather satisfactory.

And during '22, for example, the titanium aluminide production, which is our most innovative and very competitive material in the LEAP engine and other engine programs is fully utilized very soon. We are back in full production soon.

And the other aerospace areas enjoy activities that, for example, the coating or client. It is generally known that we are a world market leader in coating turbine blades in order to enable the turbine blades to operate on the higher temperatures and therefore reduce CO2 emissions materially.

And that trend is ongoing. If I may say that the long-term trend in the operating temperature of the engines advancing going higher since the time when the operating average below 1,000 degrees Celsius, but when you look into the future, it might hit 2,000 degree Celsius.

And the difference between those developments is material signs. And the material signs relates to the basic materials such as, for example, high-performance deal being replaced by ceramics.

And then whatever is the basis material has to be coated. And that is a big area, and we are in deep in that area, one of our key areas in aerospace.

And that's why our areas are so massively CO2 relevant. So aerospace is in good shape.

This concludes our fourth quarter 2021 earnings call. Thanks, everyone, for joining and for your questions.

Thank you very much.