KGHM Polska Miedz SA
WSE:KGH
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KGHM Polska Miedz SA
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Good morning, good afternoon. Welcome to our online conference. We will discuss the results of the KGHM for the third quarter and for the first 9 months of 2021. Apologies for the delay. Unfortunately, due to technical constraints, we have to make sure that everything runs seamlessly and we deliver the best quality transmission that's why it took us a little bit longer.
We will start with a quick comment on the results. They will be commented on by Mr. Marcin Chludzinski, the President of KGHM; Mr. Adam Bugajczuk, Vice President for Development; Mr. Pawel Gruza, Vice President for Foreign Assets; and Mr. Andrzej Kensbok, Vice President for Finance.
As I said, we would very much like to be here with you face-to-face. But for concern for the health of ourselves and our people, we had to reduce the number of live meetings and choose online events instead. Nevertheless, after the presentation, during the commentary, we will also move on to a Q&A session.
[Operator Instructions] All the questions that have been or will have been submitted will be answered on our website as soon as possible. Also, the transcript of this conference will be available as well. I hope that we will manage to answer as many questions as possible today.
So now let me give the floor to the CEO.
Hello, everyone. Welcome from Lubin on this charming, charming autumn afternoon or actually mid-day. But let's not talk about weather, let's talk about climate, which is somehow related.
Why climate? This week, we have adopted KGHM climate policy. That's a sign of the times. It's somehow related to EU regulations, but it's also a matter of market requirements. We want to be transparent. We want our production to be transparent in terms of our climate agenda. And we want to be in line with the European climate agenda. That's why we adopted this document that defines what KGHM should do in response to climate change and what is the footprint of the company, what is the impact of KGHM on the climate, what we want to do, what initiatives we want to take to reduce that footprint and to change the impact. So that's the essence of the newly adopted document.
There is one quite important goal. In 2050, KGHM is to be climate neutral. There will be two intermediate goals. In 2030, we want to reduce our emissions by 30% versus 2020. And we are talking about 2 kinds of emissions. We have range 2 emissions, that's emissions related to electricity production. So where CO2 emissions are related to power generation, we want to run a number of initiatives to reduce those emissions.
And the other area is the so-called range 1, which is our impact -- sorry, our production, which, of course, generates CO2, too. So we want to become CO2-neutral by 2050.
The agenda includes such measures as buying green energy or deployment of our own renewable energy sources. We want to be a more responsible consumer of energy. We want to use less energy. And we want to use as -- want to maximize the share of green energy that we use. In 2050, we also want to become independent in terms of energy supplies. When it comes to our production cycle, there are a number of initiatives such as at the mixture of hydrogen to our smelting processes. We want to use electromobility in our mining operations. We want to use CCU and CCUS, so carbon capture and storage technologies, so the technologies that are already in place and can be deployed. There are also some technologies that are still in the development stage. And we hope they will be developed and they will become viable in a few years. So this is what we want to do. These are the challenges of the European regulations and requirements of our clients.
So in a nutshell, talking about the here and now, so 9 months into 2021, there are a number of key facts and figures. So the EBITDA year-on-year is PLN 7.73 billion, which is greater than last year, which is a reflection of greater revenues. We sell at better prices, so our revenues grew by 31%. That's PLN 21 billion, over PLN 21 billion. And the higher prices, the better prices are not the only factor that has contributed to this improvement. We also have a 10% greater production of copper. We have been following our plans, our strategy. With greater production, we are immune to lower prices, but we are very happy to have the tailwind. We have greater prices. In 2019 or 2018, the prices were very low. In April 2019, it was $4,600 per tonne. And we still managed -- we reduced our cost. We increased our production. But these figures are the most important findings.
Now I will give the floor to Andrzej Kensbok, who will tell you more about the finance. The production Vice President is not with us today because he has some health concerns, so we won't be talking about production in detail.
Thank you very much. Good day to all of you. Let me start with a quick summary of our production output for metals. The good news is that [indiscernible]has grown by 10.1%. Three quarters of -- compared to the same period of 2020, all 3 segments of our operations have made a contribution. So that's domestic production from 1,412 to 440,000 tonnes; KGHM International, 49,000 tonnes to 55,000 tonnes; and Sierra Gorda from 60,000 to 78,000 tonnes.
I will give you the details in a second. But before I do that, let me mention silver production, which is very important to us. Last year, the production was very high. We didn't actually assume such a great performance this year. Looking at the geological parameters and the richness of the ore, but the results have been very good, both in terms of mining output and the content of silver in the ore and also in terms of the recovery performance in smelting operations. So the combined production of the whole group is 1,008 tonnes of silver in the first 3 quarters of 2021. Last year -- when you compare this to last year figures, we can hope that we will solidify our leading position globally. We are the second largest silver producer in the world. We are very happy about that. We want to maintain this top 2 position.
When it comes to precious metals, we have a slight decline, which is most of all related to the quality of ore in the U.S. and Canada. Moly production has not changed. Moly content in the ore in Chile remains stable.
Now let's take a look at the KGHM Poland. The other operations will be discussed by Mr. Gruza. Here, we look at mining or extraction. In terms of tonnage, we have increased our output. Also in terms of processing or processing operations, the output is has been quite stable over last year. Copper content in the ore is slightly lower. This is related to the fact that we keep continuing our prospecting operations. And the copper content cannot be predicted to a very fine degree of detail to 3 decimal places, but we we are pretty much satisfied with what we get. We are -- we keep finding new ore deposits, and we keep mining those areas that are most economically viable.
Now smelting operations, there are 2 important elements, that's maintaining -- maintenance of smelting operations and refinery operations. At last year's level, all the figures are presented in the presentation. Quite importantly, we have more copper production from third-party ores. This is -- or third-party sources because we have improved the efficiency of scrap copper processing. And this is also the direction we want to go for in the future, also in the context of our climate policy, and we want to keep improving our operations in this area. And the main growth driver in silver year-on-year is KGHM Polska Miedz. Here, we have a growth from 975 tonnes, up to 983 tonnes in the first 3 quarters of 2021.
Now let's take a look at Sierra Gorda International. So I'll give the floor to Mr. Gruza.
Thank you, Andrzej. Ladies and gentlemen, we are happy to present these results. Thanks to favorable macroeconomic situation, we focused on maximizing production in all our international assets. Also, geology has been favorable and has been a positive contributor to our results. As a result, payable copper in Sierra Gorda has grown by nearly 1/3. Also, silver has gone up. Obviously, we have been trying to to optimize our processing operations and the costs that we pay in Sierra Gorda.
Now let's move on to KGHM International. Here, we also have a 13% growth in payable copper production. Here, the main driver is the efficiency of our mining operations in Robinson. In Robinson's, we've also been trying to extend the lifetime of the mine so we want to keep mining in that area for the years to come. And production results are very good when it comes to silver, some mines produce less. But because of their relative share, their contribution to the overall international results is negligible. Thank you very much.
So let's move on to the financial results of the group. The first piece of news is the revenues. The revenues have grown by 31% year-on-year, up to PLN 21.735 billion. And this improvement is, first of all, related to changing metal prices. But there are a number of other factors that are less favorable, that's a slight decrease in sales, first of all, in KGHM International, and that's related to certain logistic problems in U.S. ports. Also, in dry docks, there have been some delays, and transportation resources are less available than they used to. But this, we believe, is temporary. We also had foreign exchange differences between the Polish zloty and the dollar. It was PLN [ 3.94 ], the average last year. Now it's PLN [ 3.87 ]. Of course, we keep track what's going on, on the zloty and the euro and the dollar. We are looking closely at what's going on in foreign exchange.
Another negative factor was the adjustment of revenues on derivatives. In the first 3 quarter, the adjustment was in the area of PLN 1.1 billion. But there is a slight difference because of the first 3 quarters of the last year. So the year-on-year difference is PLN 1.4 billion. And the positive change, the PLN 200 million that greatest sale of materials other than silver and copper. The quiet leader here is the sulfuric acid that we sell more of that acid and at a higher price than last year. But there's also a lead, rhenium, selenium, a number of other derivative products that sell greater volumes and or at greater prices than in the first 3 quarters of 2020.
Now let's move on to unit costs. As you can see in the slide, the unit cost is significantly higher. But when you look at the group level, if you take into account the corporate tax, then the C1 cost would actually be lower in the first 3 -- first 9 months of 2021 than in 2020. Because what we all know what the corporate tax is, we know the formula and you just can't beat the formula. It is rigid. There is no work around. But when you look at KGHM Polish copper, then the growth of the C1 cost net of the copper tax is in the range of $0.03 per pound. And this small growth is mostly related to growing power prices, CO2 emission rights and the cost of diesel. So these were the main cost drivers.
In KGHM International, well, the C1 cost is comparable. We have a significant growth in Sierra Gorda. We have greater volumes and higher prices of additional metals that actually bring our C1 cost down. When it comes to our operating results, first of all, our EBITDA is significantly higher, 75% greater year-on-year of actually 9 months over 9 months. And here you can -- this is an aggregate for all the segments, so KGHM Polish Copper, International and Sierra Gorda. And the main driver here is higher metal prices and that's higher sales prices.
It's not in this slide, but let me mention one more thing. When you look quarter-by-quarter, you will see that our quarter-by-quarter performance has been very stable, very constant. And the contribution of each quarter to the aggregate results for the 3 quarters has been pretty much the same. So consistently, we have been building our results, and also the third quarter has made a very good contribution to the results after 9 months.
Now the profit or net result, it's significantly higher, more than 3x higher for the whole group compared with 3 quarters of the previous year. This is mainly linked to the change in metal prices and higher revenues. But what I also mentioned during the previous revenue conference, it was related to the valuation of loans we provided to other entities, including Sierra Gorda and also the measurement of interest accrued as well as contrast between the negative result last year and positive result achieved this year. And joint ventures, PLN 1.9 billion, that's the profit on involvement in joint ventures.
What is also important is higher profit from sales by more than PLN 1 billion from PLN 1.765 billion with higher copper prices, slightly lower silver sales and an increase in services. So we have been watching this, especially the net profit on sales because this is the core of our operations. There's also one thing that I'd like to mention, that is the drop in our result on derivatives. It is related to the measurement of derivatives by PLN [ 67 ] million, but also the lower valuation by PLN [ 150 million ]. So derivatives had the impact by minus PLN 81 million on the net result. Change in CIT, exchange differences that I mentioned previously and the CIT's corporate income tax. So we have higher profits, so the taxes are also high. So the net result in profit remains strong and robust. And with each quarter, we've seen a significant contribution to the overall profit.
But we have to mention that the increase in the cost of energy, those prices accelerated in the last quarter by 17% quarter-to-quarter. That is how energy prices have increased. We have been offsetting these higher energy prices by conservation of energy savings, but it's not possible to offset such an increase in energy prices by reducing the consumption only.
And then now, let me move on to our cash flows. So there are 3 important factors here. So the first one is the allocation of the profit. The second is the change in the working capital, and that was related to us knowingly abandoning the use of some of the factoring contracts. It's PLN 1 billion. We see no need to use factoring in these areas. And this is how we can save on the costs, financing costs of these contracts. The contracts remain valid. They're in full effect as our credit agreements are. We can use them, but we're not using them at the moment because we don't see any reason to do so, and we can save the cost. Then another area is the increase in stock by PLN 1.6 billion compared with the beginning of this year. That is related to 2 factors there: one, planned downtime and repairs. So we're planning to have a downtime of the suspension furnace, which is really a huge project. So we need to prepare our company to have the stock at every stage of the process for the downtime of that important flash bonus. We're also preparing for other repairs, other work we're going to do like the carousel filling machine and other major work we're going to perform. And the other area is the uncertainty surrounding the supply chain. We've seen that over the last couple of months where we were confronted with a serious breakdown in one of our concentrate suppliers, a very important supplier. And you know how unavailable vessels are for transportation. And in order to ensure continuous production of copper, we are keeping our stock at a slightly higher level because we made a commitment in that respect in the sense that we would like to test the possibility of increasing our production volume from 1 year to the other. And in order to do so, we need to optimize all production areas, including the smelting operations, so that we can optimize that process in terms of the selection of the material and in terms of the processes themselves, so that we need to make sure that the smelter plants as well as the Cedynia plant have the resources to optimize production this year and next year.
But looking at stock, we're not only thinking about long -- short-term, 1-year horizon. We're looking forward long term. And we'd like to streamline our production and make it more efficient. That term has not changed at the end of quarter 3. The debt has not changed really. We received cash from KGHM International, as I've mentioned. But we also had a well, a situation which is stable, really, not much changed. The only change was a slightly lower cash position. The net debt increased, but the debt in terms of the banking debt is not changed. So we repaid these borrowings in the second quarter, and this is why we're not mentioning them.
Let me give the floor to Adam Bugajczuk now.
Thank you. Ladies and gentlemen, now let me focus on advancement of development initiatives. Well, as for the projects fulfilled, well, it's not so impressive maybe, but we're doing that on budget and on time. So for example, the southern quarter was finished 6 months ahead of the schedule, which shows that we're coping with the present situation. All of the broken supply chains, unavailable materials and all these minor challenges we're facing in some smaller productions, but we're really trying to resolve the problems as they arise and fulfill our objectives on time.
As for the role of deep Glogów GGP, the role is increasing by 30% year-to-year in all areas of our production, extraction and also the copper content of the head grade. And silver is also becoming more and more important in that area. We have also begun drilling an exploratory borehole for Bytom Odrzanski, our license there. And at the end of the third quarter, we were drilling exploratory boreholes at [ Kulów-Luboszyce ] So well, these are the results of project side.
So the southern quarter that I've mentioned, which is like the jewel in our crown, and this is a very complex operation, well, it's lasted more than 3 years and has been completed successfully. We have set our deposit in the first [indiscernible] and we've really managed to complete that very successfully.
As for the access program, GG-1 has sunk to 1,295 meters. We have no problems there. And commence shaft sinking procedures are underway for GG-2. We have also the central air-conditioning system on the surface. So all our key projects are being delivered on time and on budget.
Now the energy development program, including renewables. So we are showing the work which is underway to increase our renewables potential, energy potential, including renewables. We continue our work to increase the share of renewables, and we have been doing that very consistently.
As for the share of renewables in our own energy production, that's what's our CEO Marcin said about our climate policy. All of these are tools to implement our climate policy to bring us closer to our neutrality target ambitious parameters so that in 2030, half of our energy consumption is met by our own energy sources, including renewables in 2030, what Sierra Gorda will be supplied 100% from renewables. So that's the situation.
Ladies and gentlemen, we will now have a Q&A session. We would like to thank you for the positive comments and feedback we've received from you and our climate policy. Before I give the floor to Janusz Krystosiak, let me read one question about the climate policy and not the results. The question we received is about Page 10 in the presentation, which says that the carbonization program for the group will be adopted. Will we hear about the details of that publicly? It will be presented the program, I mean, in 2022. And then according to our information and disclosures, policy information, which is significant for investors will be made public.
Well, we have also a presentation which is broad in scope, a detailed presentation, which is a discussion of our climate policy, so we can also read that. It's important not to make a mistake here. So the question was about the decarbonization of the group. So in our document, we assumed how much we're emitting in our smelting and mining operations. We know what to do to achieve the right targets in 2030 and also to meet the 0 emissions target and also to take a comprehensive approach and tackle all our aspects. And we would like to have a big picture of the whole group, including our companies and subsidiaries and also to implement the right measures to achieve the 0 emissions target in our subsidiaries. We know what's happening in the parent company, and 2022 will be about the subsidiaries in our group of companies. Thank you.
Janusz Krystosiak, Head of Investor Relations, will head the Q&A.
Thank you. Let me begin with a number of questions, which will be about our foreign operations, and these will be directed first to Pawel Gruza. Your investment expenditure on the Victoria project have been growing noticeably in the last quarter. What is the scale of spending in 2022 and onwards? Well, we're not projecting that we are in the middle of our budgeting work and some of the things have not been finished. So I don't think we can tell you everything right now.
That's clear. Okay. Thank you for that question. So the CapEx on Victoria has a different nature. There are different kinds of CapEx. Some of the spending is to meet the local regulatory requirements in Canada. And the other expenditures are to ensure for our KGHM that we have the flexibility in our Victoria project contracts, and that is why we have embarked on investment projects. This year, we're talking about 2022, we're preparing the budget session. So it's really hard to tell at this point in time. We're looking at several options -- and well, I mean the options for the Victoria budget. And these decisions will be made at the Board level. And that is why I'm not in a position to comment on that question in precise terms at this moment.
And a question from [indiscernible] Could we ask you for an update on the information concerning the extraction mining tax in Chile?
Well, there's been no significant change. So far, we're waiting for the situation to develop in Chile. Now we have been watching these developments. As I've told you, well, Sierra Gorda, there are some tax and legal security measures to ensure that the effect of these changes, if they happen, will be deferred in time for Sierra Gorda.
Thank you. And 2 more questions. our foreign operations and the market. So what are the order levels from Chinese customers? And what are the expectations for demand from China in 2022? Do they feel a slowdown on how the housing market? And what about green energy development in China? And are they foreseeing any constraints in the use of energy?
Well, that's a good question. Well, we're in touch with the Chinese market by being in touch with the company which imports anodes, copper anodes to China directly. And we've not seen any significant slowdown in Chinese economy, judging by that trading relationship. The other area is the concentrate market, but we've not seen any problems either. And we see the demand for that material from the smelters, and we've not seen any significant slowdown there.
Is the increase of premium and copper related to higher demand or maybe it's to offset the energy prices, which have increased?
Are you talking about the premium in China?
Yes, I think so.
I think there are a number of reasons for this. generally, though there is a need to supply high quality concentrate for smelters, and that is what is driving the premium and the price is up. I don't know which premium of the questions about.
Okay. We will ask about that and provide the answer to the question on our website when we clarify with the [indiscernible]. And a question from [indiscernible] newspaper. The question is about the period for the decision of the preemptive right to buy a block in shares in Sierra Gorda.
Well, the period for the Board -- well, the Board has time until end of November to announce that decision. So I would not expect any comment from the Board at this moment. All the information will be provided on the decision of the Board in accordance with all the information procedures. Yes, we've not come to the decision yet.
The energy prices, energy from gas and the grid for [indiscernible] are they hedged for next year? And what is the scale of the cost with the same production volume for KGHM Poland?
Most of our demand for gas and electricity has been fixed for next year. I wouldn't actually say hedged. We don't use hedging or derivative instruments on energy. We simply use forward prices. So that's in the bag, so to speak. Obviously, we never buy 100% in advance. We leave some space for spot deals because of our balancing needs and because of bargains on [indiscernible]. And what was the second part of the question. So what will be the scale of the cost with the production scale is the same. Electricity production from our own gas resources, well, then here, the gas price is lower than when we buy energy from the grid. That's why we maximize our own energy production assets. And we also keep running a projection of energy prices, both from third-party providers. And from our own assets. And here, there are no clear answers because gas prices may change as they did last month. And when they do electricity production from coal was lower than from gas despite the CO2 emission costs. But the situation is volatile. It changes rapidly. But we keep analyzing this, and we decide as and when necessary.
Okay. Thank you very much. We spoke about hedging. Could I ask you to comment on another question. And that's the question about what is the volume of copper production that are secured with contracts for 2022 and 2023, and what is the average price?
Well, we do hedging transactions in accordance with our hedging policy. And this is work in progress. We keep signing hedging transactions in the third quarter. Most of those transactions were adjustment transactions. We took advantage of high prices, so we increased the bottom line of transactions to secure higher prices for silver. We opened the top at the top line, waiting for possible increases on silver prices, which have been expected for a few years and have materialized to some extent. The next year is still being analyzed. We've made some range transactions. The average level of hedging of our volume is in the area of 35%. But don't take my word for it. Maybe we'll provide a written answer.
Okay. Now question from Pawel Puchalski from Santander. When can we expect a refreshment of KGHM's strategy?
We've actually done that at the Economic Forum in Karpacz. We presented new business initiatives or energy policy initiatives. Those that were either impossible in 2018 or were not identified in 2018. So the strategy update is an ongoing process. So whenever any new circumstances arise. We do that. We also have a certain perspective that we follow and an extension of the strategic perspective is also possible. Some processes -- some projects take 10 years or more. And they are -- that's a living thing, and the process is always ongoing.
Thank you very much. A question from [indiscernible] In the context of Belarus, if Belarus decides to suspend gas supplies, will this affect KGHM? Do you have any other other goods that you import from Belarus?
Well, this is a difficult situation from the perspective of state security, but it doesn't affect us. The gas that we use comes from deposits that are present locally. So our gas supplies are different than the country average, so to speak, Of course, the volume of those deliveries is very high, but there are no key volumes that would be imported from Belarus, whether it's gas or anything else.
Thank you very much Okay. Let me go back to Mr. Gruza, a question from [ Santander ]. How would you explain the excellent results of KGHM International in the third quarter?
Well, let me say this again, in the beginning of the COVID crisis, we managed to renegotiate a number of cost contracts. We optimized many investments, and this reduced our cost. On the other hand, we maintained or sometimes will even improve our production. So when you combine these 2 factors with one more factor, and that is the macroeconomic climate and metal prices. So when you do the math, you will get the results that you can see on KGHM International and Sierra Gorda. And until this favorable macronomic situation continues, we will be enjoying the benefits of it. 2021 has been very favorable in terms of geology, both for international and for Sierra Gorda. Next year, there will be more challenges related to tripping in Robinson. We will have to remove a lot of overburden to get access to new [ ore ] deposits, but it seems that our operations have been optimized in terms of our deposit management policy.
Thank you very much. Apologies, I'm trying to eliminate duplicate questions. Here comes another from [indiscernible]. What wage increases and bonus increases can be expected next year? What are the demands of trade unions as of now?
Well, nothing extraordinary has been happening in this regard and I think in addition to our collective bargaining. So adjust the wages to the average industrial wages coefficient. We don't know the coefficient for the next year because it's published after the end of the year. So we don't actually try to project it. But year after year, we increased the wages by what is required in collective bargaining. And we will be able to calculate that increase when it's published by the Statistical Office of Poland.
And what will be the CapEx related to the climate policy other than the SMR project?
So another budget question, isn't it? Some of those CapEx is are already included in our budget because these are the things that have been going on regardless of our climate policy. For instance, in 2018, we assumed that 50% of our energy sources will be renewable. There are some projects that need to be counted or calculated. Some of them are experimental such as carbon capture and storage. So only after we investigate these technologies, indeed, they will be able to calculate the related cost. So we know some of the cost, and they are included in our annual CapEx budgets. Other costs, especially those that we're looking at in the context of 2050, still need to go through the R&D phase. Then we need to select the practical solution, and only then we can calculate the related costs.
Thank you very much.
Jakub Szkopek, Erste Group has a question to Mr. Bugajczuk. Could you give us some details about the suspension furnace renovation in Glogów 1, Glogów 2? What is the period? What is the expected downtime of the furnace?
That's about Glogów 2 smelting plant, and we have been discussing about how to optimize the downtime. It will be 70-something days. We don't know how much exactly.
Okay. Another question from Jakub Szkopek. Have you've seen any problems in terms of supplies of rare metals in the context of limited supplies from China?
Well, as I mentioned, when I spoke about our investments, we do have some minor problems, but we've been in the marketplace for 60 years. And we have a very good understanding of the marketplace and we are pretty much immune to those minor problems and everything has been going on as planned.
Thank you. A few more questions from [indiscernible]. Actually 2 of them have been answered, and they were about the transformation costs and the expected copper price levels. We don't do expectations or projections. We also don't make any projections with regards to the supply and demand situation. So I think we can skip that. And Monika Borkowska also asks the following questions, the following question, what is the 2022 perspective when you look at growing energy prices? And maybe let's merge this question with another one. What other important challenges other than energy prices KGHM will have to face? So the 2022 perspective in the context of growing energy prices and what other major challenges will have to be faced by the company.
Well, we've been discussing energy at length. We know that gas prices and diesel prices are going up. We know what the reason for higher prices is that's geopolitical situation and regulatory framework. So that's essentially beyond our control. What we control is adherence to our long-term energy transformation strategy and also our climate policy. So we do that year after year, month after month, and we want to stick to that. We want to increase our energy production, our energy generation assets. We want to optimize the price of energy we purchase from third-party suppliers. And we also reduce energy consumption whenever possible. Well, 2022, well, it's actually hard to say what it's going to look like. The world is changing at a very rapid pace, and that pace is only increasing. So if you want to be a responsible manager, you can't actually make predictions for the next year. Well, maybe the prices will go up. Maybe they will go down. That's anybody's guess. But we can respond to any changes. We can increase production. We can keep our cost under control. And that's how we deliver the financial results, which, as you can see, it's still pretty much okay despite the growing energy prices. And the other question was? The other part of the question?
I guess you actually answered it. That was perspectives and challenges. Okay. Thank you very much. There is a question from Robert [indiscernible] Securities. But actually, we answered that question because it's a question about the cost of energy transformation in the context of SMRs. That's Robert's question.
So let me answer it actually. We will keep reporting the next steps. So the agreement with new scale on SMRs, actually, it's a letter of intent, has been signed. And it defines a time line in our obligations. We will report this as and when required and cost aspects have been mentioned when we spoke about energy transformation.
Now let me quickly skim through the questions if we have any other questions. It seems that we do not. Actually, there are more questions, but they're about the things we spoke about. So that's it for me. So thank you very much.
Thank you. Feel free to keep submitting your questions to ir@kghm.com. All the questions and all the answers will be submitted at our website as soon as possible. Now let me give the floor to Mr. Chludzinski for a quick summary.
I believe that today presentation has shown you the direction in which we have been going in terms of our financial performance and the challenges. We have the answers to these challenges, and we know how to cope with them. It's not possible to eliminate some of them in months' time or over a year. Some of them are required to act consistently over 10 years. This is the project of small nuclear reactors. All these challenges we are aware of have been strategically. And noticed, 2050, 0 emissions in climate policies, we assume that we can achieve that by 2050, and we see the possibilities for continued operations. That's very important. So let me thank the Board for the presentation, and thank you for your attention. And we will meet next time when we will be presenting the results for 2021
Okay. So thank you very much. Thanks for your attention, and we will meet next quarter or next time for the presentation of the results. Thank you.