KGHM Polska Miedz SA
WSE:KGH
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KGHM Polska Miedz SA
Earnings Call Analysis
Q3-2023 Analysis
KGHM Polska Miedz SA
The company has successfully increased its production from the Deep Glogow deposit by 35% year-on-year, a significant jump that underlines its growth trajectory. This is complemented by the resolution of a decade-long concession dispute, as an administrative court in Warsaw rejected a complaint by a competitor, clearing any clouds of legal uncertainty over the company's concession areas.
Renewable energy initiatives are taking a front seat as the company ramps up development and acquisitions in this sector. With the successful application for connection conditions of 88 megawatts in photovoltaics and the completion of a major acquisition project, they are making strides in the renewable space, pushing towards a more sustainable and environmentally friendly operational model.
Despite the global commodities market experiencing a slowdown, reflected in the weaker prices and unfavorable exchange rates, the company's group revenues managed to stay stable compared to the previous year. This was attributed to an increased volume of sales and strong production performance, which helped mitigate nearly PLN 2 billion of unfavorable changes. Additionally, efforts to control inflationary pressures on costs reflected positively on their financial statements.
The company showed adept cost management skills in the face of a 14% rise in costs mainly due to salary increases, material costs, and third-party services. This rise was a response to domestic and global inflationary pressures, yet they have worked towards mitigating cost increases through strategic operational choices and robust sales strategies.
Profitability was significantly affected by exchange rates, particularly the weakening of the dollar, which had a mixed impact. On one hand, it lessened the negative effect on profit by reducing debt figures, yet it also led to a net result change of PLN 1,940 million in the consolidated result compared to the previous year. Various one-off events and core operational costs also contributed to this result, highlighting the company's exposure to currency fluctuations as a key factor influencing its financial outcomes.
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Ladies and gentlemen, welcome to Results Conference for the First 9 months of 2023. And the results will be presented by the Management Board: Tomasz Zdzikot, the President of the Board; Mateusz Wodejko, Vice President for Finance; Marek Swider, Vice President for Production; Miroslaw Kidon, Vice President for Foreign Assets and Acting Vice President for Development; and Marek Pietrzak, Vice President for Corporate Affairs. We also have Mr. Janusz Krystosiak, Head of Investor Relations Department, who will hold the Q&A session.And please note that this conference is also available online and questions can be submitted via mail to ir@kghm.com. Answers to all the questions will be posted online in the results center -- the Investors Kit.Now let me give the floor to the Board to discuss the results for the third quarter 2023, President Zdzikot.
Thank you very much. Good morning and good afternoon to all those present here and all those who are with us online. I will try to briefly yet comprehensively present our results for the first 3 quarters of the year.As every quarter, these results are strongly affected by our macroeconomic environment, and this is what I'm going to discuss first. In the third quarter of 2023, the prices -- copper prices were quite volatile, ranging from USD 8,017 to USD 8,720 per tonne. The average level was USD 8,356. So on the one hand, these prices were higher than in the third quarter of 2022. And the same is true for silver and moly, but quite importantly, the results of our capital group are strongly affected by the exchange rate of the dollar. And in the third quarter of 2023, it was 12% lower than last year. Consequently, the average price of copper expressed in the Polish currency was significantly lower than in the third quarter of the year before, as you can see on the bar in the left-hand bottom corner.As a global company, one of the most global Polish companies, we operate and trade globally. Hence, our results are strongly susceptible to macroeconomic performance of the world's greatest economies such as the U.S. or China. As you will see in this slide, in these charts, unfortunately, in the third quarter of the year, GDP in Europe has been rather low. Please note the quarter-on-quarter decline. It's quite big and especially in Germany, the difference is quite clear. When it comes to China, we are often asked about our predictions. We do not publish our predictions. But in this slide, you will note that the inventories historically and in the Shanghai Exchange, they are quite high and there are no growth or decline -- stimuli in the Chinese market.But if you look at the green bar that shows the inventories, it shows us that we have record level of inventories at the end of the reporting -- of this reporting level, it was historically low. So it's difficult to predict the future trends. But clearly, the changes in the dollar exchange rate front, China to use domestic resources and in international trade, China is focusing on concentrates. It's building its smelting -- internal smelting capacity. So we are glad that we signed another 5-year contract with China Metals for the years '24 to '28. As part of this contract, we will be delivering copper cathodes, which is our major commodity, and we are happy that we will stay there for another 5 years. We will be selling over 250,000 tonnes for copper. And the prices of our products will be determined annually. This is something we published today.As we move on, we can see a very interesting chart or table that shows PMI. So the mood in the industry -- it's a soft indicator, but quite important. This is a few years perspective from '21 to now and green becomes red in a nutshell. And right now, we are looking at both Europe and most of the world actually. So there's a lot of red here, which means that we are below the level of 50, which shows that in principle, the mood is not optimistic. And this index shows the opinions, outlooks of managers from some key industries. And Europe is in the middle of that table. Despite all those factors that strongly affect our operations, we are happy to have achieved stable financial and production performance.On the left-hand side on the slide, you can see macroeconomic data. We've discussed this already. So the copper price both in the dollar and in the zloty decreased. Also the dollar to zloty exchange rate has changed unfavorably. But we are very happy about production results in the Polish operation. And President Swider will tell you more about this, but we are very happy to have seen growth in all the categories.These results are for the first 9 months of 2023. So we have more extraction of ore, more copper and concentrate and more metallic silver and gold. Thanks to that, we can stabilize our performance. And despite the challenging macroeconomic environment, we can navigate safely and sticking to our strategy. So despite the left-hand side of the slide, on the right-hand side, we can see some good news. Our revenues decreased only slightly by 0.2%, and our debt is at the level of 1.2.In this slide, you can see the financial KPIs. As a group, KGHM had over PLN 25 billion in revenues and adjusted EBITDA for the group was PLN 4.2 million, of which PLN 3.1 million came from the Polish operations and the profit, PLN 1.7 billion, that's for the Polish operations and PLN 836 million for the capital group. So the group is doing well and sticking to the strategy. And my colleagues will give you the details. President Swider?
Ladies and gentlemen, payable copper production in the group, 527,000 tonnes. And here, we have a division into domestic and international assets. Domestic production, 444,000 tonnes; and 84,000 tonnes internationally. And let me focus on the domestic production because this is what I'm in charge of. When it comes to ore extraction, 23.3 million tonnes and 1.47 is copper grade in ore, which is plus 1.3 year-on-year. When it comes to the production of copper and concentrate, 303,200 tonnes, and the content is 22.5%, which is up by 2.7% year-on-year.Electrolytic copper production, 444,000 tonnes and 287,000 tonnes of that comes from our own concentrate, up by 5% year-on-year, in total 0.2% year-on-year in total. But silver production, 1,080 tonnes, up by 8% year-on-year. Quite importantly, the last 2 indicators, that's electrolytic copper and silver are our best result ever for the group. Thank you very much. And now our Vice President, Miroslaw Kidon.
Good morning or good afternoon. Let me start by discussing our investment program. It's quite impressive, PLN 3,250 million. All our investments continue as planned. There have been no threats to our plans for this year. As you will note in the slide, we focus mostly on maintaining our production and its further development.Here, we'll let me briefly discuss our investments. As I said here, we focus on Deposit Access Program and new mining areas. We have prepared -- we have opened new mining areas actually exceeding our plan, which is very important. And we have been quite successful with replacing our machine park. We will have a record level this year. We bought and got delivered 180 mine machines, 21 to Lubin, 72 to Rudna and 87 to Polkowice-Sieroszowice. We obviously continue the efforts in implementing and building new shafts. GG-1, Europe's longest, is already there, delivering fresh air to the miners, and we are working on air conditioning systems, 33 megawatts of power for those. They will allow us to maintain the appropriate temperature for the staff working down there.GG-2, the Odra shaft, work is underway. And then Retkow shaft and Gaworzyce shaft, these are also moving forward. Importantly, the maintenance shutdown at Legnica is now over. And as planned, the plant resumed operations on the 14th of October. Right now, we are calculating the data, the figures for all the repair works. We are analyzing the performance of our maintenance and repair services. We also finished Phase 1 and Phase 2 in the Southern Quarter. Right now, we are -- we commenced work on tailings slimes management. Simply speaking, all these efforts -- as a result of all these efforts, the quality of tailings delivered to Zelazny Most Storage Facility will be much more dense. They will be more solid in it. As a result, the storage will be cheaper. And when you have more solid waste, you need less strict embankments. In our Polish operation, we are about to implement a new technology for increasing solid contents in tailings.So that's it when it comes to major investments. Now the next slide talks about the Deep Glogow facility. This has been an important progress for us when we accessed this deposit. So as always, I would like to tell you about how we increase our production from that deposit. And year-on-year, we have -- well, the share of production from Deep Glogow has grown by 35%. The slide also shows you concession areas and let me bring you some news. We have 9 domestic concessions, 7 for copper, 1 for hydrocarbons and 1 for potassium salts. And quite importantly, an administrative court in Warsaw ruled -- refused to accept a complaint submitted by a competitor. And that decision ends -- put an end to a 10-year dispute over that concession area.Now the floor goes to our colleague specializing in renewable energies.
Thank you. Mateusz Wodejko, Vice President. Thank you. I'm glad to see that we're starting with renewables so we can boast a lot. In the last year, in this area is where we developed and enhanced our acquisition and our development processes. As for development, as you can see in this slide, connection condition applications have been filed for 88 megawatt in the photovoltaics and 15 photovoltaics large projects have been applied for in Lower Silesia, close to our technological process plants and also smaller PV projects are being implemented and Glogow Smelter Plant 1, 2, 3 and also some smaller projects.We have successfully completed a large acquisition project. We acquired more than 47 megawatts of solar projects in 4 target companies, PVs. So one is on board already, the other 3 several companies are going to be acquired most probably in January. And in quarter 4, we signed a preliminary agreement to acquire another project -- before they are to be, for another close to 20 megawatts in solar power, which is to be in a direct vicinity of our technological facilities. A lot of interesting information showing us that renewables are being developed at our company. So the energy transition is a reality here.There's also a wind farm project here. So we're working on it. So Radwanice-Zukowice is a prospective project for our wind farm. Another topic that is related to energy, that's our SMR project. So information was published or released last Friday on what the situation is. We have the decision on light water reactor technologies from 5 developers developing such projects. And we need to add that SMR projects globally are at a developmental stage, R&D projects. So they have not advanced into implementation. So we need to be next-of-a-kind or first-of-a-kind. So this is why we have analytic work, which is ongoing. So we need to have a transparent and fully competitive project here.So ultimately, when SMR technology is profitable and implementable, we would like to choose a supply technology that will be most competitive in terms of profitability, safety and environment. Such a decision will be done in the future when SMR technology is developed, but we obtained the basic decision to show that KGHM is a good reliable investor. The decision is about 5 light water technology developers. Those are most crucial in terms of nuclear development site KGHM.And besides CCGT units are working full steam ahead. We were thinking about some restrictions related to high gas prices, but we were surprised positively with the level of gas prices that we can be using gas as fuel without such restrictions.Now the key financial figures. The President has outlined them already, the most important ones. The situation on the global commodities market is what it is because of the economic slowdown globally. So the prices over those 3 quarters, especially in quarter 3, reflected the situation in global markets, and it's much worse compared with 2022 when prices of commodities were high, especially copper. And also the exchange rate -- dollar exchange rate was weaker compared with the 3 quarters of 2022, which impacted results. In these 9 months, the copper price in zloty per ton is more than 8% lower than in the 3 quarters of 2022, and quarter 3, the difference is 3% down.But the success is that with this unfavorable macroeconomic situation, we managed to keep the level of our revenues stable. And in the case of Polish Miedz -- Polska was higher. EBITDA is PLN 4,235 million in the group, which is a decent result and more than PLN 3 billion in Polska Miedz. Very good results, historically speaking. We are referring to the high base that was the previous year. We need to be aware of the economic changes and the economic situation, sometimes you benefit from high commodity prices and strong dollar. Otherwise, you have a different situation when the macroeconomic situation is not so favorable.Now, group revenues. Well, the group revenues have remained almost unchanged compared with the previous year. So we were really making up for the negative trends, minus PLN 2 million and minus PLN 81 million for the prices of commodities and exchange rates. So the change was almost PLN 2 billion, which was unfavorable, but we used -- increased the volume of sales of our products. So we need to thank Mr. Swider and our production has been running very well. And Mr. Kidon with their active sales, so we need to thank them as well because we've seen the slowdown in the global economy but we've been selling successfully to those markets where there is a higher premium and lower cost and also the adjustment for derivatives. So we lost because of that adjustment minus PLN 254 million. This year, it was more than PLN 400 million plus, a positive change, a huge success. So this allowed us to keep our revenues at a similar level.When you look at this graph to the right of revenues from contracts with customers, broken down to parts or segments of our group, in the case of Polska Miedz, this is almost [ PLN 700 ] million more. We had more of a problem with KGHM International with a negative difference in revenues, but we are trying to improve the situation in KGHM International. Now, of course by nature, an increase [Audio Gap] by 7% in tandem, but there are 2 parts here which influenced that difference. So that is the tax on extraction of some minerals, it increased because last year, the Polish Parliament reduced the tax. So this year, we didn't -- haven't had this change of the tax or reduction in tax. So you can see the slides been changing. So for the 9 months, it was PLN 2,797 million, and compared with PLN 2,300 million in the previous year. It will also be referred during the questions.And now the positive development was PLN [ 5,597 ] million, our own metal-bearing materials, so PLN 900 million less in spending and costs compared with the previous year. Also in terms of sales, it was a negative situation, but the prices of concentrate were lower. But as Mr. Swider said, we were trying to optimize our domestic production from own concentrates. So with such own production and high level of own concentrate, we were able to increase our revenues from these sources.Other costs, by nature, up by 14%. So mainly labor, so that's the pay -- increase in pay, higher cost of materials and third-party services as the pressure of inflation because of the domestic and also global situation, these are global macroeconomic factors affecting our business and our costs of services we buy in materials. And in other quarters, you see that in quarter 3, so it was a significant level, but when you compare it with quarter 2, 2023 and quarter 1, 2023 and quarter 4, 2022, you see that we're trying to handle the problem of inflation and mitigate the situation in terms of cost rises. And it's not been rising over these successive quarters of 2023. And C1 is related to what I described in the previous -- up by 34% in the group, that is caused by international with some exceptional situations, problems with the [indiscernible], now we're moving to high-quality deposit. So I hope that this is going to improve.And in the case of Polska Miedz, up by 26% and the tax cost -- because the tax relief is no longer there. As for the other costs, it also impacted the level of C1 Polska Miedz but it's calculated in the dollar, the dollar was weaker. So we convert that to zloty, its increase is 21% -- [ not 26% ], so the dollar exchange rate actually had a strong influence on the figure because of the conversion.Net result now. The change is a [ lot of time ] compared with the basic -- compared with the previous year. So PLN 1,940 million have affected the consolidated result. So this includes the profit, which was lower and the debt figure was affected by the dollar. So the dollar was weaker, so that was a positive influence. So it did not bring our profit so much down. And other differences, one-off events, Oxide project along with disposal of Franke mine, PLN 300 million of difference altogether and joint ventures. So reversals were lower because of loans compared with the previous year because when you reverse right on loans then you will not be reversing it again, and the cost of core operations, so PLN 2,597 million because of the pay rises related to inflation. The costs by nature increased by PLN 1,619 million, and we had a change in stock by PLN [ 1,140 ] million. So this is why we have this result.But as I mentioned during the previous conferences and results, we're strongly influenced by the changes in the dollar exchange rates, as it affects our profits. So I would say, [indiscernible] is more representative as a figure showing the actual situation of our company.Cash flows now, PLN 1,200 million at the beginning of the financial year. Now we have PLN 1,403 million. We have the proceeds from repayments, borrowings, interest pay, dividend and other such figure at the end of the year. Now the debt of the KGHM Group increased by 0.3 because of lower EBITDA, but it still remains at the same level of 1.2. Net debt in dollars, USD 1,151 million, and we're using debt factoring to improve our situation and optimize the company's cash flows.Quarter 3, 2023, consolidated revenues higher than in quarter 3, 2022 in spite of copper prices in zloty per tonne, which were 5% lower, PLN 34,536 compared to PLN 36,469 in a situation where the copper price expressed in zloty is going down, and we're increasing revenues. It's telling -- it shows that our company is operating safely, trying to show good results to shareholders.Adjusted EBITDA dropped from PLN 1,652 million to PLN 1,173 million. But in the Polska Miedz, it was not so significant in spite of the macroeconomic situation. Now the segments for the 9 months. So the decrease was in Polska Miedz, PLN 1,328 million and the key drop PLN 1,251 million in KGHM International. So from change from PLN 786 million to this negative results. So this is why the difference. Sierra Gorda, a negative result as well because of the quality of the deposit that when colleagues were describing that during the previous conferences, that is the nature of our mining operations.Now Polska Miedz, revenues from contracts with customers, an increase over the 3 months, despite the minus 8% in copper prices in zloty. This increase resulted from hedging and also a higher sales increase -- an increase by 3% in copper sales and 0.3% up in silver sales. And it's not true that sales are going on because there are customers waiting at the gate, knowing also have to get across to customers to diversify our sales to find customers to optimize sales, to enter into safe contracts, work on liquidity under those contracts. So with this difficult macroeconomic situation, we have been able to sell more copper and silver in those higher premium markets globally, shows how successfully have been.Now expenses by nature, you can see the cost of debt and the extraction tax that went up. So that's up by 7% and 18% if we remove those 2 factors and, in fact, 18% is less than in the first and the second quarter, and it's actually less than even in the fourth quarter of 2022. Now, EBITDA for the Polish operations and the profit for the operations as we have seen already in both KPIs go down, but they remain in a safe zone if you look at our EBITDA and profit. Well, EBITDA is close to the second quarter and the fourth quarter of 2023. It's not that much lower than in the third quarter last year. And when it comes to the profit, well, it's mostly affected by exchange rates.And what were the contributors to the net profit? On the one hand, we had exchange losses that's most -- that's PLN 723 million. We compensate that with a greater increase in revenues plus by PLN 687 million and basic operating expenses. We've discussed these here. We had less production for inventories and smaller volume of third-party concentrates and less income tax. With smaller profit, you pay less tax.And risk management -- market risk management, here, it's important to note that our result on hedging instruments and derivative instruments was up by -- it was PLN 279 million. This is unprecedented, and we are very happy about this. And we have adjusted our revenues from contracts by PLN 425 million. That's because we have good hedging and foreign currencies and in silver. Also, in the first 3 quarters of the year, despite the challenges in our international operations, the level of contributions to the parent company was USD 46.6 million, which is good news. This shows us that even with the challenging environment, international assets contribute to our Polish operations.Thank you very much. That's it from me.
Thank you, Mr. President, and 2 more slides, that's President Kidon.
Yes, let me quickly discuss production results in Sierra Gorda. Sierra Gorda is -- the way I see it and the way the board sees it, it's very well managed. And year after year, it has been successful in terms of optimizing and increasing its output. There is a lot of potential in that mine. There are good prospects. But nevertheless, if we look at the fact that we have a 12% decrease in payable copper production, this tells us a little bit about the improvements -- technological improvements we've been doing there.So if you... if we disregard copper content information and content of other minerals in the ore, then we would have 2% increase in production from Sierra Gorda, which is good news. And we want to continue increasing output. We are continuing the debottlenecking project and surely next year, we will want to see even more throughput.KGHM International, here, the main driver behind the production decrease is the Robinson mine. As I explained on previous occasions, the deposits there are completely different than in Poland. At Robinson, we have a much lower variability of metals in the ore. In open pit mines, the fluctuations are great from several to dozens percentage points when it comes to the content of minerals. And this is exactly what happens in Robinson. We are in a transition phase there. It did -- it continued for the first 3 quarters of the year.So it was not only copper content that was lower, but zinc content was much higher. Zinc in collective flotation, it penetrates into the concentrate. And if you have too much zinc, the concentrate will be no longer useful in smelting operations. So we need to prevent this. So we need to reduce the processing and we need to extend the retention time. So we need to effectively extend the flotation time. As a result, we ultimately come up with less production.Good news is that in the third quarter, we have finished the transition zone, and we have dug into proper ore and our production and throughput figures are back to the levels from 2022.That's it for me. Thank you.
Thank you, Mr. President. And this is where the presentation ends. And now let's move on to our questions, both from journalists present here and those submitted online. Janusz Krystosiak, over to you.
Thank you. Good afternoon. Let me start with questions to President in charge of production. Lukasz Prokopiuk from BOS Bank asks -- Lukasz asks about the payable copper production target for KGHM Poland in 2024. Is it realistic to continue with this year's levels?
Obviously, we are following our strategy currently. We are in the planning stage, budgeting stage, and it's a bit too early to answer questions like this. When it comes to the total production in our domestic assets, then in line with our strategy, we don't want our production figures to be lower next year. But let's wait until planning is completed.
Thank you. Now questions about international assets and their production, again, Lukasz Prokopiuk. What is the preliminary copper production target for KGHM International for 2024?
So as Mr. President Swider has already said, we are still in the budget planning period. So maybe just a quick general comment. I guess I can say that after we have broken through the transition zone, we are in the proper ore deposit at Robinson. So surely, our production volume will be higher. But just like the other Vice President said, we are still in the budget planning period, and we are prospecting the deposit. And for block caving, we need to do it in 5-year windows. But to calculate our metal resources for the next year, we need to have an understanding of 80% [ over ]. In this way, we can reduce the error margin to 5%. And we are still drilling. We are still collecting information. We are still building our model, and we are doing flotation samples. We will use the results to build our production plan and for KGHM International for 2024.
Thank you. And Pawel Puchalski from Santander asks if the improvement of production volume at Santander International will be lasting? Or will it be just a few months?
For KGHM International, the improvement will be -- will extend beyond 2 or 3 quarters because I don't think we will hit another transition zone anytime soon.
Thank you. Another question again from Pawel Puchalski of Santander. And that's about our financial performance. And the question asks about the prediction, but nevertheless, let's ask it. Will the energy prices be lower in 2024? Or what is the range of price reductions you're expecting.
Yes, as we've said, we are not allowed to make any forecasts, especially for energy prices. We do follow price trends. We keep analyzing the market also in terms of hedging contracts. As for now, I can't disclose any information about our assumptions because we are still in the budget planning phase. Let me just say that, this year, we were happy to see the spot prices of electricity and gas were sold at very good prices compared to our plans. So we were happy to see -- happy to be surprised. So that's good news. And in a way, this also improves our situation. And on that basis, we will decide whether or not to sign purchase contracts.
Thank you very much. And I will give the next question to Vice President Wodejko. A question about releasing current capital, a question from Santander and UBS. So we've had a positive trend in releasing current capital. Can this trend continue in the fourth quarter or next year? Could it be a lasting change?
That's a very complex question, especially in KGHM Capital Group because we have a lot of items in our inventories. We have to approach each of them separately. We have material inventories. We are still in the post-COVID scenario, in the wartime scenario and there are many gaps in supply. So we have to keep our inventories high. When it comes to our process and our semi-finished product inventories or finished product inventories, we are taking the next year's perspective and the perspective of even further years. So we are also trying to identify the moment when the prices in the market will be the highest and what will be our capability to sell our products in the most optimum period in the highest paying markets. So all that has an effect on the levels of our capital inventories. I guess this has to suffice as an answer because it's hard to judge today about the future levels.
Thank you. And I think I will now thank for these questions. Many of them were about our view on the market, our forecast about production levels and the process of freeing up cash. So Board members have already described that. Well, we're not allowed to reveal our production forecast so much from me. Thank you.
Thank you, Director. So if you have no questions from analysts, we may also reply to further questions sent to us on our website. And any questions from the media in the room, please introduce yourself.
[ Andrzej Rembelski, Biuro Maklerskie ]. I'm asking about the current financial results. Do they have an impact on these projects. We have heard about like the salt manufacturing facility. Local government has frequently mentioned agreements with KGHM also on the project of building a hospital in Lubin here.
I think that Mr. Zdzikot, the CEO, is the person to answer this question.
So the project we presented here the salt facility is on its way. We have a team dedicated to that, and this is an important project. So it's a double purpose project, a business project to have a business line, salt production at KGHM and also clearly beneficial to the environment. So there's nothing worrying there. The project is on track. There is a business rationale behind it, and it's also reasonable in terms of the environment, and we will continue with that. As for the hospital you have been asking about, we have this Miedziowe health center, which is a hospital we already own, close to a big company in Lubin. And this needs to be developed further. The company -- health company we own is also investigating opportunities to expand locally, also to acquire new facilities, new premises. And as the owner of that company sees that we will be listening to the proposals that they have, so the possibilities of growing in terms of the premises and location, they've been already used. So we're thinking about new premises.
[indiscernible]. Something that's been touched upon here, but if you can give us more detail about the agreement with China Metals. So the value of the contract, the importance of copper sales, how important this is to KGHM?
Mr. Kidon, please?
I can answer this question. This is a framework agreement, 50,000 tonnes of copper and cathodes with the possibility of extending to 70,000 tonnes. We're open to larger volumes as well. Why is this contract important? Looking at the global trends, what's happening in the world, we see a huge increase in the potential in China, allowing for the production of cathodes. So this is why having a presence on the Asian market and a regular partner collecting cathodes from us is very important because there's too many producers of cathodes in the world, these sales are becoming a more difficult and complex. And this is why we're happy to have a strong presence on the Chinese market. And we have a partner we've worked with for more than 10 years now. We've never had any problems in terms of the organization or this corporation, the finances as well. We've built trust and confidence between our companies over those years, and we're going to continue on that.
So we have still some time for one more question. I can't see anything. If I may, a question, if you allow, there are 2 brief questions sent to our e-mail. So just they need some clarification. Maciej Wisniewski, Lubin24 is asking, you're always providing information for one quarter, why giving information for a longer period right now?
[ Not always ], for 9 months cumulative results. Well, the last quarter is naturally most interesting for analysts. Now we're talking about cumulative results. So in the third quarter result, third and fourth quarter, has not been presented before and published yesterday in CBS. CapEx for international investment projects is at PLN 921 million. It's a small implementation compared with PLN 2.1 billion, but PLN 2.1 billion was the total CapEx, we have to divide it. As we talk to investors, nonetheless, so it's got to be split into renewables, conventional power and also investments in our projects, including foreign projects because the question was about the power projects and also spending abroad. PLN 2.1 billion is total CapEx for the 3 parts and not only for foreign projects. So that's for everything.
All right. Thank you. So that's the end of our conference. So we're presenting results for quarter 3 and for the 9 months of 2023. In March, towards the end of March, we're planning an annual conference to present the results for quarter 4 and for the entire year 2024. Thank you for today, and see you next time. Goodbye.[Statements in English on this transcript were spoken by an interpreter present on the live call.]