Century Aluminum Co (CENX) 2012 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2012 earnings conference call. At this time all phone lines are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given to you at that time.

(Operator Instructions)

As a reminder, today's conference is also being recorded. I'll now turn the conference over to your opening speaker for today, Enrique DeAnda. Please go ahead.

Thank you very much, Doug. Hello, everyone, and welcome to the conference call. Before we begin I would like to remind you that today's discussion will contain forward-looking statements related to future events and expectations including our expected future financial performance, results of operations and financial conditions. These forward-looking statements involve import -- known and unknown risks and uncertainties which could cause our actual results to differ materially from those expressed in our forward-looking statements. Please review the forward looking statements disclosure in today's slides and press release for a full discussion of these risks and uncertainties.

In addition, we will include some non-GAAP financial measures in our discussion. Reconciliations to the most comparable GAAP measures can be found in the appendix to today's presentation and on our website at www.CenturyAluminum.com.

I'd now like to introduce Michael Bless, Century's President and Chief Executive Officer.

Thanks, Enrique, and thanks, everybody, for joining us this afternoon. If we could turn to Slide 4, please, I would like to give you just a brief review of the major events in 2012. Okay.

First and foremost I'm proud to say that the Company recorded the best safety performance in its history, and this was at each of our facilities. This takes a tremendous amount of hard work. Those of you familiar with industrial safety know this kind of performance requires focus each and every day. This result is especially noteworthy at Hawesville, where people have been working in an environment of some uncertainty due to the power situation there, and I'll talk about that obviously in detail in just a moment. I'd also like to note that this result was the result of great cooperation and ownership from our represented workforces, and I'd like to salute them for that.

Turning to Hawesville, as you remember, we returned the plant to stability in the latter part of 2011 going into 2012. We've got a great management team at this plant now with the right mix of skills and experiences. We saw improvement through 2012 in all areas of the plant. Especially noteworthy in the potrooms and in the rodding shop. We're now working at staying ahead in housekeeping and maintenance which are obviously are the key to plant stability. Importantly here, our people are feeling a great deal of pride in being part of a well-run plant. These efforts resulted in significant cost reductions across the plant in each and every department throughout 2012. Just to give you a sense, excluding power, if you were to take the power out of the cost base, and, as I'll talk about in a minute, the power cost has continued to rise. But if you were to take the power out, the conversion cost is down over $250 a ton, since the fourth quarter of last year. So fourth quarter of '12 over fourth quarter of '11, the non-power conversion cost down $250 a ton. And obviously we're committed to continue this process into 2013 and beyond.

So let us talk about where we are at Hawesville right now. The remaining issue is indeed the power price. Per our data we're paying the highest or perhaps the second highest tariff -- power tariff amongst all US smelters. As you remember, during the first half of 2012 we spent significant time discussing alternatives with our power supplier, and, regrettably, we were unable to reach an acceptable solution. As you remember, in August of 2012, we gave them a one-year termination notice. It is important to note that our assessment hasn't changed.

The plant is not viable under this power contract and in this environment. It is also important to understand that Hawesville is a great plant other than this power contract. The cost structure excluding power is competitive, as I said. As you know, the plant produces a premium product or many premium products for which we are in a premium above the Midwest transaction price high purity and high conductivity metal. We have got a world class customer next door that takes up to half of the metal in molten form, that's the Southwire Company. And we have the right team in place. So we need to fix that power price. As you know, our intent is to access the wholesale power markets. There is plenty of power out there and plenty of transmission capacity to bring it in. Just to give you a sense, the difference between the current price we're paying under the current power contract and the market price, fully delivered market price, is over $50 million on an annual basis. So, of course, we need to capture as much of that differential as possible.

We have been on this path since we gave the termination notice in August at which time we began negotiations with the power supplier to provide for [bent] market access. We've had substantive discussions, principally in the last couple months of the year and then coming into 2013. Recently we have developed some concern about whether we'll get to the finish line on a rational basis. The power company has been taking some positions that just don't make sense to us. And, thus, we recently launched an effort in Kentucky to propose legislation, obviously, in the state capital, to allow Hawesville to access the market directly. Given the developments in US power markets with which you're all familiar, we strongly believe that Hawesville and similar plants should be more than viable for years and years to come. But we need a framework for these plants to access the market on a rational basis.

As with anything having to do with utilities in this country, there are a lot of complex issues to deal with, but logic dictates these issues should be solved. There's just too much on the line. For example, obviously we're talking about thousands of direct and indirect jobs. As you may have noted the other smelter in the region gave its termination notice to that same power provider. This was just a couple of weeks ago they did that. We've got hundreds of millions of dollars of economic activity related to these two plants. We strongly believe that there is a consensus that this country ought to have a strong, indigenous primary aluminum supply. It's especially important for key industries like aerospace and the electrical grid. Given the developments in the power markets, we believe that we should be able to find a successful resolution here.

On that score we had very good success at Mount Holly during the year. We did reach an agreement with the power supplier in June as you remember. This resulted in a three and a half year arrangement, so it goes out through the end of 2015, in which we have secured market-based power again through the current power supplier. As we have talked about before, in essence here we're leasing spare generation capacity from an out of state system, and this gives all the parties time to work on an even longer term solution. We think this is one good example of how this kind of thing should work, and it wouldn't have happened without the strong backing of Governor Haley of South Carolina and other state leaders.

Turning to Ravenswood, as we expected in December, the Public Service Commission generally confirmed the elements of original order it issued back in September. Let me just take you back to remind you we did secure during the year two tiers of power credits. This is support for our power price, in essence, reduction on the price we would otherwise pay. Those two tiers, if you will, aggregate to $40 million annually over a 10-year period. We have been seeking a third tier of LME related power, LME reference power, in order to support the restart of the plant. In essence, this would have been a third tier of support, additional power price reduction that would kick in at lower LME prices. We believe that we need these kind of support to justify the restart cost, as I said, just to remind, you we talked about this before. It will cost us we believe about $45 million in one-time costs to restart the plant, plus an additional $45 million investment in working capital.

The terms of that third tier that was approved by the PSE just don't make perfect sense to us, and in that respect, we're now looking at different ways to get to the same place. We're in active discussions with the key constituencies, and I'll talk little bit about next steps in a few minutes.

Turning to Iceland, at Grundartangi we made significant progress during the year on both growing the plant and continuing to improve an already very good cost structure. First and foremost we began a major hot metal capacity expansion that will add about 15% incremental capacity to the plant over the next approximately four years. Capital spending for the project will be about $65 million over that four years. A good portion of that spending will occur in 2013, about 40% of that $65 million, we'll spend this year. That's due to the fact that some large ticket items like high voltage electrical equipment need to be ordered and paid for in the early days of the project.

The new capacity will come on at a very attractive install price and at a good incremental conversion cost. Thus far, I'm happy to report we're at or ahead of plan in this project. Grundartangi produced at an annualized rate during the fourth quarter of 289,000 tons. We have got a great plat at Grundartangi and a terrific management team, and we're convinced that they can continue to produce incremental value for years to come. During the middle of the year as you'll remember we acquired an anode plant in the Netherlands. This was an investment in cost reduction for Grundartangi as well as operational stability. As a reminder, there is no anode plant at Grundartangi, nor do any -- either of the other two smelters in Iceland have their own anode plant, this due to stringent environmental standards in Iceland, of course.

Last year we terminated our relationships with our two historical European anode suppliers. Two reasons really. First is that the supply -- these supplies weren't cost competitive. Second, they weren't flexible enough to support the larger anodes that we need as we start to run higher and higher amperages at Grundartangi. Thus we were opportunistic when the former Zealand Aluminum smelter went into bankruptcy. It was in the last month of December 2011.

The anode plant that we bought requires a reasonable investment before we can restart it, so this year in 2013 -- Shelley will give you some more detail on this when she takes you through the numbers -- but this year we'll spend between $25 million and $30 million to restart, in essence, half of the plant, one of the two baking furnaces, for a capacity of 75,000 tons in anodes. At the right time we'll spend another approximately $10 million to $15 million to start up -- to modernize and then start up the other furnace. So, thus, we'll have a total capacity of 150,000 tons of anodes at that plant. Combined with the supply that we get from our 40% owned affiliate in China, this will leave us well covered in anodes at a very good cost.

Lastly at Helguvik we spent considerable time last year with the power companies getting closer to final agreements to enable a restart of the project. To be blunt, we're disappointed we didn't get all the way there last year. We were reasonably confident at the beginning of the year that we could get to the finish line in 2012. We have got some complex issues that remain, but the parties continue to work together to try to solve those issues. And I'll give you a sense of what's coming up next again toward the end of my comments.

Okay. If we could turn to Slide 5, please. I'd just like to make some quick comments on the market environment. Obviously that is changing every day as we've seen over the last couple of days. First, just some historical data for you in the fourth quarter, the LME cash aluminum price averaged $2,000 a ton. That was up nicely about $80 a ton from the average during the third quarter. Since November, as you've seen, the price has been in a reasonably tight -- at least tight for this commodity -- reasonably tight range of between $2,000 and approximately $2,150 per ton. For all of 2012 the average cash price was $2,020 a ton. That was as you know down significantly from 2011 when the price averaged $2,400.

I won't go into all the causes of this. They are known -- well known to everybody on the phone. Obviously relatively weak economic conditions in China for most of the year, in the euro zone, concerns about the banking system, and a couple of large sovereigns and other factors weighed down the price for a good portion of the year. Overall, the sentiment seems generally to be on an upswing in most of these areas, but as we've seen over the last couple of days, it is not going to be a straight line up and to the right.

Moving on talking about inventory a little bit, LME stocks increased 150,000 tons during the fourth quarter. That made 240,000 tons total for 2012. That's a reasonably small amount in a market the size of the global primary aluminum market. LME stocks now stand at about 5.1 million tons, and, as you know, this is been commented about widely, a majority of that stock serves as collateral for warehousing transactions, the conditions for which remain attractive. Couple comments on premiums, they remained strong, regional premiums around the world. In the US the Midwest price is now over $11.03 per pound. Duty-paid European premium just shy of $300 a ton. Japanese premiums came down slightly over the quarter, but they are still strong at just shy of $250 a ton.

Just a couple quick comments on fundamentals globally. First on the demand side, global consumption was up 4% in 2012. Inside that, China was up 8%. That's obviously down from the mid-teens just a couple of years ago. In China, the PMI has been above 50.0, every month since October. We're obviously watching that closely. The US had a strong consumption performance in 2012; we're up 7%. Turning to supply, global production was up just about the same as demand, 3.5%. So you have got a market now that is close to in balance. Almost all of that new production came from China where the production was up over -- in the year 2.2 million tons over 2011. Most of that increased production coming from Greenfield projects coming on stream in the northwest part of that country. We continue to see few closures in China despite the high cost of their smelting base there, that due principally to power subsidies on a regional basis, plus stock -- metal stockpiling by the government and related entities.

Chinese authorities obviously realize this issue. We've recently seen them aggressively encouraging industry consolidation. Lastly, we see little supply coming on other than China and perhaps places like India. But certainly in the western world you've got little supply coming on over the next couple years, other than a couple of large projects in the Persian Gulf. Before I move on, just a couple quick comments on aluminum. Prices continue to increase during the quarter, the spot Australian price now about $345 to $350 a ton. Part of that increase was due to some production disruptions caused by some severe weather events. The market globally is reasonably balanced to maybe modest surplus, but you have got some significant regional variations.

Okay. If we could turn to Slide 6, please, just a couple of comments on the operations during the quarter. I've commented on a lot of this already, so I'll move through this pretty quickly. Again safety performance, we had a great year in 2012. As you can see in the fourth quarter we were relatively flat to Q3, Q3 already being a very good performance. Now we're focused on taking it to the next level as you would expect. We're very focused on forward-looking indicators and on recognizing and mitigating risks before accidents can happen. So more about that through the balance of this year. Turning to production volume, Hawesville continued a very solid performance this quarter, turned in annualized production at that rate of 251,000 tons. Shelly will explain to you shipment volumes at Hawesville were down slightly during the quarter solely due to some timing issues.

Mount Holly production down about a half a percent quarter-to-quarter, no specific issue there. And Grundartangi, as I said, a terrific performance producing at an annualized rate during Q4 of 289,000 tons. Production metrics or KPIs, as we call them, good stability across the operations. I have got nothing significant to report here. And conversion costs, obviously I have already spoken about Hawesville. As you see we had increase in Mount Holly quarter-to-quarter, that is Q4 over Q3, again, solely due to increase in the power costs caused by two factors. First and foremost, the average natural gas price was higher in Q4 than it was in Q3. In addition, one of the generation units at the system that in effect we're leasing power from was down from one of the three months in the quarter due to some scheduled maintenance. So we took a little bit more power than normal under our normal contract.

And with that I'll turn it over to Shelly, who will take you through the numbers.

All right. Thanks, Mike. If you turn to Slide 7, please, I'll take you through the Company's financial performance for the quarter. Shipments for Q4 were down 1.5% at Hawesville and 4% at Mount Holly, primarily due to timing of deliveries. As you would expect, we saw the benefit of these shipments reflected in our January results. For Iceland, we had direct shipments of approximately 3500 tons in Q4, so if you include that amount along with the tolling volume, you'll see that Iceland shipments were up 1% Q4 over Q3. Putting this altogether, global shipments for the Company were down about 1% in the quarter. The average cash LME price was up 4% Q4 over Q3, but on a one-month lag basis, the LME price was up almost 7%. When you look at our realized unit prices in the US, they were up 5% quarter-over-quarter. This reflects the fact that we do have some sales in the US that price on a current-month basis. In Iceland our realized unit prices were up 6%, which reflects the impacts of the tolling structure we have at Grundartangi.

Moving on to the income statement data, net sales were up 4% Q4 over Q3. The income -- or increase in the aluminum price drove net sales up by $16 million or 5%, but slightly lower shipments offset a portion of this impact during the quarter. Adjusted operating income increased $20 million from Q3 to Q4, primarily due to higher revenues. On the cost side, we saw higher LME-linked alumina and power costs of $5 million and US power costs were up roughly $2 million, primarily due to the maintenance outage at a facility that supplies Mount Holly that Mike mentioned. Moving down the income statement we had a quarterly adjusted loss of $7 million or $0.07 per share on total common and preferred shares. This compares to an adjusted loss of $0.25 per share in Q3. Lastly on this slide, I will just make a couple quick comments on cash flow.

As you can see here, CapEx for the quarter was $7 million. This is consistent with our expectation that the fourth quarter will generally have the highest capital spending of the year. Also affecting cash in the fourth quarter was a refund of $28 million related to withholding tax payments. As we've mentioned in previous quarters, we are required to pay temporary withholding taxes on certain transfers between our Icelandic entities, and these taxes are refunded to us at the end of the year. So quarter-over-quarter cash was up $11 million, and we ended the year with $184 million on the balance sheet. Let's go on to the next slide, and I'll take you through the changes in cash in a bit more detail. So on Slide 8 we show our normal cash flow waterfall bridging Q3 to Q4, and I will just focus on a couple of the more unusual items here.

As I just mentioned, we had a withholding tax refund of $28 million in Q4. Partially offsetting this we made approximately $8 million in income tax payments which were primarily related to Iceland. Moving to the right, you can see we had a $3 million cash inflow in the form of a dividend payment from our Chinese anode facility. And I would also note that the timing of metal deliveries I mentioned earlier contributed to a working capital use of cash for the quarter. And we saw this come back into cash in January.

So, if we can move along to Slide 9, I'll take you through the Company's full-year performance. Shipments at Hawesville were up almost 18% year-over-year as we reached full production at that plant in Q1 2012. And shipments at Mount Holly were roughly flat. In 2012 we had almost 15,000 tons of direct shipments from Iceland. So if you include that amount along with the tolling volume, you see that Iceland shipments were up 2% over 2011. The overall shipments for the Company were up 7% year-over-year. In 2012 the one-month lagged LME price was down almost 17%. When you look at our realized unit prices in the US, they were only down 12%, which reflects the improvement in Midwest premiums. In Iceland our realized unit prices were down 16%. This reflects the improved regional premium there as well but to a lesser extent because of the tolling structure in Iceland.

Moving on to the income statement data, net sales were down 6% in 2012. The decrease in the aluminum price drove net sales down by $197 million or 15%, but higher shipments offset a significant portion of the price impact. Adjusted operating income decreased $83 million from 2011 primarily due to lower metal sales -- sorry, lower metal prices. On the cost side we saw benefit of $71 million due to LME-linked alumina and power and $26 million for labor, supplies and maintenance efficiencies at Hawesville, as that plant returned to full stable operation.

We also saw a $13 million year-over-year reduction in raw materials, mainly carbon, and another $6 million benefit for net unit US energy cost savings, primarily due to the amended contract at Mount Holly. So putting this altogether, our adjusted loss for 2012 was $57 million or $0.59 per share on total common and preferred shares, which compares to adjusted income of $0.28 per share in 2011. I'll make most of my comments on cash volume in the next slide, but I would note that, even with the increase in working capital that we saw at year-end, our full-year reduction in working capital provided a meaningful source of cash in 2012.

Moving on to Slide 10, here we have the 2012 cash flow waterfall, and I'll just call out a couple of items here. For the full year we had a net inflow of about $5 million related to withholding taxes in Iceland. Offsetting this was $18 million for income taxes paid in 2012, most of which related to Iceland. As Mike mentioned earlier, we acquired a curtailed anode facility in the Netherlands in June of last year, and the total acquisition costs came to about $14 million. The restart efforts for this facility will begin in earnest in Q1, and I'll take you through our expected spending in a moment. Continuing on to the right we had cash inflow of $8 million for an insurance settlement related to a transformer that was damaged back in 2010, and we also received a total of $7 million from our Chinese anode joint venture in 2012.

So turning on to Slide 11, on the next couple of slides I'll take you through the Company's expectations for financial measures for the coming year. In 2013 we anticipate that all operating facilities will be producing above their rated capacity levels and slightly above 2012 levels. The significant production impacts and the investment in the Grundartangi Creek program will be seen in 2014 and beyond. We continue to sell the majority of our products on a one-month lag basis, but I would note that we expect spend about -- we expect about 10% of our US shipments in 2013 to be on a current-month basis.

Continuing down the slide, we provided our cash cost expectations for the US and Icelandic facilities. As you would expect, our cost production is highly dependent on metal prices due to our LME-linked alumina and power contracts. The indicated ranges for costs are consistent with LME price of $2,000 to $2,200 per ton. For this purpose we're presenting cash costs in a format that we believe is directly comparable to the LME reported price. To do this we added the cost of alumina for our tolling production in Iceland and deducted regional premiums above the LME for all facilities. As indicated on the slide, the US cash cost and the power cost -- power forecast for Hawesville are only for the period through August when the Hawesville power contract terminates. We'll provide an update on our cost forecast later in the year once we have further data on Hawesville's power arrangements beyond August.

For carbon we'd expect to see some continued improvement in US costs due to lower coke prices, and in Iceland we anticipate flat anode costs year-over-year. I want to point out that the restart of the Netherlands anode facility is expected to occur in late 2013, so it will only have a limited impact on current year operations. When the first phase of the anode plant is fully up and running in 2014 we expect annual price savings of about $5 million as compared to 2012 when we were buying these anodes from third parties, not to mention the additional benefit of larger anodes that Mike mentioned as well as potential for further expansion.

Moving on to Slide 12, we expect the cost to maintain Ravenswood in its curtailed state will be fairly consistent with 2012, and we expect cash and book interest to also be in line with the prior year. Corporate SG&A will be up about $10 million as we incur start-up expenses associated with the new anode facility. In addition to these start-up costs, we expect to invest $25 million to $30 million in capital to restart the first furnace. As Mike has mentioned, we have multi-year investment program to increase the capacity at our Grundartangi facility, and 2013 will be the most concentrated year for spending with an estimated investment of $25 million to $30 million.

Moving on to income taxes, our current-year income in Iceland will be taxed at a rate of 18% for book purposes. Cash taxes in Iceland are on a one-year lag, and we anticipate these will be in a range of $5 million to $10 million, based on 2012 taxable income. In the US, we continue to expect essentially no book taxes due to our significant deferred tax assets. From a cash standpoint we expect to pay some modest amount of taxes in the US due primarily to limitations on state NOL usage. One last thing that I want to note here is that, based on some cash transfers that were made in 2012, we expect to pay approximately $8 million in withholding taxes in Q1 2013 and receive a refund of $21 million in Q4.

I'll now hand it back to Mike, who will take you through our priorities for 2013.

Thanks, Shelly, if we can turn to Slide 13, as Shell said, I'll just focus here on the major things that we'll be working on through the balance of 2013, and then we'll get right to your questions. First and foremost again on safety. We have got a real commitment to continuous improvement throughout the Company here. There is a real effort required just to stay even in this area, the proverbial gravity works really against you here, and so we are focused every day. We've had efforts drilling down to specific areas of focus for each department in each plant for safety improvement. And we are also investing judiciously in outside experts where we think they can add some real value. At Hawesville, as I said earlier, we are absolutely convinced that this plant can produce attractive returns at market power rates, so we're using all efforts right now to pursue a plan to get that plant to market.

At Ravenswood we remain absolutely committed to restarting this plant. As I've said, we have had great support from Governor Tomblin of West Virginia and other state leaders, and this support, combined with the developments in the US power markets about which I've spoken, should provide the basis for a restart and a significant life for this plant. At Grundartangi we're very focused on the two large capital projects bringing those both in on time and on budget. First at the plant itself the hot metal capacity expansion, and, second, the restart of the anode plant in the Netherlands. Last, at Helguvik, we're absolutely determined to assemble a package of power to enable this project to restart. As you remember about half way through 2012 we announced that we had reached an agreement in principle with one of the two power suppliers on headline terms. And we have been working with them and continue to work with them on working out the complex details to round out that contract. With the other supplier, we've spent quite a bit of time and continue to working on discussing the terms of the new power station that they'll be building to support the Helguvik project.

And with that, I think Shelly, Enrique, we can take questions.

Hey, Doug. We're ready for questions.

Certainly.

(Operator Instructions)

Kuni Chen, CRT Capital Group.

Just to start off, obviously the volume expectations at Grundartangi continue to be pretty positive here. Can you just talk about how that ramps up through the -- through the year, kind of sequentially?

Ooh, I think Kuni, just thinking it through, I don't have it in front of me, but I know obviously how the project goes. It is going to be more back end loaded as we create the conditions to start ramping up the amperage here. Just to elaborate, what we're not doing is adding any new production cells, right? So we're staying with the footprint we have now and to oversimplify what we're really doing is just cranking up the amperage need, as I said, larger anodes in order to do that. We need some refurbishments, for example, in the rodding shop in order to accommodate the transfer of those larger anode -- rodded anodes and things like that. So I would say, Shelly, please stop me if I'm wrong, more back end loaded this year in terms of the ramp -- the 2013 portion of it. As Shelly correctly said, Kuni, we're going to see the more meaningful additional tons in '14 and '15.

(multiple speakers) Very modest increase in 2013 and then you'll really start to see the impact over the next few years.

Okay. Got you. And I guess just as a follow-up on the Big Rivers issue, I think you've talked about it in the past, seeking a 30% reduction in your power costs, by going to the spot market. Now, in light of the fact that I think they are looking to raise rates, something on the order of 20% this year, plus you have the announcement from the other smelter there in the region, can you give us some characterization of where you are in the negotiations? Are you guys miles apart?

Of course.

If you could just give us some color there.

Good question. So, let me take a step back. That 30% reduction, Kuni, to which you referred, is the difference between on the one hand the power rate that we're paying right now under the power contract with Big Rivers as you correctly identified the current supplier, and the market price. So the market price doesn't change based on any requests that Big Rivers makes to the Public Service Commission for a rate increase. That -- those two are completely independent things. That is part of the issue here.

What happened is, when we terminated our power contract in August, Big Rivers necessarily, just to remind you, Big Rivers -- pardon me -- is a cooperative, thus a non-- in essence a non-profit entity. Their revenues have to match their expenses. And so when we gave them notice that our load was going away, our load is roughly 35% of their total load, little bit more than that, 38%, if I recall, they had to prepare a rate case which they filed -- this is what you're referring to on the 20% -- and apply to the public service commission to raise rates on the other rate payers in order to make up for the Hawesville load that is going to leave their system in August of 2013. So -- so the two facts that you pointed out are correct, but they're totally different things.

Now the last point you raised I'll address, the other smelter in the region, it is about 50, 60 miles away from Hawesville, gave their own termination notice. It was just in the middle of January, if I recall, Kuni, and so all else being equal, the expectation is, in fact, they have said it quite publicly that Big Rivers will have to again go to the Public Service Commission and in essence or in practice, increase their request for a rate increase, given that now, in aggregate, 70% of the load in that system will be leaving their system. So, I hope that makes sense. Really your facts are right but two completely separate things. The market price hasn't changed at all. It has been bumping along at about the same rate for the past year or so.

Okay. That helps, I guess with that situation.

David Gagliano, Barclays.

I have a few questions with regards to page 11 in the slide deck, the 2013 item. I want to clarify one thing. Did you see strip out the premium to calculate the cash cost range?

We do. They'll either net of premiums so you truly can line it up with the LME reported price, and they are apples to apples.

Okay and what is the assumed premium in that number, just so I know?

It is between -- right around $0.10 for the full year.

Okay. All right. And then just and this may be covered elsewhere and I apologize if it is. The shipments, if you could -- can you give us the 2012 actuals for Hawesville, Mount Holly and Iceland shipments, as well as the actuals for US and Iceland cash costs in 2012?

David, we don't give -- it's Mike -- so if you go to the back of the financial information that follows the verbiage in the earnings release, you will get part of that. You will get shipments by quarter for the last eight quarters in Iceland as distinct from the US. We don't traditionally break out in the US Hawesville versus Mount Holly, and because it is just one geographic pool there of revenues. And we haven't traditionally broken out cash costs by plant, either.

Okay. I'm just trying to get a feel for on the cash cost side on -- and to do that, what kind of -- what do those numbers represent year-over-year basis, maybe a percentage basis for the US and Iceland.

When you say what do they represent--

In terms of percentage increase or decrease.

Obviously a big piece of it is LME-dependent. So you have to adjust for that. Significant improvement, as Mike mentioned already, in the power cost at Mount Holly, you'll see that embedded in the current year.

Carbon prices down, just to go through them in both -- both geographic regions, and Iceland on the finished anode side, if you will. And on -- and then in the US principally because of reduction in the price of calcined coke. Pitch marches to its own tune to a certain extent. Power, as Shelly already covered, labor costs are up sort of normal amount per CBAs, basically inflationary. So you will see them down in both. I wouldn't want to quote, David, off the top of my head a, as Shelly said, an LME consistent percentage, but they're both down in absolute.

All right. All right. Thanks very much.

(Operator Instructions)

Brett Levy, Jefferies & Company.

It's Jefferies, yes. First off, and I ask this every quarter, but can you talk about hedging especially in the context of maybe uncertain (technical difficulties) '13?

Hey, Brett, you broke -- you said hedging, and then you broke up at the latter part of your question.

Okay. Yes, given uncertain levels of production in 2013, sort of what level of hedging--

Yes, so we've got no hedges on at all. No forward sales, and the last of our production contracts expired in June of last year, of course. So we've got nothing on the books right now.

And then the maturity of the '08s, obviously it seems like a lot of the different parts of your business are kind of getting sort of kicked down the road in terms of like decision-making and in terms of the Helguvik power contract, the Hawesville, et cetera. Can you talk a little bit about kind of what your thinking is given the capital markets are very open right now?

Yes, sure, and we would agree with you. The capital markets are very open right now, and we do anticipate a refinancing in the near term. As you likely know, right now we're waiting for the filing of the 10-K really before we can pursue anything for marketing purposes. We need that document. But beyond that, as you know, as we get closer to the call date, the cost of redeeming those bonds actually comes down. So during that time we're taking a look at all of the different instruments that are available to us, and, as I said, we anticipate that we will do something on that refinancing in the near term.

And then on Helguvik you said you were optimistic something might happen in 2012. It seems like you sort of reached an impasse. Are you optimistic that something will happen in reaching a favorable agreement in 2013?

Yes, I wouldn't say we were optimistic, and we got it wrong, so that is correct. I wouldn't characterize it, Brett, as an impasse. An impasse, at least the way I would define it is, you've got two parties with kind of mutually exclusive positions. It hasn't come to that at all. It's just the complexity of the problems. Remember, that the issue here, primarily, is around the financial condition of both of these power companies post-you know, crash. I don't like using that term, but post-crisis in Iceland, capital controls remain on, despite the fact that the sovereign has continued to improve in its credit rating and its credit outlook, as you know. But there is some still deeply embedded issues in each of those power companies which are both highly levered, and so we're -- that's kind of what we're dealing. So it's -- I wouldn't describe it as an impasse.

We agree on the -- on the problem, and we're just trying various ways to try to fix it. The latter -- or your last question, last part of your question, I guess, I'm going to again say, I hope I don't have to sit here a year from now. I don't expect to sit here a year from now and make the same comment. We do see for a variety of reasons conditions kind of coming together for some time during this year, I wouldn't like to predict when during the year, but we're reasonably confident something ought to get done one way or another this year to get that project back running. Right now, the site is closed down for the winter, but we're hoping here as early in 2013 as possible to get it running again.

And then the last one, and this is sort of just pie in the sky because I know you guys think of yourself as a global company, and you should. Would you look, perhaps as a bargaining chip or perhaps just because it is a good idea economically would you look at pursuing a Mideast project?

Well, first and foremost, never -- if you mean as a bargaining chip, vis-a-vis the other situations with which we're dealing with power, never there. We have a firm view that, each of these -- just like any investment in which we look has a different cost of capital and different risk profile. Each of these are a different situation and, as far as we are concerned, are mutually exclusive. So never from that perspective. I guess would not -- never say no in terms of a Mideast project. But, Brett, we would really have to look at ourselves and ask what do we bring -- what does this bring to our share owners, what do we bring to that project? How can we get value out of it for our share owners given our size and given who we are and what we do well in our opinion, anyway. So I guess that is a long-winded way of saying I wouldn't wait up at night waiting for us to sort of announce a Persian Gulf project, but we would certainly look.

All right. Thanks very much, guys.

Speakers, at this time we have no further questions in the queue.

Thank you very much, Doug.

All right. We appreciate, again, everybody joining us this afternoon, and we look forward to reporting the first quarter to you around the third week, or so, in April.

Ladies and gentlemen, that does conclude our conference call for this afternoon. Thank you for your participation. You may now disconnect.