CEO Jochen Tilk Presentation at the BMO Capital Markets Farm to Market Conference

Transcription

1 May 18, 2017 TRANSCRIPT CEO Jochen Tilk Presentation at the BMO Capital Markets Farm to Market Conference Jochen Tilk- President, CEO PotashCorp Thanks very much, Joel. Good to be here, and good afternoon, everybody. Hope you had a good lunch, and I'll walk you through a couple of points while you have a chance to look at this. We'll talk a little about markets in general, what we think, talk about the nutrient markets, but also the crop markets. And then talk a bit about our strategic focus, and we will finish off with the merger of equals and where we stand. A couple of points on who we are. We're the world's largest fertilizer company or nutrient company by capacity. We produce all products, which is potash, nitrogen and phosphate, and then we also have four investments, we call them equity investments, which have considerable value in our equity portfolio, our market cap. And our mines, potash mines are all in Saskatchewan and one in New Brunswick. Saskatchewan is in a province in Canada. Our nitrogen facilities are in the United States and Trinidad and Tobago, and phosphate, we have two mines in one in Florida and one in North Carolina, and then we have P2O5 plants associated with both of these facilities. Our equity investments, there's four of them. ICL, we have a stake, 14%; APC is Arab Potash Company in Jordan, we have a 28% stake; SQM in Chile have a 32% stake; and then we also have a stake of 22% in Sinofert in China. That's the company in a nutshell. When you look at distribution, our namesake, potash, is still our core portfolio in terms of production in metric tonnes. You can see that we produce just around 9 million tonnes annually. We produce approximately 6.4 million tonnes of nitrogen products, and then just under 3 million tonnes, 2.7 million tonnes of phosphate product. And when you look at gross margin distribution, it's a little different, which has mostly to do with the fact that phosphate has been a difficult year. So it's almost an equal distribution right now between potash and nitrogen. If you would have looked at that distribution in gross margin just a couple of years ago, it would have been quite different when potash prices were higher. And I expect if you look at it next year, we'll look very, very different again. Well, I'd like to just start talking a bit about crop prices, where they are, what we see in different parts of the world, and how things are moving along there. And then we'll look at the different markets in terms of demand. I'll focus a little bit on potash, but switch to nitrogen, and make a couple of comments about phosphate as well. 1

2 When we look at various countries, I'll start with India. We have good weather conditions in India, crop conditions are excellent. So, we see good movement there. The monsoon demonstrated good rainfall, which is always important in India. What has put a bit of a damper on the movement of nutrients is the subsidy shift. And I'll say a few more words about that in a second. Asia, Southeast Asia in particular is a large palm oil producer. It's been very good. The weather conditions are good for application. Palm oil is a big consumer of or oil palms, I should say, the plants are a big consumer of potash. And the palm oil prices are good right now. So that demand is correlated to that. North America, we had some pullback in acreage for corn, and people are switching to soy, which is mostly a function of the crops that we had in the previous years. May have some impact on nitrogen, but will not have any significant impact on potash. Strong fertilizer affordability in North America is a big driver. Farmers are in good shape, and the combination of that with the affordability of the fertilizer means that demand has picked up. Latin America, particularly Brazil, has been quite good since the beginning of the year. We've seen very strong demand. There's a couple of reasons for that, barter ratios, fertilizer demand. Brazil is the one country in South America where we see an acreage expansion, which is in addition to application, because of a larger footprint, a source of growth in Brazil as well. China, we see ongoing farm consolidation, things are good. We see a shift to higher-end crops, which, in general, demand more nutrients, particularly potash. So, we like to see that. And we've seen that government has reduced subsidies in local prices for fertilizer, and that's sorry, for crops, and most notably in corn. So, a couple of changes there in those crops, but overall, very consistent and a pretty good market, mostly driven by the farmer economics and the affordability of nutrients. Moving on to a couple of factors. So, the first one is looking at potash. Obviously, the market factor there is affordability, and I mentioned it a couple of times in the previous slide, affordability driven by prices. This is a chart that covers just about two and a half years, 2015, First thing I'll say is the factors that have impacted that and the particular change toward the end is inventory has been drawn down. And so we saw a surplus in inventory, so growth in inventories, particularly in It's changed at the beginning of 2017, and has been a bit of a supporter of some modest but certainly welcome price recovery. We expected and we've seen strong demand, particular at the beginning of the end of As I mentioned earlier, a strong demand in South America. And then, of course, as we look forward, we do anticipate new capacities coming on, and that new capacity will have some impact. We won't quantify it, but we're certainly aware of it. When you look at the evolution of prices, there's a couple of lines in that. They re actually different data points. There is Brazil, there's the Midwest of the U.S., which is another data point for price, and then there's Southeast Asia. You can see they're all correlated. They hardly deviate from one of each other. And most recently, since about September of 2016, we saw modest price recovery that is a pretty shallow slope, but it's continued throughout May, and much of that was driven in South America because of significant demand. When we look at shipments into the world globally and how it distributes in various regions, it does correlate to the second last slide I was showing, which is the crop economics that we see in 2

3 different countries. We particular see very strong demand in Latin America. Globally, we anticipate shipments of 61 million tonnes to 64 million tonnes, and about 12 million tonnes of that is anticipated to go into Latin America, and just about 9 million tonnes of that into Brazil. And again, that's the strong ag market that we see there, and it's also driven, again, by affordability of fertilizer. China, we expect about 15 million tonnes, strong consumption, consumption still going up. Remember, China has domestic production of about 50% of that, the other half is all imports. So about 7 million tonnes to 8 million tonnes is domestically produced, the second half is imported. We do believe that Chinese domestic production pretty much flattened out. There's not a lot more capacity, it's produced in a much different way. It s actually evaporated from brines rather than from mines. So, we think that local capacity exhausted and any future demand in China will have to come through imports. North America is quite a mature market for potash, nevertheless it's a very reliable market, and we anticipate about 9.5 million tonnes into North America. Other Asia, we spoke about palm oil and the demand there, very robust this year, and we anticipate anywhere between 9 million tonnes and 9.5 million tonnes. And then India is always the wild card. We always get our hopes up and think, this is the year, and then something happens on subsidies and it's a bit of a disappointment. Somebody asked me today, said, what do you think will have to happen in India for demand to finally pick up? And I think there's multiple things. As you know, India regulates its nutrient price, its fertilizer price to what's called the MRP, the maximum retail price. It's a function of the exchange rate with the rupee, it's a function of the input cost, i.e., the price that the importers pay. And it's also a function of the subsidy that is paid. And the intention is to keep it pretty solid and pretty steady. But it does create fluctuations in demand. I think we believe and we strongly believe, don't put me on the spot for timing, but we strongly believe that eventually, signs will prevail. When you look at the deficiency of potash in the soil, when you look at the yields that India could achieve, if it'd be if it would apply a certain ratio of nutrients, there's a lot of upside. And I think that signs in upside as an opportunity will prevail eventually, and subsidies and other things will adjust to that. But the timing, of course, is a bit uncertain. Moving on and looking at our expectation of demand into the future, this is 20 years of it's actually 17 years of actual potash increases in demand, and it's four years of extrapolation of the last 17 years. And what the slide is showing you, it's the bars, different colors are actually crops, various crops. The green is fruits and vegetables, the light blue is grain and oil seeds, and then the red is other. And on average, in the last 17 years, the demand for the production of these crops, which kind of equates to the consumption, has grown approximately 2.5%. And the orange line that follows that is potash consumption. And you can see that there's a direct and a very obvious correlation between potash consumption and the increasing crop production, particularly when you look at the green bar, which demands a lot of potash for its high quality crop. And we could see that on average, it's about 2.7% that potash has grown on an annual basis. There are ups and downs, there's a dip in , which was the global financial crisis. 3

4 We extrapolate that and we think that's a reasonable assumption going forward, even though we recognize it does have some inconsistency year-over-year. And if you look at that on a basis of current world consumption of potash, it's approximately 1.5 million tonnes a year. And that's not insignificant. So, on average, we anticipate going forward that the world will consume 1.5 million tonnes if history and the past is about true. And if you translate that, just to give you an order of magnitude, 3 million tonnes is the size of an average potash mine. And there are not that many globally, there's 20 mines to 30 mines that produce potash. So, every second year, the world needs an average sized potash mine to keep up with that. And that's certainly a statistic of the past, but I think it's a reasonable correlation going forward. Looking at that from that perspective then on the supply and demand, the S&D chart, which is the one that tells you whether we're in deficit, whether we're in oversupply, and that's the one that's generally used to extrapolate what direction price is going. Ultimately, no matter what happens on a monthly basis, what happens on an annual basis, that is really what tells you in a long-term, perhaps in the mid-term, direction where prices would go. The red line here is operational capability. It's what we believe this is a Potash Corp. line what we believe the operational capability is, and it includes us at 11 million tonnes. The green line here is what we believe shipments are going forward in Everything going back 2017 are actual numbers. And so, our belief is that somewhere around 2021, four, five years from now, the shipments will be somewhere in the range of 72 million tones, 75 million tonnes, and that operational capabilities will be somewhat above that, but not a lot. And the point of this is that they're still reasonably close, and again, that includes us at 11 million tonnes to be clear. And we think that's reasonably close, it's reasonably balanced, and you can do the math to a certain level of resolution. And then going forward, past 2021, we certainly believe that incremental capacity will eventually be absorbed. And then eventually, at some point in time, it may go into deficit. So, that's the outlook on potash, and maybe I'll sum it up as a balance. When I look at that 1.5 million tonnes of incremental consumption, I look at the projects that we know will come on and, as I made the point earlier, will have an impact on pricing. But once we go beyond 2021, we can see how supply and demand balances out, and demand will outpace that at a not insignificant rate. A few comments, look at nitrogen, very much a tough year mostly because of significant amount of new production coming on. When we look at, I think, there's about 8 million tonnes of ammonia and nitrogen production that has and is about to come online in When you look at what the net increase is, it's about 6 million tonnes. And the difference between new and the net increase is a curtailment in China, which has, on one hand, had some impact on pricing, but it's also the big question mark going forward, whether or not China will continue to curtail its domestic production, which it has done for two reasons. Number one is because of cost. It uses coal to produce urea and nitrogen product. But secondly, because of environmental reasons because those producers tend to be environmentally impactful, and China has become less tolerant of that. 4

5 The question is, of course, will that continue? Will the curtailment actually increase or will China revert to becoming a larger importer into or exporter and, therefore, import in the U.S.? It's a big question, it's a judgment call, people have different opinions on that. I would think that the status quo and that being sustained is probably a good starting point to think. The other thing is for next year is that incremental supply, that net 6 million tonnes, of which, by the way, 3.4 million tonnes is in the United States, the rest is globally, but that incremental production will be absorbed. Nitrogen is a huge a non-discretionary nutrient is somewhere around 200 million tonnes of nitrogen products consumed. So 6 million tonnes is about 3% of that, and the growth rate is about that. So you talk about one year of incremental demand on that 2% to 3% growth projection. So it doesn't take long for that to go to the system. And with that, the majority of new projects should have gone through the system. So we are more bullish 2018 onwards. We're cautious and conservative in We're seeing it a little bit at the beginning of the year. Ammonia had a good start in the season because it was dry, then it became very wet. And farming has been delayed by probably about a couple of weeks in the U.S. And so, we see now that because where urea is, which is, from a price perspective, relatively low, that farmers are now migrating directly to urea. So, there's a couple of seasonal effects as well, but on a broader, longer-term perspective, we think 2017 will be a tougher year will be a recovery year as incremental production is going through, and 2019 obviously is the extension of that. Moving forward, talk to you about our strategic objectives. So, this is all background, really, where crops sit, where product sits, where nitrogen sits. I mentioned a little bit on phosphate, but it's been a tough market. So really, I think the phosphate story is one that's less impactful on us. So I'd like to talk a bit about our strategic objectives and what we have done in response to that, and how we position the company. Before I do that, I'd just like to point out, this is actually a picture of Rocanville, which is our largest mine. As some of you may know, we've ramped it up now, the design capacity of Rocanville is just under 6 million tonnes, 6 million tonnes is one of the largest mines in the world. Certainly, our largest potash mine by margin. Rocanville has been expanded over probably the last seven, eight years. It's just been finished. We spent $2.7 billion to do that. And the objective was to actually get our operating costs down to the lowest point. Rocanville is now scheduled to run at $40 to $50 cash cost, which brings our overall cash cost down to about $70 per metric tonne. And that's a tremendous achievement, and it's one of the abilities that we had to really put our costs down to the lowest. And Rocanville will play a very significant role in our portfolio of five mines in Saskatchewan. Onto the strategic objectives. The first one is very much related to the picture I showed you on the little story on Rocanville. It is how we responded to the market, and we always take a cautious approach. We always say that we will supply where demand leads us, and this year, we expect somewhere to have an operational capability of about 10.1 million tonnes. We expect to sell about 8.9 million tonnes to 9.4 million tonnes, that's our guidance. It was a little lower, 8.7 million tonnes to 9.4 million tonnes, but we brought it up because we're a little more optimistic that we might be able to ship at the higher end of our range. But you can see that we always have 1 million tonnes extra capacity or flexibility for any given time in the event that the market would demand that, and we can respond to that. 5

6 We made some significant adjustments in our portfolio to respond to that. And we brought one of our mines down to a lower production, but we brought it to a premium product, which we call white product. It's generally an industrial product, a non-fertilizer product. It has somewhat of a premium attached to it, so it was a very sensible change. And then, we focused our other operations on the fertilizer potash. We announced some inventory shutdowns that we normally take on an annual basis to respond to what we anticipate demand is, and we try to optimize that so that we can do that at the lowest possible cost. At the same time, we brought in Rocanville. As I mentioned, we ramped it up. We suspended New Brunswick. New Brunswick is a brand new operation that we built, and unfortunately, it has higher cost. And we decided that it was more sensible to reduce our overall cost by maximizing the output from Rocanville. And as a consequence of that, we had to suspend New Brunswick. And we focus now very dramatically on operational excellence and cost reduction, business improvement activities that are most relevant in this potash price environment because there's two ways of obviously increasing margin. One is prices go up, but the other one that is in our control is by bringing our costs down. I'll show you a slide to that, and you can see that on the left side, the third point here is our operational balance sheet flexibility. And the balance sheet flexibility is really what was our third strategic focus for us, that when prices had come off, we realized that we needed to look at cost, when need to look at our dividend, we need to look at our capital. And this chart kind of points out where we are three years later. The first one is on our potash costs. 2013, 2014, thereabouts, our average cost before D&A was approximately $110, $115. And today, we're just around $70. So, a big reduction, and I explained how that worked. Total amount of that is about $450 million. The other thing we did is a reduction in capital. We used to spend approximately $1.2 billion in capital and during our expansion phase, when we actually built our expansions, that was significantly higher. We're now at a run rate of approximately $600 million to $700 million per year. We anticipate that to be our capital run rate going forward, that's $1 billion. And then we adjusted our dividend, and we brought our dividend down. It was painful to do that, certainly disappointing, and but the right thing to do. And when you combine that, it's about $2 billion in reduction of cash outflow, and that put us in a much better position. When you look at our first quarter this year, you can see the results. I mean, the combination of cost reduction, the combination of the steps we've taken certainly were demonstrated by the significant proof results we had in Q1 of this year. So that's three of the strategic focuses, portfolio optimization, cost reduction, balance sheet flexibility. The fourth one is the merger with Agrium that we announced now in just after, I think, September of last year, so seven, eight months back. And but we've been working on that, as you may know, for approximately a year. The strategic reasons have been communicated quite frequently. It's certainly the value creation between the two companies. We anticipate to generate $500 million per year of synergies, amount to approximately sorry, $500 million amounting to $5 billion on a NPV basis. Our enhanced financial flexibility, a larger balance sheet, somewhat a more balanced earnings profile given that we have four pillars, three business units in the three nutrients, and one 6

7 business unit in retail. And then we expect to be best-in-class in a number of things. And leadership and governance, given the quality of both companies, come together. And, of course, we look forward to communicating the strategic expectations and the platform of NewCo, how we approach our market. Very excited about that. We are waiting to finish and finalize all the interactions we have with anti-trust authorities. We've been working with them very closely. We've received approval from Brazil and Russia. We're still working waiting from the United States, Canada, India and China. We expect that to happen in the coming months. So we feel confident that the thereabouts midyear target for closing is still a reasonable target. We've started integration, the things that we're allowed to do. We brought the teams together. We formed our work streams, and we certainly are coming together. We developed our synergies. We built a new business platform for the company. We built a new organization for the new company. Very exciting time. I can tell you to start, a wonderful company from scratch, but having the ability to bring in from both companies, great talent and phenomenal assets. So very much looking forward to the coming months and then the future of that company. Okay. Any questions from the audience, first? Okay. So, Jochen, we've got a lot of questions in from the app. They're fun. Okay. So let's start off easy. So, on your order book visibility for yearto-date and intelligence on competitors, do you feel globally, you talk about 61 million tonnes to 64 million of tonnes of potash demand, do you think the distribution of that from the first half of the year and the second half of the year is more front half or back half loaded? Yeah. I think it's consistent. I mean when we said 61 million tonnes to 64 million tonnes, the midpoint is obviously 62.5 million tonnes. So that's kind of where we see it coming out. I think what we see today when we look at our order book, it's confirmatory. I don't think we would suggest anything fundamentally different. And, quite frankly, Joel, if we were to come out with a projection today, I think it would be 61 million tonnes to 64 million tonnes, pretty much the same. And but it sorry, but they're asking about the split between the first half of the year and the second half of the year. 7

8 Oh, in terms of... Yeah, the back half or front half yeah, the split, how is it as two, six months. Yeah. I mean the split always depends, obviously, in different seasons. I mean, the U.S. is a couple of weeks behind because of weather conditions. We're at the end of May, so we don't even know how that's going to flow through the system. So, you'll have parts that will be in the first half, you have parts on the field that would be in the second half. Brazil is the same way, you got demand in the second half. The China contract will have an impact because the timing of the contract will determine the amount of shipment. So, I can't really talk about the split, H1, H2, but I can tell you right now, what we're seeing, that it's pretty consistent with our annual forecast. So, with the IFA Conference coming up, I guess, this weekend or next week, I mean I know I hate asking this question. What are the odds or what's the probability that you might see an Indian contract over the next week, a Chinese contract? I do realize that and maybe some of your competitors overseas that will be the first to settle, but what would you put the probabilities on if you had to guess? I don't know, Joel, I couldn't even make a projection. I mean, I because I'm not part of the negotiation, so I'm not invited. I read about IFA being a forum, but I'm not even sure if and when and where that might take place. So, I really have to rely on and can t even comment on that. Another question that came out is, how far out do you have how much visibility do you have or how far out is your visibility into domestic and your international order books for potash? And then are buyers more cautious later in the year as they know the K+S Bethune mine is ramping up? 8

9 Yeah. We have pretty good visibility globally because we do have, obviously, interactions with our customers. And globally, we don't have, quite frankly, that many customers. So, we know where they stand, we know what their expectations are. We have good visibility in North America, but it does go from field-to-field because the fill program is announced, and then there is a window during which it's open, and then people place orders, and at the end, we look at the tally, and then we have a pretty good idea of what that order book will look like for that fill program. So, globally, decent visibility; domestically, depending a bit, but overall, not bad. Okay. So, this is a question that's provocative a little bit. So, it says that Potash Corp. has been the main player to lose potash share to balance the market. With the new capacity coming, it's hard to see Potash Corp. potash volumes increasing. Okay, that's this person's view. What are your thoughts? Yeah. I mean, I'll refer back to the demand and the supply chart. And when if you go back to the numbers and you take 2.7% equaling 1.5 million tonnes a year, and you extrapolate that. And then you look at the projects that have been built and have come to fruition, I think there is a good case to be made that we're in a good position. We recognize the projects that will come online, we recognize how they will flow through the system. But I think we also believe that there's a good chance and an anticipation, more than a chance, anticipation that we use our incremental capacity to service that. I mean, I'd just make one point, which is an interesting one, it's just another data point. When you go back, every one of the projects that you see today, and there's a tail end to that now, so the projects that are now being completed and start production are the final ones, but the wave started in about 2002, 2003, 2004, thereabouts, and the industry collectively invested about $50 billion in brownfields and greenfields, spread over that approximately 20-year period, between 2020 and So in that period, 20 years, $50 billion. But in the last few years, those amounts have obviously gone down significantly. And, yes, there are some final projects that will come through, but they'll be at the tail end of that. And no question, that wave has to make its way through, but I think when you compare that with the demand that you can see how post-2020 there is a very high opportunity, a high chance for us to be able to apply our incremental tonnes and benefit from that. 9

10 So, let's talk about that because it's very topical at this conference because BHP's here to talk about potash, they obviously announced some more concrete numbers on Jansen. You talk about 2020, 2021 maybe balancing. Here they are BHP saying, look, we're going to spend $5 billion, we're going to bring on 4 million tonnes of Jansen. That timeline, 2023, is not necessarily new with what they've been saying, but there's more numbers around it now, and they're here talking to investors. The question I would ask is, does it impact how your strategy will be for potash if you think Jansen is really going to come in 2023 or not? You have lots of idle tonnes, you have lots of things you could do, does that change what you think and what you want to do? Yeah, Joel, really good question and a lot to be analyzed. I think the first I'd like to say is that there really isn't much new in BHP's projection. You would have seen it, they've always spoke about the decade after 2020, for Jansen to come into production, so there's consistency to that. I think what is new is that they're being more specific and the mine now is significantly smaller than what they had suggested before, at least in the initial phase. The capital is more specific. And they actually spoke, from what I saw, about a rate of return, which, of course, will greatly depend on what the prices would be at the time. So, I don't think there were any surprises there. I think the time that BHP has chosen, I don't know for sure, but we're sure it's on the same trajectory of world demand and the anticipation when the world demand has grown to be able to anticipate and absorb a mine. Whether or not that if it does become real, I think there is still a couple of steps BHP would undertake before that is actually a reality. And I'm sure there's more comments to come, but we would look at that and we would think about that. Whether or not that would cause us to react in a certain way, I have no idea today, I think that's much too early to state, it was a very preliminary comment, but we will certainly incorporate that. And as times goes on, we'll be able to make reference to that. And if it is real, then we can say what we might do. So, there's a question, and the question is from the app. Look, if you re so optimistic on potash, Jochen, why did you choose to merge with Agrium when your assets are half of replacement costs? Shouldn't your assets over time re-rate to your replacement costs? 10

11 Yeah, I think replacement cost is a figure that has relevance at a certain moment in time, and particularly when you build them. I think at the end, it's the earnings that you generate with your assets that drive the value of your company. So if you can demonstrate an earnings profile that represents that, that's good. But if not, then obviously, your market capitalization will be that. And I think right now, we're trading, like any other company, we're not trading on asset value, but we're trading on earnings profile. The merger of equals that we proceeded has tremendous strategic merit. There's a timing factor, but there is the combination. We would not get the synergies, we would not have the platform, we would not have the balance sheet, we would not have the distribution centers. We would not have the opportunity to make headway on innovation, on technology. I think there are tremendous opportunities that go far beyond just the leverage on potash, which you have to time perfectly. So, I think the first the strategic merit of the transaction, in my opinion, far exceeds the leverage and the perfect timing of that. There's a question also about this merger will hopefully close in a couple of months, and the questions are what will your priorities be in your new role when we get there with the merger? A couple I mean, first of all, Chuck Magro, my colleague for whom I got tremendous respect, is a great CEO, will run the company, and a big part of what I do is to support him because I have every confidence, it's going to be a phenomenal transaction. So that's number one. Number two is leading the board as the Chair of the board. So I look forward to bringing two boards together from very different companies. Obviously, Agrium had historically a different strategic focus than Potash Corp., we have different experiences. We ve got different directors, so it'd be great to bring them together and bridge excellence in governance, and develop a strategy together. And the third is that my responsibility as an executive is to look after corporate development and strategy. I also have integration reporting into me, and working with the team, and, of course, again, working with Chuck to develop the strategy because we look forward to that. And I mean to come to you as investors and present to you what the more detailed strategy of NewCo is. So that is my third responsibility. 11

12 Undisclosed Natural gas in Trinidad, can you just give us an update? Because I've spoken to some of the methanol guys, spoken to CF and everybody is saying different things. I'm sorry, I really I just couldn't hear it. Yeah, the gas availability. So I'll be fast just to be mindful of time. I'm not trying to rush through it, but good progress. A year-and-a-half ago, we've been more pessimistic on gas availability. The new government that's been in office for a couple of years now has taken a number of steps. Most importantly, it promoted projects, it found investors. There's four or five projects now in Trinidad and Tobago that are coming online. There's Juniper, there's Starfish. They just signed a contract with the Dragon project with the Venezuelan government, and that progress is encouraging, I have to say. The next step is to see that come into production. Obviously, they have to yield the volumes, and the step after that is to negotiate with a natural gas company and the government, the terms of the new contract. And I think if there's more gas available, which there seems to be that seems to be the case, it is has been the focus of the government those gas contracts could be negotiated on a mutually beneficial basis. And I think then, we would be in a much better position. So, good progress, more optimism still needs to be seen, but we are hopeful. Thank you, Jochen. 12