Earnings Call Transcript
Ferroglobe PLC (GSM)
Earnings Call Transcript - GSM Q4 2020
Operator, Operator
Good morning, everyone, and thank you for joining Ferroglobe's Fourth Quarter and Full Year 2020 Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; Gaurav Mehta, our Transformation Director and EVP of Strategy and Investor Relations; and Jorge Lavin, Group Controller. Before we get started with some prepared remarks, I'm going to read a brief statement. Please turn to Slide 2 at this time. Statements made by management during this conference call that are forward-looking are based on current expectations. Risk factors that could cause actual results to differ materially from these forward-looking statements can be found in Ferroglobe's most recent SEC filings and exhibits to those filings, which are available on our webpage, www.ferroglobe.com. In addition, this discussion includes reference to EBITDA, adjusted EBITDA, gross debt, net debt, and adjusted diluted earnings per share, which are non-IFRS measures. Reconciliation of these non-IFRS measures may be found in our most recent SEC filings. Next slide, please. During today's call, we will first review the highlights for the fourth quarter and full year 2020 as well as our business and operating environment. Then I will provide some additional details on our financial performance and key drivers behind our results. And finally, we will provide an update on the transformation plan. At this time, I would like to turn the call over to Marco Levi, our Chief Executive Officer. Next slide, please.
Marco Levi, CEO
Thank you, Beatriz, and good morning or good afternoon to everyone. 2020 was a defining year for Ferroglobe and an extraordinary one in many ways. On one side, the world was fighting the challenges resulting from the global pandemic. This required our relatively new senior management team to make drastic decisions and change internal processes to support swift decision-making. It changed the way we operated our assets. And it forced us to expand and accelerate our efforts on the cost-cutting side. On the other side, we had the clear and critical initiative, which was to design a strategy for turning around the company and to push forward with this agenda while navigating an unprecedented operating environment. The challenges we encountered, particularly during the early days of the pandemic, highlighted gaps in our business and the opportunities to align the team to drive change. All in all, our financial performance was not what we would have liked to deliver. But we do view 2020 as a success in many areas. We made changes in management at various levels and started redesigning parts of the organization to drive results and emphasize accountability. Despite the 30% decline in sales versus 2019, we returned to positive adjusted EBITDA in 2020. This is a testament to our ability to operate this business and reinforces the potential of the asset base. Furthermore, we continued operating the business while managing our cash. This has been a focus area for the company, and we've made significant strides to operate without any disruptions during a turbulent period. We successfully refinanced our accounts receivable securitization program, which released some previously trapped cash but also lowered our financing costs. Lastly, we now have a robust multi-year strategy and well-defined roadmap for turning around this company. We have discussed our turnaround plan on recent calls and have recently published projections we provide further details on how we are going to create value. As we look ahead, 2021 will be a pivotal year not only as the operating environment improved steadily over the past few months, but we are also making substantial progress on critical priorities. We are certainly starting the New Year on a positive note. A few weeks back, we informed the market of our progress regarding a proposed financing, which addresses the maturity of our senior unsecured notes and addresses the injection of new capital into the company. Reaching this milestone in the financing process, we are taking steps toward ensuring that we have the resources to execute our turnaround plan. Furthermore, it validates the strategy underlying our business plan illustrating a clear path towards value recovery that is recognized by our financing partners. On the turnaround plan itself, we completed most of the preparation work in 2020. At this time, we are in the execution phase across all the new creation areas. I will get more into this later in today's presentation. Moving ahead to Slide 6, please. For the full year, sales were $1.14 billion, which is 30% lower than the $1.62 billion of sales generated in 2019. This is primarily attributable to the unforeseen impact of COVID-19 on volumes and pricing across all our products. The net loss for the full year 2020 is $194 million, including an impairment charge of $36.8 million related to the Niagara plant compared to a net loss of $296 million during the full year 2019, which includes a goodwill impairment charge of $134 million. Finally, we returned to a positive adjusted EBITDA. For the year, we had $32.7 million of adjusted EBITDA, which compares to negative $29.2 million of adjusted EBITDA during 2019. Once again, this variance highlights the drastic changes we have made in costs. Likewise, for the full year 2020, we returned to positive operating cash flow, generating $154 million throughout the year. During the fourth quarter, the company generated sales of $322 million, an increase of 22% compared to $263 million of sales during the third quarter. The net loss for the fourth quarter was $84.1 million, which compares to a net loss of $46.8 million during the prior quarter. Adjusted EBITDA for the fourth quarter was positive $5.7 million, a decrease of $22.2 million reported for the third quarter. Overall Q4 was marked by higher sales volumes and slightly higher prices coupled with significantly higher costs, some of which are not recurring, resulting in margin erosion during the quarter. The higher shipment volume levels for the fourth quarter reflect improving market demand, particularly in the later part of the quarter. We also continued our efforts to reduce debt levels. The gross debt increased by $31 million during the quarter, primarily due to the bond coupon accrual. We ended the year with gross debt of $473 million and net debt of $341 million. The cash balance was $132 million at year-end. With the refinancing of our prior securitization program, there was a cash release from the previously trapped cash in the SPV structure. While the total cash balance is down quarter-over-quarter, the unrestricted cash available actually increased following that financing, improving from $78 million in Q3 to $130 million at year-end. Next slide, please. On the next three slides, we will discuss pricing and volume trends, earnings contributions, and market observations for each of our key products. Turning first to silicon metal on Slide 7, Ferroglobe realized an average selling price for silicon metal of $2,260 per metric ton in Q4, relatively flat from $2,248 per ton the previous quarter. The index pricing in the U.S. gradually increased by approximately 2.6% during the quarter, while the European index increased 7.5% during the same period. Much of the pricing recovery was seen late in the quarter, as low inventories along the value chain coupled with strong demand in both the U.S. and Europe supported pricing, adding some upward pressure. The volume trend chart on the top of Slide 7 shows that there was a 7% increase in silicon metal shipments over the previous quarter to approximately 55,000 tons. We saw deterioration in our EBITDA from the silicon metal business quarter-over-quarter, driven primarily by an increase in costs. Our silicon metal production was adversely impacted by higher winter electricity unit cost in France, as well as greater energy consumption at a few locations. Additionally, the planned production curtailments drove lower fixed costs absorption. Lastly, we incurred some one-off penalties resulting from a reduction in production due to COVID-19 relative to our energy commitments, which anticipated a healthier production profile. Overall, the market dynamics at the end of 2020 have carried over into the beginning of 2021, with the U.S. and European indices showing steady improvement. After a weak demand picture for most of 2020 driven by COVID, there has been a pickup in activity across the industrial sector. We are seeing that trend in our sales into the chemical and aluminum end markets in both the U.S. and Europe. This demand improvement comes at a time when inventory levels are low throughout the value chain alongside logistical barriers and increased domestic consumption with limited Asian inputs into our markets. As a reminder, there is a lag from the moment in the index when we realize that benefit. Overall, the momentum at the beginning of the year is favorable for our business. We will get to our ongoing silicon trade case on February 23. The U.S. Department of Commerce imposed final duties of up to 160% on all silicon metal imports from Bosnia, Iceland, and Kazakhstan. Next, the International Trade Commission will vote whether to affirm the preliminary decision that these inputs are a threat to U.S. industry. The ITC vote is scheduled for March 24. Regarding Malaysia, the investigation is proceeding, and to date, Commerce has imposed preliminary duties of 7.21% at the end of January. This rate may increase in a final determination, which is scheduled for announcement on June 17. Next slide, please. Turning to silicon-based alloys on Slide 8. During the quarter, the average selling price decreased marginally by 0.4% to $1,528 per metric ton, down from $1,534 per metric ton in the third quarter of 2020. Despite the decline, Ferroglobe’s realized price for silicon-based alloys is above the U.S. and European indices. This is due to the weighting of our higher margin specialty ferroalloys products, which accounted for approximately half of the shipments during the fourth quarter. During the quarter, we realized a 35% increase in sales volumes. Sales volumes of silicon-based alloys were approximately 57,000 tons in Q4, about 15,000 tons higher than the previous quarter. This improvement is primarily attributable to sales of ferrosilicon, which has benefited from the restart of steel production, especially blast furnaces in Europe. Furthermore, our foundry sales also improved on the back of gradual recovery across the global automotive end market. EBITDA for our silicon-based alloys business was positively impacted by prices, volumes, and lower costs during the quarter. We realized cost improvements of $8 million due to improved fixed cost absorption. This benefit was realized in both France and Spain, which previously suffered from lower production following the slowdown in steel demand in Europe during the second and third quarters of 2020. Collectively, these factors resulted in an improvement in EBITDA contribution from this segment to $7.1 million in Q4, up from negative $1.9 million in the third quarter. As you can see in the pricing trend graphs, pricing in the U.S. and Europe steadily rebounded in the second half of 2020. Overall, ferrosilicon pricing is benefiting from the rebuilding of inventory along the value chain, as well as recovering steel demand. Next slide, please. Turning now to manganese-based alloys. During the quarter, the average selling price increased by 2.2% to $1,031 per metric ton, up from $1,009 per metric ton in the third quarter of 2020. During this timeframe, the ferromanganese business had a 4.4% increase in realized prices, while realized silicon manganese pricing was 1.7% higher. Shipments during the fourth quarter were up 58%, an increase of approximately 24,600 tons over the previous quarter. As with other products, the value chain for manganese alloys also reflected low inventory levels at a time when demand was picking up. The EBITDA contribution from this business was negative $0.1 million per metric ton in Q4, versus positive $13.1 million in the third quarter. Volumes and pricing positively impacted the quarterly results by $3.1 million and $1.5 million, respectively. However, on the cost side, there was an adverse net impact for the quarter of $17.8 million. Of this amount, approximately $12 million is attributable to a potential earn-out payment relating to our manganese alloy plants in Norway and France. Additionally, we were adversely affected by lower plant efficiency and higher fixed cost consumption costs. I would now like to turn the call over to Beatriz to review the financial results in more detail.
Operator, Operator
Thank you, Marco. Beginning with Slide 11, sales of $321 million during Q4 were 22% higher than the $263 million of sales in the prior quarter. This increase in sales was driven by a 29% increase in shipments, which more than offset the 3.5% decrease in average realized selling price across our portfolio. During the quarter, our cost of sales increased by 36%. This is primarily attributable to the variable costs directly related to the increase in shipments during the quarter. Additionally, it also includes the $12 million charge for the mark-to-market of the end-of-liability for the manganese assets. The increase in other operating expenses of approximately 75% or approximately $20 million can be explained by three key factors. In Q3, we realized a $5 million benefit resulting from an R&D project in France. That impact was one-time, so we are not getting the same benefit this quarter. Additionally, we had a $6 million accrual for the potential purchase of CO2 emissions rights based on current pricing. Finally, the remaining balance is mainly attributable to higher transportation and logistics costs resulting from increased volume activity, as well as higher freight rates as broader industrial activity has picked up. The net impact of higher sales was partially offset by higher costs, leading to an improvement in our operating loss for the quarter, before adjustments to negative $26.2 million compared to negative $38.8 million during the prior quarter. Adjusted EBITDA was positive $5.7 million, declining from $22.2 million in the third quarter. It should be noted that the results presented are un-audited. On November 16, 2020, the Tribunal Superior de Justicia of Galicia dismissed FerroAtlántica’s claim to separate the metallurgical plants of Cee and Dumbria from the related hydroelectric power plants. The accounting impact of this decision has been considered in the Q4 results. This accounting impact is under discussion with our external auditors and could change. Next slide, please. Quarter-over-quarter, we saw a decline in our adjusted EBITDA from $22.2 million in Q3 to $5.7 million in Q4. There are a few key elements behind this, and I will specifically stress a few items that are non-recurring in nature and should be considered when you look at our normalized EBITDA thresholds. During the quarter, we benefited from some volume pickup late in the year, and we also benefited from improved pricing across the portfolio. Furthermore, there was an adverse impact of $9.4 million also attributable to energy costs. This specifically relates to a $5.8 million penalty incurred in France, as we consumed less energy than contracted due to unplanned production curtailments in Europe. On the other hand, we benefited from a $3 million compensation on energy from the last quarter, as a result of energy providers being unable to secure minimum energy levels. As in the previous quarter, we had significant mark-to-market adjustments relating to a potential earn-out liability tied to some manganese assets. The P&L impact was positive $7.5 million in Q3 and negative $2.2 million in Q4, hence, implying a quarter-over-quarter variance of approximately $10 million. Given the fluidity of the underlying market for manganese alloys, this liability could move back and forth quarter-to-quarter and create some noise. Hence, one must factor this into their assessment when evaluating the quarterly performance. Similarly, we had a $5 million benefit from the elimination of a liability tied to an R&D project in France. In the bridge, we have a negative impact of these one-off benefits realized last quarter. Lastly, we continue to make progress on head office cost reduction efforts during the quarter, which contributes $5 million. Slide 13, please. For the full year, adjusted EBITDA improved from negative $29.2 million in 2019 to positive $32.7 million in 2020. The most significant factor impacting the adjustment was the cost-saving initiatives resulting from improved production costs. First and foremost, we continue to drive initiatives aimed at obtaining the raw material mix to generate savings without compromising the end quality of our finished goods. Furthermore, by curtailing capacity and running our most competitive assets at higher utilization, we gained further benefits in our overall production costs. Lastly, due to slower industrial activity, we benefit from lower pricing for raw materials and other critical inputs. Significant pricing declines across all our core products adversely impacted us year-over-year. As mentioned in the prior slide, we have been extremely focused on corporate expenses, targeting both discretionary and non-discretionary spend. The net result was a benefit of $13.5 million in 2020. Next slide, please. Turning now to Slide 14, I will review our balance sheet in greater detail, where we have made improvements to our total available cash and working capital. With a challenging market environment, this improvement is critical for our business. Cash and restricted cash totaled approximately $132 million at the end of 2020 compared to $147 million for the prior quarter. While there is a decrease in the total cash amount, what is critical to the company is the available cash balance which can be accessed without any restrictions. During the quarter, our available unrestricted cash increased by $25 million from $77 million at the end of the third quarter to $103 million at the end of 2020. In refinancing the prior account receivable securitization facility in Europe, the special purpose vehicle structure supporting the financial fell away once the facility was refinanced. This release some previously restricted cash. Gross debt increased by approximately $31 million over the quarter, which is primarily related to the accrual for the semi-annual bond coupon payments. Net debt increased by $46 million over the same period. This increase is driven by lower accounting cash as the trapped cash in the SPV is no longer consolidated. Total assets were approximately $1.4 billion at year-end 2020, a slight decrease of $34 million over the prior balance at the end of Q3. Ferroglobe’s working capital improved by $15.3 million in the fourth quarter, primarily as a result of our emphasis on lowering raw materials and finished goods inventory across the portfolio. Next slide, please. We have provided all the quarterly details for 2020 on this slide. Let me first bring your attention to the Q4 2020 figures. The cash flow from operating activities during the quarter was $3.5 million, the negative $0.6 million of reported EBITDA was offset by our working capital inflows, yielding net cash inflows of $13.5 million with cash released from inventory being the biggest contributor. Cash flow from investing activities was negative $14.2 million as we had a pickup in capital expenditures during the winter months during some planned outages, mainly in Europe. Lastly, cash flow from financing activities was negative $4.7 million for the quarter. During the quarter, we refinanced our prior accounts receivable securitization facility and replaced it with a new factoring facility in Europe. This year, approximately $19.7 million of cash was released at closing. Additionally, the cash movements relating to refinancing are being considered as bank borrowings and payments in the cash flow summary. In aggregate, we had free cash flow of negative $10.7 million during Q4. For the full year, our cash from operations was positive $8.9 million, and free cash flow was positive $122 million. Next slide, please. Now turning to Slide 16. We reduced working capital by $1.5 million during the fourth quarter. This reduction was driven by a decrease in inventory and an increase in accounts receivable, which was offset by an increase in accounts payable. The positive impact from inventory was partially offset by the effect of a strengthening euro relative to the U.S. dollar. Turning to the chart on the right, our cash balance at year-end was $132 million compared to $147 million in the prior quarter. Slide 17, please. During the quarter, both our gross debt and net debt increased. The gross debt increase is attributed to the accrual of the semi-annual coupon payments under the existing senior notes. Likewise, the decline in total cash was adversely impacted by the quarter-over-quarter movement in net debt. Next slide, please. In regard to our prior accounts receivable securitization program in Europe, we closed on a new facility on October 1. The new facility is slightly different than the previous securitization program, and it is structured as a factoring facility. This helps with improved advance rates and eliminates the SPV structure we previously had. As a result, we were able to release $19.7 million of cash at closing, which was previously restricted within the SPV structure. Finally, the proposed financing discussions we referred to in our previous announcement on February 1 are continuing, and we hope to be able to make a further announcement about those soon. At this time, I would like to turn the call over to Marco Levi, who will provide an update on the strategic plan.
Marco Levi, CEO
Thank you, Beatriz. Now turning to Slide 20. At this time, I would like to take a few minutes to provide an update on our strategic plan. At this stage, we have formally transitioned from the planning and preparation phase of the strategic plan into the execution phase across all value creation areas. The bottom-up analysis we conducted during the preparation phase was critical in validating our assumptions and financial targets. As we get deeper into the execution phase, we're also going deeper into the organization. Not only are we involving more of our workforce throughout the organization, we're also training and empowering them to drive the change required to make improvements in their respective areas. Equally, the company is undertaking significant efforts to address gaps in the business, such as internal communication. The centers of engagement with our workforce ensure that the full organization has a sound understanding of what we're aiming to achieve with the turnaround plan and how it impacts them. Now, I will quickly update you on where we are across the various value creation areas. On footprint optimization, our goal is to make adjustments to our installed capacity across the world by eliminating excess and uncompetitive capacity. Today, we have completed the restructuring of our Mo I Rana facility in Norway and our Niagara facility in the United States. Regarding Mo I Rana, our decision has been to idle one of the two furnaces. By doing so, we have taken action to correct the cost structure, particularly the fixed costs, ensuring that we can effectively consider this facility a smaller operation in the near-term while preserving the optionality to restart the second furnace. Our Niagara facility has been idled since the end of 2018. Given our broader focus on shedding installed capacity and concentrating on the most competitive plants, we have decided to permanently close this location, and several options for what we do with the property are currently under review. We have further actions in place for 2021, and we will provide updates as we begin execution in other areas. The continuous plant efficiency value creation area is an extension of our key technical metrics program. As part of the strategic plan, we have a long backlog of specific initiatives focusing on raw materials, general efficiency improvement, and reduction in energy consumption. We will implement some combination of these initiatives at our facilities globally this year. Most recently, we completed our first pilot project at the facility in France. This was a successful two-week on-site pilot to test and learn ahead of a global rollout. What makes the program different from previous initiatives is the preparation and planning leading up to it. Furthermore, we have launched a process aimed at employee training and engagement to create a culture centered on operational excellence and a workforce that constantly seeks ways to improve competitiveness. While this level of engagement is being rolled-out in all areas of the strategic plan, it has been quite noticeable in plant efficiency, particularly since it involves direct participation of our workers in their facilities and collaboration between teams from different plants around the world. The SG&A cost reduction plan is essentially an extension of our corporate overhead reduction initiatives beyond head offices. Today, we have good success in setting up the internal infrastructure and processes to set specific targets and track progress. Improvement in discretionary spending is one specific area where we are realizing the benefits of our efforts and are taking measures to ensure that there is no cost creep over time. By creating a centralized procurement group, we have disrupted the historical approach to operations and decision-making with the aim of driving cost savings and increased efficiencies. At this point, the new centralized procurement organization is fully operational, and we've recognized that this is a very different way of working, necessitating time and resources to train our people to adapt to this new structure. Given the vast opportunities to capture cost savings across raw materials, consumables, and logistics, we must be systematic and methodical in our approach to identify key areas of focus and prioritize them for the current year. We are already witnessing positive results from this organization following the initial round of tenders launched in the area of freight and logistics. We feel confident that this organization will drive significant value going forward, and we will seek to potentially expand its role over time. Finally, we are working on achieving commercial excellence through a number of initiatives across our portfolio aiming at improving our strategic alignment to our key customers while maximizing the potential of our commercial efforts. This will be accomplished by enhancing our planning between commercial and production, leveraging data analytics, and bolstering our market intelligence capabilities to capitalize on market movements. At the moment, we are revamping existing processes and developing new processes to support this initiative. In a market environment like the one we are currently experiencing, with growing demand, having a systematic and organized approach is critical to maximizing our potential. Beyond the EBITDA drivers, we have established a separate work stream dedicated to capturing improvements in working capital. Thus far, we have created three distinct themes focusing on inventory management, accounts receivable, and accounts payable. As Beatriz highlighted, we are seeing some benefits from the inventory side. Overall, I am proud of our organization’s efforts at all levels. We embarked on this journey last year in the midst of the global pandemic and in a very challenging backdrop. While we have good momentum launching initiatives in these areas, we recognize it is early in the year and that we have some significant challenges ahead. We are proud of our achievements in 2020 that advanced the company operationally, strategically, and financially, and we are excited to execute on the new targets for this year. I certainly look forward to keeping our stakeholders updated on this journey over the coming quarters. At this time, I will ask the operator to please open the line for questions.
Operator, Operator
Thank you. Your first question today comes from the line of Nick Jarmoszuk of Stifel. Please go ahead with your question.
Nick Jarmoszuk, Analyst
Hi, good morning. Thanks for taking the questions. First one is that with the recent price strengthening in silicon metal and ferrosilicon, how can we think about when that improved pricing is going to flow through the income statement?
Marco Levi, CEO
Thank you for the question, Marco Levi speaking. When you consider silicon metal, where we have price agreements which are indexed, there is a quarter lag, and since a large part of our business is on fixed yearly pricing, the net effect of an index price rise doesn't cover all our silicon sales. Our alloys business is still far more indexed, and the lag is between two to three months.
Nick Jarmoszuk, Analyst
Okay, with the silicon metal, what's the mix between the index and the annual contract?
Marco Levi, CEO
Well, approximately 70% is annual contract, but then not all the 70% is fixed price for the year.
Nick Jarmoszuk, Analyst
Yes. And then can you talk about how the contracting environment was on a year-over-year basis? Was your pricing up, down, or flat? The environment is obviously very different at this time of the year than it was a year ago, so if you can just talk about how that environment is?
Marco Levi, CEO
I have been with the company for about a year, and during this time, I have observed significant volatility in pricing. Using silicon as an example, prices last year began at favorable levels, but due to low demand in the second and third quarters, the index price dropped to very low levels. We have seen market prices even below €1,500 per metric ton in Europe. This decline affected negotiations for the new year, as prices started from around €2,000, fell to €1,500 at least for the indexes, and did not recover in the third quarter, only improving in the fourth quarter. The trend has been to negotiate contracts with lower price commitments for 2021, either at prices that were the same or lower than in 2020, or to increase the allocation of business to metallurgical silicon, which typically operates on a spot market basis.
Nick Jarmoszuk, Analyst
Okay, and question for you on the European CO2 credits, what portion of your 2021 projected CO2 emissions do you have covered? And then what dollar amount of credits are you going to have to expand, so that you're covered on your CO2 emissions for 2021?
Operator, Operator
Yes, thank you, Nick, for the question. This is Beatriz speaking. As of today, we have part of the CO2 allocations that we need already in our balance sheet. If this answers your question, is that we need to put a certain amount of CO2 in place. What we are planning to do is to try to offset as much as we can the new allocation with the new purchases that we need to accomplish. Time-wise, this looks challenging at the moment, but this is what we're driving for.
Nick Jarmoszuk, Analyst
So of your 2021 emissions, how much do you have credits for? And then how much are you going to have to spend so that you can get all the European production done?
Operator, Operator
Yes, as I mentioned, we have part already accounted in our balance sheet on a percentage basis. That's maybe something that I can disclose, not in dollar value. The issue is about the timing because we're going to be getting the new allocation in June 2021. If we need to offset the CO2 by the end of April, right? More or less I can say that as of today, we have found part of it already in our balance sheet. But it's true that we need to procure an additional amount.
Nick Jarmoszuk, Analyst
How about the $30 million that you monetized? I believe it's at the end of the second quarter beginning of the third. What percentage of your 2021 emissions does that account for?
Operator, Operator
Well, there’s a relation between the two processes, but let me put it this way: the ones that we sold in 2020 were part of the consumptions in 2020. The ones we are going be allocated in 2021 would be based on the future allocation regarding our brands. So I don't think you can connect this to 2020 or the 2021 one, if I'm answering your question.
Nick Jarmoszuk, Analyst
Okay, but there's a disclosure that you accounted for a CO2 accrual of $6 million. So the accrual is $6 million for the fact that they're more expensive now. However, you're going to be spending $6 million more than you would have, in addition to some additional amounts. So you could be spending, if you sold $10 million last year now, is that value of the CO2 credit now is $16 million? Is that how we should think about it?
Operator, Operator
I believe the best way to answer your question is by examining how CO2 prices have changed over the past year. Prices have risen from around €27 to as high as €40. Currently, we are at €36 per EUA. This market is quite volatile. Recently, there has been strong demand from investors, which has driven prices up, but we are now observing a slight decrease. We are actively monitoring the situation and strategizing our plan to repurchase the remaining credits while keeping a close eye on market developments.
Marco Levi, CEO
If I may add, the amount that we need to repurchase this year depends also on our operating footprint and the new location for credits for 2021. So these are two moving parts.
Nick Jarmoszuk, Analyst
Yes, and then the question on the asset closures when you're exiting the Niagara facility, are there any environmental remediation liabilities that are triggered, and can you give any sense of what the cash exit costs will be?
Marco Levi, CEO
Yes, in the event that we need to shut down Niagara, we have already estimated a couple of million dollars, but we do not expect to completely close the facility at this stage. We are considering some alternative options.
Nick Jarmoszuk, Analyst
Okay. And then a final question on production costs. Are you seeing any inflationary cost pressures across the manganese, silicon metal, and ferrosilicon side? If you could talk about the early passes where?
Marco Levi, CEO
Well, for sure we can see some of the raw materials moving up. Manganese has moved up a little bit market-wise between Q1 and Q4 of last year. Coal is moving slightly up versus Quarter 4 last year. These are the two main ones at the top of my mind.
Operator, Operator
Yes, I agree with nothing to add.
Nick Jarmoszuk, Analyst
Okay. That’s all I had. Thank you.
Marco Levi, CEO
Thank you.
Operator, Operator
Thank you.
Operator, Operator
Thank you. There are no further questions at this time. Please continue.
Marco Levi, CEO
Yes. So if there are no other questions, that concludes our fourth quarter and full year 2020 earnings call. As I mentioned at the beginning of the call, we see some positive developments and meaningful market trends to monitor. This past year's results have not been what we set out to achieve, but despite the unforeseen impacts of the pandemic, we made significant progress in returning to positive EBITDA and beginning to address a number of critical gaps to turn this company around and return us to profitability. Thanks again for your participation. We look forward to hearing from you on the next call. Have a great day.