Posco Holdings Inc. Q4 FY2023 Earnings Call

Greetings. We will now begin the 2023 POSCO Holdings Earnings Release Conference Call. Today's conference call will start with presentations from POSCO Holdings. After that, all participants will engage in a Q&A session. Let's hand it over to POSCO Holdings.

Good afternoon. I am Ki-Seop Jeong, CSO of POSCO Holdings. First of all, I would like to thank our investors for your continuous support and attention to POSCO Holdings. 2023 was a difficult year, both internally and externally. Looking inward, the early recovery from flood-related damage was encouraging. However, high-interest rates in the U.S. weighed down on the global economy, while China's underwhelming reopening suppressed steel prices. On the backdrop of the ongoing war in Ukraine, the conflict in Gaza in the fourth quarter escalated geopolitical risks in the Middle East and pushed up energy prices. This has been coupled with softening EV demand and the downturn in critical metals prices, bringing our consolidated revenues in 2023 to KRW 77.1 trillion and operating profit to KRW 3.5 trillion, a decline in profits from last year. Despite the challenging environment, POSCO Group continued to lay the groundwork for its future. First, the steel-making business expanded the introduction of low-carbon bridge technologies for the BF-BOF route and defined our transition strategy to HyREX, positioning us for sustainable growth. Second, in the rechargeable battery materials business, construction was completed on lithium hydroxide and recycling plants in Gwangyang. We are progressing with Phases 1 and 2 of the Argentine lithium brine project and the nickel JV project. The strong uplift in lithium and nickel production will put us on a solid path into the EV supply chain. POSCO Pilbara Lithium Solution completed construction on POSCO type plant 1, which uses hard-rock lithium, and now final testing with raw material feed is underway. The first batch of products will soon come off our production line. Third, the reshaping of our business portfolio, such as the merger of POSCO International and POSCO Energy generated synergy and enhanced operational efficiency. Finally, we increased board oversight on group-wide ESG governance, and a preventive workplace safety system was established by the group's safety council. As a result, major local and global ESG rating providers such as Sustainalytics, ISS, and the Korea Institute of Corporate Governance and Sustainability upgraded our ESG scores. Uncertainties remain high about demand for steel and prices of critical battery metals. But our executives cautiously conjecture that we are moving past the most difficult period of time for our business. To offset mid- to long-term price volatility, we will continue to strengthen our bottom line by lowering costs and improving P&L management. New investments in long-term growth projects will be put under closer scrutiny to enhance capital efficiency. My final point is on the dividend payouts and record date announced at the Board meeting earlier today. Based on our mid-term shareholder return policy, business performance, and dividend yield, the Board approved the KRW 2,500 per share Q4 dividend, bringing the total annual payout to KRW 10,000 per share. As our shareholders agreed at the March AGM, we have renewed our shareholder return program that defines the dividend prior to posting the record date. The year-end record date is set to February 29. Going forward, POSCO Holdings will continue to pursue a balance between stronger enterprise value driven by growth and reliable shareholder returns. With that, I would like to hand over the call to the Head of our IR team for an in-depth briefing.

Hello. On our website, we have posted the earnings report, so we will take note of that as I give you this presentation. First, year-on-year, the 2023 annual revenue and operating profit fell by 9% and 27%, respectively, each closing with KRW 77.127 trillion and KRW 3.531 trillion. We generated annual EBITDA of KRW 7.355 trillion. Inclusive of CapEx and share repurchases, total investment came to KRW 8.6 trillion. Consequently, net debt rose to KRW 8 trillion, but the net debt ratio was kept consistently low at about 13.4%. Looking at the fourth quarter, the consolidated revenue and operating profit, respectively, were KRW 18.664 trillion and KRW 304 billion, recording significant losses compared to the previous year. Year-on-year, in the fourth quarter, despite the very strong 24.2% profit in eco-friendly infrastructure business, other businesses, namely steel and eco-friendly future materials suffered weakened performance. Let's first look at steel. The price decline that began in the third quarter continues today while the cost of raw materials such as iron ore held on strong. Then in December, feed costs actually rose. The rare and momentary decoupling of prices associated with raw feed and steel drove down steel business profits from KRW 853 billion in Q3 to KRW 346 billion in Q4. Eco-friendly future materials recorded a KRW 169 billion deficit in Q4 with the fall in price of metals, including lithium; the price of cathode active materials also declined. Profit was also driven down by the reverse lag effect generated by the time difference between raw materials feed and product sale. Reflected in the current earnings report is the loss of inventory valuation or inventory repairment that results from metals price decline. In eco-friendly future materials, that inventory valuation loss across 2023 was KRW 148.2 billion, of which KRW 130.6 billion was recognized in the fourth quarter. This impairment was felt not only at POSCO Future M but also in the entity that fed the raw materials into initial plant ramp-up, which involved POSCO Hy Clean Metal and other new incorporations whose valuation losses were larger than normal. These valuation losses will likely shrink meaningfully once raw materials price stabilize. Next, allow me to briefly discuss '23 key business activities by each business sector. First, again, steel. We completed a 150,000-tonne capacity high-grade NO plant expansion in Gwangyang. Additionally, another 150,000-tonne plant will come online by the end of this year, making a positive dent in enlarging our production capacity of high value-add products. Moreover, we aim to build a 300,000-tonne capacity hydrogen reduction process pilot plant by 2027. Therefore, design, engineering, and construction work is being lined up since the Board approved in February 2023 the installation of a 2.5 million tonne electric furnace required to produce decarbonized steel. And with the goal to commission the plant in 2026, we have begun work on construction. This exemplifies our commitment and action to invest toward decarbonized steel production. Finally, to enhance our position in China, we have a JV with HBIS, a #2 steelmaker in China. Secondly, eco-friendly infrastructure by merging POSCO International with POSCO Energy, a new combined entity has launched. This was a deliberate decision to complete the LNG value chain loop and to cultivate our sustainable energy business as a means to galvanize the growth engine of POSCO Group. We invested to increase capacity at Senex in Australia. The EV Motor core plant was completed in Mexico, too. And at this plant, we're already picking up speed on orders from OEMs. In eco-friendly future materials at the end of '23, the construction of PPLS plant 1 was completed. Solid progress is being made in the brine lithium plant in Argentina, helping to build out our lithium production system. After 2026, we need to be ready to put our hydrogen reduction steelmaking facility into operation. So we're all in on ways to acquire the requisite hydrogen. In Duqm, Oman, we have secured exclusive rights to business development and operation to produce green hydrogen. Feasibility study is underway. On the next slide, I would like to discuss our ESG performance, and Mr. Kim, our CSO, already mentioned some of this. But in 2023, many local and global agencies such as Sustainalytics, ISS, and Korea Institute of Corporate Governance and Sustainability published reports that revealed POSCO Group's phenomenal improvements in ESG indicators. Since transitioning to a holding company structure, we've dramatically enhanced our ESG governance. For instance, we actively respond to issues identified at different affiliated companies, real-time disclosures are made on key ESG controversy issues. In effect, there is a broader disclosure. Emissions per tonne of crude steel made is expressed at POSCO by carbon intensity. To improve this index, we use a variety of bridging technologies, which led to a 3% reduction against the baseline year. By strengthening the group safety council, preventive index, such as LTIFR assessments have taken root. Finally, I'll discuss dividends and dividend record date. In April '23, we released the mid-term shareholder return policy based on which today, the Board approved KRW 2,500 per share Q4 dividend payout. That brings the total 2023 annual dividend to KRW 10,000 per share, which will be submitted to the Annual General Shareholders' Meeting. The year-end dividend record date will be changed for your information based on the new and advanced policy to determine dividend distribution first, then post-dividend record date. For your information, 2024 first quarter quarterly dividend record date is March 31.

Hello. My name is Park Hyun-Wook. I have three questions. First, in the first quarter, you indicated that steel prices could rise. However, due to sluggish demand, there appear to be some limits on price increases. What is your outlook for the steel market in the first quarter regarding automotive, shipbuilding, and other demand industries? How do you perceive the demand? Second, the first plant for POSCO Pilbara Lithium Solution was completed at the end of last year, and production is set to ramp up this year. When can we expect to see products coming off the conveyor belt? Given that lithium demand is lower than anticipated, how do you foresee profitability with current prices? For my third question, with discussions surrounding the next leadership at POSCO Holdings, we believe there will be significant focus on the rechargeable battery materials industry and leadership in that sector. Will there be any strategic changes in this business during or after this leadership transition? Those are my three questions.

On the first half steel market prospects, we will have Mr. Ban. And on the profitability of lithium, from rechargeable battery materials business, we will have Mr. Lee, Kyung-Sub respond. And on the holdings' leadership, yes, there's a lot of buzz about that.

So what are our growth strategies? I will address that question. I'm at POSCO marketing strategy office. My name is Ban Don-ho. So Ms. Young already spoke about the market prospects in the first quarter. So just to repeat, last year, we saw a lot of recessionary factors, such as China as well as the sluggish demand of steel. And in the domestic market, we saw a slight increase in imports, about 20%. And so it was very difficult for us to hold on to our price levels. In the fourth quarter of '23, as Ms. Young already mentioned, with iron ore, about 20%, and with coal, about 51% cost increases were experienced. The raw materials price hikes are really impacting us in a big way. And so we failed to see this happening. And already about a month has passed in 2024. We anticipate 3 highs: high inflation, high-interest rates, and high prices. So we're going to have to anticipate a little more slowdown in recovery. By industry, automotive and shipbuilding industries did very well. We're going to anticipate a little bit of slowdown in that this year. In infrastructure building and SOC, there are some restraints that will cause the market to slow down. And so that's why we believe that steel market is going to continue to experience a recession. And you've heard through media coverage that not only us, but also other steelmakers are suffering from profit losses, and we are taking all things into consideration to try and improve our profit structure. Especially this year in China through the lowering of interest rates in China by about 5%, we are anticipating a little bit of a pickup there. And so we saw some prices go as low as $700 and then jump right back up to about $1,100. What's significant is that in the distribution industry in Korea because inventory is low, we believe there may be a little bit of a possibility for price rebounds. So anyway, steelmakers are looking to raise prices. We will collaborate with other steelmakers in the market to see if that can happen. And we already raised prices by about KRW 30,000 in the previous quarter. And on a monthly basis, starting with the first quarter, we have plans to incrementally increase price just a little bit. Looking at other companies, they are also in the same boat with us. So we all failed to anticipate this rise in raw materials price, and we are now beginning to apply that to our books. You had a question about the automotive industry. We have long-term contracts with OEMs and the automotive industry. So because of the raw materials price fluctuation in the second half, we are renegotiating some of our agreements. So to apply some of this hike in raw materials price, we will be renegotiating. In the shipbuilding industry, we will look at the supply, the total volume as well as what our production situation is to adjust price and to renegotiate as well. That will conclude my response.

My name is Lee, Kyung-Sub, in charge of battery materials business. I will address the second question. So lithium production, projections as well as the lithium market projections. So I know that you're all very curious. So I will take this as a general question and try to address as much of it as possible. PPLS completed construction at the end of last year. And so raw materials are being fed in and we are ramping up production. So we consider the first year the period of ramp-up, and we are going in phases. By the end of the year, we will see about 80% to 89% operation rate. So by the end of the year, our target is to operate the plant at 80%. So purchasing agreements are in place with Pilbara as well as Fastmarkets based on the benchmarked price formula. And we're also almost reaching the end of our sales negotiations as well. So including Argentina, our long-term purchasing agreements are almost at conclusion point. On profit and loss, because lithium prices have fallen, I know that you're all very concerned. This morning, Fastmarkets said $17,530 spodumene was $850. So PPLS stage 1, which completed last year by the fourth quarter of this year, we hope it will turn to black. By next year, we will begin to definitely hit black ink. Yes, lithium prices have fallen. But even at this rate, we are still seeing operating profit at 2 digits. Because we are linked to the benchmark price and formula, when lithium prices fall, then other prices also tend to fall. And as a result, we are able to maintain our operating margin relatively. Spodumene was $850 this morning. This is Australian spodumene and they've hit the highest point. I believe the production cost is $800 to $900. So for small-scale miners, for example, in Western Australia, because spodumene prices have been falling, some of them have had to close business. And there are other parts of Australia, where we're seeing small-scale miners closing business as well. Liontown is another region; Albemarle. Australia Phase 4 lithium hydroxide plant is being delayed on their side as well. So lithium price, based on the current spodumene price, I think, have hit almost the rock bottom. Lithium production cost is compared to even Chinese companies; POSCO does not pale in comparison. So if lithium price falls, spodumene price falls as well, and that's what gives us the leeway to generate margin. So this market structure for battery-grade materials, we are anticipating about a 5% to 10% oversupply in the next 2 years to 3 years. So in the lithium market, we will begin to see some restructuring of smaller-scale producers. But from a long-term perspective, we believe we are still very competitive. That concludes my response.

My name is Jeong Ki-Seop. I am the CSO. Among your questions, you asked about the leadership change at POSCO Holdings. And so will the leadership change impact our growth strategy in the rechargeable battery materials business? We are devising strategies and we have phased management plans. POSCO Holdings, since it acquired the Salt Lake in Argentina, we have planned 2 phases, each producing well, the capacity to produce 25,000 tonnes. And so we are very close to actually producing lithium from these acquisitions. By 2025, we will be expanding a lot more. But come the end of 2025, we will begin to turn profits. We believe we were able to make these decisions, bold decisions, thanks to our investors and shareholders. So we have mid- to long-term strategies, and these are based on various supplies and orders as well. So even if there is a leadership change on the investments that have already been executed or those that await to be executed, there will not be a dramatic change in direction. And definitely, we will not be abandoning any of these plans. However, there could be some short-term changes, environmental change, and whether that will lead to significant risk, we have mechanisms in place, regular meetings to keep that in check. This year, we also will see another presidential election in the United States, so these will impact our business as well. So we are keeping eyes and our antennas up on all of these factors. Our basic strategy is to enhance our shareholder value. And that is why before anything dramatic happens, we will have in-depth discussions with our shareholders. So yes, we are going through a succession process right now, and our growth strategy fares very prominently in who becomes the leader next. Rechargeable battery materials is a very important part of our strategy. And so I have no doubt that this will continue. I hope you will continue to pay attention to us and continue to participate actively so that we can continue to show this very positive relationship between the company and investors. If for any reason due to these changes some of these mid- to long-term strategies, any part of it may have to change, we are going to make sure that we communicate with you through ample discussions. Communication with the shareholders, being transparent and enhancing and maximizing shareholder value, that is our strategy, and that will not budge.

This is Kim Yoon Sang from HI Securities. I have 3 questions as well. Business plan for different quarters in 2024 is what I'm interested in. And in steel, the projections are not bright. So how do you see your earnings panning out in 2024? Secondly, on nickel. So there are some restraints concerning nickel, but what are your price projections? And should there be a price fall? Will that impact your investment plans? Next is coking coal. The price of coking coal has been fluctuating. Because of net-zero goals, I know that there were some cutbacks. But recently, I think we're seeing an increase in demand. So any traditional strategies that you can share and changes in those strategies, I would appreciate.

So the first question was the business plan by each business in the year 2024. So the numbers for each business will be discussed by the people who are in charge of the each business. And for the price on nickel, Mr. Lee Kyung-Sub will take over again, and for coking coal, Mr. Suh Ji-Won, in charge of the raw materials office at POSCO.

My name is Byeong-Og Yoo. In 2023, our emphasis was on merging POSCO International and POSCO Energy to create more synergies. In 2024, our objective is to build on that and realize the potential synergies, particularly in energy, as we can develop a complete LNG value chain, which provides us with significant advantages. This allows us to handle greater volumes, indicating strong growth potential. That's the growth we are aiming for this year. I can't provide specific numbers at this moment, but we expect to maintain at least the same level as in 2023, if not improve on it. Unfortunately, POSCO E&C is facing challenges due to market and construction conditions, leading to less favorable prospects. Consequently, we are experiencing somewhat disappointing performance compared to last year, and I don't anticipate significant improvements this year. This is attributed to rising prices of raw materials and overall cost increases. While we see the peak in prices easing somewhat, some construction projects we previously contracted will start in 2024. However, due to these cost increases, I think our performance and earnings may decline slightly compared to 2023. We will do everything possible to manage our costs so the decline isn't substantial, and we will keep a close eye on these factors. In the green materials sector, the drop in metal prices led to inventory impairments for companies like PPLS and Hy Clean Metal. We believe the effects from last year's raw material price declines have been fully realized this year, and this impact is now diminishing. Therefore, I expect we will see profits this year. It's not just my opinion; the entire market recognizes that the EV battery materials sector will face significant challenges this year. Compared to the dramatic growth we had in 2022 and 2023, we won't see that growth rate this time, but we will continue to take orders and pursue growth. At PPLS, plant #1 was completed last year, and we are working on a project in Argentina, which we hope to operationalize by the end of this year or at least in the first quarter of next year. Up until then, we will incur initial ramp-up costs as we bring the plant online, and some losses over the next year are unavoidable. I want you to understand that.

I'm from the finance office. My name is Kim Seung-Jun. I will be discussing the business plan for the steel sector. This year, our focus in the steel market will be on ESG regulations, the transition to carbon net-zero, and the formation of major economic blocks worldwide. While these factors will present challenges, our primary emphasis will remain on safety. Last year, we had zero major accidents, and we aim to maintain that record this year. By fostering a culture of safety and leveraging smart technologies, we aim to establish new production systems that incorporate green and sustainable practices. Our new brand, Greenate, will focus on various decarbonization strategies. We will embrace green products and materials, contributing to our growth. We plan to innovate our processes to enhance competitiveness against rivals. Through digital transformation, we will incorporate robotics, automation, and metaverse technologies to create a future-oriented platform. These represent our strategic plans, but the business outlook is challenging due to rising raw material costs and price fluctuations that have yet to be accounted for. In the first quarter, we may not see significant progress. However, with price adjustments to reflect raw material increases, we anticipate boosting our strategic product sales. These efforts aim to improve our profit structure. The first quarter will pose difficulties, but I hope to share positive results after that, as our goals surpass last year's targets. We're optimistic about a stronger year ahead. Regarding nickel prices, I understand there are concerns about joint ventures with Chinese companies. However, our portfolio emphasizes IRA compliance, and SNNC is building plants in North America. For low-cost nickel, we are collaborating with Indonesia, albeit facing some challenges due to FEOC and IRA regulations. If Indonesia is recognized as an FTA-compliant partner, we can establish agreements that meet regulatory requirements. Thus, the China risk is not significant for us, despite considerable Chinese investments in Indonesian nickel production. This has led to increased supply and a decline in prices, with benchmarks like WoodMac indicating around $17,000 as the average price, while we currently see prices between $15,000 and $16,000. Any price adjustments are likely to be minimal. The rationale comes from the production costs associated with nickel, particularly from the dry method, which is more cost-effective. Currently, production costs for dry method nickel are around $14,000. The margins at current prices are narrow, and while some regions like Australia are struggling to turn a profit, the market is adjusting. Thus, while there is some potential for a minor price increase for nickel, it is expected to be limited. In terms of our rechargeable battery materials business, while demand exists, falling nickel prices raise questions about our investment plans. Nickel is a component of NCM batteries, and while we will analyze market demands and make some adjustments, a significant strategic shift is unlikely. Adjustments will be guided by market conditions, timelines, and project schedules. That concludes my remarks.

My name is Suh Ji-Won. I'm with the POSCO raw materials office. On coking coal, the price is quite high. What is the reason? From a demand perspective, it's because India is putting out a lot more volume. And there are many new businesses that are producing coke. But on the supply side, because of difficulties in acquiring labor as well as inclement climate, weather conditions, this is the reason for the hike in price. So mid-term price strategy, starting this year with new project starts because new plants will come online and ramp up, we will see about 10 million tonne expansion in production. So price-wise, it will not be as high as the previous year, but we will see it stabilize. Investments. Coking coal and raw materials investments, we have basic ground rules. So we have target prices as well as partners, investors, and they have to be ESG issue-free. These are some of the benchmarks of our investment plan. And with coking coal, we have some concerns because we need to make some adjustments based on our net-zero goal. That concludes my response.

My name is Hyun-soo. I'm from Yuanta Securities. I think this was already mentioned. In battery materials, IRA and FEOC are concerns. I would like to know how you will address this going forward. Secondly, because of dull demand in China, there's oversupply because they continue to produce just as much. So I think if this trend continues, we will end up importing more from China. What is your response to this? And the next question, NSC is acquiring U.S. Steel. If my memory is correct, in July of 2021, POSCO released record-level crude steel production and made some promises. So I want to know what is happening with this plan. And I want POSCO's opinion on NSC's acquisition of U.S. Steel. One more question in NSC.

We will ask Mr. Ban Don-ho from POSCO's marketing strategy office. And on exports, we will ask Mr. Kim Kyung-Han from the international trade office.

For battery materials, I previously mentioned FEOC concerning nickel. Nickel is not relevant to FEOC since it doesn't involve China, meaning FEOC applies globally to nickel. Regarding IRA-compliant volume, we will utilize production from the SNNC plant in Gwangyang, which we expect to complete construction on in March this year. This facility will be responsible for producing and supplying our IRA-compliant nickel to POSCO Future M. There are joint ventures with China that are subject to FEOC, some targeting European markets and others targeting different markets. For instance, if Indonesia is not bound by IRA rules, we are open to that scenario. Conversely, if Indonesia is recognized as an FTA-compliant or equivalent partner, we foresee additional benefits beyond our current expectations. We do not predict any direct negative impact from FEOC on our business this year. At POSCO Future M, in their natural graphite business for anode active materials, detailed guidelines related to FEOC or other IRA rules have not yet been issued, as discussions and adjustments are still ongoing. Once these guidelines are released, we will respond accordingly. Currently, for natural anode active materials, we produce spherical graphite and are importing a significant amount from China but will aim to increase local production in Korea.

I'm from the international trade affairs office. I'd like to address your question about substituting imports. All global steelmakers are facing oversupply and are also concerned about meeting carbon neutrality goals, which are two main issues that need to be tackled. China accounts for about 50% of the world's crude steel production, and since 2020, they have been increasing their exports, which appears to be an ongoing trend. Whether this trend will continue this year depends on the Chinese government's stimulus package and its impact. If the impact is positive, imports may decrease. However, from a domestic viewpoint, local steelmakers in the United States, for instance, are using the Trade Expansion Act Section 232 to impose tariffs. Emerging economies like India, Brazil, Thailand, and Indonesia are also implementing non-tariff measures to limit imports. There are numerous retaliatory measures being applied. Nevertheless, steel remains a fundamental material for infrastructure and societal needs. Compared to other countries, our import restrictions are not significant, and given our robust manufacturing base, we recognize the need to prepare for incoming imports. We must consider whether this market situation caused by oversupply is temporary or will necessitate long-term adjustments in the Korean market. We need to safeguard our crude steel industry. With that in mind, we are currently evaluating all options to address each issue to benefit our country. There seems to be a misunderstanding that POSCO, being a large company, will block all imports. Low-cost imports affect some of our industries, and this is the basis upon which we will oppose some imports.

I'm responsible for marketing strategy. I will discuss the status of the overseas market, the acquisition of U.S. Steel by NSC, and sales projections for 2024. We aim to expand our growth beyond the local market and maintain our position among the top three globally. We will implement strategies that include investments in India, both those already planned and additional ones. Regarding our efforts through PTKP in Indonesia, we have made significant progress in that market. PTKP is expected to be one of the few automotive steel sheet manufacturers in Southeast Asia, producing 10 million tons in an environmentally friendly way through a decarbonized steelmaking process. India represents one of the most active markets, and we are looking for more investment opportunities there. To manage business risks, we are talking to a reliable partner about building an integrated mill. NSC's acquisition of U.S. Steel last December was valued at $15 billion. However, the Biden administration has an overseas investment consultation committee reviewing this, and there is opposition from unions. Some people in the U.S. support this decision to boost steelmaking competitiveness. We need to observe the outcome. POSCO and NSC have differing business strategies; NSC wants to expand by investing overseas due to limitations in its local market, while POSCO aims to strengthen its core quality and has broadened its strategy portfolio. The revenue ratio of international markets indicates our strategic path, with 88% coming from Japan and 51% from Korea. The U.S. market presents more trade barriers, and we are exporting in accordance with quotas and tariffs. We will keep a close watch on NSC's ability to acquire U.S. Steel with government approval and address ongoing issues in the U.S. market. Last year's sales volume was about 34 million tons, and we have fully recovered from Typhoon Hinnamnor's impact, achieving our goals. However, given the varying market conditions, it may be challenging to set higher targets for crude steel production. Therefore, we aim for 33 million tons this year. Thank you.

I'm in charge of corporate strategy. Let me speak a little bit about the CapEx strategy. We plan this every year. I want to tell you that this year is similar to last year. Overall, it will be about KRW 8 trillion consolidated basis by each business. We can look at steel and battery materials. The 2 are neck and neck in terms of the investment volume or value, about KRW 3 trillion each. This year's investment plans, whether it's in steel or battery materials, our CapEx will increase this year for each business. In steel, we need to brace for carbon net-zero decarbonization. Some of our larger investments will begin this year. In battery materials as well, because we have expanded orders, we will be building out more, and that means more CapEx. At the end of last year, beginning of this year, looking at the economic situation, there are a lot of uncertainties. Some of the investment plans that were devised at the end of last year, we do this every year, but on a quarterly basis, some of that has to be revised. So we need to be conservative but flexible and make sure that we keep an eye on our growth.

So a lot more time has transpired than we had planned. We will just take a few more questions.

This is Eugene at Eugene Investment Securities. So a lot of questions were already addressed. I know that you have a hydrogen project in Oman. But we can't find too much information on that. So what is the project? How are you conducting it? And what is the projected margin? Secondly, retirement of treasury stocks. You did that in the previous year. Do you have plans to do more? And there are claims about dumping. Do you have some progress update on that?

Let me discuss dividends first. We hold 10.3% in treasury stocks. In September 2021, we issued transferable convertible bonds, of which K-SURE owns 3.8%. Excluding that portion gives us our actual ownership of treasury stocks. By retiring our treasury stocks in 2022, we integrated this mechanism into our shareholder return policy. While we cannot confirm our plans for this year at the moment, we are focused not just on paying dividends but also on actively considering the retirement of our treasury stocks. That’s all I can share for now. Now, regarding the Oman project, in June 2023, we signed an agreement with the Oman government for exclusive land use rights necessary for green energy generation. This land is around half the size of Seoul and will be used for solar and other renewable energy projects. We are currently conducting a feasibility study to determine the specifics of how we will use the land, including capacity and operating margins, so we cannot provide detailed information at this time.

What I want to express regarding dumping is that every country aims to safeguard its own steel industry. This is one of the challenges they face. To begin an investigation, there must be evidence of dumping. These are unfair prices from volumes entering a market at unjust rates. We are looking into all the specifics, but I cannot confirm at this moment if we are preparing a case against dumping. We are keeping all options available and assessing the situation.

To all people who participated today, I want to thank you. Because of time constraints, I'm afraid we have to close. It would be lovely to get more questions and comments from you, but I'm afraid we'll have to conclude. I would like to conclude the 2023 fourth quarter earnings release conference call. Thank you very much.