Gianpietro Benedetti - Carissima energia - FBF Treviso 2022

Am I speaking? I said I have to wait until the twentieth. Can we start? No, I was watching the clock.

It started, it started. 19:42. Good morning, good morning everyone.

If I knew what to say, I'd be set. Anyway, it's already a step forward. It was a topic that could have exposed the fact that Europe's unity is only aesthetic, not substantive. When it touches substance, everyone goes with what suits them.

They were talking about a price cap, it seems like entering an airplane. Yes, temporary. I understand it's temporary because, as is likely for all of us, what do we do next year, in two years? We move, we invest. We have decided, rightly or wrongly, to hold firm on the energy issue for the next few months—perhaps 12, 18—and then we're counting on the idea that prices will fluctuate, won't return to 40, but will probably be around 80, hopefully.

Exactly. It's not a stable fact but temporary. I believe they'll adjust it based on market conditions, which as we know are largely determined by futures trading on the Amsterdam exchange and elsewhere.

The discussion we tried to have as steelmakers—to pay for energy not based on gas but based on the share of gas, because 40% of Italian energy comes from renewables, hydroelectric, solar—but we pay based on a reference price. So again, someone loses and someone gains. I'd say the price cap is a step forward. It suggests considering that the peak has hopefully passed and there should be a decline.

Regarding the Ukraine war, it was also used to speculate on gas prices. The same price cap—Russia says it won't supply gas anymore, and so on. I'll be optimistic: I believe within the next eight to ten months there should be some sort of truce. Something similar to what happens occasionally with Israel-Palestine.

There should be a sort of truce, and the reconstruction of Ukraine should begin, with all the prospects that for you, for us, in the social sense—Danieli in general—they see, I think, yes, they're already organizing for investments, though they believe more than industrial investments, they'll be infrastructure, housing, and so on. Good for construction companies, but there aren't many in Italy—besides Salini and the ex-Impregilo.

There's a big word there—truce. It could be. We're certainly heading toward a situation like the 2015 Minsk agreements, where the problem is pushed forward, but at least the general situation and supply flows will be restored—all the Ukrainian supplies that mostly concerned our sector: steel semi-finished products, iron ore, and so on. Fertilizers, etc.

The Dutch were the first to sail the world's oceans and do business. They're a bit like the Venetians in that sense—they have business in their DNA. Exactly. The stock exchange stop in Amsterdam was certainly a business move. And you'll have noticed that in September of last year—well before the war—with the liberalization pushed by the US, UK, and Netherlands, gas prices started rising. Then the war accentuated it and gave speculation an excuse. Speculation doesn't close—it opens, perhaps, with the collaboration of the media, which seems like an orchestra directed accordingly—closing and opening, and so on.

Following speculation, we paid in July 410 euros, today it's 140. Practically, in July, a small steel mill—for Europe it's small, for Italy it's medium-large—paid 60 million in monthly energy costs, compared to 5.8 million the year before. Eight times, ten times more. We had to absorb that as a loss because you have to honor deliveries and commitments to clients. So we decided to move forward, honor our commitments, and for one, two, three months we lost 20 to 30 million per month.

Then we adjusted prices, obviously. Now we're all in a situation where, well, we've already been through the price issue, I added an energy surcharge. Energy is now negotiated every morning—it's not like you just go and pay. You have to see how much the market accepts these increases.

We've made it a variable. The variable of energy prices. Before, the variables were raw materials, scrap, and so on. Now there's also energy price. But how much longer will the market absorb these extra costs?

I think we shouldn't make it too dramatic. You'll have noticed that every 6, 7, 8 years there's an up period and a down period. In the up period, we had our first teeth, as they used to say. Now, with the hindsight of a family man, and probably with the profits that many have been able to make in past years, like camels we have reserves to face and manage the next 2-3 years that will be down. It won't be a dramatic down like in some cases, but a decline of 10-15-20% depending on circumstances.

So it eases us a bit, and we're thinking about what to do beyond the next up cycle.

Exactly, it's a complex matter. As you know, Germany put up 200 billion, but not added to their debt. We have a heavy debt, as we know. It's rarely mentioned because just mentioning it puts us in a fragile position. But the fragility is there—we reached 2,800. I was doing the math: for the 25 million Italians who work, with an average salary that's not excellent, every percentage point—you have to refinance 400 to 500 billion every year. One percent on 500 billion—5 billion. Two percent, three percent—15 billion comes out. For 25 million people, you see that every citizen somehow pays this amount.

It may be nothing for some, but it's about 1,500 euros per year—100 to 120 euros per month—from this interest rate increase.

Well, some have already been done, and they may think of doing others. But it brings us back to the question of European solidarity—we need to see to what extent the Germans, the Dutch, and northern countries in general are still willing to make these concessions. After all, it's not just us—there are also other southern countries that might make similar requests.

Obviously, when you think that we pay for American gas four or five times more than what it costs them...

When you talk between people, you also have to consider others' conditions. They've managed to become energy self-sufficient and more. We ask ourselves the question. Now everyone's tearing their clothes because we had a single supplier and all these things. But in fact, it's useless to talk about the past. We should manage the energy issue through some sort of programming.

It's true we have Algeria, we also have Libya that's increasing, but Algeria could also have a third revolution. Anyway, it's a beautiful country. We'll need it even if 20-30% might not agree. We should use the energy resources we have, give further momentum where it exists. It seems they've now simplified the process for solar panels, solar fields, and so on. Because you say you'll do it in three months, and then this one, that one—guys, okay. So push more on solar, on whatever is freely available.

And then everyone talks about the famous hydrogen. If you don't talk about hydrogen, you're not trendy. Hydrogen will probably be available in 10 to 12 years, but to produce it you need a mountain of energy, plus water—another resource nobody talks about. Where do you get the energy? So renewables come up, and then, useless to sugarcoat it, nuclear power comes up.

I can give you an example. A client of ours from Veneto is making an investment in Romania and told me they'll very likely take stakes in a nuclear plant being built there—a modular plant, very interesting. Now, I speak as a layman, but think about it: submarines and ships have been running on nuclear energy for about 30 years. We haven't heard of many incidents—maybe a couple in 30 years. This plant is modular—basically the reactor unit from a submarine is placed there, and there are several of those units. So they're automatically safer, being small and modular, with new generation 4 and 5 technology—people are even talking about generation 5.

What they do in Romania is: if you consume 3% or 5% of the plant's capacity, they give you the option to be a 3% stakeholder, and you take an offtake of 3%. It's a smart, safe solution. It can be one of the options to consider, but we need to actually address it.

Otherwise we have to buy—today we buy 10% of our energy, and it's a bit laughable: our biggest supplier is Switzerland. It's a bit ridiculous. And we pay for it—they don't give it to us free, obviously, they profit. Then comes France, I think, and Slovenia. By the way, we're in Friuli, next to Slovenia. Slovenia is now building its second modern nuclear module. Why? Because I think the limit is also this: when you have a series of neighboring countries that have nuclear, does it make sense to reject it a priori on principle? With all the rules and safety measures applied as intelligently as possible, the risk becomes infinitesimally small.

I remember when Chernobyl happened. I had a construction site of 2,500 people, 300 kilometers away. Then there's the discussion about whether it rained or not. What we learned was that the radioactive fallout gets incorporated into clouds, and when it rains it gets released. It passed over the construction site—not released directly, but it came down a bit here in the northern Alps, in Austria, in Friuli. And we were taking samples because we couldn't dismantle the site—the Soviets told us if you abandon it, the contract is closed. So it would have been a complete disaster. We had a vehicle bringing food down because it was better not to use local produce, and we were sending two or three technicians to Bologna for radioactive monitoring. And the result in the end was that the people in Bologna had higher levels than our site workers. And that was 300 kilometers away.

So that's a parenthetical. The nuclear issue needs to be addressed somehow—we can't just leave it to chance and then complain. As for renewables, to what extent are they truly an option? Renewables are fine—it's become almost a slogan—but to what extent, in a country like Italy, where the wind mainly exists around Sicily and Sardinia?

We actually thought about putting a floating wind farm in Sardinia, but then you run into tourism concerns and so on. Also true. Now they're laying a cable from Sardinia to Italy—and we could have, excuse me, let's pretend we're in the United States, where it would be from one state to another. And then solar. We're planning to set up solar fields on unused agricultural land, and we should be able to reach 400 megawatts, which means 12 full hours of a steel mill's operation. Right now we're at about 45%, and we'll probably go to 50-55%.

But German colleagues were telling me yesterday—and I don't know if it's true—that to build just one wind turbine now takes ten years. And beyond the environmental impact of producing wind turbines, because all the mines in Peru and South America are opening up to extract rare earth materials—cement, iron—a lot of energy goes into building something that already has an environmental impact just from construction. Eventually, after the initial impact—they now make them 100 meters tall—they'll probably have some designer figure that looks like the windmills from 200 years ago.

So I believe we've finished. Silvia, is that right?