All right. Good afternoon, everybody, here in London and of course, to all the viewers online as well. For us, it's an important day and an exciting day because today, we get the opportunity to explain the outcome and the trajectory towards 2028 and especially also share the outcomes of our battery materials strategy review.
Now if you look to those 2 groups of words here on the screen, this is the core of our strategy for the next 4 years, right? In the foundation business, it's all about being maximizing that cash generation potential. And in Battery Materials, it's going to be about value recovery.
Now you will see later today that at the core of everything that we do is our circular business model. That is what combines us together as a group. That's the joint red thread to all our activities. That's our purpose. That's what gets us up in the morning, right? That business model has served us well for over 2 decades, and it's continued to serve us well in the future and is more relevant than ever.
Next to that, an important pillar in our strategy are the 4 imperatives. And these imperatives are, frankly speaking, nonnegotiable as the imperative around capital, performance, people and organization as well as partnerships. Now, together with the leadership team: Jensen Verhelle, Wannes and Geert, together we will show you today how our circular business model these four imperatives, and our differentiating characteristics and levers that we have in our different businesses underpin our plan towards 2028 and give substance to the targets that we have set ourselves for that timeframe.
Now, we all know that since the start of 2024, the world around us has changed quite significantly. One day, we have tariffs; the other day, we don't have tariffs. The other day, you have kind tariffs, right? So there's all kind of movements out there. It creates uncertainty in the world. We see that the overall economy is slowing somewhat down. But next to that, we've also learned at the start of 2024 that the overall uptake in EV sales was lower than what we expected, and therefore, we also had to correct and act. And that's what we did.
So let me show you some of the actions that we took over those last 10 months. And I'm quite sure that most of you know them, but it's important to stress again what we have done.
First of all, an immediate CapEx reduction. We paused the construction of our Canadian plant in Loyalist, right? Secondly, for Battery Materials. Secondly, we also postponed the construction of our battery recycling facilities, and this is now expected to come earliest beyond 2032 with an SOP, so with start of production. But also throughout the entire group, we have been stepping up our CapEx discipline.
Accelerated focus on performance. Second part of this year, we really have been stepping up that focus. And the first proof point is there that we were setting as a target of EUR 70 million for the year. We've exceeded well north of that EUR 100 million for 2024. And we're going to continue to do so because in 2024, we also already filled the pipeline for '25. And of course, we announced a resizing of our operations and activities in the fall of this year.
And of course, you cannot do that if you don't change the way you think in your organization and how you move that culture along. And if you want to give the example, you have to start with the right leadership team. And I'll get back to that, but the leadership team was also resized and reshaped. And we start to embed really this value and efficiency mindset. We have it in Catalysis. I see the green shoots throughout the organization emerging, but we want to bring that at the entire group level. That's going to be an entirety of our focus and cultural journey.
So we start seeing those 3 first imperatives coming forward, capital, performance, people and organization. Now we also announced, of course, we were going to do a strategy review for our Battery Materials business. And we really had a deep and hard look at this, look at our strengths and areas of improvement.
Now coming back to the leadership team. You see that the size of the team has come down from 9 to 7. But you also see that we have a great combination of people with long-standing experience within the company, but we also bring external perspective: company -- colleagues coming from companies that have worked on performance, that have worked on this process integration. And that unique combination will now allow us to push forward on that path that we have both for ourselves.
And let me come maybe what is most -- at least for myself, the most important slide of all, our circular business model. It's at the basis of everything that we do. And what we do at Umicore basically is we bring metals alive, and we turn them through our application know-how, through our materials know-how, through our chemistry, metallurgy, our metals management. We activate the world around us and give life to applications. And I'll come with an example later on.
We work very closely with our customers. Customer intimacy is important. We have to understand what they want. And we want to play in markets where we can attain leadership. Now let me give you an example, an Autocat. You all know it, you all drive with it. Basically, you have platinum, palladium, rhodium, interesting shiny metals, but through our unique technology. We mix those with support materials, and we bring that on that ceramic piece. And frankly speaking, before we enter and pump our solutions in that ceramic piece, it's just a dead piece, nonfunctional ceramic structure.
But when our solutions come in, you activate it. And suddenly, you can change these harmful gases in gases that we can breathe and keep our cities healthy and clean. Now okay, at the same time, these catalysts also get older, right? Again, we will recycle those. So we take this catalyst and bring them back to the virgin state because we believe and are convinced that metals can and should be reused endlessly. And compared to plastics, for instance, metals can be reused and regain their unique properties from day 1. So we continue to close that loop.
Another ecosystem that we serve well, germanium. It's a micro ecosystem, I would say, on that same business model. So we start from the germanium metal. We bring that to germanium wafers. They go into solar panels for space, more difficult to recycle, I have to admit, but also in lasers and many other applications that actually stimulate that world around us. Now at the very core, if I would say, is that, that's where innovation sits. That's what we do best. We are an innovation company. We invest in innovation. We will continue to invest in innovation.
So this business model really sits at the core of everything that we do. And this is also going to be the theme outside and inside our organization. We really have to focus on the essence, what we do best, where we can differentiate and put our efforts over there. That's what we need to do. That's what we're going to do.
Now with our business model, we embrace and actually we benefit from megatrends, clean technologies, mobility transformation, a connected world. We all want to have been more connected. Microelectronics, we're in that space. But at the very heart, you have resource scarcity. And why is resource scarcity so important on 2 levels. First, we have a growing population. People want to see their own living environment improve. So they want to have access to technologies, better ways of living that requires more resources. That's one. But now more recently as well, we also see more and more a regional dimension popping up for self-sufficiency in different regions. And this is also an undercurrent that could strongly support our business going forward because a lot of our assets are actually in the Western Hemisphere, while we're also active in China, but we have that balance. We can play with that.
And of course, that increasing need for functional materials ultimately will require closing the loop and that circularity. And as you all -- well, I'm going too fast. We have to work on our strengths and these 4 key imperatives always starting from our business model. So let me talk about the 4 imperatives here.
Capital. We're going to have a more balanced capital allocation. And what do I mean with that? Our funds are no longer going to flow to Battery Materials alone. And I'm telling you already today and will come later on as well, we will have a restricted amount of funds still flowing to Battery Materials to finish off of our footprints and to deliver against our customer and product requirements. But we're also funneling quite some money back again to the businesses where we really have those high returns already today. And a big chunk will also flow in this plan as we prepare to open up the flow sheet in Hoboken. So our precious metals refining, recycling flow sheet in Hoboken, we're going to inject cash over there, especially in the outer years of this plan.
But most of all, we've been cutting CapEx. We're taking EUR 1.4 billion plan over plan for the '25 to '28 period. We're taking that out of plan. So EUR 1.4 billion CapEx cuts. I wanted to repeat that number because it's an important number.
Performance. I talked about performance of 2024, right? But we really would like to influence and we really will actually embed that operational efficiency. And of course, when I say operational efficiency, it's efficiency in our processes, the way we do things, but it's also value capture. It's also not being shy to make sure you get what you deserve through your technology position. It's top line, it's bottom line, it's internal organization as well. So all dimensions. And here, we commit to a target of EUR 100 million EBITDA improvements for the year. And beyond, we want to offset our inflation cost, EUR 50 million to EUR 75 million. That's what we aim for. That's what we go for.
People and culture. I talked about this, but probably this is the most important pillar if you want to deliver on your strategy. We have now really to further drive to that performance culture. We were successful in Catalysis, and Jensen will talk to that at length later on. I want to bring it to the entire organization together with the team. We are committed to that, and that's why I believe we can get more cash out of these already very successful businesses that we have. And in a different color, partnerships. Why? It's definitely an imperative that has an external component and stands on its own, it's fast here, but we will actively explore partnerships in Battery Materials activities. And I would say actively, not just an optionality, we're actively going to explore.
Let me now have a look at the different foundation businesses which we have. And I can truly say that they are industry leaders in the fields that they play, undisputed industry leaders, I would even say. Catalysis, and it's not because it's my passion because I spent a couple of years there, it's in an alphabetical order, if you might be wondering. Catalysis. There, we are the undisputed leader, the #1 in the high-value section of the gasoline catalyst systems.
We're also a technology leader in the proton exchange membrane fuel cell catalyst for hydrogen vehicles. I had to practice on that sentence because that's quite a mouthful. And we have world-class catalyst technologies for fine chemicals. But we did not get to that position just by luck or by coincidence. It's because we have these unique assets and capabilities.
First of all, Automotive Catalyst. We really have these strong customer relationships. We really work with them already for decades. We have a flexible footprint close to our customers, and we can steer and function of their needs and certain risks that you might see that are out in the market. We proactively work with those. And I'm sure there will be a question on geopolitical and potentially tariffs later on. And Jensen and myself will happily reply to that. But we also have differentiated and cost-efficient technologies. And what I mean, we are the best-in-class for the gasoline catalyst systems to bring the lowest cost -- total cost of ownership for our customers while having that performance that they require. And that's how we get value off the table as well.
Fuel cell catalysts. We're in business with all the major OEMs globally. And I'm talking China. There are quite some OEMs stepping up there. They are using our technologies, Korea, Europe, U.S. We really are present with these people.
And then performance. I don't know what you guys think of this, but this is quite impressive. It was impressive already for years, but how we were able to step it up in the last years and now have returns north of 40%, then you can claim that you're an indisputed industry leader in the field that you play.
Recycling. And recycling is going to be get that cash, get that value creation out of these businesses while investing for the future. We want to sustain this for the long run. We want to deepen our competitive edge and be here and play for the long run, even with lower PGM prices.
Our leadership position. There's only one Hoboken. There's only one precious metals recycling refining facility in the world, and we own it. And this facility, I'll come back to that later what it's all about, but we truly can say there's only one of those facilities as well in the world. And you only need one in the world because we really work on these small high-value pockets that nobody else can treat. We're one of the top players in Automotive Catalyst recycling and our key customer relationships are more than 20 years old. And mind, I'm talking here about customer relationship. Why I mean? Because they particularly take in supply. Well, we approach this business as a service business. We provide recycling services in the most efficient and economical way and in the most trustworthy way to our customers.
Unique assets and capabilities, and Geert will also talk about that, of course, quite passionately as CTO and of course, EVP of the Recycling business. In Hoboken, it's all about this precious metal smelter where we retrieve these PGMs. But then we have built this whole ecosystem of metal treatment facilities around it. And we can extract 17 metals in one site. So what does that mean? Whatever the market moves or however the market moves around to you, we can optimize.
We're not bound to volume. We are focusing on value. Value is a focus in PMR. We're not bound to volume. But you can only do that if you have leading metallurgical expertise and we have industrial scale piloting operations. So we really test all our new flow sheets because our flow sheets are in continuous improvement mode. And we are more and more also using data planning to bring down those costs and improve that -- I would say, that recurrent searching faster and faster and fast because we want to deepen that advantage that we have. And we have a wealth of data. That's the true gold mine, I would say, even of PMR because we have been doing this for decades.
Sampling and assaying. PMR recycling is all about credibility. Your customers want to get what they pay for and what they have right to, and they trust us to the deepest, and they're also here to talk about these core capabilities that we have. And we're passionate about efficiency, about yields, metallurgy, but we want to do it in the best performance from an environmental point of view as well. So we want to be the world leader on the process side, the yield side, but also in performance because at that cross point, that's where that future value for this business will continue to sit and even more sit going forward. And can you then even imagine that more regional dimension coming forward.
Performance, you all know that PMR or the precious metals recycling business, refining business has been performing extremely well, very high returns. Yes, we had these peak years of PGMs in '21, '22. And now some of the hedges that we took are starting to tail off. But I can tell you, even beyond 2024, that performance will remain strong. And you have seen the press release, right? That performance will remain strong while investing for the future.
And then I come to the world of Veerle. Veerle, of course, next to the EVP, Specialty Materials is also responsible for group environmental health and safety. But today, she will really focus on this hidden gem that we have in Umicore. And sometimes it's difficult to see some of these hidden gems that we have Veerle, and maybe we took your queue there. But it's because actually the cobalt and specialty materials is now clouding somewhat of these returns. And the reason being is that the cobalt market today, despite that uptick in price because of the DRC situation, it's still a significantly oversupplied market with a tough competition. Now Veerle will come back to that. But also in this business, we are truly technology leaders in the breadth, and Veerle will demonstrate that with all these applications. Now in germanium, we're the world leader. And we have, I would say, a resilient geographical sourcing. A lot of germanium is coming from China. We have good access there. We also get germanium now from Africa, but more than 50% of what we use, we recycle basically. So we really have that balance. So security supply for our customers is super important, and we can guarantee them that.
Cobalt and Specialty Materials, we are not where we want to be today, but we do own the only cobalt refinery at scale in the West. So if this undercurrent of self-reliance growth, this is a future potential. Did we factor that in our plans? No. But this is another undercurrent that potentially we could benefit from. And of course, in that PGM electrochemical plating, we also have this very strong, especially European and now growing to Asian exposure as well.
And here, the returns, we're not happy with the returns. From some businesses, we are, but global as a business group, we're not happy. And we're addressing those. And these returns will have to go back above that cost of capital and in order to earn for us to be in that spot.
Now if now I bring the foundation businesses together and let's look at some numbers because at the end of the Capital Markets Day, we have to see some numbers. What are our commitments? Catalysis, EUR 1.8 billion in revenues in 2028, an EBITDA margin of approx 25%, return on capital north of 35%. Not bad, I would say. Recycling, EUR 800 million in revenues. 35% EBITDA margin approximately, return on capital north of 40%. Happy with that.
Specialty Materials, EUR 600 million in revenues. EBITDA margin north of 20% and return on capital in 2028 will be again, above that 12.5%. But more importantly, if you look across the foundation business, our free cash flow for the foundation business over that '25 to '28 period will be between EUR 2 billion and EUR 2.2 billion. So I repeat, EUR 2 billion to EUR 2.2 billion, we will generate as free cash flow in our foundation business over that '25 to 2028 period.
And let me now have a first snapshot at Battery Materials and don't panic. There's going to be much more details in the next section. So I'll have to ask you to bear a little bit with me. But in Battery Materials, it's all about that path to value recovery. And why do we call it value recovery? Because we have invested for years heavily in this business, and we did not produce the returns or EBITDA. That's the reality. We have to dare to say that. And where we stand today so far, we have destroyed value. That's the only conclusion I can have. So now our job is with the assets that we have, how can we put those to work and recover as much as possible from these investments that we have made. So it's about value recovery.
Now in Battery Materials, everything for us started as well from that circular business model, and it gave us a strong position to start from. It really does. You have that sourcing element. You have that industrialization capability that we have. We have been operating plants more than 20 years. We have that technology, freedom to operate the right products. I truly believe we have that all. And next to that, we have long-term customer contracts with existing battery players, but also with new entrants backed by OEMs. And guess what, some of these customers or partners invest together with us and provide us with take-or-pays. That's not a bad starting position.
At the same time, I also recognize that new or additional requirements emerged in that cathode material market. And that's a market that is also still taking shape. And I'll deep dive in these aspects in the second presentation. So on that path to value recovery and starting from our strengths, we will be focusing on our capital and performance. But I also told you that we have the strong customer contracts already today, but we're also going to put and we're doing already, of course, a lot of effort on customer and platform diversification.
In Battery Materials, actually, it goes down to one thing, bring down the dollar per kilowatt hour for your customer. That's what we need to do. That's our assignments. And that's where we have to improve and going to put more effort.
Capital. Also here, we're going to be very rigorous. Plant utilization, maximizing that is one of our key priorities. We're going to play with our footprint flexibility, and I'll explain later what that means. And the remaining investment that we're still doing are the investments we need to make to deliver against our customer and product requirements. So we're minimizing that to the maximum extent possible. And if through the plant, we should see opportunities to even do it better, we will not hesitate to do that.
Now in Battery Materials, specifically, we bring down CapEx with EUR 800 million. And you will see later on that the cash reduction is about EUR 600 million cash saving because we're investing a bit more or putting more equity in Iron Way than initially planned. But again, I repeat, we take out EUR 800 million over that EUR 25 million to 2028 period for Battery Materials.
Performance. I want to see in Battery Materials a much more end-to-end approach across functions, really playing that whole piano with that clear oversight. And what do I mean with that? Of course, it's about product development. It's about, of course, about unlocking that potential at the customer side, drive their cost down and their performance, but you also have to design products that actually you can process in the most simple way because that allows you to increase throughput, reduce CapEx density and therefore, ultimately, if you would still be in the growth mode, which we are not, we will reduce the risk that you have to put in upfront CapEx. So that integration play is very important.
And of course, we're going to reduce our focus on reducing our overall cost base, but always without giving up, of course, the potential that we have in this business also for partnership options out there. And based on this, we have a robust midterm plan, significant resides going forward. And these are the financials that we are putting forward for Battery Materials. EUR 1.1 billion in revenues, EBITDA margin north of 25% and return on capital of about 9% in 2028. EBITDA positive in '26, EBIT positive in 2027. We're going to invest EUR 370 million in the finishing of our plants, inject EUR 500 million in IONWAY. And you will recognize that a lot of these numbers that you see here are the big bulk, we also announced already for this year, actually for 2025. The free cash flow over the period, EUR 600 million negative, yes, free cash flow positive as of 2027.
But we will not stop here. We now have this midterm significantly resized plan that we can execute stand-alone. But we will not invest beyond the current plan. I repeat, we will not invest beyond the current plan. And simultaneously, and also here, I repeat, simultaneously, we are actively exploring partnership options out there, and we see an industry that sees value in consolidation and cooperation.
So our midterm plan, while at the same time, we're actively seeking partnership options out there. I'm quite sure some of these questions might also put up later today. We have 3 business groups: Catalysis, Recycling, Specialty Materials. And you know we have this fourth business group for the cathode material business. We're not throwing that away, but we're injecting actually 2 activities in there. And we call now this business group as an extended battery material solutions. And what will you find in this business group? The battery cathode materials business, and we will continue to report on it separately. So you will continue to see that transparency on this business. We're not changing that.
The Battery Recycling Solutions business will also go in there and we also have an interesting technology still at the technology stage today in the battery anode materials. And why do we group those actually together? First of all, we have the exposure to the same market that EV market, which is currently still taking shape. All these businesses will or would require sizable upfront CapEx. And for all of these businesses, exploring that partnership potential to bring these businesses to the market will be an integral part of our analysis from day 1. That's why we bring that together.
So what are now the mandates for the group, right? Maximize that cash generation potential of the foundation business, value recovery battery materials for Catalysis, maximize that cash generation and drive the quality of earnings in a mature market. And Jensen will explain with pleasure how -- what the impact could be from declining metal prices or how we are intending to offset actually and structurally improve these margins.
Recycling. Get the cash out of the assets that we have while investing for the future. And therefore, our plan includes in the end already EUR 300 million out of that EUR 400 million we now earmarked for such a project and we're now in detailed design, so that number could slightly change, of course. But the EBITDA will only come beyond the plan. So if you look at the recycling returns in 2028, they carry the burden of roughly EUR 300 million in our plan, no EBITDA included because the go-live is rather foreseen for 2030.
Specialty Materials. We're going to have selective investments in high-quality growth for the metal deposition solutions as well as the electrooptic material business. But we have to improve the value creation in Cobalt and Specialty Materials, hence, a double mandate. And Battery Materials, I said it before, but I'll repeat it again, execute on that stand-alone midterm plan that we have, significantly sized, but also from day 1 and already today, actively explore these partnership options.
Bringing it all together at a group level, EBITDA 2028 between EUR 1 billion and EUR 1.2 billion, EBITDA margin north of 33% free cash flow, EUR 1 billion to EUR 1.2 billion over the period cumulative and return on capital above 15%. Those are our targets. That's what we're going for.
So key takeaways from this intro. We're going to leverage on our core strength and circular business model. That's what we are in essence, that's what we do best. That's where we're unique. That's what gives us purpose and drives us forward. Four strategic imperatives: capital, performance, people and organization, partnerships. Maximize that cash generation potential in the foundation business, recover value for battery materials. And we have taken substantial CapEx out of the plan. And in the future, our CapEx deployment will be more rigorous, but also more balanced throughout the group, investing in the foundation business and finishing off in battery materials. So this maybe is a good time to have a look at how our business model comes alive in the next video.
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Indeed, we are at the core of everyday life. And this is what gets us up in the morning every single day because, of course, we want to deliver value to our customers. But at the same time, we have this positive environmental and societal impact. And that's great to work in such a company, and that's why we can also attract and retain so many talents out there, which is crucial in a technology company.
Now let's talk a bit more about battery cathode materials and that solid midterm plan or that value recovery that we're looking at. Let me first have a look still at the business group. Battery cathode materials, robust stand-alone midterm plan and that partnership coming back. But the mandate, I repeat it, it's that value recovery. And I'll continue to repeat it because it's very essence. We move from a growth strategy to a value recovery strategy. That's a big difference that we make. We move from a growth company to a cash optimization potential and a value recovery strategy. I want you to really understand that.
And of course, battery recycling solution is going to be there. And here, it's about optimizing our differentiating pyro-hydro technologies. But also here, technologies will be in our thought with every next step that we take.
Battery cathode materials. I talked about this developing markets still taking shape, right? And I talked about the strengths that we have starting from our core business model. But I also talked about these additional requirements that emerged along the way. And one of those requirements is large CapEx. I mean, we know in the meanwhile, it requires a lot of money, right? We all know that in the room. The need for economies of scale. There's an intense competition from Asia, particularly China. That's a fact.
There's an increased focus on cost next to the technology dimension. We have to recognize that. And there's a dynamic geopolitical environment out there. IRA might be gone. Europe talks about local content requirements. We're still going to see movements in that space. And of course, the macroeconomic and therefore, customer adoption, consumer adoption is always something that will evolve over time. And again, all against this background of a hidden volatile market, still taking shape today. So it's not a straight line.
Now we said that we had to adjust to the new reality and that we were going to do this strategy review, right? And we did not just do an internal exercise. That would have been too easy. We really want to do a comprehensive and thorough exercise. But also, we want to incorporate insights from industry experts, we wanted these externals to talk to our customers. Of course, we also talk to our own customers on the strengths and weaknesses and we want to use external benchmarks. So I really tried as hard as I could to get all these blind falls off, talking to bulls and bears just to see that perspective and understand it.
And we looked at 2 big dimensions. First of all, market effectiveness. What's the size of that market? What could be the growth of that market? What is the potential return in this market, what are key success factors. And then our ability to deliver against those customer portfolio and footprint, technology, our cost position, value chain coverage and the financial requirements. And out of that came this midterm plan towards that value recovery. That's the main conclusion out of it.
And if you look at the markets, and this is external data. This market is still on a significant growth trajectory, especially for the EV vehicles out there. And you see differences in different countries, of course, in different regions, China moving faster than Europe and U.S. But you see that the growth is out there. And that growth will not always be linear. That's normal in a transformation. That's normal in economies or in activities or industry which are in a transformation. And you will see that volatility. So we have to take that into account. It will not always be that straight line.
But we also looked at what is the potential of NMC? And let me be clear, I'm not here to debate today percentage of LFP versus NMC. What I'm going to show here is actually external analysis based on these external market frames, and you might recognize these numbers out there, talking to the bulls and the bears what could NMC adoption be in the different regions and globally. And what we see out of this is that, yes, there is definitely a market for LFP. Of course, in that cost segment, right? I mean, that entry segment in the high-end NMC, the premium segment, yes, it's there. But in that mass market, that's where that technology evolution is still in full swing. And that's where technologies will coexist.
But we can also see that even in the bear case, there is a sizable NMC market out there, especially in Europe and North America. Now we know there are additional requirements, but we should also recognize that we start off from quite some strengths as well. Security of cost effective supply. And I spent myself quite some time of my career in this area, buying cobalt, nickel, lithium, refining that. So I really enjoy that space to be there. And we truly have this flexibility. We truly understand this market. We don't position necessarily at the mines because these are very cyclical as well. And one day, if the price is high, great, price is low. We know it suffers a lot in that mining industry.
And you also saw that we actually announced a press release today that we're opening up our optionalities around precursor sourcing. We now have an extra partner in Korea. We also have now a partner in Morocco. We have our own precursor in Europe and China. We're opening optionalities. We're not investing it for us ourselves because that market is still moving, right? Keep some powder dry. A strong asset base. We have a strong foothold in Europe. We have a Korean asset that has been running for more than 2 decades, and we have the Chinese plant optionality. And that's also a question which sits in the room, will or will they not close the China plant? And I tell you, we're not closing the China plant today. Why? Because it's cash flow positive. Based on the utilization that we have, it's cash flow positive.
And it's an interesting bridge for CAM and PCAM going into Europe, but I'll come back to that more when I go through our footprint side by side.
Leading technologies. We have freedom to operate. We own IP in the different regions that we can apply globally, not only in China, but also globally, right? We have been developing these products for more than 25 years, and we have the right products. We're also working already on the next-gen solid-state batteries with good traction of customers. Of course, these technologies are not yet at market maturity and not yet in large scale in that market.
And the strong customer relationships. I'm sure we're going to have a debate on that as well, but we believe that we have these strong customer relationships with take-or-pays with new entrants backed by OEMs, but also existing cell makers. So this robust midterm plan, what did we establish? There is a sizable NMC market out there. No discussion. There is a solid foundation on which we can build and we have strength and capabilities. But there's also additional requirements that we had to recognize.
So again, we continue to work on our business model, work with the existing customer, but customer and platform diversification is going to be a core action that we're going to do here as well.
The two pillars, capital and performance, you start seeing it coming back, I guess.
Rigorous capital deployment EUR 800 million decrease in CapEx. Where is the money going? In Nysa, I'll get back to that, to finish off the footprint, Korea to enable to bring that volume back from Canada and in our IONWAY joint venture. And China, that's that optional footprint.
Performance, dollar per kilowatt hour. All the colleagues, including myself, first thing we do when we think -- we get up in the morning is what am I going to do to bring that dollar per kilowatt hour down. Every meeting has to start with how do I bring that dollar per kilowatt hour down. If you don't have the answer, don't do it. If you go to that, what did I do today to bring that dollar per kilowatt hour down. And we have a good cost position, but we have to improve it, and we have to be more cost competitive going forward. And I'll get to some of these cost drivers also later on.
We want to be transparent as well on how this take-or-pay trajectory actually look because it was always difficult for every one of you to assess. I felt that in our exchanges. So I wanted to give that transparency. And this is the sum of all the take-or-pay contracts that we have. 133 gigawatts hours in 2028. And if we look at different scenarios on volume uptake against these take-or-pay contracts on then, of course, changing compensation that we could get depending on that volume shortfall, we always end up in that range, 275 to 325.
You also noticed that I said we're going to focus on customer diversification. There's no upside of customer diversification taken into these numbers. So customer diversification is not part of this. But I can also tell you that the contracts that we have in the take-or-pay allow us to use that same capacity for different customers. So we know that some of our customers might have a volume shortfall. We know that they will have to pay for it, and we'll also enforce that because these are strong contracts. But simultaneously, we can work on that customer diversification, and that's what we're going to do.
I just said what was coming on that slide, right? Rigorous capital deployment, '25 to '28. We cut EUR 800 million in CapEx. Over that period in the original plan, '25 to '28, we were planning EUR 1.6 billion of cash out, EUR 300 million equity for the IONWAY joint venture with PowerCo, EUR 1.3 billion for Umicore 100% owned facilities. We took out EUR 800 million, and that's really mainly related to that Canadian project that we stopped and the related investments, of course, we now need to do in Korea to absorb these volumes in that plant.
Now if you look, that means that if you take out this EUR 800 million, that we would stand at EUR 300 million equity, right, and EUR 500 million remaining investments, investments in CapEx, of course, and maintenance. So that's total both. But as Wannes explained also over the call and of course, we see some delay in that project financing, that nonrecourse financing out there. And therefore, the CapEx cut is EUR 800 million, but the cash saving is EUR 600 million. That's something that we have to take into account.
Footprint, always an interesting one. We have a global footprint. And let me start in the East Korea. Today, we have 30 gigawatt hour up and running in Korea. This plant is running for more than 20 years, very experienced teams. And Korea today -- and let's see how the market evolves ultimately. But today, Korea is able to deliver locally. They can access Europe, they can access U.S., very interesting footprint. It's also the R&D hub for our cathode materials business. That's also where it sits.
We now also have this partner out there in Korea to supply precursors that allow us to go to Europe and to the U.S. going forward. Then let me go to China. In China, we roughly have 30 gigawatt hour cathode material up and running. And here, we also have pCAM capacity, precursor capacity for 80,000 tonnes. And China is also still open for Europe. Yes, it comes with some duties, but keeping that cost position is still open to Europe. And that's also what you see in the business, right? I mean, people try to import cathode material from Europe as long as they can until local content required might come on certain steps of that value chain. And the first step will be cathode material.
Then we go to Kokkola, 20,000 tonnes pCAM. So we're ready to upscale that. We have a footprint in Europe if these requirements change. And also in Kokkola, I mentioned before, we have the largest refinery, cobalt refinery at scale outside China. There's only one large cobalt refinery out there in the world outside China.
Poland, Nysa, our 100% owned plant, currently 30 gigawatt hour capacity as the first operational NMC asset in Europe. And we're building now the IONWAY joint venture in Nysa next door, I would say. Of course, it's separate fence, it's separated, but it's on the same location.
Now let me go a bit, and I thought it was useful to walk you through the different sites and why and how much we are investing in these different sites. Nysa, EUR 250 million to deliver against our customer requirements and product requirements. We have to do it. If we see room later on to postpone a part of that, we will do that. But the ingoing assumption is we have to do it. That's what it is when I read my contracts and when I see the customer commitments.
All of that, of course, is against contracts that we're delivering against a take-or-pay. If we do this, we start to unlock when we start filling that plant through that customer diversification and the existing contracts we have already, we really open up that optionality also for that scale -- for that economy of scale, which will bring our CapEx density per kg as well as that cost per kilogram cathode down.
It will be a highly competitive asset, and we are ready for the uptake of that market and also ready for that local content requirement where the EU is now talking about. You see here the CapEx, the capital and cost reduction, I also get back to that.
But if I look at the individual return on capital because remember, I'm not in a growth strategy anymore. I'm in a value recovery strategy. So I'm looking what is that return of that incremental CapEx that I'm doing, it's north of 20% as we start filling up that plant. Again, I have to do these investments.
Korea. Korea, we want to bring from 30 to 40 gigawatt hour. And we have a proof point here as well. We were successful to bring that contract with AESC back from Canada into Korea. And this allows us to minimize an investment. And also here, we will have a return well north of 15% on that incremental investment that we're doing.
So money well spent to deliver against these contractual commitments and to avoid a very bulky investment in Canada, where, by the way, if you look at the environment, there's a significant strong inflation and ultimately, probably that project would even have costed much more given the cost evolution that you see in that region. Also here, covered by take-or-pay and still an interesting proposal for access to the U.S.
IONWAY strong partnership with PowerCo. We still feel that commitment on their side. We're making equity contributions at the same level. So the same value always goes in at the same time. We now have waves called off out of that 164 gigawatts, what we initially talked about, right, and that contract is still in place. Currently, under call-off is 70 gigawatt hour. That's also extra transparency that we give to you today.
And as explained, that nonrecourse debt has some delay here, and that's why we're going to invest an extra EUR 200 million versus the original plan, summing it up to EUR 500 million, anything beyond is assumed to come through nonrecourse financing because it's a bankable plan because it comes with the necessary returns and guarantees as well as some inflation offset mechanisms. So to anticipate your question, yes, this will have returns above the cost of capital even on this set. So just to answer your question on that one.
PCAM and China. Why do I want to stay in China? First of all, the cash burn is not there. It's cash flow positive. Secondly, I want to stay in the Chinese ecosystem because we want to develop products with leading Chinese OEMs. Even for business for Europe, you have to be there. Your teams have to speak the language, that you have to be there fast proximity and you have to demonstrate it locally because that's where their R&D sits. That's the value.
And secondly, it's still an interesting bridge into Europe for pCAM, but also CAM. And it would allow, of course, for maximum capacity utilization because if you can play with your footprint and you start hitting more that maximum capacity, you still have that backup capacity that could be interesting as well, always depending, of course, how duties and geopolitics would evolve.
Let's leave the capital pillar on the side now. And let's go to the performance. Bringing down the dollar per kilowatt hour. In 2025, we're going to take out already EUR 50 million costs and accumulate over the plan, '26, '28, another EUR 80 million. So -- and of course, apart from that with that volume ramp-up, that's clear, but a total of EUR 95 million. And this, of course, will further support that profitability and these cash flows that we are seeing that are going to take place.
But I also talked about specific levers on which we were going to work for that cost improvement. And you hear me say once more that end-to-end approach. And in Catalysis, we also have that. I mean, it's only if you have that interplay between product development, your salespeople, your process people and your sourcing that you get that maximum value out of it. That's really that integration of that product design with that process design, and we have to improve there. Very frankly speaking, we have to step that further up.
We continue to work on process optimization in Asia and in Europe. We always have done that, improve your yields, right? Decreasing energy consumption. We have these big furnaces, some of you might have seen them. It does consume energy. So that's also an important cost and ESG driver. And of course, increase that throughput, but also lower the running cost and get your yields at the highest level.
It's a bulk business. That means you buy a lot of utilities, reagents, et cetera. You transport a lot of material because actually, it's not such a dense product that you ship around the globe, transportation, indirect procurement, extremely important. And the overall philosophy and operating model, really work on that lean setup and also really make sure that we have these good scale-up processes that you can go fast, that you don't have this big learning curve that you would have to travel through if you start up new lines or new locations.
Here, you see that reduction in that -- in the production process. It would allow us to take out 20% of our cost base on 2028 and evolving towards 2030, another 10%. At the same time, while doing that, we prepare for that European local market when the market returns, but also when that local content requirement plays up.
So to summarize, once more the financials, EUR 1.1 billion revenues in 2028, 25% -- north of 25% EBITDA margin in 2028. Return on capital, 9%; EBITDA positive '26, EBIT positive 2027. And I will not repeat the rest because I've said that before. But I want to stress this slide because I think that's an important slide that we should not underestimate is that we will not invest beyond the current footprint.
That means we move from that growth to value recovery. And in that same spirit of value recovery, we will actively and we are actively looking into partnerships to see if we can speed up or increase that value recovery. So we do that simultaneously.
A small update on battery recycling in the same business group. And Geert, of course, later on, if there's questions, you're the man to answer, right? It's all about scaling up at optimal market timing. We've discussed about this, right? That long-term market is going to be there. There's going to be an NMC market out there.
The size of that market might be smaller than we all initially thought or it might take longer before it's there. Hence, we're scaling up later, but those fundamentals are there in that longer term. It is a sizable addressable market at that point in time. And we're looking not only at end of life, but also at crops throughout that value chain. Is it now foils? Is it now defect cells? Is it ultimately end-of-life cells coming back?
We have a winning proposition. The pyrohydro technology at scale is the most competitive, but it has to happen at scale. That's important. So that's why our market timing has to be right. And right now, we will continue to further optimize that technology and test all these process parameters that we check to really seeing what -- how can we now play with the installations that we have to see, what is now these possibilities of these technologies. And we're going to do that in the next 2 years with our pilot industrial pilot facility. And this results in a spend for '25 and '26 of roughly EUR 25 million EBITDA.
But we are not just going to do the scale up and say, okay, wow, technology is there, we have something unique and we truly have something unique. The market is coming. Let's go in and do it alone. From day 1, we will see are there smarter ways to do this to play in this market because we have all these technologies. I mean, we cannot always scale them on our own. Can we have some risk reward share? Can we optimize our position in that value chain or ecosystem if we partner with somebody, while at the same time, not carrying all the risk and the CapEx burden on our own. So that's a bit the trajectory for battery recyclings, what we have here.
So key takeaways, value recovery and a solid midterm plan on the one hand. CapEx reduction, very disciplined where we spend and how we spend that money. We focus on the investments through the optimized use of our assets. I mean, we've utilized in Korea, and we're actively exploring these partnerships. And I think, of course, brings us back to the call. But then we are in Catalysis, but I think we have a break first for some Q&A. Thank you.
Welcome back for the second part of our Capital Markets Day. I'm very happy to welcome Jensen on stage, who's going to take you on a journey into the magical world of Catalysis. Floor is yours.
Thank you, Caroline. And also from my side, a warm welcome, and I'm very excited to stand in here in front of you today to share with you the remarkable performance, one of the key imperatives that Bart mentioned, but also to share with you the future prospects of our business group Catalysis. And we want to continue on this success story, or outperformance being faster, stronger and longer while staying committed towards innovation, efficiency and customer intimacy, and there are really elements deeply embedded into our organization.
And Catalysis is the foundation business, and we will, for much longer than foreseen, deliver cash and value to our shareholders. And we have consistently proven to have the ability to rapidly adapt and increase our margins in a fast-changing environment. So today, I want to demonstrate you today that in the automotive catalyst market, we will continue to maximize value and cash for the next decades and that we also have interesting growth opportunities in adjacent markets like in fuel cells. So faster, stronger, longer, that's what I will demonstrate to you today.
The business group of Catalysis consists of 3 business units, and they all nicely combined together because they're all selling and producing PGM-based catalyst. And they do that in the megatrends of the mobility transformation and also the clean technologies. So automotive catalysts, AC in abbreviation is still the driving force in our business group. And faster than foreseen, the internal combustion engine has entered the mature market stage. But also, I'm proud to state that we are short our #1 position in the light-duty gasoline segment. So the mandate of automotive catalyst is crystal clear, maximizing cash, and we will do that for much longer than foreseen and therefore be a cash generator for Umicore.
The second unit, fuel cells and stationary catalysts or growth units. And both of these businesses operate in promising and attractive markets, being a technology leader. And over the past years, we have modestly invested into that growth and to also make sure that we have a long-term profitability within the business group of Catalysis.
In the third unit, precious metals chemistry, a strong contributor to the EBITDA of the business group. And they do that because they are an essential internal supplier of the PGM recursors for automotive catalysts for fuel cells and even for specialty materials. And we also have a unique and strong precious metal-based catalyst portfolio, serving markets like pharmaceuticals, fine chemicals, et cetera. And their mandate is strong profitability by customized innovation. So in a nutshell, the business group Catalysis, an exciting business group serving on maximizing value in the mega trends of mobility transformation with the mandate of maximizing cash, driving growth and strong profitability.
So maximizing cash. Automotive catalysts is still the driving force, like I said, within the business group. And today, I want to demonstrate to you that the strategy of faster, stronger, longer and that we have strong proof points over the last couple of years, but it is still a very attractive market out there and that we're extremely well positioned to capture on these future opportunities.
Market first. So even though when you look towards the light-duty vehicle markets, combining all powertrains, we see an increase in the demand. The internal combustion engines have entered the mature market stage. We see in the graph here that when we look towards the global ICE vehicle production that compared to 2 years ago, there's an uplift, a substantial uplift. And so we are looking towards light-duty vehicles and the heavy-duty vehicles on the road. And so this shows that ICEs will remain the dominant powertrain for the next years. And that's, of course, coming from the slowdown that we see in the global EV, and also because of the revival that we see of the hybrids and hybrids are part of the internal combustion engine. So this will have a positive impact for automotive catalysts. And we also see a moderate market growth when we look towards the heavy-duty diesel.
Looking towards our market model, we, of course, follow what we listen and what we hear from our customers and what we see in the market. And we are a bit more conservative on China because there we see a dynamic of a fast uptake of what we call the NEV, the new electrified vehicles. So even the end in China, there would be still a bit of upside it would also uplift our midterm financial plan.
So a first takeaway for you is that internal combustion engines will remain the dominant powertrain for the next years. And in 2028, we still see 74% in the LDV being ICEs. So AC does matter, automotive catalyst does matter, and it will be for much longer than initially expected.
So a stronger and longer ICE market, it's a fact, you know this. Let me now add an element, the interesting elements may be a surprise. While the ICE vehicle production demand is slowing down, the catalyst margin linked to that is slowing down slower. That's mainly because of the new legislation that still need to kick in about [indiscernible], the China 7, et cetera. And to meet these standards, we need to have more complex and advanced catalysts and also more bricks, more catalysts per vehicle. So let's look to the graph.
It's showing the value pool of the catalyst market in the 3 segments. So let's look at the green one, the light-duty gasoline. More than 40%, so really the biggest value pool still out there until 2028. It's almost flat compared to today. And that's where we will leverage a stronger and longer performance because we are the #1 in the light-duty gasoline. Looking towards the LDD, the light-duty diesel, it's sliding off and we have less impact there. And on the heavy-duty diesel, like I mentioned, we see a market growth of around 10% between '24 and 2028.
So with these positive ICE trends, we have refined our strategy of maximizing cash and driving the quality of earnings. We want to continue on our strength on our core. And therefore, we will be very strong on our leveraging, our #1 position in the big value pool of the light-duty gasoline and also selectively invest in AGD, meaning in Europe and in China.
And our strategy of maximizing cash consists of 3 elements. One is linked to our core, to our business model of Umicore. It's our unique customer proposition. How we create value for Umicore for our customer, so better together. The second element is linked to one of the key imperatives is our performance or outperformance and how we will continue to create cash for as long as possible and as strong as possible. And the last one is linked to the another imperative, it's people and culture, how are people in Catalysis and AC can really excel in their execution.
So let me now start with the first one, unique customer proposition. And so I want to come from 2 angles: one, the customer, one technology. And so the key success of automotive catalysts is based upon the foundation of really close customer relationships and a commitment towards efficiency and excellence. And we are serving OEMs worldwide, global OEMs, local OEMs. And we have a very balanced portfolio across the regions, especially for the light-duty vehicles. And like Bart mentioned in the introduction, that's a strong asset to also serve these customers in the long-lasting regions like India and South America. And in India, we are a preferred supplier to 2 of the top 3 local OEMs. And in Brazil, South America, we are, by far, the strongest with our renewable fuel technologies, the flex flows. So for decades, for more than 5 decades, we have -- the OEMs have chosen Umicore for the close collaboration and joint value creation, really reducing the total cost of ownership, it creates a win-win.
The second element for the customers is our strong and global footprint, production footprint and also an agile footprint. And we, of course, manage that in line with the customer demand. And I know today, there are uncertainties out there. We have uncertainties in terms of the legislations on CO2, but also the tariffs. But it's really that management of an agile production footprint that will make sure that we can meet our customer demand.
And the third element from the customer side is that we will set up even closer relationships with our OEMs. And reduce the total cost of ownership. And examples here are we are discussing last one standings. We are also looking towards in-sourcing opportunities across the value chain. We're also looking to elements that are typical to a mature market, meaning, for example, managing better, small lot sizes. And so on top of that, we, of course, are very, very rigor in our costs across the value chain, looking to raw materials. We're also looking, for example, to us, test center setups.
And coming from the technology side, this is, of course, also key. That's our priority to stay the leading player in the light-duty gasoline and to stay competitive in the heavy-duty diesel. And we, of course, also in R&D are much more conscious over the last years. While staying innovative, we are really more selective in product development, and also really focused on these high-value technologies for the upcoming legislations. And we want, of course, to stay agile also here because if there would be an extra -- an extra platform that would occur that we still have the resources to capture that opportunity.
I also would like to share with you one of our key strengths, a key advantage, it's called our Flex metal technology. It has brought us a lot of strength during the Euro VII to really gain market share during these awards. This is also helping us even abroad outside of Europe. And it's really demonstrating the win-win how we reduce the total cost of ownership because the Flex metal is based upon an innovative technology that looks towards trimetal usage, meaning palladium, platinum and rhodium and to reduce that concept while still meeting the tight legislations.
And also I would like to add here the revival of the hybrids, also the flex metal or low cost and low PGM technologies are very strong for these cold-start conditions. And the last element is that we continue our ambitions on sustainability. We are reducing the CO2 in our footprint, so that they can benefit the Scope III of our customers.
So we are very well positioned and have strong assets, well equipped for the future driving of our success. And here is an important message. In 2028, with our unique assets and our strong assets, we will maintain the #1 position in the light-duty gasoline and even will strengthen our share with 3% to 4% in the light duty catalyst in 2028.
So let me go now to the second element, which is a pillar, performance part of our key imperatives. In a couple of years, when Bart was leading Catalysis, he said automotive catalysts need to focus on cash and cost to really prepare for that mature market. And so we did, we even did faster and stronger than we thought. So let me now quickly guide you through some examples, some accomplishments over the last years because they are real proof points of our strategy of maximizing cash. And the first one is linked to how we manage our agility in that footprint. And yes, in the mature markets, you need to consolidate. So we have closed our AGD plants in Denmark. And last year, we announced the closedown of our Japanese plant, and we are shifting these units towards other Umicore agent plans.
On the other hand, we are also still investing very modestly in these long-lasting regions, for example, in India and in Brazil. Also over the last couple of years, we have launched several efficiency projects across departments to really improve what we call the end-to-end flows. And so a very big part is coming from our management of our supply chains of our planning to really reduce -- to really optimize utilization rates and to reduce the net working capital. And I mentioned during the technology slides that we also, over the last 2 years, really focused on the reduction in R&D, so that, of course, is also supporting our quality of earnings.
And so over the last 2 years, we were able by these initiatives to reduce EUR 50 million of annual fixed costs for the last 2 years. And this generated together with operational improvements in the net working capital, but also the tailwinds we got in the PGM prices to generate a free cash flow of EUR 1.8 billion for automotive catalysts between '22 and '24, a strong proof point, I would say.
But of course, we will not stop here. We want to continue to build on that core on our strength, and we want to do that continuously strong and fast. So the ambitions that we have set before to meet in 2030, we want to meet them in 2028. And so we continue to manage our agile footprint in line with the customer demand, and we keep that mandate within operations to have more than 85% utilization rate. It's really key for our way of working. And we also really slowly lower our investments, so by '26, we will be substantially below today's depreciation rate. And yes, we continue, of course, on these efficiency projects, and we will add an extra EUR 50 million of fixed cost reductions per year, so meaning EUR 100 million between '22 -- between '22 and 2028. And overall, between '25 and '28, that will generate an extra EUR 1 billion of cash within automotive catalysts.
This brings me to the third pillar, people and culture. And that's really, for me, the most important one, it makes me happy as well at the same moment. Because our people we're open for change in that mature market, and they really excel in their execution. And I would also like to add the angle of safety and well-being. Safety and well-being is not a priority, because priorities can change. It is, like [indiscernible] said, a prerequisite and everything we do. And having worked hard on that, I really have a very nice positive track record. I'm sure that's also and I'm also convinced that this also helps the financial performance. So at AC, we really embrace the future even in a mature market in a declining market. And our teams have over the last years really changed their mindset from volume, growth and product development towards cost, efficiency and process excellence. And we are now organizing regions to be closer to what's happening locally and closer to our customers. But we also have now core process units to work on these efficiencies, and we will do that faster, stronger and longer.
But the success story does not stop with automotive catalysts. So let's switch gears here and talk about fuel cells. So the next couple of slides, I would like you to show you that this technology will have its place in the mobility and energy transformation, and that we have a very nice position in that market, and it will partially compensate for later on the decline that we will see in the ICEs.
So yes, BEVs will over time be the alternative, the dominant alternative for fossil fuel powered vehicles. And yes, there's a longer transition because of hybrids. But there will be also a market for fuel cells, especially and most specifically for the long-haul heavy-duty trucks. And the third is, it's a niche market. It's a small market. It's a market growing 30% to 40% per year until 2028 and beyond. And in China, it's happening. China has more than -- almost 50% of that market, and that's where we made a decision to put our mass production plant in Changshu, close to our AC [indiscernible] plant.
Let me give you a short anecdote. When I was stationed in Germany, leading [indiscernible] for 3 years, I had the honor and the luck to drive a fuel cell-powered vehicle in a joint collaboration with the customer. So I could really firsthand test it, our own technologies and how that car was driving, was really, really great. But more specifically, it showed me very close to the challenges. The hydrogen price, the hydrogen availability and most important, the infrastructure because they are key levers for the success for that -- for such a new technology. And again, here, in China, it is happening. It's kicking off, there is a momentum.
So let me give you 2 examples. Between '22 and '24, the amount of refueling stations in China doubled to over 500. And this year, we'll even go above 1,000 and doubling year after year. And secondly, more and more provinces in China are waiving the highway toll for fuel cell-powered vehicles. So that will reduce the total cost of ownership already below HDD, the heavy-duty diesel. And if you would add upcoming potential based upon locations on the subsidies for the purchase price, it even goes as far or below the gas and the electric trucks.
So in China, it's really happening. So there is a market, how are we now best positioned to capture on this. I will explain you. In fuel cells, we also are not new. We have a track record. And we want to really build upon that because we listen very carefully to our customers. So we use our strength here. And the strength is we only sell and produce PEM-based fuel cell catalyst for anode and cathode and for electrolysis and PEM meaning proton exchange memory. And it's really listening to that customer. So we don't produce membranes. We don't produce these stacks. We only focus on the catalyst. And so we really here leverage our expertise in chemistry and also in innovation because these 2 elements are key to this success and to stay in front.
And looking towards cost and innovation, I'm really proud of our teams that they constantly innovate and that customers say that we have the best efficiencies, the best durability and also the lowest PGMs in our catalysts. The customer even says it is 25% lower compared to competition.
Let me give you some other facts on fuel cells. We are a preferred supplier because of our track record as said. We are already producing ton scale in our plants in Europe and the plant in Korea. And this really helps because it's a technical, very highly advanced material that is impacting a lot of elements within a fuel cell stack. And so over the last 2, 3 years, we were able to more than double the amount of customers that we serve and that were qualified. So also here are proof points of our strategy. And I mentioned in China, it is happening. And I'm very proud to state that we are now supplying and serving 4 out of the 5 top fuel cell players in China. So I mentioned China quite a couple of times, although also in Korea, we are a leading player. Within China, we are, of course, investing into our mass production plant. And on top, we also invest in application labs to really stay very close to the local customers in China and to codevelop.
So we are best positioned in fuel cells to capture a profitable, growing niche market. And sticking up in China and it's preparing for rollouts, the rest of the world more towards the end of 0the decade. And this is our picture of the plant and buildup in Changshu, which we are building well within budget, and it will be operational early 2026.
So what I would like you to take away on fuel cells is that we are -- we're well equipped also here to stay in front in terms of cost and innovation, be faster and stronger than our competition and have a longer profitability for the business group Catalysis.
So let me bring that towards the overall Catalysis financials. And I would say they are quite impressive. We have shown the strong proof points and towards 2028, with modest investments below EUR 300 million, which means mainly maintenance CapEx and modestly in growth, we will generate in the business group, another EUR 1.4 billion of free cash. And I want to come back on the statements that we said that we would generate EUR 3 billion in Catalysis from '22 to 2030, and today, uplifting that ambition to be close to EUR 4 billion.
On top of that, if you look to revenues, they're slightly increasing compared to today, driven by all 3 business units. Strong EBITDAs around 25% and ROCEs north of 35%.
So to conclude, what are the main takeaways for you on my presentation on Catalysis. We have delivered -- we have a strong strategy of cash generation and driving quality of earnings. We have strong proof points. Going forward, we have one, a faster implementation of our strategy, generating impressive cash. Secondly, we have even stronger returns based upon our legacy business, the big value pool out there in light-duty gasoline where we are maintaining our #1 position. And three, a longer dominance of ICEs and also a longer profitability when we look towards our modest investments in fuel cells.
So in the end -- or not in the end -- to end, in Catalysis or teams are and will be faster, stronger and longer. Thank you.
And by this, I will give the mic to Geert.
Thank you very much, Jensen. And -- but I have to disappoint you. I will have to recycle all your nice products in the end, right? So let me introduce you today through this nice world, magical world of recycling of nonferrous metals. And I think this is a business that goes really far back into the roots of Umicore. And at the same time, as also Bart already said this morning, it's more relevant than ever.
So why is that? I think just to give you 3 elements. The energy and mobility transformation it's a material transformation and nonferrous metals have a really important role to play there. Secondly, recycling of critical metals is key, I think, sustainability, think resource scarcity. And last but not least, the element also Bart alluded to sell-off sufficiency in metals in today's geopolitical environment, it's really a hot topic.
That to say that recycling in all that environment is part of the solution, and we really have an opportunity to stand out. And that's why we present to you how we will strengthen our solid leadership position that we already have today, how we will strengthen that going forward.
So what is this business group recycling about? We have 3 business units in that business group. The first one is, by far, the largest. That's our precious metals refining activity. That's roughly 75% of the revenues in the business group. Teir strategic imperative going forward is to maximize the cash generation of the current assets. And at the same time, I will show you that we will invest in the future, and that investment will both be a positive business case, but it will also be a game changers in environmental performance. We will further advance this massively.
The second business unit in our business group cycling is jewelry and industrial metals. So what do they do? They recycle high-grade precious metal scraps, and they turn that scrap into semifinished and finished products again for the jewelry industry, for investment products like gold bars, silver coin banks, and industrial products. So their strategic imperative has basically not changed compared to what they do today. It's about maintaining their regional leadership for sustainable and resilient value creation.
And last but not least, we have what I would call the spider in the web, that's our precious metal management. So what do they do? They do the delivery, the hedging and the trading of precious metals from our own refineries, from industrial partners and from banks.
So in the remainder of the presentation, I will now focus and zoom in into precious metal refining, which is our largest business unit, and I will address 2 elements. Where do we play today? So what is it about? And why do we have this solid leadership position? And the second part will be how do we strengthen that position going forward.
And megatrends. We addressed it already this morning. Megatrends are important, supporting the Umicore business model, but especially also supporting the recycling business group. For a couple of reasons, think resource scarcity. We need more materials in the world. The ores are getting depleted. We need more and more recycling to get these materials back. So recycling is serving on that trend.
Think CO2 footprint. For precious metals, for example, the CO2 footprint of recycled precious metal is more than 90%, 9-0% lower than from primary metals. And just the third point take also the self-sufficiency in raw materials for regions which don't have access to primary materials like Europe, this is critical to come in this recycling loop. And that's also why Europe is now pushing forward with legislation, green deal, critical raw material act. So that's supportive.
So we need circularity. We need to close the loop, and we need to do that with a better environmental performance. And I believe you will agree with me that this is very close to Umicore's business model. So we serve on these megatrends and the business group recycling is well positioned there. So where do we play? And some of you were already asking that during the break as well, what metals and what portfolio.
We have a unique position because we recovered 17 different metals, precious metals, but also secondary metals. And that's really unique, and we are the biggest one, by far, the largest one in the world. And as Bart mentioned, only one of such big refineries is used in the world. And we have that refinery. It's in our site in Belgium in Hoboken. The feed streams come from industrial byproducts on one hand and recyclables, end-of-life materials on the other hand.
That market is already large. But given the trends in the megatrends, that market will also increase. Ores get depleted, more secondary metals come as industrial byproducts. We need more recycling to close the loop. So overall, this is a growing market and opportunity space for us to play. We do not stop there. We will also open up our flow sheet for future end markets, but also to address certain supply streams that we do not -- take in today.
So it provides an opportunity on the short term, but also the future end markets think electrolyzers, think fuel cells to get those metals recycled, and it open up for more nickel for antimony, tin also for more secondary metals. And that's clearly a growing market where we want to play, which brings me to our business model. And there's a lot of information on this slide, but I think 2 key messages are on this slide.
One, we capture fees along the whole value chain from mines to end-of-life materials. And in each of these streams, we capture material. And we clustered them in 2 categories: industrial byproducts, which represents roughly 80% of our feed and end-of-life materials, recyclable, which is 20% of the feed. So we play along this whole value chain.
The second element, which sets us apart and which really makes us or differentiate from others, is that we can be flexible in the feeds that we treat. We can -- depending on opportunities in the market, we can optimize our feed for value, and we don't always have to go for volume. And that's truly unique.
Most refineries, they are specialized in one mono stream. We have more than 200 different material streams coming in. And our commercial teams can really pinpoints or use opportunities in the market to optimize the value. And that's why you will see if you go back historically that the EBITDA margins of this unit and that the ROCE numbers of these units are always high across the various economical cycles because we can adjust that. And what is behind the fact that we can adjust it, that's our flow sheet, which is really one of a kind. And I want to illustrate that flow sheets to you.
[Presentation]
Yes. So great flow sheets. And personally, I have great memories to that because I was working in that plant 15 years ago and I was heading one of these unique operations. And so a lot of connection to it. And even today, if I see how passionate these colleagues are to every day optimize that flow sheet and get it to work, it's really fantastic.
So this slide basically summarizes a bit and gives you some points why this is really one of a kind of a flow sheet. And let me walk you through these different elements. For the first point, you see on the left, highly accurate sampling and assaying. So why is that so important? So what we treat in Hoboken are really low grade PGM products. So that means sometimes there are only a few grams into a ton of material. So -- and that's really not easy to sample and assay correctly. So it has to be 100% reliable what we do and in sampling.
Because in the end, based on that sampling, that's where the contracts are based on, that's how we define the value of that material. And we have developed there a rock solid reputation and we are recognized for that to be best-in-class, and that's also why our customers trust us so much. That's why they bring their very expensive materials to us, why they trust us with the sampling and assaying. So it's really a key differentiator that we have in that plant to analyze this low PGM concentrated materials.
Once we have analyzed it, you also have to do the same in your flow sheet. I tend to say you have to find back that needle in the haystack, in the sampling and assaying but that same needle, you have to find back in your flow sheet. So we have the technology, we have the size, and we have the scale to do that. And that's unique. We have developed that over decades. That's the point seen most on the right. And that's why it's also so difficult to replicate for others because it's step by step, we have built that and now it's there. And we continuously keep on pushing the limits of that investment.
It's integrated metal and processing ecosystem to recover these 17 metals in the highest metal yields and with the faster throughput times, you need a lot of unit operations. We have seen that in the video. And that's why we have also world-leading metal recovery rates.
So we deliver industry-leading returns already over the past decades, and we will continue doing that in the future. So this -- some data points, some -- which I want to share with you. So we are the #1, and you have heard it already, #1, PGM and specialty refinery globally who can deal with that variety of supply. We are top 3 PGM suppliers in Europe.
We are top 5 in terms of spent automotive and industrial catalyst recycler, and with most of our customers, we have long-term relations, spanning more than 20 years, and that's very important for us because that's again shining through that element of trust that reliability, that partnership over time.
So that brings me to the second part of PMR, where I want to show you how we will now strengthen that solid leadership position that we have today going forward. And for that, we will invest. So there is a capital element, but we will also make sure we drive performance further. So let's double-click on these 2 elements.
First, on the capital on the investment. So that's really -- I'm very honored and very excited to announce here then today that we will have this proprietary hydrometallurgical flow sheet expansion where we invest into. And with that, we will pioneer the future of recycling. So in a way, it's another one of a kind because it's really based on proprietary knowledge. And it has a double win.
So here, you see the first one. The first one is a game changer in environmental performance. We will strengthen the best-in-class environmental performance via that investment. That gives us guaranteed compliance with the upcoming 2030 EU Ambient Air Quality Directive. The second win is that we can do that with a very attractive positive business case. The business case through which we can attract more profitable supply. We can have higher yields and improved throughput times. So better commercial conditions and better return for us.
So to go there a bit in detail and give you some more details, we will increase our copper and nickel capacity. We will increase and reduce the PGM throughput times, so faster throughput of PGMs. We will expand the process window, meaning the 17 metals you have seen now become 18 metals. Cobalt will be added to that as an 18th metal. And that's important because it will again allow us to attract to source certain material we cannot source today. And we will have increased yields on the secondary metals like antimony and tin. So a double win with that investment.
So the total investment amount will be EUR 400 million. We are now in detailed engineering. The amount we took in the plan is EUR 300 million because that's the amount we will spend until 2028 out of the total of EUR 400 million. The investment will be value accretive and the payback of that investment is now 6 years. So it's a positive business case, which is also a huge game changer in environmental performance.
Good. Let's look then at the second pillar of performance and give you some elements there. First, I want to mention operational and cost excellence. That's what we do every day. Operational excellence is -- that's why we have metallurgists, chemists in the plant working on debottlenecking, the activities on improving the yields every day. Cost excellence, that's about gross profitability. How can we keep our cost as low as possible? How can we compensate for elements like inflation to improve our cost competitiveness over the years to come.
The second pillar is topline measures. There, I really like to mention the Nexyclus. That's really a label we introduced last year, and it's a label for guaranteed recycled content. So if you buy material under the Nexyclus label, we guarantee you that, that material is coming from 100% recycled. And there is a market for that, and we see that market picking up over the coming years. We expand our services beyond the refining and recycling services we deliver today. And we work on the quality of earnings, meaning optimizing for value over volume, meaning looking at win-win with new customers to attract new attractive volumes.
And last but not least, we heavily invest in technology and digitalization, automation and digitalization. Here, you see an example of a robotization of our sampling in assaying. It helps to reduce costs to work on this cost excellence. It also brings robustness. It brings accuracy, reliability of installation. And important as well, it's the foundation for artificial intelligence, which we already use today, and I will come to that on the next slide as well in environmental applications, but also already in the process plant.
We have a gold mine of data, Bart called it that way. So we will use that gold mine of data to do these process optimizations, and we see a lot of potential, and we are already tapping into a lot of potential via that.
And the last point on performance, which is really very close to our heart is our world-class environmental performance which is driven by advanced technology. And give me -- let me give you here 3 examples. First, real-time environmental monitoring. What does it mean? It means that today, we have basically on a second per second basis, we know what emissions we have in the plant. And we only -- we do not only know how much dust is emitted, but we also analyze immediately the composition. And that does 2 things. We can immediately have feedback on what we do, and we can also trace back the source of that emission so that we can also remediate it going forward.
We couple that to weather forecasting tools, AI models on top of that so that we have now even a tool which we call smart logistics. And with that, the model can predict which activities we can turn on and off depending on the weather conditions to really minimize the emission of the plant. And that's one of the elements of the examples of where AI is already fully active and in place. The second example is state-of-the-art technology. That's where we invested the last year quite a bit. Examples being encapsulation of the lead refinery, installing wind screens and other investments that really reduce the emissions of the plant.
And last but not least is the creation of the green zone to really help to create a sustainable coexistence of an industrial area with a residential area very nearby. On top of all the other measures, we also make sure there is a certain separation of that guaranteed, which, of course, further helps the quality of life around this production plant. So with that, we continue to raise the bar, and we are really committed to remaining the world's most efficient and environmental-friendly refiner.
And we do that for the environment, but it has also a business component because customers will come to us because we are the most environmental friendly. Other competitors might not fully live up to the expectations, like I mentioned, the EU 2030 Air Quality Directive. So we see also there this as a competitive advantage next to our duty to have the best possible coexistence with our neighborhood.
So let's come back to the financials where I now come back to the business group recycling. So this is not only precious metal refining, this is the whole together with Jim and precious metal management. Our revenues towards '28 will be EUR 800 million. We will have a very strong EBITDA numbers with 35%. And our ROCEs will be over 40%, well knowing that in those years of the plan, we will invest heavily in that proprietary hydrometallurgical installation. And still, we reached this high level or this high ROCE levels. The CapEx is EUR 600 million, including that investment. And the free cash flows, they remain extremely strong with EUR 400 million over the plan.
So that brings me to the takeaways for recycling. I think 3 elements I would like you to really take home. Strong leadership position. We have that unique market position. We have that possibility to go for value over volume and thereby serve the different economical cycles and use the opportunities in the market to keep our EBITDA levels high. We see significant market opportunities we serve on these megatrends. And we invest for the future. We stay ahead of the curve via this proprietary hydrometallurgical investment that we plan to do.
So thank you very much for letting me introduce to the worlds of the magical world of the recycling. And now I would like to hand over to Veerle for Specialty Materials.
Thank you, Geert. And also from me, a warm welcome to all of you. And I have to say that I'm extremely excited to be here today and introduce you to the magical world of Specialty Materials. It's a business group that I have the pleasure of leading now since 4 months, so only a short period of time, but during which I really got excited by the vast amount of incredible opportunities and exciting challenges that we have and in ways of making our business.
Specialty Materials really embodies the essence of you can't see us, yet we are everywhere, whether in your phones, in your iPads, in the cars that you drove, in the connection that you currently enjoy by using this webcast or your connection on your phones here, we are present. So as part of that, I wanted to share with you and demonstrate to you today that we are truly a hidden gem of Umicore. By leveraging the circular business model that Umicore has and selectively choosing those applications that we play in, that we participate in, we are poised for growth and impact. So let's dive in.
In 2024, the business group delivered revenues of EUR 536 million, and we did that across 3 distinct and dynamic business units. First -- not working. Electro-optic materials. Here, it's all about the minor metal germanium. And this metal is used in space exploration today. Our ISS space station is currently powered by that. We are also active in the IR infrared optics market space as well.
In Metal Deposition Solutions, it's all about precious metal electrolytes and metal plating solutions. And those are used and where we innovate in applications such as electronic interconnects in semiconductors as well as in optics. These 2 businesses both have a mandate of growth. We will be driving forward those applications and really serve the waves of the megatrends that power these. We are valorizing our leadership positions in these high-growth applications and selectively investing in high-quality adjacencies that use our capabilities that we have today.
Our third and biggest business unit is Cobalt and Specialty Materials. Here, it's about refining, transforming and distributing nickel and cobalt-based specialty chemicals. And in this business, this is where we have some challenges that we have to address heads on. We have to improve by managing our performance throughout the entire business. At the same time, we have to select and find further attractive opportunities that we can invest in, and they are out there.
So now let me walk you through and dive into electro-optic materials. As I mentioned, this is the business unit where we deal with ultra-high purity germanium. We make high-purity crystals out of it, and we cut those into different substrates. The markets that we serve within that is growing at 8% per year. And just one thing before I go on. What is unique about germanium is that it's a metal that is actually a byproduct from mining activities. It's not a product that you can just go out and dig for. So through that, 65% of the sources come from China. And currently, pricing of germanium is about $3,000 per kilo, which is truly a testament to the strategic importance that it has and the rarity as well that it constitutes.
So we operate in this market in 2 business lines. Germanium solutions, again, this is where we make the crystals and we cut the substrates that are used to produce high efficient -- highly efficient solar cells that power the satellites of today, but that will also be powering those satellites for the race for space. Think about the European Union's investment program of EUR 10 billion, where they will be launching close to 300 satellites into orbit in the years to come.
Also, in the field of photonics and microelectronics, our germanium products are used in the current existing LED lamps in automotive, but also in the growing application of face detection.
Our second business line is about infrared solutions. This is really about making the invisible visible through thermal imaging and detection. And here, we have a very strong position and our materials, our lenses that we make and that we coat are used in the smart cities of today as well as of tomorrow. We're using them in surveillance to make sure that we can detect intruders and protect our installations or our people.
Also, think about self-driving cars in the future. These will be coming. And ultimately, they will have more and more sensors around them to, for example, protect the vulnerable road users. So this market that we are participating is truly set for growth in the years to come.
So how will we win in that market? As I mentioned, we are a market leader in germanium. We have a #1 position in our germanium substrates, and we are a very strong and integrated player in infrared solutions. We are known throughout the world for our excellence in sourcing and recycling. In fact, we source 50% of our needs, as Bart has highlighted, for our own needs through recycling of material that comes back to us, obviously, not from space, but from out of the earth, from within the earth and the applications that we have there.
Also, I wanted to highlight that 2 days ago, the European Union came out with their listing of strategic projects for the European Critical Raw Materials Act. Well, the 2 Belgium projects that were selected are actually from this business unit and are a testimony to our expertise and our further progression in recycling of this critical raw material. We have competencies -- strong competencies in metal like we do everywhere in Umicore. And the technologies that we have built has enabled us to build the world's purest dislocation-free germanium.
Now why is that important? Difficult word. But it's important because it's really used in very high-end, very unique applications where that purity of the germane is of utmost importance. We have unique innovations and IP and an extensive know-how of the applications that our customers are actually driving for. We built that through market intimacy with joint developments and product co-engineering.
Our long-standing customer, Axis Communications has here a statement to has provided us with this statement that the lenses that we provide, the thermal lenses that we provide are vital to their success in the market. And we're proud of that. And based on this, I am confident that we will be outpacing the market and deliver revenue growth at a growth rate of 10% per year over this planning period. As a testimony to Umicore's commitment to sustainable sourcing, I wanted to give a bit more color around the announcement that we did last year of our agreement with a company named STL based out of the Democratic Republic of Congo.
As I mentioned, germanium is available through treating byproducts from mining activities. And obviously, in Congo, there has been a lot of historical mining. So there's big hills of tailings from that activity in Lubumbashi. And the Congo was obviously trying to in-source and create economic development and people employment locally rather than sending these tailings out, they wanted to do that in the country.
They came to Umicore to help them build out and develop the hydrometallurgical flow sheet that enables the first step of refining of these tailings into what we call a germanium alloy. That alloy is then shipped back to us in Olen, and we will then be treating that to recover the germanium from that. We received our first batch end of last year. And I can say that we have successfully treated that in our Olen facility just a month ago.
So now let's move to the other hidden gem within Specialty Materials, metal deposition solutions. Here, it's about electrolytes, precious metal electrolytes and plating solutions that are used in an array of applications. And in fact, the megatrends that we talked about of the connected world as well as the clean technologies are really supporting our business here.
I'll give you first 3 examples of the clean technologies. We have anodes in our business that are used for hydrogen electrolysis. We know that this business will be growing over the future with green hydrogen economy. And this will grow for us about 6%. This market will grow about 6% per year. In our Optics segment, we have developed environmentally fluor-free coatings -- sorry, environmentally friendly fluor-free coatings for lenses, which our consumers are actually looking for. Also, the high-power laser market has -- in their optical systems has about EUR 2,000 of plating solutions embedded.
And these are used in EUV lithography applications for microelectronics, again, something that in total, not only in that application, but also in others. And we will see growth of about 6% in that market segment.
The electronic interconnect business that we have historically from the connectors in your smartphones that will be in the future growing towards high-power connectors. Those are connectors that are used to charge your electric vehicle and to enable the renewable power grid to be bringing this power back onshore from offshore, for example. So there also, we see high growth.
The second megatrend that supports this business is the one of the connected world. And here, I want to take you on a tour, a mental tour. Think about back in the '90s when you would go on a hike, you would be taking your flip phone, you take your big camera, you take a compass and a map, a paper map. Today, you go with your smartphone. And that's it. That transformation and the way it impacts our lives in a daily basis is actually coming by the innovations that the microelectronics industry is pushing forward.
And they drive this through what is known as more than more by integrating different devices into each other into one packaging. And this is where we did an acquisition a year ago, an IP acquisition to do 3-dimensional packaging of those semiconductor components into one package and create that integrated system. We believe that, that integrated packaging market will grow by more than 7% per year. And we have a unique IP for that.
So also here, how will we win? First of all, we start from a strong base today. We are a top 5 player in the market of precious metal electrolytes and metal plating solutions. We apply the same business model as Umicore does -- or sorry, as Electro-Optic Materials does. And we are actually very well in the applications know-how, and that truly sets us apart. And we create through that the needed market intimacy to develop jointly the products that will make the end product work. Without that, it would not be possible.
And Simetric, we have a joint development agreement with them, and they're actually a producer and the original equipment manufacturer for the advanced packaging industry in microelectronics based out of China. And they also work with us and they gain a true competitive edge by introducing and including our specialized electrolytes into the solution and the package solution that they provide to the end users. We have qualifications that are completed, and we will see that revenue come in. So based on this and our positioning in this market, I am confident that we will be generating above-average GDP rate growth for the future and for the few years to come.
Now let me switch to Cobalt and Specialty Materials. Like I said, our largest business unit. But this one is confronted with challenges of the cobalt market, and we have to attack them heads on. Now we operate in 4 different business lines. We have an inorganic business line. We have a distribution activity. We do tool materials as well as metal organic chemistry materials as well.
So the inorganics business is actually the one that has the most impact from the volatility in the cobalt market, which is driven obviously by the imbalance or balance of supply and demand as well as the highly competitive environment triggered by the dominance of the Chinese refiners. So in that context, what can we do? It's about controlling the controllable. It's all about performance management.
So first, in our inorganics business, it's about optimizing our production costs and our production footprint and our fixed cost and reducing the overall working capital that we -- and capital employed in this business globally. We have a unique asset based out of Kokkola, Finland. It's the only and the largest refiner outside of China. We have to leverage that with our customer base.
On top of that, we have also 2 other business lines within this business that truly create or have a potential for growth by diversifying and expanding into other geographies for our distribution business, but also by valorizing our position in high-value applications with our metal organics chemicals. One example I will give and share with you is that we produce high-quality neodymium catalysts that are used for the production of ultra high-performance rubbers that are used on your electric vehicles, but also in high durability circumstances such as for certain conveyor belts.
So at the end of '28, I hope I'd be here in front of you and give you a scorecard that looks as follows. Our revenues will have grown by 4% per year to more than EUR 600 million in 2028. Our EBITDA contribution will have grown by 8%, and we will land our EBITDA margin in 2028 at above 20%. Our ROCE as a result, will grow from the current 9%, low single digit to a value-accretive double-digit 12.5% or more. We'll do that by spending some capital, less than EUR 200 million, but more importantly, creating or generating a free cash flow of close to EUR 300 million.
One other insight I wanted to provide you is that between our growth mandated businesses, EOM, Electro-optic Materials and Metal Deposition Solutions, we will generate more growth, and they constitute about 40% of our revenues. And the majority of the EBITDA that we will be growing will come from that -- from those 2 activities. Also, their cash conversion is about 70%. So from every euro of EBITDA that we make, EUR 0.70 flows back to free cash flow. It's quite impressive.
So to conclude, our key takeaways. First of all, I'm convinced I showed you that Specialty Materials is a hidden gem of Umicore. I'm proud to lead this business, and I will drive our teams towards value creation in high-tech niche markets by selectively investing in high-quality growth opportunities and improving our performance in our Cobalt and Specialty Materials.
I believe that Specialty Materials is a strong contributor to Umicore and has a strong value for the future. We are propelled forward by the megatrends of connected world and clean technologies, and our teams around the world are ready to capture that value and deliver on our promise and innovate.
Thank you. I will now pass it on to Wannes.
Good afternoon, everyone. And for the last session of today, I would walk through -- I would like to walk you through the financials of our plan. Now I'm very excited about this plan as it is a clear path towards solid profitability, strong cash flows and consistent value creation. And this is a plan, as Bart explained and many of the colleagues explained, it's all based around rigorous capital deployment, performance management, people and culture and partnerships.
If you look at capital allocation, this is where we are applying a more balanced approach. We are allocating capital between the foundation business and Battery Materials. If you look at Battery Materials, this is where we are very disciplined. We limit the CapEx to the existing customer commitments. And across the group, we leverage on the existing footprint. We look at increasing the utilization rate of the existing assets.
Looking at performance. This is where we continue to embed the operational efficiencies across every part of the organization. This will help us to reinforce the industry-leading position of the foundation businesses, but also to make sure that we recover to a maximum extent the value in battery materials.
People and culture. This is where we continue to drive on that performance culture. We have that mindset of continuous improvement in the organization, and this is what is helping us further improving from the performance side. Looking at partnerships, this is where we see an opportunity to explore if we can accelerate the value recovery, in particular, in the Battery Material Solutions space.
Now based on those pillars, we are confident that we will maintain a strong, solid balance sheet and that we will contain the leverage of the group.
Now if you look at Umicore and the historical performance, we can build on a consistent strong financial performance. If you look at the years 2018 until 2024, we have consistently delivered EBITDA exceeding EUR 750 million. In certain years, in particular, in '21 to '23, we have benefited from exceptional metal markets. In '21, '22, we had the peak of palladium and rhodium prices. In '22, '23, we had the peak of lithium prices at a moment where we were not transactly hedging yet lithium. So those have contributed over the past. But independent of those tailwinds, we consistently performed strong.
We have EBITDA margins exceeding 20%. We have return on capital employed exceeding the cost of capital. Here, I have to acknowledge '24 has been a difficult year. We have taken an impairment that also contributed to that return on capital employed in '24.
Now looking at this plan. The full focus is on cash flow generation and on value recovery in Battery Materials. Looking at the ambitions, the EBITDA, we target an EBITDA of EUR 1 billion to EUR 1.2 billion by '28. This is strongly supported by the resilient and well-performing foundation business, but also by the value recovery in Battery Materials on the back of the strong commercial agreements. That focus on operational performance will further drive the EBITDA margin.
We expect an EBITDA margin exceeding 23%, which is a step-up versus '24 and which is well in line with historical performance. We are applying a strict approach looking at capital allocation. This is helping us in generating that free cash flow, EUR 1 billion to EUR 1.2 billion between '25 and '28. And yes, '25 will be a year where the free cash flow generation is under pressure given that we are finalizing the investments in Battery Materials.
But as from '26, this is where we anticipate where we expect the free cash flow to turn positive again. That combination of performance management and rigorous capital deployment will drive the returns on capital employed. They will exceed 15%, which is very attractive and which is clearly creating value for our shareholders.
Now looking at the foundation business. This is where the full focus is on strong cash flow generation. Here, we are supporting that cash flow generation through operational excellence, but also looking at some selective growth investments.
If you look at the revenues between '24 and '28, we expect those to grow from EUR 3.1 billion to EUR 3.3 billion. In Catalysis, as Jensen explained, yes, the market of internal combustion engines is declining. But looking at the value per platform, that is increasing on the back of the more stringent emission legislation. But also looking at market share, here, we expect to gain market share. And we have the growth in Precious Metals Chemistry and in fuel cells.
Looking at Recycling, the revenues, we expect them to slightly decrease from EUR 900 million to EUR 800 million. This is entirely on the back of some of the favorable hedges rolling off in '24 moving into '25. In Specialty Materials, we expect the growth on the back of those high-tech technology markets. And overall, if you look at the foundation business, this is where we expect an EBITDA margin exceeding 25%. So truly industry-leading if you look at this performance.
Now looking at the free cash flow. Free cash flow before CapEx across the foundation businesses will be between EUR 3 billion to EUR 3.2 billion. We are investing close to EUR 1 billion in the foundation businesses. Majority of that is linked to maintenance. We have a program in recycling that helps us to widen the operational window to process more complex feed to increase the yields and to reduce the throughput times. This is a program where we will invest EUR 300 million primarily in '27, '28. Overall, looking at the program, it's EUR 400 million. But in this plan, '27, '28, we're talking about EUR 300 million. And this will help us to make a significant step-up in EBITDA generation as from the end of the decade when this investment is up and running.
Looking at Catalysis, Jensen explained, we are investing in fuel cells. At the same time, we are finalizing the investment. The plant will be up and running in '26. This year, we need about EUR 20 million, EUR 25 million to complete that investment. In Specialty Materials, yes, we will grow. At the same time, it's heavily focused, heavily based on the existing footprint. So minor investment needed to support that growth. So overall, strong free cash flow, EUR 2 billion to EUR 2.2 billion, '25 and '28.
Now what is also really exciting if you look at the foundation business is that the return on capital employed will exceed 30%. So we're exceeding 30%. So it truly shows that Umicore is the best operator to operate those circular businesses, I would say.
Battery Materials. This is where we have a solid path to value recovery. And this is fully supported by the strong commercial agreements that we have concluded over past years. So if you look at the revenues, the revenues of '24, around EUR 400 million. On the back of those commercial agreements, we expect revenues to increase to an excess or exceeding EUR 1.1 billion or close to EUR 1.1 billion by '28.
Now we also understand looking at the market, maybe some -- not all of our customers will be entirely there as we anticipate in the contracts. And this is where we take a realistic, a cautious approach. So looking at the EBITDA, what we did is we started from the take-or-pay thresholds, and we simulated different scenarios, anticipating or incorporating if there would be volume shortfalls, where would that land us and then looking at the take-or-pays, finally, where would that land us. So that would land us at an EBITDA between EUR 275 million and EUR 325 million.
This is not excluding that if there's a volume shortfall that we would be trying to diversify, I mean, we are diversifying. We're looking into diversifying. So this is not including any upside from the diversification. So this will generate a free cash flow exceeding EUR 100 million by '28.
Now you have heard the intermediate proof points before. So looking at '26, this is where we expect EBITDA to turn positive. '27, this is where the EBIT will turn positive and also the free cash flow will turn positive. By '28, the ROCE in this business will be around 9%.
Now looking at capital deployment. Again, this is where we are rigorous. This is where we are strict. First is a previous plan that we referred to in October '23, when we announced the investment in Canada. We reduced or we generated net cash savings of EUR 1.2 billion. This comes primarily from a CapEx reduction of EUR 1.4 billion, which is driven by Battery Materials, where we reduced CapEx with EUR 800 million.
In Battery Materials, we have paused the investment in Canada. We have absorbed successfully, we have relocated successfully the contract with the customer towards Korea, where through debottlenecking investment, we're able to absorb this. Across the footprint, we are minimizing the CapEx to an absolute minimum. And as such, we get to an EUR 800 million of CapEx savings in Battery Materials.
Now looking at Battery Recycling, this is where we have cut the CapEx. The market is developing slowly. It's not developing in line with what we anticipated. Looking at the foundation business, this is where across the board, we have been scrutinizing and we have been able to reduce with about 10% across the foundation business, further helping to reduce CapEx with EUR 100 million.
Now we have a joint venture with PowerCo, a strong commitment from both parties, and we also are committed to set up nonrecourse debt financing. This is where the process takes time. There's a lot of due diligence involved. And this is where we will add another EUR 200 million in equity contributions while we are completing that project financing. So overall, this brings us to EUR 2.1 billion of investments between '25 and '28. And again, as you can see in this graph, well balanced between the Battery Materials business and the foundation business.
Performance management has been a hot topic within Umicore, in particular in '24, and will remain a hot topic. And here, I'm really proud of what we achieved as a team with the colleagues. Looking at the efficiency savings that we have generated in '24, we achieved over EUR 100 million of efficiency savings using different levers, looking at top line, but also looking at the cost basis. Some examples, if you look at Recycling, we have been basically looking at data science and process technology in order to improve the first-time pass yields of certain flows. So meaning that we reduce the loops, reprocessing loops, and as such, also reduce costs in order to extract the value in order to extract metals.
Looking at Catalysis, this is where we have been able to reduce the throughput times on coating lines, which helps us to release working capital, release cash. But also looking at the utilization of the assets, we are optimizing utilization by consolidating footprint, looking at coating capacity, but also looking at test center capacity. And then with the latest emission legislation coming up, this is also where we have been streamlining the R&D organization.
Now for '25, we are committed to deliver this again. So we are looking at an efficiency saving of EUR 100 million. A significant part of that is already secured through the rightsizing the restructuring exercise that we have announced in November and that we are completing by the end of this month. If you look at Battery Materials, for instance, we have rightsized the organization in China, which helps us to reduce the breakeven point and also make sure that the local operations are cash positive and create that optionality for the future.
Now we have an ambition to repeat time after time. So looking at '26 to '28, we are anticipating to offset inflation year after year through gross efficiency savings of EUR 50 million to EUR 75 million per year. What we also did is we increased the visibility on future earnings. So we have a structural exposure primarily linked to platinum, crude metals and precious metals that we have hedged for a substantial part until '28.
Now just as a clarification, if you talk about the structural exposure, Geert highlighted the recycling model where we recover metals and where we contractually agree on the recovery rate. If we are able to recover more, we have metal gains. Those metal gains, if you bring them to the market, this is what creates that structural exposure, this is what creates that potential tailwind depending on the volatility or depending on the level of the metal prices.
Now moving forward, we want to have that visibility on cash flows, while we are investing in Battery Materials, while we're finalizing that and while Battery Materials is ramping up. So this is where we have hedged that structural exposure linked to precious metals and platinum group metals at historically attractive prices. So the remaining sensitivity, if you look at '28 and you would assume that metal prices, PMs and PGMs would move with 10%. This would result in an EBITDA impact of EUR 25 million versus the overall EBITDA of EUR 1 billion to EUR 1.2 billion, so about 2%, which is significantly different from what we have seen in the past. So yes, we are reducing the ability to benefit from the upside. But what is important for us is that we are protecting the balance sheet from the potential downside.
Now for completion, I also wanted to highlight that also, look at the recycling activities. We have minor and base metals that we process. So also there, we have some exposure. At the same time then, looking at the application side, those metals are used in a wide range of applications. Prices go up and down. Typically, what we see is a more balancing effect. But just for completeness, I do want to highlight this.
Now looking at the balance sheet. Again, this is where we are starting from a strong balance sheet and where we are strongly committed to keep a strong balance sheet. Looking at the start of the year, we had EUR 2 billion cash on balance. Strong liquidity. And on top of that, we also have access to committed undrawn credit facilities exceeding EUR 1.1 billion.
Now looking at the long-term debt. We have EUR 2.8 billion of long-term debt with well-spread maturities. In '25, we have the convertible bond that is maturing in June and that we will repay out of the cash position. Apart from that, there's no immediate refinancing needs. Again, a very well-spread debt profile. But also looking at the cost of debt, 85% of the debt instruments are at fixed rate. So meaning that we have a good visibility on future cost of debt. And looking at the average cost of debt, we will be hovering around 3.5% throughout the period.
Leverage. Leverage has increased. At the end of the year, we are now at 1.9, not an exception, if you look at it from a historical perspective. At the same time, we have also highlighted with that negative free cash flow in '25, while we are finalizing the investments, that the leverage will be peaking at a level of around 2.5. And we expect this peak in '25 and '26. At the same time, on the back of that strong free cash flow generation in the group, the leverage will come down. It will come down to levels below 2, and this is a midterm capital structure that we feel comfortable with. This plan also takes into account the dividend policy, which is a stable to rising dividend, starting from a new baseline, the new baseline that we announced being EUR 0.50 gross per share.
So key takeaways. We see a plan with strong profitability, with excellent margins and excellent returns. We have a strict approach on capital allocation, which supports the strong solid free cash flows. And we are convinced that we will maintain a robust balance sheet. So bringing this all together, we are confident on the financial trajectory that we are moving forward.
And with this, I would like to open it up for Q&A. And I'm just thinking, I thought there was going to be, in the meantime, some chairs being set up. Okay.
Charlie Bentley from Jefferies. I've got a few. So on the core business, EUR 2 billion to EUR 2.2 billion of free cash flow, EUR 600 million outflow for Battery Materials, but the target is EUR 1.0 billion to EUR 1.2 billion as a gap. Is that IONWAY?
That's corporate basically.
That's corporate. Okay. That makes sense. And then secondly, just as you think about the kind of exit rate almost as you exit the CapEx from Battery Materials, you're talking to that EUR 2 billion to EUR 2.2 billion. That leaves you with something like EUR 500 million a year of free cash flow generation. Is that what we should be expecting as like, I guess, a run rate post 2028? Is that kind of a good benchmark for thinking about the exit rate of kind of annual free cash flow generation of the business?
You would expect looking at Battery Materials -- sorry. So you would expect for Battery Materials -- that Battery Materials somewhat ramps up further going into '29, 2030, but you could assume that's EUR 500 million, yes.
Okay. Great. And then I guess just on that point around no more CapEx and if you add up all your capacities, you have 115 gigawatt hours by 2028. You've got commitments for 2028 to supply 133 gigawatt hours. So you would be sure on contracts, which you've agreed to promise something, you'd be potentially outbound on some contracts. So you almost need to commit to more CapEx. So how do you manage that? How are you managing that with customers? Is the take-or-pay 85% of that 133, so it is about 115 gigawatt hours?
Yes. So looking at the 133 gigawatt hours, this is where we took into account the threshold of the take-or-pay contract. So we indeed already apply that factor of 85% on average versus the overall contractual volume. At the same time, we are looking at those multiple contracts, looking at AAC, ACC and PowerCo. We also have the capacity in China, which brings that optionality, which also brings additional capacity to bridge also looking at potential upside.
Yes. And I would add to that, if I can. I think the total capacity, as you pointed out, Charlie, is actually 155 roughly in 2028 versus that commitment of 133 at take-or-pay levels. I mean, we also know that some of our customers might have that -- I mean, they have not been committing some of the assets that they would need to commit to in order to have that volume free fall, right? So there will be room for that customer diversification in there.
I guess if all those customers do hit those take-or-pay levels, you're going to have to invest more CapEx and that's just going to...
Well, I mean, what I would say, I mean, we do also see quite some capacity out there in the world. It's not like actually it's an industry that's running at 85% capacity utilization. So let's also be clever on that. And as I said the industry is ready for consolidation and cooperation.
Mazahir Mammadli from Redburn Atlantic. Just a follow-up on the evolution of take-or-pay volumes. So since we've already had delayed volumes from your customers, and that ramp-up stage, they have some flexibility in the ramp-up stage. But that's not indefinite, right? If the EV market doesn't pick up until 2030, they will still have to pay you. So how long is that window for your customers?
Well, I think that's what we try to bring through the slide that we presented on that take-or-pay ramp-up, right? These are the ramp-up rates on that take-or-pay commitment that they would have to hit. So I mean, if you saw the number for '26, for instance, right, the combined contracts, the customers would have -- if they don't take the volume, would have to deliver and pay up to that level. So that ramp-up is in there.
Okay. And just thinking about your CAM capacity in China. Have you had a chance to have a look where you are on the cost curve versus the rest of the competition? And are you planning to take any measures to perhaps improve your position on the cost curve?
Yes. I mean I think it's fair to say that in China, there are some players with higher capacity out there in that specific Chinese context, right? So inherently, you could imagine that their position on the cost curve could be somewhat better. Now we also have seen that we have done some rightsizing in November, and we have taken out also quite some staff in China.
Now our focus, as mentioned, for the Chinese plant is actually be part of that ecosystem, not necessarily to supply in China, but to develop that -- use that as a technology development base and bridging capacity to Europe much more than wanting to compete in that local context.
Okay. And then the last one. So your previous messaging has been that South Korea is really rather well utilized. And now you want to use Korea to serve the AESC contract. So if there's only so much spare capacity in Korea, how are you going to serve that contract?
Yes. So I mean, it also depends on different contract durations that you have. So -- and I think that matches quite well with the current profile that we see. Now of course, if these current contracts we have continue to extend, which we'll be very happy with, I mean they're not in the plan, by the way, right? We do see that there's quite some capacity out there in Korea and that industry is open for consolidation and cooperation. So there will be alternative way to get access to that.
Wim Hoste, KBC Securities. Also a couple of questions from my side. Maybe first, on the technology side, your contract portfolio, is that consisting now mainly of mid-voltage? Is that already including some HLM? Can you shed a bit of light of what the contract is?
Yes, sure. So on the contract side today, what we see, and this can also evolve over time. So because we're not stubborn, let's say, that's the type of project you have to take if it makes more sense for the customer to have a different product and it comes at the right price and return point, why would I block it, right?
But now it's mainly high nickel, but we see that increased interest in customers to qualify that mid-nickel, high voltage to be better on that cost performance element that they also need for their batteries.
On HLM, the picture, I would say, is balanced in a certain way. Some customers slow down a bit. Otherwise, still -- others still really would like to accelerate that HLM. But in the customer contracts, which are currently portrayed under take-or-pay, there's no HLM in it.
Now our assets are perfectly suited to produce that HLM as well. So again, depending on how customer preferences would evolve, we would be able to cater for that.
Okay. And then another question would be on the anode ambitions. It's technology project for quite a while. Is it coming closer to maturity or not yet?
Well, can I maybe ask you Wim to reserve that question when hits on stage, but we'll -- please, Caroline, I'm looking where you are. Okay. You're very bright, but the light was even brighter. So can you note out that question so that we don't forget to answer, Wim.
It's Matthew at Bank of America. Can I just clarify something you said? Are we changing the reporting scope of the division? We've added some businesses. And if so, can you sort of pro forma what the results in '24 would have been and how that would impact the '25 guide. I'm not sure if we're injecting profits or losses from that scope change.
So you're right, looking at Battery Material Solutions, this will be a new scope, including the battery cathode materials, but also battery recycling and battery anode materials. Looking at battery, and we will restate looking at the '25 figures where we also give the comparables for '24.
So looking at Battery Solutions, looking at the cash out, this has been around EUR 40 million, I would say, looking at '24 in Battery Recycling Solutions for the full year. Battery anodes, I would say this is a small double-digit EBITDA cash flow equivalent.
The second question I had was around pCAM. And I'm frankly quite confused by the message here. My understanding was that Umicore felt pCAM was an area where it was very strong, very differentiated. And now you're sort of saying that you've got this upstream make or buy flexibility. Can you reconcile that for me and why you would want to outsource something that you previously claim you're very, very strong and differentiated in?
And I think you're right. I mean, we have differentiating technology. I think we have also IP around these elements. And of course, in our contracts, nothing prevents us to inject basically those technologies also with our customers. But of course, that goes very stringent and then it would have a specific scope for ourselves.
So -- I mean, it's not that in this business, while technology is important that you cannot have a safe and good licensing setup also for that. And that's how we're also approaching this. So how can we do this more capital light in a certain way.
Sebastian Bray of Berenberg Bank. I have 2, please. The first is on accounting treatment of the IONWAY JV and the second is on tariffs [indiscernible]. On the accounting treatment of the IONWAY JV, is everything in the slides being treated as if it's pro rata consolidated. So imagine we are sitting in the year 2028. When Umicore comes to report the results of the JV, is it actually going to report an EBIT and EBITDA like that? Or is there going to be some kind of associate line that has a pro rata net income consolidation?
Yes. So I think also as we have clarified earlier, we understand that there will be a need at a certain point in time to give that look through, and that's something that we also will work on. So today, indeed, looking at the accounting treatment, it's consolidated as an equity under the equity method.
So looking at adjusted EBITDA, this is where you have the share in the net result that we included also in this adjusted EBITDA target. So it's the share in net result into IONWAY. Looking at the revenues, indeed, you do not see the full look-through looking at the revenues of IONWAY. So that's not in there.
And building on that, it's only, let's say, for that capacity gigawatt hour slide, right? There, we have that 100% IONWAY because we wanted to give you that volume outlook within the financials. It's really that pro rata equity method approach in all metrics.
That's helpful. So when -- I suppose this is laboring a point because it doesn't make a difference from an economic perspective. But the sales you show are not consolidated, i.e. IONWAY is not in them, but the net income contribution is included within the EBITDA. Is that right?
Well, in the revenues, you have the -- well, there's also other revenue stream looking at IONWAY, which are in there, thinking about IP, for instance, so that's also part of it.
I see. But most of what you receive for producing it is not shown as a sale within the...
That's correct. I think that's very correct.
The second one is on tariffs. Could you give an idea of where the starting point is for Umicore because it does supply some other markets from South Korea already. And I assume this is subject to most [indiscernible] nation somewhere between 5% and 10% on the shipment. Can you give an idea of what the mean tariff pay typically on exports of cathode material is at the moment?
And if these were to increase, so let's take the example of servicing the AESC contract out of South Korea. I imagine some of those volumes might go the way of the states, probably not that much of them. But is there an automatic pass-through? Or is this one of these things where everybody sits around the table and says, okay, I pay this, you pay that and the customer pays something else?
So I think that would be a pass-through. I mean, the contractual setup is such that we deliver against that and the duty is not on our side.
Geoff Haire from UBS. Just 2 questions. One, first on battery materials. You talk about the take-or-pay contracts. Clearly, you've had take-or-pay contracts in Europe previously in 2019, I think they were announced with the Korean producers, which at least optically from what we saw didn't apply from what we saw.
And just wondering how you believe you'll be able to test whether or not the take-or-pay contracts are going to work this time, particularly when you think that you have some very large customers, not just in battery materials, but for the group as a whole.
And also, can you give some idea of are the take-or-pay limits set on an annual basis or a 6-month basis? Or how does that work?
And then the second more broad question, I think, Bart, you said at the very start that circularity was key to the growth of Umicore. I think it's fair to say that we've heard that previously from the last 2 CEOs. What's different this time?
Yes. So maybe I'll start with the second one. I think what I said today is not that circularity is a key part To the growth of Umicore. It's an integral part to the business model that we apply. Now next to that, and Geert will explain that more in the recycling section afterwards, Geoff, is that we are investing roughly. And again, we still have to do the detailed design. So this is the rough estimate at this point in time. So don't hold me against it because these [indiscernible] can be higher or lower, let's see.
EUR 400 million in opening the flow sheet in Hoboken Antwerp for that precious metals recycling that would allow us faster throughputs in the plant. It would allow to cater for better yields on some of the metals and actually allow to treat an additional metal, but I will not spoil everything for here. So -- but that would indeed be a level of growth, Geoff, and that would also result in extra EBITDA in 2030. So that's one.
I think your first question was on the take-or-pay and the potential how to enforce it and how we have performed in the past. At least when I have the internal look, right, we did enforce and capture, I would even say, the large majority of that take-or-pay even with the Asian customers. We did do that.
And to the question that I have large customers out there, I will enforce those take-or-pays. I mean, have you seen how much we invested in this plant? I mean, it's just too important not to go after these take or pays that is clear.
Secondly, on that time frame, it depends on contract to contract. But I would say roughly rounding it up through the year is probably a better indicator than a semester approach -- semester approach. Did that answer your question? Okay, thank you.
Chetan from JPMorgan. I'm just -- again, just going back to the take-or-pay contract slide, and thanks for giving that phasing. I'm seeing there's a number of 32 gigawatt hours in 2025. And I'm just curious, is that something you are getting paid for this year? Is that already in your bank? Or have you -- I mean, is there any -- like how can we get comfort that this number is actually coming through in terms of actual payment?
Let me say 2 things on this, Chetan. We will give transparency in our EBITDA going forward, how much of that take-or-pay assumption that we have taken in that EBITDA and when that cash flow would come in, I think we will share that with you.
Secondly, a big part of that number actually is on the contract that we're supplying and the contract is pretty -- running pretty well. So we don't need -- fortunately, we don't need to invoice all those take-or-pays this year.
Okay. And the second question I had was just going back to the point of exploring partnership. Is that journey something that you are only going to start now? Or as part of the strategic review, have you already started doing that? And can you maybe shed some light in terms of what are the possible scenarios we could have? Is it going to be more like consolidation between Umicore and one of the other players? Is it going to be more like PowerCo like JV where PowerCo possibly just becomes a bigger partner?
Because I remember in the past, there used to be this concern that every company in cathode have their own process for manufacturing that sort of limits the amount of cooperation or consolidation? Isn't that an issue still in place?
Okay. Thank you. Actually, it took quite a while to get that question. So thank you because now I can speak to it. So the mandate is value recovery. So that means I keep all options on the table, and we actively explore all potential options out there. And we're not just starting. We're doing that. And you're going to ask me where are you? I will not reply on that because you know I cannot reply on that. So let's not entertain that kind of game here right now. But all options are there, if it fits in speeding up that value recovery.
To your question on cooperation in the industry, I think I have a more optimistic view on that, that even if you would think in a horizontal constellation, that capacities can be used with some product tuning, et cetera, in a sensible way. And then, of course, you would look at synergies and R&D process management. I mean, yes, that would, of course, then be part of such a consideration.
It's more likely going to be an industry consolidation type deal rather than vertical integration with your customer...
I'll come to you at the right point saying what we're going to do. But I can only say I'm not excluding any option. And I mean it's not just to evade the question. We see that the industry is active, right? We see these discussions and we're part of these discussions. So it would be for me too premature to speak to that because my goal is value recovery, and I'm going to act in the benefit of the shareholders.
[indiscernible] One of the things we haven't heard too much about is the technology piece. And I guess we heard a lot about that at the previous CMD. You obviously mentioned about the need to reduce cost in terms of dollar per kilowatt hour. Is that something that is about boosting EBITDA? So your price sold to customer remains the same, but you produce at a lower cost and therefore, you guys can generate more value? Or is there a need to also reduce that cost as a way of -- you mentioned you kind of diversifying the customer base.
Maybe you could just talk a little bit about from the strategic review, you obviously touched on it a little bit at the beginning in terms of why Umicore was sort of right to win in this market. I'm assuming given you haven't really mentioned technology, the technology, you're happy with that platform. Generally, you view it to be cost competitive, albeit there are levers that you need to pull to make it more cost competitive.
Let me speak to that. So in general, we're happy with the product performance. I mean, we get good feedback from the customers if you really would do a poll in the industry from the pure quality and the quality is important because stability in that production is key. We really come forward as one of the leaders in that field. So we can also have that point of pride.
At the same time, while I was stressing this product and process integration, I think we have to do better there. And is it now to attract a customer or not because, I mean, in the end, it's a term and then a margin that you make, right? But I think we have to be better.
And in the industry overall, when we compare to others, it's not that we are behind, but I think we have the potential to do better, and that's where we have to seek it. I think that's as we were organized, I'm not happy with the way we were organized in the past.
The product development happened a bit too much stand-alone and that connection to that process. In the last 2, 3 years, we lost that. It was really there in the past and that integration got a bit lost. I want that to be back. And that's why I talk about this end-to-end.
Will that change overnight? No. Because first, you have to develop that right product again with that process throughput and then you have to acquire that business. But this -- we have to start today to have a benefit tomorrow. I might have wanted to start that 2 years ago, but I cannot change the past. The only thing is I can learn from the past, act responsibly and improve.
Ranulf Orr, Citi. Just 2, please. Firstly, would you mind just expanding a little bit on the product and platform diversification, why that wasn't a focus before? Maybe assure us that's not just lowering your prices to compete with the mass market.
And secondly, just in relation to your comments around cost per kilowatt hour being the main driver, HLM or high manganese is meant to be a bit of sort of the pair, the kind of the middle ground between NMC and LFP. So why is that not seeing adoption at the rate that you kind of thought it would?
The first question, can you repeat.
Yes, product and platform diversification.
Yes, yes, yes. Well, I mean, when I made the analysis, and of course, I cannot speak in detail from my predecessor what was in his head, right? But I mean, when I made the analysis, we really were going for that local for local setup. We made already big CapEx investments, and we wanted to derisk that business to the maximum extent. So that's why we went with a certain set of customers, providing some of that security. But I mean, we also clearly from the market, you cannot just keep on investing, right? I mean, get your stuff right and then do it.
So as you're working and building these plants and working with these specific customers, automatically, you start excluding some of that potential in a certain way because you're focusing. Now we see today that we have capacity. We see that there's a slowdown in that market and that some of our customers might have that delay on that trajectory.
So we have now the space to do it. And I think we need it because I want to have a broader customer portfolio to also more further Asian incumbent battery makers, that's clear. So I think that explains.
And so -- but if you allow me, I'm mainly forward-looking because I mean making the assessment of the past on the weaks and the strength, we can definitely discuss. But it's difficult for me also, of course, to talk about predecessors. That's not typically my style and put it in that way.
So your second question was on HLM, right? So that actually -- we see it a bit going up and down. I mean HLM was out there, and then we had a real slowdown. And I think I mentioned that in one of the calls as well. We had the slowdown in the overall battery space and capacity utilization and pressure on R&D budgets even for some of those big battery makers were a bit more challenged, and they really started moving more to that mid-nickel, high voltage. So we saw that shifting again. And now lately, we see it going back to that HLM element.
So that's why it's important that we have this suite of technologies. We have to continue to work on that HLM on that met nickel high voltage on that high nickel because also even in an existing contract, as I mentioned to win as well, we might have to see product changes because car OEMs will want to adopt their drive range or capabilities of their car and function of what the customer needs, right? And we want to be flexible there. So we have to be in these technologies. But right now, I confirm that today, there's no HLM in the market. if there's any at all and not with Umicore material insights in all transparency.
Okay. And so just to clarify on the first question, the product and platform. I mean, the change in strategy, you're saying is -- it's just we're reaching out to more people rather than we're lowering our price points to enter a different part of the market?
Well, I think the change in the strategy is we go from a growth model to a value recovery model. And capacity utilization is a key element to recover value. We see that the markets can have ups and downs. We see that there's potential overflow capacity in the market. So I feel I think it's more comfortable to have more customers and platforms in the mix, so that you're more robust against some of these fluctuations in the market.
We see some traction out there with customers. If I would have a qualification or several qualifications, you can imagine I would have come to you, but that's where the focus is. And let's see when these materialize.
It's [ Robin Fiedler ] from Covalis Capital. Just going back to the take-or-pay, Bart, I thought I heard you say that the number you guys provided is associated with battery plants from your customers that have been fully been built or potentially have an even [indiscernible]. So just when I think about the number that you guys provided by 2028, is that what is stepping stone today? Or is that the plan that if your customers maintain their previous plans, if they were to follow through with those, this is what the take-or-pay structure would look like?
So what we end up EUR 275 million to EUR 325 million EBITDA range. I think that's the range that you're referring to, right? This is -- we work very closely with our customers and exchange almost on a weekly basis, right, where we're heading to try also to see that market. These are the latest volume uptake forecast that we have and how such a shortfall then would trigger certain compensations per different customer. And if you look at all these, some variations around that, we end up at EUR 275 million to EUR 325 million. So it's the current, and not anticipated for new uptake. If I understood that was your question, right?
Essentially, if they decide not to FID with their previous plans. They would still be committed to paying this amount?
Yes, they would have to pay that, yes. That's clear. At the same time, I also would like to stress again, I mean, when the EUR 275 million, EUR 325 million, but we did not include any customer diversification in that number. We have capacity available. That's what we see. So if that would come, this is another element that comes into play at that one moment.
Maybe just to clarify that point. So would it be fair to assume that the EUR 275 million is almost a, let's say, those customers sort of would have stopped things today, in terms of building anticipated plants or whatever it would be out to 2028. The volumes plus any contractual take-or-pay those variations would sort of get you to the bottom end of that range. Is that the type of...
Exactly. And based on the customer ramp-up and demand schedules that we have at hand today, yes.
Okay. And then on [indiscernible].
Yes.
I think Charlie is having handed probably quite a well. You can speak without or with, online, online of course, yes.
That was exactly my question. Okay. Again, you can appreciate [indiscernible] I think consensus numbers are back into about EUR 100 million for 2028 right? So you can appreciate steps on that point. You said something like EUR 100 million of cost savings, EUR 95 million of cost savings. So it's the EBITDA to stays 0 or maybe slightly negative, excluding about breakeven this year...
You mean for this year?
Yes, plus EUR 95 million of cost savings. And then we're saying, basically, we have EUR 180 million of earnings, which is guaranteed by take-or-pay. So the volumes, just very clearly, if the volumes were the same as they are today, as they are in 2028, the earnings should be tangents and you deliver the cost savings, the earnings should be EUR 275 million. Is that what you're saying?
Again, I know you're saying customer ramp plans and so on and so forth. If they killed all of those ramp plans today, would it be EUR 275 million or would it be lower?
[indiscernible] So, I also said on the cost saving and it's also cleared on the slide. And of course, the part comes with that ramp-up, right? Because I mean, we're investing in this that volume effect. So if there is no volume, part of that effect would not be there, Charlie, but if you can maybe -- so but indeed looking at that cost saving that's cumulative, and it's also looking at the basis of '24, if you look at where we are in '24, where do we protect ourselves on the back of those programs to improve cost. And then again, looking at the EUR 275 million, EUR 325 million, this is where we use different scenarios where we see, okay, what if volumes truly fall short versus what has been anticipated and what is then the take-or-pay that offsets it. So we are using a range of scenarios, let's say, looking at -- looking at those shortfalls.
Okay. Great. And then just a follow-up on Mark's question around the PCAM. I mean is that like -- are you targeting different regions, you are targeting different applications. You look like is the idea that this is a cheaper cost to you than your internal production. It's maybe a bit more commodity grade?
I think a make-or-buy has different elements that play into it. I mean, of course, there's a trade of internal cost versus external, and maybe if you go externally, have to give up a part of that margin. Same time, you don't have to do the CapEx. But I also wanted to have that footprint flexibility because now I'm working from 4 different locations in a certain way. I have Finland, Morocco, we have Korea and China. And the world around myself is moving. So now I have potential flexibility to play and depending on what happens, that's one. And I don't have to bring the CapEx to the table. So that also played in that equation.
So I'm just checking for time. Where are we on schedule?
Just a follow-up on the EBITDA target range. So it's only EUR 50 million, so EUR 275 million to EUR 325 million, which is quite narrow given that it's sort of 3 years in the future. How come it's so narrow? And what scenario does EUR 325 million imply?
So the scenario will be the [indiscernible] good comments on this. But the narrowness you can explain.
No, indeed, and again, it shows the -- I mean, the effectiveness of the take-or-pay, looking at the size of the take-or-pay that we have contractually agreed against any volume shortfall. And then again, looking at the scenario. So yes, we take a scenario that obviously between 0% and 100% where we took a bit above 100% and also somewhat below that 100%, [indiscernible] and below that 100%.
And you're returning to the CapEx. So you said -- I'm sorry, I confused there. So EUR 1.4 billion in total and EUR 800 million in battery materials reduction, right? That means EUR 600 million in the rest of the business, right?
That is correct.
And what businesses are those CapEx stand and...
So looking versus the previous plan that we announced, this is a cut of EUR 600 million, EUR 500 million is related to battery recycling, so this is where we have cut the CapEx from the plan. When I'm looking at the foundation businesses, this is where we also applied a further scrutiny and we were able to reduce that roughly 10%, so another EUR 100 million that we removed out of the foundation businesses.
Those detailed financials, Wannes would come to those with a financial segment in the end and you have a clear graph.
Yes, we'll go through that.
Okay. So may be we can take some questions from the webcast as well. We have a question about solid state. American and Chinese companies in the solid-state market will have commercial products in 2027? What's Umicore position on this? And would you increase CapEx for this?
Well, I mean, on the first part, additional CapEx. No, I think typically, that works on the same lines as NMC. That's not really -- and I'm speaking under the approval of the CTO here. Now on the specific plans of solid state, I mean, we have good traction with customers. But there's no, let's say, immediate mass production that we see for ourselves coming to the market within this midterm plan. Of course, things can change, and we worked on that, but that's the assumption in the plan.
It's indeed correct. I think we are in that solid-state battery active as well, and we use similar cathode-active materials as we have on the current platforms of NMC. So we are in sampling to a lot of customers. So we are active. What we see happening in the market is that [indiscernible] demonstration cars are coming on the market. But the real full launch to a broad launch of solid state that's still a bit out, but we are really active in that field, and we can deliver our care materials from the lines we have to do.
We have the catalyst, right?
Yes, that's a specific development where we really try to differentiate our position where we try to integrate because what is the challenge of solid state is the contact of your cathode material if you're a solid electrolyte. If contact is not perfect, you lose your capability and conductivity. So what we do is we integrate in a project that electrolyte [indiscernible] with our cathode active material. And we sell that as a product so that the compatibility of that what we call catalyte, with the solid electrolyte is much better, and that improves the connectivity and improves the performance on that of such a solid state. I mean that's an additional development on top of the normal car materials, which we can supply and are supplying today in this market already.
Then we can maybe take a final question from the webcast. Please elaborate on what your revised plans mean for your investments in the Canadian battery material market?
Well, I mean, it's clear. I mean, at this point in time, we are not investing. I mean I have no investments beyond the plants. And next to that, we're exploring actively partnership options. So de facto any investments, but I don't see any additional investments would again be complete new and decision trajectory, both at a management level, but also at the board level. But, that's not included in this midterm plan, and there's no intention with the current market that we see to go then immediately.
All right. Thank you. So I think we have all deserved break because I can tell you it's really hot here.
And that means also for the people online that we will see each other again at the 3:00 p.m. this afternoon for the next session. Thank you.
Thank you.
[Break]
So what foundation business questions will we get?
All right. It's me first this time. We start from front. So first on Catalyst business, I'm surprised to see your revenue guidance is actually higher than what you did last year by '28. Can you just help us understand how do you grow your revenue in a shrinking market?
Yes, I can take that one. Sure. So first of all, if you look to AC, Automotive Catalyst, so we still see the growth on the heavy-duty diesel with the trucks, 10% towards 2028, where also we see then a recovery in China and also the current awards that we see. Until that time, all right, give me confidence that we can grow there. On top of the market share gain that we have in the light-duty gasoline and the more complex catalyst will improve that revenue. But don't forget, we also, of course, are growing step by step for revenues in Precious Metals Chemistry. I did not go into detail there. And of course, the ramping up of the China plant for fuel cells.
So are you still gaining share in gasoline?
Yes. That's what I said.
Because your competitor says they are also winning shares. So I don't know who is actually losing, but I will find out. Just last question on that is in terms of your exposure to heavy duty. I mean in China, we are seeing a lot of LNG trucks. Isn't that a headwind for the whole industry, including Umicore?
That's certainly an element that we saw compared to a couple of years ago that the -- yes, the market slowdown overall. And also, indeed, the cheap gas prices have created a good momentum for the gas. That doesn't mean that HDD also still has -- also with China 7 coming up, still some growth potential. Like I mentioned in my presentation, we foresee a 10% increase for that market in the HDD.
Maybe one question on Specialty Materials, and maybe it's for Bart, probably.
For me? Yes.
Like why is this business within Umicore? Like what is the like strategic synergy? I mean it seems you've got some niche positioning, which maybe somebody else might be willing to pay a much higher price for than what we in the public markets might be paying in terms of value?
Yes. Now how we see this, I think, and I also highlight that at the start of the presentation today. It's really that circular business model that we have, and that also applies to Specialty Materials as a whole. And I think if you see the returns that we're producing on these activities, it truly shows that we mastered that one. So in that sense, we still strongly believe that we are the best parents to bring most value and returns out of these businesses.
Now Finland has shown now that these are hidden gems, right? So I'm also looking out outside of the room and maybe your perception on a subsegment of that Specialty Materials might deserve indeed some more attention, and I'll see what you have written in your notes afterwards.
Okay. And sorry, last question on recycling. Can you just explain what is -- what exactly are you doing with the new flow sheet? Is it that completely new cross-sell that you're trying to come up with? And I mean is there any -- like can you quantify what is the benefit? I know it's beyond 2030, but if your appetite in recycling 2018 -- 2028 target, whatever that is, do we add EUR 50 million per year [ in 2020 -- '31? ] Or like any quantification in terms of benefit of that investment?
So you're rather accurate. So looking at the step-up in EBITDA, I think we are in that range of EUR 50 million EBITDA step-up as from the start of the decade.
I just have 2 questions, please. The first is, you didn't mention the auto catalyst presentation, the regulatory outlook. And I suspect that emission might be deliberate because some of it is not particularly clear at this stage. But can you give us an idea of when you expect Euro 7 to be implemented? Because I'm not 100% sure if it's fully confirmed or if it's still a bit up in the air. What kind of regulatory uplift is built into the model?
And my second question is on the Battery Materials business. Imagine a customer just says, "Okay, we're going to -- we're not either building a plant or we're not interested in taking the volumes, but we'll pay the penalty." How long is that for? Is it that it last 3, 5 years, 7 years, 10 years? Because that can make a difference to the incentive to walk away.
Jensen, maybe you take the first one, and I'll cover the second one.
Yes, very good. So when we talk about Euro 7, I would say for the light-duty gasoline, I would call it the mild Euro 7, which will start to kick in as of '26. And then going forward, if you look to the heavy-duty diesel, it starts kicking in '27, '28, which is a structural significant, I would say, stricter regulations compared to Euro 6. If you look to the rest, of course, you're right. So China 7, we will know more details by the end of the year, beginning of '26. And if we now look to, for example, North America towards Tier 4, that I would say is a total open box because we need to see what President Trump, of course, will force yes or no, which is an EPA decisions.
Yes. And then I'll take the second one. I think I can be very brief. I mean across these 3 contracts, it's roughly an 8- to 10-year tenor for these contracts. So it will take us well beyond 2032 -- 2030, sorry.
Yes. A couple of questions from my side, and maybe it's easier to ask them one by one. The first one would be on the battery recycling technology. I think in an earlier presentation, it was said that you will invest a few tens of millions in '25 and '26 in further improving your technology. .
That's why...
Yes, I think you mentioned that the market is not ready, but how is your technology? And is it still fully focused on NMC? Is it also -- are you also working on LFP?
That's a perfect CTO question, I would say. Let's start with that one. Geert, please.
Well, I think it's indeed still focused on NMC because that's where you get a benefit from recycling because the metal content pays for the recycling. On LFP, the big challenge is that the value of the metals is not paying for the recycling. So recycling LFP is an issue overall. And our technology is focusing on NMC. So we have that pilot installation where we are finally further optimizing so that we are ready when the market comes that we can put the right engineering in place to scale it. And that's also why we look at partnerships to do that potentially with a partner, but that's still open how we will finally do it if we do it at all.
Okay. And then a second question would be on the long-term metal demand that is relevant for recycling. And specifically looking at the PGMs, if electrification goes on, also, yes, fuel cells may be growing and evolving some demands in PGMs as well. But how do you see the long-term balance in the PGM markets? What is the structural demand going to look like versus today in, let's say, 10 or 15 years from now?
So I will talk in generalities here because I don't want to be a price maker, right? I mean because you see the use of PGMs, platinum, palladium, rhodium, it's quite concentrated in the industry as it's highly Autocat related, right? So I can repeat what was -- I was having technical break. So maybe you might have mentioned it or not, but in our plan, we assumed for that PGM trajectory the January 2025 prices. So we did not do any price assumption there. I think that's important to say and that sensitivity that I want to show supplies to that.
Now of course, overall, Wim, I would say that if I see declines, it's the biggest use of palladium and rhodium. Now it will also be the interplay versus can mines afford to stay open versus recycling and where will ultimately that price point sits? Could it be lower than today's prices? Yes, that could be. But I mean, it would not be probably elegant or accurate anyway if I would make a prediction on that. I've made several times internally prediction on how price will move based on supply and demand. Well, you're being generous, so yes.
Okay. And then last question for me would be on the Battery Materials profitability outlook. Is there any discrepancy in ROCE or EBITDA margin outlook for the various contracts? And specifically asking the question, obviously, to get an idea between IONWAY and the rest of Battery Materials.
Yes. I think -- well...
I was going to say that we cannot comment on the individual contracts. So it -- I would...
No, no. But I mean as you -- as has been -- the question has been asked before, it's a pretty tight range that you give, right? And we had -- we have simulated several scenarios. And of course, these take-or-pays have been engineered in a certain way to make sure that, of course, we have these returns above cost of capital, and that sits across the different contracts that we have.
Thanks for all the presentations. I'll start off with Recycling. I noticed at year-end 2024, the capital employed in Recycling dropped to as low as EUR 185 million from EUR 460 million a year ago. Can you just walk us through that? Are we looking at mostly depreciated fixed assets here, and are there swings because of working capital?
So it's primarily working capital related. So this is where we have optimized some of the payment terms with suppliers. So that has helped in improving that working capital.
So does that mean the working capital was actually negative at year-end?
Well, we have a very unique business model in Recycling, where indeed we are well positioned and have a very low working capital to sometimes even negative working capital.
We love these cash cycles.
Going back to Battery Materials. So you said something like EUR 370 million to finish up all the work. If we assume that you stick with 30-gigawatt capacity in China, 30 in Korea and 45 in Europe, what's the approximate maintenance capital per year are we looking at?
And I'll pass the question to Wannes as well, but I want just to clarify to make sure that we don't have a mistake out there. It will be roughly 40 gigawatts in Korea ultimately in 2028, just to make sure that's clear.
Yes. Thanks for the clarification.
So looking at maintenance CapEx over the 4 years, we're talking about EUR 100 million over those 4 years, so about EUR 25 million per year.
Is that in addition to EUR 370 million? Or is it...
That's in addition to the EUR 370 million. So looking at the net investments that we highlighted, the EUR 2.1 billion in the group, close to EUR 1 billion is in Battery Materials and that standard EUR 370 million you referred to, and then the EUR 100 million looking at maintenance.
Great. And my last question is on megatrends. So you've mentioned all of these megatrends, but I wanted to ask about EU defense spending. Are we seeing any tailwind from that? I assume stuff like infrared would have some tailwind. But overall, your exposure to that end market, how would you quantify it?
Maybe I'll start off and then maybe I'll pass it on to you, Veerle. Now as I explained at the start, I mean, you had this dual element on that resource scarcity. You have the global dimension where the population wants more and more, of course, and we have more applications. And then you have the regional dimension, right? I think that's independence that we are seeking. At the same time, there's also potential starting up in strategical resources for defense application, et cetera.
We have not factored in these potential undercurrents in our plans because they're difficult to assess at this point in time. At the same time, Veerle can maybe talk some of that visioning and infrared applications for our second part.
So for sure, in Specialty Materials and across the board in Umicore, the way we look at this is through our trade compliance lenses. And so what we do is we focus on those applications where there's dual use and where we do build-to-print applications. So yes, there might be some activities that are of dual use and therefore, also within any defense activities. But again, we do third-party screening, we do end-user statements to make sure that it doesn't go into those things that are not allowed under the trade compliance that is in place. Like Bart said, for the future, what will come, we'll need to assess that against that same policy that we hold ourselves to.
Yes. I could imagine, of course, that this undercurrent would be there. Despite the application, some specialty metals will be in higher demand and would fuel then, of course, ultimately in the metal prices and therefore, our business model.
Can you remind me, within your 17 elements in the basket, the importance of gold? And given your sort of hedging position to that, does it matter now? If prices have gone up 50% in the last year, does that move the needle in any way for the business?
So if you talk about the structural exposure, the majority sits in PMs and PGMs. So gold is indeed one of those elements that contribute or can contribute. Looking at the recent price decline, yes, I mean, we have hedged a substantial portion...
Increase.
Increase, yes, I said increase, recent price increase, okay, for gold. So yes, we are -- I mean, we have hedged a substantial part of that exposure. So the sensitivity has reduced. So that is correct.
Okay. I'm going to ask you a horrible question. The news overnight about tariffs, I assume you've had some preliminary conversations with your customers about how they would react and respond to that. Just what are your early thoughts on how ordering patterns evolve over the coming weeks and months?
Yes. So maybe in general, on the tariffs because indeed, it's a hot topic, and then I'll pass maybe because the biggest exposure could be in Catalysis for us. So Jensen, maybe you can address that one. So first of all, of course, we look into scenarios. And of course, we have a clear map on what our dependencies are and what our flows up. We work proactively with our customers to say, "Okay, this could happen. How will we react to it? How can we apply our footprint," right?
But we also even discuss upfront. I mean if this happens, this is what it's going to cost you, right? I mean you have to play upfront on that.
Now secondly, of course, we also make sure that we inform the official instances in the proper way, what consequences could be. So that's also where we play our role and try to educate consequences of certain decisions are being put in place. Now if you now speak specifically, overnight, again, especially for the Autocat, Jensen, maybe you can explain a bit on that NAFTA and other implications that you could see.
Yes. Indeed, that's, of course, quite hot off the press. But I think overall, the tariffs that were already anticipated for, of course, created, like Bart said it's already very early in that stage, discussions with our customers very closely to prepare for alternatives in our flows so that we can also use our global footprint and that agility there to limit their potential impacts. If you now purely look to what has been stated overnight, currently, President Trump is really focusing on the tariffs on the cars. And currently, the teams are still looking what that now means in terms of the U.S. NCA, so where Umicore is mainly falling under because there, the components of automotive would then be potentially not be part of that. So still a lot of elements that can play, but we are very closely monitoring and working on them.
And of course, there could be a market impact. I mean if ultimately, vehicles would be more expensive in the U.S., you might see a decline in some sales. So we did not factor into our plan any geopolitical impact because that would be just guessing in a certain way. So we'll assess what happens going forward and play very close on those evolutions.
Can I just ask a quick question on Autocat -- or sorry, Catalysis? You said that the business is going to generate cash for the next 10 years within the plan. You've given us over EUR 1 billion for the next 4 years. So do we just multiply by 2.5 and get EUR 2.5 billion for 10 years?
That's what the Catalysis team will work for. But that's, I think, too long to make these statements. We really focus now on the next 3 years. I'm very confident with the uplift towards EUR 4 billion, like I mentioned. But overall, we see that longer existence of the ICEs. If you now look to even the market as such, so I stated 74% in 2028. The consensus currently in the market that it's still more than 50% of ICEs in 2035.
A few from me, mostly on Catalysis. Firstly, just thinking about the longer-term structure of the industry, I mean, do you see much scope for increased tolling relationships, partnerships with your peers as a way to sort of really further optimize industry efficiency and sort of plant utilization?
Yes. I mean Jensen could do it as well, but of course, I mean, you see we aim for a capacity realization of 85% plus. So we have this agile footprint. And Jensen, you can speak to how we actually have this cadence on what -- where we put out the light first in function of how that market evolution would be. So in that respect, the potential may be a little, but in specific regions, there might be scope for doing that. And definitely, we would explore certain such initiatives if they would present themselves. But right now, our capacity utilization is good, so it's not an urgency for us. So Jensen, I don't know if you want to like to add.
Maybe 2 short elements. When I joined Automotive Catalysts coming from Precious Metals Chemistry, I was leading the operations. And there, I went in with the total flexibility for stability to really make sure that in these agile markets that we really can make sure we maintain that plus 85% utilization rate. And like I mentioned in my presentation, yes, we are looking towards closer relationships in many ways, also in-sourcing opportunities in the value chain are part of that.
Yes. And as an example to that, Jensen, I think before, we were expecting a different trajectory on that ICE development. So we have adjusted again our plan on how to optimize our footprint. So we are ready. We have worked with our customers to, let's say, dual certify them in different locations so we can really act in a very agile way according to market evolution.
Great. Second one is just on the PGM benefits coming through in Catalysis. I think there are probably still some in the EBITDA. Can you give an idea of what they're contributing at the moment and what will fade out?
I'll approach it differently. Looking at the gains that we make from the structural exposure, majority comes from Recycling, so over 70%, 75% comes from Recycling, the other share comes from Catalysis.
Okay. And then lastly, just on the cash flow targets for that business. What's the working capital assumption? Is there any outflow assumed [indiscernible]?
Yes. So looking at Catalysis, this is where we do assume a certain moderate increase in working capital, looking at the introduction of those new platforms that are in the starting up of the fuel cell plant.
Yes. But if you would look, for instance, on the last 3- to 4-year horizon, cash cycles have been cut by 2. So we really worked hard on that, getting that excess inventory out, spare parts out, really focus again with Jensen because he was in operations, optimizing all our operations and basically metal flows out there. So we established -- I'm sorry, I was expanding, but through supply chain management has a core layer because we have to steer between the plants and we work with PGMs. So we want as little as possible PGMs in that.
Great. And my last one, forgive me if my memory is a bit hazy, but I think the first half results last year in Battery Materials, it emerged there was a fairly significant one-off contributing to results. I'm just wondering, this year, are there any one-offs contributing to the guidance that we should have in mind?
I'm trying to refresh my memory as well looking at '24. But looking at '25, we do not anticipate any major one-offs.
Yes. And we have to remember you had a question for here, but maybe online first, right?
Yes, it's on. Okay. A question for Wannes on the free cash flow generation. Will Umicore focus on debt reduction or share buybacks given the low share price?
Well, as I shared today, the focus is indeed on the free cash flow generation, but also to support the balance sheet to maintain robust balance sheet and to also maintain that robust leverage. So that first focus is on that balance sheet and making -- keeping it robust.
And the rest, we'll see when we get there.
Then there was also a question about the 9% ROCE targets in Battery Materials. Does that also include the invested capital related to IONWAY? Or is it only for Umicore's own Battery Materials business?
No, it's the full scope of the business unit.
That is correct.
We still also have some questions on the partnerships and what type of partnerships. So we have a question also referring to the possibility of having a partnership in the Battery Materials activity with an LFP player. Or what other type of partnerships are we looking at?
I mean the mandate is very clear. The mandate is value recovery. So I don't want to have any exclusions today. If we can get back more of that value at Umicore side, we will look at all these aspects. I have to look at all these proposals. That's my duty first with the shareholders. Anode question, the anode question?
Yes, the anode question.
I see a follow-up question emerging.
You got to take the anode question first. So indeed, it's correct that we are active in anodes. There is in anodes for batteries, there is a trend coming from graphite and there is today already in the market, some mixing in of lithium oxide. But the next thing, and that's where we are active is lithium composites. So that's really an intense mixture of carbon-based or graphite with silicon. And that's silicon composite materials, and that's what we are working on. And we get super good customer feedback, but this is something where we only continue with partnerships because it will also require, again, CapEx and massive investments, which we will not do on our own. We are in advanced discussions for partnerships, but it's not finalized yet.
There was a follow-up question.
Yes. Just a couple on tariff, your recycling plant...
On tariffs?
Yes.
Okay, yes.
It's in Hoboken. But I assume you are shipping globally, including in the U.S. So how will you manage those tariffs? And also, all these tariffs on copper imports in the U.S., et cetera, does that actually benefit Umicore? Or is it a neutral? Is it negative?
And there's one follow-up on Battery Materials. It seems your strategy is understandable, but if you're not really investing in the future, and this business is all about investing. That's how you stay at the forefront. You need to invest in capacity, you need to invest in R&D. I mean doesn't the stand-alone picture become even worse in 5 years given that you are at the moment just trying to make it under cruising altitude without really investing? So in other words, if you don't get the partnership, the profile of this business even deteriorates even more in 3, 4 years' time.
Yes. So first, I take the Recycling. Maybe today, the impact of tariffs on our Recycling result is very limited because in U.S., there are no mining. So we do not have massive supply out of the U.S. and everything globally comes to Hoboken. So I think on tariffs, as such today, it's limited.
On the other hand, depending on the outcome, if, for example, Europe becomes more -- much more self-sufficient and reflecting differently to critical materials, it can also create an upside. But that is, of course, to be seen. So it's not only negative. It would be better to have a global open economy, but it can go both ways and no direct major impact out of the U.S.
Yes. And on your second question on Battery Materials, right? There is capacity out there already today, right? That's very clear. And we will have 155 gigawatt hours outside China. And all of these plans actually come in these incremental box that will also be cost-efficient in that element. Now today, the reality is I have capacity available. So I'm first going to put these assets to work. And when that market will be totally different, we can have another discussion, but that's not what I'm seeing today. So I put my assets to work and focus on value recovery.
Okay. So I think this was it in terms of Q&A. So I would like to invite you to take your seat back, and we will leave Bart on the stage for your closing remarks.
So yes, here it is. So first of all, I would like to thank you all for being here, also to the viewers online. So we highly appreciate it, and we enjoyed the exchange or the conversation. It was very enjoyable for us, and we were also very happy to share on the hard work that we have done over the last 10 months. And we are convinced that we have shown the strong trajectory going forward, that we're going to take these decisive actions, and I'm going to implement this new culture of performance and capital discipline.
Now closing remarks. Our circular business model is more relevant than ever throughout the company. We have a solid plan based on four key imperatives: capital, performance, people and culture, partnerships. Two mandates, so one group mandate and two components: cash and value recovery. That's where our focus sits. That's where you will have our attention for the next 4 years. Our return on capital will be north of 15% in 2028, and our cumulative free cash flows will be in the range of EUR 1 billion to EUR 1.2 billion.
So we truly remain at the core of society. We really are going to work on what we're the strongest at. So we leave this room and we leave with our own conviction and confidence that we're now on a solid path towards 2028. We take our own destiny in hand, and now we start the real hard work. That's the implementation, but I'm quite sure we will continue to discuss on that also in the next year.
So thank you, everybody, also online. Have a wonderful remainder of your day. And of course, for the people in the room, there will be further possibility to further exchange. So thank you, and well, look forward to seeing you again.
