Middle East, aluminum, and Hydro: Boliden valuation

Metals & MiningMetals & Mining Middle East, aluminium & Hydro. Liam FitzpatrickResearch Analyst Exploring key trends in the Indian Steel & Mining sector The Metals & Mining team has the pleasure of inviting you to a series of virtualmeetings with the senior management ofHindalco,ArcelorMittal/NS Indiaand Bastian SynagowitzResearch Analyst JSW Steel, to discuss key trends in the steel, aluminium and copper sectors. Theformat will be virtual ~45 minute fireside discussions with an opportunity for Q&A. Cody HaydenResearch Analyst+44-20-754-13230 Middle East conflict: aluminium and company exposures The conflict in the Middle East (ME) has led to another potential energy crisis, andDB has published a number of reports on the situation, including on oil, the geopolitical ramifications, and China. From a metals and mining perspective, we published a summary of the aluminium, steel and copper markets' exposure to theregion, and some initial company and sector thoughts. In the near term, companieswith exposure to energy and trading (GLEN) and aluminium (Hydro,RIO) are likelyto benefit from higher prices, premiums and volatility, as could companies with On Aluminium, the ME is a very meaningful producer and as a region, it is theworld's number one exporter. Primary output was ~6.7 mt in 2025, making up~23% of ex-China and ~9% of global production. Recent supply disruptions in theregion have pushed aluminium prices to their highest level since 2022 as shipmentsthrough the Strait of Hormuz are effectively closed. Aluminium Bahrain has Hydro: temporary closure of the Qatalum smelter Hydro (Buy) confirmed the temporary closure of the Qatalum smelter in Qatar dueto disruptions to gas supply (Qatalum is a non-consolidated 50:50 JV). Thecontrolled shutdown is expected to be completed by the end of March and shouldreduce the time and cost of an eventual restart. As a result, Hydro has issued a forcemajeure notice to its Qatalum customers. The Qatalum smelter accounts for slightlyover ~2% of ex-China supply. As per Hydro's 2025 Annual Report, Qatalum up through H2, returning to steady state by the start of 2027. Under this scenario,we estimate the underlying impact is a ~5% cut to group EBITDA, although this isbefore price changes and per the company's sensitivities, every $100/t move inaluminium adds NOK 1.5bn to EBITDA, while $10/t on premiums adds NOK 210m.If we assume the smelter outage adds $200/t to LME and $20 to premiums in 2026, Kevitsa: a test case for Europe’s critical minerals strategy BOL (Buy) is starting redundancy proceedings at the Kevitsa mine in Finland due torecent increases to taxes and the company's unwillingness to proceed with the nextmajor investment to extend the mine life beyond 2034. This could be viewed as alast-ditch attempt to receive some level of governmental support for the mine andto extend the mine life. It is also an interesting test case for the EU's critical minerals Week ahead A number of datapoints are expected over the course of next week including Chileand Peru copper production for January, China total NEV sales for February, as well Data & news flow GLENhas proposed backing a Kazakh entrepreneur's $1.4bn bid to buy a 40% stakein Eurasian Resources Group by providing an $800m upfront prepayment inexchange for future shipments of ferrochrome.Aluminium Bahrainannounced on Wednesday that it has halted shipments due to the widening ME conflict. China hasset its2026 economic growth target at 4.5-5%, its first formal downgrade since2023. China’saluminium inventoryhit peak (1,256 kt) on 5 March, up 45% YoY andits highest since April 2023. China'sFebruary steel industry PMI at 46.7, down 3.2ppts MoMand up 1.6 ppts YoY. China produced 3.5 mt of aluminium in February, up 3.6% YoY on a daily output basis. China’sBF capacity utilisation rate for the weekending 26 February stood at 87.5%, up 1.1 ppts WoW, and marking four weeks of consecutive increases.Iron ore port inventories +1% WoW(up 12% YoY). China Commodity price & FX trends (Fig 9-16) Base metals were mixed over the past week. Aluminium (+5%) increased followingsupply disruptions in the ME, while zinc (-5%) decreased and followed by copper(-3%). Precious metals declined over the past week, led by palladium (-8%) andfollowed by platinum and silver (both -7%), rhodium (-4%) and gold (-2%). Withinbulks, NEWC (+16%) has pushed higher on rising energy concerns, while iron ore MTM earnings & valuations (Fig 1-8) Spot FCF yields (2026)are highest for GLEN and VALE (~9%), followed by RIO (~6%), BHP (~5%) and Anglo (~3%).Spot EV/EBITDA (2026)is lowest for VALE(4.4x), followed by GLEN (4.8x), RIO (5.8x), BHP (7.0x) and Anglo (9.0x).Earningsupgrade risk (2026E EBITDA basis) has shifted on the back of revised consensusand recent commodity price moves following the strikes on Iran. It is positive for GLEN (+16%) on better coal prices and remains positive for RIO and BHP (+3-9%).There is also a small upgrade risk for VAL