Eramet: Adjusted turnover of €980m in Q3 2023, supported by growth
in mining operations
Paris, 26 October 2023, 7:30 a.m.
PRESS RELEASE
Eramet: Adjusted turnover of €980m in Q3
2023, supported by growth in mining operations
-
Adjusted turnover1 of €980m in Q3
2023, down 26% versus Q3 2022, including the strong decrease in
selling prices (-27% vs. Q3 2022), partly offset by the growth in
volumes for mining operations (+7%)
-
Positive intrinsic performance over the quarter:
-
Continued exceptional growth at the Weda Bay mine in Indonesia,
with 8.3 Mwmt in volumes of nickel ore sold (+184%)
- Record
production in Gabon at 2.1 Mt (+4%) and stable transported volumes
(2.0 Mt)
- Reduction in
fixed costs
-
Continued significant decline in selling prices,
particularly for manganese
-
Decrease in the price of reductants and
lower freight prices
-
Sale of Norwegian subsidiary Eramet Titanium & Iron
(“ETI”) at end-September with a positive impact of around
€200m on the Group's cash position
-
2023 adjusted EBITDA1 revised
to around €800m, reflecting:
- a
decline in average manganese ore price estimated
at around $4.7/dmtu over the year
- a volume
target for nickel ore at Weda Bay revised
to 30 Mwmt (-5 Mwmt) in the absence of an approval
obtained to date
- despite
the solid intrinsic performance expected in Q4,
combined with a higher ore grade and a premium on
prices for nickel ore at Weda Bay, as
well as lower input costs (particularly
reductants)
Christel Bories, Group Chair
and CEO:
"In the third quarter, in a difficult
macroeconomic environment, with selling prices significantly lower
than last year, we achieved a very good operational performance,
thanks to the increase in our produced volumes and strict financial
discipline. As a result, we successfully recovered from the
production delays in the first half, which were caused by
exceptional incidents.
We remain focused on improving our operational
performance, adapting production to market conditions and strictly
controlling our costs. Now more robust, Eramet, despite the
economic situation, continues to make progress in its development
projects. We are on track to start our lithium carbonate production
in Argentina in the second quarter of 2024 and are close to
deciding on the project's expansion in order to double our
production by 2027.
Through our partnership with Suez, we will soon
open our pilot plant for recycling lithium-ion batteries.
With these projects, Eramet confirms
technological leadership in the value chain of metals needed for
the energy transition."
In terms of safety, the FR22 was 1.1 for
Eramet's new scope at end-September 2023 (stable vs. end-2022),
much better than the CSR roadmap target for 2023 (FR2<4).
Nevertheless, two serious accidents occurred in Q3 2023. The Group
has already implemented an action plan and preventive measures for
each accident.
In September, Eramet published its new corporate
website including a new open data tool which provides interactive
access to the Group's reporting on most ESG indicators over the
last five years. This initiative aims to increase Eramet's
transparency and encourage dialogue with its stakeholders.
In Senegal, the Group launched EraTrace, an
online traceability platform for products designed to improve
transparency to customers. Thanks to this initiative, Eramet is
proactively anticipating future obligations for metal traceability
by providing customers with reliable information on the origin and
CSR performance of purchased products (carbon footprint, water
consumption, etc.) via a "product passport" they can access.
Eramet also continued the launch of its "Femmes
d'Avenir" programme, in partnership with Women In Africa, which
seeks to support women entrepreneurs over a three-year period.
Following the closing ceremony for the first intake of Femmes
d'Avenir beneficiaries in Gabon, the Group announced an extension
of the programme in Senegal where the first class was welcomed in
October. The programme will support a total of 745 women in Gabon
and Senegal between 2023 and 2026.
Eramet will host its first Capital Markets Day
on 13 November.
On this occasion, the Executive Committee will
focus in depth on its vision for Eramet and the Group’s growth
strategy, as a stakeholder in the responsible mining of metals,
with a diversified portfolio of assets and world-class mining
deposits.
It will also unveil the targets of the Group's
new 2024-2026 CSR roadmap.
-
Eramet group adjusted turnover by activity (IFRS
5)
Millions of euros1 |
Q32023 |
Q3 20222 |
Chg.3(%) |
9m2023 |
9m 20222 |
Chg.3(%) |
Manganese |
528 |
873 |
-40% |
1,474 |
2,520 |
-42% |
Manganese ore activity4,5 |
330 |
465 |
-29% |
801 |
1,212 |
-34% |
Manganese alloys activity4 |
198 |
407 |
-51% |
673 |
1,308 |
-49% |
Adjusted Nickel7 |
396 |
357 |
+11% |
1,211 |
1,299 |
-7% |
Share of Weda Bay (38.7% - excluding off-take contract) |
135 |
57 |
+137% |
432 |
237 |
+82% |
Weda Bay (trading activity, off-take contract) |
37 |
65 |
-43% |
139 |
224 |
-38% |
SLN |
224 |
235 |
-5% |
640 |
838 |
-24% |
Mineral Sands |
55 |
99 |
-44% |
191 |
323 |
-41% |
GCO |
48 |
76 |
-37% |
166 |
238 |
-30% |
Intra-group eliminations6 |
(11) |
(23) |
-52% |
(40) |
(72) |
-44% |
ETI |
18 |
46 |
-61% |
65 |
157 |
-59% |
Lithium |
0 |
0 |
n.a. |
0 |
0 |
n.a. |
Holding and eliminations |
0 |
0 |
n.a. |
5 |
2 |
n.a. |
ERAMET GROUP adjusted7 |
980 |
1,328 |
-26% |
2,881 |
4,144 |
-30% |
1 Data rounded to the nearest million. 2
Excluding discontinued operations in 2022 in accordance with the
IFRS 5 standard – "Non-current assets held for sale and
discontinued operations"3 Data rounded to higher or lower %. 4 See
definition in Appendix 4.5 Turnover linked to external sales of
manganese ore only, including €15m linked to Setrag transport
activity other than Comilog's ore in Q3 2023 (€8m in Q3 2022). 6
Turnover for the sale of ilmenite produced by GCO ("Grande Côte
Opérations") to ETI.7 Adjusted turnover defined in the financial
glossary in Appendix 4.
N.B. 1: all the commented figures for Q3 2023
and Q3 2022 correspond to figures in accordance with the IFRS 5
standard as presented in the Group’s consolidated financial
statements, unless otherwise specified.
N.B. 2: all the commented changes in Q3 2023 or
9m 2023 are calculated with respect to Q3 2022 or 9m 2022, unless
otherwise specified.
N.B. 3: mentions of Q1, Q2, Q3 and Q4 refer to
the four quarters of the financial year; mentions of H1 and H2
refer to the two half-years.
The Group's adjusted
turnover1, including the proportional
contribution of Weda Bay, amounted to €980m in Q3
2023, down 26% (-22% at constant scope and exchange rates3, with
-4% of currency effect). This mainly reflects a negative price
effect (-27%) compared to the high level of prices in Q3 2022,
notably for manganese ore and alloys. The volume/mix effect was
positive (+5%, of which +7% for mining operations), notably
reflecting the strong growth in volumes sold at Weda Bay.
Input costs decreased over the quarter versus Q3
2022. This is particularly the case for prices of metallurgical
coke and Ultra Low Phos Coke (from Colombia) consumed, down 30% in
Q3 2023, reflecting the fall in purchasing costs with a lag of 3 to
6 months. Energy costs also strongly decreased over the quarter, as
did sea freight prices.
The Group also pursued its cost control
measures, reinforced by productivity actions.
Manganese
In Q3 2023, in Gabon, ore volumes
returned to record levels, with 2.1 Mt in ore produced (+4% vs. Q3
2022) and 2.0 Mt in ore transported (stable). These volumes
increased by around 40% versus Q2 2023, impacted by non-recurring
logistical incidents.
Turnover of the Manganese activities
decreased to €528m over the quarter.
Sales for manganese ore activity were
down 29% to €330m, mainly reflecting the decline in selling
prices.
Sales for manganese alloys activity were
down 51% to €198m, owing to a sharp decline in prices compared to
the very high levels of Q3 2022 and the decrease in volumes sold,
albeit with a favourable mix.
Market trends4 & prices5
Global production of carbon steel, the main
end-product for manganese, was up by 2% in Q3 2023 to 468 Mt. For
the first nine months of the year, production was stable at 1,425
Mt.
Production in China, which accounts for more
than 50% of global production, increased by 4% compared to the low
levels of Q3 2022. Production in Europe declined by 12% over the
period where the real estate sector remains strongly impacted by
the economic situation and high interest rates. Production in India
was up 17%, with volumes now exceeding those in Europe.
Manganese ore consumption was slightly up by 2%
to 5 Mt. Global ore supply increased by 5% to 5.4 Mt, reflecting
the growth in production in South Africa (+5%) which notably
benefited from a favourable exchange rate, and growth in production
in Brazil (+58%). Production in Gabon returned to normal levels
over the quarter.
In this context, the supply/demand balance
remained in slight surplus in Q3 2023 with Chinese port inventories
still at high levels, at 6.2 Mt at end-September, representing
close to 11 weeks' consumption.
The average CIF China 44% manganese ore price
index stood at $4.5/dmtu in Q3 2023, down 23% vs. Q3 2022, in line
with market fundamentals.
The price index (CRU) for refined alloys in
Europe (MC Ferromanganese) was €1,427/t over the quarter (-40% vs.
Q3 2022) with that for standard alloys (Silicomanganese) at €907/t
(-27%), reflecting the very depressed situation in these
markets.
Activities
The expansion programme at the Moanda mine in
Gabon, already the world's largest manganese mine,
is continuing, with further operational progress. On the back of a
first-half 2023 disrupted by logistical incidents which are now
resolved (landslide at end-2022, breach of civil engineering
structure in early April), manganese ore production and transport
returned to normal levels.
In Q3 2023, manganese ore production achieved a
record 2.1 Mt, up by 4%. Transported ore volumes and ore volumes
sold externally also returned to the record levels reached in Q3
2022, at 2.0 Mt and 1.8 Mt, respectively.
The suspension of operations on the day of the
military coup lasted less than 24 hours in total, and therefore had
no impact on the quarter's performance.
The FOB cash cost6 of manganese ore activity was
$2.1/dmtu, up 4% compared to Q3 2022.
The commissioning of modular washing facilities
and an electric conveyor on the Okouma plateau led to productivity
gains over the quarter. However, these, combined with better
control of fixed costs, have not yet enabled to offset cost
inflation and a negative currency effect. However, in Q3 2022, the
cash cost decreased by 22% from H1 2023 ($2.7/dmtu).
Sea transport costs per tonne amounted to
$1.1/dmtu in Q3 2023.
Manganese alloys production
totalled 171 kt in Q3 2023, up 4%, factoring in a decrease in
energy costs and resumed production of one furnace following a
relining programme in H1. Sales amounted to 154 kt (-19%, factoring
in high volumes of standard alloys sold in Q3 2022) with a much
more favourable mix over the period.
The manganese alloys margin, very high in 2022,
continued to decline in Q3, driven by the continuing decline in
selling prices, despite the decreased energy and consumed
reductants costs.
Outlook
In Q4 2023, steel production is expected to
continue declining given the unfavourable seasonality, while rising
interest rates continue to penalise the construction sector at the
global level. Production levels should remain stable compared to H2
2022, notably driven by India, despite the significant decline in
Europe.
Demand for manganese alloys is expected to
continue declining, particularly in Europe, with inventories still
high for most products, particularly standard alloys. Supply is
also expected to decrease as a result. The US market is showing
some resilience, but the recent strike held by the country's United
Auto Workers (UAW) labour union could weigh on demand for steel and
manganese alloys in Q4.
As the manganese ore market is currently in
surplus, prices should continue to decline in Q4 before stabilising
at year-end. Today, the average CIF China 44% manganese ore price
index is close to $4.3/dmtu.
In H2 2023, alloys invoiced selling prices could
stabilise on average to the level of mid-2023 and therefore remain
significantly below the average prices for 2022.
In Gabon, the targets for
transported ore volumes are
maintained at around 7.0 Mt. The production will be adjusted
according to the level of volumes transported. Cash cost is
expected to decrease in Q4, reflecting a structurally more
favourable seasonality in the second half of the year and
productivity gains linked to the ramp-up of new equipment.
The multi-year rehabilitation programme for
manganese alloys furnaces will continue through to
year-end with a second shutdown after the one in H1.
Nickel
In Q3 2023, the Weda Bay mine in
Indonesia continued its ramp-up with the sale of 8.8 Mwmt of nickel
ore, leading sales volumes to almost double over nine
months.
Adjusted
turnover1 for the Nickel
activities totalled €396m, including the proportional contribution
of Weda Bay.
The share of turnover at Weda Bay
(excluding the off-take contract) contributed up to €135m (+137%),
driven by an increase in nickel ore volumes, which very largely
offset the decline in selling prices.
The trading activity of nickel
ferroalloys produced at Weda Bay (off-take contract on plant
production) contributed up to €37m (-43%), due to a decline in
volumes and prices.
At
SLN7, sales decreased by 5% to
€224m, reflecting a strongly unfavourable price effect which was
partly offset by the strong growth in ore and ferronickel volumes
sold, compared to the low levels in Q3 2022.
Market trends8 & prices
Global stainless-steel production, which is the
main end-market for nickel, was up 16% to 14.8 Mt in Q3 2023 (an
increase of 3% over nine months). China, which accounts for more
than 60% of global production, saw growth of 29% over the quarter,
driven by the resilience of the infrastructure sector and the
completion of real estate projects. Production in the rest of the
world declined by 2%, with a notable decrease in Indonesia (-7%)
due to the temporary shutdown by some local producers.
Global demand for primary nickel increased by
12% over the quarter, benefiting from a recovery in demand for
stainless-steel (+13%) and continued sustained demand in the
batteries sector (+19%).
Parallel to this, global primary nickel
production was slightly up by 2% over the period. Growth in the NPI
supply was offset notably by a decline in traditional production
(-8%).
The nickel supply/demand balance (class I and
II9) was at break-even over the quarter but remained in surplus for
the first nine months of 2023. Nickel inventories at the LME and
SHFE10 (pure nickel cathodes and briquettes) remained at low levels
(47 kt at end-September) and are still less representative of the
current global market.
In Q3 2023, the LME price
average (price of class I nickel) was $20,342/t, down 8% (-16% vs.
H1 2023).
Similarly, the average for the
NPI11 price index (class II nickel) as sold at
Weda Bay was $13,860/t over the quarter, down by
17% (-10% vs. H1 2023). However, prices rebounded slightly during
September, in connection with demand from the stainless-steel
sector in China, but also as a result of a sharp slowdown in ore
supply in Indonesia, following a reorganization of the institutions
issuing mining permits.
The spot price of ferronickel
as produced by SLN (also class II nickel) was set, as expected, at
a level approaching NPI prices, posting a decline of around 12%
over the quarter.
Nickel ore prices (1.8% CIF
China), as exported by SLN, averaged $87/wmt12,
down by 20% over the quarter (-6% vs. H1 2023). Nonetheless, prices
gradually increased over the quarter, from $80/wmt to around
$95/wmt in early October, due to pressures on Indonesia's nickel
ore supply.
In Indonesia, the official domestic
price index for high-grade nickel ore ("HPM Nickel") was
approximately $47/wmt13 over the quarter, a decline of 13% versus
Q3 2022 and 19% versus H1 2023. The price index followed nickel
price trends at the LME, with the price formula indexed to the
London-based exchange, with a lag of 1 month.
Activities
In Indonesia, Weda Bay, the
world's largest nickel mine, continued its
exceptional ramp-up with the sale of 8.8 Mwmt (for 100%) over the
quarter, representing almost triple the volumes sold in Q3
2022.
External ore sales (at the plants on the
industrial site other than the JV plant) totalled 8.3 Mwmt,
including 4.3 Mwmt in high-grade ore and 4.0 Mwmt in low-grade ore;
internal consumption for NPI production amounted to 0.5 Mwmt over
the quarter.
Production at the plant reached 9.0 kt-Ni of NPI
in Q3 2023 (on a 100% basis), stable versus Q3 2022. The volumes
sold by Eramet as part of the off-take contract, representing 3.5
kt-Ni, declined by 15%, factoring in a lag in shipments.
In New Caledonia, mining
production amounted to 1.5 Mwmt, stable versus Q3 2022. However,
societal problems as well as difficulties obtaining operating
permits persisted, notably at the Poum (operations suspended since
end-August) and Népoui sites.
Low-grade nickel ore exports increased to 0.7
Mwmt (+17%), factoring in a limited ore supply in Indonesia.
Ferronickel production and sales were also up, at 12.8 kt-Ni (+35%)
and 13.2 kt-Ni (+25%), as a result of the plant's improved
operation, now properly supplied with electricity following the
deployment of a Temporary Offshore Power Plant14.
Thanks to the implementation of the plan to
reduce costs, cash cost15 of ferronickel production decreased to
$8.2/lb on average over the quarter. This change notably reflects
the decrease in fixed costs as well as a positive volume effect.
These effects were partly offset by a negative price effect on
nickel ore and an unfavourable currency impact.
However, the Group's New Caledonian subsidiary
continues to face its major difficulties, both in terms of
operating permits and access to competitive energy, in a depressed
price environment that is weighing on its results. To date,
continuation of the plan to reduce costs and preserve cash remains
the top priority.
Outlook
In Q4 2023, demand for primary nickel is
expected to continue growing thanks to the more marked recovery in
the batteries sector in China, despite a still sluggish
stainless-steel market in Europe.
Primary nickel production is also expected to
increase over the period, with new projects from Indonesia (matte
and HPAL16) again making a more significant contribution, owing to
an improvement in the batteries market. The market surplus should
therefore be maintained for 2023.
NPI and nickel ore prices (as exported by SLN)
could stabilise given the uncertainty linked to the administrative
process to issue mining permits in Indonesia which weighs on the
local ore supply.
In Indonesia, the Weda Bay mine
should continue its exceptional ramp-up in Q4 2023, albeit with a
marketable target (on a 100% basis) revised downwards to around 30
Mwmt over the year, of which half is low-grade ore, factoring in
the local context of a slowdown in the administrative process to
issue mining permits (revised down by 5 Mwmt, albeit partly offset
by a higher grade and a premium on “HPM Nickel” reference prices
for high-grade ores, due to supply tensions).
In New Caledonia, as announced,
SLN drew the last tranche of €20m in August from the loan granted
by the French State at the beginning of the year (for a total
amount of €60m).
Since early September, following the report
issued by the French General Inspectorate of Finance (“IGF”17), SLN
has been actively participating in a Nickel Task Force, bringing
together all nickel sector stakeholders in New Caledonia, with the
aim of making nickel production viable in the territory. In this
context, Eramet is contributing to the search for solutions, while
staying the course of its global strategy. The Group thus confirms
its decision not to provide any further financing to its New
Caledonian subsidiary.
Assuming a normal functioning of operations,
ferronickel production for the plant is confirmed at above 45 kt-Ni
in 2023. As a result of difficulties in accessing the deposits, the
ore export target has been revised downwards to around 3.0
Mwmt.
Strategic growth projects
During the quarter, Eramet and BASF continued
studies related to the Sonic Bay
project, the hydro-metallurgical project
(HPAL) intending to produce battery-grade nickel and
cobalt intermediate products, using laterite ores
extracted from the Weda Bay mine. In view of the progress made in
discussions regarding project execution and funding strategy, the
investment decision is now expected in H1 2024.
Mineral Sands
The Mineral Sands activities reported
turnover down 44% to €55m in Q3 2023, reflecting a decline in
volumes and prices.
Market trends & prices18
In an unfavourable macroeconomic context for the
ceramics sector, global demand for zircon slightly declined again
over the quarter. Zircon supply increased over the quarter due to
the ramp-up of new capacities and the market is in surplus.
As a result, zircon market prices averaged
$2,050/t FOB over the quarter, declining by 7% (-2% vs.
H1 2023).
Global demand for TiO219 pigments, the main
end-market for titanium-based products20, remained stable over the
quarter, at a low level. Supply for titanium-based products
continued to grow, driven by additional capacities in China with
the market also in surplus.
The average market price for ilmenite as
produced by GCO was therefore $315/t FOB over the quarter, a
decline of 9% (-3% vs. H1 2023).
Activities
In GCO ("Grande Côte
Opérations"), in Senegal, mineral sands production decreased by 5%
to 161 kt over the quarter, mainly due, as anticipated, to the
lower average grade and unfavourable mining conditions in the area
currently being mined.
Ilmenite volumes produced, mainly sold to ETI,
stood at 102 kt, also down 16%, and in line with the trend for
mineral sands production. External sales (excluding ETI) doubled
over the quarter to 58 kt, compared to low levels in Q3 2022.
Over the quarter, zircon volumes produced and
sold were down 7% to 13 kt and 43% to 8 kt respectively, reflecting
the decline in mining production and congestion observed at Dakar's
port.
As regards ETI, in Norway, at
end-September, Eramet announced the sale of its subsidiary for an
enterprise value of $245m (around €225m) to INEOS Enterprises, with
immediate effect. As a reminder, ETI is an ilmenite transformation
plant producing titanium slag used in the pigment industry,
achieving turnover and EBITDA of €222m and €18m respectively in
2022. The agreement between Eramet and INEOS Enterprises also
includes a long-term supply contract for ilmenite produced by
GCO.
Outlook
Demand for zircon is expected to continue
decreasing in Q4, factoring in macroeconomic difficulties
(inflation, construction market at half-mast, notably in China),
leading to an overall decline over the year. The market should
remain in surplus, which would result in the decline of prices at
end-2023, on the back of a record 2022.
Demand for titanium-based products is also
expected to decrease in Q4, impacted by the soft demand for
pigments linked to the construction market, setting prices on a
downward trend. Demand over the year is set to decrease, leading to
a surplus.
GCO mineral sands production for 2023 is
expected to be around 700 kt HMC, down versus 2022. The
commissioning of the dry mining unit has helped to limit the impact
of the low grade and unfavourable mining conditions. Mining will
now continue in an area with a higher grade.
Moreover, in Cameroon, the results of the
additional technical and environmental feasibility study conducted
in 2023 did not serve to validate the economic profitability of the
Akonolinga project (mining of a rutile block in the country's
central region), while guaranteeing compliance with CSR standards.
The Group has therefore decided not to pursue the project and will
instead demobilise resources in a way that is responsible and
complies with local laws, including the rehabilitation of the
exploration sites to international standards, the return of the
mineral sands permits to the Cameroonian government and the
handover of the studies conducted on the deposit. In line with its
commitment to act for responsible and positive mining, Eramet plans
to finance the development of a societal project to promote local
cultures in the Akonolinga region. The Group is finalising a
partnership with local players in order to launch this initiative
in the months ahead.
Lithium
In Q3 2023, lithium carbonate prices continued
their decline which started in H1 2023 due to destocking among
producers of Cathode Active Material (CAM21) and sluggish demand on
the spot market, with volumes consumed being covered by long-term
contractual agreements. As a result, lithium carbonate prices
averaged around $33,000/t LCE22,23 in Q3 2023, a decline of 55%
versus historically high levels of Q3 2022. In early October, they
ranged around $25,000/t LCE, with a long-term price remaining
between $15,000 and $20,000/t LCE.
In Argentina, the construction
of the Centenario lithium plant (Phase I), launched in 2022, is
continuing and had achieved a completion rate of more than 70% at
end-September 2023. On this basis, production is still scheduled to
start in Q2 2024 and the achievement of a full ramp-up, to
24 kt LCE battery-grade (100% basis), is expected by
mid-2025.
During the quarter, in collaboration with
Tsingshan, its partner in Phase I, Eramet continued the feasibility
study into a Phase II expansion project (in order to eventually
reach an annual total production capacity, for the combined two
phases of more than 75 kt-LCE per year). An investment decision for
a first stage of additional 30 kt-LCE should be taken very
soon.
Battery recycling in France
In France, Eramet and Suez recently announced
Dunkirk as the location for their joint ReLieVe project. The
project involves an upstream dismantling plant and a downstream
metal extraction plant, which should be able to process up to 50 kt
of battery modules per year. The final investment decision for the
project is expected by the end of 2023 for the upstream plant, with
a target start-up in 2025, and by the end of 2024 for the
downstream plant, with a target start-up in 2027.
A pilot plant, designed to test and validate the
continuous refining process on a pre-industrial scale is about to
be put into operation in Trappes, on the site of Eramet's research
centrer.
This project would strengthen Eramet's position
in the electric battery value chain, with a presence upstream and
downstream, from the collection and dismantling of end-of-life
batteries to their recovery in the form of recycled battery-grade
metal salts.
The climate of geopolitical and macroeconomic
uncertainties and the inflationary context continue to weigh on all
of the Group’s markets.
The rebound in China's economy is yet to fully
materialise, while high key interest rates continue to apply
pressure on other markets, both in Europe and North America. Demand
across all the underlying markets for the Group's products remains
sluggish, which is reflected in the second half of the year by the
continued downward trend in prices observed throughout the first
half.
In parallel, freight rates, which strongly
decreased over the first nine months, are expected to stabilise in
Q4. The price of reductants should continue declining in Q4 while
the cost of energy is expected to stabilise compared to the first
nine months of 2023. This should favourably impact the financial
performance of metallurgical activities.
The sharp decline in selling prices observed in
the first nine months of the year is expected to continue in Q4,
notably:
-
The manganese ore price index, close to $4.3/dmtu since the start
of October, continues to fall, resulting in an estimated average
price of around $4.7/dmtu over the year,
-
Domestic prices for nickel ore sold in Indonesia, which are indexed
to the LME24, continue to change accordingly, with the consensus
revised downwards to $21,800/t for 2023 (averaging $19,300/t in
H2). However, the high-grade ore sold by Weda Bay should benefit
from a premium on the reference price, due to tensions on
supply.
The Group's volume targets over the year now
stand at:
-
Around 30 Mwmt of marketable nickel ore at Weda
Bay, of which approximately half is low-grade ore,
-
Around 7.0 Mt of manganese ore transported in
Gabon, given the non-recurring logistical incidents in H1.
The €/$ exchange rate is expected at
1.0825 for the year.
Based on the above-mentioned price forecasts and
volume targets, the Group's guidance on adjusted
EBITDA1 is revised to around
€800m in 2023 (versus €900m previously), including the
proportional contribution of Weda Bay.
Capex is confirmed at around
€550m in 2023 (excluding the operations sold in H1 and
excluding the share of the Lithium project financed by Tsingshan).
It includes €250m in current capex and €300m in growth capex.
The Group remains focused on improving the
performance of its operations, adapting production to market
conditions and strictly controlling its costs.
Calendar
13.11.2023: Eramet's first Capital Markets Day
– "A New ERA"
21.02.2024: Publication of 2023 Group annual results
25.04.2024: Publication of 2024 Group first-quarter turnover
ABOUT ERAMET
Eramet transforms the Earth’s mineral resources
to provide sustainable and responsible solutions to the growth of
the industry and to the challenges of the energy transition.
Its employees are committed to this through
their civic and contributory approach in all the countries where
the mining and metallurgical group is present.
Manganese, nickel, mineral sands, lithium, and
cobalt: Eramet recovers and develops metals that are essential to
the construction of a more sustainable world.
As a privileged partner of its industrial
clients, the Group contributes to making robust and resistant
infrastructures and constructions, more efficient means of
mobility, safer health tools and more efficient telecommunications
devices.
Fully committed to the era of metals, Eramet’s
ambition is to become a reference for the responsible
transformation of the Earth’s mineral resources for living well
together.
www.eramet.com
INVESTOR
CONTACTDirector of Investor
RelationsSandrine Nourry-DabiT. +33 1 45
38 37 02 sandrine.nourrydabi@eramet.com |
PRESS
CONTACTMedia relations
managerFanny
Mounierfanny.mounier@eramet.comT. +33 7 65 26 46
83Image 7Marie ArtznerT. +33 1 53
70 74 31 | M. +33 6 75 74 31 73martzner@image7.fr |
Appendix 1: Quarterly turnover (IFRS 5)
€ million1 |
Q3 2023 |
Q2 2023 |
Q1 2023 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
|
|
|
|
|
|
|
|
Manganese |
528 |
505 |
440 |
630 |
873 |
926 |
722 |
Manganese ore activity2 |
330 |
262 |
209 |
315 |
465 |
439 |
308 |
Manganese alloys activity2 |
198 |
244 |
231 |
316 |
407 |
487 |
414 |
Nickel |
261 |
228 |
290 |
331 |
300 |
409 |
352 |
Adjusted Nickel3,4 |
396 |
356 |
459 |
464 |
357 |
514 |
428 |
Mineral Sands |
55 |
93 |
44 |
142 |
99 |
134 |
90 |
GCO |
48 |
79 |
40 |
101 |
77 |
95 |
67 |
Intra-group eliminations5 |
(11) |
(16) |
(12) |
(24) |
(24) |
(25) |
(24) |
ETI |
18 |
31 |
16 |
65 |
46 |
64 |
47 |
Lithium |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Holding, elim. and others |
0 |
3 |
1 |
4 |
0 |
1 |
1 |
Eramet group published financial statements |
845 |
828 |
775 |
1,107 |
1,272 |
1,470 |
1,165 |
Eramet group adjusted3,4 |
980 |
956 |
944 |
1,241 |
1,329 |
1,576 |
1,240 |
1 Data rounded to the nearest million.2 See
financial glossary in Appendix 4.3 Adjusted turnover defined in the
financial glossary in Appendix 4.4 Adjusted turnover restated for
2022 and Q1 2023, following update of indicator definition.5
Turnover for the sale of ilmenite produced by GCO at ETI.
Appendix
2: Productions and shipments
In thousands of tonnes |
Q32023 |
Q2 2023 |
Q1 2023 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
9m 2023 |
9m 2022 |
MANGANESE |
Manganese ore and sinter production |
2,149 |
1,543 |
1,097 |
1,854 |
2,061 |
1,862 |
1,762 |
4,789 |
5,685 |
Manganese ore and sinter transportation |
2,038 |
1,489 |
1,359 |
1,734 |
2,048 |
1,765 |
1,620 |
4,886 |
5,434 |
External manganese ore sales |
1,830 |
1,2451 |
1,158 |
1,753 |
1,840 |
1,535 |
1,409 |
4,233 |
4,784 |
Manganese alloys production |
171 |
160 |
151 |
132 |
164 |
193 |
188 |
482 |
545 |
Manganese alloys sales |
154 |
170 |
140 |
166 |
190 |
186 |
156 |
464 |
531 |
NICKEL |
Nickel ore production (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
|
SLN |
1,461 |
1,405 |
1,482 |
1,490 |
1,460 |
1,290 |
1,154 |
4,348 |
3,903 |
Weda Bay Nickel (100%) – marketable production (high-grade) |
4,247 |
3,802 |
3,958 |
3,539 |
3,485 |
3,552 |
4,563 |
12,007 |
11,600 |
Ferronickel production – SLN |
12.8 |
9.7 |
10.6 |
11.0 |
9.5 |
10.5 |
9.9 |
33.1 |
30.0 |
Low-grade nickel ferroalloys production –
Weda Bay Nickel (kt of Ni content – 100%) |
9.0 |
7.9 |
7.8 |
8.1 |
8.9 |
9.6 |
10.0 |
24.7 |
28.6 |
Nickel ore sales (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
|
SLN |
675 |
734 |
657 |
982 |
576 |
830 |
632 |
2,066 |
2,038 |
Weda Bay Nickel (100%) |
8,323 |
7,753 |
7,318 |
7,581 |
2,931 |
3,576 |
3,875 |
23,394 |
10,382 |
Ferronickel sales – SLN |
13.2 |
10.1 |
10.2 |
10.7 |
10.6 |
10.8 |
9.2 |
33.5 |
30.6 |
Low-grade nickel ferroalloy sales– Weda Bay
Nickel/Off-take Eramet (kt of Ni content) |
3.5 |
3.9 |
3.1 |
3.2 |
4.1 |
4.2 |
4.3 |
10.5 |
12.6 |
MINERAL SANDS |
Mineral Sands production |
161 |
194 |
112 |
186 |
170 |
188 |
198 |
468 |
556 |
Ilmenite production |
102 |
129 |
77 |
124 |
121 |
132 |
121 |
308 |
374 |
Zircon production |
13 |
15 |
9 |
13 |
14 |
15 |
15 |
37 |
44 |
Titanium dioxide slag production |
342 |
13 |
19 |
40 |
48 |
48 |
52 |
661 |
148 |
Ilmenite sales |
58 |
88 |
20 |
103 |
29 |
70 |
29 |
166 |
128 |
Zircon sales |
8 |
14 |
9 |
14 |
14 |
16 |
15 |
31 |
45 |
Titanium dioxide slag sales |
172 |
26 |
13 |
44 |
39 |
52 |
40 |
561 |
131 |
1 Correction of a difference of 80 kt vs. the
figure reported in the appendix table of the Press Release on the
Group's Half-Year Results 20232 Available data up to end-August
2023.
Appendix 3: Price and index
|
Q3 2023 |
H1 2023 |
Q3 2022 |
H1 2022 |
Chg. Q3 2023 – Q3 20229 |
Chg. Q3 2023 – H1 20239 |
MANGANESE |
|
|
|
|
|
|
Mn CIF China 44% ($/dmtu)1 |
4.50 |
5.22 |
5.87 |
6.79 |
-23% |
-14% |
Ferromanganese MC - Europe (€/t)
1 |
1,427 |
1,682 |
2,366 |
3,254 |
-40% |
-15% |
Silicomanganese - Europe (€/t)
1 |
907 |
1,100 |
1,247 |
1,739 |
-27% |
-18% |
NICKEL |
|
|
|
|
|
|
Ni LME ($/t)2 |
9.23 |
10.99 |
10.00 |
12.51 |
-8% |
-16% |
Ni LME ($/lb)2 |
20,342 |
24,236 |
22,054 |
27,575 |
-8% |
-16% |
SMM NPI Index ($/t)3 |
13,860 |
15,368 |
16,730 |
20,778 |
-17% |
-10% |
Ni ore CIF China 1.8%
($/wmt)4 |
86.8 |
92.2 |
108.9 |
124.8 |
-20% |
-6% |
HPM5 Nickel prices 1.8%/35%
($/wmt) |
47 |
57 |
53 |
56 |
-13% |
-19% |
MINERAL SANDS |
|
|
|
|
|
|
Zircon ($/t) 6 |
2,050 |
2,100 |
2,200 |
2,035 |
-7% |
-2% |
Chloride ilmenite ($/t) 7 |
315 |
325 |
348 |
281 |
-9% |
-3% |
CP grade titanium dioxide ($/t)
8 |
900 |
930 |
850 |
850 |
+6% |
-3% |
1 Quarterly average for market prices, Eramet
calculations and analysis.2 LME (London Metal Exchange) prices.3
SMM NPI 8-12%.4 CNFEOL (China FerroAlloy Online), “Other mining
countries”. 5 Official index for domestic nickel ore prices in
Indonesia.6 Market and Eramet analysis (premium zircon).7 Market
analysis, Eramet analysis.8 Market analysis, Eramet analysis.9
Eramet calculation rounded to the nearest decimal place.
Appendix 4: Financial
glossary
Consolidated performance indicators
The consolidated performance indicators used for
the financial reporting of the Group's results and economic
performance and presented in this document are restated data from
the Group's reporting and are monitored by the Executive
Committee.
Turnover at constant scope and exchange
rates
Turnover at constant scope and exchange rates
corresponds to turnover adjusted for the impact of the changes in
scope and the fluctuations in the exchange rate from one financial
year to the next. The scope effect is calculated as follows: for
the companies acquired during the financial year, by eliminating
the turnover for the current period and for the companies acquired
during the previous period by integrating, in the previous period,
the full-year turnover; for the companies sold, by eliminating the
turnover during the period considered and during the previous
comparable period. The exchange rate effect is calculated by
applying the exchange rates of the previous financial year to the
turnover for the year under review.
Adjusted turnover
Adjusted turnover is presented to provide a better understanding
of the underlying operating performance of the Group's activities.
Adjusted turnover corresponds to turnover including Eramet's share
of the turnover of significant joint ventures accounted for using
the equity method in the Group's financial statements, restated for
the off-take of all or part of the business activity.
As of 30 June 2023, turnover was adjusted to
include the contribution of PT Weda Bay Nickel, a company in which
Eramet owns a 38.7% indirect interest. Eramet owns a 43% interest
in Strand Minerals Pte Ltd, the holding which owns 90% of PT Weda
Bay Nickel and is booked in the Group’s consolidated financial
statements under the equity method. An off-take agreement for
nickel ferroalloys production (NPI) is in place with Tsingshan,
with Eramet holding a 43% interest, and Tsingshan 57%.
A reconciliation with Group turnover is provided
in Note 3 to the Group's consolidated financial statements.
EBITDA (“Earnings
before interest, taxes, depreciation and
amortisation”)
Earnings before financial revenue and other
operating expenses and income, income tax, contingencies and loss
provision, and amortisation and impairment of property, plant and
equipment and tangible and intangible assets.
Adjusted EBITDA
Adjusted EBITDA is presented to provide a better
understanding of the underlying operating performance of the
Group's activities. Adjusted EBITDA corresponds to EBITDA including
Eramet's share of the EBITDA of significant joint ventures
accounted for using the equity method in the Group's financial
statements.
As of 30 June 2023, EBITDA was adjusted to
include the proportional EBITDA of PT Weda Bay Nickel, a company in
which Eramet owns a 38.7% indirect interest. Eramet owns a 43%
interest in Strand Minerals Pte Ltd, the holding which owns 90% of
PT Weda Bay Nickel and is booked in the Group’s consolidated
financial statements under the equity method.
A reconciliation with Group EBITDA is provided
in Note 3 to the Group's consolidated financial statements.
Adjusted leverage
Adjusted leverage is defined as net debt (on a
consolidated basis) to adjusted EBITDA (as defined above), as PT
Weda Bay did not have any external debt during the 2022 and 2023
financial years.
However, in the future, should other significant
joint ventures restated for adjusted EBITDA have external debt, net
debt will be adjusted to include Eramet's share in the external
debt of the joint ventures (“adjusted net debt”). Adjusted leverage
would then be defined as adjusted net debt to adjusted EBITDA, in
compliance with a fair and economic approach to Eramet’s debt.
Manganese ore activity
Manganese ore activity corresponds to Comilog's
mining activities (excluding the activity of the Moanda
Metallurgical Complex, “CMM”, which produces manganese alloys) and
Setrag's transport activities.
Manganese alloys activity
Manganese alloys activity corresponds to the
plants that transform manganese ore into manganese alloys. It
includes the three Norwegian plants comprising Eramet Norway
(“ENO”, i.e., Porsgrunn, Sauda, and Kvinesdal), Eramet Marietta
(“EMI”) in the United States, Comilog Dunkerque (“CDK”) in France
and the Moanda Metallurgical Complex (“CMM”) in Gabon.
Manganese ore FOB cash cost
The FOB (“Free On Board”) cash cost of manganese
ore is defined as all production and overhead costs (R&D
including exploration geology, administrative expenses, sales
expenses, overland transport expenses), which cover all stages of
ore extraction through to shipping to the port of shipment and
loading, and which impact the EBITDA in the company's financial
statements, over tonnage sold for a given period. This cash cost
does not include sea transport or marketing costs. Conversely, it
includes the mining taxes and royalties from which the Gabonese
state benefits.
SLN’s cash cost
SLN’s cash cost is defined as all production and
overhead costs (R&D including exploration geology,
administrative expenses, logistical and commercial expenses), net
of by-products credits (including exports and nickel ore) and local
services, which cover all the stages of industrial development of
the finished product until delivery to the end customer and which
impact the EBITDA in the company’s financial statements, over
tonnage sold.
Appendix 5: Footnotes
1 Definitions for adjusted turnover and adjusted EBITDA, new
Group Alternative Performance Indicators, are presented in the
financial glossary in Appendix 42 TRIR (total recordable injury
rate) = number of lost time and recordable injury accidents for 1
million hours worked (employees and sub-contractors).3 See
Financial glossary in Appendix 4.4 Unless otherwise indicated,
market data corresponds to Eramet estimates based on World Steel
Association production data5 Unless otherwise indicated, price data
corresponds to the average for market prices, Eramet calculations
and analysis; manganese ore price index: CRU CIF China 44% spot
price; manganese alloys price indices: CRU Western Europe spot
price6 See Financial glossary in Appendix 4.7 SLN, ENI and others8
Unless otherwise indicated, market data corresponds to Eramet
estimates9 Class I: produced with a nickel content above or equal
to 99%; Class II: produced with a nickel content below 99%10 LME:
London Metal Exchange; SHFE: Shanghai Futures Exchange11 SMM NPI
8-12% index12 Source: CNFEOL (China FerroAlloy Online)13 For nickel
ore with 1.8% nickel content and 35% moisture content. Indonesian
prices are set according to domestic market conditions, but with a
monthly price floor based on the LME, in compliance with a
government regulation published in April 2020.14 Commissioning at
full capacity in early January 2023, replacing the old plant, whose
phase-out became effective in Q1 202315 See Financial glossary in
Appendix 4.16 High Pressure Acid Leach17 Inspection Générale des
Finances18 Unless otherwise indicated, price data corresponds to
the average for market prices, Eramet calculations and analysis;
Source Zircon premium (FOB prices): Market and Eramet analysis;
Source CP slag (FOB prices): Market and Eramet analysis19 c.90% of
titanium-based end-products20 Titanium dioxide slag, ilmenite,
leucoxene and rutile21 CAM: Cathode Active Material22 LCE: Lithium
Carbonate equivalent, battery grade23 Source: Fastmarkets –
Battery-grade Lithium Carbonate price CIF Asia24 Consensus of main
market analysts.25 Bloomberg forecast consensus for the year
2023.
Eramet (EU:ERA)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Eramet (EU:ERA)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024