Eramet Group 2023 Results: Confirmation Of Solid Fundamentals For The Group, In A Very Depressed Price Environment In 2023

In presenting the Group’s performance Christel Bories, Group Chair and CEO, noted that “In 2023, the Group demonstrated its ability to withstand low cycle periods and continue its development projects despite the economic situation. The second half confirmed the strong improvement in our operational performance, notably with record manganese production in Gabon and continued strong growth in nickel production in Indonesia. These results enabled us to face the price environment, which was depressed throughout the year, and to achieve a solid performance in terms of cash generation. The 2023 financial year was also marked by the conclusion of our first CSR roadmap, with major progress. At our first Capital Markets Day, we unveiled a new, even more ambitious roadmap, “Act for positive mining”, with targets that will position Eramet among the leading players in responsible mining. In 2024, we will accomplish a new key milestone with the start of our lithium production in Argentina. This ambitious and innovative project will position us as a key player in the production of this metal which is essential for the energy transition. The price environment remains very depressed in early 2024 and we are focusing our efforts on the performance of our operations and the strict control of our cash. Building on the repositioning of our high-quality mining assets’ portfolio, and thanks to the commitment of our teams, our solid fundamentals, as well as our innovations, we are confidently pursuing our responsible development strategy in the new era of metals.”

Among the Eramet Group highlights

• Excellent intrinsic performance in the second half (+€230m, for a total of +€153m over the year) leading to adjusted EBITDA1 at €772m in 2023, in a depressed price environment on a full-year basis (-€1,373m):
  • New record for nickel ore volumes in Indonesia (+72% at 36.3 Mwmt) o
  • Rebound in manganese ore production in Gabon in H2 2023 (+22% vs. H2 2022) reaching stable production over the year (at 7.4 Mt)
  • Very strong decline in selling prices for all of the Group’s markets, notably manganese, and class II nickel
  • Limited decline in input costs, compared to the decline in prices.

Access the full statement here: https://www.eramet.com/wp-content/uploads/2024/02/2024-02-21-Eramet-PR-2023-Results.pdf

Access the presentation here: https://www.eramet.com/wp-content/uploads/2024/02/2024-02-22-Eramet-FY2023-Results-Presentation.pdf

Eramet’s Future Outlook

Global carbon steel production is expected to slightly increase in 2024 in the context of energy costs remaining relatively high. Only India, where Eramet has a strong footprint, is expected to continue posting significant growth in its production, thanks to investments from the State in infrastructures and an automotive sector that continues to grow strongly.

Global demand for manganese ore could decline slightly over the year, given the expected destocking of manganese alloys in China. Manganese ore supply is expected to decline in H1 2024, therefore with the expectation of a deficit versus demand on a full-year basis.

The market consensus, which is currently set at around $4.6/dmtu for 2024, with a lower H1 than H2, expects a decline of close to 4% in the average manganese ore price index (CIF China 44%) compared with 2023.

Global demand for manganese alloys is expected to be relatively stable with a slight increase assuming steel production improves. Supply should continue to adjust accordingly, with several producers likely to resume production and a continued shutdown among those less competitive.

Manganese alloys invoiced selling prices, after declining sharply until early 2024, have recently started to lift in Europe notably given the conflict in the Red Sea which is impacting logistics costs and delivery times for Asia-based producers in the short term.

In Gabon, transported ore volumes should reach between 7.0 Mt and 7.7 Mt, factoring in works to renovate and maintain the railway through SETRAG. Manganese ore production will be adjusted to transport in order to limit inventories at the mine.

The successful start of modular washing plants and a conveyor on the Okouma plateau expect a production capacity of more than 8 Mt per year, as well as productivity gains and a reduction in CO2 emissions in 2024. Manganese alloy production is expected to reach around 700 kt over the year and may be adjusted to market conditions.