Eramet: Adjusted turnover of €761m in Q1 2024
Paris, 25 April 2024, 7:00 a.m.
PRESS RELEASE
Eramet: Adjusted turnover of €761m
in Q1 2024
-
Adjusted turnover1 of €761m
(-19%) reflecting, as expected, a strong negative price effect
(-24%), while the positive volume effect is limited (+2%),
penalised by the decline in SLN volumes sold
- Good
operational performance of the Group’s main mining
activities compared to the unfavourable comparison base of Q1 2023:
- +27% in manganese ore volumes sold
from Gabon
- +52% in nickel ore volumes produced
in Indonesia, but -17% in volumes sold, reflecting the absence of
sales of low-grade saprolites over the quarter, whose
commercialization permit for 2024 is under assessment by the
Indonesian government
- +52% in zircon volumes and +36% in
ilmenite2 sold from Senegal
-
Strong decline in selling prices compared to Q1
2023
-
Neutralization of SLN’s debt in the Group’s
consolidated accounts3
- Group mineral resources
revised upwards on 1 January 20244:
- +52% at 15.1 Mt-LCE in
Argentina
- +19% at 2,193 Mwmt of nickel in
Indonesia
-
2024 outlook set, as expected, against the
background of a lacklustre market environment,
albeit with improved price levels at the start of
Q2
-
Given the prolonged halt in exports of high-grade ore from
Australia, high-grade manganese ore prices should
significantly increase, with a substantial impact on
Eramet’s financial performance in 2024 (a $1/dmtu price variation
on average over the year corresponds to a €255m impact on the
Group’s adjusted EBITDA5)
- Volume
growth targets confirmed in 2024 for the Group’s main
mining activities:
- Manganese ore transported in Gabon:
between 7.0 and 7.7 Mt
- Marketable nickel ore at Weda Bay:
between 40 and 50 Mwmt, depending
on the schedule for approvals, of which a third is limonites
- Lithium carbonate produced at
Centenario: between 5 and 7
kt-LCE
-
Financial performance in H1 2024 expected to be
significantly below that of H2 2024, given the
unfavourable seasonality and the price scenario
-
Continued strict cost control and
confirmation of the controlled capex plan
including the continuation of growth projects (of around
€700m to €750m6 financed by the
Group in 2024)
Christel Bories, Group Chair
and CEO:
"At the start of this second quarter, we remain
focused on achieving our operational performance, strictly managing
our costs and growth capex, especially in Argentina.
Our mining production increased, particularly in
Indonesia and Gabon, reflecting the continuous improvement in our
operational efficiency. We also continued maintenance works on the
Transgabonese railway to be able to increase its transport
capacity.
The market environment remains lacklustre,
albeit with signs of improvement and the outlook of a strong
tension on the supply of manganese ore."
Safety
In Q1 2024, the safety performance improved
versus the same period last year (as well as compared to Q4 2023).
As a result, the TRIR7 was 0.9 at the Group level (vs. 1.1 in Q1
2023), in line with the target in the new CSR roadmap (<1.0).
Nevertheless, the Group mourns the deaths of three sub-contractors
in a helicopter accident on the island of Halmahera. Indonesian
authorities are currently conducting an inquiry into the causes of
this accident.
Decarbonisation
As part of the new CSR roadmap, industrial tests
for partial substitution of metallurgical coke with bio reducers
have started at our manganese alloys plant in Gabon.
Community relations
During the quarter, the Group also initiated two
projects under its “Eramet Beyond” impact investment programme
aimed at supporting communities, particularly with “Lire pour
l’Avenir” (“Read for the future”) in Gabon. Launched in partnership
with the French association Bibliothèques Sans Frontières
(Libraries Without Borders) and the Gabonese Ministry of Education,
this educational initiative seeks to provide learning materials to
students from six high schools located in five municipalities
around the Transgabonese railroad line.
Extra-financial rating
In March 2024, the ratings agency Moody’s
(Vigeo) revised Eramet’s extra-financial performance rating
upwards, scoring 69/100 (vs. 66/100 in 2021), significantly above
the overall average which totalled 54/100, across all sectors.
The term loan, which was renewed last year with
a pool of banks, was entirely drawn for €500m in Q1 2024.
-
Eramet group adjusted turnover by activity (IFRS
5)
|
(Millions of euros)1 |
Q1 20241 |
Q1 20232 |
Change (€m) |
Change3 (%) |
|
Manganese |
|
448 |
440 |
+8 |
+2% |
|
|
Manganese ore activity4,5 |
254 |
209 |
+45 |
+22% |
|
|
Manganese alloys activity4 |
193 |
231 |
-38 |
-16% |
|
Adjusted Nickel4 |
|
259 |
459 |
-200 |
-44% |
|
|
Weda Bay (share of 38.7% - excluding off-take contract) |
106 |
169 |
-63 |
-37% |
|
|
Weda Bay (trading activity, off-take contract) |
32 |
47 |
-15 |
-32% |
|
|
SLN6 |
121 |
243 |
-122 |
-50% |
|
Mineral Sands |
52 |
44 |
8 |
+20% |
|
GCO |
52 |
40 |
+12 |
+30% |
|
Intra-group eliminations7 |
0 |
-12 |
+12 |
n.a. |
|
ETI |
0 |
16 |
-16 |
n.a. |
|
Lithium |
0 |
0 |
0 |
n.a. |
|
Holding and eliminations |
2 |
1 |
+1 |
+100% |
|
ERAMET GROUP adjusted4 |
761 |
944 |
-183 |
-19% |
1 Data rounded to the nearest million. 2
Excluding Aubert & Duval, Sandouville and Erasteel, which in
accordance with the IFRS 5 standard – “Non-current assets held for
sale and discontinued operations”, are presented as operations in
the process of being sold in 2023.3 Data rounded to higher or lower
%. 4 See definition in Appendix 5.5 Turnover linked to external
sales of manganese ore only, including €17m linked to Setrag
transport activity other than Comilog's ore (€13m in Q1 2023). 6
SLN and others.7 Turnover for the sale of ilmenite produced by GCO
to ETI until the date the Norwegian subsidiary was sold.
N.B. 1: all the commented figures for Q1 2024
and Q1 2023 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 Q1 2024 are
calculated with respect to Q1 2023, 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 €761m in Q1
2024, down 19% (-22% at constant scope and exchange rates8, with
+2% of currency effect). This mainly reflects an unfavourable price
effect (-24%) in a depressed market environment, particularly for
manganese and nickel. The volume effect was almost neutral (+2%),
with the positive impact linked to growth in volumes for the
manganese and mineral sands activities largely offset by the
negative impact of the strong decline in SLN sales.
Input costs decreased over the quarter versus Q1
2023. Prices of metallurgical coke and Ultra Low Phos Coke (from
Colombia) declined respectively by around 20%9 and 30%9 compared to
Q1 2023. On the other hand, sea freight prices have risen compared
with Q1 2023 (around +22% for manganese ore exported from Gabon to
China).
Manganese
In Q1 2024, turnover of the Manganese
activities increased by 2% to €448m:
- Sales
for manganese ore activity were up 22% to €254m, driven by the
increase in volumes sold externally (+27% vs. Q1 2023 impacted by
non-recurring logistical incidents) but affected by an unfavourable
price impact,
- Sales
for manganese alloys activity were down by 16% to €193m, owing to a
sharp decline in prices (between -5% and -25% for indices in
Europe), partly offset by an increase in volumes sold
(+7%).
Market trends10 & prices11
Global production of carbon steel, the main
end-product of manganese, remained almost flat (+0.6%) in Q1 2024,
at 479 Mt.
Production in China, which accounts for more
than half of global steel production, declined by 2%, while it
increased by 4% in the rest of the world. Production slightly
declined in North America and Europe (-1% and -2% respectively),
while it continued to increase in India (+10%).
Over the quarter, manganese ore consumption
remained stable at 5.1 Mt; global supply decreased by 7% to 4.9 Mt.
Production strongly declined in Brazil (-74%), notably reflecting
the closure of illegal mines and due to unfavourable prices, it was
also down in Gabon (-9%) despite the growth in volumes produced by
Comilog. South Africa was the only region to post an increase over
the quarter (+12%). Production in Australia was also impacted by
Cyclone Megan in March, which will strongly impact global supply of
high-grade ore over the coming months.
In this context, the overall ore supply/demand
balance was in deficit in Q1 2024. Chinese port ore inventories
stood slightly down to 5.8 Mt at end-March, representing 10 weeks'
consumption. The decline in ore production in Q1 is expected to
impact port inventories in Q2.
The price index for manganese ore (CIF China
44%) averaged $4.3/dmtu over the quarter, down 21% vs. Q1 2023, but
up very slightly compared to Q4 2023.
Compared to high comparatives in Q1 2023, the
price index for refined alloys in Europe (MC Ferromanganese)
declined by 21% in Q1 2024 (averaging €1,419/t), as did that for
standard alloys (Silicomanganese), down 5%, (to €1,097/t). However,
indices were significantly up on Q4 2023, supported by supply
tensions factoring in the sea transport crisis in the Red Sea which
led to delayed deliveries from Asia.
Activities
In Gabon, the Moanda mine posted production of
1.9 Mt in ore, a record level for a first quarter,
up 76% on Q1 2023, which was penalised by the landslide at
end-2022. Transported ore volumes and ore volumes sold externally
increased to a lesser extent (+21% and +27% respectively), reaching
1.6 Mt and 1.5 Mt over the period, factoring in maintenance works
on the railroad line during the quarter to be able to increase the
transport capacity of the Transgabonese railway.
The FOB cash cost12 of manganese ore activity
averaged $2.4/dmtu over the quarter, down 14% compared to Q1 2023.
This change mainly reflects the positive impact of the increase in
volumes.
Sea transport costs per tonne increased by 24%
to $1.1/dmtu vs. Q1 2023, driven by a tighter bulk sea freight
market.
Alloys production totalled 154
kt in Q1 2024 (+2% vs. Q1 2023). Sales amounted to 149 kt (+7% vs.
low levels in Q1 2023) with a more favourable mix over the
period.
The alloys product margins declined in Q1 2024,
mainly driven by the continuing decline in selling prices (more
significantly in Europe than the United States).
Outlook
Global carbon steel production is expected to
slightly increase in 2024. Only India, where Eramet has a strong
footprint selling manganese ores, is expected to continue posting
significant growth in its steel 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. The supply, on the other hand, is expected to
decline significantly due to the extended halt of high-grade
manganese ore exports from Australia.
The current market consensus anticipates a
decline of around 3% in the average manganese ore price index (CIF
China 44%) compared with 2023, i.e., around $4.7/dmtu for 2024,
with H1 expected to be lower than H2. This level does not factor in
the recent price rebound (around $5.0/dmtu currently) which should
significantly increase in 2024.
Global demand for alloys is expected to be
relatively stable while supply could trend upwards again, notably
in Europe given the strong decline in electricity spot prices
observed since February, which could weigh on prices in the short
term.
After rebounding in Europe in Q1 2024, notably
given the conflict in the Red Sea (which also affected logistics
costs), manganese alloys selling prices, may normalise in the
coming months without necessarily reaching the very low levels of
Q4 2023. However, the recent rebound in manganese ore prices could
also lead alloys producers to seek to pass on the cost increase of
this key raw material in their selling prices.
In Gabon, annual transported
ore volumes for 2024 are forecast between 7.0 Mt and 7.7
Mt. Manganese ore production will be adjusted to transportation in
order to limit inventories at the mine.
Manganese alloys production is
forecast to reach around 700 kt over the year and may be adjusted
to market conditions.
Nickel
In Q1 2024, adjusted
turnover1 for the Nickel
activities totalled €259m, including the proportional contribution
of PT Weda Bay Nickel (“PT WBN”):
- At
SLN13, sales decreased by 50% to
€121m, reflecting a strong negative volume effect coupled with an
unfavourable price effect,
- The
share of turnover of PT WBN (excluding the off-take contract)
contributed up to €106m, down 37% due to a strong decline in ore
prices,
- The
trading activity of nickel ferroalloys produced at Weda Bay
(off-take contract on plant production) contributed up to €32m to
the turnover.
Market trends14 & prices
Global stainless-steel production, which is the
main end-market for nickel, was up by 6% to 14.2 Mt in Q1 2024.
Production in China, which accounts for nearly
60% of global production, saw growth of 7% compared to Q1 2023.
Production in the rest of the world was up by 4% with a strong
increase in Indonesia (+35%).
Global demand for primary nickel increased by 8%
from Q1 2023, benefitting from a recovery in demand for
stainless-steel (+8%) and continued sustained demand in the
batteries sector (+14%).
In parallel to this demand growth, global
primary nickel production was up 6% over the quarter. This growth
was supported by NPI15 supply in Indonesia (+15%), as well as the
ramp-up in new projects, notably HPAL16 (+57%) also in Indonesia.
Production for intermediate products continued to grow due to the
development of class I nickel refining capabilities in China, but
also in Indonesia. NPI production in China as well as traditional
ferronickel production declined significantly (-14% and -7%
respectively), with the slowdown or shutdown of production capacity
with a cost profile that is no longer competitive in the current
price environment.
The nickel supply/demand balance (class I and
II17) was thus in slight surplus over the quarter. Nickel
inventories at the LME and SHFE18 strongly increased, reaching 99
kt-Ni at end-March.
In Q1 2024, the LME price
average (price of class I nickel), stood at $16,611/t, down 36% vs.
Q1 2023 and down 3% vs. Q4 2023 with a recovery since the start of
the year, after reaching a low point.
In parallel, the NPI19 price
index (class II nickel) continued to decline, averaging $11,673/t
over the quarter (-31% vs. Q1 2023 and -7% vs. Q4 2023).
The spot price of ferronickel
as produced by SLN (also class II nickel) was set at a level
slightly above prices for NPI, posting a decline of 19% vs. Q1 2023
(+3% vs. Q4 2023).
Nickel ore prices (1.8% CIF
China), as exported by SLN, averaged $69/wmt over the quarter, down
33% vs. Q1 2023 (-20% vs. Q4 2023).
In Indonesia, the official domestic
price index for high-grade nickel ore (“HPM Nickel”)
averaged $36/wmt20, down 42% vs. Q1 2023 (-14% vs. Q4 2023). The
ore price index followed nickel price trends at the LME, with the
price formula indexed to the London-based exchange, with a lag of
approximately one month.
Activities
In Indonesia, following a
campaign of additional drilling, resources at the Weda Bay mine
came out to 2,193 Mwmt of nickel4,21 on 1 January 2024, with an
average grade of 1.23%. They were up by 19% on 2023, with a target
to certify 2,800 Mwmt of nickel in the short term.
In Q1 2024, the mine produced 11.1 Mwmt (for
100%) of marketable ore (+52% vs. Q1 2023), including 8.6 Mwmt in
saprolites (around 6.3 Mwmt high-grade and 2.2 Mwmt low-grade) and
2.5 Mwmt in limonites.
Internal consumption of the PT WBN NPI plant
increased to 0.7 Mwmt and external ore sales (at the other plants
on the industrial site) totalled 6.1 Mwmt, including 5.5 Mwmt in
high-grade saprolites and 0.6 Mwmt in limonites. These sales do not
include low-grade saprolites (3.8 Mwmt in Q1 2023), whose
commercialization permit for 2024 is under review.
Production at the plant reached 7.4 kt-Ni in Q1
2024 (on a 100% basis), down 5%, due to maintenance scheduled at
one furnace. As part of the off-take contract, the Group sold 2.8
kt-Ni over the quarter, down nearly 10%.
In New Caledonia, mining
production amounted to 1.0 Mwmt in Q1 2024, down 32% versus Q1
2023. This decline was due to societal problems and persistent
difficulties obtaining operating permits. This was particularly the
case for the Poum site, where operations have been suspended since
August 2023, but also for the Nepoui site where production declined
by nearly 40% over the period.
As a result and factoring in the very low-price
levels that led to the cancellation of sales, low-grade nickel ore
exports declined to 0.2 Mwmt over the quarter (-62% vs. Q1 2023).
Ferronickel production and volumes sold also declined to 9.1 kt-Ni
(-14%) and 8.7 kt-Ni (-15%) respectively.
Cash cost22 of ferronickel production increased
to $8.8/lb on average in Q1 2024 (vs. $8.3/lb in Q1 2023),
reflecting the impact of the decline in volumes as well as an
unfavourable price and currency effect, partly offset by a decrease
in energy prices.
Outlook
Demand for primary nickel is expected to
increase in Q2 2024 from the previous quarter thanks to an
improvement in stainless-steel in China and a recovery started in
March by the country’s batteries sector.
Global primary nickel supply should also
increase in Q2 with increased NPI production in Indonesia and the
continued ramp-up in new projects (MHP and NPI-to-Matte).
Considering the low number of permits issued to date by the
Indonesian government, there are current tensions in domestic ore
supply in Indonesia, resulting in a premium on ore sold by PT
WBN.
The overall nickel market’s surplus is thus
expected to continue in 2024, albeit to a lesser extent than in
2023.
Nickel prices on the LME have recently rebounded
(around $19,000/t). This is notably due to the American and British
sanctions imposed in April against Russia regarding nickel imports
and exchanges in metal markets23. However, the impact of these
sanctions on the coming months remains uncertain.
In Indonesia, subject to
permitting currently under review, external sales volumes for
nickel ore produced in Weda Bay (on a 100% basis) should reach
between 40 and 50 Mwmt, of which around a third in low-grade
limonite for HPAL plants and an average grade slightly below that
of 2023.
In New Caledonia, SLN continues
to face major challenges and its financial situation remains
critical. In addition, the mining activities it operates in the
Northen Province have been suspended since mid-April. The
administrative process for resumption is underway.
In order to help SLN find more sustainable
solutions enabling the entity to ensure its continuity as a going
concern, while preserving the Group’s balance sheet, the French
State and Eramet reached an agreement, which was signed in April.
The latter notably concerns the conversion of existing loans to SLN
into an instrument akin to equity (undated fixed rate subordinated
bonds, “TSDI”) enabling the neutralisation of the entity’s debt on
the Group’s consolidated financial statements (€320m in total as of
31 March 2024).
Furthermore, Eramet reiterates its decision not
to provide any further financing to SLN.
Mineral Sands
The Mineral Sands activity reported
turnover up 20% to €52m in Q1 2024, reflecting
growth in sold volumes.
Market trends & prices24
In a macroeconomic context that remains
unfavourable for the ceramics sector, the main end-market for
zircon, global demand for this product declined over the quarter
versus Q1 2023, despite replenished inventories among European
ceramists. Zircon production also declined, owing to production
adjustments by some producers, resulting in a supply/demand balance
in slight surplus.
Zircon market prices were down 10% to $1,900/t
FOB in Q1 2024 (stable vs. Q4 2023).
Global demand for TiO225 pigments, the main
end-market for titanium-based products26, recovered in Q1 2024,
notably driven by the end of destocking among Western producers.
Supply for titanium-based products continued to grow, resulting in
a market that remained in surplus.
In Q1 2024, the market price for ilmenite as
produced by Grande Côte Operations (“GCO”) was $300/t FOB, down 9%
from Q1 2023 (stable vs. Q4 2023).
Activities
In Senegal, mineral sands
production at GCO significantly increased, ending at 192 kt over
the quarter (+71%), given the favourable comparatives following a
major breakdown in equipment which affected Q1 2023.
This progress reflects both the improved
equipment availability and an increase in the average heavy metal
grade of the sands being mined over the period.
Ilmenite volumes produced stood at 116 kt, up
51%, and in line with the trend for mineral sands production.
Ilmenite external sales reached 75 kt, including volumes linked to
the long-term supply contract signed with ETI27, which is now
considered an external customer. At comparable scope (including ETI
sales), ilmenite sales increased by 36%2 vs. Q1 2023.
Zircon volumes produced increased by 49% to 14
kt vs. Q1 2023, with sales volumes up 52% to 13 kt.
Outlook
Demand for zircon could post an increase in
2024, notably driven by government policy measures to support the
renovation sector in China. However, the market should remain in
surplus due to the arrival of new production capacity in Australia,
therefore sustaining the pressure on prices started at
end-2023.
Demand for titanium-based products, notably
ilmenite, could also increase, driven by China, and factoring in
low inventory levels among TiO2 pigment producers. Supply, however,
is expected to remain in surplus, factoring in the additional
capacities in China, leading to lower average price levels over the
year.
In Senegal, mineral sands
production in 2024 is still expected to rise to more than 800
kt-HMC.
Lithium
Market trends & prices 28
Lithium carbonate prices (battery-grade, CIF
Asia) were down nearly 80% in the first quarter versus Q1 2023,
averaging $13,971/t-LCE (-30% vs. Q4 2023). This decline is notably
owing to the slowdown in electric vehicle sales worldwide excluding
China, coupled with destocking among producers of cathodes and
batteries.
Activities
In Argentina, lithium resources
from the salar in Centenario-Ratones have been reassessed and
increased by 52% totalling 15.1 Mt-LCE4,21 on 1 January 2024 (vs. 1
January 2023). The average grade for these resources increased by
16% to 407 mg/L.
The construction of the Centenario lithium plant
(Phase I), launched in 2022 is now nearly 95% complete.
At full capacity, Phase I
production is expected to reach 24 kt-LCE with a cash cost12
positioned in the first quartile of the industry cost curve
(estimated at approximately $4.5 to $5.0 per kt-LCE). The annual
EBITDA (at 100%) is estimated between $210 million and $315
million, based on a long-term price assumption ranging from $15 to
$20 per kt-LCE.
Outlook
Demand should continue to grow in 2024
(estimated around +25%), driven by the increased sales of electric
vehicles in China and the emerging energy storage market.
Strong growth in supply is also expected in
2024, driven by the arrival of new projects on the market as well
as the start of production of in expanded existing mines, albeit
conditional on price trends. In the current environment, although
margins for most producers remain positive, some high-cost players
were forced to stop their production (spodumene in Australia and
China), put their plants on maintenance and further delay their
proposed expansions.
The market consensus (battery-grade CIF Asia
lithium carbonate), which currently averages around $15,200/t-LCE
in 2024 expects an improvement from Q2.
In 2024, production volumes of lithium carbonate
(battery-grade) remain estimated between 5 and 7 kt-LCE (100%
basis) in H2.
Despite declining inflation in Europe, the
macroeconomic fundamentals remain depressed at the start of the
second quarter. Europe’s economy suffers from high interest rates
while the US economy is showing more resilience. In China,
industrial production is up significantly but is not enough to
offset the construction crisis which continues to worsen. This
difficult macroeconomic environment, combined with geopolitical
instability and uncertainties surrounding a number of elections,
will continue to weigh on demand across all our markets. However,
supply is expected to decline significantly in the manganese ore
market in 2024, due to the extended suspension of exports of
high-grade ore from Australia.
In 2024, freight prices should reach higher
levels than in 2023, especially given that uncertainties persist
over the situation in the Red Sea. Declining from 2023, the price
of reductants remains at high levels.
Volume growth targets over the year are
confirmed at:
- Between 7.0 and
7.7 Mt of manganese ore transported in Gabon,
- Between 40 and
50 Mwmt of marketable nickel ore at Weda Bay,
depending on the schedule for approvals, of which a third is
limonites,
- Between 5 and
7 kt-LCE of lithium carbonate produced at
Centenario.
The average price consensus29 and exchange rate for the year30
is currently:
- $4.7/dmtu for
manganese ore (CIF China 44%); this level does not account for the
recent price rebound (currently around $5/dmtu) that should
significantly increase in 2024,
- $16,800/t for LME
nickel,
- $15,200/t-LCE for
lithium carbonate (battery-grade, CIF Asia),
- The €/$ exchange rate expected at
1.09.
Invoiced selling prices for manganese alloys
should remain below 2023 on average for the year.
The price of ferronickel is expected to remain
slightly above the SMM NPI 8-12% index. Domestic prices for nickel
ore sold in Indonesia are indexed to the LME and change
accordingly.
Sensitivity of adjusted EBITDA to the price of
metals and to the exchange rate are presented in Appendix 4. As a
reminder, a $1/dmtu high-grade manganese ore price variation on
average over the year corresponds to a €255m impact on the Group’s
adjusted EBITDA.
For illustrative purposes,
based on the current consensus prices for the year and the volume
target range detailed above, adjusted EBITDA is
expected to be between €750m and €900m in 2024.
Financial performance in H1 2024 is also expected to be
significantly below that of H2 2024, given the unfavourable
seasonality, but also market prices that are expected to improve in
H2.
The amount of investments
financed by the Group6 is confirmed between €700m and
€750m in 2024, of which:
- Current
capex: close to €250m,
- Growth
capex: close to €500m, notably aimed at sustaining growth
in production and transport for ore in Gabon (around €150m), as
well as to develop the Lithium project in Argentina (around
€250m).
Calendar
30.05.2024: Shareholders’ General Meeting
25.07.2024: Publication of 2024 half-year results
24.10.2024: Publication of 2024 Group third-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 MounierT. +33 7 65 26 46
83fanny.mounier@eramet.com |
Appendix 1: Quarterly turnover (IFRS 5)
|
€ million1 |
Q1 2024 |
Q4 2023 |
Q3 2023 |
Q2 2023 |
Q1 20235 |
|
|
|
|
|
|
|
|
Manganese |
448 |
504 |
528 |
505 |
440 |
|
Manganese ore activity2 |
254 |
288 |
330 |
262 |
209 |
|
Manganese alloys activity2 |
193 |
216 |
198 |
244 |
231 |
|
Nickel |
153 |
215 |
261 |
228 |
290 |
|
Adjusted Nickel3,4 |
259 |
356 |
396 |
356 |
459 |
|
Mineral Sands |
52 |
84 |
55 |
93 |
44 |
|
GCO |
52 |
72 |
48 |
79 |
40 |
|
Intra-group eliminations5 |
0 |
1 |
-11 |
-16 |
-12 |
|
ETI |
0 |
11 |
18 |
31 |
16 |
|
Lithium |
0 |
0 |
0 |
0 |
0 |
|
Holding, elim. and others |
2 |
(1) |
0 |
3 |
1 |
|
Eramet group published financial statements |
655 |
803 |
845 |
828 |
775 |
|
Eramet group adjusted3,4 |
761 |
943 |
980 |
956 |
944 |
1 Data rounded to the nearest million.2 See
financial glossary in Appendix 5.3 Adjusted turnover defined in the
financial glossary in Appendix 5.4 Excluding Aubert & Duval,
Sandouville and Erasteel, which in accordance with the IFRS 5
standard – “Non-current assets held for sale and discontinued
operations”, are presented as operations in the process of being
sold in 2023.5 Adjusted turnover restated in Q1 2023, following
update of indicator definition (see 2023 half-year results press
release published on 26 July 2023).
Appendix 2: Productions and
shipments
|
In thousands of tonnes |
Q1 2024 |
Q4 2023 |
Q3 2023 |
Q2 2023 |
Q1 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANGANESE |
|
Manganese ore and sinter
production |
1,926 |
2,620 |
2,149 |
1,543 |
1,097 |
|
Manganese ore and sinter
transportation |
1,638 |
1,737 |
2,038 |
1,489 |
1,359 |
|
External manganese ore sales |
1,466 |
1,646 |
1,830 |
1,245 |
1,158 |
|
Manganese alloys production |
154 |
153 |
171 |
160 |
151 |
|
Manganese alloys sales |
149 |
175 |
154 |
170 |
140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NICKEL |
|
|
Nickel ore production (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
SLN |
1,014 |
1,422 |
1,461 |
1,405 |
1,482 |
|
|
Weda Bay Nickel (100%) – marketable production (High-grade
Saprolites) |
6,342 |
4,898 |
4,247 |
3,802 |
3,958 |
|
|
Ferronickel production – SLN |
9.1 |
11.7 |
12.8 |
9.7 |
10.6 |
|
|
Low-grade nickel ferroalloys
production – Weda Bay Nickel (kt of Ni content –
100%) |
7.4 |
8.7 |
9.0 |
7.9 |
7.8 |
|
|
Nickel ore sales (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
SLN |
247 |
668 |
675 |
734 |
657 |
|
|
Weda Bay Nickel (100%) |
6,079 |
9,761 |
8,323 |
7,753 |
7,318 |
|
|
o/w Saprolites |
5,479 |
8,734 |
8,323 |
7,753 |
7,318 |
|
|
Limonites |
600 |
1,027 |
- |
- |
- |
|
|
Ferronickel sales – SLN |
8.7 |
10.9 |
13.2 |
10.1 |
10.2 |
|
|
Low-grade nickel ferroalloy sales – Weda Bay
Nickel/Off-take Eramet (kt of Ni content) |
2.8 |
3.8 |
3.5 |
3.9 |
3.1 |
|
|
|
|
|
|
|
|
|
MINERAL SANDS |
|
|
|
Mineral Sands production |
192 |
161 |
161 |
194 |
112 |
|
Ilmenite production |
116 |
113 |
102 |
129 |
77 |
|
Zircon production |
14 |
11 |
13 |
15 |
9 |
|
Ilmenite sales (external) |
75 |
132 |
58 |
88 |
20 |
|
Zircon sales |
13 |
17 |
8 |
14 |
9 |
Appendix 3: Price and index
|
|
Q1 2024 |
Q4 2023 |
Q1 2023 |
Chg. Q1 2024 – Q1 20238 |
Chg. Q1 2024 – Q4 20238 |
|
|
|
|
|
|
|
|
MANGANESE |
|
|
|
|
|
|
Mn CIF China 44% ($/dmtu)1 |
4.29 |
4.27 |
5.44 |
-21% |
+1% |
|
Ferromanganese MC - Europe
(€/t)1 |
1,419 |
1,350 |
1,808 |
-22% |
+5% |
|
Silicomanganese - Europe
(€/t)1 |
1,097 |
934 |
1,149 |
-5% |
+17% |
|
|
|
|
|
|
|
|
NICKEL |
|
|
|
|
|
|
Ni LME ($/t)2 |
16,611 |
17,191 |
26,079 |
-36% |
-3% |
|
Ni LME ($/lb)2 |
7.53 |
7.80 |
11.83 |
-36% |
-3% |
|
SMM NPI Index ($/t)3 |
11,673 |
12,576 |
16,986 |
-31% |
-7% |
|
Ni ore CIF China 1.8%
($/wmt)4 |
69.4 |
86.6 |
103.0 |
-32% |
-20% |
|
HPM5 Nickel prices 1.8%/35%
($/wmt) |
36 |
42 |
62 |
-42% |
-14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MINERAL SANDS |
|
|
|
|
|
Zircon ($/t)6 |
1,900 |
1,900 |
2,100 |
-10% |
- |
|
Chloride ilmenite ($/t)7 |
300 |
300 |
302 |
-9% |
- |
|
Lithium |
|
|
|
|
|
Lithium carbonate, battery-grade, CIF
Asia($/t LCE)9 |
13,971 |
20,096 |
68,000 |
-79% |
-30% |
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 Eramet calculation rounded to the
nearest decimal place. 9 Lithium carbonate price
index: Fastmarkets – battery-grade spot price CIF Asia
Appendix 4: Sensitivities of Group adjusted
EBITDA
|
Sensitivities |
Change |
Impact on adjusted EBITDA |
|
Manganese ore prices (CIF China 44%) |
+$1/dmtu |
c.€255m1 |
|
Manganese alloys prices |
+$100/t |
c.€65m1 |
|
Ferronickel prices - SLN |
+$1/lb |
c.€95m1 |
|
Nickel ore prices (CIF China 1.8%) - SLN |
+$10/wmt |
c.€30m1 |
|
Nickel ore prices (HPM nickel) – Weda Bay |
+$10/wmt |
c.€160m1 |
|
Lithium prices (lithium carbonate, battery-grade,
CIF Asia) |
+$1,000/t LCE |
c. €5m |
|
Exchange rate |
-$/€0.1 |
c.€175m |
|
Oil price per barrel (Brent) |
+$10/bbl |
c.-€15m1 |
1 For an exchange rate of $/€1.11.
Appendix 5: 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 31 December 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 5 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 31 December 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 5 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.
Ex-Works cash cost for lithium
carbonate
The Ex-Works cash cost for lithium carbonate produced by Eramine
is defined as all the production and structure costs covering the
entire extraction and refining stages required to make the finished
or final product upon leaving the plant, and which have an impact
on EBITDA in the company's financial statements, over tonnage sold
for a given period. This cash cost does not include land and sea
transport costs, mining taxes and royalties paid to the Argentine
State, or marketing costs.
Appendix 6: Footnotes
1 Definitions for adjusted turnover and adjusted
EBITDA are presented in the financial glossary in Appendix 52 At
comparable scope, i.e., a total of 55 kt in Q1 2023, including 35
kt of internal sales to ETI 3 Conversion of the existing debt of
SLN into undated fixed-rate subordinated bonds (“TSDI” – Titres
Subordonnées à Durée Indéterminée), an instrument akin to equity 4
Total mineral resources (“inferred”, “indicated” and “measured”)
for nickel and drainable for lithium as of January 1, 2024, see
section 1.3 of the 2023 Universal Registration Document entitled
“Exploration results, mineral resources and ore reserves”5 See
Appendix 4 Sensitivities of Group adjusted EBITDA
6 Excluding Tsingshan's capital contributions to
the Centenario project7 TRIR (total recordable injury
rate) = number of lost time and recordable injury
accidents for 1 million hours worked (employees and
subcontractors)8 See Financial glossary in Appendix 59 Source:
Resources-net CAMR for Nut coke spot price, Europe; Eramet analysis
for Ultra Low Phos Coke (from Colombia)10 Unless otherwise
indicated, market data corresponds to Eramet estimates based on
World Steel Association production data11 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 price12 See Financial glossary in Appendix 513
SLN and others14 Unless otherwise indicated, market data
corresponds to Eramet estimates15Nickel Pig Iron (“NPI”)16 High
Pressure Acid Leach17 Class I: produced with a nickel content above
or equal to 99%; Class II: produced with a nickel content below
99%18 LME: London Metal Exchange; SHFE: Shanghai Futures Exchange19
SMM NPI 8-12% index20 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 2020.21 Certified by the JORC Code22See financial glossary in
Appendix 523 LME et CME24 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 analysis25
c.90% of titanium-based end-products26 Titanium dioxide slag,
ilmenite, leucoxene and rutile27 Contract signed as part of the
sale of the Norwegian subsidiary to INEOS at end-September 202328
Unless otherwise indicated, price data corresponds to the average
for market prices, Eramet calculations and analysis; Lithium
carbonate price index: Fastmarkets – battery-grade spot price CIF
Asia 29 Eramet analysis based on a panel of the main sell side and
market analysts30 Bloomberg forecast consensus as of 31/03/2024 for
the year 2024
- 25 04 2024 - Eramet - PR - Q1 2024
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