[Ferro-Alloys.com] Eramet: Adjusted turnover of €980m in Q3 2023, supported by growth in mining operations

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."

• CSR commitments

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.

• Capital Markets Day

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	Q3 2023	Q3 20222	Chg.3 (%)	9m 2023	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 LCE^22,23 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.

• 2023 outlook

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

€ 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

Appendix 1: Quarterly turnover (IFRS 5)

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	Q3 2023	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 2023
² 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.

• [Editor:tianyawei]