Eramet: Record year with EBITDA above €1.5bn and very strong
deleveraging
Paris, 22 February 2023, 6:30 p.m.
PRESS RELEASE
Eramet: Record year with EBITDA
above €1.5bn and very strong deleveraging
- EBITDA1
at €1.5bn and Adjusted EBITDA1,2 at
€1.9bn (+58%), including the proportional
contribution of Weda Bay:
-
Intrinsic performance of €180m,
driven by strong growth in volumes in Gabon and
Indonesia: 7.5 Mt (+7%) of manganese ore in Moanda, 21.1
Mwmt (x 2) of nickel ore in Weda Bay
-
High price levels in H1 for all
of the Group’s markets, combined with a favourable €/$
currency effect
-
New record year for manganese alloys in a very
favourable price environment in H1 and with a good control of
rising energy and reductant costs
-
Record increase in Free Cash-Flow
(FCF) to €824m (+57%) and
continued Group deleveraging with
net debt of €344m and leverage of
0.2x
-
Net income, Group share at
€740m
-
Significant progress in CSR, particularly
regarding climate, biodiversity and safety, with one of the lowest
accident rates in the sector
-
Finalisation of Eramet’s repositioning, with the
planned completion at end-March of the divestment of Aubert
& Duval and the receipt of an exclusive put
option agreement for Erasteel
-
Solid fundamentals enabling to accelerate on
growth projects in metals for the energy
transition: lithium, nickel-cobalt and longer-term,
battery recycling
-
Proposal of a dividend of €3.5
per share (+40%), in line with the Group’s capital allocation
policy which priorities deleveraging and growth projects
-
2023 outlook which is in line with a less buoyant
and inflationary macroeconomic context:
- Ore volumes
up: more than 30
Mwmt of nickel ore in Indonesia and
more than 7.5 Mt of
manganese ore in Gabon
- Average prices expected to
decline compared to 2022, notably for manganese
alloys
- Energy and
reductant costs to remain at a high
level
- Group adjusted
EBITDA expected at around
€1.2bn in 2023, including the proportional
contribution of Weda Bay
Christel Bories, Group Chair and CEO:
- Eramet achieved
a record year in 2022, with further increases in our mining
productions. The price environment was very favourable in the first
half, before a strong slowdown in the second, in a context of
inflation and significantly rising energy prices. The year ended
also marks the finalisation of our strategic repositioning and the
acceleration of our deleveraging.
Eramet now has solid operating assets and the
financial resources required to develop its ambitious and promising
projects, whether in lithium in Argentina and France, nickel-cobalt
in Indonesia, or battery recycling in France. These medium-term
strong growth projects position us as a leading player in mining
and metals for the energy transition.
In 2023, in an uncertain economic environment,
we remain focused on the strict control of our cash, delivering
excellence in our operational management and making good progress
in our priority projects.
Driven by the commitment of our employees
worldwide, we are firmly focused on responsible mining and our
ambition is to provide efficient and sustainable solutions to meet
the essential challenges of economic development and the energy
transition.
The Group continued to successfully implement
its CSR Roadmap 2018-2023, ahead of its targets, with further
progress in 2022 (see Appendix 7) resulting in a performance rate
of 115% compared to the target:
- Safety is
constantly improving with a 27% decline in the number of accidents
versus 2021. The TRIR3 was 1.6
for the Group and 1.1 for continuing operations,
achieving one of the lowest rates in the Mining and Metals industry
(Safety Performance Report 2021, ICMM, July 2022).
- A
40% reduction in the Group's carbon
intensity since 2018, significantly exceeding the 2023
target initially set for a 26% reduction.
- Continued
actions to promote biodiversity:
- GCO returned 85
hectares of land to the Senegalese government, which was
rehabilitated and replanted with species chosen by local
communities,
- Eramet
rehabilitated 17 hectares in Gabon thanks to an innovative drone
seed planting initiative, in collaboration with the start-up
Morfo.
The Group continued to implement the Initiative for
Responsible Mining Assurance (IRMA)
standard in its activities, conducting two
self-assessments in 2022: the Lithium project in Argentina and the
mineral sands site in Senegal.
Our CSR progress was again recognised in 2022 by extra-financial
rating agencies. The Carbon Disclosure Project (CDP) upgraded the
Group's Climate Change rating from B to A-, ranking Eramet
among the best in the industry.
In addition, the Group received a B- score as
part of CDP’s Water Security ratings for its first participation in
the assessment. This score reflects the efforts made at its
industrial and mining sites and, more specifically, its commitment
to the responsible management of the aquatic environment and to the
management of runoff water in operational and rehabilitated
areas.
Moreover, in 2022, Eramet updated its
materiality matrix of extra-financial risks, in collaboration with
more than 600 internal and external stakeholders. The results of
this consultation, published in the 2022 Universal Registration
Document, will be used to update the Group's CSR objectives.
Eramet’s Board of Directors met on 22 February
2023, chaired by Christel Bories, and approved the financial
statements for the 2022 financial year4 which will be submitted for
approval at the Shareholders’ General Meeting on 23 May 2023.
-
Eramet group key figures (in accordance with the
IFRS 5 standard)
(Millions of euros)1 |
20222 |
20212 |
Chg. (€m) |
Chg.3 (%) |
Turnover |
5,014 |
3,668 |
+1,346 |
+37% |
Adjusted EBITDA4 |
1,897 |
1,204 |
+693 |
+58% |
EBITDA |
1,553 |
1,051 |
+502 |
+48% |
Current operating income (COI) |
1,280 |
784 |
+496 |
+63% |
Net income from continuing operations |
930 |
791 |
+139 |
+18% |
Net income from discontinued operations |
(156) |
(426) |
+270 |
n.a. |
Net income, Group share |
740 |
298 |
+442 |
+148% |
|
|
|
|
|
Group Free Cash-Flow (continuing operations) |
824 |
526 |
+298 |
+57% |
|
|
|
|
|
|
|
|
|
|
|
31/12/223 |
31/12/213 |
Chg. (€m) |
Chg.2 (%) |
Net debt (Net cash) |
344 |
936 |
-592 |
-63% |
Shareholders' equity |
2,245 |
1,335 |
+910 |
+68% |
Adjusted leverage (Net debt-to-adjusted EBITDA
ratio) |
0.2 |
0.8 |
-0.6 pts |
n.a. |
Leverage (Net debt-to-EBITDA ratio) |
0.2 |
0.9 |
-0.7 pts |
n.a. |
Gearing (Net debt-to-Shareholders’ equity
ratio) |
15% |
70% |
-55 pts |
n.a. |
Gearing within the meaning of bank
covenants5 |
2% |
51% |
-49 pts |
n.a. |
ROCE (COI/capital employed6 for previous
year) |
51% |
30% |
+21pts |
n.a. |
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 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 Adjusted
EBITDA and adjusted leverage are defined in the financial glossary
in Appendix 9.5 Net debt-to-Shareholders’ equity ratio, excluding
IFRS 16 impact and French state loan to SLN.6 Total shareholders'
equity, net debt, site restoration provisions, restructuring and
other social risks, less long-term investments, excluding Weda Bay
Nickel capital employed.
N.B. 1: all the commented figures for FY 2022
and FY 2021 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 FY 2022 are
with respect to FY 2021, unless otherwise specified. “H1”
corresponds to the first half of the year, “H2” to the second half
and “Q1, Q2, Q3, Q4” to the quarters.
The Group’s turnover amounted
to €5,014m in 2022, up significantly by 37% (+25%
at constant exchange rates5). This growth was driven by a very
favourable price and currency environment, mainly in H1, as well as
excellent operational performance in the manganese ore business
(+13% in volumes sold).
Group EBITDA totalled
€1,553m.
Adjusted EBITDA1,2 (including
the proportional contribution of Weda Bay) amounted to
€1,897m, a very strong increase (+58% vs. 2021),
notably reflecting:
- The
positive impact of external factors of around
€530m, including a very favourable price effect
(€960m, of which nearly half linked to manganese alloys) as well as
a favourable currency effect (around €230m) partly offset, among
other factors, by the strong increase in input costs (around €450m,
mainly reductants and energy);
- A
positive intrinsic performance of
€180m for activities in the new scope, mainly
reflecting the growth in nickel ore volumes sold in Weda Bay
(around €160m) and manganese ore sales (around €90m) despite an
increase in fixed costs to support the growth in volumes (around
€50m) and the difficulties at SLN (around €30m).
Net loss for discontinued
operations amounted to -€156m, mainly
reflecting the asset impairment booked for Erasteel (-€126m).
Net income, Group share for the
year was €740m. It also includes the share of
income in Weda Bay (€258m) as well as the asset impairment related
to SLN (-€124m, Group share).
Capex accounted for
€588m, excluding operations in the process of
being sold (€62m), and €436m excluding capex
linked to the Lithium project (€152m), entirely financed by
Tsingshan via a capital increase of the Argentine subsidiary. It
includes €200m in organic growth capex, mainly in Gabon (€168m).
Current capex increased, amounting to €236m in 2022.
Free Cash-Flow (“FCF”) totalled
€824m, including a contribution from Weda
Bay of €237m.
Net debt stood
at €344m at 31 December 2022, a
reduction of nearly €600m6 due to the
Group’s strong cash generation, despite negative
FCF of -€214m in discontinued operations.
The change in net debt also includes dividends paid to Eramet
shareholders (-€72m) and Comilog minority shareholders (-€32m) in
respect of the 2021 financial year.
The leverage ratio was 0.2x,
the lowest level achieved by the Group for the last ten years.
Moreover, a proposal to pay out a
dividend of €3.5 per
share in respect of the 2022 financial year will be made
at the Shareholders’ General Meeting on 23 May 2023, representing
an increase of 40%. This proposal is in line with the Group’s
capital allocation policy which priorities deleveraging, to
maintain leverage below 1x on average over the cycle, as well as
capex in its growth projects and shareholders return.
As of 31 December 2022, Eramet’s
liquidity, including undrawn credit lines,
remained high at €2.6bn. In January 2023, Eramet
renewed and extended the term loan for an amount of €480m with a
pool of banks. The maturity date of the new loan is January 2027,
with a floating rate, amortising from January 2025. The loan was
drawn down for €270m mainly to refinance the outstanding amount of
the former loan.
(Millions of euros)1 |
20222 |
20212 |
Change (€m) |
Change3 (%) |
CONTINUING OPERATIONS |
Manganese BU |
Turnover |
3,151 |
2,267 |
884 |
+39% |
|
EBITDA |
1,402 |
910 |
492 |
+54% |
Manganese ore activity4,5 |
Turnover |
1,527 |
1,063 |
464 |
+44% |
|
EBITDA |
722 |
387 |
335 |
+87% |
Manganese alloys activity4 |
Turnover |
1,624 |
1,204 |
420 |
+35% |
|
EBITDA |
680 |
522 |
158 |
+30% |
|
|
|
|
|
|
Nickel BU |
Turnover |
1,392 |
1,046 |
346 |
+33% |
|
Adjusted EBITDA6 |
430 |
266 |
164 |
+62% |
|
|
|
|
|
|
Mineral Sands BU |
Turnover |
465 |
349 |
116 |
+33% |
|
EBITDA |
184 |
137 |
47 |
+34% |
|
|
|
|
|
|
Lithium BU |
Turnover |
0 |
0 |
n.a. |
n.a. |
|
EBITDA |
(12) |
(5) |
(7) |
n.a. |
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS |
Aubert & Duval |
Turnover |
553 |
493 |
60 |
+12% |
|
EBITDA |
(47) |
(44) |
(3) |
n.a. |
|
|
|
|
|
|
Erasteel |
Turnover |
273 |
184 |
89 |
+48% |
|
EBITDA |
23 |
13 |
10 |
+77% |
|
|
|
|
|
|
Sandouville |
Turnover |
11 |
154 |
(143) |
-93% |
|
EBITDA |
(2) |
(27) |
25 |
n.a. |
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 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 See
financial glossary in Appendix 9.5 Turnover linked to external
sales of manganese ore only, including €64m linked to Setrag
transport activity other than Comilog's ore (vs. €82m in 2021).6
Adjusted EBITDA and adjusted leverage are defined in the financial
glossary in Appendix 9.
Manganese BU
In 2022, in Gabon,
Moanda confirmed its status as the world’s
leading manganese mine with production that almost doubled in the
last five years and a positioning in the first quartile of the cash
cost curve.
The Manganese BU posted a very strong
increase in EBITDA to €1,402m (+54%).
EBITDA for the manganese ore activity
was up very significantly to €722m7 (+87%),
reflecting the growth in volumes sold externally (+13%) in a
favourable price and currency environment.
EBITDA for the alloys activity posted a
new record at €680m (+30%). This strong increase was driven by the
very strong increase in selling prices in H1,
partially offset by significantly rising
energy and coke prices; volumes sold declined by 3% with a less
favourable product mix.
Market trends8 & prices9
Global production of carbon steel, the main
end-product for manganese, was down by more than 4% in 2022 to
1,855 Mt.
Production in China, which accounts for more
than 50% of global production, declined by 2% due to the health
situation and the slowdown in the construction sector. Production
also declined in the rest of the world (-7%), notably in North
America (-7%) and Europe (-10%), where inflation and the energy
crisis led to production cuts. Among the major markets, only India
increased production (+6%).
As a result, annual manganese ore consumption
decreased by 3% to 20.8 Mt in 2022. Conversely, global ore
production increased by 2% to 21.1 Mt. The production increases in
Gabon (+15%) and South Africa (+7%) more than offset the decline in
production in Brazil (-37%) and the decline in Australia (-7%).
In this context, the surplus supply increased
slightly, and Chinese port ore inventories stood at 6.1 Mt at
year-end, an increase compared to 2021.
The average CIF China 44% manganese ore price
index stood at $6.0/dmtu in 2022, up 13% on a full-year basis. The
price was strongly driven up in H1 with an anticipated recovery in
the Chinese economy, reflected at the same time in a historically
high price differential between high-grade ore (44%), which is
coveted for its better energy performance, and lower grade South
African ore (37%). The price then contracted in H2, reflecting a
return to a market in significant surplus.
The price index (CRU) for refined alloys in
Europe (MC Ferromanganese) was up 11% on a full-year basis, with a
5% increase for standard alloys (Silicomanganese). Conversely,
these indices declined by 34% and 31% respectively in H2 compared
to H1. Faced with uncertainty weighing on demand, steelmakers
reduced their production in H2 and reduced their contractual
commitments to volume floor levels.
Activities
In Gabon, the manganese ore
production target of 7.5 Mt was reached thanks to the mine
expansion programme combined with continuous operational
improvement.
The improvement in Setrag’s logistical
performance enabled the achievement of nearly 7.2 Mt in transported
and shipped ore volumes (+10% vs. 2021). However, the transport of
ore was penalised at end-December by the suspension of rail traffic
following a landslide.
Factoring in the consumption of the Group’s
alloys plants during the year, external sale volumes stood at 6.5
Mt in 2022 (+13%).
The FOB cash cost10 of manganese ore activity
was $2.3/dmtu (+$0.1/dmtu vs. 2021). Favourable effects linked to
growth in volumes and currency were offset by the increase in sales
taxes11 and fixed costs to support the ramp-up in production.
Sea transport costs per tonne decreased to
$1.1/dmtu with freight prices remaining stable on average in 2022
and gains made from the optimised transport solution deployed at
the beginning of the year.
Manganese alloys production
volumes declined by 9% to 677 kt, reflecting the optimisation of
production methods in order to adapt to market conditions and to
limit the impact of energy price increases (for the part of energy
supply unprotected by long-term contracts). Sales were down 3% to
698 kt. Over the year, the mix remained unfavourable, with a lower
share of refined alloys sold.
The manganese alloys margin significantly
increased in 2022, driven by the increase in selling prices and
despite the higher cost of metallurgical coke (used as a reducing
agent). Conversely, it strongly declined in H2 compared to H1,
reflecting the decrease in selling prices, a less favourable mix,
and the increase in the cost of manganese ore consumed by the
plants.
Outlook
Global carbon steel production is expected to
remain limited in 2023, in a context of inflation and high
energy costs. Demand from the construction sector is slowing in
several regions. Only India is expected to post growth again,
driven by the country's momentum.
As a result, demand for manganese ore could
decline over the year, while supply capacity should continue to
increase. The recent increase in the CIF China 44% price index may
not continue due to excessive supply.
Demand for manganese alloys is expected to
decrease very slightly, notably in Europe, while uncertainties in
the automotive market, still affected by the shortage of
semiconductors, should continue to weigh on refined manganese
alloys. As a result, the alloys supply should continue
adjusting.
In 2023, manganese alloys invoiced selling
prices could stabilise to the level of end-2022/early 2023 and thus
remain significantly below the average prices for 2022, notably
with a very strong decline in North America.
In Gabon, following the
landslide on the railway, mining activities were halted for nearly
four weeks in January. Rail traffic gradually recovered at the end
of the month. This recovery, combined with the continued organic
growth in ore, enables to target a production of 7.5 Mt in 2023,
which is stable compared to 2022, despite the loss of nearly one
month of production (approximately 0.4 Mt). Transported volumes
should amount to more than 7.5 Mt
The planned shutdowns as part of the multi-year
furnace rehabilitation programme and the adjustment of the
production to energy prices, will result in a decline in alloys
production in 2023.
Nickel BU
In 2022, Weda Bay in Indonesia became
the world’s leading nickel mine, with
a positioning in the 1st
quartile of the cash cost curve of the
industry.
Adjusted
EBITDA2 for the BU amounted to
€430m, up 62%, including a proportional contribution from Weda Bay
which more than doubled in 2022 to €344m, thanks to excellent
operational performance in the mine, as well as a favourable price
and currency environment.
EBITDA for
SLN12 declined to €75m (-26%),
reflecting the subsidiary’s persistent difficulties in a context of
very bad weather conditions.
Market trends13 & prices
Global stainless steel production, which is the
main end-market for nickel, was down by more than 4% to 55.2 Mt in
2022. Production in China declined by 2% on a full-year basis,
despite a rebound in Q4 (+18% vs. Q3) due to the lifting of health
measures. In the rest of the world, production declined by 7%,
mainly owing to the energy crisis in Europe.
However, global demand for primary nickel
continued to grow, increasing by 5% in 2022 to 2.9 Mt, mainly
driven by strong growth in the batteries sector (+37%).
In parallel, global primary nickel production
grew by more than 15% in 2022 to 3.1 Mt, supported by the NPI
supply in Indonesia (+27%), as well as the strong ramp-up in new
projects, notably HPAL14. Conversely, NPI production15 in China as
well as traditional production were down by 5% and 4%
respectively.
The nickel supply/demand balance (class I and
II16) was thus in surplus in 2022. Nickel inventories at the LME
and SHFE17 remained low and totalled 58 kt at year-end, considering
the inventories in the developing battery sector.
In 2022, the LME price average (price of class I
nickel), was $25,638/t, a strong increase versus 2021 (+39%),
albeit with a significant decline in H2 (-14% vs. H1).
The average for the NPI price index18 as sold at
Weda Bay was $18,808/t, up 9% on a full-year basis (-19% in H2 vs.
H1).
The spot price of ferronickel as produced by SLN
(class II nickel) was set at a level very significantly below the
LME and approached prices for NPI (also class II nickel), notably
in H2, posting an increase of 17% over the year (-23% in H2 vs.
H1).
The nickel ore market remained tight over the
period, factoring in a limited supply. 1.8% CIF China nickel ore
prices increased on average by 10% to $116/wmt19 over the year
(-14% in H2 vs. H1).
In Indonesia, the official domestic price index
for high-grade nickel ore (“HPM Nickel”) averaged approximately
$54/wmt20, an increase of 35% (-8% in H2).
Activities
In Indonesia, the Weda Bay mine
continued its exceptional ramp-up with the sale of 21.1 Mwmt in
2022 (for 100%), of which 3.9 Mwmt in low-grade ore. This
represents an increase of more than 100%.
External ore sales, at the plants on the
industrial site other than the Joint Venture (JV) plant, amounted
to 17.9 Mwmt, with internal consumption for nickel ferroalloys
production remaining stable at 3.2 Mwmt.
Production at the plant reached 36.6 kt-Ni over
the year (on a 100% basis), a decline of 6% due to operating
difficulties in Q4. The volumes sold by Eramet as part of the
off-take contract for production remained stable, contributing
€278m to Group turnover, up 21%, in a favourable price
environment.
The excellent operational performance of Weda
Bay was again reflected in a substantial contribution to Group FCF
over the period of €237m.
In New Caledonia, mining
production amounted to 5.4 Mwmt, stable compared to 2021,
reflecting persistent operating difficulties in the mines in a
context of very bad weather conditions (with a rainfall volume
nearly 90% higher in 2022 compared to the average of the last six
years). Low-grade nickel ore exports stood at 3.0 Mwmt, stable
compared to 2021.
Ferronickel production and sales were up 5% to
40.9 kt-Ni and 41.3 kt-Ni respectively. However, over the year, the
operation of the Doniambo plant was strongly disrupted by ore and
power supply difficulties.
Cash cost21 amounted to $8.2/lb on average in
2022, up 17%, reflecting a very strong increase in energy costs,
mainly electricity and coal (which price more than doubled vs.
2021), but also fixed costs, combined with a decline in
productivity. These effects were partly offset by a favourable
currency and ore price impact.
As a result, SLN generated negative Free
Cash-Flow in H2, with a total of -€70m at the local level for the
year. A plan to reduce costs and preserve cash was introduced by
the subsidiary in Q4 to address its difficulties.
Outlook
In 2023, demand for primary nickel is expected
to continue growing thanks to the development of the batteries
sector and the recovery of the stainless steel industry.
In parallel, primary nickel production could
also increase, notably in Indonesia with the continued growth of
NPI and new projects for batteries (HPAL, intermediate products and
mattes).
In Indonesia, the Weda Bay mine
should continue its exceptional ramp-up in 2023, with a marketable
target (on a 100% basis) of more than 30 Mwmt, of which
approximately 15 Mwmt in low-grade ore. The nickel ferroalloys
production (on a 100% basis) is expected to total approximately
38kt-Ni.
In New Caledonia, in response
to the structural difficulties of the SLN, a short term answer is
being implemented to drastically reduce costs and focus efforts on
production. In light of its critical financial situation, the
French State granted SLN a €40m loan in early February to enable
the entity to meet its short-term cash requirements. This new loan,
together with the implementation of the contingency progress plan,
makes it possible to avoid the risk of suspension of payments.
The Temporary Offshore Power Plant, aimed at
ensuring a continued electricity supply for the Doniambo site was
commissioned at full capacity in early January 2023, replacing the
old plant, which will be phased out in Q1 2023.
Assuming normal functioning of operations, SLN’s
nickel ore exports are expected to total around 3.5 Mwmt in 2023
with ferronickel production for the Doniambo plant above 45
kt-Ni.
Strategic growth projects
In 2022, Eramet continued, in partnership with
BASF, studies related to the Sonic Bay project,
the hydrometallurgical project (high pressure acid leach or
HPAL18)
intending to produce battery-grade nickel
and cobalt intermediate products using laterite ores
extracted from the Weda Bay mine, with a view to making an
investment decision in H2 2023.
The start of production is currently envisaged
for 2026. The latest studies have helped to specify and update the
performances of the plant and planned production levels, which are
expected to be around 60 kt-Ni and 6 kt-Co per year (in MHP22
content, an intermediate mixed hydroxide product).
This project would position Eramet as a
participant in the electric vehicle battery chain by adding value
to the ore mined at Weda Bay.
In addition, the Group continues its exploration
and business development activity targeting nickel laterites, with
a particular emphasis on Indonesia.
Mineral Sands BU
The Mineral Sands BU delivered a record
performance with EBITDA at €184m, up more than 30%, mainly
reflecting a favourable price and currency environment, and partly
offset by the increase in input costs.
Market trends & prices23
Global demand for zircon remained stable in
2022, driven by the ceramics sector in H1 (approximately 50% of the
end-product). However, a slowdown was observed in Q3 due to the
global economic decline, impacting ceramics consumption as well as
foundry and refractory activity. Parallel to this, zircon
production was slightly down, with a decline of 1%. The market
remained in slight deficit over the year.
Zircon market prices were well-oriented over the
year and averaged $2,093/t FOB, (+40% vs. 2021), while starting a
trend reversal at the end of the year.
Global demand for TiO2 pigments24 remained
stable in comparison to the records achieved in 2021. This results
from sustained production in TiO2 pigments25 (approximately 90% of
the end-market for titanium-based products) in H1, partly offset by
a decline in demand in Q4, linked to the large-scale destocking of
end products. In a pressured environment in H1, the market started
to decelerate in Q3 before ending the year with a surplus.
The average market price for CP titanium dioxide
slag, as produced by Eramet in the ETI (Eramet Titanium &
Iron's) plant in Norway, increased to $858/t in 2022 (+10%).
Activities
In Senegal, mineral sands
production declined by 8% to 742 kt in 2022, due to a lower average
content in the area mined compared to 2021.
Zircon production decreased by 11% to 57 kt, and
sale volumes totalled 59 kt, a decline of 7%.
In Norway, CP grade titanium
slag production amounted to 188 kt in 2022, down 10%, owing to the
reduction of production in the second half of the year, in order to
limit the impact of significantly rising energy prices for the part
of supply unprotected by long-term contracts.
The optimisation of production at the plant also
made it possible to limit the negative impact of the strong
increase of reducing agent costs over the year (notably the cost of
thermal coal which spot price more than doubled compared to 2021,
despite a decline of more than 30% in Q4 22 vs. Q3 2226).
Sales volumes also decreased to 175 kt (-20%)
due to extremely low inventory levels at end-2021.
Outlook
Demand for zircon is expected to slow in 2023,
still with some uncertainties (logistics, energy prices in Europe,
construction market in China). The market could be in slight
surplus, which would result in the normalisation of prices in 2023
on the back of a record year.
Demand for titanium-based products is expected
to remain constrained, leading to average price levels in 2023 that
are likely to be slightly lower than those reported in 2022.
In Senegal, mineral sands
production in 2023 is expected to be equivalent to that of 2022.
The commissioning of the dry mining unit at end-2022 made it
possible to offset the lower average content in the mined area of
the deposit. This unit, as well as higher content from the deposit
in 2024, will enable a significant increase in production from
2024.
In Norway, major ten-yearly
maintenance works planned at the ETI plant, as well as various
de-bottlenecking operations, should enable the plant’s capacity to
be increased to 230 kt of slag per year from 2024 (+7%). These
works, which will last two and a half months, will significantly
limit production in H1. In addition, in response to high energy
prices and constrained margins, the plant will continue to adapt
its production to economic and market conditions, as was
successfully done in 2022.
Lithium BU
Lithium carbonate prices remained at very high
levels in 2022 (nearly $71,400/t LCE27 on average, x4 vs. 2021), in
a context of very significant growth in demand for this critical
metal for the energy transition. They currently amount to more than
$70,000/t LCE27 and the long-term price forecast, based on the
market consensus, is now $17,800/t LCE.
In Argentina, the construction
of the Centenario lithium plant (Phase 1), launched in 2022, is
continuing according to the announced schedule, with commissioning
of the plant in Q1 2024 and a full ramp-up in production to 24 kt
LCE28 (100% basis), in mid-2025.
Based on the market consensus price forecast,
and factoring in an expected positioning in the 1st quartile of the
cash cost curve of the industry, estimated EBITDA
(at 100%), after ramp-up, is expected to total around
$300m29 per year, with a very high Internal Rate of Return
(IRR).
Capex linked to the project in 2023, estimated
at around €310m, will mainly be financed by Tsingshan.
Together with its partner in Phase 1, Eramet is
continuing a feasibility study into a Phase 2 expansion of
the project in order to reach an annual total production
capacity of around 75 kt LCE. An investment decision could be taken
by the end of the year.
In France, Eramet and
Électricité de Strasbourg (ÉS) announced in January 2023 their
ongoing collaboration by signing an exclusive Memorandum of
Understanding (MoU) with a view to jointly studying the development
of lithium production in the Alsace region from geothermal brines.
The envisaged annual production would be approximately 10,000
tonnes of lithium carbonate and corresponds to 15 to 20% of
France's lithium needs (by 2030). It could start before the end of
the decade subject to a Final Investment Decision (FID), which
would take place within four years.
In addition, the exploration and business
development activity targeting brine-based lithium projects remains
a priority for the Group.
Battery recycling in France
In France, Eramet is considering becoming a
major player in recycling across Europe through its ReLieVe
project in partnership with SUEZ, from the collection and
dismantling of end-of-life batteries to their recovery in the form
of metal salts in an almost infinite closed-loop recycling
process.
The Group is therefore continuing
pre-feasibility studies into the potential establishment of a
battery pre-treatment production plant in collaboration with SUEZ,
as well as a hydrometallurgical refinery using extraction and
refining processes developed by Eramet. The potential scale of the
proposed recycling facility should enable the processing of up to
50 kt of battery modules per year.
Eramet was recently awarded material financial
grants of around €80m, notably by the European Union.
The Group has started the construction of a
pre-industrial demonstration facility at its research and
innovation centre near Paris and is currently finalising
discussions to reserve a location for an initial battery recycling
facility in the Dunkirk area (northern France). Activities could
start by 2027, subject to a FID.
This project would position Eramet
upstream and downstream of the electric vehicle battery
chain.
In accordance with the IFRS 5 standard –
“Non-current assets held for sale and discontinued operations”, the
Aubert & Duval, Erasteel and Sandouville entities are presented
in the Group’s consolidated financial statements as operations in
the process of being sold for the 2021 and 2022 financial
years:
-
The sale of the Sandouville plant to Sibanye-Stillwater was closed
in February 2022, for a net sale price of around €86m.
-
Regarding the divestment of Aubert & Duval, the transaction is
expected to be completed at end-March, subject to the satisfaction
of one last regulatory approval,
-
Regarding the divestment of Erasteel, Eramet has today been granted
an exclusive put option from the Syntagma Capital fund. The
transaction is expected to be completed in the months ahead, once
the proposal has been submitted to employee representative bodies
and the usual conditions precedent have been waived.
Aubert &
Duval30,31
The global aerospace sector, which represents
approximately 70% of A&D turnover, returned to pre-Covid crisis
levels, leading to a strong increase in the subsidiary’s order
book.
A&D turnover ended at €553m in 2022, up 12%,
with a 30% increase for the aerospace sector, which posted €373m.
Conversely, Energy and Defence sector sales declined by 16% to
€123m.
Activity was strongly affected by the very sharp
increases in energy costs, notably electricity (which cost more
than doubled on average in 2022) and rising raw material costs with
an impact on both EBITDA and FCF, in the absence of an automatic
pass-through in commercial contracts.
As a result, EBITDA was negative at -€47m
(slightly down vs. 2021) and the subsidiary’s cash consumption
amounted to €220m, including disbursements as part of the
divestment agreement.
Erasteel30
Erasteel’s turnover increased 48%, totalling
€273m in 2022. Growth in sold volumes of high-speed steels was also
supported by the positive impact of reinvoicing raw material and
energy price increases to customers. Recycling activity (batteries
and catalysts) also posted an increase of 7% to €21m.
As such, EBITDA almost doubled, ending at €23m
in 2022.
The cash consumption of €14m for the year
reflects the increase in working capital requirement (WCR),
resulting from strong growth in activity and the increase in
materials costs.
The high level of Erasteel’s order book enables
the entity to face the first half of 2023 with confidence, despite
the macroeconomic uncertainties weighing on its main markets.
The climate of geopolitical and macroeconomic
uncertainties and the inflationary context continue to weigh on all
of the Group’s markets, with a trend reversal in demand and prices
in line with Q4 2022. The latter is to a greater or lesser extent,
depending on markets and regions. Stainless steel is expected to
rebound while carbon steel should stabilise.
Strong uncertainties also remain regarding
freight (with its costs significantly reduced currently, but which
could rise again over the year, while remaining at lower levels
than observed in 2022) as well as reducing agents and energy costs.
The latter, which were down compared to 2022 at the start of this
year, could remain at a historically high level, which would weigh
on the performance of metallurgical activities. However, the Group
continues to benefit from long-term supply contracts that cover
approximately 80% of its electricity needs.
The Group is expected to invest nearly
€600m in capex in 2023, excluding the operations
in the process of being sold and excluding the
share of the Lithium project financed by Tsingshan. On the
one hand, this capital expenditure includes nearly €300m in current
capex and, on the other, approximately €300m in organic growth
capex. The latter is mainly intended to continue,
but also to sustain growth in
production and transport for ore in Gabon (around
€200m), as well as to develop Phase 1 of the Lithium project in
Argentina (around €50m).
Decisions will be made in 2023 on major growth
projects, including Sonic Bay and Lithium Phase 2, which could lead
to capex expenditure from 2023. The amount of this expenditure
remains to be determined depending on the date of the
decision.
As part of its strategic roadmap, Eramet is
targeting new records:
- More
than 30 Mwmt of marketable nickel ore at
Weda Bay, of which approximately 15 Mwmt of low-grade ore,
- More
than 7.5 Mt of manganese ore transported
in Gabon, despite the loss of nearly one month's production
(approximately 0.4 Mt) following the landslide on the railway.
Invoiced selling prices for manganese alloys
should remain significantly below 2022 on average for the year,
particularly in North America, while the consensus for average
manganese ore prices is $5.2/dmtu.
The price of ferronickel should be set at a
level slightly above the SMM NPI 8-12% index but well below the
consensus for the LME nickel price. Consensus for the LME is
$23,100/t for 202332. Domestic prices for nickel ore sold in
Indonesia are indexed to the LME and change accordingly.
The €/$ exchange rate is expected at
1.0933 for 2023.
Based on the above production targets and price
forecasts, and factoring in energy and reductant costs which remain
high, the Group's adjusted
EBITDA2 would be around
€1.2bn in 2023, including the
proportional contribution of Weda Bay.
Thanks to its solid fundamentals and the
finalisation of its repositioning towards highly cash-generating
Mining and Metals activities, the Group is focusing on the
development of its projects to produce the metals required for the
energy transition, and to meet the needs of this fast-growing
market in the years to come.
Calendar
23.02.2023: 2022 annual results presentation
A live Internet webcast of the 2022 annual
results presentation will take place on Thursday 23 February 2023
at 10:30 a.m. (Paris time), on our website: www.eramet.com.
Presentation material will be available at the time of the
webcast.
27.04.2023: Publication of 2023 first-quarter turnover
23.05.2023: Shareholders’ General Meeting
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
CONTACT Director of Investor Relations
Sandrine Nourry-Dabi T. +33 1 45 38 37 02
sandrine.nourrydabi@eramet.com |
PRESS
CONTACT Media relations manager
Fanny Mounier
fanny.mounier@eramet.com T. +33 7 65 26 46 83 Image
7 Marie Artzner T. +33 1 53 70 74 31 | M.
+33 6 75 74 31 73 martzner@image7.fr |
Appendix 1: Reconciliation tables
2022 reported reconciliation table
before IFRS 5
|
2022 |
|
|
|
|
|
|
|
2022 |
(in millions of euros) |
Before IFRS 5
treatment |
|
Aubert & Duval CGU |
Erasteel CGU |
Sandouville CGU |
Restatementsand
eliminations |
Total discontinued
operations |
|
reported |
|
|
|
|
|
|
|
|
|
|
Turnover |
5 851 |
|
553 |
273 |
11 |
|
837 |
|
5 014 |
|
|
|
|
|
|
|
|
|
|
Current operating
income |
1 288 |
|
(50) |
23 |
(2) |
37 |
8 |
|
1 280 |
|
|
|
|
|
|
|
|
|
|
Operating income |
893 |
|
(71) |
(111) |
13 |
37 |
(132) |
|
1 025 |
|
|
|
|
|
|
|
|
|
|
Net
income from dicontinued
operations |
|
|
(90) |
(121) |
13 |
42 |
(156) |
|
(156) |
2021 reported reconciliation table
before IFRS 5
|
2021 |
|
|
|
|
|
|
|
2021 |
(in millions of euros) |
Before IFRS 5
treatment |
|
Aubert & Duval CGU |
Erasteel CGU |
Sandouville CGU |
Restatementsand
eliminations |
Total discontinued
operations |
|
reported |
|
|
|
|
|
|
|
|
|
|
Turnover |
4 499 |
|
493 |
184 |
154 |
|
831 |
|
3 668 |
|
|
|
|
|
|
|
|
|
|
Current operating
income |
751 |
|
(57) |
12 |
(27) |
40 |
(32) |
|
784 |
|
|
|
|
|
|
|
|
|
|
Operating income |
545 |
|
(394) |
17 |
19 |
26 |
(332) |
|
879 |
|
|
|
|
|
|
|
|
|
|
Net
income from dicontinued
operations |
|
|
(488) |
15 |
9 |
39 |
(426) |
|
791 |
Appendix 2:
Quarterly turnover (IFRS 5)
€ million1 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
FY 2022 |
FY 2021 Restated |
Manganese BU |
630 |
873 |
926 |
722 |
3,151 |
2,267 |
Manganese ore activity2 |
315 |
465 |
439 |
308 |
1,527 |
1,063 |
Manganese alloys activity2 |
316 |
407 |
487 |
414 |
1,624 |
1,204 |
Nickel BU3 |
331 |
300 |
409 |
352 |
1,392 |
1,046 |
Mineral Sands BU |
142 |
99 |
134 |
90 |
465 |
349 |
Lithium BU |
0 |
0 |
0 |
0 |
0 |
0 |
Holding, elim. and
others |
4 |
0 |
1 |
1 |
6 |
6 |
Eramet grouppublished IFRS 5 financial
statements4 |
1,107 |
1,272 |
1,470 |
1,165 |
5,014 |
3,668 |
1 Data rounded to the nearest million.2 See
financial glossary in Appendix 9.3 Nickel BU excluding Sandouville
(discontinued operation).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 2022 and 2021. See reconciliation tables in Appendix 1.
Appendix 2b: Reconciliation of quarterly
turnover
€ million1 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
Q1 2022 |
FY 2022 |
FY 2021 Restated |
Eramet grouppublished IFRS 5 financial
statements2 |
1,107 |
1,272 |
1,470 |
1,165 |
5,014 |
3,668 |
Aubert & Duval |
153 |
122 |
137 |
141 |
553 |
493 |
Erasteel |
72 |
63 |
74 |
64 |
273 |
184 |
Sandouville |
0 |
0 |
0 |
11 |
11 |
154 |
Eramet group before IFRS 5 |
1,332 |
1,456 |
1,682 |
1,381 |
5,851 |
4,499 |
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 2022 and 2021. See reconciliation
tables in Appendix 1.
Appendix 3: Productions and
shipments
In thousands of tonnes |
H2 2022 |
Q4 2022 |
Q3 2022 |
H1 2022 |
Q2 2022 |
Q1 2022 |
FY 2022 |
FY 2021 |
|
|
|
|
|
|
MANGANESE BU |
Manganese ore and sinter production |
3,915 |
1,854 |
2,061 |
3,624 |
1,862 |
1,762 |
7,539 |
7,024 |
Manganese ore and sinter transportation |
3,782 |
1,734 |
2,048 |
3,385 |
1,765 |
1,620 |
7,167 |
6,544 |
External manganese ore sales |
3,593 |
1,753 |
1,840 |
2,944 |
1,535 |
1,409 |
6,537 |
5,765 |
Manganese alloys production |
296 |
132 |
164 |
381 |
193 |
188 |
677 |
747 |
Manganese alloys sales |
356 |
166 |
190 |
342 |
186 |
156 |
698 |
716 |
|
|
|
|
|
|
NICKEL BU |
Nickel ore production (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
SLN |
2,950 |
1,490 |
1,460 |
2,444 |
1,290 |
1,154 |
5,394 |
5,378 |
Weda Bay Nickel (100%) – marketable production (high-grade) |
7,024 |
3,539 |
3,485 |
8,115 |
3,552 |
4,563 |
15,139 |
9,899 |
Ferronickel production – SLN |
20.5 |
11.0 |
9.5 |
20.4 |
10.5 |
9.9 |
40.9 |
39.0 |
Low-grade nickel ferroalloys production –
Weda Bay Nickel (kt of Ni content – 100%) |
17.0 |
8.1 |
8.9 |
19.6 |
9.6 |
10.0 |
36.6 |
39.0 |
Nickel ore sales (in thousands of wet
tonnes) |
|
|
|
|
|
|
|
|
SLN |
1,558 |
982 |
576 |
1,462 |
830 |
632 |
3,020 |
2,949 |
Weda Bay Nickel (100%) |
10,512 |
7,581 |
2,931 |
7,451 |
3,576 |
3,875 |
17,963 |
6,559 |
Ferronickel sales – SLN |
21.3 |
10.7 |
10.6 |
20.0 |
10.8 |
9.2 |
41.3 |
39.2 |
Low-grade nickel ferroalloy sales – Weda
Bay Nickel/Off-take Eramet (kt of Ni content) |
7.3 |
3.2 |
4.1 |
8.5 |
4.2 |
4.3 |
15.8 |
15.7 |
|
|
|
|
|
|
MINERAL SANDS BU |
Mineral Sands production |
356 |
186 |
170 |
386 |
188 |
198 |
742 |
804 |
Zircon production |
27 |
13 |
14 |
30 |
15 |
15 |
57 |
64 |
Titanium dioxide slag production |
88 |
40 |
48 |
100 |
48 |
52 |
188 |
209 |
Zircon sales |
28 |
14 |
14 |
31 |
16 |
15 |
59 |
63 |
Titanium dioxide slag sales |
83 |
44 |
39 |
92 |
52 |
40 |
175 |
220 |
Appendix 4: Price and index
|
Q4 2022 |
H2 2022 |
H1 2022 |
FY 2022 |
Q4 2021 |
H2 2021 |
H1 2021 |
FY 2021 |
Chg. H2 2022 – H1 20228 |
Chg. 2022 – 20218 |
|
|
|
|
|
|
|
|
|
|
|
MANGANESE BU |
|
|
|
|
|
|
|
|
|
|
Mn CIF China 44% ($/dmtu)1 |
4.40 |
5.14 |
6.79 |
5.97 |
5.61 |
5.49 |
5.06 |
5.27 |
-24% |
+13% |
Ferromanganese MC – Europe
(EUR/t) 1 |
1,950 |
2,158 |
3,254 |
2,706 |
3,480 |
2,996 |
1,886 |
2,441 |
-34% |
+11% |
Silicomanganese – Europe (EUR/t)
1 |
1,163 |
1,205 |
1,739 |
1,472 |
1,709 |
1,607 |
1,191 |
1,399 |
-31% |
+5% |
|
|
|
|
|
|
|
|
|
|
|
NICKEL BU |
|
|
|
|
|
|
|
|
|
|
Ni LME ($/lb)2 |
11.50 |
10.75 |
12.51 |
11.63 |
8.99 |
8.83 |
7.93 |
8.38 |
-14% |
+39% |
Ni LME ($/t)2 |
25,349 |
23,702 |
27,575 |
25,638 |
19,818 |
19,472 |
17,485 |
18,478 |
-14% |
+39% |
SMM NPI Index ($/t)3 |
16,945 |
16,837 |
20,778 |
18,808 |
19,721 |
19,256 |
15,339 |
17,297 |
-19% |
+9% |
Ni ore CIF China 1.8%
($/wmt)4 |
105.3 |
107.1 |
124.8 |
116.0 |
121.1 |
115.4 |
95.4 |
105.4 |
-14% |
+10% |
HPM5 Nickel prices 1.8%/35%
($/wmt) |
51 |
52 |
56 |
54 |
43 |
42 |
38 |
40 |
-8% |
+35% |
|
|
|
|
|
|
|
|
|
|
|
MINERAL SANDS BU |
|
|
Zircon ($/t)6 |
2,100 |
2,150 |
2,035 |
2,093 |
1,780 |
1,655 |
1,338 |
1,496 |
+6% |
+40% |
CP-grade titanium dioxide
($/t)7 |
880 |
865 |
850 |
858 |
820 |
810 |
753 |
781 |
+2% |
+10% |
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), market
prices in Q2 2022 were adjusted after analysis of additional
transactions7 Market analysis, Eramet analysis.8 Eramet calculation
rounded to the nearest decimal place.
Appendix 5:
Performance indicators of continuing
operations (IFRS 5)
€ million1 |
20222 |
2021Restated2 |
Change (€m) |
Change3 (%) |
|
|
|
|
|
Manganese BU |
Turnover |
3,151 |
2,267 |
884 |
+39% |
|
EBITDA |
1,402 |
910 |
492 |
+54% |
|
COI4 |
1,255 |
769 |
486 |
+63% |
|
FCF |
835 |
490 |
345 |
+70% |
Activity Mn ore5 |
Turnover |
1,527 |
1,063 |
464 |
+44% |
|
EBITDA |
722 |
387 |
335 |
+87% |
|
FCF |
371 |
126 |
245 |
+194% |
Activity Mn alloys5 |
Turnover |
1,624 |
1,204 |
420 |
+35% |
|
EBITDA |
680 |
522 |
158 |
+30% |
|
FCF |
464 |
364 |
100 |
+27% |
Nickel BU |
Turnover |
1,392 |
1,046 |
346 |
+33% |
|
Adjusted
EBITDA6
EBITDA |
43086 |
266113 |
164(27) |
+62%-24% |
|
COI |
14 |
37 |
(23) |
-62% |
|
FCF |
148 |
111 |
37 |
+33% |
Mineral Sands BU |
Turnover |
465 |
349 |
116 |
+33% |
|
EBITDA |
184 |
137 |
47 |
+34% |
|
COI |
140 |
94 |
46 |
+49% |
|
FCF |
105 |
108 |
(3) |
-3% |
Lithium BU |
Turnover |
0 |
0 |
n.a. |
n.a. |
|
EBITDA |
(12) |
(5) |
(7) |
n.a. |
|
COI |
(13) |
(5) |
(8) |
n.a. |
|
FCF |
(175) |
(24) |
(151) |
n.a. |
|
|
|
|
|
|
Holding,
elim. |
Turnover |
6 |
6 |
0 |
n.a. |
and others |
EBITDA |
(107) |
(103) |
(4) |
n.a. |
|
COI |
(116) |
(112) |
(4) |
n.a. |
|
FCF |
(89) |
(159) |
70 |
n.a. |
|
|
|
|
|
|
GROUP total |
Turnover |
5,014 |
3,668 |
1,346 |
+37% |
(IFRS5)3 |
Adjusted EBITDA6
EBITDA |
1,8971,553 |
1,2041,051 |
693502 |
+58%+48% |
|
COI |
1,280 |
784 |
496 |
+63% |
|
FCF |
824 |
526 |
298 |
+57% |
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 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 Current
operating income (COI). 5 See financial glossary in Appendix 9.6
Adjusted EBITDA and adjusted leverage are defined in the financial
glossary in Appendix 9.
Appendix 5b:
Performance indicators of operations in
the process of being sold (IFRS 5)
€ million1 |
20222 |
2021Restated2 |
Change (€m) |
Change3 (%) |
|
|
|
|
Aubert & Duval |
Turnover |
553 |
493 |
60 |
+12% |
|
EBITDA |
(47) |
(44) |
(3) |
n.a. |
|
COI4 |
(50) |
(57) |
7 |
n.a. |
|
FCF |
(220) |
(124) |
(96) |
n.a. |
Erasteel |
Turnover |
273 |
184 |
89 |
+48% |
|
EBITDA |
23 |
13 |
10 |
+77% |
|
COI |
23 |
12 |
11 |
+92% |
|
FCF |
(14) |
(11) |
(3) |
n.a. |
Sandouville |
Turnover |
11 |
154 |
(143) |
-93% |
|
EBITDA |
(2) |
(27) |
25 |
n.a. |
|
COI |
(2) |
(27) |
25 |
n.a. |
|
FCF |
3 |
(48) |
51 |
n.a. |
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 2022 and 2021. See reconciliation
tables in Appendix 1.3 Data rounded to higher or lower %.4 Current
operating income (COI).
Appendix 6: Sensitivities of Group adjusted
EBITDA
Sensitivities |
Change |
Impact on adjusted EBITDA |
Manganese ore prices (CIF China 44%) |
+$1/dmtu |
c.€275m1 |
Manganese alloys prices |
+$100/t |
c.€60m1 |
Ferronickel prices - SLN |
+$1/lb |
c.€90m1 |
Nickel ore prices (CIF China 1.8%) - SLN |
+$10/wmt |
c.€35m1 |
Nickel ore prices (HPM nickel, 1.8%, 35% moisture)
– Weda Bay |
+$10/wmt |
c.€90m1 |
Exchange rate |
-$/€0.1 |
c.€220m |
Oil price per barrel (Brent) |
+$10/bbl |
c.€(20)m1 |
1 For an exchange rate of $/€1.09
Appendix 7 - 2018-2023 CSR roadmap progress
Commitment to people |
Indicator |
2018 |
2022 |
2023 xTarget |
1 - Ensure the
Health and Safety of employees and subcontractors |
FR2 incident rate / # of fatalities |
8.3 / 1 |
1.6 / 0 ü |
<4 / 0 |
2 - Build skills and promote talent and career development |
% of employees trained per year |
71% |
85% |
100% |
3 - Strengthen employee engagement |
Employees engagement rate |
67% |
n.a.2 |
>75% |
4 - Integrate and foster the richness of diversity |
% of women managers |
22% |
26% |
30% |
5 - Be a valued and contributing partner to our host
communities |
% of sites engaging with local stakeholders% of sites having
implemented investment programme to contribute to local
communities |
Ref. Year |
100% ü |
100% |
|
|
|
|
|
Commitment to economic
responsibility |
|
|
|
|
6 - Be an energy transition leader in the metals sector |
Diversification in projects related to EV batteries |
Ref. Year |
þ |
þ |
7 - Actively contribute to the development of the circular economy
|
Low-grade ore and tailings recovered |
Ref. Year |
2,311 Mt ü |
2 Mt |
Waste recovered |
Ref. Year |
185 kt ü |
10 kt |
8 - Be a reference company in terms of respect for human
rights |
Mature Level in the Shift reporting for the expectations of the UN
Guiding Principles on Business and Human Rights (UNGPs) |
Ref. Year |
þ |
þ |
9 - Be an ethical partner of choice |
% of S&P1 teams trained on anti-corruption |
Ref. Year |
100% ü |
100% |
10 - Be a responsible company of reference in the M&M
sector |
% of high-risk suppliers / customers aligned with Eramet’s CSR
commitments |
Ref. Year |
90% / 99% |
100% |
|
|
|
|
|
Commitment to the planet |
|
|
|
|
11 - Reduce our atmospheric emissions |
t ducted dust emitted by industrial facilities |
Ref. Year |
(69)% |
(80)% |
12 - Protect water resources and accelerate the rehabilitation of
our mining sites by fostering biodiversity |
Ratio of rehabilitated areas to cleared areas (cumulated over the
period 2019-2023) |
Ref. Year |
1.2 ü |
>1 |
13 - Reduce our energy and climate footprint |
tCO2/t outgoing product |
Ref. Year |
(40)% ü |
(26)% |
1 Sales & Purchasing teams2 No survey performed in 2022,
last one performed in 2021 with 70% engagement
rateü 2023 target already reached in
2022þ Performance in line to reach 2023 target
Appendix 8:
Performance indicators
Operational performance by
division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions
of euros) |
Operations Department |
Holding and |
Total |
High |
|
|
Total |
|
Manganese |
Nickel |
Sand |
Lithium |
other eliminations, |
of continuing |
performance |
Sandouville |
Eliminations |
continuing |
|
|
|
Minerals |
|
and others |
operations |
Alloys |
|
|
and |
|
|
|
|
|
|
|
|
|
|
discontinued |
|
|
|
|
|
|
|
|
|
|
|
FY
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover |
3 151 |
1 392 |
465 |
- |
6 |
5 014 |
826 |
11 |
|
5 851 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
1 402 |
86 |
184 |
(12) |
(107) |
1 553 |
(24) |
(2) |
37 |
1 564 |
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
1 255 |
14 |
140 |
(13) |
(116) |
1 280 |
(27) |
(2) |
37 |
1 288 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
generated by operating activities |
1 124 |
- |
157 |
(23) |
(142) |
1 116 |
(146) |
5 |
16 |
991 |
|
|
|
|
|
|
|
|
|
|
|
Industrial
investments (intangible assets and property, plant &
equipment) |
273 |
85 |
52 |
109 |
11 |
530 |
63 |
- |
|
593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover |
2 267 |
1 046 |
349 |
- |
6 |
3 668 |
677 |
154 |
|
4 499 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
910 |
113 |
137 |
(5) |
(103) |
1 051 |
(32) |
(27) |
38 |
1 031 |
|
|
|
|
|
|
|
|
|
|
|
Current
operating income |
769 |
37 |
94 |
(5) |
(112) |
784 |
(45) |
(27) |
38 |
751 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow
generated by operating activities |
728 |
39 |
129 |
(20) |
(164) |
713 |
(84) |
(42) |
58 |
644 |
|
|
|
|
|
|
|
|
|
|
|
Industrial
investments (intangible assets and property, plant &
equipment) |
244 |
35 |
21 |
5 |
7 |
312 |
46 |
6 |
|
364 |
|
|
|
|
|
|
|
|
|
|
|
Turnover and investments by
region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions
of euros) |
France |
Europe |
North |
China |
Other |
Oceania |
Africa |
South |
Total |
|
|
|
America |
|
Asia |
|
|
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
(destination of sales) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial year 2022 |
313 |
1 215 |
294 |
1 057 |
1 261 |
76 |
128 |
670 |
5 014 |
|
|
|
|
|
|
|
|
|
|
Financial year
2021 |
253 |
966 |
657 |
604 |
985 |
57 |
115 |
31 |
3 668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial investments (intangible assets and property,
plant & equipment) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial year 2022 |
9 |
50 |
13 |
1 |
- |
84 |
263 |
110 |
530 |
|
|
|
|
|
|
|
|
|
|
Financial year
2021 |
9 |
42 |
2 |
- |
- |
35 |
219 |
5 |
312 |
|
|
|
|
|
|
|
|
|
|
Consolidated performance indicators –
Income statement
|
|
|
|
|
|
|
|
(in millions of
euros) |
Financial year |
Financial year |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Turnover |
5 014 |
3 668 |
|
|
|
|
|
|
|
|
|
EBITDA |
1 553 |
1 051 |
|
|
|
|
|
|
|
|
|
Amortisation and
depreciation of non-current assets |
(271) |
(259) |
|
Provisions for
liabilities and charges |
(2) |
(8) |
|
|
|
|
|
|
|
|
|
Current operating
income |
1 280 |
784 |
|
|
|
|
|
|
|
|
|
(Impairment of
assets)/reversals |
(221) |
117 |
|
Other operating
income and expenses |
(34) |
(22) |
|
|
|
|
|
|
|
|
|
Operating income |
1 025 |
879 |
|
|
|
|
|
|
|
|
|
Financial income
(loss) |
(89) |
(111) |
|
Share of income
from associates |
258 |
121 |
|
Income taxes |
(264) |
(98) |
|
|
|
|
|
|
|
|
|
Net
income from continuing operations |
930 |
791 |
|
|
|
|
|
|
|
|
|
Net income from
discontinued operations (1) |
(156) |
(426) |
|
|
|
|
|
|
|
|
|
Net
income for the period |
774 |
365 |
|
|
|
|
|
|
|
|
|
- Attributable to
non-controlling interests |
34 |
67 |
|
- Attributable to Group
share |
740 |
298 |
|
|
|
|
|
|
|
|
|
Basic earnings
per share (in euros) |
25,81 |
10,42 |
|
|
|
|
|
|
|
|
|
(1) Pursuant to IFRS 5 – "Non-current assets held for sale and
discontinued operations”, the Sandouville, Erasteel and Aubert
& Duval CGUs are shown as discontinued operations. |
Consolidated performance indicators –
Net financial debt flow table
|
|
|
|
|
|
(in millions
of euros) |
Financial year |
Financial year |
|
2022 |
2021 |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
EBITDA |
1 553 |
1 051 |
Cash impact of
items below EBITDA |
(326) |
(258) |
|
|
|
|
|
|
Cash
flow from
operations |
1 227 |
793 |
|
|
|
Change in
WCR |
(111) |
(80) |
|
|
|
|
|
|
Net
cash flow generated by operating operations (A) |
1 116 |
713 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Industrial
investments |
(530) |
(312) |
Other
investment cash flows |
238 |
125 |
|
, |
|
|
|
|
Net
cash flows from investing activities of continuing operations
(B) |
(292) |
(187) |
|
|
|
|
|
|
Net
cash flows from financing activities of continuing
operations |
80 |
21 |
|
|
|
|
|
|
Impact of
fluctuations in exchange rates and others |
(49) |
(25) |
Acquisition of
IFRS 16 rights of use |
(26) |
(10) |
|
|
|
Change in the net financial debt of continuing operations
before taking into account flows with discontinued
operations |
829 |
512 |
|
|
|
Net cash flow
from continuing operations carried out with discontinued
operations(1) |
(236) |
(114) |
|
|
|
Change in net financial debt of continuing
operations |
593 |
398 |
|
|
|
Change in net financial debt of discontinued operations
before taking into account flows with continuing
operations |
(213) |
(125) |
|
|
|
Net cash flow
from discontinued operations carried out with continuing
operations(2) |
236 |
114 |
|
|
|
Change in net financial debt of discontinued
operations |
23 |
(11) |
|
|
|
|
|
|
(Increase)/Decrease in net financial debt |
616 |
387 |
|
|
|
|
|
|
|
|
|
Opening (net financial debt) of continuing
operations |
(936) |
(1 378) |
Opening (net financial debt) of
discontiued operations |
(54) |
N/A |
Closing (net financial debt) of continuing
operations |
(344) |
(936) |
(Net
financial debt) of discontinued operations |
(31) |
(54) |
|
|
|
|
|
|
Free
Cash Flow (A) + (B) |
824 |
526 |
|
|
|
|
|
|
(1) Pursuant to IFRS 5 – "Non-current assets held for sale and
discontinued operations”, the Sandouville, Erasteel and Aubert
& Duval CGUs are shown as discontinued operations. |
(2) In 2022, the amounts relate mainly to investment cash flows
from discontinued operations by the continuing operations |
Consolidated performance indicators –
Balance sheet
|
|
|
|
|
|
|
|
(in millions
of euros) |
31 december |
31 december |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Non-current
assets |
3 122 |
3 083 |
|
|
|
|
|
|
|
|
|
Inventories |
724 |
577 |
|
Customers |
369 |
375 |
|
Suppliers |
(424) |
(403) |
|
Simplified Working Capital Requirements (WCR) |
669 |
549 |
|
Other items of
WCR |
(201) |
(233) |
|
|
|
|
|
|
|
|
|
Total
Working Capital Requirements (WCR) |
468 |
316 |
|
|
|
|
|
|
|
|
|
Derivatives |
62 |
- |
|
|
|
|
|
|
|
|
|
Assets held for
sale(1) |
714 |
651 |
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
4 366 |
4 050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions
of euros) |
31 december |
31 december |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
Shareholders’
equity – Group share |
1 781 |
1 012 |
|
Non-controlling interests |
464 |
323 |
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
2 245 |
1 335 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents and other current financial assets |
(1 660) |
(1 176) |
|
Loans |
2 004 |
2 112 |
|
|
|
|
|
|
|
|
|
Net financial
debt |
344 |
936 |
|
|
|
|
|
|
|
|
|
Employee-related liabilities and provisions |
814 |
899 |
|
|
|
|
|
|
|
|
|
Net deferred
tax |
226 |
184 |
|
|
|
|
|
|
|
|
|
Derivatives |
- |
11 |
|
|
|
|
|
|
|
|
|
Liabilities associated with assets held for
sale(1) |
737 |
685 |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES |
4 366 |
4 050 |
|
|
|
|
|
|
|
|
|
(1)
Pursuant to IFRS 5 “Non-current assets held for sale and
discontinued operations”, the assets and liabilities of Aubert et
Duval and Erasteel CGUs are shown in the consolidated balance sheet
at 31 December 2022 as assets held for sale. |
Appendix
9: 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 financial year under review.
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 December 31, 2022, 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 owning 90% of PT
Weda Bay Nickel, which is booked in the Group’s consolidated
financial statements under the equity method.
A reconciliation with Group EBITDA is provided
in Note 4 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 at the end of the 2021 and
2022 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 10:
Footnotes
1 In accordance with the IFRS 5 standard – “Non-current assets
held for sale and discontinued operations”. See reconciliation
tables in Appendix 12 Definition of adjusted EBITDA, the Group’s
new Alternative Performance Indicator, presented in the financial
glossary in Appendix 93 TRIR (total recordable injury
rate) = number of lost time and recordable injury
accidents for 1 million hours worked (employees and
sub-contractors)
4 Audit procedures for the 2022 consolidated
financial statements have been completed. The certification report
will be released after the Board of Directors’ meeting held on 21
March 2023, which will set the draft shareholders‘ resolutions.5
See financial glossary in Appendix 96 Reduction in net debt of
€616m, before application of the IFRS 5 standard7 Includes €29m
linked to Setrag transport activity other than Comilog’s ore (€37m
in 2021)8 Unless otherwise indicated, market data corresponds to
Eramet estimates based on World Steel Association production data9
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 price10 See financial glossary in
Appendix 9. Cash cost calculated excluding sea transport and
marketing costs 11 Export duties and proportional mining
royalties12 SLN, ENI and others13 Unless otherwise indicated,
market data corresponds to Eramet estimates14 High Pressure Acid
Leach15 Nickel Pig Iron16 Class I: produced with a nickel content
above or equal to 99%; Class II: produced with a nickel content
below 99%17 LME: London Metal Exchange; SHFE: Shanghai Futures
Exchange18 SMM NPI 8-12% index 19 Source: CNFEOL (China FerroAlloy
Online)20 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
See financial glossary in Appendix 922 MHP: Mixed Hydroxide
Precipitate23 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 analysis24 Titanium
dioxide slag, ilmenite, leucoxene and rutile25 c.90% of
titanium-based end-products26 Source: Argus, thermal coal spot
price, ARA, Europe27 Source: Fastmarkets – Battery-grade Lithium
Carbonate price CIF Asia28 LCE: Lithium Carbonate equivalent29
Includes royalties and logistics costs30 Unless otherwise
indicated, the figures mentioned are restated in accordance with
the IFRS 5 standard – “Non-current assets held for sale and
discontinued operations”31 Aubert & Duval and others, excluding
EHA32 Consensus of main market analysts33 Bloomberg forecast
consensus as of 31/01/2023 for the year 2023
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