Eramet (ERA) Q3 2024 earnings summary

Executive summary

• Regained 100% ownership of flagship Centenario lithium asset in Argentina by acquiring Tsingshan's 49.9% stake for $699 million, fully funded by existing liquidity.

• Centenario asset includes 15Mt-LCE resources and a 24kt-LCE battery-grade DLE plant, with long-term production potential above 75kt-LCE.

• Major transformation underway, focusing on core mining and metals assets, with a strong balance sheet and high liquidity.

• Market conditions for carbon steel in China deteriorated, impacting manganese sales; nickel sales in Indonesia were limited by permit delays.

• Battery recycling project in France suspended due to lack of raw material supply and market demand.

Financial highlights

• Q3 2024 adjusted revenue was €809 million, down 17% year-over-year, mainly due to a 43% drop in volumes, partially offset by a 26% positive price effect.

• Manganese ore sales from Gabon fell 37% year-over-year; nickel ore sales in Indonesia dropped 83% due to permit timing.

• Record mineral sands production in Senegal, up 55% year-over-year.

• Manganese ore average price up 62% year-over-year in Q3, but dropped sharply by October.

• $699 million net cash outflow for the Centenario acquisition, with limited premium over Tsingshan's $619 million equity contributions since 2021.

Outlook and guidance

• Centenario lithium plant to start production in coming weeks, ramping to 24,000 tons/year by mid-2025.

• Long-term lithium production capacity could exceed 75,000 tons/year; expansion under assessment.

• Adjusted EBITDA for H2 2024 expected to be higher than H1, supported by cost control and production adjustments.

• 2024 guidance revised: manganese ore sales 6–6.5 million tons, nickel ore sales in Indonesia 32 million wet tons, lithium carbonate production ~1kt.

• Market conditions remain challenging for Q4 2024, with continued price pressure, especially for manganese.