Eramet SA · EURONEXT:ERA
Eramet SA — FY2023 Earnings Presentation
72 slides from Eramet SA's earnings presentation, Feb 22, 2024
Slide 1: Annual results
Annual results February 224, 2024 Christel BORIES, Chair & CEO Nicolas CARRE, CFO 4 eraMeT,T
Slide 2: Disclaimer
Disclaimer Certain information contained in this presentation including any information on plans or future financial or operating performance and any other statements that express expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a n
Slide 3: Contents
Contents Introduction 1 Financial performance 2 Operational performance 3 Strategic & CSR roadmap Conclusion and outlook 3 Eramet FY 2023 results
Slide 4: Introduction
Introduction
Slide 5: Eramet demonstrated ability to withstand low-cycle periods while developing major projects
In a very challenging year, Eramet demonstrated its ability to withstand low-cycle periods while developing major projects New record nickel ore production in Indonesia and rebound of manganese ore production in Gabon in H2 Excellent intrinsic performance in H2 2023 fundamentals Solid cash generatio
Slide 6: Capitalizing on consistent operational performance to face depressed price environment
Capitalizing on a consistent operational performance to face a depressed price environment 2023 performance demonstrating outstanding resilience of our reshaped business portfolio Intrinsic performance +85% Record nickel ore in Indonesia vs. 2022 2023 Adjusted + Rebound of manganese ore vs. 2022 +22
Slide 7: Solid performance in Free Cash-Flow in a context of growth capex
Solid performance in Free Cash-Flow in a context of growth capex FCF Net Capex generation debt 1 2 Growth capex Weda Bay Adjusted leverage 1,2 contribution 0.8x3 o/w to sustain organic growth in Gabon 1 Excl. devaluation of the Argentinean peso in December 2023, offset at the level of Other financia
Slide 8: Success of our first CSR roadmap: major achievements
Success of our first CSR roadmap: major achievements over the past five years Safety as #1 priority 2018-2023 CSR roadmap 1.1 TRIR in 2023 1 98% Global performance over 3 areas of actions 2023 target <4 1st independent audit Industry at 2.72 at GCO in 2023 Divided by since 2018 5 Commitment to Commi
Slide 9: Launch of our new ambitious CSR roadmap
Launch of our new ambitious CSR roadmap Responsible mining is part of the solutions to support the energy transition 3 AREAS Care for people Trusted partner Transform our FOR ACTION TRANSLATED for nature value chain INTO 10 AMBITIONS 1 Take care of health 4 Control & optimize 7 Reduce the CO2 FOR 20
Slide 10: Progressing on our energy transition roadmap: lithium project in Argentina
Progressing on our energy transition roadmap: executing the development of our lithium project in Argentina Progressing on our lithium Focusing on unlocking the full potential new business of Weda Bay mine Centenario project in Argentina 60 Mwmt c.15% Phase 1 NI ORE (2026 TARGET) MARKET SHARE in Ni
Slide 11: Advanced discussions to address SLN's specific case
Advanced discussions to address SLN’s specific case in the coming weeks No further financing provided by Eramet Preventive conciliation procedure ongoing Advanced discussions with the French state on solutions for the long-lasting neutralization of SLN's debt weighing on the Group's consolidated acc
Slide 12: Financial performance
1 Financial performance Unless otherwise specified, financial figures are presented in accordance with IFRS 5 - Non- current Assets Held for Sale and Discontinued Operations - in line with new scope
Slide 13: Robust performance in 2023
Robust performance in 2023 2023 2022 Adjusted sales1 3,824 5,385 Sales 3,251 5,014 Adjusted EBITDA1 772 1,897 EBITDA 347 1,553 Current operating income 127 1,280 Net income Continuing operations 12 930 Net income Discontinued operations 6 (156) Net income Group share 109 740 31/12/2023 31/12/2022 Ne
Slide 14: Strong intrinsic performance, hampered by major downturn in market prices
Strong intrinsic performance, hampered by a major downturn in market prices 2 87 26 3 1 163 In External factors 344 -124 1,553 -124 + -1,373 Intrinsic performance 1,897 68 (+ , excl. one-offs2) 81 -43 -13 4 3 425 772 347 2022 One-off Volume/ Productivity Other En. Trans. Price Freight Input Inflatio
Slide 15: Net income Group share
Net income Group share: 2023 2022 1 (- ) as the Sales 3,251 5,014 conditions are no longer met, and costs for energy transition development Current operating income 127 1,280 projects (- Other operating income and expenses 1 (320) (255) 2 Financial result (2) (89) Eramet share (38.7%) in Weda Bay 20
Slide 16: Cash capex and future organic growth
future organic growth 1 Cash capex ( IFRS 5 Increase in current capex to sustain operations 920 Strict capex management 2 Capex to sustain organic growth, o/w: 451 3 588 Manganese ore Transgabonese Renovation Program 1523 Total 1 196 2 200 financed by 3 Eramet Strategic greenfield projects 1 capex f
Slide 17: Significant reduction in operating working capital requirement
Significant reduction in operating working capital requirement Mining & activity operating WCR ( - 685 - 588 cash generation at Group level1 in 2023 409 724 688 Cash generation mainly driven by: 619 a decrease in trade receivables, mostly resulting from the sharp 373 308 decline in selling prices 22
Slide 18: Solid FCF supported by Weda Bay contribution; net debt
Solid FCF supported by a c. Weda Bay contribution in a context of substantial growth capex; Net debt up to FCF, net of Tsingshan capital injection ( 136 FCF - 2 -374 -344 347 30 -920 -102 -614 321 3 -187 -35 3 Financed -88 -59 by 267 4 Tsingshan3 -172 214 311 1 -90 97 2022 Net debt 2022 EBITDA Chang
Slide 19: Sustained proactive management of debt structure; substantial liquidity
Sustained proactive management of debt structure; substantial liquidity to tackle upcoming maturities effectively Debt maturity as of 31 December 2023 (in Group financial liquidity (in 621 2,989 563 2,596 44 206 461 15 1,383 57 2,012 935 70 12 71 60 249 901 500 184 15 43 260 300 43 1,661 1,606 15 17
Slide 20: 2023 cash allocation focusing on growth capex
2023 cash allocation focusing on growth capex while maintaining adjusted leverage below 1x and rewarding our shareholders 01 02 03 Adjusted Growth Dividend leverage capex 0.8x1 2,3 4 1 Net debt/ Adjusted EBITDA 2 Excl. - 3 Net of Tsingshan's capital contributions to the Centenario project 20 Eramet
Slide 21: Operational performance
2 Operational performance
Slide 22: Depressed price environment in 2023: declining selling prices
Depressed price environment in 2023: continued decline in selling prices in H2 vs. H1 Manganese ore (CIF China 44%) Nickel ore 23 vs. 22 = -23% 23 vs. 22 = -20% 23 vs. 22 = -6% SLN nickel ore (CIF China 1.8%) WB Nickel ore (HPM 1.8%/35%) 2022 2023 2024 2022 2023 2024 Manganese alloys (European C
Slide 23: Lower input cost prices reflected in manganese alloys cost base
Lower input cost prices reflected in cost base of manganese alloys from H2 Reductants consumption prices ▪ Lower energy and reductant purchase 100 basis prices in 2023 reflected in the cost 280 500 base in H2 (3 to 5-month lag between 240 23 vs. 22 = -21% purchasing and consumption of coke): 200 450
Slide 24: Drop in Freight rates in 2023
Drop in Freight rates in 2023 Freight rates ($/t)1 - bulk ▪ European Freight rates 60 include: o chartering costs, based on 50 23 vs. 22 = -28% route times charter rate2 o transportation fuel costs3 40 30 ▪ Freight rates significantly down in 20 2023, although increasing 10 23 vs. 22 = -40% in Q4 du
Slide 25: Strengthening operational excellence across the organization
Strengthening operational excellence across the organization STRIVE FOR OPERATIONAL DRIVE COST REDUCTIONS & EXCELLENCE SAVINGS PLAN Fixed cost reductions & operational cost savings Optimization of production ▪ Optimization of ore grade: & OEE c. 130m o +1.3pts1 (c. ) at Moanda (Mn) Productivity gain
Slide 26: Stable manganese ore production; Weda Bay output almost doubled
Stable manganese ore production in 2023, while Weda Bay mine output almost doubled MANGANESE NICKEL MINERAL SANDS Production External ore sales 7.4Mt 33.2Mwmt GCO -2% vs. 2022 +85% vs. 2022 Weda Ore Bay Transportation NPI sales1 HMC production 6.6Mt 14.3kt-Ni 628kt -8% vs. 2022 -9% vs. 2022 -15% vs.
Slide 27: Manganese BU
25 Mn Manganese BU
Slide 28: 2023 lower performance reflecting sharp decline in prices
2023 lower performance reflecting a sharp decline in prices & 25 non-recurring logistics incidents in Gabon in H1 Mn EBITDA Ore EBITDA down , +60,000 beneficiaries2 of o/w: CSR actions in Gabon 1,402 - price1 impact Manganese ore - one-off logistics incidents Manganese alloys ▪ Health ▪ Lighting & 7
Slide 29: Steel production stable; sharp decrease in prices for ore & alloys
Steel production stable; sharp decrease in prices 25 for ore & alloys Mn China stable despite slowdown in construction sector Supply/demand balance in very slight surplus ROW also stable, European production (-7.5%) Downward trending prices for both ore and alloys, the overtaken by Indian production
Slide 30: Record H2 performance offsetting H1 one-off logistics incidents
Record H2 performance offsetting H1 one-off 25 logistics incidents Mn Manganese ore cash cost FOB1 ($/dmtu) Ore production volumes (Mt) c.8.0Mt 2022 7.5 capacity Temporary production 2.26 cash-cost stoppages in H1 due to Volume impact 0.17 H2 3.9 Record railway incidents H2 4.8 7.4Mt Record H2 Produ
Slide 31: Value over volume strategy: reduction in alloys production
Value over volume strategy: reduction in alloys production; 25 margin squeeze due to falling prices Mn Sales volumes down 8% to 640 kt, as well as Lower margin in 2023 resulting from a decline in production (down 6%) mainly to adjust to market selling price and still high energy and reductants condi
Slide 32: Nickel BU
28 Nickel BU eramerT
Slide 33: Strong contribution from Weda Bay; SLN in critical financial situation
Strong contribution from Weda Bay in a difficult price 28 environment; SLN in a critical financial situation Ni Adjusted EBITDA Indonesia (Weda Bay) 430 305 share in WB EBITDA 869ha of watershed area3 up , o/w: offset with rehabilitation planting 344 + volume impact 425 outside the mining concession
Slide 34: Chinese stainless-steel production driving primary nickel demand
Chinese stainless-steel production driving primary nickel 28 demand increase; sharp decline in prices in Q4 Ni Global stainless-steel production up 5% in 2023 driven Average nickel ore prices at $51/wmt in Indonesia & by China +10%; ROW down 3% with Indonesia down 9% $89/wmt at SLN in 2023 Batteries
Slide 35: Another record year for Weda Bay in Indonesia
28 Another record year for Weda Bay in Indonesia Ni NPI production down 9%, due to maintenance & Exceptional ramp-up continuing (+72% YoY) with energy supply difficulties in H1 record sales, including first sales of limonites achieved end-2023 NPI volumes sold by Eramet (off-take agreement) also dow
Slide 36: Improved operational performance of SLN
Improved operational performance of SLN, 28 despite local context Ni Record production in 2023 (+7%) thanks to better weather conditions, improved availability & use of equipment FeNi production up 10%, supported by consistent Exports penalized by societal issues & difficulties in electricity supply
Slide 37: Mineral Sands BU
es 40 =< Ti 2h ai ‘Mineral Sands BU _-
Slide 38: GCO financial performance reflecting lower production and prices
GCO financial performance reflecting lower production 22 40 and lower prices Ti Zr EBITDA Eratrace 184 GCO EBITDA down , o/w: 105 - volume impact 166 - price impact First traceability 89 - productivity impact due to platform launched for a major equipment breakdown Mineral Sands products 18 16 2022
Slide 39: Weaker global demand in 2023; HMC production down
Weaker global demand in 2023; HMC production down 22 40 due to a major equipment breakdown & lower grade Ti Zr Slowdown throughout the year in global demand for Zircon amid challenging macroeconomic environment HMC production down 15% in 2023 due to an Global demand for TiO2 pigments contracted slig
Slide 40: Strategic & CSR roadmap
3 Strategic & CSR roadmap
Slide 41: A strategy tailored to the new era of metals
A strategy tailored to the new era of metals Two strategic axes aligned with global macro-trends, supported by an ambitious CSR roadmap GROW IN METALS supporting SUSTAINABLY DEVELOP CRITICAL global economic development METALS for the energy transition RESILIENT Manganese ore FAST-GROWING Lithium MAR
Slide 42: Centenario Phase 1: sustainable battery-grade DLE project
Centenario Phase 1: a sustainable & competitive battery-grade 3 DLE technology project coming on-stream shortly Li H1 End-January Summer Summer 2022 2024 2024 2025 2023 achievements people, incl. 430 young Start of construction >87% Start of production Full ramp-up 682 people benefited from Construc
Slide 43: Centenario Phase 1: attractive profitability, first quartile cost
Centenario Phase 1: Attractive profitability 3 underpinned by first quartile cost position Li Cost curve of the lithium industry (2028, Eramet internal estimates) Cash cost1, $/kg LCE 30 Expected strong resilience 25 through-the-cycle 20 Current long-term price forecast (market consensus) 15 Spot pr
Slide 44: Conclusion & outlook
Conclusion & outlook
Slide 45: Continuously focusing on operational performance against challenging backdrop
Continuously focusing on operational performance against a persistently challenging macroeconomic backdrop Demand across all the underlying markets for Eramet products remains sluggish; stability in prices at a low level, awaiting a rebound in demand, notably from China Reductants and energy costs,
Slide 46: Growth in mining operations compensating uncertain 2024 outlook
Growth in mining operations compensating a still uncertain 2024 outlook, while delivering our strategic plan 7.0-7.7 Mt 40-50 Mwmt1 5-7 kt-LCE Illustrative 2024 Growth Ni ore in volume Mn ore sold at Weda Bay1 Lithium carbonate Adjusted EBITDA transported produced (o/w 1/3 limonite) range of - Based
Slide 47: Eramet perfectly positioned to unlock value in a new era of metals
Eramet perfectly positioned to further unlock value in a new era of metals Pure-play Highest CSR Mining & Metals standards Well World-class Robust positioned asset base financials on attractive with proven enabling markets track record growth 47 Eramet FY 2023 results
Slide 48: Q&A
Q&A “ Become a reference for the responsible transformation of the Earth’s mineral resources, for living well together ”
Slide 49: Appendices
EfAMeT Appendices
Slide 50: Safety results
Safety results Eramet accident frequency rate (FR21,2) 16 14 13.4 12 Divided by 10 10.9 5x since 20153 8.3 8 6 5.4 4.1 4 New 2.2 perimeter 2 1.1 1.1 0 2016 2017 2018 2019 2020 2021 2022 2023 1 FR2 = number of lost-time and recordable injury accidents for 1 million hours worked 2 Including employees
Slide 51: 2018-2023 CSR roadmap achievements
2018-2023 CSR roadmap achievements 2023 2023 2018 Commitment to people Indicators Target Results Ensure the Health and Safety of employees and subcontractors FR2 incident rate / # of fatalities 8.3 / 1 <4 / 0 1.1 /0 ✓ Build skills and promote talent and career development % of employees trained per
Slide 52: CSR commitment recognized by leading rating agencies
A CSR commitment and performance recognized by leading rating agencies CLIMATE B CHANGE B- Prime WATER C SECURITY Among the Among the best in the best in the industry industry A 28.31 2nd decile in 1st decile in the the M&M diversified sector M&M sector 52 Eramet FY 2023 results 1 Lower is better
Slide 53: Carbon & stainless-steel markets related productions
25 28 Carbon & stainless-steel markets related productions Mn Ni Global primary nickel Global manganese ore Global stainless steel production (kt)2 production - Mn content (Mt)1 production (Mt)2 (excl. recycling) 20.6 20.7 56.6 3,109 3,203 54.2 5.1 5.0 642 632 0.5 0.8 2.8 59% 62% 3.0 1,147 1,279 4.1
Slide 54: Manganese ore & alloys CRU index price trends
Manganese ore & alloys (refined & standards in Europe) 25 CRU index price trends Mn Monthly change in manganese ore prices1 Monthly change in manganese alloys prices2 $/dmtu Mwmt 9 4,000 8 23 vs. 22 = -43% 23 vs. 22 = -20% 3,500 7 23 vs. 22 = -31% 3,000 6 2,500 5 2,000 4 1,500 3 2 1,000 1 500 0 0 20
Slide 55: LME & nickel ore historical price (5-years)
28 LME & nickel ore historical price (5-years) Ni Monthly change in nickel LME prices Monthly change in nickel ore prices2 k$/t kt $/wmt 35 300 160 20 140 18 30 23 vs .22 = -23% 250 16 120 25 14 200 100 12 20 150 80 10 15 8 23 vs. 22 = -16% 60 100 6 10 40 4 5 50 20 2 0 0 0 0 2019 2020 2021 2022 2023
Slide 56: Zircon premium & chloride ilmenite historical price
22 40 Zircon premium & chloride ilmenite historical price (5-years) Ti Zr Monthly premium zircon FOB prices1 Monthly chloride ilmenite FOB prices1,2 $/t $/t 400 2,400 350 2,000 300 1,600 23 vs. 22 = -3% 23 vs. 22 = +4% 250 1,200 0 2019 2020 2021 2022 2023 2022 2023 Zircon Chloride ilmenite price Zir
Slide 57: Zircon & ilmenite FY22 and FY23 sales volumes
22 40 Zircon & ilmenite FY22 and FY23 sales volumes Ti Zr Agreement signed with INEOS Enterprises (sale of ETI), includes a long-term supply contract for ilmenite Zircon sales down 19% produced at GCO Ilmenite sales (internal & external) down 2% Zircon sales (kt) Ilmenite sales1 (kt) 122 196 59 48 2
Slide 58: Lithium demand forecast & lithium carbonate historical price
Lithium demand forecast & lithium carbonate historical price 3 (5-years) Li Lithium demand 10-year forecasts1 Lithium carbonate price (CIF Asia) Kt-LCE2 $/Kt-LCE2 5,000 CAGR 90 2021-40 +12% 80 4,000 70 23 vs. 22 = -45% 60 3,000 CAGR 50 2021-30 +20% 40 2,000 Centenario Phase 1 30 start of production
Slide 59: Group Adjusted EBITDA sensitivity to market prices
Group Adjusted EBITDA sensitivity to market prices Annual impact Sensitivities Change on Adjusted EBITDA Manganese ore prices (CIF China 44%) +$1/dmtu c. 1 Manganese alloy prices +$100/t c. 1 Ferronickel selling prices SLN +$1/lb c. 1 Nickel ore prices (CIF China 1.8%) SLN exports +$10/wmt c. 1 Nick
Slide 60: Continuing activities (IFRS 5) Key figures
Continuing activities (IFRS 5) Key figures 2023 Holding company, Total from eliminations, operations In Manganese Nickel Mineral sands Lithium restatements continuing and other entities (IFRS 5) Sales 1,978 994 275 - 4 3,251 EBITDA 499 (120) 105 (17) (121) 347 Current Operating Income 361 (146) 62 (
Slide 61: Cash-flow table (IFRS 5)
Cash-flow table (IFRS 5) 2023 2022 Operating activities EBITDA 347 1,553 Cash impact of below EBITDA items (179) (326) Cash-flow from operations 168 1,227 Change in WCR 73 (111) Net cash generated by operating activities (1) 241 1,116 Investing activities Industrial investments (706) (530) Other inv
Slide 62: 2023 FCF (IFRS5) by activity
2023 FCF (IFRS5) by activity (In o/w: - ore activity, incl. growth capex (- ) Manganese (39) - alloys activityOre -93 Nickel SLN1: (125) Weda Bay: 280 Other2 +220 o/w: Mineral Sands 16 - Centenario project, net of capital increase from Tsingshan (+ - 0m Chilean concession prepayment Lithium (481) (3
Slide 63: Bond maturities
Bond maturities Amount as at Initial Currency Initial amount 31/12/2023 Coupon Maturity date (in m) November 2019 bond issue 300 300 May 2025 5.88% May 2023 bond issue 500 500 May 2028 7.00% 63 Eramet FY 2023 results
Slide 64: Well positioned in the battery value-chain
Well positioned in the battery value-chain to sustainably create value leveraging on our core expertise PRIMARY SECONDARY UPSTREAM UPSTREAM 3 28 27 25 3 28 27 Li Ni Co Mn Li Ni Co Mining and first Refining & CAM Battery Battery life cycle transformation production recycling High-return business Posi
Slide 65: Centenario Phase 2 1st tranche
3 Centenario Phase 2 1st tranche (conditionally Board approved) Li Attractive market Appealing Phase 2 metrics Scalable resources enabling to consider a fundamentals (1st tranche) 2nd tranche for Limited competitive pressure 30kt $4.5-5.0k/t-LCE Phase 2 (to be assessed) with >50% of new lithium Prod
Slide 66: Nickel class 1 in Indonesia
28 27 Nickel class 1 in Indonesia Ni Co Scope to create a significant source of competitive Western-controlled nickel Ore sourced from the world-class PT Weda Bay Nickel orebody Leveraging our access to proven Chinese HPAL technology Limonite ore IRMA-certified value chain and dry High-Pressure Acid
Slide 67: Geothermal lithium in France
3 Geothermal lithium in France Li Assessing the feasibility of a very low-carbon intensity project Located in the emerging Rhine Valley geothermal lithium field Bringing Leveraging on lithium Close to 0 our Direct exploration Target CO2 emissions Lithium permits and Extraction Lithium extraction exp
Slide 68: Acquisition of exploration and mining concessions in Chile
3 Acquisition of exploration and mining concessions in Chile Li c.120,000Ha Located in the Atacama region of exploration & mining concessions Concessions covering a cluster of some of the most promising undeveloped lithium salars in Chile 100% Development of a future project subject to future owners
Slide 69: EV Battery recycling
EV Battery recycling Favoring an integrated approach and partnership model Upstream Downstream Integrated battery recycling Recovering blackmass1 by dismantling and shredding Extracting battery-grade Li, Ni and business model Co from blackmass Li-ion batteries and scrap • DFS underway (end 2024) Fir
Slide 70: Eramet capital allocation policy
Eramet capital allocation policy 01 02 03 Balance sheet Capex Dividend Maintain adjusted leverage Disciplined investment policy Reward shareholders for their below 1x on average through long-term commitment the cycle Deliver organic growth with very quick payback and Return value created by attracti
Slide 71: Shareholding at 31 December 2023
Shareholding at 31 December 2023 STCPI1 Sorame + CEIR (Duval Family) 4% 37.1% Number of shares issued APE 27.1% 28,755,047 Other float 31.8% 1 STCPI (Société Territoriale Calédonienne de Participation Industrielle): entity owned by the New Caledonian provinces 71 Eramet FY 2023 results
Slide 72: Contacts
CONTACTS Director of Investor Relations Sandrine NOURRY-DABI sandrine.nourrydabi@eramet.com