Eramet Sa · EURONEXT:ERA
Eramet Sa — Debt Investor Presentation (May 2024)
49 slides from Eramet Sa's debt investor presentation, May 21, 2024
Slide 1: Credit investors presentation
Credit investors presentation May 21st, 2024 Christel BORIES, Chair & Group CEO Nicolas CARRE, Group CFO Sandrine NOURRY-DABI, Head of Investor Relations Philippe BERNEUR, Group Treasurer
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) This presentation was prepared solely for information purposes. This presentation should not be construed as either a solicitation or an offer to purchase or sell securities in any jurisdiction. Similarly, this presentation does not constitute investment advice. It has no regard to
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) Unless otherwise expressly indicated or noted herein, all information regarding markets, market size, market share, market position, growth rates or other industry data pertaining to the business of Eramet are based on estimates prepared by Eramet based on certain assumptions and it
Slide 4: Contents
Contents Introduction: Eramet at a glance 1 – A strong credit profile resulting from a successful turnaround 2 – A value-creation strategy, supported by a controlled capex plan and an ambitious CSR roadmap 3 – A solid financial performance and a favorable outlook Conclusion: Credit Highlights 4 Eram
Slide 5: Eramet at a glance
Eramet at a glance
Slide 6: A global pure-play Metals & Mining Company
A global pure-play Metals & Mining Company Refocused on four activities in M&M FY 2023 performance Manganese Nickel 59% 33% Adjusted of sales 2023 Group of sales EBITDA1 Adj. turnover FCF 9% of sales €3.8bn generation2 €772m In construction €78m Mineral sands Lithium Adjusted sales by geography Leve
Slide 7: Operating in manganese, nickel, mineral sands & developing battery-grade lithium
Operating in manganese, nickel, mineral sands & developing battery-grade lithium MANGANESE NICKEL MINERAL SANDS LITHIUM In operation In operation In operation Starting summer 2024 ASSETS ASSETS ASSETS ASSETS Ore – Moanda (Gabon) Weda Bay (Indonesia) GCO (Senegal) Centenario (Argentina) World’s large
Slide 8: Large resources, long-life, high-grade, scalable deposits
Large resources, long-life, high-grade, scalable deposits Mining assets positioned on the 1st quartile of their respective industry cost curves Moanda GABON Weda Bay INDONESIA GCO SENEGAL Centenario ARGENTINA 457 Mwmt 2,800 Mwmt 3,056 Mt >15 Mt RESOURCES1,2 44 % RESOURCES1,3 1.2 % RESOURCES1,4 1.1 %
Slide 9: A strategy tailored to energy transition
A strategy tailored to energy transition 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 MARKETS
Slide 10: Supported by strong shareholding
Supported by strong shareholding Shareholders stability STCPI1 Sorame + CEIR (Duval Family) 4% • Shareholder agreement signed between 37.1% the two major shareholders since 1999 • Long-term investment approach aligned with Group strategy and business French State (APE) 27% environment Number of shar
Slide 11: A CSR commitment and performance recognized by leading ESG rating agencies
A CSR commitment and performance recognized by leading ESG rating agencies B C Top 33% CLIMATE WATER B- Prime CHANGE SECURITY In the M&M – Among the best Among the best in non precious in the industry the industry metals sector 27.61 69/100 Advanced (3/44) 1st decile in the in the M&M M&M sector sec
Slide 12: Aligning with the highest standard in responsible mining through CSR roadmap
Aligning with the highest standard in responsible mining through CSR roadmap A standard encompassing international best practices 100% EQUAL multi- ASSESSMENT stakeholders BEST-IN-CLASS TRANSPARENCY of mining sites engaged process governance comprehensive through in an independent of mining sites st
Slide 13: A strong credit profile resulting from a successful turnaround and disciplined capital allocation
A strong credit profile resulting from a successful turnaround and disciplined capital allocation
Slide 14: A successful repositioning by divesting or finding solution to the problematic assets
A successful repositioning by divesting or finding solution to the problematic assets Divestment / Closing Neutralization of SLN’s debt of non-core & non-performing assets Agreement with the French state (April 2024) to neutralize SLN’s debt in Eramet’s consolidated accounts and strengthen its b
Slide 15: A robust and well positioned current asset portfolio: profitable at very low commodity prices
A robust and well positioned current asset portfolio: profitable at very low commodity prices Current manganese ore industry cost curve CIF1 Forecast lithium industry cost curve1 (Simplified) (2028) High-grade (>40%) Medium-grade (30-40%) Low-grade (<30%) 30 25 Spot price Cash cost2, $/kg LCE Cash c
Slide 16: Significant cash generation from the reshaped asset portfolio over the past 5 years
Significant cash generation from the reshaped asset portfolio over the past 5 years Bridge from 2018 net debt to 2023 net debt (€m) Current asset portfolio: c.€1bn net cash generation c.35% FCF/Adj.EBITDA - Average cash conversion over the period -289 (excl. SLN & divested assets) -253 • Reshaped as
Slide 17: Eramet capital allocation policy
Eramet capital allocation policy 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 attractive return
Slide 18: Disciplined capital management & commitment to strong balance sheet
Disciplined capital management & commitment to strong balance sheet Proforma Debt1 maturity profile – End-2023 (€m) Group financial liquidity (€m) 2,989 c.3 years 2,596 563 48 Av. maturity 461 15 2,012 1,383 361 78 12 935 71 249 500 901 291 184 55 15 149 1,661 300 62 1,606 15 179 1,111 107 134 15 70
Slide 19: A value-creation strategy, supported by a controlled capex plan and an ambitious CSR roadmap
A value-creation strategy, supported by a controlled capex plan and an ambitious CSR roadmap
Slide 20: Ambitious mid-term to long-term production targets
Ambitious mid-term to long-term production targets >10Mt Up to 800kt 60Mwmt Mn ore Mn alloys Ni ore at Weda Bay (production capacity can flex (Targets assessed based on (Indonesia) depending on market situation) market demand & margins) 1.0Mt >75 kt-LCE Energy transition Projects in HMC Li battery g
Slide 21: Centenario: a sustainable & competitive battery-grade DLE technology project
Centenario: a sustainable & competitive battery-grade DLE 3 technology project coming on-stream shortly Li Phase 1 in operation shortly Phase 2 (1st tranche) H1 April 2024 Summer +12 conditionally Board 2022 2024 months approved Start of construction c.95% Start of production Full ramp-up Constructi
Slide 22: Deploying capital to grow our world-class asset base through 2026
Deploying capital to grow our world-class asset base through 2026 Capex plan1 for the next 3 years (€m) c.700-750 c.700 c.€1.9bn 2024-2026e CAPEX net of partners’ share and Sonic Bay/Recycling c.500 c.400 c.400 • >€1bn to be invested in growth projects c.100 over the next three years reflecting inve
Slide 23: "Act for positive mining": a new ambitious CSR roadmap
“Act for positive mining”: a new ambitious CSR roadmap Responsible mining is part of the solutions to support the energy transition Care for people Trusted partner Transform our for nature value chain 1 Take care of health 4 Control & optimize 7 Reduce the CO2 and safety of people water consumption
Slide 24: A solid financial performance and a favorable outlook
A solid financial performance and a favorable outlook Unless otherwise specified, financial figures are presented in accordance with IFRS 5 - Non- current Assets Held for Sale and Discontinued Operations - in line with Eramet’s new scope
Slide 25: 2023: capitalizing on a consistent operational performance to manage a low price environment
2023: capitalizing on a consistent operational performance to manage a low price environment 2023 performance demonstrating outstanding resilience of our reshaped business portfolio Intrinsic performance +85% Record nickel ore in Indonesia vs. 2022 2023 Adjusted +€153m Rebound of manganese ore vs. 2
Slide 26: Depressed price environment in 2023: continued decline in selling prices in H2 vs. H1
Depressed price environment in 2023: continued decline in selling prices in H2 vs. H1; a more optimistic outlook from Q2 2024 25 Manganese ore (CIF China 44% - CRU) Nickel ore Var. Q1 24 Mn vs. Q1 23 Mn ore -21% Mn FeMn -22% SiMn -5% SLN nickel ore (CIF China 1.8%) WB Nickel ore (HPM 1.8%/35%) H
Slide 27: Lacklustre market environment at start of 2024, but improving pricing environment from Q2
Lacklustre market environment at start of 2024, SD but improving pricing environment from Q2 Demand remains sluggish across all Group markets, expecting a rebound, particularly from China; price levels improving at the start of Q2 Mn ore supply expected to decline significantly in 2024, given the pr
Slide 28: Supply side shortages of Mn ore give price upside not yet reflected in consensus
Supply side shortages of Mn ore give price upside not yet reflected in the current average consensus price for 2024 2024 illustrative Adjusted EBITDA FY 2023 Q1 2024 Press Release Press Release Market upside Manganese high-grade ore 750-900M€ 650-800M€ Impact on Increase Price yearly Adjusted linked
Slide 29: Conclusion: credit highlights
Conclusion: credit highlights
Slide 30: Key credit highlights
Key credit highlights Support from long-term Pure-play Highest CSR major shareholders Mining & Metals standards with (French State) coupled with strong KPIs onboarded in with a seasoned strategic positions bond issuances management team Well World-class Robust financials positioned asset base highly
Slide 31: Appendix
Appendix
Slide 32: A Mining & Metals longtime player
A Mining & Metals longtime player 1880 1985 1991 1994 1997 Nickel Nickel Alloys Manganese Société Le Nickel (SLN) was Eramet-SLN Erasteel acquired Initial public offering 61% of Comilog acquired incorporated to operate created (diversification into of the Eramet Group (diversification into nickel mi
Slide 33: Pricing features of Eramet's businesses
Pricing features of Eramet’s businesses Manganese Nickel Mineral sands 25 28 22 40 Mn Ni Ti Zr No future market: Nickel ore indexes OTC1 negotiation Weda Bay: HPM nickel 1.8%/35%2,3 OTC1 negotiation CRU index: bi-weekly SLN: Ni ore CIF China 1.8% Mn ore: CRU CIF China 44% (CNFEOL) Eramet’s prices pu
Slide 34: Lithium demand forecast & lithium carbonate historical price (5-years)
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 35: Diversified portfolio of world-class deposits and downstream processing
Diversified portfolio of world-class deposits and downstream processing MINING SITE PROCESSING R&D CENTER FRANCE 25 NORWAY 25 Dunkirk Mn UNITED 25 Mn Mn Kvinesdal, STATES Eramet Ideas Trappes Porsgrunn, Sauda Marietta ASIA 28 Ni INDONESIA WEDA BAY AFRICA ARGENTINA GABON 3 Li 25 28 SALAR DE MOANDA Mn
Slide 36: Building a portfolio of projects in energy transition metals
Building a portfolio of projects in energy transition metals Projects still in study phases Acquisition of exploration & mining Nickel class 1 in Indonesia concessions in Chile HPAL technology to produce Ni-Co Located in the Atacama region Partnership mixed hydroxide product (MHP) c.120kHa Concessio
Slide 37: Governance supported by stable shareholding
Governance supported by stable shareholding Board of Directors Long-term reference shareholding Others float SORAME + CEIR 18 50% 44% 32% At 2023 37% (Duval Number of shares issued Family) Members Nationalities Independency1 Parity1 year-end 4% 28,755,047 STCPI2 Christel François 27% BORIES CORBIN A
Slide 38: A seasoned Executive Committee
A seasoned Executive Committee After graduating from the École des Hautes Études Commerciales (HEC), Christel Bories began her career in 1986 as a strategy consultant at Booz-Allen & Hamilton, and then at Corporate Value Associates. She then held various positions of responsibility at Umicore, follo
Slide 39: 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.€255m1 Manganese alloy prices +$100/t c.€65m1 Ferronickel selling prices – SLN +$1/lb c.€95m1 Nickel ore prices (CIF China 1.8%) SLN exports +$10/w
Slide 40: Bond maturities
Bond maturities Amount as at Initial €m Currency Initial amount 31/12/2023 Maturity date Coupon (in m) November 2019 bond issue € 300 300 May 2025 5.88% May 2023 bond issue € 500 500 May 2028 7.00% 40 Eramet – Credit investors presentation – May 2024
Slide 41: Biodiversity, a priority
Biodiversity, a priority Setting an ecological example in Dedicated teams at every mine 1 ore extraction Mitigation hierarchy at the heart of the action before, during and after operation, integrating a territory approach Strengthening our action plans to align with IFC PS61 & the IRMA standard 2 De
Slide 42: Care for people: 2026 ambitions
Care for people: 2026 ambitions 1 Take care of health 2 Provide an inclusive 3 Accelerate the local and safety of people environment where & sustainable on our sites everyone can grow development for communities FR2 < 1.0 30% of women managers 6,000 jobs voluntarily supported (excluding core busines
Slide 43: Trusted partner for nature: 2026 ambitions
Trusted partner for nature: 2026 ambitions 4 Control & optimize 5 Biodiversity 6 Mitigate risk of water consumption preservation pollution / Reduce environmental impact 60% at GCO 100% of sites have a diffuse 80% at Centenario Rehabilitation ratio > 1.0 dust source map and a reduction action plan fo
Slide 44: Transform our value chain: 2026 ambitions
Transform our value chain: 2026 ambitions 7 Reduce the CO2 8 Optimize mineral 9 Develop responsible footprint of our value resources consumption value chain that chain & contribute to a respects our Human Reduce emissions per ton circular economy rights & CSR produced on scopes 1 & 2 to requirements
Slide 45: Significant decrease in the carbon intensity of the Group's products since 2019
Significant decrease in the carbon intensity of the Group’s products since 2019 – KPI #2 2019-2023 strong performance Carbon intensity1 of Eramet's products (Scopes 1 & 2) -30% achieved vs. 2019 (tCO2/t sellable product) Increase of mining activities, less emissive than pyrometallurgy Improvement th
Slide 46: 90% of the Group's direct GHG emissions come from pyrometallurgy
90% of the Group’s direct GHG emissions come from pyrometallurgy Eramet’s 2023 scopes 1 & 2 GHG Eramet’s Scopes 1 & 2 GHG emissions emissions breakdown1 (MtCO2) reduction & targets1 (MtCO2) 0.3Mt -12% -18% Pyrometallurgy -40% 0.2Mt 90% 0.2Mt 3.0 Mt Scopes 1 +2 Mining 8% -90% Transport & 3.3Mt loadin
Slide 47: Decarbonization levers tailored to Eramet's challenges
Decarbonization levers tailored to Eramet’s challenges Pyrometallurgy (c.90% of energy consumption & GHG emissions) Realized Implementation / industrialization ongoing Mining (c.10% of energy consumption & GHG emissions) Project or under consideration -15% -40% Scopes 1&2 -9% Decarbonization of our
Slide 48: Supporting Eramet's value chain in reducing its emissions
Supporting Eramet’s value chain in reducing its emissions – KPI #3 Eramet’s 2023 scope 3 emissions Engaging with our value SPTs breakdown (MtCO2) chain on Scope 3 67% 67% Transport 7% 46% 31% 33% Energy 5% 15.4Mt Purchases Scope3 10% 2019 … 2022 2023 … 2025 2026 Joint-ventures 8% Sales 67% of its su
Slide 49: Contacts
CONTACTS Director of Investor Relations Sandrine NOURRY-DABI sandrine.nourrydabi@eramet.com Financing & Treasury Director Philippe BERNEUR philippe.berneur@eramet.com