Eramet has upgraded its full-year core earnings outlook following a significant increase in manganese prices, despite anticipating ongoing difficulties in the nickel market, which negatively impacted the company’s first-half results.
The French mining company reported a 27% decline in adjusted earnings before interest, tax, debt, and amortization (EBITDA) for the first half, totaling 247 million euros ($268.17 million). This drop was primarily driven by lower nickel prices amid a supply surplus in the sector.
The spike in manganese ore prices, largely caused by weather-related disruptions in Australian production, prompted Eramet to revise its full-year adjusted EBITDA guidance to a range of 1.2 billion to 1.3 billion euros, up from the previous estimate of 750 million to 900 million euros. According to CFO Nicolas Carre, this manganese rally is the main reason behind the increased guidance and will be fully reflected in the company’s activities starting in the third quarter.
Eramet’s manganese operations, particularly its mine in Gabon, are key contributors to its performance. While the company continues to expand nickel production in Indonesia through a joint venture with Tsingshan, it has lowered its full-year sales volume target due to challenges in securing permits for marketing lower-content ore.
The nickel segment faces additional pressure from unrest in New Caledonia, affecting the performance of Eramet’s struggling subsidiary, SLN, which has reported operational losses amid violent disruptions that halted nickel production. To support SLN, the French government has provided significant funding, including 80 million euros this month and 140 million euros in the first half of the year.
In a strategic shift towards the electric vehicle market, Eramet plans to commence lithium production in Argentina later this year, also in collaboration with Tsingshan. However, the start of work on a second lithium plant has been postponed to next year as the company seeks more favorable investment conditions under new legislation.