(News Bulletin 247) – For the first time since 2020, the French mining group has revealed accounts in the red for the first half of the year, weighed down by its subsidiary in New Caledonia and the fall in mineral prices.

The French mining group Eramet suffered its first half-yearly net loss since 2020 in the first six months of the year, at -41 million euros, due in particular to the fall in mineral prices on the markets and the losses of its subsidiary in New Caledonia.

On the Paris Stock Exchange, Eramet shares fell by 9% around 11:45 a.m.

The group nevertheless said on Thursday that it was confident for the year, announcing a “significantly better” performance in the second half thanks to a rise in prices, and even significantly raised its gross operating profit target, now expected to be between 1.2 and 1.3 billion euros in 2024.

An increase in volumes

To justify its optimism, Eramet highlights the “good operational performance” of the first six months, with an increase in the volumes of ore produced and the expected rise in prices on world markets.

For manganese ore, prices are currently “up 65% compared to the first half of 2024,” CFO Nicolas Carré stressed. The group is therefore counting on an average price higher by $2.5 in 2024 compared to 2023 – and one dollar “represents €255 million” in additional gross operating income for Eramet.

Moreover, the second half of the year is traditionally better for the group due to the weather, especially in the third quarter, according to Nicolas Carré.

This “favorable seasonality”, “combined” with the expected rise in prices, “makes us particularly confident in the prospect of a very strong improvement in our financial performance by the end of the year”, indicated Christel Bories, CEO of Eramet, quoted in a press release.

The price effect will be felt especially “from the third quarter,” he added.

A difficult start to the year

The figures for the first six months reflect a difficult start to the year. “This first half-year is taking place in a context of still degraded prices”, especially for nickel but also for manganese ore, noted Nicolas Carré.

The “price effect” weighed 310 million euros on gross operating profit (adjusted EBITDA, including certain subsidiaries), which fell by 27% over one year, to 247 million euros.

It also weighs on turnover, which comes to 1.5 billion euros, or 9% less than in the first half of 2023.

In addition, the subsidiary Société Le Nickel (SLN), which operates the mines in New Caledonia, “experienced a very difficult first half of the year, made worse by the riots that began on May 13 in New Caledonia,” according to Nicolas Carré. The operation of the mines was impossible “for a major part” of the second quarter, according to the press release.

SLN’s losses, of 72 million euros net in the first half, “still appear in our income statement, but the cash outflow and the resulting debt are entirely financed by the State” and therefore no longer weigh on Eramet’s balance sheet according to an agreement sealed in April. This allows the entity’s debt to be neutralized in the consolidated accounts.

Excluding SLN, “our net profit, group share, would be positive by 31 million euros over the half-year,” Nicolas Carré stressed.

Nickel mining is at the heart of the New Caledonian economy, which contains significant reserves but is going through an unprecedented crisis affected by the fall in the price of the ore, which plummeted by more than 45% in 2023, causing record losses for the groups operating the three factories on the archipelago.

(With AFP)