Eramet sees higher core earnings this year after pandemic hit

Image source: Eramet

French mining group Eramet said on Tuesday it expected a rebound in core earnings this year after starting to recover in recent months from severe disruption caused by the covid-19 pandemic.

The company reported a net loss of 675 million euros ($817 million) for 2020, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 398 million euros against 630 million in 2019.

The full-year EBITDA showed a higher second-half level than the 120 million euros in the first half, in line with Eramet’s previous guidance.

Record mining output, including a 22% increase in manganese ore output in Gabon, and higher nickel ore exports from New Caledonia had supported the recovery, it said.

Based on the start of 2021 and the outlook for manganese and nickel prices, Eramet forecast EBITDA this year around 600 million euros, assuming no further economic setback related to the pandemic, it said in a statement.

The group had reported a plunge in EBITDA and a net loss of 623 million euros for its first half, with a pandemic-related aviation slump hitting its Aubert & Duval (A&D) alloys unit that Eramet is considering selling.

Eramet Chairwoman and Chief Executive Christel Bories told reporters on a call that “discussions are continuing” over the sale of A&D, declining to comment further on talks.

Sources said in December that Airbus, Safran and aerospace-focused fund Ace Aero Partenaires had submitted a non-binding offer for A&D.

In New Caledonia, which has seen unrest over the sale of a mine by Brazilian group Vale, higher exports helped lower SLN’s costs and lead to positive fresh cash flow in the second half, Eramet said.

Eramet warned last month that SLN risked collapse if local disruption continued, but Bories said SLN was not in danger and had shown its potential to generate cash.

For 2021, the group forecast a 20% increase in manganese ore production in Gabon, a rise of at least 40% in nickel ore exports from New Caledonia and a near doubling of nickel ore output at its new mine inIndonesia.

($1 = 0.8260 euros)

(By Gus Trompiz; Editing by Edmund Blair, Barbara Lewis and Emelia Sithole-Matarise)

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