Investor Presentation

Transcription

1 12 September 2018 Investor Presentation Philippe Gundermann Executive VP Strategy & Innovation, Investor Relations Sandrine Nourry-Dabi Investor Relations Manager

2 CONTENT 1 ERAMET at a glance half-year financial results 3 Operating performance 4 Strategic orientations 5 Conclusion & outlook

3 DISCLAIMER Certain information contained in this presentation including any information on ERAMET s plans or future financial or operating performance and any other statements that express management s expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. ERAMET cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of ERAMET to be materially different from the company s estimated future results, performance or achievements expressed or implied by those forward-looking statements. Past performance information given in this presentation is solely provided for illustrative purposes and is not necessarily a guide to future performance. No representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forwardlooking statements, forecast financial information or other forecast. Nothing contained in this presentation is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or future performance of ERAMET. Nothing in this presentation should be construed as either an offer to sell or a solicitation to buy or sell securities nor shall there be any offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction.. ERAMET Investor Presentation 3

4 1 ERAMET at a glance ERAMET Investor Presentation 4

5 A GLOBAL LEADER AND A DIVERSIFIED MINING AND METALLURGICAL GROUP (1/2) business divisions with global leading positions Integrated MANGANESE as well as mineral sands producer Integrated NICKEL producer Producer of parts and semi-products in high performing special steels and ALLOYS Stock market performance Base 100 ALLOYS 30% NICKEL 18% Others 32.14% In 2017 turnover MANGANESE 53% Historic and stable shareholders Duval Family : SORAME + CEIR 36.93% 3,652m 2,984m sales 24% 13% EBITDA margin 608m 84 m current operating income (COI) 12,600 Employees in 20 countries 230m 217 m of capital expenditure 19% 47% gearing / / / /2018 ERAMET SBF 120 ERAMET Investor Presentation BRGM % STCPI % APE 25.57% 21.4% 2.7% ROCE 1 In 2017 / in COI / Capital employed 1 of year n-1 (see 2017 Registration document - p.12) ; 2 Bureau de Recherches Géologiques et Minières (French Geological Survey Office) ; 3 Société Territoriale Calédonienne de Participation Industrielle ) 5

6 2017 Key figures Main market Division A GLOBAL LEADER AND A DIVERSIFIED MINING AND METALLURGICAL GROUP (2/2) World class deposits with long term resources 62 facilities MANGANESE NICKEL ALLOYS Gabon (manganese): 273 Mt resources New Caledonia: 4.4 Mt resources (Ni content) Unique know-hows #2 manganese ore producer worldwide #1 refined manganese alloys producer worldwide Senegal (Zircon & Ilmenite): 26.2 Mt resources (HM 1 In situ) Titanium slag producer Indonesia Weda Bay Nickel: 9.3 Mt resources (Ni content) #1 high grade Ferronickel producer worldwide One of the high purity nickel salts producer worldwide #2 high-power closed-die forged parts producer worldwide One of the gas-atomized powders producer worldwide A leading producer of highperformance special steels Carbon Steel (90% of the manganese market) Stainless Steel (2/3 of the nickel market) Aerospace, energy and High speed steel sectors Sales: 1,919m Headcount: c.4,800 Sales: 644m Headcount: c.2,300 Sales: 1,087m Headcount: c.5,000 Lithium deposit (Argentina): 9.9 Mt drainable resources (LCE 2 ); development ongoing From mining to metallurgy to serve our customers ERAMET Investor Presentation 1 Heavy-Mineral contents ; 2 Lithium Carbonate Equivalent 6

7 Strong fundamentals in H (1/2) Sales 1,813m + 1% vs. H Alloys 29% 1 813m 51% Manganese Nickel 20% Current operating income (COI) 294m + 15% vs. H Net income share 94m + 16% vs H Net debt 449m + 73m vs. end-2017 Gearing 1 23% ROCE 2 22% ERAMET Investor Presentation 1 Net debt-to-equity ratio 2 Current operating income divided by capital employed from previous financial year 7

8 Strong fundamentals in H (2/2) Results up in H Well oriented mining activities, driven by an increase in metals prices, but penalised by the decrease in the US dollar versus the euro (-12%) and the increase in brent prices (+32%) Slight decrease in results for the Manganese division Manganese ore spot prices (+29% 1 ) and COMILOG production maintained at a historically high level Erosion in manganese alloys prices, resulting in a margin squeeze Improvement in results for the Nickel division Very sharp increase in nickel prices in H (+42% 1 ) Under-performance for Aubert & Duval Unfavourable market environment in the aerospace sector (adjustment in the production rate) and energy sector Recognition of an asset impairment charge ( 200m) 1 ERAMET Investor Presentation Change calculated based on average monthly prices: CRU index (manganese ore) and LME prices (nickel) 8

9 Successful takeover in the attractive mineral sands sector Successful takeover for our partner in mineral sands, MDL* 100 % interest acquired. Offer price at A$1.75 per share valuing: MDL s equity at approximately A$350, i.e. c. 220m TiZir s underlying assets at c. 770m Main markets for TiZir: Pigment industry (titanium dioxide slag) Ceramics (Zircon) Senegalese govt. 10 % 90 % Grande Côte Operations 100 % TTI plant Integration ongoing TiZir fully integrated in ERAMET accounts from 1st July 2018 onwards * ERAMET Investor Presentation Mineral Deposits Limited, ERAMET s former partner in TiZir 9

10 17% reduction in accident frequency rate in H Roll-out of a «STOP PLANT» day in March 2018: c. 8,000 employees mobilised Participation in World Day for Health and Safety at Work in April 2018: On-site sessions and workshops Continued roll-out and assessment: Essential Safety Requirements H Safety interactions 1 ERAMET Investor Presentation TF2 = number of lost time and recordable injury accidents for 1 million hours worked 10

11 half-year financial results ERAMET Investor Presentation 11

12 Current operating income up 15 % in H m H H Sales 1,813 1,797 EBITDA % Sales 24% 22% Current operating income % Sales 16% 14% Net income share Net debt (net cash) Net debt-to-equity ratio 23% 36% ROCE (current operating income / capital employed for previous year) 1 22% 19% Adjusted data from reporting, in which joint-ventures are accounted for using proportionate consolidation. The reconciliation with the published financial statements is presented in the Appendix. 1 Sum of equity, net debt, and provisions for site rehabilitation, for restructuring and other social risks, deducted from financial assets, excluding the Weda Bay Nickel capital employed. ROCE at 30 June is calculated based on 12 rolling months. ERAMET Investor Presentation 12

13 Net income share up 16% m H H Sales 1,813 1,797 Current operating income Other income and operating expenses (1) (28) o/w Development projects (11) 6 Provisions/Reversal on asset impairment tests (133) 0 Gain or loss on disposal 162 (2) Other items (19) (32) Financial result (51) (52) Share in income from associated companies 0 (1) Income tax (103) (107) Net income O/w minority interests share 45 (13) Net income share Adjusted data from reporting, in which joint-ventures are accounted for using proportionate consolidation. The reconciliation with the published financial statements is presented in the Appendix. ERAMET Investor Presentation 13

14 Increase in current operating income, due to Nickel division, driven by price increases m H COI m H H Manganese Nickel (22) (104) Alloys Holding (26) (18) Nickel Alloys Manganese SENSITIVITIES Variation (+/-) Impact on annual COI (+/-) Exchange rates 0,1 USD/EUR ~ 65 M Brent prices 10 USD/bbl ~ 20 M * Manganese ore prices 1 USD/dmtu ~ 95 M * Manganese alloys prices 100 USD/t ~ 73 M * Nickel prices 1 USD/lb ~ 110 M * ERAMET Investor Presentation *For an exchange rate of USD/ 14

15 Strong margin squeeze impact for manganese alloys Margin squeeze impact on manganese alloys: several months lag between the price of ore consumed (from COMILOG or third party) and the selling price of alloys (impact on price variations and input costs). Change in current operating income ( m) m m Squeeze impact H COI Volume/Mix Productivity Businesses in ramp-up Price* Alloys prices Manganese Ore cost Input Costs** Currency Amort. Prov. and others H COI ERAMET Investor Presentation * Excluding manganese alloys prices, included in margin squeeze; ** Excluding cost of ore purchased externally, included in margin squeeze 15 Scope

16 Stable industrial CAPEX Mainly focused on industrial maintenance, transgabonese railway renovation (SETRAG), and SLN s port unloading equipment replacement. In m* Growth Maintenance / EHS / Productivity % H H ERAMET Investor Presentation * At real scope 16

17 Positive Free Cash Flow* at 42m, after 118m in liquidation of tax debt Positive Free Cash Flow in the last 4 half-years The 144m reduction in FCF excluding asset disposals in H vs. H is mainly due to: a 87m increase in operating cash flow cash consumption of 202m, due to an increase in the WCR o/w 122m in non-operating items (mainly liquidation of COMILOG and ERAMET Norway tax debt) Free cash flow ( m) Proceeds from assets disposal FCF excluding disposals -75.6% FCF H Operating cash flow** -122 Change in IT WCR -80 Change in other WCR -15 Capex & Other 42 FCF H H H H H H ERAMET Investor Presentation *Sum of cash flow generated by activity and attributable to investment operations and disposals; **Net income excluding amortization and provisions 17

18 Net debt* impacted by dividends payment Net debt increase of 73m in H Strong contribution from operating cash flow. Negative impact of the WCR due to corporate tax debt liquidation. Strict and targeted CAPEX management. Payment of dividends to ERAMET and COMILOG shareholders FCF : 42m In m Net debt end-2017 Operating cash flow** Change in Simplified WCR Change in income tax WCR Other changes of WCR Industrial capex Acquisition of MDL shares* Other investments flows Dividends paid * Only considering the acquisition of 8.03% of MDL shares prior to the takeover offer ERAMET Investor Presentation ** Net income excluding amortisation and provisions and excluding the impact of full consolidation of TiZir 18 7 Others -449 Net debt endjune 2018

19 Liquidity still high to support ambitions Revolving credit facility («RCF») : January 2018: full repayment of the balance of the entire drawdown made in early 2016 ( 250m) RCF extended in February 2018 for 981m with a five-year maturity (new term 2023) Prepayment of Schuldschein loan ( 60m, term in 2020) in June ,000 2,500 2,000 1,500 1, ,281 1,281 30/06/2016 financial liquidity ( m) 1,698 1,698 31/12/2016 Available cash Other undrawn lines 1,946 1, /06/2017 2,806 1,825 2,482 1, /12/2017 pro forma* Undrawn line: Revolving Credit Facility ("RCF") 30/06/2018 ERAMET Investor Presentation * Pro forma of drawdown repayment of 250m of the RCF on 18 January 2018, and after the extension to 2023 for the RCF signed on 13 Feb

20 Debt maturity of c. 3.5 years (excl. RCF) gross debt ended at 1,951m at 30 June debt (excl RCF) is c. 80% based on fixed rates. Maturity in 30 June 2018 ( m) Bonds (ERAMET / TiZir at 50%) French Government SLN loan Commercial papers, bank debt and operating debt >2026 ERAMET Investor Presentation 20

21 3 Operating performance ERAMET Investor Presentation 21

22 Manganese 2 nd global producer of high-grade manganese ore. 2 nd global producer of manganese alloys. 1 st global producer of refined manganese alloys. Mn ERAMET Investor Presentation 22

23 Sustained global production levels in manganese ore in a context of carbon steel production that is still favourable Mn Global carbon steel production up 4.7% vs. H (+3.6% vs. H2 2017), particularly driven by China (+6.6%). Slight downturn posted in Europe (-1.7%). Sustained manganese ore production levels in H1 2017, especially in South Africa. Increase to stable levels of manganese ore inventories in Chinese ports at 2.8 Mt at end-june GLOBAL CARBON STEEL PRODUCTION GLOBAL MANGANESE ORE PRODUCTION (MANGANESE CONTENT) 1,800 1,500 1,200 Mt 1,606 49% +5.4% +4.7% 1,692 49% Mt % +11.1% % % 50% 51% % 50% H H1 2018e 2016e H1 2017e 2017e H1 2018e China Rest of world ERAMET Investor Presentation Source: Worldsteel Association / ERAMET Source: ERAMET 23

24 USD/dmtu Increase in manganese ore prices in H1 2018, erosion in manganese alloys prices Mn Increase in spot prices for manganese ore of 29% on average in H vs. H and 18% vs. H Decrease in prices since May, remaining at high levels. Erosion in prices for manganese alloys in H vs. H Decrease in refined and standard European ferromanganese prices by 12% and 17% during the period. Margin squeeze (increase in raw materials costs, declining prices) weighed heavily on the manganese alloys margin in H MONTHLY CHANGE IN CRU PRICES FOR MANGANESE ORE AND MEDIUM-CARBON FERROMANGANESE (REFINED) H average 5.69 H average ,000 1,500 1, /t 0 Jan Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Manganese Ore Medium-carbon ferromanganese ERAMET Investor Presentation Manganese: CRU 44% CIF China; FerroMn MediumCarbon: CRU Western Europe spot prices 24

25 High level of manganese ore production at COMILOG. Annual target at 4 Mt confirmed Mn High level of ore produced and transported by COMILOG at 1.85 Mt in H (-3% vs. H1 2017, given the derailment of an ore train in February). Decrease in alloys production for manganese by 1.5%, due to maintenance operations in Norway and the US. MANGANESE ORE PRODUCTION AND AGGLOMERATES* MANGANESE ALLOYS PRODUCTION High-carbon ferromanganese kt 4,500 4,000 3, % -3.0% kt 1, % Standard silicomanganese Refined alloys (including Mn Metal) -1.5% 716 3,000 2, ,000 4, , ,500 1,000 1,906 1, H H H H ERAMET Investor Presentation * Produced and transported; excl. CMM consumption 25

26 Solid performance of TiZir* in H Other metals Mine in Senegal (Grande Côte Operations) +8% in heavy mineral concentrate production in H (374 kt) vs. H After railway track construction works on the outskirts of Dakar that weighed on ilmenite shipments at the start of the year, the situation is currently normalized. Metallurgy in Norway (TTI) +38% in titanium dioxide slag produced in H (81 kt), despite a technical incident impacting the prereduction furnace at the start of the year. COI of 20m (100%) during H (vs. 10m in H1 2017) Highly favourable trends in zircon prices. Titanium dioxide slag prices up. ERAMET Investor Presentation *50% JV with Mineral Deposits Limited (Australia) 26

27 Nickel 1 st global producer of high-grade ferronickel. One of the global producers of high-purity nickel salts. Ni ERAMET Investor Presentation 27

28 Continued growth in global stainless steel production in H Growth in global stainless steel production: 6.5% in H vs. H Ni Global primary nickel production up 6.8%, with sharp growth in NPI production from Indonesia and China (+33%). GLOBAL STAINLESS STEEL PRODUCTION GLOBAL PRIMARY NICKEL PRODUCTION (EXCL. SCRAP) kt 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,084 54% 46% % +5.7% 47,656 22,856 52% 48% H % 46% 2017 China Rest of the world 24,336 50% 50% H1 2018e +6.8% kt +2.9% 2,200 2,000 1,800 1,600 1,999 1,022 2, ,400 1,200 1, , H H1 2018e Ni Class I* Ni Class II - NPI Indonesia Ni Class II - NPI China** NI Class II - FeNi high grade & other * ** ERAMET Investor Presentation Refined nickel (class I) - products with a Charge nickel (class II) - products Source: ISSF and ERAMET 28

29 Sharp increase in nickel prices at the LME in H Significant decline in inventories Ni Half-year average in nickel prices at the LME at USD 13,871/t (USD 6.30 /lb) in H1 2018, up 42% vs. H (USD 9,761/t and USD 4.43/lb on average) and 26% vs. H (USD 11,052/t and USD 5.01/lb on average). Significant decline in nickel metal inventories at the LME and SHFE (-27% at 299 kt at 30 June 2018). Demand above supply. LME Nickel price USD / lb ERAMET Investor Presentation 29

30 Global production in the Nickel division down 3% SLN production down 2% at 27 kt in H vs. H1 2017: deteriorated weather conditions vs and delay in implementing increase in mine working hours. Sandouville ramp-up progressing, 40% nameplate capacity in June. Ni 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 In tonnes 55, ,156 1,656 27,500 NICKEL PRODUCTION -2.9% +7.2% 59,183 2,412 56,771 H ,300 1,300 27,000 H High purity nickel Ferronickel Ferronickel and matte ERAMET Investor Presentation 30

31 A challenging environment to achieve targeted intrinsic progress in 2018 Ni SLN break-even cost at USD 6.57/lb in H (+13% vs. H1 2017), adversely impacted by: negative impact of the euro-us dollar exchange rate (-12%) and the increase in Brent prices (+32%), usual negative seasonal effect, amplified by even more unfavourable weather conditions vs. 2017, a labour union context delaying the implementation of organisational changes. SLN CASH-COST & BREAK-EVEN COST (USD/lb) +13% Vs.FY18 targeted gains of USD 0.26/lb on average 5.95 H Break-even cost Intrinsic progress External factors (*) Investments & financial expenses H Break-even cost Cash-cost Investments** & financial expenses*** ERAMET Investor Presentation * Mainly US dollar and fuel impact; ** Forecasted 2018 investment divided by tonnage; ** *Accounted for in SLN s financial statements 31

32 All Alloys 2 nd global producer of high-power closed-die forged parts. One of the global leaders in gas atomised powder metallurgy. A leading producer of high-performance special steels. ERAMET Investor Presentation 32

33 Lower sales in an unfavourable market environment for A&D All Aerospace 9% 25% H SALES BY SECTOR 9% 520m High-speed steels, Tools & Specialties 57% Energy Others Aerospace 10% decline in sales particularly penalised by a slowdown in the production rate of several wide bodies programs. Energy Sharp decrease in land turbine sector in H1 2018; low order backlogs of major players in the energy sector. High-speed steels c. 3% growth in high-speed steel volumes sold thanks to a global sales action plan. Powder metallurgy Continued strong interest from clients for developments in this segment. 8% decline in sales vs. H ERAMET Investor Presentation 33

34 Decrease in COI with contrasting business trends Under-performance of Aubert & Duval Impact of lower activity with less absorption of fixed costs. Negative impact of the euro-us dollar exchange rate variation. + 7m of non-recurring income from hedging in H Improved performance of Erasteel Growth in volumes and favourable impact of raw materials prices COI (in m) All Alloys division 32-22m Aubert & Duval Erasteel 32-26m H H H H H m H H H H H ERAMET Investor Presentation 34

35 4 Strategic orientations ERAMET Investor Presentation 35

36 strategic and managerial transformation underway in H1 2018, boosted by digital transformation Significant transformation Strategic Managerial: Digital transformation ERAMET Investor Presentation 36 36

37 strategic transformation: 3 key pillars 1 FIX / REPOSITION OUR LEAST PERFORMING ASSETS 3 EXPAND OUR PORTFOLIO INTO HIGH VALUE-ACCRETIVE MARKETS 2 GROW ORGANICALLY AND / OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES ERAMET Investor Presentation 37

38 1 FIX / REPOSITION OUR LEAST PERFORMING ASSETS SLN: targeted decrease in cash cost A&D / Erasteel: Redefine strategic orientation for each business Industrial and commercial optimisation Strengthening operational excellence ERAMET Investor Presentation 38

39 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (1/6) Grow in manganese ore: maximise value of our existing assets COMILOG: Bangombé plateau, currently operated: Ongoing studies regarding an alternative processing route for part of the ore to increase incrementally short-term production. Okouma plateau: Ongoing Detailed Feasibility Study (DFS) to increase the Moanda mine s production capacity: mobilisation of team in charge (c. 50 persons, fulltime), production increase of more than 30%, with mining resources for several decades. SETRAG: renovation plan for railway ERAMET Investor Presentation 39

40 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (2/6) Strategy to increase manganese ore production by more than 30% (COMILOG): Moanda deposit in Gabon: one of the two most competitive manganese mines in the world, with long-lasting reserves. Transition to a new mining plateau (from Bangombé to Okouma) from 2020 onwards to guarantee several decades of manganese ore operations. Pre-feasibility Study (PFS) in 2018 for an investment decision in first-half Gradual change in plateau without impacting cash-cost and production. ERAMET Investor Presentation 40

41 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (3/6) Strategy supported by renovation of the Transgabonese railway (SETRAG): Works started in 2017: renovation of the Transgabonese railway line, operated by SETRAG, a subsidiary of COMILOG. This investment will allow for increased transport capacity and railway line reliability. Investment, spread over 8 years: 316m, including 93m made by the Gabonese government, and 223m financed by SETRAG. ERAMET Investor Presentation 41

42 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (4/6) Grow in manganese ore: developing and operating new deposits Study of potential targets with view to control assets; target either already operational, or in development ERAMET Investor Presentation 42

43 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (5/6) Bringing value to the Weda Bay Nickel deposit May 2018: implementation of partnership with Tsingshan, No. 1 global stainless steel producer, after waiving preliminary conditions in the agreement. Shareholder structure: ERAMET 43% / Tsingshan 57%. One of the largest nickel oxidised deposits in the world still not in operation, on Halmahera island, Indonesia, supplied by ERAMET. Tsingshan responsible for plant construction and operations. Objective: competitive NPI production in Indonesia, with a production target of 30 kt / year in nickel content (13 kt in nickel / a year for ERAMET). 1 st orders of equipment for plant construction and earth works. 1 st production expected end-2020 ERAMET Investor Presentation 43

44 2 GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES (6/6) Other metals Opportunistic development in other metals, offering synergies with our existing businesses. ERAMET Investor Presentation 44

45 3 EXPAND OUR PORTFOLIO INTO HIGH VALUE- ACCRETIVE MARKETS (1/3) Project to expand portfolio into metals for energy transition Strategic development options for ERAMET in the electric vehicle batteries segment ERAMET business segment Raw materials Manufactured materials Batteries Vehicles Second life ERAMET business segment Recycling Ni, Li, Co and Mn mines Ni salts Circular, sustainable economy Battery recycling Metals production ERAMET Investor Presentation 45

46 3 EXPAND OUR PORTFOLIO INTO HIGH VALUE- ACCRETIVE MARKETS (2/3) Project to expand portfolio into metals for energy transition Annual sales of Electric Vehicles in 2025* (Millions) Annual metal consumption for the Electric Vehicles* batteries market and mass energy storage* (kt except Mn in Mt) Lithium <0,01 0,1 Manganese > 25m 215 kt 15 Mt ~3m 100m 310 ~50 Nickel salts 120 kt ~20 90 Cobalt 110 kt Current size 2025 size Current global market (across all applications) ERAMET Investor Presentation * ERAMET estimations, electric bikes and buses included 46

47 3 EXPAND OUR PORTFOLIO INTO HIGH VALUE- ACCRETIVE MARKETS (3/3) 3 Li Lithium Development of our lithium deposit in Argentina Investment decision in H subject to a technico-economical assessment Start of production in 2021 Production capacity: 20 kt of lithium carbonate per year Co, Ni Li Lithium Investigation of opportunities in order to increase our exposure to nickel salts, cobalt and primary lithium: study of potential targets and/or development options Li Lithium Co, Ni Development in recycling: evaluation of opportunities to develop battery recycling business (lithium, nickel, cobalt) ERAMET Investor Presentation 47

48 Acceleration in the s strategic transformation in H SLN 1 FIX / REPOSITION OUR LEAST PERFORMING ASSETS Aubert & Duval Erasteel Review of strategic options underway targeting a sustainable recovery in our activities 2 Organic growth: Review of an alternative ore processing route Mobilisation of the team responsible for the Detailed Feasibility Study (DFS) (production increase of +30%) EXPAND OUR PORTFOLIO INTO HIGH VALUE-ACCRETIVE MARKETS GROW ORGANICALLY AND/OR EXTERNALLY IN OUR ATTRACTIVE BUSINESSES Energy transition (nickel, lithium, cobalt) Feasibility study ongoing: Large-scale long duration process pilot conducted in H1 2018; satisfactory results Engineering is ongoing ERAMET Investor Presentation COMILOG / SETRAG Weda Bay Nickel TiZir External growth in manganese ore Implementation of the partnership with Tsingshan Successful takeover offer for MDL 48

49 5 Conclusion and outlook ERAMET Investor Presentation 49

50 ERAMET group: a strategic and managerial transformation with strong fundamentals Results up in H with consolidated COI at 294m (+15% versus H1 2017). A first step in achieving the strategic roadmap with the success of the takeover offer for MDL. A managerial transformation that is progressing, a pillar for our performance and development. Markets that are favourable overall for the at the start of this H2 2018, except some sectors in the Alloys division. However, a limited visibility in a context of tensions and uncertainty observed in international trade relations, increasing the volatility of raw materials prices. All ERAMET employees are fully committed to delivering the targets set. ERAMET Investor Presentation 50

51 Appendices ERAMET Investor Presentation 51

52 Shareholding structure Diversification activities A long term player Inauguration of Moanda Metallurgical Complex Establishment of MKAD closed-die forged parts for aircraft parts manufacturers 100% of TiZir owned by ERAMET Inauguration of EcoTitanium Incorporation Nickel (operations of nickel mines in New Caledonia) Le Nickel becomes SLN, with Elf Aquitaine (French State) holding 50% of the company Acquisition by ERAP (French State) of 70% of SLN Set up of ERAMET- SLN Acquisition of the refined manganese alloy business of the group Elkem The Duval family becomes shareholder of ERAMET, through the contribution of Aubert & Duval Listing of ERAMET Acquisition of Weda Bay Nickel (nickel project) in Indonesia Diversification into closed-died forging and specials steels, following contribution by the Duval family and Aubert & Duval (now Alloys division) to ERAMET Diversification into manganese, with the acquisition of 61% of COMILOG in Gabon Partnership Weda Bay Nickel Transfer of AREVA shares to FSI (26%) Set-up of TiZir in Senegal (ilmenite and zircon project) Acquisition of a 59% stake in Tinfos (manganese alloys, titanium dioxyde) Acquisition of Erasteel (High speed steel producer) Nickel Alloys Manganese Mineral sands ERAMET Investor Presentation 52

53 Diversified markets 2017 ERAMET sales breakdown by end-market Energy 4% High-Speed steels & Tooling 7% Other All. 2% Other Mn 4% Mineral sands/ pigments 3% Stainless steel 1% Aerospace 17% Carbon steel 45% Steels: >60% Other Ni 1% Stainless steel 16% ERAMET Investor Presentation 53

54 A global geographic footprint Main operations: France / Europe/USA Manganese alloys France / Europe High speed steels and metals powders France / Europe Closed-die forging Production of alloys & super alloys Senegal Ilmenite and zircon mine Gabon Manganese mine Manganese alloys and metal plants New-Caledonia Nickel mines and ferronickel plant ERAMET Investor Presentation 54

55 Manganese division Key figures Mn m H H Sales EBITDA COI Industrial CAPEX ERAMET Investor Presentation 55

56 Nickel division Key figures Ni m H H Sales EBITDA 22 (59) COI (22) (104) Industrial CAPEX ERAMET Investor Presentation 56

57 Alloys division Key figures All m H H Sales EBITDA COI Industrial CAPEX ERAMET Investor Presentation 57

58 /t CRU price trends in manganese alloys (refined and standard) in Europe Mn CRU PRICE TRENDS FOR MANGANESE ALLOYS IN EUROPE BETWEEN JANUARY 2014 AND JUNE ,000 1,500 1, Jan.14 Jul.14 Jan.15 Jul.15 Jan.16 Jul.16 Jan.17 Jul.17 Jan.18 High-carbon ferromanganese Silicomanganese Medium-carbon ferromanganese Source: CRU spot Prices Western Europe ERAMET Investor Presentation 58

59 Reconciliation reporting and published accounts m H H Sales 1,813 1,797 EBITDA % Sales 24% 22% COI % Sales 16% 14% Other operating income and expense (1) (28) Operating income Financial result (51) (52) Pre-tax income Share of income of equity affiliates (0) (1) Income tax (103) (107) Net income Minority interests 45 (13) Net income share ERAMET Investor Presentation 59

60 Cash-flow table m H H Operating activities EBITDA Cash impact on items under EBITDA (160) (204) Cash from operating activities Change in WCR (99) 94 Net cash generated by operating activities (1) Investment activities Industrial CAPEX (112) (107) Other investment flows (19) - Net cash from investment activities (2) (131) (107) Free Cash Flow (1) + (2) Cash from equity operations (122) (3) Impact of changes in exchange rates and in accounting methods 7 3 (Increase) / Reduction in net debt (73) 172 (Net debt) at start of period (376) (836) (Net debt) at close of period (449) (664) ERAMET Investor Presentation 60

61 Balance Sheet at 30 June 2018 Assets - m Liabilities - m 31/12/ /06/ /12/ /06/2018 3,269 3,290 3,269 3,290 1,694 1,699 2,710 2, Fixed assets Working capital requirement Financial instruments Equity- share Minority interests Provisions and net deferred tax Net debt Financial instruments ERAMET Investor Presentation 61

62 Bond maturities Currency Initial amount (in m) Amount on 30/06/18 (in m) Maturity date Interest rate 2013 bond issue % 2014 ODIRNAN bond issue perpetual 4% TiZir bond renewal - July 2017 USD Jul % Bond issue Sept Feb % ERAMET Investor Presentation 62

63 Shareholding on 30 June 2018 Others 32.14% Duval family: SORAME + CEIR 36.93% BRGM % STCPI % APE 25.57% Numbers of shares issued: 26,635,856 Notes 1 STCPI (Société Territoriale Calédonienne de Participation Industrielle): entity owned by the New Caledonian provinces 2 BRGM (Bureau de Recherches Géologiques et Minières): the French Geological Survey Office ERAMET Investor Presentation 63

64 CONTACT Executive Vice-President Strategy and Innovation, Investor Relations Philippe Gundermann - philippe.gundermann@erametgroup.com Investor Relations Manager Sandrine Nourry-Dabi - sandrine.nourrydabi@erametgroup.com SEE YOU ONLINE DOWNLOAD OUR FINANCE APP SEE YOU ON LINKEDIN