INVESTOR PRESENTATION. September 2017

Transcription

1 INVESTOR PRESENTATION September 2017

2 DISCLAIMER This presentation does not constitute an offer to sell or the solicitation of an offer to buy any 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. The securities to be offered have not been registered under the U.S. Securities Act of 1933, as amended (the Securities Act ) and may not be offered or sold in the United States absent registration or unless pursuant to an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. The securities will be offered outside the United States pursuant to Regulation S under the Securities Act pursuant to an exemption from registration. There is no assurance that the offering will be completed or, if completed, as to the terms on which it is completed. 2

3 SUMMARY 1 ERAMET IN A NUTSHELL 2 FOCUS ON DIVISIONS 3 FINANCIALS 4 PRIORITIES AHEAD 5 KEY INVESTMENT POINTS & TERM SHEET 3

4 ERAMET IN A NUTSHELL 4

5 USD/lb or USD/dmtu ERAMET AT A GLANCE 2,984 m 1,797 m sales 13% 22% EBITDA margin 84 m 256 m current operating income A diversified mining and metallurgical Group with world-class positions o 3 business divisions with leading positions Integrated NICKEL producer Integrated MANGANESE producer In ,000 employees in m 107 m of capital expenditure 47% 36% gearing 1,493 m market cap. at In 2016 / in H ALLOYS Producer of highly technological advanced steel products for the most demanding industries Manganese Ore and Nickel metal prices evolution since 2010 Ni price LME (USD/lb) Mn ore 44% (CRU CIF Chine) Turnover since 2010 (in m) ,373 1, H H

6 Shareholding structure Diversification activities ERAMET A LONG TERM PLAYER Inauguration of EcoTitanium, to establish the first European facility for recycling aviation grade titanium Inauguration of Moanda Metallurgical Complex. Establishment of MKAD closed-die forged parts for aircraft parts manufacturers Incorporation Nickel (operations of nickel mines in New Caledonia) Agreement with the Gabonese Republic for a phased increase of its shareholding in COMILOG (up to 35%) The Duval family becomes shareholder of ERAMET, through the contribution of Aubert & Duval Transfer of ERAP stake to Cogema, subsequently absorbed into AREVA Transfer of AREVA 26% to FSI Acquisition of a 59% stake in Tinfos (manganese alloys, titanium dioxyde) Partnership Weda Bay Nickel Set-up of TiZir in Senegal (ilmenite and zircon project) 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 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 ERAMET Alloys) to ERAMET Diversification into manganese, with the acquisition of 61% of COMILOG in Gabon Acquisition of 51% of Eurotungstène (cobalt and tungstene powder producer) Acquisition of Erasteel (High speed steel producer) Nickel Alloys Manganese Group

7 ERAMET IS PRESENT ON EVERY STAGE IN THE METALS VALUE CHAIN EXPLORATION & MINING METAL VALORIZATION TRANSFORMATION 5 world-class deposits Nickel New Caledonia Weda Bay 50+ years ressources / #7 largest producer of nickel Manganese - Gabon 40+ years resources / #2 high-grade Mn ore worldwide Zircon and Ilménite Senegal 25+ years ressources Lithium project Exploration Mine #1 High grade FeNi producer worldwide #2 Manganese alloys producer worldwide #1 refined manganese alloys producer worldwide Titanium / producer Extractive Metallurgy Elaboration Metallurgy Products RAW MATERIAL VALUE CHAIN #1 nickel chloride producer worldwide #3 high grade nickel producer worldwide #2 closed-die forging parts producer worldwide & #1 gas-atomized powders producer worldwide R&D and engineering at each stage 7

8 WITH AN INTERNATIONAL FOOTPRINT Main operations: France / Europe/USA Manganese alloys France / Europe High speed steels and metals powders France / Europe Closed-die forging Production of alloys & superalloys Senegal Ilmenite and zircon mine Sales FY 2016 (breakdown by geographic area) 31% 5% 21% 11% 32% France Europe North America Asia Other Gabon Manganese mine Manganese alloys and metal plants New-Caledonia Nickel mines and ferronickel plant 8

9 A COMMITTED EXECUTIVE MANAGEMENT AND A SHAREHOLDING STRUCTURE ENSURING A LONG TERM STRATEGY Shareholding structure as of 30/06/2017 Executive committee Others 32.01% Duval family: SORAME + CEIR 37.00% Christel BORIES Chairman and CEO Philippe VECTEN CEO Mining Division Denis HUGELMANN CEO Alloys divisions BRGM % STCPI % French State: APE % Thomas DEVEDJIAN Chief Financial Officer Michel CARNEC HR, Health, Safety and Security Catherine TISSOT-COLLE Communication and Sustainable Development Outstanding shares: 26,585,360 To be noted Acquisition by Intesa, Unicredit and Ubi of Carlo Tassara s participation (c. 12%) in December APE (Agence des Participations de l Etat) 2 STCPI (Société Territoriale Calédonienne de Participation Industrielle) : entity owned by the New Caledonian provinces 3 BRGM (Bureau de Recherches Géologiques et Minières the French Geological Survey Office) Philippe GUNDERMANN Strategy and Financial Communication Jean de L HERMITE Chief Legal Officer 9

10 CAPITALIZE ON THE SOLID FRAMEWORK SET UP IN TERMS OF CSR ERAMET implements this sustainable development policy in all Group activities with: An environmental charter. A biodiversity policy adopted in An ethical charter updated in A responsible purchasing charter. An energy policy. Sustainable development is at the heart of ERAMET strategy Protecting women and men by placing health and safety at the heart of our issues. Designing processes that respect regulations and the environment. Developing ways of reducing environmental impacts, engaging in biodiversity. Implement a "license to market" responsibility. Increase resource efficiency and promote recycling. Maintain a trusting relationship with stakeholders main focus Strengthening the Group s ethics compliance and CSR programs Ensuring Group compliance with new French legislation (Sapin II law, Due diligence) Implement the Responsible Procurement and Purchasing Charter through new CSR evaluation process with suppliers 10

11 FOCUS ON DIVISIONS 11

12 Key Figures Activity OVERVIEW OF ERAMET DIVISIONS ERAMET ERAMET Manganese Mineral sands* ERAMET Nickel ERAMET Alloys New metal project Fully-integrated producer: extraction, transformation and commercialisation Products: Manganese ore and Manganese alloys Extraction, transformation and commercialisation Products: Zircon and Titanium (Ilmenite, Rutile, leucoxene) *included in ERAMET Manganese Fully-integrated producer: extraction, transformation and commercialisation Products: Ferronickel and nickel salts and metal (as of H1 2017) Producer of highly technological advanced steel products Products: Alloys, Atomised powder Ongoing development of the process of direct extraction of lithium from lithium deposits in Argentina Products: Lithium carbonate Sales: 1,439m Sales: 595m Sales: 949m Sales: - EBITDA: 358m EBITDA: ( 24m) EBITDA: 74m EBITDA: - Employees: 4,962 Employees: 2,534 Employees: 4,840 Employees: 41 In

13 New Metal Project Nickel Mineral sands Manganese AND ITS 5 WORLD CLASS DEPOSITS Gabon RESSOURCES KEY ELEMENTS 40+ y resources In operation for more than 50 y Leading high-grade manganese producers Senegal Resources available estimated at > 25 y In operation since 2014 Mix geological deposit (Titanium / Zircon) positioned on growth end use market New-Caledonia ~ 50 y resources In operation since the end of the 19th century Indonesia Weda Bay project ~ 50 y resources Partnership with Tsingshan World class mines in terms of quality and size of their resources Argentina Lithium Project Resources available estimated at > 50 y In house innovative process (10 patents) 13

14 Changer photos ERAMET MANGANESE World #2 producer of high-grade manganese ore World #2 producer of manganese alloys World #1 producer of refined manganese alloys 14

15 ERAMET MANGANESE AT GLANCE Manganese main use: carbon steel 90% of world manganese is used for the production of carbon steel in the form of alloys, 10% in the chemical industry (cells and batteries, agriculture, pigments, etc.) A mining and industrial facility in Gabon A manganese mine in Gabon, operated by COMILOG Two local transformation units in Gabon, CIM for fines agglomeration and CMM for the production of highpurity manganese and manganese alloys Production of manganese alloys 3 industrial sites in Norway, 1 in France and 1 in the USA for the production of high carbon and refined manganese alloys 48% of ERAMET turnover In ,803 employees In H

16 WHAT IS THE USE OF MANGANESE? 1 EXTRACTION OF ORE IN ORDER TO o o Manganese is found in minerals and needs to be transformed for exploitation (metallurgical valorization) Mining operations are carried on open pits o Manganese has no satisfactory substitute in its major application in metallurgy 2 TRANSFORM IN ALLOYS OF MANGANESE o o o In the production of steel, manganese occurs mainly as alloys: on average 6 to 7 kg of manganese are used to make one tonne of steel. Utilization as an alloying element improve properties of the steel: hardness, abrasion resistance, elasticity and surface condition for rolling Key component in large range of industries (construction and automobile) 3 TO SATISFY THE CARBON STEEL DEMAND Construction Automobile Machine Ship White goods o If not transformed as manganese alloys, the ore can be used in the form of chemical derivatives targeting various customers in the chemical industry Chemistry and other application 10% Batteries Ferrites (electronic circuits) Agriculture (fertilizers) Other varied applications (pigments, fine chemistry) Carbon steel 90% 16

17 EUR/t EUR/t EUR/t Analysis MARKET TRENDS 1 MANGANESE ORE Main market for Manganese: CARBON STEEL USD/dmtu Worldwide production Evolution of Manganese ore and alloys prices DECREASE OF CARBON STEEL INVENTORIES DUE TO SUPPORTIVE DEMAND In Mt High-carbon ferromanganese Silico-manganese Medium-carbon ferromanganese Mn CRU CIF Chine 44% 2 0 After a record low level in H1 2016, sharp rise in prices seen in H thanks to the recovery in carbon steel production in China and the tightening of production by manganese ore producers. Prices stable at high levels since early Regarding Manganese alloys prices, from their low point early in the year 2016, prices grew very strongly and remain currently firm. Demand for manganese largely depends on changes in the global production of carbon steel. Global carbon steel production in H grew by 4.5% compared with H and 0.4% compared with H Momentum continued to be very strong in China. Source: CRU Western Europe spot prices Exane BNP Paribas 17

18 PERSPECTIVES ON END USE MARKETS 1 EXPECTED DEMAND OF CRUDE STEEL: MODERATE GROWTH WITH A STEADY DEMAND Apparent demand for crude steel In million metric ton SUPPORTIVE DEMAND IN CHINA: IN TERMS OF END USE Forecast crude steel demand in China (in tonnes) // // Other developed North America Europe Emerging countries India China Growth rate CAGR % % +2.0 % +1.2 % +3.7 % +0.0 % +2.4 % +0.8 % +2.5 % +4.7 % +4.5 % +2.1 % -0.8 % Total +2.3 % +0.9 % Source: World Steel Association, ArcelorMittal 18

19 ERAMET EXPERTISE ON MANGANESE: EXTRACTION AND PREPARATION 1 Manganese ore extraction The raw manganese ore comes from Moanda in Gabon. After milling and washing, it is partially enriched and agglomerated 2 Transport by rail and sea The ore is transported by rail (the Transgabon railway), administered by SETRAG, a subsidiary of COMILOG, to the port of Owendo near Libreville, from where it is exported 3 Processing (Alloys) 3a Shipment to chemistry players 4 The ore is mixed with coke in an electric furnace. Ferromanganese or silicomanganese is obtained, which is used in ERAMET customers steel production processes. Shipment to steelworkers 4a End-Application 5 End-Application 19

20 2016 cash-cost position (ore) ERAMET MANGANESE KEY ELEMENTS KEY FIGURES* ERAMET PRODUCTION OF MANGANESE ALLOYS (In thousands of tonnes) M H1 17 H Sales ,439 1,430 1,429 EBITDA Current operating Income Industrial investment *Including TiZir TOP TIER CUSTOMERS % 46% 48% 49% 56% 59% 51% % 25% 32% 36% 51% 55% 34% 38% 31% 33% 29% 20% 38% 36% 16% 10% 9% 11% 11% 9% H H MANGANESE ORE: POSITIONING AND CASH COST High-carbon ferromanganese Standard silicomanganese Refined alloys ERAMET objective: 4 million tonnes manganese ore produced for 2017 ERAMET Manganese accounted for 10% of world production of Manganese in th quartile 1 st quartile P South-Africa Australia ERAMET has one of the lowest cash cost of the industry 3 rd quartile 2 nd quartile Source: ERAMET estimates 20

21 MINERAL SANDS TiZir is included in ERAMET Manganese 21

22 AT A GLANCE Two main products: Zircon and Ilmenite Extraction of mineral sands (mineral raw materials which contain heavy minerals concentrated over time in an alluvial or windy environment) TiZir 50% ERAMET a 50/50 joint venture with the Australian Group, Mineral Deposits Limited, bringing together this leading downstream metallurgical asset and an upstream source of ore. Integrated operations maximising margin and minimising risk. TiZir aims to become one of the world s leading players in zircon and titaniferous raw materials. TiZir Senegal Production of heavy mineral concentrates of 614,000 tonnes in 2016 TiZir Norway Transformation of the extracted Ilmenite (metallurgical valorization) into Titanium slag which are bought by pigments producers 894 employees In H

23 WHAT IS THE USE OF ZIRCON? 1 DOWNSTREAM : MICRONIZATION OR CHEMISTRY MINERALURGICAL EXTRACTION AND SEPARATION 2 Key figures World production of zircon in 2015: 1.3 Mt World consumption of zircon in 2015: 1.1 Mt. Main applications of zircon Ceramics, refractory products, foundry and chemistry (necessary in the composition of nuclear reactors) The zircon can also be converted to zirconia or reduced to zirconium. Zirconia can be used in microelectronics or jewelery. Zircon «flour grade» Zirconia 3 Consumption of zircon by regions Applications by final markets FINISHED PRODUCTS 31% 12% 1,1 Mt in % China Western Europe Rest of the World 18% 13% 12% Ceramics 1,1 Mt in % 42% Foundry sands Refactory Chemistry Other Ceramic Refractory and foundry Zirconium metal and salts of zirconium 23

24 WHAT IS THE USE OF TITANIUM DIOXIDE (TiO 2 ) Mineralurgical extraction and separation 1 MIDSTREAM: Titanium slag 3 UPSTREAM: titanium ore (Ilmenite, leucoxene, rutile) 2 Production of slag and synthetic rutile (high purity TiO 2 ) Key figures World production of TiO 2 in 2015: 6.99 Mt Global consumption of TiO 2 in 2015: 6.82 Mt Consumption of TiO2 by regions Main applications of TiO 2 More than 90% of TiO 2 feedstocks (in the form of titanium slag, ilmenite, leucoxene and rutile) are used for the manufacture of pigments for paints, paper and plastics About 5% of the production is used for the manufacture of titanium metal (aeronautics,...) Applications by final markets DOWNSTREAM: pigments and titanium metal 10% 20% 14% 7 Mt in % 34% China North America Western Europe Asia - Pacific Rest of the World 5% 4% 7 Mt in % Pigment Ti metal Other Pigment Titanium metal 24

25 TRENDS FOR TiO 2 FEEDSTOCK AND ZIRCON 1 Ti0 2 -Feedstocks Demand by feedstock product: TiO 2 -Feedstocks (Ilmenite, Rutile, Leucoxene and Titanium dioxide slag) is mainly used for pigments production. Price recovery in the market (ilmenite notably), driven by high demand for pigments. Future supply will be influenced by the timing of investment decisions for mine expansions or new supply to provide feed for beneficiation facilities such as synthetic rutile. 2 ZIRCON Demand by end-use: Regional demand in 2020 Particularly used for the ceramics market. The low stock levels and higher demand in China allowed for price increases which will be effective in H

26 TRENDS ON ILMENITE AND ZIRCON: INDUSTRY MARKET DYNAMICS INDUSTRY CHARACTERISTICS IMPROVING MARKET CONDITIONS INDUSTRY OUTLOOK Demand and global GDP/urbanisation strongly correlated Opaque product pricing Emergence of China in 2010 Influence of major producers strategies Demand growth driven by improving economic fundamentals Limited inventories throughout supply chain Investment deferrals Environmental pressure driving rationalisation in China Declining resource base Pigment higher plant utilisation rates contract prices continue to increase High-grade titanium feedstock restart of idled operations removing excess capacity higher spot prices for rutile Zircon supply limitations point to further price recovery 26

27 ERAMET NICKEL World #1 Producer of High Grade Ferronickel World #1 Producer of Nickel Chloride One of the only three global producers of high purity Nickel 27

28 ERAMET NICKEL AT A GLANCE Nickel main use: stainless steel Is mainly used to produce stainless steel (2/3 of the world production) with a strong development expected in the medium term on the battery market (high purity nickel, nickel salts) 5 Mines and one pyrometallurgical plant in New Caledonia Exploitation of 5 of its own mines + 4 subcontracted mines, two ore-processing plants (washing plants) and a pyrometallurgical plant in Doniambo, Noumea SLN is certified ISO and ISO for the industrial site Nickel refinery in France A refinery plant to produce nickel salts and high-purity nickel Weda Bay nickel project One of the world's largest undeveloped nickel deposits Project to be developed in partnership with Tsingshan 20% of ERAMET turnover In ,353 employees In H

29 Transport Construction Hygiene and health WHAT IS THE USE OF NICKEL? 1 EXTRACTION OF ORE IN ORDER TO o o Nickel belongs to the transition metals and is hard and ductile They are two main types of nickel ore: sulphide ores (nickel combined with several other metals ie cobalt, silver etc.) or oxide ores (as in New Caledonia, to be transformed as ferronickel) 2 BE TRANSFORMED IN NICKEL ALLOYS 3 o Allied to other elements, it can be used for different applications in growing industry. Its rich and varied properties are chiefly in alloys, electroplating and catalyst in organic synthesis o Stainless market (main market): nickel combined with chromium makes it corrosion-resistant and more ductile and malleable o Nickel-based alloys: conception of superalloys for its mechanical performances and to meet the most stringent requirements (for aerospace and nuclear power for example) o Strong development expected on the battery market TO SATISFY MAINLY THE STAINLESS MARKET DEMAND 29

30 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 July-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Jan-14 Apr-15 Mar-14 Apr-14 May-15 Feb-14 Jun-15 Jul-15 Aug-15 May-14 Jun-14 July-14 Aug-14 Sep-14 Oct-14 Sep-15 Oct-15 Nov-15 Mar-15 Dec-15 Apr-15 Jan-16 Feb-16 Jul-15 Mar-16 Apr-16 Oct-15 May-16 Nov-14 Dec-14 Jan-15 Feb-15 May-15 Jun-15 Aug-15 Sep-15 Nov-15 Jun-16 Jul-16 Dec-15 Jan-16 Feb-16 Aug-16 Sep-16 Oct-16 Jul-16 Nov-16 Dec-16 Mar-16 Apr-16 May-16 Jun-16 Aug-16 Sep-16 Oct-16 Jan-17 Feb-17 Mar-17 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Analysis MARKET TRENDS USD /lb /t , , , , , , , , ,00 0,00 1 NICKEL PRICES REMAINING AT LOW LEVEL Nickel inventories tonnes LME nickel stocks (in tonnes) SHFE nickel LME stocks (in tonnes) SHFE stocks LME Nickel nickel spot price settlement (USD/t) (USD/tonne) (in tonnes) ,000 YTD 2017: (-16540,000 kt) 510, STRONG SUPPLY FOR STAINLESS STEEL DRIVEN BY CHINA kt +9.0% Source: ISSF and ERAMET 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6, % 46% 50% 52% 51% % 52% 44,925 54% 59% 44% 50% 48% 48% 46% 48% 49% 44% % 480, , , , , , , , , , % 180, , ,000 90,000 60,000 30, China Rest of World Main market for Nickel: STAINLESS STEEL Worldwide production (2/3 of the Nickel market) Evolution of nickel prices 2017 total primary Ni demand expected to face a robust growth, after a 8% increase in 2016, driven by all segments: stainless steel, plating and booming perspectives for batteries 2017 primary Ni supply expected to increase the growth being fueled by Indonesian NPI ramp-up (including Tsingshan operations) Partially constrained by ore supply from Philippines : -4% in H (Government sanctions or bad weather) and Indonesian allowed shipments resuming only very slowly All in all, the balance should result in a greater deficit than 2016 (-54KT) Visible stocks (LME and SHFE warehouses) still stand at a high level. However producers and distributors inventories are low and there is good outlook in China, fueling the recent price increase. 30

31 PERSPECTIVES ON END USE MARKETS In kt Ni 1 OUTLOOK FOR PRIMARY NICKEL DEMAND Stainless will remain the largest application while automotive batteries will be a major growth driver. Roskill forecasts a primary nickel demand CAGR of 4% to 2030, up from 3.1% if automotive batteries were not included 2 STAINLESS DEMAND INDEX The good news for stainless is that usage should continue to rise and especially for steel the outlook is even more robust Source: Roskill, OEF, MBR s Stainless Steels Market Tracker & MBR s Steel Forecaster 31

32 ERAMET NICKEL EXPERTISE: A FULLY-INTEGRATED PRODUCER 1 2 Nickel ore extraction 9 mining centers in New Caledonia (of which 4 where the extraction is partially subcontracted ) Important tonnages High nickel content (2.45%-2.5%) Important reserves Ore storage and loading Nickel ore transformation 3 At Doniambo (New Caledonia), the ore is unloaded from three ships chartered all year by SLN to provide the link to the mining centers Ferronickel SLN25 ferronickel shots are manufactured at the Doniambo smelter in New Caledonia and considered as products perfectly tailored to the needs of our customers who produce stainless steels. 4 Nickel Matte The Sandouville plant (France) applies a hydrometallurgy process to transform the matte received from its Finnish supplier and recovers the nickel and cobalt it contains. 6 Variety of Applications AOD converter Electric Arc Furnace EAF Oxygen converter VOD equipment Induction furnace End-Application It then produce Very high purity nickel metal (99.99% Ni) Very high purity nickel chloride (NiCI2) Very high purity nickel carbonate (NiCO3) 32

33 ERAMET NICKEL KEY ELEMENTS KEY FIGURES ERAMET PRODUCTION OF NICKEL* (IN TONNES) M H1 17 H Sales EBITDA (59) (36) (24) (156) 42 53,719 54,360 56,447 53,015 55,012 53,369 55,227 Current operating Income (104) (89) (119) (261) (52) Industrial investment *Ferronickel and matte TOP TIER CUSTOMERS SLN CASH COST (USD/LB) -25% mid-2017 end-2017 end-2020 *Annual rate, based on economic conditions at the start of

34 SLN PERFORMANCE AND PRODUCTIVITY PLAN CASH-COST TARGET: USD 4/lb END 2020* PLANT PROJECTS Plant projects Stoppage of Bessemer melting shop Technical productivity through measures to increase work time and overhaul organizations Maintenance / reliability Slag valorization USD 6/lb in 2015 Mining projects Lean Supports MINING PROJECTS Grade optimization Lean in mining operations Export of low-grade ore LEAN SUPPORTS Productivity in support functions Purchasing gains Others USD 4.5/lb in end-2017 Strenghtening plan STRENGHTENING PLAN Raise the company s productivity through measures to increase work time and overhaul organizations. Reduce SLN s energy bill through measures on energy efficiency and the revision of electricity prices To be noted that on top of those measures, a new power plant will be built in New Caledonia, benefitting from the French State guarantee on the banking financing (up to 320m) USD 4/lb end-2020* *Annual rate, based on economic conditions at the start of

35 The group is adapting its mix production to meet the final demand FOCUS ON ERAMET NICKEL PRODUCTION: TOWARDS A DIVERSIFIED NICKEL PORTFOLIO ,000 tonnes 2 1 Weda Bay o THE WORLD LARGEST DEPOSIT NOT YET IN OPERATION accounting for more than 9mt of Ni content o AGREEMENT (integrated partnership) WITH TSIGNSHAN IN JUNE 2017 o VERY COMPETITIVE INDUSTRIAL NEW SET UP o 43% HELD BY ERAMET o 30,000kt OF NICKEL (of which 13,000kt for ERAMET) o First commercial transactions in 2020 TSINGSHAN: A PRIVATE UNLISTED COMPANY, BASED IN CHINA AND INDONESIA Leading global producer of stainless steel since 2014 Stainless steel production capacity of approximately 6.5 million tonnes, including 1 million tonnes in Sulawesi, Indonesia USD 13 billion in sales in ,000 tonnes Nickel Pig Iron Nickel Haute pureté Ferronickel 2 Sandouville o LONG TERM AGREEMENT CONCLUDED for the supply of Sandouville with external nickel matte as of H o Start of the new process in Ramping-up over the next months o 15,000kt OF HIGH PURITY NICKEL o Main markets: electronic markets and batteries 35

36 ERAMET ALLOYS World #2 producer of high-power closed-die forged parts for aeronautics and energy generation World #1 player in gas-atomised powder metallurgy A leading producer of high-performance special steels 36

37 ERAMET ALLOYS AT A GLANCE Main market: aerospace Unique know-hows Recognized skills in R&D and development of complex processes or products (in the field of alloys, super alloys and titanium alloys...) for strategic industries (specifically aerospace) A primarly European presence Stamped parts and long products: 7 Aubert & Duval plants in France High-speed steels and recycling: 2 Erasteel plants in France, 3 in Sweden, 1 in China, 1 in the USA, 1 in the UK Forging and forging: a partnership in India SQUAD A Titanium industry developed in partnership Titanium Recycling: EcoTitanium partnership Titanium transformation: UKAD partnership Machining of titanium parts: MKAD partnership 32% of ERAMET turnover In ,823 employees In H

38 USE AND PRODUCTION ROUTES OF ERAMET ALLOYS PRODUCTS 1 ALLOYS PRODUCTION o Metallic alloys made by combining metallic elements, in order to generate special usage properties such as strength, heat resistance, resistance to corrosion, fatigue, hardness o ERAMET Alloys is covering the all spectrum of metallurgical solutions: Superalloys In house design & production High performance special steels High speed steel Recycling aerospace titanium Titanium, aluminium alloys outsourced 2 o ERAMET has strong know how in alloys transformation to meet the most demanding challenges: TRANSFORMATION Closed die forging Forging Rolling Machining 3 FOR STRATEGIC INDUSTRIES SPECIALLY AERONAUTICS Aeronautical structure: bringing resistance to crucial points Energy: a recognized performance 38

39 Analysis MARKET TRENDS Main market for alloys: AEROSPACE SECTOR Demand in the sector Perspectives in the sector The aerospace sector continues to enjoy steady growth and is the leading contributor to ERAMET Alloys. Products rates for single aisle, both at Boeing and Airbus are very high (high production output), and globally order book is full at least for the 5 coming years at OEMs. The demand in aircraft is driven by world traffic growth, aircraft deliveris growth, demand from emerging countries and fleet renewal. 39

40 ERAMET ALLOYS EXPERTISE: DESIGN AND DEVELOPMENT OF HIGH-PERFORMANCE STEELS 1 Design 2 Raw material sourcing Based on the customers order, the production range will be designed in collaboration with the various production departments Melting Two stages can be distinguished: primary metallurgy, which consists in melting the material and secondary metallurgy, during which the metal is refined. The metal is then poured into ingots. Heat treatment The product s metallurgical structure is changed by combined heating and cooling, which makes it possible to modify its mechanical properties. 6 Non-destructive testing The raw materials consist of iron, scraps and off-cuts which are carefully selected and analyzed chemically as well as ferro-alloys Transformation The ingots or capsules produced are then heated and processed to obtain semi-finished products, forged parts, closed-die parts, bars or wires. Finishing, machining Samples are taken for mechanical testing to ensure that the customer s requirements in terms of elasticity, hardness and tensile strength are met. The final peeling or milling stages produce different finishes. These controls (ultrasonic, magnetic, etc.) ensure the quality of products by revealing the existence of any type defect that might occur within the material or on its surface. 8 End-Application 40

41 ERAMET ALLOYS KEY ELEMENTS KEY FIGURES M H1 17 H Sales EBITDA Current operating Income Industrial investment TOP TIER CUSTOMERS KEY FACTS Opening of MKAD, a joint venture between Aubert & Duval and Mecachrome, on 14 October 2014 o Aerospace grade titanium machining parts Launch in early 2017 of spent catalysts and batteries facilities at Commentry (France) o New commercial segment, which will gradually ramp up over the coming months but which is expected to weight on Erasteel s results for the H2 Launch of EcoTitanium on 3 February o First European producer of aerospace grade titanium using recycled material Launch of Galaad on 11 May 2017 o New atomising tower in Ancizes (France) which will produce powders from superalloys directed at the aerospace sector and the additive manufacturing segment POSITIONING Aubert & Duval well positioned in high power close die forged parts. Example: engine disks for the A350 and B777 models, landing gear for the A350 model, wing structuring parts for Airbus Aubert & Duval s teams were rewarded at the salon du Bourget (the Paris air show), with the "Best Performer Supplier Award", handed out by Airbus Helicopters (Paris, June 2017). 41

42 NEW METAL PROJECT 42

43 PERSPECTIVES ON LITHIUM END USE MARKETS Lithium demand Kt LCE % 43% +12 % pa % 40% +8 to +12% pa 48% 52% Avicenne (2015) 31% 69% Deutsche Bank (2016) 2010 A 2015 A 2025 E 22% Others 78% Batteries BCG (2016) Demand across all lithium applications is expected to remain strong, growing at a CAGR between 8 to 12 % over the period Lithium-ion batteries, ERAMET key target market, represent the key segment of demand underpinned by the growing importance of electric vehicles Expected CAGR between 11-20% over , vs. average 4% across other applications. Source: Avicenne Energy Report (December 2015); Deutsche Bank, BCG CMI lithium model 43

44 NEW METAL PROJECT WHICH PREPARES ERAMET FUTURE ERAMET LITHIUM PROJECT IN ARGENTINA ENTERS ITS LAST PHASE OF DEVELOPMENT BEFORE AN INVESTMENT DECISION Extremely dynamic lithium market in Bright perspectives Success in piloting the innovative patented extraction process : few hundreds kg of lithium carbonate battery grade produced in 2016 Pre-feasibility study performed Investment of MUSD ERAMET secured mining rights over a very vast 500 km² domain with ressources >7MT LCE (50 years+ of operations) : Detailed feasibility study and economical valuation Active continuation of CSR programs Start of construction scheduled early 2019 subject to investment decision Start of production end of 2021 Production capacity : 20 ktpy lithium carbonate. Key Lithium Applications ERAMET Target Applications Cumulative Industry LCE Production (kt) US$/t LCE 0 ERAMET process competitiveness target (LCE produced from brines*) LCE produced from spodumene* Spodumene conversion cost (US$2800/t) Spodumene producers Environmental permitting demand filed in December 2016 Li-Ion Batteries Portable Devices Li-Ion Batteries Electric Vehicles Glass & Ceramics Grease Aluminium-alloys Pharmaceuticals 44 Note: The chart above is not intended as an exhaustive list of lithium products and their applications, but depicts a select number of lithium applications. *Brines : lithium from salt flat deposits Spodumene : lithium from hard rock deposits

45 FINANCIALS 45

46 H H H H H H H H H FINANCIAL PERFORMANCES SALES CURRENT OPERATING INCOME In m % 34% 39% % 21% 54% % 24% 48% % 25% 27% 27% 29% % 30% 32% 32% 26% 22% 25% 22% 20% 52% 48% 45% 49% 45% 46% 48% % 19% 45% 1,797 31% 17% 51% In m Nickel Alloys Manganese Group H1 Manganèse Nickel Alloys 2016 H Breakdown by divisions excluding holding and eliminations EBITDA MARGIN FREE CASH FLOW 36% 35% 2% 27% 22% 12% 17% in average since % 12% 3% 13% 4% 22% In m H H H H H H H Of which asset disposals 46

47 ACTION PLAN PERFORMED IN THE LAST 3 YEARS TO GENERATE FCF AND REINFORCE THE BALANCE SHEET Issue of 100m perpetual convertible bond in September 2016 (net share setteled undated bonds convertible into new shares ie ODIRNAN) REINFORCE THE EQUITY Industrial action plan to increase productivity and performances: 306m on aggregate savings since 2014 on annual basis INCREASE PRODUCTIVITY PERFORMANCES Generate Free Cash Flow Reinforce the balance sheet Maturity extension of the c. 1bn revolving credit facility in January m French State loan agreement in July 2016 with a final maturity in June 2024 (bullet) INCREASE LIQUIDITY ASSET DISPOSALS Disposal of assets for a total impact of 144m 47

48 DEBT ANALYSIS (1/2) STRONG BALANCE SHEET CHANGE IN NET DEBT In m In m H H Equity* *including minority interests IFRS Net Debt Joint-venture contribution Equity (836) -836 Net debt at end of Cash gener. from op. 94 (107) -107 Change in operating WCR Industrial investments -664 (664) Net debt at end of H RECONCILIATION OF NET DEBT SIGNIFICANT FINANCIAL LIQUIDITY In m H H Gross IFRS debt 1,910 2,265 2,366 Available IFRS cash (1,409) (1,277) (1,691) IFRS Net debt Joint Venture gross debt Joint Venture available cash (7) (4) (7) Net debt 664 1, Undrawn In m RCF repayment for 500m at end- June Additional repayment for 230m in July H H H H proforma RCF not drawn Part of the RCF repaid on 25/07/2017 Credit lines not Undrawn Available Cash 2 48

49 DEBT ANALYSIS (2/2) GROSS DEBT SCHEDULE AS AT 30/06/2017 (IN M) Pro forma maturity schedule as at 30/06/2017, including RCF repayment and TiZir s Bond refinancing 835 RCF Alloys Manganese Nickel > Holding - Group 40 KEY DEBT ELEMENTS 730m RCF repayment out of 981m as of end of June 2017 (pro forma) In July 2017, TiZir (an ERAMET 50% owned company) issued a new $300m bond (maturing in July 2022) which will mainly refinance the previous one scheduled to mature in September The reduction in debt is the result of (i) priority given by the company to cash generation and (ii) markets improvement. ERAMET gearing is in line with the sector average Other borrowings Finance leases 11% 3% Bank overdrafts 3% TYPE OF GROSS DEBT (AS OF 30/06/2017) Banking debt 38% Desintermediated debt 45% 1,861m Gross debt pro forma (ie gross IFRS debt and Joint Venture gross debt) GEARING Net cash position from 2007 to % 49% 20% 47% 36% 7% H H % -12% -30% -27% -33% -28% 49

50 PRIORITIES AHEAD 50

51 STRATEGIC PRIORITIES - UNDER REVIEW 1 REINFORCE ASSETS WITH GLOBAL LEADERSHIP 3 FIX UNDERPERFORMING BUSINESSES Manganese Aubert & Duval downstream 2 DIVERSIFY THE PORTFOLIO THROUGH GROWTH ON SELECTED HIGH VALUE PROJECTS SLN Erasteel Aubert & Duval upstream Lithium Weda Bay Other projects ERAMET MEANS COMMITMENT TO COST REDUCTION AND IMPROVED PRODUCTIVITY LEVERAGE ON ERAMET STRONG KNOW HOW TRANSFORM ERAMET IN A HIGH PERFORMING ORGANIZATION ERAMET AIMS FOR MANAGERIAL AND OPERATIONAL EXCELLENCE AT ALL LEVELS OF ITS ORGANIZATION 51

52 REDUCE COSTS AND INCREASE PRODUCTIVITY o ACTION ON COMILOG o Increase of the availability and utilization rates of mining equipments (trucks, shovels) through improved maintenance. o Increase in the operating rate of the ore processing plant by optimizing operating parameters. o Renovation plan of the Transgabonese railway (SETRAG). o OPTIMIZATION OF PRODUCTION PARAMETERS o These optimizations allow half year after half year to increase ERAMET production, as already demonstrated. o REACH FULL CAPACITY AND OPTIMIZE THE ASSET o PRODUCTIVITY AND ENERGY EFFICIENCY o Raise the company s productivity through measures to increase work time and overhaul organizations. o Reduce SLN s energy bill through measures on energy efficiency and the revision of electricity prices. o RAMP-UP ON SANDOUVILLE NEW MODEL o Successful ramp-up due to the change in matte sourcing. o Selling nickel metal in whole plates rather than in pieces (better margins). o ACTIONS FOCUSED ON INDUSTRIAL SET UP AND CUSTOMER RELATIONSHIP o Reconfiguration of the steel melting shops: centralization of the 2 existing steel meltings activity on a single one located in Les Ancizes, closure of the Firminy steel melting shop. o Maximize capacity utilisation through better availability of the equipment and productivity improvement o Reduce waste. o Specialization and optimization of rolling mills: concentration of large diameter rolled products on one site and small diameter rolled products on another one. Closure of the other rolling mills. o Improve the customer experience: improve service and business performance. 52

53 APPLICATION EXEMPLES LEVERAGE ERAMET STRONG KNOW-HOW 220 employees AN EFFICIENT SET UP FOR A HIGH LEVEL APPLIED RESEARCH 30 M spent in products o R&D activity across the entire metals value chain, from mining to products including recycling o Specific know-how, often produced by the group R&D with solid social and environmental criteria o Leverage network through open innovation Support a production increase at the Mn alloys plants Adapting the Sandouville s plant to a new source of nickel matte Development of the new Aubert & Duval ML340 superalloy. This new ultra high-performance steel will form the turbine shaft for the LEAP and Silvercrest aircraft engines. Lithium project in Argentina Best performance of the Mn alloys plant worldwide. New business model for the Sandouville refinery. Reduction by 15% of fuel consumption thanks to this alloy. 10 patents on a very original and innovative process. 53

54 TRANSFORMING ERAMET IN A HIGH PERFORMING ORGANIZATION Managerial transformation o Review the managerial model: build leaner organization o Right people at the right places o Leverage best practices o Promote agility and accelerate decision making o Reinforce discipline and execution o Create a continuous improvement mindset Focus on investments selected on the criteria of value creation o New industrial facilities will come on stream and be ramped up (ex: Ecotitanium, the last link in the European aerospace-grade titanium sector) o Reconfiguration of Sandouville to handle a new commodity o Roll-out of the Transgabonais railway modernisation plan (SETRAG) o Start of the detailed engineering design stage for the Lithium project (deposit in Argentina) 54

55 KEY INVESTMENT POINTS & TERM SHEET 55

56 KEY INVESTMENT POINTS SOLID POSITIONS IN ITS BUSINESS Significant value in its assets with world class orebodies (high grade ore and significant resources), having long term expected lives World leading positions in almost all its business segments An experienced specialist with a high knowledge of all its businesses High reputation with customers A BALANCE SHEET THAT SHOWED ITS ROBUSTNESS THOUGH THE CYCLES A successful de-risking strategy on the balance sheet Improved results in 2016 and H A resilient EBITDA margin (17% in average since 2007) A STABLE SHAREHOLDING STRUCTURE FOR A LONG TERM ACTOR A stable shareholder structure, ensuring a long term strategy A committed management team Stable relationships with partners, clients and countries where ERAMET is operating ONGOING ACTION PLAN TO GAIN COMPETITIVE EDGE Action plan to reduce cost and improve productivity at the level of each business unit Develop ERAMET agility through value added partnership and/or investments Continue to benefit from R&D projects focused on a practical use of innovations Capitalize on ERAMET historical CSR framework 56

57 TERM SHEET Issuer ERAMET Rating Unrated Notional Amount EUR 300m+ Issue Type Fixed Status of the Notes Senior, Unsecured, Unsubordinated Form of the Notes Bearer dematerialized Maturity 6 7 years Documentation Standalone / Change of Control / Make Whole Call / 3 month par call / Clean-Up Call (80%) Governing Law French Listing Euronext Paris Denominations 100, ,000 Use of Proceeds General Corporate Purpose and refinancing of its existing debt Targeted bonds EUR 525m 4.500% due November 2020 Tender price % Offer period Prioritary allocation 11 September 20 September 4pm CET (intermediaries may have earlier deadlines) Tendering bondholders must contact the dealer managers to request an allocation code to receive priority allocation in the new issue 57

58 APPENDIX 58

59 INCOME STATEMENT In m H H Sales 1,797 1,373 2,984 3,109 3,144 3,162 3,447 3,603 EBITDA % of Sales 22% 4% 13% 3% 12% 7% 12% 22% Amortisation and depreciation of fixed assets and provisions for contingencies and losses (133) (147) (291) (299) (288) (276) (254) (235) Current operating Income 256 (91) 84 (207) 75 (45) % of Sales 14% (7%) 3% (7%) 2% (1%) 4% 15% Other operating income and expenses (28) (55) (179) (606) (129) (503) (74) (63) Operating Income 228 (146) (95) (813) (54) (548) Financial income (52) (53) (79) (90) (68) (32) (7) 30 Pre-tax Income 68 (199) (174) (903) (122) (580) Share of income of equity affiliates (1) - (2) (1) Income tax (107) - (61) (8) (49) 72 (29) (219) Net income 68 (199) (237) (912) (171) (507) Minority interest (13) (58) (58) (198) 12 (137) Net income Group share 81 (141) (179) (714) (159) (370)

60 CASH FLOW STATEMENT In m H H Operating activities EBITDA Cash impact of items under EBITDA (204) (95) (228) (252) (238) (157) (149) (155) Cash generated from operations 185 (39) 147 (160) Change in WCR 94 (59) (26) 153 (82) 87 (41) (43) Net cash generated by operating activities (1) 279 (98) 121 (7) Investing activities Industrial investments (107) (85) (217) (267) (346) (587) (641) (492) Other investment flows - (109) 30 (16) 26 (7) 5 (33) Net cash from investing activities (2) (107) (194) (187) (283) (320) (594) (636) (525) Free Cash Flow (1) + (2) 172 (292) (66) (290) (277) (433) (419) 66 Cash linked to equity operations (3) (25) (252) (285) (187) Impact of changes on exchange rates (41) (27) 19 (1) (21) (Increase)/Reduction in net financial debt position 172 (285) 42 (331) (329) (666) (705) (142) (Net financial debt) at beginning of period (836) (878) (878) (547) (218) (Net financial debt) at closing of period (664) (1,163) (836) (878) (547) (218)

61 GROUP BALANCE SHEET Assets - M Liabilities - M /12/ /06/ /12/ /06/2017 Fixed assets Equity Provisions and net deferred tax Net debt WCR Minority interests Financial instruments 61

62 RECONCILIATION OF GROUP REPORTING AND PUBLISHED ACCOUNTS ( million) 1st half year Joint-venture 1st half year 1st half year Joint-venture 1st half year FY Joint-venture FY 2017 contribution contribution contribution 2016 Published (1) Reporting (2) Published (1) Reporting (2) Published (1) Reporting (2) Sales EBITDA Current operating income (85) (6) (91) 91 (7) 84 Operating income (139) (7) (146) (47) (48) (95) Net income for the period - Group share (141) - (141) (179) - (179) Net cash generated by operating activities 292 (13) 279 (96) (2) (98) Industrial investments (Net financial debt) (501) (163) (664) (988) (175) (1 163) (675) (161) (836) Shareholders' equity (14) (10) (15) Shareholders' equity - Group share (1) Financial statements prepared under applicable IFRS, with joint ventures are accounted for using equity method (2) Group reporting, in which joint ventures are accounted for using proportionate consolidation. 62

63 ERAMET ORGANIZATION MANGANÈSE NICKEL Gabonese (28.94%) State Others (7.35%) (100%) COMLOG (63.71%) 10 sites Mine (Maonda) & Metallurgy complex SETRAG Transgabon railway (99.98%) COMOLOG Dunkerque (France) (20%) (80%) COMILOG Asia Ltd 3 sites ERAMET Manganese ERAMET Norway Manganese Alloys (Norway) ERAMET Marietta Manganese Alloys (USA) Mineral Deposits Ltd (50%) (100%) (100%) (50%) TiZir 3 sites 1 site 2 sites Mineral sands (90% TiZir) (Senegal) TiZir Titan & Iron (Norway) Nisshin Steel 10% STCPI 34% French State 1 share New-Caledonia (56%) SLN 5 mines 1 metallurgical plant Ferronickel 1 site (100%) ERAMET Nickel Sandouville Refinery Le Havre (France) NICKEL SALTS & METAL BUSINESS UNIT (100%) Strand Minerals Pte Ltd (Singapour) (90%) PT Antam PT Weda Bay Nickel Mine and hydrometallurgical plant (project) Halmahera (Indonesia) ALLOYS ERAMET ERAMET Alloys ERAMET group (100%) (100%) Albert & Duval 7 sites Interforge (France) 94% UKAD (France) (50%) Titanium alloys Aluminium alloys Special steels Superalloys Erasteel 8 sites Erasteel HEIML (China) (49%) Pre-alloyed powder metallurgy Eramet Engineering (100%) Eramet Research (100%) ERAMET Alloys ERAMET Manganese Eramet International(100%) ERAMET Nichel 63

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