ERAMET TOKYO PRESS CONFERENCE. July 6 th, 2017

Transcription

1 ERAMET TOKYO PRESS CONFERENCE July 6 th, 2017

2 CONTENTS ERAMET TOKYO PRESS CONFERENCE Key Figures 2016 financial results / improving performance Operating performance ERAMET Nickel ERAMET Alloys ERAMET Manganese Conclusion - outlook Appendice 2

3 ERAMET AT A GLANCE From Mining to Metallurgy to serve our Japanese clients Mining Extractive Metallurgy Elaboration & transformation high-value products Nickel New Caledonia 50+ years ressources Manganese - Gabon 40+ years resources Zircon and Ilmenite Senegal 25+ years ressources #1 in FeNi worldwide #2 in Manganese alloys worldwide #1 in refined manganese alloys worldwide # 1 in nickel chloride worldwide # 3 in high grade Ni worldwide First metallurgical complex for Mn metal produced in Africa # 2 in high power closed-die forged parts worldwide # 1 capacity in gas-atomized metal powders worldwide About people worldwide A presence in more than 20 countries 220 employees dedicated to R&D 150 products in portfolio ERAMET Group turnover (2016) ERAMET Alloys 32% ERAMET Nickel 20% 2984 M ERAMET Manganese 48% 3

4 After a very difficult 2015 year, 2016 has shown some recovery thanks to a combination of better metal prices and internal cost reduction Millions of Current Operating Income (COI) Millions of Nickel (119) (261) Alloys Manganese Holding (43) (31) Group 84 (207) Nickel Alliages Manganèse Groupe 4

5 2016 : GIVING PRIORITY TO CASH-FLOW GENERATION Focused our efforts on our core businesses. CAPEX Restriction of capital expenditure Projects Suspension of major projects Asset disposals Program for Increased competitiveness to strengthen our market positions. Operational plan for million (1) in cost reduction and productivity improvement ERAMET Nickel - SLN The performance improvement plan has been stepped up: target: USD 4.5/lb (2) (1) Annual impact on current operating income relative to 2013 at the end of the plan. (2) Cash-cost, on an annual basis, to the end of 2017, based on economic conditions at the start of

6 ACCELERATION AND AMPLIFICATION OF THE COST REDUCTION AND PRODUCTIVITY IMPROVEMENT PLAN Updated plan: target of 400 million Annual impact on current operating income Initial plan: target of 360 million Annual impact on current operating income Total: 400 million (1) million achieved in million since 2014 (1) (1) annual impact on current operating income relative to

7 STRENGTHENING OF ERAMET'S BALANCE SHEET Drawdown of the revolving credit facility (RCF) in early January Strengthening of ERAMET's equity through the issue of 100 million in net share settled undated bonds convertible into new shares (ODIRNAN) in September Completion of the asset disposal program, generating in 2016 an impact of 142 million on the Group's net debt. 2-year extension to the maturity of the revolving credit facility in January ERAMET group financial liquidity (millions of ) ,698 1, Substantial financial liquidity % Net Debt / Equity ratio /12/ /12/2016 Available cash Revolving credit facility 7

8 ERAMET NICKEL World number 1 producer of ferronickel. World number 1 producer of nickel chloride. One of only three producers of high-purity nickel in the world. 8

9 NICKEL PRICES REMAINING AT LOW LEVELS Low nickel price environment and high level of nickel inventories In LME and SHFE warehouses. Sustained primary nickel demand despite current slowdown in China. Impact of Indonesia and the Philippines on global primary nickel supply. A change of USD 1/lb in LME price results in a change of approximately 110 million in ERAMET's annual current operating income (at an exchange rate of USD 1.1/ ). LME nickel prices USD / lbusd/tonne LME stocks SHFE stocks LME Nickel spot price (USD/t) Nickel inventories (in tonnes) 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 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun

10 SLN HAS PUT A STRONG FOCUS ON COST REDUCTION SLN's cash-cost fell 16% in 2016 compared with 2015, as it rapidly implemented the performance plan. SLN cash-cost* (USD/lb) % end-2017 end-2020 *Annual rate, based on economic conditions at the start of

11 NEW SETUP ATSANDOUVILLEPLANT WITH AN OBJECTIVE OF INCREASED PROFITABILITY Decoupling the Sandouville refinery from SLN feed Long-term agreement for the supply of Sandouville with nickel matte as of the second half of 2017 Start of the new process 19 June Ramping-up over the next months Target capacity : t Ni in high purity products 11

12 AGREEMENT WITH TSINGSHAN, THE WORLD'S LEADING STAINLESS STEEL PRODUCER TO DEVELOP WEDA BAY NICKEL April 2016: Put option exercised by Mitsubishi June 2017: Agreement finalised with the Tsingshan group to develop the Weda Bay Nickel deposit in Indonesia An integrated partnership for: Mining operations Production in Indonesia of nickel ferroalloys, with a target annual output of 30,000 tonnes of nickel content The parties will each market their own share Tsingshan group 57% Shareholding planned for Strand Minerals Pte Ltd, controlling holding of Pt Weda Bay Nickel Strand Minerals Pte. Ltd. (Singapore) ERAMET group 43% 90% 10% Indonesian Government 65% PT Antam Tbk (Indonesia) PT WEDA BAY Nickel (Indonesia) The Weda Bay deposit is one of the largest unexploited nickel oxide deposits in the world. Resources in excess of 9 million tonnes of nickel content* * Inferred, indicated and measured resources 12

13 ERAMET WILL GROW IN NICKEL BY CA. 50% kt ERAMET Nickel will grow : SLN, Sandouville and Weda Bay ERAMET Nickel projected size: t Weda Bay Sandouville production SLN

14 ERAMET ALLOYS World number 2 producer of high-power closed-die forged parts World number 1 player in gas atomized powder metallurgy A leading producer of high-performance special steels 14

15 EXCELLENT PERSPECTIVES IN AEROSPACE SECTOR 60% of our sales ordered in Aerospace, a growing business Production rates are sustained at a high level for single aisle at both Boeing and Airbus Success of the new Leap engine program developed by CFM (JV Safran / GE) Globally order books are strong and full for the 5 years to come at OEMs Aubert & Duval is well positioned on high-power closed-die forged parts: Examples : Jet engine turbines disks for A350 and B777, landing gears for A350, wing parts for Airbus Aubert & Duval has been awarded the Best Performer supplier from Airbus Helicopters 2016, during Le Bourget Air Show (Paris, June 2017). 15

16 ERAMET ALLOYS IS WORKING ON IMPROVING ITS PERFORMANCE Across the division, roll out of strong improvement plans: Cost reduction and productivity at shopfloor levels: o Boosting the usage of recycled materials o Simplifying manufacturing routes to shorten production steps o Improving OEE (Overall Equipment Efficiency, especially on large forging presses, melting shops, rolling mills, machining and finishing equipment) Shorter lead times and better customer service o Re-designing and accelerating product flows all along our industrial processes. Forging press at UKAD Products quality enhancement New industrial setup for melting shops concentrating high performance and stainless steels metal elaboration on one site at Les Ancizes, France. 16

17 WHILE INVESTING TO GROW AND TO REINFORCE ITS BUSINESS POSITION Opening of the MKAD plant, a joint venture between Aubert & Duval and Mecachrome, on 14 October 2016 Machining of aerospace-grade titanium parts Start-up of EcoTitanium on 3 February 2017 the first producer of aerospace-grade titanium in Europe using recycled materials Start-up of spent catalysts and batteries recycling facilities early 2017 at the Commentry (Allier) site New market segment, set to be ramped up progressively throughout 2017: recycling of molybdenum, nickel, manganese, cobalt, zinc Powder metallurgy : Start up of a new atomizing tower on 11 May 2017 New atomization tower to produce superalloys powders, especially for aerospace and additive manufacturing sectors 17

18 ERAMET MANGANESE World number 2 producer of high-grade manganese ore World number 2 producer of manganese alloys World leading producer of refined manganese alloys 18

19 MANGANESE ORE PRICES REMAIN FIRM The "CRU 44% CIF China" manganese ore price index hit a record low in February Prices recovered strongly during the second half of the year and peaked end Prices remain firm in this first half A change of USD 1/dmtu in this price translates into an impact of approximately 95 million on ERAMET's annual current operating income (at an exchange rate of USD 1.1 / at nominal production level). CIF CHINA HIGH-GRADE (44%) MONTHLY MANGANESE ORE PRICES USD/dmtu Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jun-16 Jan-17 Jul Chart source: CRU

20 MANGANESE ALLOYS PRICES AT HISTORICAL HIGH LEVEL From their low point early 2016, manganese alloys prices trended upward strongly. They continue to remain firm in H A change of USD 100/t in the price of manganese alloys translates into an impact of approximately 65 million on ERAMET's annual current operating income (at an exchange rate of USD 1.1 / ). 20 Source: CRU Western Europe Spot Prices

21 MANGANESEORE PRODUCTION SHOULD BEBACK TO NORMAL IN 2017 Output was primarily affected by our decision to halt mine production for one month in Q1 2016, in view of market conditions early in the year. Focused on improving performance at our Moanda mine and modernization of railway. Ramp-up of Mn alloys and Mn metal facility in Gabon. kt MANGANESE ORE AND SINTER PRODUCTION -12% ,434 3,037 3,703 3,

22 TIZIR: MARKET ENVIRONMENT IMPROVING IN 2017 Ilmenite, Rutile, Leucoxene and Titanium Slag Ilmenite, rutile and leucoxene sold to pigment, slag producers and for welding applications; this market is firming up in the beginning of Titanium slag product from TiZir Norway used to make TiO 2 pigments Stable prices in 2016 Zircon Used notably for ceramics Market prices seem well oriented in the beginning of

23 TIZIR: AN INTEGRATED PLAYER FOR TITANIUM DIOXIDE AND ZIRCON TiZir: Joint venture with Mineral Deposits Limited (Australia) Positive EBITDA: 16 million in 2016 Upstream: TiZir Senegal production of heavy mineral concentrates of 614,000 tonnes in 2016 Ramp-up in progress with 194,000 tonnes in Q4 in 2016 and good outlook for 2017 Downstream: TiZir Norway After the incident of 15 August 2016, the furrnace is back to normal operations. 23

24 LITHIUM PROJECT WHICH PREPARES ERAMET S FUTURE ERAMET LITHIUM PROJECT IN ARGENTINA ENTERS ITS LAST PHASE OF DEVELOPMENT BEFORE INVESTMENT DECISION Extremely dynamic lithium market in Bright perspectives : Detailed feasibility study and economical valuation Success in piloting the innovative proprietary extraction process : few hundreds of kg of lithium carbonate battery grade produced in 2016 Active continuation of CSR programs Start of construction scheduled early 2019 subject to investment decision Pre-feasibility study performed Investment of MUSD Start of production end of 2021 Production capacity : 20 ktpy Lithium carbonate. Environmental permitting demand filed in December

25 ROBUST CSR POLICY Sustainable development is at the core of ERAMET's strategy Protect men and women by placing health and safety at the heart of our objectives. Create processes which respect both regulations and the environment. Develop ways to reduce environmental impacts, commit to biodiversity. Implement "product" responsiblity ("license to market"). Increase resource effectiveness and promote recycling. Maintain a trusting relationship with stakeholders. ERAMET is implementing this sustainable development policy across all Group activities through: An environmental charter. A biodiversity policy deployed in An ethics charter updated in A sustainable purchasing charter. An energy policy. 25

26 CONCLUSION - OUTLOOK 26

27 CONCLUSION ERAMET is at a turning point with significant potential ahead. But in a still fragile and volatile environment, ERAMET needs to transform itself: To accelerate improvement initiatives for performance and launch new ones To review organisation and working flows to develop agility and adaptation capacity to fast changing market conditions To design a new strategy for growth with ambitious targets 27

28 APPENDICE 28

29 SHAREHOLDER STRUCTURE ON 31 DECEMBER 2016 Autres 31.93% Famille Duval : SORAME + CEIR 37.05% BRGM % STCPI % APE 25.65% Number of issued shares: 26,550,443 Notes 1 STCPI (Société Territoriale Calédonienne de Participation Industrielle): an entity owned by the neo-caledonian provinces 2 BRGM (Bureau de Recherches Géologiques et Minières) 29