Eramet shares plunge after 2024 output cuts

Eramet shares plunged nearly 19% on Wednesday after the company cut its 2024 production targets for its manganese mine in Gabon and nickel mine in Indonesia, the group’s two biggest mining operations.

Eramet announced the lowered forecasts late on Tuesday, citing a downturn in the manganese market and a smaller-than-expected permit allowance in Indonesia.

The Moanda mine in Gabon and the Weda Bay mine in Indonesia have driven Eramet’s growth, as its historic nickel operation in New Caledonia has been drained by losses and social unrest.

Analysts at ODDO BHF called the news “another setback” for Eramet, following its July reduction of 2024 targets for ore output in Gabon and Indonesia, while also trimming short-term targets for a new lithium mine in Argentina.

Eramet attributed the deterioration in the manganese market to falling Chinese output of carbon steel — which requires manganese in its production — and an influx of low-grade ore after a price surge earlier this year.

The company’s full-year sales volumes of high-grade manganese ore are estimated to be between 6.0 and 6.5 million tonnes in 2024, of which approximately 700,000 tonnes are internal sales.

As a result, Eramet has decided to suspend ore production at the Moanda mine for a minimum of three weeks. According to the company, sales and shipments will continue during this period.

The 2024 volume target for produced and transported manganese ore was revised to between 6.5 and 7.0 million tonnes, down from the previous 7.0 to 7.5 million tonnes.

In Indonesia, the mines ministry this week issued PT Weda Bay Nickel, Eramet’s joint venture with Chinese group Tsingshan, a revised allowance of 32 million wet tonnes annually for 2024-2026, including 3 million for internal sales, according to Eramet.

As a result, the operation’s 2024 volume target for external marketable nickel ore has been revised to 29 million wet tonnes, down from the previous 40 to 42 million tonnes. Eramet noted that the impact on the operation’s 2024 financial performance is expected to be largely offset by higher ore premiums due to domestic supply restrictions.

(With files from Reuters)