Eramet sees high metal prices sustaining earnings this year

The group had targeted 2021 EBITDA of close to 1 billion euros.

Net profit reached 298 million euros after a 426 million euro loss from discontinued operations. That included a 340 million euro charge for Aubert & Duval that Eramet flagged on Tuesday when announcing a preliminary agreement to sell the unit.

The company said a surge in metal prices, supported by a demand rebound following the initial impact of the pandemic, and increased mining output boosted its earnings and offset higher shipping and energy costs as well as production difficulties in New Caledonia.

For this year, the group expects full-year EBITDA of around 1.2 billion euros, it said.

“Prices remain favourable and although the context is volatile … we think that overall they should stay at high levels on average in 2022,” Chairwoman and Chief Executive Christel Bories told reporters during a call.

Nickel prices hit their highest since 2011 on Tuesday amid worries that Western sanctions against Moscow in a standoff over Ukraine could curb Russian exports and add to global supply tensions.

Eramet said its increased production of nickel in Indonesia and manganese in Gabon helped it benefit from elevated market prices, and it expects further mine output growth in 2022.

The initial deal to sell alloys maker Aubert & Duval to an aeronautics consortium including Airbus and Safran reflects a focus by Eramet on mining and the development of materials for electric vehicle batteries.

After relaunching a lithium project in Argentina last year, it is studying the possibility of processing nickel and cobalt in Indonesia into battery materials with chemical group BASF.

Eramet and BASF will make an investment decision when the study phase ends during 2022, the French group said.

($1 = 0.8839 euros)

(By Gus Trompiz; Editing by Barbara Lewis and Elaine Hardcastle)