Eramet Sa Unsp/Adr

Good morning, good afternoon everyone and welcome to this presentation of our 2023 annual results. Clearly, 2023 has been a very challenging year for our industry and consequently for Eramet. We have been facing a very deteriorated price environment with a huge impact on our financial results. But thanks to the recent repositioning of our portfolio on high-quality assets with strong fundamentals, and thanks to our continuous improvement of operating performance, we have been able to withstand the downturn and pursue our development projects. We have achieved a new record of production of nickel ore in Indonesia at Wedah Bay. And thanks to the rebound of our production of manganese ore in Gabon in H2, we managed to compensate for the logistic issues that we had at the beginning of the year. Overall, our intrinsic performance in H2 has been very strong, showing our ability to react quickly to issues. Considering the very challenging environment and the rise of gross investments, we have delivered very solid cash flow and been able to maintain a robust financial structure. In 2024, we will reach another important milestone with the start of our lithium production in Argentina this summer, with full capacity confirmed for mid-2025. And last but not least, 2023 was also marked by the successful conclusion of our first CSR roadmap with major progress, And we have just launched the new one, Act for Positive Mining, which is even more ambitious and which will position Eramet as one of the leading players in responsible mining. So when we come to figures, in this depressed price environment, we have delivered an adjusted EBITDA of 772 million euros, thanks to the significant contribution of Ueda Bay. As you can see on this chart, Ueda Bay contribution in 23 has been 425 million, i.e. 55% of our total adjusted EBITDA. and also thanks to an excellent intrinsic performance of 153 million, especially in the second half of the year. The external impact has been hugely negative, with 1.3 billion of negative impact on our EBITDA, And the very strong decline in price has not been compensated by the slightly positive evolution of the input cost, mainly the freight. Interesting performance, as I said, reached 150 million with 230 million during the second half. after the difficult start of the year that you remember was affected by the landslide that we had on the railway in Gabon. In addition to the volume increase, and so record volume increase in Indonesia plus 85%, and also the rebound of production in Gabon after this major logistic issue, We have also benefited from a significant productivity improvement and cost reduction, which helped, of course, to improve the bottom line. So thanks to this intrinsic performance and also thanks to the very good control and optimization of our cash flow and especially the working capital, We managed to generate a positive cash flow generation of 78 million net of Tsing-Chang contribution to the Centenario project. This is important as in 2023 we have started the acceleration of our growth capex in line with our strategy. We have spent 522 million of capex, out of which 250 million of gross capex, largely in lithium and in Gabon to sustain our organic growth. The net debt reached 614 million euros, leading to an adjusted leverage of 0.8%. 2023 was also marked by the successful conclusion of our first CSR roadmap with major achievements. To name a few safety, the incident rate was divided by five over the period of this roadmap, reaching 1.1 at the end of 2023 in a context of a significant increase in activity. And these position us among the very best in our industry. The group's carbon intensity has been reduced by 40% compared to 2018, significantly exceeding the target. The ratio of rehabilitated areas to cleared areas reached 1.2 over the period, significantly exceeding the initial target of above 1. And we have strongly invested in community relations. A dedicated organization has been deployed throughout the group with the development of specific standards and tools, which led to the creation of Eramet's Beyond Impact investment program. And in December, the group published its first human rights report to transparently answer questions from its stakeholders on the integration of fundamental rights into its organization and its activities. Last but not least, the independent audit process of the IRMA standard was launched, with the first independent audit at GCO at the end of the year, and the self-assessment audit at PTUEDAB, both at the end of the year, and there will be other audits coming in 2024. I remind you that we are committed to have all our sites audited by 2027. 2023 was also the year of the launch of a new CSR roadmap, Act for Positive Mining, that we have described to you during our last Capital Market Day. I don't want to come back to all the details of these roadmaps, but it's based on three ambitions, covering all Eramet's responsibilities and interactions. So the first one is taking care of people. The second one is protecting the environment, being a trusted partner for nature. And the third one is transforming our value chain. It is divided into ten short-term objectives for 2026. So it's quite short-term, to be very pragmatic and force us to deliver on the short-term. and also three long-term objectives for 2035 that are based on best practices in the sector. We strongly believe at Ehamet that responsible mining not only is a requirement of everyone, but responsible mining is possible and is part of the solution to support the energy transition. As we talk about energy transition, we are progressing well on our strategic roadmap. And I wanted in this introduction to focus on our lithium projects. The phase one lithium project in Argentina is progressing well. The plant is now 90% complete and production is scheduled to start this summer with nominal capacity expected to be reached by mid-2025. Phase 2 studies are progressing well, and the permitted process is underway. And we continue to ramp up our nickel mine in Ueda Bay, which has, as you know, huge potential. The objective is to reach 40 to 50 million tons of production this year, and 60 million tons by 2026, i.e. about 15% of the global nickel market. All this with an extremely competitive cash cost. And finally, we continue to feed our pipeline of long-term projects with concession purchase and farming agreements, particularly in lithium in Chile. And so last but not least, in Caledonia, in the context of the very low ferronical price nowadays, the financial situation of SLN is deteriorating and really becoming critical. Preventive conciliation procedure is ongoing and in February 2024 the state had to grant another loan to SLN for an amount of 60 million euros. Eramet is obviously involved in the search for solutions to maintain business continuity. But we have also clearly reiterated our former decision not to grant any new financing to SLN. And in this context, we have initiated a process already several weeks ago, and we are now in advanced discussion with the French state to finalize the solution to neutralize the weight of SLN past and future debt in the group-consolidated financial statement. And the details of the solution chosen will be announced in the very next weeks. So now I think we can start with the financial performance and I will hand over to Nicolas.

Thank you Christelle, and indeed I will now detail the financial performance. I just want to remind once again that unless specified otherwise, all the financial figures are presented in accordance with IFRS 5, especially for the comparison of 2022. So this being said, as Christelle has been mentioning, 23 has been, in a very challenging context, a solid and robust performance for the group, with an adjusted EBITDA reaching 772 million euros. And I will describe how we got there versus 22 in a minute. With a net income group share which was at 109 million euros, so still despite a significant decrease versus 22, something I want to highlight here is in the very challenging context we have faced in 2013. and also knowing that this number is including an impairment on the assets related to SLN for €122 million, we have been able to deliver a positive net income despite all these challenges, which says a lot about the strength and the quality of the reposition portfolio of the company. And that's something we'll continue to highlight in the rest of the presentation. The other thing also I would like to highlight, the net debt reaches 614 million euros, an increase versus last year, but a maintained increase, and I will describe also later on how we got there, reaching an adjusted leverage of 0.8, which remains under the 1x mark that we have defined as the average target through the cycle. So how did we deliver this 772 million euros of adjusted EBITDA? Clearly, Christelle said it in her introduction, it's been significantly impacted, and significant is even another statement, by very challenging external factors through the year. As you can see, all in all, it's representing a negative 1.3 billion euros, including, and the biggest impact by far is, and it's even more than that actually, it's on the selling price effect, which is reaching for the year 1.4 billion euros. And this is coming, as also Christelle has been mentioning, from almost all the products, with significant examples that we'll describe later on. But a key one is, for example, for manganese alloys, the prices have been reduced in average for the product by more than 40%. And for nickel, it was in the range of 25%. So this is what led to this huge impact, knowing that it has been partially compensated, and we'll also describe later on how it was built. It was partially compensated by lower input cost but to a much lower extent because here the positive impact if we add up freight input cost and inflation was limited to around 100 million euros. So this is clearly a small compensation versus the huge negative evolution of the selling prices. And that's why it was really important to deliver an intrinsic performance as we did in 23. And I think it's really important to highlight when we met at the end of July to talk about the H1 numbers, and also Christelle was reminding it, we were in a situation due to the one-off logistic incidents we faced in Gabon to have a negative performance at that time of 77 million euros. So being with 153 at the end of the year for the full year means that we delivered in one single semester 230 million euros and implementing everything we've said actually when we've met in July in terms of productivity, in terms of fixed cost management and also in terms of volume improvement in all the areas. So that's why, all in all, as we've said, clearly a challenging year in terms of economic context, but very solid performance, especially thanks to the recovery we have handled in terms of internal and operational performance in the second semester. So with that, it's leading, as I mentioned before, to a net income group share of 109 million euros. And as I stated earlier, it's very important to highlight that we have generated this performance despite the impairment we have taken on the SLN assets. As you can see, at 100%, it's 218 million euros. And if we take the group share of it, which is what, at the end of the day, lies into the €109 million, so this is €122 million negative coming from this impairment. And it's also highlighting there what is the outstanding contribution of UEDABE. So it's an outstanding contribution in terms of EBDA, as Christelle was highlighting earlier. But it's also an outstanding contribution in terms of net income. As you can see, it's 295 million euros for the 38.7% we own in this operation. Now moving to the cash items. So the first thing we'd like to highlight, and which also we have described before, is the fact that in 23, as we said before, we were focusing more than the previous years, and it's a start, in terms of gross capex. Part of it is coming from the manganese ore, especially to ensure that we can optimize our operations in Moanda, especially on the new plateau of Okuma, and also a big piece which is to ensure that we deliver the Trans-Caribbean renovation program which is very important and we'll describe later on why, to ensure that we can deliver and we can transport the amazing growth we have generated in terms of production in this operation in the past years. So that's one piece. The other piece is concerning lithium, where, as also we have already stated, we have continued the phase one of the project centenario in Argentina to start the production in 24. And also we have accelerated making some early capex already on the phase two. phase 2, trench A, which has started in 23, and that will clearly continue in 24. We'll come back to that later on. And just for the sake of clarity, the gap, or let's say the evolution between the €920 million you will see in our line capex, and you can see on this chart, And the piece which is purely economical, which is actually the capex, which is true cash out, and also the portion which is financed by Eramet, is of 522 million euros, in line with the guidance we have actually provided earlier. And the gap between the two numbers is, for a portion of it, the financing by Shenzhen. As you can see here, it is 250 million euros. And the other piece, which is also to be restated and that we have restated in this more economical view, is the devaluation of the Argentinian pesos for 148 million euros, which finds actually a counterpart, a positive counterpart, in the rest of the free cash flow. That's why we wanted to provide you this clear picture. So the number to retain in mind is 522 million euros you see on the right-hand side of the chart. As Christelle alluded to earlier, we have also very well managed our working capital through the year and especially at the end of the year. So a portion of the evolution is coming from the lower selling prices, but honestly not to the biggest extent because when we started the year 2023, We were already based at the end of 2022 on lower prices, so the comparison end of the year, end of the year is not that dramatic. We have had clearly a very strong management of our working capital in two areas. One is inventory. I will give one example. We finished the year in terms of finished goods inventory for Morganis Alloys below 90,000 tons, which is the first time ever. So this is a very strong management and ensuring that we turn into cash what we can to deliver cash flow to our shareholders. Second example I wanted to highlight is receivable, for which we have also significantly reduced. As you can see here, it's moving down from 308 to 221. And this piece, so small portion was led by the prices, a bigger portion was actually led by the fact that we got very early payments from all our customers and that was a strong work we have achieved and will continue to do to optimize our working capital. So with all of that, with all the items I've just described, what was our cash flow? Christelle has mentioned a number in her introduction. What we call the free cash flow, the economic view, was positive by 78 million euros. And why do we talk about economic cash flow? It's to take into account these capital injections from Tingshan into the Eramine project. the 321 million euros you see there which don't belong to the accounting free cash flow but which from a pure economic standpoint is to be considered so that's showing what that's showing that in a year on which we have had a very challenging economic context in a year on which we wanted and that was part of the capital allocation policy we have said for two years now we wanted to continue to invest in very profitable growth projects and also in a year on which we were to handle some key divestments for the strategy of the company we have been able to deliver a positive free cash flow of 78 million euros. One thing I would like to highlight also here is the fact that with all of these numbers, we moved to a debt of 614 million euros. Christelle has been mentioning SLN earlier. SLN, out of this 614 million euros number, is representing the portion of the French state debt, 260 million euros. This means that 40% of this number, of the 614, come from the debt of SLN versus the French state, hence the work we are currently performing to remove the impact of this debt out of our consolidated financial statement, as it has been mentioned before. So the debt, not only we have been very active in managing operations, ensuring, delivering intrinsic performance, ensuring that we could also deliver strong cash flow with working capital management, discipline capex policy, and optimizing all the areas of the cash flow. We have also been very active in managing the debt in 23. by issuing a sustainably linked bond in May of 2023, by getting the prepayment on the lithium products with Glencore as we announced in July, also extending our term loan at the very beginning of the year. So all of that was enabling us to extend our maturity by close to a year. Now the maturity of our gross debt is close to three years at the end of the year, and it was close to two years at the end of 2022. So that's also something which is to be highlighted because this demonstrates once again the robustness that we have created in the last years. And also the other point I wanted to highlight in terms of robustness is the level of liquidity we are able to demonstrate. Because in terms of pure cash, as you can see on the right hand side, we have 1.6 billion euros at the end of the year, which is more or less in line with what we had at the end of 22. But on top of that, We have another 1.4 billion euros, which is coming from lines which are undrawn at the end of 2023. The biggest portion of that is the same as the end of 2022, which is the RCF for 935 million euros. The rest, the 450 million euros on top of it, is coming from the biggest portion of the prepayment with Glencore, which is not drawn yet at the end of 2023. It represents 320 million dollars. And the second portion is related to the term loan for which there was 145 million euros still to be drawn at the end of the year. With that, I want and we want to confirm our cash allocation policy, which remains the same as for the past two years. The first pillar is to ensure that we keep an adjusted leverage below one on average through the cycle. We are at this mark at the end of 2023. Concerning the second one is accelerating the growth capex and so we have done so as you can see in 23 and we'll talk about 24 in a minute but that's clearly coming and we want to ensure that we deliver these growth projects something we have not always done in the past as a company and something we want to do and we will do in the coming years and we'll come back to that. And the third piece, which is also very important and shows the confidence about our strategy and shows the confidence about our perspectives despite the challenging market environment, is to reward our shareholders. And that's why we have decided to propose for the vote of the General Assembly in May a dividend of 1.5 euros per share. So now I will give you some more details about the operational performance in 23. I've already, and I won't spend too much time there because we have already mentioned it, clearly 23 was a very depressed pricing environment in all the markets with a continued decline through the year. So this means that H2 was even worse than H1, which was already a significant gap versus H1 of 22. And to give some key examples, I mentioned there before, for manganese alloys, minus 43% in average for all the products. Manganese ore, minus 20% through the year. And ferro-nickel, and here I really want to remind once again that since the issue on LME, which happened at the beginning of 2022, We don't have, and it's not only by the way, SLN, Eramet, it's the situation for all the players on Ferro Niquel. There is no product, no town which is sold under an NME reference. The line to be looked at in terms of trend is the evolution of the NPI SMM 12% index, which is the orange line. And as you can see, this one has been moving down by 24% through the year and reaching a level which is close to $11,000 per ton at the end of 2023. As I said before, the input costs have been easing, which at least is a positive thing. Also, we've said it, H1 was not showing a positive trend because of the lag between the time we purchase and the time we consume. We said that it will be the case in the second half, and that has been the case. So as you can see, the main evolution was on the reductance, with an overall reduction year-over-year of 21%. and it was on all the products. I want to keep in mind also, I want to highlight the fact that the evolution of the mix of our reductants has changed. The mix of our reductants has changed in 22 following the war in Ukraine. So we purchased before that part of our carbon products out of Russia and we moved immediately. to ultra-low phosphor coke coming from other countries, leading to a significant change in the mix. It's higher cost by definition, but it was also an evolution we had to do and which was very well handled by the group. The freight rates have been also easing through the year and it was following an upward trend in 2021 and 2022. So that was also positively impacting our costs. by around 28, between 28 and 40%, as you can see on the screen. And this was leading to this positive impact of around 50 million euros year over year in the P&L. Again, this is a positive impact, but very, very, very partially compensating the huge drop we face in terms of selling prices. So the other piece, and this is a piece we have under our control and really I want to spend a minute there because we've said it at the end of H1 results and that's why we are very pleased to present and to announce today The fact that we have delivered what we are committing and we are even over delivering, honestly, in H2, thanks to a lot of items. As I said before, productivity via the optimization of production and OEE, and also via the reduction of fixed costs. And if I want to highlight a few items, as you can see, we have generated 130 million euros of productivity gains overall. Two key examples out of that. If I start with Moanda, with manganese ore production, We have improved our grade overall by 1.3 points and this was leading for one single semester to a positive impact of 30 million euros. I think I was providing this example when we presented our H1 results and I'm really happy to say that we have been able to deliver this performance. We did also a very significant performance at Wedabe mine, not only volume, but also in terms of grade improvement. As you can see, by improving the overall grade by 0.2 points, we have actually delivered a 70 million euros positive performance. To be clear, this 70 million euros performance is the impact to Eramet, meaning that to Eramet adjusted EBDA. So it is at our 38.7 share. So this is how amazing and how significant this action has been. We have and will continue to do, to make a tight capex monitoring, I've mentioned it, and also mentioned the working capital optimization that something we'll continue to do. All in all, we are continuing to develop a culture of operational excellence. So we've seen, and I was trying to demonstrate, all the results we have already achieved in H2 of 23. And we'll continue to do that. We have developed a program, which is named NERAMET production system, to be able to deliver that on a regular basis and to accelerate on this. So more to come for 24. If I move to the overall KPIs, operational KPIs for 23, a few things I would like to highlight. The first one is the fact that for Manganese, or despite the significant challenge we faced in the beginning of 23 with the landslide and then the incident on the railway in April, we have been able to deliver a production in 23 very close to the one of 22. And I don't want to understate this performance because the impact of the incidents at the beginning of the year for the production also because we are not able to produce given the fact that the fuel was not going to the mine anymore. We have lost between 600 and 800,000 tons just at the beginning of the year due to this incidence. So that's why getting at the end of the year to a 2% lower number versus 22 is clearly an outstanding performance. Transportation was not following exactly the same trend. Why? Because we had to also cope with the fact that we need still to invest and to maintain the railway. So we are not able to fully deliver all this production, but we are continuing to invest and to improve the railway. That's why we invested in 23. We'll continue, as we said, during our CMD to do so. in 24 and the coming years to ensure that we can match the capacity of transportation with what we are already capable to do in terms of production. If we take, by the way, the last quarter of 23, we are already, in terms of production, on a pace which will be very close to the 10 million tons we have been communicating concerning the long-term target. This was a positive period in terms of production, of operational production, but I think it's important to highlight that. I will not describe much more this because I will go into the details business by business, but one thing still I would like to highlight is... For Ueda Bay, Christelle said it in our introduction, but the 33.2 million tons we delivered in 23 is still an 85% increase versus 22. 22 was already a record year by definition, but also Ueda Bay was already the biggest nickel mine in the world. So this means that delivering an 85% growth tells a lot about the... capacity and the performance of this mine and there is more to come in 2024. We'll come back to that when we talk about the guidance for the year to come. Morganese, so that's something we have already said since the beginning of the presentation, was suffering of two things. The first piece is the evolution of the prices, very significant especially for alloys, but also suffering at the beginning of the year of the non-recurring logistic incidents we faced on the railway. That's where to impact. This being said, despite these two events, we have been able to generate for the two activities belonging to Morganese an EBITDA of close to 500 million euros. The reason why the free cash flow is negative is, as we said before, we are investing still especially on the railway. So that's why overall this cash flow is negative and it's primarily coming from the capex and also it was to ensure that the outstanding cash flow which was generated in 22 was retrieving the shareholders of these companies and the main one being by definition the group. So that's about the Morganese financial performance. Just back to the free cash flow. As you can see, if we exclude the gross capex that was done in 23, it was still a positive free cash flow by 145 million euros. I think it's really important to highlight. And concerning these operations, we keep also, and that's the theme for all activities, and Christelle mentioned the importance of our new CSR roadmap. We have developed a lot of activities in Gabon with 60,000 beneficiaries of these activities. And also, we are accelerating our projects on the Norwegian manganese alloys plants to reduce our carbon emissions with the two projects which are described here, and which is clearly the trend that the steel market is following. Talking about steel market, so overall worldwide, a pretty stable market evolution, close to be very the same, with China being itself stable. And India showing a continued strong growth at plus 12%, compensating the decline we have clearly seen in Europe. So that's the overall evolution of the steel market. In terms of all production and supply, so on our side, we have seen a slight decline by 2%. And in terms of potential transportation, a bit more than that. But it's been compensated by a one-off increase in Brazil, which won't occur again. And that's why I think it's important to highlight that even if 23 was accordingly in a very slight surplus, we anticipate 24 to be the other way around because we have started to see what has been happening regularly in the past. With the level of price reached at the end of 2023, some of our competitors, especially in South Africa, are stopping their production. So we anticipate the market balance to be more in a deficit mode in 2024. which should show confidence about the expected evolution of the price, knowing that it will likely more happen in the back half of the year, more than at the beginning, even if we started to see already a positive trend in terms of pricing, which is something to be highlighted. As you can see, as of today, the index price is at $4.3 per the MTU. It was very close to $4 at the end of 2023. So we've said it before, I won't repeat it too much, but our production volumes, outstanding performance in the second half, compared to the second half of 22, it's a plus 22%, which is a huge performance. And as I said, especially it was a very strong performance in Q4. The transported volumes were in line in the second half versus what it was in the second half of 22. So it's not a bad performance, clearly not. But it was not enabling us to recover the gap which was created in the first half that was leading to this overall decline between the two years. and as said the investments and the maintenance plan we have within our operations in Gabon should and will enable us to recover and to deliver the same level of volumes as the one we are anticipating in terms of production and that's why we have provided as you can see here a guidance between 7 and 7.7 million tons for the year 24. In terms of cash cost, that's highlighting the focus we have done in terms of productivity and fixed cost that I've been mentioning before, despite the negative evolution of volumes because of the beginning of the year issues. Despite the inflation, despite the FX rate evolution, we have been able to reduce the cash cost year over year thanks to this productivity and fixed costs reaching almost 20 cents per DMTU. I said before, this is not over in terms of potential to improve our cost management and productivity within this operation, so that's something we'll continue to work on. Morganis Alloys, something I would like to highlight is we are, given the evolution of prices, focusing clearly more than ever on our value of our volume strategy. So that's also why we have seen an overall reduction of the volumes versus 22. We are producing when we can make money. So if we don't make money, we are slightly reducing the power of our furnaces to also reduce our variable cost. which is by definition critical, as we've said in the previous periods, when we are in a high input and a high electricity cost environment. So that's something we are still committing to do. We don't expect a huge recovery in 2024 of the prices, so that's why this strategy of value over volume remains very important. And the other piece I want to highlight for 23 versus 22, we have relined two furnaces. It was planned, and that's also more or less in line with what we communicated to the market at the beginning of last year. So that was also impacting the overall production. But again, something we were also controlling to ensure that when we are producing, it's to generate margin and value for the company. Nickel, clearly, as I've said already a few times, a story of two tales. So one side, which is a high success story, is Wedabe. I've mentioned the key numbers already. So I won't describe them again, but it's showing here how big and how significant it is. And the other one is SLN. Unfortunately, this one is negative. And I will show afterwards, it's not negative because of the operational performance, which actually has been solid in 2023. But it's because of the market environment due to this minus 24% prices I've mentioned earlier. And that's leading to this significant negative adjusted EBITDA or EBITDA of 124 million euros in 2023. And more or less the same cash flow, which by the way, because still there are some necessary investments, this means that here also the working capital has been very well managed because this operation has generated the same amount of cash flow consumption as the negative EBITDA. So that's why we are working now with the French state to remove the negative impact of the debt of SLN out of our consolidated financial statements, for which we'll announce in the very coming weeks the final solution on this topic. But we are in very advanced discussion. That's why we communicated about it yesterday. And the other piece we are confirming, and I think it's really important to stress this this morning, is that we won't put any more financing within this entity. And that's why, accordingly, the French state has put this additional loan of 60 million euros in February that Christelle was mentioning earlier. We are also working on this activity on the CSR items as everywhere. And as you can see, spinning up on rehabilitation, for example. So that's, as I said before, something which remains core for all our activities. In terms of market, the Chinese stainless steel production has actually been pretty solid in 2023, so with a growth of 10%, which was enabling an overall growth of the worldwide market by 10%. And also, clearly, a huge or significant growth on the batteries and nickel class 1 demand with a plus 15%. Unfortunately, due to the overall evolution of the nickel market with the significant increase of the NPI production out of Indonesia with a much lower cost of production, It was leading to significant drop in the market price that I was already mentioning before with a minus 24% on the NPI index year over year. And this was impacting Earth, of course, but I'm sure that you have seen that almost all competitors out of Indonesia are suffering currently. That's something... which has been, for example, impacting Australia. BHP has announced that they were suffering into their operations. They have booked on their side an impairment of $2.5 billion. So it's just an example to highlight that it's not an SLN or ERAMET issue. It's clearly a market shift, which is unfortunately expected to last likely to a lower extent than the prices we have seen at the end of 2023, but still to last in the coming period. So, with Abbe, another record year, I've said it. One thing I would like to highlight here is when I said that we will continue to grow, our target that we have communicated in our press release yesterday is to be between 40 and 50 million tonnes in 2024. So that's another increase of between 15% and 40%. So the range is pretty wide. But I think it's showing the outstanding quality of this deposit. And it's the way to the 60 million tons that we are disclosing in our CMD in November. So the potential is huge. And what we'll target for 2024 is, in terms of mix, very close to the one we're also announcing during the CMD, 1,3-lamonite for the feed of the growing H-pal plants and H-pal demand. And two-thirds of saprolytes, it's really also important to know because the mix, by definition, is not as accretive for limonite as for saprolyte. This being said, it remains a very positive margin given the quality of our operations. SLN, as I said before, so not an operational issue. And I really here, I would like to highlight the fact that if I compare to 22, it was an increase by overall 10% in terms of ferro-nickel production. So moving from 41 to 45. By the way, 21 was below 40. So this means that this is back to a regular standard in terms of performance with also consistent electricity supply from the temporary offshore power plant. So that's a very positive performance, unfortunately. leading, given the still very high input cost we face, and especially the cost of fuel, which has remained high, versus 22. We still have a cash cost, which is at $8.3 per pound. So this means that, unfortunately, due to this high electricity cost and sometimes the complexity to access to some of our mining operations, leading to this high cash cost in the current market environment. This makes the very challenging financial situation that this entity is currently facing. I will end on our MineralSense BU. As a reminder, we have divested our operations in Norway, our smelter in Norway in September, leading to a positive €214 million net proceeds to the group. As you can see, the enterprise value was 12 times the 2022 ABDA for this operation. So it was for us the possibility to deliver to our shareholders immediately the value of this operation thanks to the offer we have received from INEOS. So that's why we took it. Concerning GCO, here we have delivered still a solid ABDA performance of 105 million euros. yet in reduction versus 22 for the same reasons as the one for the other products, meaning the market environment, which is the biggest impact. Also, due to the fact that we have not been able to deliver the same performance in terms of OEE and productivity, as the one this operation was able to deliver in the past and that's something we have been working very actively and you will see later on that we are planning to be back on the standard performance for the coming periods. And in terms of CSR, I would like to stress one very important topic. We have performed in AGCO our first independent audit under IRMA. And as we have already communicated a few times, IRMA, we want it to be our standard for all our operations. And that's why this first audit was very important and is showing the way and showing the path for all our operations. Last, so market, nothing very much to say, just showing the trend, which, again, is similar to the other products. And we anticipate that 24 will show still a slight decline. That's our anticipation. I want to, on this one, to focus more on the production of GCO because, as I said before, 23 was a challenging year on top of the market evolution. But 24 is expected to go back to a high level of performance with a level expected above 800,000 tons of HMC, which means that it will be a growth of 30% or more versus what we have delivered in 23. So and it's even more than what we delivered in 22. And we are confident because once again, we have worked a lot to improve the OE, which was not as efficient as possible as it could have been in the past in 23. And also we are now entering into higher grade areas with a dredge. 23, and we've said it before, we are crossing an area which was with a much lower grade. Now we are down with this area. So we have a much more positive outlook in front of us, enabling us to be confident with the target we are showing here. So I'm done with this financial and operational description of our results and on the outlook and I hand it over to Christelle for the conclusion.

Thank you, Nicolas. Just before we go to the conclusion and the outlook for 2024, I would like to say some words on how we progress on our strategic roadmap. I won't go into a lot of details because we had our CMD only a few months ago. and most of it was described there. You know very well now our strategy tailored for the new era of metals. It is based on two pillars, clearly aligned with global macro trends, with the economic development of the world and also the energy transition as a growth booster. So this strategy is supported by a big ambition in terms of CSR as we have described. So we are progressing well on this strategic roadmap and especially on our different projects in energy transition, lithium, nickel for battery and recycling. But clearly, 2024 for us will be the year of lithium. And I would like to focus on that. We will start in a few months now our first lithium plants in Argentina based on our very efficient DLE technology. The plant, as I said, is now 90% complete. It will start during summer, so almost on time and on budget. We should produce 5 to 7,000 tons of lithium carbonate in 2024, and the full ramp-up at 24,000 tons of capacity is expected by mid-2025. So once this nominal capacity will be achieved, the expected annual EBITDA should be between $200 and $300 million, depending on the long-term prices. And this very good EBITDA is based on an expected cash cost, which is definitely in the first quartile of the cash cost curve. and is expected around $4,500 to $5,000 per ton. So as you can see on this chart, and I think the first time we showed the projected cost position of Santonario on the cash cost curve, And as you can see, we are really in the very first quartile of the cash-cost curve. We expect then strong resilience of the business through the cycle. And as you can see with the chart, the long-term price forecast, according to the market consensus, is between $15,000 and $20,000 per ton of carbonates. The spot price today is around 13,000. So you see that with the spot price of today and the current long-term price expectation, we are still making a big margin. And even if we take the lowest recorded price since 2017, which was at the time of the COVID and it showed here at the bottom, we would have still been making money with this level of price. So as you can see, a very resilient business and we're expecting a lot from it. So now coming to the conclusion and the outlook for 2024, clearly the start of 2024 remains challenging from a macroeconomic point of view. The demand remains sluggish in most of our markets, and the price remains low. The economic outlook for our commodity, we think, will remain depressed until we see a clear rebound in the Chinese economy. Nevertheless, as was mentioned by Nicolas, I think it seems that the bottom has been hit again. And we are seeing right now some signs, small signs of recovery. We see some suppliers clearly hit by the low prices shutting down capacity or reducing production, which is helping the price to recover a bit. But, of course, we are far from being in good territories in terms of pricing, and we have to remain cautious. On the other side, reductant and energy costs also declining are still at a rather high level compared to the past. And because of the issues in Red Sea, the freight price in 2024 is expected to be at higher levels than in 2023. So all together in this difficult context at the beginning of the year, it's more than ever crucial to focus on our operational performance. And we are working on optimizing our production according to the market needs and reducing our costs. And all the companies really focus on that nowadays. And I would say that the main challenges of the year will be first to return to a good level of transport in Gabon after a year marked by lockdown. the landslide. As you know, we have de-bottlenecked the production at the mine in Gabon. So we are not restricted in terms of production. What is a bottleneck is the transport. There is still a lot to do in terms of maintenance and renovation on the railway. And that's why we remain cautious on how much we can transport and ship in 2024. We will continue the exceptional ramp-up of Ueda Bay and it is important as you can see Ueda Bay is highly cost competitive and generates quite a lot of EBITDA and cash. And importantly, we are finalizing the solution to neutralize the impact of SLN debt in our accounts. So as a target for 2024, the volume targets for the year are between 7 and 7.7 million tons of manganese ore transported in Gabon. because of recovery and improvement in the transport capacity. We put a range because we know that, again, according to the performance of the railway and the market needs, we should be in that range. We also target between 40 and 50 million tons of nickel ore market at Wedabe. And this range is because it's depending on the timing of the authorization. As you know, we need each time authorization from the Indonesian government in order to be able to increase our production. And we target, as I said, between 5,000 and 7,000 tons of lithium carbonate in Santonario from our new plant in Argentina. For illustrative purpose, and it's a change, it's not a guidance of EBITDA, it's an illustrative calculation based on the consensus price average for the year. that you can see here, and the range of volumes that we have given above. So the consensus right now, and as you know it moves all the time, but right now the consensus for manganese ore is $4.6 per day MTU. For nickel LME, because there is no consensus on SMM, it's $17,000 per ton. And for lithium carbonate, it's $16,000 per ton. With this consensus forecast and the range of volumes that is described above, we expect an adjusted EBITDA range between 650 million euros to 800 million euros. We expect also the financial performance in H1 to be significantly lower than in H2 for two reasons. Because you know that we have a more favorable seasonality in our production in H2. It's always true. But also, we expect market price to be higher in H2 than in H1, knowing that the very beginning of the year was very low. And also very important, in line with our strategic roadmap and in order to support the growth of our activities and prepare the future, We continue to invest massively in the group and the capex is estimated to be between 700 and 750 million euros in 2024. including current capex of close to 250 million and gross capex reaching 500 million. So this is mainly for continuing to invest in Gabon, especially on the railway, and also with around 250 million to develop the lithium projects. So phase one, but also the start of phase two in Argentina. So just to finish, I think that in 2023, the group has demonstrated its ability to withstand the downturns and pursue its development project despite the ups and downs of the economic environment. And it was not the case for Eramet before. So even in a very depressed situation, overall pricing and economic environment, we have been able to deliver this kind of results, and despite also an impairment on SLN, a positive net result. This is clearly thanks to the successful repositioning that we have operated during the last years, and we have now a much stronger portfolio of high-quality mining assets. And we are addressing right now the last part of our historical problematic assets with SLN. And this is also thanks to the commitment of the team and our constant focus on performance that is improving year over year. So we are convinced that we are now perfectly positioned to further unlock value and confidently pursuing our development strategy in the new era of metals. Thank you very much for your attention. And now, Nicolas and I and the rest of the team here, we are ready to answer your questions.

Thank you, Keistel. Thank you, Nicolas. So we will start with the questions from the floor and then move on to the questions from the chat box of the webcast. Maxime.

Good morning, Maxime from Adobe HF. So I have two questions on Nickel. So reverting to this tale of two stories, as you called it, Nicolas, first. How many authorizations have you already obtained for this year? Because you plan a quite significant increase in production and there's a new system in Indonesia for seeing now three-year quota instead of one-year quota. So what's the impact for you? So that would be the first question on Reda Bay, and the second is on SLN. It seems to be structurally loss-making, so very basically, why don't you choose to idle the operation there, as the Clean Corps did? And in relation to that, does the deconsolidation of debt entail transferring some capital or some governance rights to the government or to somebody else? Thank you.

So maybe on Weda Bay, we have not obtained any authorization so far, but it's the normal process. Every year is the same thing. We have to obtain the authorization and we are doing it right now. Today it's progressing well. We have good feedback from the local administration. You have seen the results of the election, even if it's not officially, I mean, the results have not been officially announced. We know that it's a high probability that there will be a little change in the government of Indonesia. So we don't expect the administration to be so much disturbed And so we will continue and we are in progress of obtaining the authorization during the first half of the year. So we are reasonably confident, but we cannot say anything else so far. And the system, yes, and we are applying for this now long-term, more long-term authorization process that we are going to get because we want, as we have already said, to increase to 60 million tons. We have already applied for the future 60 million tons that we want to produce in Ueda Bay in the next years. Regarding SLN, your question is, I mean, the situation is different from Glencore. First, SLN is losing money, but compared to what KNS was losing, it's... Small amount of money. And a very big difference is that Glencore continues to finance KNS. And as you may have noticed, since the loan that was provided to SLN by Eramet in 2015, we have not financed anymore SLN. And we have reiterated our decision not to provide any new financing. So the state today is financing SLN. They have provided a loan of $60 million last year. They have in February provided a new loan of $60 million. So it's giving SLN the time to know what is coming in the discussion presently going on around the nickel pact. As you know, there are discussions between the local authorities, the French state, and the local industrial companies. And we want to give, I mean, all these stakeholders the opportunity to finish this discussion and to give a long-term answer to the potential viability of the metallurgy in Caledonia. But in the meantime, as we know that these discussions are taking quite a lot of time, we don't want to finance and finance The next step that we are discussing right now is that not only we don't finance, but we don't want anymore that the financing by somebody else, today the French state, tomorrow we don't know, hits the balance sheet of Eramet. So we want to disconnect the balance sheet of Eramet from the balance sheet of SLN. It doesn't mean that we will not continue to be the industrial partner of SLN, but as we are not financing SLN anymore, we want this to be reflected in our balance sheet. So we are working on it, we are well advanced, and we should be able to announce the solution in the very next week. Yes, there are several questions.

Hi. from Stifel. Just to come back on ,, sorry for that. But you targeting to deconsolidate the debt. Are you targeting also to deconsolidate the losses?

Because you are making... It will depend on the solution.

Okay. Because normally if you deconsolidate, it means you deconsolidate the company and therefore revenues and losses too. And it's a big amount of your sales losses. So it can be different.

No, no, yeah, we talk about solutions with NS. So we are working on several solutions, not that many, but there are different solutions that can lead to what you said.

Just technically, how can you deconsolidate the debt without deconsolidating the... I answer, so we didn't use the term deconsolidate.

We say that we remove the burden of the SLN debt out of the financial debt, net financial debt of the group. So just another mean to remove that is not only to deconsolidate, it's also potentially to have the financing of SLN not being a financial debt. It's just to answer your question.

Second question on HPL. You don't talk about it today. Obviously, the market condition of battery is difficult. We have seen, of course, a lot of projects have been starting to be reviewed. What's your position? What is the position of BASF? Because you're not the only one in this project today.

We continue to work on it, and we are still convinced that if there is one place in the world where NASHPAL can be cost-competitive, it's in Halmahera, at the bottom of Wedabe. With the cost of this industrial park, with the logistics, that is, I mean, a mine, a very big one, by far the biggest in the world, very cost-competitive, close to the sea, and the plants at the bottom of it, honestly, you cannot imagine a better cost position for a Nashville. So we continue to think that, and you said that the battery is struggling, we... We have still experienced 20% growth of nickel for batteries. So, of course, when you expect 40% and it's only 20% growth, everybody is disappointed, but it's still growing quite fast and we expect the same kind of dynamic in the coming years. There will be a need for nickel class one. If there is, again, an area in the world where it could be cost competitive, it's where we are planning to build it. Now, we want to make sure that we de-risk the project and we partner with the right partners. And you know that today the technology that is working is Chinese technologies. So it's the way we build this partnership and we execute this model that we are still working on. So the intent is still there. We are monitoring the market carefully, but we continue to think that it's a good opportunity and we are still working on it.

And what BASF is saying about it?

BASF is very motivated to have it because they have the same view, and they continue to think that it will be a key advantage for battery manufacturers to have secured the feed in terms of MHP, especially because, as we all know, the probability that most of the nickel class 1, as it is the case today for the nickel class 2, will come from Indonesia. So being there and part of it is for them a way to secure their feed on the long term.

Two other questions on the market. First, on the nickel market, Australia is in trouble. New Caledonia is in trouble. Many other places are in trouble in terms of pricing. Are you starting to really anticipate closures, stopping of production of higher cost? I mean, you are a higher cost producer in a way. in New Caledonia, and you are not stopping production due to political reasons in particular, and social reasons. Do you think that we will see some closure, however? And are you trying to quantify that? That's one question. Second question seems a bit similar, but more on the Manganese part. On the Manganese, not only on the ore side, the ore side, we will all know what's happening in South African costs, so therefore it's quite transparent. It's more on the alloys part. We know that some Chinese producers have problems right now in alloys, and therefore, how do you see eventually some closure, and eventually you'll see closure which will lead to a better pricing later on?

Okay, so starting with nickel, definitely, I mean, it's not our analysis. It's a common analysis. This market has structurally changed with the huge low cost and efficient capacity that has been put in place in Indonesia, both in class two and now coming in class one. So what we anticipate is that a higher and higher part of the nickel production of the world will come from Indonesia, which means that there will be closure of capacity elsewhere. It's already happening, and you can see what has been announced in the last month. There has been some closure elsewhere. care and maintenance. And we know that many of the care and maintenance, they don't restart automatically. So it's a way to go for a definite closure at the end. Some mines are closing. the outside of Indonesia, there will be closure of capacity. And even if the states, and it's happening in Australia, for example, the Australian state has stated that they wanted to help the nickel industry in Australia to make sure that it does not fully disappear for sovereignty reason, but they will maybe not help all of them and sustain, I mean, make all of them sustainable. So there will be limits to the subsidies given by the government and it will not happen in all the area of the world. So Our anticipation is that there will be closure of capacity elsewhere in the world, and we start to see them happening. And there will be then more and more capacity coming, or production coming from Indonesia. So I think it's happening. It has started now, and it will continue. In manganese alloys, so you know about the ore, in manganese alloys we see also a shutdown of furnaces, or I mean a temporary shutdown of furnaces in Europe. Ferroglobe has announced some, Privat in Europe has announced some furnaces closure. Because of the Red Sea issues, the imports from India are decreasing today. So as you know, this market is quite regional, and we are operating mainly in Europe and North America. The Chinese market is quite separated. So, yes, we see closure today. And when I said that we saw some signs of recovery in the last months or weeks, maybe, It's because of the Red Sea issue. We have seen the price of commodity manganese alloys going up again a bit at the beginning of this month because of all these issues. So shutdown of capacity and logistic issues. So yes, it's happening. But in the manganese alloys industry, it's not automatically permanent shutdown. It's quite usual to have this swing, some producers shutting down their furnaces for a temporary period and then restarting. As we are, as Ehamet positioned, on the first half of the cash cost curve, today we just modulate our production, but we have not anticipated any full shutdown of a furnace. If it's required, we may do it, but today it does not make sense. Thank you. Questions here?

A few questions on nickel also. What is your hypothesis for nickel or price for 2024, considering the fact that you're expecting 17,000 for LME, but LME, we don't know how. It's only for class one right now, so it's not...

Yes, but as you may know, in Indonesia, there is a regulated price for ore, as it is a regulated market, and the formula for nickel ore is still based on LME. So the formula is public. You can go on the website and find it. And depending on your LME assumption, you can calculate the price of nickel ore in Indonesia, which is what is affecting us the most because of the huge production of WDAP.

With the increase in production in Weather Bay, do you expect a decrease in your cash cost there for the NPR?

We expect a reduction of our cash?

Your cash cost?

Yes, the cash costs, we are already quite low, and so we don't anticipate a reduction of cash costs, because now we are expanding and we are opening new parts of the mine. But we manage through productivity to compensate for inflation, so we continue to have a good cash cost there.

Yeah, and to complete to your question, Nicolas, the point is the model we have at Wedabe is we use a lot of subcontractors, so we are pretty light in terms of fixed costs. So, indeed, what you could usually anticipate as a positive evolution of cash costs because you better absorb your fixed costs when you have higher volumes is not really applicable in the model we have at Wedabe.

And in terms of NP price, what is your hypothesis for 2024? It's around the level of 11,000.

We don't disclose the level of detail, but one thing I can share, because you mentioned the... the consensus for LME, that is something which is followed. So I won't contradict myself saying that unfortunately we don't see anything anymore at LME level, but usually the discount you can see between NPI and LME is in the range of $4,000 to $5,000 per ton.

Okay, so now we will move on to the questions from the chat box of the webcast.

There was another question in the room.

Good morning, everyone. Fabien Ledizer, Kepler Chevreux. Do you expect some capacity closure in the lithium industry, also given very low lithium prices? And regarding the situation in Senegal, so the political situation, which is tense, did some protests take place close to your site? And what could you say about the global situation in the country? Thank you.

So regarding the lithium capacity, yes, we see some reduction of production in some high-cost areas, especially in those podumens, so hard rock lithium. that are high cost in Africa, for example, also some high cost in Australia. So, yes, we see some reduction of production and, more importantly... We see some projects, you know, when the lithium price was at 70,000 or 80,000, we have seen popping up a lot of projects, which seems quite strange in terms of economics. But of course, with that level of prices, everything could be justified. A lot of these projects now have been most bold and stopped, and most of them could not get their financing. So we don't see so many projects in the pipeline. When you look at the long-term supply for lithium, there are many projects that were accounted for by the analysts before that we can't see anymore with the level of price of today. So I think it's Rather good thing because it's cleaning the industry from some time projects that were a bit strange in terms of economics. Not robust, to say the least. In terms of... So in Senegal, the answer is no. The demonstrations have been located in Jakarta... in Dakar, and there was nothing in the TS area, so we have not been affected. The situation is very quiet right now in the region, so of course we are monitoring the situation carefully, but we have not been affected so far, and we don't see things evolving in the wrong direction for the time being.

Okay, thank you.

Thank you. So from the web, to continue on lithium, considering the weak price and weak demand dynamic, could you decide to delay your Argentinian lithium project?

I think we have answered to this question through the cash cost curve that I have shown just earlier. And you can see that even with lower price, we can still make money. And it does still make a lot of sense to continue to invest in our projects. So of course, phase one first is 90% completed. So we'll start. And phase two today will be highly competitive. And we don't see any reason, even, again, the long-term price today is still between $15,000 and $20,000 per ton. And honestly, at this level, the phase two has high return.

In Indonesia and Argentina, are Eramet's relationship with new leaders as strong as with the previous ones?

First, people have to understand that Argentina is a federal system, so there is a central government and you have the provinces. In the Salta province, people in charge have not changed, so we still have the same stakeholders and we continue to work very well with them and they are very supportive of our projects. and at central level, and a lot of things regarding mining are decided at province level. Regarding the central government, it's business-friendly and European-friendly government. So today we are creating the relationship with this new government, but we don't expect any negative impact on our projects. If not the contrary, we could expect some positive impact if some of the anticipated laws are implemented.

Have you noticed a change in the financial health of your Chinese partner, especially in the Nickel and Lithium project?

So the financial partner, so it's Xin Shan. Xin Shan is a very strong company. They have invested in highly cost-competitive facilities and operations. And so they were making a lot of money. They are still making good money. So no financial distress observed with this company.

And finally, a more technical question. What implication would there be for your financing lines if you were downgraded to single B rating?

So as it is a technical question, I think it's for me, Laurent. So I think it's important to distinguish two things. First, for the existing financing, there wouldn't be any real impact. That's one. Second, if we would be downgraded, I want to be very clear, it wouldn't be to be in a single B area. The worst case scenario, and I will come back to that, would be to be downgraded by one notch, and currently we have a double B plus with Fitch, so it would be a worst case being downgraded to double B. And with Moody's, we are BA2, which is the equivalent of BB, and that case will be downgraded to BB-, and I will repeat it, worst case. The point is, we are clearly working to avoid that it will happen. We know, and that's something you may have seen, that the outlook provided by Fitch was turning to negative during the summer because of the situation of SLN and the way of SLN on the debt. Hence, the the point we are discussing with the French state, because we clearly do appreciate the fact that it's weighing on our consolidated financial debt, and that's why it's really important to remove this weight. And we want to do that because if we are downgraded, the risk is by definition for future financing in that case to potentially see an increase of the cost of debt and to reduce the potential of investors. We are working to avoid it could happen. And the second thing, if it happens, worst case is that it will be by one notch. So we'll be still in the BB area.

Thank you. We have no more questions.

Okay, so thank you very much to all of you. And so we will meet some of you in the roadshow that we have in the coming hours. Have a good day. Thank you.