This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Adjusted EBITDA increased by 45% year-over-year to EUR 276 million, driven by strong intrinsic performance.
-
Adjusted free cash flow returned to positive territory at EUR 7 million, reflecting improved cash discipline.
-
Lithium business unit reached 90% nameplate capacity in June, contributing positively to both EBITDA and free cash flow.
-
Manganese ore transport volume increased by 6% in Gabon, supported by improved railway performance.
-
Funding plan is on track, with a EUR 500 million capital increase approved and targeted for Q4 execution.
Negative Points
-
Two fatal contractor accidents occurred at Weda Bay in January and May, highlighting safety concerns.
-
A fire at the Eramet Grand Cote plant in Senegal caused full suspension of operations from March to April, with full recovery not expected until Q1 2027.
-
Net income group share remained negative at EUR -146 million due to an impairment test on the Senegal asset.
-
Net debt remained stable at EUR 2 billion, with leverage at 4.5x, indicating further balance sheet strengthening is needed.
-
Weda Bay nickel operations faced permitting restrictions, limiting production to 12 million tons and resulting in no dividends during the semester.
Q & A Highlights
Q: Regarding the depreciation of reserves in Gabon, is it due to pricing effects or to something else? Also, how can we model longer-term production and contribution from Weda Bay given the uncertainty in short-term permit allocations? A: (CFO Simon Enixberg) On Gabon, the inventory depreciation is not due to pricing but a revised mining plan. We produce 70% high-value lumpy ore and 30% lower-value fines. To maximize present value, we will prioritize transporting higher-value ore and destock the fines at a slower pace, reducing their present value. (CEO Christel Bories) On Weda Bay, the situation is very difficult to manage. The mine is a significant part of Indonesian nickel production, and the downstream industrial park consumes over 100 million tons of ore annually. We are very agile, reducing costs when not operating, but must maintain readiness to restart. We have filed for an extended permit, which is typically decided in July/August, but we have no precise timing or volume certainty.
Q: How much of the CapEx decrease is structural versus deferred into 2027 and beyond? How much more flexibility do you have to reduce CapEx further? A: (CFO Simon Enixberg) The CapEx of EUR100 million in H1 is a historical low for Eramet and is not sustainable. We maintain our full-year guidance of EUR250-290 million, which covers our sustaining CapEx and is a sustainable level without future growth CapEx. The reduction is a mix of structural cuts and deferrals, but we have limited flexibility to go lower.
Q: Can you provide more color on the asset monetizations? Are you still looking for both majority and minority stake sales? A: (CFO Simon Enixberg) We are on track and advancing multiple options that are progressing well. We cannot comment further at this time and will communicate in due course. (CEO Christel Bories) It is important to have several options to avoid a fire sale and ensure any deal makes strategic sense and is at the right value.
Q: Regarding the MOU with the Gabonese government, what will be the cost of building a manganese smelter? Would you be open to industrial partners? A: (CEO Christel Bories) It is premature to give CapEx numbers as we are in early study stages. The MOU establishes a roadmap, and transformation is not limited to a smelter; we are also studying manganese oxide for batteries and high-performance steel. A key prerequisite is competitive energy, which we are working on with the government. We are open to industrial partners, but it is too early to discuss specifics.
Q: In the MOU, you presented three scenarios. Which one is likely to take place first? A: (CEO Christel Bories) Manganese oxide is less capital intensive and requires less energy than a manganese alloy smelter. Therefore, the prerequisites are easier to meet, and it could happen earlier.
Q: What is the remaining carrying value and mine life for the mineral sands asset following the new impairment and reduction in reserves? A: (COO Charles Noel) The mine life has been reduced to around 15 years following a review of the structural shift in the mineral sands market with lower prices. (CFO Simon Enixberg) Reserves decreased from 14-15 million tons of heavy mineral to 12 million tons, which led to the impairment. We do not comment on the specific valuation of the asset in our books.
Q: Is the RCF still fully drawn as of June 2026, and do you plan to repay it through 2026? A: (CFO Simon Enixberg) Yes, the RCF is still fully drawn. Our liquidity stands at EUR1.3 billion, down from EUR1.5 billion at year-end due to debt repayments. Our policy is to keep the RCF fully drawn until we have executed our funding plan, starting with the capital increase.
Q: Can you elaborate on the performance of the lithium business unit and its contribution to the H1 results? A: (CEO Christel Bories) The lithium business unit reached 90% nameplate capacity in June, on schedule, and contributed positively to both EBITDA and free cash flow in H1. This confirms the robustness of our DLE technology and the quality of the asset. We are targeting full capacity by year-end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
