Christel Bories (Eramet): Eramet poursuit sa stratégie de recentrage sur ses activités minières

We transport ore in bulk and we transport metals in containers, so we have both. And bulk has increased enormously in August, to Africa, China, etc., the cost has been multiplied by two and a half, even three. So in fact a large part of the increase, especially for ore because the cost of transport relative to the cost of ore is very high, has absorbed all of the price increase. So in fact the increase in ore prices is the increase in transport prices. So effectively we have an extremely important impact from freight, and I think that will last for a while.

Well, it is not resolved, in any case today it is not resolved. We do not expect it to be resolved in the very next months. Maybe the second half of 2022 will be better, but for the moment there is such congestion still in the ports, especially one that is actually the bottleneck of loading and waiting lines in ports, which blocks part of the fleet, and the ships that are waiting in ports are not serving to transport, so the blocked capacity is considerable.

So today it is very little, but we consume very little. The batteries, the construction of batteries in Europe that use nickel, cobalt, and lithium are in fact very little produced, they are mostly produced in China. Look at the megafactories, 70% of them are in China. And so we have projects. So it is the strategic refocusing of Eramet, which has refocused on the mining and metals part, and especially the metals of the energy transition. That is our major development axis, with lithium, with nickel, with cobalt. And the projects we currently have under development could represent, depending on the metal, between 15 and 25% of Europe's needs by 2025-2030. So that can be quite significant, but we would need other projects and other areas to put in place to represent a larger part of this supply.

Well, acquisitions are often quite expensive. We are lucky to have projects that are at the beginning of their life, so there is enormous development potential. I take the example of our lithium project that we hope to restart in the very next months. There will be a first phase. It is in Argentina, on the Altiplano, in the lithium triangle in Latin America. And so there are expansion phases because it is a huge deposit. There are reserves of 10 million tons of lithium, enormous reserves. So there will be several expansion phases from a mine that is extremely well positioned on the cost curve. So effectively we will be able to grow. It is true that mining projects are extremely capital intensive. Eramet is not a very large company, there is a financing constraint. So we will have to find alternatives, and especially partners. And when you have big projects like that, it is quite common in the mining world, in the world of raw materials, to partner with others to develop big projects. Because effectively you have to balance between a family shareholding and a state shareholder.

No, no, the search for partners is not forbidden, and so we do it today. It is one of the means to develop our projects. So I think that the good results that we are accumulating quarter after quarter will give us financial leeway that will allow us, with more serenity, to develop our projects, and then perhaps to separate from certain activities that you consider less strategic, like in the part of metallurgy or alloys. I think for example of the Aubert & Duval plants, which should normally be taken over by a consortium, the aeronautical constructors who need them. Where are we on that? Well, we effectively have a strategy to exit activities that were all downstream of the chain, which were not yet core business for Eramet, so notably Aubert & Duval, and then in a second step Erasteel. And on Aubert & Duval, well, listen, we continue, it continues to be the preferred option. We continue to discuss, but for the moment there is no agreement that has been reached yet.

So on the one hand, there are resources, many resources exist on the planet, but it is true that the demand for metals will explode. It is estimated that for metals like copper, we will extract more in the next thirty years than we have extracted since the beginning of humanity. So these are considerable needs. And that is why I often say that we are moving from the oil era to the metals era. We have considerable needs: lithium multiplied by 6, cobalt by 4, nickel by 2, so an explosion by 2030 of the need for metals. So that obviously requires having the means, including the financial means for investments for this value chain of the energy transition. The planet demands a lot of investment, so we will need capital, and we will also need to do it in a sustainable way to respond, I would say, to the ecological promise of the energy transition. Because if we start extracting these metals by emitting a lot of CO2, without paying attention to the environment, biodiversity, or the well-being of communities, we will not have responded to the ecological promise of this transition. And we know how to do that, but it has a cost. So to answer your question, we still expect to have metal prices that will be supported in the coming years, not necessarily at the prices they are today, but in any case supported in the coming years precisely to respond to this ecological promise and obviously to finance all the investments that will have to be made. But not everyone does it. I was going to say, your competitors do the same thing? Not everyone does it. And so I think it is also the challenge for Europe to put in place regulations at the entry of its market, to build certifications of traceability, to avoid social and environmental dumping. We must treat these fronts on metals as we did on industrial products. Exactly. And there are all the means. We know how to produce nickel in a totally responsible way. We know how to produce all metals in a much more responsible way. That said, once again, it requires very specific approaches at a cost. Eramet is particularly well positioned, recognized by all rating agencies. We are on the podium in terms of CSR rating by all agencies. It is also very recognized, our clients want to see us a lot on this today. But it is both an advantage, but the chain will have to... at some point.