ERAMET S.A. (ERA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Thank you for being here today with us. We are going to start soon. So first, a few safety instructions. In case of an evacuation, lights will come on, an alarm will sound and the emergency exits are on your left and on your right. Then you will have to exit taking the stairs, and you will be directed to the assembly point outside of the building. So I am Sandrine Nourry-Dabi, Head of Investor Relations at Eramet. We are very pleased to be here today with you for Eramet first Capital Markets Day. The agenda for today's session comprise presentations with members of the management team of Eramet including Christel Bories, Chair and CEO of Eramet; Virginie De Chassey, Chief Sustainability and External Affairs Officer; Nicolas Carre, Chief Financial Officer; Geoff Streeton, Chief Development Officer; and Kleber Silva, Chief Operating Officer. There will be a coffee break midway through the presentation. Once we have gone through the presentation, there will be a Q&A session. I certainly hope you'll enjoy today's event. Thank you. [Presentation]

Good afternoon to all of you here in the room and to those who are participating remotely, and I would like to thank you very much for participating in this event. This is the first Capital Market Day of Eramet, and I hope that after the presentations of today, you will understand much better the fundamentals of our companies and also its full potential for value creation. As you have seen just in the film, Eramet today is a pure mining and metal company with diversified and first-class portfolio of asset, very international footprint, an international and agile organization with safety rates at the level of the best in the industry and reference in CSR. But Eramet has not always been like this. It was a very different company 6 years ago with a lot of noncore downstream metal processing businesses, very French-centric, having Gabon as the main source of cash, quite slow in making decisions and with quite mediocre safety results. So when I joined the company 6 years ago, I launched a huge managerial and strategic transformation. And the first thing I did is I put safety as a first top priority and value for the company. I then put CSR at the center of the strategic vision of Eramet, the central pillar and as the center of the business model, to be a committed and contributive corporate citizen. I also reinforced it by integrating it into our corporate purpose. And this corporate purpose is now embedded in the Article of Association of the company, and it is to become a reference of the responsible transformation of the Earth's mineral resource for living well together. And this corporate purpose is very important because it is now the backbone of everything we do at Eramet. I also completely repositioned the portfolio of the group, first, by divesting the noncore downstream processing businesses, which were not profitable, and it's mainly Aubert & Duval and Erasteel, but also selling or closing some nonprofitable activities like Sandouville or the electro manganese activity in Gabon. Altogether, these activities, which are finally out of our portfolio now, have burned almost EUR 1 billion of cash over the last 5 years. So you can imagine how much their exit of the portfolio have changed the face of the company and made it much more financially robust. At the same time, we have invested to grow our cash-generative and attractive mines. During the period, we have almost doubled our manganese ore production in Gabon through productivity and the opening of a new plateau in Okouma, and this mine is now by far the largest manganese mine in the world. But also -- and it was a game changer. We opened in 2019 a new big nickel mine in Indonesia at Weda Bay, and this mine will produce this year more than 30 million tonnes of ore. So in less than 4 years, it has become the largest nickel mine in the world. Those 2 big mines are now strong cash generators for the company, and they have still a lot of potential for further growth. At the same time, also, we have paved our way for our positioning on the energy transition. Through the opening of our outstanding deposits of lithium in Argentina, which will be in production by mid of next year, but also launching some projects, which are in pre-FID phases, one with BASF in Indonesia for nickel-cobalt-asphalt plant at the bottom of our Weda Bay mine and the other one with SUEZ in France for recycling of the EV batteries. We have also more upstream projects that will be detailed later on in this presentation. Beyond the portfolio repositioning, I also completely transformed the organization of the company to be more agile; more flexible; faster in making decisions; more international; also bringing a lot of new talents from the mining industry from all over the world; creating new position that didn't exist in the company before; and also being more diverse, putting more women in managerial position. It would not have been possible to transform Eramet in such a way without having this huge managerial transformation at the same time. So Eramet today is definitely a different company. The first, and it is clearly the company's great strength, is that we are refocused on a portfolio of world-class mining assets. All our mines are large resource, long-life, high-grade and scalable deposits, and they are all positioned in the first quartile of the cash cost curve. And this is quite unique in our industry. The company is also much safer, and we managed to create a strong culture of safety throughout the organization with quite outstanding results. As you can see on this chart, in 5 years, we moved from the worst to the best position in our industry, dividing by more than 7 our incident rate. And for me, this tremendous improvement is a marker of the huge transformation that this organization has gone through and has successfully achieved because I'm convinced that a safer company is also a more efficient and a more productive one. And I suggest that we have a look at this great journey in a video. [Presentation]

So indeed, we are much safer. But thanks to our portfolio reshuffling and the management for performance, we are also more financially robust and more resilient to the downs of the cycle. As illustrated on this chart, thanks to our intrinsic improvement over the last 5 years, at same price condition, the new portfolio generate 2x more EBITDA than the previous one and significantly more cash. We are also geographically more diversified, and this is important because we are less exposed to a single country's geopolitical situation. And last but not least, our excellence in terms of CSR is recognized by all the rating agencies. They are positioning us among the best in our industry, whether we talk about climate, environment, social responsibility or relation with communities. This successful transformation of the company allows us to be now well positioned to benefit from this unique time in the history. The world will need more metals, and these metals will have to be provided in a more responsible way. Population growth, economic development of the developing countries, increased urbanization requires always more metals, metals like manganese for infrastructure, nickel for capital or consumer goods or mineral sands for construction. But the key accelerator is coming from the energy transition driven by the green technology and by the electrification of the mobility and of the industrial processes. Power grids, batteries, windmills, all these assets will require even more metals and new metals such as lithium, nickel, cobalt or even other metals and rare earths. We are then moving from the age of oil to the new age of metals. And such a shift happens at the time where they are higher than ever expectations on CSR practices for mining and metals companies, whether it is on CO2 emission, on biodiversity, on social responsibility or long-term sustainability. And those challenges give the opportunity to responsible mining and metal companies like Eramet to bring key solutions to the green transition and also to play a strategic role in the future of our economies. And Eramet is perfectly positioned to capitalize on these trends and to fully benefit from the huge metal growth, particularly coming from the energy transition. As a consequence, Eramet's strategy is now based on 2 pillars. The first pillar is to continue to support the global economic development through urbanization and infrastructure with our manganese, nickel and mineral sands products. In these areas, we have leadership position, and we still have a lot of potential to continue to create value through organic growth. The second pillar of the strategy is to sustainably develop the critical metals for the energy transition. Here, we are talking about lithium, nickel/cobalt for batteries, but also being active in the recycling value chain. These are fast-growing markets where we have strong levers to compete. We have outstanding deposits in all these areas, and we have a strong know-how in hydrometallurgy that is used in most of these metals. And this strategy is supported by an ambitious new CSR road map that we label act for positive mining, and that will be described later today by Virginie. So in conclusion, with our repositioning, we think that we have now the right portfolio of assets with the right organization at the right time to become a major player in the new era of metals and of energy transition. Let's see. [Presentation]

Good afternoon, everybody. I'm Geoff Streeton, Eramet's Chief Development Officer. And I'm going to now go further into the detail that sits behind the strategy that Christel started to reveal to you in her comments earlier. So thank you firstly for being here at Eramet's first Capital Market Day. Sorry, we have -- as Christel mentioned, we're entering a new era of metals with a transformed stronger company that has a robust strategy now in line with today and tomorrow's key trends. I'm not going to take you -- I'm going to be taking you through the detail of that strategy. And then later in the session, my colleague, Virginie, will introduce you to the CSR road map that we have delivered over the last 5 years and our new CSR road map, act for positive mining. So context is everything, energy transition, economic growth, urbanization, the world needs increasingly larger quantities of metals to deliver a sustainable outcome. It's estimated that over the next 30 years, the world will consume more metals than it has extracted since the start of the industrial revolution. The OECD predicts that metals will be the fastest-growing material of all the various major material commodities over the next few decades to 2060. Drivers of this demand, population growth. So the UN is predicting population grows to 8.5 billion people by 2030, moving towards 10 billion by 2050. Urbanization. So that growing population is also increasingly urbanizing. By 2050, 7 out of 10 people are expected to live in a city, typically requiring large investment in infrastructure to house and transport them and feed and deliver power. At the same time, as we have that demographic trend, we also have underlying GDP growth in the emerging economies driving the consumption of people, driving their economic purchasing power and creating further demand. And finally, over this, we have the emerging and significantly urgent trend of decarbonization, economies starting to transform how they deliver energy, how they transport people, how they process materials. And as we move to tackle climate change at a global level, that will increasingly also drive demand for key materials such as metals. So the demand for metals is really expected to surpass all the prior estimates that have traditionally underpinned the mining industry. Now we know and it's been spoken about a lot that the electric vehicle boom will be a huge driver. And it will be particularly a driver of a boom for miners like Eramet with a large critical metals resource base. And we're going to be spending a lot of this session today explaining to you the resource base we have and what opportunities it creates for the growth of this company. Just to put this into perspective, electric car sales increased by 60% globally in 2022, exceeding 10 million units. And we currently expect that half of all cars sold by 2030 should be fully or partially electric and 70% by 2040. This EV revolution will require a lot of batteries, and to build those batteries, we will require a lot of metals. For example, one nickel-based NMC battery for a typical 70-kilowatt electric vehicle, which is today the most common vehicle in the market, requires 6x the amount of critical metal as a conventional vehicle, some 45 kilograms of nickel. And for us in our business, that requires around 5 tonnes of laterite ore to be mined and likewise, 6 kilograms of cobalt coming from that same laterite source, 40 kilograms of lithium carbonate equivalent, requiring around 20 cubic meters of brine to be processed at Centenario. As a result, we look at these critical metals for e-mobility and we believe they will drive tremendous growth, creating multiples of today's annual demand for some of these commodities. So we're going to be -- we are focused on building and developing the resource base to supply these metals and through that, delivering value to our shareholders. Just to look at a bit more specifically at lithium and nickel class I, where we see both of these metals poised to experience sustained high growth. So if we look at lithium, for the remainder of this decade, we are looking at a 20% cumulative annual growth rate and 12% annual growth rate for the next 2 decades to 2040. Nickel growth rates are lower, but we must bear in mind that this is off a much larger existing industrial base. All of this means though that there is room for high-quality first cost quartile critical metal projects, such as the ones that Eramet has in its portfolio and that we're going to introduce you to today. So what is the role of mining and metals companies in the foundation of this global electric vehicle supply chain? So the journey to create a battery is complex. It requires numerous input materials and multiple stages and processes to get to that endpoint. Our investments focus on the mining or extraction of the underlying resources and primary conversion on location into an intermediate product that can then be sold into the global battery precursor product markets. We build resource positions through exploration, through business development, through evaluating and understanding our ore bodies, and then we develop operations to deliver the metal units needed into the battery value chain. Our nickel customers in the battery value chain are the base metal refineries, who then feed what's called the pre-CAM, the pre-Cathode Active Material producers. And our lithium products will flow directly to the Cathode Active Material manufacturing sector. As Christel mentioned earlier, CSR and ESG have absolutely become key factors for mining and metals companies. They've emerged as the topmost concern for our industry. With ESG taking center stage, mining and metals companies have no alternative, no other solution than to focus heavily on the implications of our activities and our operations in terms of the environment, society and our stakeholders. Just below ESG, we increasingly see geopolitics and climate change as 2 other key matters. As climate change becomes increasingly urgent, we see governments paying greater and greater attention to the valuable resources that facilitate energy transition. And our customers are increasingly demanding action by upstream producers such as ourselves, and we'll cover our response to this later. So a strong commitment to CSR is no longer just an ethical choice. It's a competitive advantage and, frankly, a strategic must. Eramet has recognized this, and we place CSR at the heart of our strategy, at the heart of our values and our mission. By taking it seriously, we're not only doing the right thing by our stakeholders, but we believe we are positioning the company for long-term success. This is especially pertinent in the mining and metals sector where transforming mineral resources responsibly is essential. To emphasize this, having a license to operate is not merely about legal and regulatory permissions. It's about building and maintaining trust with the communities we operate in, with our customers, our investors and the wider public and through that, sustaining the license to operate through which we create value for our shareholders. Geopolitical factors are also creating both risks and opportunities for the company. We faced in the recent years the emergence of growing resource nationalism, which is changing how we have to compete to secure opportunities. We see increasing risk of geopolitical conflict disrupting mineral supply chains. On the opportunity side, though, through that also comes an increased desire for sovereign states to secure the supply of the metals they need for their economies. We see increased desire of companies to secure the supply of metals they need. And for us, that creates new sources of demand, new sources of financing that we can leverage in building our portfolio. So if we visualize these key trends, these macro factors and compare them to our 2 strategic axes, you'll see that Eramet has developed a strategy that checks the boxes of addressing these drivers. Our long-term strategy is in line with this macroeconomic context, and we have access to the mineral resources to deliver it. To further grow in our historical metals, this is the metals which we have participated in for, in some instances, many decades that support global economic development, we'll be focusing on driving productivity improvements through improved operational performance to deliver better capital asset utilization, improve productivity and gradually and organically grow our output and improve our capital returns. We're going to be leveraging on the increasing push for sustainability and green steel by leveraging our already leading carbon footprint in our metallurgical businesses and increasingly trying and to seek to develop greener products that can take market share in the emerging demand for these materials. On the other side of our strategy, we will continue now to invest to position ourselves as a key provider of critical metals for the energy transition, meaning we're going to be focusing on developing our ongoing projects, and we are also, and we'll be introducing to you today, developing a portfolio of future projects. These include leveraging the absolutely world-class resource positions we have at Centenario and Weda Bay to generate significant value. This includes potentially becoming a major participant in the battery recycling project, which we believe will become an increasingly important center of mining activity in the coming years, the whole emerging industry of recycling. And we are actively exploring and building a portfolio of early-stage resource opportunities that could drive our growth in the future as we work through them in development. We've put in place the enablers to accelerate our transition and to grow -- drive growth and to capture value. In our innovation, we have a long track record of developing mineral processing technologies, developing technologies that can improve the sustainability of our operations and the economic competitiveness of our businesses. One of our primary objectives in our innovation activities is to unlock the value of our mineral deposits. In doing so, we believe we are also typically enhancing the sustainability of our operations because just as much as we focus on the traditional mining levers of yield and recovery, we also focus on reducing the consumption of resources, reducing the consumption of energy, reducing the consumption of water, all of which typically delivers a double bottom line benefit of lower cost and improved sustainability. In decarbonization, we're moving to electrify and phase out the use of diesel in our mining operations. And importantly, we're advancing the decarbonization of our pyrometallurgical businesses, and we'll go through that in detail later on today. We're looking to expand our production of high-grade ores, which typically deliver greater efficiency from an emissions perspective and energy consumption perspective for our customers. We're also looking, as I said before, to start producing more tailored low-emission products for the needs of our customers as they emerge. At our operating level, we're undertaking a digital transformation of our businesses, reinvesting and bringing our mines up to contemporary technological standards through which we can drive productivity, coordination and value delivery. We're connecting our geology right through to the economy. We're optimizing our processes. We're accessing now the ability to use artificial intelligence to optimize our day-to-day planning. We're integrating remote control centers that enable far better control of our operations, and we're investing in the materials needed and required by our customers increasingly around product traceability and quality. Just a little bit on SLN. In this very successful repositioning of our company that has been undertaken in recent years and the repositioning of our strategy and portfolio, there is still one single asset for which we don't yet have a solution. We are still working on it. And this is our historic business in New Caledonia, historic nickel business, SLN, which today remains structurally uncompetitive and loss-making. From a management perspective and an operational perspective, we believe we've delivered everything we can in the terms of trying to drive productivity, improving the export of ores, improving the performance of the plant and putting in place improved energy security to underpin process security. But the remaining levers to enable SLN to be cash positive are structural factors. And these are not in our hands but in the hands of the local and national authorities, issues such as energy price, issues such as access to ore. These are issues that have to be resolved by these stakeholders. We are working with these stakeholders to find the best solution for the future. But as previously stated, Eramet will not be providing any further financing to SLN. Our exploration activity is an area that we are increasingly focusing on as a company to deliver future growth options for the company. We are, at the moment, building an exploration capability that is intended to be agile and global. And through this, we are particularly today focusing on identifying and capturing early-stage resources in the nickel, lithium and cobalt space. These elements, which are, as we've spoken about already, pivotal in the technological landscape today are at the heart of our strategy. Our exploration and business development capability is designed to be global and is today prioritizing the capture of these commodities. Consistent with this theme, we today announced the acquisition of a package of mining and exploration concessions in Chile. This is in a lithium-prospective region of Chile and where we'll be providing some more information on this acquisition later. But it is all about positioning the company for future growth opportunities. My colleague, Virginie De Chassey, will now talk to you about our CSR road map, act for positive mining.

Thank you, Geoff. Good afternoon, ladies and gentlemen. I'm thrilled to be here as the Chief Sustainability Officer of this company as we saw this new era of metals come with high level of expectations in terms of ESG. Our journey towards sustainable mining started 5 years ago, and we are taking a new leap forward now. Our ambition, being a key contributor by shifting mining from problem maker to solution provider. And the way we work is using our corporate purpose, this vision that we have and acting on a daily basis with CSR action plans, dedicated organization and organization working with the operations, processes, high level of standards and strong reporting. So let's have a look of what we achieved over the last 5 years, a journey in which we succeed to become a company committed to people, committed to responsibility -- economic responsibility and to planet. We are now -- most goals will be achieved or exceeded. We are now very well positioned in -- around our mines with community investment giving more and more beneficiaries. Last year, we had 125,000 people benefiting from the actions that we conducted. And on the planet side, we managed to cut by 40% our carbon intensity. And we started a new way of working in the mining operations with active rehabilitation. This gives us solid foundation to go further, and I propose that we look to a video to see that. [Presentation]

Building on this successful transformation, we are taking a new impulse, and I'm very pleased today to launch this new CSR road map. Here comes the time for us to be bold, to be focused and to act with a positive mindset. Well positioned on the energy transition, Eramet is resolutely convinced that mining brings a strong contribution to our world. And we are, therefore, launching this new road map. But to be part of the solution means addressing the main sustainability issues identified by our stakeholders, by you and all our stakeholders internally and externally. And these plans addresses priority and significant challenges that are material, of course, health and safety for our employees and our subcontractors; the way we contribute and impact on local communities; how we can decrease our energy consumption and greenhouse gas emissions; the sustainability of the ecosystem that we have around us; but also water, biodiversity and human rights. So act for positive mining is composed of 3 axes, 3 dimensions: care for people, trusted partner for nature and transform our value chain. Within these 3 areas, we have 10 ambitions for '26 and 3 long-term commitment. We are working with a results-oriented target for each of this ambition, and it's the entire organization that is aligned on the way to improve and to work with best practices. So let's have a look of this first pillar, care for people. In care for people, social responsibility starts, of course, with safety. And we're going to continue the journey started to change the culture of this company. The group confirms its absolute commitment to operational safety with an even more ambitious target, drive FR2 below 1. And we also wish to address health in a comprehensive way by defining a global benefits program for employees. Being more inclusive means being more performant. So providing an inclusive environment where everyone can grow is absolutely key. Despite a lot of improvement, we did not success to achieve the 30% female managers that we have in our previous CSR road map. So we keep -- we decided to keep this objective. And we also want in this new road map to work on young -- early-in-career opportunity. Regarding the communities, we accelerate the local and sustainable development for communities. Job employment is the first preoccupation for the people living around us. So we are going to work on education, diversification of their economies with an ambition of having 6,000 noncore business voluntary supported with local programs in addition to the jobs directly linked and indirectly linked to our mine. And in this ambition, we also want to support young talented people from the communities with 500 scholarships for secondary and higher education. Regarding environment, in this new road map, we will work on water management, control and optimizing water consumption. We will have a deep dive, I would say, in the water recycling of the 2 site where we have some water-stress areas in Senegal and in Argentina. And we want also to continue the work that we started on biodiversity with this rehabilitation ratio everywhere, but also by improving the quality of this biodiversity action plans that we have site by site. Of course, when we speak about protecting the environment, it means also mitigate and reduce the environmental impact. And on this, behind lots of work that we do on a daily basis, we focus this road map on sharing with the communities, ambient air quality monitoring and water discharge monitoring. Talking about decarbonization means for us talking about our whole value chain. Reduce the CO2 footprint of our value chain means working with our customers and suppliers, working on our processes and on our daily work in the mine. But 90% of our CO2 emissions come from our processes. So we'll come back on this, this afternoon. Optimizing mineral resource consumption is also a key aspect of the work that we do. And in this road map beyond our historical activities, we want to work on a robust technically and economically model to industrialize EV batteries recycling. And last but not least, transforming our value chain means also works on human rights and ethics behaviors for our customers and suppliers. And on this, we work with screening of them and trainings of our people. I would say to lock this system, we have decided to also certified -- engage in the certification 100% of our mining sites with the highest level of standard, the IRMA one. We started this work 2 years ago, and we are developing it. GCO in Senegal will be the first mine to be IRMA-certified. And we are working also on Weda Bay, and the lithium that will come out Centenario will be immediately audited by IRMA next year -- well, the year after. So we have these short-term objectives, and we also have set long-term objectives because we need to set our eyes also on the long term. Care for people comes with 100% site with D&I label because we want to be an inclusive company. Biodiversity comes with working towards net positive impact. And by 2035, we want to cut by 40% our CO2 emissions, Scope 1 and 2. To achieve both short- and long-term objectives, we have built, as you just see, a comprehensive system with a positive mindset to act on a daily basis in all our sites. At the corporate level and with the operations, we all work full speed to become this leading player in the new era of metals contributing to a sustainable future. And I will now hand over to Geoff and Kleber to introduce you on our portfolio. Thank you.

Thank you, Virginie. So what we're going to do in the next 2 sessions is take you through our portfolio and how it aligns with the strategic axes that I spoke of earlier. I'm going to be joined in this exercise by Eramet's Chief Operating Officer, Kleber Silva, and together, we'll take you through that portfolio and introduce you to the key value drivers. So firstly, just a little bit more detail on the Eramet portfolio. We have here what we regard as a diversified portfolio of world-class deposits and downstream processing activities. And that portfolio is split between operations that contribute to our traditional business, producing the metals that go to support the global economic activity, and the emerging projects, which, in some instances, leverage off our existing businesses, to produce -- sustainably produce critical metals for the energy transition. So the key assets in our first axis. At the heart of it is our Gabon manganese business, where we are the majority owner of Comilog, which operates the Moanda manganese mine, and the railway infrastructure provider, Setrag, that provides logistic services to move that manganese to the coast. In Senegal, we have the Grande Côte Opérations, which is a mineral sands producer producing titanium mineral products and zirconium. In Indonesia, the Weda Bay Nickel mine. In New Caledonia, we have our legacy portfolio of the SLN nickel mines and the Doniambo nickel smelter. And in France, Norway and the United States, we have our manganese alloy smelter portfolio. In our second axis, the projects to produce sustainably critical metals. We have our emerging lithium business in Argentina and our projects to expand the Weda Bay mine supply into the class I nickel sector. Our first strategic access, as I mentioned before, is focused on manganese, nickel and mineral sands. We regard these as resilient, well-formed markets in which Eramet is strongly positioned to continue cementing its leadership and generate value. Let's start with manganese, a product at the heart of our portfolio and one of Eramet's key value drivers. Our Comilog asset in Gabon, based on the Moanda mine, is the largest global producer of high-grade manganese ore today. Eramet is also the largest global producer of refined manganese alloys. And I want to give you some market insights into why we believe we are well positioned -- why we believe being well positioned in manganese is so important for growth and value. As you may know, manganese is an essential metal. It is, in fact, the fourth most widely used metal in the global society today after iron, aluminum and copper. In making steel, manganese is a critical ingredient that gives steel its important strength and durability properties. In terms of the market for manganese ore, the global steel sector is a mature and stable market expected to reach around 1.9 billion tonnes in 2026. And over the next few years, we see around a 3% to 5% growth rate. We see key growth signals for steel coming from emerging regions. In India, we are seeing rapid growth in steelmaking capacity there over the next 5 years. Southeast Asia, we see continued investment. In the Middle East, we see emerging investment in particularly transformative steel processes, moving away from the traditional blast furnace. Our largest market, of course, is China, where we do not, today, see strong capacity growth signals, but it represents for us around 50% of our global market today. Specifically, for the high-grade ore we produce, there is an industry-wide push for high-grade ore because it allows our customers, the steelmakers to lower the consumption of the carbon reductants they need to use to convert ore into metal. It also, therefore, is more energy efficient. It lowers their emissions intensity. And this gives us an opportunity to expand and capture market share from the lower grade emission -- lower grade ores that typically have a higher emission intensity and higher energy consumption requirement for our customers. Another emerging demand for manganese ore is the manganese chemical sector, where feedstock demand for batteries is starting to now grow as an important market for us to address. So let's look in a bit more detail at the high-grade manganese ore market and what are the characteristics that make it attractive place for us. Firstly, it's really important to recognize that high-grade ore dominates the first quartile of the manganese industry cost curve. So in terms of the high-grade producers, it is Moanda, the Comilog business in Gabon. It's our competitor GEMCO operating out of Australia and a number of smaller high-grade mines. Collectively, 70% of the global high-grade market is made up from 3 producers. And we only see growth signals at the moment from our operation in Gabon and South Africa. Our competitors tend to be constrained in their ability to grow. South Africa is a very important participant in the manganese market because in addition to having some limited high-grade capacity, it is a significant producer of medium-grade manganese ores. So these are semi-carbonated ores, which have a different chemical composition to our high-grade oxide ores. And they have a lower grade. And typically, they are used by our customers to reduce input costs. But the ability to use these lower-grade ores has to be balanced in the blend by maintaining a certain ratio of high-grade ores. And that means even if our customers want to drive towards lower-grade ores, they have to maintain the use of high-grade ores. And secondly, because their manganese content is lower and because they have a higher, therefore, unit cost of production, they provide, from a cost perspective, a pricing umbrella, under which the high-grade producers can comfortably live in terms of pricing and margin. So we see, in this instance, high-grade manganese, growth constrained other than for our business and strong emerging demand for high-grade ores to drive energy transition outcomes. Looking in a bit more detail at how high-grade manganese ore is priced because it's typically priced at a premium per dmtu or per manganese unit to the medium-grade ores. Now traditionally, that premium was around $0.40 a dmtu. In recent years, we've seen that premium rise to as high as $1.20. At the moment, the premium is closer to $0.60. And we have our view, and the view of a number of other commentators is that, that premium will likely settle around $0.80 for the next few years in our midterm forecast. So that's an $0.80 premium that is attributed by our customers to the benefits of high-grade ore over medium-grade ore. And the drivers behind that, I've touched on them already. So it's the lower energy and reductant cost associated with processing these high-grade ores. It lowers the energy demand. It improves the emissions intensity. There is -- as I said before, there is this undersupply of high grade relative to the capacity of the medium-grade sector to expand. So if they want to increase their use of semi-carbonate ores, lower-grade ores, our customers have to also increase the usage of high-grade ores in their blend. And we are really, at this point, the only producer able to expand to that market, and of course, the environmental factors of increasing demand for high-grade ores to improve the efficiency and environmental performance of our customers. So all of this is really significant. As I said before, Moanda is really the only existing high-grade ore asset with significant available growth potential, and we will go through that in more detail shortly. Let's now look at the manganese alloys business. So this is the business of converting ore into a manganese alloy, which is then the product that can be added into the blast, into the furnace, in the creation of steel. Overall, the manganese alloy market is a geographically fragmented market. China, which is the single largest customer for manganese alloys, is a closed market with around a 20% import tax. Effectively, China's manganese alloy demands are produced domestically, and we are a significant provider of ore to those producers. For ERAMET's alloy smelters in Europe and North America, we see Europe and North America as the most attractive market because for us, these are the markets that are -- in terms of the steel industry, that are leading the push for lower-emission steel products that are going to increasingly require lower-emission manganese alloy inputs. As we lower the carbon footprint of our alloys, we will have a competitive advantage in those markets, and we already have a competitive advantage because of the nature of energy source. Secondly, we have in our portfolio an enhanced capacity to produce refined manganese alloy products, which have a higher manganese content and a lower carbon content in the alloy. This is really important because refined products are less -- are operating in a less competitive market. They are harder to produce, and they attract a pricing premium over standard manganese alloy commodity products. So we can earn stronger margins in refined alloys, and our strategy is typically to maximize our output of refined products relative to conventional commodity alloy products. So what is our value-add strategy for our manganese ore business going forward? On the ore side, effectively, we want to continue to grow manganese ore production but in response to the market's needs. We want to capitalize on our customers' emerging and growing demand for high-grade ores. We want to unlock value through productivity improvement, targeted debottlenecking investment but effectively trying to gradually grow the business with as lower capital intensity as possible. We want to build market share through displacing the marginal semi-carbonate and lower-grade producers where we can and increasingly provide premium high-grade products to the battery chemical sector that can underpin that element of the global energy transition. On the alloy side, our approach is slightly different because the alloy sector, being a much more competitive market, it is more about managing for value rather than managing for volume, and that is our strategy in this sector. So we will, in our alloy sector, want to focus on this value over volume strategy. That means constantly monitoring the market and adjusting our production plans to meet the needs of the market, and where it makes sense from a margin perspective, to potentially reduce production and sell surplus electricity back into the Western European energy markets. However, as our customers in Europe and North America increasingly lead the shift to the premium-grade products and increasingly lead the shift to low-emission intensity steel products, we are going to build within our portfolio product offerings that meet those needs with a view to locking in a first-mover advantage, and if necessary, partnering with those steel industry first movers. So how are we going to produce a low-emission intensity manganese alloy product? It is a key step for us. And we'll be going through that in more detail, but it effectively involves transitioning away from fossil carbon sources to bio-produced carbon sources, exploring technologies such as carbon capture storage and carbon capture utilization. What I'm now going to do is pass over to Kleber, who is going to introduce you to our operations on the ground and explain to you the value chains of our manganese ore and manganese alloy operations. Thank you.

Thank you, Geoff. Good afternoon, all of you. I'm very happy -- extremely happy to be here to show you the marvelous mines that we have, plants all over the world. First one is our Comilog and Setrag, 35 years there, operating with a partnership with the government, 75 years mine concession, 30 years railroad concession, a strong fiscal stability there, really well positioned at the country, more than 9,000 people working there, contracting ourselves in this place, really well positioned in terms of mine, railroad and port. And as Christel mentioned, as Geoff mentioned, I'll just reiterate the beauty of this asset, of this mine. It's a huge base of resource. 454 million that we can continue to develop because we are still exploring there, brownfield exploration. We are very well positioned in terms of cost, cash cost at $2.3 billion. You see the price of last year just to compare and also with a perspective of growth that we have as in the 4 -- in the last 4 years, we went from 4.3 to 7.5. It means really the mine [ or this truck ] that is well positioned to serve the world and the steel business to decrease the carbon footprint or to any growth that we can have. Completely integrated from geology, mine, railroad, port and to have the transition that we can do different sizes of shipments to our customers. I mean to have the full chain there completely integrated in order to serve our customers. And as Virginie said, the CSR is with us. It's a part of the business. It's inside us. It's our DNA. And I have some examples in the different acts that she described here for people, the consultation, the assessor of water, in the decarbonization. We have a plan to electrify conveyor belts, trucks, electrical trucks and so entire -- full hydropower and for the -- in order to rehabilitate, we are rehabilitating more than our mine, and the rate is 1.65 with 270 hectares of rehabilitation. And we have Lekedi foundation that protect area of forest there. It means it's not only the mine itself. It's that CSR is with us. CSR is inside us. And we saw very, very good, as Christel mentioned, safety performance in mine. Today, there are total TF2 -- total recorded was around 0.7 at this mine. Therefore, we can continue to respond. We can continue to create value. I think Christel touched it. It's how we create value from 4.3 to 7.4 in the last -- in these 4 years. But the beauty of the model, that we can continue to respond. We have a scalable -- we can expand because of the resource and reserve that we are investing. We have invested at the mine with a very low CapEx in terms of OEE, improvement of utilization, productivity there. And we can target 8 million or more depending on the market and be flexible also in terms of -- to create the value. And the same thing, we can have even a target. We have a target to be beyond 10 million there. So it's -- the beauty of our model is that's scalable, low cost, long run and quality because as Geoff said, each tonne of manganese that they took from us compared to the carbonate decrease the carbon footprint by 20%, how therefore that the mines are doing in order to decrease for high-grade ore. These we have in our hands and the only one that is scalable. The same in order to continue to grow at -- we have to continue to invest at the railroad. We -- you know that the bottleneck there, the system, is the railroad. We are renewed. We increased the size of the train, the crossing, and we respond. We were at the 4, 7.2, and we can be to 8 and plus. It means how this gives us really the condition to respond to the market at the first quartile cost, high quality and quantity. In order to go through a little bit of this marvelous mines and system, we have a video of Gabon. [Presentation]

I will talk a little bit about of our manganese alloy business, and Geoff will continue to the strategy, what we start to discuss. Last year, 608,000 tonnes. Very well positioned in terms of refined, where the margin are better, where we have a high added product, with a program to decrease the carbon footprint. And we'll see some customers that will talk to us today to see how we are in the right direction with them, hand in hand with these 2 businesses in order to decrease the carbon footprint. It means it's a business that has the quality, has the reliability, has the value in order to continue to respond. And whenever we have a peak of price in the steel business, as you saw last year, we are there. And when it's downturn like this year, we are there also because we have -- we are very competitive in the cost that we have in the energy that we're in the business of energy and a reliable partner for our customers. And I'd like to say because even though in the peak of the COVID, how these plants worked to serve our customers and to protect our people. Plants and mines. And that shows the strength of this business and other business that we have. Now I'll hand over to Geoff to continue to develop the strategy that we have for the manganese alloys.

Thank you, Kleber. So I spoke earlier about the manganese alloys market and a strategic consequences. So it is a competitive market. And in response to that competitive market, we have to be able to manage this business to maximize its value in a variety of market situations. And this has led us to adopt a value over volume strategy. So as we're doing in manganese ore, we absolutely are focused on improving the productivity and asset utilization of this business. And we are seeking to optimize its products as well as invest in long-term decarbonization. Through our operational improvement and with minimal capacity investment, we believe we want to -- we have the capacity to grow the ability of this business to deliver up to 800,000 tonnes of alloys products a year. However, with a value over volume strategy, that doesn't necessarily mean we will produce 800,000 tonnes. But we want to have the capacity to respond to demand in the market when it's needed up to that level. Importantly, we're also really tackling how to position our manganese alloys in the market. Of that 800,000 tonnes, we want to maintain that at least half of it can be refined alloys production, where we would represent at that point around 19% of global demand for alloys. And this would cement our position in the market -- in that market segment with a low carbon content. And on top of that, through our decarbonization initiatives, we would like to be able to launch a 0 carbon dioxide manganese alloy product in and around 2028. Now in a value over volume strategy, when the market margins aren't there, when the signals are not there, we will scale back production, and if it makes sense, sell energy back into the Western European grid if that's a more profitable and then rapidly scale production back up when the market signals are in place. So how to become a supplier of choice for the emerging green steel sector because for us, this is an important long-term sustainability objective of our business. Now firstly, I really want to emphasize. We are already today -- in our portfolio, we already have the lowest existing carbon dioxide footprint in the industry. Our CO2 footprint today is 60% lower than the industry average globally. So 2.3x lower than our competitors. And this is because today, our portfolio is largely powered, with 1 or 2 exceptions, by renewable or low-emission energy. In Norway, we have a hydroelectric power portfolio. Our smelter in Gabon is hydroelectric. In France, we access nuclear power. So it is only today our U.S. smelters that are powered by fossil fuel energy sources. So this already places us at a competitive advantage. We're already 60% lower than the global average. So for us, the focus on how to further decarbonize our asset is about removing the use of carbon or fossilize carbon in the conversion of ore into alloy in the chemical conversion that takes place in the furnace. So how do we intend to do that? How do we intend to reduce by 70% that admission of CO2? Firstly, we're really working on -- at this point on 3 key initiatives. We're looking to replace the use of fossil carbon products such as coal and coke with biocarbon product. So this can be product such as charcoal or the emerging bioreductant, which is an engineered bioproduct that can replace coke. Where carbon capture storage projects emerge in the basins in which we operate such as in Western Europe, we are looking to participate to capture and store our CO2 through those industry-leading projects. And we're also looking at targeted carbon capture utilization projects that enable us to do plant-specific investments that can capture an emission stream and convert it into other value-add chemicals such as ethanol. [Presentation]

Let's now discuss another key metal in ERAMET's overall strategy. And this plays an important role in both of our strategic access, and that's nickel. So nickel is a highly prized material, and it can be recycled endlessly without any loss of quality, and it has unique physical and chemical properties that enable it to be used in a variety of applications. It's mainly used today in the single largest demand source, stainless steel. 66% today of nickel units produced go into the stainless steel sector. And that puts it into then being used in all ranges of special alloys and industrial applications. In the battery space, it offers a greater energy density in electric vehicle batteries, which makes an essential metal for the energy transition that we've already spoken of. And it's also used in a whole wide range of socially useful applications across food, safety, pharmaceutical, surgical sectors, for example. So we see strong ongoing industrial demand for nickel and its existing applications as well as, of course, the really rapid emerging growth in demand for the energy transition. So over the next few years, we see a cumulative average growth rate for nickel of around 8%. So from around 3 million tonnes of demand today to 3.8 million tonnes by 2026. And the bulk of that demand, as you can see in this chart, comes from the emerging battery market, where we accelerate, really, as I said earlier, around a 21% cumulative average growth rate. So that would actually see, if it's maintained, batteries and the battery sector overtake stainless steel around 2032 as the single largest source of demand for nickel. But at the same time, we still continue to see continued growth in demand for stainless steel. And we see an underlying growth there that we will continue to invest to support for as well. So this is a recurring theme when you look at both of our key growth assets of Weda Bay and Centenario. And this is something that I learned earlier in my carrier, is the ore body is the key. It's the source of value. And if you want to grow a world-class ore body, you have to drill out and discover whether your ore body is world class. And at Weda Bay, we have been implementing a strategy emphasizing on establishing its resource position, which we have established for now has been quite simply huge. And now our approach going forward is to maximize the value from this huge resource strategy. So we will continue to drill out the ore body, continue to convert mineral resource into reserve, and through that, be able to develop mine plans that can deliver an expansion in production and value. It's really important to recognize that Weda Bay is a first quartile nickel mine source, and it is substantially scalable. But of course, it's operating in the Indonesia nickel market, which is a closed nickel market. We can't export our ore. So we can only expand the ore to the extent that there is demand for the ore to be processed. And that takes place in the case of Weda Bay at the Weda Bay Industrial Park, where we continue to see strong growth in investment in the conversion -- in investment in plants to convert nickel ore, be it saprolite into nickel pig iron, and increasingly, in the last year or 2, we're now seeing strong investment to convert limonite ore into nickel intermediate product through HPAL plant. Now on top of that, we're looking to further build our nickel laterite position. But I really want to emphasize here today the enormous value opportunity that comes through our resource position at Weda Bay. And just to delve a little further into the role of Indonesia, this is a topic that's much discussed in the global nickel industry and the role that Weda Bay plays at Indonesia. So Indonesia today, 2023, delivers around 40% of world supply. And this is expected with the investments that are taking place to grow capacity to move towards 60% of world supply by 2026, over the next 3 years. So Indonesia is emerging now as the world's nickel superpower. And the Weda Bay Industrial Park represents already around 25% of the nickel units coming out of Indonesia. And we see strong growth plan for the park. We see a number of Class I nickel HPAL plants being planned, which will create a significant demand for the limonite ore that until now has traditionally not been valorized because it's not had a conversion process operating. And at the same time, we are seeing continued investment in nickel pig iron furnaces, often at the expense of installed capacity elsewhere in the world being shut down, particularly now in China, and being relocated to Indonesia. And our role at Weda Bay is to feed that value chain and unlock the value potential of the Weda Bay deposit. Kleber will now take you through in more detail the nickel operations at Weda Bay.

After the beauty of the manganese, the units of manganese from the present and from the future come from us, we have the beauty of the nickel there with, as Geoff said, as Christel said, a major body. We started our journey there around 600 million tonnes of resource. Now it's 2.8 billion. This year, we'll do 350,000 meters of drilling there in order to continue to grow the base of resource and reserve. They're very well positioned in terms of cost. Strip ratio, 0.47. My goodness. Our grade from 1.2 to 1.9. What -- mother nature did a very good job there. Mother nature did a good job in Gabon also [ in materials here ]. And we are doing the best as human beings, safety, social way to operate there. And it means high grade, a huge base of resource, very well positioned in terms of cost, in terms of quality that can serve our customers there. And that the same as we discussed for manganese there, they're still not better because the market is there. The mine is in the upper part, and we have other plants there that consume today -- these plants today, the NPI plus the HPAL, 80 million tonnes of ore per year. It means we are behind. We are just starting. We have to do 80 million tonnes. And then -- and you see the potential of the growth of this mine. And with all the different players that are there, this is a huge potential of growth and with a mine that can deliver cost, quality, quantity, resource to serve them. The same as I said for the manganese, CSR in the heart of our ore. CSR is with us in terms of safety. It's one of the best safety results that we have in the whole group and benchmark of the world. And work with the community, we have a lot of projects of infrastructure, water treatment, IRMA standard, as Virginie said, for all our mines to be the IRMA standard, the revisitation. We have started the mine because we are developing it, but we are doing what she said, the active rehabilitation at Weda Bay, at [indiscernible], at Comilog. And that's why we can continue to grow. That's why what we did -- this photo here, I love this photo. It's the first truck, the first truck that bring the precious nickel ore. It was 1st October 2019, 1st October, and now 30 million tonnes this year. And our long-term target is 60 million tonnes and more with very, very efficient -- it means cost. And the beauty of this model there, that we have there, that the CapEx intensity is extremely low because we put the infrastructure and the contractors that are there bring their equipment. The people, we train them, we work with them. They have 11,000 people work at this mine, ourselves and contract. It means this -- the mine can respond to the growth. As Geoff said, Indonesia is where the units of nickel will come. In Indonesia, the units of the nickel will from this mine. And then we can generate value. We can continue to create value as we did from the first truck to 30 million tonnes, 60 million tonnes. And the sky is not the limit. It means you can respond. The units of manganese who come from us, the units of nickel come from us, the units of nickel will come from us. Now we have a video that show a little bit of this marvelous mine to us. It's wonderful mine. [Presentation]

Now I'll hand over to Geoff to present the strategy for mineral sands, and I'll come back to talk about GCO.

Thank you, Kleber. So mineral sands is an extraction business that's slightly different to the previous 2 mines that we've just dove into. And so it's a little bit more complex in some areas. But it's a very attractive and important and valuable business within the ERAMET portfolio. So within our mineral sands business, we produce 2 titanium mineral-based products: ilmenite and zircon. The needs for these 2 minerals is primarily directly related to growing urbanization and construction sectors. For ilmenite, its uses are largely for industrial and metallurgical purposes. So 89% of the ilmenite goes into the global pigment market, and 7% is used for the production of titanium metal, known for its strength and corrosion with a lot of high value-added applications in aeronautics. So industry forecasts expect the demand for titanium groups to grow at a compound growth rate of around 2.8% for the next few years. More importantly, demand for that chloride feedstock that feeds the pigment sector is expected to grow at a higher rate. So we see there is an opportunity today to continue to grow our GCO operation to meet that increased demand through productivity improvement and targeted debottlenecking. Again, our focus here is low capital intensity, gradual volume growth to meet demand. On the flip side, we also have the zircon side of our business -- of our product suite. And zircon is consumed particularly in the ceramic sector and in refractories and foundry applications for making the refractory materials. And around 20% finds its way into other industrial sectors such as cosmetics. Zircon's demand is likewise expected to continue to grow at around 2.8% for the next few years. But what's important in zircon is not so much the growth rate, but it's actually the production decline rate. And we're actually expecting to see a number of significant zircon producers reduce their production as they reach towards end of mine life over the next few years. And we see a real opportunity here for the higher-quality product we produce at GCO, which has a lower chemical contamination, to move to meet that emerging gap between supply and demand. So we look at our mineral sands business, and we believe it's well positioned to capture market share, and it's well positioned to benefit from disciplined, low-intensity capital investment to grow as it does that. Now our mineral sands business actually until recently had 2 elements. And we have looked to optimize the portfolio, particularly the upstream elements, and at the same time, look to increase value capture by exiting the downstream aspect of our portfolio. So we recently announced the sale of our titanium slag smelter in Norway, ETI. And this is really representative for us an opportunity to capture more value from divesting than we felt we could achieve from retaining the asset. So whilst there's growing demand for the end users, there's also rapidly growing capacity, particularly in China, in the processing step. And we feel that our ability in an energy cost constrained operational environment like Norway, our ability to continue to add value in that competitive environment was limited, and it made sense to take the opportunity to divest that business. We have entered into a long-term supply contract to that business from Grande Côte. So we will continue to capture value through the supply of ilmenite, where we see much better market fundamentals than the processing of ilmenite. So that means our strategy in this sector is to really focus on the upstream, in the minerals, in the mining and particularly at Grande Côte. And there, our emphasis is on optimization, productivity improvement, targeted debottlenecking to gradually expand the business, where we can, capturing value through the high quality of the Grande Côte product suite. It is a particularly well-placed operation in that regard. And we continue, like we do at Weda Bay, like we do at Moanda, like we do at Centenario, we continue to invest in drilling to expand our knowledge of the resource base so that we can optimize and maximize the value of this deposit. So we've strengthened ERAMET's balance sheet by exiting the ETI asset and reduced our exposure to the downstream competitive processing sector. And we have a resilient source of cash in the upstream mining end of the value chain at Grande Côte with limited capital investment need. Kleber will now introduce you to the operation itself.

Thank you, Geoff. And as Christel said, and as you know, the beauty of our business is that in terms of mining, we are extremely well positioned. This is, what, $3 billion of resource. It means we're very well positioned in terms of cost, CapEx intensive for growth, the fourth largest producer of the world, the biggest dredge of the world, 21,000 cubic meters per hour dredge. It's crazy. And we can continue to develop this mine in terms of quantity and quality. And that's the same point that Virginie, that myself, that we made. That is extremely well positioned in terms of CSR because there, the way that we mine is that we have to displace population. We do it in the best way as possible. They are keen to participate on this journey because we do really, really, really respectful and good way. Very -- in terms of safe, one of the best place that we have in terms of mine. IRMA standard, it will be the first one to be certified at -- in our joint certify, IRMA. We have a solar PV that -- a project now that we are putting there for 20% of the energy of GCO. And as we mine very quickly, we also do the work in order to do rehabilitation to give back the area that we mine to the population, to the government. It means a very, very strong CSR. This is our DNA. And I like to say it's not all the license to operate. It's not this. This is ourselves. This is our way of being that -- to have good business with CSR and people who like us, come here at ERAMET cause we are good. And the same profile of investment, not in the same scale, but the same profile. We are working how to debottleneck. As Geoff said, we have very low CapEx intensity. We increased the reserves and the production of the dry mine. We are debottlenecking the plant. We are going to the high-grade area in terms of mine plan. It means that we can have a really good business. And as I said, the units of manganese will come from us. The units of nickel will come from us. The units of [indiscernible] will come from us. And the units of zircon will come from us. And now we will have a little break -- you'll see the units of lithium that will come from us also. Okay. Thank you so much, and we'll have a little break now. [Break]

So welcome back. In this next session, we're now going to explore the second axis of our strategy, which is to sustainably develop in the metals -- the critical metals for energy transition. And I think here, we're going to particularly obviously focus on lithium and nickel for battery sector. So as the world transitions from combustion propelled mobility towards electrified mobility, the trend there is on how rapidly can this take place. And what we spoke of earlier is we're seeing this huge uplift in demand for the critical metals that support the electro mobility transition. And what we're going to talk about now is how is ERAMET positioning itself to take advantage of that huge uplift in demand. The key product, therefore, is the battery. And the most developed battery technology today, of course, is the lithium-ion battery. And that contains both anode and cathode, between which the electricity differential is triggered and the current is generated. It's in the cathode where ERAMET is poised to play its part as a supplier of lithium, nickel, cobalt and manganese. And we are really well positioned here to supply -- to provide these metals, which are critical. With our large lithium, nickel and manganese resource positions and the project options we're building, we believe ERAMET is really well placed to supply the energy transition. So our positioning, as we spoke through earlier, is very much in the primary upstream space, mining and first transformation. This is a sector where we see high returns business provided we're investing in first quartile businesses that are well positioned to compete globally. We're also looking, and I'll explore in more detail, to start to position the company to have options to participate in the secondary upstream market that is going to gradually emerge in battery recycling. So our target in this space is to really leverage our existing deposits and extract the raw materials that will feed into this chain through participating only in the first transformation. So we feel it's time now to really look at the position of ERAMET and the future evolution of recycling and to position ERAMET in the growing lithium and nickel sectors. So let's have a little bit of a look now at this development pipeline, and we'll go into these projects in detail. But essentially, in lithium, we're seeking to unlock real short-term growth potential in the Centenario deposit. We're currently constructing Phase 1, and we'll talk later about the project that's just been approved to commence on Phase 2. We have Weda Bay, which we've spoken of in terms of its resource potential. We also have an opportunity at Weda Bay to look at investing in making the mine a nickel for Class I for battery products driver as much as it is for Class II ferronickel product today. We have a portfolio of projects under study in MHP. So producing a mixed hydroxide product in Indonesia, battery recycling, as I spoke about, potential other early-stage lithium projects. And I'm going to take you into a little bit more detail about of our exploration and R&D capabilities that we have. All of these are all about positioning a portfolio of projects that we can develop in a sustainable and responsible manner. Our exploration and technical teams are really critical for us being able to unlock value. And when you look at the projects we have today, they have come from the origins of the work done by our exploration and technical teams. So in exploration, our focus is to enlarge our mineral resource base. So we focus on drilling out for our existing ore bodies, proving up the ore that's there so that we can maximize the value existing ore bodies. And we focus on identifying and capturing early-stage opportunities that could become future projects in the ERAMET portfolio. We're establishing exploration positions in Indonesia and Chile, 2 core regions for our commodities, namely nickel and lithium. And with our innovation center in France, we continuously focus on developing new ways to process minerals, to improve operational performance, to improve the sustainability of our operations and the competitive positioning of our operations and to reach our targets for sustainability. You may have seen in the announcement that was published this morning that we have announced the acquisition of a package of exploration and mining concessions in Chile and that a binding offer that we recently submitted for this package has been accepted. And this transaction is a significant milestone of our entry strategy into Chile. So Chile, along with Argentina and Bolivia, forms what's known as a lithium triangle. It's the concentration of the highest lithium concentration globally. And the transaction that we've announced positions us to hold general exploration and mining rights over quite a large package of mining concessions that cover a series of undeveloped but potentially high-grade salars in Northern Chile. And this and of itself does not give us a lithium project because lithium, being a controlled commodity in Chile under the Chilean constitution, it's control -- its development is controlled by the government. But by holding these rights, we are effectively trying to put ourselves in pole position to partner with the government for the development of the deposits that sit under these concessions. And so we believe we can bring to the equation our proven capabilities in lithium brine exploration in lithium brine project development, the DLE technology that we've developed in-house and are deploying today in Argentina, and of course, our CSR approach. And we believe we have a very compelling value proposition to put to the Chilean government now. The package that we've acquired is very extensive, 120,000 hectares, covering over 40,000 hectares of salar surface. The -- this would enable us to be the sole owner of mining concessions on these salars, which then means we're the only party who holds rights that the Chilean government needs to negotiate with as it wants to develop these projects. We see significant exploration upside, but our next step is really a focus on engaging with the Chilean government and the state-owned entities charged with developing lithium to put in place a potential partnership for taking these projects forward. So it's a future project potential for ERAMET. Now let's have a bit of a look at our Class I nickel. So we've already spoken extensively of the incredible resource position we have at Weda Bay, 2.8 billion tonnes of nickel resource or there and still continuing to grow. And to date, the bulk of the nickel produced at Weda Bay has come from saprolite ores that are processed in furnaces to produce nickel pig iron or ferronickel products. There's a tremendous expansion now of capacity taking place in Indonesia in what's called high-pressure acid leach projects. So this is a hydrometallurgical process rather than a furnace-based pyrometallurgical process that can convert a different type of ore called limonite that coexists with a saprolite into Class I nickel products. Now HPAL projects have been around for some time. For the last 20 or 30 years, there's been HPAL projects developed, and there's been mixed performance. But what's changed in the last 5 years is that Chinese engineering and investment in HPAL projects in Indonesia and other -- and elsewhere has cracked the engineering and operational designs needed, and they've cracked how to build them on a far more cost-effective basis. And what's happening as a result of that is that coupled with the structural settings and policy settings in Indonesia, we're seeing a big increase in demand for limonite to convert into nickel intermediate products through HPAL projects. And given 1/3 of the resource at Weda Bay is limonite, this is a huge new market for Weda Bay that we can expand to feed. So we're very well placed to be a really significant supplier of nickel units into the battery sector. Now in addition to the potential to expand the Weda Bay mine to feed the HPAL sector, we've also been working with our partner, BASF, from Germany to investigate the potential to build our own HPAL plant at the Weda Bay site, where we could take advantage of rights that we have under our partnership to secure ore supplies. So this plant would produce what's called mixed hydroxide product. This is an intermediate product that contains both nickel and cobalt and is then converted in a base metals refinery into downstream products that can feed the battery value chain. So our goal there is to access the -- to leverage the access, we have [ the Chinese ] engineering and construction to leverage the access we have to ore and our partnership with BASF to potentially consider a significant investment. Now the capacity of this plant would probably be in the region of 60,000 tonnes of contained nickel. We would look at a dry tailings -- dry stack tailings method of disposal to ensure that plant would be operating from a tailings disposal perspective from the most sustainable means possible. To be very clear, today, the conditions are not yet met for us to be willing to commit to an investment in this plant. We have to work through still issues associated with how we would deliver this project, and also to be completely comfortable with the investment case metrics. But this is something we're working towards with a view to potentially be in a position to consider an investment decision in the first half of next year. I've spoken a little bit about battery recycling. And here, our approach is that we believe this is an emerging area of activity the mining industry can't ignore. Now what I'd like you think about it is we've spoken already about the tremendous volume of nickel and lithium that is building up in batteries. And if you think over the years ahead, millions and millions of cars with batteries in them. We're going to have this huge inventory of metal building up. It is increasingly going to become of itself a significant source of metal as it is recycled into new projects. And so we have been developing in-house at our innovation center, a hydrometallurgical battery recycling project that captures lithium, nickel, cobalt and manganese from batteries and we're investigating the potential to consider investing in a battery recycling plant here in France. Now this plant has already secured a very significant grant from the EU Innovation Fund. We've also successfully secured the grant from the French state. We're looking effectively at 2 plants, what's called an upstream plant that dismantles batteries and extracts the blackmass. At a downstream plant, that then recycles the blackmass and extracts out of it, the nickel, cobalt and lithium. Tomorrow, we'll inaugurate a large-scale demonstration plant of this technology that will showcase our blackmass recycling process that we've developed. This plant -- this demonstration plant will be located at our innovation center, and we will use it to facilitate the establishment of the business model, commercial partnerships and marketing of our capability. So we have a potential to be able to enter this industry around 2027. Of course, it will be subject to that investment metrics make sense. We're also at an earlier stage of maturity, investigating a novel geothermal lithium project here in France. So we have a partnership with Électricité de Strasbourg, the electricity utility in Alsace, who already operate an existing geothermal energy business. And the geothermal brines that they're extracting heat and energy from today also contain lithium. And we're looking at bringing our proprietary lithium extraction technology, capping it with the lithium extraction rights that are held by Électricité de Strasbourg to see whether there's a potential to also process the hot geothermal fluids for lithium as well as extracting heat from them. So this would be a really novel project. It would provide for France, obviously, a domestic lithium source. It would be effectively a zero carbon production because the energy source in the plant would come from geothermal energy. And at this stage, it is still very early stage. We've commenced a pre-feasibility study. We've got a continuous pilot plant underway at the project location, testing the existing technologies, but there's a lot of technical, economic and social hurdles to overcome before we have in this project that we could advance to investment, but it's an interesting project nonetheless. First production might be possible by around the end of the decade, but we, as I said, have significant issues to still work through. We're now going to hear from our partner at both Weda Bay and Centenario, Tsingshan, our partner in both those operations. And after we've heard from Tsingshan, Kleber will introduce you to Centenario lithium deposit in Argentina and the Phase 1 project that is currently under construction there.

We are private company. We have something around 30 years history in China. We start with very small stainless steel mills, but now we become the biggest stainless steel producer in the worldwide. And also, we are the biggest nickel producer. 4 years ago, we started our battery business. Also 2 years ago, we are very happy that we expanded our business in Argentina, jointly together with ERAMET to explore the lithium resources in Argentina. In Weda Bay, we developed together a world-class nickel resources. And also in Argentina, starting from last year, we are developing a leasing world-class lithium resources in Argentina. Tsingshan and ERAMET, we are great partners. I believe that ERAMET is expert on exploring world-class resources in the world. We can find that in Weda Bay and also we can find this advantage in lithium in Argentina. And also, ERAMET has a very strong R&D resources. In Tsingshan, we believe we have a strong engineering experience, and we are good at to deliver a project. And also that ERAMET has a very high standards on safety, for example. By putting this together, we also are very strong financial. ERAMET and Tsingshan, we all committed to develop our resources in a sustainable way. So ERAMET brings the highest requirements and standard for IRMA and with Tsingshan, we would like to follow. In both projects in Weda Bay and Argentina lithium, we spend a lot of time to build up the solar farms to support our mining business, which we believe that can substantially reduce carbon footprint.

Now we talk a little bit about our lithium project in Argentina. And as I said before, the way that we are developing and the potential is huge as we have for manganese, as we have for lithium, for nickel, for titanium and zircon. This is a huge, huge. It means we start around the 10 million tonnes or at 15 million tonnes of lithium carbonate units. 350 milligrams per liter of good grade and this combination of grade and quantity and cost to give us the same way of participate of the lithium business of this high growth market in the best way as possible. And we have a lot of work that we did before. As John Li mentioned, as he mentioned, lot of process development of DLE, direct extraction, a lot of working drilling -- drilling program to find water, to find the lithium units. I mean there's a huge work that we did in order to be where we are now. We are now at the moment that are delivering this project, okay, with 24,000 tonnes of lithium carbonate equivalent, $800 million of investments and $200 million to $300 million plus of EBITDA associated. We have, as Geoff and Christel mentioned, we are studying accelerate the Phase 2 because, as I said before, [indiscernible], but they're scalable in a good way with CapEx expense and cost expenses. We are entering the lithium business, I'd like to say for the front door. We really be a player that can be in top 5 in some years. It's one of the reasons, as I said before, very well positioned will be in terms of cost, very well positioned. It means you have the whole spodumene chain before touching us because of the brand, you know the brand is the most cost-effective way to extract lithium and what about of the cost because of the ore body, because of the highest -- there's no issues in the geology. They were 400 meters and you pump it and we have been working on this with our pilot plant since 4 years back, and it's really good. It means you have a business model that can really -- can imagine a cost of $4,500, $5,000 compared to the price that we have even today or even the long-term, first quartile and a huge resource. The same as I think is extremely important for this mine, CSR for our mines and plants. We -- compared to the spodumene, 60% less carbon footprint while recycling the water and optimize the water. We have a very, very strong community project development support. I was there 3 weeks -- 4 weeks back, and we visit the community from the mine. They like work with us in different activities there, IRMA certificate, we have the auditing, we have the self-assessment that we be the audit in 2024. And we are developing solar energy in order to really to be this lithium as green as possible in this project, it means. And here, just a little bit of where we are today, 75% accomplishment. 1,420 people work at the high at 4,000 meters in order to build this beauty, this project. We have 4 years that we work with the pilot plant there to test in a real conditions, and we have the best recovery of the industry in terms of economics because we recover more units in terms of also environment, water consumption, 90% recovered and battery grade. And we're happy to say that we are in line. We are to deliver this project to start the production in Q4 next year. It means tomorrow that we see this bright product coming from there. And the potential, as we have everywhere the potential there, 15 million tonnes of a lithium carbonate, and we have also the source of water with these [ two ] and very good CapEx intensity for the industry and the cost, it means. We can have -- Geoff, who develop it. We can have really in this area, in this -- it's a 65 kilometers ore body. And we have Arizaro, that's another body there with the same characteristics. It means that in this area, we have a huge potential to continue to grow to serve this important market for us. And now a little bit of this marvelous project there. We have a video and then, Geoff, will conclude with the future developments of our [indiscernible] there. [Presentation]

So thank you, Kleber. So you've seen a little bit now about Phase 1 Centenario, 24,000 tonnes of capacity, first quartile producer, low cash cost, high -- really attractive business, $800 million of capital. What I'd now like to introduce you to is what our Board has just approved which is conditionally approved, which is the first tranche of our Phase 2 project. So Kleber showed you, we've been drilling. We've proven up more nickel -- pardon. We've proven up more lithium resource, and now we're able to expand production. And so Phase 2, first tranche will give us an additional 30,000 tonnes of LCE production capacity, around $800 million of capital. So on a dollar per lithium unit, it is more capital efficient than Phase 1, a similar cash cost of production to Phase 1 and a 50% reduction in the primary consumption of freshwater in the process through optimization that we've been able to do between the design of Phase 1 and the optimization we've done for this Phase 2 design. So this gives us the opportunity to accelerate a very competitive expansion project, very sound fundamentals. We can take advantage, and we have taken advantage of our partnership with Tsingshan to access improvements in the capital efficiency, access to Chinese engineering and procurement. And their strong skills in project construction and to really bring forward what we now feel is a really exciting and competitive project. There's a lot of lithium projects being kicked around capital markets at the moment. Most of them being hard rock. They'll typically end up in third or fourth quarter of the cost curve. And you saw before that the cost curve in lithium, the place to be is in the first quartile, which is where this project will position us. So if you look at our lithium portfolio, Phase 1, we look at commencing production and ramp-up in the second quarter of next year in a matter of months. We're moving towards nameplate capacity in later in 2025 and into '26. Phase 2 first tranche has now been approved. We need to work through some permitting to commence construction. We anticipate commencing construction next year with a view that we would commence ramp-up of operations in 2026. So around 2 years behind Phase 1, we should be starting to turn on valves and produce in Phase 2 first tranche. We then have potential to do another comparable expansion, which would take us up above 75,000 tonnes of capacity. The resources there, we're doing further drilling now to demonstrate the resource. The timing of that will be confirmed as we first focus on advancing the first 2 projects. Then we have in Arizaro, this is a very similar [ slab ], but a bit smaller, where we hold a tenement position. At Centenario, where [ Aramino ] is really the sole holder of tenements. At Arizaro, there are other companies that also hold tenements. Our objective at Arizaro this year will be to drill and demonstrate a resource position there, with a view to understanding what the future of project potential is there. But it gives us another potential growth option to bring forward into our portfolio. So that's now the end of our portfolio presentation. I'm now going to hand over to our CFO, Nicolas Carre, and he'll take you through the financial section of this Capital Market Day presentation. Thank you very much.

Thank you, Geoff, and good afternoon, everyone, or good morning for some of you over the phone. So I wanted to now give you what was the overall financial journey, which is accompanying this very beautiful transformation, which we have described in the last 6 years and also what is in front of us. So as -- I would like to divide actually this presentation into 3 different periods. I will start with the first one, which started between 2018 and 2020. It was actually our first significant CapEx cycle to unlock the great potential of our manganese deposits in Gabon. And that's something we have achieved tremendously as it has been described because at that time, we started at 4 million tonnes. And as we already mentioned, we finished or we are currently at 7.5 million tonnes. So that's the first thing which happened. We have also started our investment in the second strategic pillar with the Centenario project in Argentina. We just talked about it. At the same time, and I think it's really important to highlight this, we were still suffering heavily from an intensified cash burn from our now divested portfolio. And it's important to keep in mind, it's now divested. Also, at that same time, so the fact is we were in a pretty poor market situation, market context. So it was less favorable. So this means that we had, at that time, a limited cash generation even if we are growing significantly. So that's why during that period, and I will come back to that, we reached a peak of net debt at around EUR 1.3 billion, which was at the end of 2020. And despite very strong efforts in terms of cost control, in terms of also intrinsic performance by growing volumes during the period. By the way, just for the sake of information in this 3 years, we generated EUR 200 million of intrinsic performance, which was already a very solid performance. Then we move to 2021 and 2022. Totally different context, very strong market recovery post-COVID. And guess what? What could we achieve during that period as we are able to grow significantly before we are actually able to seize the opportunities of adding these additional volumes and being able to benefit from this strong market situation. So we were able to significantly deleverage the company. And also, we accelerated the intrinsic performance, especially with the start of our Weda Bay activity in Indonesia. In this only 2 years, we cumulated EUR 340 million of intrinsic performance, which is an amazing performance. And of course, not only we are able to deliver, but we are able also to allocate cash to value-creating growth projects, especially on the first pillar, especially in manganese, but also we were able to reward our shareholders and that's something we plan to keep in the coming years. Then in '23, the growth program is continuing, if not accelerating, and I will come back to that, especially with now the confirm second phase of our Centenario project in Argentina. And also, we are still managing to keep our leverage below 1 in a much less favorable market environment, and I will come back to that and that's something which is important. Why is it important? Because all this trajectory is giving us confidence. And then the confidence I want to share and we want to share today about the next phase, which starts now. Thanks to a stronger -- a much stronger balance sheet as well as a reshaped resilient and diversified, more diversified asset portfolio. So new growth drivers like Centenario in Argentina will enable us to execute our strategy and position the group for new opportunities. I guess we've just talked about the opportunity in Chile, and I will come back to that, [ either ] for growth and also to ensure that we provide further shareholder returns. Moving into more details. Now so I've mentioned in this period EUR 200 million between 2018, 2020 of intrinsic performance, EUR 350 million in the period between '21 and '22. This means that in these 5 years, we have generated EUR 550 million, which is an average of EUR 110 million per year. And I think it's really important also to highlight that in the same period, we have also had a very significantly negative performance of our nickel asset in New Caledonia, which is leading to EUR 163 million negative. So just for illustrative purposes, without this negative impact, our overall intrinsic performance on the assets on which we are keep growing was EUR 700 million in these 5 years. That's EUR 700 million of additional value provided to the company. And as Christel was mentioning in her introduction, we would have put -- we would have had the same market conditions in 2018 than in 2022. We would have been with a situation at EUR 1.4 million EBITDA for that period at the end of '22, that thanks to this very significant intrinsic performance. What does this mean for cash now? So here, the same -- sorry, before I move to cash, which is important. I want to first spend some time on 2023. So what about 2023? Because this performance has been amazing between 2018 to 2022. '23 is actually the same trend. And I think it's really important also to highlight this. One thing I would like first to focus on is the fact that we actually communicated to the market at the end of Q3, the fact that we adjust our guidance of adjusted EBITDA to EUR 800 million for the full year '23. Of course, it will be easy to say that it's the same -- more or less the same value as in 2018. But -- and also, it has been said by Christel earlier, so this is hiding the fact that in the period, we have faced very significant downturns in terms of market situation with them altogether, more than EUR 700 million of negative external factors. And at the same time, so we have increased our internal performance for the same value. And one thing I would like to highlight is that, so on top of the EUR 550 million we generated in the 5 years, in the 5 previous years, we are adding another EUR 150 million of additional intrinsic performance in '23. And something which is really important to highlight is that you may have in mind that in H1, we have had very significant issues in terms of logistics in Gabon. So almost the entire month of January was lost due to the earthquake taking place in December. We have had another issue stopping the transportation for 18 days in April. So all these 2 factors were leading to a negative internal performance of EUR 124 million just related to the one-off logistics incidents. What does this mean? This means that achieving EUR 150 million positive intrinsic performance in '23 will -- it means that we are having a tremendous improvement in H2. And that's something we are currently delivering. And that was enabled actually by all the performance we generated before. All the investments we have done also in our manganese business, [ the keep ] and the still growing performance in Weda Bay in Indonesia. So I promised it. So now I move it and I will move to it. So what does this mean for cash? In that period, so between 2018 and here, we are talking about the situation at the end of June '23, we have generated with now the reshaped portfolio of ERAMET EUR 1.9 billion of cash -- of free cash flow. If I compare to the EBITDA which was generated for the same period, so between 2018 to June '23, we are talking about 500 and -- EUR 5 billion, sorry, EUR 100 million (sic) [ EUR 5.1 billion ], EUR 5.1 billion. So it means that the cash conversion is actually around 37%, which is very close, which is actually a benchmark when we compare to the pure metals and mining players, and it actually confirms and demonstrates that we are now this kind of pure player of mining and metals as we have described before. One thing is to be also highlighted in this slide is while we have used part of this generated cash to grow in lithium and also to pay dividends to our shareholders. Unfortunately, in the same time, so close to EUR 1 billion, EUR 942 million, as you can see there, has been burned into the now divested portfolio. So Christel has said it, but I will repeat it. It's coming from the cash burn in Aubert & Duval that we have finalized the divestment in April of this year, coming from Erasteel for which we have finalized the sale in June of this year. And also it was coming from Sandouville, which has been sold in 2022. So all of this is gone. So it means that this huge burden the group had, especially in the last 5 years, is now gone. One other thing I would like to highlight is, of course, the fact that we have had this EUR 209 million of cash consumption of SLN in New Caledonia for the same period. This is -- if I add up the 2, so we are talking about altogether, EUR 1.1 billion. What we have said, what I will repeat is that we have confirmed our decision not to provide any further financing to New Caledonia to SLN, so to our New Caledonian subsidiary in the future. So also in terms of overall consumption, we don't plan anything in this area anymore. If now I look at the evolution of our leverage. In any case, it's very similar to the initial introduction I was making. You can see that before we are definitely facing significant ups and downs or peaks and the lower stages. And here, you can see the evolution. So as I said, the peak was at the end of 2020. What is important to know here is that due to the fact that we have now divested the very significant cash burn. Also the fact that we are now much more diversified, and I will come back to that. We are much less impacted by specific downturns or especially downturns in that case of the market limiting our cash generation. So it's also the value of the transformation, which has been done before we had a very strong leg in manganese in Gabon. Now we have 2 big legs in -- especially, and we have also GCO, but we have [ Z1 ] in Gabon as well, manganese ore and as well as Weda Bay in Indonesia in nickel. And it will add with, very soon, the lithium activity we are developing. One last thing I would like to highlight here is the fact that, of course, with the additional acquisition we have just announced this morning in terms of concessions in Chile. So this will lead us to a leverage which will get closer to one at the end of this year. But again, let's keep in mind we are accelerating the growth. We are accelerating the investment. We are also facing a much more challenging situation in terms of market. So despite that, we are able to keep leverage below 1 and has been the case actually for the last 2 years. So as you can see, it started to be the case at the end of '21. It was much more than confirmed by the end of '22, with a leverage below -- so close to 0 because it was 0.2 and now even if it's increasing again, it's in a challenging market environment, with investments and also making sure that we further prepare the ERAMET of the future. I've said a lot and we said a lot about the operational performance, which brought us here and which brought this picture in the last years. At the same time, we were also very active in terms of balance sheet and in terms of financial situation and especially our credit profile. A few things I would like to remind or to highlight: First one in Q2, we have issued our first sustainability linked end as well rated bond for a total value of EUR 500 million, which is a 5-year maturity and a coupon of 7%, which actually reflects our credit rating and the expected trajectory of our CSR road map. And as you can see, so the ratings, that's a confirmation. We have close to high investment-grade ratings with Moody's and Fitch. And again, it's a confirmation of the transformation the group has achieved recently. Also, in Q1 this year, we have renewed and actually extended our term loan, which has been extended to a value of EUR 515 million. Out of this, and I will come back to that when I will show liquidity. EUR 370 million are drawn to date, and it's something for which we still have, in that case, EUR 145 million additional money we can grow. All of this -- so thanks to this new bond, thanks to the extension of the term loan, we have actually increased the overall maturity of our debt by close to 1 year from 2.2 years to 3 years during the -- in the last 6 months. And the last piece I would like to highlight here, all these numbers actually include -- I'm sorry, the French State loan to SLN. This loan is consolidated on our balance sheet. That's why it's shown here, but actually does not reflect economically -- financial obligation per se for ERAMET. So this loan altogether at the end of October and currently is amounting to EUR 260 million. It was EUR 200 million at the end of '22 and there is an additional EUR 60 million which has been financed by the French state in '23. I was promising to come to liquidity. So also in terms of liquidity, we have a very strong situation. It was, at the end of '22, EUR 2.6 billion. It is, at the end of June, EUR 2.5 billion. So it's still very strong. So we have the cash available, which at the end of June amounts to EUR 1.4 billion. And on top of that, we have extended and renewed in RCF in '22 -- in June '22, actually, which is now expiring in 2028, which is totally undrawn today, which amounts to EUR 935 million. On top of that, you have actually this portion of the term loan, which is not drawn. So this is close to EUR 1.1 billion of additional available money that we are showing at the end of June '23. And it's not all. So you may have seen that in the last 3 months, especially in July, we have announced and we have been able to generate 2 new features for the group. One is the one that Geoff has been describing already earlier, so which is a divestment of ETI, providing an additional source of money of $200 million. I won't come into details, but it was a great example that ERAMET is capable to capture value on a non-core business. When there is a right offer, and this was really a right offer, we received from INEOS to transform it into cash. And the second item, which happened in July is the deal, a very innovative deal, we found with Glencore on the back of the lithium Phase 1 products, and I really want to clarify -- it is not an uptake. This is a marketing agreement. This means that we will commercialize the products with Glencore. We'll keep the direct access to the market and also we will be able to capture the value of the higher prices. So it's not a fixed price contract. It's clearly at market price. So when -- and we are convinced, there will be a rebound in the prices, we'll be able to capture it. And I think it's really important to highlight it. What does it confirm? It confirms two things: one, that we can be very agile and very innovative in our way on financing; second, it was also confirming the very strong market appetite and also the trust in our lithium projects and that was just the start. So what is now our overall capital allocation policy. Actually, this one didn't change in the last 2 years, and we don't change it. I want to remind that our first priority was to make sure that we have a stronger balance sheet. It is the case. It has been the case at the end of '21, at the end of '22, at the end of June. As said, we'll keep also this kind of leverage below 1 at the end of December. So this means that now we are capable to move to the second portion of our plan -- of our capital allocation policy, is to invest into our value-generative projects and to continue the growth. It has been very successful as we demonstrated in the last years. It will continue -- and we will further continue with just confirmed decision on the Phase 2 first tranche of our lithium project in Argentina. And of course, we want to make sure that we will keep also reward our shareholders for their long-term commitment. So we want to make sure that we will pay dividends based also on the very quick return value of the investments we are describing in the second part of this policy. So here is the CapEx plan. And that's something, which has, of course, to be put in numbers, all what we described before. So yes, it is a significant value, we are talking about EUR 1.9 billion for the coming 3 years, which is an average of a bit more than EUR 600 million. You can see here the breakdown by year, so it will be heavy in '24, especially because we'll start significantly the additional, so the CapEx and the investment on the Phase 2 of Centenario, and you can see also the breakdown by project. So if I want to summarize it quickly, actually, around EUR 500 million is between our manganese business and our mineral sands business in Senegal. And the reason why we have to invest and we want to invest further in the manganese business in Gabon is not because of the operations. Most of the additional growth that Kleber and Geoff have been describing before will come from additional productivity. So we won't need significant investments in the operations side. What we need is actually more on the transportation side. So that's the bottleneck. It has been reminded. And I think it's really important to make sure that we will do the investment there because it has been proven and it will keep demonstrating itself that it's very quickly paying back this kind of investment. So that's why it's really important to make sure that we make this investment. And of course, the other piece which is significant is the additional investments we do in lithium, the Phase 2. And this is actually here showing it's around EUR 500 million. So this is a portion which is net of the part, which is financed by our partner, Tsingshan. This is what we have considered in this overall value. Last but not the least, I want to make sure that also I highlight there that we have not considered anything related to the projects, for which we have not done the final investment decision. So I'm talking about Sonic Bay. I'm talking about the -- also the EV battery recycling project in France. So of course, it will increase this number if we make the final investment decision in '24 as it has been described before. And I want to remind you, it has been said already by Geoff, but I think it's really important to share it again with our shareholders, the fact that we'll, of course, make this investment decision if we are comfortable with the delivery model, of course. And also if it demonstrates to be very strong financial metrics delivered by this project, the same as for the rest of the portfolio, we have just been describing. And the thing is we have the space. We have actually -- and that's why it was important to remind what is currently our level of debt and our level of available liquidity. We could have the space to be able to finance it. This being said, we'll again only do it if it makes sense. And how will we be able to finance all of this in the coming years. So it's not only thanks to the liquidity which is available, but it's also thanks to the evolution of the portfolio. I will repeat myself here, but I think it's really important. This slide, what is really important to highlight is the fact that when we were in a previous downturn of the cycle, which was in 2015, ERAMET was close to 0 EBITDA, 0 EBITDA. 2018, we have already mentioned it, it was at EUR 800 million, but it was supported by a pretty strong market situation. So here, I said in '23, which honestly, we can also estimate to be another downturn of the cycle will also generate this EUR 800 million, as said, but it's -- if we take actually the market conditions of 2018, we will be more in the range of EUR 1.3 billion or even further to EUR 1.4 billion. So that's actually the thing is ERAMET is able -- we are now able to generate cash even in a downturn of the cycles. And that's the case in our manganese ore business. That's the case in our Weda Bay business. One number I didn't give before. Just for the sake of clarity, when we talk about Weda Bay, in 2022, actually, the cash conversion of this business was 70%, 7-0, so it was an overall cash generation of EUR 237 million out of an adjusted EBITDA, which was close to EUR 350 million, so 70%, and this is expected to continue with all the growth projects we are describing. So again, some of it will finance the activities, which are already ongoing. But as you can see, and I will here quote my friend, Kleber, "Sky is not the limit for the evolution of [indiscernible]." And that's also the beauty of the evolution we have done. So we are a much more robust company, a much stronger balance sheet. And also, we have -- we are a much more diversified company. As you can see in 2018, we're very much focused and also Christel was mentioning it in our introduction, we are very strongly focused manganese company. Almost all our EBITDA was actually coming from manganese. In '22, we have already achieved a strong evolution, especially thanks to the significant increase at Weda Bay. So now it is 70%. So I will simplify it. We moved from 95% to 70%. Now with the additional increase in Weda Bay, which will be sustained by the need of limonite, as it has been described before, plus the start of the lithium activity, we expect the manganese portion to be more in the range of 50%. So that's also a very strong message because now we have much more legs to ensure that we can capture and we can seize the evolution of the market. So clearly, the fact that we'll be entering into 2 significant years of investment in '24 and '25, we can expect to be above our target on average through the cycle of leverage of 1. So that's really the expectation. But it is to be back quickly below it. That's why we keep our target to be below on average through the cycle and how can we do that? Once again, thanks to very quickly paying back investment, very strongly value-generating investments. So this is why, all in all, our leverage should be and will be manageable during the next 2 years. And that's also why, as you can see, it's -- if we are in a more solid market environment, starting in '25, for example, we can expect to be back below this line of 1 at the end of '25. If the market conditions are more -- are less supportive, in that case, it won't be in '25, but we expect it to be in '26. So in all situations, we expect to be returning to a strong financial situation. Last but not the least, and I really want to also clarify that. In case of -- so I was saying that most of the investments we do especially in manganese, GCO will be financed by themselves by the local operations. If we talk about lithium, especially the Phase 2, we'll try to find the best mix between the cash, which will come for the Phase 1 of the project and also from financing, external financing, we do believe, and it has been demonstrated by the deal we found with Glencore, the prepayment. We do believe that we have the possibility to find also external financing, and that will be another source of potential financing for this project. So now as an overall summary of this financial presentation, we have -- I hope you felt it during the presentation, a very clear strategic road map, which has already proven to be very strong and which will continue. It will be thanks to sustained operational excellence. It has been the case in the last 5 years, again, EUR 700 million of overall intrinsic performance we have been able to deliver. All of this underpinned by a strong CSR commitment. So that's what is the new ERAMET and it enabled us to ensure a stronger balance sheet, and we'll keep ensuring that we have a sustainable financial policy. And also, we want to make sure that we are providing shareholder return on the back of very strong value creation businesses. As it has been said several times, we are positioned -- very well positioned in the cash cost curve for all our products. Normally, there is absolutely everything in our hands to be able to deliver this value. Thank you very much. And I now hand it over to Christel for the conclusion of this overall presentation.

So I hope that all these presentations that you have seen today have managed to convince you that we are really well positioned to benefit from the strong growth of the new era of metals. We have a great portfolio of very competitive and cash-generative mining assets with still a lot of potential for further growth. And we have a good pipeline of projects in the fast-growing sector of the energy transition. And altogether, we think that we have a huge potential to create value in the future, safer, highly responsible, financially more robust, more diversified in terms of geography and in terms of product portfolio, we have set the base and the organization in order to deliver this potential. With operational and commercial excellence with the digitalization, with cutting-edge innovation, and with our strong and permanent focus on management of performance, we think that we are able to deliver it in a competitive manner. So as you have seen, there are -- we have a very ambitious mid-term targets, production target that we have described today, but we have also built a pipeline of projects that will help us to deliver further value growth in -- beyond 2026. So strategically, operationally, financially stronger, I think that now we are definitely ready to enter in the new age of metals as a leading mining company and as a key contributor to a sustainable future. Thank you very much for your listening. And now we will be ready, my team and I, to answer your question.

Okay. So we will now start the Q&A session. So we will first take questions from the people in the audience, then we will take questions from the people who are connected via the phone, and finally, questions from the webcast chat. If you are asking a question, please introduce yourself, name and company. Thank you.

Sylvain Brunet with BNP Paribas. Thank you very much for all these detailed presentations and growth ambitions. My first line of question would be around capital allocation. If you could give us a sense of whether anything has changed in your analysis of internal rate of returns in this new environment for metals, new environmental costs. And related to that, if you lead to believe that some long-term prices need to be adjusted in analyst models and in consensus. And my second question around project delivery would be to get a sense of how much flexibility is built in your delivery of projects in the event the cycle would be less supportive than we think or you think, how much engineering has already been done? How much capital has already been committed? Or what is left to be decided later in the delivery of these different projects, please?

So Nicolas will start with the first question, and I can answer with -- Geoff also the second one.

Yes. So thank you, Sylvain, for your question on especially on the return -- the rate of return we are targeting. So I would say that it has not changed versus what we have always done. So we are always looking for a very high rate of returns, and I think it has been demonstrated with the investments we have performed in the last years, especially the one we need in Gabon. So the rate of return was very significant because here, we are talking about altogether an investment of EUR 500 million, but the value it has created in the last 3 to 4 years is actually amazing. So that's just to say that no, we are not really changing dramatically the approach, and it's a segue to your second part of the question, which is should we be more prudent in terms of pricing assumption. Here, I really want to emphasize the fact that usually, our approach is actually to be prudent. And I think we can see it for the lithium project. In any case, we are usually taking the consensus in terms of pricing. And here, we know that there can be significant deviations in these assumptions. Why did I take the lithium example? When we look at what some of our competitors, and I won't name them, it's not necessary, that are using as a lithium price for their long-term estimates, it's far above what we are doing. So it means that here, we have, in any case, a common approach, we usually take the consensus. And clearly, when we are deciding for a project, it's based and it has always been the case based on the very solid IRR.

So just maybe to give some examples. So right now, we looked at the consensus recently. Long-term consensus for lithium is 22,000. We have shown you we take something between 16,000 and 17,000 for -- and we always take not that we believe that it will be the case but to make sure that we are on the lowest part of the range, to make sure that, in any case, conservative case, we will -- it will be robust. And we don't need that much because in order to have NPV 0, including so our WACC, NPV 0, we need 9,000 for this project. So the long-term lithium price at 9,000, I can tell you that a lot of projects on the cash cost curve will not exist anymore. So it means the fundamental difference in the demand and supply balance. So we take usually very conservative lower part of the range because we want our project to be robust in any case.

And if I -- also the last piece I would like to complete is when we say that we'll make decisions, for example, for Sonic Bay and for the EV recycling project, if it is sound financially, this is also taking clearly conservative assumptions to avoid making decisions, which could jeopardize our financials going forward. So that's why I was answering very clearly to your initial question. So have we changed anything? No, we have not changed because this is always how we have decided our projects.

On the project delivery, how much is engaged, et cetera, we -- for the time being, they are -- so for Phase 1 of lithium, it's almost over now. I mean it's close to the start. On Phase 2, we are just starting to buy a long lead item right now, so there is not so much. We have -- we are just at the beginning. And when we look at the other projects, we are more in the study phase, so it's marginal versus the magnitude of the projects, if we take the growth projects that we have in our second pillar. That being said, one important thing I would like to outline is that the worst thing that can happen is a stop and go. And it's something I would like to avoid for the future of ERAMET. In the past, we had a lot of stop and go. And as you know, we have mothballed our lithium project in 2020. If we could have avoided to do that, it would have been in production in 2022 with a lithium price at $80,000 per ton, and we would have reimbursed the plant in some months. So I think we -- that's why being a stronger company is very important to be able -- once things are really launching, it doesn't mean that if there is a huge issue, we could not stop. But it's something that we want absolutely to avoid. You want to add something, Geoff?

Maybe -- I think you've covered lithium where, as Christel said, for Phase 1, it is, well, largely fully committed and 75%, 80% complete. Phase 2, yes, we're just at the lead item order in stage, and we won't commit to the main investment until the conditions that our Board has proposed around permitting are in place, and we do anticipate that to be some months away. I think what also is important to look at is the ongoing investments we've been making in Gabon to gradually increase capacity there. And that's not really one big project per se as in one big single commitment. It's really more a whole series of investments that all come together. So it's buying rolling stock. It's buying wash plants. It's investing in additional fleet. So it's -- a lot of it is very incremental and very suited to if we had to, to staging further.

Julien Onillon from Stifel. I have one question I would like to come back on Sonic Bay project, which is not decided yet. First of all, a few years ago, we are talking about huge expense price. I mean CapEx, we were pretty much EUR 3 billion in the press, something like that. I understand that there have been some breakthrough in terms of technologies and that, therefore, this EUR 3 billion is probably not any more EUR 3 billion, fortunately. So what's the magnitude of CapEx we have to have in mind, knowing that you will share it with BASF, if you are doing that? My first questions. And more fundamentally, you say we are looking at the different processes. We want to be cautious. But it is one major hypothesis, which is solid batteries, which could disrupt completely the nickel market. And if you expose even more in going in this grade, you take the risk that if the solid battery developed by Toyota succeed, you will get a big problem later on. So how you tackle these events? It's more easy to sell, I would say, nickel ore to HPAL plants. You take no risk. If the market go down, well, you're less, but it's okay. To NPI also, you will take an impact but not necessarily as big as you were to make a huge CapEx. And then you discover that there is new battery technology, which destroyed nickel market. So how do you see those 2 elements, further CapEx and the long-term risk considering the solid batteries?

So maybe 2 elements here. So we'll not disclose the CapEx, but it's significantly lower. And it's more in line with the asphalt that have been announced right now because this new technology is the Chinese one, is the one that we'll be using in Indonesia, so with the Indonesian construction cost, et cetera. So altogether, we are talking about something more in line with the one that have been announced recently of Huayou, et cetera. So if you could -- you take this reference, you will have an idea of what it is.

And what is the reference? But if...

And then regarding the solid batteries, and I will let Geoff elaborate. But one thing that is for sure is that we know approximately the batteries that we will have in the next 10 years because of the plants -- the gigafactories that are being built now. I think they are built now and they will not -- and when you launch a new model with the battery, you are not going to change right now, so -- right after. So I think it's, yes, we may see and we take, for example, a higher share of LFP than we used to because it's there and they are already battery manufacturing of LFP today. But when you take the installed base of batteries today, you know approximately what will be the production of the next 10 years. Beyond that, it might be another issue. So we think that, today, anyway, there is not such capacity in asphalt. And asphalt is much better in terms of CO2 and in terms of cost than the pyrometallurgy to matte and the other kind of Class 1 nickel. And so there is still enough room for asphalt capacity to come onstream. That being said, it's something -- the kind of assumption we revise all the time. And we have to make sure that we are comfortable with, as you say, a conservative long-term price in order to be able to make the decision. Geoff, do you want to add?

Yes, thank you. So maybe just build on a couple of things. I think if you look at our actions, you also can get some insight into how we view things. So to your point, yes, I get out of bed every morning and read about some new emerging potential battery technology. And it's undeniable that, over time, the chemistry mix of batteries will evolve. That's absolutely the case. We see a much more consistent theme of lithium in battery chemistry through that trend and that, I think, when you look at our actions, which is our desire to promote and bring forward investment in our lithium production capacity, that plays out in terms of our confidence that we see in that aspect of battery chemistry and in the same way that, absolutely, we're spending the time to really study and be careful about how we view the nickel battery chemistry playing out and the demand for that form of nickel. You're right. We could just participate in mining nickel ore. It's a much lower capital invest -- intensity exercise, as Kleber spoke. The bulk of the productive capacity there is really brought on by engaging contract mining, not through the large fixed infrastructure investment. So it's a very scalable business. It can be readily scaled up. And if it had to be, it could be scaled down with a relatively minor balance sheet impact. So when we look at Sonic Bay, Christel has already spoken to the magnitude of the potential investment. To finalize that amount, we need to also finalize the scope of the project, and that is driven in part by how it interacts with the existing industrial park and the infrastructure of the industrial park. We need to finalize the project delivery model and are we comfortable with the project delivery model, recognizing that this is an industrial park that's heavily geared towards, to date, Chinese engineered investments. So we need to be comfortable in bringing that forward. And absolutely, we need to be comfortable in this view and outlook on the nickel sector. And we're just taking our time. We want to make sure in this instance that we've got an investment, given its magnitude, that is one we'd be comfortable with for the long term.

Because you have a new project also in lithium with a new concession you bought. So somewhere, you have a lot of projects, so taking a big risk on these projects with huge CapEx where you don't know in 10 years. 10 years is tomorrow. I mean it's tomorrow.

So I can assure you it occupies a lot of my time thinking about those issues.

And that's also why we have not taken the decision yet. There are plenty of...

Nicolas Montel, Portzamparc. First question is about Weda Bay. You are going to double the ore production there. Can we expect some improvement in the cash cost because the size of the operation is going to be much bigger? So what can we expect about that? Second question is about, I don't know how you call it, but Phase B of Phase 2, something like that. What is the best timing for you to launch this new phase? And my first question would be -- my third question would be about the Glencore financing. Can you talk a little bit about that and how we are going to see that in your balance sheet or cash flow statement?

Kleber maybe on the cash cost of Weda Bay and Geoff on the Phase 2b and Nicolas on Glencore.

Yes, we will have [ improvements ] of scale because of the size of the mine, but on the other hand, we are going up in the hill. It means we are going to develop other areas that have the profile. The distance is going up in order to access the high-grade ore. On and on, this mine will continue to be first quartile and will make -- it will be a base of very low cost compared to the part of the industry. It means scale, even though the grade -- the trend of the grades, as you know, we started the higher grade. We go to the lower grade, but the scheme there give us extremely competitive cost with extremely high returns.

On one side, we have the scale effect; but on the other side, as usual, you start with the highest grade when you start the mine. So over time, we'll see some lower grade and -- but it will take time. It's a high-grade mine, but you'll see some more lower grade. And we are going further away from the costs. So we have longer transportation costs. So all in all, it means that we should not bet on a lower cash cost in Weda Bay than what we have today.

In terms of possible timings of the next aspect of Phase 2, so as you saw in the presentation, we don't yet have a fixed date there. Clearly, we're keen to commence operations in Phase 1 and confirm and see planned performance. We also would be keen to see [ Eramine ] being a cash-generating business before we probably commit to further investment beyond what we've announced so far. My speculation would be we'd probably be, at a minimum, a similar timing to the gap that we've had between Phase 1 and Phase 2a. So as I said in the slides, that was a 2-year gap between those 2 investment decisions. I think, at a minimum, it would be possibly a similar gap. But if we see strong market fundamentals and we've got strong performance in Phase 1, we bring it forward. If market fundamentals change, of course, we have the option to defer it. The beauty of being in the position we're starting to get into is that we have a portfolio with options, and we have the ability to turn those options on or off depending on the market signals rather than being -- feeling that we're forced into them. And so if we have to defer, we've got the option to defer. If we want to bring it forward, we can bring it forward. That's the beauty of options, and our role is to increase that cupboard of options that we can exercise over time.

Nicolas?

So thanks, Nicolas, for giving me the opportunity to again about the Glencore deal because we are really thrilled about it. It's providing a lot of very positive picture. So a few things I would like to remind even if I said it before. So it's a marketing agreement, meaning that we'll sell together. And of course, we'll sell the products to Glencore, but Glencore will sell the products afterwards with us to other customers. As said, it will be with market prices. So we are not locking in into a fixed price, and we'll still be able to seize the opportunity on the lithium selling price evolution. And I think it's really very important to highlight given the expected evolution of the market. And now if I talk more about the financial conditions, so it has been including the marketing fee we'll pay, in this context, at very good financing rates altogether. So it won't change dramatically the cost of debt of the company. And in terms of our overall drawing of this facility, we expect to have it drawn for around 20% before the end of this year and the rest being in '24. Now there is a last part in your question I won't be able to address today, is how it will flow in the balance sheet. It will be, of course, a debt. Now given the nature, that's something we are still looking at because there is a lot of aspects, which could advocate for working capital debt and some of them for our financial debt. So that's something we'll confirm when we'll have the final answer on that one.

Next question?

Maxime Kogge from ODDO BHF. So I have 3 questions. The first is on SLN. Can you perhaps give us an update on the current liquidity situation and outline the next steps ahead of a potential exit from this operation? Second question is on Comilog. You had a derailment. I think that was last week. And that's the third in a year that you had such issues, so they are partly to blame for, for the natural conditions, of course. But how can you reassure us that they will not happen again? And where do you see the changes here? And lastly on manganese, it's quite surprising to see how depressed prices are and that despite decent steel market and that's benefiting iron ore and met coal actually, so are you not -- it seems actually from what I read that the fact that you're shipping a lot of material in H2 to offset, it's one -- is contributing to this market weakness. I would love to have your thoughts on that. I know you're not afraid that by increasing production, you will contribute to further weakness on this market.

So SLN liquidity, you want to answer? And I will comment on the exit potential.

So clearly, SLN liquidity is challenging. The -- given the evolution of the selling price of ferronickel, which, as we've already shared in previous presentations, is getting much closer to the NPI price, so the LME is not anymore the reference. So the average price has been much lower in '23 than in previous years. So even if the operating performance of SLN has improved, still, given this negative evolution of selling price, high input cost, and it will be a segue to your question about manganese alloys because input costs have raised everywhere, and clearly, it was impacting significantly H1 for -- especially for SLN. So with all of that, so there will be a significant cash consumption in '23 at SLN level. It will totally consume the additional loan, which has been provided by the French state. So clearly, the liquidity, there is still some available liquidity for SLN, but we expect it to be consumed in the coming weeks. It's, I wanted to say, in the range of a couple of months maximum.

So regarding the potential exit, as you know, there are a lot of discussion right now in between the French state and the New Caledonian authorities about the nickel industry in Caledonia because all the 3 major players are running out of cash. SLN is -- has opened a conciliation procedure. [ Pony ] as well, [ Pony Resource ] and [ Forkanes ]. Glencore has already said that end of February, there will be no financing anymore, and they will not continue to finance it. So the 3 main players are in the same situation. With their main shareholders, Glencore has us saying that they will not reinject anymore -- any cash in their subsidiary for reasons that are obvious. We have done everything that we could from a managerial point of view, and honestly, the team has done a great job improving productivity and delivering what they can deliver. But today, with the energy prices that we have, in 2023, we paid our energy $200 per megawatt. So it's about 7x the level we have in Norway and -- or in France, even for the hyper electro-intensive. And it's about 3x the level we have in Indonesia. So you cannot -- you can operate that way. And the second thing is that we have huge difficulties to access our own resources with Northern Province blocking all the permitting. We have 25 permits waiting on the desk of the Northern Province, which is, in fact, making us -- it's sometimes totally impossible to operate, and we have to put in care and maintenance one of our key mines in the north, the mine of Puma in July because of the lack of permitting. So I mean all these things are out of our ends, I would say. It's not levers that we control. So they need to decide what they want to do with their nickel industry, but it's not anymore something that we can manage for them. So today, our position is clear. We continue to operate, but we don't want to bear the burden of keeping this industry life without having solutions for all these aspects. Do you want to comment on the derailment?

I think, today, we have -- we improved the railroad reliability. We had this derailment. It was not a big one. It was small one. After 120 days without any issue, means today, we monitor better the geometry part of the railroad. We have also the renewal and the maintenance. And I think we are far much better positioned than we were in the first half. And that, going forward, will continue to improve. And...

Just to give you an idea, in 2017, there was around 20 derailments per year on this line. So it's something that unfortunately happens all the time. There are small things and that we usually manage to fix in some hours, a day, 2 days. The one we have mentioned at the beginning of the year were significant things that were not normal derailment, but it was a huge landslide following a season and et cetera. So it was something totally different than the usual, I would say, derailment that we can face on this line. And that -- as Kleber said, we have improved a lot because now we have much less than we used to have in the past because of all the investments that we have done on this infrastructure.

In terms of manganese market and maybe just to build on that previous point, we are steadily investing but prudently. If we were to completely upgrade the line overnight to give you the assurance that you're looking for there would be no derailment, we'd be talking about an investment of billions and a huge disruption to our production. So we have to steadily upgrade over time. We're utilizing technology to manage and improve line performance, but we have to balance that investment with the constraints of an operating business. In terms of maybe...

I'm sorry. Maybe, Geoff, because I think it's an important point, it's a segue also of the investments we have considered when we talk about growth from manganese ore. So it's not only to generate additional growth, is to sustain the growth, so exactly what Geoff has been describing. Of course, we are not talking about renewing totally the line or to create another one. It's just to ensure that we are steadily improving and accompanying the growth. So that's why it's really important that we spend time, and really I cannot emphasize enough what Kleber and Christel have been saying that the situation has dramatically improved already versus what it was 5 or 6 years ago.

I mean it's very important to remember, this is a railway line that was not originally built to carry heavy ore wagons. This was a railway line that was built for general passenger and freight traffic. And as a consequence of events in history, it now carries much heavier ore wagons. And we have to steadily upgrade its bearing capacity, but that's a prolonged program. In terms of impact on manganese ore, we're 30-odd percent of the high-grade market, so there's 70% of other high-grade producers that are producing into the same market. I spoke earlier in the strategy section. We don't shy away from the fact that we have the capacity to grow in a first quartile cost position and potentially take share from higher-cost producers who are traditionally swing producers. We're now starting to see in the market some of the usual rational response of swing producers in the market. So we're seeing capacity starting to turn off that is loss-making in the current pricing environment. And we're in a position where we can continue to be cash positive through this environment. And we're then obviously able to instantly enjoy higher margins as and when price recovers on the back end of this. Yes, there are higher inventories at the moment in the Chinese ports. But we see, as you said in your question, the Chinese steel sector does seem to be showing some signs of recovery, so that can move fairly rapidly, and we're well placed. It's very, very damaging in a bulk commodity business to rapidly adjust production up or down because you rapidly impact your cost structure. You rapidly introduce inefficiency into your production base, and you end up potentially doing more harm than you do trying to manage your market position, you end up doing more harm to your cost position if you're not careful.

Next question?

Fabien Le Disert, Kepler Cheuvreux. Regarding geopolitics and manganese, you didn't mention the recent coup in Gabon. Do you think there could be a negative ramification on this event on your business? I mean maybe higher royalties, higher taxes or maybe a change in the shareholding structure of Comilog. And second question on lithium. What's your view -- what's your take on the recent lithium transaction? And do you see a marketing deficit in the next few years? And do you think there will be a difference between European-based lithium produced -- European-based lithium and over lithium production, difference in prices?

You take the lithium one. I will answer on the Gabon coup. Honestly, for the time being, it has not changed anything. This interim government is quite business friendly, is -- there is very -- try to maintain connection with all the countries, foreign countries, and it's not at all against the France or the French interest. So we are operating totally normally. There is no information or anything that can lead us to think that there would be a change in the conditions that we have. By the way, the concession of Comilog or everything that goes with this concession, including our tax ruling, I would say, is -- has been something voted at that time, a long time ago by the parliament. So to change it, you have to go to the parliament. So it's another protection. And by the way, we are paying a lot in Gabon. We are paying a lot of taxes, higher than the average of the other businesses. We are paying, in addition, royalties. We are paying a lot of things. So what we want is not to pay less. It's to have stability. But I don't think that we will pay more. And today, we have not heard about anything about the increasing their share, trying to increase their share in the capital of Comilog. So I would say so far, no change and a quite business-friendly environment.

And they recognized a lot even what we are doing in terms CSR. I think we have the social -- [ it was really to tweak ] back to -- go to discuss with the government, and things are going the right direction.

Comilog is considered as a very good corporate citizen in Gabon with all the CSR that we are doing for the population, et cetera. And so it's a highly recognized company for all those things. And by the way, it's something -- when we talk about the license to operate, I mean what we do for the community is a very good protection, protection when you have this kind of geopolitical issues. The population protects you against sometimes the change of mind of some of the government.

Maybe one last thing to complete is we have -- you have seen that we suspended temporarily the activity the day of the coup. It was to make sure that everybody was in safe conditions, et cetera. It was really our preventive measures we do usually. But honestly, since then, and I know it won't -- it will sound weird when we talk about the coup, but it's been really business as usual. So it's mean that we have really operated normally, and there is absolutely no sign that it will change.

Okay. On lithium?

Yes, on lithium, so I'll comment first on your price question about a European price emerging. Certainly, there'd be no sign of a European price. I mean we should bear in mind that battery-grade lithium carbonate is effectively another commodity. The price of commodities typically is set globally with local variation driven by factors like transport costs. I think it'd be very unlikely that there would be a European-specific premium, certainly, conversations I have with the OEMs is they'd be very unwilling to pay a European premium. We may see in commodities, in general, in time carbon content premiums emerge associated with the cost of emissions. But I don't see there would be a European premium per se, just about -- based on the fact that it's produced in Europe. I think it's more likely then to assist a project based in Europe. It will be more about what's the availability of government and EU grants to support capital development. I think that's the aspect where you could see a European-specific element rather than a European price per se. Your second question about the transaction. I take it you're referring to the acquisition we announced of tenements in Chile. Is that what you're referring to?

Your recent transaction in the market, the [indiscernible]

On lithium.

Or just general -- the general transaction activity in the market. Certainly. Look, I think in lithium, and I don't want to comment too much about other companies' transactions, there's obviously been a lot of transactions. Particularly back home for me in Australia, I've observed some very high-priced transactions that I sit and look at the multiples, and I say come and look at Centenario. I think -- as I said, it's very difficult to comment. The merger-based transactions, were they are somewhat balanced? I think there won't be so much angst or regret later. But I think the direct acquisition-based transactions, it's been -- it's pretty difficult to justify some of the valuations that we're seeing on those assets, particularly when you look at the role and location of spodumene in the longer-term cost curve. What we're very mindful of is this generation of brine projects emerging, both the existing brine projects that have existed for a long time and this new generation of brine projects such as our project. They generally will, we feel, own the bottom end of the cost curve. And so to be paying such high multiples for what may end up being second, third or fourth quartile cost curve assets, I would struggle with myself, but that's just my observation. You'd have to ask the companies involved.

Are there other questions?

[ George ] from Kepler Cheuvreux. You mentioned lithium as a growth driver, and there is another French player with the same strategy namely Imerys, and they are looking for a partner. So I just want to know if, for you, it's something that is possible to join forces with Imerys?

It's not something that we are considering and that we have considered. We think that we have other great projects, including -- so in France, the one that Geoff described, the geothermal one in Alsace, with Électricité de Strasbourg. So no, it's not something we have considered. We take other questions here or we...

No, I think we have one question. We have, I believe, Jason Fairclough waiting online. So -- Okay. Operator, if you could let Jason in.

Mr. Jason Fairclough from Bank of America.

Look, I've got 2 questions, I guess, both on nickel. First one is on Weda Bay. And I guess my question is how do you think about value over volume in the nickel market. So we already have this Class 2 market as being oversupplied, and you seem to be planning to add volumes equivalent to about 10% of the market. So I guess my question is who makes decisions on producing more in the JV? Is it you? Or is it the Chinese?

So I answer this question first, and then you ask your second question. Well, I think we have explained, I mean, the very specific situation of Weda Bay. Weda Bay is just above an industrial park that today consume 80 million tons. And if we are not providing this, anyway, I mean, there will be other mines around in Halmahera or elsewhere that will open and provide this ore anyway. So -- and you know it's a closed market because you cannot export ore from Indonesia. So today, the demand is there and it's much more competitive for them to take the ore from Weda Bay because there is no transportation cost through, I mean, the barges that are coming. So it's direct ore from -- coming just from upside. So it's very competitive for them. So we have a huge demand from the industrial park. That is at the bottom of our mind. So today, it's value and volume because I would like to also remind you that, today, there is a premium for ore on the formula that is existing in Indonesia because there are some delays in the permitting for some mines or renewal of permitting of some mines in Indonesia. So there is a shortage of ore in Indonesia, and they have to import ore from Philippines, which is lower grade and not as good as the one that we have in Weda Bay. So today, we have a premium for selling ore in -- from within Indonesia, in Indonesia. So honestly, today, there is a value and volumes coming together for Weda Bay in the coming year.

I can add that we have -- is what Christel said. It is the quality of the ore that they value. It means it's quantity and quality and less cost. It's volume and value.

I think, Jason, it's worth bearing in mind, and I commented on this earlier, yes, we're -- absolutely, the mine expands. That's a considerable potential additional nickel units into the market. The dynamics of the ore, the traded laterite ore market are radically changing. So at the same time, we're seeing capacity expand in Indonesia. We're seeing capacity contract in other traditional nickel processing locations, particularly North Asia. So as one market closes and another market opens in -- well, it's the other way around, to be honest, in this instance, that then closes off ore export markets for our competitors' operations in the Philippines, for example, but opens additional ore demand in Indonesia, where essentially that cost of production driven by lower capital cost and lower operating cost and the rapidly improving operating performance is driving that new market to grow in Indonesia effectively partly at the expense of other longer-term nickel producing destinations, particularly in North Asia.

And one last point that you have to keep in mind is that the grades are decreasing everywhere because all the mines in Indonesia have, as all mines, started with the highest grade. So now the grade is decreasing source of the same quantity of ore. You have a lower unit of nickel. And so it's the unit of nickel that you have to take into account in your calculation. And it's something that starts to have a significant impact in Indonesia. Second question, Jason?

Yes. And probably a short answer on this one. It's also on nickel. Would you consider bidding for Glencore's Koniambo asset? That's probably for sale at a good price.

You are kidding? No.

Well, look, joking aside, there's a lot of nickel in New Caledonia, and the problem historically has been the insistence on processing it there and processing it using high-cost local energy. There's got to be a solution here, right? I mean they have the geological endowment.

Should I comment on that, Christel?

Yes, yes.

So Jason, you're absolutely right. And if you look at SLN today, SLN today is actually 2 businesses, 1 mine's ore. A portion of that ore is processed in New Caledonia, and a portion of that ore is exported. And the other aspect of the business is that in-country processing. And our export model is viable and profitable today. So we have to look at this business and recognize, yes, there are high-grade ores in New Caledonia. They're some of the best nickel laterite ores are still to this day in New Caledonia. The trick is how can you participate and value -- valorize that are without being exposed to that structurally higher-cost operating environment of processing in New Caledonia for sure.

And just as a follow-up, do you think this comes to a bit of a head? Like do we get to a point where we have a serious discussion about moving to all the ore exports you won out of New Caledonia? Or that can never happen?

No, I think the sale discussions are starting right now because, as I said, everybody is running out of money. So we need to have the serious discussion, which is good because, at some stage, I mean, the -- either it's a huge financing that should come from the state and the local authorities or it's we'll have to take structural decisions.

I guess there's no other questions online, so maybe one last questions in the room.

Yes. One question on ESG. I have something I don't understand. You have a planned target of 40% decline in CO2 emission, but in the same time, your production is supposed to double in Indonesia. You also increase in other places in the world. So how you match -- and by the way, as you mentioned, the concentration of nickel will go down, which means to consume more, let's say, energy to produce -- to extract the nickel, so how you match this 40%? I understand decline eventually in manganese, alloys in other businesses. But on a purely production of nickel, how can you, with doubling basically production, reducing by 40% your CO2 emissions? I got a problem on that.

Shall I?

Yes, maybe Geoff.

You need to firstly look at the sources of emissions in our portfolio, and 85% of our emissions are actually generated in our pyrometallurgical plants. Mining itself is really about 15% of our emissions today. Now in the mines, whilst there's a lower component, the technology exists today for rapidly further reducing that smaller component. We can start to electrify our trucks. You've seen in our videos. We're not operating large deep mines with very large ultra-class haulage truck fleets and big shovel fleets. We're operating smaller almost road-going track fleets. The technology exists today to start buying electric truck fleets. Our mine in Gabon, for example, is conveyor belts, powered by electricity and smaller trucks and we have hydroelectric power. So we could completely electrify Gabon with technology that exists today. So in the mines themselves, there's -- we can potentially expand ore production and -- but at the same time, reduce the intensity of the emissions associated with that ore production. So the big lever in genuinely reducing our emissions is actually in our pyrometallurgical processes, where we have to talk to the levers that I presented earlier around the replacement of coal and coke in the furnaces with either charcoal or bioreductant, carbon capture and storage, carbon capture and utilization. Now we need to work through the technological and economic feasibility of each of these steps to implement, but that's the pathway to achieve that objective, is primarily through addressing our pyrometallurgical business and not so much in terms of achieving a huge change in our mining business. We don't particularly intend to increase radically production of our pyrometallurgical businesses without also having confidence that we can address that decarbonization journey.

We -- a question from the chat.

Yes, please. So we have some questions from the webcast. First on -- from [ Barney Fontaine ] on manganese. Does ERAMET produce manganese suitable for battery use.

Yes. 10% of our production go to the batteries use.

Then from [ Sylvain Renault ]. So you explained about the geopolitical context in Gabon. What about the legal context also in Indonesia and Argentina?

The legal context?

In terms of relationship, yes. Political...

Political. This is not a political context. We are going through elections in all -- in many of our countries basically. We have the presidential election in Indonesia next February. We have the presidential election in Argentina next week, next weekend. The -- but in Argentina, the mining regulation is at the province level. Everything is regulated at province level. And here, the governor has been reelected already at the first round, and he has not changed. So there is a stability for the Salta province where we are, and we will see what happens with the election. Today, the one that is running ahead is the actual Minister of Economy, so -- and we know him and we have -- we know his position regarding the lithium expansion, which is quite positive. So we'll see. And in Indonesia, it's -- today, the system is quite constrained because there is a lot of delays that they are reinforcing all their process to give permitting. So they have now a lot of delays in giving the permitting. And it's a challenge, by the way, for all the players there because this administration is totally bottleneck. And we think that until the election, we might have some slowdown also in all the administration for our business, but there is -- we don't see anything at risk today in the coming -- the people who are running for the presidential election today, all of them are in favor -- the key ones are in favor of continued expansion in nickel but in a more responsible way, which is positioning us well versus this target.

We have a question regarding CapEx financing. Could you consider new partners other than Tsingshan? And could you imagine new equity partners taking a stake into ERAMET capital?

So I will answer in 2 steps because it's a question in 2 steps. So first concerning a potential partnership, so as it has been described, on the projects for which we have not yet taken the final investment decision, we are for Sonic Bay partnering with BASF for the EV battery recycling. We are partnering with SUEZ. So that's a confirmation that, indeed -- especially because usually in our business, in mining and also in metals. It's a significant investment. So of course, we are open for partnership to limit also the financing burden for the company. But we are not restricting ourselves in terms of partners, and what we are currently doing in these 2 projects is a confirmation. So the answer in a nutshell and very quickly, yes. Now about the potential opening of the capital for the -- for ERAMET itself, so I don't think it's up to us to answer. But clearly, I'm sure you have seen that we have had a very stable shareholding in the last years, and I don't expect it to change in the short term.

Regarding the refinancing of your maturity for 2024 and 2025, what is your agenda? And do you still target to be -- to have an investment-grade ratings?

So I think I will continue because it's a financial question. So on the first topic, so I think, again, we have done a lot to extend the maturity of our debt with a high level of liquidity. So indeed, there is still some debt, which is expiring in '24 but especially in '25 with another bond. So when we issued our bond in May of this year, we have said, and that's something I'm confirming, that we want to become a regular issuer. So if the conditions are there, if the market conditions are there, we'll definitely consider something in the near term. So that's to answer on the first part of the question. And I do remember indeed when we issued also our bond in May that we were saying that we could consider on the long term an -- or we could actually aim for an investment-grade rating. Clearly, I think the strength of our business model, the strength of our balance sheet would actually suggest that we are entitled to it. It's not possible for the long -- for the short term but clearly something on the middle term that we could indeed consider.

And we have a final question regarding, again, battery technology. It seems like many Chinese LFP CAM players are talking about LMFP within next 2 years, either single or mixed with NCM. So what you see of this kind of project?

Well, like I said in my comments earlier, I get out of bed every morning and read about battery chemistries changing. So there's absolutely no doubt battery chemistries will change. And I think as industry and carmakers and users determine there's different characteristics of batteries that are suited for different applications. And I think we're going to see that. The battery mix will respond to pricing, so consumers don't like -- don't want to see the cost of their cars jumping up and down in response to the price of nickel on the LME. But -- so the carmakers will have to adjust chemistries over time to reflect movement in price. So there's going to be a range of factors there. And that's absolutely why we see a consistent theme of lithium through that mix and why we're confident in our lithium investments. As to the emergence of the other technologies, absolutely, we can be certain that battery chemistries will change in time. And our trick and our focus is to have competitive projects in the first quartile of the cost curves that can compete and position. And we obviously look very closely at issues like payback to make sure that if we implement a major project, we can be comfortable of receiving a good payback within a time frame that we can be confident that certain battery chemistries will dominate the market.

Okay. Thank you. So we said it's the final questions. So again, this concludes the Q&A session. Thank you to everybody for joining us. And now it's time for a cocktail with the members of our Executive Committee. And thank you, and thank you to all of you for attending this first Capital Market Day. We're very, very happy, especially me, to have you today. Thank you very much.

We're all lucky, Sandrine. Thank you.