Eramet Sees Manganese Rally Amid South32's Absence — OPIS

Manganese producer Eramet expects to benefit from a "significant increase" in global prices this year due to the prolonged halt in high-grade exports from South32's Australian mine.

"Given the prolonged halt in exports of high-grade ore from Australia, high-grade manganese ore prices should significantly increase, with a substantial impact on Eramet's financial performance in 2024 (a $1/dmtu price variation on average over the year corresponds to a €255m impact on the Group's adjusted EBITDA)," said Eramet, which operates the world's largest high-grade manganese mine in Gabon.

South32 earlier this month said it would take until January-March 2025 before it can restart manganese ore exports from Australia's 6.0 mt/y Groote Eylandt Mining Company (GEMCO), which was hit by Tropical Cyclone Megan in March.

"GEMCO out of the market is a major issue and will have a major impact," Gabriel Schaub, an Eramet manganese analyst, told OPIS. "On the Eramet side, we will continue to supply the market between 7.0-7.7 mt in 2024. The longer it takes for swing suppliers to come back on the market, the higher prices will go."

The manganese price for 44% CIF Tianjin rose to $4.86/dmtu this week, up from $4.28/dmtu in early February before the cyclone and the highest so far this year. In the first quarter, the price averaged $4.30/dmtu, down 21% from a year ago.

In its first-quarter results out on Thursday, Eramet reported January-March manganese production from its Gabon-based Moanda mine rose 76% on the year to a record 1.9 mt. Sales for the quarter were up 27% on the year to 1.5 mt. Cash costs for its manganese production averaged $2.40/dmtu, down 14% from a year ago. Sea transport costs in Q1 rose 24% on the year to $1.10/dmtu due to a tighter bulk sea freight market.

Eramet sells high grade manganese 44% by blending its Gabon supplies with Assmang's South African material.

The French-based miner expected global demand for manganese ore to decline slightly this year due to the destocking of manganese alloys in China. Port ore inventories in China were estimated at 5.8 mt at the end of March, representing 10 weeks' consumption.

In the first quarter, global manganese ore consumption remained stable at 5.1 mt, while supplies fell by 7% to 4.9 mt due to a significant drop in output from Brazil following the closure of illegal mines. Eramet said South Africa was the only region to post an increase over the quarter at 12%.

For the alloys market, Eramet produced 154,000 t in the first quarter, up 2% from a year ago. Sales amounted to 149,000 t, up 7%. It forecast manganese alloy production at 700,000 t this year.

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April 25, 2024 11:07 ET (15:07 GMT)

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