Earnings call: Eramet weathers tough market with record production

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Earnings call: Eramet weathers tough market with record production
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In its 2023 Annual Results, Eramet highlighted a year marked by difficult market conditions, yet the company managed to set a record in nickel ore production in Indonesia and rebound manganese ore production in Gabon. Despite external challenges, including a downturn in industry prices, Eramet achieved an adjusted EBITDA of €772 million, with significant contributions from its Weda Bay operations.

The company also announced the anticipated start of lithium production in Argentina in summer 2024 and presented its new CSR initiative, "Act for Positive Mining." Eramet's financial health was underscored by a net income group share of €109 million and a positive free cash flow of €78 million.

The company is actively addressing the financial situation of its subsidiary SLN and is in talks with the French state to manage SLN's debt.

Key Takeaways

  • Eramet set a record in nickel ore production and rebounded manganese ore production despite a challenging price environment.
  • Adjusted EBITDA reached €772 million, with Weda Bay contributing 55%.
  • The intrinsic performance was strong due to productivity improvements and cost reductions.
  • Eramet's Phase I lithium project in Argentina is nearing completion, with production set for summer 2024.
  • The company's net income group share was €109 million, and a positive free cash flow of €78 million was reported.
  • Eramet is working with the French state to address the financial situation of its subsidiary SLN.

Company Outlook

  • Eramet anticipates a challenging start to 2024, with sluggish demand and low market prices.
  • Adjusted EBITDA for 2024 is projected to be between €650 million and €800 million.
  • Capital expenditures for 2024 are planned between €700 million and €750 million, focusing on Gabon and lithium projects in Argentina.
  • Eramet is seeking to disconnect its balance sheet from SLN's while remaining an industrial partner.

Bearish Highlights

  • The external impact on EBITDA was negatively affected mainly due to declining prices.
  • SLN's deteriorating financial situation resulted in a negative adjusted EBITDA of €124 million.
  • The company expects no significant recovery in prices in 2024 and will not provide further financing to SLN.

Bullish Highlights

  • Eramet's Weda Bay project saw record-breaking growth in 2023, with a net income contribution of €295 million.
  • The company experienced a 21% reduction in reductants across all products, with freight rates easing, positively impacting the profit and loss statement by around €50 million year-over-year.
  • Manganese ore market expected to see a deficit in 2024, leading to a positive price trend.

Misses

  • The company reported a €122 million negative impact from impairment on SLN assets.
  • Despite improvements, transportation incidents and landslides posed challenges to manganese ore delivery.
  • The market price for nickel dropped by 24%, affecting competitors worldwide, including Eramet and SLN.

Q&A highlights

  • Eramet is committed to the HPL project in Halmahera, which offers a cost-competitive position for nickel production.
  • The company has a strong relationship with new leaders in Indonesia and Argentina, with a business-friendly environment in Argentina.
  • Eramet's financial partner, Tsingshan, is financially stable, and a downgrade to a single B rating would have minimal impact on existing financing.

Eramet (ERA), in the face of a challenging economic climate, has demonstrated resilience through strategic operational performance and financial discipline. The company's commitment to productivity, cost management, and strategic investments, particularly in the lithium sector, positions it to navigate the ongoing market volatility. As Eramet prepares for the start of lithium production in Argentina and continues to optimize its manganese and nickel operations, the company remains focused on maintaining a solid financial foundation and delivering value to its shareholders.

Full transcript - Eramet (ERA) Q4 2023:

Christel Bories: Good morning, good afternoon everyone. And welcome to this presentation of our 2023 Annual Results. Clearly, 2023 has been a very challenging year for our industry and consequently for Eramet. We have been facing a very deteriorated price environment with a huge impact on our financial results. But thanks to the recent repositioning of our portfolio on high quality assets with strong fundamentals and thanks to our continuous improvement of operating performance, we have been able to withstand the downturn and pursue our development projects. We have achieved a new record of production of nickel ore in Indonesia at Weda Bay and thanks to the rebound of our production of manganese ore in Gabon in H2, we managed to compensate for the logistic issues that we had at the beginning of the year. Overall, our intrinsic performance in H2 has been very strong, showing our ability to react quickly to issues. Considering the very challenging environment and the rise of gross investments, we have delivered very solid cash flow and been able to maintain a robust financial structure. In 2024, we will reach another important milestone with the start of our lithium production in Argentina this summer with a full capacity confirmed for mid-2025. And last but not least, 2023 was also marked by the successful conclusion of our first CSR roadmap with major progress. We have just launched the new one, Act for Positive Mining, which is even more ambitious and which will position Eramet as one of the leading players in responsible mining. When we come to figures, in this depressed price environment, we have delivered an adjusted EBITDA of €772 million thanks to the significant contribution of Wed Bay. As you can see on this chart, Wed Bay contribution in 2023 has been €425 million, i.e. 55% of our total adjusted EBITDA. And also thanks to an excellent intrinsic performance of €153 million, especially in the second half of the year. The external impact has been hugely negative with €1.3 billion of negative impact on our EBITDA and the very strong decline in price has not been compensated by the slightly positive evolution of the input cost, mainly the freight. Intrinsic performance, as I said, reached €150 million with €230 million during the second half. After the difficult start of the year, which you remember was affected by the landslide that we had on the railway in Gabon. In addition to the volume increase, the record volume increase in Indonesia plus 85%, and also the rebound of production in Gabon after this major logistic issue, we have also benefited from a significant productivity improvement and cost reduction, which helped to improve the bottom line. So thanks to this intrinsic performance and also thanks to the very good control and optimization of our cash flow, and especially the working capital, we managed to generate a positive cash flow generation of €78 million net of Tsingshan contribution to the Centenario project. This is important as in 2023 we have started the acceleration of our growth CapEx in line with our strategy. We have spent €522 million of CapEx, out of which €250 million of gross CapEx, largely in lithium and in Gabon to sustain our organic growth. The net debt reached €614 million, leading to an adjusted leverage of 0.8. 2023 was also marked by the successful conclusion of our 1st CSR roadmap with major achievements. To name a few safety, the incident rate was divided by 5 over the period of this roadmap, reaching 1.1 at the end of 2023 in a context of a significant increase in activity. And this position us among the very best in our industry. The group's carbon intensity has been reduced by 40% compared to 2018, significantly exceeding the target. The ratio of rehabilitated areas to cleared areas reached 1.2 over the period, significantly exceeding the initial target of above 1. We have strongly invested in community relations. A dedicated organization has been deployed throughout the group with the development of specific standards and tools, which led to the creation of Eramet's Beyond Impact Investment Program. In December, the group published its first human rights report to transparently answer questions from its stakeholders on the integration of fundamental rights into its organization and its activities. Last but not least, the independent audit process of the IRMA standard was launched, with the first independent audit at GCO at the end of the year, and the self-assessment audit at PT Weda Bay, both at the end of the year, and there will be other audits coming in 2024. I remind you that we are committed to have all our sites audited by 2027. 2023 was also the year of the launch of a new CSR roadmap, “Act for Positive Mining” that we have described to you during our last Capital Market Day. I don't want to come back to all the details of this roadmap, but it is based on three ambitions, covering all Eramet's responsibilities and interactions. The first one is taking care of people. The second one is protecting the environment, being a trusted partner for nature. And the third one is transforming our value chain. It is divided into 10 short-term objectives for 2026, so it's quite short-term, to be very pragmatic and force us to deliver on the short-term, and also three long-term objectives for 2035 that are based on best practices in the sector. We strongly believe at Eramet that responsible mining is not only a requirement of everyone, but responsible mining is possible and is part of the solution to support the energy transition. As we talk about energy transition, we are progressing well on our strategic roadmap, and I wanted in this introduction to focus on our lithium projects. The Phase I lithium project in Argentina is progressing well. The plant is now 90% complete, and production is scheduled to start this summer, with nominal capacity expected to be reached by mid-2025. Phase II studies are progressing well, and the permitted process is underway. And we continue to ramp up our nickel mine in Weda Bay, which has, as you know, huge potential. The objective is to reach 40 million to 50 million tonnes of production this year, and 60 million tonnes by 2026, i.e. about 15% of the global nickel market. All this with an extremely competitive cash cost. And finally, we continue to feed our pipeline of long-term projects with concession purchases and farming agreements, particularly in lithium in Chile. And last but not least, in Caledonia, in the context of the very low ferronickel price nowadays, the financial situation of SLN is deteriorating and really becoming critical. Preventive reconciliation [ph] procedure is ongoing, and in February 2024, the state had to grant another loan to SLN for an amount of €60 million. Eramet is obviously involved in the search for solutions to maintain business continuity, but we have also clearly reiterated our former decision not to grant any new financing to SLN. And in this context, we have initiated a process already several weeks ago, and we are now in advanced discussion with the French state to finalize the solution, to neutralize the weight of SLN past and future debt in the group consolidated financial statement. And the details of the solution chosen will be announced in the very next weeks. So now I think we can start with the financial performance, and I will hand over to Nicolas.

Nicolas Carre: Thank you, Christel. And indeed, I will now detail the financial performance. I just want to remind once again that unless specified otherwise, all the financial figures are presented in accordance with IFRS 5, especially for the comparison of 2022. So this being said, as Christel has been mentioning, 2023 has been in a very challenging context, a solid and robust performance for the group, with an adjusted EBITDA reaching €772 million. And I will describe how we got there versus 2022 in a minute. With a net income group share which was at €109 million, so still despite a significant decrease versus 2022, something I want to highlight here is in the very challenging context we have faced in 2023, and also knowing that this number is including an impairment on the assets related to SLN for €122 million, we have been able to deliver a positive net income despite all these challenges, which says a lot about the strengths and the quality of the reposition portfolio of the company. And that's something we'll continue to highlight in the rest of the presentation. The other thing also I would like to highlight, the net debt reaches €614 million, an increase versus last year, but a maintained increase, and I will describe also later on how we got there, reaching an adjusted leverage of 0.8, which remains under the 1x mark that we have defined as the average target through the cycle. So how did we deliver this €772 million of adjusted EBITDA? Clearly, Christel said it in her introduction, it's been significantly impacted, and significant is even another statement, by very challenging external factors through the year. As you can see, all-in-all, it's representing a negative €1.3 billion, including, and the biggest impact by far is, and it's even more than that actually, it's on the selling price effect, which is reaching for the year €1.4 billion. And this is coming, as also Christel has been mentioning, from almost all the products, with significant examples that we'll describe later on, but a key one is for example for manganese alloys, the prices have been reduced in average for the product by more than 40%, and for nickel it was in the range of 25%. So this is what led to this huge impact, knowing that it has been partially compensated, and we'll also describe later on how it was built. It was partially compensated by lower input cost, but to a much lower extent, because here, the positive impact, if we add up freight input cost and inflation, was limited to around €100 million. So this is clearly a small compensation versus the huge negative evolution of the selling prices. And that's why it was really important to deliver an intrinsic performance as we did in 2003, and I think it's really important to highlight when we met at the end of July to talk about the H1 numbers, and also Christel was reminding it, we were in a situation due to the one-off logistic incidents we faced in Gabon, to have a negative performance at that time of €77 million. So being with 153 at the end of the year for the full year means that we delivered in one single semester €230 million, and implementing everything we've said actually when we met in July, in terms of productivity, in terms of fixed cost management, and also in terms of volume improvement in all the areas. So that's why, all-in-all, as we've said, clearly a challenging year in terms of economic context, but very solid performance, especially thanks to the recovery we have handled [ph] in terms of internal and operational performance in the second semester. So with that, it's leading, as I mentioned before, to a net income group share of €109 million, and as I stated earlier, it's very important to highlight that we have generated this performance despite the impairment we have taken on the SLN assets. As you can see, at 100%, it's €218 million, and if we take the group share of it, which is what, at the end of the day, lies into the €109 million, so this is €122 million negative coming from this impairment. And it's also highlighting there what is the outstanding contribution of Weda Bay, so it's an outstanding contribution in terms of EBITDA, as Christel was highlighting earlier, but it's also an outstanding contribution in terms of net income. As you can see, it's €295 million for the 38.7% we own in this operation. Now moving to the cash items. So the first thing we'd like to highlight, and which also we have described before, is the fact that in 2023, as we said before, we were focusing more than the previous years, and it's a start, in terms of gross CapEx. Part of it is coming from the manganese ore, especially to ensure that we can optimize our operations in Moanda, especially on the new plateau of Okouma, and also a big piece, which is to ensure that we deliver the Transgabonese Renovation Programme, which is very important, and we'll describe later on why, to ensure that we can deliver and we can transport the amazing growth we have generated in terms of production in this operation in the past years. So that's one piece. The other piece is concerning lithium, where, as also we have already stated, we have continued the Phase I of the project Centenario in Argentina to start the production in 2024, and also we have accelerated making some early CapEx already on the Phase II tranche, which has started in 2023, and that will clearly continue in 2024. We'll come back to that later on. And just for the sake of clarity, the gap, or let's say the evolution between the €920 million you will see in our line CapEx, and you can see on this chart, and the piece which is purely economical, which is actually the CapEx, which is true cash out, and also the portion which is financed by Eramet, is of €522 million, in line with the guidance we have actually provided earlier, and the gap between the two numbers is, for a portion of it, the financing by Tsingshan. As you can see here, it is €250 million. And the other piece, which is also to be restated, and that we have restated in this more economical view, is the devaluation of the Argentinian peso for €148 million, which finds actually a counterpart, a positive counterpart, in the rest of the free cash flow. That's why we wanted to provide you this clear picture. So the number to retain in mind is the €522 million you see on the right-hand side of the chart. As Christel alluded to earlier, we have also very well managed our working capital through the year, and especially at the end of the year. So a portion of the evolution is coming from the lower selling prices, but honestly not to the biggest extent, because when we started the year 2023, we were already based at the end of 2022 on lower prices, so the comparison end of the year is not that dramatic. We have had clearly a very strong management of our working capital in two areas. One is inventory, I will give one example. We finished the year in terms of finished goods inventory for Morgan & Deloitte below 90,000 tonnes, which is the first time ever. So this is a very strong management, and ensuring that we turn into cash what we can to deliver cash flow to our shareholders. Second example I wanted to highlight is receivable, for which we have also significantly reduced. As you can see here, it's moving down from €308 to €221. This piece, so a small portion was led by the prices, a bigger portion was actually led by the fact that we got very early payments from all our customers, and that was a strong work we have achieved and will continue to do to optimize our working capital. So with all of that, with all the items I've just described, what was our cash flow? Christel has mentioned a number in her introduction. What we call the free cash flow, the economic view, was positive by €78 million. And why do we talk about economic cash flow? It's to take into account this capital injections from Tsingshan into the Eramine project. The €321 million you see there, which don't belong to the accounting free cash flow, but which from a pure economic standpoint is to be considered. So that's showing what? That’s showing that in the year on which we have had a very challenging economic context. In the year on which we wanted [ph] and that was part of the capital allocation policy we have set for two years now. We wanted to continue to invest in very profitable growth projects. And also in the year on which we were to handle some key divestments for the strategy of the company, we have been able to deliver a positive free cash flow of €78 million. One thing I would like to highlight also here is the fact that with all of these numbers, we move to a debt of €614 million. Christel has been mentioning SLN earlier. SLN of this €614 million number is representing the portion of the French state debt, €260 million. This means that 40% of this number, of the €614 million, comes from the debt of SLN versus the French state. Hence the work we are currently performing to remove the impact of this debt out of our consolidated financial statement, as it has been mentioned before. So the debt, not only we have been very active in managing operations, ensuring delivering intrinsic performance, ensuring that we could also deliver strong cash flow with working capital management, discipline CapEx policy, and optimizing all the areas of the cash flow. We have also been very active in managing the debt in 2023 by issuing a sustainably linked bond in May of 2023, by getting the prepayment on the lithium products with Glencore (OTC: GLNCY ), as we announced in July. Also extending our term loan at the very beginning of the year. So all of that was enabling us to extend our maturity by close to a year. Now the maturity of our gross debt is close to three years at the end of the year. So it was close to two years at the end of 2022. So that's also something which is to be highlighted because this demonstrates once again the robustness that we have created in the last years. And also the other point I wanted to highlight in terms of robustness is the level of liquidity we are able to demonstrate. Because in terms of pure cash, as you can see on the right hand side, we have €1.6 billion at the end of the year, which is more or less in line with what we had at the end of 2022. But on top of that, we have another €1.4 billion, which is coming from lines which are undrawn at the end of 2023. The biggest portion of that is the same as the end of 2022, which is the RCF for €935 million. The rest, the €400 million or €450 million on top of it, is coming from the biggest portion of the prepayment with Glencore, which is not drawn yet at the end of 2023. It represents $320 million dollars. And the second portion is related to the term loan for which there was €145 million still to be drawn at the end of the year. With that, I want and we want to confirm our cash allocation policy, which remains the same as for the past two years. The first pillar is to ensure that we keep an adjusted leverage below one on average through the cycle. We are this mark at the end of 2023. Concerning the second one is accelerating the gross CapEx. And so we have done so, as you can see, in 2023 and we'll talk about 24 in a minute. But that's clearly coming and we want to ensure that we deliver this gross project, something we have not always done in the past as a company and something we want to do and we will do in the coming years. And we'll come back to that. And the third piece, which is also very important and shows a confidence about our strategy and shows a confidence about our perspectives, despite the challenging market environment, is to reward our shareholders. And that's why we have decided to propose for the vote of the General Assembly in May a dividend of €1.5 per share. So now I will give you some more details about the operational performance in 2023. I've already and I won't spend too much time there because we have already mentioned it. Clearly, 2023 was a very depressed pricing environment in all the markets with a continued decline through the year. So this means that H2 was even worse than H1, which was already a significant gap versus H1 of 2022. And to give some key examples, I mentioned there before, for manganese alloys, minus 43% in average for all the products. Manganese ore, minus 20% through the year. And ferronickel, and here I really want to remind once again that since the issue on LME, which happened at the beginning of 2022, we don't have, and it's not only by the way, SLN and Eramet, it's the situation for all the players on ferronickel. There is no product, no town, which is sold under an LME reference. So the line to be looked at in terms of trend is the evolution of the NPI SMM 8-12% index, which is the orange line. And as you can see, this one has been moving down by 24% through the year and reaching a level which is close to $11,000 per tonne at the end of 2023. As I said before, the input costs have been easing, which at least is a positive thing. Also, we've said it, H1 was not showing a positive trend because of the lag between the time we purchased and the time we consumed. We said that it will be the case in the second half, and that has been the case. So as you can see, the main evolution was on the reductants, with an overall reduction year over year of 21%. And it was on all the products. I want to keep in mind also, or I want to highlight the fact that the evolution of the mix of our reductants has changed. The mix of our reductants has changed in 2022 following the war in Ukraine. So we purchased before that part of our carbon products out of Russia, and we moved immediately to ultra-low phosphor coke coming from other countries, leading to a significant change in the mix. It's higher cost by definition, but it was also an evolution we had to do, and which was very well handled by the group. The freight rates have been also easing through the year, and it was following an upward trend in 2021 and 2022. So that was also positively impacting our cost by around 28, between 28% and 40%, as you can see on the screen. And this was leading to this positive impact of around €50 million year-over-year in the P&L. Again, this is a positive impact, but very, very, very partially compensating the huge drop we faced in terms of selling prices. So the other piece, and this is a piece we have under our control. And really, I want to spend a minute there, because we've said it at the end of H1 results. And that's why we are very pleased to present and to announce today the fact that we have delivered what we are committing, and we are even over-delivering, honestly, in H2. Thanks to a lot of items. As I said before, productivity, the optimization of production and OE, and also the reduction of fixed costs. And if I want to highlight a few items, as you can see, we have generated €130 million of productivity gains overall. Two key examples out of that. If I start with Moanda, with Manganese ore production, we have improved our grade overall by 1.3 points. And this was leading for one single semester to a positive impact of €30 million. I think I was providing this example when we presented our H1 results. And I'm really happy to say that we have been able to deliver this performance. We did also a very significant performance at Weda Bay mine, not only volume, but also in terms of grade improvement. By improving the overall grade by 0.2 points, we have actually delivered €70 million positive performance. To be clear, the €70 million performance is the impact to Eramet, meaning that to Eramet, I just did EBITDA. So it is at our 38.7 share. So you see how amazing and how significant this action has been. We have and will continue to do to make a tight CapEx monitoring, I've mentioned it. And I also mentioned the working capital optimization, that's something we'll continue to do. All-in-all, we are continuing to develop a culture of operational excellence. So we've seen and I was trying to demonstrate all the results we have already achieved in H2 of 2023. And we'll continue to do that. We have developed a program, which is named Eramet production system to be able to deliver that on a regular basis and to accelerate on this. So more to come for 2024. If I move to the overall KPIs, operational KPIs for 2023, a few things I would like to highlight. The first one is the fact that for Manganese ore, despite the significant challenge we faced in the beginning of 2023 with the landslide and then the incident on the railway in April, we have been able to deliver a production in 2023 very close to the one of 2022. And I don't want to understate this performance because the impact of the incidents at the beginning of the year for the production also because we are not able to produce, given the fact that the fuel was not going to the mine anymore. We have lost between 600 and 800,000 tonnes just at the beginning of the year due to this incident. So that's why getting at the end of the year to a 2% lower number versus 2022 is clearly an outstanding performance. Transportation was not following exactly the same trend. Why? Because we had to also cope with the fact that we need still to invest and to maintain the railway. So we are not able to fully deliver all this production, but we are continuing to invest and to improve the railway. That's why we invested in 2023. We'll continue, as we said during our CMD, to do so in 2024 and the coming years to ensure that we can match the capacity of transportation with what we are already capable to do in terms of production. If we take, by the way, the last quarter of 2023, we are already in terms of production on a pace which will be very close to the 10 million tonnes we have been communicating concerning the long-term target. This was a positive period in terms of production, of operational production, but I think it's important to highlight that. I will not describe much more of this because I will go into the details business by business, but one thing still I would like to highlight is for Weda Bay, Christel said it in her introduction, but the 33.2 million tonnes we delivered in 2023 is still an 85% increase versus 2022. 2022 was already a record year by definition, but also Weda Bay was already the biggest nickel mine in the world. This means that delivering an 85% growth tells a lot about the capacity and the performance of this mine, and there is more to come in 2024. We'll come back to that when we talk about the guidance for the year to come. Manganese. That's something we have already said since the beginning of the presentation. We're suffering of two things. The first piece is the evolution of the prices, very significant especially for alloys, but also suffering at the beginning of the year of the non-recurring logistic incidents we faced on the railway. That's we’ve to impact. Despite these two events, we have been able to generate for the two activities belonging to Manganese an EBITDA of close to €500 million. The reason why the free cash flow is negative is as we said before, we are investing still especially on the railway. That's why overall this cash flow is negative and is primarily coming from the CapEx. Also, it was to ensure that the outstanding cash flow which was generated in 2022 was reattributing [ph] the shareholders of these companies and the main one being by definition the group. That's about the Manganese financial performance. Just back to the free cash flow, as you can see if we exclude the gross CapEx that was done in 2023, it was still a positive free cash flow by €145 million. I think it's really important to highlight. Concerning these operations, we keep also and that's the theme for all activities and Christel mentioned the importance of our new CSR roadmap. We have developed a lot of activities in Gabon with 60,000 beneficiaries of these activities. Also, we are accelerating our projects on the Norwegian Manganese alloys plants to reduce our carbon emissions with the two projects which are described here which is clearly the trend that the steel market is following. Talking about the steel market, overall worldwide a pretty stable market evolution close to being very the same. With China being itself stable and India showing a continued strong growth at plus 12% compensating the decline we have clearly seen in Europe. That's the overall evolution of the steel market. In terms of ore production and supply, on our side we have seen a slight decline by 2%. In terms of potential transportation, a bit more than that. It's been compensated by one of increase in Brazil which won't occur again. That's why I think it's important to highlight that even if 23% was accordingly in a very slight surplus, we anticipate 24% to be the other way around. Because we have started to see what has been happening regularly in the past. With the level of price reached at the end of 23%, some of our competitors, especially in South Africa, are stopping their production. We anticipate the market balance to be more in a deficit mode in 24% which should show confidence about the expected evolution of the price. Knowing that it will likely more happen in the back half of the year, more than at the beginning, even if we started to see already a positive trend in terms of pricing which is something to be highlighted. As you can see, as of today, the index price is at $4.3 per dmtu. It was very close to $4 at the end of 2023. So we've said it before, I won't repeat it too much. But our production volumes outstanding performance in the second half. Comparing to the second half of 2022, it's plus 22% which is a huge performance. And I say especially it was a very strong performance in Q4. The transported volumes were in line in the second half versus what it was in the second half of 2022. So it's not a bad performance, clearly not. But it was not enabling us to recover the gap which was created in the first half. That was leading to this overall decline between the two years. And as I said, the investments and the maintenance plan we have within our operations in Gabon should and will enable us to recover and to deliver the same level of volumes as the one we are anticipating in terms of production. And that's why we have provided, as you can see here, a guidance between 7 and 7.7 million tonnes for the year 2024. In terms of cash cost, that's highlighting the focus we have done in terms of productivity and fixed cost that I've been mentioning before. Despite the negative evolution of volumes because of the beginning of the year issues. Despite the inflation, despite the FX rate evolution we have been able to reduce the cash cost year-over-year thanks to this productivity and fixed cost reaching almost $0.20 per dmtu. I said before, this is not over in terms of potential to improve our cost management and productivity within this operation. So that's something we'll continue to work on. Manganese Alloys, something I would like to highlight is we are, given the evolution of prices, focusing clearly more than ever on our value of our volume strategy. So that's also why we have seen an overall reduction of the volumes versus 2022. We are producing when we can make money. So if we don't make money, we are slightly reducing the power of our furnaces to also reduce our variable cost which is by definition critical, as we've said in the previous periods, when we are in a high input and a high electricity cost environment. So that's something we are still committing to do. We don't expect a huge recovery in 2024 of the prices. So that's why this strategy of value of our volume remains very important. The other piece I want to highlight for 2023 versus 2022, we have relined two furnaces. It was planned and that's also more or less in line with what we communicated to the market at the beginning of last year. So that was also impacting the overall production. But again, something we were also controlling to ensure that when we are producing, it's to generate margin and value for the company. Nickel, clearly, as I've said already a few times, a story of two tales. So one side, which is a high success story, is Wed Bay. I've mentioned the key numbers already. So I won't describe them again, but it's showing here how big and how significant it is. And the other one is SLN. Unfortunately, this one is negative. And I will show afterwards it's not negative because of the operational performance, which actually has been solid in 2023. But it's because of the market environment due to this minus 24% prices I've mentioned earlier. And that's leading to this significant negative adjusted EBITDA of €124 million in 2023. And more or less the same cash flow, which by the way, because still there are some necessary investments. This means that here also the working capital has been very well managed because this operation has generated the same amount of cash flow consumption that the negative EBITDA. So that's why we are working now with the French state to remove the negative impact of the debt of SLN out of our consolidated financial statements, for which we'll announce in the very coming weeks the final solution on this topic. But we are in very advanced discussions. That's why we communicated about it yesterday. And the other piece we are confirming, and I think it's really important to stress this morning, is that we won't put any more financing within this entity. And that's why, accordingly, the French state has put this additional loan of 60 million euros in February that Christel was mentioning earlier. We also are working on this activity on the CSR items as everywhere. And as you can see, speeding up on the rehabilitation, for example. So that's, as I said before, something which remains core for all our activities. In terms of market, the Chinese stainless steel production has actually been pretty solid in 2023, so with a growth of 10%, which was enabling an overall growth of the worldwide market by 10%. And also, clearly, a huge or significant growth on the batteries and nickel class 1 demand, with a plus 15%. Unfortunately, due to the overall evolution of the nickel market, with the significant increase of the NPI production out of Indonesia, with a much lower cost of production, it was leading to a significant drop in the market price that I was already mentioning before, with a minus 24% on the NPI index year-over-year. And this was impacting us, of course, but I'm sure that you have seen that almost all competitors out of Indonesia are suffering currently. That's something which has been, for example, impacting Australia. BHP has announced that they were suffering in their operations. They have booked on their side an impairment of $2.5 billion. So it's just an example to highlight that it's not an SLN or Eramet issue. It's clearly a market shift, which is unfortunately expected to last, likely to a lower extent than the prices we have seen at the end of 2023, but still to last in the coming period. So, Wed Bay, another record year, I've said it. One thing I would like to highlight here is when I said that we will continue to grow, our target that we have communicated in our press release yesterday is to be between 40 and 50 million tonnes in 2024. So that's another increase of between 15% and 40%. So the range is pretty wide, but I think it's showing that the outstanding quality of this deposit is the way to the 60 million tonnes that we are disclosing in our CMD in November. So the potential is huge. And what we'll target for 2024 is, in terms of mix, very close to the one we are also announcing during the CMD, once a limonite for the feed of the growing HPAL plants and HPAL demand, and two thirds of saprolite. It's really also important to know because the mix, by definition, is not as accurate for limonite as for saprolite. This being said, it remains a very positive margin, given the quality of our operations. SLN, as I said before, so not an operational issue. And I really here, I would like to highlight the fact that if we compare to 2022, it was an increase by over 10% in terms of ferronickel production. So moving from 41 to 45, by the way, 21 was below 40. So this means that this is back to a regular standard in terms of performance, with also consistent electricity supply from the temporary offshore power plant. So that's a very positive performance, unfortunately, leading, given the still very high input cost we face, and especially the cost of fuel, which has remained high versus 2022. We still have a cash cost, which is at $8.3 per pound. So this means that, unfortunately, due to this high electricity cost and sometimes the complexity to access to some of our mining operations, leading to this high cash cost in the current market environment, this makes the very challenging financial situation that this entity is currently facing. I will end on our Mineral Sands view. As a reminder, we have divested our operations in Norway, our smelter in Norway, in September, leading to a positive €214 million net proceeds to the group. And it was, as you can see, the enterprise value was 12 times the 2022 EBITDA for this operation. So it was for us the possibility to deliver to our shareholders immediately the value of this operation, thanks to the offer we have received from INEOS. So that's why we took it. Concerning GCO, here we have delivered still a solid EBITDA performance of €105 million, yet in a reduction versus 2022 for the same reasons as the one for the other products, meaning the market environment, which is the biggest impact. Also, due to the fact that we have not been able to deliver the same performance in terms of OEE and productivity as the one this operation was able to deliver in the past, and that's something we have been working very actively, and you will see later on that we are planning to be back on the standard performance for the coming periods. And in terms of CSR, I would like to stress one very important topic. We have performed in at GCO our first independent audit under IRMA, and as we have already communicated a few times, IRMA, we wanted to be our standard for all our operations, and that's why this first audit was very important and is showing the way and showing the path for all our operations. Last, so market, nothing very much to say, just showing the trend, which again is similar to the other products, and we anticipate that 2024 will show still a slight decline, that's our anticipation. I want to, on this one, to focus more on the production of GCO, because as I said before, 2023 was a challenging year on top of the market evolution, but 2024 is expected to go back to a high level of performance with a level expected above 800,000 tonnes of HMC, which means that it will be a growth of 30% or more versus what we have delivered in 2023. So, and it's even more than what we delivered in 2022. And we are confident, because once again, we have worked a lot to improve the OE, which was not as efficient as possible, as it could have been in the past in 2023. And also we are now entering into higher-grade areas with a dredge 2023, and we've said it before, we are crossing an area which was with a much lower grade. Now we are down with this area, so we have a much more positive outlook in front of us, and I'm going to be confident with the target we are showing here. So I'm done with this financial and operational description of our results and on the outlook, and I hand it over to Christel for the conclusion.

Christel Bories: Thank you, Nicolas. Just before we go to the conclusion and the outlook for 2024, I would like to say some words on how we progress on our strategic roadmap. I won't go into a lot of details, because we had our CMD only a few months ago, and most of it was described there. You know very well now our strategy, tailored for the new era of metals. It is based on two pillars, clearly aligned with global macro trends, with the economic development of the world, and also the energy transition as a growth booster. So this strategy is supported by a big ambition in terms of CSR, as we have described. So we are progressing well on this strategic roadmap, and especially on our different projects in energy transition, lithium, nickel for battery and recycling. But clearly 2024 for us will be the year of lithium, and I would like to focus on that. We will start in a few months now, our first lithium plants in Argentina, based on our very efficient DLE technology. The plant, as I said, is now 90% complete. It will start during summer, so almost on time and on budget. We should produce 5,000 to 7,000 tonnes of lithium carbonate in 2024, and the full ramp-up at 24,000 tonnes of capacity is expected by mid-2025. So once this nominal capacity will be achieved, the expected annual EBITDA should be between $200 million and $300 million, depending on the long-term prices. And this very good EBITDA is based on an expected cash cost, which is definitely in the first quartile of the cash cost curve, and is expected around $4.5 to $5,000 per tonne. So as you can see on this chart, and I think the first time we showed the projected cost position of Centenario on the cash cost curve, and as you can see we are really in the very first quartile of the cash cost curve. We expect then strong resilience of the business through the cycle, and as you can see with the chart, the long-term price forecast according to the market consensus is between $15,000 and $20,000 per tonne of carbonate. The spot price today is around $13,000. So you see that with the spot price of today and the current long-term price expectation, we are still making a big margin. And even if we take the lowest recorded price since 2017, which was at the time of the COVID, and it showed here at the bottom, we would have still been making money with this level of price. So as you can see, a very resilient business, and we are expecting a lot from it. So now coming to the conclusion and the outlook for 2024, clearly the start of 2024 remains challenging from a macroeconomic point of view. The demand remains sluggish in most of our markets, and the price remains low. The economic outlook for our commodity, we think, will remain depressed until we see a clear rebound in the Chinese economy. Nevertheless, as was mentioned by Nicolas, I think it seems that the bottom has been hit, and we are seeing right now some small signs of recovery. We see some suppliers clearly hit by the low prices, shutting down capacity or reducing production, which is helping the price to recover a bit. But of course, we are far from being in good territories in terms of pricing, and we have to remain cautious. On the other side, reductant and energy costs are also declining, are still at a rather high level compared to the past. And because of the issues in the Red Sea, the freight price in 2024 is expected to be at higher levels than in 2023. So altogether, in this difficult context at the beginning of the year, it's more than ever crucial to focus on our operational performance, and we are working on optimizing our production according to the market needs and reducing our costs, and all the companies really focus on that nowadays. And I would say that the main challenges of the year will be, first, to return to a good level of transport in Gabon, after a year marked by the landslide. As you know, we have de-bottlenecked the production at the mine in Gabon, so we are not restricted in terms of production, but the bottleneck is the transport. There is still a lot to do in terms of maintenance and renovation on the railway, and that's why we remain cautious on how much we can transport and ship in 2024. We will continue the exceptional ramp-up of Weda Bay, and it is important, as you can see, Weda Bay is highly cost competitive and generates quite a lot of EBITDA and cash. And importantly, we are finalizing the solution to neutralize the impact of SLN debt in our accounts. So, as targets for 2024, the volume targets for the year are between 7 and 7.7 million tonnes of manganese ore transported in Gabon, because of recovery and improvement in the transport capacity. We put a range, because we know that, again, according to the performance of the railway and the market needs, we should be in that range. We also target between 40 and 50 million tonnes of nickel ore market at Weda Bay. And this range is because it's depending on the timing of the authorization. As you know, we need each time authorization from the Indonesian government in order to be able to increase our production. And we target, as I said, between 5 and 7,000 tonnes of lithium carbonate in Centenario from our new plant in Argentina. For illustrative purposes, it's a change, it's not a guidance of EBITDA, it's an illustrative calculation based on the consensus price average for the year, that you can see here, and the range of volumes that we have given above. So the consensus right now, and as you know, it moves all the time, but right now the consensus for manganese ore is $4.6 per day dmtu. For nickel LME, because there is no consensus on SMM, it's $17,000 per tonne. And for lithium carbonate, it's $16,000 per tonne. With this consensus forecast and the range of volumes that is described above, we expect an adjusted EBITDA range between €650 million to €800 million. We expect also the financial performance in H1 to be significantly lower than in H2 for two reasons. Because you know that we have a more favourable seasonality in our production in H2, it's always true. But also we expect market price to be higher in H2 than in H1, knowing that the very beginning of the year was very low. And also very important, in line with our strategic roadmap, and in order to support the growth of our activities and prepare the future, we continue to invest massively in the group, and the CapEx is estimated to be between €700 million and €750 million in 2024, including current CapEx of close to €250 million, and growth CapEx reaching €500 million. So this is mainly for continuing to invest in Gabon, especially on the railway, and also with around €250 million to develop the lithium projects. So phase one, but also the start of phase two in Argentina. So just to finish, I think that in 2023 the group has demonstrated its ability to withstand the downturns and pursue its development project despite the ups and downs of the economic environment, and it was not the case for Eramet before. So even in a very depressed overall pricing and economic environment, we have been able to deliver this kind of result, and despite also an impairment on SLN, a positive net result. This is clearly thanks to the successful repositioning that we have operated during the last years, and we have now a much stronger portfolio of high-quality mining assets, and we are addressing right now the last part of our historical problematic assets with SLN. And this is also thanks to the commitment of the team and our constant focus on performance that is improving year-over-year. So we are convinced that we are now perfectly positioned to further unlock value and confidently pursuing our development strategy in the new era of metals. Thank you very much for your attention, and now Nicolas and I and the rest of the team here, we are ready to answer your questions.

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

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

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

Julien Onillon: Hi, Julien Onillon from Stifel. Just to come back on SLN, sorry for that, but you are targeting to deconsolidate the debt. Are you targeting also to deconsolidate the losses?

Christel Bories: It will depend on the solution.

Julien Onillon: Okay, because normally if you deconsolidate, it means you deconsolidate the company and therefore revenues and losses too. And it's a big amount of losses. It can be different.

Christel Bories: No, no, yes, we talk about solutions with an S, so we are working on several solutions, not that many, but there are different solutions that can lead to what you said.

Julien Onillon: Just technically, how can you deconsolidate the debt without deconsolidating the...

Nicolas Carre: I'm sorry, we didn't use the term deconsolidate. We say that we remove the burden of the SLN debt out of the financial debt, net financial debt of the group. So just another mean to remove that is not only to deconsolidate, it is also potentially to have the financing of SLN not being a financial debt. So it's just to answer your question.

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

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

Julien Onillon: And what about BASF is saying about it?

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

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

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

Julien Onillon: A few questions on nickel also. What is your hypothesis for nickel ore price for 2024, considering the fact that you are expecting 17,000 for LME? But LME, we don't know how. It's only for class one right now. So it's not helping to give us...

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

Julien Onillon: With the increase in production in Weda Bay, do you expect a decrease in your cash costs there for the ore, not for the NPR?

Christel Bories: We expect a reduction of our cash?

Julien Onillon: Yes, cash costs.

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

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

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

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

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

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

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

Fabien Le Disert: Okay, thank you.

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

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

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

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

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

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

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

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

Unidentified Analyst: Thank you. We have no more questions.

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

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