Eramet's Production and sales of manganese ore in Q3 CY20 offsets the pandemic impact of Q2

Eramet is the second-largest producer of high-grade manganese ore in the world. Eramet operates the Moanda mine in Gabon and around the world has various plants for processing the ore. Eramet released their Q3 CY20 results, here are some key takeaways:

Manganese ore production increased by 15% in Q3 CY20
In Gabon, Camilog's manganese ore production was up by 15% to 1.5 mn t in Q3 CY20 and 4.3 mn t Jan-Sep'20. Meanwhile, transported ore volumes also increased by 24% CPLY in Q3 CY20. The mine's good performance reflects operational improvement achieved. Despite a very volatile economic environment, we achieved a remarkable third-quarter performance in terms of mining production, commented the CEO - Christel Bories (Eramet).
Quarterly production at manganese alloys plants continued to adapt to demand in a market affected by the sharp slowdown in steel production in Europe and the United States. This drove a -15% drop in production in Q3 2020 CPLY.

Sales volume increased by 65% CPLY
Driven by the rebound in the Chinese steel production in a disrupted market, the manganese ore sales picked up by 64% CPLY. Meanwhile, the q-o-q increase was 5% in Q3 CY20. Better logistics with lower internal sales (to the Group's manganese alloys plants), led to an increase in external sales volumes by 64%, ending at 1.5mn t in Q3 20 and 53% increase in Jan-Sep'20 reaching to 3.9mn t of sales. Meanwhile, due to dull demand from the steel sector, manganese alloys sales suffered by 7% in Q3 CY20 as against last year's production was up by 15% to 1.5 mn t in Q3 CY20 (4.3 mn t Jan-Sep'20).

Manganese ore prices showed a hefty decline by 26% in Q3 CY20 CPLY
The average CIF China 44% manganese ore price stood at $4.21/dmtu in Q3 CY20, down by 26%, from Q3 2019 ($5.7/dmtu). In Q3 2020, manganese alloy prices in Europe recorded a marked decline, particularly for refined alloys (medium-carbon ferromanganese at approximately EUR1,306/t, down by 12% from Q3 CY19), and standard alloys (silicomanganese at approximately EUR863/t, which is 10% drop from Q3 CY 19).

Outlook:
Eramet has raised its Manganese ore production target for CY20 to 5.8 mn t which is 22% higher y-o-y. It also stated that opening of new mining plateau in Gabon in October, enabling gradual ramp-up in production towards a capacity of 7 mn t in manganese ore by 2022. Factoring in the operational improvements, in particular the increased mining production, EBITDA is expected to strongly improve in the second half of 2020 compared to the first half. Nevertheless, it will be significantly lower on a full-year basis.