PARIS, Oct 16 (Reuters) - Eramet shares plunged nearly 19% on Wednesday after the French firm sharply cut 2024 production targets for its manganese mine in Gabon and nickel mine in Indonesia, the group's two biggest mining operations.
Eramet announced the lowered forecasts late on Tuesday, citing a downturn in the manganese market and a smaller-than-expected permit allowance in Indonesia.
The Moanda mine in Gabon and the Weda Bay mine in Indonesia have driven Eramet's growth as its historic nickel operation in New Caledonia has been drained by losses and social unrest.
Analysts at ODDO BHF called the news "another setback" for Eramet after it cut 2024 targets for ore output in Gabon and Indonesia in July while trimming short-term targets for a new lithium mine in Argentina.
Eramet attributed the deterioration in manganese to falling Chinese output of carbon steel - which requires manganese in its production - and an influx of low-grade ore following a price surge earlier this year.
Eramet had raised its full-year core profit guidance in July in the wake of a price jump.
Shares sank 16.1% to 55.35 euros in Paris trading, after earlier dropping by as much as 18.8% to a three-year low of 53.55 euros.
The company has shifted in recent years towards minerals needed for electric vehicle batteries, notably by developing a lithium deposit in Argentina with Chinese group Tsingshan.
But the group remained largely tied to the steel sector, Bank of America analysts said in a note, adding that "this means that Eramet is subject to the broad macro moves in Chinese steel for manganese and to Indonesian policy decisions for nickel."
Concerns about slowing economic growth in China, despite stimulus measures announced by Beijing, have weighed on metals and wider commodity markets this year.
In Indonesia, where Eramet operates Weda Bay with Tsingshan and is looking to invest in processing nickel for batteries, delays to mining quota approvals have tightened ore supply.
However, Eramet said a related increase in ore prices in Indonesia should mainly offset the financial impact of its reduced production outlook for Weda Bay.
Reporting by Benoit Van Overstraeten, Olivier Cherfan and Gus Trompiz; Editing by Sudip Kar-Gupta and Bernadette Baum
Source: Reuters