France's Eramet freezes lithium mine project in Argentina
The French company had been due to make a final investment decision on the project after giving initial approval last year for plans to start producing lithium from late 2021.
“The context in Argentina and the wider economic climate do not allow us at the moment to launch with serenity such a project,” Chairman and Chief Executive Christel Bories told reporters after the company reported that it had swung to a net loss in 2019.
Currency controls introduced in Argentina in recent months and uncertainty over debt negotiations with the International Monetary Fund were a key factor in the decision to put the project on hold, she said in a call on the 2019 results.
Bories has targeted battery minerals such as lithium as a way to reduce Eramet’s reliance on the steel industry, which absorbs most of its historical nickel and manganese output.
She said that a pilot factory at its Argentine mine had confirmed the cost-efficiency of Eramet’s deposit and she expects there to be demand for the resource in a growing battery market when conditions for the project are met.
A deterioration in the global economic outlook, including uncertainty over the impact of the coronavirus outbreak in China, has also led the company to scale back a planned expansion of its manganese mining operation in Gabon, Eramet said.
The company now aims to increase output to about 6 million tonnes, having previously targeted 7 million tonnes by 2023, with a new timetable under discussion with Gabon.
Bories said that Eramet has yet to suffer any direct impact from the coronavirus outbreak in China, which has killed more than 2,000 people and led to widespread travel restrictions.
The company gave guidance for 2020 core profit of close to 400 million euros ($431.6 million), excluding potential consequences of the coronavirus crisis.
Its 2019 core profit came in at 630 million euros, down from 843 million euros the previous year, hit by lower metals prices.
It also posted a full-year net loss of 184 million euros, against a 53 million net profit in 2018, reflecting tax payments in Gabon and one-off charges relating to alloys unit Aubert & Duval. It also suspended the annual dividend, having made a payout of 0.60 euros per share for 2018.
Eramet released its results after the market close in Paris on Wednesday, with its shares ending 1.5% down at 37.75 euros.