On Monday, BofA announced that it was maintaining its buy recommendation with a target price of €64 for Eramet shares following a visit to several lithium mines in Argentina, including the Centenario project recently launched by the French group.
In a research note, the broker refers to an "impressive" and "leading" asset, wholly owned by the company, with production expected to reach 24 kt-LCE per year before eventually reaching a capacity of 75 kt-LCE.
While the broker acknowledges that lithium remains a relatively limited market at present (around 1.5 million tons, or approximately $15-20 billion) compared to copper ($260 billion) or iron ore ($200 billion), BofA highlights rapidly growing demand (+20 to 30% per year), driven by the development of the electric vehicle market and, more recently, BESS energy storage technologies.
BofA therefore believes that Eramet offers strong potential for value creation ("deep value") at a time when, in its view, the company could be approaching an inflection point in terms of cash flow generation.
Eramet, a global mining and metallurgical group, is a key player in the extraction and valorisation of metals (manganese, nickel, mineral sands) and the elaboration and transformation of alloys with a high added value (high-speed steels, high-performance steels, superalloys, aluminium and titanium alloys).
The group supports the energy transition by developing activities with high growth potential. These include lithium extraction and refining, and recycling.
Eramet positions itself as the privileged partner of its customers in sectors that include carbon and stainless steel, aerospace, pigments, energy, and new battery generations.
Building on its operating excellence, the quality of its investments and the expertise of its employees, the group leverages an industrial, managerial and societal model that is virtuous and value-accretive.
Net sales break down by family of products mainly between manganese (70.3%), mineralized sands (10.8%) and nickel (4.8%).
Net sales are distributed geographically as follows: France (1.2%), Europe (26.1%), China (23.7%), Asia (29.1%), South America (13.9%), Africa (3.4%), North America (1.8%), Oceania (0.8%).
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