Eramet flies off thanks to China after a note from Bank of America Merrill Lynch – Overseas the 1st

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"L'Etoile du Nord", this old nickel mine of the SLN in New Caledonia, would it also be the "lucky star", the lucky charm of the Eramet group? The Paris stock exchange's SBF 120 was up, the French non-ferrous metals giant's stock jumped by more than 16% on Friday morning in Paris, following Bank of America Merrill Lynch's analysis, which went directly from "Underperformance" to "outperform". A note that is timely.

China, Gabon, globalization …

In a note released Friday morning, the bank (BoA-ML) says that the new Chinese standard is expected to almost double the manganese content of steel rebar, used mainly in the construction of reinforced concrete. However, manganese is a major activity, well before nickel, for Eramet, which derives more than half of this revenue from the production of this metal produced in Gabon and processed locally, but also in Norway and the United States.

Eramet, player in the energy transition

The latest French giant of raw materials profits from the offensive strategy of its President, Christel Bories. Diversification, but also development in manganese. And the Chinese demand will flare up. The world's leading producer of ferromanganese with mines and factories in Gabon, and production sites in Norway and the United States, but also the world's largest producer of ferronickel in New Caledonia and the world's largest producer of mineral sands in Senegal, Eramet is awarded by the leading global rating agency in the extractive sector.

Goal…

The reaction on the stock market is all the stronger as the manganese activity is the only currently profitable for Eramet. Thus, says BofA analyst in his study, "a 10% increase in prices should have a positive impact of about 20% on earnings per share in 2019". The broker, who maintains a target of 113 euros on the title, also adds that the action appears "inexpensive since its violent correction started in June." Indeed, since this period the title has lost more than half of its value, due to trade tensions between the United States and China and their impact on the price of raw materials and in particular nickel. But, the demand for this metal should, it also strongly increase and supply the battery sector of electric vehicles. Eramet is well placed to enjoy …