ANNUAL AT THE CENTRE REPORT 2011 OF AN EVOLVING INDUSTRIAL WORLD RAER011_couv_monte_GB_bat.indd 1 27/04/12 10:04 RAER011_couv_monte_GB_bat.indd 2 27/04/12 10:04 Interview with the Chairman • 01 Board of Directors & governance • 04 Management • 06 Key fi gures • 10 Map of operations • 12 Manganese activity • 14 Nickel activity • 16 Alloys activity • 18 CONTENTS AT THE CENTRE OF AT THE CENTRE OF THE INDUSTRIAL THE INDUSTRIAL WORLD’S ISSUES • 20 WORLD’S DYNAMICS • 32 How can we build Focusing activity a strategic materials offering? • 22 on the customer • 34 How can we develop recycling, Fostering engagement at ERAMET • 38 a real “secondary mine”? • 24 Building responsible development How can environmental impacts with stakeholders • 42 and risks be managed when mining new deposits? • 26 How can newly available ores ECONOMIC AND be processed more effectively? • 28 FINANCIAL INDICATORS • 46 How can we offer new, more effective products to major industrial groups? • 30 GLOSSARY • 54 RAER011_cahier_IaXII_GB_bat.indd I 27/04/12 10:03 Top to bottom: nickel, manganese and geologists at work A MINING GROUP SPECIALISED IN ALLOYING METALS #6 WORLD PRODUCER OF ERAMET produces manganese NICKEL in Gabon and nickel in New #1 WORLD PRODUCER OF Caledonia. The Group turns FERRONICKEL those ores into metals and ferroalloys that are used in #2 WORLD PRODUCER OF steelmaking, but also in the HIGH-GRADE MANGANESE ORE chemical industry (batteries, AND MANGANESE ALLOYSE fertilisers, pigments, etc.). ERAMET implements a policy of diversifi cation in terms Annual production data of both geography and new metals: titanium, zirconium, lithium and other strategic metals such as niobium, 54,000t tantalum and rare earths. 3.5Mt Manganese ore and manganese alloys Ferronickel RAER011_cahier_IaXII_GB_bat.indd II 27/04/12 10:03 RAER011_cahier_IaXII_GB_bat.indd III 27/04/12 10:03 Top to bottom: ERAMET supplies alloys to the electronics and aerospace industries, but also cutlers such as Déglon in Thiers, France. AN UPSCALE METALLURGIST SERVING STRATEGIC INDUSTRIAL SECTORS #2 WORLD PRODUCER The ERAMET Group is active in OF HIGH SPEED STEELS every high value-added segment AND HIGH POWER CLOSED-DIE of alloys, from the design FORGED PARTS of “grades” – produced by #1 WORLDWIDE conventional metallurgical IN ALLOYED POWDER techniques or powder metallurgy METALLURGY – to the manufacture of forged or closed-die forged parts. Its main customers are the aerospace, power, tooling, Breakdown of strategic capital transport and medical equipment expenditure in 2011 industries. (€126 million) 32% 13% Titanium forging (France) 37% 18% Vacuum production of superalloys (France) Aluminium forging (France) Atomisation tower/ powder metallurgy (Sweden) RAER011_cahier_IaXII_GB_bat.indd IV 27/04/12 10:03 RAER011_cahier_IaXII_GB_bat.indd V 27/04/12 10:03 Top to bottom: Two examples of the Group’s recycling activity: batteries and oil catalysts. A GLOBAL PLAYER FROM MINING TO RECYCLING WORLD LEADER ERAMET is active throughout IN OIL CATALYST RECYCLING the alloying metal value chain: #3 WORLD PRODUCER mining, conversion, alloys, OF TITANIUM DIOXIDE SLAG semi-fi nished products, forged FOR PIGMENTS parts and recycling. This strategy adds high value both fi nancially and in terms of research, development and know-how, with synergies in cutting-edge technologies like hydrometallurgy and powder metallurgy. These skills make ERAMET the partner that enables strategic sectors to meet the challenges of growth and sustainable development. RAER011_cahier_IaXII_GB_bat.indd VI 27/04/12 10:03 RAER011_cahier_IaXII_GB_bat.indd VII 27/04/12 10:03 Top to bottom, left to right: Group employees in mainland France, Sweden, New Caledonia, China, Indonesia and Gabon. PRESENCE ON FIVE CONTINENTS 10 OFFICES With 47 industrial sites in WORLDWIDE FOR ERAMET INTERNATIONAL 12 countries across fi ve continents and strong sales ALMOST 100 PEOPLE presence in its three main TASKED WITH COMMERCIAL NEGOTIATIONS FOR THE GROUP’S markets – Europe, North DIVISIONS America and Asia – ERAMET is a global player. The Group draws on the diversity of its people, close relations with customers and the determination to contribute to sustainable development wherever it is based. Employees by region 45% EUROPE 15% ASIA 35% 5% AFRICA, NORTH AMERICA OCEANIA RAER011_cahier_IaXII_GB_bat.indd VIII 27/04/12 10:03 RAER011_cahier_IaXII_GB_bat.indd IX 27/04/12 10:03 Whether on production sites or in research centres, ERAMET’s men and women work to improve product quality and innovate. SHARP GROWTH IN RESEARCH & DEVELOPMENT €124M ERAMET Research, the Group’s RESEARCH & DEVELOPMENT BUDGET IN 2011* research centre in Trappes, near Paris, is host to 150 researchers, over 300 engineers and technicians PEOPLE DEDICATED TO R&D covering a wide range of areas: * Including external research costs mining, mineralurgy, and development expenditure for pyrometallurgy, non-ferrous the Weda Bay Nickel, Maboumine and lithium projects. metal production, special alloys and steels. With ERAMET Ingénierie, based on the same site, it forms a cluster that can take on industrial projects from defi nition through to start-up. Other research centres, based on production sites, mainly work Growth in R&D spending on new products. 124 109 77 67 47 42 2010 2011 Research Development RAER011_cahier_IaXII_GB_bat.indd X 27/04/12 10:03 RAER011_cahier_IaXII_GB_bat.indd XI 27/04/12 10:03 INTERVIEW WITH THE CHAIRMAN PATRICK BUFFET CHAIRMAN & CHIEF EXECUTIVE OFFICER, ERAMET RAER011_cahier_IaXII_GB_bat.indd XII 27/04/12 10:03 • 01 47 ERAMET INDUSTRIAL SITES CONTINUED TO 15,000 EMPLOYEES IMPLEMENT WORLDWIDE ITS DEVELOPMENT 3.6 billion EUROS TURNOVER PLAN IN 2011 IN 2011 How would you sum up 2011 Furthermore, the Group’s robustness and what were the main points of also depends on the quality of our risk progress? management and on constant dialogue with our stakeholders. The fundamental In 2011 our results were affected in the work done in 2011 on those issues is second half by the slump in the economic very satisfactory. environment, particularly through a fall in nickel and manganese prices. Our current What essential points would you operating income held out well, however, take away from 2011? at €554 million for the year. In nickel, the continuation of the We reached important milestones in competiveness improvement plan, the implementation of our development the modernisation of the Doniambo plan, which has two main goals: plant and the defi nition of an ambitious preparing the future of our historical strategic project for Société Le activities in nickel, manganese and Nickel - SLN in New Caledonia. Thanks alloys, and transforming ERAMET by to modernised governance at SLN, expanding into new metals, regions dialogue with our New Caledonian and technologies. partners now runs deeper, allowing us to plan for the future effectively. Finally, We should also congratulate ourselves the highly satisfactory progress made on the fi nancial health of the Group, on studies for the Weda Bay Nickel which succeeded in increasing capital project in Indonesia (the fi nal investment expenditure, stepping up research decision for the fi rst phase is scheduled & development efforts and gaining in 2013) should be noted, as well a foothold in new businesses, while as the Japanese company Pamco’s maintaining net cash of more than involvement in the project alongside €1.1 billion as at the end of 2011. Mitsubishi Corporation. ••• ERAMET | ANNUAL REPORT 2011 RAER011_1a3_GB_bat.indd 1 27/04/12 09:51 02 • INTERVIEW WITH THE CHAIRMAN WE’LL CONTINUE OUR OPERATING IMPROVEMENT PROGRAMMES ••• In manganese, our major projects are potential and our very favourable moving ahead, particularly in Gabon: medium and long-term vision is increase in ore production capacity, unchanged. modernisation of the Transgabonais railway and the Moanda Metallurgical We’ll keep up our operating Complex. improvement programmes, ramp-up of recent facilities and completion of In ERAMET Alloys, we commissioned the capital projects in progress. Our four strategic new facilities in France total capital expenditure will be high and Sweden, giving us a position in compared with 2011, if the global fast-growing sectors such as titanium, economic situation remains in line powder metallurgy and vacuum fusion. with current forecasts. What’s the situation on We will also continue to step up our your development projects research and development programmes. in new metals? If the development of a specifi c relevant process is conclusive, in particular, The Group’s expansion made major the Mabounié project in Gabon could progress in 2011 with our new “Grande eventually make the Group a world Côte” project in Senegal, which should leader in rare earths and niobium. make ERAMET, through a 50/50 partnership with the Australian company Mineral Deposits Limited, a world leader from 2013 in ilmenite and zirconium, two markets with high growth potential. What are your challenges for 2012 and what goals are you setting? In 2012, the global crisis will weigh on markets in developed countries. But consumption of our metals in emerging countries is a long way off their full ERAMET | ANNUAL REPORT 2011 RAER011_1a3_GB_bat.indd 2 27/04/12 09:51 • 03 ERAMET | ANNUAL REPORT 2011 RAER011_1a3_GB_bat.indd 3 27/04/12 09:51 04 • GOVERNANCE ALIGNED ON THE PRINCIPLES OF THE AFEP/MEDEF CODE The ERAMET Group’s governance sure they are not in any confl ict of for managing exchange rates, raw is in line with the general trend interest, whether direct or indirect, materials, hedging and investments. of a greater role for directors between ERAMET and another It examines the Chairman’s report on and the Committees that support company in which they hold an offi ce. the work of the Board and internal the Board in its decision-making. Any such situation must be revealed to control procedures. the Board, resulting, as the case may In accordance with the shareholders’ be, in rejection of the appointment or The compensation committee, in agreement of June 17th, 1999 and its resignation (structural confl ict) or particular, submits to the Board of amendment on May 29th, 2008 abstention (non-recurring confl ict).