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2016-11-09

ERAMET Group: 3rd quarter 2016 sales

Paris, 09 November 2016

PRESS RELEASE

ERAMET Group: 3rdquarter 2016 sales

* Third-quarter sales in 2016 at 714 million euros, steadily increasing since
the start of 2016.

* Significant rise in manganese ore prices throughout third-quarter 2016 at a
higher level of 70% on average compared with the average of the first three
months of 2016 (source CRU). Very difficult market conditions at the start
of the year therefore justified a decision to lower manganese ore
production in Gabon, impacting the cumulative level of production at
end-September.

* Nickel LME prices in third-quarter 2016 up by 21% on average compared with
the price at the start of 2016.

* At end-September, ERAMET increased its equity by 100 million euros through
the issue of net share settled undated bonds convertible into new shares
(ODIRNAN).

* Taking into account, on the one hand, the current rise in manganese prices
and to a lesser extent, the rise in nickel prices, and, on the other hand,
the successful implementation of productivity and cost reduction plans, the
ERAMET Group's current operating income for second-half 2016 is expected to
be significantly higher than that of first-half 2016 and become positive
again.

The ERAMET Group sales by branch of activity are available in the tables
below.

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| Sales Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 |
|1(€ million) |
| ERAMET Nickel 154 137 118 144 146 |
| ERAMET Alloys 206 247 250 263 218 |
| ERAMET Manganese 353 323 297 337 375 |
| Holding company&eliminations 1 - 1 - - |
| ERAMET Group 714 707 666 744 739 |
-----------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
| Sales Q3 2016 Q3 2015 Change 9 months 2016 9 months 2015 Change |
|1 |
| |
|(€ million) |
| ERAMET Nickel 154 146 6% 409 542 (25%) |
| ERAMET Alloys 206 218 (6%) 703 728 (3%) |
| ERAMET Manganese 353 375 (6%) 973 1,093 (11%) |
| Holding company&eliminations 1 - - 2 2 - |
| ERAMET Group 714 739 (3%) 2,087 2,365 (12%) |
------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
| 1Adjusted data from Group reporting in which the joint ventures are accounted |
|for under the proportional consolidation method. Reconciliation with the |
|sales published is presented in the appendices. |
---------------------------------------------------------------------------------

* ERAMET Nickel

After a 4.1% increase over first-half 2016 compared with the same period in
2015, global stainless steel production continued to increase over
third-quarter 2016 (source ISSF).

In parallel, global nickel production is down slightly over the first nine
months of 2016 compared with the same period in 2015. This is linked to
several factors: closure of certain plants, reduction in nickel pig iron
production in China following a lengthy period of low prices, and cutbacks in
production in some long-standing industry players. All of these reductions
have not been offset by the ramp-up in newly commissioned plants, notably in
Indonesia. Furthermore, the impact of the conclusions of the audit conducted
in the Philippines, which may lead to new suspended or discontinued
activities, is also to be monitored with the utmost vigilance.

This situation has led to an increase in LME nickel prices over third-quarter
2016. The average for prices over the quarter was therefore up by 21% at USD
4.67/lb, compared with an average of USD 3.86/lb over first-quarter 2016.

At the end of third-quarter 2016, however, cumulative LME and SHFE nickel
stocks are still at a very high level (approximately 473,000 tonnes) which
continues to impact nickel prices, still preventing SLN from achieving its
operating breakeven.

Nickel metallurgical production at the Doniambo plant (New Caledonia) was up
by 16% compared with the same period in 2015 and up compared with production
for the first three months in 2016. An operating incident took place on 31
October in one of SLN's three electric furnaces. The responsiveness and
efficiency of the intervention teams meant that the consequences were limited
and no one was injured. The production rate for fourth-quarter 2016 should be
marginally impacted by this incident.

* ERAMET Alloys

Cumulative sales for ERAMET Alloys over the first nine months of 2016 are down
3% compared with the same period in 2015.

The aerospace sector, which sees steady growth, contributed significantly to
ERAMET Alloys sales, through new aircraft manufacturer programmes which
require high added value components for structures and engines. However, the
impact of social movements at the national level has negatively impacted
Aubert&Duval's business.

Moreover, the operating performance improvement plans have been pursued.
Aubert&Duval has continued with the industrial reorganisation of its sites in
view of improving its performance, particularly with the announcement made at
the end of October of a project to shut down the melting shop in Firminy,
taking into account the potential synergies with the steelworks in Les
Ancizes. This project, which will be subjected to an information and
consultation procedure with bodies representing staff from Aubert&Duval, may
lead to the loss of approximately sixty jobs, with affected employees being
offered a redeployment solution within one of the company's plants,
prioritising those in the Auvergne-Rhône-Alpes region.

October was marked by the opening of the MKAD plant, a joint venture between
Mecachrome and Aubert&Duval. MKAD, whose facilities are dedicated to the
machining of titanium parts, allows for Aubert&Duval to strengthen its
aerospace-grade titanium parts business, from the upstream through to the
delivery of finished parts.

* ERAMET Manganese

Gross global production for carbon steel, the main outlet for manganese, is
down slightly by 1.2% over the first nine months of 2016 compared with the
same period for 2015. However, global production for carbon steel grew in
September 2016 compared both with September 2015 (+1.5%), and August 2016
(+2.4%).

World ore production was down in first-quarter 2016 (temporary or permanent
closures of some mines, lowered production rates in others), in a
particularly difficult market, with a low point for prices reached in
February 2016 at USD 1.83/dmtu CIF Chine 44% (source CRU). This then led to a
fall in global ore stocks, causing prices to pick up again from April.
Logistical and production problems encountered by different operators in the
second and third quarters of 2016 then limited supply, whereas demand in
China recovered during the period.

Against this backdrop, CIF China 44% manganese ore prices (source CRU) rose
sharply from the start of second-half 2016 (USD 2.81/dmtu in July, USD
3.53/dmtu in August and USD 4.48/dmtu in September). The price level for
October stood at USD 6.24/dmtu. Very high price volatility has therefore been
observed since the start of 2016. Current price levels will probably lead to
restart some production capacity that had been put on standby under the
market conditions of early 2016. An increase in production for the majority
of players is likely. To a lesser extent, manganese alloys prices have also
risen since the start of second-half 2016.

In Moanda, Gabon, production for ERAMET Manganese stood at 2.4 million tonnes
of ore over the first nine months, down by 18% compared with the same period
in 2015, notably due to a shutdown in production decided by the Group in
first-half 2016, to take into account market conditions which were then very
depressed.

* TiZir (50/50 joint venture with Mineral Deposits Limited)

The titanium dioxide pigments market, the main outlet for titanium dioxide
slag from TiZir's Norwegian plant, continued to make progress over the third
quarter of 2016. The market was bolstered by strong demand in North America
and Europe. Prices for ilmenite (titanium ore) and titanium dioxide slag
remained generally stable with, however, some price increases on ilmenite for
China. Zircon prices (notably for the ceramics industry) remained stable over
the quarter, with a stronger market in Europe and North America.

The production of heavy mineral concentrate (HMC) in Senegal came out at
140,000 tonnes in third-quarter 2016, at a stable level compared with
previous quarters.

A localised fire, which was rapidly controlled, took place on 15 August 2016
at the TiZir plant in Norway. Taking into account observations made during
the repair and heating period carried out since 22 September the decision has
been made to proceed to relining. The furnace should restart mid-January 2017
with a ramp up to previous production level over the ensuing four weeks.

* Financial situation

ERAMET has increased its equity by 100 million euros through the issue of net
share settled undated bonds convertible into new shares (ODIRNAN).

At end-September, the cost reduction and productivity improvement programmes
are being pursued by all of the Group's entities, in line with the
established objectives.

* Outlook

Taking into account, on the one hand, the current rise in manganese prices and
to a lesser extent, the rise in nickel prices, and, on the other hand, the
successful implementation of productivity and cost reduction plans, the
ERAMET Group's current operating income for second-half 2016 is expected to
be significantly higher than that of first-half 2016 and become positive
again.

- ooOoo -

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ABOUT ERAMET

ERAMET is a leading global producer of:

* alloying metals, particularly manganese and nickel, used to improve the
properties of st...

Författare Hugin

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