Eramet announced on Monday that it intends to pursue its project to increase its lithium production capacity in Argentina and attempt to double output at its nickel mine in Indonesia, as part of an investment plan it believes will withstand the global economic downturn.

The French mining group said in a press release that it was planning around 1.9 billion euros in capital expenditure over the period 2024-2026, an acceleration on the 550 million planned this year.

"These investments are in areas that are experiencing very strong growth," Eramet CEO Christel Bories told Reuters. "Lithium is not linked to global economic growth, it's linked to battery development and the energy transition," she added.

Eramet announced that it had approved a second phase of development for its Centenario lithium project in Argentina, to produce around 30,000 additional tons per year of lithium carbonate equivalent (LCE), in addition to the 24,000 tons targeted in a first phase that will go into production in the second quarter of 2024.

In addition to studying a possible follow-up to the second phase of Centenario, the company is exploring the nearby Arizaro deposit, said Christel Bories before Eramet's first Capital Markets Day.

Eramet is developing Centenario with Chinese steel giant Tsingshan. A $400 million (€374 million) agreement with Glencore to market lithium from the first phase of the project will largely cover Eramet's financing needs for the next phase, said Christel Bories.

SLN REMAINS IN DIFFICULTY

In Chile, the Group announced the acquisition of a 120,000-hectare lithium concession in the Atacama region for an initial sum of $95 million (89 million euros).

In Indonesia, Eramet is aiming to boost production at Weda Bay, the world's largest nickel mine, which it also operates with Tsingshan, to 60 million wet metric tons (Mth) by 2026, up from the 30 million planned this year.

The Group intends to process part of Weda Bay's ore into battery-grade nickel and cobalt in a joint venture with German chemical group BASF, a decision expected next year.

Eramet also plans to increase its ore production in Gabon, where it operates the world's largest manganese mine, to 8.5 million tons in 2026, up from around 7 million planned for 2023, mainly thanks to an improved rail transport link.

The competitiveness of its flagship mines and the sale of less profitable metallurgical activities in recent years will enable Eramet to invest in a context of economic uncertainty in China, said Christel Bories.

"The outlook for 2024 is not very good," she said. "That said, despite these very sharp price declines, we're managing to keep our heads above water."

In New Caledonia, however, Eramet's nickel subsidiary SLN remains in financial difficulty, with the CEO indicating that the company has entered a new judicial conciliation procedure after exhausting a final loan from the French government.

With Eramet refusing to inject more money into SLN and Glencore only providing financing until the end of February for the operation of Koniambo Nickel SAS (KNS), which it co-owns, the authorities need to agree measures in the coming weeks to save a nickel industry battered by energy costs and political tensions, she said.

(Reported by Gus Trompiz, edited by Kate Entringer)