French mining company Eramet has swiftly announced its plans to resume manganese mining operations in Gabon, signaling a decisive move to restore normalcy following a temporary suspension in the wake of a recent coup. The abrupt decision to halt activities caused Eramet’s stock value to plunge by nearly 17% during Paris’s daily stock market trading.

Eramet’s prominence as the world’s largest producer of high-grade manganese ore for steelmaking underscored the urgency of the situation. However, the company’s decision to recommence operations is indicative of its faith in the stability of the circumstances.

The decision to resume operations was grounded in a careful assessment of the evolving events in Gabon. Eramet, in an official statement released on the evening of the suspension, stated, “In light of the information made available today regarding the events in Gabon, the group has opted to immediately reinstate rail transportation operations and recommence mining activities starting tomorrow morning.” This strategic choice showcases Eramet’s determination to maintain its preeminence in global high-grade manganese production.

Manganese’s pivotal role in steel production, accounting for approximately 90% of its consumption, underscores the significance of Eramet’s operations. The company’s extensive network of manganese alloy processing plants across key locations including France, Gabon, Norway, and the United States bolsters its position as a key player within the global steel supply chain.

In the preceding year, Eramet’s manganese operations, particularly managed by its Comilog unit overseeing the Moanda mines, formed the bedrock of the company’s profits. Notably, the Gabonese government’s 29% stake in Comilog further solidified the link between Eramet and the nation.

While Eramet’s swift decision to resume mining operations is encouraging for both the company and the manganese market, industry analysts remain vigilant about potential long-term effects. Nicolas Montel, an analyst at BNP Paribas’s asset management subsidiary Portzamparc, remarked that while Eramet is unlikely to fully withdraw from Gabon due to its economically efficient operations, an extended suspension would undoubtedly reverberate throughout the market.

Morgan Stanley’s estimation of Gabon’s contribution of 14% to global manganese supplies, with Eramet and other unlisted entities playing a substantial role, underscores the importance of Eramet’s endeavors within the global manganese landscape.

The dynamic nature of the situation emphasizes the necessity of closely monitoring Gabon’s political trajectory. Eramet, committed to transparency and timely communication, will vigilantly track unfolding developments as it navigates its pivotal role in the crucial manganese market.

Photo Source: Google

By: Montel Kamau

Serrari Financial Analyst

30th August, 2023