y/ref: questionnaire on aubert & duval. · 2017-07-19 · foundation year: 1907 legal form:...

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DQ/DM 2017‐04‐26_Aubert & Duval Company Profile_v2017‐02_EN Ce document et les pièces ci‐joints sont la propriété d’AUBERT & DUVAL. Ils ne vous sont remis qu’en réponse à votre demande. Ce document et les données issues de ce document AUBERT & DUVAL ne peuvent être transmis à un tiers sans l’autorisation expresse préalable d’AUBERT & DUVAL. © AUBERT & DUVAL ‐ 2015

Y/Ref:QuestionnaireonAubert&Duval.

DearCustomer,

Wehavedulyreceivedyourquestionnaireaboutourcompany.

Given the diversity of our markets, we cannot unfortunately answer all the specific questionnaires that we

receive.Moreoverforconfidentialitypurposes,somedatacannotbecirculated.

Asaresult,toansweryourquery,pleasefindattacheddetailedbackgroundinformationaboutAubert&Duval,

ERAMETGroupanditsAlloysDivisiontowhichthecompanybelongs.Moreinformationcanbeavailableonall

theERAMET(www.eramet.com)andAubert&Duval(www.aubertduval.com)websites.

ThisdocumentwillbeupdatedatleastonceayearaftertheofficialpublicationoftheGroupresults.

Weshallcontinuelisteningtoyourcommentstocompleteorimprovethenexteditionofthisdocument.

Yoursfaithfully,

DenisHUGELMANN

CEO

Aubert&Duval

2


TableofContents:

GENERAL INFORMATION: .................................................................................................................................................... 3

KEY FIGURES: ........................................................................................................................................................................ 4

MAJOR MARKETS & CUSTOMERS: ........................................................................................................................................ 5

PRODUCTS: ........................................................................................................................................................................... 6

ADMINISTRATIVE INFORMATION: ........................................................................................................................................ 7

LOCATIONS: ........................................................................................................................................................................ 10

COMMERCIAL NETWORK: ................................................................................................................................................... 10

INNOVATION: ...................................................................................................................................................................... 11

QUALITY CERTIFICATION: .................................................................................................................................................... 12

PRI‐NADCAP: Accreditations for special process (2016‐08‐24) .......................................................................................... 13

QUALITY MANUAL (AD QMM version of 2016/10/01): ...................................................................................................... 14

OTHER STATEMENT & THIRD PARTY CERTIFICATION: ........................................................................................................ 15

CONFLICT MINERALS: 2017/01/27 .......................................................................................................................... 15

ASBESTOS: 2017/01/01 ........................................................................................................................ 20

NANO PARTICLES: 2017/01/01 ........................................................................................................................ 21

RADIOACTIVITY: 2017/01/01 ........................................................................................................................ 22

REACH: 2017/01/01 ........................................................................................................................ 23

ROHS: 2017/01/01 ........................................................................................................................ 24

ERAMET GROUP: ................................................................................................................................................................. 25

EXTRACT ERAMET 2015 REFERENCE DOCUMENT: ............................................................................................................. 26

3


GENERALINFORMATION:

Companyname:AUBERT&DUVAL

Sharecapital:152564928€

Foundationyear:1907

Legalform:SociétéparActionsSimplifiées(S.A.S)

Membership:ERAMETGroup(100%)seeendofpresentation

Streetadress:TOURMAINEMONTPARNASSE‐33,AvenueduMAINE‐

ZIPcode:75755

City:PARISCEDEX15

Country:FRANCE

Website: www.aubertduval.com

Europeantaxidentificationnumber:FR73380342808

APEcode:2410Z‐Sidérurgie

DUNScode:767877558

NATOCode:FANU1

Companyprofilecontact:[email protected]

Phonecontact:+33145383888

4


KEYFIGURES:

ERAMETAlloysTurnoversales(M€):

2016: 2015: 2014:

991M€

1017M€ 926 M€

GeographicBreakdown(%):

France Europe excluding France

Americas Asia

36

31 16 17

Manpower(toDecember31):

2016: 2015: 2014:

3765

3646

3873

Distributionofstaffbysocio‐prof.category(%):

workers

Technicians managerial staff

56

34 11

Distributionofstaffbyjobs(%):*

Production Quality R&D / Technique Others

64

5 7

24

5


MAJORMARKETS&CUSTOMERS:

High‐endproductsfordemandingmarkets:

• Aerospace:

Landinggear,structuralforgings,enginespartsshafts,fasteners,ferrulesrocketboosters,satellitestanks.

• Energy:

Discsandshaftsforgasturbines,non‐magneticringsforalternators,variouspartsandalloysteelbars/stainlesssteel/superalloysforthenuclearindustry,Barsforboltsandturbineblades.Non‐magneticsteelsforoildrilling,alloysteelpartsfor"riser"offshoreplatform.

• Toolsteels:

Injectionlightalloys,glass,extrusion,plasticmolding,forging.

• Automotive–Transport:

Valvesteels,elementsofdieselinjectors,partsformotorracing.

• Defense–Navy:

Artillerytubes,barsandsheetsformissiles,variousparts,alloysteel/stainlesssteel/superalloysfornuclearsubmarines.

• Medical:

Protheses,medicalequipment.

Duetoconfidentialityagreementsmadewithsomeofourcustomers,wearenotabletopublicizethelist.

6


PRODUCTS:

Productforms:

‐ Bars,‐ Forgings,‐ closed‐dieforgings,‐ Hippedparts,‐ Powdersforadditivemanufacturing.

Aluminium parts ‐ Metal parts ‐ Steel parts : http://www.aubertduval.com/metal‐steel‐aluminium‐products/aluminium‐parts‐metal‐parts‐steel‐parts.html

Shapes:

‐ HighPerformanceSteels,‐ NickelbaseSuperalloys,‐ Titaniumalloys,‐ Aluminiumalloys,‐ MatallicPowders(Nickel‐baseandCobalt‐basealloys,highperformancesteels,Titaniumalloys).

Steels ‐ Superalloys ‐ Aluminum alloys ‐ Titanium alloys ‐ High speed steels: http://www.aubertduval.com/metal‐steel‐aluminium‐products/steels‐superalloys‐aluminum‐alloys‐titanium‐alloys.html

Seewebsite:

www.aubertduval.com

7


ADMINISTRATIVEINFORMATION:atDecember31,2016:

SiteTotalArea

(Ha)CoveredArea(Ha)

Manpower N°APE N°SIRET N°SIREN NATOcode

Paris(HeadOffice)

N/A N/A 49 38034280800041 380342808

Clermont‐FerrandLaPardieu

EstablishmentN/A N/A 105 380342808

AncizesPlant 54 15 1462 2410Z 38034280800090 380342808 FANU1

FirminyPlant 22,4 4,6 232 2550A 38034280800124 380342808 FANU1

ImphyPlant 1,6 1,6 168 2550A 38034280800074 380342808 FANU1

IssoirePlant 6 2,2 394 2550A 38034280800108 380342808 FANU1

PamiersPlant 22,5 6,4 1035 2550A 38034280800132 380342808 FANU1

HeyrieuxServicesCenter

2 1 42 4672Z 38034280800066 380342808

InterforgPlante 5,8 1,9 208 2550A 73203227100023 732032271

INSURANCE:

AXACorporateSolutions:N°2016/XFR0072908LI/253243madethe20th/07/2016.

OAAGC:N°F31A0027916Amadethe30th/06/2016.

KBIS:

GreffeduTribunaldeCommercedeParis:Immatriculationthe27/07/1994,updatedthe08/11/2016.

10


Clermont‐FD La PardieuEstablishment 6 rue Condorcet

63063 Clermont‐Ferrand Cedex 1 Tél: 33 (0)4 73 28 75 28

LOCATIONS:

COMMERCIALNETWORK:

Aubert & Duval Sales Network:

http://www.aubertduval.com/aubert‐duval‐about‐us/aubert‐duval‐sales‐network.html

Head Office Tour Maine Montparnasse

33, Avenue du Maine 75755 Paris Cedex 15 Tel: 33 (0)1 45 38 38 61

Imphy PlantAvenue Jean Jaurès ‐ BP 02

58160 Imphy Cedex Tel: 33 (0)3 86 90 72 00

Firminy PlantRue du Colonel Riez ‐ BP 141

42704 Firminy Cedex Tel: 33 (0)4 77 40 36 06

Ancizes Plant BP 1

63770 Les Ancizes Tel: 33 (0)4 73 67 30 00

Issoire Plant BP 45

63502 Issoire Cedex Tel: 33 (0)4 73 55 54 00

Pamiers Plant 75 boulevard de la libération

‐ BP 173 09102 Pamiers Cedex

Tel: 33 (0)5 61 68 44 00. Interforge Plant

BP 75 63502 ISSOIRE CEDEX Tel: 33 (0)4 73 89 07 83

Heyrieux Services CenterZI Rue des Balmes 38540 Heyrieux

Tel:33 (0)4 72 48 12 90

11


INNOVATION:

%Ofaddedvalue:4,9%

Partnershipsunder:VIAMECA–PNB‐Astech‐AerospaceValley‐

Numberofpatents:5to15peryear.

12


QUALITYCERTIFICATION:

All our certificates can be downloaded on our website: Aubert&DuvalDownloads

http://www.aubertduval.com/aubert‐duval‐about‐us/aubert‐duval‐downloads.html

AQAP2110(2009)

AQAP2120(2009)

AS9100C(2009)

AS9120A(2009)

ISO9001(2008)

ISO14001(2004)

ISO17025

ITER(Directive97/93/CE)

OHSAS18001(2007)

13


PRI‐NADCAP:Accreditationsforspecialprocess(2016‐08‐24)

Ancizes Firminy Imphy Pamiers Issoire Interforge

No

n D

estr

uct

ive

Tes

tin

g

AC

71

14

ACCREDITED

Ultrasonic Testing, Magnetic Particule

Inspection, Dye Penetrant Testing

(30/04/2017)

NA

ACCREDITED


Inspection

(30/04/2017)

MERIT PROGRAM

ACCREDITED


Inspection, Dye Penetrant Testing

(30/04/2018)

MERIT PROGRAM

ACCREDITED

Ultrasonic Testing, Dye Penetrant Testing

(30/10/2017)

MERIT PROGRAM

NA

Ch

emic

al

pro

cess

ing

A

C7

10

8

NA NA NA

ACCREDITED

Macrographic examination

(30/04/2018)

MERIT PROGRAM

NA NA

Hea

t Tr

eatm

ent

AC

71

02

ACCREDITED

(31/07/2017)

MERIT PROGRAM

NA ACCREDITED

(31/07/2017)

MERIT PROGRAM

ACCREDITED

(31/07/2017)

MERIT PROGRAM

ACCREDITED

(31/10/2017)

MERIT PROGRAM

ACCREDITED

(31/10/2017)

MERIT PROGRAM

Mat

eria

l Tes

tin

g

AC

71

01

an

d

AC

71

01

/x

ACCREDITED

AC7101/1, 2, 3, 4, 5, 6, 7, 9

(30/04/2018)

MERIT PROGRAM

NA NA

ACCREDITED

AC7006 AC7101/1, 2, 3, 4, 5, 7,

9

(31/10/2017)

MERIT PROGRAM

ACCREDITED

AC7006 AC7101/1, 3, 4, 7

(31/01/2018)

MERIT PROGRAM

NA

FormoreinformationcontacttheWebSite:www.eauditnet.com

14


QUALITYMANUAL(ADQMMversionof2016/10/01):

FrenchVersion:http://www.aubertduval.fr/societe/telechargements.html

EnglishVersion:http://www.aubertduval.com/aubert‐duval‐about‐us/aubert‐duval‐downloads.html

i.e.

15


OTHERSTATEMENT&THIRDPARTYCERTIFICATION:

CONFLICTMINERALS: 2017/01/27

Aubert & Duval’s commitment to the law US « Dodd-Franck Wall Street Reform and Consumer Protection act » de 2010 Section 1502:

Please find herewith the ConflictMinerals Package, updated for 2016 and including the three Aubert&Duvalcommitments,inparticulartheCMRT(ConflictMineralsReportingTemplate)issue4.20.

18


19


20


ASBESTOS: 2017/01/01

Aubert&Duvalcommitmentaboutabsenceofasbestos:

AUBERT&DUVALhereby confirms that all our products in the global Supply chain do not contain any

asbestos.

Toassertthatright.

ChristophePETIT

VPQualité

Aubert&Duval

21


NANOPARTICLES: 2017/01/01

Aubert&Duvalcommitmentontheabsenceofnanoparticulatesubstance:

AUBERT & DUVAL hereby confirms that none of our products do not contain any substance of nano

particulatestatus.

Toassertthatright.

ChristophePETIT

VPQualité

Aubert&Duval

22


RADIOACTIVITY: 2017/01/01

Aubert&Duvalcommitmentontheabsenceofradioactivecontaminationin

ourproducts(steelandNickelandTitaniumalloys):

Asamelterof specializedsteelsandalloys,wehandselect competentsupply sourcesofverynoble raw

material,andholdthemresponsibletoguaranteethetotallackofradioactiveelementsintheirdeliveries.

ThisfallswithinthebasicframeworkofourQualityAssurancePolicy.

Aubert&Duvalconductsasystematicradiationcontrolatthetrucksiteentranceforbothofourmelting

shopsinAncizesorFirminyPlants(Saphymodetectorsareused),whosethresholdissetaccordingtothe

naturalradioactivityofthesite.

Inaddition,weinstitutesimilarmeasuresforoursuppliersofingotsandbillets,toensuretheabsenceof

radioelementsintheirdeliveries.

As a result of our diligence and Quality Control of the upstream process, we guarantee the absence of

radioactiveelementsonoursitesofproduction,andinoursteelsandalloys.

Toassertthatright.

ChristophePETIT

VPQualité

Aubert&Duval

23


REACH: 2017/01/01

Aubert&DuvalcommitmentwiththerequirementsofREACHRegulation

(EC)no.1907/2006:

AUBERT & DUVAL hereby, certifies that we have taken the necessary measures to ensure that the Articles

manufacturedbyitsvariousproductionsitescomplywithREACHRegulation(EC)no.1907/2006,whichentered

intoforceon1June2007.

AUBERT & DUVAL ensures, as of today, that we have not identified the presence, within our Articles, of any

substancesofprimeconcern:

included in theCandidateList as referred to inArticle59.1of theREACHRegulation in concentration

above0.1%weightbyweight(w/w),

includedinAnnexXIVofREACH.

ThetermsreferredtoabovecapitalizedhavethemeaningsgiventothembyREACH.

Toassertthatright.

ChristophePETIT

VPQualité

Aubert&Duval

24


ROHS: 2017/01/01

Aubert&DuvalcommitmentonROHS:

Aubert&Duvalhereby,ensuresthatourproductsdonotcontain,asoftoday’sdate,anysubstanceslisted

intheEuropeanRoHSdirective2011/65/EUinconcentrationsabovethethresholds.

Toassertthatright.

ChristophePETIT

VPQualité

Aubert&Duval

25


ERAMETGROUP:

BusinessEthicsGroup:

http://www.eramet.com/en/our‐commitments/our‐general‐policy

http://www.eramet.com/en/publications

26


ERAMETGroupManpower2015:

13938people

EXTRACTERAMET2015REFERENCEDOCUMENT:

5

GROUP OVERVIEW

Chapter 1

6 1.1 GROUP PROFILE 6 1.1.1 COMMODITIES ARE ESSENTIAL

COMPONENTS OF TODAY’S WORLD AND ALSO TOMORROW’S

6 1.1.2 SPECIFIC POSITIONING OF THE ERAMET GROUP

6 1.1.3 THE ERAMET GROUP STRATEGY TO ADDRESS THE CRISIS

7 KEY BUSINESS FIGURES (1)

7 1.2 KEY FIGURES / COMMENTS ON THE FINANCIAL YEAR

8 1.2.2 SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS

10 1.2.3 CAPITAL EXPENDITURE 11 1.2.4 RECENT DEVELOPMENTS AND

OUTLOOK 12 1.3 HISTORY AND DEVELOPMENT OF

THE COMPANY

6

Group overview / Group profile

1.1 GROUP PROFILEThe ERAMET group is a French mining and metallurgical group with leading global positions in each of its businesses. The Group, which employed almost 14,000 people in 2015 in some 20 countries, generated sales of €3.1 billion during the year.

The ERAMET group holds leading global positions in each of its businesses:

– The ERAMET Nickel Division owns nickel mines in New Caledonia and processes virtually all the ore itself. The Group is the world’s eighth largest nickel producer, the largest ferronickel producer, one of the only three global producers of high-grade nickel, and global leader in nickel chloride.

– The ERAMET Alloys Division is the world’s second largest producer of closed die-forged parts for aeronautics and energy generation. It designs and develops a range of parts and products: high-performance steels, superalloys (nickel-based), aluminium and ti-tanium, a metal showing rapid development. It is also the world leader in gas-atomised powder metallurgy.

– The ERAMET Manganese Division is the world’s second largest producer of high-grade manganese ore at its mine in Moanda (Gabon), the world’s second largest produc-er of manganese alloys, the largest producer of ultra-high value-added alloys, “refined” alloys and the world’s leading producer of manganese chemical derivatives.

– The Group has also rolled out a new area of business in titanium dioxide and zircon,

TiZir, in a 50/50 joint venture with the Aus-tralian company Mineral Deposits Limited. The Division’s primary site is Grande Côte mine in Senegal (mineral sands), where operations began in the first half of 2014. Transformation (enrichment of titanium ore) is then performed by pyrometallurgy at TiZir Titanium & Iron in Norway.

1.1.1 COMMODITIES ARE ESSENTIAL COMPONENTS OF TODAY’S WORLD AND ALSO TOMORROW’SConsumption of commodities is driven by growing urbanisation (manganese, titanium dioxide, zircon), rising average living standards (stainless steel, nickel alloys, cobalt), energy production and transmission (superalloys, high-performance alloys), and new tech-nologies linked to connectivity (lithium, for example).

After solid growth in past decades, in 2015 the commodity market plunged to its lowest levels in 15 years. This was due to a slowdown in industrial production in China and the persis-tence of sluggish world growth. China, which grew steadily since the noughties, became the world’s largest consumer of metals, feeding demand for more than half of worldwide volumes of nickel and manganese.

A new supply/demand model is emerging, especially in China, where consumption has now reached the post-urbanisation phase, with substantial overcapacity with respect to demand.

1.1.2 SPECIFIC POSITIONING OF THE ERAMET GROUPBeyond the current crisis in the metal market, largely caused by developments of the Chinese economy, the ERAMET group has substantial competitive edge:

– world-class deposits;

– leading positions in each area of our busi-ness, from mining to metallurgy;

– specific know-how, often produced by our own R&D, with solid social and environmen-tal criteria.

1.1.3 THE ERAMET GROUP STRATEGY TO ADDRESS THE CRISISGiven the current panorama of markets and the worldwide economic situation, the Group strategy focuses primarily on generating cash as follows:

– Firstly, focusing on its core businesses, moving ahead with the development and restructuring required for its major activities.

– Secondly, gaining competitive edge to boost its positions. This will be brought about by plans to cut costs and boost both ongoing and planned productivity.

– In the longer run, the ERAMET group will focus on targeted projects selected on the criterion of value creation, especially those arising from the Group’s internal R&D.

The aim of this strategy is to improve the ERAMET group’s risk profile in the long term and strengthen its resilience in times of crisis.

7

R E G I S T R A T I O N D O C U M E N T

1.2 KEY FIGURES / COMMENTS ON THE FINANCIAL YEAR €1.6

BILLION FINANCIAL LIQUIDITY AT 31 DECEMBER 2015.

AN ANNUAL IMPACT OF APPROXIMATELY

€180

MILLION IN CUMULATIVE SAVINGS IN 2014 AND 2015.

2012 2013 2014 2015

641 587 346 267

Industrial capex limited to €267 million, down by 23% against 2014.

INDUSTRIAL CAPEX(€ MILLION)

2012 2013 2014 2015

448 -218 -547 -878

Net debt was €878 million at 31 December 2015.

NET CASH (NET DEBT)(€ MILLION)

2012 2013 2014 2015

153 -45 75 -207

Current operating profit/loss hard hit by worldwide metals crisis.

CURRENT OPERATING PROFIT/LOSS(€ MILLION)

2012 2013 2014 2015

9 -370 -159 -714

Group portion of net profit/loss down in 2015, hit by exceptional depreciation.

NET PROFIT/LOSS, GROUP SHARE(€ MILLION)

2012 2013 2014 2015

3,4473,162

3,1443,109

Sales were stable against 2014 at €3,109 million.

SALES(€ MILLION)

Breakdown of current operating profit by business segments(€ MILLION)

2015 2014

Nickel (261) (52)Alloys 27 23Manganese 58 137Holding (31) (33)

TOTAL (207) 75

Breakdown of industrial investment by business segments(€ MILLION)

2015 2014

Nickel 56 97Alloys 44 48Manganese 164 199Holding 3 2

TOTAL 267 346

(1) The consolidated data presented for the Group and the Divisions in this Registration Document, with the exception of Chapter 6, are adjusted data from Group reporting, which consolidates joint ventures on a proportional basis. See reconciliation with the IFRS consolidated financial statements in Section 1.2.2.

KEY BUSINESS FIGURES (1)

8

Group overview / Key figures / Comments on the financial year

1.2.2 SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS(€ MILLION) 2015 2014

Sales 3,109 3,144Current operating profit/loss (207) 75Operating profit/loss (813) (54)Net profit/loss (912) (171)Profit/loss, Group share (714) (159)Net cash generated by operating activities (7) 43Capital employed (1) 3,060 3,462Industrial capital expenditure 267 346

(1) Excluding the impact of the Weda Bay project for 2014 and 2015.

1.2.2.1 GENERAL COMMENTS

2015 earnings were hit hard by the world economic crisis and a major downturn in the mining and metallurgy sector, with prices at their lowest in 15 years—both nickel and man-ganese were affected simultaneously. Sales, however, remained steady at €3,109 million. The current operating loss was -€207 million, and the Group portion of net losses -€714 mil-lion, following consideration of €668 million in depreciation of fixed assets and tax assets.

The 2014-2017 plan to cut costs and boost productivity was strictly implemented. The target had already been met at the midpoint, with savings of approximately €180 million at year-end 2015, out of a total of €360 million targeted by the end of the plan (1). A specific plan was rolled out for SLN, to boost the scheme over the first six months of 2016 and substantially reduce cash costs.

The rigorous cash preservation measures were followed, with suspension of major pro-jects and restriction of investment to security and strict maintenance. Industrial investment stood at €267 million, down by 23% against 2014, and by 55% against 2013. Net debt was €878 million at 31 December 2015, and the Group’s financial liquidity was €1.6 billion.

1.2.2.2 INCOME STATEMENT

SALES

In a context of a downturn in metal markets, the duration and extent of which are quite exceptional, ERAMET group sales remained steady at €3,109 million (down by 1% against 2014). Sales by ERAMET Manganese were steady against the previous year, sales by ERAMET Nickel were down due to lower nickel prices, and sales by ERAMET Alloys rose by 6% compared to 2014 thanks to a sound perfor-mance in the aeronautical sector by Aubert & Duval.

CURRENT OPERATING PROFIT/LOSS

The Group’s current operating profit, however, experienced a sharp drop with respect to 2014 to -€207 million, badly hit by SLN current op-erating profit (-€261 million), which could not be offset by good performances by ERAMET Alloys and ERAMET Manganese.

This was chiefly due to lower prices for com-modities, especially the price of nickel on the LME and of manganese ore, partially offset by an increase in productivity and lower costs and better results by Aubert & Duval.

Growth in the aeronautical sector is still well on target, and the earnings of Aubert & Duval in ERAMET Alloys rose in 2015.

OPERATING PROFIT/LOSS

The operating loss of -€813 million showed a marked deterioration following the loss of -€54 million in 2014. Other operating income and expenses (excluding impairment of assets) rose from €102 million in 2014 to €132 million in 2015, including in particular survey costs on major projects.

Operating results in 2015 were pulled down €474 million by asset impairment, mainly by ERAMET Nickel and alloy business at ERAMET Manganese, due to record low metal prices.

NET PROFIT/LOSS

The net loss in 2015 was -€912 million com-pared to -€171 million in 2014, due to:

– a net financial loss of -€90 million, compared to -€68 million in 2014, composed of:

• the -€68 million net borrowing cost, the result of an average net cash investment for the period of €730 million at an interest rate of around 1.35% and average gross debt of €1,594 million at an interest rate of 4.72%,

• other finance income and expenses, lead-ing to net expenses of -€22 million;

– tax expense of -€8 million, compared to a theoretical tax income of €311 million (net loss before tax -904 x 34.43%); this difference was mainly due to the impact of asset impairment of -€105 million and unrecognised or limited deferred tax assets at certain loss-making companies within the scope of consolidation in the amount of -€292 million, including -€194 million in New Caledonia, partially offset by deferred tax liabilities of €63 million.

(1) Annual impact on current operating profit with respect to 2013.

9


NET PROFIT (LOSS), GROUP SHARE

Group share of the loss was -€714 million compared to -€159 million in 2014, net of €198 million attributed to non-controlling interests from net results in 2015.

1.2.2.3 FINANCING (1)

The Group’s net borrowings (2) stood at €878 million at 31 December 2015, as against €547 million at 31 December 2014. This change was the result of the following:

– -€7 million in net cash flows from operating activities (+€43 million in 2014):

• -€160 million in cash generated from operations compared to +€125 million in 2014, due to a large drop in earnings in 2015 against 2014,

• +€153 million WCR from business, with a large drop in stocks and receivables;

– -€283 million in net cash flows from investing activities, primarily -€267 million in capital expenditure, down by 23% against 2014 and by 55% against 2013;

– an impact of -€41 million from currency fluctuations.

1.2.2.4 ECONOMIC BALANCE SHEET (3)

The Group’s economic balance sheet total at 31 December 2015 stood at €3,704 million, compared to €4,255 million at 31 December 2014.

The €551 million decrease was chiefly due to:

– a €404 million decrease in non-current assets, mainly due to asset impairment of €474 million in 2015, and a decrease in sim-

plified WCR of €173 million from business, with a large drop in stocks and receivables—respectively -€84 million and -€94 million;

– a decrease in shareholders’ equity (-€975 million), mostly due to net losses in 2015, a €331 million increase in net debt (see the section on Financing) and a provisions increase of €80 million.

The ratio of net debt to equity (“gearing”) was 49% at 31 December 2015.

Contingent liabilities in connection with legal disputes are explained in Note 12 to the con-solidated financial statements.

Policy and objectives for management of financial risks, including the Group’s hedging policy and the exposure to price, credit, liquidity and cash-flow risks are set out in Note 7 to the consolidated financial statements, Financial instruments and risk management.

Reconciliation of Group reporting and published financial statements

(€ MILLION)

FY 2015

JOINT VENTURES

CONTRIBUTION FY 2015 FY 2014

JOINT VENTURES

CONTRIBUTION FY 2014

PUBLISHED (1) REPORTING (2) PUBLISHED (1) REPORTING (2)

Sales 3,015 94 3,109 3,075 69 3,144EBITDA 92 - 92 363 - 363Current operating profit (loss) (191) (16) (207) 86 (11) 75Operating profit (loss) (744) (69) (813) (15) (39) (54)Consolidated net profit, Group share (714) - (714) (159) - (159)Net cash generated by operating activities (13) 6 (7) 50 (7) 43Industrial capital expenditure 242 25 267 305 41 346(Net financial debt) (716) (162) (878) (411) (136) (547)Shareholders’ equity 1,788 (9) 1,779 2,756 (2) 2,754Equity, attributable to Group 1,466 - 1,466 2,322 - 2,322

(1) Published data with joint ventures accounted for using the equity method, as per current regulations.(2) Data from Group Reporting, where joint ventures are consolidated proportionally.

(1) Table of debt flows (Note 3 to the consolidated financial statements).(2) Net borrowings are comprised of short and long-term borrowings less cash and cash equivalents and current financial assets.(3) Economic balance sheet (Note 3 to the consolidated financial statements).

10

Group overview / Key figures / Comments on the financial year

1.2.3 CAPITAL EXPENDITURE

1.2.3.1 GOALS

The ultimate aim is to improve competitive-ness and boost the business of the three Divisions (Nickel, Manganese and Alloys). The capital expenditure policy is based on product differentiation with a focus on markets with structural medium and long-term growth. In view of economic conditions which prevailed in 2015 on Group’s markets, investment ap-provals have been limited notably on security and strict maintenance projects.

1.2.3.2 MAIN CAPITAL EXPENDITURE

TOTAL AMOUNT OF CAPITAL EXPENDITURE

Capital expenditure recognised at Group level totalled €641 million in 2012, €587 million in 2013, €346 million in 2014 and €267 million in 2015.

Each major project may be financed in a dif-ferent way (own resources, bank borrowings and finance leases). Further information is provided in Note 9 to the consolidated financial statements. Current capital expenditure is generally funded by own resources.

ERAMET Manganese

(€ MILLION) 2012 2013 2014 2015

Industrial capital expenditure 399 346 199 164

Against a backdrop of a much more sluggish market, in 2015 ERAMET Manganese adapted its investment by focusing on strategic items, safety and the environment, and on maintain-ing industrial equipment.

Consolidation of production capacity at COMILOG

In 2015 ERAMET Manganese wound up its investment in consolidation of COMILOG’s

production capacity at 4 million tonnes per year, with additions to railway equipment:

– 30 ore wagons; and

– six main-line locomotives.

BREAKDOWN OF CAPITAL EXPENDITURE BY DIVISIONS AND TYPES OF MAJOR PROJECTS

ERAMET Nickel

(€ MILLION) 2012 2013 2014 2015


Improving production equipment

The ERAMET Nickel investment budget for 2015 was reduced again after a substantial reduction in 2014. Strict criteria were used to appraise projects to be undertaken in order to ensure they met the priority needs of safety and environmental protection, improved productivity, or were used to replace obsolete equipment. As part of this systematic search for performance, in a context of a limitation on the sums available to invest, the largest investment projects were given priority.

– For Le Nickel-SLN, completion of construc-tion of the new coal workshop and new drying facilities alone accounted for over 10% of the total amount for SLN. The facility finally commenced operations at the end of the first half of the year 2015. At SLN, 10% of ex-penditure was accounted for by investment to improve HSE facilities, 30% by strategic investment on mines and plant, and 60% by ordinary investment in mines and plant.

– At Sandouville and Eurotungstène, invest-ment was strictly limited to minimum mainte-nance of production tools and guaranteeing safety and environmental protection as priority areas.

Power station for Le Nickel-SLN

Financing a new electric power plant at Do-niambo is not feasible by ERAMET given the current situation in the nickel market and SLN’s financial performance. ERAMET decided to suspend this project, as well as all its major pro-jects, pursue contact with the New Caledonian authorities and maintain the technology watch until such time as markets improved.

Weda Bay project

Due to the sluggish market conditions at pres-ent, most projects for nickel-processing plants in Indonesia have either been put on hold or are advancing at a much slower pace. This is the case for the Weda Bay project, in accordance with the announcement eighteen months ago that the project was to be suspended.

11


Renovation of the SETRAG railway line

The investment package required to make trains safer on the Transgabon rail network was continued in 2015, and will be stepped up in the years ahead on a multi-year refurbish-ment plan of the railway line.

Rail conditions in the most critical areas of the network significantly improved in 2015 thanks to renewal of ballast and better drainage on the rail platform. This considerably improved the ride times of both passenger and ore trains, and also significantly reduced the frequency of incidents.

Six shunt locomotives were added to the fleet at year-end to assist with train consists, and therefore reduce train cycle times.

SETRAG also continued to make improve-ments to its employees’ living arrangements—some were redeployed at certain points on the railway line to produce a better response in terms of track maintenance operations.

In addition to these projects, funds were pro-vided to improve safety, reduce environmental impact and boost the productivity of manufac-turing facilities.

A number of packages were earmarked in connection with the environmental footprint of the manganese ferroalloy production plants (fume capture and filtration systems, ultimate waste storage systems).

ERAMET Manganese also continued and completed deployment of a common steering facility for its European alloy plants, introducing the SAP system in Norway after its implemen-tation in Dunkirk in 2014.

The furnace at TiZir Titanium and Iron was fully revamped in 2015 to reduce its environ-mental footprint, boost performances and manufacture a product with greater added value (slag to manufacture pigment using a chloride process).

Finally, work continued as planned to build a Mines and Metallurgy School in Moanda in partnership with the Gabonese government.

ERAMET Alloys

(€ MILLION) 2012 2013 2014 2015


In 2015 ERAMET Alloys maintained in-vestment at the same level as 2014. This involved expenditure on safety/maintenance/modernisation of its existing facilities. It mainly concerned heat treatment facilities to speed

up processes for aeronautical titanium parts, adaptation of the Erasteel steel works in Com-mentry, and the information system, including the new wages application at Aubert & Duval.

1.2.4 RECENT DEVELOPMENTS AND OUTLOOK

1.2.4.1 INFORMATION UP TO THE BOARD MEETING ON 17 FEBRUARY 2016

MAJOR EVENTS AFTER THE REPORTING DATE

Early January 2016 ERAMET drew down €980 million on the Multicurrency Revolving Credit Facility Agreement (RCF).

To the Company’s knowledge, there were no other events after the reporting date.

1.2.4.2 OUTLOOK FOR 2016

ERAMET will address these difficult circum-stances by stepping up and extending meas-ures to cut costs and boost our performances.

In a difficult market environment and against a backdrop of worldwide increases in stocks, in the first quarter of 2016 the ERAMET group decided to shut down mining production in Moanda for four weeks and significantly reduce the production of manganese alloys.

The limitation on investment in security and strict maintenance will continue into 2016. This was made possible in the wake of a heavy outlay to modernise the production tool at the start of the current decade.

An asset disposal programme is also conducted.

12

Group overview / History and development of the Company

1.3 HISTORY AND DEVELOPMENT OF THE COMPANY1880Société Le Nickel was incorporated in 1880 to operate nickel mines in New Caledonia. Under the majority control of the Rothschild family since the end of the 19th century, in the late 1960s it became the parent company of all the Rothschild group’s mining subsidiaries (Le Nickel-Peñarroya-Mokta group).

1974The nickel business was spun off into a sub-sidiary under the name Société Métallurgique Le Nickel-SLN: Elf Aquitaine acquired a 50% interest in this new company. The former company Société Le Nickel changed its name to Imétal, thereafter holding the remaining 50% in Société Métallurgique Le Nickel-SLN.

1983As part of an industrial, shareholding and financial restructuring programme, ERAP, a French state-owned company, acquired a 70% stake in the share capital of Société Métallur-gique Le Nickel-SLN. Imétal and Elf Aquitaine’s interests were reduced to 15% each.

1985Société Métallurgique Le Nickel-SLN, owner of the mining assets in New Caledonia, became a wholly-owned subsidiary of a new parent company known as ERAMET-SLN, in which the shareholders continued to be ERAP (70%), Imétal (15%) and Elf Aquitaine (15%).

From 1989 onwards, in order to smooth out the effects of nickel cycles, the Company adopted a strategy of diversifying in comple-mentary business activities.

1989-1991Acquisition of the French company La Com-mentryenne and Swedish company Kloster Speedsteel in the high-speed steels sector. These two companies were merged in 1992 to form a new company known as Erasteel.

1991Long-term commercial and financial partner-ship with Nisshin Steel. At the end of October 1994, Nisshin Steel held a 10% stake in Société Métallurgique Le Nickel-SLN.

1992Société Métallurgique Le Nickel-SLN and ERAMET-SLN took on their current names of Société Le Nickel-SLN and ERAMET, respectively.

1994Acquisition of a 51% stake in Eurotungstène, a cobalt and tungsten powder producer.

A private placement was followed by a listing of 30% of ERAMET’s share capital on the Paris Stock Exchange’s “Second Marché”.

1994The BRGM group (Bureau de Recherches Géologiques et Minières, a French state-owned company) transferred ownership of its Cofremmi subsidiary, the owner of nickel ore reserves in New Caledonia, in return for shares representing 2.34% of ERAMET’s new share capital.

1995-1996ERAMET acquired a 46% stake in COMILOG (Gabon), a producer of manganese ore, ferromanganese and manganese-based chemicals.

1997ERAMET acquired an additional 15% in COMI-LOG from Gengabon (Gencor Group).

1998Agreement to swap Poum / Koniambo mining rights in New Caledonia.

1999 – The Group consolidated SIMA (Duval family), a producer and transformer of high-perfor-mance special steels.

– Sale of a 30% stake in Société Le Nick-el-SLN to ERAP in exchange for ERAMET shares; ERAP then transferred the stake to a New Caledonian publicly-owned entity, Société Territoriale Calédonienne de Par-ticipation Industrielle (STCPI). The French government sold ERAP’s remaining interest to Cogema, which then became part of the AREVA group.

– Acquisition of the manganese business (re-fined alloys) of the Norwegian group Elkem.

After these operations, the Group’s businesses had been organised into three Divisions—Nick-el, Manganese and Alloys—and the Group’s capital was mostly held by private shareholders (Cogema/AREVA and SORAME/CEIR—Duval family), with the French government retaining a non-controlling interest.

2000Acquisition of the Mexican company Sulfamex, producing manganese-based agrochemicals. Opening of the Moanda industrial complex in Gabon.

13


2002Acquisition of the Guilin manganese alloy plant (China).

2003Acquisition of a 100% stake in the Trappes re-search centre (France) and 100% of the shares of Eurotungstène.

2005Acquisition of 100% of the shares of Bear Metallurgical (a subsidiary of Gulf Chemical and Metallurgical Corp.) in the United States. SETRAG was granted a 30-year concession to operate the Transgabon railway. Incorporation of Maboumine, a subsidiary of COMILOG in Gabon, whose business purpose is mining ex-ploration at the deposit of Mabounié (niobium, rare earths, uranium, phosphates).

2006Acquisition of Weda Bay Nickel in Indonesia.

2007Shares in ERAMET were swapped for those in SLN for STCPI as part of the SLN shareholders’ agreement.

2008 – Acquisition of a 58.93% controlling interest in the Norwegian group Tinfos.

– Creation of UKAD for preliminary mining and first transformation of titanium (forging bars).

2009Sale of 33.4% of Strand Minerals (Weda Bay project holding company) to Mitsubishi Corporation.

ERAMET increased its stake in Eralloys (for-merly Tinfos, Norway) to 100% after buying up the non-controlling interests. Sale of Nizi, an international trading business acquired in 2008 with Tinfos.

Acquisition of Valdi (France), engaged in the recycling of non-ferrous metals.

2010Agreement with the Gabonese Republic for a phased increase (up to 2015) of its stake in the capital of COMILOG.

2011Creation of TiZir, a joint venture in mineral sands with Mineral Deposits Ltd.

2012Acquisition by Fonds Stratégique d’Inves-tissement (which became Bpifrance) of the ERAMET shares previously held by Areva.

2013Appointment, following a joint nomination by BPI and by SORAME and CEIR, of a director to represent Gabon on the ERAMET Board.

2014Start-up of the Moanda metallurgy complex in Gabon and (via TiZir) of Grande Côte in Senegal (mineral sands).

2015 – Launch of EcoTitanium, Europe’s leading producer of aeronautical-quality titanium producer using recycled materials. It has three shareholders: UKAD (43.5%), the French government as part of the Future Investments Programme operated by the ADEME Agency (41.3%), and Caisse Régionale de Crédit Agricole Centre France (15.2%), through its holding subsidiary CACF Développement.

– Creation of MKAD, a new plant machining large titanium parts, a joint venture between Aubert & Duval and Mecachrome. The aim is to use the plant to transform the titanium produced by EcoTitanium.

16 2.1 GROUP STRUCTURE 17 2.2 ERAMET NICKEL 17 2.2.1 NICKELMARKET 18 2.2.2. COMPETITION 20 2.2.3. STRUCTUREOFERAMETNICKEL 22 2.2.4 MAJOREVENTS 22 2.2.5 SPECIFICACTIVITIES 23 2.2.6. ERAMETNICKELIN2015:

KEY FIGURES 24 2.3 ERAMET ALLOYS 24 2.3.1 COREBUSINESSESOFERAMET

ALLOYS:ATOP-OF-THE-RANGEMETALLURGYOPERATORUPSTREAMOFSTRATEGICINDUSTRIES,PARTICULARLYAEROSPACE

25 2.3.2 THEUPRANGEPOSITIONINGOFERAMETALLOYS

26 2.3.3 SPECIALPRODUCTIONPROCESSESFORSTEELSWITHHIGHLYADVANCEDCHARACTERISTICSANDSUPERALLOYS

27 2.3.4 THECOMPETITORSOFERAMETALLOYS

28 2.3.5 STRUCTUREOFERAMETALLOYS 31 2.3.6 ERAMETALLOYSIN2015 32 2.4 ERAMET MANGANESE 32 2.4.1 THEMANGANESEMARKET 37 2.4.2 ERAMETMANGANESE

OVERVIEW 42 2.4.3 ERAMETMANGANESEIN2015 44 2.5 ORGANISATION OF ERAMET /

ERAMET HOLDING 45 2.6 PLANTS AND EQUIPMENT 46 2.7 RESEARCHANDDEVELOPMENT /

RESERVES AND RESOURCES 46 2.7.1 RESEARCHANDDEVELOPMENT:

R&DOPERATINGTHROUGHOUTTHEMETALSVALUECHAIN,FROMMINETOPRODUCTS

49 2.7.2 MINERALRESOURCESANDRESERVES

ACTIVITIESChapter 2

15

2.1 GROUP STRUCTURE

ERAMET GROUP

ERAMET Engineering

(100%)ERAMET

International(100%)

ERAMET Research

(100%)

A & D (France – 100%)

UKAD (France – 50%)

Erasteel (France – 100%)

Erasteel HEIML (China – 49%)

Société Le Nickel-SLN (56%)

Production unit at Sandouville-Le Havre (100%)

Eurotungstène (100%)

Strand Minerals Pte. Ltd. (66.6%)

PT Weda Bay Nickel* (90%)

Comilog (Gabon) (63.71%)

Setrag (Gabon) (99.96%)

Maboumine (Gabon) * (76.14%)

Comilog Dunkirk (France) (99.99%)

Erachem (Belgium-USA-Mexico) (100%)

Gulf (USA) (100%)

Comilog Asia Ltd (China)

ERAMET Norway (100%)

ERAMET Marietta (USA) (100%)

TIZIR (Norway, Senegal) (50%)

ERAMET Manganese • Manganese: High-grade ore, alloys

and chemical derivatives

• Catalyst recycling

• Ferrovanadium and ferromolybdenum

• Titanium dioxide and high-purity smelting business

• Zircon and ilmenite

ERAMET Alloys• High-performance special steelsand superalloys, high-speed steels

• Closed-die forged parts and forging

ERAMET Nickel• Ferronickel, high-purity nickel

• Nickel and cobalt chlorides

• Nickel carbonate

• Cobalt and tungsten powders

* Project not decided at this point

(80%)(20%)

16

Activities / Group structure

24

Activities / ERAMET Alloys

2.3 ERAMET ALLOYSKEY FACTS

Key facts concerning ERAMETAlloys are asfollows:

– global leadership in a number of respects:the world’s second largest producer ofclosed die-forged parts for aerospace(Aubert & Duval), the leading producer ofgas-atomisedmetalpowders,amajorplayerin titanium for aerospace and a leader inuprangehigh-speedsteels;

– astrategybasedontechnologicalexpertiseandnichemarkets;

– four strategic investments started in2011/2012:anewtitanium-barpress(UKAD,a50/50jointventure),anewpowderatom-isingtower(Erasteel),anewVIMfurnaceforvacuumalloyproductionandanaluminiumpress(Aubert&Duval);

– newpartnershipsinChinaandIndia.

2.3.1 COREBUSINESSES OF ERAMET ALLOYS: ATOP-OF-THE-RANGEMETALLURGY OPERATOR UPSTREAM OF STRATEGIC INDUSTRIES, PARTICULARLY AEROSPACEERAMETAlloyscarriesonitsactivitiesthroughtwo main subsidiaries: Aubert & Duval and

Erasteel, both with uprange positioning inhight-rangealloysandmetallurgicalexpertise.

Aubert & Duval is one of the world’s leading suppliers of high-performance metallurgical alloys, of critical importance to strategic industries.

Aubert & Duval’s prime expertise is inaerospace above all, but also in the defenceindustries, energy production (particularlynuclearandgasturbines).Itiswellknownforitshighqualityand itsability toprovidemet-allurgicalsolutionstomeetthemostintricatechallenges.

Aerospace, Aubert & Duval’s main industrialsector, is experiencing sound growth overthe long term, averaginga 5%annual rise inaircraftdeliveries,outpacingcyclicalvariationsinthissector.

Continuation of growth in the aeronautical sector: trends in the number of aircraft delivered by Boeing and Airbus

400

600

800

1,000

1,200

1,400

1,600

20152014201320122011201020092008200720062005200420032002

Number of aircraft Deliveries

684

553

605

668

832894

858

979 9721,011

1,189

1,274

1,3521,397

Source: Airbus/Boeing.

25


Aubert&Duvalisalsoverymuchtotheforeinthenewwide-body jetaircraftmodels (A350,A380,B787etc.). It isaglobal frontrunner inuprangemetallurgy.

Aubert & Duval is both a high-performance steel and alloy producer (upstream) and a high-power closed die-forger (downstream, inherently in contact with industrial opera-tors), and also engages in bespoke produc-tion runs using specific toolings.

– Producerofpartsusinghigh-powercloseddie-forging for aerospace and energy(rankingfirsttothirdworldwideaccordingtomaterials).Thisprocess involveshot-shap-ingmetalpartswithapressoraram,usingspecific toolings.Aubert&Duvalmanufac-tures items in four keymaterials: high-per-formance steel, nickel-based superalloys,

aluminiumandtitanium.Highpowermeansover30,000 tonnesandupto80,000 tonnes(seebelow).

– A producer of high-performance specialsteels and nickel alloys, Aubert & Duval isatthetopofthe“steelpyramid”(seebelow),and is also strengthening its positions intitaniumatseverallevelsinthevaluechaintobenefitfromthestrongdevelopmentinthismetalinaerospaceapplications,particularlyonaccountofitscompatibilitywithcompos-itematerials.TheCompanyalsoproduceslimited quantities of tool steel for specificniche applications. These are shaped byforgingorrolling.

Erasteel is the historic leader in high-speed steels, and continues to lead the uprange segment of these steels, which are used for

high-performance machining, drilling and cutting tools etc.

These steels are very hard, have a highalloy metal content, and are used to makehigh-performancetoolstooperateatveryhighspeeds upstream of industries with criticalrequirementssuchascarproduction.

Erasteel leads the world market in powdermetallurgy, a process used to producehigh-alloy steels while preserving high-grademetallurgical properties. Starting from thiswell-established skill, Erasteel has embarkedupon development in related high-growthareas,involvingotherproductsmanufacturedusingpowdermetallurgy.

2.3.2 THEUPRANGEPOSITIONING OF ERAMET ALLOYS

ThematerialsandproductsmanufacturedbyERAMETAlloyssellforfarhigherpricesthancarbon steel or even stainless steel suppliedunprocessed. Market volumes are also farsmaller.

World production of the main families of steels and alloys in 2015

World production of the main steel families in 2015

Carbon steels 1.6 billion tonnes

Stainless steels ~41 million tonnes

Tooling steels ~1.9 million tonnes

Nickel alloys, superalloys~300,000 tonnes

High-speed steels ~200,000 tonnes

Estimates by ERAMET.

Working towards the top of the pyramid,weseethefollowing(non-exhaustively):

TOOL STEELS (AROUND 1.9 MILLION TONNES)

Toolsteelsarealloysteelswithapproximately5-15%ofalloycontent.Thesearechieflynickel,chromium,molybdenum,vanadium,tungstenandcobalt.

Toolsteelsareusedtomaketoolsforshapingmetals,plasticsandglass(forstamping,extru-sion,injection,mouldingetc.)upstreamoftheautomotive industry, household appliances,electronicsetc.

ALLOYS WITH HIGHLY ADVANCED CHARACTERISTICS AND NICKEL ALLOYS (SOME 300,000 TONNES)

Thereareseveraltypesofnickelalloythatcanbegroupedtogetheraccordingtothespecificpropertyrequired:

– Alloysexhibitinghighmechanicalstrengthathightemperatures(superalloys).

Superalloys contain 40-75% nickel. Thisis alloyed with chromium (15-30%) and,depending on the required grade, cobalt,molybdenum, titanium,aluminiumorniobi-um.Theirmainoutletisaerospace(engines)

26


andthegasturbinesector.Thethirdfocusofdevelopmentistheautomotivesector.

Demand for superalloys is mainly drivenbyaerospace,whereannualmedium/long-term growth is generally estimated at 5%.This line of business, however, is stronglycyclicalinnature.Thenew-enginebusinessisalsocomplementedby themaintenanceofexistingengines.

– Alloysforelectronics industriesandelectri-calresistors.

– Alloysfortransportingliquidnaturalgas.

– Corrosion-resistant alloys (chemicalsindustry, food industry, offshore platforms,nuclearpowerandenvironment).

HIGH-SPEED STEELS (SOME 245,000 TONNES)

High-speedsteelshaveahighcarboncontentand also contain tungsten, molybdenum,vanadium,chromiumandsometimescobalt.Theycontainnonickel.Afterheat treatment,high-speed steels are extremely heat-resis-tant. Longproductsaccount formostof thetotalmarketandareusedtomakebits,taps,cutters,trimmingcuttersandreamersetc.Flatproductsareusedtomakesawblades,cuttingdisksandindustrialcutters.

Thesemarketsrequiredistributionchannelstorespondtocustomer-specificrequests.

Western consumption of high-speed steelshas been affected by competition fromtungsten carbide.Moreover, a large share oflow-end tools and similarly positioned high-speed steels has been captured by China.Competitorsproducinghighvolumesof low-cost high-speed steels of lower quality thanWesternproducershavedevelopedinChinatomeetthisdemand.

Accordingly, the Western high-speed steelmarket has increasingly refocused on moresophisticated tools using powdermetallurgyor specific products (bimetallic, for localiseduseofhigh-speedsteelsonbladesetc.).

However, inChina,demandfortoolscontain-ingbetter-qualityhigh-speedsteelsisgrowingfast as a result of the rapid economic andindustrialdevelopmentofthatcountry,whichhasrisentoworldleadershipinthenumberofcarregistrations.

Totalworldproductionofhigh-speedsteel isapproximately200,000 tonnes.

2.3.3 SPECIALPRODUCTION PROCESSES FOR STEELS WITH HIGHLY ADVANCED CHARACTERISTICS AND SUPERALLOYSERAMET Alloys has in-house processes forits steels to guarantee the highest levels ofprocesscontrolandperformance.

2.3.3.1 PRODUCTIONOFSTEELSWITH HIGHLY ADVANCED CHARACTERISTICS AND SUPERALLOYS (UPSTREAM)

Theproductionofsteelswithhighlyadvancedcharacteristics and superalloys involvesthe production of an alloy with a perfectlycontrolled composition by melting recycledalloyscrapandprimarymetals inanelectricfurnace.

Severaltypesofprocessareused,dependingontheproduct:

– Air metallurgy, using an electrical-arc fur-nace,followedbyametallurgicalprocessingphase (addingalloymetals) toachieve therequiredchemicalanalysisandpurity.

– Vacuum metallurgy, used to make alloysthatwithstandhigherstresses(andcontainnitrogen- and oxygen-reactive alloyingcompounds).Theprocess iscarriedout inVacuumInductionMelting(VIM)furnaces.

– Remeltingisrequiredforsomecriticalpartsused in the aerospace, power generationandtoolingsectors.

Remeltingtakesplace inslag(ESRfurnace—ElectroSlagRemelting)or inavacuum(VARfurnace—Vacuum Arc Remelting). For sometypes of alloy used in aerospace, the twoprocessesarecarriedoutoneaftertheother.

POWDER METALLURGY

Thisprocess,which followsmelting ina fur-nace,consistsofsprayingajetofliquidmetalintheformoffinedropletsthatcool toformapowder.This isthenturned intoaperfectlydensematerial by hot isostatic compacting.Thisprocessissuitedtohighlyalloyedgradeswith advanced properties. It is also used inloose powder form for applications such assurfacing,MIM(MetalInjectionMoulding)andadditivemanufacturing(3Dprinting).

27


2.3.3.2 ALLOYSHAPING(DOWNSTREAM)

Afteranalloyhasbeenmanufactured,varioustechniques are used to shape the materialmechanically, usually using heat processes,

to optimise the material’s mechanicalcharacteristics.

– Thedie-forging process—seeabove.

– The forgingprocess involvesshapingbarsor simply-shaped blanks. This operation isconductedusingheatandapress,aforging

machine or even a ram, with a series ofpressingrunsbetweentools.

– Therollingprocessconsistsofrunningthematerialbetweencylinders toshape it intosheets,bars(typically20-200 mmindiame-ter)orwire(5-20 mmindiameter).

2.3.4 THECOMPETITORSOFERAMETALLOYSThetablebelowshowsthemainproducersintheareasofbusinessoperatedbyERAMETAlloys,demonstratingthespecialskillsoftheDivision,whichworksinallsegmentswithhighaddedvalue.

METALSPRODUCED PRODUCTIONMETHOD HIGH-POWERCLOSEDDIE-FORGING

COMPANIES

HIGH-SPEEDSTEELS

HIGH- PERFOR-MANCESPECIALSTEELS

SUPERAL-LOYS AIR VACUUM POWDER

HIGH- PERFOR-MANCESPECIALSTEELS

SUPERAL-LOYS ALUMINIUM

TITANI-UM

Alcoa(USA&Russia)+FirthRixson(USA&UK)ATI—Ladish(USA)Böhler+Buderus(Austria/Germany)VoestAlpineBGH(Germany)Carpenter—Latrobe(USA)Cogne(Italy)Ellwood(USA)ERAMETAlloysErzong(China)Gloria(Taiwan)HeYe(China)HitachiMetals(Japan)J.Forge(Japan)Midhani(India)NachiFujikoshi(Japan)OttoFuchs(F.R.Germany)/Weber(USA)PCC(WymanGordon&SMC)andTIMETPratt&Whitney(USAIsrael)Shultz(USA)ShanghaiBaosteel(China)Schmolz&Bickenbach(GermanyUSA)TataSteel(India&UK)Tiangong(China)UniversalStainlessValbruna(Italy)VSMPO(Russia)

28


The special skills of ERAMET Alloys are asfollows:

– die-forgingknow-howacrossfourlargefam-ilies:aluminium,titanium,high-performancesteelsandsuperalloys;

– upstream integration (production) in steelsandsuperalloys.

Thefollowingaresomeofthetrendsobservedintheprofession:

– “three-dimensional” consolidation, vertically(from alloy melting to closed die-forgingand even recycling) and horizontal (closeddie-forging, foundry work etc.) and alsomulti-materials(titanium)intheUnitedStates;

– the emergence of new competitors intentonpenetrating theirdomesticmarketsandreducing their dependence: Japan, ChinaandalsoIndia;

– the increasing importance of titanium tonew and future aircraftmodels, leading toindustrial capital expenditure and strategicmoves.

ERAMETAlloyshasstruckanumberofstrate-gicpartnershipsoverthelastfiveyears:

– UKAD in titanium forging, based on theupstreamactivityofUKTMP(Kazakhstan);

– SQUAD in India in aerospace closeddie-forging;

– CreationofMKAD,a jointventurebetweenAubert&DuvalandMecachrometosupplymachinedtitaniumparts;

– Ecotitanium with the ADEME Agency andCréditAgricoleFrance,producingaerospacequalitytitaniumbarsfromtitaniumoffcuts.

ERAMET Alloys has conducted several solodevelopments of new materials, upstream(vacuum furnace for superalloys and othernickel-based alloys), powder alloy production(Sweden), forging and die-forging (alumini-um-lithiumetc.).

2.3.5 STRUCTUREOFERAMETALLOYS

Production and processing of steels and superalloys (long products etc.)

Forged and closed-die forged parts – France

Titaniumalloys

Aluminiumalloys

Specialsteels

Superalloys

100%

50% 49%

Aubert & Duval

8 sites

High-speed steel production in the form of long and flat products

Pre-alloyed powder metallurgy

100%

Erasteel

8 sites

2.3.5.1 ORGANISATIONALSTRUCTURE AT31 DECEMBER2015

ERAMETALLOYS

UKAD (France)

Erasteel HEIMLChina

29


2.3.5.2 ERAMETALLOYSPRODUCTION

ERASTEEL

Erasteel production

– This specialisation gives Erasteel a greatdealofcontroloverthequalityofitsproduc-tionandenablesittooptimiseitsprocesses.

– Erasteelisoneofthefewproducerswithapresenceinallglobalmarkets.

– Erasteelistheworldleaderingas-atomisedmetal-alloy powders, and recently doubleditscapacitywhenanewatomisingtowerinSwedenwascommissionedin2011.

Erasteel’s industrial organisation

TheErasteelgroup’s industrialactivity isnoworganised around eight production sites inFrance,Sweden,theUnitedKingdom,theUS,ChinaandSpain.

AUBERT & DUVAL

Aubert & Duval has consistently pursued astrategy of focusing on speciality productsthat are technically advanced and intendedfor customers seekinghigh repeatability andreliabilityastouchstonesofproductquality.Inlinewiththisstrategyofhighvalue-addedspe-cialities,Aubert&Duvalhasacomprehensivesetofindustrialassetsthatenableittomeetstringentandhighlydiverserequirements.

Aubert & Duval closed die-forging business

Aubert&Duval is theworld’s second largestcloseddie-forgerandspecialisesinlargepartsandhigh-powercloseddie-forginginexcessof12,000 tonnes.

Aubert & Duval is one of the few producersthat uses closed die-forging processes forall four types ofmaterial: steels, superalloys,aluminium and titanium. Steels and someof the superalloys are produced internally atAubert&Duval.Aluminiumalloysandtitaniumareboughtfromthird-partysuppliers.

Closeddie-forgingiscarriedoutattheIssoire(aluminium)andPamierssites(steel,titaniumandsuperalloys).

Thecloseddie-forgingsector

Thesectorhasthefollowingequipment:

– die-forgingpressesfrom4.5 ktto65 kt;

– ramsfrom1to16 tonnes;

– various systems for finishing (grinding),heattreatment,non-destructivetestingandmachining(lathes,millingmachines).

TheInterforgepress

The activity of Interforge, located in Issoire,hasbeencarriedonsincethemid-1970sina65,000-tonnepressthatisthemostpowerfulinthewesternworld.TheCompanycarriesoutsubcontractedcloseddie-forgingsolelyforitsshareholdersandinproportiontotheirshare-holding (Aubert & Duval 94%, and SNECMA6%).

Thepress is a key strategic advantage, as itpositionstheAubert&Duvalgroupfavourablyin comparison to global and particularly UScompetition.

– Its capacity enables it to make partsthat would be difficult to produce oncompetitors’ presses, which are limited to40,000/50,000 tonnes.FewWesternproduc-ersapartfromAubert&Duvalhavepresseswithcapacitiesover30,000 tonnes.

– Two 75,000-tonne presses in Russia(aluminium producer Rusal and titaniumproducerVSMPOAVISMA).

TheAirforgepress

TheAirforgeplantatPamiers,builtaroundafullyintegrated40,000 tonnepress,isparticu-larlysuitedtothecloseddie-forgingofaircraftengineparts,includinglarge-formatparts.

Closeddie-forgingmarkets

In the large-format part market (closeddie-forgingpowerofover12,000 tonnes),themainoutletsare:

– the aeronautics industry: this market isdivided into two segments, engine parts(customers such as General Electric,SNECMA,Pratt&Whitney,RollsRoyceetc.),airframes,landinggearandequipmentparts(Airbus, Boeing, Dassault Aviation, Messi-er-Bugatti-Dowtyetc.);

– the gas turbine industry: turbinemanufac-turing customers such as General Electric(PowerSystems),SiemensandAlstom.

Positioningincloseddie-forgingbasedonR&D

Aubert & Duval uses CAD and simulationsoftware in combination to optimise thecharacteristics and costs of parts in directcoordination with the customer. This alsoconsiderablyshortensresearch,developmentandproductioncycles.

Inrecentyears,Aubert&Duvalhasstrength-ened its strategic position in the closeddie-forgingsegmentthrough:

– aninnovativeproductR&Dpolicy:newsteeland superalloy grades, expertise in largeparts to cater for growing equipment size(wide-body jets, high-power gas turbines,etc.);

– an innovative research and developmentpolicy for processes: closed die-forging tonear-finaldimensionsdesignedtooptimisematerialuse,andhigh-speedmachining;

– optimisation of industrial performance,in terms of production costs, productqualityandservice reliability (specialisationof production plants, launch of LeanManufacturing).

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Aubert&Duvalisalsodevelopingitsposition-ingalongthevaluechainbycapitalisingonitsupstream integration capacity (material pro-duction and closed die-forging) and growingdownstreaminmachiningfunctions.

Aubert & Duval’s other business sectors

Industrial assets for these other sectorsinclude:

– arcfurnacesofupto60 tonnes,combinedwith ladle metallurgy tools (ladle, AOD orVODfurnaces);

– VIMfurnacesofupto20 tonnesforvacuumalloyproduction;

– powdermetallurgyproductionunits;

– vacuum or slag remelting furnaces withcapacityupto30 tonnes;

– rolling mills to make long products withdiametersof5.5 mm-200 mm;

– forgingpressesandmachineswithforcesofupto4,500 tonnes;

– machining facilities (for milling, turning,reamingordrilling);

– heattreatmentequipment,accommodatingparts of up to 50 tonnes or 20 metres inlength;

– non-destructive testing equipment (sweat-ing, ultrasound, X-ray, magnetic particleinspectionetc.).

All these tools have computerised man-agement and supervision systems and arecertified tomeet the requirements of hi-techmarkets (aerospace, energy, weaponry, auto-motive,medicaletc.).

Longproducts

Theseareproductswithadvancedcharacter-istics,generallyinbarformat,fortransforma-tionormachining.Aubert&Duvalfocusesoncriticalapplicationsintheaerospace,medicalandautomotivesectors(enginevalvesetc.).

Thenumberofcustomersislimited.Salesarecharacterisedbyongoingcontractsandahighnumber of marketed grades, often in smallquantities.

Toolingsector

This sector’s products are large forgedblocks, which may be pre-machined, andlong products, usually with large sections.Targetmarketsare theusualoutlets for toolsteels,namelyhot-working,cold-workingandplastic-injection moulds. The market is bothfragmented (a large number of customers)andregional.Asaresult,distributionplaysanimportant role. Aubert &Duval is specificallypositionedup-range,providingahightechnicalconsultancycontent.

Individualforgedpartsandspecialitiessector

This areacombines various relatedactivitiescallingforhighlyspecificexpertise:

– Individual forgedparts,made inshort runsfor thedefence,oildrillingandshipbuildingmarkets.

– Remeltingalloys.

– Powdermetallurgy: semi-finished productsfor turbine disk closed die-forging andsurfacingpowders.

2.3.5.3 MARKETINGPOLICYAND PRODUCTS

ERASTEEL’S MARKETING POLICY AND PRODUCTS

Erasteelworksincloselong-termpartnershipwith its customers. It has its own salessubsidiaries in the main Western countriesconsuminghigh-speedsteels.Incertaincoun-tries, Erasteel is supported by the ERAMETInternationalsalesnetwork.

In other countries, sales are made by localagents.Tosupportthissalesnetwork,marketmanagersareresponsibleforthewholerangeof products within their respective remits.

Erasteelboastsahighlycomprehensiverangeof products to respond to the needs of itsmarkets.

AUBERT & DUVAL’S MARKETING POLICY: CLOSE RELATIONS WITH MAJOR BUYERS

Multi-yearcontracts(typically3-10 years)withmajor aerospace buyers usually specify theshare of procurement contracts awarded toAubert&Duval.Shipmentsthereforemoveinstep with aircraft production rates and, con-sequently, aredependenton the stateof theaerospace market. Changes in raw materialpurchasing prices (cobalt, nickel, chromium,molybdenum,scrapironetc.)arepassedoninsellingprices.

Special-ordersingle-parttooling(asisthecasefor closed die-forging) is usually financed bycustomers.Thissituationisabarriertoentryfornewcompetitorsonce the initial contracthasbeenawarded.

A high degree of integration with the majorbuyers’ research departments from partdesign onwards is a key requirement in thisbusinesssegment:Aubert&Duval’stechnical/salesengineersworkcloselyalongsidetheseresearchdepartments

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2.3.6 ERAMETALLOYSIN 2015(€ MILLION) 2015 2014

Sales 991 938Currentoperatingprofit/loss 27 23

Netcashgeneratedbyoperatingactivities 27 18

Capitalemployed 800 789Industrialcapitalexpenditure 44 48

2.3.6.1 COMMENTS

ERAMET Alloys: sales up by 6% in 2015, to €991 million. Current operating profit rose to €27 million, including €50 million by Aubert & Duval to confirm growth, and -€23 million by ERASTEEL, drastically affected by the high-speed steel market. ERAMET Alloys still holds a good position in the aeronautical sector.

The aeronautical sector is showing regulargrowthandaccountsforalmost60%ofsalesbyERAMETAlloysonprogrammesbyaircraftmanufacturers requiring high added-valuepartsforstructuresandengines.Aubert&Du-val’shighqualityandserviceswonaspecificawardattheLeBourgetTradeFair.

In2015ERAMETAlloysenteredanewphasein the structuring of its business targetingaeronauticaltitaniummarkets:

– AnindustrialorderforUKAD,ajointventurebetween Aubert & Duval and UKTMP, toforgeaeronauticaltitaniumbars.

– Continuation of construction of EcoTitani-um,Europe’sleadingproducerofaeronauti-cal-qualitytitaniumproducerusingrecycledmaterials, in partnership with France’sADEMEagencyandCréditAgricole.

– CreationofMKAD,a jointventurebetweenAubert&DuvalandMecachrometosupplymachinedtitaniumparts.

ERAMETAlloysalsocontinued toexpand itspowdermetallurgybusiness:

– Deliveries stepped up on the Rafaleprogramme.

– Positioning in the emerging 3D printingsector.

Developments intheDivision’sothermarketswere less favourable, with smaller volumesof high-speed steel pulling down Erasteel’sresults.

Cost-cutting and better operational perfor-mance by ERAMET Alloys accounted for acumulative€57 millionin2014and2015.

2.3.6.2 ERAMETALLOYS’RETURNONCAPITALEMPLOYED

ROCE:Currentoperatingprofit(loss)/Capitalemployedat31 Decemberofyeary-1(Consolidatedequitycapitalplusnetfinancialdebt,plusprovisionsforsiterehabilitation,restructuringandotherlabourrisks,lessnon-currentfinancialassets).

Alloys ROCE (before tax)

% 2011 2012 2013 2014 2015

Alloys 2.5 (0.7) (0.5) 3.0 3.4

y/ref: questionnaire on aubert & duval. · 2017-07-19 · foundation year: 1907 legal form:...

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