Eramet's 45% EBITDA Jump Helps, but €2 Billion Debt Still Hangs Over Lithium Turnaround

EBITDA improved sharply, but the story still hinges on the balance sheet

Eramet's first-half 2026 results show a genuine operating improvement, but the shares still look like a funding story first. Management delivered a 45% jump in adjusted EBITDA to €276 million, and adjusted free cash flow improved to €17 million from -€266 million a year earlier. That does not erase the challenges, but it does suggest operations are stabilizing.

Why investors can point to real progress

The clearest improvement is in cash generation. Eramet said the gains came mainly from intrinsic performance gains, rather than favorable commodity pricing. Lithium was the standout contributor, and the broader operating improvement gives bulls a more tangible case than they had before.

Why the market still hesitates

The caution is understandable. Eramet still faces elevated leverage, with net debt of approximately €2 billion and adjusted leverage at 4.5 times EBITDA. The planned €500 million capital increase in Q4 2026 also remains a key part of the funding strategy. Until that backdrop improves, investors are likely to judge every operating gain through the lens of balance-sheet risk.

Centenario is the clearest operating win, but other assets still need to hold up

The operating fix is starting to look credible, but the next question is which assets are actually earning their keep.

Why Centenario matters most right now

Centenario is the part of the story that is easiest to validate. It has reached 90% of nameplate capacity in June and helped drive breakeven adjusted free cash flow for the Group. That makes it more than a construction narrative: the project is becoming a cash-flow contributor at the same time Eramet is trying to strengthen its financial position.

Indonesia, Senegal, and manganese form the real test

Centenario's progress does not make the rest of the portfolio irrelevant. Eramet still faces ongoing challenges at its nickel operations in Indonesia and a fire at its Senegal mineral sands facility. Those issues do not cancel out the lithium progress, but they do explain why investors are waiting for more consistency across the business.

Manganese remains the steadier, mature component of the portfolio. Eramet has also broadened the strategic case for the division with its Manganese and Decarbonized Steel: Towards a Sustainable Value Chain white paper, reinforcing manganese's role in the wider decarbonization narrative.

Cash flow, debt, and dilution matter more than another EBITDA headline

The stock decision now comes down to whether better operations can translate into a funding plan investors can trust.

What the latest numbers actually tell us

The most important change is not just the EBITDA increase. It is adjusted free cash flow of €17 million, especially after a year-ago free cash flow of -€266 million. That swing matters because it shows less cash strain, but it is still too early to call the recovery fully durable.

Eramet still reports net debt of €1.9 billion, while the earlier presentation described it as approximately €2 billion. Either way, the leverage picture remains heavy. For a mining company, that is manageable rather than unsustainable, but it does mean investors will watch cash retention and any funding actions closely.

What matters in the next quarter

• Whether adjusted free cash flow remains positive after the €17 million first-half result
• Whether the financing plan, including the planned €500 million capital increase in Q4 2026, is executed in an orderly way
• Whether Centenario's ramp continues without fresh slippage
• Whether problems in Indonesia and Senegal stop widening

The next move depends on durability, not just improvement

At this point, the debate is less about whether Eramet is getting better and more about whether the improvement is strong enough to offset the balance-sheet burden. The market needs to decide whether Centenario's ramp-up and breakeven adjusted free cash flow mark the start of a durable reset or simply a helpful first-half improvement.

What would strengthen the case from here

Bulls want proof that the good news is sticking. The clearest confirmation would be steadier cash generation, continued progress at Centenario, and a funding process that looks planned rather than forced. If those pieces line up, the current caution could start to fade.

What would weaken it

If cash flow slides back, leverage stays elevated, or operating headwinds elsewhere worsen, the market is unlikely to give much benefit of the doubt. In that scenario, the equity case remains dependent on execution and financing discipline, not just better EBITDA.