Eramet's 45% EBITDA Jump Looks Real-But Debt and Nickel Risk a 50% Sentiment Reversal

Eramet's operating improvement is visible, but sentiment is still anchored to the old risk story

Eramet has delivered a clear half-year improvement, but net debt still hovering near €2 billion means there is little room for another miss.

The core tension is simple. The old script still says Eramet carries too much leverage and too much nickel risk. The fresh data says adjusted EBITDA reached €1,276 million versus €1,091 million a year ago, while adjusted free cash flow reached €17 million, up from -€266 million. Even so, the market still appears to be pricing Eramet as if the worst of the stress is still current.

That gap matters because the headline improvement is already out. What may still rerate the stock is whether management can show that these gains are repeatable rather than limited to one strong half.

Investors now need proof that lithium's contribution is durable and that the rest of the portfolio does not drag hard enough to wash it out. Management has already pointed to Centenario reaching 90% of nameplate capacity, even as ongoing challenges at its nickel operations in Indonesia and a fire at its Senegal mineral sands facility keep skeptics engaged.

Why the improvement looks more credible than a pure narrative trade

This turnaround looks sturdier than a story driven by lithium hope alone because several operating levers moved at once. Earlier, investors mostly needed to believe Centenario could ramp. Now the evidence is broader.

Centenario reached 90% of nameplate capacity, and Eramet's improved cash position means operations are moving closer to self-funding rather than only promising to do so later.

That does not remove commodity risk. Management said the gains came even with global macro-economic headwinds and core commodities at cyclical lows. In other words, the improvement was not only a product of friendlier markets; operational execution also mattered, within a tough backdrop that the ReSolution performance improvement programme was designed to address.

Manganese gives the portfolio more breadth, even if it does not settle the debate

Eramet also published a white paper on manganese and decarbonized steel. That will not change hard fundamentals on its own, but it can matter for how the market frames the business. If investors start to see manganese less as a legacy mining asset and more as part of a lower-carbon steel value chain, the stock gains a second narrative lever instead of leaning entirely on lithium execution.

Why the market still hesitates: leverage, nickel, and the financing overhang

Even with breakeven adjusted free cash flow and a sharp EBITDA improvement, Eramet still carries net debt of approximately €2 billion and adjusted leverage at 4.5 times EBITDA. For many investors, that keeps the story in the prove-it-again zone.

The planned €500 million capital increase in Q4 2026 adds to that caution. Bulls can argue the dilution is temporary if it gives a levered turnaround time to compound. Bears will argue it signals that the financing debate is not over. Until that risk clearly fades, sentiment is likely to stay tied to credit optics as much as to lithium progress.

The execution critique also still has weight. Management itself highlighted ongoing challenges at its nickel operations in Indonesia and a fire at its Senegal mineral sands facility, alongside the need for ReSolution to support more disciplined growth. That does not invalidate the half-year turn, but it does justify a more cautious reading of the turnaround.

What would trigger a rerating - and what would break it

For sentiment to improve, Eramet has to show that adjusted free cash flow reached €17 million, up from -€266 million was the start of a pattern rather than a one-half outlier. The clearest path is straightforward: lithium must hold the momentum from 90% of nameplate capacity, while the rest of the portfolio stops reinforcing the old fragile-turnaround narrative.

What would help: - Another update that repeats cash-generation progress - Continued lithium ramp discipline after reaching 90% of nameplate capacity - A market framing that gives manganese more strategic weight after the white paper on manganese and decarbonized steel

What would break the cautious-positive view: - Further slippage at the nickel operations in Indonesia - Cost or timing pressure linked to the Senegal facility - Signs that the funding plan is mainly balance-sheet repair rather than deliberate optimization

The setup is improving, but not yet clean: operational execution is getting better while credit anxiety still shapes how the market reads each update.