REGISTRATION DOCUMENT · 2019. 7. 23. · Registration number 632 045 381 in the Paris trade and company register The French language version of this Document de Référence (Regis-tration

REGISTRATIONDOCUMENT

2015

5 GROUP OVERVIEW 6 1.1 GROUP PROFILE 7 1.2 KEY FIGURES / COMMENTS

ON THE FINANCIAL YEAR 11 AN ASSET DISPOSAL PROGRAMME

IS ALSO CONDUCTED 12 1.3 HISTORY AND DEVELOPMENT

OF THE COMPANY 15 ACTIVITIES 16 2.1 GROUP STRUCTURE 17 2.2 ERAMET NICKEL 24 2.3 ERAMET ALLOYS 32 2.4 ERAMET MANGANESE 44 2.5 ORGANISATION OF ERAMET /

ERAMET HOLDING 45 2.6 PLANTS AND EQUIPMENT 46 2.7 RESEARCH AND DEVELOPMENT /

RESERVES AND RESOURCES 61 RISK FACTORS 62 3.1 COMMODITY RISK 62 3.2 SPECIAL RELATIONSHIPS WITH

THE GROUP’S PARTNERS 64 3.3 MINING AND INDUSTRIAL RISKS 67 3.4 LEGAL AND TAX RISKS /

DISPUTES 70 3.5 LIQUIDITY, MARKET AND

COUNTERPARTY RISKS 72 3.6 INSURANCE / COVERAGE

OF RISKS LIKELY TO BE INCURRED BY THE ISSUER

75 CORPORATE GOVERNANCE 76 4.1 REPORT FROM THE CHAIRMAN

OF THE BOARD OF DIRECTORS APPROVED BY THE BOARD OF DIRECTORS ON 17 FEBRUARY 2016

98 4.2 STATUTORY AUDITORS’ REPORT DRAWN UP PURSUANT TO ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE ON THE REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS OF ERAMET

99 4.3 REMUNERATION OF CORPORATE OFFICERS

118 4.4 INFORMATION RELATING TO PENSION COMMITMENTS FOR GROUP’S CORPORAL OFFICERS – ARTICLE R. 225-104-1 OF THE FRENCH COMMERCE CODE AS IMPLEMENTED BY DECREE N°2016-182 OF 23 FEBRUARY 2016

119 4.5 SECURITIES HELD BY MEMBERS OF THE BOARD OF DIRECTORS AND BY GENERAL MANAGEMENT

120 4.6 SPECIAL REPORT ON BONUS SHARE GRANTS

123 SUSTAINABLE DEVELOPMENT 124 5.1 SUSTAINABLE DEVELOPMENT

POLICY AND ORGANISATION 125 5.2 ENVIRONMENTAL

CONSERVATION 145 5.3 INFORMATION ON SOCIETAL

COMMITMENTS IN FAVOUR OF SUSTAINABLE DEVELOPMENT

151 5.4 INDUSTRIAL AND MINING PROJECTS

154 5.5 RESPONSIBILITY FOR CHEMICALS 156 5.6 HEALTH AND SAFETY 159 5.7 HUMAN RESOURCES 171 5.8 METHODOLOGY NOTE 175 5.9 REPORT BY ONE OF THE

STATUTORY AUDITORS APPOINTED AS INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED HUMAN RESOURCES, ENVIRONMENTAL AND SOCIAL INFORMATION INCLUDED IN THE MANAGEMENT REPORT

179 FINANCIAL STATEMENTS 180 6.1 2015 CONSOLIDATED FINANCIAL

STATEMENTS 246 6.2 2015 SEPARATE FINANCIAL

STATEMENTS 276 6.3 CONSOLIDATED FINANCIAL

STATEMENTS FOR 2014 AND 2013 276 6.4 DIVIDEND POLICY 277 6.5 FEES PAID TO THE STATUTORY

AUDITORS 279 CORPORATE AND SHARE CAPITAL

INFORMATION 280 7.1 MARKET IN THE COMPANY’S

SHARES 282 7.2 SHARE CAPITAL 290 7.3 COMPANY INFORMATION 294 7.4 SHAREHOLDERS’ AGREEMENTS 299 GENERAL SHAREHOLDERS’ MEETING—

WORDING OF DRAFT RESOLUTIONS 300 8.1 EXPLANATORY NOTE 302 8.2 WORDING OF DRAFT

RESOLUTIONS 308 8.3 STATUTORY AUDITORS’ REPORTS

ON THE RESOLUTIONS PRESENTED TO THE GENERAL SHAREHOLDERS’ MEETING

311 ADDITIONAL INFORMATION 312 9.1 PERSONS RESPONSIBLE FOR

THE REGISTRATION DOCUMENT 313 9.2 AUDITORS 314 9.3 FINANCIAL INFORMATION 315 9.4 CONCORDANCE TABLE FOR

THE ANNUAL FINANCIAL REPORT 316 9.5 MANAGEMENT REPORT

CONCORDANCE TABLE 318 9.6 TABLE OF CONCORDANCE WITH

EUROPEAN REGULATION 809-2004

The French language version of this Document de Référence cancels and replaces the French language version of the Document de Référence filed under number D. 16-0301 on 7 April 2016 and posted on 8 April 2016 which contained an erroneous figure on page 302 (first paragraph of the fourth resolution): retained earnings after allocation of the losses for the past financial year amount to €493,894,189.97 instead of €1,156,925,370.65. Except for this change, no other change was made to the French language version of the Document de Reference.

This document, prepared on the basis of the 2015 financial state-ments, includes all material information subsequent to the approval of the financial statements, as available at the date of its filing.

Société anonyme (French public limited company) with registered capital of €80,956,814.90Registered office: Tour Maine Montparnasse – 33 avenue du Maine – 75015 ParisRegistration number 632 045 381 in the Paris trade and company register

The French language version of this Document de Référence (Regis-tration Document) was filed with the Autorité des Marchés Financiers (AMF) on 7 April 2016, pursuant to article 212-13 of the AMF Gene-ral Regulations. It may be used in support of a financial transaction if supplemented by a prospectus which will have received the visa of the AMF. This document has been drawn up by the issuer and is binding for its signatories.

2015

4

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.

14

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

17


2.2 ERAMET NICKEL2.2.1 NICKELMARKET

2.2.1.1 USESOFNICKEL

Nickel is chiefly used to make numerousspecialsteelsinthebroadestsense(stainlesssteel, alloy steels, and hence superalloys)which together account for some85%of itsusages. Its rich and multifarious propertiesalsomakeitusefulinsmallervolumes,forex-ampleinelectroplating(electrodepositioninathinlayeronplumber’sfittingsorinautomotiveapplications) or in rechargeable batteries. Italso possesses catalytic properties. Nickel’ssymbol in theperiodic table isNi.Worldwideprimarynickelconsumptionin2015,estimat-edatsome1.9 milliontonnes,brokendownasfollows:

– Stainlesssteel: 67%.

– Nickelalloys: 11%.

– Electroplating: 8%.

– Castingandalloysteels: 7%.

– Otheruses(includingcatalysis andrechargeablebatteries): 7%.

Sources: Estimates by ERAMET.

STAINLESS STEEL

Thestainlesssteelsectorisbyfartheworld’slargestconsumerofnickel.Combiningnickelwith chromium makes it corrosion-resistantandmoreductile,andmucheasier toshape.The followingare themainusesofstainlesssteel:

– Food safety and hygiene: householdequipment (sinks, cutlery, cooking potsetc.), household appliances (washing ma-chines,microwavesetc.)andalsothefood

industry,invatsandpipingformilkandwineproduction,pharmaceuticalpreparationsorsurgicalequipment.

– Basic industries for corrosion resistance:chemicals, petrochemicals, paper, energyproductionetc.

– Building and construction industry (aes-thetics, durability, low maintenance cost):lifts, stair-rails, urban furniture, buildingaccessories.

– Transport(limitationofcorrosion,lowmain-tenance cost): trains, ships, tanker trucks,aerospace,automotivecatalyticexhausts.

NICKEL ALLOYS

Aerospace superalloys have a nickel contentofmore than45%. It iscombinedwithothermetalssuchascobaltandchromium.Thesesuperalloys can sustain good mechanicalperformance despite the increasingly highoperatingtemperaturesofjetengines.

Nickel/iron alloys are used in the productionand transportation of industrial gases andliquidnaturalgas.Theverylowtemperaturesused in these processes make the use ofcertainnickel/ironalloysessential.

Othercorrosion-resistantnickelalloysareusedin chemical industries and in environmentalprotectionfacilities(smokeandgasprocess-ing,wastewatertreatmentetc.).

NICKEL RECYCLING

Nickel can be recycled indefinitely and itshigh economic valuemakes itworthwhile tocollectandrecycle.Thestructureofthenickelrecyclingindustryhasbeenfirmlyestablishedfor many years. Nickel is most commonlyrecycledintheproductionofstainlesssteel.

2.2.1.2 NICKELSUPPLY

NICKEL ORES

There are two main kinds of nickel ore:sulphide ores and oxide ores—the latter hastwo categories, depending on the chemicalcomposition.

Sulphide ores

Sulphide oremines aremostly underground.Geographically they are located to theNorth(Canada, Siberia) and also the South (SouthAfrica,Australia).Intheseores,nickelisfoundwith several other metals such as copper,cobalt,gold,silverandoftenplatinoids.Aben-eficiationprocesscanbeusedtoconcentratetheore,usingthedifferentdensitiesofthesul-phidesofupgradedmetalsandofoxide-basedores.Theconcentrateisprocessedbypyrome-tallurgy infurnacestocreatean intermediateproduct,amixtureofmetal-enrichedsulphidesknown as matte. Mattes are then refinedto separate the different metals and obtainmetallicnickelandextremelypuremetalsalts.

Oxide ores: laterites and garnierites or saprolites

Nickeloxideoredepositsareminedinopen-pit.Thesedeposits,wherenickel isconcentratedbyweatheringdue toclimateand thenatureof theterrain,aresituated in tropicalclimaticzones (New Caledonia, Indonesia, the Philip-pinesorCuba).

Thereare twokindsofore: lateritesandgar-nieritesorsaprolites.Garnieritesorsaprolitesliebeneathlaterites,butaretherichestnickelores.Theyhavehighernickelgradesofaround1.3-2.5%.Foralongtime,onlygarnieriteswereprocessed.

Thegarnieriteoreistreatedbypyrometallurgyin electric furnaces, which usually gives afinished product, ferronickel, used directly tomake stainless steel or, less frequently, anintermediateproduct,matte,which is refinedtomakemetallicnickel.

18

Activities / ERAMET Nickel

Thenickel content of laterites is low, usuallyaround 1-1.4%. The growing scarcity ofsulphide ores and high-grade garnieritesor saprolites has stimulated an interest inprocessing laterites since the early 1990s.They are upgraded using hydrometallurgicalplantsatwhichtheoresaredissolved insul-phuricacid,whereupon thenickelandcobaltareextractedandseparated.Oneprocess toupgradelateritesissmeltinginsmallfurnacestoproducenickelpig iron (NPI).Lateritesarethe main source of nickel in the long term.TheERAMETgrouphasdevelopedaspecialpatented hydrometallurgical process for de-velopingamixoflow-gradegarnieritesorsap-rolitesandlaterites.Thisprocessoperatesata lowerpressureand temperaturecomparedtoexistingprojectsprocessinglateritesalone.Thisprocess,andthepossibilityofproducingan ore mix, constitutes genuine competitiveedgewith respect tocurrentprocedures thatonly process laterites in autoclave mode athightemperaturesandpressures.

2.2.2. COMPETITION

2.2.2.1. RECENTTRENDSINNICKELPRICES

NickelisquotedontheLME,theLondonMetalExchange. A characteristic of this market isthe possibility, thoughwithout the obligation,ofdeliveringortakingdeliveryofthephysicalmetalcoveredbymaturedfuturecontracts.

Premiums or discounts are applied to thisbasepriceaccording to theproducts’qualityor grade, processing stage, location and thephysicalmarketequilibriumatthetime.

Recentyearshave featuredstronggrowth inworld demand for nickel, including demandin the developed countries. In view of thecomplexityandcapital-intensivenessofinvest-ment inthenickel industry, thissteepgrowthin requirementscausednickelprices topeakprominentlyin2006/2007.

In reaction, the Chinese metallurgy industrysuccessfully adapted old steel-industry sitesandsubsequentlydevelopedspecificproduc-tionresourcesformeltingimportednickeloresandsatisfyingagrowingproportionofChinesestainless steel producers’ requirements, alsoheavilyexpanding.

Productionbythesenewplayersinthenickelsector is below industry-standard grade andquality, and isgenerally referred toas “nickelpigiron”.

Chinahasfewnickeldepositsandisthereforemassively dependent on oxide ore importsfrom two countries, Indonesia and the Phil-ippines, where it has stimulated very rapiddevelopmentofminingproduction.

Between2011and2014,nickelpigiron(NPI)took approximately half the Chinesemarket,equivalent to approximately a quarter of theworld market. It should be noted that thisrapid growth entailed severe environmentalimpacts,bothinChina(particularlyemissionsetc.)andatminingsites,inexcessofindustrystandards.

However, this development far outgrew de-mand,andtheworldmarketsawarapidriseinstocksthroughouttheindustrychain,causingnickelpricestoslumpbelowproductioncostfor a large proportion of world producers in2013.

FollowinganembargobytheIndonesiangov-ernment on exports of nickel ore in January2014,anddespitetheabsenceofanyseriousthreat to supplies of ore at the beginning of2014, prices rose in thewake of the embar-go. The conflict between the Ukraine andRussia—which produces 12% of the world’snickel—drovepricesupfurtherinMarch 2014.Finally, another interruption of production atthe hydrometallurgy plant in Goro (Vale) inNew CaledoniainMay 2014broughtpricestoarecordlevelofUS$21,200/ton13 May2014.Thisoccurredeven thoughGoro’s impactonworldproductionisquitelimited.

Simultaneously, with the continued rise innickelstocksontheLME,pricesbegantofallin the latter half of 2014. This expansion ofLMEstockswasaccompaniedbyarationali-sationofChinesestocks.Analmostequivalentquantity ofmetalwasdestocked inChina in2014followingtheQindaoportscandal,whichcaused amassivewithdrawal from stock ofmetallicnickeloftenusedassecurityforloans.ThesurplusmetalstocksinChinaappearedtohavebeen exhaustedby early 2015. In addi-tion,theconsiderableorestocksaccumulatedinChinabeforetheIndonesianexportbanalsodecreasedthroughout2014.

LME metal stocks continued to increase in2015.Inthiscontext,nickelpricesontheLMEfellthroughout2015toarecordlowsincetheonset of financial crisis at the end of 2008.EconomicdevelopmentsinChinaarebringingpressure to bear on nickel prices, whichregisteredoneoftheheaviestdecreasesinthemetalsector.Attheseprices,industryanalystsclaimmorethan70%ofnickelmanufacturersareproducingataloss.Metalstocksattheendof2015hadcertainlydecreased,butarenowatarecordhighofalmost500,000 tonnes,thecombined figures of the LME and the SHFE(ShanghaiFuturesExchange)createdin2015.

19


0 30,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000 270,000 300,000 330,000 360,000 390,000 420,000 450,000 480,000 510,000 540,000

0

3,000

6,000

9,000

12,000

15,000

18,000

21,000

24,000

27,000

30,000

Stocks LME Stocks SHFE LME nickel price USD/tonne Nickel stocks(tonnes)

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

Jul-1

3

Oct-1

3

Jan-

14

Apr-1

4

July

-14

Oct-1

4

Jan-

15

Apr-1

5

Jul-1

5

Oct-1

5

Jan-

16

LME nickel priceUSD/tonne

2011 2012 2013 2014 2015

2.2.2.2 THEMAINNICKEL-PRODUCINGCOUNTRIES

Mining production(THOUSANDS OF TONNES OF NICKEL CONTENT) 2013 2014 2014-1-11 2015-1-11

Philippines 316 464 424 461Russia 264 264 242 242Australia 234 245 226 197Canada 223 235 214 215New Caledonia 164 178 163 172Indonesia 834 177 170 119Brazil 108 102 94 87China 107 100 92 91Colombia 84 76 70 68SouthAfrica 51 55 50 50Cuba 56 50 46 52Others 161 241 220 262

WORLD 2,602 2,188 2,011 2,015Source: International Nickel Study Group, INSG.

Metallurgy production Finished products(THOUSANDS OF TONNES OF NICKEL CONTENT) 2013 2014 2014-1-11 2015-1-11

China 693.5 690.5 633.4 562.4Russia 242.0 239.4 219.2 203.9Japan 178.0 177.6 161.7 175.4Canada 153.1 150.0 136.6 146.7Australia 141.5 137.8 125.7 121.1Norway 91.0 90.5 82.8 83.2Brazil 57.5 79.6 73.9 64.9New Caledonia 48.4 62.0 56.0 70.1Finland 44.3 42.6 38.4 36.6Colombia 49.3 41.2 38.0 33.7UnitedKingdom 42.4 39.1 35.6 35.2Others 213.4 238.1 219.2 258.4

WORLD TOTAL 1,954.4 1,988.4 1,820.4 1,791.7Source: International Nickel Study Group, INSG.

20


2.2.3. STRUCTUREOFERAMET NICKELERAMETNickel pursues a strategy of devel-opingoreslocallyandpositioningitselfinhighvalue-added products, with reliance on the

ERAMETgroup’sinternalR&D.ERAMETNickelisnowcomposedoffourmaincompanies:

– AtitsDoniamboplant,SociétéLe Nickel-SLNin New Caledonia, a 56% subsidiary andthe main mining and metallurgy businessdivision,producesferronickel(80to90%ofvolumes)andnickelmatte,anintermediateproductsuppliedtotheSandouvillerefinery.

– The Le Havre Sandouville nickel refinery,specialising in high value-added products,suppliedwithnickelmattebySLN.

– Eurotungstène at Grenoble, where a largeproportion of the cobalt extracted fromNew Caledonian ores at Sandouville isprocessedtomakemetalpowders.

– TheWedaBayprojectinIndonesia,basedonaworld-classdeposit.

Ferronickel

Nickel matte

NewCaledonia

56%

SLN

6 mining centres1 metallurgical plant

High-purity nickel

Nickel and cobalt chlorides

LeHavre(France)

100%

Refinery at Sandouville

1 site

Mine and hydrometallurgy plant (nickel and cobalt)

Halmahera(Indonesia)

90%

PT Weda Bay Nickel

1 site (project)

66.6%

Strand Minerals Pte Ltd

(Singapore)3.4%

10%

MitsubishiCorporation

Pamco

PT Antam

Nisshin Steel 10%

STCPI 34%(New Caledonia)

Cobalt and tungsten powders

Grenoble(France)

Eurotungstène

1 site

100%

30%

STRUCTURE AT 31 DECEMBER 2015

ERAMETNICKEL

2.2.3.1. SOCIÉTÉLE NICKEL

ERAMEThasastronglongstandingpresenceinNew Caledonia(since1880)throughSociétéLe Nickel(SLN),asubsidiaryinwhichitholds56%oftheshares.Theothershareholdersareasfollows:

– 34%isheldbySTCPI,astructurerepresent-ingtheinterestsofthethreeNew CaledonianProvinces.

– 10% is heldbyNisshinSteel, amajor cus-tomerproducingstainlesssteelinJapan.

ERAMEToperateshigh-qualityminesfromthestandpointofbothgradeandreserves.As inthemining industry as awhole, theirminingconditionshaveevolvedinrecentyearsduetolargervolumesofwaste rock, impactingpro-ductioncosts.However,theGroup’sresearchcentre has enabled the Group to adapt itsmetallurgicalprocesstothesechangeswhilecontinuingtoenhancetheoperatingefficiency

ofitsminesandtoinvestinscaled-upminingequipment.

All ERAMET’s metallurgical production usesorefromitsownmines.TheDoniamboplantinNew Caledoniamainlyproducesferronickel,withsome10to15%ofproductionvolumesintheformofnickelmatte,processedtoproducepureproductsattheSandouvillerefinerynearLeHavre.

21


ERAMETsellsallLe NickelSLNproducts, in-cludingtherecentadditionoflow-gradenickelores.ERAMETalsoprovidestechnicalsupportforLe Nickel-SLNinseveralareas,particularlypurchasingmanagement, research,engineer-ing,legalandfinancialneeds.

Le Nickel-SLNsellsallitsmetallurgicalproduc-tionfromDoniambotoERAMET.

– The sale price of the ferronickel sold toERAMET depends on the average priceat which ERAMET sells to its customers,minusmarketingcostsandasalesmarginforERAMET.

– Aspecial contract covers the salepriceofmattetotheSandouvilleplant,withtheaimofmutuallysecuringthisarrangementoverthelongterm.

TheSLNgovernancesystemcloselyinvolvesNew Caledoniaasastakeholder.

NICKEL MINES

The ERAMET Nickel mines located inNew Caledoniabenefitfrom:

– sizeabletonnagesofsaproliteresourcesforpyrometallurgy;

– highnickelcontentsofsome2.45-2.5%,withcut-offgradesof1.7to2.0% Ni;

– sizeable reserves,affordingprospectsoverseveraldecades(seethesectionaddressingResourcesandreserves).

Le Nickel-SLN’s garnierite or saprolite oxideoredeposits aremined in open-pit.Theyaregenerallylocatedataltitudesof500-1,000 me-tres. Le Nickel-SLNhasextensiveexperienceinminingdepositsinNew Caledonia.Depositsare identifiedbygeological,geochemicalandgeophysical surveys, and their geologicalstructuresaremodelled.Extractionisbasedon

minegeologyandiscarriedoutusinghydraulicshovels.Theoreistransportedbytruckswithpayloadsof50 to100 tonnes, dependingonthemodel.

ERAMET’s in-house mining techniques havegained international acclaim in terms ofenvironmentalprotection:storageoftailingsinstabilisedheaps,controlofwaterrun-offandrevegetationetc.

NÉPOUI AND TIÉBAGHI BENEFICIATION PLANTS

AtNépoui,ore issenthydraulically throughaseven-kilometre pipeline to the beneficiationplant.Thatplantwasopenedin1994andusesan (at the time innovative) technologybasedon sorting by particle size and density toincreaseorecontent.Thisallowsalargerpro-portionofthedeposittobeexploited(includinglower-gradeores),thusextendingthelifespanofthereserves.AsimilarprocesswasadaptedtoprocesstheorefromtheTiébaghimine.TheTiébaghi beneficiation plant was opened inNovember 2008.

ORE TRANSPORTATION

Themine’soutputismostlysenttotheDoniam-boplant.Thefirststageoforetransportationisfromtheminetothecoasteitherbytruck,or at Kouaoua by an 11 kilometre conveyor,oratNépouiorTiébaghiintheformofslurry.Attheport,theoreisstoredandstandardisedbeforeitisloadedontoshipsfortransfertotheDoniamboplant.

DONIAMBO METALLURGY PLANT

Around 80-85% of output at the Doniamboplantisferronickel,whichmaybesolddirectly,andnickelmatte,whichisusedinitsentiretyby the Sandouville plant. The ore mined isstandardisedandthendried.Itisthencalcined

infiverotaryfurnaces.TheoreisthenmeltedinthreeDemagelectricfurnaces.Theproductis transformed into sellable ferronickel (SLN25)byladlerefiningfollowedbyshotblasting,or into nickel matte by adding sulphur andrefininginaBessemerconverter.

TheDoniamboplantisoneoftheworld’stwolargestferronickelproductionunits.Itsproxim-itytotheportatNouméaaffordsdirectaccessforcargoshipsandorecarriers.

Theproduction equipment atDoniambohasundergoneamajormodernisationprogramme.Fourofthefiverotaryfurnacesandtwoofthethreeelectric furnaceshavebeenreplaced inrecentyears.Ore-dryinginstallationshavealsobeenrevamped.Sizeableinvestmenthasalsobeenearmarkedtoprotecttheenvironment.

2.2.3.2. SANDOUVILLEREFINERY

The Le Havre-Sandouville refinery uses ahigh-performancehydrometallurgicalprocessspecially developed by ERAMET researchteams.The70%nickelmatteused isentirelysourced from Le Nickel-SLN’s metallurgicalplantinDoniambo,New Caledonia.

Thematte is crushed and then dissolved byan iron chloride solution. Several successiveextraction stages in mixer-settlers separateoutironandcobaltastheirchlorides.There-mainingimpuritiesarethenremoved.Thepurenickel chloride solution remaining is mostlyprocessed by electrolysis in several stages.Theverypurenickelcathodeobtained iscutupandstoredindrums.Therefineryproducesmakes high-purity nickel (over 99.97% nickelcontent) in metal format (sheet nickel), andalso nickel chloride, nickel carbonate, cobaltchlorideandironchloride.

22


2.2.3.3. THEERAMETSALESNETWORK

The Group operates long-term partnershipswith itscustomers. It has itsownworldwidesales network, ERAMET International. TheGroup provides significant technical andsales support to help its customers derivemaximum benefit from its products in theirownmanufacturingprocesses.

The Group’s entire ferronickel production(“SLN 25”)issoldtostainlesssteelproducers,forwhichtheGroupsuppliesbothnickel(20to25%ofthegrossweight)andironofexcellentquality. The Group usually operates undermedium/long-termcontracts thatprovide forvolume commitments in accordance withprice reviews negotiated periodically. ThesecontractsguaranteeERAMETrelativelyregularshipments.

– Metallic nickel orHP nickel is produced intheformofhigh-puritynickelcathodesthatmeetthemoststringentconstraintsandaremainly sold to nickel alloy manufacturers(superalloys for aerospace and nuclearpowerapplicationsetc.)andtonickelelec-troplatingworkshops.

– Nickelchloride(“SELNIC”),ofwhichERAMETis the world’s leading producer, is used inelectroplatingandinthechemicalsindustry(catalysts). Some of the nickel chloride istransformed intoanhydrousnickelchloridetobeusedintheelectronicsindustry.

– Nickel carbonate (“Nickel ONE”) is mainlyusedintherefiningsectortomakecatalysts,andintheceramicsindustryasapigment.

– Cobalt chloride isused in the tyre industryand in the chemicals industry (catalysts)andbyERAMET’sEurotungstènesubsidiary.

2.2.3.4. EUROTUNGSTÈNE

Eurotungstène, located in Grenoble, specia-lises in the production of extra-fine cobaltpowders,andalsotungstenpowdersandalloypowders. These powders are used, amongotherapplications,tomakehardenedcarbidesformetalmachining and for diamond-tippedtoolsusedtocutstoneandbuildingmaterials.

2.2.3.5. WEDABAYNICKEL(INDONESIAN PROJECT)

Since2006ERAMEThasbeenexaminingde-velopmentoftheWedaBayprojectatHalma-herainIndonesia,withitspartnersMitsubishiCorporation,PamcoandAntam.Thisprojectisbasedaround:

– one of the largest world-class nickeldeposits;

– aground-breakinghydrometallurgyprocessdevelopedandownedbyERAMET.

ThedecisiontosuspendtheWedaBayprojectwasmaintainedduetosluggishnickelmarketconditions in 2015. The ERAMET groupremains in permanent contact with partnerMitsubishi and the Indonesian authorities towork on the approach that will create mostvalue.

2.2.4 MAJOREVENTSThroughSLNinNew Caledonia,ERAMETNick-elistheworld’seighthlargestnickelproducer,with output in recent years in the 50,000 to55,000 tonnesrange.

ERAMET Nickel produced 53,369 tonnes in2015 to maintain its status as the world’sleading manufacturer of ferronickel for thestainlesssteelmarket.

The Company was hit hard by productionseasonalityduetoviolentcyclonesattheendof the first quarter of 2015. It had regainednormalperformancelevelsbythelatterhalfof2015,thoughthiswasinsufficienttooffsetthebadstarttotheyear.

Metallurgical production (ferronickel and matte) at the Doniambo plant (IN TONNES OF NICKEL CONTENT)

2008 51,1312009 52,1312010 53,7192011 54,3602012 56,4472013 53,0152014 55,0122015 53,369

TheSandouvilleplantwaskeptatatechnicalminimumin2015,andworkfocusedonprod-uctswithhighermargins.

2.2.5 SPECIFICACTIVITIES

INDUSTRIAL ORGANISATION OF ERAMET NICKEL

TheERAMETgroupiscurrentlyexaminingthereorganisationofproductionbytheDivision:

– SLNistospecialiseinrefinedferronickel.

– The Sandouville output will come from adifferentsourceofmatte.

ELECTRICITY GENERATING STATION FOR LE NICKEL

Financing a new electric power plant at Do-niambo isnot feasiblebyERAMETgiven thecurrentsituationinthenickelmarketandSLN’sfinancialperformance.

ERAMETdecided tosuspend thisproject, aswell asall itsmajor projects, pursuecontactwith the New Caledonian authorities andmaintainthetechnologywatchuntilsuchtimeasmarketsimproved.

23


2.2.6. ERAMETNICKEL IN 2015: KEY FIGURES(€ MILLION) 2015 2014

Sales 686 781Currentoperatingprofit/loss (261) (52)

Netcashgeneratedbyoperatingactivities (60) (18)

Capitalemployed 382 899Industrialcapex(1) 652 967

(1) Excluding Weda Bay for 2014 and 2015.

2.2.6.1 COMMENTS

ERAMET Nickel: sales down by 12% in 2015 against 2014, to €686 million. Current operating profit well into negative territory at -€261 million, pointing to the present slump on the nickel market.

Worldproductionofstainlesssteel, themainoutlet for thenickelmarket, remainedsteadyin 2015 with respect to 2014, breaking the

trendobservedbetween2010and2014,whenannualgrowthwasbetween6%and9%.

The economic slowdown in China and con-tinuedhighoutputbynickelproducershelpedincrease stocks. They hit an all-time high atyear-end2015,withmorethan480,000 tonnesofmetalontheLME(LondonMetalExchange)andtheSHFE(ShanghaiFuturesExchange).

LMEnickelpricescontinuedtofallthroughouttheyeartotheirlowesteverlevelin12 years,one of the largest drops in themetal sector(downby42%betweenDecember2014andDecember2015).

Attheseprices, industryanalystsclaimmorethan70%ofnickelmanufacturersareproduc-ingataloss.

In this context, nickel metallurgy productionin Doniambo (New Caledonia) totalled53,369 tonnesofnickel,downby1,643 tonneswithrespectto2014.CurrentoperatingprofitearnedbyERAMETNickelwashit hard, andcameoutat-€261 million.

Cost-cutting and better operational perfor-mance by ERAMET Nickel accounted for acumulative €64 million in 2014 and 2015,bringing theSLNcashcost toapproximatelyUSD6/lb(intheeconomicconditionsofQ4in2015).

Moreover,ERAMETNickelplanstoextendtheplantocutcostsandboostSLNproductivityinH12016,withaviewtomakingmajorinroadsintoloweringcashcost.

ThedecreaseincapitalemployedwasmainlycausedbytheimpairmentofWedaBayassets.

2.2.6.2 RETURNONCAPITALEMPLOYEDBYERAMETNICKEL

ROCE:Currentoperatingprofit(loss)/Capitalemployedat31 DecemberinyearN-1(equity,plusnetfinancialborrowing,plusprovisionsforsiterehabilitation,restructuringandotherlabourrisks,lessnon-currentfinancialassets,excludingtheWedaBaycapitalemployed).

Nickel ROCE (before tax)

% 2011 2012 2013 2014 2015

Nickel 23.8 (5.1) (28.5) (6.3) (27.0)

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).

30


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

31


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

32

Activities / ERAMET Manganese

2.4 ERAMET MANGANESE2.4.1 THEMANGANESEMARKET

2.4.1.1 MANGANESEDEMAND

MAIN APPLICATIONS

Steel

Over90%ofmanganeseworldwideisusedinsteelproduction.Allsteelmakersusemanga-neseintheirproductionprocesses;onaverage,6-7 kgpertonneofsteel.Manganeseismainlyused insteelasanalloy (ferromanganeseorsilicomanganese)withanaveragecontentof70%ofmanganese:1.8 tonneoforewithanapproximate manganese content of 40% isneededtoproduceonetonneofalloy.

Manganese is used mostly in manganesealloys,andrepresentsaverysmallportionofthecostofsteelmaking.Manganeseismainlyusedasanalloytoimprovehardness,abrasionresistance,elasticityandsurfaceconditionforrolling.It isalsousedfordeoxidation/desul-phurisationinthemanufacturingprocess.

Other applications

– Batteries:mainlyalkalinedisposablebatter-ies. A smaller percentage continues to beused in saline disposable batteries, whicharelessefficient.Manganesederivativesarealsousedinrechargeablelithiumbatteries.

– Ferrites:usedinelectroniccircuits.

– Agriculture:fertiliserandanimalfeed.

– Various chemical uses: pigments, finechemicals.

– Otherusesinmetallurgy:mainlyasahard-eningagentforaluminium(beveragecans).

CARBON STEEL, THE MAIN MARKET

Manganese demand is primarily influencedby trends in global carbon steel production.The Chinese economic boom due to thecountry’s rapid urbanisation and its growinginfrastructurerequirementsmadeasignificantcontribution to the increase in carbon steelproductionanddemandformanganeseoverthelastdecade.

The iron and steel industry, however, isnow experiencing overproduction which isgiving cause for concern, while world steelproduction fell by almost 3% in 2015. TherapidincreaseofChineseproductioncapacityhas exceeded industry’s downstream needs.Additionally, inventories in themain areas ofsteel consumption (a surplus of unoccupiedaccommodation, accounting for more than40% of China’s domestic steel production)and a slowdown in economic growth havehad an adverse effect on China’s domesticsteel consumption. In a bid to offset thevolumeslostontheirinternalmarket,Chinesesteelmakerssoldpartoftheirsurpluscapacitytoothercountries, totheextentthatChinesesteel exports broke further records in 2015:netexportsoffinishedsteelproducts(almost90 million tonnes)notchedupayear-on-yearincreaseofmore than30%against2014.Asacomparison,thisexceedsproductionbytheUS,oneoftheworld’slargeststeelproducers.

OutsideChina,risingChineseexportshavehitlocal producers hard, securing lower pricesandprofits,and increasingunder-useoftheirproduction capacity. Worldwide productioncapacity, in fact,was71%over the first ninemonthsoftheyear,comparedto74%duringthe same period in 2014. Moreover, despitedynamic consumption in North America,productionofrawsteelfellbymorethan8%in2015.EconomicandgeopoliticalcrisisinLatinAmerica,RussiaandtheUkrainealsohasanadverseeffectonsteelconsumptioninthesecountries.Inthiscontext,increasingnumbersof steelmanufacturers are announcing largecapacitydownscaling.

Despitedownwardgrowthrevisions,however,the medium/long-term prospects are stilllookingquitepositive.Worlddemandforsteelwillprobablycontinuetobepulledupbydevel-opmentinemergingmarkets,especiallyIndia.

33


Distribution of raw steel production worldwide

VOLUMES(IN MILLIONS OF TONNES) %ANNUALGROWTH

WORLDPRODUCTIONOFRAWSTEEL 2013 2014 2015 2013 2014 2015

EuropeanUnion 166.3 169.3 166.2 -1.4% 1.8% -1.8%OtherEurope(incl.Turkey) 36.5 36.2 34.0 -8.7% -0.8% -6.0%CIS 108.1 105.9 101.3 -2.6% -2.0% -4.3%NorthAmerica 118.9 121.2 110.7 -2.2% 1.9% -8.6%SouthAmerica 45.8 45.0 43.9 -1.2% -1.7% -2.5%Africa 15.7 14.2 14.0 2.3% -9.2% -1.8%MiddleEast 26.0 28.0 27.4 5.4% 7.8% -2.4%China 815.4 822.8 803.8 11.5% 0.9% -2.3%India 81.3 87.3 89.8 5.2% 7.4% 2.9%OtherAsia&Oceania 204.5 217.3 209.0 -8.5% 6.3% -3.8%

65 countries 1,618.5 1,647.2 1,600.1 3.8% 1.8% -2.9%Source: World Steel Association.

Distribution of raw steel production worldwide (IN MILLIONS OF TONNES)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

China Rest of world

20132 01020072004200119981995199219891986198319801977197419711968196519621959195619531950

Source: World Steel Association, ERAMET.

34


2.4.1.2 MANGANESESUPPLY

MANGANESE ORE

Thesupplyofmanganeseore ismadeupofnumerous typesofore,ofvaryingquality.Aswith iron ore, a distinction ismade betweenhigh-gradeorewith30-48%manganesecon-tent,forwhichshipmentisaffordable,andlow-grade ore consumed locally. Although bothtypesoforeareusedincombinationbyalloyproducers, theusagevalueof thehigh-gradeoreisverymuchhigherthanlower-gradeores.

Estimated ore productionworldwide in 2015wasputat15.3 milliontonnesofmanganesecontent.

Manganese ore production (IN MILLIONS OF TONNES CONTENT)

2013 2014 2015

SouthAfrica 4.5 5.4 4.9Australia 3.2 3.2 3.0China 2.9 2.8 2.3Gabon 1.6 1.5 1.7Brazil 1.0 1.0 1.1India 0.8 0.8 0.6Kazakhstan 0.4 0.4 0.5Ghana 0.5 0.4 0.4Ukraine 0.4 0.4 0.3Malaysia 0.4 0.3 0.2Other 0.7 0.6 0.4

World 16.3 16.7 15.3Source: producer reports, ERAMET estimates.

MANGANESE ALLOYS

Manganese alloys are produced by reducingmanganeseoresat temperaturesofapproxi-mately1,600°C.Thisprocessiscarriedoutbyaddingcoketooneoftwotypesoffurnace:

– electricfurnaces:apartfromChina,virtuallyall manganese alloys are produced usingthisprocess;

– blast furnaces: manufacturers using thisprocessaremainly based inChina, due to

thelocalavailabilityofcoke.OutsideChina,blast furnaces are exclusively located inJapanandEasternEurope.

Therearefourmanganesealloyfamilies:

– high carbon ferromanganese (HC FeMn)containing 65-79% manganese and 6-8%carbon.HCFeMncanbeproducedbytwotypesofprocess,electric furnacesorblastfurnaces;

– silicomanganese(SiMn),containing60-77%ofmanganese. Itcanonlybeproducedbyelectricfurnaces,usingorewiththepossibleadditionofFeMnslag;

– refined ferromanganese (MCFeMn andLCFeMn): this product has a higher addedvalue,withlesscarbon.ItismainlyproducedbytransferringmoltenHCFeMnalloytoanoxygenconverter,which lowers thecarboncontent to the desired level. A distinctionshould be made between medium-carbonferromanganese (1.5% carbon: MCFeMn)andlow-carbonferromanganese(0.5%car-bon:LCFeMn).Thisischieflyusedtomakeflatsteelproductsandspecialsteels.

– low-carbon silicomanganese (LCSiMn) ismostlyusedtoproducestainlesssteels,oneoftheERAMETgroup’smainmarkets.

ERAMET Manganese is the world’s leading producer of refined alloys.

Manganese alloy production (IN MILLIONS OF TONNES CONTENT)

2013 2014 2015

China 12.1 11.1 9.1India 2.2 2.2 1.8Ukraine 0.6 1.0 0.8SouthKorea 0.7 0.8 0.7SouthAfrica 0.8 0.9 0.6Norway 0.6 0.6 0.6Japan 0.5 0.5 0.5Russia 0.3 0.4 0.4Australia 0.3 0.3 0.3Spain 0.3 0.3 0.2Mexico 0.2 0.2 0.2Georgia 0.2 0.2 0.2France 0.2 0.2 0.2UnitedStates 0.2 0.2 0.2Kazakhstan 0.2 0.2 0.2Brazil 0.2 0.2 0.1Other 0.4 0.4 0.4

World 19.9 19.5 16.6

Breakdown of worldwide manganese alloy production

2013 2014 2015

Silicomanganese 68% 65% 63%High-carbonferromanganese 23% 26% 27%

Refinedferromanganese 9% 9% 10%

Source: International Manganese Institute and ERAMET estimates.

Among thestandardalloys,silicomanganesehas grown the fastest. The availability oflow-grade ore resources in China (and alsoIndiaandtheUkraine)makesiteasiertouseforproducingsilicomanganese.However, thelow-grade oremust bemixedwith importedhigh-gradeore,withaconstantneedtostrikeabalancebetweenpriceandperformance.

TheChinesemarketfeaturesa largenumberof alloy producers that are dependent onimportedhigh-gradeore,accountingformorethan60%oforeimportsworldwide.Chinalostgroundasaninternationalalloyplayerafterit

35


introducedexporttaxesin2008,whileIndiaisnow a large commodity exporter (SiMn andHCFeMn).

METALLIC MANGANESE

Metallicmanganese is produced in a hydro-metallurgyprocessusingelectrolysis.Electro-lyticmanganesemetalorEMMisanextremelypureproductwithahighmanganesecontent(over 99%), generally produced in flakes. Asthe hydrometallurgy process is best suitedto processing low-grade ores, most EMM isproduced in China, which is themainmetalexporter operating an extremely fragmentedindustry. The only other countries producingmetallic manganese are South Africa andGabon,whereERAMETCOMILOGManganèseis now upgrading the Moanda MetallurgyComplex(C2M).

Manganeseismainlyusedinthecarbonsteeland stainless steel markets and aluminiumproduction. World manganese productionranges between 1.1 and 1.5 million tonnesannually,dependingontheyear.

2.4.1.3 RECENTMARKETANDPRICETRENDS

FORMATION AND MONITORING OF MANGANESE ORE PRICES

Thesellingpriceofmanganeseoreisnegotiat-eddirectlybetweenbuyersandsellers.PricesaretypicallyquotedinUSD/DMTU(drymetrictonneunit).OneDMTUcorrespondsto10 kgofmanganesecontent.ThepriceofaDMTUishigherforhigh-gradeores,anddependsonthegranularityandthepresenceorabsenceofimpurities.

Whereas previously the high-grade ore pricewas set for one year, the validity term ofcontract prices has shortened since 2009,increasing the volatility of manganese oreprices.Thistrendfurtheracceleratedin2010,withpricesmovingfromquarterlytomonthlyquotations.

Themain indicators watched by themarketaretheweeklypriceindexespublishedbytheMetalBulletin:

– the CIF China price for imported 44%manganeseore.Thisindexincludesafairlyvolatileandlargecomponent(around30%):thecostofseafreight,which isspecifictoeachmarket;

– theFOBPortElizabethprice for37%man-ganese fromSouthAfrica,nowtheworld’slargestoreproducer.

Metal Bulletin manganese ore price index (IN USD/DMTU)

0

1

2

3

4

5

6

7

FOB Port Elizabeth 37% Mn CIF China 44% Mn

Jan.16Nov.15

Sept.15Jul.15

May 15March 15

Jan.15Nov.14

Sept.14Jul.14

May 14March 14

Jan.14Nov.13

Sept.13Jul.13

May 13March 13

Jan.13

36


FORMATION AND MONITORING OF MANGANESE ALLOY PRICES

There is nomarket as such formanganesealloys.Pricesarenegotiateddirectlybetweenproducers and customers. For scheduledsales, alloy prices are often negotiated ona quarterly basis. Non-scheduled sales areagreedonthebasisofspotprices.

Themanganesealloymarketisaboveallglob-alandhighlycompetitive.However,alloyflowsbetweenthemainzonesarerelativelylimitedowingtoshipmentcosts.However,pricescansometimes vary between geographic areas

(Europe, North America and Asia) becauseof movements in exchange rates, or lagsbetweeneconomiccycles.

There are also certain structural differencesamong the various alloy groups because oftheirrelativevaluesinuse.Inparticular,refinedalloyshavehighersellingpricesthanstandardalloys.

Outside Europe, manganese alloy prices aremostly denominated in US dollars (USD). InEurope, they are mainly negotiated in euros(EUR).Pricesaredeterminedpergrosstonneofalloy.However,productquality,particularly

manganese content, is taken into accountwhennegotiatingtheprice.

Thereareseveralspecialisedpublicationsforthemetalsmarketthattrackmanganesepricetrends through monthly spot price surveys.ThegraphbelowisbasedondatapublishedintheCRU(London).

CRU index of manganese alloy prices in Europe (IN €/T)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Sept.15May 15Jan.15Sept.14May 14Jan.14Sept.13May 13Jan.13Sept.12May 12Jan.12Sept.11May 11Jan.11Sept.10May 10Jan.10

SiMn HCFeMnMCFeMn

Generallyspeaking,alloypricefluctuationsfollowthefluctuationsinoreprices.However,thescopeforpreservingmarginslargelydependsonregionalbalancesbetweensupplyanddemandforeachtypeofalloy.

RECENT MARKET AND PRICE TRENDS

The slowdown in world steel production in2015broughtmuchpressure to bear on themanganesemarket.

The increasing supply of manganese fromSouth Africa since 2010 for new projectshas had a considerable impact on market

equilibrium.Larger volumesofSouthAfricanexports, assisted by the depreciation of therand and low freight costs, have emergedalongwithlowerdemandfororeinChina,themain export destination. Lower productionandasharpinventoryrun-downofmanganesealloyshavehadanadverseeffectondemand,and CIF China 44% manganese ore prices

37


(sourceCRU)fellby49%betweenDecember2014andDecember2015.Pricesformetallicmanganesefellbyaround20%duringtheyear.

Alloy prices outside China experienced asignificantdrop in the latter part of the year.This downward trend reflects not only lowerore prices, but also lower demand outsideChina,wheremanufacturersareexperiencingovercapacity and competition from Chineseexports.Furthermore,devaluationoftherupeeandtheroubleinIndiaandRussia,bothlargecommodity producers, has also exacerbatedthepressureonmanganesealloyprices.

2.4.2 ERAMETMANGANESEOVERVIEW

2.4.2.1 KEYFACTS

MANGANESE ORE AND ALLOYS (78% OF ERAMET MANGANESE’S SALES IN 2015): A WORLD LEADER IN THE MANGANESE ORE MARKET ACROSS THE ENTIRE VALUE CHAIN

ThemainareaofbusinessistheManganeseDivisionwhichencompassestheminingoftheoreinGabonbyCOMILOG,transportbyrail(in-cludingtheothertransportationactivitiesrelat-ingtotheTransgabonrailwayconcession),andloadingattheport;thisDivision’sactivitiesalsoincludeoreprocessing,intheformofmanga-nesealloysforthesteelindustry,orchemicalderivatives targeting different customers inthechemicals industry.ERAMETManganeseisaleadingplayerinthemanganeseindustryintermsofminingandalsotransformationofore: through itsmajorityholding inCOMILOGalongwiththeGabongovernmentandthroughseveral industrial sites close to consumptionzones,itis:

– theworld’ssecondlargestproducerofhigh-grademanganeseore;

– the world’s second largest producer ofmanganesealloys;

– thelargestproducerofrefinedalloys;

– the leadingglobal producer ofmanganesechemicalderivatives.

CHEMICALS: 12% OF ERAMET MANGANESE’S SALES IN 2015

The chemicals industry also makes use ofmanganese. ERAMET Manganese manufac-tureschemicalderivatives.Theseareusedinanumberofsectors:

– theenergysector,intheproductionofalka-line batteries andlargerbatteries;

– inagriculture,tomanufacture fertiliser and animal feed;

– in the electronics industry, for hi-tech components;

– the fine chemicals industry, formetal sur-facing treatments and pigments.

ERAMETisdevelopingnewchemicalmanga-nese products, including extra-pure manga-nesesulphateat theTertreplant inBelgium,usedintheproductionoflithium batteries.

RECYCLING: 5% OF ERAMET MANGANESE’S SALES IN 2015

This became part of the Group’s activitieswhenCOMILOGwasacquired.The latterstillowns the subsidiary operating in this area(GCMCor“Gulf”).ItsmainactivityisoilcatalystrecyclingintheUnitedStates.

Apartfromtheirservicestotheenvironment,theseactivitiesincludeextractionforrecyclingand development of various alloy metals,mainlyalloysbasedonmolybdenumandva-nadium,andalsothosebasedonnickel,cobaltetc. The technologies used (pyrometallurgyand hydrometallurgy) constitute the core oftheERAMETgroup’sleadingskills.

ZIRCON / TITANIUM DIOXIDE: 5% OF SALES IN 2015 (ACCRUING TO ERAMET’S 50% HOLDING IN TIZIR)

With the commissioning of theGrandeCôteprojectinSenegalinthefirsthalfof2014,theERAMETgroup’slong-termobjective,whentheprojecthasconsolidated,istobecomeoneoftheworld’sleadingplayersinzirconandtitani-um.ThisactivityshouldmakeanincreasinglysignificantcontributiontoGroupearnings.

SincetheacquisitionoftheNorwegiangroupTINFOSin2008,theGrouphaspyrometallurgyindustrial equipment for processing titaniumore, to deliver a product with an enrichedtitaniumdioxidecontenttoproducersofwhitepigments.

In 2011 ERAMET formed a new 50/50 part-nership bringing together this front-runningdownstream asset and an upstream oresource about to be developed: the GrandeCôteminingprojectinSenegal,hithertorunbytheAustraliangroupMineralDepositsLimited.GrandeCôtebeganproductionin2014.

MABOUMINE PROJECT: NIOBIUM / RARE-EARTH METALS PROJECT IN GABON

ForthelastsevenyearsERAMEThasallocat-edmajorresourcestoamajorminingprojectinGabon,atMabounié in theMoyen-Ogoouéprovince, through Maboumine, a subsidiaryof COMILOG (76%). The project focuses onminingniobium,uraniumandrare-earthmet-als at theMabounié site usingan innovativehydrometallurgicalprocess,asthecomplexityoftheoredoesnotlenditselftodirectpyrome-tallurgy,andnotallofthevaluablecomponentscanberecovered.TheGrouphascarriedoutsomemajor researchworkat its labsandatpilot facilities todeveloptheprocess, leadingtotheregistrationoffivepatents.

InadditiontoR&Dactivity,aframeworksurveywascarriedoutin2014and2015todrawupa provisional business planwith rather unfa-vourable prospects, in due consideration ofprofitabilityanduncertaintyonthemarketsfortheproductsconcerned,especially rare-earthmetals.

Abenchmarkwithcomparableprojectsshowsthat the deposit has a good positioning, butsomemajortechnicalrisksstillpersist,callingfor continuation of R&D work to develop aneconomicallyviableproject.

Discussions are now ongoingwith all stake-holdersconcerningthefutureoftheproject.

38


2.4.2.2 STRUCTURE

ORGANISATION AT 31 DECEMBER 2015

ERAMETManganeseisnoworganisedasshownbelow:

63.71%

COMILOG(Gabon)

SETRAGTransgabon

railway

COMILOG ASIA (China) TiZir

Grande Côte Opérations (Senegal) Mineral

sands

TiZir TITANIUM &

IRON AS(Norway)

Mine (Moanda)Moanda

Metallurgy Complex

COMILOG DUNKIRK(France)

GUILINCOMILOG

(China)

GECC (China)

ERAMET NORWAY

3 sites

ERAMET MARIETTA

(USA)

ERACHEM(Belgium,

USA, Mexico)

GCMC (USA)

Bear (USA)

MABOUMINE(Gabon-project)

SEM 28.94%Others 7.35%

ERAMETMANGANESE

Mineral Deposits Ltd.

80% 50%

10%

90%

50%

MIN

EAL

LOYS

CHEM

ICAL

SRE

CYCL

ING

76%

99.98%

20%

MANGANESE

MINERAL SANDS

(TiO2/Zircon)

NIOBIUM / RARE-EARTH METALS 100% owned unless otherwise stated

RepublicofSenegal

39


COMILOGisacompanyoperatingunderGab-oneselaw,andERAMETowns63.71%oftheshares.Itsbusinessactivitiesinclude:

• Operation of the Moanda manganesemineandsinteringplant(Gabon).

• Operation of SETRAG (Transgabonrailway).

• Production of manganese alloys inDunkirk(France).

• Production of manganese-based chem-ical derivatives by ERACHEM (Belgium,China,Mexico,US).

• Recyclingofmetalsinoilcatalysts(GCMC,US).

• Productionofferrovanadiumandferromo-lybdenumbyBearMetallurgical(US).

• The Maboumine project (niobium, ra-re-earthmetals)inGabon.

– COMILOGAsiaincludesChinesemanganesechemicalactivitiesandalloysproduction.

With regard to alloys, in 2013 the Groupconcentrated all its Chinese production ofmanganese alloys at the new Guilin site,replacing twoolder and less efficient sitesthatdidnotproducerefinedalloysandwereclosedin2011and2012.

COMILOGAsiaalsoincludesundermanga-nese chemical derivatives the electrolyticmanganese dioxide plant at Chongzuo fordisposablebatteries.

– ERAMETNorway has three alloy plants atPorsgrunn,SaudaandKvinesdal(Norway).

– ERAMET Marietta (US) produces manga-nesealloys.

– TiZiristhejointventure50%-ownedwiththeAustraliangroup,MineralDepositsLimited,focusingonmineralsands,andproduction

oftitaniumdioxideandzircon.TiZirgroupstogethertheminingoperationatGrandeCôteinSenegal,whichincreaseditsproductionofmineral sands (zircon and titanium ore) in2015, and the titanium ore pyrometallurgybeneficiationplantatTyssedal(Norway).

2.4.2.3 ERAMETMANGANESE’SACTIVITIES

MANGANESE MINING AND PROCESSING BUSINESS (MANGANESE ALLOYS AND CHEMICALS)

The Moanda mine and sintering plant

TheMoandamineoperatesoneoftheworld’srichest manganese ore deposits. The ore’smanganese content averages around 46%.OrereservesarediscussedinSection 2.8.

Themineisopen-cast.Theoreiscoveredbya4-5 metrelayerofoverburden.Therun-of-mineoreisextractedusingmechanicalexcavatorsandloadedonto100-tonnetrucks.Theoreisprocessedat theMoandaorewashingplant.The upgrade ore is transferred to Moandarailwaystationbyconveyor.

TheMoandaindustrialcomplexupgradesthefineby-products from theorewashingplant,along with manganese-bearing sedimentextracted from the Moulili river bed. Thefines are beneficiated using dense-mediumand high-intensitymagnetic separation tech-niques,designedtoincreasetheirmanganesecontent, in approximate terms, from 35% to50%.Partoftheconcentratesproducedbythisprocess is sold directly, while the remainderismixedwithcokeandsintered ina furnaceat1,300 degreesCelsius toobtainaproductcontaining approximately 56% manganese.ThisistransferredbyconveyortoMoandarail-waystation,where it is loadedontowagons.Thesinteringplanthasanannualproductioncapacityof600,000 tonnes.

TheTransgabonrailwayrunsfromFrancevilleto Libreville over a distance of more than600 kilometres. In addition to COMILOG’smanganeseore,itcarriestimberandmiscella-neousgoodsandalsotransportspassengers.COMILOGhasitsownlocomotivesandwag-ons,andalsooperatesthese.

Starting in November 2005, COMILOG wasgranteda30-year concession tooperate theTransgabonrailway.Thisenablesittosecureitslogisticsandshipever-increasingamountsofore.

COMILOG, via its subsidiary, Port Minéralierd’Owendo, holds the concession to operateitsoreterminal,thePortofOwendo,withthecapacity to store approximately one and ahalf months’ production. The port can dock60,000-tonne ships and load them in threedays.

Manganese alloy production

The Group is the world’s second largestproducerofmanganesealloysandtheleadingglobalmanufacturerofrefinedalloys,productswithahigheraddedvalue.TheGroupcurrentlyhassixmanganesealloyplantsinallthreeofthemainconsuming regions,whichallows itto offer better customer service and furtherprotectsitfromforeignexchangeandmarketfluctuations.

TheGroupproducesaverywiderangeofal-loys:high-carbonferromanganese,silicoman-ganese,medium/low-carbonferromanganeseand low-carbon silicomanganese. ERAMETManganeseisgraduallyincreasingthepropor-tionofrefinedalloysinitsproduction.In2014theMoandaMetallurgicalComplex inGabon(CMM)completedthisindustrialscheme,add-ingmetallicmanganesetotheproductrange.

40


ERAMET manganese alloy production

(THOUSANDS OF TONNES) 2015 2014 2013 2012 2011 2010 2009

High-carbonferromanganese 62 68 118 144 227 256 246Standardsilicomanganese 219 237 267 236 199 196 197Refinedalloys 422 389 366 350 358 327 174

TOTAL 703 694 750 730 784 779 617

Manganese alloy production sites

SITES COUNTRYPRODUCTIONCAPACITY FURNACETYPE PRODUCTS

Dunkirk France 70 kt Electricfurnace SiMnSauda Norway 210 kt Electricfurnace HC,MC,LCFeMn,SiMnPorsgrünn Norway 165 kt Electricfurnace HC,MC,LCFeMn,SiMn,LCSiMnKvinesdal Norway 165 kt Electricfurnace SiMn,LCSiMnMarietta UnitedStates 120 kt Electricfurnace HC,MC,LCFeMn,SiMnGuilin China 165 kt Electricfurnace HCFeMn,SiMnMoanda Gabon 65 kt Electricfurnace SiMnMoanda Gabon 20 kt Hydro+electrolysis Manganesemetal

InEurope,threealloyplantsarelocatedinNor-way.ThefourthplantisatDunkirkinFrance.

In China, the industrial facilities were ra-tionalisedandrepositionedtocopewithamar-ketsurplusofstandardalloys.Thetwoplantsat Guilin (the old plant) and Guangxi wereclosed,andanewplantwascommissionedatGuilininJuly2012,usingelectricfurnaces,andwillhavearangeofproductsincludingrefinedalloys.

IntheUS,ERAMETMariettaisthelargerofthetwolocalmanganesealloyproducers.

ERAMET MANGANESE MARKETING POLICY

With its industrial network andwide productrange, ERAMET Manganese can provide acomprehensiveproductofferandaflexiblere-sponsetoitscustomers’differentmanganeseneeds.

The Group takes a partnership approach toworking with its customers and providessignificant technical and sales support to

help themextractmaximumbenefit from itsproducts in their own production processes.Marketing policy is managed by ERAMETCOMILOG Manganese, using the ERAMETgroupworldwidemarketingnetwork,ERAMET

International,whichsellsmostoftheManga-nese Division’s products. In countries whereERAMET International does not operate, theGroupisrepresentedbyagents.

MANGANESE CHEMICALS BUSINESS

TheGroup is theglobal leader inmanganesechemicalderivatives.ThemanganesechemicalsbusinessinERACHEMCOMILOGcomprisesfiveindustrialsites:

LOCATION PRODUCTS

Tertre(Belgium) ManganesesaltsandoxidesBaltimore(USA) ManganesesaltsandoxidesNew Johnsonville(UnitedStates) EMD(electrolyticmanganesedioxide)Tampico(Mexico) ManganeseoxideandsulphateChongzuo(GuangxiProvince—China) EMD(electrolyticmanganesedioxide)

Themainmarketstargetedbymanganesechemicalderivativesare:

– Portableenergy(rechargeableanddisposablebatteries).

– Ferrites(electronicsindustry).

– Agriculture(fertiliserandanimalfeed).

– Finechemicals.

41


RECYCLING BUSINESS

Thisiscurrentlycarriedonatthefollowingsites:

Tertre(Belgium) Coppersolutionsrecycling

Freeport(UnitedStates) Recyclingofoilcatalystsandrecoveryofmetalcontent(vanadium,molybdenum,nickel,cobaltetc.)

Butler(UnitedStates) Ferromolybdenumandferrovanadiumproduction

RecyclingbusinessintheUnitedStateswashithardbyfallingmetalprices.

2.4.2.4 TIZIR50%ERAMET:AMAJORPLAYERINEMERGINGMARKETSFORTITANIUMDIOXIDEANDZIRCON

TiZirwascreatedin2011byERAMETandAustraliancompanyMineralDepositsLimited.HalfofitssharesareheldbyERAMET,andithastwosites:

– GrandeCôteisamineralsandsdepositlocatedinSenegal.

– TheTyssedalplantinNorwayproducestitaniumdioxideslurryforuseinthepigmentsindustry,andalsocarriesouthigh-puritysmeltingusingilmeniteoresourcedfromseveralsuppliers.

SITES COUNTRY PRODUCTS

GrandeCôte Senegal Mineralsands:titaniumdioxide(ilmenite,rutile, leucoxene)andzircon

Tyssedal Norway Titaniumdioxideslurry(pigmentsindustry) andhigh-puritysmeltingforfoundries

TiZir production

2015 2014

Mine

Sandextracted (kt) 34,760 14,102Mineralsandconcentrate (kt) 632.9 184.0Finishedproducts

Titaniumdioxideslurry (kt) 106.8 183.7Ilmenite (kt) 427.7 100.6Zircon (kt) 45.2 9.0High-puritysmelting (kt) 59.2 103.0Rutileandleucoxene (kt) 5.3 0.7

The combination of these two assetsconstitutes a vertically integrated entity, andamajor player in themineral sandsmarket:fromthisyearonwards,theTyssedalplantwillenjoythesecurityaffordedbyanewsourceofhigh-qualityilmenite—atitaniumore—suppliedfromtheGrandeCôtesite,whichwillbenefitfrom guaranteed long-term sales of amajorproportionofitsproduction.

MINERAL SANDS, THE SOURCE FOR ZIRCON AND TITANIUM DIOXIDE

Mineral sands are mineral raw materialsin which the minerals have become highlyconcentratedover time inalluvialareas(riverplans,seacoastsorlakeshores)orwindsweptareas (dunes). Mineral sand deposits werethus formerly beaches, dunes or river beds.The main products from these sands aretitaniumdioxide—chieflyintheformofilmen-

ite(FeTiO3),andalsoasrutile(TiO2),andtoalesserextentasleucoxeneandzircon(ZrSiO4).

The content of these ores in the sand isoftenaroundafewpercent.Accordingly,theymust be concentrated by an initial stage ofgravimetricseparation, followedbymagneticand electrostatic separation. Zirconium andtitaniumoresare separatedat themineandareroutedalongseparatelogisticalpaths.

Themainmineralsanddepositsexploitedasof the end of 2015 are located in Australia,SouthAfricaandChina,whichbetweenthemaccount for almost 50% of the titanium oresupply and over two thirds of the supply ofzircon.

THE TITANIUM DIOXIDE MARKET: HIGH GROWTH POTENTIAL DRIVEN BY EMERGING MARKETS

Whilemetallic titanium is well known for itsaerospace uses, as is the case at ERAMETAlloys, 90% of titanium units is used by thewhitepigmentsindustryintheformoftitaniumdioxide.

Uses of TiO2-based white pigment

– Paint 56%

– Plastic 25%

– Paper 9%

– Other 10%

The TiO2-base pigment has two exceptionalproperties—itisextremelyopaque,purewhite,andisnon-toxic.Itisusedforpaints,plastics,textilesandevenpaper.

Thismarket isgrowingatarateofsome4%peryearworldwide.

PIGMENT PRODUCERS NEED A RAW MATERIAL RICH IN TIO2

This may be rutile, with over 95% of TiO2 content; synthetic rutile is produced fromhigh-grade ilmenite. TiO2 slag is obtained bymelting/reducingilmeniteattheTTIplant.Thismayconstituteavaluableby-productusedby

42


foundries and in applications such as windturbinehubs.

ThefollowingaretheleadingTiO2-baseilmen-iteproducers:

– RioTinto;

– Iluka;

– Tronox;

– Kenmare;

– Kronos;

– TiZir;

– and Chinese, Indian and Ukrainianmanufacturers.

MARKET AND PRICE TRENDS

Afteralongphaseofstability,demandbegantorisein2008andfrom2011onwardspricesbegansoaringonthetitaniumdioxidemarketthroughoutthevaluechain,withspotpricesasmuchastreblingduringthe2012peak.

Goodproductprofitabilityandpositivegrowthforecasts in China led to investment and aconsiderable overcapacity. Prices then fellalongwithmostothercommodities.

THE ZIRCON MARKET

Zircon isparticularlyused inceramicsasanopacifier,impartingbrillianceandsmoothnesstoceramicitems.Ceramictilesorwashbasinscontainzircon:zirconsandisfinelyground,andthenaddeddirectlytotheceramicpreparation.

Thismineralalsohasveryimportantrefractoryproperties,making it useful in certain indus-trial segments as a component ofmouldingmaterials inhigh-precisionfoundrywork.Thechemical derivatives of zircon are used in amultitude of applications such as abrasives,wear-resistant materials or some catalysts.Lastly, metallic zirconium is used among

othersinthenuclearindustry,constitutingtheprotectivesheathof fuel rods(highlyheat-re-sistantandpermeabletoneutrons).

As with titanium dioxide, zircon prices wereveryhighatthebeginningofthedecade,withtension on the physicalmarket. Thismarkettension was accentuated by stockpilingthroughouttheindustrialchain.

In 2013, the trend reversed. The marketfeaturedaphaseofde-stockingandsizeableprice fallsovermostof theyear,whilesomeconsumers made technical adjustments totheir consumption patterns in order to opti-misetheiruseofzircon.

Thepriceof zircon remainedquite steady in2015, although overcapacities and stockspersist.

THE TYSSEDAL PLANT (TIZIR TITANIUM & IRON)

This plant in Tyssedal (Norway) producestitaniumdioxideslagmainlyforthepigmentsindustry,withanannualcapacityof230 kt (1),and high-purity pig iron with an annualcapacity of 100 kt (1), sold to foundries forvarious applications, particularly the produc-tion ofwind turbine parts.The site also hasunrivalledaccesstohydroelectricpoweratitslocationnearlargewaterfalls.Theparticularlycomplex technology involved in processingilmenite, theflexibilityoftheTTIprocessandits unique access to a competitive energysourcemaketheTTIplantakeyasset inthetitaniumindustry.Thefurnacewascompletelyoverhauledin2015,witha3-monthshutdownto fit equipment to boost its environmentalcharacteristicsandperformance.

GRANDE CÔTE OPERATIONS

The Grande Côte mineral sands project islocatedalong theSenegalesecoast. Itstartssome 50 km north of Dakar and extendsnorthwardsforover100 km.

Constructionworkbeganinthesecondquar-terof2011.Industrialproductioncommencedin April 2014, andwas upgraded throughout2015.

Thefacilitiesincludeadredgerandafloatingconcentration unit to recover the sand andseparate the main heavy minerals; a heavymineralseparatingplantwasalsobuilt,alongwith an electricity power plant. Logistics areacrucialfactorforthesuccessofthisminingproject, and accordingly a railway line, portandstorageinfrastructuresatDakarwerealsobuilt.

2.4.3 ERAMETMANGANESEIN 2015(€ MILLION) 2015 2014

Sales 1,430 1,429Currentoperatingprofit/loss 58 137

Netcashgenerated byoperatingactivities 106 140

Capitalemployed 1,587 1,676Industrialcapitalexpenditure 164 199

2.4.3.1 COMMENTS

ERAMET MANGANESE

Sales steady at €1,430 million and current operating profit a positive €58 million, despite much lower prices for manganese ore (-49% in December 2015 compared to December 2014). The Moanda deposit is one of the world’s most competitive.

(1) Production capacity as from 2016.

43


Gross world production of carbon steel, themainoutletformanganese,fellbyaround3%against2014,forthefirsttimeinalongperiod.Construction, which accounts formore than40% of carbon steel consumption in China,stagnated in 2015, with very high levels ofemptyhousingstocksattheendoftheyear.

Chinese producers offset falling domesticdemandwith an increase ofmore than 25%inexports,bringingmuchpressuretobearonforeignsteelmanufacturers.Productionfellbyapproximately 1% in Europe, by 8% in NorthAmerica,andbetween3%and5% inRussia,the Middle East, Africa and Latin America.Therewasageneraldropinpricesforsteel.

In this context, manganese ore prices CIFChina(Source:CRU)plungedin2015,by49%betweenDecember2014andDecember2015.Thefallwaschieflycausedbynewproductionoutlets in South Africa, spurred on by aconsiderable depreciation of local currency.Manganesealloypriceshaveshownthesamedownwardtrendsincethesummerof2015.

ERAMETManganeseheldoutwellagainstthelowerpricesthankstoitscompetitivepositionin terms of manganese ore and alloys. In

Gabon, ore production by ERAMET Manga-nesenotchedupanew recordof3.9 milliontonnestransported in2015.Thiswasthankstosimultaneousprogressbythemineandbythe Transgabon railway (SETRAG) betweenMoandaandtheportofOwendo.

Cost-cutting and better operational perfor-mancebyERAMETManganeseaccountedforacumulative€54 millionin2014and2015.

SETRAGisalsosettoundertakeamajorsev-en-yearmodernisationprogrammetoincreasetransportcapacityandimproverailreliability.

The last threemonths havewitnessed shut-downs or prolongedmaintenance downtimeby manganese producers, in the miningor alloys sectors. Facing difficult marketconditions and increases in world stocks,ERAMET Manganese decided to shut downminingproductionatMoandaforfourweeksinQ12016inordertoreduceitsstocks.Bythebeginning of 2016 the pace of the Division’sglobal production of manganese alloys hadslackened considerably in comparison to2015.ThemanganesealloyproductionplantinGuilin(China)hasbeennon-operationalsincemid-November2015.

TiZircontinuedtostepupproductionin2015withalmost633,000 tonnesofmineralsandsmanufactured (ilmenite, zircon, rutile andleucoxene)atGCO(GrandeCôteOperations)inSenegal.Thepaceof industrialoperationsatyear-endwasinkeepingwithexpectations.

In Norway, investment tomodernise and in-creasetheproductioncapacityoftheTyssedalplant (TiZirTitaniumand Iron)wasdeployedduring the last quarter of the year, enablingproduction to resume at the beginning ofJanuary 2016.Thisoperationconstitutes thestrategy of integrating the twomineral sandmanufacturingplantsinSenegalandproduc-tionoftitaniumslurryinNorwayfromilmenite.

2.4.3.2 ERAMETMANGANESERETURN ON CAPITAL EMPLOYED

ROCE: Current operating profit (loss)/Capitalemployedat31 Decemberofyeary-1(Consol-idated equity capital plus financial debt, plusprovisionsforprovisionsforsiterehabilitation,restructuring and other labour risks, lessnon-currentfinancialassets.excludinginvest-mentintheMoandametallurgycomplex).

Manganese ROCE (before tax)

% 2011 2012 2013 2014 2015

Manganese 36.3 20.6 15.6 9.7 3.5

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Activities / Organisation of ERAMET / ERAMET Holding

2.5 ORGANISATION OF ERAMET / ERAMET HOLDING

ERAMET S.A. is the consolidating parentcompany,groupingtogetheroperationallytwomainfunctions:

– Apureholdingcompany,ERAMETHolding,bringing together the various supportdepartmentssuchasGeneralManagement,Administration & Finance, Human Re-sources,CommunicationsandSustainableDevelopment,LegalAffairs,PurchasingandInformationSystems.

– A section of ERAMET Nickel (GeneralManagement,andtheSalesandMarketingDepartments).

The costs of the holding departments arerebilled to the threeDivisionsundermanage-mentfeecontracts.TheotheroperatingcostsofERAMETNickelaredirectlyallocatedtotheNickelDivision.

ERAMET also has direct subsidiaries, actingonbehalfofthevariousentitiesoroftheparentcompany.Themainsubsidiariesare:

– ERAMET Research: ERAMET’s researchcentre, responsible for research anddevelopment.

– ERAMETEngineering:aprojectandtechnol-ogycompany.

– ERAMET International: a company thatpoolstheERAMETsalesnetworkforcertainactivities of the three divisions. ERAMETInternationalhassubsidiariesandbranchesacross the globe. ERAMET Internationalisgenerallypaid for itsworkunderagencyagreements.

– ERAMETServices:asharedservicescentretomanagecertainhumanresources, ITanaccountingservices.

– MetalSecurities:theGroup’streasuryman-agementcompanywhichpoolsthesurpluscash and short-term funding requirementsoftheentireGroup.

– Metal Currencies: the Group’s foreignexchange management company, whichcarriesouttheforeignexchangehedgingfortheentireGroup.

– ERAS:areinsurancecompany.

Atconsolidatedlevel,theHoldingDivisionthusencompasses the holding role for ERAMETS.A. and its consolidated subsidiaries (MetalSecurities,MetalCurrenciesandERAS).

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2.6 PLANTS AND EQUIPMENT

Asarule,theGroupownsitsproductionplantsandtheirequipment.Somelargeitemsofequipmentarefinancedunderfinanceleases(IV30andthe40,000-tonnepressinERAMETAlloys,theTiébaghiwashingunitandtheminingequipmentinERAMETNickel)andarerestatedintheconsolidatedfinancialstatements.

Property,plantandequipmentarebrokendownbydivisions,asshownbelow.Almost80%ofthevalueofthesenon-currentassetsbelongstosometenindustrialsites:

(€ MILLION) GROSSVALUE % NETVALUE %

SociétéLe Nickel-SLN(New Caledonia) 1,763 28.4% 609 24.4%Other 149 26Nickel Division 1,912 30.8% 635 25.5%COMILOGS.A.(Gabon) 1,001 16.1% 577 23.1%ERAMETNorwayA/S(Norway) 345 5.6% 125 5.0%GrandeCôteOpérationsS.A.(Sénégal)(1) 350 5.6% 314 12.6%SETRAG(Gabon) 258 4.2% 175 7.0%GCMC(UnitedStates) 203 3.3% 0 0.0%ERAMETMariettaInc.(UnitedStates) 178 2.9% 18 0.7%ERACHEMCOMILOGSPRL(Belgium) 129 2.1% 12 0.5%ERACHEMCOMILOGInc.(UnitedStates) 150 2.4% 50 2.0%GuilinCOMILOGFerroAlloysLtd(China) 112 1.8% 20 0.3%Other 220 83Manganese Division 2,946 47.5% 1,374 55.1%Aubert&Duval(France) 873 14.1% 392 15.7%ErasteelSAS(France) 135 2.2% 12 0.5%ErasteelKlosterAB(Sweden) 137 2.2% 12 0.5%Other 167 61 2.4%Alloys Division 1,312 21.2% 477 19.1%Holding Division (France) 32 8

TOTAL 6,202 2,494(1) ERAMET share 50%.

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Activities / Research and Development / Reserves and Resources

2.7 RESEARCH AND DEVELOPMENT / RESERVES AND RESOURCES2.7.1 RESEARCHANDDEVELOPMENT:R&DOPERATING THROUGHOUT THE METALS VALUE CHAIN, FROM MINE TO PRODUCTS

2.7.1.1 R&DACTIVITIES

TheERAMETgroupconductsitsR&Dactivitiesthroughoutthemetalsvaluechainfrommineto products, including recycling. This valuechain covers exploration, mining, extractivemetallurgy, process metallurgy (primaryprocessing, remelting processes, powdermetallurgy), transformation metallurgy withopendie-forgingandcloseddie-forging.Metalrecyclingisfactoredintoallstagesofthisvaluechain.ThispositioningconstitutesastrategicopportunityfortheERAMETgrouptoacquireaglobalinsightintoeachofthevaluecreationstagesforproductsandprocesses.

Morespecifically,ERAMETisactivelyengagedinR&D,developinganumberofmetalsintheperiodic table, or their mineral derivatives,ofwhich the followingmetals in theorderoftheir atomic numbers: aluminium, titanium,vanadium, manganese, iron, cobalt, nickel,copper, zirconium, molybdenum, tungstenandrhenium.Tofurtheritsprojects,theGroupalso conducts research into a wide rangeof othermetals such as the following in the

order of their atomic numbers: lithium, zinc,germanium,yttrium,lead,niobium,indium,thelanthanides including rare-earthmetals suchas lanthanum, cerium, praseodymium, neo-dymium, samarium, europium, dysprosiumanduranium.

ERAMETalsoconductsnumerousR&Dproj-ects in the fields of superalloys, high-perfor-mancesteels,aluminiumalloysand titaniumalloys,andalsopowdermetallurgy.

Thesemulti-metal andmulti-alloy skills, alsocoveringthewholevaluechain,contributetoauniquepositioningforERAMETR&D.

2.7.1.2 AREASOFEXPERTISE

TheERAMETgroup’sprimefieldofexpertiseisfocusedupstreamaroundthemaindisciplinesofextractive metallurgy suchasmineralogy,ore beneficiation, hydrometallurgy andpyrometallurgy.

The ERAMET group’s second major field ofexpertise is process metallurgy, coveringinnovationinallalloygradestogetherwithallprocesses involved in thismetallurgicalarea.Withinthisfield,increasingemphasisisgiventopowdermetallurgy, inwhichnewdevelop-mentsincludeaerospace,particularlywiththerapidexpansionofadditivemanufacturing.

The ERAMET group’s third field of expertiseis alloy fabrication by closed-die forging toproducepartswithdimensionsclosetothefin-ishedproducts,particularlyfortheaerospace,nuclearanddefencemarkets.

The fourth and last of the ERAMET group’sfields of expertise is manganese chemistry, with associated recycling activities.

Digital modelling, applied to areas such asthermodynamics, fluid mechanics, dynamicreactorsimulation, chemicalengineeringandphysicalmetallurgy,providesanindispensable

adjuncttoprocessandproductdevelopmentandoptimisation.

2.7.1.3 GROUPR&DORGANISATION

TheGroup’sR&Dorganisationisdividedoper-ationallyintoeachofthecentresofexpertise.

Forextractivemetallurgy,ERAMETResearch,adedicated researchcentre (awholly-ownedsubsidiary of ERAMET since 2003) basedin Trappes, employs some 100 persons,including80 researchers,engineersandtech-nicians. This centre’s activity on the Group’sown account earned €14 million in 2015. Ithasultra-powerful observation tools suchasFrance’s firstmicroscope enhancedwith theQEMSCAN mineralogical analysis software,together with state-of-the-art laboratoryequipmentandpilot facilities,someofwhichare semi-industrial scale (rotary furnaces,highand low impedanceelectric furnacesofapproximately 1 MW), capable of sustainingseveralweeks’continuoususe.

SociétéLe Nickel-SLN’sTechnicalStudiesandInvestigationsDepartment(DETI)inNew Cale-donia isalsoveryactive inthisfield,andhasaroundthirtyemployees.

Forprocessmetallurgy (airandvacuumpro-cessing,remelting)amajorcentreofexpertiseis locatedatLes Ancizes(Puy-de-Dôme)andaR&Dteamincloseddie-forging isbased inPamiers (Ariège), with a total of some thirtypeopleemployedinthisfield.

In powdermetallurgy, thereare twodifferentprocesses,eachorganiseddifferently:

– Atomising, which employs 10 people atSöderforsinSweden.Thisactivityiscarriedonbywhatisknownas“PEARL”(PowderEx-pertiseAnalysisandResearchLaboratory).

– Hydrogen reduction, carried on by the13-strongEurotungstèneteamatGrenoble.

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Lastly,inmanganesechemistryandrecycling,nineemployeesareengagedinR&Dactivities,mainly in Baltimore (USA), Tertre (Belgium)andChongzuo(China).

Inall, theERAMETgrouphassome200 full-timeemployeesworkingonR&D,notincludingthe industrialisation teams and the processmonitoringcarriedonatalltheindustrialsites.Within the strategic Divisions, these teamscoordinate the testsand theessential indus-trialisation phases of the Group’s researchprojects. An approximate total of 1% of theindustrialdivisions’salesrevenueisdevotedtoR&D,accountingforsome€30 millionin2015.

In2010,inordertoenhancetheefficiencyandeffectiveness of its R&D activities, ERAMETbrought the Research, Innovation and Engi-neeringDivisionunderasinglemanagementauthority. This combined entity was broughtundertheStrategyDepartmentin2014.

2.7.1.4 MAINR&DACHIEVEMENTSIN 2015

ERAMET targets its research&developmentefforts to meet the needs of its industrialclients,improveitscompetitiveness,offernewservicesandcreatenewdevelopmentoppor-tunities.Theenvironmentisaconstantfocusduring the development of new processes,with the aim of reducing the environmentalfootprint.

For ERAMET’s mining, metallurgical andchemical businesses, effective research is acriticaladvantage.Designed tomeetorevenworkaheadofcustomers’expectations,there-searchanddevelopmentprogrammesenabletheGrouptostrengthenitspositions, ineventhemostcompetitivemarkets.

These programmes are implemented withinthe Divisions or at the ERAMET Researchcentre.Toensurethattheirresultsarewhollyrelevant, the ERAMET Research teamswork

closely alongside ERAMET Engineering andthose responsible for development at thevariousunits,whointurnareindirectcontactwith the operational teams. This makes forconsiderableefficiencygains, fromdetermin-ing programmes to introducing innovations,whether involving products, the processesthemselvesorproductivity.

Themain research themes for 2015 are setoutbelow.

ERAMET NICKEL

R&DactivitiesatERAMETNickel focusedonthreeareasin2015.

Thefirstareafocusedonimprovingtechnicaland economic performances at its plant inNew Caledonia,helpingittoadaptitspyromet-allurgyprocessinrelationtocurrentandfuturechemical developments in nickel ores. Newtoolsweredevelopedtoimprovecontroloftheprocess. Industrial testswere carried out oncalcinationofores,toimprovethestabilityofoperationsinelectricfurnaces.Apilotprojectis underway to examine the changes to bemade to the nickel ore smelting/reductionprocess.

The second area of research concentrateson improvingenvironmentalperformance,byworkingtoupgradetheferronickelrefiningpro-cessthatproducesinertslag,andexaminingpossible processes for internal and externalupgrading of by-products at the DoniamboplantinNew Caledonia.

The third area focuses on diversificationof the nickel matte feed at the Sandouvillehigh-purity nickel production facility. Thisproject consideredother rawmaterials toberefined,firstasapilotand thenonan indus-trialscale,maintainingthepurityofthenickelcathodesproducedandofnickelsaltsforhighadded-valuemarkets.

All these projects were carried out thanksto close cooperation by ERAMET Research,theTechnical Studies and Investigations De-partment, theSandouvilleplantandERAMETNickel’sindustrialdepartment.

ERAMET MANGANESE

Themain taskof ERAMETResearchwas toputtheC2MMoandaMetallurgyComplexintooperation in Gabon. Technical support wasprovidedforthemetallicmanganeseprocessandproductionteams,particularlyintermsofanalysing the causes of the traditional prob-lemsinvolvedinstartingupthistypeoffacility,andsolvingthem.

Itwasalsonecessarytooptimiseordevelopthefacility’ssteeringdocument,trainstaffandtable proposals. Assistance for operationalteamswillcontinue in2016until theplant isoperatingatanominallevel.

With regard to manganese alloys, ERAMETResearch concentrated on improving plantperformance,particularlywithprojectsaimedatreducingprocess-inherentmetallosses,in-creasingrefiningcapacity,loweringproductioncosts and improving furnace stability. Workonmanganesemetallurgywasconducted inclosecoordinationwiththeERAMETNorwayR&DteambasedatTrondheim.

A significant volume of R&D work focusedon improving pyrochlore processing forthe Mabounié deposit in Gabon, to developniobium and rare-earth metals. In 2015 twopriorities were issued for this task—benefi-ciation of ore using ore dressing processes,and simplification of the hydrometallurgicalprocess.Anewprocesswasdevelopedatthelabonapilot basis toproduceconcentratesof niobium and rare-earth metals in fewerphases. A continuous pilot phase obtainedthedatarequiredfortechnicalandeconomicsizingandquantificationofbothscenarios.

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ERAMET ALLOYS

R&Dactivitiesarecarriedoutinclosecoordina-tionwiththeDivision’sbusinessunits,coveringproduction, manufacturing metallurgy (forg-ing,includingcloseddie-forging),andpowdermetallurgy.

Themainstudies,usually inpartnershipwithcustomers,coveredthefollowingthemes:

– Development of new superalloys (withhigher temperature resistance, particularlyfor aircraft enginesor land-based turbines:performanceof thenewAD730superalloy,metallurgyofthe718,718+andR65alloys,titanium metallurgy, and metallurgy of706 alloysforland-basedturbines).

– Reductionof the “buy to fly” ratio,with theaimofimprovingcompetitivepositions.

– Continuation of the optimisation of newalloygradesforturbineshafts,suchastheML340, which received the Safran group’s2014GrandPrixforinnovation.

– Continuation of the optimisation anddevelopmentofnewtitaniumalloyparts inthe structural field, particularly for aircraftmanufacturers’newprogrammes.

– NewR&Dpowdermetallurgyprogrammes,especiallyinthenewadditivemanufacturingsector.

– Optimisation of industrial processperformance.

ERAMET Research helped improve thecharacterisation of freedom from inclusions,andalsohelpedenhancethethermodynamicdatabasesaspartofaEuropeanconsortium.

GROUP PROJECTS

ForGroupprojects,themainactivitiesfocusedondevelopingtheprocessfordirectextractionof lithiumfromArgentiniansaltflats. In2015workfocusedonindustrialisationofsynthesisoftheactivematerialforselectiverecoveryoflithiumfromothercomponentsofbrines.Thematerial’spropertiesweretestedandvalidatedonacontinuousbasisatapilotfacilityonrealArgentinianbrines.

RECYCLING

Lastly,R&Dhasakeyroletoplayinrecyclingstrategy.In2015,ERAMETResearchconduct-ed several research and technical supportactivitiesinthisareafortheERAMETsubsid-iaries,featuringthefollowing:

– Determination of new recycling facilitiesfor the BMC Bear Metallurgical plant, andresearch into optimisation ofmetal yields:a number of schemes have been alreadybeendrawnuptoboostsynergieswithotherGroupcompanies.Themetalyieldssurveyalso enabled progress to bemade on therecoveryyieldplanforusableportionsofMoandV.

ThechallengesfacingtheRecyclingsegmentinclude increasing yields of materials recov-ered and lowering energy consumption bythe processes involved. In 2015, efforts alsoaddressed performance of refractory bricksandcoolingsystems,optimisationoffurnaceenergy balances and the quality of productoutput.

2.7.1.5 COOPERATIVEVENTURESAND PARTNERSHIPS

The ERAMET group’s R&D is enriched bycontinuouscontactwith theacademicworldand by partnerships with research institutesandindustrialfirms.

InFrance,inthefieldofextractivemetallurgy,ERAMET has standing partnershipswith theParis advanced learning institutes ChimieParisTech,MinesParisTechandÉcole Centrale inParis,and theNancy-basedAdvancedNa-tionalGeologySchoolandtheMiningInstitute.Formanyyears,BRGM(BureaudeRecherchesGéologiques et Minières, a French state-owned company) has conducted numerousforERAMETinawidevarietyofareas(geology,resourceaudits,researchprojects).

To devise the process for developing py-rochlores in theMabounié deposit, ERAMETworks in partnership with AREVA (France),GTK (Geologian Tutkimuskeskus, Finland),Hazen Research (United States), SGS Lake-field(Canada),andtheFrenchUniversitiesofLorraineandBurgundy.

ERAMETalsohasapartnershipwith IFPEn-ergiesNouvellestodevelopinnovativelithiumextractionprocesses.

TheGrouphasentered intoseveralpyromet-allurgyresearchpartnerships,particularlywiththeTrondheimUniversity inNorway,theKTH(RoyalInstituteofTechnology)inSwedenandthe Swedish semi-public MEFOS researchcentre.

In France, in the field of alloys, the Groupmaintains close partnership relations withacademic research centres contributingspecific skills in metallic materials (design,structure, thermo-mechanical processing,

49


manufacture,shaping)inassociationwiththefollowingmajor engineering institutes:MinesParisTech,École CentraleParis,theadvancedmining institutesatNancy,Saint-ÉtienneandAlbi, IFMA (Clermont-Ferrand) and ENSMA(Poitiers).Thesepartnershipsmainlytaketheform of doctoral thesis activities promotingthe development and sharing of innovativetechniquesandskillsinmetallurgy,mechanicsandprocessmodelling.For thedevelopmentof new alloys and of the products madefrom them, ERAMET is also involved inprojects initiated inCompetitivenessClusters(ViaMéca,AerospaceValley,Pôle Nucléaire de Bourgogne, Saint-Exupéry) and partners theM2PtechnologicalresearchinstitutebasedatMetz,BesançonandTroyes.

Another landmark in this fieldwas the 2014inauguration of Metafensch, the metallurgyresearch centre at Florange, to enable theconsortiumofindustrialpartnerstomovefor-wardinpowdermetallurgyandtherecyclingoftitaniumalloys.ERAMETisanactivememberofthescheme,especiallyconcerningtitaniumpowders.

Outside France, in the alloys field, Aubert& Duval continued its partnership with theUniversityofStrathclyde inScotland,withanactiveandcontinuouspresenceattheUniver-sity’sresearchanddevelopmentcentreontheformingandforgingofpartsfortheaerospaceindustry (the AFRC). Partnership efforts arecontinuing with the University of Cambridgefor developing new steels. Research pro-grammes also continued with CEIT (Centred’Études et d’Investigations Techniques), asemi-public technological research institutionin theSpanishBasque region, specialising inpowdermetallurgyandmaterials.

SinceforsomeyearstheEuropeanUnionhasplaced considerable emphasis on innovationandrawmaterials,ERAMETisnowamemberof several consortiums being formed atEuropean levelunder theEIPRMprogramme

(European Innovation Partnership for RawMaterials)bytheDGEnterprise,nowknownasDGGrowth.ERAMETentered thesecoopera-tiveprojectsaspartofEuropeanconsortium,either as coordinator or partner, in areas asvariedas theoptimisationofminingsurveyswith online mineralogical analysis, refractorymetals,upgradingofby-productsoroptimisa-tionofnickel.ERAMETteamedupwithmorethan 100 industrial partners, academics andresearchcentresinEuropeasacorememberof the Raw Materials “KIC”, an innovativeschemetoboostlinksbetweenresearchandteaching within an industrial framework, toencourage innovation,skillsandemploymentintheareaofcommodities.

Cooperative projects are also ongoing on anational scale, with validation of schemessuchasheat treatmentmodelling,controlofresidual constraints in aluminium parts, andaluminium-lithiumcloseddie-forging.

ERAMETEngineering,awholly-ownedsubsidi-ary,isregularlyinvolvedinthephasesofindus-trial transpositionofprocessesdevelopedbyERAMETResearch,byconductingengineeringscopingstudies,preliminaryfeasibilitystudies(PFS),detailedstudies(BFS)orbyconductingpilotrunsfornewinvestments.

2.7.1.6 CONCLUSION

TheERAMETgroup’sR&Doperates through-out the metals value chain, from mining toproducts. R&D organisation and governancefocus on value creation for the Group. TheGroup’sR&Disthereforeanessentiallinkinthechainofdeploymentofitsstrategyinthelongterm,andinmeetingoperationalchallengesintheshorterterm.

2.7.2 MINERALRESOURCESAND RESERVES

2.7.2.1. OVERVIEW

DEFINITIONS

Definitions of mineral resources

A Mineral Resource is a concentration oroccurrenceofcommerciallyvaluablematerialin or on the Earth’s crust in such grade andquantity as to give reasonable likelihoodthat mining will be economically viable. Thelocation,quantity,grade,geologicalcharacter-isticsandcontinuityofaMineralResourceareknown,estimatedorinterpretedfromspecificgeological evidence and knowledge. MineralResources are sub-divided, in order of in-creasinggeologicalconfidence,into“Inferred”,“Indicated”and“Measured”categories.

An Inferred Mineral Resource is the portionofaMineralResourcethequantityandgradeof which can be estimated from geologicalevidence, butwith a low level of confidence.Geological and grade continuity are inferred,but not verified. The estimate is based oninformation, gathered through appropriatetechniques from locationssuchasoutcrops,trenches,pits,workingsanddrillholes,whichmay be limited or of uncertain grade andreliability.

AnIndicated Mineral Resourceistheportionof a Mineral Resource the tonnage, density,shape,physicalcharacteristics,gradeandmin-eralcontentofwhichcanbeestimatedwithareasonable levelofconfidence.Theestimateisbasedonexploration,samplingandtestinginformation gathered through appropriatetechniques from locationssuchasoutcrops,trenches, pits, workings and drill holes. Thelocations are too widely or inappropriatelyspaced to confirm geological and/or gradecontinuity,butarespacedcloselyenoughforcontinuitytobeassumed.

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AMeasured Mineral Resource is theportionof a Mineral Resource the tonnage, density,shape, physical characteristics, grade andmineral content of which can be estimatedwithahigh levelofconfidence.Theestimateisbasedonexploration,samplingandtestinginformation gathered through appropriatetechniques from locationssuchasoutcrops,trenches,pits,workingsanddrillholes.Thelo-cationsarespacedcloselyenoughtoconfirmgeologicalcontinuityand/orgrade.

Definition of drainable resources

ADrainable Resource isdefinedbytheavail-ability of a given envelope of confidence ofbrineswithacertainlithiumcontentinamedi-umwithsufficienteffectiveporositytoenableextraction.Acut-offgrademaybeassigned.Inourcase,estimatesofdrainableresourcesaremade inaconcentrationenvelopeexceeding200mg/L Li. The level of classification isbasedondrillingpatternsthatcanassessthelateralandvertical continuityof the lithology,brine concentrations in lithium and hydraulicparameters.

AnInferred Drainable Resourceistheportionof a Drainable Resource forwhich only geo-physical measurements and some drills areavailable. Hydraulic continuity is not verified.The estimate of lithium content is based onlimitedinformation,orinformationthequalityorreliabilityofwhichisuncertain.

An Indicated Drainable Resource is the por-tionof aDrainableResource forwhich thereisproven lateralcontinuityat less than6 kmof theaquifer’shydraulicparametersandthebrine’s lithiumcontent and vertical continuitybetweentwomeasurementpointsinasingleshaft.

A Measured Drainable Resource is theportionofaDrainableResourcethequalityofsampling,hydraulicparametersandcontents

ofwhichmaybeestimatedwithahighlevelofconfidence,andmeetthequalitycriteria(QA/QC). The number of lithium measurementsin excess of the cut-off grade in a specificlithologicalhorizonmustbemorethan3.

The brine’s lithium content and the aquifer’shydrodynamic parameters are determinedby pumping tests in the volume considered,including at least one long-duration test(t>30 days). The reliability and consistenceof the results of grades and hydrodynamicparametersareanalysedusingtheconceptualmodel of brine distribution and a numericmodel.

Definition of extractable resources

An Extractable Resource is defined as anavailablevolumeofbrinewithacertainlithiumcontent that may be extracted by one ormorepumping shafts over a givenperiod tomeet economic feasibility. The reliability andconsistenceofthehydrodynamicparametersareanalysedandsimulatedusingtheconcep-tualmodelofbrinedistributionandanumericmodel.

An Inferred Extractable Resource is amod-elled volume of brine with a lithium contentexceeding the cut-off grade extracted by apumping system from zones where inferreddrainable resources have been defined. Apreliminary estimate using a numericmodelof volumes and grades of brines and an in-sufficientlevelofconfidenceinthegeologicaland hydrological data cannot convert theseresources intoreserves.Theseresourcesareexcludedfromfeasibilitysurveys.

AnIndicated Extractable Resourceisamod-elisedvolumeofbrinewitha lithiumcontentexceedingthecut-offgradeextractedthatcanbeextractedbyapumpingsystemorsystemsoveragivenperiodfromzoneswhereinferreddrainableresourceshavebeendefined.Varia-

tionsintheestimatesofgeologicalandhydro-logical parametersmay affect the economicfeasibility of the pumping field.The volumesandlithiumcontentsofbrinesextractedhaveanaccuracyof+/-25%.

AMeasured Extractable Resourceisamodel-isedvolumeofbrinewithalithiumcontentex-ceedingthecut-offgradethatcanbeextractedbyapumpingsystemorsystemsoveragivenperiod from zones where inferred drainableresourceshavebeendefined.Thegeologicaland hydrological parameters are estimatedwithasufficientlevelofconfidencesuchthatanyvariationswillnotaffecttheeconomicfea-sibilityofthepumpingfield,orwillaffectitonlyslightly.Thevolumesand lithiumcontentsofbrinesextractedhaveanaccuracyof+/-15%.

Definitions of reserves

AnOre ReserveistheeconomicallymineablepartofaMeasuredand/or IndicatedMineralResource. Reserves are estimated on thebasis of a preliminary or actual feasibilitystudy(aminingprojectinthebroadersense),whichtakesaccountofanytechnicalfactors(shapeofmine,dilutionandlossesdependingontheminingmethod,industrialplantyields),economic, marketing, legal, environmental,social,employmentandgovernmentalfactorsinexistenceorforeseeableatthetimeoftheestimate.Thepreliminaryoractual feasibilitystudy demonstrates at the time of reportingthat extraction is viable. Ore reserves aresub-divided inorderof increasingconfidenceinto “probable” ore reserves and “proven” orereserves.

AProbable Reserveistheeconomicallymine-ableportionofan“indicated”mineralresource,and in some circumstances, a “measured”reserve,whereasaProven Reserveistheeco-nomically mineable portion of a “measured”mineralresource.

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Exploration results

Exploration Results correspond to the samecommercially valuable materials as areassessed for resources and reserves. Theprospectingcarriedoutsuggests thatanorezonemay be found, but available reconnais-sanceinformationisnotsufficienttoestimateamineralresource.

LOCATION

Through its subsidiaries, Le Nickel-SLN inNew CaledoniaandCOMILOGS.A. inGabon,the Group operates nickel and manganesedeposits respectively. In addition, with de-velopmentof theWedaBayNickelproject inIndonesia, ERAMET has plans to double itsnickelproductioninthelongterm.

InNew Caledonia,Le Nickel-SLNminesopen-castnickeloxidedepositsformedbysuperfi-cialweatheringofultrabasicrocks.Miningandprocessingnowfocusonthesaproliticportionoftheweatheringprofile.

In Gabon, COMILOG S.A. operates a richtabularopen-castmanganesedeposit,locatedunderthincaprockandformedbysuperficialweatheringofvolcanic-sedimentaryrocks.

In Gabon, La Minière de la Mabounié(Maboumine) carried out exploratory workfor an hydrometallurgical processing projectfor niobium, rare earths, tantal and uranium.Inviewofthecurrentmarketoutlookforrawmaterials,focusshouldbeplacedin2016,inajointinitiativebetweentheRepublicofGabonandERAMET,onlookingforapartnerwithanore enriching technology enabling to reachaveragereturns.

As the market is so depressed at present,most projects for nickel-processing plants inIndonesiahaveeitherbeenputonholdorareadvancingatamuchslowerpace.ERAMETisnoexception,andeighteenmonthsagoitwasannounced that theWedaBayNickelproject

had been suspended. However, ERAMETremain inpermanentcontactwith itspartnerMitsubishi and the Indonesian authorities towork on the approach that will best ensurevaluecreation.

InSenegal,theGrandeCôteOpérationscom-pany(GCO),theresultofthejointventuremen-tionedinSection 3.2addressingpartnerships,operates a heavy-mineral sand deposit. TheGrandeCôtedeposit,afewdozenkilometresnorth of Dakar, is a coastal-dune heavy-min-eral placer containing large quantities oftitanium-bearing minerals (ilmenite, rutile)andzircons.Thesedepositscanbeminedbydredging. After a favourable feasibility study,constructionof theGrandeCôteminebeganin the third quarter of 2011 and productionstartedin2014.

In Argentina, Eramine Sud America, a whol-ly-owned subsidiary of Eramine SAS (whollyowned in turn by ERAMET S.A.), carried outexploratory work on several salt flats beforefocussing on the Centenario-Ratonès flatnorthwest of Salta in the Andes cordillera.Exploratoryworkshowedthatresourceswereavailableinthelithiumfoundinnaturalbrines.

LEGAL CLAIMS

Mining-claim instrumentsassure theGroup’slong-term rights over the reserves andresources. These rights mainly consist ofperpetual concessions foreshortened to theexpiry date of 31 December 2048 (Article 7of the New-Caledonian “Loi de Pays” Act of16 April 2009) and of rights conceded for aperiod of 75 years renewable in successive25-year periods inNew Caledonia, a 75-yearconcession inGabonexpiringon31 Decem-ber 2032 renewable for successive 10-yearterms,andaContractofWorkforarenewable 30-yearperiodinIndonesia.

The mineral deposits at the Grande Côteproject in Senegal are located in a mining

concessionassignedtoGCOsince2008,andoriginally granted toMDL by the Senegalesegovernment in November 2007 for a renew-able25-yearterm.

Mabouminehasaminingexplorationpermit,renewedon14 November2014forathreeyearperiod,inwhichmineraldepositsarelocated.

Eramine S.A. had 55 consolidated miningclaimson theCentenario-Ratonèssalt flatatyear-end 2015, issued on a perpetual basis(subjecttopresentationofmandatoryimpactsurveysandpaymentofannualminingfees).

Thecarryingamountofreservesisrecognisedat historical cost for purchased claims, withnomeasurementofgrantedconcessions.Thebalance sheet amount does not necessarilyreflectmarketvalue.

ESTIMATES

The resource and reserve estimates weredrawnupforLe NickelSLN,WedaBayNickelandCOMILOGS.A.byprofessionalswhoarefull-timeemployeesof theGroup, usingcon-ventionalorgeostatisticalmethods.

InthecaseofTiZirandEramineS.A.,theyweredrawn up by qualified persons outside theGroup.

Geological reconnaissance, resource andreserve estimation, exploitation planning andminingaresupplementedbyover40 years’in-dustrialexperience.Themethodsusedevolveconstantly to take advantage of technicalprogressintheseareas.

Basis of estimates

Estimates are based on sampling that cannever be fully representative of the entiredeposit. As deposits are explored and/orexploited,estimatesmayincreaseordecreaseinlinewithimprovementsinknowledgeofthemineralizedmass.

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Estimate methodology

Indueconsiderationof theGroup’spresencein New Caledonia, estimates of the Group’sreservesandmineralresourcesaspresentedhere were drawn up pursuant to the 2012edition of the JORC Code (Australian Codefor Reporting of Exploration Results,MineralResourcesandOreReserves) forallaspectsrelatingtoestimationmethodsandclassifica-tionlevels.

Thepublishedfiguresare internally validatedby a board of referees and by “CompetentPersons”asdefinedbytheJORCcode.

The resource and reserve estimates for themineralsandsprojectweremadebyCompe-tentPersonsatAMCConsultant,acompanyunrelatedtoMDLandERAMET.

Estimates of lithium project drainable andextractable resourcesaredrawnupbyan in-dependentfirm,MontgomeryandAssociated,acting as “Qualified Persons” in the area oflithium-bearingdepositsextractedfrombrine.An audit of resourceswas also drawn up inFebruary 2015 by Mr. King, an independentspecialistconsultant.

For Pt Weda Bay Nickel (laterites andsaprolites), Le Nickel-SLN (saprolites forthe Doniambo plant) and COMILOG S.A.(manganese ore), external audits conductedin 2009, 2013 and 2014 respectively havecertified that the resources and reservestheretohavebeenevaluated inasatisfactorymanner and in compliance with the JORCcoderecommandations.

Mineral resources

Resourcesarecalculatedwith thesamecut-offgradesasreserves(exceptwhereexpresslyspecified otherwise), but with not guaranteethattheserecoverableresourceswillbewhollyconverted into reserves following additionaltechnical-economicandmarketingstudies.

Adrillingand/or intercept isconsideredposi-tiveif:

– it containsat least twometresoforeat agradeequalorhigherthanthecut-offgrade;

– itisnotisolated.

Themineralizedmass definedby the drillingintercepts selected on this basis is includedinmineralresourcesifitspositioningandgeo-metricandchemicalcharacteristicsaresuchthat it isreasonably likelytobeeconomicallyviable.

Drainable resources

Drainable resources are establishedwithin a200mg/LLienveloperepresentingthecut-offgrade.

Thedepositissurveyedbydrillinginapatternthatwillverifytheverticalandlateralcontinuityof the aquifer’s lithologic, geochemical andhydraulicparameterswithalithiumcontentinexcessofthecut-offgrade.

Recoverable mineral resources

Recoverable resources are those mineralresources where mining recovery and oredressing factors have been applied on thebasisofexperienceacquiredonthosesites.

The nickel or manganese tonnages givencorrespondtothequantityofmetalpresentintheoresattheoutletpointtotheminingunitswhenshipped toametallurgical or chemicalprocessing plant. Themining allowances forminingdilutionandlosses,andthoserelatingtooredressing,areestablishedonthebasisofminingsummarieswichcompareproductiontoestimatesofvolumesalreadyextracted.

Recoverableresourcesareincludedinmineralresources.

Exploration results

Explorationresultsfollowthesameestimationprocessasresources.

Reserves

Reserve estimates are based on medium/long-term economic conditions (prices offuel oil, coal, coke, electricity, metal pricesand exchange rates etc.), commercialconstraints (quality, customers etc.), envi-ronmentalconstraints(permits,miningcon-straintsetc.)andconstraintsoncurrentandforeseeabletechnicalminingandtreatmentprocesses.

Reserves are estimated on the basis of acomplete mining project. No assurancescan be given as to the total recovery of thereserves announced, as market fluctuationsandtechnicaldevelopmentsmaymakethere-coveryofcertaindepositsorpartsofdepositseconomicallyviableorotherwise.

Reservesareincludedinmineralresources.

Presentation of estimates

Mineral resource estimates and those forrecoverableresourcesandreservesaregivenfortheminingdepositasawhole.Resultsmayalso be compared to production levels, thusprovidinganindicationoftheremainingminelife.

2.7.2.2. COMILOGS.A.RESERVESAND RESOURCES

Anexternalauditwascarriedout in2014byMelabar GeoConsulting, which certified thatthe resources and reserves estimated byCOMILOGS.A.wereevaluatedsatisfactorilyinaccordancewiththerecommendationsoftheJORCcode.

MINERAL RESOURCES

ThetablebelowshowsthefiguresforCOMI-LOG S.A.’s mineral resources, updated to1 January2016.ThefiguresareinmillionsofDryMetricTonneUnits(“millionsofDMTUMn”,where1 DMTU=10 kgofmanganese).

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Mineral resources in manganese rock ore and fines at 1 January 2016

MEASURED INDICATED INFERRED TOTAL

DOMAIN KT % MN DMTU.106 KT % MN DMTU.106 KT % MN DMTU.106 KT % MN DMTU.106

Rockore>5 mm

Bangombé 21,796 45.2 985 39,424 45.5 1,795 1,261 45.3 57 62,480 45.4 2,837Okouma 28,900 48.3 1,390 52,400 46.3 2,430 81,300 47.0 3,820Bafoula 23,000 34.0 780 23,000 34.0 780Massengo 12,000 40.0 480 12,000 40.0 480Total 50,696 46.8 2,375 91,824 46.0 4,225 36,261 36.3 1,317 178,780 44.3 7,917Fines1-5 mm

Bangombé 8,352 41.0 342 15,611 42.0 656 430 41.4 25 24,394 41.6 1,016Okouma 9,300 45.3 420 17,400 43.5 760 26,700 44.1 1,180Moulili 2,689 44.8 120 2,594 41.2 107 490 34.2 17 5,772 42.3 244Bafoula 15,000 32.4 490 15,000 32.4 490Massengo 7,900 38.1 300 7,900 38.1 300Total 20,341 43.4 882 35,605 42.8 1,523 23,820 34.9 832 79,766 40.5 3,230

GRAND TOTAL 71,037 45.9 3,257 127,429 45.1 5,748 60,081 35.8 2,149 258,546 43.1 11,147

Bangombé deposit

For the Bangombé deposit, currently oper-ated, declared resources at 1 January 2016correspondtothefindingsoftheestimateat1 January2015, less the resourcesmined in2015.

Resourcesarecalculatedintwogranulometricfractions—“Rock” ore (+5 mm, 9% H2O) and“Fines” (1-5 mm, 12% H2O). The mineralresourcesconsistoforeswithamanganesecontent in the “Rock” fractiongreater thanorequalto30%.

Okouma, Bafoula and Massengo deposits

For the unexploited deposits of Okouma,Bafoula and Massengo, declared mineralresourcesat1 January2016are identical tothosepublishedat1 January2015,accordingtothesamecriteriaofgranulometry(+5 mm,1-5 mm fractions), humidity (9%, 12%) andselection(30% Mn)asfortheBangombéores.

Moulili deposit

TheMoulili river bed was filled with aman-ganese ore deposit of which only the fine1-10 mmfractionhasbeenevaluatedtodate.

Working from upstream to downstream, thedeposit was divided into sections, MT1 toMT4, twoofwhich,MT1andMT3,arebeingexploited.

At 1 January 2016, the update of mineralresources in sections MT1, MT2 and MT3takesaccountoftheupdateoftopographicalsurveysof theareasexploitedby the endofDecember 2015 (MT1 andMT3). No cut-offgrade is applied.Mineral resources are clas-sifiedaccordingtotheextentofknowledgeofthedifferentsections.

Inferredmineralresourcesdeclaredat1 Janu-ary2016areintheMT4section,forwhichdrillswerecarriedoutand interpreted in2014and2015.

Yéyé deposit

ReconnaissanceworkcarriedoutonYéyéin-dicatestheexistenceofpotentialoredeposits.However,thequantityandqualityofavailableinformationiscurrentlyinsufficienttoestimateinferredmineralresources.

RECOVERABLE RESOURCES AND RESERVES

Thetablebelowsetsoutthefiguresforrecover-ableresourcesandreservesontheBangombéandOkoumaplateauxat01/01/2016,brokendown among four deposits. The productionfiguresindicatedinthetablecorrespondtooreshipmentsmadein2015,includingproductionofsinterandbeneficiatedfines.

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Manganese ore recoverable resources and reserves at 1 January 2016 (MILLIONS OF DMTU)

MEASURED INDICATED TOTAL

DOMAIN KT % MN DMTU.106 KT % MN DMTU.106 KT % MN DMTU.106

Rockore>5 mm

Bangombé 15,950 45.7 729 24,909 46.4 1,155 40,859 46.1 1,884Okouma 57,500 47.2 2,710 57,500 47.2 2,710Total 15,950 45.7 729 82,409 46.9 3,865 98,359 46.7 4,594Fines1-5 mm

Bangombé 8,352 41.0 342 15,611 42.0 656 23,963 41.6 998Okouma 27,300 44.2 1,200 27,300 44.2 1,200Moulili 2,555 46.6 119 2,097 42.3 89 4,651 44.6 208Total 10,907 42.3 461 45,008 43.2 1,945 55,914 43.0 2,406

GRAND TOTAL 26,857 44.3 1,190 127,417 45.6 5,810 154,273 45.4 7,000

Mineral resources in manganese rock ore and fines at 1 January 2016

PROVEN PROBABLE TOTAL

DOMAIN KT % MN DMTU.106 KT % MN DMTU.106 KT % MN DMTU.106

Rockore>5 mm

Bangombé 12,491 44.9 561 10,119 46.6 472 22,610 45.7 1,033Total 12,491 44.9 561 10,119 46.6 472 22,610 45.7 1,033Fines1-5 mm

Bangombé 4,957 41.0 203 5,139 43.2 222 10,096 42.1 425Moulili 2,555 46.6 119 1,681 43.1 72 4,235 45.2 191Total 7,512 42.9 322 6,820 43.2 294 14,331 43.0 616

GRAND TOTAL 20,003 44.1 883 16,939 45.2 766 36,941 44.7 1,649

Bangombé deposit

Onthebasisofthemineralresources,thefig-uresforrecoverableresourcesareestablishedtakingthefollowingintoaccount:

– Geologicaluncertainties,thereforeexcludinginferredmineralresources.

– The presence of durable infrastructuresjudgednot tobemoveable,ofwhichmap-pingwascompletedin2015.

– Commercial specifications with a cut-offgradeof37% Mnontherock-orefraction.

– Mining and technical factors arising fromreconciliations,carriedout/estimated.

The definition of recoverable resourcesfactors in criteria established for the givengeologicaldomainthataresubjecttochange

inlightoffurtherinformationandstudies.Fortheoremassesof thePlateauand the inneredges,thesecriteriarelatetoaminimumorethickness of 2 m and the mining methodsassociated with at least an outline diagram.Forouteredges,recoverableresourcescorre-spondtotheoreincludedinaminingplanwithanexcavationdiagram.

Recoverable resources for which theminingprojectiscomplete,andwhichareincludedinalong-termplanningsequence,areconvertedinto reserves. The recommendations of theauditor (MelabarGeoConsulting2014) led toexclusionof the reserve inneredgesand theclassification of part of the outer edges asprobable reserves at 1 January 2015.Thesemodificationswere still current at 1 January2016.

Okouma deposit

TheoreattheOkoumadepositwasestimatedand classified as indicated recoverable re-sourcesusingthesameprocedureasfortheBangombéplateauore,regardingtheplateauasasinglegeologicaldomain. Inviewof theuncertainties regarding the mining recoveryanddressingfactors,theindicatedrecoverableresources have not yet been converted intoreservestodate.

Moulili deposit

The MT1 section has been exploited since2010.Theestimatesofrecoverableresourcesand reserves are reupdated annually on thebasisoftheyear-endtopographicalsurvey.

55


The MT3 section has been exploited since2013. The production sheets between 2013and2015provide informationon theexploit-abilityofthesection,enablingaportionoftherecoverable resources to be converted intoreserves.

Surveys of the MT2 and MT4 sections be-tween2013and2015wereunabletoestimateanyrecoverableresourcesorreservesintheseareas.

Bafoula and Massengo deposits

Inviewofuncertaintiesregardingorerecoveryanddressingfactorsthatmayapplytoinferredmineral resources, no recoverable resourceshave been calculated for the Bafoula andMassengooremasses.

2.7.2.3. LE NICKEL-SLN’SRESERVESAND RESOURCES

SAPROLITE RESERVES AND RESOURCES FOR PYROMETALLURGY

Anexternalauditwascarriedout in2013bySigma Blue Pty Ltd, which certified that theestimatesforresourcesandreservesofnick-el-bearing saprolitic ores intended to supplytheSociétéLe NickelpyrometallurgyplantatDoniambowerefreeofmaterialerrorandwereevaluatedacceptablyand,incompliancewiththerecommendationsoftheJORCcode.

MINERAL RESOURCES

Mineral resources are grouped togetheraccording to their classification, using thecriteriadefinedby theSLNgeologistsand inaccordancewiththeJORCcodedefinition.

Inaccordancewiththesystemfordescribingdrilling data, the tonnages and grades givencorrespondsolelytotheweathered,ore-bear-ing phase of saprolites at a defined cut-offgrade and not to the saprolitic column as awhole.

Developments in mineral resources between 2014 and 2015

2015 2014

MINERALRESOURCES MT % NI KTNI MT % NI KTNI

Measured 28.2 2.41 681 30.0 2.42 727Indicated 79.0 2.41 1,903 80.1 2.41 1,930Inferred 72.6 2.43 1,768 72.9 2.43 1,771

TOTAL 179.9 2.42 4,352 183.0 2.42 4,428

For the most part, mineral resources areestimatedbymodelling3-Dblocksusinglineargeostatisticalmethodsfortheoremassesasawhole.

Oretonnagesaregiveninmillionsofdrytonnesandthehumiditycontents,whetherobservedinproductioninprogressorestimated,rangefrom22to45%accordingtooremass.

The figures were established with cut-offgradesappliedtotheweatheredfractionwhichrangefrom1.8to2.4%ofnickeldependingonthetypeofprocessing,whethermineralurgicalorconventional,whichisappliedtotherun-of-mineore.

Reduction of mineral resources is linked tomining production in 2015, and geologicalmodelswillbeupdatedinthecourseof2016.

EXPLORATION RESULTS

The exploration results also correspond totheweathered saprolite phase.At 1 January2016 they were assessed as 676 ktNi, theequivalentofthefiguresfortheprecedingyear.Prospectingcarriedoutin2015mainlytarget-edlocationssituatedinMontDo,Monéo,MeAdeo,Thio,PortBouquetandtheareaaroundKouaoua.Work will continue in the years tocome to advance these targets to inferred/indicatedmineralresourcestatus.

RECOVERABLE RESOURCES AND RESERVES

Thetablebelowsetsoutthefiguresforsapro-literecoverableresourcesandreservesfortheDoniambo pyrometallurgy plant surveyed in2015andpublishedat1 January2016,withthefigurespublishedat1 January2015initalics.Thesefiguresstemfromtheabovementionedmineralresourcesandfactorinthefollowing:

– Traditionalrun-of-mineprocessingsimilartothatusedatthesitesofLe Nickel-SLNand/orsubcontractorswhichincludesscreeningat approximately 80 mm with or withoutrecovery of part of the coarser fractions,dependingonthetypeofore.

– MineralurgicalprocessingatNépouiKopétoandTiébaghi.

– Optimizationofminingprojectsinthecaseofreserves.

Ore tonnages are given in millions of drytonnes, andmetal tonnages in thousandsoftonnesofnickelcontentintheore.

Recoverable resources and reserves of oreintendedformineralurgicalprocessingarees-timatedas“washeryconcentrate”arisingfromprocessing all the ore from Népoui-Kopéto,and1.8-2.8% NirangeforTiébaghi).

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Developments in recoverable resources and reserves between end of 2014 and end of 2015

2015 2014

RECOVERABLERESOURCES MT % NI KTNI MT % NI KTNI

Measured 18.3 2.60 475 19.5 2.60 507Indicated 52.8 2.53 1,338 53.5 2.53 1,355Inferred 48.6 2.51 1,220 48.7 2.51 1,223

TOTAL 119.7 2.53 3,033 121.8 2.53 3,0852015 2014

RESERVES MT % NI KTNI MT % NI KTNI

Proven 13.0 2.67 346 14.1 2.68 378Probable 24.3 2.60 631 24.9 2.60 648

TOTAL 37.3 2.62 977 39.0 2.63 1,026

Measuredand indicatedrecoverableresourc-es are estimated at 1,813 ktNi, with theirproportionininventoriedtotalremainingstablefromthe2014figures.

Inferred recoverable resources estimated at1,220 ktNiwhichareequivalentto2014levels.

SLN’sminingproductionin2015amountedto53.3 ktNi(thousandsoftonnesofnickel,corre-spondingtothetonnagesofnickelcontainedin the ore carried to the various shore sites(wharformechanicalloading)).

Reservesareestimatedat977 ktNiatyear-end2015, as against the1,026 ktNi publishedatyear-end 2014. This decrease was mainlyduetoproduction in2015.Theproportionofprovenreservesfellslightlyfrom37%oftotalreserves in 2014 to 35% of total reserves in2015,asmodelswerenotreupdated.

SLNdrawsupitsminingandindustrialplanonthebasisofallitsreservesandpartofthere-coverableresourcesregardedaseconomicallyexploitablebutnotyetincludedinanyminingproject.

MINERAL RESOURCES FOR HYDROMETALLURGY

For the whole of the mineral deposits ofSociétéLe Nickel-SLNandatacut-offgrade

of 1.0% Ni, inferred and measured mineralresources in lateritesare currently estimatedat6,000 ktNi.

Outside the centres with mineralurgicalprocessing facilities, exploration results onlow-gradesaprolitezones,whicharecurrentlyuneconomical forpyrometallurgyprocessing,point on a preliminary basis to 2,000 kt innickelcontentwhichmayberecoverableusingthe hydrometallurgical process developed byERAMET,orexportedundercontractssignedorintheprocessofbeingsignedwithferron-ickelproducers.

Mineral resources for hydrometallurgy havenotbeenaudited todate.Theyare, however,estimatedusingthemethodologydefinedforestimatingresourcesintendedfortheDoniam-boplant.

2.7.2.4. RESERVESANDRESOURCESOFPT WEDABAYNICKEL

MINERAL RESOURCES

The data onmineral resources relate to thetonnages,Nicontentandthousandsoftonnesof nickel contained in ore envelopes withinlimoniteandsaprolitesstrataata1% Nicut-off rate,without applyingany transformation

or enrichment factors.Mineral resourcesarecalculated at the 1% Ni cut-off grade, andare broken down by prospect, distinguishingbetweenlateriticandsaproliticproducts.

Average dry densities for laterites andsaprolites were established on the basis ofmeasurements performed in 1999-2001 and2008-2012.

Given thesmall proportionof sounddividingrock,thesaprolitetonnagesandnickelcontentprovided are representative of the saproliticcolumnasawhole.

Global resources are calculated by 3-Dblockmodellingperformedby theWedaBayNickelgeologyteam.Measuredandindicatedresources are estimated by ordinary kriging,while inferred resourcesareestimatedeitherby inverse square distance or by ordinarykrigingwhenkrigingispermittedbyvariogramquality.

LocalresourceswereestimatedfortheBukitLimber Barat deposit by Tenzing Pty Ltd,and on the Coastal, Tofu Blowen and KaoRahaïmasses,by theERAMETPt WedaBayNickel teams, using multivariate uniformconditioning.

Thefiguressetoutbelowarefromlocalesti-matesforthesaprolitesclassedasmeasuredorindicatedresourcesconvertedintoreserves,andofglobalestimatesfortheothermassesinthesaprolitesandthelateritehorizon.

The measured mineral resources areunchangedwith respect to the figures as of1 January 2015. Further drills were carriedout in 2015 on theCasuarinamineralmass,formingpartofCoastalDeposits.Theresourc-es, initially classified as inferred resources,were reassessed and classified as indicatedresources.

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Changes in limonite and saprolite mineral resources from end of 2014 to end of 2015

LIMONITE 2015 2014


Measured 36.0 1.26 455 36.0 1.26 455Indicated 68.0 1.22 829 66.4 1.22 809Inferred 44.9 1.21 543 46.1 1.21 556

Total 148.9 1.23 1,827 148.5 1.23 1,820SAPROLITE 2015 2014


Measured 98.8 1.72 1,694 98.8 1.72 1,694Indicated 169.8 1.54 2,613 166.0 1.54 2,547Inferred 215.2 1.49 3,206 219.8 1.49 3,284Total 483.8 1.55 7,513 484.6 1.55 7,525

TOTAL 632.7 1.48 9,340 633.1 1.48 9,345

RESERVES

Thefiguresbelow relate to thesaproliteandlimonite reserves intended forhydrometallur-gical processing. These data are unchangedfromthosepublishedon1 January2015,andcorrespond to the conversion of resourcesthat are in themasses covered by amining

project,withtheapplicationofminingfactorsbasedonthefollowingcriteria:

– 1% NiCut-offgradefortheCoastalDepositsores,earthy limonitesandsaprolites in theBukit Limbermasses and limonites in theTofuBlowenandKaoRahaimasses;

– 1.4% Nicut-offgradeintherockysaprolitesatBukitLimberandallthesaprolitesatTofuBlowenandKaoRahaiWest.Themeasuredresources of these products establishedat a 1% Ni cut-off grade were convertedinto proven reserves following non-lineargeo-statisticalstudiesmeasuringtheimpactonthoseproductsofselectivityat1.4% Ni.

The experience garnered from amining testcarried out in 2007 determined the choiceof mining and technical factors, and thegeotechnical and environmental constraintsused. Access issues and management ofwaterdraining fromthemine led toareasoftheoremasseswithanatural inclinegreaterthan30°,andtolimitingtheaveragepitslopeto 35°. The same reasons determined theuseofminimumorethicknessasaselectioncriterionformineablezones,accordingtotheclimatic, geomorphological or environmentalconditionsspecifictoeachoremass.

Pt Weda Bay Nickel limonite and saprolite reserves at 1 January 2016

LIMONITERESERVES MT % NI KTNI % CO KTCO

Proven 31.5 1.27 400 0.17 54Probable 21.4 1.26 269 0.16 35

Total 52.9 1.26 669 0.17 89

SAPROLITERESERVES MT % NI KTNI % CO KTCO

Proven 75.1 1.78 1,334 0.04 28Probable 47.2 1.62 765 0.03 16Total 122.3 1.72 2,099 0.04 44TOTAL 175.2 1.58 2,768 0.08 134

CHANGES IN RESOURCES AND RESERVES IN 2015

There were few changes in the figures forWedaBayNickelmineral resourcesbetween

end of 2014 and end of 2015—an overallnickeltonnageof9.3 milliontonnes,ofwhichalmost60%wereclassifiedasmeasuredandindicatedresources.Therewerenochangesto

thefiguresforreserves.Theywereestablishedusingtheprocedureforestimatingandclassi-fyingresourcesandreservescertifiedin2009byMelabarGeoConsulting.

Worksmade in 2015 also identifiedmassesmadeofmineralswithanaveragenickelcon-tentvaryingbetween1.8and2.0%,represent-ing35%ofmineral resourcesmeasuredandindicatedforsaprolitesand38%ofsaprolitesreserves.

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2.7.2.5. TIZIR’SRESERVESANDRESOURCES

MINERAL RESOURCES

Thedataonmineralresourcesaremineral-sandtonnagesandheavy-mineralcontents(HM).

TiZir mineral resources at 1 January 2016

2015 2014

MINERALRESOURCES

RUN-OF-MINE(Mt) HM(%) HM(Mt)

RUN-OF-MINE

(Mt) HM(%) HM(Mt)

Measured 1,585 1.5 23.5 1,623 1.5 24.2Indicated 210 1.4 3.1 214 1.4 3.1Inferred 120 1.1 1.3

TOTALS 1,915 1.4 27.9 1,837 1.5 27.3

Theestimatesarecalculatedonblockmodelsusingordinarykriging.Themineralresourceswereestimatedatacut-offgradeof1.0%HM,toadepthof6 mbelowthenaturalgroundwa-ter level, with no processing or beneficiationfactorapplied.

HeavyMineral contents were determined byheavy-liquidgravimetricseparationatthecut-off density of 2.85 g/cm3. Themineralogicalblendwasdeterminedoncompositesamples,usingMineralLiberationAnalyser(MLA)tech-nology,employinganelectronmicroscopeanda microprobe, and using X-ray fluorescencespectrometry.

On average, the heavy mineral concentratescontain approximately 11% of zircon and

77% of titanium-bearing minerals (ilmenite,pseudorutileandrutile).

RESERVES

Thedataonreservescorrespondtothecon-versionofresourcesdiscussedinthepreviousparagraph that lie within the area mined bydredging,withtheapplicationofminingfactorsfordilutionandloss.Reservesareincludedinmineralresources.

Thestartofmininginmid-2014demonstratedthetechnicalfeasibilityofheavy-oreextractionanditsseparationbyamineralurgicalmethodup to the production of commercial-gradeconcentrates.

TiZir reserves at 1 January 2016

2015 2014

RESERVES RUN-OF-MINE(Mt) HM(%) HM(Mt) RUN-OF-MINE(Mt) HM(%) HM(Mt)

Proven 1,143 1.54 17.64 1,211 1.5 18.3Probable 151 1.26 1.91 318 1.1 3.4

TOTALS 1,294 1.51 19.55 1,529 1.4 21.7

CHANGES IN RESOURCES AND RESERVES IN 2015

Changestomineral resourcesbetween2014showed a reduction of measured mineralresources in connection with 2015 miningproductionandtheadditionofapproximately1.3 million tonnes of heavy minerals (“HM”)classifiedasinferredmineralresources.

The reserves update was used to plan thelifespanoftheGrandeCôtemineupto2040,atanominalminingoutputrateofoperation.

2.7.2.6 RESOURCESOFERAMINES.A.

DRAINABLE RESOURCES

Drainable resources were calculated in April2015 by Montgomery and Associates asQualifiedPersons, at theCentenario-Ratonèsbrinefield.

The calculation used the effective porositiesfor each lithological units in the aquifer. Thecut-off grade of 200 mg/L was applied tothe resource envelopes.The results are onlypresentedforconcessionsownedbyEramineS.A.

The equivalent LCE tonnage is calculatedusingthemassoflithiummultipliedbyafactorfrom the atomic mass of each element oflithiumcarbonate,5.322785.

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Drainable resources at 1 January 2016

DRAINABLERESOURCES VOLUMEOFBRINES(M3) AVERAGEDENSITY LICONTENT(MG/L) LEC(KILOTONNES)

Measured 297,000,000 1.15 371 586Indicated 962,000,000 1.15 353 1,809Inferred 2,997,000,000 1.14 305 4,865

TOTALS 4,256,000,000 1.14 320 7,260

EXTRACTABLE RESOURCES

Brinevolumesand“LithiumCarbonateEquivalent”(LCE)tonnageswerecalculatedforapumpingfieldwith26 shaftsoperatingatanextractionrateof19L/spershaftonapumpingfielddefinedfortheRatonèsbrinefieldonly.

Extractable resources at 1 January 2016

EXTRACTABLERESOURCES

TOTALOVER20 YEARSOFPRODUCTION

VOLUMEOFBRINES(M3) LICONTENT(MG/L) LEC(KILOTONNES)

Measured 144,000,000 379 290.7Indicated 105,500,000 373 209.6Inferred 43,900,000 404 94.5

Measured + Indicated 249,500,000 377 500.3

Thelithiumcontent isthecontentsextractedfrom the shaft field averaged out over thedurationofpumping.TheequivalentLCEton-nage iscalculatedusing themassof lithiummultipliedbyafactorfromtheatomicmassofeachelementoflithiumcarbonate,5.322785.

Inferredextractableresourcesareindicatedforinformationpurposesonly,andareincludedintheextractableresourcesusedtodrawupthebusinessplan.

2.7.2.7 RESOURCES OFTHECOMPANYMABOUMINE

MINERAL RESOURCES

Data concerning mineral resources refer totonnages,niobiumcontentandthousandsoftonnes of niobium, rare-earth metal content(metal equivalent) and thousands of tonnesof rare-earth metals, tantalum content andthousandsoftonnesoftantalum,anduraniumcontentandthousandsoftonnesofuraniuminthesuperficialbandedoreestimatedinthe3Dmodelledenvelope,withnoapplicationofany transformation or beneficiation factors.The mineral resources of the superficial

bandedorearecalculatedwithacut-offgradeof0.4%Nb2O5.

The average dry densities of the ores wereestablished on the basis of measurementsperformedin2013.

Global resources are estimated by ordinarykrigingina3Dblockmodel.

Mineralresourcesandtheirclassificationwerecertifiedin2015bytheSGSGéostatcompany.

The distinction between inferred (1) andinferred (2)mineralresourcesisbasedonthelevel of information regarding the estimatedelements(rare-earths,TaandUnotestimatedininferred (2)mineralresources).

Mineral resources for superficial banded ore with a cut-off grade of 0.4% Nb2O5

MINERALRESOURCES Mt %NB KTNb %TR KTTR %Ta KTTa %U KTU

Measured 66.5 0.98 650 0.97 644 0.30 20 0.20 15Indicated - - - - - - - - -Inferred(1) 79.3 0.70 554 1.04 828 0.20 16 0.20 16Inferred(2) 49.7 0.85 420 219 (*) - NE - NE

NE: Not Estimated. (*) EstimatedforCeriumonly.

60

RISK FACTORS

Chapter 3

62 3.1 COMMODITY RISK 62 3.2 SPECIAL RELATIONSHIPS WITH

THE GROUP’S PARTNERS 62 3.2.1 POLITICALRISKS 62 3.2.2 SUPPLY/SALECONTRACTS 62 3.2.3 SPECIALRELATIONSHIPSWITH

THIRDPARTIES 64 3.3 MINING AND INDUSTRIAL RISKS 64 3.3.1 RISKSINRELATIONTO

ASSESSMENTOFMININGRESERVESANDRESOURCES

64 3.3.2 MININGPROJECTDEVELOPMENTRISKS

64 3.3.3 SAFETYANDENVIRONMENTALRISKS

66 3.3.4 TRANSPORTATIONRISKS

67 3.4 LEGALAND TAXRISKS/DISPUTES

67 3.4.1 THEGROUP’SDEPENDENCEONTHELEGISLATIVEANDREGULATORYENVIRONMENT

68 3.4.2 MAJORLAWSUITS 70 3.5 LIQUIDITY, MARKET AND

COUNTERPARTY RISKS 70 3.5.1 LIQUIDITYRISK 70 3.5.2 MARKETRISKS 71 3.5.3 COUNTERPARTYRISK 72 3.6 INSURANCE/COVERAGE

OF RISKSLIKELYTOBEINCURREDBY THE ISSUER

72 3.6.1 THEGROUP’SGENERALCOVERAGEPOLICY/RISKCOVERAGESTRATEGY

72 3.6.2 THEDIFFERENTTYPESOFINSURANCETAKENOUT

61

62

Risk factors / Commodity risk

3.1 COMMODITY RISKThe Group is exposed to commodity pricevolatility,affectingbothitssalesasanickelandmanganeseproduceranditsproductioncosts,asaconsumerofenergy(fueloilandelectrici-ty)andcommodities(nickel,aluminium).

ThemainGroupentitiesinvolvedare:

– ERAMET,Le Nickel-SLNandAubert&Duvalfornickel;

– Le Nickel-SLNforfueloil;

– Aubert&Duvalforaluminium;

– ErasteelKlosterABandERAMETNorwayASforelectricity.

Manganese and coke exposures are nothedgedsincethereisnoorganisedmarketinthesecommodities.

Hedges are arranged for one to four years,dependingonthecommodities,andarebasedon the budget. Only a portion of plannedconsumption or production is hedged whenthecriteriainthehedgingpolicyaremet.TheGroupusesvariousinstrumentstohedgeandlimit itsexposurewhileprofitingfromfavour-ablepricefluctuations(futuresandoptions).

At31 December2015,thefairvalueofhedgesset up for the various commodities breaksdownasfollows:

– €2 millioninliabilitiesfornickel(€0 millionat31 December2014).

– €16 millioninliabilitiesforfueloil(€10 mil-lioninliabilitiesat31 December2014).

– €1 millioninliabilitiesforaluminium(€0 mil-lionat31 December2014).

– €4 millioninliabilitiesforelectricity(€2 mil-lioninliabilitiesat31 December2014).

3.2 SPECIAL RELATIONSHIPS WITH THE GROUP’S PARTNERS3.2.1 POLITICALRISKSSomeoftheGroup’sactivitiesarecarriedonincountrieswherepoliticaldevelopmentscouldlead to regulatory changes. In particular, theGroupproducesand/ormarkets itsproductsin non-OECD countries, some of whichmaybe classed as countries with no long-termpoliticaloreconomicstability.WhiletheGroupensuresthatappropriatemeasuresaretakentoavoidsuchrisks,politicaland/oreconomicchangescouldhaveasignificantimpactonitsbusiness.

3.2.2 SUPPLY/SALECONTRACTSTheGrouphasoverallcontrolofthecontractsforsupplyandsaleoforeanditsby-products,where such contracts are entered into withcompanies it controls (such as the supplyand sales contract between ERAMET andLe Nickel-SLN and the supply of ERAMETManganese production sites by COMILOG).The other commercial agreements on con-tinuingoperationsdonotentailanyparticularrisks or commitments for the Group. Thoseagreementsaremainlyforpurchasesofcom-modities (electricity, coke and special alloys)andfreightservices(seaandland).

To date ERAMET has not entered into anymajorcontractsentailingamajorobligationorcommitmentfortheGroupasawhole,otherthanthoseentered into inthenormalcourseofitsbusiness.

3.2.3 SPECIALRELATIONSHIPS WITH THIRD PARTIESTosupport itsvariousactivitiesandprojects,theGroup’spolicy istodevelopandmaintainfirm, sustainable and complementary part-nershipswithnationalpartnersorlocalfirms.Amongotherformat,thesepartnershipsmayconsistofastakeinGroupsubsidiaries,withanumberofspecialcovenantstotakeaccountoftheexistingshareholderbalance.

3.2.3.1 ERAMETNICKEL

RELATIONS WITH STCPI AND NEW CALEDONIA—LE NICKEL-SLN SHAREHOLDERS’ AGREEMENT

Le Nickel-SLN,asubsidiary56%ofthesharesofwhichareheldbyERAMET,and10%heldby Nisshin Steel, also has a 34% stake heldby the Société Territoriale Calédonienne deParticipationIndustrielle—STCPI.

STCPI is an “SAS” (simplified joint-stock cor-poration)thesolepurposeofwhichistoholdthis interest inLe Nickel-SLNandan interest

63


ofsome4%inthecapitalofERAMET(wheretwodirectorsrepresentitoutoftheseventeenon the ERAMET Board). The interest in theshare capital of Le Nickel-SLN, initially 30%,wasraisedto34%inashare-swaptransactionon23 July2007,andthensoldbytheFrenchgovernment when ERAMET was privatised.Its political, financial and strategic value liesintheassociationoflocalpublicinterestswiththeGroup’sminingand industrial interests inNew Caledonia. STCPI represents the threeNew CaledonianProvinces:theSouthernProv-ince, and theNorthernand IslandProvinces.TheBoardmembersandobserverareselect-ed to guarantee a balanced representationbetween the Northern and Island ProvincesandtheSouthernProvince.

The Le Nickel-SLN shareholders’ agreementof13 September2000 followedon from theagreementof17 July2000betweenthegov-ernment,theProvincesofNew Caledoniaandrepresentatives of the island’s main politicalparties.In2010,theshareholders’agreementwasextended forafirstadditional termuntil31 December 2011. Since 2010 it has beenextendedannuallyforperiodsofoneyear.Itstermsincludethefollowing:

– adistributionofthedirectorshipsonthefol-lowingbasis,atpresent:eight forERAMET(including the representative of NisshinSteel), and four for STCPI, which is alsoentitledtoappointanobserver;

– a reciprocal right of pre-emption for eachparty;

– a reciprocal call option on the shares heldbythepartythatfallsunderthecontrolofacompany,“ofwhichthemainactivity,orthemainactivityoftheGrouptowhichitbelongscompeteswiththatofLe Nickel-SLN”;

– anon-dilutionclausewhereby, in theeventofthesaleofsharestoanothershareholderor a share capital increase, eachpartywillretainthesameinterestinthesharecapital

orvotingrightsastheyhadpreviouslyheld,eitherthroughtheretrocessionofsharesorjointexerciseofthesubscriptionrightsinasharecapitalincrease.

FollowingaSTCPIpress releaseon27 June2008 offering to open discussions regardingthe size of its stake in Le Nickel-SLN, anERAMET Board meeting on 11 July 2008resolvedthattherewasnoreasontochangethe shareholding structure of Le Nickel-SLN,whichrepresentsasatisfactorybalance.

Followingameetingof itsBoardofDirectorson 19 November 2009, Le Nickel-SLN an-nounced that it was instituting newmoderncorporate governance measures to furtherinvolveNew Caledonia,withthecreationofaStrategyCommittee,anAuditCommitteeandaRemunerationCommittee.STCPIhassignif-icant representationonall threecommittees,andchairstheAuditCommittee.

On13 July2010,STCPIandERAMETagreedto hold discussions aimed at adjusting theagreement. Its guiding principles wouldremainunchanged,buttheadjustmentswouldtake account of the full array of industrial,commercial and technological changes bothwithin Le Nickel-SLN and in its environmentsince theoriginalagreement.Theextensionsof thatagreement in2011,2012,2013,2014and2015until31 December2016allowthesediscussionstocontinue.

SUPPLY CONTRACT WITH NISSHIN STEEL

The ERAMET group and Nisshin Steel havehad a ferronickel supply agreement in placesince 1991. Nisshin Steel is a Japaneseproducerofstainlesssteelwitha10%interestin Le Nickel-SLN. Nisshin-Steel is a majorcustomerthataccountsfor10%ofsalesintheNickelDivision.Thisagreementwasrenewedin2001and2007andisdesignedtoguaranteeferronickeldeliveriesforseveralyearsandironoutanyfluctuationsinnickelprices.

RELATIONS WITH PT ANTAM AND INDONESIA (WEDA BAY PROJECT)

TheIndonesiancompany,Pt WedaBayNickel,istheprojectandexplorationcompanycreat-edtodevelopthenickelandcobaltprojectatWedaBay,situatedontheislandofHalmaherain Indonesia. 90% of its capital is held byStrandMinerals(Indonesia),andtheremaining10%heldby thenickel-producing Indonesianpublic limitedcorporation,Pt AntamTbk(An-tam), a company specialising in exploration,miningoperations,refininganddistributionofmining products. Antam is represented by adirectoron theBoardofPt WedaBayNickel(outofatotaloffivedirectors,ofwhomthreerepresentERAMET)anditalsoholdsanoptiontoincreaseitsshareholdingto25%.

Pt WedaBayNickel’sexplorationandminingarecarriedoutunderaContractofWorkwiththeIndonesiangovernment.

RELATIONS WITH MITSUBISHI CORPORATION (WEDA BAY PROJECT)

On19 February2009MitsubishiCorporationacquireda33.4% interest inStrandMinerals,whichowns90%ofthecapitalofIndonesiancompany Pt Weda Bay Nickel. In December2011, Mitsubishi Corporation decided tosell a 3.4% interest in Strand Minerals tothe Japanese company Pacific Metals Co.Ltd (Pamco). The shareholders’ agreementbetweenERAMETandMitsubishiCorporationwasamendedtoallowPamcotobeincluded.Underthisamendedshareholders’agreement,MitsubishiCorporation is representedon theBoardofStrandMineralsbytwodirectorsoutof a total of six, and by one director on theBoardofPt WedaBayNickeloutofatotaloffive directors. Pamco is not represented onany of these Boards. Mitsubishi Corporationand Pamco have put options to sell theirintereststoERAMET.

64

Risk factors / Mining and industrial risks

3.2.3.2 ERAMETMANGANESE

RELATIONSHIP WITH THE GOVERNMENT OF GABON

COMILOGhasaspecial relationshipwith thegovernment of Gabon, which is representedbythreemembersontheBoardofDirectors.In 2014 Société Équatoriale des Mines, afully state-controlled company, becamea shareholder of COMILOG, replacing thegovernment of Gabon, which had been ashareholder since 1973. From the outset,the State has supported COMILOG throughbothtaxmeasures(aminingagreementandspecialtaxagreementtofinancethesinteringcomplex)and industrialmeasures (asCOMI-LOG’spartnerinbuildingtheOwendoPort,ofwhichitssubsidiary,PortMinéralierd’Owendo,holds the concession), andmore recently bygrantinga railwayconcession toSETRAG, inwhichCOMILOGistheleadingpartner,andbygranting amining exploration licence for theMabounié polymetallic deposit (Maboumineproject).Thisrelationship,basedontrustandthe recognition ofmutual interests,makes itpossible to work together on a constructivebasisandtoplanforthedevelopmentofnewindustrialprojects.

Forthepurposesofitsprojecttoconstructtwosilicomanganese and metallic-manganesemetallurgical units at Moanda in the UpperOgooué (known as the Moanda MetallurgyComplex),COMILOGsigned twoagreementswith the Gabonese authorities on 7 January2010inLibreville;amongotheritems,thefirstagreementlaiddownthespecificlegal,taxandcustomsframeworkfortheproject,whilethesecond specified the conditions for securingthe future energy supply to the complex. Toimplement the project a special financingfacilitywassetup,withguaranteesprovidedbyERAMETandtheGaboneseRepublic.ThenewMoandaMetallurgyComplexwasinaugu-rated in2015ataceremonyattendedbytheGabonesePresidentandtheERAMETCEO.

On 20 October 2010, ERAMET and theGaboneseRepublicconcludedanagreementto step up the Gabonese Republic’s interestin the capital of COMILOG. Under its terms,from2010to2015ERAMETwilltransfertotheGaboneseRepublicbystagesafurtherstakeofupto10%ofCOMILOGS.A.’scapital,whichwould increase the Gabonese Republic’sshareholding inCOMILOGS.A. to35.4%.Thefirsttransferstageinvolved3.54%ofthesharecapital;2.17%ofthecapitalwastransferredon

17 December2010,andtheremaining1.37%for this stage was transferred on 14 June2011.Inaddition,acandidateproposedbytheGaboneseStatewasappointeddirectorbytheERAMETGeneralMeetingofShareholderson15 May2013.

TIZIR PARTNERSHIP WITH MINERAL DEPOSITS LIMITED

On 25 October 2011, ERAMET and MineralDepositsLtdcreateda50/50jointventuretotake up a 100% stake in TiZir Titanium andIron (TTI) (Norway) and 90% of the GrandeCôtemineralsandsprojectinSenegal.GrandeCôte aims to provide TTI with a supply ofgood-quality ilmenite for its titanium dioxideslagproduction,andTiZirwithastrongposi-tion in thezirconmarket.TiZiravails itselfofERAMET’s know-how in mineral processing,metallurgy,R&D, logisticsandmarketing,andbytheexperienceoftheMDLteaminprojectdevelopment, and the exploitation ofmineralsands.

3.3 MINING AND INDUSTRIAL RISKS3.3.1 RISKSINRELATIONTO ASSESSMENT OF MININGRESERVESANDRESOURCESMining reserves and resources may evolveover time, particularly with changes in thetechnicalandeconomicassumptionsusedinmining (geological data,mining cost factors,

mining technology). Accordingly, resourceand reserveestimatesare revisedeachyear,bothquantitativelyandqualitatively.Detailsoftheestimatesandassumptionsusedforthispurpose are given in Section 2, sub-section“Reservesandresources”inthisdocument.

3.3.2 MININGPROJECTDEVELOPMENTRISKSSincetheyarecapital-intensiveandtakeupaconsiderableamountof time, studies for thelaunch of new mining operations or for therenovation of existing operations are capexdecisionswhich require prior technical feasi-bilitystudieswithfinancingassumptionsandprofitabilitycalculations,whicharethemselvesdirectlyinfluencedbytherelevantcommodity

prices and currency rates, the cost of creditand the typeof financing chosen. In periodsof slower demand, some of these decisionsmaybedelayedorcancelled,whichmayhaveanimpactonaminingoperation’sprofitability.

3.3.3 SAFETYANDENVIRONMENTALRISKSGiventheuniquecapacityofmetalsforalmostindefinite recycling, the Group’s businessactivitiesnaturallydovetailwithasustainabledevelopmentapproach inaglobalcontextofscarcity and, accordingly, of the maximumre-useandoptimisationofnatural resources.Nevertheless, though durable and recyclable,theseproductsmayentailhazardsorrisksatsomestageoftheirtransformationorusage.

65


TheGroupthereforehastofacethechallengeofidentifyingallsuchhazards,preventingandcontrollingtheriskstoitssites,whilecontribut-ingtothesustainabilityanddevelopmentofitsbusinessactivity.

Considerationofthesocialandenvironmentaldimensions of sustainable development inconnectionwithbusinessprojectsformspartof the criteria applied as part of theGroup’sinvestment procedure and the Environment,Industrial Risks and Product Responsibilityfunction is systematically represented onprojectsteeringcommittees.

The section below describes the proceduresdeployed by the Communications and Sus-tainable Development Department to controlindustrialandenvironmentalrisksatsites.

3.3.3.1 INDUSTRIALRISKPREVENTIONPOLICY

METHODOLOGICAL ASSISTANCE WITH RISK ANALYSIS

The Group provides assistance to the sitesfor their hazard studies. These analyses areused to exhaustively identify major accidentscenarios, their causes and impacts, in thelight of which prevention and/or protectionsafeguards (important safety items) are in-stalledtoreducethelikelihoodorseriousnessofcontingencies.In2015thismainlyinvolvedSLN,thePlantCprojectinDoniamboandtheEcotitanium,VALMETandMKADprojects.

PREVENTIVE ENGINEERING REQUIRED UNDER THE GROUP’S PROPERTY INSURANCE POLICY

In2015,ERAMETcontinuedthepolicyofbian-nual engineering visits (preventive insuranceaudits) to all industrial sites in close cooper-ationwith the insurers, underwriters and theGroupInsuranceDepartment.

Thefollowingsiteswerevisited:

– ERAMET Alloys:• UKAD,• Aubert&Duval:Imphy,andPamiers(France),• ERASTEEL:Kloster(threesites,Sweden);

– ERAMET Manganese:• GCMC (USA), BMC (USA), EMI (USA),COMILOG S.A. (Gabon), CMM (Gabon),Kvinesdal(Norway),COMILOGGuilin(Chi-na), GECC (China), COMILOGDunkerque(France)andERACHEMTertre(Belgium);

– ERAMET Nickel:• Eurotungstène(France).

The follow-up indicators for the actionsdecided as a result of these visits are setout inasummaryreport issuedtwiceayear,coveringcompliancewithstandardfiresafetyprocedures and courses of action to protectstrategicindustrialfacilities.

As always, close involvement of the on-siteindustrialriskofficersandtheleadinginsurer’sengineering teams in all capex programmesensured that insurer recommendations arefactored into new facilities from the designstageonwards.

In 2015 surveys chiefly focused on theEcoTitaniumandVALMETprojectsandSLN,with 63 kV basement cable protection andprotectionofcriticalelectricalrooms.

GROUP CRISIS MANAGEMENT PROCEDURES

These procedures set out best practicesand communication requirements for threescenarios:

– Crisis prevention: identification and takinginto account at operational level weaksignals, crisis simulation exercises so thateach person knows their role and in ordertocontinually improveemergencyplanning(inconjunctionwiththestandardinsuranceprocedure).

– Serious incident management: definitionofaseriousincident,Groupreporting,feed-back,communication.

– In a crisis: criteria for identifying crisissituations, Group reporting, organisationduring crises (operations management,communication, recourse to experts, crisisunit),feedback.

These procedures have been deployed at allsites.Asin2014,specialattentionwaspaidtocrisissimulationexercisesatallthesites.

Outof the42 sites currentlymonitored, 90%conducted one or more exercises in 2015,some of them in cooperation with the firebrigade.

3.3.3.2 ENVIRONMENTALRISKPREVENTIONPOLICY

AUDIT POLICY

ERAMETavails itselfofasystemtoperformregular internal audits on the performancesof its companies in terms of Environment,Health and Safety. The audits are arrangedby the Group’s Safety and EnvironmentDepartments,onastringentschedulethatatleast meets the requirements of ISO 14001and OHSAS 18001. The chapter addressingenvironmental protection provides details oftheinternalauditprocess.

Otherinspectionsarealsocarriedoutaspartof the ECOSPHERE insurance programmeoperatedinpartnershipwithAXA.Theinspec-tionsaddressbothindustrialandenvironmen-talrisks,andprovidefurtherinformationontheenvironmental impactofsitesandstructuresand the courses of action implemented to

66

Risk factors / Mining and industrial risks

minimiseimpact.Since2008,therefore,anin-spectionprogrammehasenabledtheinsurerstoassesstheriskofharmtotheenvironmentat15 sites,inadditiontoexchangeofinforma-tionandquestionnairesfilledinbyalltheunitscoveredbythispolicy.

The insurers’ recommendations, ranked inorderofpriority,arethenfollowedupinactionplansbythesites,withaconsolidatedreviewcarriedoutatGrouplevelannually.

Thison-sitepresenceisessentialtoensuretheproperintegrationofmulti-facetedregulationsandthechallengesthatapplytovariousactivi-ties.Thisdetailedknowledgeisalsoprimordialfortheproactivestudyofregulatorychangesandtoencourageprogressthroughexchang-esandsynergybetweensitesandDivisions.

Thedataproducedbytheseauditingandcon-trol systems allows the Group to constantlybolsteritsongoingimprovementprocess.

“ZERO DISPUTE” GOAL

The ERAMET group promotes a policy ofstrict regulatory compliance, transparencyanddialoguewith thesupervisoryauthoritiesin all circumstances, particularly in theeventof temporary difficulties or special operatingconditions.Since2007ithasworkedtowardsa “Zero dispute” goal aimed at zero formalnotices or legal proceedings liable to arisefrom any breach by Group sites of bindingregulatoryrequirements.

Monitoringofdisputeswasamendedin2015to move forward from a mere observationschemetoaschemetoanticipateandcontrolrisks.Thelistofdisputesnowtakesaccountoffourtypesofincidents:

– Type 1—Low-level signals:Writtenwarningbytheauthoritiesasareminderofadeadlinewhich, if it is not observed, could lead toformalnotice(knownintheUSasa“noticeofviolation”),athird-partyclaimagainsttheplantorinthemedia.

– Type 2—Declaration of a non-compliance andnoticebytheauthoritiestotakeactiontoaspecificdeadlineinordertoavoidafine;ex-ample inmainlandFrance,New Caledonia,Gabon:noticeofviolation,intheUS:“noticeof enforcement” or “consent agreement”betweentheauthoritiesandtheoperator,oran“administrativeorder”.

– Type 3—Legal action: Legal proceedingsby the prosecution or any other publicauthorityafteranoticeofviolationoraclaimsubmitted to the courts by a third party.Legalclaimsbyemployeesor thirdpartiesfordamagesarisingfromanenvironmentalinfringement. Legal claimsbya thirdpartyagainst an administrative permit issuedpursuanttoenvironmentallegislation.

– Type 4—Actual sanction:Anadministrativesanction(fine,suspensionofpermit),unfa-vourablelegalrulingorcriminalconviction.

The2015 “ZeroDispute” assessment showsthatinaggregatetermsthenumberofcaseswasinkeepingwiththepreviousassessment.ThenumberofType 3andType 4disputeswasquite low (three incidents) and the incidentswerenotsoserious,andthesamewastrueofType 2incidents(11 incidents,asagainsteightin2014).

Thisverylimitednumberofdisputesshouldbeputintoperspectiveagainstallthedetailedre-quirementsinthevariousminingpermitswithwhichGroupsitesmustcomply.Thenumberofminingpermits in 2015was177, eachofwhich includesat least tenparameters tobecompliedwithonanannual,quarterly,monthlyorevencontinuousbasis.

3.3.4 TRANSPORTATIONRISKS

3.3.4.1 SEAFREIGHT

TheGroupmakesextensiveuseofshippingtotransportitsproducts;first, invariousstages,

to production sites, and then for delivery tocustomers, because of the long distancesbetween the mines where raw materialsare extracted and the sites where they areprocessed, andbetween those sites and themarkets.Toprotectitselfagainstsharprisesinfreightcosts,theGroupseekstocontractlongtermatpredefinedpricesand tobooksomeshipsonalong-termbasis.Duringperiodsoflowsalesactivity,ontheotherhand,thismayentailrenegotiationofcontracts.

The risk of property damage is moreovercoveredbyspecificinsurancepolicies.

3.3.4.2 RAILTRANSPORTANDHARBOURINFRASTRUCTURES

In Gabon, the Group was awarded the con-cessiontooperatetheTransgabonrailwayfora30-year termbeginning inNovember2005.In addition to providing a public service andtransportingmiscellaneousgoods,therailwaycarriesmanganeseorefromtheMoandamineto the port inOwendo (Libreville). COMILOG,throughitsPortMinéralierd’Owendosubsidi-ary,hasaconcessiontooperatetheoreportofOwendo.

In Senegal, TiZir’s Grande Côte operationsalsoincludethe25-yearrailwayconcessionasof2011totransportorefromtheminingsiteto the Dakar harbour facilities. Grande CôteOperationsalsobenefitsfromalicencetousepublicdomainattheDakarautonomousport.

Aninterruptioninseaorrailtransportationorasharprise in transportationprices,notwith-standinglong-termcontracts,wouldneverthe-lesshaveanegativeimpactonresults.

67


3.4 LEGAL AND TAX RISKS / DISPUTES3.4.1 THEGROUP’SDEPENDENCE ON THELEGISLATIVEAND REGULATORY ENVIRONMENT

3.4.1.1 SPECIFICREGULATIONS

Miningoperationsaresubjecttospecificregu-lations,dependingonextractionlocationsandactivities.Theseregulationschieflyrelateto:

– miningpermitandconcessionregimes;

– obligationsspecifictominingoperations;

– environmental and biodiversity limits andcontrols;

– siterestorationafterdepletion.

Theseregulationsmaychange,withapossibleimpact on operations and results. This iscurrentlythecaseinGabon,followingtheintro-ductionoftheMiningCodeviaLaw017/2014of30 January2015,althoughthedecreesforitsapplicationhavenotbeenpublishedyet.

In addition to actual mining work, industrialoperationsarealsosubjecttospecificregula-tionsdependingontheindustrialsites.Theseregulationsmainlycover:

– the regimes governing themining permitsandauthorisations;

– compliance with limitations on waste dis-charge into thenaturalenvironmentduringsiteoperation,takingdueaccountofmajorindustrial risksandhealthhazardsentailedin operations, and the management andeliminationofindustrialwaste;

– theobligationsentailedinrestoringthesiteafter cessation of operations, factoring inthe risks relating to polluted sites, groundpollutionandwaste.

Theseregulationsmaychange,withapossi-ble impact on operations, particularly whereadditional capital expenditure is required tofactorinenvironmentalconcernsinresponsetochangesintheregulations.

3.4.1.2 SPECIFICTAXCONCERNS

In addition, the Group’s business is partiallysubject toaspecial tax framework (royalties,duties and taxes). Its companies and unitsin mainland France are liable for tax at thestandard French rate. The current corporateincome tax rate is 33.33%, excluding anadditionalwelfarecontributionof3.3%andaspecial surcharge of 10.7% applicable since2013.

ItshouldbenotedthatERAMETistheparentcompany of a tax consolidation group thatcomprised 21 companies at 31 December2015.

The following notes apply to subsidiariesoutsidemainlandFrance:

– Le Nickel-SLNisliableforthe35%miningandmetallurgicalcorporationtaxinNew Caledo-nia.Since1975thecompanyhasenjoyedataxfreeze,whichhasbeenrenewedseveraltimes. The last renewal was for 15 yearsfrom 1 January 2002 to December 2016,pursuant toa localorderof13 June2002.Moreover, some of the subsidiary’s capital

expenditureprogrammesinNew Caledoniabenefitedfromthetaxexemptionmeasuresintroduced by the Paul and Girardin Actsand tax reliefgrantedunder theNew Cale-donianTaxCode on capital expenditure inmetallurgy.

In2014New Caledoniaintroducedareformof its tax system. On 31 December 2014a number of laws were published in theNew Caledonia Official Journal, and theycame into forceon1 January2015.SLN’sdistributionstoERAMETwillhenceforthbesubject to anadditional income tax contri-butionof3% (anydistribution in excessof30 million Pacific francs, i.e. €251,400). Inaddition, the tax withholding on dividendpayments in New Caledonia was raisedfrom5%to10%asaresultoftheintroduc-tion of a solidarity contribution of 5%. Asanextensiontothisreform,anewlawwaspublishedon29 December2015creatinganupperlimittothedeductibilityofoverheadsof5%oftheamountofexternalservices.

– TheWedaBayprojectisgovernedbyacon-tractofworkdefining,amongother issues,the tax regime applicable to productionactivityat thestartof thesite’soperations.TaxmatterscurrentlyunderdiscussionwiththeIndonesianGovernmentconcernissuesrelating to State revenue (royalties, taxincentives,VAT).Theoutcomeofthesedis-cussionswillbedecisivefortheinvestment’scontinuityandprofitability.

– TheCOMILOGsubsidiaryisliableforincometaxat35%andforexportdutyandminingroyalties that represent approximately 6%ofthepitheadvalueoftheproductsmined(closetoFOBvalue),andalsoa15%taxondividends (10% on the fiscal scheme forcorporategroups).This tax regime isfixeduntil 2032 as part of amining agreementsigned inOctober2004and ratifiedby the

68

Risk factors / Legal and tax risks / Disputes

Gabonese Parliament in 2005. The dou-ble-taxationconventionbetweenGabonandFrancesignedinLibrevilleon20 September1995tookeffecton1 March2008,replacingtheearlierconventionof21 April1966.Thecurrent convention was published in theOfficialJournaloftheRepublicofGabonof24-31 July2011.

A new Mining Code was introduced inGabonin2015.Thenewregulationsdonotentailanymajorchangesforcompaniesal-readyengagedinmining,buttheydocontainsome favourable provisions for holders ofminingexplorationlicencesandcompaniescommencingoperations.

– Chinaiscurrentlyintheprocessoftighten-ing controls on foreign companies wherecross-borderflowsareinvolved.Thiscreatesmore stringent reporting requirements, theadoptionofanti-abusetaxrulesandreclas-sification of the business as a permanentestablishment of a foreign company inChina.

Chinaalsoundertookareformofitsindirecttaxation, with the introduction of a val-ue-addedtaxsystemtoreplacetheexisting“businesstax”.

– UnderanAgreementsignedwiththeSenega-lesegovernmentin2005andAmendment 1signed in 2007, Grande Côte Operations(GCO) benefits from a mining concessionregime for25 years fromNovember2007.Under theprovisionsof theminingcode itenjoysfullexemptionfor15 years(exemp-tionfromVAT,customsduties, incometax,levies and property tax), not including theinvestmentperiod(construction).

Moreover,inthecaseofminingroyalties,byway of exemption from the Mining Code,which sets these royalties at 3% of thepitheadvalue,GCOagreedin2007toraisetheseroyaltiesto5%andtoapplyproductionsharingat10%onthebasisofnetmarginoncertaincosts.

– Generally,subsidiariesbasedabroadarelia-

bleforstandard-ratelocaltaxationandben-

efitfromthedouble-taxationconventionsin

force.Taxisnotwithheldondividendspaid

totheparentcompanybythesubsidiariesin

Norway, Sweden, the United States, China

andBelgium.Ontheotherhand,taxiswith-

heldondividendspaidbyCOMILOG(Gabon)

andSLN(New Caledonia)atarateof15%

(10% on the fiscal scheme for corporate

groups)and10%respectively.

3.4.2 MAJORLAWSUITS

Apart from the matters explained below, as

farastheCompanyisawarenogovernment,

judicialorarbitrationproceedingsexist,pend-

ingorimminent,thatareliabletohaveorinthe

last12 monthshavehadanymaterialeffects

onthefinancialpositionorprofitabilityofthe

Companyand/ortheGroup.

CARLO TASSARA FRANCE LITIGATION

On17 December2009,CarloTassaraFrance

issuedasummonsfortheSIMA,SORAMEand

CEIRcompaniesandcertainmembersofthe

DuvalfamilytoappearattheParisCommer-

cialCourt.Thesummonsspecifiesthatthese

proceedingsarebeingbroughtinthepresence

ofERAMET.ThefactsareexplainedinNote 14

to the consolidated financial statements set

outinSection 6ofthisdocument.

On2 December 2011, theParisCommercial

Court ruled thatallofCarloTassaraFrance’s

claimswereinadmissibleonthegroundsthat

theywere time-barred. CarloTassara France

appealed the ruling. On 19 March 2013, the

ParisCourtofAppealupheldtherulingofthe

ParisCommercialCourtinallitsprovisions.

On 8 July 2014, the Court of Cassationdismissed the appeal filed by Carlo TassaraFranceagainsttherulingon19 March2013bytheParisCourtofAppeal.

On 10 April 2014 Carlo Tassara France alsofiled an application for judicial review of theruling on 19 March 2013 by the Paris CourtofAppeal.On29 September2015theAppealCourtdismissedthejudicialreviewsubmittedbyCarloTassaraFrance.

3.4.2.1 ERAMETNICKEL

SLN DISPUTE WITH MANAGEMENT EMPLOYEES

In 2012, some fifty SLN management em-ployeesandformermanagementemployeessubmittedaclaimtotheNouméaEmploymentTribunalagainsttheiremployerforbackpayasanend-of-yearbonus for theperiod thathadnotbeentime-barred.Theplaintiffschallengedthe validity of a measure taken at year-end1992byvirtueofwhichthisbonuswasincor-porated into theannual salarypaid in twelvemonthlyinstalments.

Inbindingjudgmentson26 August2014,theNouméaEmploymentTribunalgrantedthesefor theperiodthathadnotbeentime-barred.Judgments on 5 November 2015 by theNouméaAppealCourtconfirmedtherulingsoftheNouméaEmploymentTribunal,butlimitedthe amount due to one twelfth of the grossannualsalaryforeachyearconsideredintheperiodthathadnotbeentime-barred.

3.4.2.2 ERAMETMANGANESE

FORMER EMPLOYEES OF COMILOG IN CONGO

Before the Transgabon railway commencedoperations,COMILOGexporteditsmanganeseoreviatheCongo,where itemployedalmost1,000 people at that time. Following an ex-tremelyseriousrailwayaccidenton5 Septem-

69


ber1991intheRepublicofCongo,COMILOG’srail shipments of ore through this countrywere suspended. This situation persistedand led to thediscontinuationofCOMILOG’soperations intheCongo,anddismissalof itsCongolese employees.After several years ofnegotiations delayed by the civil war in theCongo,a“memorandumofunderstandingforthefinalsettlementof thedispute relating tothediscontinuationofCOMILOG’soperationsin theRepublicofCongo”wasagreedby theRepublicofCongo,theGaboneseRepublicandCOMILOGon19 July2003.Underthismemo-randum,COMILOGandtheRepublicofCongoput an end to all past and future disputes,andtheRepublicofCongotookoverallliabil-itiesandobligationsarising fromCOMILOG’soperations in theCongo.Under the termsofthis agreement, COMILOG paid the RepublicofCongothesumofonebilliontwohundredmillion FCFA to compensate the employeeswhoweredismissed.Thissumisinadditiontothemovables and non-movables transferredat no charge by COMILOG. Challenging theterms of this agreement as unsatisfactory,867 former employees of COMILOG in theCongo summoned three French subsidiariesofCOMILOG,whichhadneverbeentheirem-ployers,andCOMILOG,toappearon9 October2008beforetheParisEmploymentArbitrationTribunal’s Conciliation Board. In a ruling on26 January2011theEmploymentArbitrationTribunal’sJudgmentBoarddeclaredthatithadnoterritorialcompetenceinthematter.Theap-pellantschallengedthisinareferraltotheParisCourtofAppeal.TheCourtofAppealagreedtoconductaninitialexaminationofsixcases.Injudgmentson20 June2013, theParisCourtofAppealordered twoofCOMILOG’sFrenchsubsidiaries to produce various documents.COMILOG and its subsidiaries submitted anappeal against these rulings to the Court ofCassation,andaccordinglyissuedarequesttotheCourtofAppeal foranadjournmentuntiltheCourtofCassationhadruled.TheCourtofCassationrulingon28 January2015rejectedthe appeals, confirming that the Paris Courtof Appeal judgment of 20 June 2013 hadnot decided that French employment courts

wouldbecompetent to ruleon themeritsofthe dispute between the claimants and theirformer Gabonese employer, and that it hadmoreovernotdecidedthattheFrenchsubsid-iariesofCOMILOGweretheiremployers.

Consequentlythesixcaseswereagainexam-inedbytheParisCourtofAppeal, issuingsixjudgmentson10 September2015wherebyitruledthatCOMILOG’sFrenchsubsidiarieswerenot co-employers of the plaintiffs, and thatCOMILOGwasinfactaGabonesecompany.Itdismissedthechallengesofthefourplaintiffs.However, in thecaseof twoof theplaintiffs,which had instigated proceedings with theCongolese authorities, it stipulated FrenchjurisdictiontoruleontheclaimsmadeagainstCOMILOG, considering that these plaintiffshad been denied justice by the Congoleseauthoritiesand that these legaldisputeshadasufficientconnectionwithFrance.COMILOGappealedagainstthesetworulings.

CRIMINAL PROCEEDINGS AGAINST THE CEO OF SETRAG

On 3 February 2014, a railway accidentinvolvingaSETRAGpassengertrainonalevelcrossingatNkoltang(Gabon)ledtothedeathsofsevenoccupantsofavehicle.TheCEOofSETRAG, theTransgabon railwayconcessionoperator, was subsequently charged withmanslaughter.

TheevidencepresentedbythePublicProsecu-tordidnotdemonstrateanycriminaloffenceor breach by SETRAG of the concessionagreementwith theStateorof the lawsandregulationsgoverningrailsafety.

On 16 March 2016, the Libreville Tribunaldismissed these charges and ruled publicprosecutionshouldseekanotherlegalgroundforrecourse.

MOANDA ENVIRONMENTAL DISPUTE

FourNGOs(non-governmentalorganisations),an inhabitants’ protest group (“collectif d’ha-bitants”)andaformerMemberofParliamentmadeanumberofapplicationstotheLibrevilleCourt of First Instance, in February and

March 2011, instituting civil actions, seekingreparationfromCOMILOGSAandErametforenvironmental damage alleged to have beencausedbytheoperationoftheMoandaminingsite.

On13November2012,theLibrevilleCourtofFirst Instance, in response to an applicationbyComilogSAandtheotherdefendants,de-clinedterritorialcompetence.Theappealfiledbytheappellantsagainstthisjudgementwasdeemed inadmissible by the Libreville Courtof Appeal on 16 May 2013. The claimantsappealedtotheCourtofCassationagainsttheSeptember 2013 judgement of the LibrevilleCourtofAppeal.On7January2015,theCourtofCassationdismissedtheclaimants’appeal.

GULF CHEMICAL & METALLURGICAL CORP.

InFebruary2013,theGroupwasinformedofcivil proceedings against Group companies,seeking redress for alleged damage toresidentslivingclosetotheplantatFreeport,Texas. A summons was received in March2015 to the court inWharton county,Texas.Thesumofdamagesthatmaybeclaimedisnotknown.

3.4.2.3 ERAMETALLOYS

ASBESTOS CLASSIFICATION OF LES ANCIZES

The Les Ancizes establishment belonging toAubert&Duvalhasneverproducedor trans-formed asbestos or sold materials that arewhollyorpartlycomposedofasbestos.Thismaterialhasonlyeverbeenacomponentofsomeofthematerialsusedinitsheattransferequipment(furnaces).Forexample,heat-resis-tantmaterialscontainingasbestos,usedinthepastattheLes Ancizessite,representedlessthan1%ofallheat-resistantmaterialsusedatthesite.

Theregulatoryschemefortheearlyretirementof asbestos workers is open to workers ofestablishmentswhereasignificantproportionof workers were significantly exposed toasbestos, regardless of the positions held.

70

Risk factors / Liquidity, market and counterparty risks

The Employment Minister is responsible forassessingtheextentofexposureandaddingthe establishments concerned to the listof establishments the employees of whichqualify for this scheme. The EmploymentMinistercarriedoutfoursuccessiveenquiriesregardingtheLes Ancizessite,andconcludedthat this establishment did not satisfy anyof the regulatory criteria required for it to beaddedtothelist.

Arulingon7 May2013bytheLyonsAdminis-trativeCourtofAppealneverthelessrequestedtheEmploymentMinistertoaddLes Ancizes

tothelistofsiteswhereemployeesareentitledtothemeasure,fortheperiodpriorto2005.

On1 August2013, theCouncil ofStatesus-pendedthejudgementof7 May2013fortheperiodafter1992anddismissedtheappealforthe period before 1993. Classification of theLes Ancizessitewasorderedfortheperiodpri-orto1993throughajointministerialdecisionofNovember2013.

Initsdecisionof19 May2014,theCouncilofState revoked the judgementof7 May2013deliveredbytheLyonsAdministrativeCourtof

Appealfortheperiodafter1992.Itreferredtherulingonthemeritsof thecasetotheLyonsAdministrativeCourtofAppealfor theperiodafter1992.

A rulingon17 November2015by theLyonsAdministrativeCourtofAppeal(contrarytotheCourtrulinginMay2013)foundnogroundstoclassifyLes Ancizesonthelistofsiteswhereemployeesareentitledtothemeasurefortheperiodafter31 December1992.

Thedisputeterminatedatthispoint.

3.5 LIQUIDITY, MARKET AND COUNTERPARTY RISKS3.5.1 LIQUIDITYRISKThe Group has a financial liquidity positionwhichisstillstrongbyvirtueof:

– the Revolving Credit Facility (RCF) of€981 million, mostly repayable in January2018.€980 millionhadbeendrawnon thefacilityatthebeginningofJanuary 2016;

– acashsurplusof€630 million,€434 millionofwhichwereclassifiedascashandcashequivalents.Thesecashsurplusesaremost-lytransferredtoMetalSecurities,theGroup’sspecial-purpose entity responsible forpoolingandinvestingGroupcashsurpluses.

TheGroup’snetborrowingsstoodat€878 mil-lionat31 December2015.

COVENANTS

The main covenants at Group level are de-scribedinNote 7totheconsolidatedfinancialstatementsinChapter 6ofthisdocument.

3.5.2 MARKETRISKSTheGroupisprimarilyexposedtothreetypesof market risk: foreign-currency risk, inter-est-rateriskandcommodityrisks.Thesethreetypesof riskaremeasuredandmanagedbytheGroupTreasuryDepartmentinaccordancewithGrouppolicies.

3.5.2.1 FOREIGNCURRENCYRISK

TheERAMETgroupisexposedtotwotypesofforeigncurrencyrisk,asfollows:

– transactional currency riskswhen aGroupcompany pays or receives net flows in acurrencyotherthanitsfunctionalcurrency;

– foreigncurrencyrisks to thebalancesheetduetochangesinthenetassetsofsubsid-iariesmeasuredincurrenciesotherthantheeuro.

TRANSACTIONAL RISKS

The Group has pooled its subsidiaries’transactional foreign currency risks since2003.EachGroupcompanyreportstoGroupTreasuryonitsforeigncurrencyexposure.Thismanagement scheme is part of amulti-yearpolicybasedonproceduresapprovedby theExecutive Committee and monthly reportingtoitsmembers.

Foreign exchange hedging has been carriedout via the special-purpose entity, MetalCurrencies, since 2007. The subsidiaries inquestiondeterminetheamountoftheirnetex-posure.Theassociatedrisksarethenhedgedifthenetamountisgreaterthan€2 millionorthe equivalent thereof per currency and peryear.

Currency hedging primarily involves the USdollar,butalsoincludestheNorwegiankrone,thepoundsterlingandtheSwedishkrona.

DetailsofhedgesareexplainedinNote 7totheconsolidatedfinancialstatementsinSection 6ofthisdocument.

At 31 December 2015, the fair value ofcurrency hedges covering transactional risksrepresented net liabilities of €89 million (netliabilitiesof€71 millionat31 December2014).

Salesandpurchasesdenominated in foreigncurrencies(invoicesissued,invoicesreceived,receipts and payments) are translated at amonthlyexchangeratethatrepresentsanac-curateapproximationofthemarketexchangerate. At the end of eachmonth trade receiv-ables/payables and bank account balancesare restatedat thehedging rate indicatedby

71


the Treasury Department. Any differencesbetween:

– themonthly exchange rate applied to rec-ognisesalesand receipts /purchasesandpayments;

– thecontractualsettlementrateforhedges,

are recognised by each company undercurrent operating profit or loss on sales(under“Translationadjustmentsonsales”)orpurchases(under“Costofgoodssold”).

Achangeofplusorminus0.10invalueintheeuro-dollarratewouldhaveanimpact,beforetax, on the hedges recognised in equity of+€55 million if rates rose, andapproximately-€66 millioniftheyfell.

BALANCE SHEET RISKS

The ERAMET group manages part of theforeigncurrencyriskstothebalancesheetbyissuingfinancialliabilitiesdenominatedinthesamecurrencyasthenetassetsconcerned.

TheGroupmanagesbalance sheet currencyriskonacase-by-casebasis.

3.5.2.2 INTERESTRATERISK

a)Regardingitsgrossdebtposition,theGroupconsiders its debt position and markettrendswhendecidingwhethertohedgeforinterestrates.TheGroup’sTreasuryDepart-mentisresponsibleforsettinguphedges.

A10-basispointchangeinrateswouldnothave a significant annual impact on theGroup’soverallfloating-ratedebt.

b)Cash surplusesmanagedbyMetal Securi-tiesaremostlyinvestedininstrumentslinkedtotheEONIA(EuroOverNightIndexAverage)orEURIBOR(EuroInterBankOfferedRate).

A10-basispointchangeinrateswouldnothaveasignificantannualimpactonfinancialincome.

3.5.3 COUNTERPARTYRISKTheGroupisexposedtoseveraltypesofcoun-terparty risk,which arise from its customersanditsfinancialpartners,particularlybecauseofitscashsurpluses.

For customer risk, the Group uses creditinsuranceor lettersofcreditordocumentarycredits.Forunsecuredreceivables,theGroup

has a number of different monitoring andhedgingtools:business intelligenceaheadoftransactions (ratingandbusiness-intelligenceagencies,publishedfinancialstatementsetc.).Trade receivables are specifically monitoredbyacreditmanagerforeachGroupDivision,withaCreditCommitteemeetingmonthly toset credit and outstanding-balance limits foreachcustomer.Inaddition,everytwomonthsa Group Credit Committee exchanges bestpractices and reviews the commercial situa-tionofkeyaccounts.

Forissuersofbondsornegotiabledebtsecuri-tieswithmaturitiesbeyondthreemonths:theprocedureapplicabletoMetalSecuritiessetsgeneral investment limits according to coun-terpartyratingandmaturity.Eachcounterpartyis also subject to regular monitoring of theassessmentsbycreditanalystsand/orratingagencies,andallrisksarereviewedquarterly.

ForUCITS, theprocedureapplicabletoMetalSecurities sets a double risk-dispersion rule,withbothamaximum investment ratio foragivenUCITSandthespreadingoftheassetsmanagedbyMetalSecurities.Thisprocedureapplies inaddition to therisk-spreadingrulesappliedby the fundmanagers themselves totheirassets.

72

Risk factors / Insurance/coverage of risks likely to be incurred by the Issuer

3.6 INSURANCE/COVERAGE OF RISKS LIKELY TO BE INCURRED BY THE ISSUER3.6.1 THEGROUP’SGENERALCOVERAGEPOLICY/RISKCOVERAGESTRATEGY

3.6.1.1 GROUPORGANISATION

The Group Risks and Insurance Departmentestablishesanddevelopsmanagement’s riskpolicy and, following approval by theComexcommittee, draws up insurance strategies:implementationofGroupprogrammes,mon-itoring prevention policy in coordinationwiththe Communications and Sustainable Devel-opmentDepartmentandseekingoptimalrisk/premium/retentionsolutions,includinguseoftheGroup’scaptivereinsurer.PursuanttotheGroupCharter, it reports to theGroup’sChiefFinancial Officer and on a functional basisto the Audit Committee, and also has directaccesstotheGroupChairman/CEO.

3.6.1.2 RISKIDENTIFICATIONANDCONTROL

Aspartoftheimplementationofitsriskman-agementpolicy,in2014theGroupremappeditsrisksontheprincipleofathree-yearprocess(remappinginyear 1,followingbytwoupdatesinyears 2and3).Onthisprinciple,theGroup’s

2014 mapping was updated at the end of2015.

Themainrisksidentifiedbyriskmappingaretreatedinseveralways:

– Deployment of action plans aimed atstrengthening the existing control mecha-nismsforthemajorrisksidentified.

– As far as possible, integration with theGroup’s internal audit plan: this aims toensure that the existing control processfunctionsproperly,andthattheactionplansdecidedareactuallyimplemented.

– Transfertotheinsurancemarketwheneverthisispossibleandadvisable.

3.6.1.3 USEOFTHEINSURANCEMARKET

As risks are identified and their impact con-trolled,theGroupseeksthemostappropriatesolutions on the insurancemarket that offeran optimum cost/cover balance. Throughunderwriters, the Group has deployed globalinsuranceschemeswithpoolsof internation-ally renownedandfinanciallysound insurers.TheGroupalsousesthemarkettocoverrisksthat are specific to some of its subsidiaries’activities or non-recurring operations, and incaseswhereinsuranceisrequiredunderlocalregulations.

3.6.1.4 REINSURANCE

TheGroupalsohasacaptivereinsurancecom-pany(ERAS)thatenablesittoprovideprimarycoverage in some insurance schemes. TheGroupisthusabletomoreeffectivelymanagepremiumsviaaretrocessionmechanismandto decide retention limits. The Divisions areaccordinglyencouragedtodeveloptheirownpreventionprogrammes.

3.6.1.5 AMOUNTOFCOVER

The Group considers that it has establishedsufficient cover, in terms of both scope andamountsinsuredorcoverlimits,forthemainrisksrelatingtoitsglobaloperations.

3.6.2 THEDIFFERENTTYPES OF INSURANCE TAKEN OUTThe Group has a varied range of insuranceschemes designed to cover the differentinsurableriskstowhichitisexposed.

Thefourmain insuranceschemescovercivilliability, environmental civil liability, propertydamage, business interruption and transpor-tationrisks.

3.6.2.1 CIVILLIABILITYINSURANCE

GENERAL CIVIL LIABILITY INSURANCE

Thisschemecovers thecivil liability incurredby theGroup as a result of damage causedto thirdpartiesby itsbusinessoperationsorproducts, i.e. general operating liability, les-sors’ insurance, product liability including foraerospaceproducts,professionalcivil liabilityandcoverforsuddenandaccidentalpollution.Cover iscomprehensive,meaningthatevery-thingnotexcludediscovered,exclusionsbeingthosecommonlyappliedforsuchrisks.Coverisappliedona“claims”basis,meaningthatitappliestoanyclaimmadeduringtheinsuranceperiod (including the subsequent five-yearperiod, pursuant to French regulations). Foranyclaimsreceived,theschemeappliesfromFrance. If applicable, when local regulationsrequirelocalpolicies,itisusedontopofthesepoliciesandtocompensatefordifferencesinconditions and/or limits on a DIC/DIL basisworldwide.

73


Thisscheme,whichwasrolledouton1 July2004 following a tender for AXA CorporateSolutions (leading insurer),wasdrawnupfortwoyears.

It is based on a “master” policy issued inFrancecovering€75 millionandtwoadditional“excess” policies in the respective amountsof €50 and €25 million, supplementing themasterpolicyandprovidingadditionalcoverof€150 million.

The excesses applicable are usually around€15,000perclaim.

CIVIL LIABILITY FOR AERONAUTICAL PRODUCTS

Thecapacityofthisprogramme,operatedwithAllianzGlobal Corporate & Specialty (leadinginsurer) since August 2012, was boosted to€800 milliononrenewalinJuly2015.

ENVIRONMENTAL CIVIL LIABILITY

ThepoliciesforEuropeandMexico(€25 mil-lion) the United States (€25 million) andNew Caledonia (€20 million) were renewedwithnomajorchanges.

3.6.2.2 PROPERTYDAMAGEANDBUSINESSINTERRUPTIONINSURANCE

Thisschemecoverspropertydamageincurredsuddenlyandaccidentallytotheinsuredprop-erty,includingtheriskofmachinerybreakage,andanyoperating lossesarisingtoallGroupentities. Cover is comprehensive, meaningthateverythingnotexcluded iscovered,withexclusions commonly applied for such risks.Theprogramme isbasedonamasterpolicyissuedinFrancethatdirectlycoversthefollow-ing countries: France, Belgium, Italy, Norway,UnitedKingdomandSweden,providingcoveronanydifferenceinconditionsand/orinlimits

(DIC/DIL) under local policies (Gabon, China,USAandMexico).

When this programme was renewed on1 January 2015, a tenderwas arranged andthissubstantially improvedthecoverandthefinancial conditions. It is now operated by apoolofinsurerswithHDICorporateSolutionsas the leading insurer, offering maximumcoverof€300 million.

3.6.2.3 TRANSPORTATIONINSURANCE

A global Group transportation insurancescheme is in place. This scheme covers allGroup entities worldwide, for all types oftransportationandalltypesoffreightorgoodstransported. The scheme comprises threepolicies: “marine cargo” for goods shipping,“charterer” with RAETS Club and “hull andmachinery”withAXACorporateSolutions.

74

CORPORATE GOVERNANCE

Chapter 4

76 4.1 REPORT FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS APPROVED BY THE BOARD OF DIRECTORS ON 17 FEBRUARY 2016

76 4.1.1 COMPOSITIONOFTHEBOARDOFDIRECTORSANDCONDITIONSFORTHEPREPARATIONANDORGANISATIONOFITSWORK

85 4.1.2 INTERNALCONTROLPROCEDURES

98 4.2 STATUTORY AUDITORS’ REPORT DRAWN UP PURSUANT TO ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE ON THE REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS OF ERAMET

99 4.3 REMUNERATION OF CORPORATE OFFICERS

99 4.3.1 REMUNERATIONPOLICYFOREXECUTIVECORPORATEOFFICERS

106 4.3.2 REMUNERATIONITEMSFALLINGDUEORGRANTEDTOEACHEXECUTIVECORPORATEOFFICERFORTHEFINANCIALYEARENDED,SUBJECTTOSHAREHOLDERAPPROVAL

118 4.4 INFORMATION RELATING TO PENSION COMMITMENTS FOR GROUP’S CORPORAL OFFICERS – ARTICLE R. 225-104-1 OF THE FRENCH COMMERCE CODE AS IMPLEMENTED BY DECREE N°2016-182 OF 23 FEBRUARY 2016

119 4.5 SECURITIES HELD BY MEMBERS OF THE BOARD OF DIRECTORS AND BY GENERAL MANAGEMENT

119 4.5.1 INDIRECTINTERESTS119 4.5.2 DIRECTINTERESTS119 4.5.3 LOANSANDGUARANTEES

GRANTEDORARRANGED120 4.6 SPECIAL REPORT ON BONUS

SHARE GRANTS120 4.6.1 GRANTSTOCORPORATE

OFFICERSOFTHECOMPANY120 4.6.2 GRANTSTONON-CORPORATE

OFFICEREMPLOYEESOFTHECOMPANYANDITSSUBSIDIARIES

120 4.6.3 GRANTSTOALLBENEFICIARYEMPLOYEES

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4.1 REPORT FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS APPROVED BY THE BOARD OF DIRECTORS ON 17 FEBRUARY 2016

Pursuant to the provisions of Article L. 225-37 of the French Commercial Code, thisreport covers, ononehand, the compositionoftheBoardofDirectors,theapplicationoftheprinciple of balanced representation of menandwomenontheBoardandtheconditionsgoverningthepreparationandorganisationoftheBoard’sworkand,on theotherhand, theinternal control and riskmanagementproce-duresinplacewithintheCompany.

4.1.1 COMPOSITION OF THE BOARD OF DIRECTORS AND CONDITIONS FOR THE PREPARATION AND ORGANISATION OF ITS WORK

4.1.1.1 CORPORATE GOVERNANCE CODE

InaccordancewiththedecisionoftheBoardofDirectorstakenon9 December2008,ERAMETrefers to the AFEP/MEDEF corporate gover-nancecodefor listedcompanies(“theAFEP/MEDEF code”), as its reference framework;thecodeisavailableontheAFEPandMEDEFwebsites.

The Company considers that its practicesare compliant with AFEP/MEDEF coderecommendations. In some cases, certainadjustmentshavebeenmadetothoserecom-mendations for reasonsdetailed in the tablesetoutintheAppendixtothisreport.

4.1.1.2 BOARD OF DIRECTORS

MEMBERSHIP / INDEPENDENCE

In accordance with the Shareholders’Agreement of 16 March 2012, amended on21 March2013,betweenSORAMEandCEIR,ononehand,andFSIEquation(asubsidiaryofBpifrance Participations), on the other, since15 May2013theBoardofDirectorshasbeencomprisedasfollows:

– fivedirectorsputforwardby theSORAME-CEIRconcertparty;

– threedirectorsputforwardbyBpifranceParticipations;

– twodirectorsputforwardbySTCPI;

– onedirectorputforwardbymutualagreementbetweenSORAME-CEIRandBpifranceParticipations;

– five“qualifiedpersons”,threeputforwardbytheSORAME-CEIRconcertpartyandtwobyBpifranceParticipations,selectedinviewoftheirexpertiseandtheirindependencefromthe party that proposes their appointmentandfromtheCompanyitself,inlinewiththeAFEP/MEDEF corporate governance codeforlistedcompanies;

– onedirectorcalledontoChairtheBoardofDirectors.

Furthermore, in accordance with the law of14 June 2013 related to job security (articleL. 225-27-1of theFrenchCommercialCode)andArticle 10.9oftheArticlesofAssociation,two directors representing employees weredesignated, one by the Company WorksCouncilandtheotherbytheEuropeanWorksCouncil,andtookuptheirdutiesin2014.

Full details of the composition of the BoardofDirectorsat the timeof this reportcanbefound in the tablesetout in theAppendix tothisreport.

TheAFEP/MEDEFcodeconsidersthatadirec-torisindependent“whenhehasnorelationshipofanykindwhatsoeverwiththeCompany,itsGrouporthemanagementofeitherthatcouldcompromise his freedomof judgement” andalsoidentifiesacertainnumberofcriteriathathavetobeanalysedinordertodecidewhetheradirectormaybeclassifiedasindependent:

– “notbeingasalariedemployeeorcorporateofficeroftheCompany,asalariedemployeeor director of its parent company or of acompany consolidated by the latter, andnothavingbeensoduringthecourseofthepreviousfiveyears”;

– “not being a corporate officer of a com-pany in which the Company directly orindirectlyholdsadirectorshiporinwhichadirectorship isheldbyasalariedemployeedesignatedassuchorbyacorporateofficer(currentorformerwithinthepastfiveyears),oftheCompany”;

– “not being (or being directly or indirectlylinked with) a major customer, supplier,merchant banker or commercial banker oftheCompanyorofitsGroup,oroneoftheaforesaid for whom the Company or itsGroup represents a significant percentageofitsbusinessactivity”;

– “nothavinganyclosefamilyconnectionwithacorporateofficer”;

– “nothavingbeenanauditoroftheCompanyduringthepastfiveyears”;

76

Corporate Governance / Report from the Chairman of the Board of Directors

– “not having been a Company director formorethantwelveyears”.

At the time of this report, based on annualexaminationbytheBoardofthecriteriasetoutabove,theBoardcontainedsevenindependentdirectorsoutofatotalof16 Boardmembers(the two directors representing employeesnotbeingcounted inaccordancewithAFEP/MEDEFcodeprovisionsandoneofthedirectorposts being currently unoccupied), therefore,more than one third of Boardmembers areindependent, in accordancewith recommen-dation 9.2oftheAFEP/MEDEFcodeinrespectofcontrolledcompanies.

It is noted that at the annual review of theindependentstatusofdirectors,theBoardper-formedanappraisalofbusinessrelationshipsexistingbetweentheERAMETgroupandthegroup inwhichcertain independentdirectorsholdacorporateoffice.ERAMET’sminingandmetallurgical business generates businessflows with a limited number of customersamongwhomnootherbusinessrelationshipsexistwithERAMETdirectors.Tocarryout itsbusiness,ERAMETusesanumberofsuppliersofrawmaterials,goodsandservices.Amongthese,therearetwogroupsinwhichtwodirec-torsinparticular(Ms. LepoutreforpetroleumproductsandMr. Tendilforinsurance)workinaprofessionalcapacity.ThisappraisalenabledtheBoardtoverifythattherearenosignificantbusiness relationships in that regard, eitherin terms of the nature of goods or servicesprovided, or in terms of their correspondingvalueortheconditionsoftheirnegotiationorprovision.

Withregardto the independenceofdirectorswhere the duration of their duties extendsbeyond12 years,atitsmeetingof16 February2011, the Board of Directors reasoned thatMr. Treuille,firstappointedasadirectoroftheCompany inJuly1999, couldcontinue tobeconsideredindependentowingtohisfar-reach-ingexperienceandexpertise.Atitsmeetingof21 March 2013, the Board of Directors alsoconsidered that Mr. Tona, representative ofAREVA from2002 to2012,whohashadno

tieswithAREVAsinceMay2012,satisfiedtherequisiteconditionsofindependence.

Atthetimeofthisreport,theBoardofDirectorsofERAMETconsistsof18 members,includingseven women, two of whom are directorsrepresentingemployees,designatedinaccor-dancewith article L. 225-27-1 of the FrenchCommercialCode.Consequently,womenrep-resent39%ofthefullBoardofDirectorsand31%ofBoardmemberscountedaccordingtothe AFEP/MEDEF code (excluding directorsrepresentingemployees).

UnderArticle 10oftheArticlesofAssociation,directors may not be over seventy years ofageat thetimeof theirappointmentandareappointed for a four-year termofoffice.TheChairmanandamajorityofmembersof theBoard of Directors (including legal entitiesandtheirpermanentrepresentatives)mustbenationalsofamemberstateoftheEuropeanUnion.InaccordancewiththeArticlesofAsso-ciation,eachdirectorshouldholdatleastoneshare in theCompanyand,at itsmeetingof11 May2011theBoardofDirectorsindicatedthat,inaddition,eachdirectorshouldholdonehundred shares within eighteen months ofjoiningtheBoard.

For historical reasons associated with theCompany’s shareholding structure and theexistenceofaShareholders’Agreementsince1999, the termsofofficeofBoardmembersappointedbytheGeneralShareholders’Meet-ingarenotstaggered.ThreetermsofofficewillcometoanendattheGeneralShareholders’Meetingcalledtoapprovethefinancialstate-mentsfortheyearended31 December2016andthethirteenotherongoingtermsofofficewillendattheGeneralShareholders’Meetingcalledtoapprovethefinancialstatementsfortheyearended31 December2018.

Other participants at Board meetings

Observers

Atitsmeetingof12 April2000,drawingontheoptionprovidedforinArticle 18oftheArticlesofAssociation,theBoardofDirectorsdecidedto provide twoObserver posts on the BoardandtoappointGroupemployeestothatrole,in addition toWorksCouncil representatives.Inpractice,thetwoObserversareappointedatthe recommendationof theEuropeanWorksCouncil; if an Observer quits his/her mem-bershipoftheCouncil,theBoardwillorderanearlyterminationofhis/hertermofoffice.On27 July 2012, the Board reappointed DanielSignoretandPierreLescotasObserversforafurtherfouryears.On26 July2013,theBoardappointed Jean-François Rebatel to replacePierreLescotfortheremainingdurationofhistermofoffice.

Inviewof thenewprovisionspecifyingman-datory representation of employees on theBoard,introducedbythelawof14 June2013concerningjobsecurity(articleL. 225-27-1ofthe French Commercial Code), the GeneralShareholders’ Meeting held in May 2014amendedArticle 18oftheCompany’sArticlesofAssociationtoremovetheoptionofferedtotheBoard ofDirectors to appointObservers.The terms of office of the two Observerscurrentlyinofficewillcontinuetorununtiltheirexpiry,undertheconditionscurrentlyprovidedbytheArticlesofAssociation.

Company Works Council Delegate

PhilippeLaignel.

ERAMET DIRECTORS’ CHARTER

Thedutiesandobligationsofthedirectorsareset out in theDirectors’ charter, provided forunderArticle 11-4of theArticlesofAssocia-tion.Sub-section 6ofArticle 12oftheArticlesofAssociationalsostatesthat“itisthedutyofdirectors to defend the interests of ERAMETin all circumstances and, whilst carrying outtheir duties, they shall refrain from any andallactions,orinaction,thatmaycompromisethoseinterests”.

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AnynewdirectorelectedbytheGeneralShare-holders’ Meeting or co-opted by the Board,whetheradirectorinhisownrightortheper-manent representativeofa legalentity,mustadhere to the charter which gives a generaldescription of the directors’ responsibilities,theprinciplesgoverningtheiractionsandtherulesofconductimposedbycurrentlegislationandtheCompany’sArticlesofAssociation.

Thecharter,whichwasfirstadoptedin1999,placesparticularemphasisondirectors’com-petence, their right of access to informationand theirdutyofdisclosure, theirattendanceat Board meetings and, insofar as possible,at general shareholders’ meetings and theirindependence. In particular, Board membersareasked,atalltimes,toensurethatthereisnodirectorindirectconflictofinterestexistingbetween the Company and any company inwhichtheymayholdaposition.Suchasitua-tion,whichmustbenotifiedtotheBoard,mayresult ina refusal toappointora resignation(structural conflict) or an abstention (one-offconflict), depending on the case in point. Atthetimeofwritingthisreport, totheCompa-ny’s knowledge, no director was involved ina conflict of interest within the meaning ofparagraph 14.2ofAppendix 1toEC RegulationNo. 809/2004.

NomemberoftheBoardofDirectorshasen-teredintoaservicecontractwiththeCompanyoroneofitssubsidiaries.

Theobligationofconfidentialityandofrefrain-ing from dealing in the Company’s shares,when in possession of unpublishedmaterialinformation, is stressed.Since2005, the ruleprohibiting dealing in the Company’s shareshasbeensetdowninaprocedurethatappliestocorporateofficersandexecutivesandwhosecirculation list is regularly updated. At theBoardmeetingof16 February2011, thepro-cedureitselfwasupdatedandreassessedandtheBoardadoptedasecurities’tradingcodeofconductfortheERAMETgroup.Thesecuritiestradingcodeofconduct,aimedatpreventinginsider trading offences and infringements,establishes a period of abstention from any

transactioninvolvingERAMETsecuritiespriorto publication of the Company’s annual andinterimfinancialstatementsand itsquarterlyfinancialresults.

INTERNAL REGULATIONS

The By-laws specifying the arrangementsfororganisationoftheBoardofDirectorsareavailable from the Secretary of the Board ofDirectors at the Company’s head office. Itis specified therein that the Board approvestheGroup’sstrategicobjectivesandstrategicinvestments, as well as any transaction,particularly acquisitions or disposals, thatmay significantly affect Group results, thestructureofitsbalancesheetoritsriskprofile.PriortoeachBoardmeetingandaccordingtothe agenda, directors receive the accounts,the budget and forecasts. Board memberswill also examine press releases related tothefinancialstatementsor toacquisitionsordisposals,priortotheirdistribution,exceptinadulyjustifiedemergency.

The by-laws also specify the membership,organisationandoperationoftheCommittees,as described here below. The Committeesmay, within the scope of their respectivecompetencies and having first informed theChairman,conferwithmembersoftheGroup’smanagement.Theyreportontheinformationobtainedandadvicereceived.

CODE OF CONDUCT

AttherecommendationoftheAuditCommit-tee,on20 January2010,theBoardofDirectorsadoptedtheprovisionsoftheGroup’scodeofconduct. The complete text of the code ofconductisavailableontheERAMETwebsite.Thepurposeofthecodeofconductistofor-malizeabaseofessentialcommonprinciplesofbehaviourforeveryoneintheGrouptorefertoandcomplywithinallsituations.Theseprin-ciplesapply,inthefirstinstance,totheGroup,but theGroup encourages all its partners toadheretothesamestandards.Theprinciplesareasfollows:combatanykindoffraudorcor-ruption,avoidanyconflictof interest, respectcompetition rules,protectGroup information,

respectandprotecthealthandsafetyatwork,supplyqualityproductsandserviceswhileob-servingsecurityandenvironmentalprotectionstandards,promotetheGroup’sterritorialandcivic responsibility,supplyquality informationto the Group’s local partners and providereliableandcomprehensiveinformationtoitsshareholders.

A new version of the code of conduct wasdraftedtofurtherdevelopandbetterillustratetheprinciplesguidingtheGroup’sactionsandthoseofitsemployeesandhasbeeninforcesince1 January2015.

The decision to redraft the code of conductwastakenforthefollowingreasons:

– Totake intoaccountsignificantnationalorinternational legal developments that hadarisen since the Group’s previous code ofconductcameintoforcein2010.

– To enable ERAMET to respond more ef-fectivelytochangestakingplace insocietyworldwideandtotheexpectationsofallofourstakeholders.

– To provide each employee of the Groupwithadetailed,clearandexplicit referencedocument, encompassing the main legalor voluntary obligations thatwe should allrespectaspartofourduties.

Thisupdatetothecodeofconduct,translatedinto the Group’s twelve languages, was dis-tributed toallGroupemployees in2015. It ispassedonbymembersoftheExecutiveCom-mittee, theManagementCommitteeof eachDivision and the main Corporate managers.An Ethics Officer has specific responsibilityformonitoringproperapplicationofthecodeofconduct.

ASSESSMENT OF THE BOARD’S WORK

Theconclusionsofthelastformaltriennialas-sessmentoftheworkoftheBoardofDirectorswerereviewedattheBoardmeetingof14 May2014. The Board approved the main pointsdrawnfromtheseconclusionsandcalledfortheorganisationofshorterBoardmeetings,anextendedperiodoftimeforpriorexamination

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of the draft financial statements and annualbudgetsandastrongerrolefortheSelectionCommittee with regard to the executives’successionplan.

A further assessment of the Board’s workduring2015wasinitiatedwithdirectorsattheendof2015.ItsconclusionswerediscussedattheBoardmeetingof17 February2016.

MEETINGS

Meeting notice

MeetingsarecalledasoftenasnecessarybytheChairmanwhoaddressesaninvitationtoall Board members, in accordance with thelaw. Invitationsmay be sent tomembers byany means, including email, in principle oneweek prior to the date of themeeting.Withtheexceptionofmeetingsheldby telephoneduringtheyear,theBoard’smeetingsareusu-ally heldat theCompany’s headoffice (TourMaine-Montparnasse).

Board meeting procedures

AteachBoardmeeting, adossier containingfiles onmost of the items on the agenda isgiventoeveryparticipantintheMeeting.

Themeetingusuallybeginswithapreliminaryreport by the Chairman on the main eventshaving occurred since the last meeting, fol-lowedbyapresentationgivenbytheDivisionalHeads on the market conditions relevant toeachofthethreeDivisions.Projectsofparticu-larimportanceintermsoftheGroup’sstrategymaybepresented.

Attheendofthemeeting,particularlywhentheBoard is approving the financial statements,a draft press release is usually submitted todirectors for their approval and is publishedat theendof thedayor thenextday,beforemarketsopen,inordertoreporttothemarketonthemaindevelopmentsaffectingtheCom-panyandtheGroup.

Minutes of the meeting

The Secretary of the Board (in principle, theCompany’sDirectorofLegalAffairs)drawsuptheminutesforeachBoardmeeting,whichtheChairmansubmitstodirectorsforapprovalatthenextBoardmeeting,thedraftminutesbeingsent toeachparticipant (directors,observersandGroupWorksCouncilmembers),togetherwiththeinvitationandagenda,approximatelyoneweekpriortothescheduledmeetingdate.

WORK IN 2015

TheBoardofDirectorsmettentimesin2015.Theattendancerateofmemberswas93%.

Inadditiontoexaminingrecurringitemsrelat-ing to theGroup’s business, Boardmeetingswereconcerned,inparticular,with:

– approval of the 2014 financial statementsof theCompanyandof theGroupand thecallingof theannualGeneralShareholders’Meeting;

– review of the 2015 interim financialstatements;

– reviewofthekeyeventsaffectingtheGroupanditsbusinessdivisions;

– theproductivity improvementprogrammesand investment projects of the threedivisions;

– reviewofthe2016-2018OperationalPlan.

Inordertocarryoutitswork,theBoardisalsoaidedbytheworkoffourCommitteeswhichit has set up. Each Committeemay refer tooutside experts, as necessary, on matterswithintheirareaofexpertise.

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IndividualparticipationatmeetingsoftheBoardofDirectorsandoftheCommittees,in2015,isshowninthetablesetoutherebelow.

BOARDOFDIRECTORS AUDITCOMMITTEE

REMUNERATIONCOMMITTEE

STRATEGICCOMMITTEE

MichelAntsélévé 100% - - -ValérieBaudson(1) 100% 100% - -PatrickBuffet 100% - - 100%CyrilleDuval(SORAME) 100% - - 100%ÉdouardDuval 90% - - 100%GeorgesDuval 100% - - -NathaliedeLaFournière(CEIR)(2) 100% - - -MarieAxelleGautier 100% - - -JeanYvesGilet(FSIEquation) 100% - - 100%PhilippeGomès 80% - - -CarolineGrégoire-Sainte-Marie 80% 100% - -ThierryLeHénaff(4) 80% - - 33%ManoelleLepoutre 90% - 100% 100%PiaOlders 100% - - -MichelSomnolet(3) 66% 50% 50% -ClaudeTendil 70% - 100% -FrédéricTona 100% 100% 100% -AntoineTreuille 100% 100% 100% -AlexisZajdenweber(Staterep.) 90% - - 100%

Average 93% 90% 90% 90%(1) Appointment by General Shareholders’ Meeting of 29 May 2015.(2) New permanent representative of CEIR since 4 May 2015.(3) Term of office expired at General Shareholders’ Meeting of 29 May 2015.(4) Resignation on 17 February 2016.

AUDIT COMMITTEE

ThebylawsspecifyingthemembershipoftheAudit Committee (minimum threemembers,maximum five members, two thirds beingindependentDirectors, in linewith theAFEP/MEDEFcorporategovernancecode),itsoper-ationanditsresponsibilitieswerereviewedbytheBoardon25 May2012.

In accordance with article L. 823-19 of theFrench Commercial Code, this Committeehas particular responsibility for monitoring(i) the preparation of financial information(ii) theeffectivenessofinternalcontrolandriskmanagement systems (iii) statutory audit oftheindividualand,asapplicable,consolidatedfinancialstatementsbyaStatutoryAuditorand(iv) theindependenceoftheStatutoryAuditor.

Tothatend,andbyapplicationoftherespon-sibilitiesreferredtointheprecedingparagraph,

it is the responsibility of the Committee to(i) reviewthesuitabilityandproperapplicationof the accounting methods used (includingoffbalancesheetcommitments); (ii) analysethe interim and annual financial statements(iii) examine the internal audit plans andtheirconclusions (iv) monitormajordisputes(v) examinetheGroup’sforeignexchangeandcommodity risk management policy and itshedging and investment policies (vi) renderanopiniontotheBoardconcerningproposalsfortheappointmentofStatutoryAuditors,and(vii) examine the Chairman’s report on thepreparation and organisation of the Board’sworkandinternalcontrolprocedures.Itmeetsat least twodaysprior to theBoard’s review.Inaccordancewithrecommendationssetoutin Section 16.2.1 of the AFEP/MEDEF code,the examination of financial statements isaccompaniedbyapresentationgivenby the

statutoryauditorshighlightingthemainpointsarising from the statutory audit and the ac-countingmethodschosen,andapresentationgivenbytheChiefFinancialOfficerdescribingtheGroup’s risk exposure and significant offbalancesheetcommitments.

The Company refers to the AMF workinggroup’s report on Audit Committees toorganise the Audit Committee’s work (AMFrecommendationof22 July2010).

Audit Committee meetings are attended, inparticular, by the Chief Financial Officer, theStatutory Auditors, theGroup’s Internal AuditDirector, the Director of Accounting, Tax andConsolidation, the Director of Planning andManagement Control, the Financing andTreasury Director and the Group Director ofRiskManagementandInsurance.

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TheAuditCommitteeiscurrentlycomprisedoffour directors: Valérie Baudson (independentdirector),CatherineRonge(independentdirec-tor),AntoineTreuille(ChairmanoftheCommit-tee—independentdirector)andFrédéricTona(independentdirector).

ValérieBaudson, a graduateofHECand theInstitute of Political Studies of Paris, is theglobalheadofAmundi’sETFbusinesslineanditsindexfund.

CatherineRonge,agraduateoftheÉcole Nor-male Supérieure,withapostgraduatedegreeinPhysicsandPhDinquantumphysics,isChairofWeaveAir,astrategyconsultancyfirm.

AntoineTreuille,agraduateofESSECwithanMBAfromtheUniversityofColumbia,USA,isExecutiveManagingDirectorofAltamontCap-italPartnersLLC,aprivateequityfirmbasedinNew York.

FrédéricTona,PhD inAppliedGeology,spent30 yearsworkingintheminingdivisionoftheAREVAgroup.Heisanindependentconsultantandadirectorofvariouscompanies.

TheAuditCommitteemetninetimesin2015.

In addition to presenting the financial state-ments for the previous year in February andexaminingtheinterimfinancialstatementsinJuly,eachyeartheCommitteereviewsinternalauditreportsfortheyearaswellastheinternalaudit programme for the following year.TheexaminationofthefinancialstatementsbytheCommitteeisaccompaniedbyapresentationgivenbytheStatutoryAuditorsdescribingtheconclusions drawn from their work and themainissuesconcerned.

In addition to the review of the annual andinterim financial statements and the internalaudits, in2015,theCommitteeexaminedthefollowingpointsinparticular:

– the Chairman’s report on the work of theBoardofDirectorsandoninternalcontrol;

– theworkoftheInternalAuditDepartmentin2015anditsscheduledworkplanfor2016;

– thelatestchangestoIFRS;

– monitoringchangestotheGroup’sworkingcapital requirement and that of its mainsubsidiaries;

– the Group’s risk management monitoringprocedures;

– theGroup’scurrencyriskhedgingpolicy;

– theprocedureformonitoringtheGroup’soffbalancesheetcommitments.

REMUNERATION COMMITTEE

ThebylawsspecifyingthemembershipoftheRemuneration Committee (minimum threemembers, maximum five members and amajoritybeing independentdirectors), itsop-erationand its responsibilitieswere reviewedbytheBoardon29 July2014.ThisCommitteeismainly responsible formaking recommen-dationstotheBoardofDirectorswithregardto the remuneration of executive corporateofficers of the ERAMET group appointed bytheBoardofDirectors.

The Group’s Director of Human Resources,Health,SafetyandSecurityactsasSecretaryoftheCommittee.

The Remuneration Committee currently hasfour members: Manoelle Lepoutre (indepen-dentdirector),ClaudeTendil(ChairmanoftheCommittee—independent director), FrédéricTona (independent director) and AntoineTreuille(independentdirector).

TheremunerationpolicyforcorporateofficersestablishedbytheBoardofDirectorsisbasedonthefollowingelements:

– Remuneration is comprisedof afixedpor-tionandavariableportion,decidedannuallyby the Board following recommendationsfrom the Remuneration Committee. Thefixed portion has remained unchangedsince1 January2013,exceptforthereview,on 22 December 2015, of Mr. Vecten’sremuneration.

– The variable portion is based on a certainnumberofcriteriaandspecific targets, thechoiceandweightingofwhichareapprovedbytheBoardofDirectorseveryyear,attherecommendationoftheRemunerationCom-mittee;forexample,in2015itwasbasedon:(i) actual economic performance (CurrentOperating Profit), (ii) financial performance(netcashposition),(iii) thecompletionvis-à-visthebudgetandscheduleofmajorcapitalexpenditureprogrammes,industrialprojectsor acquisition and development activities,(iv) “managerial” results in terms of teammotivationandleadership,projectandstrat-egyproposalsandgoalsinthefieldofhealth,safety, environmental and industrial risks.Forreasonsofconfidentiality,theseresults,compared against pre-established targetsandaccuratelydefinedbytheRemunerationCommittee and the Board of Directors,maynotbedisclosedtothegeneralpublic.The variable portionmay not exceed 70%of gross annual fixed remuneration (140%fortheChairmanandCEO).Thequalitativeportionofvariableremunerationrepresents40%ofvariableremuneration.Fulldetailsaresetoutinthesectiononremunerationitemsfalling due or granted to each executivecorporate officer of the Company for thefinancialyearendedandsubmittedtovotingattheGeneralShareholders’Meeting.

– In addition, in respect of stock-basedcompensation plans, corporate officersmaybenefitfromperformanceshareplansor share subscription or purchase optionplans,thetermsandconditionsofwhicharedecideduponby theBoardofDirectors,atthe recommendation of the RemunerationCommittee. Since the Board meeting of23 July2007,corporateofficersarerequiredto retain 20% of shares acquired underperformance share plans, throughout theirentire term of office. Given the significantlevelofthismandatoryholdingrequirement,imposed when the shares are vested, therecommendation set out in the AFEP/MEDEFcode thatanadditionalquantityof

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sharesintheCompanyshouldbepurchasedwhenthesharegrantbecomesavailable,isnotimposed.Sharegrantsareawardedan-nually,atthesametimeofyear,andarenotdiscounted. Since these concern existingshares,asopposedtonewshares,thereisnosharedilution.Withregardtothedilutionof voting rights, the allocation of existingshares only has a marginal impact, giventhe composition of ERAMET’s equity, ononehand,and theselectivityof thecriteriaestablished for these plans, on the other.Theshareplanregulationsprohibithedgingoperationsandexecutivecorporateofficersgive a formal undertaking in this respect.In 2015, a total of 34,105 performanceshares, in the form of existing shares, allconditional upon the fulfilment of specificperformance conditions, were grantedto corporate officers. The performanceconditionsare calculatedover a three-yearperiod,asfollows:therelativeperformanceofERAMETsharesforone-thirdofthesharegrant (this involves comparing the changeintotalshareholderreturnoverathree-yearperiod with that of a panel composed ofaround sixty comparable companies fromtwo industry panels, namely, “diversifiedmetalsandmining”and“steel”,andfromtheEuromoney Mining Index, with the perfor-manceconditionsbeingfullyachievediftheERAMET share ranks among the top 15%ofthepanel)andtheintrinsicperformanceachieved in three instalmentsovera three-yearperiodofcertainfinancialindicatorsfortwo-thirdsofthesharegrant(50%operatingmargin (currentoperating income/revenue)and 50% operating cash-flow, with annualtargets related to theCompany’sbudgetedtargets and with performance conditionsonlybeingfullyachievedwhenthesetargetsare significantly out-performed). No sharesubscription or purchase options were

granted during the financial year to thesesamebeneficiaries.

– CorporateofficersareeligiblefortheexistingdefinedbenefitsupplementarypensionplanforERAMETexecutives,withnewarrange-ments applicable as from 1 July 2008. Inthe event of settlement of their pensionrightsvis-à-vissocialsecurity, theymaybeentitled to a supplementary pension thatmaynotexceed35%ofthereferencesalarydefinedintheplan’sinternalregulations,withsaid reference salary being capped, in thesame regulations, at twenty-five times theannual social security ceiling. The overallremuneration of corporate officers takesintoaccountthebenefitrepresentedbythesupplementary pension plan. People whohave completedat least two years servicewiththeCompanyareeligibleforthisplan.The referenceperiodused tocalculate thereference salary is twelve months for theannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedon the basis of full years, for the variableportion.Thearrangementdoesnotprovidefor any specific annual rate of increase ofpotentialpensionentitlements.Allthesear-rangements,combinedwiththeoveralllimitof35%ofthereferencesalary,whichisitselflimitedto25 timestheannualsocialsecurityceiling (1),givethewholepensionplanquitea balanced structure. Based on the latestactuarial calculation, the present value oftheestimatedportionofthethreecorporateofficers in questionwhowere stillworkingasat31 December2015,outoftotalcom-mitmentsinrespectofthepastserviceofallbeneficiariesofthissupplementarypensionplan,amountedto€16.9 millionat theendofDecember2015,withthetotalamountofcommitmentsbeingmeasuredunder IFRSat€52.4 million.

– Following the reappointment of the Chair-man and CEO to that role, decided by theBoardofDirectorson29 May2015,andatthe recommendation of the RemunerationCommittee,on29 May2015theBoardofDi-rectors,withtheChairmanandCEOabstain-ing,votedunanimouslytoretainallelementsof the remuneration of the Chairman andCEOandalltheprovisionsofhiscorporateofficer’s contract dated 20 February 2008(incorporatingall theamendmentsdecidedsincebytheCompany’sBoardofDirectorsat the recommendation of the Remuner-ation Committee). However, two changesweremadetotheseverancepayfallingduetotheChairmanandCEOintheeventofhisdeparturefromtheCompany(asaresultofforced resignation, cancellation or non-re-newalofhis termofofficeormodificationof theconditionsunderwhichheoriginallyjoinedtheERAMETgroup):• Theamountofseverancepaywhichmayfalldueisequaltotwice—insteadofthreetimes,asitwaspreviously—thelastgrossannualfixedremunerationplustwice—in-stead of three times—the average grossannual variable remuneration received inthe lastthreecompleteyearspriortohisdeparture.

• Theseverancepaybenefitspecifiedinhiscorporate officer contract is conditionalupon the fulfilment of performance con-ditions:thetotalgrossvariableremunera-tion(itselfsubjecttospecificperformanceconditions) received over the final threefull financial years of his term of officemust be35%ormoreof the total grossannualfixedremunerationreceivedduringthe same three-year period—instead of20% as it was previously. Consequently,thesearrangements ruleoutpaymentofsuchabenefitshould theChairmanandCEOfailtoachievehistargets.

(1) In 2015, the annual social security ceiling was €38,040.

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InaccordancewiththeprovisionsofArti-cleL. 225-42-1oftheFrenchCommercialCode,thesemodifiedarrangementsshallbe thesubjectofa resolutionputbeforetheannualGeneralShareholders’Meetingof27 May2016.Inaddition,inaccordancewith AFEP/MEDEF Code recommen-dations, Patrick Buffet does not hold acontractofemploymentbindinghimwiththeCompany.

Theothercorporateofficersdonotbenefitfroma commitment or promise relating tothegrantingofseverancepay in respectoftheir offices. The employment contractsbetweentheDeputyCEOsandtheCompanyhave been suspended until their respectiveterms of office expire. The suspendedemploymentcontractofMr. Vectenprovidesfor the payment, in the event of dismissal,retirementorpensioning-off,ofacustomarypayment, calculated on the basis of thenationalcollectivebargainingagreementforexecutives in the metallurgy industry andon the basis of his reference remuneration(fixed plus variable) as an employee. Thecollectivebargainingagreementprovidesforamaximumof18 months’remunerationformaximumlengthofserviceof28or30 yearsdepending on the age of the persons con-cernedupontheirdeparture.ThesuspendedemploymentcontractofGeorgesDuvalcon-tainsaclausemakingprovisionforthepay-ment,intheeventofhisdismissal,retirementorpensioning-off,ofacontractualindemnityamounting to18 months’salary,calculatedon the basis of his reference remuneration(fixedplusvariable)asanemployee,whichisnotcombinedwiththecustomarypaymentscalculatedbyapplicationofthenationalcol-lectivebargainingagreementforexecutivesinthemetallurgyindustry.

There isnoprovisionforcorporateofficerstoreceivepaymentinrespectofanon-com-petition commitment upon conclusion oftheirrespectivetermsofoffice.

IntheeventofachangeincontrolofERAMETand the termination of an employmentcontractthatisconsideredtobeattributable

totheemployer,aspecificguarantee,whichmaynotbecombinedwithotherindemnitiesapplicable under contracts or collectivebargaining agreements, was decided in2005andenforced.At31 December2014,thisguaranteeappliedto12oftheGroup’sseniorexecutives(Mr. Vecten,theonlycor-porateofficerbeneficiary,certainmembersof the Group Executive Committee whoarenotcorporateofficersandmembersofthe Divisional Executive Committee). Thisguarantee, which represents an indemnityof three years’ remuneration (fixed plusvariable) for each executive concerned,wasestimatedat a total of €5.6 millionat31 December2015.PatrickBuffetdoesnotbenefitfromthisguarantee.

Under their employment contracts, certainemployees also benefit from contractualindemnities,includinganindemnitypayableuponretirement,calculatedonthebasisofonetotwoyears’salary(fixedplusvariable)and including the rights vested under thecollective bargaining agreement to whichtheyaresubject.

– Corporate officers also benefit from asupplementary healthcare plan and asupplementary disability and life insurancescheme, offered to all ERAMET groupemployees.

TheRemunerationCommitteemetfivetimesin2015.

During the year, besides validating the pro-posed 2014 bonuses and 2015 targets forcorporate officers, the Committee also pro-posedtotheBoardofDirectors,andthelatterapproved, a 2015Erashareworldwidebonusshareplan,aspartoftheannualperformanceshare award plan for corporate officers andseniorexecutivesoftheCompanyanditssub-sidiaries,grantingtwobonussharestoallem-ployeesoftheCompanyanditssubsidiaries,inadditiontoaselectiveperformanceshareandbonusshareplanfor2015,grantingatotalof132,830 shares,including95,205 performancesharesand37,625 bonussharesto276 Groupexecutives (including 34,105 performancesharestocorporateofficers).

SELECTION COMMITTEE

Comprisedof fourmembers (threedirectorsand the Chairman), it recommends theappointmentofthedirectorsheadingupeachoftheGroup’sthreeDivisionsandtheGroup’sChiefFinancialOfficer.Thecharterspecifyingitsmembership,operationandresponsibilities,was reviewed by the Board of Directors on25 May2012.

Withregardtotheconsiderationofproposalsfor the appointment of new directors, theSelection Committee ensures that no legalincompatibility or conflict of interest existsand, concerning proposals for the appoint-mentofnewindependentdirectors,itstudiestheextenttowhichpotentialcandidatesmeetthe independence criteria laid down by theAFEP/MEDEFcode.Finally,withregardtothereplacementofexecutivecorporateofficersintheeventofanunforeseenvacancy, itexam-inesand rendersanopiniononsolutions fortheirsuccession.

The Committee is currently comprised ofPatrick Buffet, Cyrille Duval, Édouard Duvaland Jean-Yves Gilet. This committee doesnot have an independent Director among itsmembers. This is due to the specific rulesof the Shareholders’ Agreement designed tostructure the relationship between the con-trollingshareholdersoftheCompany.

The Selection Committee met four times in2015 toexaminenominations fornewdirec-torships, the replacement of the Group CFOand theplans for rearrangementof delegateCEOsattheminingdivisions.Therateofpar-ticipationofmembersatmeetingswas100%.

STRATEGIC COMMITTEE

TheStrategicCommitteehassevenmembers(sixdirectorsandtheChairman).Thecharterspecifying its membership, operation andresponsibilities, was adopted by the BoardofDirectors’meetingsof14 Mayand29 July2014.

The role of the Strategic Committee is toexamineand render anopinion to theBoardof Directors on the main strategic lines

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of the Company as proposed by GeneralManagement and on investment, disposalorpartnershipprojectsofparticularstrategicimportance,or indeedonanyspecificmatterofstrategicsignificancetotheGroup.

The Committee currently comprisesPatrick Buffet, Alexis Zajdenweber, CyrilleDuval,ÉdouardDuval,Jean-YvesGilet,CarolineGrégoire-Sainte-Marie (independent director)andManoelleLepoutre(independentdirector).

TheGroup’s Strategy and Financial Commu-nications Manager acts as Secretary of theCommittee.

In 2015, the Strategic Committee met threetimes.Atthesemeetings, theStrategicCom-mittee examined developments taking placeinthemarketsinwhichtheGroup’sthreeDivi-sionsoperateandtheircompetitiveness.Onacasebycasebasis,theCommitteeexaminedthe productivity improvement programmescarried out, aswell as certain investment ordisinvestmentprojects.

4.1.1.3 MEANS OF SHAREHOLDER PARTICIPATION AT GENERAL SHAREHOLDERS’ MEETINGS

Themeansbywhichshareholdersmaypartic-ipateatgeneralshareholders’meetingsaresetoutinArticles 8,20,21and22oftheArticlesofAssociation.

4.1.1.4 GENERAL MANAGEMENT

COMPANY MANAGEMENT METHOD

Since thedeliberationsof theBoardmeetingof 26 March 2003, the Company’s Chief Ex-ecutiveOfficerisalsoChairmanoftheBoardofDirectors,given that theBoardconsideredthisarrangementbestsuitedtotheCompany’sorganisation and shareholding structure,with 63% of the share capital controlled bytwo shareholder groups in concert. Regulardialoguebetweenthetwomainshareholdersthatarepartiestotheshareholders’agreement

and General Management is thus facilitatedthrough a single point of contact combiningthe duties of Chairman of the Board ofDirectors andCEO.This governancemethodis by far the most common among Frenchcompanies whose securities are listed on aregulated market. The amalgamation of thefunctionsofChairmanandChiefExecutiveOf-ficerisincompliancewithbalancedcorporategovernancerules,basedon:

– a Board structure comprising at leastone third independent directors, and twocommittees (the Audit and RemunerationCommittees)thatareentirelycomprisedofindependentmembers;

– priorexaminationbytheStrategicCommit-teefollowedbyBoardapprovalarerequiredfor major strategic lines of action, asdescribedintheparagraphonthe“StrategicCommittee”hereaboveandintheparagraphconcerning “Composition of General Man-agement”herebelow;

– General Management comprising twoDeputyCEOs.

InaccordancewithArticle 16oftheArticlesofAssociation,theBoardmay,attherecommen-dationoftheheadoftheCompany’sGeneralManagement,appointuptofiveDeputyCEOs.The Company’s CEO and the Deputy CEOsmustbenationalsof amember stateof theEuropeanUnionandmaynotholdthepositionbeyondtheageof70.

COMPOSITION OF GENERAL MANAGEMENT

The General Management of the CompanyandoftheGroupisorganisedasfollows:

Chairman and CEO

PatrickBuffet.

At itsmeetingof25 April2007, theBoardofDirectorsgrantedhimallpowersconferredbyFrenchlawtoaChairmanandCEOofapubliclimited company. At itsmeetings of 11 May2011and29 May2015,theBoardofDirectorsrenewedhispowersandthoseoftheDeputy

CEOs.TheBoardalsogranted theChairmanandCEO powers to substitute and delegate,underhisresponsibility,tosuchpersonsasheseesfit,withthepossibilityofsub-delegatingsuchpartofhispowersashefeelsappropri-ate,bygrantingspecialpowersforoneormorespecificpurposes.

TheChairmanandCEOexercisesfullauthoritypursuant to the lawandwithin the scopeofthe Company’s corporate purpose, subjectto the proviso that, “no decision relating tothe Company’s major strategic, economic,financialortechnologicalissuesmaybetakenwithout first being discussed by the Board”,asspecifiedinArticle 13,Sub-section 2oftheArticlesofAssociation.

In line with Article 13, Sub-section 4 of theArticles of Association, “acts affecting theCompany are signed either by the CEO, theDeputy CEO or by any specially authorisedperson.”

Deputy CEOs

– GeorgesDuval,ERAMETAlliages,

– Philippe Vecten, ERAMETManganèse andERAMETNickel.

EachdeputyCEOisalsoaDivisionManager.TheChinaDepartment reports to thedeputyCEOof theManganeseDivision.TheAdmin-istrationandFinanceDepartment,theHumanResources, Health, Safety & Security Depart-ment, the Communications and SustainableDevelopment Department, the Strategyand Financial Communication Department,the Economic Research Department, theIndustrialAffairsDepartment,theLegalAffairsDepartment and ERAMET International, allreporttotheChairmanandCEO.

TheCFOalsosupervisesITsystems,internalaudit,managementcontrol,treasury,riskman-agementandinsurance,financing,accountingandtaxmatters.

Monthly Division meetings chaired by theChairman and CEO enable monitoring of

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monthlyreportingandthedefinitionofessen-tialoperatingchoicesfortheDivisions.

Since September 2004, the Company’smanagement method has also included anExecutiveCommittee(Comex)andanInterna-tionalManagement Committee (IMC), whicharebothchairedbytheChairmanandCEO.

The Executive Committee consists of theChairmanandCEO,theDivisionManagers,theHumanResources,Health,SafetyandSecurityDirector, the CFO, and the Communicationsand Sustainable Development Director. Thefact that theheadsof corporate support de-partments(HumanResources,Health,SafetyandSecuritydepartment,AdministrationandFinancedepartmentandCommunicationsandSustainableDevelopmentdepartment)areEx-ecutiveCommitteemembers,strengthenstheeffectivenessandconsistencyoftheiractions.Theaimistoenablecross-entitydepartmentstocarryouttheirthreeessentialroles,namely:an operational role, a supervisory role and aservicerolefortheDivisions.

The International Management Committeemeets periodically and is attended bymem-bersoftheExecutiveCommittee, theCEOofAubert & Duval and Erasteel, the ChairmanofERAMET International, theCEOofSociétéLe Nickel-SLN, the CEO of COMILOG, theMaboumine Project Director, the Directorof ERAMET in China, the Executive Directorin charge of Group development in Africa,ERAMET’s General Representative in Gabon,the Director of Strategy and Financial Com-munication and the Group Director of LegalAffairs.

4.1.2 INTERNAL CONTROL PROCEDURES

4.1.2.1 THE COMPANY’S INTERNAL CONTROL OBJECTIVES

InaccordancewiththeAMFreferenceframe-work,updatedinJuly2010,theinternalcontrolproceduresinforceatERAMETaredesignedto:

– ensure that transaction execution ormanagement activities and the behaviourof personnel, complywith the policies laiddown by the Company’s governing bodiesand those set out in applicable legislationandregulationsandthattheyadheretotheCompany’s values, standards and internalrules;

– check that the accounting, financial andmanagement information provided to theCompany’s governing bodies faithfullyreflects the Company’s business activitiesandposition;

– ensure that insurance procedures and/orprogrammesareput inplace toprotecttheCompany’sassetsagainstrisksof lossresulting fromtheft,fire, improperor illegalactionsandnaturalhazards;

– prevent and control risks of error or fraud,inparticular,intheareasofaccountingandfinance.

However,aswithanycontrolsystem,itcannotprovideanabsoluteguaranteethattheserisksaretotallyeliminated.

4.1.2.2 OVERVIEW OF THE AUDIT PROCEDURES IN PLACE

INTERNAL CONTROL PLAYERS

Owingtothediversityofitsbusinessactivities,ERAMET isorganised into three independentDivisions,eachwithallthefunctionsrequiredfor its operations (management, production,sales, purchasing, finance, etc.). In addition

toitsgeneralmanagementfunction,theheadoffice provides support and carries out thecontrol work required for the Group’s overallcohesion.Thefollowingarethemaininternalcontrolplayers:

– the ExecutiveCommittee,whosemember-shipissetoutinthe“GeneralManagement”sectionabove,meetsonceeverytwoweeks.TheInternationalManagementCommittee,whose membership is also set out in the“General Management” section above,deals,morespecifically,withorganisationalmatters.Itmeetsperiodically;

– the Internal Audit Department, reportingto theChiefFinancialOfficer (CFO).Basedon an Audit Plan approved each year bytheExecutiveCommittee andby theAuditCommittee, the department carries outassignmentsintheGroup’svariousbusinessunitsasdefinedinthePlanandasinstructedby the Chairman. It reports regularly tomembersof theExecutiveCommitteeandannually to the Audit Committee on theresults of its assignments and progressachieved with the resulting action plans.EachyeartheAuditCommitteealsoreviewsthe internalauditplanof theGroupand itssubsidiaries (the current plan and theplanfor the following year) and proposes anyadjustments it considers necessary to theBoardofDirectors;

– the Group Planning and ManagementControl Department reports to the CFO.This department sets out the structure ofERAMET’smanagementcontrolandmoni-torstheDivisions’developingmanagementsystemstoensuretheyareconsistentwiththeGroup’sgoals.ThedepartmentdefinestherelevantkeyperformanceindicatorsfortheGroup,ateachlevel,andhelpstoimple-mentthemforeachDivisionandentity.ItisalsoresponsibleforGroupreporting;

– theLegalAffairsDepartmentreportstotheChairman andCEO. As a service centre, itprovidesthewholeGroupwithlegalsupportonallissueswithinitsareaofexpertise;

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– the Financing and Treasury Department,reportingtotheChiefFinancialOfficer(CFO),in liaisonwiththespecialistcommitteesofthemainsubsidiaries,manageshedgingofforeign currency exposure and commodityrisk, particularly with regard to nickel andoil, and is in charge of financial resourcemanagement(investmentsandborrowings)forthewholeGroup;

– theGroupRiskManagementandInsurancedepartment,reportingtotheCFOandfunc-tionally to the Audit Committee, promotesandcoordinatesriskmanagement.Assuch:• It carries out an annual update of theGroup risk map working from the Divi-sionalriskmapspreparedbyeachofthedivisionalriskmanagers.

• It ensures the implementation of actionplans for allmajor risks, to increase thelevelofriskcontrol.

• ItreportstotheExecutiveCommitteeandto theAuditCommitteeon riskmanage-mentmeasurestaken.

• It is also responsible for arranging andmonitoring all insurance policies sub-scribedbytheGroup;

– theTaxDepartment,partoftheAccounting,Tax andConsolidationDepartment, report-ingtotheCFO.Asaservicecentre,itassiststhe Group’s various subsidiaries with theirrespectivetaxobligationsandfulfilsthoseoftheparentcompany;

– the Communications and SustainableDevelopment Department. It assists thevarious Divisions to control and reducethe Group’s environmental impact, therebyensuring the sustainability of ERAMET’sbusiness activities, products and marketsin line with regulatory, political and labourdevelopments;

– theGroupHumanResources,Health,Safetyand Security Department. It manages theCompany’s human resources and ensuresthat HR policies are consistent across theGroup’svariousentities.Thedepartmentco-

ordinatesSafetyandSecuritypolicieswithintheGroupandformaliseshealthissuesviaanetworkoflocalcontactsatthesites;

– moregenerally, everymanagement level intheCompany is responsiblewithin itsfieldofexpertisefordefining, implementingandsteeringinternalcontrol,underthemanage-mentoftherelevantDirectorandExecutiveCommitteemember.

RISK MANAGEMENT

Risk Management Charter

On11 December2013,theBoardofDirectorsadoptedthetermsoftheERAMETgroupRiskManagementCharter.TheERAMETgroupde-finesitsplanforriskmanagementasfollows:

“Our plan of action for RiskManagement isa lever for Groupmanagement and contrib-utes, in particular, to achieving the followingobjectives:

– protect our main human and financialresources,andourcorporateimage;

– safeguardvaluecreation;

– encouragerisk-takingatanacceptablelevel;

– complywithlegalandregulatoryobligations,andwiththevaluespromotedbytheGroup;

– seekoutvalue-creatingopportunitiesfortheGroup (e.g. newmarkets, new customers,etc.).”

ThefulltextoftheCharterisavailableontheERAMETwebsite.

BecauseoftheconstantchangetakingplaceintheeconomicandregulatoryenvironmentsencompassingtheGroup’sactivities,ERAMETmustbeknowledgeableofthe internalorex-ternalrisksthatcouldpreventitfromachievingitsobjectivesorthatcouldimpactonanyofitsmainassetsor keybusinessprocesses.TheapproachimplementedbytheGroupconsistsof two stages: firstly, the identification andassessmentofmajorrisksand,secondly,riskmanagement.

Risk identification and assessment

– Attheendof2011,theGroupperformedaGroup-wide riskmappingexercisewith theassistanceofaconsultingfirm.Themethodusedenabledtheidentificationofthemajorstrategic, operational, financial andcompli-anceriskswhichcouldaffect theDivisionsand,inabroadersense,theGroup.

– Since that date, the risk identification andassessmentmeasureswerecontinued,withtheaimofimplementingbestpracticeinthisrespect:• introductionofariskmonitoringtool;• creationofaRiskManagementCommit-tee includingall riskareas:security,envi-ronment,health,industrialrisk,insurance,riskmanagers);

• establishment of a risk managementprocedure to complement the riskman-agementcharter;

• implementationofriskmanagementinallmajorprojects.

– In2014, anew riskmappingexercisewascarriedout, basedona three-yearprocess(establishmentofanewmapinyear 1andfollowupwithtwoupdatesinyears 2and3).

– In accordancewith this process, the 2014Groupriskmapwasupdatedattheendof2015.

Treatment of risk

Themainrisksidentifiedbyriskmappingaretreatedintwodifferentways:

– Action plans aimed at strengthening theexisting controlmechanisms are deployedforthemajorrisksidentified.TheGroupRiskManagers are responsible for monitoringthisprocedure.

– The result of the riskmapping exercise isincluded in the Group’s internal audit plan:the aimof this approach is to ensure thatexistingcontrolprocessesarefullyfunction-al and that action plans decided upon aresuccessfullyimplemented.

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Theoperational risksaremainlymanagedatDivisional level, in a manner adapted to thespecific business activities. Industrial andenvironmental risks are monitored by theDivisions, togetherwith theCommunicationsandSustainableDevelopmentDepartment.

Liquidity, interest rate, foreign currency andcommodityrisksaremanagedbytheTreasuryDepartmentforthewholeGroup,togetherwiththerelevantcontactsinthelargersubsidiaries.

Finally,theGroupRiskManagementandInsur-ance department, together with the Divisionheads,establishes thepolicy forcoverageofinsurable risk, for all theGroup’s companies.The various insurance programmes aredescribed in the Group’s 2014 RegistrationDocument. Any additions to those insuranceprogrammes will be detailed in the Group’s2015RegistrationDocument.

SUMMARY OF INTERNAL CONTROL PROCEDURES IMPLEMENTED IN THE GROUP

– Existing charters: the Audit Committee,Internal Audit (updated in 2015), Legal Af-fairsDepartment,GroupRiskManagementand Insurance Department, ManagementControl,TaxDepartmentandITSystemsDe-partmenthaveeachpublishedacharter.Thepurposeof thesecharters is tospecify theoperatingrulesofthevariouscommitteesordepartmentsandtoformaliserelationshipswith other parties. Finally, on 20 February2014 the Board adopted the terms of theGroup’snewCodeofConductwhichcameintoeffecton1 January2015.

– Signing authority, other powers: the Divi-sionHeads,whoareDeputyCEOs,haveallthepowersgrantedbylaw.TheGroupCFO

has the power granted by the ChairmanandCEOtooperatetheCompany’svariousbanksaccounts.

– Information systems:theroleoftheGroupITDepartmentistomakeITsystemsmoreharmonisedacross theGroupandsupportthe various subsidiaries. It has set up aworldwidenetworkandasingleGroupemailsystem.Securityhasbeenimprovedthroughtheauditingofcertainsystemsandtheim-plementationofspecifictools.Astandardforoffice technology (hardware and softwarepackages) has been established. Severalprojects to improvemanagement systemsare ongoing in the Divisions, including theimplementation of integrated procurementapplications for better control of commit-ments and separation of tasks throughoutthe supply chain.The “Spring” projectwaslaunchedin2011toprovidebettersecurityand to modernise our IT infrastructure. Aglobal organisational structure, coveringthewholeGroup and its subsidiaries, is inthe process of being implemented. Themodernisationworkinvolvesthreeaspects:• Aredesignedworkstation,encompassingthelatesttechnologiesforofficesystems,communications,datasecurityand inter-netnavigation,iscurrentlybeingrolledout.

• The main servers are consolidated inregionalcentres.Theglobalnetworkistobe reinforced and, if necessary, doubledin size, to support that new technicalarchitecture.

• Concerningbusinessapplications,anum-berofprojectsareunderwaytomoderniseourmainERPplatformsaroundtheSAPsolutionwiththeaimofprovidingamoreharmonisedsolution in the long-term fortheGroupasawhole.

– General organisation of procedures: ERAMEThasdrawnup,andpublishedwithinthe Company and its subsidiaries, internalproceduremanuals forcapitalexpenditure,foreign currency hedging, managementprocedures (budgeting, operational plan-ning, long-term financing plans, updatingforecasts, analysis of over/under-spends,etc.), a consolidation manual and sharedaccounting rules, travel and expense ac-countsandfinancialprocedures in relationtocash.Threeproceduresrelatingtocrisisscenariopreventionandmanagementhavebeen established and distributed. Theserelate to the anticipation and identificationofweaksignals,major incidentsandcrisismanagementinrespectofissuesoreventsrelatingtothesafetyoffacilities,propertyorpersons, and the control of industrial andenvironmentalrisks.

– Legal and operational control of subsidiar-ies by the parent company:• Owingtothediversityoftheirbusinesses,theDivisionsaremanagedindependentlyfor their day-to-day management. EachDivision has a Management Committeethatmakesallthedecisionswithinitsareaof responsibility, reporting to the GroupExecutiveCommitteeonaregularbasis.

• The Legal Affairs Department acts asSecretarytotheBoardforthemaincom-panies(SociétéLe Nickel-SLN,COMILOGS.A.).

• In2008, theBoardofDirectorsofCOMI-LOGS.A.setupanAuditCommitteeandaRemunerationCommittee.Atthemeetingof the Board of Directors of SociétéLe Nickel (SLN),held inNovember 2008,the Directors representing ERAMET alsoproposed the establishment of three

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committees: a Strategy Committee, anAudit Committee and a RemunerationCommittee, as part of a modernisedcorporategovernancestructure.Thiswasimplemented at the SLN Boardmeetingof17 November2009.ThisarrangementwasmodifiedattheSLNBoardmeetingof4 December2012totakeintoaccounttheseparation of the functions of ChairmanandCEOoftheCompanyandtheappoint-ment of new persons to those officesreplacingtheChairmanandCEO.

• Divisionmeetings:monthlymeetingsareorganisedforthemanagementofeachDi-visiontoreviewmonthlyperformanceandanalyse budget over/under-spends andthe resultingactionplans.Management/Accounting and Treasury Committeemeetingsarealsoheldmonthly,bringingtogether Division and parent companyCFOs, accountants, management con-trollers and treasurers, respectively, todealwithcommonissuesandprovidethenecessary coordination. Specific meet-ings take place every month to discusssales,accounting,treasury,insuranceandother issues with the Divisions. Finally,specificbudgeting,forecastupdatingandplanningmeetingsareorganisedwiththesameparticipantsasDivisionmeetingstoaddresstheseissues.

• Implementationoftheinternalauditplan:InternalAuditcarriedout16 assignmentsin2015acrossalltheGroup’ssubsidiaries.

• Control of strategic investments: underthe capital expenditure procedures, allprojects exceeding €4 million are exam-inedatcorporatelevelinaccordancewithspecificprocedures(presentationdossier,approvalmeetings,follow-up,etc.).Capitalexpenditure projects are controlled andapproved, from a technical perspective,by the IndustrialAffairsDepartmentand,fromafinancialperspectivebytheAdmin-istration&FinanceDepartment.Strategicprojects are presented to the StrategicCommitteeandtotheBoardofDirectorsof ERAMET. The main projects will beauditedinternallyoncecapitalexpenditurehasbegun.

• Monitoringofcommitmentsundertaken/received:independentlyoftheabovemen-tioned procedure, quarterly accountingreporting provides information on thesecommitments.Moreover,theLegalAffairsDepartment provides support for majorcontract negotiations or in the event ofdisputes.

INTERNAL CONTROL SYSTEM FOR THE PREPARATION OF FINANCIAL AND ACCOUNTING INFORMATION

– Organisation of the accounting function within the Group: the AccountingUnits oftheparentcompanyandof itssubsidiariesrecorddailytransactions(purchases,sales,cashflow,etc.)andensurethattheaccount-ingmethodscomplywiththeGroup’sestab-lishedprocedures.TheAccounting,TaxandConsolidationDepartment,withintheGroupAdministration and Finance Department,keeps the parent company’s accounts,files tax returns and all those relating totaxconsolidation,andpublishesERAMET’sindividual and consolidated financial state-ments. The necessary coordination withsubsidiariesisprovidedbytheAccounting/ManagementCommittee, throughmonthlymeetings attended by the CFOs, accoun-tants and management controllers of themainDivisionsandSubsidiaries.

– Procedures for the preparation of the consolidated financial statements: theconsolidationreturnsareinputintotheBusi-nessObjects Finance programme by eachsubsidiary and Division-level consolidationiscarriedoutbyeachDivisionunderthesu-pervisionandwiththesupportofthecentralconsolidationdepartment.Thisdepartmentalso carries out Group consolidation.Consolidationismonthlywithannualitems(taxes,provisions,etc.)estimatedatvarioustimesduringtheyear.

– Accounting manual: the consolidationmanualisdistributedtoallsubsidiariesandcontains the accounting rules which arecommon to the whole Group and whichapply to financial statements drawn upin compliance with IFRS. It sets out the

measurementmethodsusedby theGroupand specifies the rules to be followed forconsolidation milestones when preparingthefinancialstatements.

– Budget and management control: thebudget for the three-year operational plan,including the budget for the first year, iscalculatedatyear-endfor theensuingyearandthebudgetforecastforthecurrentyearwill beupdatedat least three timesduringthecourseof theyear.Thesebudgetsandforecastupdates,aswellastherelatedac-tionplans,areformallyapprovedbyDivisionmanagement, the Group Executive Com-mitteeand,subsequently,by theChairmanandCEO of ERAMET. An analysis of gapsbetweenbudgetedandactualfiguresiscar-riedoutonamonthlybasis,firstlyatDivisionlevelandsubsequentlyatGrouplevel.Asasupplementtothefinancialstatements,theManagementControlDepartmentpreparesanalysesoftheGroup’sperformancefortheperiod.

– Cash and Financing control:inadditiontoitspivotalroleinmanagingforeigncurrencyandcommodity risk, the Group AdministrationandFinanceDepartmentsetsupfinancingfortheGroup’smainsubsidiariesandcarriesoutfinancial investmentstogetherwiththemanagersofthosesubsidiaries.Itcentralis-escashforecastingforthemaincompaniesand assists them in establishing paymentmethodsforat-riskcountries.Attheendof2004,theGroupsetupacashpoolingcom-pany,MetalSecurities,toserveasacentralcash hub for all Group companies. At theendof2006,an “exchange rateguarantee”company,MetalCurrencies,wasestablishedtocentraliseforeignexchangetransactions,whichhadinthepastbeenrecognisedinthefinancial statements of each Group entity.BothMetalSecuritiesandMetalCurrenciesaresubjecttocorporategovernanceestab-lishedinfullcollaborationwiththemanagersoftherelevantsubsidiaries.

– Work of the Board of Directors’ Audit Committee: the Audit Committee reviewstheinterimandannualfinancialstatements,

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monitors major disputes and ensurescompliancewithforeigncurrencyandcom-modityriskmanagementpolicyproceduresas well as hedging policies. It reviews theinternalauditplanand theactionsdecideduponbasedontheauditscarriedout.

– Liaison with the Statutory Auditors: theAuditorscarryouthalf-yearlyreviewsofthefinancialstatementswhichareapprovedatmeetingsheldwiththeDivisionalandGroupFinance Departments, the Division Heads,

theGroupCFOand,subsequently,with theChairmanandCEOofERAMET.

Paris,17 February2016.

TheChairmanoftheBoardofDirectors

List of Directors and their positions

SURNAME,FORENAMEORCOMPANYNAMEPOSITIONFAMILYCONNECTIONEXPERTISE

DATEOFFIRSTAPPOINTMENT

DATEOFLASTREAPPOINTMENT ANDENDDATE OFTERMOFOFFICE OTHERPOSITIONSHELD

Buffet PatrickDirector,(3) (5)ChairmanandCEOsince25 April2007Born19 October1953(62 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMr. Buffetisaminingengineer. HewasSeniorExecutiveVicePresidentofSuezuntil2007.

Director:Co-optedtotheBoardon7 March2007ChairmanandCEO:Boardmeetingof25 April2007

Reappointments:GeneralShareholders’Meetingsof25 April2007,11 May2011and29 May2015, forafour-yeartermExpirydate:Generalshareholders’Meetingcalledtoapprovethe2018financialstatements

In Group companies• DirectorofSociétéLe Nickel-SLN• DirectorofCOMILOGS.A.In non-Group companies• DirectorofBureauVéritasandBanimmo(Belgium)(listedcompanies)

Offices held and completed during the past five years• DirectorofRhodia(until21 October2011)• ChairmanandCEOofSociétéLe Nickel-SLN (until31 December2012)

• MemberoftheSupervisoryBoardofArcoleIndustries(unlisted)(until4 October2014)

Antsélévé MichelDirectorBorn19 February1965(50 years)GabonesenationalityBusiness address:PrésidencedelaRépubliqueLibrevilleGabonMr. AntsélévéisSpecialAdvisor tothePresidentoftheGaboneseRepublic,HeadoftheMines,Hydrocar-bon,EnergyandHydraulicResourcesDepartment.

GeneralSharehold-ers’Meetingof15 May2013

Expirydate:Generalshareholders’Meetingcalledtoapprovethe2016financialstatements

In non-Group companies• DirectorrepresentingthePresidencyoftheGaboneseRepublicontheBoardsofDirectorsofSociétédeDéveloppementdesPorts(Gabon),CompagnieMinièredeBelinga(Gabon)andSociétéNationaledeGestionetdeConstruction duLogementSocial(Gabon)

Offices held and completed during the past five years• DirectorrepresentingtheGaboneseRepublicontheBoardofDirectorsofCompagniedeNavigationIntérieure(Gabon)

Baudson ValérieDirector,(1) (4)Born7 May1971(44 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMs. BaudsonisglobalHead oftheAmundiETFbusinessline andindexfund.



In non-Group companies• ChairmanoftheBoardofDirectorsofSPDRLLC(Ireland)(unlistedcompany)

Offices held and completed during the past five yearsNone

(1) Audit Committee.(2) Remuneration Committee.(3) Selection Committee.(4) Independent Director.(5) Strategic Committee.

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Duval GeorgesDirectorDeputyCEOBorn3 May1946(69 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceBrotherofÉdouardDuval,cousinofCyrilleDuvalandNathaliedeLaFournière.Mr. DuvalisDeputyCEOofERAMET,ManagerofSORAMEandCEOofCEIR.

GeneralSharehold-ers’Meetingof21 July1999DeputyCEO:Boardmeetingof23 May2002

Reappointment:GeneralShareholders’Meetingsof21 May2003,25 April2007,11 May2011and29 May2015forafour-yeartermExpirydate:Generalshareholders’Meetingcalledtoapprovethe2018financialstatements

In Group companies• Chairmanof:

• Aubert&Duval(SAS);ERAMETHoldingAlliages(SAS);

• ERAMETAlloys;Erasteel(SAS)In non-Group companies (unlisted companies)• ManagerofSORAMESCA• CEOofCEIROffices held and completed during the past five years• ChairmanofUKAD(S.A.)

Duval ÉdouardDirector,(3) (5)Born02 December1944(71 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceBrotherofGeorgesDuval,cousinofCyrilleDuvalandNathaliedeLaFournière.Mr. DuvalisChairmanoftheManage-mentBoardofSORAMEandCEOofCEIR.

GeneralSharehold-ers’Meetingof21 July1999

Reappointments:GeneralShareholders’Meetingsof21 May2003,25 April2007,11 May2011and29 May2015forafour-yeartermExpirydate:Generalshareholders’Meetingcalledtoapprovethe2018financialstatements

In Group companies• DirectorofSociétéLe Nickel-SLN• DeputyCEOofERAMETHoldingAlliages(SAS)In non-Group companies (unlisted companies)• ChairmanoftheManagementBoardofSORAMESCA

• CEOofCEIR• ChairmanofERAMETInternational(SAS)

SORAMEDirector(3) (5)representedby

Duval CyrillePermanentrepresentativeofSORAMEtotheBoardofDirectorsBorn18 July1948(67 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceUncleofNathaliedeLaFournière,cousinofGeorgesandÉdouardDuvalMr. DuvalisSecretaryGeneraloftheAlloysDivision,ManagerofSORAMEandCEOofCEIR.


Reappointment:Generalshareholders’Meetingof29 May2015forafour-yearterm.Expirydate:Generalshareholders’Meetingcalledtoapprovethe2018financialstatements

In Group companies• DeputyCEOofERAMETHoldingAlliages• DirectorofCOMILOGS.A.• PermanentrepresentativeofERAMETHoldingAlliagesontheBoardofMetalSecurities

• ChairmanofBrownEuropeandofForgesdeMontplaisir

• ManagerofSCIGrandePlaineIn non-Group companies• DirectorofNexans(listedcompany)• (unlistedcompanies)• CEOofCEIRManager of SORAME• Officesheldandcompletedduringthepastfiveyears(Groupcompanies)

• ChairmanofADTAF(until2011)• ManagerofTransmet(untilApril2014)


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CEIRDirectorrepresentedby

de La Fournière NathaliePermanentrepresentativeofCEIRtotheBoardofDirectorsBorn1 October1967(48 years)FrenchnationalityAddress:c/oERAMETTourMaine-Montparnasse33,avenueduMaine75015Paris,FranceNieceofCyrilleDuval,cousinofGeorgesandÉdouardDuvalMs. deLaFournièreisFinanceandAdministrationDirectoroftheAgence d’Urbanisme et d’Aménagement Toulouse Aire urbaine.



In non-Group companiesNoneOffices held and completed during the past five yearsNone

Gautier Marie AxelleDirectorrepresentingemployeesBorn22 July1974(41 years)FrenchNationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMs. Gautierisinchargeofthepubliclaw—mininglawunitoftheLegalAffairsDepartment.

AppointedbytheEuropeanWorksCouncilon12 November2014inaccordancewithArticle 10.9oftheArticlesofAssociation

Expirydate: 11 November2018

In Group companiesNoneIn non-Group companiesNoneOffices held and completed during the past five years• DirectorArcelorMittalGeoLorraine(toJune2011)

FSI EquationDirector(3) (5)Representedby

Jean Yves GiletBorn9 May1956(59 years)FrenchnationalityBusiness address:6-8,boulevardHaussmann75009Paris,FranceMr. GiletisExecutiveDirectorofBpifrance.

Co-optedbytheBoardmeetingof25 May2012(RatifiedbyGeneralShareholders’Meet-ingof15 May2013)


In non-Group companies• ExecutiveDirectorofBpifranceParticipations• MemberofBoardofDirectorsofEiffageandOrange

Offices held and completed during the past five years• CEOofFondsStratégiqued’Investissement(2010-2013)(untilSeptember2010)

• MemberofBoardofDirectorsofArcelorMittalFrance,ArcelorMittalStainlessInternational,ArcelorMittalEurope,ArcelorMittalStainlessFrance,ArcelorMittalStainlessBelgium, ArcelorMittalInoxBrasil

• MemberoftheBoardofDirectorsofCGGVeritas(2014-2015)


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Gomès PhilippeDirectorBorn27 October1958(57 years)FrenchnationalityBusiness address:AssembléeNationale126,ruedel’Université75355Paris07SPMr. GomèsismemberofParliamentforthe2nd constituencyofNew Caledonia.

Co-optedbytheBoardmeetingof10 December2014


In non-Group companies• DeputyChairmanofSTCPI• ChairmanoftheBoardofDirectorsofENERCAL• DirectorofSEMofTinaOffices held and completed during the past five years• DeputyChairmanofSTCPI(from2004to2009)• ChairmanoftheNew CaledoniaAirServicesAgency(Agence pour la desserte aérienne de la Nouvelle-Calédonie—ADANC)(from2009to2011)

• ChairmanofSociétéImmobilièreCalédonienne(SIC)(from2004to2009)

• ChairmanofSociétédeParticipationMinièreduSudCalédonien(SPMSC)(from2005to2009andin2014)

Grégoire-Sainte-Marie CarolineDirector,(4) (5)Born27 October1957(58 years)FrenchnationalityBusiness address:c/oERAMETTourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMs. Grégoire-Sainte-MariehasworkedinvariousGeneralManagementpositionsattheFransBonhomme,TarmacandLafargegroups,inaninvestorcapacity.



In non-Group companies• DirectorofGroupamaS.A.(listedcompany),FLSMIDTH(Denmark)andCalyos(Belgium)

• ObserverofSafran(listedcompany)Offices held and completed during the past five years• ChairmanandCEOofFransBonhomme,ChairmanandCEOofTarmac

Lepoutre ManoelleDirector(2) (4) (5)Born8 May1959(56 years)FrenchnationalityBusiness address:TOTAL2,placeJean-MillierLaDéfense692078ParisLa DéfenseCedexMs. LepoutreisDirectorofSeniorManagementandManagementTeamsofTOTALGroupandisamemberofCODIR.



In non-Group companies (unlisted companies)• DirectorofFondationVillette-EntreprisesOffices held and completed during the past five years• DirectorofIfremer(until2011)

Olders PiaDirectorrepresentingemployeesBorn3 May1971(44 years)FrenchnationalityBusiness address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMs. Oldersisheadofinsuranceportfolios.

AppointedbytheEuropeanWorksCouncilon23 June2014inaccordancewithArticle 10.9oftheArticlesofAssociation

Expirydate:22 June2018

In Group companiesNoneIn non-Group companiesNoneOffices held and completed during the past five yearsNone


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Ronge CatherineDirector,(1) (4)Born13 April1961(54 years)FrenchnationalityBusiness address:WeaveAir37-41,rueduRocher75008ParisMs. RongeisChairmanofWeaveAir,astrategyconsultancyfirm.

Co-optedbytheBoardmeetingof17 February2016


In non-Group companies• DirectorofColas,PaprecandInnortex(start-up)Offices held and completed during the past five years• DirectorofInnoveox

Tendil ClaudeDirector,(2) (4)Born25 July1945(70 years)FrenchnationalityBusiness address:GENERALIFrance7-9,boulevardHaussmann75309ParisCedex 09Mr. TendilisChairman oftheGENERALIGroupinFrance.



In non-Group companies• ChairmanoftheBoardofDirectorsofGENERALIFrance,GENERALIFranceAssurances,GENERALIVieandGENERALIIARD

• DirectorofEuropAssistanceHodlingandSCORSE• ChairmanofRVS 5(association)• MemberoftheExecutiveCommitteeofMEDEFOffices held and completed during the past five years• CEOofGeneraliFrance,GeneraliVie,GeneraliIard(untilOctober 2013)

• ChairmanoftheBoardofDirectorsofEuropAssistanceHolding(untilJune 2015)andEuropAssistanceItalie(untilApril 2015)

• DirectorofAssicurzioniGeneraliSpA• MemberoftheSupervisoryBoardofGeneraliInvestmentsSpA

• PermanentrepresentativeofEuropAssistanceHoldingontheBoardofEuropAssistanceSpain(until2014)

Frédéric TonaDirector(1) (2) (4)Born27 August1947(68 years)FrenchnationalityBusiness address:c/oERAMETTourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMr. Tonaisanindependentconsultantintheminingfield.



In non-Group companies• DirectorofCMT(CompagnieMinièredeTouissit)(Morocco),andMinrexS.A.(Morocco).

Offices held and completed during the past five years• DirectorofOMM(OSEADMiningMorocco)(until2014),OSEADSAS(France),SOMAIR(Niger),COMINAK(Niger),IMOURAREN(Niger)andCFMM(France).

• DirectorofERAMETinhiscapacityasrepresenta-tiveofAREVAuntilMay 2011,theninhisownnameuntil25 May2012.


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Treuille AntoineDirector(1) (2) (4)Born07 October1948(67 years)Business address:CharterPacificCorporation3239,47 StreetAstoria,NY11103USAMr. TreuilleisChairmanofCharterPacificCorporation(UnitedStates).

GeneralSharehold-ers’Meetingof21 July1999

Reappointment:GeneralShareholders’Meetingsof21 May2003,25 April2007,11 May2011and29 May2015forafour-yeartermExpirydate:Generalshareholders’Meetingcalledtoapprovethe2018financialstatements

In non-Group companies (unlisted companies)• ChairmanofCharterPacificCorporation(UnitedStates)

• Director:FrenchAmericanFoundation(USA)andFondationFranco-AméricaineFoch(France)

Offices held and completed during the past five years• Chairmanof:AltamontCapitalPartners,LLC(UnitedStates)(until2014),MercantileCapitalPartnersLLC(UnitedStates)(until2014)andPartexCorporation(until2013)

• DirectorofBICS.A.(France),HarrisInteractive,PartexCorporationandImperialHeadwearInc.(UnitedStates)(until2013).

Zajdenweber AlexisDirectorrepresentingtheState(5)Born18 May1976(39 years)FrenchnationalityBusiness address:AgencedesParticipationsdel’État139,ruedeBercyTeledoc22975012Paris,FranceMr. ZajdenweberisDirectorofenergyshareholdingsattheFrenchGovern-mentShareholdingAgency(l’AgencedesParticipationsdel’État—APE).

Co-optedtotheBoardon 10 December2014


In non-Group companies• MemberoftheSupervisoryBoardofElectricitéRéseauDistributionFrance(ERDF)

• DirectorofAREVAOffices held and completed during the past five years• DirectorofMonnaie de Paris(from2009to2011)

Vecten PhilippeDeputyCEO(nonDirector)Born22 April1949(66 years)Business address:TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceMr. VectenisDeputyCEO.

AppointedbytheBoardmeetingof23 May2007

In Group companies• DirectorofCOMILOGS.A.;COMILOGUS;PortMinéralierd’Owendo,Maboumine

• ChairmanoftheBoardofDirectorsofSETRAGandofEralloysHoldingAS

• CEOofERAMETCOMILOGManganèse• ManagerofCOMILOGHoldingOffices held and completed during the past five years• DirectorofSociétéLe Nickel-SLN(untilJune2012)


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Asprovidedbyparagraph 14.1ofAppendix 1ofEC RegulationNo. 809/2004,theCompanystatesthat,toitsknowledgeandatthetimeofwritingthisreport:

– No conviction of fraud has been handeddown, in the last five years, against anymember of the Board of Directors or ofGeneralManagement.

– Inthelastfiveyears,nomemberoftheBoardofDirectorsorofGeneralManagementhas

beenassociatedwithabankruptcy,receiver-shiporliquidationintheircapacityasmem-ber of an administrative, management orsupervisorybody,orasCEO,ofacompany.

– No criminal charge and/or official publicpenaltyhasbeenhandeddown, in the lastfiveyears,againstanymemberoftheBoardof Directors or of General Management,by the statutory or regulatory authorities(includingtherelevantprofessionalbodies);and

– NodirectorormemberofGeneralManage-menthasbeenbarredbyacourt,inthelastfiveyears, fromactingasamemberofanadministrative,managementorsupervisorybody or from participating in themanage-mentorbusinessaffairsofalistedcompany.

– Nodirectorissubjecttoaconflictofinterestwithin the meaning of Section 14.2 ofAppendix 1ofEC RegulationNo. 809/2004orhasentered intoaservicecontractwithERAMET.

Table summarising changes to the composition of the Board of Directors during the 2015 financial year and up to the date of filing of this registration document

Co-options On17 February2016,CatherineRongewasnominatedbytheBoardofDirectorsasaDirectorreplacingThierryLeHénaffwhoresigned.

AppointmentofnewpermanentrepresentativesrepresentinglegalentityDirectors

On4 May2015,NathaliedeLaFournièrewasappointedthenewpermanentrepresentativeofCEIRontheBoard,replacingPatrickDuval.

AppointmentsbytheGeneralShareholders’Meeting

On29 May2015,theGeneralShareholders’MeetingappointedValérieBaudsonasaDirector,replacingMichelSomnoletwhosetermofofficehadexpired.

Resignation ValérieBaudsonresignedasaDirector,witheffectasof31March2016.

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Implementation of the “Comply or Explain” rule

AFEP/MEDEFCODERECOMMENDATION ERAMETCORPORATEGOVERNANCE

Recommendation 10.4:Itisrecommendedthatthenon-executivedirectorsmeetperiodicallywithoutexecutivedirectorsorin-housedirectorsinattendance.TheinternalrulesofoperationoftheBoardofDirectorsshouldprovideforsuchameetingonceayear,atwhichtimetheperformanceoftheChairman,ChiefExecutiveOfficerandDeputyChiefExecutiveOfficersshallbeevaluated,andtheparticipantsshallreflectonthefutureoftheCompany’sexecutivemanagement.

TheinternalrulesoftheBoardofDirectorsdonotexpresslymentiontheoptionofholdingannualmeetingsfornon-executivedirectorswithouthavingexecutivedirectorsinattendance.However,inpractice,theRemunerationCommitteeiscomposedonlyofnon-executivedirectorsanditmeetsatleastonceayear,withoutthepresenceoftheexecutivedirectorsconcerned,toevaluatetheperformanceoftheChairmanandCEOandthatoftheDeputyCEOs.

Recommendation 14:Directors’termsofofficeshouldbestaggeredsoastoavoidreplacementoftheentirebodyandtofavourasmoothreplacementofdirectors.

Thedistributionoftermsofofficeiscurrentlystaggeredamongtwogroupsofdirectors:oneoffourdirectorsandanotherof13 directors.ThisisaconsequenceoftheCompany’sshareholdingstructureandoftheprovisionsoftheShareholders’Agreementinforce.

Recommendation 15onBoardofDirectors’Committees:thecommit-teesoftheBoardmayrequestexternaltechnicalstudiesrelatingtomatterswithintheircompetence,attheCompany’sexpense.

TheinternalrulesoftheBoardofDirectorsandoftheCommitteesdonotexpresslymentiontheoptionoftakingrecoursetoexternalexperts.However,externalexpertsmaybeconsulted,asandwhennecessary.

Recommendation 17.1onthecompositionoftheSelectionCommittee:“itshouldnotincludeanyexecutivecorporateofficersandshouldbecomprisedmainlyofindependentdirectors.”

TheSelectionCommitteedoesnotincludeanyindependentdirectorsandtheChairmanandCEOisamemberoftheCommit-tee.ThisisduetothespecificrulesoftheShareholders’AgreementdesignedtostructuretherelationshipbetweentheCompany’smainshareholders.

Recommendation 17.2:TheSelectionCommitteeisinchargeofsubmittingproposalstotheBoardfortheselectionofnewdirectors.

ItisnottheremitoftheSelectionCommitteetoproposecandi-datesfordirectorshipstotheBoardofDirectors.ThissituationisduetotheparticularrulesoftheShareholders’Agreement,intendedtostructurerelationshipsbetweencontrollingshareholdersoftheCompany,whichonlymakesprovisiontotheeffectthattheSelectionCommittee“isresponsibleforproposing,totheCompany’sgoverningbodies,theappointmentofcandidatestoseniormanagementpositionswithintheCompany’svariousdivisionsandtothepositionofFinancialDirectoroftheERAMETgroup”.However,theSelectionCommitteeCharterspecifiesthat“withregardtotheexaminationofproposalsfortheappointmentofnewindependentdirectors,theSelectionCommitteeisresponsibleforexamining,whilstadheringtotheprovisionsoftheShareholders’Agreement,theextenttowhichpossiblecandidatessatisfytheindependencecriteriaputforwardbytheAFEP/MEDEFcodeandtoreporttotheBoardofDirectorsonitsfindingsinthatrespect”andthat“withregardtotheexaminationofproposalsfortheappointmentofnewdirectors,theSelectionCommitteeisresponsibleforensuring,whilstadheringtotheprovisionsoftheShareholders’Agreement,thatcandidatesfordirectorshipsdonotpresentanylegalincompatibilityorconflictofinterest”.

Recommendation 18.1onthecompositionoftheRemunerationCommittee:“itisrecommendedthattheRemunerationCommitteeshouldhaveonesalariedDirectoramongitsmembers”.

ThecurrentShareholders’AgreementspecifiesacontractuallypredefinedcompositionoftheRemunerationCommittee.Inthatrespect,thetwoshareholdergroupshaveagreedtheirpreferenceforthecurrentformofrepresentationonthisCommitteewhichissolelycomprisedofindependentdirectors,whileitisassumedthatdirectorsrepresentingemployeesmaynotbeclassifiedassuch.

Recommendation 18.2ontheproceduresforoperationoftheRemunerationCommittee:“whenthereportontheworkoftheRemunerationCommitteeispresented,theBoardshoulddeliberateonissuesrelatingtothecompensationofexecutivecorporateofficerswithoutthepresenceofthelatter.”

ExecutivecorporateofficersmaybepresentduringpresentationofthereportontheworkoftheRemunerationCommittee.TheBoardmakesitsdeliberationsincompliancewithlegalrulesandgovernancerecommendations.


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AFEP/MEDEFCODERECOMMENDATION ERAMETCORPORATEGOVERNANCE

Recommendation 23.2.4:performanceshares.“InaccordancewithtermsdeterminedbytheBoardandannouncedupontheaward,theperformancesharesawardedtoexecutivecorporateofficersshouldbeconditionalupontheacquisitionofadefinedquantityofsharesoncetheawardedsharesbecomeavailable.”

Giventhemandatoryrequirement,imposedupontheacquisitionofshares,thatasignificantlevelofthesharesacquiredshouldberetained(20%ofsharesthroughouttheentiretermofoffice),therequirementthatanadditionalquantityofsharesintheCompanyshouldbepurchasedwhenthesharegrantbecomesavailableisnotimposed.Furthermore,sincethefirstperformanceshareawardintroducedin2010,thepercentageofsharesdefinitivelyvestedbyexecutivecorporateofficers,incomparisonwiththenumberofperformancesharesoriginallygrantedtothem,hasbeenverylow,giventhestringentperformanceconditionsrequired.

Recommendation 23.2.5:Chairman&CEOseverancepay:TheseperformanceconditionssetbytheBoardmustbedemandingandmaynotallowfortheindemnificationofanexecutivedirector,unlesshisorherdepartureisimposedinsomewayandlinkedtoachangeincontrolorstrategy.ThepaymentofanyterminationbenefitstoanexecutivedirectormustbeexcludedifthesaidexecutivedirectorelectstoleavetheCompanyinordertoholdanotherpositionorisassignedtoanotherpositionwithinthesamegrouporisabletobenefitinthenearfuturefrompensionrights.

ShouldtheChairmanandCEOleavetheCompany(pursuanttoforcedresignation,cancellationornon-renewalofhistermofofficeormodificationoftheconditionsunderwhichheoriginallyjoinedtheERAMETgroup),hisentitlementtoseverancepay,asprovidedforinhiscorporateofficercontract,isconditionaluponthefulfilmentofperformanceconditions:thesumofgrossvariableremuneration(itselfsubjecttospecificperformanceconditions)receivedoverthelastthreecompleteyearsofhistermofofficemustbe35%ormoreofthetotalgrossannualfixedremunerationreceivedduringthesamethree-yearperiod.Consequently,thesearrangementsexcludepaymentofsuchabenefitshouldtheChairmanandCEOfailtoachievehistargets.FollowingrenewalofthetermofofficeoftheChairmanandCEOattheBoardmeetingof29 May2015,pursuanttotheprovisionsofArticleL. 225-42-1oftheFrenchCommercialCode,thesearrangementsshallbesubjecttoapprovalbytheGeneralShareholders’Meetingof27 May2016.

Recommendation 23.2.6:SupplementaryPensionPlans.Thereferenceperiodusedforthecalculationofpensionbenefitsmustcoverseveralyears.

Thereferenceperiodistwelvemonthsforthefixedportionandtheaverageofthethreelastgrossvariableremunerations,calculatedinfullyearsforthevariableportion.Lengthofservicemustbegreaterthantwoyears.Thesesupplementarypensionplanarrangements,combinedwiththeoveralllimitof35%ofthereferenceremuneration,whichisitselflimitedto25 timestheannualsocialsecurityceiling (1),providethewholepensionplanwithaverywellbalancedstructure.

Recommendation 24.1:ongoingprovisionofinformationtosharehold-ersonremunerationreceivedAllcomponentsofexecutivecorporateofficers’remuneration,whetherpotentialorvested,mustbepubliclydisclosed,immediatelyaftertheBoardmeetingatwhichtheyareapproved.

ThereisnocommunicationafterBoardmeetingsheldtoreviewremuneration.Thecomponentsarecommunicatedintheregistra-tiondocumentpriortoshareholderconsultation.


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4.2 STATUTORY AUDITORS’ REPORT DRAWN UP PURSUANT TO ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE ON THE REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS OF ERAMET

2015 FINANCIAL YEAR

TotheShareholders,

In our capacity as statutory auditors ofERAMETandinaccordancewitharticleL. 225-235oftheFrenchCommercialCode(Code de commerce), we hereby report on the reportpreparedbytheChairmanofyourCompanyinaccordancewitharticleL. 225-37oftheFrenchCommercialCode(Code de commerce)fortheyearended31 December2015.

It is the Chairman’s responsibility to prepareand submit for the Board of Directors’approvala reporton internalcontroland riskmanagementproceduresimplementedbytheCompanyandtoprovidetheotherinformationrequired by article L. 225-37 of the FrenchCommercialCode(Code de commerce)relat-ingtomatterssuchascorporategovernance.

Ourroleisto:

– reportonanymattersastotheinformationcontainedintheChairman’sreportinrespectoftheinternalcontrolandriskmanagementprocedures relating to the preparation andprocessingof theaccountingandfinancialinformation;

– confirm that the report also includes theotherinformationrequiredbyarticleL. 225-37 of the French Commercial Code (Code de commerce). It shouldbenoted thatourroleisnottoverifythefairnessofthisotherinformation.

We conducted our work in accordance withprofessionalstandardsapplicableinFrance.

INFORMATION ON INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION

The professional standards require that weperformthenecessaryprocedurestoassessthefairnessoftheinformationprovidedintheChairman’s report in respect of the internalcontroland riskmanagementprocedures re-latingtothepreparationandprocessingoftheaccounting and financial information. Theseproceduresconsistmainlyin:

– obtaining an understanding of the internalcontrol and risk management proceduresrelating to the preparation and processingoftheaccountingandfinancialinformationonwhich the information presented in theChairman’sreportisbasedandoftheexist-ingdocumentation;

– obtaininganunderstandingof thework in-volvedinthepreparationofthisinformationandoftheexistingdocumentation;

– determining if anymaterialweaknesses inthe internal control procedures relating tothe preparation and processing of the ac-countingandfinancial information thatwewouldhavenotedinthecourseofourworkare properly disclosed in the Chairman’sreport.

Onthebasisofourwork,wehavenomattersto report on the information relating to theCompany’s internalcontroland riskmanage-ment procedures relating to the preparationandprocessingoftheaccountingandfinancialinformation contained in the report preparedby theChairmanof theBoardofDirectors inaccordancewitharticleL. 225-37oftheFrenchCommercialCode(Code de commerce).

OTHER INFORMATION

We confirm that the report prepared by theChairmanoftheBoardofDirectorsalsocon-tainstheotherinformationrequiredbyarticleL. 225-37 of the French Commercial Code(Code de commerce).

Paris-LaDéfense,22 February2016Thestatutoryauditors

FrenchoriginalsignedbyKPMGAudit

DepartmentofKPMGS.A.Ernst&YoungAudit

DenisMarangé Jean-RochVaron

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Corporate Governance / Statutory Auditors’ Report

4.3 REMUNERATION OF CORPORATE OFFICERS

4.3.1 REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERSTheremunerationofexecutivecorporateofficersissetannuallybytheBoardofDirectorsattherecommendationoftheRemunerationCommittee.Theremunerationofeachexecutivecorporateofficerisbrokendownintoafixedportionandavariableportion.ThegoalsofexecutivecorporateofficersaredeterminedbytheRemunerationCommitteeandsubmittedtotheBoardofDirectorsforapproval.

TheremunerationpolicyforexecutivecorporateofficersisbasedonprinciplessetoutindetailinthereportoftheChairmanoftheBoardofDirectors,undertheparagraphheading“RemunerationCommittee”.

Thetablebelowsetsoutanindividualbreakdownofgrossremunerationduetocorporateofficersin2015:

Table 1—Table summarising the remuneration of all executive corporate officers in addition to shares and options granted to each one

REMUNERATIONSDUEINTHEYEARVALUEOFPERFORMANCESHARESGRANTEDDURINGTHEYEAR(2) TOTAL(3) TOTAL(3)

(IN EUROS) 2015 2014 2015 2014 2015 2014

Patrick BuffetChairmanandCEO 1,259,194 1,839,402 1,346,989 1,064,910 2,606,182 2,904,312

Georges DuvalDeputyCEO 445,915 494,478 180,360 241,690 626,275 736,168

Bertrand Madelin (1)

DeputyCEO 333,972 458,565 238,676 188,694 572,648 647,259

Philippe VectenDeputyCEO 471,328 525,707 284,368 224,817 755,695 750,524

Édouard Duval 0 597,947 0 42,777 0 640,724Cyrille Duval 0 406,442 0 23,765 0 430,207

TOTAL CORPORATE OFFICERS 2,510,409 4,322,541 2,050,393 1,786,653 4,560,801 6,109,194(1) Up to 27 November 2015.(2) Calculated according to the fair value per share on the day of granting by the Board of Directors, that is, €60.12 at 19 February 2015 and €47.53 at 20 February 2014; for reference, the closing share price on 17 February 2016 was €18.18—no options were granted during the financial year.(3) The valuation method used to calculate the value of performance shares does not permit the actual remuneration of executives to be extrapolated from these figures for the years in question.

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Table 2—Table summarising the remuneration of each executive corporate officer

AMOUNTFOR2015 AMOUNTFOR2014

DUE PAID DUE PAID

Patrick BuffetChairman and CEOFixedremuneration 807,365 807,365 807,365 807,365Variableremuneration(4) 377,921 949,151 949,151 712,566Directors’fees 65,222 74,200 74,200 62,992Benefitsinkind(1) 8,686 8,686 8,686 6,579Total 1,259,194 1,839,402 1,839,402 1,589,502Georges DuvalDeputy CEOFixedremuneration 326,600 326,600 326,600 326,600Variableremuneration(4) 88,063 127,227 127,227 119,145Directors’fees 27,640 36,700 36,700 25,000Benefitsinkind(1) 3,612 3,951 3,951 4,194Total 445,915 494,478 494,478 474,939Bertrand MadelinDeputy CEOFixedremuneration(2) 237,808 261,250 261,250 261,250Variableremuneration 91,438 169,159 169,159 96,924Directors’fees 0 23,000 23,000 22,500Benefitsinkind(1) 4,726 5,156 5,156 3,194Total 333,972 458,565 458,565 383,868Philippe VectenDeputy CEOFixedremuneration(3) 312,191 306,940 306,940 306,940Variableremuneration(4) 110,258 173,821 173,821 156,191Directors’fees 42,181 38,248 38,248 38,737Benefitsinkind(1) 6,698 6,698 6,698 5,614Total 471,328 525,707 525,707 507,482

TOTAL CORPORATE OFFICERS 2,510,409 3,318,152 3,318,152 2,955,791(1) This relates to the provision of a Company car.(2) Term of office as corporate officer ended on 27 November 2015.(3) Fixed remuneration review at Board meeting of 22 December 2015.(4) In view of the Group’s financial situation, the corporate officers have voluntarily waived 20% of their variable portion as validated by the Board of Directors.

Nomulti-yearvariableremunerationfelldueorwaspaidoutduringthefinancialyear.

ThecombinedtotalremunerationreceivedbythetoptenearnersatERAMETinrespectof2015was€5,860,223andhasbeencertifiedbytheStatutoryAuditors.

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Corporate Governance / Remuneration of corporate officers

Table 3—Table setting out Directors’ fees and other remuneration received by non-executive corporate officers

The amount of Directors’ fees paid toERAMET’scorporateofficersinJanuary 2016in respect of 2015 was €745,000 (€674,117in2014).ThetotalsumallocatedtotheBoardofDirectorswassetat€700,000at theGen-eral Shareholders’ Meeting of 15 May 2013(thirteenthresolution), tobedistributedfreelyamongthedirectorsbytheBoardofDirectors.

For2015,andinaccordancewithrecommen-dation 21.1oftheAFEP/MEDEFcode,inorderto have a predominant variable portion, thedistribution rules for Directors’ fees were asfollows:

– annualfixedamountof€10,000;

– €2,000foreachactualattendanceatBoardmeetings;

– annual fixed amount of €5,000 for AuditCommitteemembers, Remuneration Com-mittee members or Strategic Committeemembers;

– €1,800foreachactualattendanceatAuditCommittee, Remuneration Committee orStrategicCommitteemeetings;

– applicationofanoverallceilingof€700,000applied prorata to the sum due to eachdirector.

Inaddition,€1,525intravelexpensesispaidforeachdirectorlivingabroadinrespectofeachBoard meeting (and Committee meetingsin cases where a Committeemeeting takesplacemore than 48 hours before or after aBoardmeeting).

From2016onwards,and inaccordancewithrecommendation 21.1 of the AFEP/MEDEFcode,inordertohaveapredominantvariableportion,thedistributionrulesforDirectors’feeswillbethefollowing:

– annualfixedamountof€10,000;

– a sum of €2,000 for each Board meetingattendedinperson,withanannualceilingof€14,000correspondingtosevenmeetings;

– annuallumpsumof€5,000forAuditCom-mitteemembers,RemunerationCommitteemembersorStrategicCommitteemembers;

– asumof€1,800foreachAuditCommitteemeetingattendedinperson,withanannualceiling of €9,000, corresponding to fiveAudit Committee meetings, and for eachRemunerationCommitteemeetingattendedinpersonwithanannualceilingof€7,200,corresponding to four RemunerationCommitteemeetings,andforeachStrategicCommitteemeetingattendedinpersonwithan annual ceilingof €7,200, correspondingtofourStrategicCommitteemeetings.

Inaddition,€1,525intravelexpensesshallbepaidforeachdirectorlivingabroadinrespectofeachBoardmeeting(andCommitteemeet-ings in cases where a Committee meetingtakesplacemorethan48 hoursbeforeorafteraBoardmeeting).

TheDirectors’feespaidtoERAMETdirectorsbyothercompaniesintheGroupamountedtoanoveralltotalof€45,000in2015(€73,959in2014).

Nootherremunerationwaspaidtonon-exec-utivecorporateofficers,withtheexceptionoftheremunerationsspecifiedherebelow.

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ThedistributionofDirectors’feesatthebeginningof2016inrespectof2015wasasfollows(ineuros,beforedeductions):

ERAMET OTHERCOMPANIES TOTAL2015 TOTAL2014

MichelAntsélévé 36,070 - 36,070 31,150ValérieBaudson(3) 32,569 - 32,569 -PatrickBuffet(1) 37,222 28,000 65,222 74,200CyrilleDuval(1)(SORAME) 37,222 17,000 54,222 52,700Other remuneration €150,098ÉdouardDuval(1) 35,379 - 35,379 50,200Other remuneration €62,998GeorgesDuval(1) 27,640 - 27,640 23,500PatrickDuval(CEIR)(2) 6,757 - 6,757 23,500NathaliedeLaFournière(CEIR)(2) 20,883 - 20,883 -MarieAxelleGautier(8) 27,640 - 27,640 3,666Other remuneration €87,113JeanYvesGilet(FSIEquation)(4) 37,222 - 37,222 36,700PhilippeGomès(10) 33,790 - 33,790 4,108CarolineGrégoire-Sainte-Marie 43,487 - 43,487 35,400ThierryLeHénaff 30,219 - 30,219 31,100ManoelleLepoutre 39,724 - 39,724 35,200LouisMapou(5) - - - 6,500PiaOlders(7) 27,640 - 27,640 11,000Other remuneration €51,890MichelQuintard(6) - - - 25,117MichelSomnolet(3) 19,149 - 19,149 51,926ClaudeTendil 35,010 - 35,010 39,300FrédéricTona 60,070 - 60,070 40,000AntoineTreuille 76,931 - 76,931 66,450AlexisZajdenweber(StateRep.)(9) 35,379 - 35,379 3,249

TOTAL 700,000 45,000 745,000 674,117(1) Other remuneration: see other tables related to corporate officers’ remuneration.(2) Appointment of Nathalie de La Fournière as the new permanent representative of CEIR, replacing Patrick Duval, on 4 May 2015.(3) Appointment of Valérie Baudson by the General Shareholders’ meeting of 29 May 2015, replacing Michel Somnolet.(4) Amount paid to Bpifrance Participations—In February 2014, Jean-Yves Gilet was appointed representative of FSI Equation.(5) Resignation 26 June 2014.(6) Resignation 31 July 2014.(7) Director representing employees—Appointment 23 June 2014.(8) Director representing employees—Appointment 12 November 2014.(9) Co-option 10 December 2014—amount paid to the Ministry of Finance.(10) Co-option 10 December 2014.

Tables 4 and 5—Not applicable

Nosharepurchaseorsubscriptionoptionsweregrantedtoexecutivecorporateofficersduringthefinancialyear.Nosharepurchaseorsubscriptionoptionswereexercisedbyexecutivecorporateofficersduringthefinancialyear.

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Table 6—Performance shares granted to each Executive Corporate Officer during the year

PLANNO. ANDDATE

NUMBEROFSHARESGRANTED

VALUEOFSHARES(1)

ACQUISITIONDATE

DATEAVAILABLE PERFORMANCECONDITIONS

P.Buffet Planof19/02/2015 22,405 1,346,989 19/02/2018 19/02/2020

PerformanceoftheERAMETsharepriceinrelationtothatofcomparablecompanieslist-edontheStoxx600BasicResourcesindex(1/3)andintrinsicperformanceaccordingtofinancialindicators(2/3)(operatingmargin(currentoperatingincome/revenue)andoperatingcashflow);progressiveacquisitionoverthreeyears

G.Duval Planof19/02/2015 3,000 180,360 19/02/2018 19/02/2020 ditto

B.Madelin Planof19/02/2015 3,970 238,676 19/02/2018 19/02/2020 ditto

P.Vecten Planof19/02/2015 4,730 284,368 19/02/2018 19/02/2020 ditto

TOTAL 34,105 2,050,393(1) Calculated according to the fair value per share on the day of granting by the Board of Directors, that is €60.12 on 19 February 2015 and €47.53 on 20 February 2014; for reference the closing share price on 17 February 2016 was €18.18.

Table 7—Performance shares becoming available during the financial year for each executive corporate officer

PLANNO.ANDDATE

NUMBEROFSHARESTHATBECAMEAVAILABLEDURINGTHEFINANCIALYEAR

(PLAN HOLDING PERIOD ENDED ON 20 MAY 2010)

VESTINGCONDITIONS (NUMBER OF SHARES TO BE VESTED UPON AVAILABILITY

IN THE EVENT THAT ALL PERFORMANCE CONDITIONS ARE MET, ACCORDING TO THE TERMS SET BY THE BOARD

UPON GRANTING)

P.Buffet Planof20/05/2010 2,376 8,670G.Duval Planof20/05/2010 439 1,600B.Madelin Planof20/05/2010 420 1,530P.Vecten Planof20/05/2010 512 1,865

TOTAL 3,747 13,665

Takingintoconsiderationtheperformanceconditions,thevestingrateasapercentageofsharesawardedfromthe20 May2010planis27.4%.

SincetheBoardmeetingof23 July2007,corporateofficersarerequiredtoretain20%ofsharesacquiredunderperformanceshareplans,throughouttheirentiretermofoffice.

Table 8—Not applicable

Thereisnosharepurchaseorsubscriptionoptionplancurrentlyinoperation.

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Table 9—Historical details of performance share grants—Information on performance shares

PLAN2010 PLAN2011 PLAN2012 PLAN2013 PLAN2014 PLAN2015

DateofShareholders’Meeting 20/05/2010 20/05/2010 20/05/2010 15/05/2012 15/05/2012 15/05/2012

DateofBoardmeeting 20/05/2010 16/02/2011 15/02/2012 21/03/2013 20/02/2014 19/02/2015TotalNo.sharesgranted,ofwhichnumbergrantedto(total)

65,008 71,665 89,885 145,040 143,510 132,680

Corporate OfficersP.Buffet 8,670 8,605 10,755 22,405 22,405 22,405G.Duval 1,600 2,030 1,000 5,085 5,085 3,000B.Madelin 1,530 1,490 1,865 3,970 3,970 3,970P.Vecten 1,865 1,820 2,275 4,730 4,730 4,730DateofvestingofFrancePlanshares 20/05/2013 16/02/2014 15/02/2015 21//03/2016 20/02/2017 19/02/2018

EnddateofholdingperiodforFrancePlan 20/05/2015 16/02/1016 15/02/2017 21/03/2018 20/02/2019 19/02/2020

Enddateofvesting andholdingperiodforInternationalPlanshares

20/05/2014 16/02/2015 15/02/2016 21/03/2017 20/02/2018 19/02/2019

Performanceconditions

PerformanceoftheERAMET

shareprice(totalshareholder

returnorTSR)inrelationtothatofcomparable

companieslistedontheStoxx600BasicResourcesindex(50%)and

theintrinsicperformanceoffinancial

indicators(50%)(operating

margin(currentoperatingincome/

revenue)andoperatingcashflow);progres-siveacquisition

over3 years

PerformanceoftheERAMET

shareprice(totalshareholder

returnorTSR)inrelationtothatofcomparable

companieslistedontheStoxx600BasicResourcesindex(50%)and

theintrinsicperformanceoffinancial




over3 years

PerformanceoftheERAMETsharepriceinrelationtothatofcomparable

companieslistedontheStoxx600BasicResources

index(50%)andintrinsicperformance

accordingtofinancial




over3 years



index(1/3)andintrinsicperformanceoffinancial

indicators(2/3)(operating



over3 years







over3 years







over3 years

Numberofsharesvested at31/12/2015 (InternationalPlan)

4,397 3,545

Numberofsharesvestedat31/12/2015(FrancePlan) 13,097 8,008 13,836 0 0 0

Cumulativenumberofcancelledorlapsedshares 47,514 60,102 49,074 5,900 4,190 1,741

Performancesharesremainingatend offinancialyear

0 0 26,125 139,140 139,320 131,087

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The performance conditions are calculatedoverathree-yearperiodand,forthe2010,2011and 2012 performance share plans, are asfollows: therelativeperformanceofERAMETsharesfor50%ofthesharegrant(thisinvolvescomparing the change in total shareholderreturnovera three-yearperiodwith thatofapanel composed of around 30 comparablecompaniesontheStoxx600BasicResourcesIndex,withtheperformanceconditionsbeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel)andtheintrinsicper-formanceachieved,inthreeinstalmentsoverathree-yearperiod,ofcertainfinancialindicatorsfor50%ofthesharegrant(25%operatingmar-

gin (current operating income/revenue), and25%operatingcash-flow,withannual targetsrelatedtotheCompany’sbudgetedtargetsandwith performance conditions only being fullyachievedwhenthesetargetsaresignificantlyout-performed).Takingintoconsiderationtheperformanceconditions,thevestingrateasapercentageof shares awarded is as follows:2010,27.4%—2011,15.6%—2012,22.4%.

For the 2013, 2014 and 2015 performanceshare plans the performance conditions arecalculatedoverathree-yearperiod,asfollows:the relative performance of ERAMET sharesforone-thirdof thesharegrant (this involvescomparing the change in total shareholder

returnovera three-yearperiodwith thatofapanel composed of around 30 comparablecompaniesontheStoxx600BasicResourcesIndex,withtheperformanceconditionsbeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel)andtheintrinsicper-formanceachieved,inthreeinstalmentsoverathree-yearperiod,ofcertainfinancialindicatorsfor two-thirds of the share grant (one-thirdoperatingmargin (current operating income/revenue), and one-third operating cash-flow,withannualtargetsrelatedtotheCompany’sbudgetedtargetsandwithperformancecon-ditions only being fully achievedwhen thesetargetsaresignificantlyout-performed).

Table 10—Summary table of corporate officers

CORPORATEOFFICERSCONTRACTOFEMPLOYMENT

SUPPLEMENTARYPENSIONPLAN

COMPENSATION ORBENEFITSFALLINGDUE,ORWHICHMAYFALLDUE,ASARESULTOFDEPARTUREORACHANGEOFPOSITION

COMPENSATIONRELATEDTOANON-COMPETITIONCLAUSE

Patrick BuffetChairmanandCEOStartoftermofoffice:25/04/2007Endoftermofoffice:AGMtoapprove2014financialstatements

No Yes Yes No

Georges DuvalDeputyCEOStartoftermofoffice:23/05/2002EndoftermofofficeasDirector:AGMtoapprove2014financialstatements

Yes—suspended Yes

Yes(withinlimitofsuspendedcontractofemployment)

No

Bertrand MadelinDeputyCEOStartoftermofoffice:01/01/2008Endoftermofoffice:27/11/2015

Yes—suspended Yes


No

Philippe VectenDeputyCEOStartoftermofoffice:23/05/2007Endoftermofoffice:openended

Yes—suspended Yes


No

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4.3.2 REMUNERATION ITEMS FALLING DUE OR GRANTED TO EACH EXECUTIVE CORPORATE OFFICER FOR THE FINANCIAL YEAR ENDED, SUBJECT TO SHAREHOLDER APPROVALPursuant to recommendation 24.3 of theAFEP/MEDEFcodedatedJune2013which,inaccordancewitharticleL. 225-37oftheFrenchCommercial Code is the code of reference

applicable to the Company, remunerationitemsfallingdueorgrantedtoeachExecutiveCorporate Officer of the Company for thefinancialyearendedaresubjecttoshareholderapprovalandconsistof:

– thefixedportion;

– theannualvariableportionand,asthecasemaybe,themulti-yearvariableportion,withthetargetsusedtodeterminethatvariableportion;

– exceptionalremunerationitems;

– stockoptions,performancesharesandanyotherlong-termremunerationitem;

– compensationrelatedtotakinguporleavingapost;

– theSupplementaryPensionPlan;and

– benefitsofanykind.

Byvotingonthe7th,8th,9thand10th resolutions,shareholdersareaskedtoapprovetheremu-neration itemsfallingdueorgranted toeachExecutive Corporate Officer, for the financialyearended31 December2015.

Consequently, shareholders are asked toconsiderthefollowingremunerationitemsforeachExecutiveCorporateOfficer.

4.3.2.1 PATRICK BUFFET, CHAIRMAN AND CEO

REMUNERATION ITEMS SUBJECT TO SHAREHOLDER APPROVAL

Remuneration items falling due or granted for the financial year ended

AMOUNTORCARRY-INGVALUESUBJECTTOSHAREHOLDERVOTE PRESENTATION

Nosuspendedcontractofemployment;PatrickBuffethasastraightforwardcorporateofficercontract

Fixedremuneration €807,365 (amountpaid)

Grossfixedremunerationforthefinancialyear2015approvedbytheBoardofDirectorson19 February2015attherecommendationoftheRemunerationCommittee.

Annualvariableremuneration

€377,921 (amountapprovedfor2015)

Atitsmeetingof17 February2016,theBoardofDirectors,attherecommendationoftheRemunerationCommitteeandfollowingvalidationoffinancialitemsbytheAuditCommittee,approvedtheamountofvariableremunerationofPatrickBuffetforthefinancialyear2015at€472,401(41.79%ofhismaximumpermittedvariableremuneration).InviewoftheparticularlychallengingeconomicsituationcurrentlyexperiencedbytheERAMETgroup,PatrickBuffethasvoluntarilywaived20%ofhisvariableportionasinitiallyvalidatedbytheBoardofDirectors.Thevariableportionisbasedoncertaincriteriaandonspecifictargets,whoseselectionandweightingareproposedbytheRemunerationCommitteeandapprovedbytheBoard ofDirectors.Thetargetsfor2015were:(i) theCompany’stradingresults(CurrentOperatingIncome);(ii) theCompany’sfinancialposition(netcash);(iii) theaccomplishment,vis-à-visthebudgetandschedule,ofmajorindustrialprojectsor

ofdevelopmentactivities;(iv) “managerial”resultsintermsofteammotivationandleadership,strategicproposals,

projectsandgoalsinthefieldsofhealth,safety,theenvironmentandindustrialrisk.Thelevelofaccomplishmentrequired,foreachofthesecriteria,ispreciselyestablishedatthestartofthefinancialyearbutcannotbedisclosedtothegeneralpublicforreasonsrelatedtotradesecretsandconfidentiality.Thevariableportionmaynotexceed140%ofgrossannualfixedremuneration forthe ChairmanandCEO.In2015,theportionrelatedtoquantitativetargetsrepresented60%ofmaximumannualvariableremuneration.

Deferredvariableremuneration

N/A Mr. Buffetdoesnothaveanydeferredvariableremuneration.

106



Multi-yearvariableremuneration

N/A Mr. Buffetdoesnothaveanymulti-yearvariableremuneration.

Exceptionalremuneration

N/A Mr. Buffetdoesnothaveanyexceptionalremuneration.

Performancesharesorstockoptionsoranyotherlong-termremunerationitem

22,405 perfor-manceshares=€1,346,989(applyingthemethodusedintheconsolidatedfinancialstate-ments,fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors)Options=N/AOtheritems=N/A

On19 February2015,attherecommendationoftheRemunerationCommitteeandfollowingtheapprovaloftheGeneralShareholders’Meetingof15 May2012(10th resolution),theBoardofDirectorsgrantedPatrickBuffet22,405 performanceshares(thatis,0.08%ofsharecapital),foravalueof€1,346,989applyingthemethodusedintheconsolidatedfinancialstatements(fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors).Thenumberofsharesgranted,asspecifiedabove,correspondstothemaximumnumberofsharesthatmaybeacquired,fullyorpartially,threeyearsfollowinggrantingprovidedthattheperformanceconditionsarefullymetandtheCompany’sannualtargets,assetoutinthebudget,havebeensignificantlyout-performed.Furthermore,theseperformancesharesaresubjecttoanadditionaltwo-yearholdingperiodand20%ofthesesharesareprohibitedfromsaleuntiltheendofthecorporateofficer’stermofoffice.Theseveryrigorousperformanceconditions,calculatedoverathree-yearperiod,areasfollows:• relativeperformanceoftheERAMETshareprice,foronethirdofthesharegrant(thisinvolvescomparingthechangeintotalshareholderreturnoverathree-yearperiodwiththatofapanelcomposedof57 comparablecompaniesontheEuromoneyGlobalMiningIndex;DiversifiedMetals&Mining,Steel;withtheperformanceconditionsonlybeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel);and

• intrinsicperformanceachievedoverathree-yearperiodofcertainfinancialindicatorsfor2/3(two-thirds)ofthesharegrant(one-thirdoperatingmargin(currentoperatingincome/revenue)andone-thirdoperatingcash-flow,withannualtargetsrelatedtotheCompany’sbudgetedtargets;thisperformanceconditionisonlyfullyachievedintheeventofsignificantout-performanceofthesetargets).

Forinformationpurposes,the2013performanceshareplan,whichreacheditsconclusionin2015,allowedfortheacquisitionofjust16.37%ofallsharesoriginallygranted.Furthermore,thesesharesaresubjecttoanadditionaltwo-yearholdingperiod.Mr. Buffetwasnotgrantedanystockoptionsoranyotherlong-termremunerationitemduringthefinancialyearended31 December2015.

Directors’fees €65,222 (grossamountbeforedeductions)

InaccordancewiththerulesfortheallocationofDirectors’feesapplicabletoallERAMETDirectors,PatrickBuffetreceivedERAMETDirectors’fees.Healsoreceivedagrossamountof€28,000fromCOMILOG,inaccordancewiththerulesapplicabletoalldirectorsofthatcompany.InviewofthecurrentsituationofSociétéLe NickelSLN,hechosetowaivetheDirectors’feesduetohimfor2015,asdidallotherdirectorsofthatcompany.

Benefitsofanyotherkind

€8,686 (carryingvalue)

Mr. BuffethasaCompanycar.

107


Remuneration items falling due or granted for the financial year ended which have been or are subject to shareholder approval pursuant to the procedures related to regulated agreements and commitments

AMOUNTSUBJECTTOSHAREHOLDERVOTE PRESENTATION

Compensationrelatedtotakinguporleavingapost

Nopayment FollowingthereappointmentoftheChairmanandCEOtothatrole,decidedbytheBoardofDirectorson29 May2015,andattherecommendationoftheRemuner-ationCommittee,on29 May2015theBoardofDirectorsvotedunanimously,withtheabstentionoftheChairmanandCEO,toretainallelementsoftheremunerationoftheChairmanandCEOandalltheprovisionsofhiscorporateofficer’scontractdated20 February2008(incorporatingalltheamendmentsdecidedsincethenbytheCompany’sBoardofDirectorsattherecommendationoftheRemunerationCommittee).However,twochangesweremadetotheseverancepayfallingduetotheChairmanandCEOintheeventofhisdeparturefromtheCompany(asaresultofforcedresignation,cancellationornon-renewalofhistermofofficeormodifica-tionoftheconditionsunderwhichheoriginallyjoinedtheERAMETgroup):Theamountofseverancepaywhichmayfalldueisequaltotwice—insteadofthreetimes,asitwaspreviously—thelastgrossannualfixedremuneration,plustwice—insteadofthreetimes—theaveragegrossannualvariableremunerationreceivedinthelastthreecompleteyearspriortohisdeparture.Theseverancepaybenefitspecifiedinhiscorporateofficercontractisconditionaluponthefulfilmentofperformanceconditions:thetotalgrossvariableremuneration(itselfsubjecttospecificperformanceconditions)receivedoverthefinalthreefullfinancialyearsofhistermofofficemustbe35%ormoreofthetotalgrossannualfixedremunerationreceivedduringthesamethree-yearperiod—insteadof20%asitwaspreviously.Consequently,thesearrangementsruleoutpaymentofsuchabenefitshouldtheChairmanandCEOfailtoachievehistargets.InaccordancewiththeprovisionsofArticleL. 225-42-1oftheFrenchCommercialCode,thesemodifiedarrangementsshallbethesubjectofaresolutionputbeforetheannualGeneralShareholders’Meetingof29 May2016.

Non-competitioncompensation

N/A PatrickBuffetisnotboundbyanon-competitionclause.

SupplementaryPensionPlan

Nopayment PatrickBuffetbenefitsfromtheexistingdefinedbenefitsupplementarypensionplanforERAMETexecutives,entitlinghimtoasupplementarypensionthatmaynotexceed35%ofthereferencesalarydefinedintheinternalplanregulations,withsaidreferencesalarybeingcappedattwenty-fivetimestheannualsocialsecurityceiling(ASSC).Thereferenceperiodusedtocalculatethereferencesalaryistwelvemonthsfortheannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasisoffullyears,forthevariableportion.InPatrickBuffet’scase,supplementarypensionincomeiscappedat35%of25 timesASSC.ThisarrangementwasauthorisedbytheBoardofDirectorson30 July2008andapprovedbytheGeneralShareholders’Meetingof13 May2009(3rd resolution).Bywayofillustration,calculationmadeforMrPatrickBuffetbasedonthereferenceremunerationassetoutabove(fixed+averagevariableforthelastthreeyears)amountstoanannualgrossincomeof282,923eurosasof31/12/2015(beforetaxesandsocialcharges),whichis17.4%ofhisglobalgrossremuneration(fixedgrossannualremuneration+averagegrossannualvariableremunerationforthelastthreeyearsincludingtheyear2015).Becauseasignificantreductionrateapplyontheannualamountpaid(reductionfrom35%to26.25%)intheeventofanearlydrawdownofpensionbenefitsbetween60and65yearsofage.Reminder:theseArticle39supplementarypensionplanarrangementsofERAMETprovidethewholepensionplanwithaverywellbalancedandreasonablestructure.

Supplementaryinsuranceschemeandhealthcareplan

PatrickBuffetbenefitsfromthesupplementaryhealthcareplanandthesupplemen-tarydisabilityandlifeinsuranceschemeoperatingwithintheERAMETgroup.Inaccordancewiththeproceduresrelatedtoregulatedagreementsandcommit-ments,thiscommitmentwasauthorisedbytheBoardofDirectorson17 February2010andapprovedbytheGeneralShareholders’Meetingof20 May2010(3rd resolution).

ASSEDICentitlement N/A PatrickBuffetdoesnotbenefitfromsuchentitlement.Customaryseverancepayments(collectivebargainingagreement)

N/A PatrickBuffetdoesnotbenefitfromanycustomaryseveranceindemnityunderacollectivebargainingagreement,whetheruponretirementorupondepartureforanyotherreason.

108


4.3.2.2 GEORGES DUVAL, DEPUTY CEO




GeorgesDuvalhasacontractofemployment,suspendedthroughouthistermofofficeontheBoard.

Fixedremuneration €326,600(amountpaid)

Grossfixedremunerationforthefinancialyear2015approvedbytheBoardofDirectorson19 February2015attherecommendationoftheRemunerationCommittee.

Annualvariableremuneration €88,063(amountapprovedfor2015)

Atitsmeetingof17 February2016,theBoardofDirectors,attherecommen-dationoftheRemunerationCommitteeandfollowingvalidationoffinancialitemsbytheAuditCommittee,approvedtheamountofvariableremunerationofGeorgesDuvalforthefinancialyear2015at€110,079(48.15%ofhismaximumpermittedvariableremuneration).InviewoftheparticularlychallengingeconomicsituationcurrentlyexperiencedbytheERAMETgroup,GeorgesDuvalhasvoluntarilywaived20%ofhisvariableportionasinitiallyvalidatedbytheBoardofDirectors.Thevariableportionisbasedoncertaincriteriaandonspecifictargets,whoseselectionandweightingareproposedbytheRemunerationCommitteeandapprovedbytheBoardofDirectors.Thetargetsfor2015were:(i) theCompany’stradingresults(CurrentOperatingIncome);(ii) theCompany’sfinancialposition(netcash);(iii) theaccomplishment,vis-à-visthebudgetandschedule,ofmajor

industrialprojectsorofdevelopmentactivities;(iv) “managerial”resultsintermsofteammotivationandleadership,strategic

proposals,projectsandgoalsinthefieldsofhealth,safety,theenviron-mentandindustrialrisk.

Thelevelofaccomplishmentrequired,foreachofthesecriteria,ispreciselyestablishedatthestartofthefinancialyearbutcannotbedisclosedtothegeneralpublicforreasonsrelatedtotradesecretsandconfidentiality.Thevariableportionmaynotexceed70%ofgrossannualfixedremunerationfortheDeputyCEOs.In2015,theportionrelatedtoquantitativetargetsrepresented60%ofmaximumannualvariableremuneration.

Deferredvariableremuneration N/A Mr. Duvaldoesnothaveanydeferredvariableremuneration.Multi-yearvariableremuneration N/A Mr. Duvaldoesnothaveanymulti-yearvariableremuneration.Exceptionalremuneration N/A Mr. Duvaldoesnothaveanyexceptionalremuneration.

109




3,000 performanceshares=€180,360(applyingthemethodusedintheconsolidatedfinancialstate-ments,fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors)Options=N/AOtheritems=N/A

On19 February2015,attherecommendationoftheRemunerationCom-mitteeandfollowingtheapprovaloftheGeneralShareholders’Meetingof15 May2012(10th resolution),theBoardofDirectorsgrantedGeorgesDuval5,085 performanceshares(thatis,0.01%ofsharecapital),foravalueof€180,360applyingthemethodusedintheconsolidatedfinancialstatements(fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors).Thenumberofsharesgranted,asspecifiedabove,correspondstothemaximumnumberofsharesthatmaybeacquired,fullyorpartially,threeyearsfollowinggrantingprovidedthattheperformanceconditionsarefullymetandtheCompany’sannualtargets,assetoutinthebudget,havebeensignificantlyout-performed.Furthermore,theseperformancesharesaresubjecttoanadditionaltwo-yearholdingperiodand20%ofthesesharesareprohibitedfromsaleuntiltheendofthecorporateofficer’stermofoffice.Theseveryrigorousperformanceconditions,calculatedoverathree-yearperiod,areasfollows:• relativeperformanceoftheERAMETshareprice,foronethirdofthesharegrant(thisinvolvescomparingthechangeintotalshareholderreturnoverathree-yearperiodwiththatofapanelcomposedof57 comparablecompaniesontheEuromoneyGlobalMiningIndex;DiversifiedMetals&Mining,Steel;withtheperformanceconditionsonlybeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel);and


Forinformationpurposes,the2013performanceshareplan,whichreacheditsconclusionin2015,allowedfortheacquisitionofjust16.37%ofallsharesoriginallygranted.Furthermore,thesesharesaresubjecttoanadditionaltwo-yearholdingperiod.Mr. Duvalwasnotgrantedanystockoptionsoranyotherlong-termremunera-tionitemduringthefinancialyearended31 December2015.

Directors’fees €27,640 (grossamountbeforedeductions)

InaccordancewiththerulesfortheallocationofDirectors’feesapplicabletoallERAMETDirectors,GeorgesDuvalreceivedERAMETDirectors’fees.

Benefitsofanyotherkind €3,612 (carryingvalue)

Mr. DuvalhasaCompanycar.

110





Nopayment Mr. Duvaldoesnotbenefitfromanycommitmentorundertakingrelatedtoseveranceindemnityunderthetermsofhiscorporateoffice.GeorgesDuval’ssuspendedemploymentcontractmakesprovisionforthepayment,intheeventofhisdismissal,retirementorpensioning-off,ofacontractualindemnityamountingto18 months’salary,calculatedonthebasisofhisreferenceremuneration(fixedplusvariable)asanemployee,whichisnotcombinedwiththecustomarypaymentscalculatedbyapplicationofthenationalcollectivebargainingagreementforexecutivesinthemetallurgyindustry.


N/A GeorgesDuvalisnotboundbyanon-competitionclause.

SupplementaryPensionPlan Nopayment GeorgesDuvalbenefitsfromtheexistingdefinedbenefitsupplementarypensionplanforERAMETexecutives,entitlinghimtoasupplementarypensionthatmaynotexceed35%ofthereferencesalarydefinedintheinternalplanregulations,withsaidreferencesalarybeingcappedattwenty-fivetimestheannualsocialsecurityceiling(ASSC). Thereferenceperiodusedtocalculatethereferencesalaryistwelvemonthsfortheannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasisoffullyears,forthevariableportion.ThisarrangementwasauthorisedbytheBoardofDirectorson30July2008andapprovedbytheGeneralShareholders’Meetingof13May2009(3rdresolution).ThisarrangementwasauthorisedbytheBoardofDirectorson30July2008andapprovedbytheGeneralShareholders’Meetingof13May2009(3rdresolution).Bywayofillustration,calculationmadeforMrGeorgesDuvalbasedonthereferenceremunerationassetoutabove(fixed+averagevariableforthelastthreeyears)amountstoanannualgrossincomeof148,058eurosasof31/12/2015(beforetaxesandsocialcharges),whichis33%ofhisglobalgrossremuneration(fixedgrossannualremuneration+averagegrossannualvariableremunerationforthelastthreeyearsincludingtheyear2015).Reminder:theseArticle39supplementarypensionplanarrangementsofERAMETprovidethewholepensionplanwithaverywellbalancedandreasonablestructure.


GeorgesDuvalbenefitsfromthesupplementaryhealthcareplanandthesupplementarydisabilityandlifeinsuranceschemeoperatingwithintheERAMETgroup.Inaccordancewiththeproceduresrelatedtoregulatedagreementsandcommitments,thiscommitmentwasauthorisedbytheBoardofDirectorson17 February2010andapprovedbytheGeneralShareholders’Meetingof20 May2010(3rd resolution).

111


4.3.2.3 BERTRAND MADELIN, DEPUTY CEO, UP TO 27 NOVEMBER 2015




BertrandMadelinhasacontractofemployment,suspendedthroughouthistermofofficeontheBoard.


GrossfixedremunerationapprovedbytheBoardofDirectorson19 February2015attherecommendationoftheRemunerationCommittee,paidfrom1 Januaryto27 November2015(endofhistermofofficeasacorporateofficer)



Atitsmeetingof17 February2016,theBoardofDirectors,attherecommendationoftheRemunerationCommitteeandfollowingvalidationoffinancialitemsbytheAuditCommittee,approvedtheamountofvariableremunerationofBertrandMadelinforthefinancialyear2015(from1 Januaryto27 November2015)at€91,438(50%ofhismaximumpermittedvariableremuneration).Thevariableportionisbasedoncertaincriteriaandonspecifictargets,whoseselectionandweightingareproposedbytheRemunerationCommitteeandapprovedbytheBoardofDirectors.Thetargetsfor2015were:(i) theCompany’stradingresults(CurrentOperatingIncome);(ii) theCompany’sfinancialposition(netcash);(iii) theaccomplishment,vis-à-visthebudgetandschedule,ofmajorindustrialprojectsorof

developmentactivities;(iv) “managerial”resultsintermsofteammotivationandleadership,strategicproposals,

projectsandgoalsinthefieldsofhealth,safety,theenvironmentandindustrialrisk.Thelevelofaccomplishmentrequired,foreachofthesecriteria,ispreciselyestablishedatthestartofthefinancialyearbutcannotbedisclosedtothegeneralpublicforreasonsrelatedtotradesecretsandconfidentiality.Thevariableportionmaynotexceed70%ofgrossannualfixedremunerationfortheDeputyCEOs.In2015,theportionrelatedtoquantitativetargetsrepresented60%ofmaximumannualvariableremuneration.


N/A Mr. Madelindoesnothaveanydeferredvariableremuneration.


N/A Mr. Madelindoesnothaveanymulti-yearvariableremuneration.


N/A Mr. Madelindoesnothaveanyexceptionalremuneration.

112




3,970 performanceshares=€238,676(applyingthemethodusedintheconsolidatedfinancialstatements:fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors)Options=N/AOtheritems=N/A

On19 February2015,attherecommendationoftheRemunerationCommitteeandfollowingtheapprovaloftheGeneralShareholders’Meetingof15 May2012(10th resolution),theBoardofDirectorsgrantedBertrandMadelin3,970 performanceshares(thatis,0.01%ofsharecapital),foravalueof€238,676applyingthemethodusedintheconsolidatedfinancialstatements(fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors).Thenumberofsharesgranted,asspecifiedabove,correspondstothemaximumnumberofsharesthatmaybeacquired,fullyorpartially,threeyearsfollowinggrantingprovidedthattheperformanceconditionsarefullymetandtheCompany’sannualtargets,assetoutinthebudget,havebeensignificantlyout-performed.Furthermore,theseperformancesharesaresubjecttoanadditionaltwo-yearholdingperiodand20%ofthesesharesareprohibitedfromsaleuntiltheendofthecorporateofficer’stermofoffice.Theseveryrigorousperformanceconditions,calculatedoverathree-yearperiod,areasfollows:• relativeperformanceoftheERAMETshareprice,foronethirdofthesharegrant(thisinvolvescomparingthechangeintotalshareholderreturnoverathree-yearperiodwiththatofapanelcomposedof57 comparablecompaniesontheEuromoneyGlobalMiningIndex;DiversifiedMetals&Mining,Steel;withtheperformanceconditionsonlybeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel);and


Forinformationpurposes,the2013performanceshareplan,whichreacheditsconclusionin2015,allowedfortheacquisitionofjust16.37%ofallsharesoriginallygranted.Furthermore,thesesharesaresubjecttoanadditionaltwo-yearholdingperiod.Mr. Madelinwasnotgrantedanystockoptionsoranyotherlong-termremunerationitemduringthefinancialyearended31 December2015.

Directors’fees Nopayment BertrandMadelindidnotreceiveanyDirectors’feesfromERAMET,sinceheisnotadirectorofERAMETS.A.InviewofthecurrentsituationofSociétéLe NickelSLN,hechosetowaivetheDirectors’feesduetohimfor2015,asdidallotherdirectorsofthatcompany.


€4,726 (carryingvalue)

Mr. MadelinhasaCompanycar.

113





Nopayment Mr. Madelindidnotbenefitfromanycommitmentorundertakingrelatedtoseveranceindemnityunderthetermsofhiscorporateoffice.BertrandMadelin’ssuspendedemploymentcontractmakesprovisionforthepayment,intheeventofdismissal,retirementorpensioning-off,ofacustomaryindemnity,calculatedonthebasisofthenationalcollectivebargainingagreementforexecutivesinthemetallurgyindustryandonthebasisofhisreferenceremuneration(fixedplusvariable)asanemployee.Thecollectivebargainingagreementprovidesforamaximumof18 months’remunerationformaximumlengthofserviceof28or30 yearsdependingontheageofthepersonsconcernedupontheirdeparture.IntheeventofachangeincontrolofERAMETandtheterminationofanemploymentcontractdeemedasbeingattributabletotheemployer,aspecificguarantee,whichmaynotbecombinedwithotherindemnitiesapplicableundercontractsorcollectivebargainingagreements,wasdecideduponin2005andwouldbeenforceable.Itrepresentsanindemnityequivalenttothreeyears’remuneration(fixed+variable).


N/A BertrandMadelinisnotboundbyanon-competitionclause.

SupplementaryPensionPlan Nopayment BertrandMadelinbenefitsfromtheexistingdefinedbenefitsupplementarypensionplanforERAMETexecutives,entitlinghimtoasupplementarypensionthatmaynotexceed35%ofthereferencesalarydefinedintheinternalplanregulations,withsaidreferencesalarybeingcappedattwenty-fivetimestheannualsocialsecurityceiling(ASSC).Thereferenceperiodusedtocalculatethereferencesalaryistwelvemonthsfortheannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasisoffullyears,forthevariableportion.ThisarrangementwasauthorisedbytheBoardofDirectorson30 July2008andapprovedbytheGeneralShareholders’Meetingof13 May2009(3rd resolution).Bywayofillustration,calculationmadeforMrBertrandMadelinbasedonthereferenceremunerationassetoutabove(fixed+averagevariableforthelastthreeyears)amountstoanannualgrossincomeof112,789eurosasof31/12/2015(beforetaxesandsocialcharges),whichis28.4%ofhisglobalgrossremuneration(fixedgrossannualremuneration+averagegrossannualvariableremunerationforthelastthreeyearsincludingtheyear2015).Becauseasignificantreductionrateapplyontheannualamountpaid(reductionfrom35%to26.25%)intheeventofanearlydrawdownofpensionbenefitsbetween60and65yearsofage.Reminder:theseArticle39supplementarypensionplanarrangementsofERAMETprovidethewholepensionplanwithaverywellbalancedandreasonablestructure.


BertrandMadelinbenefitedfromthesupplementaryhealthcareplanandthesupple-mentarydisabilityandlifeinsuranceschemeoperatingwithintheERAMETgroup.Inaccordancewiththeproceduresrelatedtoregulatedagreementsandcommitments,thiscommitmentwasauthorisedbytheBoardofDirectorson17 February2010andapprovedbytheGeneralShareholders’Meetingof20 May2010(3rd resolution).

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4.3.2.4 PHILIPPE VECTEN, DEPUTY CEO




PhilippeVectenhasacontractofemployment,suspendedthroughouthistermofofficeontheBoard.


Grossfixedremunerationforthefinancialyear2015approvedbytheBoardofDirectorson19 February2015attherecommendationoftheRemunerationCommitteeandreviewedattheBoardofDirectorsmeetingof22 December2015attherecommendationoftheRemuner-ationCommittee.



Atitsmeetingof17 February2016,theBoardofDirectors,attherecommendationoftheRemunerationCommitteeandfollowingvalidationoffinancialitemsbytheAuditCommittee,approvedtheamountofvariableremunerationofPhilippeVectenforthefinancialyear2015at€137,822(64.15%ofhismaximumpermittedvariableremuneration).InviewoftheparticularlychallengingeconomicsituationcurrentlyexperiencedbytheERAMETgroup,PhilippeVectenhasvoluntarilywaived20%ofhisvariableportionasinitiallyvalidatedbytheBoardofDirectors.Thevariableportionisbasedoncertaincriteriaandonspecifictargets,whoseselectionandweightingareproposedbytheRemunerationCommitteeandapprovedbytheBoardofDirectors.Thetargetsfor2015were:(i) theCompany’stradingresults(CurrentOperatingIncome);(ii) theCompany’sfinancialposition(netcash);(iii) theaccomplishment,vis-à-visthebudgetandschedule,ofmajorindustrialprojectsorof

developmentactivities;(iv) “managerial”resultsintermsofteammotivationandleadership,strategicproposals,

projectsandgoalsinthefieldsofhealth,safety,theenvironmentandindustrialrisk.Thelevelofaccomplishmentrequired,foreachofthesecriteria,ispreciselyestablishedatthestartofthefinancialyearbutcannotbedisclosedtothegeneralpublicforreasonsrelatedtotradesecretsandconfidentiality.Thevariableportionmaynotexceed70%ofgrossannualfixedremunerationfortheDeputyCEOs.In2015,theportionrelatedtoquantitativetargetsrepresented60%ofmaximumannualvariableremuneration.


N/A Mr. Vectendoesnothaveanydeferredvariableremuneration.


N/A Mr. Vectendoesnothaveanymulti-yearvariableremuneration.


N/A Mr. Vectendoesnothaveanyexceptionalremuneration.

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4,730 perfor-manceshares=€284,368(applyingthemethodusedintheconsolidatedfinancialstate-ments:fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors)Options=N/AOtheritems=N/A

On19 February2015,attherecommendationoftheRemunerationCommitteeandfollowingtheapprovaloftheGeneralShareholders’Meetingof15 May2012(10th resolution),theBoardofDirectorsgrantedPhilippeVecten4,730 performanceshares(thatis,0.02%ofsharecapital),foravalueof€284,368applyingthemethodusedintheconsolidatedfinancialstatements(fairvalueoftheshareonthedayofgrantingbytheBoardofDirectors).Thenumberofsharesgranted,asspecifiedabove,correspondstothemaximumnumberofsharesthatmaybeacquired,fullyorpartially,threeyearsfollowinggrantingprovidedthattheperformanceconditionsarefullymetandtheCompany’sannualtargets,assetoutinthebudget,havebeensignificantlyout-performed.Furthermore,theseperformancesharesaresubjecttoanadditionaltwo-yearholdingperiodand20%ofthesesharesareprohibitedfromsaleuntiltheendofthecorporateofficer’stermofoffice.Theseveryrigorousperformanceconditions,calculatedoverathree-yearperiod,areasfollows:• relativeperformanceoftheERAMETshareprice,foronethirdofthesharegrant(thisinvolvescomparingthechangeintotalshareholderreturnoverathree-yearperiodwiththatofapanelcomposedof57 comparablecompaniesontheEuromoneyGlobalMiningIndex;DiversifiedMetals&Mining,Steel;withtheperformanceconditionsonlybeingfullyachievediftheERAMETshareisrankedinthetop15%ofthepanel);and


Forinformationpurposes,the2013performanceshareplan,whichreacheditsconclusionin2015,allowedfortheacquisitionofjust16.37%ofallsharesoriginallygranted.Furthermore,thesesharesaresubjecttoanadditionaltwo-yearholdingperiod.PhilippeVectenwasnotgrantedanystockoptionsduringthefinancialyearended31 Decem-ber2015.

Directors’fees €42,181 (grossamountbe-foredeductions)

PhilippeVectendidnotreceiveanyDirectors’feesfromERAMET,sinceheisnotadirectorofERAMETS.A.Hereceivedagrossamountof€42,181forhisattendanceatBoardmeetingsofCOMILOGanditssubsidiaries,inaccordancewiththerulesapplicabletoalldirectorsofthosecompanies.


€6,698 Mr. VectenhasaCompanycar.

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Nopayment PhilippeVectendoesnotbenefitfromanycommitmentorundertakingrelatedtoseveranceindemnityunderthetermsofhiscorporateoffice.PhilippeVecten’ssuspendedemploymentcontractmakesprovisionforthepayment,intheeventofdismissal,retirementorpensioning-off,ofacustomaryindemnity,calculatedonthebasisofthenationalcollectivebargainingagreementforexecutivesinthemetallurgyindustryandonthebasisofhisreferenceremuneration(fixedplusvariable)asanemployee.Thecollectivebargainingagreementprovidesforamaximumof18 months’remunerationformaximumlengthofserviceof28or30 yearsdependingontheageofthepersonsconcernedupontheirdeparture.IntheeventofachangeincontrolofERAMETandtheterminationofanemploymentcontractdeemedasbeingattributabletotheemployer,aspecificguarantee,whichmaynotbecombinedwithotherindemnitiesapplicableundercontractsorcollectivebargainingagreements,wasdecideduponin2005andwouldbeenforceable.Itrepresentsanindemnityequivalenttothreeyears’remuneration(fixed+variable).


N/A PhilippeVectenisnotboundbyanon-competitionclause.

SupplementaryPensionPlan Nopayment PhilippeVectenbenefitsfromtheexistingdefinedbenefitsupplementarypensionplanforERAMETexecutives,entitlinghimtoasupplementarypensionthatmaynotexceed35%ofthereferencesalarydefinedintheinternalplanregulations,withsaidreferencesalarybeingcappedattwenty-fivetimestheannualsocialsecurityceiling(ASSC).Thereferenceperiodusedtocalculatethereferencesalaryistwelvemonthsfortheannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasisoffullyears,forthevariableportion.ThisarrangementwasauthorisedbytheBoardofDirectorson30 July2008andapprovedbytheGeneralShareholders’Meetingof13 May2009(3rd resolution).Bywayofillustration,calculationmadeforMrPhilippeVectenbasedonthereferenceremunerationassetoutabove(fixed+averagevariableforthelastthreeyears)amountstoanannualgrossincomeof167,694eurosasof31/12/2015(beforetaxesandsocialcharges),whichis35%ofhisglobalgrossremuneration(fixedgrossannualremuneration+averagegrossannualvariableremunerationforthelastthreeyearsincludingtheyear2015).Reminder:theseArticle39supplementarypensionplanarrangementsofERAMETprovidethewholepensionplanwithaverywellbalancedandreasonablestructure.


PhilippeVectenbenefitsfromthesupplementaryhealthcareplanandthesupplemen-tarydisabilityandlifeinsuranceschemeoperatingwithintheERAMETgroup.Inaccordancewiththeproceduresrelatedtoregulatedagreementsandcommitments,thiscommitmentwasauthorisedbytheBoardofDirectorson17 February2010andapprovedbytheGeneralShareholders’Meetingof20 May2010(3rd resolution).

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4.4 INFORMATION RELATING TO PENSION COMMITMENTS FOR GROUP’S CORPORAL OFFICERS – ARTICLE R. 225-104-1 OF THE FRENCH COMMERCE CODE AS IMPLEMENTED BY DECREE N°2016-182 OF 23 FEBRUARY 2016

a) Nameofthecommitmentconcerned

Corporateofficersareeligiblefortheexistingdefinedbenefitsupplementarypensionplan forERAMETexecutives.

b) Referencetolegalprovisionsidentifyingthecorrespondingscheme

Article39-5°oftheFrenchTaxcode

c) Conditionsforjoiningtheschemeandothereligibilityconditionstobenefitfromthescheme

Peoplewhohavecompletedatleasttwoyearsservicewiththecompanyandwhoseannualremuneration(fixedandvariable)exceeds5timestheannualsocialsecurityceilingareeligible forthisplan.Conditionstobenefitfromthescheme:beatleast60yearsold,haveendedhis/herprofessionalcareeratERAMEToroneoftheERAMETgroupcompaniesandfulfiltheeligibilitycriteriaforpensionbenefitsunderthebasicsocialsecuritypensionscheme.

d) Termsandconditionsfordetermin-ingthereferencesalarydeterminedbytheschemeinquestionandusedtocalculatetherightsofbeneficiaries

Thereferenceperiodusedtocalculatethereferencesalaryistwelvemonthsfortheannualfixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasisoffullyears,forthevariableportion.Thereisnoautomaticreevaluationfactorinthescheme.

e) Patternofvestingofrights Thearrangementdoesnotprovideforanyspecificannualrateofincreaseofpotentialpensionentitlements.

f) Existenceofaceilingandtheamountandtermsandconditionsfordeterminingtheceiling

Intheeventofsettlementoftheirpensionrightsvis-à-vissocialsecurity,theymaybeentitledtoasupplementarypensionthatmaynotexceed35%ofthereferencesalarydefinedintheplan’sinternalregulations,withsaidreferencesalarybeingcapped,inthesameregulations,attwenty-fivetimestheannualsocialsecurityceiling.Asignificantreductionrateapplyontheannualamountpaid(reductionfrom35%to26.25%) intheeventofanearlydrawdownofpensionbenefitsbetween60and65yearsofage.

g) Termsandconditionsforfundingthebenefit

ERAMETsubscribedaninsuranceplanwithanauthorisedcompany.ContributionsareentirelyfinancedbyERAMET,theyareglobalized,donotcreatedanyindividualrightpriortoeligibility tothesupplementarypensionplanandarenotallocatedtoanindividualaccountopenedinthenamesofpotentialbeneficiaries.

h) Estimatedamountoftheannuityasoftheendofthefinancialyearperiod

Estimatedgrossannualannuity(beforetaxesandsocialcharges)foreachcorporateofficer:• P.Buffet:€282,923,whichamountsto17.4%ofhisglobalgrossremuneration(annualgross fixedportionandtheaverageofthethreelastvariableremunerations,calculatedonthebasis offullyearsincluding2015,forthevariableportion)foraretirementasoftheendof2015.

• G.Duval:€148,058,whichamountsto33%ofhisreferencesalary.• B.Madelin:€112,789,whichamountsto28.4%ofhisreferencesalary.• P.Vecten:€167,694,whichamountsto35%ofhisreferencesalary.

i) Relatedtaxandsocialsecuritychargespayablebythecompany

Intheestimatedamountasof31/12/2015,thereisnotaxorsocialsecuritycharge.ERAMEToptedforalevyoncontributionstotheinsurancecompany;nocontributionwaspaidin2015.

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Corporate Governance / Information relating to pension commitments

4.5 SECURITIES HELD BY MEMBERS OF THE BOARD OF DIRECTORS AND BY GENERAL MANAGEMENT

SomedirectorshaveamaterialinterestintheCompany’ssharecapital.

4.5.1 INDIRECT INTERESTSGeorges,ÉdouardandCyrilleDuvalareshareholdersofSORAMEandCEIR,managersofSORAMEandCEOsofCEIR.

4.5.2 DIRECT INTERESTSNodirectorhasadirectmaterialinterestinanyGroupsubsidiary.

4.5.3 LOANS AND GUARANTEES GRANTED OR ARRANGEDTheCompanyhasnotgrantedorarrangedanyloansorguaranteesforthebenefitofmembersoftheadministrative,managementorsupervisorybodies.

SHARESHELDAT31 DECEMBER2015 EQUITIES VOTINGRIGHTS

MichelAntsélévé 100 100ValérieBaudson 100 100PatrickBuffet 16,137 28,523SORAME 8,051,838 16,103,676CyrilleDuval 5,781 6,487ÉdouardDuval 941 1,571GeorgesDuval 2,189 3,837CEIR 1,783,996 3,567,992 (1)

NathaliedeLaFournière 100 100MarieAxelleGautier 4 4FSIEquation 6,810,317 13,620,634 (2)

PhilippeGomès 1 1CarolineGrégoire-Sainte-Marie 150 250ManoelleLepoutre 100 200PiaOlders 13 22ClaudeTendil 100 200FrédéricTona 204 204AntoineTreuille 160 320AlexisZajdenweber(Staterepresentative) n/a n/aPhilippeVecten 2,456 4,118

(1) Including 720,866 voting rights which are not exercisable until 21 July 2016 (see AMF Decision No. 214C1461 of 21 July 2014).(2) Including 2,751,872 voting rights which are not exercisable until 21 July 2016 (see AMF Decision No. 214C1461 of 21 July 2014).

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4.6 SPECIAL REPORT ON BONUS SHARE GRANTS

FY 2015

DearShareholders,

PursuanttotheprovisionsofArticleL. 225-197-4oftheFrenchCommercialCode,thisreportispresentedtotheGeneralShareholders’Meeting.

4.6.1 GRANTS TO CORPORATE OFFICERS OF THE COMPANYPLANOF19 FEBRUARY2015 NUMBEROFSHARES VALUE

PatrickBuffet 22,405 1,346,989GeorgesDuval 3,000 180,360BertrandMadelin 3,970 238,676PhilippeVecten 4,730 284,368

4.6.2 GRANTS TO NON-CORPORATE OFFICER EMPLOYEES OF THE COMPANY AND ITS SUBSIDIARIESPLANOF19 FEBRUARY2015 NUMBEROFSHARES VALUE

Jean-DidierDujardin 4,970 298,796MichelCarnec 4,295 258,215BertrandMadelin 3,970 238,676DenisHugelmann 3,585 215,530CatherineTissot-Colle 2,885 173,446PierreGugliermina 1,500 101,820PhilippeGundermann 1,500 90,180JeandeL’Hermite 1,300 78,156Marie-ChristineJaulmes 1,000 60,120PietroAmico 900 61,092

4.6.3 GRANTS TO ALL BENEFICIARY EMPLOYEESEachemployeeonthepayrollreceived2 bonusshares,subjecttolengthofserviceconditions,aspartofthebonusshareplanof19 February2015.

TheBoardofDirectors

120

Corporate Governance / Special report on bonus share grants

121

122

SUSTAINABLE DEVELOPMENT

Chapter 5

124 5.1 SUSTAINABLE DEVELOPMENT POLICY AND ORGANISATION

124 5.1.1 SUSTAINABLEDEVELOPMENTPOLICY

124 5.1.2 THEORGANISATIONOFSUSTAINABLEDEVELOPMENT

125 5.2 ENVIRONMENTAL CONSERVATION

125 5.2.1 CHALLENGES,OBJECTIVES,ORGANISATIONANDMEANSOFPREVENTINGENVIRONMENTALRISKS

128 5.2.2 ISO 14001CERTIFICATIONS129 5.2.3 EMISSIONANDWASTE

MANAGEMENT132 5.2.4 SUSTAINABLEUSEOF

RESOURCES134 5.2.5 ENERGYANDCLIMATECHANGE137 5.2.6 THEMININGENVIRONMENT141 5.2.7 PRESERVINGBIODIVERSITY145 5.3 INFORMATION ON SOCIETAL

COMMITMENTS IN FAVOUR OF SUSTAINABLE DEVELOPMENT

145 5.3.1 TERRITORIAL,ECONOMICANDSOCIALIMPACTOFTHECOMPANY’SACTIVITY

146 5.3.2 RELATIONSWITHOTHERSTAKEHOLDERS

149 5.3.3 RESPONSIBLEGOVERNANCE150 5.3.4 RESPONSIBLEPURCHASING151 5.4 INDUSTRIAL AND MINING

PROJECTS151 5.4.1 THEWEDABAYNICKELPROJECT

ININDONESIA152 5.4.2 THEMABOUMINE

BENEFICIATIONOFNIOBIUMANDRAREEARTHSINGABON

152 5.4.3 PLANSFORANEWELECTRICPOWERPLANTINNEW CALEDONIA

152 5.4.4 THESETRAGMODERNISATIONPROJECT

153 5.4.5 THELITHIUMPROJECTINARGENTINA

153 5.4.6 THEEXTENSIONOFTITANIUMACTIVITIESINVARILHESINFRANCE(MKAD)ANDTHEAERONAUTICALTITANIUMRECYCLINGPROJECT(ECOTITANIUM)

153 5.4.7 THEPRODUCTIONOFHIGH-SPEEDSTEELANDTHERECYCLINGOFBATTERIESANDCATALYSTSONTHESAMESITEINFRANCE

154 5.5 RESPONSIBILITY FOR CHEMICALS

154 5.5.1 CHALLENGES154 5.5.2 THEORGANISATIONATERAMET156 5.6 HEALTHAND SAFETY156 5.6.1 STRUCTUREANDFUNCTIONING

OFHEALTHANDSAFETY156 5.6.2 HEALTH&SAFETY

ORIENTATIONSANDACHIEVEMENTSIN2015

158 5.6.3 HEALTH&SAFETYPERFORMANCE

159 5.7 HUMANRESOURCES159 5.7.1 THEGROUP’SHUMAN

RESOURCESPOLICY160 5.7.2 EMPLOYMENT162 5.7.3 WORKORGANISATION163 5.7.4 AFAIRANDCOMPETITIVE

REMUNERATIONPOLICY164 5.7.5 SOCIALDIALOGUEON

THEGROUP’SRESTRUCTURINGOBJECTIVES

166 5.7.6 EMPLOYEEDEVELOPMENTANDCAREERMANAGEMENT

169 5.7.7 EQUALOPPORTUNITIES—MEASURESTOPROMOTENON-DISCRIMINATIONANDDIVERSITY

171 5.8 METHODOLOGYNOTE171 5.8.1 SYSTEMOFINDICATORS171 5.8.2 REPORTINGSCOPE174 5.8.3 COLLECTING,CONSOLIDATING

ANDCHECKINGDATA174 5.8.4 SPECIFICITIESAND

METHODOLOGICALLIMITATIONS175 5.9 REPORTBYONEOFTHE

STATUTORY AUDITORS APPOINTED ASINDEPENDENTTHIRDPARTY,ONTHE CONSOLIDATEDHUMANRESOURCES,ENVIRONMENTALANDSOCIALINFORMATIONINCLUDED INTHEMANAGEMENTREPORT

123

124

Sustainable Development / Sustainable Development Policy and Organisation

5.1 SUSTAINABLE DEVELOPMENT POLICY AND ORGANISATION5.1.1 SUSTAINABLEDEVELOPMENT POLICYERAMETisaminingandmetallurgicalgroupthat operates three world-class mining sitesandaboutfiftyindustrialsites,whiledevelopingprojects.Due to thenatureof itsminingandindustrial activities, the Group is concernedbyalltheaspectsofsustainabledevelopmentandsocialresponsibility(economicandsocialdevelopment,environmentalprotection,goodrelations with stakeholders). Aware of thestrong inter-dependenceofERAMETand theregions inwhich it operates, ERAMET has along-term commitment to implementing acontinuousimprovementprocessandplacingSustainable Development at the heart of itsactivities.Bypursuingitsactivitiesinasustain-ablemannerintheareasinwhichitoperates,ERAMET’s goal is to constantly increase theacceptabilityofitsoperationsandaccompanyits development in new regions and newsectors.

In this value-creating, continuous improve-ment rationale,ERAMET’sBoardofDirectorsadoptedaSustainableDevelopmentpolicy in2010.

Thispolicyisbasedonfourpriorities:

– protecting and developing the Group’semployees;

– managingrisksandimpactsonhealthandtheenvironment;

– factoringsustainabledevelopment into theproductandinnovationpolicy;

– andlastlynurtureatrustingrelationshipwithstakeholders.

The full text is available on ERAMET’swebsite at the following address: http://www.eramet.com/publications/la-politique-de-developpement-durable.

In2015,theCommunicationsandSustainableDevelopment teams finished developing ane-learningmoduleaimedatpursuinga large-scale campaign to raise Group employees’awarenessofthispolicyandthewaysinwhichitcanbeimplementedinconcreteterms.

TheGroup’s SustainableDevelopment Policyisdeployedatall theDivisionsandsitesandis applied to daily activities via multi-annualhierarchicobjectivesbasedondifferentlevelsof priority andapprovedby theCOMEX.Thelatest version of these objectives, coveringthe 2015-2016 period, was approved by theGroup’sCOMEXinNovember2014.

Thisactionplanisbasedonthefourfollowingareas:

– reinforcesystemstocontrolenvironmentalandindustrialrisks;

– anchorcontinuousenvironmental improve-menttoouractivities;

– improve the Group’s environmental andsocietalreporting;

– strengthenourstakeholders’knowledgeandtheinterfaceswiththem.

Finally,theGroup’sCodeofConduct,thenewmodifiedversionofwhichcameintoeffectinJanuary2015,setsouttherulesandprinciplesof action and behaviour that unite and bindus all, and oversee the whole complianceprogramme that ERAMET has set up. ThisconcernsmanyareasofGroupandemployeecommitments: development, respect for

and trust in stakeholder relations, the safetyof employees and their families, respect forand protection of the environment, security,respectforclients,socialdialogue,combatingallkindsofcoercionandharassment,transpar-ency,preventingcorruption,observingrulesofcompetition,etc.

5.1.2 THEORGANISATIONOF SUSTAINABLE DEVELOPMENTInvolvement from the highest levels of theCompany reflects the Group’s commitment.The Directors of Communications and Sus-tainableDevelopmentandHumanResourcesare both members of the Group’s ExecutiveCommittee (COMEX) and they propose,supportandfollowupthesevariousinitiatives,includingifnecessaryotherfunctionaldepart-ments.TheCommunicationsandSustainableDevelopmentDepartment(DC2D)hasanEnvi-ronment,IndustrialRisksandProductsDepart-ment(DERIP)andaPublicAffairsDepartmentwhiletheHumanResourcesDepartment(HR)includesaSafetyandPreventionDepartment(SP) and a Security Department. Lastly, theGroupalsohasaMedicalOfficerinchargeofactivatingtheGroup’sHealthpolicy.

Toreinforceitscommitmentandefficiency,in2015thesecorporatefunctionswerereorgan-ised intoacommon integratedmanagementobjective based on seven processes sharedby these five activities, i.e. health, safety, theenvironment,industrialrisksandproducts,em-phasisingastrongriskmanagementculture.

TheorientationsandactionplansareadaptedtoeachoperationalentityandDivision in theGroup.Overthepastyears,ERAMEThassetup several cross-functional theme-basedworking groups (biodiversity,mining environ-ment)toreinforceenvironmentalcoordinationbetween the Head Office and the Divisions,or the coordination of corporate functions

5.2 ENVIRONMENTAL CONSERVATION

5.2.1 CHALLENGES,OBJECTIVES,ORGANISATION AND MEANS OF PREVENTING ENVIRONMENTAL RISKS

5.2.1.1 ENVIRONMENTALCHALLENGESFACINGERAMETSITES

TheactivitiescarriedoutattheGroup’sindus-trialandminingsitessometimesdiffergreatlyasdothegeographicalareasoftheoperations.

Therefore, theenvironmentalchallengesvaryconsiderablyfromonesitetoanother.

Theenvironmentalchallengesspecific to theGroup’sthreeminingoperationsaredescribedindetail intheparagraphontheminingenvi-ronment(5.2.6).

The following table gives an overview of allthe main environmental challenges for themain categoriesof industrial siteswithin theGroup.Thissummarystrives toenhance thereader’sunderstanding.Obviously,itismacro-scopicandrathersimplisticanddoesnotfully

reflectthediversityofchallengesfacingeachindividualsite.Moreover,somesitescarryoutactivitiesinvolvedinseveralofthecategoriespresented here. Furthermore, most of theindustrialsiteslocatedinFrancecomeunderICPE regulations (Classified Facility for theProtectionoftheEnvironment)andsomehavetheSEVESOstatus.

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basedontheriskmanagementobjective.Thisreinforces the sharing of experience and theproperapplicationoftheGroup’srules.

At the same time, the Group is very carefulto integratesocial, environmental,healthandsafety, cultural and societal criteria whenit conceives and develops its projects. Byreferring to the best international standards,theGroupstrivestobuildlong-lastingrelationswith its stakeholders everywhere it sets upbusiness and to respect any specific rulesandculturesandcurrentscientificknowledge.For this purpose, the Communications and

Sustainable Development Department isalways represented in the project steeringcommittees. In part 5.4 of this Chapter, wewilldescribehowthesegeneralprinciplesareappliedinalltheGroup’sprojects.

Lastly, the Group introducedmonitoring andcontrol instruments tomeasure theconcreteimplementation of the sustainable develop-ment objectives across the whole scope.These instruments include dedicated infor-mation systems that collect andconsolidaterelatedindicatorsforthewholescope.Detailsontheframeworksandtoolsusedtoproduce

thisinformationaregiveninthemethodologynoteinparagraph 5.8.

The Group also uses an internal system toaudittheperformanceofitsentitiesregardingthe Environment, Health, Safety and Energy.Thisisdescribedinparagraph 5.2.1.Thedataproduced by these auditing and control sys-temsallowstheGrouptoconstantlybolsteritsongoingimprovementprocess.

126

Sustainable Development / Environmental Conservation

Summary table of environmental challenges facing ERAMET industrial sites

PYROMET-ALLURGICALSITES(FURNACES)

HYDROMETAL-LURGYSITES

METAL-LURGICALPROCESSINGANDCONVERSIONSITES(rollingmills,forges,closeddieforging,heattreatment,etc.) COMMENTS

Waterconsumption Significant Significant Moderate

Withtheexceptionofhydrometallurgicalsites,most oftheGroup’swaterconsumptionisrelatedtoindustrialfacilities’coolingcircuits.Thewaterusedintheseprocessesisnotsubjectedtoanyconversionorpollution.Inaddition,mostsitesuseclosed-circuitsystemsthatconsiderablyreducerequirements.Inothercases,thewatertakenupisreturned tothenaturalenvironment.

Wateremissions Moderate Significant Low

Relativelyspeaking,itisthehydrometallurgicalsitesthatpresentthehighestrisksintermsofwaterpollution,due totheuseofchemicals.Allindustrialwateristreatedbeforebeingdischarged.

Airemissions High Low Moderate

Sitesthathavemetallurgicalfurnacesaccountformost oftheGroup’sairemissions(dust,nitrogenoxideorsulphuroxide).Mostofthefacilitiesareequippedwithemissioncollectionsystemsinaccordancewithapplicableregulations.

Energyconsumption/greenhousegases High Low Moderate

Sitesthathavemetallurgicalfurnacesand/orelectricityproductionfacilitiesarethosethatconsumethemostenergyandemitthemostgreenhousegases.

Productionofhazardouswaste Significant Significant Moderate

TheManganeseDivision’s“chemicals”operationsgenerate alargequantityofproductionandpurificationresidues (calledoregangues).Pyrometallurgyproducesdust,sludgeandslag,someofwhichcanbeconsideredashazardouswaste,accordingtotheirintrinsiccharacteristicsandtheplacesofoperation.

Impactsonbiodiversity Low Low Low MostoftheGroup’sindustrialsitesarelocatedinindustrial andurbanareas.

Lastly,tocompletetheprevioustable,itshouldbementionedthatproductionsitesareusuallybuiltonslabsthatprotectthegroundandhaz-ardous product storage areas are fittedwithcontainmentsystems.However, as industrialpractices have evolved, the oldest sitesmaypresenthistoricalsoilpollutionrisks.

It should be noted that noise pollution doesnot have any significant impact on the envi-ronment.Thevarioussitesconcernedcomplywiththenoiselevelsstipulatedintheiroperat-ingpermitsandthismatterdoesnotseemtobesignificantintheGroup’slistofdisputes.

5.2.1.2 ENVIRONMENTALOBJECTIVES

TheGroup’s environmental initiatives are en-shrinedintheeightprinciplesofactionsetoutintheEnvironmentCharterpublishedin2002,thefulltextofwhichisavailableonERAMET’sinternetsiteatthefollowingaddress:

http://www.eramet.com/sites/default/files/charte_environnement_2010_fr.pdf

As indicated in the introduction (5.1),cross-functional,multi-yearenvironmentalob-jectivesaredeveloped,updatedandfollowedupaccordingtotheSustainableDevelopmentPolicy.

Since 2007, the Group has also workedtowardsa“Zerodispute”goal,aimingforzeroformal notices or legal proceedings liable toarisefromanybreachbyGroupsitesofbind-ing regulatory requirements.The informationonthissystem,whichgreatlyevolvedin2015,andtheresultsitproducedaresetoutindetail

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in paragraph 3.3.3 Safety and EnvironmentalRisks.

Lastly, the Group continues to deployISO 14001 certified environmental manage-ment systems for all industrial and miningsites that face significant environmentalchallenges.TheresultsofthisprocessaresetoutinSection 5.2.2.

5.2.1.3 ORGANISATIONANDINSTRUMENTS FOR ENVIRONMENTAL RISK PREVENTION

Toimplementitsobjectives,theGroupissup-portedbyanetworkofin-houseexpertsandawellstructuredorganisation:

– The Environment, Industrial Risks andProducts Department (DERIP) coordinatesnumerous environmental protectioninitiativesaswellasthegeneralprocessofcontinualimprovementwhichhasprevailedforseveralyears.

– TheGroup’s threedivisionshaveasystemin place that coordinates environmentalmatters.

– ThePublicAffairsDepartment(DAP)steersand coordinates CSR initiatives linked torelationswithstakeholders.

– In sites where there is a network of over90 people who carry out HSE duties andwhoreporttogeneralmanagementatmostsites.

– Once a year, the domain Committee onHealth&Safety(H&S)andtheEnvironment(E)analysestheskillsavailableintheGroupwithregardtorequirementsandobjectives.Thisproactiveprocess iscarriedout inco-ordinationwiththeGroupDivisions’HumanResourcesDepartmentsandthePreventionand Security/Sustainable DevelopmentDepartments.

InNovember 2015, over 80 membersof theHSEnetworkandGroupmanagersmetinLilleinFrancetodiscuss“theinvolvementofmenand women in HSE” with sessions devotedto sharing experiences, giving feedback andlistening to others and the intervention ofexternalexperts.

On the sites, in the Divisions and even atHeadOffice, therearenoendof trainingandawareness-raising initiatives covering theessential aspects of management and envi-ronmentalresponsibility.In2014and2015forexample,ane-learningmoduledevotedtothemanagementofriskslinkedtochemicalswasdeveloped.

Some of the strong points of the Group’senvironmentalmanagement process are themonitoringandcontrolsystems.

A dedicated environmental informationsystem (EraGreen) has been fully deployedatalltheindustrialandminingsites,allowingenvironmental performance indicators to becollected and consolidated. Most of theseindicators are provided by the sampling andanalysisplansdevelopedbythesitesperfectlyinlinewiththeiroperatingpermitrequirements.

The Group also uses an internal system toaudittheperformanceofitsentitiesregardingthe Environment, Health, Safety and Energy.The common audit framework is based onthreemainthemes:theinvolvementofpeople,operationalcontrolandpreventionItcomplete-ly integrates the requirements of ISO 14001,OHSAS 18001andISO 50001.MixedteamsofGroupauditors(centralDepartments,Division-alcoordinatorsandsiterepresentatives),whohave been trained according to an in-houseframework, organise these audits so thatHSEaspectsateachsiteareassessedeverytwo to fouryearsat themost,dependingonthe improvementssuggestedat thepreviousaudit.This involvement strengthens the levelofcross-functionalexpertiseofHSEmanagers

and encourages operational teams to shareexperience. Over the past few years, 34 ofthe 48 sites facing significant environmentalchallengeswereauditedusingthesemethods.

In 2014 and 2015 a great deal ofworkwasdonetoimprovetheinternalauditingprocessandbytheendof2015theprocedure imple-mented had been adapted. This work com-pletelyupdatedtheframeworkandresultedinmoreinstructivereports.Italsoreinforcedthesystemusedtomonitoractionplanssetoutinthereports.

Other inspections carried out as part of theinsuranceprogrammewhichaddressbothin-dustrialandenvironmentalrisks,providemoreinformation on the environmental impactof the sites and the structures and actionsimplementedtominimisetheimpact.Thison-sitepresenceisessentialtoensuretheproperintegration of multi-faceted regulations andthechallengesthatapplytovariousactivities.

Lastly,asindicatedintheminingandindustrialrisks section of Chapter 3 in the referencedocument,theGrouphasindicatorsthatallowittofollowtheimplementationofits“zerodis-putes”goalconcerningbindingenvironmentalregulations.

5.2.1.4 FINANCIALRESOURCESDEVOTED TO ENVIRONMENTAL CONSERVATION

Overall environmental capital expenditure isestimated to be almost €43 million in 2015,spread out over about 40 sites. This figureismuchhigher than thatof2014due to thesignificantcapitalexpendituredevotedto theenvironmentat theTizirTTI site (Norway). Ifthis specific capital expenditure is excluded,thecapitalexpendituredevotedtotheenviron-ment remainshighat€24 million, illustratingthesustainabilityofERAMET’scommitmentstoenvironmentalprotectionandtheregulatorycomplianceinverydifficulttimes.

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The capital expenditure discussed here isstrictly related to environmental protectionand prevention. For example, it covers theinstallation of new facilities or work carriedouttominimiseimpacts.Thecostalsocoverssome capital expenditure for new activitieswith exclusively environmental dimensions.In2015,46%ofenvironmentalcapitalexpen-diturewas used to combat air pollution and40%topreventwaterpollution.Therestwasreservedforwastemanagement,biodiversity,andthepreventionofotherimpacts.

Mining sites spent considerable amountson preventing water pollution. This capitalexpenditurewasmainly aimed at controllingthequality of runoffwater via settling tanks.Tanksandcontainmentswerealsoinstalledorreplacedtopreventanyhydrocarbonpollution.Therefore this can cover the construction ofengineering works, the creation of settlingtanks, work on down-coming water, work toimprovefillingstationsandtheinstallationandmanagementofpiezometers.Thesedifferentexamples perfectly apply to themining sitesinKouaoua,ThioandTiébaghiat theSLN inNew Caledonia, the COMILOG site in GabonandtheGCOinSenegal.

Theindustrialsitesalsodevotedagreatdealof capital expenditure to the prevention ofwaterpollution.Innoparticularorder,wecancite: holding tanks, double-walled storagetanks, gutters, slabs, repairs to seweragesystems,rainwatercollectionbasins,recoveryof process water, incidence basin in theeventoffireorstorms,etc.In2015,themostsignificantcapitalexpenditurewasinvestedintheERACHEMsiteinBaltimore(USA)toallowit to continue constructing a de-nitrificationplant and comply with the new regulationsbeingimposeduponit,andintheGCMCsiteinFreeport(USA).

As regards preventing air pollution, themaincapital expenditure in 2015 concerned theTizirTTItitaniumdioxideslagproductionsiteinNorway,whereseveralnewfiltrationinstal-lationswerebuilt,allowingtheplanttosignifi-cantlyimproveitsenvironmentalperformance.

ERAMET Norway’s sites in Kvinesdal andPorsgrunn also invested in various improve-ments such as replacing or reinforcing dustremovers and equipment to reduce levels offugitivedust.SLNDoniambo(New Caledonia)andGCMCinFreeport(USA)alsocontinuedtoinvestininitiativestoimprovethequalityofair.

5.2.2 ISO 14001CERTIFICATIONSThesignificantprogressmadeinrecentyearswithregardtothegoalofgradualintroductionofmeasuresalongthelinesofEnvironmentalManagementSystemscontinuedin2015.

Since2013,theGrouphasmeasuredtheprog-ressofitsISO 14001certificationgoalforsiteslikelytohavearealimpactontheenvironment.

Therefore,somesiteswhoseactivitiesdonotpresent,ornolongerpresent,significantenvi-ronmentalrisksarenotincludedinthescopeofcomparison,i.e.siteswhereoperationshaveceasedanddistributioncentres.

At the end of 2015, 36 sites had obtainedISO 14001certification,whichrepresents75%ofthetargetobjective(numberofsites).

Two more sites obtained ISO 14001certification:

– SLNminingsite—Poum;

– SLNminingsite—Thiebaghi.

To support and evaluate sites in their envi-ronmental approach, the Group carries outinternalpre-certificationaudits,and follow-upaudits in the fields of health, safety (H&S)and theenvironment,using the internalauditframeworkmentionedin5.1.2.

Changes in sites with ISO 14001 certification (including mines)

201520142013201220112010200920082007200620052004200320022001

1 2 2 47 8 9 10

1623 26

32 33 34 36

Atthestartof2016,theGrouphasthreenewsitesundertakingthisprocess.TheminesinKouaoua,NepouiandThiosuccessfullyunderwenttheirISO 14001certificationauditsattheendof2015andhaveappliedforcertification.Theyshouldofficiallyreceivethisrecognitioninthefirstfewmonthsof2016.

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5.2.3 EMISSIONANDWASTEMANAGEMENT

5.2.3.1 AIR

AIREMISSIONS 2013 2014 2015

Sulphuroxides(SOx) tonnes 13,500 11,021 13,494Nitrogenoxide(NOx) tonnes 5,234 6,366 6,045Volatileorganiccompounds(VOC) tonnes 438 377 390Totalcanaliseddust tonnes 1,629 1,355 1,219Nickel tonnes 8.8 11.2 13.3Manganese tonnes 161 144 149

Inparalleltoenergyrequirements,ithasbeennoted that it is mainly the pyrometallurgicalactivitieswiththeirmeltingfacilitiesandheattreatment furnaces that contribute to cana-lizedairemissions.

CO2 emissions are discussed inparagraph 5.2.5.

The air emissions produced depend on thetype of raw materials and ores used, thetransferandloadingtechnologiesinplace,theinstalledcapacityoffacilitiesandaboveallthelevelofactivityatsites.

In pyrometallurgy, the emissions channelledare generated where material is handled, atfurnaces and where there are operationsinvolvingcastingandgrinding,liquidmetalandslag.

Inhydrometallurgy,dustemissionsareusuallychannelledwhen thereareoperations involv-ingthehandling,grinding,dryingandtransportofmaterials.

Sulphur oxide emissions (SOx) are mainlyproducedattheSLN(thethermalpowerplantandDoniamboplant).Afteraslightfallin2014,related to repair work on fuel storage tankswhich led toSLN losing its flexibilitywith re-gardsthedifferentfuelqualitiesavailable,2015wasmorerepresentativeofnormaloperationsatapowerplantandtherewasareturntothesamelevelasthatof2013.

GrandeCôteOpérations(GCO),whichstartedoperatingin2014,hasgraduallyincreaseditsnominalproduction,soin2015itcontributedtotheGroup’srisingSOxemissions.

Levels of nitrogen oxide (NOx) have beenrelativelystableoverthelastthreeyears.

The downward trend in Volatile OrganicCompounds(VOC)inairemissionsstartedin2014wasconfirmedin2015.ErasteelinCom-mentry,theERAMETSandouvilleplantandtheMoanda IndustrialComplex inGabongreatlycontributed to this improvement by reducingtheiremissions.

There was a sharp fall in canalized dustemissions once again in 2015.The 25% im-provementachievedwithintwoyearsispartlyduethedifferentcapitalexpenditure investedover the past years, but an asymptotic levelhas probably been reached (asmost of thesitesusethebestavailabletechnologies)anditwill bemoreandmoredifficult to improvethisperformancewhilestriving tomaintain itovertime.

TheGroupalsoconcentratesondiffusereleas-es. Initiativescontinued inorder todevelopadeeperunderstandingofthesourcesofthesereleases. The situations are very varied andthe rulesandhypothesesadopted toassessthese releases at sites or specific places ofoperationscanbeveryvariable.

Levelsofnickelandmanganeseairemissionsoverthepastthreeyearshaveremainedmoreor lessthesame,andarerelatedtothe levelofactivity.Their relativevariabilitycanbeex-plainedbythefactthatlowconcentrationsaremultipliedbyhighquantities.

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5.2.3.2 WATER

AQUEOUSDISCHARGES 2013 2014 2015

Suspendedsolids(SS) tonnes 5,246 6,159 8,479Chemicaloxygendemand(COD) tonnes 168 151 145Nickel tonnes 8.7 12.2 6.4Manganese tonnes 129.5 62.9 107.0

Aswithairemissions,ERAMETisdeterminedto reduce its aqueous discharges. Industrialsites are striving to improve treatment pro-cessestoensurethatthewatertheyreleaseisofbetterquality.

The general tendency for Suspended Solids(SS) remains very variable from one year tothenextandSLNDoniambo(New Caledonia)producesmost of theGroup’s discharge. Asexplained in previous years, these variationsareduetothevariableamountsofSSfoundin the sea water used for plant cooling andslag granulation but this year work tomovetheslagstoragestallresultedinanexceptionalincrease.

Other industrial sites contribute to thesefigures but their quantities are lower. This isthe case with ERAMET Marietta (USA) andERACHEMCOMILOGinTertre(Belgium).

The Chemical Oxygen Demand (COD) hasregularly improved over the past two years.Greatprogresshasbeenmadeatsomesites,liketheDoniamboplantinNew CaledoniaandtheLes Ancizesplant(France).

Asregardsmetaldischarge,therewasasignif-icantfallinnickeldischargesin2015,allowingtheGrouptoachievelevelsthatwerebelowthelevelsusuallyreachedinpreviousyears.

As for manganese aqueous discharge,ERACHEM COMILOG Tertre (Belgium) sig-nificantly contributed to the increased levels.

Indeed, an unexpected spillage in June wasnotcontainedduetorepairworkbeingcarriedoutontheindustrialwatercollectionbasinatthetime.Showinggreattransparencytowardslocal authorities, the site decided to takecorrective action during these maintenancephases.

Finally,theGroup’ssitescarefullymonitorthequalityofgroundwaterandtheimpactoftheactivityonsoilsandsub-soils.Therearehun-dredsofpiezometersdeployedattheGroup’sdifferent sites, both within their borders andoutsidetheirborders.Theyareusedinthefirststagesofallnewprojects(characterisationofthe initial state) and tomonitor anypossibleimpactongroundwaterandsurfacewater.

5.2.3.3 WASTE

WASTEPRODUCTION 2013 2014 2015

Quantityofnon-hazardouswaste thousandtonnes 3,647 3,764 4,595Quantityofhazardouswaste thousandtonnes 72 71 77

Environmentalmanagementsystemssetupatmorethan75%ofGroupsitesleadtospecificwastemanagement.

NON-HAZARDOUS WASTE

Thenotionofhazardousandnon-hazardouswaste is defined in accordance with theregulationsofthecountriesinwhichtheGroupoperates. Indeed, at themoment, the statusof waste varies greatly from one country toanother.

Mining activities and their related industrialoperationsare themainsourcesofnon-haz-

ardous waste. A large quantity of this isstoredinindustrialbasinsinGabon.Theyarefine fractions of manganese ore collectedafter the washing phase that separates thegranular parts intended for sale. As regardsnickel,thepyrometallurgicalprocessingattheDoniambo plant generates a large quantityof non-hazardouswaste in the formof slag.Thethreemaincontributors, i.e. theSLN, theMoandamineandMoandaIndustrialComplex

(CIM), account for 95% of the total quantitycalculatedfor2015.

Much smaller quantities of by-productsand non-hazardous waste are generated byindustriesinvolvedinsteel-making,melting-re-ductionandtheproductionofferroalloys.Theycomeintheformofslagandinertslagwhichismainlystoredininternallandfillsandsomeofwhichisrecycledbyanexternaloperator.

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It should be noted that the non-hazardouswastecalculationsdonotincludethetonnagesofdeliberatelyrichslaggeneratedintheferro-manganesepyrometallurgicalprocess,whichserveasasecondaryrawmaterialtofuelthefurnacesthatproducesilicomanganese, thuscontributingtothecirculareconomyconcept.

The calculation of non-hazardous waste isalsoaffectedbythesignificanttonnagesthatresult from maintenance operations, works,decommissioning(rubble,scrapmetal,etc.)aswellasoccasionaloperationstoremovewastestored on site for several years, as was thecasein2015inMoandaoratsomeSLNsites.

HAZARDOUS WASTE

Activities that generatehazardouswastearemainly the pyrometallurgical and chemicalprocesses carried out by the ManganeseDivision.

Therefore, the Manganese Division’s “chem-icals”operationsgeneratea largequantityofproduction and purification residues (calledoregangues).The fact that approved landfillsiteshandlethiswastemeansthattheapplica-bleregulationsarecompliedwithonallpoints.

Pyrometallurgy produces dust, sludge andsodium-calciumslag, someofwhich canbeconsideredashazardouswaste,accordingtotheirintrinsiccharacteristicsandtheplacesofoperation.

The quantity of hazardous waste remainedstable between 2013 and 2014 but rose in2015,mainlydue to increasedactivity at thenew Moanda Metallurgy Complex (C2M) inGabon and due to more limited operationssuch as the removal of contaminated soilcausedbythedredgingofacanalatERAMETSandouville(France).

5.2.3.4 SITEREHABILITATION

The Group carefully monitors potentialimpactson the soil andsubsoil arising frompast,continuingorfutureminingandindustrialoperations.

Overthepastseveralyears,theGrouphasde-velopedapolicyandexpertiseininvestigating,identifying,monitoringandmanaginglandun-derpotentialimpactfromdifferentprojectslikethe rehabilitation of industrial areas, internallandfillsattheendoftheirworkinglife,formermines,etc.andalsosoilmappingbeforenewprojectsaresetup.

Moreover, the Group takes all these issuescarefullyintoaccountinitsinternalauditsandwhenitacquiresnewactivities.

Thekeyeventsof2015arelistedbelow.Intheindustrialfield:

– Aubert & Duval Gennevilliers (France): TheB&Cplantsceasedactivitiesin2011andtheinitialdismantlingandrestorationoperationswerecarriedoutin2013and2014.Furtherstudies conducted upon completion ofthisworkrevealedtheneedtoestablishanadditionalmanagementplan,and thiswassubmitted to the administration in 2015.Furtherworkwillbecarriedout in2016 toachievethetargetobjectivessetoutbytheadministrationand toensure this landcanbeusedforindustrialactivitiesinthefuture.

In 2015, Plant A, which started a similarprocessin2014,submittedamanagementplanon the restorationof its land (it isstillbeingexaminedbytheadministration).

Aswas the casewith plantsB&C, the sitecalledupon theservicesofaprojectman-agement expert (the RAMBOL-ENVIRONfirm) to help it draw up documents andsupervisethework.

– GCMC Freeport (USA): The site of GCMCFreeport (USA)recyclesthemetal found in

usedoilcatalysts.Thesitereachedanagree-mentwith theauthoritiesaspartofafinaljudgementin2013includingactionitmusttaketocontrol impactonsoils.Tothisendandinaccordancewiththeschedule,GCMCfinalised the internal actions and in 2015,as part of its voluntary action plan, withthe Texan environment authorities (TCEQ),continuedcarryingoutstudiesandseekingsolutionstoincludeinthemanagementplanforthe“CleanClosure”oftheformerremotestorageareaforresiduefromusedcatalystprocessing. The study and finalisationprocesscontinues.

– Valdi Feurs (France): In 2014, the siteannounced its discontinuationof activities,filedtheassociatedstatementandproposeda management plan to the supervisoryauthoritywhich led to an operating permitthatsetout the restorationobjectives.Therestorationworkstarted in2015shouldbefinalised in the first quarter of 2016. Thesiteadoptedasimilar typeofproceduretothattakenattheGennevilliersB&Cplants.Aprojectmanagerhasbeencommissionedtoorganisethecall for tendersandsupervisetheworkonsite.

– Valdi Le Palais (France): As itswaste recy-cling activities are to be transferred to theErasteel Commentry site (France), the siteannounced its discontinuation of activitiesandin2015itlaunchedanenvironmentalas-sessmentstudywithaviewtosubmittingalandrestorationmanagementplanin2016.

– Erasteel Commentry (France): As partof preparations for the waste recyclingactivitiesfromVALDI,thissitehaspreparedconstructionplatformsandcarriedout thenecessaryinvestigationsthathaveresulted,whenjustified,inthemanagementofpollut-edsoilandmaterialsintheareasconcerned.

– SETRAG (Gabon):SinceCOMILOGtookoverthe railway concession, environmental au-

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ditshavegraduallybeencarriedoutandhaverevealedasignificantimpactonsoils.Setupbefore any legislation on the environmentwas introduced, SETRAG has undertakentofindsolutionstothislegacyproblem.Anenvironmentalandsocialmanagementplan(ESMP)wasdevelopedwiththeimpactas-sessment file accompanying the voluntaryprocess of ICPE regularization. Detailedstudiesonthe initialdiagnosisenabledthesite to start taking the first measures in

2014 toensuresafetyandcontrol and theaction plan continued in 2015.Restorationworkstartedonthegroundaroundthefillingstationsandwillcontinuein2016.

– SLN (New-Caledonia):Aspartofpreparationsfortheplatformofthefuturepowerplant,astudy was carried out on the 15-hectaresof land toassessgroundconditionsandamanagement plan was submitted to theadministration.

Initiativeswerealsotakenintheminingsector.TheyaredescribedinthechapteronTheMin-ing Environment (5.2.6) and inChapter 5.2.7devotedtobiodiversity.

Animportantpointtonotehereistheinstitutionofapolicyofsystematicallymappinggroundconditionbeforethestarttoanynewproject,in accordance with the Group’s SustainableDevelopmentpolicy.

5.2.4 SUSTAINABLEUSEOFRESOURCES

5.2.4.1 WATERCONSUMPTION

CONSUMPTION 2013 2014 2015

Totalwaterconsumption millionm3 31.5 33.5 34.9

Before discussing the water consumptionof sites in the ERAMET group, it should beemphasisedthatnoneoftheGroup’sindustrialsitesarelocatedincountriesconfrontedwith“waterstress”,asdefinedbytheUN, inotherwordswhenwaterresourcesperinhabitant,in-cludingalluses,usuallydropsbelow1,700 m3 per person. Despite the fact that water re-sourcesareusuallysubstantialandplentifulonitssites,theGroupattachesgreatimportanceto preserving resources. Many initiatives aretakentoensurethatjusttherequiredquantityisused.

Thetotalwaterconsumptionfor2015canbebrokendownasfollows:

– 53%ofsurfacewater (water fromthesea,riversorlakes);

– 28%ofgroundwater;

– 12% of industrial water (industrial qualitywaterprovidedbyanexternalnetwork);

– 7%ofdrinkingwaterboughtfromadistribu-tionnetwork.

Mining, metallurgy, hydrometallurgy andchemicals are activities that consumewaterforarangeofpurposes:

– Coolingoffurnacesandothermetallurgicalinstallations;

– Washing of ore, raw materials andby-products;

– Hydrometallurgy processes: solubilisationandreactionenvironments.

We should also remember that water isrequiredtomanagecertainprocessescarriedoutwithintheGroup.Forexample,thecoolingof the electric furnaces must be perfectlymanaged and optimised. In some cases, awater supply shortage could present a high-risk situation during which securitymust beensuredbeforeanyotherconsideration.

Whenitistechnicallypossible,thesites:

– favour the internal recycling of the waterconsumed. The cooling of furnaces andother metallurgic facilities as well as allother high-consumption processes aremainly carried out in a closed circuit. The

waterconsumed ismainly top-upwater tocompensateforevaporation;

– usewaterfromaneighbouringindustrialsitelikeatERAMETNorwayPorsgrunn.

In 2015, total water consumption increasedslightly.

Indeed, Grande Côte Opérations (GCO) inSenegal,whichaloneaccountsfor25%oftheGroup’stotalconsumption,startedoperationsin2014andisgraduallyincreasingitsproduc-tionandthereforeitsconsumption.

Furtherefforts to reducewaterconsumptioncontinuedelsewhere.Thisyear,theeffortspaidoffatErasteelCommentrywhichsuccessfullyrecycled all its rainwater, and also at Aubert&DuvalLes Ancizesthanksto its initiativeto“track down leaks”. TheMoandamining site(Gabon) benefited from an improved rate ofrecirculationforitsindustrialwaterresultinginsavingsof30%initstop-upwater.

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5.2.4.2 USEOFRAWMATERIALS/CIRCULAR ECONOMY

ERAMET is totally involved in theprocessofpromotingacirculareconomy.

The sustainable use of mineral resourcesis described in the Mining Environmentchapter (5.2.6) and further information canalsobe found in thechapteronResponsiblePurchasing—Monitoringthesupplyof“conflictminerals”(5.3.4).

Foryears,ERAMEThasstrivedtoensurethatsomeofthewaste itgeneratesat itssites isrecycledinitsprocesses.Moreover,itensuresthat waste containing metals resulting fromthemanufactureoruseofproductsmarketedbyotherindustrialplayersisrecycledwithinitsvariousprocesses.

TheGroup’sAlloysDivisionisalong-standingandmajorplayerinthisrecyclingofmaterials.Indeed, internal metal residue (machiningchips, offcuts, etc.) and external residue(secondary raw materials) are put into theGroup’ssteelworksfurnaces.Thissectorhasextremelyhighrecyclinglevels.Thequantityofsecondary rawmaterials used varies greatlyanddependsonthesitesandtheirprocessesbutcanreachalmost90%atsomesites.

Alloys Division’s Recycling also extends toaeronautical-quality titanium, through theEcotitanium project for the production ofingots for use by UKAD, using scraps andshavings.Itsbusinessmodelisimplementingtheprincipleofcirculareconomy.

Likewise, at pyrometallurgical plants thatproduce manganese alloys, large quantitiesof ferromanganeseslagareusedtoproducesilico-manganese.

For many years, ERAMET has also beendeveloping its recyclingbusiness.Partof theManganeseDivisionisspecialisedinactivitiesbasedontheuseofsecondaryrawmaterials.

This is the case with GCMC Freeport (USA)which mainly recycles used catalysts fromthe petrochemicals industry and ERACHEMCOMILOG Tertre (Belgium) which producescopper salts and oxides from waste. TheactivitiescarriedoutbyValdi(France),amajorplayerinthere-useofcontainedmetalsviatherecyclingofwastefromthesteelindustry,cat-alysts from the petrochemicals industry andrechargeableanddisposablebatteries, joinedtheAlloysDivisionwitha view todevelopingnewsynergies.

Effortsarealsomadetore-usewastewhenitsphysico-chemical characteristics allow.Thus,slagfromSLN(New Caledonia)andlow-levelslagfromCOMILOGDunkerqueareapprovedandusedinroadconstructionapplications.

5.2.4.3 INDUSTRIALECOLOGY

Industrialecologyisamanagementprocedurethatdoesnotsimplyaimtoreducepollutionattheendofthechainintermsof“finalwaste”,but tries to reduce the flow of material andenergybydesigning industrialecosystems inwhichtheseflowswouldcirculateasmuchaspossibleinclosedloops.

According to this concept, insteadof gettingridoftheflowsofmatteremittedbyaprocess,we can either re-use this matter within theCompany or pass it on to third parties.Thisflow,whichcanbeelectricity,steam,wasteorwater,canbere-usedinthreedifferentways:

– withintheCompanytofuelanotherprocessorforotherpurposes, likeheatingaplant’sofficesforexample;

– byoutsideneighbouringcompanies to fueltheir installationsorflowsfromothercom-paniescanbeused;

– the community can re-use these flows (toheatshopsorsportsfacilitiesforexample).

Awareoftheneedtocontroltheirimpact,theGroup’s siteshave for a long timesought tointroduceorreinforcethistypeofinitiative,asillustratedinthefollowingexamples.

RE-USING FLOWS INTERNALLY

Therearemanyexamplesofinternal,andoftenlong-standing,recyclinginitiatives.Waterrecy-cling initiativesare very commonandsome-times the rates can reach 95%. Some sitesalso recover rainwater for use in the plant’sindustrialwatercircuitinsteadofgroundwaterorsurfacewater.Toensureenergyefficiency,hotgas thathasbeengenerated isoften re-usedwithintheCompany;ERACHEMMexicorecycles it topre-heatmanganeseoreduringgrinding operations instead of using fossilenergy.Themostsignificantexamplesincludethe SLN site in Doniambo (New Caledonia)which has a sensible heat circuit and theERAMETNorwaysiteinSaudawhichrecyclesandburnsgasrichincarbonmonoxide.Steamproduced from the sensible heat of gasesgivenoffduringprocessesisoftenusedwithincompaniestoheatofficesandbuildings.

RE-USE OF FLOWS BY OTHER COMPANIES OR FROM OTHER COMPANIES

Synergies between neighbouring companiesare also closely studied in the Group. InBelgium,ERACHEMCOMILOGinTertreisstillveryinvolvedintheEco-Zoningproject,espe-cially inthefieldsoftransport,sanitationandoptimised energy between all the industrialfacilitiesinthearea.

InNew Caledonia,theSLNcollectsaluminiumcans inside and outside the Company andthis partially meets the requirements of theferronickelrefiningprocess.Thermalrecoveryoftheregion’swasteoilsalsoallowsPlantBtoreduceitsconsumptionoffuel.

InFrance,theSandouvillesiteusessteamasitsmainsourceofenergy.97%ofthissteam

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comes from a non-carbon source mainlyprovided by a neighbouring company (SED-IBEX) thatburnschemicalwaste.The rest isprovidedbyawood-burningboilerinstalledonthesite.

RE-USE OF FLOWS BY NEIGHBOURING COMMUNITIES

Some Group sites allow neighbouring com-munitiestobenefitfromsurplusflows,freeofcharge.ERAMETNorwayinSaudaandKvines-dalusetheirexcesssteamproductiontoheatthegroundunderthetowns’streets,whichareoftenicyorcoveredinsnow,andthestadiumtopreventthegroundfromfreezinginwinter.

AlargeproportionoftheGroup’soverallwaterconsumptionisusedbythegeneralpublicorthestafflivingintheaccommodationprovidedtothem.

These types of initiatives are being gener-alised.IntermsofR&D,theGroup’sERAMETResearchcentre (Trappes,France) integratesthese requirements into its process develop-ment programmes as objectives: ensuringoptimal neutrality of residue, minimisingemissions and consumption (energy, waterandconsumables,etc.).

5.2.5 ENERGYANDCLIMATECHANGEIn 2015, in view of the strategic nature ofenergy, the Group decided to set up a new“Group Energy Centre” within the IndustrialAffairsDepartment.Itencompassesmissionsrelatedtoenergypurchasing,energyefficiencyandclimatechange.

5.2.5.1 ENERGYCONSUMPTION

In2015, theenergyconsumption(16.6 TWh)was virtually stable compared with 2014(16.5 TWh).

The energy consumed by the Group servesseveralmainpurposes:

– Extractivemetallurgy: Inordertotransform(through reduction reactions), the oxides

containedinoresintometalalloyswhichitthensells,theGroupusesmostlypyrometal-lurgicalprocesses.• These processes require energy sothat the reduction or melting reactiontemperatures can be reached, under theformofelectricalenergyandmetallurgicalreducers that also contain energy. Thisconsumption is directly related to theactivity.

• Mastering the processes also imply tohaveagoodcontrolonthewatercontentof the ores upstream. The amount ofenergy needed to carry out these tasksdependsontheweatherconditions.

– Processmetallurgyandhotforming.Alloysprocessing, hot forming and related heatprocessingareenergy-consuming(electric-ityandgas).

– Processes implemented for manganesechemistry and recycling businesses arealsoenergy-consuming (electricityandgasmostly).

– The last use is fuel formining equipment.The consumption is proportional to theactivity(orevolumesproduced)andmostlyto theamountofstrippingandpreliminaryworksneeded(totalvolumeshandled).

fuels4%

drying /heat treatment /

heating16%

reducing agents27% fuel for

electricity28%

"carbon" electricity5%

carbon-free electricity20%

R&D 0%Recycling 2%

Logistics 1%Comilog 4%

Chemicals 5%Metallurgy 6%

Pyrometallurgy 83%

ERAMET group has seven core activities(pyrometallurgy, metallurgy, chemicals, min-ing, logistics, recyclingandR&D).83%of theenergy requirementsareconsumedby14oftheGroup’spyrometallurgyplants.

Itshouldalsobenotedthat79%of theelec-tricity bought in 2015wasproducedwithoutrecoursetofossilenergy,andthereforewithalowercarbonfootprint(including55%hydrau-licenergyand24%nuclearenergy).

5.2.5.2. ENERGYEFFICIENCY

– AfterCOMEXapprovedtheGroup’s Energy Policy in September 2013, which adoptsthe principles of the ISO 50001 standard,the Group’s Industrial Affairs Departmentcontinued the ongoing deployment of itsenergyefficiencyprocessinitiatedin2005.

– Therefore, an additional operating modeassociatingthoseatsitelevelandthoseatcorporate levelwas set up.Three typesofrepresentativesweredefined:• theGroupcoordinator,mainlyinchargeoforganisingtheprocess,providingmethod-ology(theGroupcoordinatorisanAFNORcertified ISO 50001 auditor), providingexpertise on several of the Group’s corebusinesses and keeping a close eye onregulationsandtechnologies;

• siteenergycorrespondentswhorepresentthe site’s Departments in terms of theISO 50001 standard; they are in chargeoflocallypromotingcontinuousimprove-mentinthefieldofenergy;

• the Sites’ Departments whose mainrole is to showgreat commitment toanenergy management system based ontheprinciplesoftheISO 50001standard,and of course, allocating the resourcesrequiredtofulfileachsite’sobjectives.TheDivisionaldepartmentsarecalledupontosupportthesites’departments;

• the deployment continued in the threeDivisionsin2015andseveralsitesappliedtheGroup’snewrecommendations.

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Divisions / SitesContinuous

improvement plans energy savings

Corporate• watch

• methodological expertise

• coordination

Innovations enabling new BAT

(Best Available Techniques)

Methodologies and energy

reviews

Shared data analysis

Sharing knowledge

LAWS & REGULATIONS

– As part of the energy efficiency process,energyperformanceindicatorsaresetupforeachsite.

– Thevalueandtrendoftheseindicatorsareanalysedinrelationtoeachlocalprocess.Asthereissuchawiderangeofactivitiesandprocesses,thereisnopointinconsolidatingtheseindicatorsatGrouplevel.Consequent-ly, to ensure confidentiality and protectprocesses, the Group has decided not toprovidemoredetailedinformationontheseindicators.

– In2015,anothersite(Sandouville)obtainedISO 50001 certification, bringing the totalnumberofcertifiedsitestofive.Severaloth-ersitesareintheprocessofbeingcertified.

CHANGES IN EUROPEAN REGULATIONS: COMPULSORY ENERGY AUDITS

TheGroup’s initiative is perfectly in linewithEurope’s new regulationswhich require largecompaniestocarryoutanenergyauditeveryfour years. All the energy audits of the sitesconcerned were conducted before the legaldeadline,i.e.beforetheendof2015,byateamofqualifiedinternalauditors.

5.2.5.3 CLIMATECHANGE

GREENHOUSE GAS MANAGEMENT AND REDUCTION POLICY

Themissions of the energy centre set up in2015include:

– Playinganactiveroleintheclimatechangecommittees of French and Europeanprofessional bodies (AFEP, A3M, Eurofer,Euroalliages)thatrepresenttheindustryvis-à-vistheFrenchandEuropeanauthoritiesinthedraftingofrelatedregulations.

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– Informing the relevant sites about suchregulations and assisting them with theirapplication.

– HelpingdefineandrollouttheGroup’spol-icywithrespecttoclimatechange,inclosecooperationwith theCommunicationsandSustainableDevelopmentDepartment.

– Managing the accounts of the relevantFrench sites vis-à-vis the European green-house gas allowance registry. The Norwe-gian sites manage their own accounts inconsultationwiththeenergycentre.

ETS 3: Directive 2009/29/EC of 23 April 2009 amending Directive 2003/87/EC “in order to enhance and extend the Community system for greenhouse gas emission allowance trading”

TheGroupplayedanactiveroleinthediscus-sions between the industry (via professionalbodies)andthenationalandEuropeanauthor-ities(Commission,ParliamentandCouncil).

ERAMET sites concerned

– Alloys Division:Aubert&Duval:Les Ancizes,Firminy,PamiersandInterforge;

Erasteel:Commentry.

– Manganese Division:COMILOGDunkerque,ERAMET Norway (Porsgrunn, Sauda,Kvinesdal) and TiZir Titanium & Iron inTyssedal(Norway).

Free allowances

Calculationofthenumberoffreeallowancesisbasedonthegeneralformula:

Free allowances=

specific emissions (accordingtobenchmark)

xhistorical production volume (2005-2008medianactivity)

xtrans-sectoral reduction factor

TheCommissiondecisionof27 April2011setoutthevarioustermswhichwilldifferaccord-ingtotheinstallationsandsub-installations.

It shouldbenoted that the forgingsites (ADPamiersandINTERFORGE)arenotincludedinthelistofsectorswitha“riskofcarbonleak-age”andtherefore,theywillnotbeentitledtofreequotas.However,foratransitionalperiod,they received a decreasing number of freequotas(fromthehistoric80%ofemissionsin2013to30%in2020and0%in2027).

Attheendof2013,theEuropeanCommissionapproved the allocation of the free quotasproposed by the French and Norwegianauthorities.Therefore,allthesitesintheGroupconcerned officially received free quotasthroughoutperiod3.

Thesites’2015emissionsareintheprocessofbeingcheckedbytheEuropeanCommission’sapprovedbodies.Theywill issuethe“reason-able assurance reports” that are essential tosurrender the quotas in the official registerssometimein2016.

IMPACT OF CLIMATE CHANGE

A study has been initiated to assess andanticipate the impact of climate change onthe Group’s activities. Via the environmentalreportingtoolEragreen,sitesareaskedspecif-icquestionsontheirriskassessmentandthemeasurestheyintendtotaketoadapttoit.

In2015,approximately30%ofsitesindicatedthey may be affected by the consequencesof climate change. The consequencesmen-tionedbythesitesmostoftenare:

– possibleconsequencesofrisingsealevels;

– possibleconsequencesofextremeweatherconditions(drought,violentwinds,flooding,etc.).

With thecurrentknowledgeonpossiblecon-sequencesofclimatechange,siteshavenotplannedanyshort-termmeasurestoadapttoanyhypotheticalconsequences.Withregardtoapossibleriseinlealevels,siteslocatednearthecoastconsiderthealtitudeoftheirfacilitiestoensureminimaltonegligibleimpact.

AtGroup level, climate change could lead tohigher taxes on energy and more difficultyobtaining funding for some investments.Currently,itisdifficulttoassesstheseconse-quencesmoreclearly.

CARBON FOOTPRINT

ERAMET’sinitialCarbonFootprint,wascarriedout in 2007-2008 in joint consultation withCarbone 4, a company in receipt of ADEMEapproval.

The Group’s carbon footprint for 2007 wasapproximately:

6.35 million tonnes CO2 equivalent

Breakdownperitem:

– 87% for “energy”whichincludesenergycon-sumption(electricity,gas,fueloil,coal)andtheconsumptionofreducingagentsneededinprocesses(coke,coal,anthracite,etc.)

– 8% for freight

– 3% for “inputs”: CO2 emitted, particularlyduring theproductionof scrapused inarcfurnacesinsteelworks.

Accordingtothe“GHGProtocol”classification,theGroup’semissionscanbebrokendownasfollows:

– Scope 1 emissions = 4,742,098 tonnes ofCO2,i.e.74%ofthetotal.

– Scope 2emissions=797,918 tonnesofCO2,i.e.13%ofthetotal.

– Scope 3emissions=810,473 tonnesofCO2,i.e.13%ofthetotal.

Changes in the Group’s Carbon Footprint

Tofollowchangesinthecarbonfootprintovertime,onlyemissionsofScopes 1and2aretak-enintoaccount(representing87%ofthetotal)becausetheyareeasytocalculatebasedontheGroup’sactivity.Thedatausedtocalculatethese emissions is entered into the Group’ssystem for consolidating environmental data(EraGreen).

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ThefollowingtableshowschangesintheGroup’semissionsbetween2007and2015.

ERAMET Group - Changes in group’s emissions - Tonnes of CO2 emitted (scopes 1 & 2)

201520142013201220112010200920082007

5,540

4,581

3,603 4,5014,346

4,4614,344

4,4504,438

Apartfrom2009,thisfootprintremainsstable.

Thedeviation from2007 ismainly related todifferences inscopesbetween the footprints(China,Norway,etc.).

Aubert&Duval(AD)istheonlycorporateentityoftheGroupinFrancetoemployover500 peo-pleandthereforeitissubjecttotheapplicationof Article 75 of the French environment actGrenelle IIandorder2011-829.

WiththeassistanceofaBURGEAPconsultant,a carbon footprint assessment was carriedoutforthisscopein 2011,basedonthe“guide-linesongreenhousegasemissioninventories”drawnupbythenationalcoordinationcentre(2012version).

Thefirstpartofthe27 November2012reportdetails the consolidation of greenhouse gasemissions for all the French Aubert & Duvalsites.ThesecondpartsummarisesthemaininitiativesthatAubert&Duval intendstotaketoreducetheseemissions.

Thereviewreportsthefollowingemissions:

– Directemissions(Scope 1)= 85,491 tCO2e

– Indirectemissions(Scope 2)= 16,504 tCO2e

– Total emissions (Scopes 1 and 2) = 101,995 tCO2e

5.2.6 THEMININGENVIRONMENTThischapter isdevotedto theenvironmentalprotection initiatives implemented at theproductivemining sites (excludingmeasuresrelatedtobiodiversitywhichwillbepresentedinChapter 5.2.7).Measuresrelatedtominingprojectsunderdevelopmentaredescribed inChapter 5.4Industrialandminingprojects.

TheGroup’sminingoperationsdonotincludeundergroundmines.

ThemineoperatedbyCOMILOGontheBan-gombéplateauinGabonisoneoftheworld’srichestmanganese ore deposits and is cov-eredbya4-5 meter-thicklayerofoverburden.Dueto thecharacteristicsof thedepositandthe ore, thismine produces very little wasterock.

SLN operates 15 nickel mines in New Cale-donia; the seven largest ones are operateddirectlybySLNandtheothersarecontractedouttolocaloperators.Theminesarelocatedonruggedterrainataltitudesofbetween250and 1,000 meters.With this type of deposit,approximately7to9 tonnesofoverburdenhastoberemovedinordertoproduce1 tonneofuseableore.Therefore,itisessentialthatthiswasterockisstoredinsuchawayastoensurethesecurityandprotectionoftheenvironment.

The Grande Côte mineral sands mine inSenegal produces zircon, ilmenite, rutile andleucoxene. The mining operations follow anoptimisedroutetominedepositsinthesanddunesclosetothecoasttothenorthofDakar.The extraction operations are carried out ina mobile 12-hectare, 6-meter deep artificialbasin. The mining process uses a dredgewith a capacity of 7,000 tonnes per hour,linkedtoafloatingconcentrationplantwhereminerals are separated from the sand via agranulometric and gravimetric process. Afterextractingtheuseablefractions(about1.8%ofthesandprocessed), thesand isputback inplacebehindthefacilitiestore-formthedune.The heavy mineral concentrate obtained istransferred to a land-based separating plantwhere commercial products are obtained bygranulometric, gravimetric, electro-static andmagneticseparation.Thesmallquantitiesofproductsthatarenotusedatthisstagearere-incorporatedintothereconstituteddunes.Thewater required to carry out these operationsispumpedfromadeepaquiferandrecycled,asfaraspossible.Theminedoesnotuseanychemicalsanddoesnotproduceanyminingwaste.

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Summary table of environmental challenges facing ERAMET mining sites

SLNMINESINNEWCALEDONIA

COMILOGCOMILOG INGABON

GCOMINEINSENEGAL COMMENTS

Strainonwaterresources(quantity)

Lowvulnerability

Lowvulnerability

Veryvulnerable

BecauseofhighrainfallatthesitesinNew CaledoniaandGabon, thematterofwaterconsumptionisrelativelyunimportant.However,inSenegaltheoppositeistrue—thetwoaquifersusedbythemineareimportantwaterreservesforlocalpeopleandthecountry.

Erosion Veryvulnerable

Averagevulnerability


Thenatureofthesoilandrocks,thetopographyofthedepositsandthepresenceoffragilereceivingbodiesmakeerosionaverysensitivesubjectNew Caledonia.InSenegal,afterthedredgingoperations, thereconstituteddunesarevulnerabletowindandwatererosion. InGabon,thedepositwasrecentlyextendedtoadownwardslopingareaandthishasexacerbatedtheproblemrelativelyspeakingastherest ofthemineisnotveryvulnerabletoerosion.

AcidminedrainageNoacidminedrainage

Lowriskofacidminedrainage

Lowriskofacidminedrainage

Generally,ERAMETminingsitesarenotreallyconcernedbytherisk ofacidminedrainage.InGabon,onlyonehorizonofbarrenrocklocatedinthecurrentextensionofthedepositislikelytopresentthisrisk. InSenegal,asandhorizoncontainingpeatcanbeencounteredduringminingoperationsandmaypotentiallygenerateaslightacidification.

Productionofwasterock

Veryvulnerable

Lowvulnerability

Lowvulnerability

MostofthewasterockfromtheMoandamineisputbackintothepitsimmediately.TheSenegalminedoesnotproducewasterock.However,inNew Caledonia,muchgreaterquantitiesofwasterocksareproduced.OperatingmethodsatSLNarechangingandinsteadofstoringwasterocksinheaps,moreandmoreoften,theyareusedtofillupthepits.

Productionofresidues Lowvulnerability

Lowvulnerability

Lowvulnerability

OnlytheCOMILOGmineandtheTiébaghiandNépouiminingsitesproducesignificantquantitiesofminingresidueduring theconcentrationstages.Thisresidueischemicallystable andcannotbeconsideredaswastethatisdangerousfortheenviron-ment.Moreover,inNew Caledonia,residuefromprocessingplantsisrecycledandsoldasaminingby-product.InSenegal,98%ofthesandisreturnedtotheenvironmentstraight aftertheuseablefractionhasbeenextracted.

Biodiversity Veryvulnerable



ThebiodiversityatNew Caledonia’ssitesisconsideredremarkablemainlybecauseofitshighlyendemicnature.Studiescarriedout withregardtointernationalstandardsshowedthattheminingsites inGabonandSenegalarenotasvulnerable.However,theSenegalmineisnexttoimportantmarketgardeningareas.

5.2.6.1 MININGENVIRONMENTMANAGEMENT STRUCTURES

Teamsdedicatedtoensuringthattheenviron-ment is factored into mining operations arepresentonthesitesandinthesubsidiariescon-cernedinGabon,SenegalandNew Caledonia.

Since 2010, within the framework of itsSustainableDevelopmentPolicy,ERAMEThasreinforcedtheconstruction,formalisationandinternational coordination of environmental

management tools formining activities. Thefollowinginitiativesweretakentoachievethis:

– AlltheminingsubsidiariesdrewupaMiningEnvironment action plan; the progress oftheseactionplansisregularlyreviewedwiththe Group’s Environment, Industrial RisksandProductDepartment.

– Acommunityofminingenvironmentexpertswassetupandmeetsregularly.ItsroleistodrawupguidelinesonthebestpracticestoapplythroughouttheGroupandtoencour-agesitestoexchangeexpertise.Sustainable

Developmentwasoneofthemainthemesdiscussed at the Geology, Mining andMineralProcessingactivitiesseminarheldinOctober2015inJohannesburg.

– The Group’s internal audit guidelines wereadaptedtothespecificitiesofminingactivi-ties,thusenablingtheminingsitestobefullyintegratedintotheGroup’sauditingsystem.

– Environment Management Systems com-patible with the requirements of standardISO 14001wereimplementedbytheminingsubsidiaries. Two of the five main SLN

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mining centreswere certified in 2015, andthethreeothersappliedforthiscertificationin December 2015. In 2012 COMILOGobtained its certification and in November2015thiscertificationwasrenewed.Itcov-erstheMoandaminingoperations,storageactivities,transportationoforeandsintertoOwendoandequipmentmaintenance.

– In recent years, all SLNmining sites haveupdatedtheirenvironmentalimpactstudieswithin the framework of the reform tothe New Caledonian Mining Code. Thisconsiderabletaskenableseachsitetohavecomprehensivestudiesontheenvironmentand ecosystems in which they operatetogether with efficient environment man-agementplanssuitedto theirownspecificcharacteristics.

– Atthesametime,since2012,alotofefforthasbeenputintodevelopingenvironmentalstudies for the COMILOG mine in Gabontogainabetterunderstandingof thesite’senvironmental characteristics with a viewto developing a pertinent strategy for therehabilitation of the site. These studiesconcern the soil, hydrology, hydrogeologyandbiodiversityofthesite.

– Lastly, in consultation with the authorities,COMILOG has decided to go beyond themandatoryregulationsimposeduponitandtocarryoutacomprehensiveenvironmentalimpactstudy toenable it tobetterpreparethe extension of Moanda’s mining opera-tionstotheedgeofthepresentdeposit(thedownwardslopingpartofthedepositwithintheCOMILOGconcession).

– In2014, thesupervisoryauthoritiescarriedout an environmental and social audit atthe Grande Côte mining site in Senegal.Theresultsofthisauditwereconsideredassatisfactory by the authorities and servedasabasistoupdatethesite’sEnvironmentManagementPlans.

5.2.6.2 DEVELOPINGRESOURCESRESPONSIBLY

ThedevelopmentofminingresourcesisoneoftheGroup’scorebusinesses.Mineralresourc-esare extracted in a responsibleway, i.e. byminimisingimpactduringtheexplorationandextraction stages, andby optimising the useofdeposits.InNew Caledonia,geologistslimitthe number of tracks opened, prefer indirectgeophysicalexplorationthatdoesnotimpactthe environment and transport equipmentby helicopter during exploration operations.Theyalsousemodellingtoolstoimprovetheirunderstandingofdepositsandbetterevaluateresources.This data is passedon tominerswhooptimisetheextractionstagesbyreduc-ingthevolumeoftailingshandled,bymappingareasprecisely,bykeepingthesurfaceareasof cleared land to aminimum, and bymaxi-misingtherecyclingofthemineralprofile.Onthesites,theserecoveryimprovementscanbeseenintheimplementationofGPSondiggersandthedisplayofloadingplansinthecabins.

Moreover, ERAMET researchers are seekingways of recycling tailings and ore with aneven lower content. This determination wasdemonstrated in Moanda, Gabon, whereCOMILOG incurred a capital expenditure of€12 million. The sand processing workshopcanrecoverthefinestfractionsoforebyusinga magnetic separation process developedwithintheGroup.

The SLN has developed techniques to useoresthatwereinitiallyconsideredasmarginaland thus significantly extend the life of de-positswhile reducing thefinalenvironmentalimpact. These results were achieved thanksto the construction of washing plants (OreProcessingPlants) that allow ore to be con-centrated without adding chemicals. Since2010, SLN has been developing co-productsfromthewashingunitandalsotheproductsselectivelystoredinheaps.Infiveyears,morethan 985,000 tonnes of products have been

developed,makingtherecyclingofsecondaryrawmaterialsaconcretereality.

Lastly, the Research Centre in Trappes isworking hard to develop innovative, highvalue-added, geo-metallurgical methods forthe non-destructive characterisation andmodellingofcomplexgeologicalprofiles.

5.2.6.3 WATERMANAGEMENT

ConcerningtheminingsitesinNew Caledonia,andtoalesserextentthoseinGabon,themainobjectiveofwatermanagement istopreventerosioncausedbythestrippingtheland,andthus prevent runoff water from taking sus-pendedsolids(SS)intoreceivingbodies.

Theavoidthis,sometimeago,SLNequippeditssiteswithsedimentationbasinswhichtrapthesuspendedsolidsandpreventthemfrombeing deposited in the natural environment.Before the water reaches these structures,many precautions are taken to limit erosion:keepingsitesoutofwater,reducinguncoveredareasasmuchaspossible,preservingnaturaldikes around the edges of stripping sites,organising runoff water to reduce its speed,implementing hydraulic locks, etc. Each ofSLN’sminingsiteshasaWaterManagementPlanwhichdescribes thesemeasureswhichfullycomplywithNew Caledonia’sregulations.ImplementingtheseWaterManagementPlansas and when operations develop representsan ongoing commitment and considerablecapitalexpenditure.Thus,overthepastthreeyears,thecapitalexpendituredevotedtowatermanagement at these sites has exceeded€15 million.

The specific know-how developed by SLNon erosion prevention was compiled into atechnicalguidewhichwaspublished in2005andrevised in2012(calledthe“BlueGuide”).ItisconsideredareferencebytheprofessioninNew CaledoniaandbytheGroupworldwide.

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InGabon,thesubjectoferosionislesssensi-tivebecausethedepositislocatedonaplateauandtheuppergeologicalstratumoffersbetterdrainage.Thisobservationwasconfirmedinastudycarriedoutin2012-2013tocharacterisethebodiesofwaterandthehydrologyofthesite.However,themineoperatorsareawareofthemeasurestheyneedtotaketolimiterosion.This subject is being carefully considered inrelationtothecurrentextensionofthedeposittotheslope.Therefore,aspecificwaterman-agementplanhasbeensetoutintheimpactstudyonthisextension.Itwasimplementedatthesametimeasoperationsandisthesubjectofspecialenvironmentalmonitoring.

Inaddition,overthepastfewyears,importantprogresshasbeenmadeinthemanagementof aqueous discharge from the ore concen-tration facility at the Moanda site. In 2010,basins to store ultra-fine residue were putinto operation to prevent discharges fromentering the riverMoulili. These basinswerebuilt torecoveroverflowwaterandredirect ittotheconcentrationfacility,toensurethatnodischargeenterstheriver.

InSenegal,thematterofwatermanagementissensitivebecauseminingoperationsusetwoaquifers, one of which is very important forthepeople and the country in general.Giventhis situation, every precaution is taken toensurethattheimpactofthemineisaslowaspossible.GCOhasateamofexpertsentirelydevotedtohydrogeology.

Thewatermanagementsystemwasdesignedinsuchawayastoavoidanyadditionalpres-sureonthegroundwater tablewhich isusedbytheneighbouringpopulationtowatertheircropsandhasbeenauthorisedbytherelevantdepartment of the State of Senegal. All themining facilities aremanaged in suchawayastokeepvariationsingroundwaterlevelstoaminimum.Thisaquiferismonitoredtwiceaday.More than80%of thenet consumption

ofthemineisusedtoensureaconstantlevelofwaterinthebasininwhichtheinstallationsfloat.For this, theminepumpswater fromadeeper aquifer. Limits on the pumping rateare set by authorities and since productionstartedtheyhavebeenobservedbyGCO.Thewaterfromthisaquiferisrecycledasmuchaspossible.Moreover, this aquifer is constantlymonitored.Tothisend,ninepiezometerswereinstalled in 2015 to check this deep aquifer(Maestrichtian).

Monthlyreportsonthismatteraresenttotheadministrationsconcerned.Continuousmoni-toringhasshownthatthemeasurestakenareeffective and that no harmful consequenceson thewater resources have been observedsinceoperationsstarted.

5.2.6.4. MANAGINGTAILINGSANDMININGWASTE

GiventheconsiderableamountoftailingsthatSLNhandlesinitsoperations,intermsofenvi-ronmentalprotection,itisextremelyimportanttostoretailings insuitablestructuresandre-plantthesitestoreduceerosionandminimisetheimpactonecosystemsandlandscapes.

Thanks to its long experience, SLN hasdeveloped efficient techniques, oneofwhichinvolvescreatingheapsoftailings.Thestruc-turesarebuiltaccordingtogoodpracticesandtheirlong-termstabilityisensured,evenduringtimesofcyclonicrainfall.Thesetailingsheapsare constantly monitored (internal investiga-tions) and regularly assessed by an outsidethird party. As it did for water managementtechniques, the SLN published a technicalguide that was updated in 2012, describingtheconstructionmethodsfortheseheapsandthesizingrules.ThisguideappliestoallSLN’sdirect and subcontractedmining operations.Moreover,tokeepclearingtoaminimumandaid in the rehabilitation of sites, for several

years the SLN has been creating spoil tipswithintheformermines.

InGabon,theissueisnotassensitivebecausemuchsmallervolumesoftailingsarehandledand the mining technique involves openingandclosingpitsoneaftertheother,thereforemostofthetailingsareputbackintothepitsstraightaftertheextractionprocess.

The mine in Senegal is not in the leastconcernedbythisproblembecausethesanddune is reconstructedafter thedredgingandextraction equipment has passed over theusablepart.

Theminingresidueproducedbyoreconcen-tration facilities at the mines is chemicallystable and, according to the regulations,does not constitute hazardous waste. InGabon, this residue isstored insevenbasinswith a capacity of onemillion cubicmeters.These structures are subject to continuousenvironmentalsurveillanceandmonitoring.InSenegal, very small quantities of residue areproducedbytheconcentrationplantand,givenitscharacteristics,thisresiduecanbereturnedto the natural environment when the duneis reformed.This residuemay contain smallvolumes of naturally low-level radioactivemineralswhicharemanagedinsuchawayastominimiseenvironmentalexposure.

5.2.6.5 REHABILITATIONOFMININGSITES

IN NEW CALEDONIA

AlltheSLNminingsitescarryoutcontinuousrehabilitation. This work includes reshapingand replanting the land. The methods andresultsof thisaredescribed inChapter 5.2.7PreservingBiodiversity.

Overthepasttwoyears,aspartoftheimple-mentationoftheenvironmentalmanagement

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systemformines,SLNhascompletelyrevisedits internal procedures and instructions forrehabilitation and formalised the know-howdevelopedoverthepasttenyearsorso.Theaimofthisistosharegoodpractices,ensuresite homogeneity, and allow rehabilitationoperations to be better integrated into shortandmediumtermmineplanning.Tothisend,aTechnicalGuidetotheoptimalmanagementoftopsoilwaspublishedforexample.

Out of SLN’s fivemining centres, three havea formalised master plan on rehabilitation.Master plans for theother twocentreshavealmostbeenfinalised.

Lastly,overthepastfewyears,aconsiderableamount of restorationwork to complete therehabilitationhasbeenconducted, continuedorfinished:

– In Poum, restoration work on the formerFabricetip(atipthathadsliddownbeforeSLN recovered the Poum Massif) wascompleted in 2014. This allowed morethan 130,000 m3 of fallen material to beevacuated and 50,000 m3 of hillside to beremodelled.In2015,thissitewasreplanted.

– OntheThioPlateautheSLNteamscontin-uedtoremodelaveryoldtailingstip.Mostoftheverylargeearthmovingworks(about200,000 m3ofearthmoved)andlandscaperemodelling was completed. It involvedimpressivewatercanalisationandmanage-mentsystemsandtheremodellingofthetip.

– InNépoui,theclosureoftheRacheltailingstipwascompletedwiththehydraulicseed-ingofaboutsixhectaresofland.

Thisyear,theSLN,incollaborationwiththerel-evantadministrations,conductedalarge-scaleoperation at the foot of themining sites, toremovegravelfromtwostreamsthatflowintotheriverThio(theNakaléandtheNemburu).

IN GABON

It ismucheasier to replant the landscape inGabonthaninNew Caledoniabecauseplants

recolonize the area naturally.When restoringsites, the landscaping aspects are of keyimportance;moundsoftailings,afewmetersinheightandcreatedduringoperations,havetoberemodelled.

– Since2010,theminingprocedurehasbeenreviewedsoas to integrate land reshapingasandwhenoperationsprogress.Remodel-lingworkonareasthatweredisturbedpriortothisdatewasalsoundertakenandisthesubjectofanannualobjectiveinthemine’senvironmental management system. Theresultsofthisworkaredescribedinthefol-lowingChapter 5.2.7PreservingBiodiversity.Inadditiontotheseconcreteinitiatives,priorstudiestodefineafullrehabilitationstrategyfortheBangombéminingplateaucontinuedin2015.

– Moreover, operations to restore the riverMoulilibyextractingtheultra-finesedimentdepositedintheriverbeddownstreamfromtheminewasheryhavebeenongoingsince2010.Attheendof2015,morethan8 milliontonnes ofmanganese sediment had beenexcavated.TheseoperationsarecarriedoutinstrictcompliancewiththeEnvironmentaland Social Management Plan drawn upfollowing the impact study. Moreover, inJune 2014, in a spirit of transparency andconsultation, COMILOG organised a dis-cussionseminarontherehabilitationofthedownstreamsectionoftheriver.Thissem-inar brought together all the stakeholdersconcerned (authorities, civil society, NGOs,scientists,etc.).Itenabledaconsensustobereachedandrecommendationstobemadefor this downstream section and thesewere then passed on to the supervisoryauthorities. This consultation process wasthefirstofitskindtobeconductedinGabon.In2015,theengineeringstudiesandimpactstudiespriortotheworkagreeduponafterthisseminarwereconductedinaccordancewiththeprinciplesoftransparencyandcon-sultationwithstakeholdersthatprevailedattheseminar.

IN SENEGAL

The specific operating method used at thismine,whereby thebeneficiationplantmovesalongthedepositgradually,leadstotheclear-ing of the vegetation in the area, composedof sparsely distributed grasses and trees.Neighbouring populations’ expectations arehigh with regard to the replanting of dunesreformedafterthemobilemininginstallationshavepassed,but this representsachallengedue to low rainfall anda short rainy season.Afterconsultingtheauthoritiesconcerned,thepopulationsandtheirrepresentatives,areha-bilitation strategywas formalised at the endof 2013. The rehabilitation work is regularlymonitoredwithina formalisedanddedicatedconsultation framework, set up in 2015 bytheSub-PrefectofMéouane.Anauditby theInspectorate for Forestry and Water ascer-tained that the rehabilitationoperationsweresuccessfulandtherehabilitationstrategyrig-orouslyapplied.Thisresultedinacompliancecertificate dated October 2015 being issuedfor the rehabilitation operations conductedsinceproductionstarted in2014.Theresultsof this work are described in the followingChapter 5.2.7PreservingBiodiversity.

5.2.7 PRESERVINGBIODIVERSITYThe multiplicity and location of ERAMET’smining and metallurgical activities haveenabledittoacquireconsiderableexperienceinsubjectsrelatedtobiodiversity.Boostedbyitsexperienceinbiodiversityconservation,andthemitigationof itsactivities’ impact, andatthe joint instigationof itsemployeesand theExecutive Committee, ERAMET decided toformaliseitsactionsbyadoptingaBiodiversityPolicy thatwasconveyedto theGroup’sem-ployeesin2015.

Thispolicyisbasedonthreemainareas:

1.Gainingabetterknowledgeandunderstand-ingofbiodiversityanditsfunctions.

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2.Takingactiontoconservebiodiversity.

3.Increasing awareness, exchanging andsharing.

ItaimstobringallthediversifiedpracticesoftheGroup’ssites together inoneagreement.The principles set forth are to be applied atsitesinamannerproportionaltolocalissues.The full text can be accessed directly onERAMET’swebsiteatthefollowingaddress:

http://www.eramet.com/sites/default/files/eramet_politique_biodiversite_fr.pdf

Overthepastfewyears,theGrouphastakenadvantageofitsexperienceto:

– takepartinlocal,nationalandinternationalad hocdiscussions;

– expandaskillwithinERAMETviaaninternalworkinggroupdevotedtobiodiversitysetupin2012;

– develop methodological tools to managebiodiversityatERAMETsitesinacoordinat-edmanner.

ThegoalistoreducetheimpactoftheGroup’sactivities,inamannerthatisproportionatetotherisks,throughoutthelifeofthesites.

Internationally,ERAMETisveryinvolvedintheBusinessandBiodiversityOffsetsProgramme(BBOP),arecognisedthink-tankthattheGroupjoined in 2011. In 2015, ERAMET took partin theannual seminar andchaired the think-tank’sexecutivecommittee.

InFrance,ERAMETplaysanactiveroleindis-cussionsonthedraftlawaimedatrecoveringbiodiversity,particularlythroughitschairingofMEDEF’sBiodiversityWorkingGroup (1).

5.2.7.1 BIODIVERSITYISSUES

The mining and metallurgical activities ofERAMET may have an impact on species,habitats and ecosystem services, whetherordinaryorremarkablebiodiversity,dependingonthelocation.However,asthefollowingtableillustrates,theGroup’smainbiodiversityissuesareconcentratedinthreegeographicalareas:New Caledonia,GabonandIndonesia.Despitealowtomoderatevulnerabilityofbiodiversity,agreatdealofeffortisputintothesiteinSen-egalbecausetherehabilitationandreplantingoperationsrepresentachallenge.

SITES NEW CALEDONIA GABON INDONESIA OTHERS

Numberofspecies(floraandflora)classifiedasCR (2)intheIUCNredlist (3) 4 2 (*) 0 (*) 0

Numberofspecies(floraandflora)classifiedasEN (4)intheIUCNredlist 24 4 (*) 14 (*) 0

(*) These values are based on the findings of characterisation studies carried out at the Weda Bay Nickel and Maboumine projects.(2) CR: IUCN classification referring to critically endangered species.(3) IUCN: International Union for Conservation of Nature.(4) EN: IUCN classification referring to endangered species.

TheGrouphasnominingormetallurgicalsitesin protected areas. However, this is not thecasewithSETRAG,theGabontraincompany,whoserailwaytrackscrosstheRAMSAR (2)oftheBas-Ogoouésite(for56 km),theRAMSARof the Rapides de Mboungou Badouma andDoumesite(for30 km)andtheLopéNationalPark (for 62 km)which is a UNESCOWorldHeritage site (3). The RAMSAR and NationalPark sites were set up in 2007 and 2009,i.e. 35 years after the construction of theTrans-Gabon railway. Moreover, SETRAGjoined forceswithGabon’sMinistry ofWaterandForestsandtheNGOWWF (4)tocombatpoachingbyraisingtheawarenessofitsper-sonnelandbyprohibitingthetransportationofprotectedspecies.

(1) MEDEF: Mouvement des Entreprises de France (movement of French enterprises).(2) The RAMSAR list designates wetlands of international importance.(3) UNESCO: United Nations Educational, Scientific and Cultural Organization.(4) WWF: World Wildlife Fund.

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Numberofsiteslocatedwithin10 km ofaprotectedarea 21

Averagedistanceofthesesites fromprotectedareas 2 km

TypesofprotectedareasNatureReserve,NationalParks,

ZNIEFF (1),ZICO (2),Natura 2000 (3), Ramsar,UNESCOWorldHeritage

(1) ZNIEFF: Zone d’Intérêt Écologique, Faunistique et Floristique—natural area of ecological, faunistic and floristic interest.(2) ZICO: Zone Importante pour la Conservation des Oiseaux—Important Bird Area (IBA).(3) Natura 2000 is a European network of Special Protection Areas and Special Areas of Conservation designated by Member States.

5.2.7.2 INNEW CALEDONIA

The Société Le Nickel (SLN) mines nickeldeposits at different sites in the heart of aregionknownforitsgreatbiodiversityandtheveryendemicnatureof itsplantsandanimalspecies.

TheSLNhasbeendevelopingreliableanden-vironmentally-friendly rehabilitation methodsformorethan30 years.Hydraulicseedingandplantinghaveledtothereplantingofapproxi-mately265 haofland.Thelowfertilityofthesoil,whichisrichinmetalsandpoorinorganicelements, togetherwith extreme rainfall con-

ditions,makethesestudiesverycomplicatedanddifficultandthusproduceresultsthatarenotalwaysveryapparentintheshortterm.

Since 2010, the SLN has put a great effortintore-organisingthis“replanting”activityandhas succeeded in considerably increasingthe surface areas treatedwhile at the sametimecontinuing to improve thequalityof thefeaturescreated.In2015,26 haoflandwererehabilitated and 26 ha were replanted. Thefollowing table indicates the surface areasaffectedandrehabilitatedinthelastfouryearsofoperationsatthefiveminingcentres.

SURFACEAREA(IN HECTARES) 2012 2013 2014 2015

Surfaceareaaffectedduringtheyear 41 60 48 52Surfacearearehabilitatedduringtheyear 50 13 26 26Surfaceareareplantedduringtheyear 29 21 21 26

On 1 January 2013, SLN’s Managementset up a Biodiversity Strategy based oninternational standards on biodiversityconservation.Through this, theSLNdrewupanoverallbiodiversitymanagementplanthatwasappliedateachminingcentrein2015viaflora and faunamanagement plans adaptedto thespecific localecological issues.Thesemanagementplansincludemeasurestoavoidcertain areas, measures to combat invasivespecies, measures to multiply vulnerablespeciesandinitiativestogainbetterscientificknowledge. The operational implementation

is accompanied by awareness-building andtrainingof technicians involved in theminingenvironmentandoperationsmanagers.

In addition, the SLN continued its work oncompensation, aimed at assessing thefeasibilityofachievingnonetlossinbiodiver-sity inNew Caledonia by following an offsetapproachinabiodiversityhotspot.Todothis,theSLNdevelopstoolstocalculatethelossesand gains in biodiversity with the supportof its scientific partners and the firm MICAEnvironnement.These toolsarebeing testedattwopilotsites.

Moreover,in2015,theSLN,togetherwiththeUnionofMining Industries inNew Caledoniaand Northern and Southern Provinces, tookpart in thecurrentdiscussionson the regionregardingcompensationand implementationtools.

5.2.7.3 INGABON

The CompagnieMinière de l’Ogooué (COMI-LOG) has been mining manganese ore ontheBangombéplateauinMoanda,Gabon,formorethanfiftyyears.

Althoughtherearestillconsiderable reservesofmanganeseoreonthisplateau,and itwillbepossible tomine them formore than tenoreventwentyyears,partoftheplateauhasalready been rehabilitated. The mining pro-cedurehasbeen reviewedsoas to integrateareshapingstageanddevelopthetopsoilasandwhenworkprogresses.Since2010,areasthatweredisruptedinthepasthavealsobeengraduallyreshaped.

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In2014,aminingenvironmentbrigadewascreatedandthissignificantly increasedthesurfaceareasrehabilitated,i.e.morethan220 haintwoyears.

SURFACEAREA(IN HECTARES) 2012 2013 2014 2015

Surfaceareaaffectedduringtheyear 46 64 67 52Surfacearearehabilitatedduringtheyear 28 31 95 119

Atthesametime,COMILOGcontinuesimprov-ingitsrehabilitationstrategybytakingaccountoffindingsfromthelastenvironmentalstudiesdeveloped for the Bangombé plateau andoperationsonitsedges.

Alongside themining activities of COMILOG,the Parc de la Lékédi which is 5 km fromBakoumba, in theSouth-Eastof theRepublicofGabon,covers14,000 hectaresofsavannah,galleryforestsandlakes.Itismadeupofthreereservesandishometorepresentativeexam-ples of localwildlife like buffaloes,mandrills,chimpanzees,gorillas,redriverhogs,panthers,andantelopes.

Theparkisdedicatedtopreservingprotectedspecies, observing animals and taking inyounganimalsthathavebecomeorphansasaresultofpoaching(monkeysandprimates).Itisalsoinvolvedinresearchintobiodiversityandthefightagainstpoaching,inpartnershipwith Gabonese and international scientistsandorganisations.

In2015,initiativeswillbetaken,incollaborationwithGabon’sMinistryofWaterandForests,toraisetheawarenessoflocalauthorities,villageand district leaders, and elected representa-tives. TheMandrillus project, set up in 2011inpartnershipwiththeCNRS,wascontinued.The researchers and field assistants studya population of mandrills in the wild with aviewtoansweringfundamentalquestionsonevolutionary ecology, anthropology, feedingecology,animalcommunication,etc.andalsomorespecificquestionsonconservationandepidemiology.

With the aim of protecting gorillas, the parkworkswith theAspinall Foundation. In2015,it launched a project to reintroduce orphangorillas into the park. It should culminate in

2017withthereleaseofthegroupformedintheBatékéPlateauNationalPark.

Theparkisalsoinvolvedin:

– a new programme, started in 2014, toreintroduce species that are threatened orextirpated in Gabon (e.g. Cobe de Fassaantelopes)with theNationalParksAgencyandtheInternationalUnionforConservationof Nature. The first reintroductions shouldtakeplacein2016;

– a plan to repopulate the Batéké PlateauNational Park with buffaloes in order toreinforcethepopulationof largecarnivores(lions).

In2013, theParkalso joined forceswith theNGO Conservation Justice and the RegionalDepartment forWater and Forests of UpperOgooué to conduct joint awareness-raisingand anti-poaching campaigns. The resultswere very positive in terms of seizure andconfiscationofillegalweapons.

Lastly, the park is Gabon’s leading producerof Tilapias. For neighbouring populations,this fish is a well-appreciated alternative tobushmeat.

InGabon,theMaboumineprojectinvolvingthebeneficiationofadepositofniobiumandrareearthsislocatedapproximately250 kmfromLibreville,tothesouthofLambaréné.Thesiteislocatedinquitearemoteareawhereforestryactivitieswerecarriedoutinpreviousdecades.

Theprojectimmediatelyrecognisedthesite’sgreatbiodiversitywhichisrelatedto:

– thelocationofthecountry:GabonispartoftheCongoBasin,theworld’ssecondlargestareaoftropicalrainforestaftertheAmazonBasin;

– the fact that it is close to wetlands ofinternational importance—the Bas-OgoouéRAMSARsite.

Soparticularattentionwaspaidtobiodiversityrightfromtheexplorationstage:

– the first characterization and evaluationstudiesonfaunaandflorain2012and2013;

– an initial evaluation of biodiversity issueswas carried out, based on the criteria setout in International Financial Corporation’sperformancestandard 6in2013and2014;

– theassistanceofrecognisedGaboneseandinternational experts: the National Centrefor Scientific and Technological Research(CENAREST), the National Herbarium ofLibreville, the Missouri Botanical Garden(MBG), the Wildlife Conservation Society(WCS),andthefirmsofenvironmentalcon-sultantsTEREAandGolder&Associates;

– biodiversity is taken into account in theprojectdevelopmentandlocationscenarios.

5.2.7.4 ININDONESIA

Weda Bay Nickel’s project to extract andbeneficiate nickel is located on the island ofHalmahera, in the equatorial region in Indo-nesia. There are two well-known ecologicalfeaturesofthisislandwhichislocated:

– near the three ecological boundaries ofWallace,WeberandLydekkerwhichmeansthat the islandhasamixtureofAsianandAustralasianspeciesoffaunaandflora;

– inthemiddleoftheCoralTrianglewhichisworld-renowned for its coastal andmarinebiodiversity and which stretches betweenthe coasts of the Philippines, the CelebesandPapua.

Withinthiscontext,ERAMETanditssubsidiaryWeda Bay Nickel (WBN) have placed biodi-versity at the heart of thisGreenfield projectandbetween2009and2014,withrecognisedIndonesianandinternationalexpertsandspe-cialists, they conducted studies to establishtheinitialstateoftheenvironmentandassesstheimpactonbiodiversity.

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InlinewiththeperformancestandardssetoutbytheInternationalFinanceCorporation(IFC),the project undertook to ensure a positiveimpactonbiodiversity,given thepresenceofcriticalhabitats.WBNensuredthatthemitiga-tionsequencewasappliedinthedevelopmentoftheprojectandestablishedaninitialstudyonthefeasibilityofoffsetsbasedontheBBOPstandardwithaviewtocompensatingforanyresidualnegativeimpactsoftheproject.

TheWBNprojectiscurrentlysuspended.

5.2.7.5 INSENEGAL

InSenegal,operationsinGrandeCôtestartedin2014.Theminingofmineralsandsinvolvesgradually clearing away the vegetation as afloatingdredgermovesalongsidethedeposit.

The biodiversity is not particularly vulnerablehere.Themainchallenge is therehabilitationandreplantingoflargeareasofland.

After reconstructing the dune, the replantingmethodsusedare thesameas thosedevel-oped inNew Caledonia: theareasconcernedare covered with topsoil which encouragesseedandplantgrowth,thenpioneerendemicspecies are sown or planted to stabilise thedunesintheshorttermandhelpotherspeciesrecolonizetheareainthelongterm.However,therearetwoparticularities:

– thereconstructionofadunelandscape;

– replantingoperationscanonlybeconductedduring the rainy period, between July andSeptember.

The first replanting tests were carried outon-site in 2014 and were conclusive. Twomethodswereused:

– seedsharvestedinthatareaweresown;

– localspeciesofplantsdevelopedinnurser-ieswereplanted.

In 2015, the rehabilitation methods wereproved to be successful and a much largerareawascovered.

SURFACEAREA(IN HECTARES) 2014 2015

Surfaceareaaffectedduringtheyear 150 188Surfacearearehabilitatedduringtheyear 2 45Surfaceareareplantedduringtheyear 2 45

5.3 INFORMATION ON SOCIETAL COMMITMENTS IN FAVOUR OF SUSTAINABLE DEVELOPMENT

5.3.1 TERRITORIAL,ECONOMIC AND SOCIAL IMPACTOFTHECOMPANY’SACTIVITY

5.3.1.1 EMPLOYMENTANDREGIONALDEVELOPMENT

TheERAMETgroupispresentinovertwentycountriesworldwideandactivelyparticipatesintheeconomicandsocialdevelopmentofthecountriesandregionsinwhichitoperates.Thisisseenintheemergenceofcompanieslinkedto the sites’ activities, the construction oflocalinfrastructuresthatareimportantforthedevelopmentandinvolvementofsitesinmajornationalor regionalsustainabledevelopmentinitiatives.

THE EMERGENCE OF COMPANIES

Groupsitesencouragetheemergenceoflocalcompanies because the nature and devel-

opmentofthesites’activitiesoften leadtoagreatdealofsubcontractingwhichgivesrisetospecificrequirements.

In2015,COMILOGinGaboncontinuedtore-inforceanddevelopthelocaleconomicfabricbyorganising regularmulti-themedmeetingswithallits300 subcontractingSMEs.Anotherconcrete example can be seen in GabonwheretheopeningoftheMoandametallurgycomplexgeneratedapproximately400 indirectjobs,inadditiontothe432 directjobs.

Subcontracting allows local populations tobecomeinvolvedinsites’economicactivities.InNew Caledonia, theSLN isat theoriginofmost of the industrial subcontracting in theregion.Theseactivitiesincludecontractwork,transporting ore, watering tracks, replanting,andmanagingwateratmines.Numerousin-dustrialsitesleadtothecreationofspecialisedSMEs.Forexample,theBrownEuropesiteinFranceledtothecreationofaSMEspecialisedinprecisionengineering.

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Sustainable Development / Information on societal commitments

CONSTRUCTION OF LOCAL INFRASTRUCTURES

The Group’s major subsidiaries can con-tribute directly to the construction of localinfrastructures.

InSenegalforexample,GrandeCôteOpération(GCO)setupcommunityprojectsinconsulta-tion with local populations and authorities:theseincludetheconstructionofanewprimaryschoolinNgouyeYewatt,anupper-secondaryschoolinNdjiligne,anewcommunitymarketinNdoucoura,abusstationinFassBoyeandaten-kilometreextensionofthewatersupplynetworkinDiogofor13 villages.

InNew Caledonia,aspartofseveralpartner-ships and agreements with mining townsandProvinces, theSLNhelpsfundmunicipalfacilities likestadiumsandcontributestotherepair, restorationandconstructionofcapitalgoods(bridges,roads,etc.).

INITIATIVES RELATED TO SUSTAINABLE DEVELOPMENT

Aware of the impact they can have on theirenvironmentandcommunities,therearemoreandmoresitesopeninguptocivilsocietyandundertaking regional and national initiativesrelatedtosustainabledevelopment.

Siterepresentativescontributetolocalandna-tionalstudieson themes likeenergysavings,clean production, climate plans and waterconservation,viatheirparticipationinworkinggroups on these themes. For example, theSandouville site in France gave a talk onsustainable steam in theUICcarriageof theCOP21ClimateTrainthatstoppedinLeHavre,closetoERAMET’sSandouvillesite.InSenegal,GCOtookpartintheSustainableDevelopmentShow.SomesitesarealsoinvolvedinnationalandEuropeanresearchprogrammestoworkon various themes like energy efficiency inindustryforexample.

Moregenerally,theinitiativesimplementedbyCOMILOGinGabonandGCOinSenegalareinlinewiththetwonationalprogrammescalled“Gabon Emergent” and “Senégal Emergent”aimedatthesustainabledevelopmentofthesetwocountries’potentialinhuman,naturalandmineralresources.

5.3.1.2 RELATIONSWITHNEIGHBOURINGANDLOCALPOPULATIONS

Aware of its responsibility towards societyand more specifically towards neighbouringandlocalpopulations,theGroupiscommittedto keeping its stakeholders informed of itsactivities by taking part in local informationcommitteesandbyraisingthegeneralpublic’sawarenessofsustainabledevelopment.

LOCAL INFORMATION BODIES

Assitesareoftenlocatedneartowns,andnow-adays in townsdue tourbanisation, theyaremorethaneverintegratedintolocallife.TheytakepartinlocalinformationandconsultationCommissions to keep populations informedabouttheiractivities,togivethemnewsonthesite, particularly regarding industrial risks, toensuretransparency.

Publicmeetingsgivesites theopportunity topresent a site’s new activities to their stake-holders.Theysometimesattracthundredsoflocalpeoplewhowanttolearnmoreabouttheindustrialsiteslocatedclosetotheirhomes.In2015, theFrench sites inPamiers andCom-mentry,andtheGCMCsiteinFreeport(UnitedStates) held public meetings to present themajorchangesof theyear, like theconstruc-tionofnewworkshops.OthersubsidiarieslikeErasteel Kloster A.B. (Sweden) inform localpopulations of any significant changes thathavetakenplaceattheirsiteviaothermedia,like local newspapers and newsletters, forexample.

Everyyearsince2010,WedaBayNickel(WBN)Indonesia has organised numerous informa-tion meetings for the local populations. In2015,itchangedtheformatofthesemeetings:Thisyear,WBNorganisedabigmeetingthatbroughttogetherpeoplefromover290 villagesallatonce,inthepresenceoftheprojectteam.

RAISING POPULATIONS’ AWARENESS ON SUSTAINABLE DEVELOPMENT

As regards sustainable development, theGroup’ssitesgofurtherthanjustinformingthepublic; theyhelp train thepublicandraise itsawareness.

The four examples presented here illustratethe initiatives taken to raise people’s aware-ness on the different aspects of sustainabledevelopmentinthedifferentcountriesinwhichtheGroupoperates.

Eramine Sudamerica in Argentina organisestraining sessions on the collection andrecycling of waste. In Sweden, the ErasteelKloster A. B. sites organise informationcampaignsforyoungstudentsfromUpplandprovince and Dalarna province to raise theirawareness of sustainable development andtheenvironment.IntheUnitedStates,theBearMetallurgicalsite,incooperationwithaneigh-bouringplant, offered the local communityafreepaperrecyclingprogrammeviatheAbitibiPaperRetrieverassociation.

Lastly, in Gabon, information campaigns onpoachingareorganisedeveryyeartoraisetheawarenessoflocalpopulations.

5.3.2 RELATIONSWITHOTHERSTAKEHOLDERSAllERAMETsites,whetherinvolvedinmining,metallurgy,pyro-metallurgyorhydro-metallur-gy,interactwithawidevarietyofstakeholderson a daily basis, i.e. neighbours, schools,customers, public authorities, associations,etc.Theseinteractionscantakemanyforms—presentingtheirsitesandcelebratingevents.

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Oneofthefirststeps,priortoanydiscussions,istoidentifyandmapthestakeholders,whoseprofilesvaryaccording to theirsites, locationand activity. Using simple tools (Excel files)or specific tools, many of the Group’s sitesformalisethesemaps.

5.3.2.1 INITIATIVESTHATPROMOTEDIALOGUE

There aremany types of dialoguewith localstakeholders. These can be local consulta-tions,specificinitiatives,informationmeetings,orOpenDaysandeachsiteactsaccordingtoitsownsensibilitiesandresources,inlinewiththeGroup’ssustainabledevelopmentpolicy.

OPENING THE SITES TO THE PUBLIC

Toensuretransparencyandcommunicatebet-ter,theGroup’ssitesregularlyopentheirdoorstoalltypesofstakeholders—employees’fami-lies,neighbouringpopulations,localauthorities,customers,etc.Thesevisitscanhostbetweena fewdozen and a fewhundred peoplewhocometodiscovertheirfacilitiesandactivities.

They canbeorganised as part of a nationalplansuchastheFrench“NationalScienceandEngineeringDay”orbeorganisedtomeetalo-caldemand.In2015,thePamierssite(France)organised as many as 24 visits, includingpublicpresentationstoshowlocalpeopleandschools the activities involved in metallurgyandtheenvironment.

InNew Caledonia,1,700 visitorscametotheSLN Doniambo plant and took part in threeopen days based on the theme “SLN gener-ations”.The fact that somany people cameshowsthereisagreatinterestforthelargestlocal company, its miners and metallurgistswhohavebeenforgingitsidentityforgenera-tions.Visitingtheindustrialsiteandseeingthe

exhibition devoted to “SLNGenerations”wasanemotionalmoment for theeldersand the7th generation employees. Visitors were alsoabletotalktoemployeesabouttheireconom-ic,environmentalandsocietalcommitments.

CELEBRATING EVENTS

Industrialandminingsitesregularlycelebrateevents thatare important to themselvesandtheirstakeholders.

At the end of 2015, ERAMET Researchinaugurated its new mineral processing hallin the presence of over 130 guests. Duringtheday,visitorswereable togoonaguidedtour of the site, attend presentations on theresearch centre’s skills (hydro-metallurgy, py-ro-metallurgy,mineralprocessing,engineering,modelling,HSE, etc.) andmeet experts fromERAMETResearch.InNorway,theSaudasitecelebrated its 100th anniversary in the com-panyof representativesof localandnationalauthorities and, in particular, the NorwegianMinisterforTrade.

5.3.2.2 DIALOGUEWITHEDUCATIONAL INSTITUTIONS AND SUPPORT FOR EDUCATION AND TRAINING

TheGroupiscommittedtoapolicyofactivesupportfortheeducationandtrainingoflocalcommunities and youngpeople in particular.Thissupporttakesmanyformsonthesites,attheheadofficeandwithintheGroup’sprojects.

DIALOGUE WITH EDUCATIONAL INSTITUTIONS

NumeroussitesandsubsidiariesoftheGrouphavestrongtieswitheducationalinstitutions.Thismanifestsitselfin:

– sitevisitsorganisedforclassesofalllevels;

– classsponsorships;

– partnershipswitheducationalinstitutions;

– participation in the definition of trainingprogrammesforeducationalinstitutions.

Cooperation programmes with local institu-tions are also implemented. The French siteofAubert&DuvalLes Ancizes(Puy-de-Dôme)onceagaintookpartinanorganisationcalled“ScienceSchools”.Madeupofpupils, teach-ers, instructors, representatives of Aubert &Duvalandlocalpartners,thisorganisationsetsupeventsrelatedtoeducationandin2015itorganisedtwomajorevents:

– introducing sustainable development toprimary school classes via support withclassprojects,organisingadaywhenalltheclassespresentedtheirworkandworkshopspreparedbyAubert&Duval;

– receiving teachers, university lecturers andscientistsatthesitetodiscussathemere-latedtosustainabledevelopmentandhaveaninstructivetourofaninstallation.

Group representatives regularly share theirexpertisebygivingtalkstospecialisedmasterclasses at schools of higher education. Forexample,atalkonenergyefficiencywasgivenatINSAandatalkontheenvironmentandthesocialchallengesofminingandindustrialproj-ectswasgivenattheParisÉcole des Mines.

In Gabon, the COMILOG and Mabouminesubsidiaries helped set up the training pro-grammesforthefutureMinesandMetallurgySchoolinMoanda.

In Indonesia, theWBNprojectmakesaccesstotrainingeasierbycontinuingtofinancetheschooling of 30 students and by financing10 newgrantsforstudentsfromlocalvillages,currentlyattendingtheIndonesianuniversities

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ofMakassar,Manado,Bandung,Jakarta,andTernate.

HOSTING STUDENTS

Everyyear,mostof theGroup’ssiteshost in-terns,apprenticesandPhDstudentsforafewweeksora fewmonths.Thestudentscomefrom various horizons: junior high schools,highschools,specialisedschools,universities,andtopgraduateschools,andtheylearnhowanindustrialsiteoperates.Theyarealsogiventhe opportunity to put the knowledge theyacquiredonvocationalcoursesintopractice.

Therefore,theGroup’ssitesplayanimportantrolelocallyasregardsknowledgetransfer.TheNorwegianPorsgrunnsiteisagoodexampleofthis.In2015,ithostedstudentsofalllevelsviapartnershipswithvariousschoolsandforafewweeksithostedsomeGermanstudentsdoing apprenticeships at BASF. Overall, theGrouphostsapproximately1,000 studentsorapprenticeseveryyear.

5.3.2.3 DIALOGUEWITH THEAUTHORITIES

AlltheGroup’ssitesareinregularcontactwiththeir authorities to discuss any subject thateitherpartymaybringup.ThisisthecasewiththeLithiumprojectinArgentina.Everymonth,ameetingwiththeSecretariatofMinesisheldto report on the progress of the project andexchangeinformationonitsdevelopment.

Evenoutsidethecontextofeverydayregulato-ryobligations,numeroussiteskeepincontactwiththeirauthorities;theyregularlyinvitethemtovisittheirfacilitiesandlearnabouttheirbusi-nessandactivities.Thesevisitsaregoodop-portunitiestopresentwhathasbeenachievedwithcapitalexpenditure,whatprojectsare inthepipelineandthemainchallenges.Thiswas

the case when the new Moanda MetallurgyComplex in Gabon was inaugurated in thepresence of the President of the GaboneseRepublic, local elected representatives, thePrefect,theGovernorandtheirteams.In2015,theGCOsiteinSenegalreceivedadelegationofseveralmembersoftheParliamentarynet-workforGoodMiningGovernance,accompa-niedbytheNGOsOxfamandForumCivil.Onthisoccasion,theysawtheindustrialsiteandtheprocessimplementedandvisitedthenewvillagenearthesiteaswellastherehabilitationsites.

Relations with authorities are also fosteredby the Group’s Head Office. The variousentities of the ERAMET groupmeet upwithministerialofficesanddepartmentstopresentthe Group’s activities and concerns, to takepart inworkinggroups,organisevisitsofourfacilities, or simply answer their enquiries.SimilarexchangesarehadwiththeEuropeanauthoritiesinBrussels.

5.3.2.4 STRONGINVOLVEMENT IN PROFESSIONAL BODIES

Whetheratnational,Europeanorinternationallevel,ERAMETisveryinvolvedinprofessionalbodies that represent its own activities andgenerally contribute to the promotion anddevelopmentofcompaniesandtheirindustrialandcommercialactivities.

There are different levels of Group involve-ment. Several members of the Comex andBoard members represent the Group inbodies concerned with governance andmanagement:thisisthecasewiththeAlliance des Minerais, Minéraux et Métaux (A3M), theExtractive IndustriesandPrimaryProcessingStrategyCommittee,theMEDEF,EuroAlliages,theEuropeanPowderMetallurgyAssociation,the International Manganese Institute and

theNickelInstitute.Inaddition,severalGroupexpertstakepartintheworkofvariouscom-missions and theme-based working groupssetupbytheseprofessionalbodies.

5.3.2.5 PARTNERSHIPSANDSPONSORSHIPS

The ERAMET group is involved, to varyingdegrees, in different partnerships and spon-sorships, based on various themes like theenvironment,supportforthepopulation,sportandculture.

LOCAL PARTNERSHIPS AND SPONSORSHIPS

The vastmajority of sites have entered intooneormorepartnershipswith localassocia-tionstofinanceactivities.ThesumsinvolvedareafewhundredorafewthousandEurosineachcase.SportingactivitiesweresponsoredbyFrench,Norwegian,Chinese,andNew Cale-donian sites. In Gabon, COMILOG funds theMangaSportsportingassociationseveryyearandhasbeendoingsoforseveraldecades.

Sites encourage the development of culturalinitiativesandall contribute financially to thedevelopment of various activities, i.e. sup-porting shows aimed at developing people’sinterest in classical music in disadvantagedareas (Eurotungstène, France), supporting afestival of sacred music (Pamiers, France)and an international dance festival (Tertre,Belgium).InNorway,thePorsgrunnsiteonceagainsponsoredthetown’stheatrefestivalthisyear.

Inthefieldofcommunityandeducationalsup-port,charitiesreceivedmanysponsorshipsfortheirprojects.Forexample,inGabon,thefightagainstHIV/AIDSreceivedsupport;intheUnit-edStates,smalllocalprojectsweresponsoredand inArgentina, thedevelopmentofquinoa

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cropswassupported.In2015,theGCOinSen-egaldevelopedapartnershipwiththeNationalEco-VillageAgency(ANEV)toprovidesupportinsettingupanewvillage.Amongotherthings,theimplementationoftheEco-Villageconceptledtotheconstructionof35 housesequippedwithrunningwaterandsolar-poweredlighting,theconstructionoffacilitiesforthecommunitylikeaschool,adispensaryandevenamosque.Moreover, reforestation was achieved bycreating15 hectaresofwoodlandaroundthevillage.Tobearwitnesstothegoodpracticesimplemented in this project, the governmentofSenegalinvitedrepresentativesoftheGCO,together with the ANEV, to take part in theCOP21heldinParisin2015.

Some sites fund environmental protectioninitiatives or enter into partnerships withNGOs. In 2015, the SLN entered into a part-nership with Mocamana, an environmentalassociationinvolvedinreforestationinitiativesinNew Caledonia.The fourNorwegian sitesof TiZir Titanium & Iron in Tyssedal, andERAMETNorwayinKvinesdal,PorsgrunnandSauda have been partners with Bellona forseveral years. This NGO provides themwithadviceandexpertiseonsubjectsrelatedtotheenvironment.

FOUNDATIONS

TheERAMETgroupnowsupportstwofounda-tionscreatedin2010.ThefirstwassetupaspartoftheWBNprojectandthesecondwascreatedundertheaegisofAubert&Duvalandisdedicatedtothissubsidiary’sFrenchsites.

TheSaloiFoundation,setupandsponsoredbytheWBNproject in Indonesia,aimsto imple-ment community development programmesonHalmaheraIsland.Inconcreteterms,itactsin four areas: education, the local economy,health,environmentalandculturalinitiatives.

The Aubert & Duval Foundation aims todevelop initiatives that contribute to thevitalityof theFrenchregions inwhichAubert&Duvalsitesoperateandtosupportlocalmi-cro-economicprojectsandassociations.TheFoundationfocusesontwoareas:promotingregional action (local economic initiatives,

micro-entrepreneurship, the development oftourism,etc.)andhumandevelopment(sport-ing,cultural,andleisureactivities,trainingandeducation,etc.).TheFoundationcollectsappli-cationsfromtheFrenchAubert&Duvalsitesseekingfundingforsponsorships,studiestheprojectsandthenarbitrates.TheFoundation’sExecutiveCommitteethenallocatesabudgettothesitesfortheirsports,culturalorcharitysponsorships.

So once again in 2015, the Aubert & DuvalFoundation sponsored the CombraillesTraining Centre (Puy-de-Dôme), that startedoperatingin2015andthatprovidestechnicaltrainingfordifferentpeople:apprentices,thoseon sandwich courses, salaried employeesfollowingongoing training courses, job seek-ers,etc.Locatednearthesite inLes Ancizes(France)andopentoalllocalcompaniesandgroups, the Combrailles Training Centre cancaterforupto500 traineesperyear.

Moreover in 2015, AFFRI (The African Foun-dation forResourcesand Industry)setupatthe initiative of ERAMET and MDL, the twoshareholders of TiZir Ltd which owns theGrande Côte deposit in Senegal, continueddesigning and preparing an economic andsocial developmentproject for thebenefitofruralcommunitieslocatedclosetotheGrandeCôteproject.

5.3.3 RESPONSIBLEGOVERNANCE

5.3.3.1 CODEOFETHICSANDTRANSPARENCY

In line with the values ERAMET group hasestablished for itself and to respond moreeffectively to the global issues it faces, on1 January 2015, the Group adopted a newCodeofEthics that hasbeen translated intothe twelve languages usedwithin the Groupandwhichhasfourgoals:

– respondtosocialchangebetter;

– specify,clarifyandexplaintheessentialno-tions concerning the working environmentoftheGroup’semployees;

– give clearer, more explicit indications onthe legalobligations imposedoneveryone,and take account of changes in nationaland international legislation governing theGroup’sactivities;

– ensuretheinternalcoherenceofdocumentsandusefullycompleteasystemof internalrulesandcommitments.

Inthecourseof2015,theCodeofEthicswaswidely circulated.Allmanagers in theGroup,whatever the country of the site, received acommunications kit to help them raise theawarenessof their teamswith regard to theCodeofEthics.

Lastly,ataskforcehasbeensetuptodeveloparapidlearningmoduleontheCodeofEthicsin2016foralltheGroup’semployees.

Of all the themes developed in this Code,business ethicshasa verymobilising effect.MorethanhalfoftheGroup’ssiteshavespenttimediscussingthissubjectintheCompanyatleastonceintheyear.

Moreover, via its employees, ERAMET is in-volvedinnational,Europeanandinternationalfederationsrepresentingthesector’sinterests.It is for thisreasonthat theGroupregisteredwith the European Union’s TransparencyRegister.

5.3.3.2 EXTRACTIVEINDUSTRIESTRANSPARENCY INITIATIVE (EITI)

ERAMET has been a supporter of EITI(Extractive Industries Transparency Initiative)since 2011. Based on a set of principlesand rules, aswell as a coalitionmadeupofgovernments,companies,civilsocietygroups,investorsandinternationalorganisations,EITIpromotes transparency on local revenues.In signing up to these principles, ERAMETshows its intention to beneficiate naturalresources responsiblyandbe transparentonmoney transfers between businesses and

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hostcountries,butalso to report regularly toitsstakeholders.

Bytakingpartinnationalandmulti-stakehold-erworkinggroups,ERAMET’sEITIcorrespon-dentshelpimplementtheEITIinthedifferentcountries in which the Group operates, i.e.the countries that adhere to this initiative orthathaveapplied formembership.Moreover,ERAMETkeepsaclosewatchonthechangesand implementationofFrance’smembershipoftheEITIannouncedbythePresidentoftheFrenchRepublicattheG8SummitheldinJune2013inMoscow.Lastly,ERAMETfollowstheprogressofthereformofgovernanceandtheEITIstandardscheduledfor2016.

5.3.3.3 CUSTOMERRELATIONS—PRODUCT INFORMATION

TheGroup’ssitesimplementproducttraceabil-itywhichinvolvesprovidinginformationonallthestagesoftheprocess,i.e.thereceiptofrawmaterials, the manufacturing of the finishedproductanddeliverytothecustomer.

When compulsory, the sites produce safetydatasheets(SDS)tocirculateinformationonchemicals.However,whenitisnotcompulso-rytodrawupaSDSbuttheGroupconsidersthatexternalandinternalstakeholdersshouldhave sufficient information on products andsubstances, sites draw up RMIS (Risk Man-agementInformationSheet),whicharenearlythesameasSDS.

Moreover, theGroup’s entities and sites onlyselltheirproductstootherindustrialoperators(“BusinesstoBusiness”relations).Withinthisframework, theGroupproduces full informa-tionon theproduct and itsdownstreamuseanddistributesittoitscustomers.Numerousinformation and discussion forums areorganisedforplayersinvolvedinupstreamand

downstreamsectors of themetal andmetalprocessingindustry.

Product traceability is mainly carried outupstream to identify the source of the rawmaterials. Those who use our products,especiallymajorcustomersfromcutting-edgesectors,attachgreatimportancetotraceabilitybecauseitenablesthemtotracktherawma-terialsused tomakeaparticularpartand toidentifyallthestagesthatledtotheproductionofthefinishedproductfromthismaterial.

5.3.4 RESPONSIBLEPURCHASING

5.3.4.1 THEGROUP’SRESPONSIBLEPURCHASINGCHARTER

Inforcesince2013,theResponsiblePurchas-ing Charter formalises the Group’s desire toensurethatpurchasingintegratessustainabledevelopmentissuesbetteranditstrivestopro-moteaprocessofcontinuous improvement.ERAMET’sexpectationswithregardtoitssup-pliers, subcontractors and service providersconcernthreemainareas:workingconditionsand labourstandards, theenvironment,goodbusinesspractices.

The in-house deployment and awarenessbuilding continued in 2015. One-third of theGroup’s industrial and mining sites give theResponsiblePurchasingCharter to theirsub-contractors and suppliers and the long-termobjectiveisthatallERAMETsiteswilldothis.

Somesiteshavealsoformalisedaresponsiblepurchasingprocessmorespecifically.This isthecasewithCOMILOG inGabonwhichhasdrawnupa“SupplierGuide”describingtheRe-sponsiblePurchasingCharterand thevaluesonwhichitisbased.

5.3.4.2 RELATIONSWITHSUBCONTRACTORS AND SUPPLIERS

Due to its activities, ERAMET has recourseto purchasing and subcontracting. Greatattentionispaidtothissubjectbecauseofthespecific issues associated with the Group’sactivities and also because of the strongexpectationsofthestakeholdersinthismatter.

ThereforeERAMETgivespriority tosuppliersthatofferproductsandservicesthatareenvi-ronmentally friendly and socially responsiblewhileremainingverycompetitiveandprefertoworkwithlocalsuppliers.

With purchases representing almost XPF30 billion(€251.40 million),90%ofwhicharemade locally, a significant proportion of theSLN’sexpensesareincurredthroughpurchas-esfromcompaniesinNew Caledonia,andtheSLNtakesaccountofsocialandenvironmen-talaspectsinitsapproachtolocalsuppliers.

InlinewiththeprinciplessetoutintheRespon-siblePurchasingCharter,moreandmoresitesare integratingCSRcriteria into theirassess-mentsofsubcontractorsandsuppliers.ThisisthecasewithsomeERAMETNickelsites(SLNinNew Caledonia,WBNinIndonesia)ERAMETAlloys (Pamiers, France) and ERAMETMan-ganese(GuilinandGECCChongzuoinChina)whichin2015,addedaseriesofquestionsonenvironmentalprotectionandbusinessethicstotheirsupplierassessments.

At theFrenchsitesofAubert&DuvalTAF inGennevilliers and Les Ancizes, suppliers arealwaysrequiredtoprovideindicatorsonsafetyand the environment, including their compli-ancewithcertificationssuchastheISO 14001,etc.Moreover, thesite inLes Ancizeschecksthedependencyratioofitssuppliersandaimstoensurethatitdoesnotrepresentmorethan20%oftheirsales.

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5.4 INDUSTRIAL AND MINING PROJECTS

ERAMET is driving projects, currently at dif-ferentstagesofmaturity,someofwhicharedescribedbelow:

1.theWedaBayNickelprojectinIndonesia;

2.theMaboumineprojectinGabon;

3.the new electrical power plant inNew Caledonia;

4.theSETRAGmodernisationproject;

5.theLithiumprojectinArgentina;

6.theplantoextendtitaniumactivitiesinVaril-hes,France(MKAD),andtheplantorecycleaeronauticaltitanium(EcoTitanium);

7.theplantocreateaddedvaluebyrecyclingmetals, for theErasteelCommentry site inFrance.

ItshouldbepointedoutthattheBoardmeet-ingon14 October2015suspendedtheGroup’smajorprojects.

AlltheseprojectsaredevelopedinaccordancewiththeGroup’sSustainableDevelopmentpol-icy,withitsCodeofEthicsandenvironmental,health and safety charters and internationalreference standards. The aim is to establisha long-term trusting relationship with thecommunitiespresentintheregionswheretheGroupoperates, and to prevent any violationof the basic rights of these communities,particularly the native communities, as ap-propriate. This is achieved by implementingmechanismsfordialoguewithrepresentativesofthestakeholdersconcerned.

Environmental, social, corporate and healthaspects are taken into account right fromthe beginning. Experts and specialists insustainable development are incorporatedintotheindustrial,technical,legalandfinancial

teamsandparticipate in thevarioussteeringandmanagementcommitteesright fromtheproject brief, feasibility and pre-constructionstages. Likewise, they take part in the duediligenceauditsinthecaseofplannedM&As,and in due diligence audits related to assetdisposals.Lastly,theenvironmentalandsocialaspects for which the Group can be heldliableare integrated intotheriskassessmentand management process for these capitalexpenditures.

5.4.1 THEWEDABAYNICKEL PROJECT IN INDONESIADuetothedepressedmarketconditions,mostprojects for nickel-processing plants in Indo-nesiahaveeitherbeenputonholdoraread-vancingatamuchslowerpace,andERAMETis no exception. Together with its JapaneseandIndonesianpartners,theGroupdecidedtosuspend theWedaBayNickelproject (WBN)in2014.

At Eurotungstène (Isère, France), the level ofqualityof itssuppliers isassessedaccordingtotheirfulfilmentofthecommitmentsmade.Boasting triple certification, the site adoptsa continuous improvement approach withits suppliers. To ensure this approach, all ofEurotungstène’s “key” suppliersareassessedby the Purchasing department every year.Asthe internalcustomersare involved in theassessment, it isanopportunitytoexchangeideasandmakeprogress.Thistypeofannualassessment of suppliers that directly affectthe final product delivered to the customerisalsoconductedonthesitesoftheGroup’ssubsidiaryErasteel.

Moreover, the Group makes sure that itssuppliers comply with the European REACHregulations and wishes to promote goodbusinesspractices.ERAMETalsotookpartinvarious French initiatives (SME pact, Innova-

tiveSME)aimedat improving thevisibilityofcommitmentsamongsuppliers.

5.3.4.3 MONITORINGANDSUPPLYOF“CONFLICT MINERALS”

SomeoftheGroup’ssitesusetungstenortinintheirproductionprocess.Thesetwomineralsareconsideredas“conflict”mineralsbecauseinsomeregionsoftheworldtheactivitymaybe used to finance armed groups and fuelcivilwars.Eurotungstènepayscloseattentionto the conditions in which these resourcesare mined, to compliance with the “ConflictMineral Trade Act”, more commonly calledthe Dodd Frank Act, and to the guidelinesset out for multinational companies by theOECD.EurotungstèneisalsoamemberoftheTI-CMC(TungstenIndustry—ConflictMineralsCouncil)andassuch is listedasacompanythatgetsitstungstensuppliesfromcompliant

suppliers (“conflict free smelters”).Moreover,Eurotungstènehassetupaprocesswherebyitgetssupplierstomakeawrittencommitmenttomeettheserequirementsanditsystemati-callyexaminesanypotentialnewentrantinthesuppliers’list.

In 2014, the subsidiaries of ERAMET Alloys,Aubert & Duval and Erasteel, adopted a“ConflictMineralsPolicyStatement”specifyingthatERAMETAlloyswillnotobtainsuppliesofmineralsfromareasofconflictandrequiresitssupplierstogiveinformationonthesourceofsupplyofthesemetals.

Lastly, theGroup’sPublicAffairsDepartmentiskeepingacloseeyeonworkontheplantointroduce a European Regulation on conflictmineralsandanyimplicationsfortheGroupifthisregulationisadopted.

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Asa result, the impact studyaddendabeingdrawn up to take account of the latest rec-ommendations issued by the InternationalFinance Corporation in 2012, as well as thelatest engineering adaptations to the projectdesignhavebeensuspended.

However,theteamsdedicatedtosustainabledevelopmentatthesiteremainmobilisedandarefocussingtheireffortsonmonitoringandmanagingenvironmental and social aspects,ensuringcompliancewith theEquatorPrinci-ples, the International Financial Corporation’sPerformance Standards, the Group’s policiesandIndonesianregulations.

In line with its commitments, WBN activelymaintainsrelationswithlocalcommunities,In-donesianauthoritiesanditsscientificpartners.

Thedeploymentofitssocialandenvironmen-talmanagementplansinthefieldandwithitssubcontractorsstrengthens thedevelopmentof the project’s overall environmental andsocialmanagementsystem.

Inaccordancewith thestatementmade, theprojecthasbeensuspendeduntilthemiddleof2017attheearliest.

5.4.2 THEMABOUMINEBENEFICIATION OF NIOBIUM ANDRAREEARTHSINGABONThe company Maboumine, a subsidiary ofCOMILOG,holdsaminingexploration licencefor the Mabounié polymetallic deposit, nearthetownofLambarénéinGabon.Thisdepositis rich in niobium (used in steels and superalloys), rareearths (groupof17 metalsusedinhybridcars,windturbines,oilcatalysts,etc.)anduranium.

After the first initial characterisation studiesconductedbetween2012and2013,asocialandenvironmental impactstudywascarried

out in 2015 as part of plans to construct apilotplant.Thisstudyfoundthatthepotentialimpactsareacceptable.

For several years, ERAMET’s researchcentre has been working with internationalresearchlaboratoriestodevelopaninnovativehydro-metallurgical process to extract thevaluableelementsfromthisdeposit.

In 2014 and 2015, a framework study wascarried out to draw up a projected businessplanforanindustrialprojectofwhichthespec-ifications had not yet been confirmed, giventhe uncertaintiesweighing onmarket prices,particularlyrareearths.

Moreover, the level of technical risksmeansthatR&Dstudiesneedtobecontinuedinordertodevelopaneconomicallyviableprocess.

Discussions are currently underwaywith allthe stakeholders, especially the GaboneseRepublic,concerningthefutureoftheproject.

5.4.3 PLANSFORANEWELECTRICPOWERPLANTINNEW CALEDONIAInNew Caledonia,attheDoniamboindustrialsite,theSLNrecoversitsnickeloresviaapyro-metallurgicalprocess.Thedrying,calcinationandreductionfurnacesaremostlyfuelledbyafuelplantdatingbackto1972.

Thisprojectmeets two fundamental require-mentsfortheSLN’ssite:

1.Replace the present power plant and thussustaintheindustrialactivity.

2.Improve performance and considerablyreducetheenvironmentalfootprint(thenewpowerplantwillcomplywiththemostrecentEuropean environmental standards on airemissions).

In2015,theSLNappliedforitsbuildingpermitandoperatingpermit.

However, confronted with difficult economicconditions, the ERAMET group decided tosuspendtheprojectattheendof2015.

5.4.4 THESETRAGMODERNISATION PROJECTThe Trans-Gabon railway crosses Gabon,fromLibreville to Franceville, over a distanceof710 kmandhas52 engineeringstructuresand 22 stations. Aswell as transporting orefromCOMILOGtotheportofOwendo,itplaysa strategic role in the country’s economicdevelopment.

ThecompanySETRAG(Sociétéd’ExploitationduTransgabonais)operatestherailwaywithinthe framework of a Concession Agreementdrawn up in 2005 and updated in 2015. SE-TRAGmanages the infrastructure, the trafficandrailwayoperations(passengers,wood,oreandothergoods).

Over the past several years, SETRAG hassteppedupthepaceofmaintenanceandres-torationworkontheTrans-Gabonrailwayline.Theseeffortsgobeyondnormalmaintenance.

Yetdespiteall thiswork, thegeneralstateofthe railway continues to penalise networkoperations. Therefore, SETRAG has decidedto intensify the infrastructure renovationprogramme. This requires a high level ofcapitalinvestmentthatcannotbefinancedbyown resources. So the company has turnedtotheInternationalFinancialCorporationandProparcotostudythepossibilityoffundingforthisprogramme.

In order to complete the application forfunding and also to manage the risks andimpacts related to this programme and toapplyfortheoperatingpermit,between2014and2015,SETRAGlaunchedanenvironmentalandsocial assessment studyanddevelopedmanagementplansanddedicatedinitiatives.

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5.4.5 THELITHIUMPROJECT IN ARGENTINALithium is one of the metals with a highgrowth potential—to develop energy storageinportableequipmentandelectricvehiclesforexample.ERAMETteamshavedevelopedaninnovativeextractionprocess for theproduc-tionoflithiumsaltsusedinthemanufactureofcathodesforLithium-ionbatteries.

Thisisanalternativewayofproducinglithiumsaltsfrombrineandisfundamentallydifferentfromthetraditionalprocessinvolvingthenat-ural evaporation of brine. The environmentalimpactof thisnewprocess is far lower thanthat of the traditional process. This processwasdevelopedinpartnershipwithIFPEN(IFPEnergiesNouvelles)andtenpatentshavebeenfiledforit.

In2012,theArgentiniansubsidiary,ERAMINESUDAMERICA S.A., discovered a deposit oflithiumintheProvinceofSalta,inthenorthofArgentina: the “salar de Centenario-Ratones”. Since then, it has conducted an explorationprogramme which revealed considerablepotentialresources,andenoughtodevelopalarge-scale industrial project (see chapter onresources—reserves).

In 2014, the Salta government endorsed theagreement signed by REMSA, a public com-panyintheSaltaProvince,andERAMINESU-DAMERICAwhichallowsERAMETtoacquireminingsharesinthedepositthatextendsoveralmost500 squarekilometres.Theagreementnot only allows ERAMINE SUDAMERICA tocarry out a programme of work to estimatetheresourcesandevaluatethedeposit,italsoprovides for the taxation framework for itsindustrialoperations.

In2015,theexplorationprogrammewascon-tinuedtoconfirmtheextentofthedepositandenhancethereliabilityofestimationsoflithiumresources. The exploration activities, suchas the drilling, pumping tests, hydrodynamicmodelling, engineering studies and socialand environmental studies required for thedevelopment of the project were conducted

in accordance with the Group’s SustainableDevelopmentpolicy,inotherwords,incompli-ancewithArgentina’sregulationsandinterna-tionalstandards.ERAMINESUDAMERICAhasregular exchanges with communities livingnearthesiteoftheprojectandhaslaunchedseveraldevelopmentprojectswiththem.

5.4.6 THEEXTENSIONOF TITANIUM ACTIVITIES INVARILHESINFRANCE(MKAD)ANDTHEAERONAUTICAL TITANIUM RECYCLING PROJECT (ECOTITANIUM)Inorder toprovideacomprehensiveofferingtoitscustomers,MKAD,ajointventurecreatedbyMecachromeandAubert&Duval, locatednear thepresentPamierssite, in thetownofVarhiles, less than one hour from Toulouse,intends to develop a unit specialising infinishingaviation-grade titaniumpartsand toconsolidatetheGroup’spositionincloseddie-forgedparts.This two-stageproject involvesthecreationofanewplantthatwillcompletethe European aviation-grade titanium partssector.

In2015,MKADobtained itsoperatingpermitfor the first phase (production in one singleplace of current parts divided between nu-meroussubcontractors)and ispreparing thetechnicalfilesforthesecondphase(steppingupitscurrentandfutureprogrammes).

Moreover, theconstructionofEcoTitaniumisstillunderwayontheSaint-Georges-de-Monssite, with a view to setting up the first avia-tion-gradetitaniumrecyclingsector.

5.4.7 THEPRODUCTIONOFHIGH-SPEEDSTEELANDTHERECYCLINGOFBATTERIES AND CATALYSTS ONTHESAMESITEINFRANCEIn 2015, ERAMETdecided to group togetherthe activities of three plants on the ErasteelCommentrysite:

– therecyclingofalkalineandsalinebatteriesthatusedtobecarriedoutatValdiFeursbutwhichstoppedin2011;

– the recycling of oil catalysts carried out atValdiLe Palais-sur-Vienne;

– theproductionofhigh-speedsteelscarriedout at Erasteel Commentry which usesmetalsrecycledbyValdi.

This project benefits from strong industrialsynergiesandavaluechainapproachbasedon innovative and efficient resources. It islocatedintheheartofthetownanditsfutureactivities will depend upon a “Seveso highthreshold” statusdue to thestorageof largequantities of used oil catalysts. This projectshows the shift from steelmaking towasterecyclingusingtheprocessemployedbyValdiinthepasttogetherwithmanyenvironmental,technicalandindustrialimprovements.

The environment, safety and stakeholderconsultations were taken into account rightfromtheframeworkstudy.Designcriteriaweredefined,anapplicationforanoperatingpermit(DDAE)wasdrawnupandtherewereregulardiscussionswithlocalpopulations,localelect-edrepresentatives,nearbymanufacturers,andtheRegionalDirectoratefor theEnvironment,PlanningandHousing(DREAL).

The application for the DDAE was filed inMarch 2015. The public enquirywas carriedoutinJuneandJuly2015andwasprecededbyaninformationmeetingwithlocalresidents.ThebuildingpermitwasgrantedinJune2015andtheapplicationforanoperatingpermitisbeingstudiedatthebeginningof2016.

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Sustainable Development / Responsibility for chemicals

5.5 RESPONSIBILITY FOR CHEMICALS

5.5.1 CHALLENGESERAMET is one of the world’s leadingproducers of alloy metals, super-alloys andhigh-performance steels, and also producesa series of chemicals resulting from varioushydro-metallurgical and recycling processes.The Group pays special attention to themanagement of the chemical substancesandmixturesitusesorproduces,andstrivesto replace the most dangerous substanceswheneverpossibletoensureahighlevelofriskcontrolandprotection forhumanhealthandtheenvironment.

Because of its diversified activities, ERAMETacts on two fronts—it both uses and pro-duces substances and chemical mixtures.Indeed, the development of these productsrequires the use of ores, minerals, recycledsecondary materials and a series of metaladditives to ensure the right composition oftheshadesrequired.Theuseofchemicalsas“commodities”(acids,bases,salts,etc.)isalsocommon.Moreover,theGrouphastomanagenumerousproductsusedinlaboratories,inthemaintenanceoffacilitiesandforotherspecificpurposes like treating water, trapping gases,andairborneparticles.

Toimproveknowledgeontheintrinsicproper-tiesandimpactoftheproductsandtospecifyriskmanagementmeasures, a great deal ofcommitment is required. This involves bothanalysing the dangerousness of the metalsin certain products and taking their physicalform intoaccountaccordingtowhether they

aresoldassolidsornot.TheGroup’sminingactivitiesarealsointegratedintothesestudies.

The Group’s commitment is reflected in itsinvolvement in professional organisationsdedicated to developing robust scientificknowledgeandalso in the roleof lead regis-trant takenonbysomesubsidiaries tomeetthe requirements of the European REAChregulation (Registration, Evaluation and Au-thorisationofChemicals).

At European level, special attention is stillpaid to the authorities’ monitoring of theselectionofsubstancesofveryhighconcernandtotheprocessthatmayresultfromtheirinclusioninthecandidatelistforauthorisation.Indeed, the REACh regulation includes anauthorisation procedure aimed at graduallyreplacing substances of very high concernwithlesshazardoussubstances.SelectionofthesesubstancesinvolvestheMemberStates,theEuropeanCommissionandtheEuropeanChemicalsAgency(ECHA),aswellasproduc-ingcompanies, importersandusersofthesesubstancesandotherinterestedparties.Thisselectionprocesscontinuedthroughout2015.TheGrouptookpartinsomeofthisworkandactively contributed to discussions betweenproducers and users, particularly within theprofessionalorganisationsconcerned.

Atan international level,newregulationsandimportantrevisionscameintoeffect in2015.In theUSA inparticular, the “HAZCOM2012”revisionwas introducedby theOSHA (Occu-pationalSafetyandHealthAdministration). It

concerns the hazard standards communica-tion which now adopts the UN GHS bench-marksystem(GlobalHarmonizedSystem).ItismucheasiernowtocompareanAmericanSafetyDataSheet(SDS)withaEuropeanone.Thisglobalisationandharmonisationofrulesandstandardshasalsoledtotheapplicationof regulations that are similar to REACh inSouthKorea,ChinaandTurkey.ERAMET fol-lowedtheapplicationofthesenewregulationsclosely,butconsidersthatthe impactson itsmarketsarelimited.

5.5.2 THEORGANISATIONAT ERAMETIn 2015, the internal organisation of theGroup with regard chemicals managementbecame centralised at Group ManagementlevelinordertoincreasethesynergybetweenDivisionsandtoimprovetheexchangeofgoodpractices. Five years after the first REAChregistrations,chemical riskmanagementhasreachedmaturityandregulationsandpractic-esaretendingtobecomeglobalized.

5.5.2.1 HARMONISINGPRODUCTDOCUMENTS

Oneofthefundamentalmissionsofchemicalsexpertise is to provide support to in-houseclients like departments involved in sales,logistics and industrialmatters. In 2015, thisinvolved revisingmore than 100 SafetyDataSheets (SDS) of commercialised products.ThisupdateledtothepermanenteliminationinJune2015oftheformerhazardassessmentclassification system based on directive EU67/548,whichwasreplacedbytheapplicationoftheEU 1272/2008regulation,knownastheCLPregulation.

Theupdatesmustalwaysbeavailable in theclient’s language.Thismeans always having

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the SDS available in the five European lan-guages: French, English, German, Italian andSpanishandbeingabletoprovideversionsinSwedish, Slovakian, Portuguese, Chinese, Ar-abic,KoreanandJapanese,dependingontheclients.Theexposurescenarios forallsafetydata sheets distributed in Europe were alsoreviewed. This second part of the SDS, onlyrequiredinEurope,specifiestheconditionsofuseandtheprecautionstotaketoensuresafeandcontrolledlevelsofexposure.

Thisneworganisationalsoallowsexpertisetobeprovidedintheupstreamstagesofprojectdesign.

5.5.2.2 CENTRALISINGSCIENTIFICEXPERTISE

In Europe in 2015, the hazard classificationsystem based on the CLP regulationswas applied to mixtures. For a mining andmetallurgical Group like ERAMET, mixturesare usually alloys, i.e. a particularmixture ofdifferentmetals,basedonaspecificstructureandfixedprocess.

TheknowledgeacquiredbydifferentDivisions,on each of the constituents may partiallyexplain the chemical characteristics and theimpactsonhealthandtheenvironment.There-fore, it is efficient to centralise informationandstudiesfromeachDivision(nickel,cobalt,manganese,copper,etc.)inordertodescribethetoxicologicalandecotoxicologicalproper-tiesoftheGroup’salloys.

To illustrate the importance of this inter-divi-sionalexchangeof informationonalloys, theNickel Division carried out different studiesoncobaltmetalin2015.Theyprovideabetterunderstanding of how thismetal behaves inan alloy structure and provide justificationfor placing the alloy in a specific hazardclassification.

This complementarity also applies to ores.Scientific studies had already been carried

out on nickel ore and they concluded that itpresentednodanger. In2015,similarstudieswerecarriedoutonmanganeseoreandtheyalso concluded that it presented almost nodanger,exceptforapropertythatcausedmildirritation to the eyes. This finding led to therevisionofthemanganeseoreclassification.Anoteindicating“Eyesirritant2”wasaddedandaSDSwasprovided.

Further information can also be requestedby authorities like the European ChemicalsAgency (ECHA) which, following the exam-inationofREAChfilesonseveralmanganesecompounds(manganesedioxide,manganesecarbonate, silicomanganese and ferroman-ganese slag), decided to ask for furthertoxicologicaltestsattheendof2014.In2015,the required information was collected bythemanganesecompoundsconsortiumandcompletedwithtoxicologicaltests.Therefore,the Manganese consortium will be able toreply to theauthoritieswithin thedeadline, inthesecondhalfof2016.

5.5.2.3 COMPLEMENTARITYINCOMPLIANCEWITHREGULATIONS

The latestchanges toSEVESO III alsocameintoforceinEuropein2015.Thisdirectivepro-videsaframeworkforthepreventionofmajorindustrial risks, and greatly strengthens thelink between the SEVESO classification andthe chemicals classification. A great deal ofsupportonthismatterwasprovidedtothoseEuropeansitesintheGroupconcerned.

The aim was to facilitate the exchange ofinformationandknow-howfor thecharacter-isation of products and risk control, in ordertoestablish themostaccurateandpertinentclassifications and to adapt the preventivemeasures for potential risks as efficiently aspossible.Forsites,thisalsoallowsanyissuesrelatedtoproductregulationstobemanagedinanefficientandcross-functionalmanner.

This rigorous approach taken to understandproductsalsoappliestosuppliers.Numerousauditsonthequalityandconformityof infor-mationinthesuppliers’SCSwerealsocarriedoutintheAlloysDivision.

Moreover, changes to the classification ofhazardousproducts from the constitution ofREACh files also have consequences on theconditions under which hazardousmaterialsare transported. Some changes in the clas-sification of hazardous products can evenleadtomodificationsininternationalshippingregulations. This “upstream-downstream”connection between the two hazard classifi-cationshavetobeanticipatedandmonitoredto ensure deliveries complywith regulations.In2015,theGroupstrivedtodothiswiththeutmostrigour.

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Sustainable Development / Health and Safety

5.6 HEALTH AND SAFETY

5.6.1 STRUCTUREANDFUNCTIONINGOFHEALTHAND SAFETYThe Group’s commitment to OccupationalHealthandSafetyismadeatthehighestlevelsof the Company by the Group’s ExecutiveCommittee. ERAMET’s Director of HumanResources is in charge of the dedicatedinitiatives.

This commitment ismaterialised in aSafetyCharterthatwasrevisedin2015andaGroupHealthPolicydrawnupin2007.

TheDirectorofSafetyandPreventionandtheGroup’sMedicalOfficerreportdirectlytohim.Together,theydrawuptheHealthandSafetypolicy and orientations for the Group andpropose them to the Executive Committee.Oncetheyareapproved,theseorientationsareapplied in theDivisionsby theDeputyCEOs,assisted by Health and Safety coordinators,then they are applied at the sites by theDirectorsofthesites,whoareassistedbysitehealthandsafetycoordinators.

Toprotectthehealthandsafetyofemployeesas well as subcontractors working on sites,preventive measures are taken at worksta-tions. They aim to ensure the fitness foremployment of these workers and preventaccidentsandoccupationalillnesses.

Ateachsite,occupationalhealthprofessionalsmonitor the health of the employees. TheGroup’s main sites (Les Ancizes, PamiersforAubertandDuval,Doniambofor theSLN,

MoandaforCOMILOG,OwendoforSETRAG)haveanOccupationalHealthDepartmentwithoneormoreoccupationalhealthofficersandnurses.

In2015,toimproveefficiency,thisorganisationwasreviewed:newmanagementritualsweredefinedand implemented, teamswithexper-tiseonhazardoussubstanceexposure(CMR,dust, etc.) were grouped together at Grouplevel and new guidelines were formalised.This maximizes synergies between thesecurity, health, and environment functions,andalsoGroupauditingandriskmanagementfunctions, and represents amove towards acommoncultureofriskmanagement.

5.6.2 HEALTH&SAFETYORIENTATIONS AND ACHIEVEMENTSIN2015In 2015, six agreements related to safetywereconcludedandsigned.Theyconcernthefollowingsites:

– ForAlloys:UKAD,ErasteelGmbH.

– ForManganese:Baltimore,Marietta,SaudaandChongzo.

Moreover, in 2015, the Group’s orientationsconcerned:

– ThereorganisationofHSEwithintheframe-workofOptimum.

– Initiativesinthefieldcontinued,particularlyassociating first-level supervision with theuseofSafetytools,bothforemployeesandforthemainsubcontractors.

– Resources were centred on dealing withworkstationspresentingthehighestrisks.

– Reporting and analyses associated withaccidentswereimproved.

– Medical surveillance of employees wasimproved.

– The quality of life at work was improvedby taking more account of changemanagement.

– Support for the epidemiological studies inMoanda.

Theachievementsdescribedbelowaresomeexamples of how these orientations wereimplemented:

5.6.2.1 OVERHAULINGTHEGROUP’SHSEAUDITINGPROCESS

In order to improve the HSE managementprocess, theGroup’s internalauditingsystemthathadbeeninplaceformorethan10 yearswasreviewed.

Twotypesofauditsweredefined:

– auditstoreviewrisks;

– detailed audits focused on certain priorityrisks.

Newreportingformatswerecreatedtomakethemmoreglobal,easiertoassimilatebytheentitiesbeingauditedandperfectlyinlinewiththeriskmanagementprocess.Therefore,fromjustafewgraphs,managementcaninterpretthemainissuesidentifiedbytheaudit.

Lastly, the ritualsofmonitoringpost-auditingactions were reorganised between the divi-sionsandtheGroup’sHSEdepartments.

EightGroupHSEauditswerecarriedoutatthethree divisions’ industrial andmining sites in2015,resultinginthemappingofspecificriskcontrol.

5.6.2.2 GENERALIMPLEMENTATIONOF“DETECTION-ACTION”TOOL

In 2015, the “detection-action” tool wasgeneralised. This means that any ERAMETemployeecantakeimmediateactiontoreduce

157


the riskswhenheor shedetects a situationthatpresentsaspecifichazard.

Thisprocesshastwoobjectives:

– ensuregreaterstrictnessbyforcingworkerstoseeworkingsituationsintermsofsafety;

– create a reflex whereby workers reactsimmediatelywhenfacedwithanypotentiallydangeroussituation.

Everyone, including supervisors, workers,office staff and administrative staff, helpedimproveworkingsituationsbytakingstandardinitiatives like tidying up, making the rightchoice concerning tools and PPE (PersonalProtective Equipment), correcting posturesandattitudesthatposeariskandsignpostinghazardsthatcannotbeeliminatedimmediate-ly.Onitsown,thepioneerofthisapproach,i.e.theAlloysDivision,tookover180,000 initiativestoreducerisks.

5.6.2.3 SYSTEMATIZINGSAFETY-ORIENTED INTERACTIONS IN THE FIELD

To improve managerial proximity, the Groupdeploysitssupervisors,ofalllevels,andtrainsthemtointeractwithoperatorsinthefieldofSafety.

Thisapproachhasthreeobjectives:

– mark the commitment and rigour of thewholemanagerialline;

– improve pragmatic knowledge on hazardsin the field via a benevolent approach foroperators;

– ensure supervisors gain a better under-standingoftheactualproblemsthatteamsencounter in thefieldso theycanhelp theteamsbetter.

Deployed by members of the COMEX eachtimetheyvisit thesite, these interactionsareessentialaspectsthathelpimprovethecultureofSafetyintheGroup.

5.6.2.4 TAKINGACCOUNTOFTHEQUALITYOFLIFEATWORKANDPSYCHO-SOCIALRISKSWHENREORGANISINGHEADOFFICEFUNCTIONS AND SUPPORT FUNCTIONS

Importantchangesintheorganisationofheadoffice functions and support functions maylead to psychosocial risks. They have beenreducedthankstoseveralinitiativesaswellasinstitutionalsocialdialogue:

– Aparticipativeapproachtodevelopcost-re-duction measures, involving 70 managersin workshops, generated ideas that werethen submitted to the Group’s COMEX forarbitration. This phase of preparation andthought allowedmanagers to take controlof thechangestheyconsideredusefulandnecessary.

– A human impact study was carried outto measure the risks associated with thechanges requested and risk control initia-tivesweredefinedandimplemented.

– The project was conducted with asmuchtransparency as possible and differentcommunicationtoolsweretargetedateachcategoryofstafftosupporttheinformationpassed on to social partners: “Optimumcafés”, periodical letters, informationmeet-ings,etc.

– Specific support was offered to each ofthe staff categories affected: “managerworkshops” targeted supervisors to trainthemhowtousechangemanagementtoolsand discuss difficulties with their peers.Confidentialandpersonal “InformationandAdvice”consultations,availabletoeveryone,provided support to employees affectedbytheplanstohelpthemplanforacareeroutsideofERAMET.Lastly,anoccupationalpsychologistwasavailableatset timesforanyonewhowantedtohaveananonymousconsultation.

All these measures allowed employees toovercomethedifficultiesthatsuchareorgan-isationimplies.

5.6.2.5 INTRODUCTIONOFAHEALTHINDICATOR PILOT SYSTEM

Thehealthdepartment inPamiers (Aubert&Duval) is testingaseriesofhealth indicatorsto track the impact of occupational healthpreventionmeasures.These indicatorscoverawareness raising initiatives, job retentioninitiatives, chemical risks and the quality oflifeatwork.Theyarebeingdeployedgradually,startingwiththeAlloysDivision.

5.6.2.6 MOANDAEPIDEMIOLOGICALSTUDY

Several recommendations were made atthe8th FEDSYSMINandoneofthemwastoconduct anepidemiological study.Therefore,to assess the potential impact of itsminingand industrialactivitiesonthehealthof localpopulations,COMILOGconductedaseriesofenvironmentalandhealthstudies inMoandathatlastedmorethantwoyears.

The populations’ exposure to fine dust andMn dust by inhalation and by ingestionwasassessed. At the same time, a case-controlstudy and surveys of local populationswerecarriedout.ThefindingswerepresentedtotheGaboneseMinistryofHealthdirectorategener-al,toCOMILOG’sManagementCommittee,tothe FormalisedConsultation Framework andtolocalpopulations(atameetinginMoandatownhall).

ThemainconclusionsindicatethatCOMILOG’sminingandindustrialactivitiesdonotpresentanyhealthhazardsfor localpopulations.Thewholedossier(sixreports)isintheprocessofbeingapprovedby theGaboneseMinistryofHealth.

Recommendations from these studies willcontinue to be discussed and decisions will

158

Sustainable Development / Health and Safety

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Therewere122 accidentswithlost-timeintheGroup(employeesandtemporarystaff),down14%comparedto2014.Thefrequencyrateas-sociatedwiththisis4.8.TheGrouphadsetanobjectiveofunder5.In2015,theseverityratewas0.26.Nofatalaccidentsweredeclared.

Theseencouragingresultsconfirmtheadjust-mentstotheSafetyCharterandtheareasofwork considered. This approach, based onproximity to thefieldand the involvementofthe wholemanagerial line, from directors toworkshop foremen, will be consolidated in2016.

be takenwithin the Formalised ConsultationFrameworkaspartofitsongoingactivities.

5.6.2.7 ASBESTOS-RELATEDRISKMANAGEMENT

FortheGroup,asbestos-relatedriskmanage-ment concerns environmental asbestos atNickelminesandproductscontainingasbes-tosatindustrialsites.

InNew Caledonia,therearespecificoperatingprocedures to control asbestos-containingseams if they are discovered during miningoperations.Operators are trained to take thenecessary precautions and specific medicalsurveillance is provided, in consultation with

theauthorities,socialpartnersandothermineoperators.

None of the Group’s industrial sites haveever produced or transformed asbestos norsoldmaterialsthatarefullyorpartlymadeofasbestos.ThismaterialhasneverbeenarawmaterialfortheCompanybutonlyaconstitu-entofsomeofthematerialsusedin itsheattransfer equipment. For example, heat-resis-tantmaterialscontainingasbestos,usedinthepastattheLes Ancizessite,representedlessthan1%ofallheat-resistantmaterialsusedatthesite.

Inlinewithapplicableregulations,mostnota-bly inFrance, technicalasbestosauditswerecarriedout by approved inspectors at all the

Group’sindustrialsites,andtheauditfindingsand recommendations have been used topreparedetailedactionplans.

5.6.3 HEALTH&SAFETYPERFORMANCEThe Groupmonitors the accident rate at itssites constantly and the results are formallyreviewed every month. The indicators moni-toredconcernthefrequencyrateof lost-timeaccidentsandof accidentswithout lost-timeforERAMETstaffandfortemporarystaffandthe accident severity rate for ERAMET staff.The trends of these indicators are displayedbelow.

159


5.7 HUMAN RESOURCES5.7.1 THEGROUP’SHUMANRESOURCES POLICYThe ERAMET group feels that the men andwomen in its community are the leadingfactors that drive its performance. They areresponsible for thestrengthof thecustomerrelationship, which is at the heart of theGroup’s business development. They areresponsible for future growth driven by en-hanced technological leadership and on themostcomprehensivepossibledemonstrationoftheirmanagerialandtechnicalcapabilities.Lastly,theyareresponsibleforcontrollingthemanagement and operational excellence ineachDivision.

TheERAMETgroup’sHumanResourcesstrat-egy isanadaptationof thestrategyadoptedbytheGrouptodealwith itschallenges. It isbasedonsixmainstrategicobjectives:

1.Identify,attract, retainanddeveloptalentedpeople, reflected inourwill todiversifyourtalentpoolandmake itmore international,withmorewomen inmanagerialpositions,develop local talent, anticipate skills thatwillberequired,developcross-functionality,versatility andmobility to provide staff forour projects and absorb cycles, preparetomorrow’s leaders, develop and pass onskills.

2.Develop and recognise performance thatcreates value by ensuring that a perfor-mance process is implemented andman-aged, supporting employees’ performanceandstrengtheningtherelationbetweenpayandperformance:basic, variableand long-termpay.

3.Strengthen managerial skills, define andpromotetheroleofmanagementbyassoci-atingitandtrainingittomanageitsteams.

4.Help implement an employee-friendlyworking environment that complies withGroupvaluesbyaimingfor‘zeroaccidents’,bypromotingwell-beingatwork illustratedby equality, transparency, exemplary man-agement,ethicsandtheobservanceoftheGroup values, by active management ofissues related to Occupational Health, theimplementationonallsitesofnationalreg-ulationsandILOdirectives,andbyensuringour employees benefit from social protec-tion tocovermajor riskswhilemaintainingourcompetitiveness.

5.Develop and promote constructive rela-tions with social partners by ensuring theimplementation of a decentralised butcoordinated approach anchored to theeconomicrealitiesofcompaniesandsites,by promoting transparent and continuousdialogue,byensuring thatsystemsandor-ganisationsevolveandbybeingexemplaryinthehandlingofsocialissues.

6.DeveloptheoperationalexcellenceoftheHRfunction,byacquiringefficientanappropri-ate tools, bypresentingaclearand legibleorganisationthatservesitsin-houseclients,by placing theHR function at the heart ofstrategicandbusinessobjectives.

While ERAMET has a very marked inter-national dimension (more than 62% of itsworkforce works outside mainland France),the Group also relies on subsidiaries whichare highly present and well-known locally.The Group’s human resourcesmanagementis thus decentralised but it is still based onunifyingprinciplesandtoolsthataresharedbyallGroupcompaniesandsites.

ERAMETgroup’ssocialpolicyclearly reflectsitsdesirefor:

– strong Group management involvement(information and discussion seminars,developmentcourses,meetingswithGroupandCompanymanagers,intraandinter-divi-sionalcareerdevelopmentandmobility);

– employee involvement in the life of theirCompanyandGroupviaregular,clearinfor-mation (regularlydistributedCompanyandsite newsletters, Group intranet, inductiondaysfornewrecruits);

– dialoguewithsocialpartners,bothformally(remuneration policy, training, welfare andemploymentmanagement)andonaday-to-daybasisonsites.

5.7.2.2 BREAKDOWNOFTOTALWORKFORCEBYDIVISION

Between2014and2015,thelistedworkforceremainedstable.ItfellforalldivisionsandtheHoldingDivision,withtheexceptionoftheAlloysDivisioninwhichtheworkforceincreasedfollowingthetransferofValdi’sactivities.ThedecisiontofreezetherecruitmentofmanagerialstaffparticularlyaffectedtheHoldingcompanywheretheworkforcehascontinuedtofallsince2014.

Workforce per Division

2013 2014 2015BREAKDOWNIN

2015

Holdingcompany 514 455 439 3%NickelDivision 2,974 2,809 2,777 20%ManganeseDivision 5,673 5,982 5,898 42%AlloysDivision 4,865 4,746 4,824 35%

TOTAL 14,026 13,992 13,938 100%

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Sustainable Development / Human Resources

5.7.2 EMPLOYMENT

5.7.2.1 TOTALWORKFORCEANDGEOGRAPHICBREAKDOWN

On31 December2015, theGroupemployed13,938 employees in20 countries,comparedwith13,992 employeeson31 December2014.TheHRreportinginforcewithintheGroupconcernstheconsolidatedworkforceandthemanagedworkforce.

Workforce on 31 December (open-ended and fixed-term contracts)

2013 2014 2015BREAKDOWNIN

2015

France 5,368 5,171 5,159 37%Europeex.France 1,370 1,345 1,316 9%TheAmericas 693 665 666 5%Africa 3,331 3,747 3,771 27%Asia 1,045 854 822 6%Pacific 2,219 2,210 2,204 16%

TOTAL 14,026 13,992 13,938 100%

Total workforce in 2015 by geographical area

Pacific 16%

Asia 6%

Africa 27%

The Americas 5%

Europe ex France 9%

France 37%

Total workforce in 2015 by Division

Holding3 %

Nickel20 %

Manganese42 %

Alloys35 %

5.7.2.3 BREAKDOWNOFTOTALWORKFORCEBYTYPEOFEMPLOYMENT CONTRACT

On 31 December 2015, 92% of the Group’semployeeshadopen-endedcontracts.

Thetechnicalnatureofminingandmetallurgi-caljobscallsforalongperiodofprofessionaltraining, and very little use ismadeof short-termcontracts.

29% of the fixed-term contracts concernedAsia where this type of contract is more

widespread and corresponds to modes ofmanagementthatarespecifictothisregion.

Employees on fixed-term contracts withintheGrouphavethesamesocialentitlementsandbenefits (insuranceschemes, healthcarecosts, profit-sharing, etc.,) as employees onopen-endedcontracts.

Workforce by type of employment contract

2013 2014 2015 BREAKDOWNIN2015

Open-endedcontracts 13,079 12,763 12,812 92Fixed-termcontracts 947 1,229 1,126 8

TOTAL 14,026 13,992 13,938 100%Temporarystaff(infull-timeequivalent) 2,557 1,137 934

5.7.2.4 BREAKDOWNOFTOTALWORKFORCEBYSOCIO-PROFESSIONAL CATEGORY

ERAMET has extended the French notion ofsocio-professional category to all its entitieswhichsharethefollowingdefinitions:

Workers workers(bluecollars)

Supervisorystaff clerks,technicians, foremen(whitecollars)

Managementexecutives,managers,post-graduatestaff,civilengineers(whitecollars)

Workforce by socio-professional category

2013 2014 2015

Workers 52% 54% 53%Supervisorystaff 34% 32% 33%Management 14% 14% 14%

5.7.2.5 AVERAGEAGEANDAGEPYRAMID

The average age of employees in theGroupwas42on31 December2015.

WORKERSSUPERVISORY

STAFF MANAGEMENT

41 45 45

Employeesover50accountedfor27%ofthetotalworkforceandthoseaged30orunderalittleover14%ofthetotalworkforce.

ERAMETkeepsaclosewatchonchangestothemanagersagepyramid, inordertoantici-patetheretirementofitskeymembersofstaff.SincethePeopleReviewprocesswassetuplocally,inDivisionsandatGrouplevel,ERAMEThasaccesstoupdatedsuccessionplanseveryyearforallitskeypositions.

Group age pyramid

≥ 65 ans61-64 ans56-60 ans51-55 ans46-50 ans41-45 ans36-40 ans31-35 ans26-30 ans21-25 ans

≤ 20 ans 52

1,456549

2,0512,191

2,2382,089

1,8801,098

27953

161


5.7.2.6 RECRUITMENT

Companies intheGrouprecruited1,156 employ-eesin2015(excludingtransfersbetweencompa-

nies),down17.7%comparedwith2014.Sincethesummerof2013,theGrouphasstoppedrecruitingmanagerialstafffromoutsidetheGroupandhasactivelyencouragedinternalmobility.

New recruits by geographic region (excluding transfers between Group companies)

2013 2014 2015

France 503 362 387Europeex.France 115 127 153TheAmericas 145 136 176Africa 359 654 258Asia 126 74 95Pacific 82 52 87

TOTAL 1,330 1,405 1,156

New recruits in 2015 excluding transfers within the group

Pacific 8%

Asia 8%

Africa 22%

The Americas15%

Europe ex. France 13%

France 34%

Therecruitmentofemployeesonopen-endedcontractscanbebrokendownintothefollow-ingprofessionalcategories:

Recruitment of staff on open-ended contracts in 2015 excluding transfers within the group

Management24%

Supervisorystaff15%

Workers61%

Since 1 January 2013, ERAMET pays closeattention to the recruitment of employees onopen-endedcontractsagedunder30andover55.

RECRUITMENTOFSTAFFONOPEN-ENDEDCONTRACTSIN2015

<30 > 55

TOTAL 151 24Total percentage of employees recruited on open-ended contracts

36% 5%

5.7.2.7 DEPARTURES

Thetotalnumberofdepartures(thisnotionen-compasses resignations, redundancies, retire-ments,contractterminationbymutualconsent,butdoesnotincludetransferswithintheGroup)in 2015 reached 1,169, including 230 resigna-tions (20% of departures), 236 redundancies(20%ofdepartures),comparedwith252in2014,and 180 retirements (16% of departures). Theendoffixed-termcontractsmainlyaccountsfortheotherdepartures(44%ofdepartures).

Departures by geographic area (excluding transfers within the Group)

2013 2014 2015

France 439 540 381Europeex.France 134 149 151TheAmericas 199 168 177Africa 208 221 232Asia 551 265 129Pacific 101 67 94

TOTAL 1,632 1,410 1,169

Breakdown of the reasons for the departures

Departures 2015 excluding transfers within the group

Others44%

Retirements16%

Resignations20%

Redundancies20%

5.7.3 WORKORGANISATION

5.7.3.1 WORKINGHOURS

The types of working-hour organisationvaryby company, their typeof businessandlocationsandaredefined tomatchbusinessneeds and employee preferences as muchpossible. Wherever it operates, the ERAMETgroupcomplieswithapplicable legislationonworking hours. For reference, working hoursareasfollows:

– inmainlandFrance:35 hoursperweek;

– inNorway:37.5 hoursperweek;

– inNew Caledonia:37.5 hoursperweek;

– inChina,Gabon,theUnitedStates,Sweden:40 hoursper5-dayweek.

5.7.3.2 PART-TIMEWORKERS

Therearepart-timeemploymentcontracts inmanyofthecountriesinwhichtheGroupop-erates.Theworkforceconcernedbythistypeofcontractrepresents1.5%ofthetotalwork-force,allcategoriesofstafftakentogether.

On31 December2015,211 peoplehadpart-time employment contracts, two-thirds ofwhomwerewomen.

162


72% of these part-time employees, i.e.153 people,workinFranceandrepresent3%ofthetotalworkforceinmainlandFrance.

5.7.3.3 WORKORGANISATION

In2015,55%oftheemployeesworkeddaytimehourswhile45%workedonshifts.

5.7.3.4 ABSENTEEISM(DATAFROMTHECSRSURVEY)

The reasons for absence covered here arerandom unexpected absences like illness,maternity,occupationalaccidents,commutingaccidentsandunjustifiedabsences.

TheaveragerateofabsenteeismintheGroupwas2.3%in2015.Outofthe30 Frenchsites,sevenhada rate lower than1.5%, threehada rate higher than 7.5%.The average rate inFrance was 2.3%. In the rest of Europe, theaverageratewas1.7%withfluctuationsof0%to 16%. In theAmericas, the ratewasabout4.5%.InAfrica,theaverageratewas6.5%witharangeofbetween0.1%and10.0%.Theav-eragerateinAsiawaslowerthantheGroup’sratewitharangeofbetween0%and3.8%.TheaveragerateinPacificareawas4.89%.

5.7.4 AFAIRANDCOMPETITIVE REMUNERATION POLICYEmployeeexpertiseandlevelofresponsibilityareremuneratedwithafixedsalaryinlinewithpastexperienceandthepracticeofeachbusi-ness inthesector.TheGroup’sremunerationpolicy aims to be equitable and competitivebutalsotailoredtothespecificlocalfactorsofthecountryinwhichactivitiesarecarriedon.

One in twoexecutiveshasvariable individualremunerationarrangementsbasedonannualquantitative and qualitative objectives. TheGroup provides a common framework forsettingandassessingannualobjectives.

Remuneration arrangements based oncollectiveresultsmayexistinsomecountries;theycanbelegalarrangements(profit-sharingschemesinFrance,etc.)orvoluntaryarrange-mentssetupbytheGroupaccordingtolocalpractices(incentiveplansbasedonCompanyresults,collectivesavingplans).Profit-sharingschemes are often based on negotiatedcriteriarelatedtosafety,theenvironmentandthe Company’s activity. Depending on thearrangementsinforce,thesebonusescanbeinvestedinsavingschemesofferingadvanta-geousterms.

Surveysonremunerationarecarriedouteachyear to assess the competitiveness of theremunerationpackagesofferedbytheGroupin relation to those offered by companiesworkinginthesamebusinesssectors.

IneachcountryinwhichtheGroupoperates,theremunerationpolicyisdesignedtorewardperformance while adapting to the localenvironment.

5.7.4.1 PERSONNEL—PAYROLLCHARGES

Salariesaccountforthemainpartofemployeeremuneration.

In 2015, personnel costs for the ERAMETgroup stood at €682 million, comparedwith€674 millionin2014,i.e.alimitedincreaseof1.2%.

Over11,400 employees, i.e.82%ofthework-force,hadtheirfixedsalaryincreasedin2015,eitherviaageneralincreaseorviaanindividualperformance-relatedincrease.

5.7.4.2 EMPLOYEEBENEFITS

In linewithGroupagreementsonstaffprovi-dentschemesformajorrisksandunforeseenevents,theERAMETgroupwantsallmainlandFrance employees to benefit from supple-mentary healthcare cover. In France, a newcollectiveagreementwassignedinJuly2014by all the employee representative bodies.Thesenewprovisionsensurethesustainabilityof the healthcare plan, by balancing the ac-countsandgivingtheplananinterdependent,collectiveandfamilycharacter.TheCompanyalso pays the health insurance contributionsof employees leaving the Company andbecomingaffiliatedtoPoleEmploi(theFrenchemployment agency).This portability enablesformeremployeestoenjoythesameguaran-teesasactiveemployeesforaperiodofoneyear.

Provisionshavebeenrecordedforallpensions,severance compensation, medical coverage,staffprovidentschemesandotherbenefitsforworkingorretiredpersonnelinlinewithcurrentpracticesineachcountry.

Provisionsarealsorecordedfortheportionnotcovered by insurance companies or pensionfunds,particularlyforUSandNorwegiancom-panies (generally defined-benefit plans). TheliabilitiesunderthesespecificplansareintheUSA(42%),Norway(17%),New Caledonia(7%)and in France (very old specific planswhicharenowclosed).Theotherplansaredefinedcontributionplanswherebyemployercontribu-tionsareexpensedintheperiodtowhichtheyrelate.Detailsofthemainassumptionsusedtocalculatethese liabilitiesaresetout in theconsolidatedfinancialstatements.

Finally, a supplementary pension plan (Arti-cle 39)foragroupofmanagershasalsobeenfullyprovidedfor.On31 December2015, theestimatedactuarialvalueoftheplanforactiverecipientswas€52.3 million.

163


5.7.4.3 EMPLOYEESHAREOWNERSHIP

InanefforttodevelopasenseofGroupbelong-ing,inplacesinwhichitoperates,andtosharethevaluecreated,in2009,theERAMETgroupdecidedtoimplementworldwidebonusshareplans. This plan, called EraShare, originallyconsistedingranting5 bonussharestoeachGroup employee, regardless of the country,Division,joborlevelofresponsibility.

SinceJuly2011inFranceandItaly,andsinceJuly 2013 in other countries, employeeshave been entitled to all rights associatedwith ERAMET shares, including voting rightsand dividend entitlement. An informationleafletonEraSharewasalsoprepared in thenine languages used within the Group tosupporttheworldwideimplementationofthearrangement.

Sixnewplanstoallocatebonusshareswereimplementedin2010,2011,2012,2013,2014and 2015 involving the same scope, andallowing2 extrasharestobeallocatedtoover14,000 employeeseachyear.

5.7.4.4 EMPLOYEEPROFIT-SHARINGSCHEME

InmainlandFranceandNew Caledonia,discre-tionaryprofit-sharingagreementsareregularlynegotiatedandsignedwiththesocialpartners.Theysupplementanyregulatoryprovisionsonprofit-sharing.Thediscretionaryprofit-shareispaidtoemployeeswithoverthreemonths’ser-viceon31 Decemberbrokendownintoafixedstandardamountandaportionthatdependsonthereferencegrossannualremuneration.In2014, theGroup’sHumanResourcesDepart-mentspecifiedinaframeworkmemorandumthethreeelementsthatERAMETgroupwishesto find in the renewed agreements, as from2014:

– theGroup’sfinancialincome;

– theentity’sfinancialincome;

– the entity’s specific operational progresscriteria (security criteria, service rate, rejectrate,WCRvariation,etc.).

In 2015, eleven of theGroup’s companies inFranceandNew Caledoniamadeprofit-shar-ing payments for 2014. Thus, €17.1 millionwaspaidtothebeneficiariesconcerned(grossamount).

5.7.4.5 EMPLOYEESAVINGSPLAN

In mainland France and New Caledonia,ERAMET group employees can sign up toa Company Savings Plan to set up salarysavings.Thesumspaidundermandatoryanddiscretionaryprofit-sharingschemesmayalsobepaidin,aswellasvoluntarypaymentsmademonthlyoronaone-offbasisbyemployees.Group companies participate in the savingsplan through a top-up to the sums paid byemployees (the arrangements for paying thetop-upvaryfromcompanytocompany).

Arangeofdiversifiedemployeeshareholdingfunds (Fonds Communs de Placement d’Entreprise orFCPE)isofferedtotheGroup’semployees.Thereisalsoacollectivepensionfundscheme(Plan d’Épargne Retraite Collectif orPERCO).

On31 December2015,6,257 employeesandformeremployeesofERAMET inFrancehadan Employee Savings Plan,with total assetsof about €69.70 million, i.e. approximately€11,000 per saver. All the assets are brokendownas follows—90% in theFCPEand10%in the PERCO. In 2015, the Group’s Frenchcompanies paid approximately €2.56 milliontop-upmoney(grossamount)intotheGroup’sEmployeeSavingsPlan(PEG)andthePERCO,i.e.anaverageof€778foreachemployeewhopaidintotheplan(therewere3,294in2015).

5.7.5 SOCIALDIALOGUEONTHEGROUP’SRESTRUCTURING OBJECTIVESIndustrial Relations are coordinated atcorporate level to ensure the traceability andfollow-upofongoingnegotiations, theagree-mentsreached(109 worldwide)andthesocialenvironment.Regular reporting iscarriedoutvia performance indicators, and regular ortheme-basedcoordinatedexchangesbetweensitesoncurrentandsharedtopics.

Moreover, agreements are negotiated andfollowedupinacentralisedmannerwithtradeunionsinmainlandFranceinordertoensurethat they are implemented consistently atall thesites,particularly those related toem-ployee benefits (healthcare costs, providentschemes,employeesavingplans),safetyandprofessionalequality.

Lastly, via the EuropeanWorks Council withits 34 elected representatives from France,Norway,BelgiumandSwedenandtheGroupWorksCouncilwithits32 electedrepresenta-tivesfrommainlandFranceandNew Caledo-nia, it ispossibletocommunicatewithsocialpartnersanddiscusstheGroup’soutlook,thedevelopments and projects and to answertheirquestions.

TheGroup’seconomicandfinancialresultsin2014and2015andthestilluncertainoutlookin many markets have led Management atcorporate level, in subsidiaries and on sitestopursuetheireffortstoimproveproductivitywhile undertaking restructuring programmesaimed at optimising organisations via JobSavingPlansforexample.

Asthepriceofnickeloninternationalmarketscontinued to be unfavourable, the NickelDivisionpursuedandintensifieditsinitiatives:

– Studying the reorientation of industrial ac-tivitiesat theSandouvillesiteandstudying

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the possibility of diversifying its upstreamsupplyofnickelmatte.

– Continuing its ambitious initiatives toimprovecompetitivenessandproductivityattheSLNinNew Caledonia,bylaunchingin-ternalreorganisationplansandspecialisingintheproductionofhigher-marginproducts.

– Improvingtheefficiencyofheadofficefunc-tionsintegratingasmallerworkforce.

At eachstageof thesedevelopments, socialpartners, employee representative bodies(Works Council and Central Works Council)andrepresentativeTradeUnionswerecloselyassociated with the risk analysis and thestakesandwereregularlyconsultedoneachof the scopes concerned.Firstly, this enabledus to obtain favourable opinions on thereorganisation and secondly to ensure thattheDivision’simprovementobjectivesaremet.Within this context, specific appraisals wereconducted by the site’s Works Council andERAMET’s CentralWorks Council to analyseandassessthechangingindustrialsituationattheSandouvillesite,theoutlookandthereor-ganisationneededtoensureitssustainability.

TheManganeseDivisiontookactionatallofitsbusinessunitsaccordingtothesituationofeachof itsmarkets andwithin specific localcontexts:

– TheOre andAlloysBusinessUnit pursuedand intensified its action to enhance pro-ductivityandreliabilityagainstabackdropofdecliningcommoditypricesandmanganesealloyprices:• inGabonbothinitssubsidiaryCOMILOGand in SETRAG (improving the railwayserviceandenhancingthelogisticsoforetransportationaremajorobjectives);

• in China by adapting production tomarket constraints and by adjusting theworkforce at itsManganeseAlloys plantinNew Guilin;

• in Norway by continually adapting itsorganisation.

– The Manganese Chemistry Business Unit,with its long-term commitment to theimprovementprocess,pursueditsactioninBelgiumandMexico;

– The Recycling Business Unit pursued itsobjectives of recapturing market share inAmerica.

Takingaccountofitslocalcontext,eachentityand Business Unit, accompanied its actionwith specific social dialogue with its tradeunions.

Activitiesatheadofficewerealsorestructuredaspartoftheplantomakecorporatefunctionsmorecompetitive.

The Alloys Division continued to take actionto improve its economic ratios, its customerservicerateanditsindustrialorganisation:

– Onbehalfof itssubsidiaryAubert&Duval,theManagementofAubert&Duvalunder-took an important plan to improve its pro-cessesandreduceitsoverheads,thereforeitimplementedthechangesdecidedin2014,i.e.reorganisationandreducedworkforce.

– AmajorindustrialtransformationprojectatErasteel, involving a reduction in its work-force,continuedin2015.

Lastly, a programme called Optimum waslaunchedtoimproveperformanceandreducecosts.It concerns Group management, Divi-sionManagement,R&DandEngineering.Thisprogrammeaims to simplify, harmonise andrationaliseoperatingprocedures,inrelationtotheGroup’schangingoutlookandthereducednumberofprojectsunderstudy.

Theprogrammestartedin2014,wascomplet-edin2015andfouragreementsonmethodsweresignedbyallTradeUnionsconcerned.

5.7.5.1 AMODERATEWAGEPOLICY

The Group’s financial position resulted in amoderation of thewage policy in 2015. Thevariousnegotiationsallowed26 wageagree-mentstobereachedwithintheGroup.

5.7.5.2 CONSOLIDATINGTHESOCIALPOLICY

In2015,inadditiontotheagreementssignedas part of the information and consultationprocedures on reorganisation projects, theGroup’s social policy was consolidatedthrough adaptations of the arrangements inforce,andinconsultationwiththetradeunionorganisations.

Thus, negotiations concerning mainlandFranceledto:

– changes in the agreements on employeesavingplansandprovidentschemes;

– several profit-sharing agreements that hadreachedmaturity inmainland Francewerenegotiated.

Negotiationsconcerningexistingagreementsareaimedat1)ensuringalevelofcompliancewith legislative and regulatory developments(changes to the portability of providentschemes, preparations for the managementofhealthexpenses in responsiblecontracts),AMF recommendations (changes in FCPEnames)and2)improvingtheseexistingagree-ments further to thevariousauditsonsocialsecurity (controlling the balance of systemsanddevelopingtherelatedsocialsecurityandemployer contributions) and audits on em-ployeesavingplans(FCPEyield,repositioninginvestmentprofileonrisk/investmentlevels).

Intheframeworkofjointmonitoringcommit-tees,discussionswithtradeunionscontinuedonsubjects likeemployeesavingsplans, thequalityoflifeatwork,thepreventionofdifficultworkingconditions,genderequality,etc.

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5.7.5.3 CHANGESAFFECTINGGOVERNANCE

InaccordancewiththeFrenchlawonjobsecu-rity,therewasachangeintherepresentationof the workforce on the Board of DirectorswhichintegratedtwowomenemployeeBoardmemberswhowereappointedbytheCompa-nyWorksCouncilofERAMETS.A.andbytheEuropeanWorksCouncil.

It should also be noted that a consultationwas carried out on the Company’s StrategicPriorities with the Company Works CouncilofERAMETS.A.,theparentcompany,andtheSocialandEconomicDatabasewasdeployed.

This consultation and these new tools helpimprove theknowledgeof theCompanyandGroupandsharethenecessaryinformationtoenablesocialpartnerstoperformtheirduties.

5.7.6 EMPLOYEEDEVELOPMENT AND CAREER MANAGEMENT

5.7.6.1 THEPROCESSOFCAREERMANAGEMENT

ERAMEThasalwayspaidparticularattentiontothedevelopmentofitsemployees.Respect-ingpeopleanddevelopingtheirpotentialisoneoftheGroup’svaluesandisthefirstobjectiveofitsHRStrategy.Withthefreezeonoutsiderecruitments introduced in theGroup in July2013andthecurrentrestructuringoperations,the advantages of our internal mobility andcareerdevelopmentprocessesareevenmoreevident.

Indeed, in the frameworkof job-savingplansintroducedinMetropolitanFrancein2015,the

mobilisation of HR teams at all Group siteshaveenabledinternalmobilitytobepromotedthroughprocessesput inplacebytheGroup(jobvacanciespublishedinERAJOB,theinter-naljobexchange,careerorientationinterviews,etc.).

Hence, at the end of December 2015, withregard to the job-saving plan following theOptimum Project on Corporate structures, athird of the repositioning solutions involvedinternalmobility.

On 31 December 2015, as part of Wave 1and2ofAPMFProjects(ProjectstoimproveProcesses and operating methods in theAlloysDivision),56%ofinternaltransferswereregistered.

Inthepasttwoyears,ERAMEThasformalisedandprovided informationoncareermanage-mentandtherolesandresponsibilitiesofeachperson.

The “CareerDevelopment andMobilityChar-ter”defineseveryone’s rolesand responsibili-ties(employee,ManagerandHR)sothatthedevelopmentandprogressofpeople’scareerscanbepromotedandencouraged inaclear,preciseandsharedframeworkusingtoolsandprocesses.

Itemphasisestheimportanceofencouragingemployeestotakeinitiativesandbeproactiveintheirowncareerdevelopment.

Abrochurecalled “Parcours: Carnet de route” (careers—a roadmap) has been in widecirculation.ItillustratedtheCharter’sessentialpoints via examples and testimonies fromemployees. This “Roadmap”, given to all theGroup’smanagers,explainsthebasicaspectsof the Charter, describes the tools and pro-cessesavailable forcareerdevelopmentand

aboveallshowsthemanagersthevastrangeofopportunitiesandprogressionspossibleviatestimoniesandexamples.

To ensure this career development plan isimplemented inanoptimalmanner,manage-ment processes are set up and coordinatedthroughouttheyear.

Annual Performance Reviews (APR) enablemobilitywishestobecollectedandtakenintoaccountatthemonthlyHRnetworkmeetingsand the “People Reviews”. These ManagerReviewsareorganised in the sites, BusinessUnits,entitiesandcountries.Theyaimtoiden-tifypeoplewhoneedtoprogress,todiscovertheirpotential,etc.

Othermeetingsareorganisedhalfwaythroughthe year, for each type of job (leadershiptechniquesandjobcommittees).Theseneedsforprogressionarereviewedinacross-depart-mentalmanner,and themedium-termneedsandresourcesareassessedforeachtypeofjob.

These exchanges are consolidated in eachDivision at the Divisional Manager Reviewsheldattheendoftheyear,thusenablingcon-crete suggestions to bemadeat theAnnualPerformanceReviews.

A review of executives and key Group posi-tionswasheldattheendoftheyearwiththeCOMEX.

Reports are drawn up and the Talent@workSuccession module is used to record thesecareerprospects.

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Performance module

Remuneration module

Succession module

Career module

THE HR PROCESSES ARE INTEGRATED INTO TALENT@WORK

Manager Reviews by Division

October-November

Salary reviews

March

Leadership Techniques and

Domain Committee

June-July

Manager Reviews “HP+”

December

Personnel Reviews by Site, BU, Country

First half-year

Annual Performance Review

November-February

Erajob internal job vacancies

Throughout the year

Lastly,aCareerAppraisalInterviewforallem-ployeesinMetropolitanFrancewasintroducedin2015.This isdevoted tocareerprospects,particularly in terms of qualifications andemployment. It focuses on the employee’scareer,professionaldevelopmentandtrainingrequirements.

5.7.6.2 ATRAININGMODULEONRECRUITMENT/MOBILITYFORMANAGERSANDHR

To help Managers fulfil their role as careermanagers,a training module on recruitment and mobilityhasbeenmadeavailable in theframeworkofIMaGE.

ThismoduletrainsmanagersandHRtocon-duct job interviews using the same tools, tochoosepeopleinanobjective and transparent manner, toprovidegood-quality feedback tointernalandexternalapplicants.

This training course is also based on the“Recruitment” module developed inTalent@Workwhichraisesparticipants’awarenessonsubjectsrelatedtonon-discrimination.

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5.7.6.3 ERAJOB2.0ANDTHECAREERMODULE

ERAJOB (the Group’s internal job exchange)wasre-developed in2012ontheHumanRe-sources Information System “Talent@Work”:ERAJOB2.0.The job offers are available viatheCareer modulesopeoplecanapplyonline,transfera joboffer toanotherperson,setupalertsforspecificjobs,etc.

Due to theGroup’s difficulties, ameasure tofreezetheoutsiderecruitmentofmanagersonopen-endedcontractshasbeeninforcesinceJuly2013.However,specialdispensationscanbeobtaineduponapprovalfromtheCOMEX.

A Recruitment module has also beendeveloped in Talent@work, enabling HR andmanagersinchargeofaninternalorexternalrecruitment to follow the process, from themomentapositionisdefinedtothemomentitisfilled.

5.7.6.4 TRAINING

ThedifferenttrainingmodulesdesignedwithinIMaGE (ERAMET group’s Management Insti-tute)areintendedforGroupemployees:

– toencouragetheirintegrationbygivingthemthekeys tounderstanding theGroup’spro-cessesoforganisationandmanagement;

– todeveloptheGroup’smanagersbygivingthem access to technical and managerialprogrammes;

– toencourageparticipantstoexchangebestpractices;

– tobuilddevelopmentcourses.

Integrating and improving know-how, raisingawarenessofspecificrisks,sharingexperienceand best practices, developing a cross-com-panyapproachatGroup level,promoting the

applicationofmanagerialmethodsand reaf-firmingtheGroup’sexpertiseanditstechnicalleadership—these are the challenges for thetraining programmes that are undertaken bytheGroupannuallyatallitssites.

The courses aimed at improvingmanagerialskills,(“BasicManagement”and“PerformanceBased Management”) are in line with therationale behind broader managerial trainingthatalso includeskeyskills inSafety,ProjectManagement, Continuous PerformanceImprovementandCommunication.

As regards the vocational training of its em-ployees,theERAMETgroupprioritisestrainingthatfocuses,firstly,onsafetyand,secondly,onthedevelopmentoftechnicalskillsgivingem-ployeesabetterunderstandingofprocessesandtheirenvironment.

In 2015, IMaGE (ERAMET group’s Manage-mentInstitute)providedabout10,000 hoursoftraining. 1,087 people followed these varioustraining programmes in 2015. This schoolnowoffersseveral trainingcoursesaimedatintegratinganddevelopingmanagerialstaff.

Twenty-fourGroupexecutivesandmanagersattended the 12th session of the ERAMETLeaders Program lasting one week. Since2006, 245 executives have takenpart in thisprogrammewhichallowsthemtocreateanet-work, improve their knowledgeof theGroup,discuss strategic development policies withseniormanagement,etc.

In 2015, the executive development pro-gramme was organised once again for thethirdgroup.TheERAMETExecutiveDevelop-ment Program is a twelve-day course giveninEnglishinpartnershipwithDukeCorporateEducation.Itaimstoenhancetheparticipants’leadershipskillsandpreparethemfortheirca-reerwithintheGroup.ThisthirdgroupfollowedtheirfirstsessioninParisin2015(fivedaysin

theclassroom)andwillgoonaLearningTriptoIndia(sevendays)in2016.

In2015,timewasspentondeployingatrainingmodule on Continuous Performance Im-provementtools,bringingtogethermorethan300 executives and managers who workedon a common methodological frameworkto consolidate the local implementation ofimprovementplans.

New trainingmodules were created in 2015(like the “ChangeManagement” programme)and were added to the IMaGE catalogue oftrainingcourseswhichalsointegratedtheAMI(Alloys Management Institute) programmesunder the IMaGE banner as part of theOptimum project. There are now 45 trainingprogrammesavailable.

Efforts were made to digitalise the trainingcourses (“Blended” Learning, E-learning,Video-training, etc.) and in 2015, this wasachievedfor25%oftheoffering.

Altogether,in2015,ERAMETgroupemployeesreceivedmorethan317,500 hours (1) oftraining,i.e.about23 hoursoftrainingperemployeefortheyear.Thus,almost11,300 employees (1),i.e.80% of the total workforce, received trainingin2015(comparedto374,500 hours in2014correspondingto27 hoursperemployeeandalmost11,200 employeestrainedlastyear).

5.7.6.5 PERFORMANCEMONITORING

Therearethreeaspectstosuccessfulmobilityandcareerdevelopment:

– goodperformanceinthejob;

– theexistenceofanopportunity;

– thedesiretodemonstratemobilityfunction-allyand/orgeographically.

(1) Data from the HR annual questionnaire completed by Group entities and based on declarations.

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Therefore, the Annual Performance Review(APR)isanimportantopportunityforemploy-eestotalktotheirdirectsuperiorsabouttheirperformance,reachingtheirgoals,determiningtheroadmapforthecomingyearandalsotheirwishesasregardsmobility.

The dedicated Talent@work form is thencompletedwithdetailsfromtheAPR.Thus,thedetailsexpressedareextractedandprocessedbytheHR,aspartof thePeopleReviewsforexample.

Forseveralyears,allmembersofGroupman-agement have had an Annual PerformanceReview, during which their performance isevaluated in relation to the goals set for theelapsed year alongside application of thevaluesoftheERAMETgroup.

In2015,4,417 managerialandnon-managerialstaffhadannualperformancereviews.Indeed,manysiteshavestartedtoextendthebenefitsofthissystemtonon-managerialstaff.

The document used for the Annual Perfor-mance Review (APR) was modified to inte-gratetheroll-outofanewGoalManagementmodule. Indeed, following the commitmentsurvey,andinanefforttobettermonitorandassess performance, the working group inchargeofperformancedecidedtoimplementthismodulewhichenablesmanagerstofollowtheprogressofgoalssetfortheirteams,ad-justingthemifnecessary,andusingthistoolformid-yearreviews,etc.

Thewidespreaduseof theAPR form inTal-ent@Workhasnowconsiderablyimprovedac-cesstoinformationonstaffmobilityrequestsand ensured that these requests are bettertaken into account in career managementand people reviews and has optimised thefollow-up.

At theendof2014,aprogrammeonhowtoidentifyandassesstalentpotentialwasorgan-

isedattheinitiativeoftheManganeseDivisioninGabon.Thisprogrammewasusedtotrainthe COMILOG Management Committee inmethodologyandtocarryoutanassessmentcampaign. The HR network of entities inGabonalsoreceivedtraining.

The Optimum Project aimed at improvingperformanceattheGroup’sHeadOfficesandsupportdepartments identifiedcurrentareasfor improvement based on training, recruit-mentmanagement,etc.

5.7.7 EQUALOPPORTUNITIES—MEASURES TO PROMOTE NON-DISCRIMINATIONANDDIVERSITY

5.7.7.1 ENSURINGGENDEREQUALITY

Currently,15%oftheGroup’stotalworkforceisfemale,andmorespecifically:7%ofoperators,24%ofsupervisors, techniciansandworkersand21%ofmanagersarewomen.

%ofwomenintotalworkforce 15%%ofwomeninmanagerialpositions 21%

%ofwomenhiredonopen-endedcontractsin2015 14%

%ofwomenhiredasmanagersonopen-endedcontractsin2015 16%

AllGroupentitiesarestrivingtotakeinitiativestopromotetheemploymentofwomeneveninjobs that, in thepast,haveusuallybeenheldbymen.

Therefore, efforts are being made locally toencouragesecondaryandhighschoolpupilsand students to consider technical careers.Premises are being adapted to integrate theneedsof femalestaff (changingrooms),andequalgendermeasuresarebeing introduced

in the collective agreements signedatmanyof the sites in mainland France. The AlloysDivisionisalsocommittedtohiringwomentocarryoutmachiningjobs.

Initiatives to prevent discrimination are alsotaken in the United States, at the ERAMETMariettaInc.siteforexample,whereacourseondiversityandanti-harassmentisgiveneveryyeartoraiseawareness.

InGabon,duringthecampaigntorecruitem-ployeesfortheCMM’snewindustrialfacilities,effortsweremadetorecruitwomen,whoac-countforalmost25%ofthisunit’sworkforce.The Imphysitealso tookpart in a forumoncareers forwomen in theNièvredepartmentinFrance.

5.7.7.2 LIFE-WORKBALANCE

In mainland France, the Group continuedits efforts to raise team awareness on Psy-cho-SocialRisksviatheZEPHYRprogrammewhichwasintroducedthreeyearsago.

Thismatter isalsoaddressedduring theAn-nualPerformanceReviews.Indeed,duringthisspecialannualmeeting,someoftheinterviewbetween the employee and his/hermanageris devoted to the organisation of work, theworkloadandthelife-workbalance.

In this field, the Group also encourages acertainnumberof local initiativesofdifferentnaturesbutallaimedatpromotingthisessen-tial balance: sabbatical leaves were grantedto employees wanting to pursue personalprojects, tele-working measures were intro-duced for employees encountering personalproblems, measures to facilitate parenthoodwerealsointroducedatsomesites:theorgan-isationofworkingtime,theallocationofCESUcheques (cheques for universal employmentservices)topayforhomehelps(child-minders,homeworkhelpers,cleaners,etc.).

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5.7.7.3 EMPLOYMENTANDINTEGRATION OF DISABLED PEOPLE

ERAMETgroupstrivestoemployandintegratedisabledpeople.

TheGroupemploys267 disabledpeople(datafromtheCSRsurvey).Thisfigure isprobablyan under-estimation because regulationsin some States do not allow the number ofdisabledpeopletobecounted.

AtmostoftheGroup’ssites,differentinitiativesareundertakentoencouragetheemploymentofdisabledpeople:adaptingpremises,accesspoints and workstations, organising aware-ness-raisingcampaigns,fundinghearingaids,contributingtoorganisationsandassociationsthat help disabled people and at Aubert &DuvalinLes Ancizes,thereisevenafirmthatcomestothesitetwodaysamonthtoprovidesupport and enable disabled employees toremaininwork.

Work is also subcontracted out to shelteredworkshops and associations that employdisabledpeople.ManyoftheGroup’ssitesalsoaddresstheissueofaccessibilitytopremises.

Every year, the Handicap Mission made upof representatives from entities in Paris andTrappes(ERAMETTMM(HoldingandNickel)),ECM, Erasteel, Aubert & Duval, ERAMETResearch,ERAMETIngénierie,ERAMETInter-national)organisesvariousawareness-raisingevents during the Disabled People’s Employ-mentWeek.

The Handicap Mission undertaken byERAMET group entities based in Paris (TourMaineMontparnasse)andTrappesapplythemeasuressetout in the lawonEqualRightsand Opportunities, Participation and Citizen-ship of 11 February 2005. It was created in2012inordertomakeemployeesintheGroupaware of the disability issues. It ismade upof representatives of the entities’ differentdepartments (Health/Safety, HR, Communi-cation,etc.).Oneofitsobjectivesistodevelopappropriatepartnershipswithcompaniesthatworkintheadaptedsector(cateringservicesandmealtrays,floraldecoration,etc.).

ERAMET isapartnerofOfficiel du Handicap, an organisation made up of public andprivate players committed to promoting abetterintegrationofdisabledpeopleinFrance(employment, sub-contracting, accessibility,technology,etc.).

In 2015, as part of the creation of ERAMETServices (Shared Services Centre) based inClermont-Ferrand,ERAMETfocuseditsatten-tionontherecruitmentofdisabledpeople.

5.7.7.4 EMPLOYINGYOUNGERANDOLDERWORKERS

InmainlandFrancetheGroup’sManagementhas signed an action plan related to theGeneration Contract and it is committed toimplementing inter-generational synergies.This plan expresses a desire to integrateyoung people and help them progresswhileat the same time putting the experience ofolderpeopletoadvantageandpreservingtheirknow-how. Across the scope of the Group,24 peoplewhoare10 yearsfromthelegalageofretirementwererecruited.

In2015,theGroupreceivedover1,450 youngpeople on work-based training contracts(apprenticeships or professional trainingcontracts)andinternships.

Since 2013, together with 60 major groups,and within the framework of the AFEP (As-sociation Française des Entreprises Privées), ERAMET has been committed to employingyoungpeople.Indeed,theGroupisasignatoryto an initiative called “Jeunes et Entreprises” (Youth&Business).

Furthermore,ERAMEThasdevelopedrelationswith educational establishments locally andnationally. This has led to various initiativesand partnerships: for example, numerousvisitswereorganisedtomorethan46 Groupentities which received pupils from nearbysecondary and high schools, students fromlocaluniversitiesandGrandes Écoles, teachersandprofessors.

ERAMETtakespartinmanyschoolforumsinmainlandFranceandinthecountriesinwhichitoperates.This isanopportunity topresentthe Group and its different businesses, totalktoyoungpeopleandadvisethemonthedirectiontotake.ManyoftheGroup’semploy-eesalsocontributetothecurriculum,mostofthemvoluntarily, bypresenting theCompanyorteachingaboutspecialisedtechnicalfields.Someoftheseexpertsarealsoonschoolad-visoryboardsorschoolboardsofgovernors.There are also scientific exchangesbetweensome projects and the laboratories of someGrandes Écolesoruniversitiesandteachers.

WithagreatdealofsupportfromtheTrappesresearch centre (ERAMET Research) and itsteams, theGroup is very involved inpartner-ship operations with some Grandes Écoles: ERAMETsponsorsthe2015classofstudentsfromtheÉcole Nationale Supérieure de Chimie de Paris(ChimieParisTech)andithelpsfundstudytripsoroptions(ENSG,MontpellierUni-versity (Geology), Mines ParisTech (ENSMPSoilandSubsoiloption),ECP(Energyoption)).

TheSLNhasapartnershipwith theprepara-tory classes at JulesGarnier High School inNouméa.TheassistanceprovidedbySLN isprecioustotheseyoungCaledonianswhogotomainland France to pursue their scientificstudies.

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5.7.7.5 OBSERVINGTHEFUNDAMENTAL CONVENTIONS OFTHEINTERNATIONALLABOURORGANISATIONANDHUMANRIGHTS

ERAMET complies with the regulations inforce in the different countries in which theGroupoperates.

AstheGroupindicatesintheCodeofEthics,ERAMET complies with the internationalstandardsof the International LabourOrgan-isation, and more generally it complies withthe principles of international law related tohumanrights.Inparticular,theGroupbanstheuseofforcedorchildlabour,whetherdirectlyorviaitssuppliersorpartnersandrespectsthefreedomofassociation.

TheGroupalsoguaranteesthefairtreatmentof all its employees in terms of professionalequality by combating employment andjob-related discrimination, seeks to preventanyphysicalharm to thepeopleon itssites,andrespectsthemoralintegrityofallemploy-ees.TheGroupseekstoensuregoodhumanrelations within work teams. In particular, itundertakes to combat all forms of violenceandpromotesrespectforothersandwarmthinprofessionalrelations.

When the Group’s entities report on non-fi-nancialmatters every year, they are asked aquestionconcerningtheircompliancewiththeprovisionsofthefundamentalconventionsoftheILO(freedomofassociationorrightofcol-lectivebargaining,theabolitionofchildlabour,combating undeclared work, eliminating dis-crimination inemploymentandoccupations)anditisimportanttostressthattheirfeedbackwas excellent, illustrating the attention theypaytothissubject.

In 2015, all the Group’s sites were activelyengaged in circulating the Group’s Code ofConduct.

5.8 METHODOLOGY NOTE5.8.1 SYSTEMOF INDICATORSChapter 5aimstoinformstakeholdersoftheactiontakenbyERAMETinfavourofSustain-able Development. The system of indicatorsusedtodothiswasdesignedinsuchawayastoprovidethemostaccuratepicturepossibleoftheGroup’ssignificantchallengesgivenitsactivities. It includes the list of informationrequiredbyarticleR. 225-101-1oftheFrenchCommercialCode.Inaddition,otherindicatorshavebeenchosenbasedon thoseproposedby theGlobalReporting Initiativeand its ver-siondedicatedtoMines&Metallurgy.

5.8.2 REPORTINGSCOPEERAMETgroup’sreportingscopecovers:

– Social aspects: all the consolidated com-panies in thechartof accounts.For someindicators(indicated“CSRdata”inthetext),thereportingcovers101%oftheconsolidat-edworkforce,by includingninemorecom-panies(TiZirLondon,Sodepal,Maboumine,Metallied Irun,ERAMETAlloysUK,ErasteelGmbH, ERAMET Services, Erasteel India,Aubert&DuvalDeutschlandGmbH),whichmakesatotalof172 people.

– Safety aspects: all the consolidated com-panies in the chart of accounts, includingEcotitanium, Sodepal and Metallied Irun,butexcludingsalesoffices (whichaccountfor lessthan1%oftheGroup’sworkforce).EntitiesthathaverecentlyjoinedtheGroup

(from acquisitions, new projects) may beexcludedfromthescopeofconsolidationiftheirreportingisnotreliableoriftheprojectdoesnotyetrepresentasignificantactivityintheGroup(in2015:MaboumineandMukulu,accountingfor lessthan1%oftheGroup’sworkforce).Thereportingscopeforsafetyin2015wasthesameasthatin2014.

– EnvironmentandEnergy:alltheGroup’ssitesifthesesitesmeetthefollowingcriteria:• in financial terms, ERAMET has a con-trollinginterestofatleast50%;

• the sites are subject to environmentalregulations (licence, code, nationalregulations).

Thisscopedoesnotincludesites:• whereonlyadministrativeworkiscarriedout(e.g.salesoffices);

• where the project stage is under wayand no production intended for sale isconducted(sixentitiesconcerned).

With 57 sites concerned, the environmentalreportingscopein2015wasthesameasthatin2014.

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172

Sustainable Development / Methodology note

Thefollowingtablesumsupalltheentitiesincludedinthedifferentreportingscopes.

COUNTRY LEGALENTITIES SITESSOCIAL

DATASCOPESAFETYSCOPE

ENVIRONMENT—ENERGYSCOPE

Germany Aubert&DuvalSpecialSteelsGmbH—Stahlschmitt Mönchengladbach x x xERAMETInternational Frankfurt x

Argentina Eramine: Salta x xBelgium ERACHEMCOMILOG Tertre x x xBrazil ERAMETLatinAmerica SãoPaulo xChina Aubert&DuvalMoulds&DieTechnology(ADMDT) Wuxi x x x

ErasteelTradingCo.Ltd Tianjin xCOMILOGFarEastDevelopment(CFED) HongKong xERAMETChinaGuilinCOMILOGFerroAlloysLtd Guilin x x xERAMETCOMILOGShanghaiTrading(ECST)&ERAMETCOMILOGShanghaiConsultancyServices(ECSCS)

Shanghai x

GuangxiERAMETCOMILOGChemical(GECC) Chongzuo x x xKorea ERAMETInternational Seoul xSpain MetalliedPowderSolutions Irun xUnitedStates ErasteelInc Boonton x x x

Romeoville x x xERAMETNorthAmerica Pittsburgh xBearMetallurgicalCorp. Butler x x xERACHEMCOMILOG Baltimore x x x

New Johnsonville x x xERAMETMarietta Marietta x x xGulfChemical&Metallurgical(GCMC) Freeport x x xAubert&DuvalUSA Charlotte x

France EcoTitanium xAubert&Duval Les Ancizes x x x

Clermont-FerrandLa Pardieu x x

Issoire x x xHeyrieux x x xImphy x x xGennevilliers xPamiers x x xFirminy x x x

Aubert&DuvalTAF Gennevilliers x x xBrownEurope Laval-de-Cère x x xConstructiondeMoulesMetalliques(CMM) Landévant x x xERAMETAlloysandAubert&DuvalTMM Paris xErasteel Commentry x x x

Champagnole x x xParis

xx

Chalon-sur-SaôneForgesdeMonplaisir Saint-Priest x x xInterforge Issoire x x xSUPA Varilhes x x xUKAD Les Ancizes x x xValdi Feurs x

Le Palais-sur-Vienne x x x

173


COUNTRY LEGALENTITIES SITESSOCIAL

DATASCOPESAFETYSCOPE

ENVIRONMENT—ENERGYSCOPE

ERAMETHolding ParisandTrappes x xERAMETIngénierie Trappes x xERAMETResearch Trappes x x xCOMILOGDunkerque Dunkerque x x x

ERAMETCOMILOGManganese ParisandTrappes x xCOMILOGInternational Paris xERAMETNickel Sandouville x x x

ParisandTrappes x xEurotungstenePoudres Grenoble x x x

Gabon COMILOGS.A. MoandaCom-plexeC2M x x x

MoandaCom-plexeCIM x x x

OwendoTrackMaintenanceDepartment

x x x

PortMinéralierOwendo x x x

MoandaMine x x xMaboumine Lambaréné xSETRAG Owendo x x xSODEPAL Bakoumba x x

SOMIVAB Libreville,Biliba,Essassa x x x

India ERAMETIndiaPrivateLimited Mumbai x x

Indonesia Pt WedaBayNickel Jakarta,Halmahera x x

Italy ADES Ferrara x x xERAMETInternational Trezzano x

Japan ERAMETInternational Tokyo xMexico ERACHEMMexico Tampico x x xNorway ERAMETNorway Kvinesdal x x x

Sauda x x xPorsgrünn x x x

ERAMETTitanium&Iron(ETI) Tyssedal x x xEralloysHolding x

NewCaledonia SLN Nouméa

(Doniambo) x x x

Kouaoua x x xNépoui x x xPoum x x xTiébaghi x x xThio x x x

UnitedKingdom ErasteelStubs Warrington x x x

Senegal GrandeCôteOpérations—TiZir Diogo x x xSweden ErasteelKloster Soderfors x x x

Långshyttan x x xVikmanshyttan x x x

Taiwan ERAMETInternational Taipeh x

5.8.3 COLLECTING,CONSOLIDATING AND CHECKINGDATAThe social reporting (including safety report-ing)isbasedonEra-Link,thededicatedinputand consolidation tool, and on a qualitativequestionnaire sent to the entities concerned(whichalsoallowsthefeedbackofinformationonthesites’societalcommitments).Forsomecommon indicators, the figures from thesetwo toolsarecomparedallowing thedata tobechecked.

“ReportingonSafetyandprovidingInformationintheeventofanExceptionalSituation”isthereferencesystemintermsofSafetyreporting.Theapplicableversionwasrevisedin2015.

Dataonoccupationalaccidentsarecomparedto thedeclarationsmadebysites to thePre-ventionandSafetyDepartmentviatheGroup’sHSESharePoint.

The environment and energy reportingprocess is based on a procedure that wasupdated in 2014 andwhich clearly specifiesresponsibilitiesandoperatingmethods.

A dedicated information system called Era-Green,deployedatallsitesin2011,isusedfortheenvironmentandenergyreportingprocess.Allthequantitativedatagiveninthepresentre-port(environmentaldata)hasbeenextractedfrom EraGreen and comes exclusively fromthedataenteredbyeachoftheGroup’ssitesandvalidatedbyeachsitedirector.

EraGreen contains automatic data checkingsystemsbasedoncomparisonswithpreviousyears. In addition, annual reports drawn upby sites using EraGreen are always checkedbyexpertsfromthedivisionsortheGrouptoensuretheyarecoherent.

5.8.4 SPECIFICITIESANDMETHODOLOGICALLIMITATIONS

– In 2015, for the first time, the frequencyrates (1)andseverity (2) ratesofoccupationalaccidents were calculated by includingtemporarystaffintheworkforce.

– Due to scheduling constraints, somemonthlydataon theenvironmentmaynotbeavailableforthelastmonthoftheyear.Inthiscase,themissingdataisestimatedasaccuratelyaspossibleonthebasisofpastdataforthesite,and,ifnecessary,correlatedwith production, in accordance with theGroup’sbaseline.

– If an environmental measurement isconsidered erroneous or is unavailable, anestimationbasedonpastratiosisused,andadjustedaccordingtothelevelofproductionatthesite.Thissituationmayarisefornitro-gen oxide (NOx) and canalised dust levelsfor example because, for some sites, thequantities declared are based on a limitednumberofmeasurementstakenduringtheyear.

– COD (Chemical Oxygen Demand): thispa-rameter isdifficult tomeasureandvariouschemicalsmay interferewith it,particularlythe presence of chlorides. Regarding thepertinenceofthemeasurementofthisindi-cator at Eurotungstène Grenoble (France),the situation is not ideal. As the operatingpermit obliges the site tomeasureCOD inaccordance with specific conditions andmethodsofanalysis,thisdataisintegratedintotheconsolidatedreportingdespitethisdifficultywhichresultsintheindicatorbeingconsiderablyover-estimated.

– Waste:dependingonthenationalregulationsthatapplytothesites,wasteisdeclaredin

theenvironmentalreporting.Thequantitiesdeclared correspond to the quantities ofwaste evacuated to treatment channelsduring the year. The criteria that identifywasteashazardousornon-hazardousvaryfromonecountrytoanothersothereportingonthiscannotbecompletelyhomogeneous.

– Water consumption: the quantities of seawaterusedtocoolthethermalpowerplantandfortheslaggranulationprocessattheSLN(New Caledonia)andthewaterusedtocoolinstallationsattheMariettasite(UnitedStates)arenotcountedbecausethewaterisreturnedtothenaturalenvironmentdirectlywithoutundergoinganytransformation.

– Greenhouse gas emissions: reporting iscarriedoutincompliancewithrulessetoutintheGHGprotocol(WRI).Emissionfactorsare based on the carbon footprint criteriaestablishedbyADEME,theFrenchenviron-mentandenergyagency.

– The registered workforce: employeeswith an employment contract with theCompany (“CDD” fixed-term contracts,“CDI”open-endedcontracts)andwhowereregisteredasmembersofstaffon the lastdayofthereportingperiod.Thisinformationcorresponds to the number of people,regardlessofthehourstheywork(full-timeandpart-time).Eachemployeeiscountedasoneperson.

(1) The frequency rate of occupational accidents is the number of occupational accidents occurring in a given period, per million hours worked. Frequency rate = (number of occupational accidents x 1,000,000) / number of hours worked.(2) The severity rate of occupational accidents is the number of calendar days lost following an occupational accident, occurring in a given period, per thousand hours worked. Severity rate = (number of days lost following an occupational accident x 1,000) / number of hours worked.

174

Sustainable Development / Methodology note

175


5.9 REPORT BY ONE OF THE STATUTORY AUDITORS APPOINTED AS INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED HUMAN RESOURCES, ENVIRONMENTAL AND SOCIAL INFORMATION INCLUDED IN THE MANAGEMENT REPORT

YEAR ENDED 31 DECEMBER 2015

This is a free English translation of the designated independent third party’s report issued in French and it is provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

TotheShareholders,

In our capacity as Statutory Auditor of thecompany ERAMET S.A., (the “Company”),appointed as independent third party andcertifiedbyCOFRACundernumber 3-1049 (1),wehereby report toyouon theconsolidatedhuman resources, environmental and socialinformation for theyearended31 December2015, included in the management report(hereinafter named “CSR Information”), pur-suant to Article L. 225-102-1 of the FrenchCommercialCode(Code de commerce).

Company’s responsibility

The Board of Directors is responsible forpreparing a Company’s management reportincluding the CSR Information required byArticleR. 225-105-1oftheFrenchCommercialCodeinaccordancewiththeguidelinesusedbytheCompany(hereinafterthe“Guidelines”),summarized in themanagement report andavailableonrequestfromtheCompany’sheadoffice.

Independence and quality control

Our independence is defined by regulatorytexts,theFrenchCodeofethics(Code de déon-tologie)ofourprofessionandtherequirementsofArticleL. 822-11oftheFrenchCommercialCode.Inaddition,wehaveimplementedasys-temof quality control including documentedpoliciesandproceduresregardingcompliancewith the ethical requirements, French pro-fessional standards andapplicable legal andregulatoryrequirements.

Statutory Auditor’s responsibility

Onthebasisofourwork,ourresponsibilityisto:

– attest that the requiredCSR Information isincluded in the management report or, intheeventofnon-disclosureofapartoralloftheCSRInformation,thatanexplanationisprovidedinaccordancewiththethirdpara-graph of Article R. 225-105 of the FrenchCommercialCode(AttestationregardingthecompletenessofCSRInformation);

– express a limited assurance conclusionthattheCSRInformationtakenasawholeis,inallmaterialrespects,fairlypresentedinaccordancewiththeGuidelines(ConclusiononthefairnessofCSRInformation).

Our work involved six persons and wasconducted between September 2015 andFebruary2016duringasixweeksintervention

period.Wewereassisted inourworkbyourCSRexperts.

We performed our work in accordance withthe French professional standards and withthe order dated 13 May 2013 defining theconditionsunderwhichtheindependentthirdpartyperformsitsengagement,andwithInter-nationalStandardISAE 3000 (2)concerningourconclusiononthefairnessofCSRInformation.

1. ATTESTATION REGARDING THE COMPLETENESS OF CSR INFORMATION

Nature and scope of our work

Onthebasisofinterviewswiththeindividualsin charge of the relevant departments, weobtainedanunderstandingoftheCompany’ssustainability strategy regarding humanresources and environmental impacts of itsactivities and its social commitments and,whereapplicable,anyactionsorprogrammesarisingfromthem.

WecomparedtheCSRInformationpresentedin the management report with the listprovidedinArticleR. 225-105-1oftheFrenchCommercialCode.

For any consolidated information that is notdisclosed,weverified thatexplanationswereprovidedinaccordancewithArticleR. 225-105,paragraph 3oftheFrenchCommercialCode.

We verified that the CSR Information coversthescopeofconsolidation, i.e.,theCompany,

(1) Whose scope is available at www.cofrac.fr.(2) ISAE 3000—Assurance engagements other than audits or reviews of historical financial information.

itssubsidiariesasdefinedbyArticleL. 233-1andthecontrolledentitiesasdefinedbyArticleL. 233-3 of the French Commercial Codewithin the limitations set out in themethod-ologicalnote,presented in theSection 5.8ofthemanagementreport.

Conclusion

Basedon theworkperformedandgiven thelimitationsmentionedabove,weattestthattherequiredCSRInformationhasbeendisclosedinthemanagementreport.

2. CONCLUSION ON THE FAIRNESS OF CSR INFORMATION

Nature and scope of our work

We conducted approximately ten interviewswiththepersonsresponsibleforpreparingtheCSRInformationinthedepartmentsinchargeofcollectingtheinformationand,whereappro-priate,responsibleforinternalcontrolandriskmanagementprocedures,inorderto:

– assess the suitability of the Guidelines intermsof their relevance, completeness, re-liability,neutralityandunderstandability,andtaking intoaccount industrybestpracticeswhereappropriate;

– verifytheimplementationofdata-collection,compilation,processingandcontrolprocessto reach completeness and consistencyof the CSR Information and obtain an un-derstandingof the internalcontroland riskmanagement procedures used to preparetheCSRInformation.

Wedetermined the nature and scope of ourtests and procedures based on the natureand importanceof theCSR InformationwithrespecttothecharacteristicsoftheCompany,the human resources and environmentalchallenges of its activities, its sustainabilitystrategyandindustrybestpractices.

Regarding theCSR Information thatwecon-sideredtobethemostimportant (3):

– at parent entity level, we referred to docu-mentarysourcesandconductedinterviewsto corroborate the qualitative information(organization, policies, actions), performedanalytical procedures on the quantitativeinformation and verified, using samplingtechniques, the calculations and theconsolidation of the data.We also verifiedthat the informationwasconsistentand inagreementwiththeotherinformationinthemanagementreport;

– at the level of a representative sample ofentities selected by us (4) on the basis oftheir activity, their contribution to the con-solidatedindicators,theirlocationandariskanalysis,weconducted interviews toverifythatproceduresareproperlyappliedandtoidentifypotentialundiscloseddata,andweperformed tests of details, using samplingtechniques,inordertoverifythecalculationsand reconcile thedatawith thesupportingdocuments. The selected sample rep-resents20%ofheadcountandbetween14%and31%ofquantitativeenvironmentaldatadisclosed.

FortheremainingconsolidatedCSRInforma-tion, we assessed its consistency based onourunderstandingoftheCompany.

We also assessed the relevance of explana-tionsprovidedforanyinformationthatwasnotdisclosed,eitherinwholeorinpart.

We believe that the sampling methods andsamplesizeswehaveused,basedonourpro-fessionaljudgment,aresufficienttoprovideabasisforour limitedassuranceconclusion;ahigherlevelofassurancewouldhaverequiredustocarryoutmoreextensiveprocedures.Dueto theuseofsampling techniquesandotherlimitationsinherenttoinformationandinternal

(3) Social information: Workforce on 31 December 2015, Workforce by type of employment contract, Workforce by socio-professional category, New recruits, Departures, Number of resignations, Number of dismissals, Percentage of women in managerial positions, Number of training hours held during the exercise, Lost time injury frequency rate, Accident severity rate.

Environmental information: Total energy consumption, CO2 emission related to energy, Total canalised dust, Chemical oxygen demand (COD), Quantity of hazardous waste, Total water consumption.

Qualitative information: Occupational health and safety conditions, Organization of social dialogue including information procedures, consultation and negotiation with the employees, The organization of the Company to integrate environmental issues and, if appropriate, the assessments and certification process regarding environmental issues, Resources allocated to prevention of environmental risks and pollution, Land usage, Measures implemented to protect and conserve the biodiversity, Action implemented against corruption.

(4) Social information: Aubert & Duval (AD) Les Ancizes (France), Setrag (Gabon), Erach S.A. (Belgium).

Environmental information: Aubert & Duval (AD) Les Ancizes (France), Comilog Gabon Mine Moanda (Gabon), Erachem Comilog Tertre (Belgium), Eramet Norway Kvinesdal (Norway), Société Le Nickel (SLN), Centrale Thermique Doniambo (New Caledonia).

176

Sustainable Development / Report by one of the Statutory Auditors

control systems, the risk of not detecting amaterialmisstatementintheCSRInformationcannotbetotallyeliminated.

Conclusion

Based on the work performed, no materialmisstatementhascometoourattentionthat

causesustobelievethattheCSRInformation,taken as a whole, is not presented fairly inaccordancewiththeGuidelines.

French original signed by:Paris-LaDéfense,18 February2016

KPMGS.A.AnneGarans DenisMarangé

Partner PartnerClimate Change and Sustainability Services

177


178

FINANCIAL STATEMENTS

Chapter 6

179

180 6.1 2015 CONSOLIDATED FINANCIAL STATEMENTS

180 6.1.1 INCOMESTATEMENT180 6.1.2 STATEMENTOF

COMPREHENSIVEINCOME181 6.1.3 CASHFLOWSTATEMENT182 6.1.4 CHANGESINSHAREHOLDERS’

EQUITY183 6.1.5 BALANCESHEET184 6.1.6 NOTESTOTHECONSOLIDATED

STATEMENTS244 6.1.7 STATUTORYAUDITORS’REPORT

ONTHECONSOLIDATEDFINANCIALSTATEMENTS

246 6.2 2015 SEPARATE FINANCIAL STATEMENTS

246 6.2.1 INCOMESTATEMENT247 6.2.2 BALANCESHEET249 6.2.3 STATEMENTOFCASHFLOWS250 6.2.4 NOTESTOTHESEPARATE

FINANCIALSTATEMENTS269 6.2.5 STATUTORYAUDITORS’

REPORTONTHEANNUALFINANCIALSTATEMENTS

271 6.2.6 REPORTOFTHESTATUTORYAUDITORSONREGULATEDAGREEMENTSAND COMMITMENTS

275 6.2.7 SEPARATEFINANCIALRESULTSOVERTHEPASTFIVEFINANCIALYEARS

276 6.3 CONSOLIDATED FINANCIAL STATEMENTS FOR 2014 AND 2013

276 6.4 DIVIDEND POLICY276 6.4.1 DIVIDENDPAYOUT

ARRANGEMENTS276 6.4.2 ALLOCATIONANDDISTRIBUTION

OFEARNINGS(ARTICLE 24OFTHEARTICLESOF ASSOCIATION)

276 6.4.3 BREAKDOWNOF2015EARNINGSALLOCATION

276 6.4.4 DIVIDENDPOLICY277 6.5 FEES PAID TO THE STATUTORY

AUDITORS

180

Financial statements / 2015 Consolidated financial statements

6.1 2015 CONSOLIDATED FINANCIAL STATEMENTS6.1.1 INCOME STATEMENT(€ MILLION) NOTES FY2015 FY2014

Sales 3 / 4 3,015 3,075Costofsalesandotherincome (2,726) (2,521)Administrativeandsellingexpenses (172) (161)Researchanddevelopmentexpenditure 4 (25) (30)EBITDA 3 92 363Amortisationanddepreciationofnon-currentassetsandprovisions forcontingenciesandlosses 4 (283) (277)

Current operating profit (loss) 3 / 4 (191) 86Otheroperatingincomeandexpenses 5 (553) (101)Operating profit (loss) 3 (744) (15)Netfinancialincome 6 (74) (60)Shareofincomefromjointventuresandassociates 9 (78) (44)Incometax 10 (9) (48)

Profit (loss) for the period (905) (167)• Attributabletonon-controllinginterests 5 (191) (8)• Attributable to equity holders of the parent 3 / 5 (714) (159)Basic/Dilutedearningspershare(€) 5 (27.11) (6.06)

6.1.2 STATEMENT OF COMPREHENSIVE INCOME(€ MILLION) NOTES FY2015 FY2014

Profit (loss) for the period (905) (167)Translationdifferencesforsubsidiaries’financialstatementsinforeigncurrency 22 28Changeinrevaluationreserveforhedgingfinancialinstruments (30) (92)Incometax - 15Items recyclable to profit or loss (8) (49)Revaluationofnetdefinedbenefitplansliabilities 11 (10) (18)Incometax 3 1Items not recyclable to profit or loss (7) (17)Other comprehensive income (15) (66)• Attributabletonon-controllinginterests (14) (9)• Attributable to equity holders of the parent (1) (57)

TOTAL COMPREHENSIVE INCOME (920) (233)• Attributabletonon-controllinginterests (205) (17)• Attributable to equity holders of the parent (715) (216)

Theseitemsareshowninthestatementofchangesinshareholders’equityunderOthercomprehensiveincome(OCI).

TheimpactofOthercomprehensiveincomeonNetprofit(loss)Groupshareinthe2015reportingperiodisnotmaterial.

The impactof -€57 milliononNetprofit (loss)Groupshare forFY2014underOthercomprehensive incomemainly relates to thechange in themeasurementofhedgingfinancialinstrumentsfollowinganunfavourablechangeintheEUR-USDexchangerate.

181


6.1.3 CASH FLOW STATEMENT(€ MILLION) NOTES FY2015 FY2014

Operating activitiesProfit(loss)fortheperiod (905) (167)Non-cashincomeandexpenses 6 761 303Cash generated from operations (144) 136Netchangeinworkingcapitalrequirement 8 131 (86)Net cash flow from operating activities (1) 3 (13) 50Investing activitiesPaymentsfornon-currentassets 9 (249) (316)Proceedsfromnon-currentassetdisposals 12 10Netchangeinnon-currentfinancialassets 9 (29) (5)Netchangeincurrentfinancialassets 9 224 (251)Jointventurescapitalincrease - (3)Impactofchangesinconsolidationscope - 30Net cash used in investing activities (42) (535)Financing activitiesDividendsdistributedtonon-controllinginterestsinconsolidatedcompanies 5 - (25)Bondissues 6 140 482Repaymentofborrowings 6 (220) (194)Changeinbankoverdrafts 6 49 (11)Otherchanges 6 5 10Net cash used in financing activities (26) 262Exchange-rateimpact (3) 1

Increase (decrease) in cash and cash equivalents (84) (222)Opening cash and cash equivalents 6 516 738Closing cash and cash equivalents 6 432 516

(1) Including under operating activities

Interest income 6 11 14

Interest paid 6 (62) (50)

Tax paid 10 (71) (59)

182


6.1.4 CHANGES IN SHAREHOLDERS’ EQUITY

(€ MILLION)NUMBEROF

SHARESSHARE

CAPITAL

SHAREPRE-

MIUM

RESERVES/HEDGINGINSTRU-MENTS

RESERVES/DEFINEDBENEFITPLANS

TRANS-LATIONADJUST-MENTS

OTHERRESERVES

ATTRIBUT-ABLETOEQUITY

HOLDERSOFTHEPARENT

ATTRIBUTABLETONON-CON-

TROLLINGINTERESTS

TOTALSHARE-

HOLDERS’EQUITY

Shareholders’ equity at 1 January 2014 26,543,218 81 373 10 (37) (29) 2,134 2,532 476 3,008

Profit (loss) for the period (159) (159) (8) (167)

Othercomprehensiveincome - - (70) (17) 30 - (57) (9) (66)

Total comprehensive income - - (70) (17) 30 (159) (216) (17) (233)

Dividendsdistributed - (25) (25)Share-basedpayment 5 5 5Othermovements 1 1 1Total transactions with shareholders - - - - - 6 6 (25) (19)

Shareholders’ equity at 31 December 2014

26,543,218 81 373 (60) (54) 1 1,981 2,322 434 2,756

Profit (loss) for the period (714) (714) (191) (905)

Othercomprehensiveincome - - (20) (7) 26 - (1) (14) (15)

Total comprehensive income - - (20) (7) 26 (714) (715) (205) (920)

Share-basedpayment 5 5 5Othermovements (146) (146) 93 (53)Total transactions with shareholders - - - - - (141) (141) 93 (48)

Shareholders’ equity at 31 December 2015

26,543,218 81 373 (80) (61) 27 1,126 1,466 322 1,788

MAIN COMPONENTS OF THE CHANGE IN EQUITY

Premiumsessentiallyconsistof issuepremi-ums,representingthedifferencebetweentheparvalueofthesharesissuedandtheamountofthecontributionsincashorinkindreceivedonissue.

The“Hedginginstruments”reservescomprisethecumulativechangeintheeffectiveportionof the fair value of derivatives relating tofuture cash flow hedging in connectionwithtransactions that have not yet impacted the

Net income for the period. This is offset inDerivativesunderassetsorliabilities,depend-ing on whether hedging gains or losses arerecognised.

The Defined benefit pension plans reservesinclude the impact of changes in actuarialassumptions used for commitments, andthe variance between actual returns and thediscountratesontheplans’hedgingassets.

Translationadjustmentsrecognisetheconver-siondifferencesderiving fromthe translationofthefinancialstatementsofforeignsubsid-

iaries intoeuros.Theyalsocomprise the fairvaluechangesofthenetinvestmenthedgesofforeignsubsidiaries.

At the end of the 2015 reporting period, theERAMET group remeasured the put optiongranted by it to Mitsubishi (see Note 12)directly in equity, and now recognises thenon-controlling interest intheWedaBayproj-ectinIndonesiadirectlyinshareholders’equity,Group share (held through Strand Minerals(Indonesia)PteLtd.,a66.6%-ownedsubsidiaryofERAMET).

183


6.1.5 BALANCE SHEET

ASSETS

(€ MILLION) NOTES 31/12/2015 31/12/2014

Intangibleassetsandgoodwill 9 370 593Property,plant&equipment 9 2,116 2,296Investmentsinjointventuresandassociates 9 169 231Non-currentfinancialassets 9 153 141Deferredtax 10 8 108Othernon-currentassets 8 70 39Non-current assets 2,886 3,408Inventories 8 937 1,019Tradereceivablesandothercurrentassets 8 538 645Taxreceivables 8/10 58 61Derivatives 7 30 23Currentfinancialassets 6 196 420Cashandcashequivalents 6 432 516Current assets 2,191 2,684

TOTAL ASSETS 5,077 6,092

LIABILITIES

(€ MILLION) NOTES 31/12/2015 31/12/2014

Sharecapital 81 81Sharepremium 373 373Hedginginstrumentrevaluationreserve (80) (60)Revaluationreservefornetdefinedbenefitplansliabilities (61) (54)Translationadjustments 27 1Otherreserves 1,126 1,981Attributable to equity holders of the parent 1,466 2,322Attributabletonon-controllinginterests 5 322 434Shareholders’ equity 1,788 2,756Employee-relatedliabilities 11 215 202Provisions 12 564 488Deferredtax 10 136 242Borrowings—long-termportion 6 1,163 1,031Othernon-currentliabilities 8 31 29Non-current liabilities 2,109 1,992Provisions—short-termportion 12 33 42Borrowings—short-termportion 6 181 316Tradepayablesandothercurrentliabilities 8 748 781Taxliabilities 8/10 31 64Derivatives 7 187 141Current liabilities 1,180 1,344

TOTAL LIABILITIES 5,077 6,092

184


6.1.6 NOTES TO THE CONSOLIDATED STATEMENTS184 NOTE 1 DESCRIPTIONOFTHE

ERAMETGROUP’SBUSINESS185 NOTE 2 KEYEVENTSINTHE

REPORTINGPERIOD186 NOTE 3 OPERATIONAL

PERFORMANCEOFDIVISIONSANDTHEGROUP—SEGMENTREPORTING

189 NOTE 4 CURRENTOPERATINGPROFIT(LOSS)

192 NOTE 5 NETPROFIT(LOSS)GROUPSHAREANDNON-CONTROLLINGINTEREST

194 NOTE 6 NETFINANCIALDEBTANDSHAREHOLDER’SEQUITY

201 NOTE 7 FINANCIALINSTRUMENTSANDRISKMANAGEMENT

209 NOTE 8 WORKINGCAPITALREQUIREMENT

213 NOTE 9 INVESTMENTS221 NOTE 10 TAXES224 NOTE 11 PERSONNELCOSTSAND

EMPLOYEEBENEFITS231 NOTE 12 PROVISIONS234 NOTE 13 RELATED-PARTY

TRANSACTIONS235 NOTE 14 OFF-BALANCE

SHEETCOMMITMENTS,OTHERCOMMITMENTS,CONTINGENTLIABILITIESANDOTHERDISCLOSURES

238 NOTE 15 FEESPAIDTOTHESTATUTORYAUDITORS

238 NOTE 16 EVENTSAFTERTHEREPORTINGDATE

238 NOTE 17 BASISOFPREPARATIONOF CONSOLIDATEDFINANCIALSTATEMENTS

242 NOTE 18 CROSS-REFERENCESBETWEENTHENOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFOR2015AND2014

243 NOTE 19 GLOSSARY

CHANGES TO THE 2015 CONSOLIDATED FINANCIAL STATEMENTS

Thepresentationoftheconsolidatedfinancialstatementsandtheiraccompanyingnoteshasbeenmodifiedcomparedtothatusedpreviouslyinthereportingperiodended31 December2014tomakethemeasiertoreadandmorerelevant,inkeepingwiththeAMFrecommendationsgiveninitsGuidetotherelevance,consistencyandreadabilityoffinancialstatementspublishedinJune2015.

Mostoftheaccountingprinciples,exceptforthegeneralaccountingprinciplesrelatingtothebasisofpreparationoftheconsolidatedfinancialstatements,presentedpreviouslyinNote 1arenowappliedinalltheotherNotes.

TheformerNotes 5to24tothebalancesheetandNotes 25to30andNote 34totheincomestatementarenowgroupedintomajortransversalthemesinNotes 4to12.

Across-reference tablebetween thepresentationadopted for theconsolidatedfinancialstatementsat31 December2015and theoneusedpreviouslyforthereportingperiodended31 December2014,isgivenattheendoftheconsolidatedfinancialstatementsinNote 18.

NOTE 1 DESCRIPTION OF THE ERAMET GROUP’S BUSINESSThe ERAMET group is one of the world’slargestproducersof:

– alloy metals, especially manganese andnickel, which are employed to boost thepropertiesofsteel;

– high-performance special steels and alloys usedbyindustriessuchastheaeronauticalsector,theenergyproductionsectorandthetoolingindustry.

The ERAMET group is divided into threeDivisions.

ERAMET Manganese extracts and upgrades manganese

COMILOG operates the Moanda mine inGabon.

The manganese extracted is treated in theGroup’smetallurgicalandchemicalprocessingplantsinFrance,inChina,inEuropeandintheUnitedStates.TheGroupproducestheindus-try’swidestrangeofalloys.

ERAMET Nickel extracts and upgrades nickel

Le Nickel-SLN operates fivemines and onemetallurgical plant in New Caledonia. TheERAMETgroup is also involved in theWeda Bay Nickel project to mine a major nickeldepositinIndonesia.

OnepartofthenickelisthenupgradedintheSandouvillerefineryinFrancetoproducepurenickel, nickel chloride, nickel carbonate andcobaltchloride.Also,EurotungstèneproducescobaltandtungstenpowdersinFrance.

ERAMET Alloys creates, produces and treats alloys

Aubert & Duval and Erasteel make specialsteels and superalloys, notably for the aero-nauticalandenergysector.Thesemarketscallforhighadded-valuemetallurgicalexpertise.

The ERAMET group has also expanded intitanium, aluminium and aluminium-lithiumalloysandinthepowdermetallurgybusiness.

Additionally, the ERAMET group is exploringlargeprojectsinnewbusinesssegmentswitha strong growth potential such as mineralsands (titanium dioxide and zircon), lithiumandrecycling.

185


NOTE 2 KEY EVENTS IN THE REPORTING PERIODWorsening of market conditions—Group’s major projects suspended

Giventheglobalenvironmentinwhichmetalsareata15-year low,theGroupisparticularlyaffectedbythenickelandmanganesepricesthatsimultaneouslyhittheirall-timelow.

TheGroup’sBoardofDirectorsof14 October2015 decided to reinforce the operationalactionplantoimprovecashflow:

– limit capital investments to only safetyconcernsandmaintenanceofequipment;

– suspendmajorGroupprojects;

– continue to implement the ongoing assetdisposalprogramme;

– continue to strictly follow the 2014-2017plantocutcostsandimproveproductivity.

Reinforcement of the SLN savings and financing plan

Tocopewiththefinancialdifficultiesfollowingthesharpdropinthepriceofnickel,Le Nick-el-SLN(calledSLN)setupashorttermsavings

plan right from theendof theH12015, andboosteditscompetitivenessplanforthe2016-2017period.

On 23 December 2015, ERAMET granted aloanof€120 milliontoSLN,expiringon31 May2016.€45 millionofthisloanhadbeenutilisedat31 December2015.Thetotalloanamountwasraisedfrom€120 millionto€150 millionfollowingthedecisionoftheERAMETBoardofDirectorson17 February2016.

Asnickelprices remained low right from thebeginningof the year 2016, SLNsteppedupitssavingsplanandwillputbefore itsBoardofDirectorsinend-April2016,aplantoadapttotheeconomicclimateinordertoensureitsbusiness continuity and the financing of itsoperationsunderthatplan.

ERAMET’sBoardofDirectorswillalsogiveitsopinionontheplanatthatdate.

Inauguration of the Metallurgy Complex at Moanda

TheMoandaMetallurgyComplex(CMM)wasofficiallyinauguratedon12 June2015bythePresident of theGaboneseRepublic and theGroup’sChairmanandChiefExecutiveOfficer.

This metallurgical treatment plant for oreincludes a plant to produce 20,000 tonnesofmanganesemetalperyearandaplant toproduce 65,000 tonnes of silico-manganeseperyear.

Theplant ramp-upwascontinuedduring the2015reportingperiod.

Impairment of assets

Consideringthedegradedmarketconditionsinthe2015reportingperiodandthehistoricallylowmetal prices, at 31 December 2015, theERAMETgrouprecognisedasset impairmentlosses of €474 million (1) in all on a certainnumberofassetsaffectingnotablytheminingdivisions.

Limitation of deferred tax assets for the tax loss carry-forwards of Le Nickel-SLN

GiventhedeclineinLMEnickelpricesandthefinancial situation of its subsidiary Le Nick-el-SLN (see above), the ERAMET group nolonger recognisesdeferred taxassetson taxloss carry-forwards in New Caledonia. Thetotalimpactforthe2015reportingperiodwas€194 million (1).

(1) Asset impairment amount (€474 million) and tax receivables (€194 million) totalling €668 million.

186


NOTE 3 OPERATIONAL PERFORMANCE OF DIVISIONS AND THE GROUP—SEGMENT REPORTINGTheERAMETgroupisdividedintothreeDivisions:ERAMETNickel,ERAMETAlloysandERAMETManganese.EachDivisionoffersdifferentproductsandservicesandreliesondistincttechnologiesandsalesstrategies.Theiroperationalandfinancialperformanceisthereforemonitoredseparately.TheircontributiontothemainfinancialindicatorsoftheGroupisgivenbelow.

ACCOUNTING METHOD ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

ThefinancialdisclosuresoftheDivisionsarepreparedincompliancewiththeaccountingprinciplesadoptedfortheGroup’sreporting.Inthisconnection,theopera-tionalperformancesofjointventures—theTiZirsub-group(ERAMETManganese)andUkad(ERAMETAlloys)—arepostedusingtheproportionateconsolidationmethod.ThereconciliationwiththepublisheddataisgivenintheJointventurecontributioncolumn.TransactionsbetweentheDivisionsarecarriedoutundermarketconditions.

TheExecutiveCommittee,themainoperatingdecision-makerregularlyassessestheperformanceofeachDivisionagainstthefollowingindicators:• Sales.• EBITDAincludingthegrossprofit(differencebetweensalesandthecostofsales),AdministrativeandsellingexpensesandResearch&Developmentexpenditurebeforedepreciation,amortisationandprovisions,whicharepresentedseparately.

• Current operating profit (loss),groupingtogetherEBITDA,amortisationanddepreciation,andprovisionsforcontingenciesandlosses.Thecurrentoperatingprofit(loss)excludesmaterialtransactionsthatareconsideredtobeunusualinnature,notablyeventsrelatingtorestructuringandimpairmentlosses.

• Cash flows generated by operating activitiesgroupingtogetherEBITDA,otheroperationalcashflowsnotimpactingEBITDAandthechangeinworkingcapitalrequirement(WCR).

• Industrial investments,groupingtogethertheacquisitionsofintangibleassetsandproperty,plantandequipment.

TheExecutiveCommitteealsomonitorsconsolidatedindicatorssuchas:• Net profit (loss) Group share,definedasthenetincomeaftertax,attributabletoERAMET’sshareholders,afteraccountingforthepercentageofnon-controllinginterestineachsubsidiarycontrolledbytheGroup.

• Net financial debt,representingthegrossfinancialdebt(long-termandshort-termborrowings)lesscurrentfinancialassets,andcashandcashequivalents.Thesecomponentsincludethevaluationofderivativesusedtohedgethedebt(currencyandratehedges).

• Gearing,definedastheratioofNetfinancialdebttoShareholders’equity.TheHoldingcompaniesthataretheGroup’scentraldepartments(cashmanagement,currencyriskmanagement,captivereinsurance)donotconstituteaDivision.Theiraggregatesareshowninacolumnwiththeinter-Divisioneliminations(Holdingandeliminations).

3.1 RECONCILIATION OF PUBLISHED FINANCIAL STATEMENTS AND GROUP REPORTING

(€ MILLION)

FY2015

JOINTVENTURES

CONTRIBUTION FY2015 FY2014

JOINTVENTURES

CONTRIBUTION FY2014

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

Sales 3,015 94 3,109 3,075 69 3,144EBITDA 92 - 92 363 - 363Currentoperatingprofit(loss) (191) (16) (207) 86 (11) 75Operatingprofit(loss) (744) (69) (813) (15) (39) (54)Consolidatednetprofit,Groupshare (714) - (714) (159) - (159)Netcashgeneratedbyoperatingactivities (13) 6 (7) 50 (7) 43Industrialcapitalexpenditure 242 25 267 305 41 346(Netfinancialdebt) (716) (162) (878) (411) (136) (547)Shareholders’equity 1,788 (9) 1,779 2,756 (2) 2,754

Equity,attributabletoGroup 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.

187


3.2 PERFORMANCE INDICATORS PER DIVISION

(€ MILLION) NICKEL ALLOYS MANGANESEHOLDINGCO.AND

ELIMINATIONS TOTAL

FY 2015

Sales 686 991 1,430 2 3,109EBITDA (156) 78 196 (26) 92Currentoperatingprofit(loss) (261) 27 58 (31) (207)Netcashgeneratedbyoperatingactivities (60) 27 106 (80) (7)Industrialcapitalexpenditure (intangibleassets,property,plant&equipment) 56 44 164 3 267

FY 2014

Sales 781 938 1,429 (4) 3,144EBITDA 42 81 266 (26) 363Currentoperatingprofit(loss) (52) 23 137 (33) 75Netcashgeneratedbyoperatingactivities (18) 18 140 (97) 43Industrialcapitalexpenditure (intangibleassets,property,plant&equipment) 97 48 199 2 346

2015 Reporting sales by Division

Alloys99132%

Nickel68622%

Manganese1,43046%

2014 Reporting sales by Division

Alloys93830%

Nickel78125%

Manganese1,42945%

2015/2014 Reporting current operating profit by Division

HoldingManganese

2015

AlloysNickel

(261)

27 58

(31)(52) (33)

23

137

2014

3.3 SALES AND INDUSTRIAL INVESTMENTS BY GEOGRAPHIC AREA

(€ MILLION) FRANCE EUROPENORTH

AMERICA ASIA OCEANIA AFRICASOUTH

AMERICA TOTAL

Sales (sales destination)

FY2015 419 977 663 889 36 85 40 3,109FY2014 407 986 664 947 16 81 43 3,144Industrial capital expenditure (intangible assets, property, plant & equipment)

FY2015 49 47 21 1 53 95 1 267FY2014 56 28 19 20 73 149 1 346

188


3.4 CONSOLIDATED PERFORMANCE INDICATORS

SegmentreportinginformationissupplementedwiththemainconsolidatedperformanceindicatorsmonitoredbytheExecutiveCommittee.TheseindicatorsaretakenfromGroupreportingandusedforthefinancialdisclosureoftheGroup’sincomeandperformance.

INCOME STATEMENT

(€ MILLION) FY2015 FY2014

Sales 3,109 3,144EBITDA 92 363Current operating profit (loss) (207) 75Operating profit (loss) (813) (54)Netfinancialincome (90) (68)Shareofincomefromassociates (1) -Incometax (8) (49)Profit (loss) for the period (912) (171)• Non-controllinginterests (198) (12)

• Group share (714) (159)Basic/Dilutedearningspershare(€) (27,11) (6,06)

STATEMENT OF CHANGES IN NET DEBT


Operating activitiesEBITDA 92 363CashimpactofitemsbelowEBITDA (252) (238)Cash generated from operations (160) 125ChangeinWCR 153 (82)Net cash generated by operating activities (7) 43Investing activitiesIndustrialcapitalexpenditure (267) (346)Otherinvestmentflows (16) 26Net cash used in investing activities (283) (320)Net cash used in financing activities - (25)Exchange-rateimpact (41) (27)

(Increase)/decrease in net financial debt (331) (329)Opening (net financial debt) (547) (218)Closing (net financial debt) (878) (547)

ThereconciliationofcashandcashequivalentsinthestatementofcashflowstothenetfinancialdebtintheERAMETgroupreportingisasfollows:

(€ MILLION) 31/12/2015 31/12/2014

Cash and cash equivalents 432 516Othercurrentfinancialassets 196 420Borrowings (1,344) (1,347)Jointventurecontribution (162) (136)

Net financial debt—Reporting (878) (547)

189


ECONOMIC ASSESSMENT

(€ MILLION) 31/12/2015 31/12/2014

Non-current assets 3,003 3,407Inventories 974 1,058Tradereceivables 293 387Tradepayables (430) (435)Simplified WCR 837 1,010OtheritemsofWCR (136) (162)Total WCR 701 848

TOTAL 3,704 4,255

(€ MILLION) 31/12/2015 31/12/2014

Equity,attributabletoGroup 1,466 2,322Equity,non-controllinginterest 313 432Shareholders’ equity 1,779 2,754Cashandcashequivalentsandcurrentfinancialassets (630) (938)Borrowings 1,508 1,485Net financial debt 878 547Ratio of net financial debt to shareholders’ equity (gearing) 49% 20%Employee liabilities and provisions 812 732Net deferred tax 123 130Derivatives 112 92

TOTAL 3,704 4,255

NOTE 4 CURRENT OPERATING PROFIT (LOSS)Thecurrentoperatingprofit(loss)reflectstheperformanceoftheERAMETgroup’sordinarybusinessaspresentedanddefinedinNote 3.Thissectionpresents its components: sales, cost of sales,Administrative andselling expenses,Research&Development expenditure, andamortisationandprovisions.

4.1 SALES

ACCOUNTING METHOD

Salesmostlycomprisesalesofores(nickelandmanganese)andmanufacturedgoods(specialsteels,alloys,superalloys,etc.)tothirdparties.Theearningsfromthesaleoftheseproductsarerecognisedfromthetimealltherisksandrewardsattachedtotheownershipofthesoldproducthavebeentransferredtotheclient.Salesaregrosssaleslesstraderebates.Transportationandmanufacturingexpensesareincludedinthecostpriceofthegoodssold.

Consolidatedsalesfor2015decreasedby2%at€3,015 million,comparedto€3,075 millionin2014(-€60 million).

ThecomparisonagainsttheGroup’sreportedsalesandthedistributionbyDivisionaregiveninNote 3.

190


4.2 COST OF SALES AND OTHER INCOME


Thecostofsalesmainlycomprisescostsborneinindustrial,miningandmetallurgicalfacil-ities,notablytheconsumptionofrawmaterials,energycosts,personnelcosts,andlogisticsandtransportcosts.Italsoaccountsfortheimpactsofthechangeinandvaluationofrawmaterialinventories,work-in-progressandfinishedproducts.Otherrevenueincludesthecomponentsrelatedtocurrentoperatingprofit(loss)suchastranslationadjustmentsonsalesandinsuranceproceeds.Unhedgedcurrencytransactionsaremeasuredatthemonthlyexchangerateinthemonthofthetransactioneffectivedate.Gainsandlossesarisingfromtheconversionofoperatingreceivablesandpayablesarerecognisedincurrentoperatingprofit(loss).Inthecaseofhedgedtransactions,thetranslationadjustmentsarisingfromthedifferencebetweenthemonthlyexchangerateusedtorecognisesalesandreceiptsorpurchasesandpaymentsandthehedgingrateforthesettlementoftransactionsarealsorecognisedincurrentoperatingprofit(loss).

Thedateofatransactionisthedate atwhichitisexecuted.Forpracticalreasons,thetransactiondateusedisthemonthinwhichthetransactionisbooked.Therateappliedtorecognisecurrencytransactionsinamonthcorrespondstotheaveragedailyrateapplicableinthepreviousmonth.

4.3 ADMINISTRATIVE AND SELLING EXPENSES

ACCOUNTING METHOD

Administrativeandsellingexpensesmainlycomprisepersonnelcostsfornon-industrialsitesandothercentraladministrativeservices.

4.4 RESEARCH AND DEVELOPMENT EXPENDITURE

ACCOUNTING METHOD

Researchanddevelopmentexpenditurerelatestoexpensesforscientificandtechnicalactivitiesnecessaryfortheresearch, developmentandimplementationofnewmanufacturingprocessesortheimprovementofexistingprocesses.Oncethetechnicalfeasibilityandprofitabilityofaprojecthavebeenestablished,thecostsincurredarecapitalised.Theseexpensesalsoincludethegeologyexpensesincurredintheminingsites(ERAMETNickelandERAMETManganese) thatarealreadyinoperation.

Expenses for the period

(€ MILLION) 31/12/2015 31/12/2014

Non-capitalisedresearchanddevelopmentexpenditure 25 30of which, geological expenditure:• Nickel 7 7

191


4.5 AMORTISATION AND DEPRECIATION OF NON-CURRENT ASSETS AND PROVISIONS FOR CONTINGENCIES AND LOSSES

ACCOUNTING METHOD

Amortisation and depreciation of non-current assetsThenon-currentassetscanbedepreciatedwhentheirexpecteduseislimitedintimeorbasedonproductionunits.Wherethedurationorthepaceofutilisationofanassetcannotbedeterminedreliably,thestraight-linemethodisapplied.Theselecteddepreciationmethodisappliedacrossallsimilarassetswiththesameconditionsofuse.Depreciationbeginsatthedateonwhichtheassetisputintoservice.Anysignificantchangeintheplannedutilisationoftheasset,intermsofdurationorthepace,willresultinthedepreciationbeingrevised forthecurrentyearandfutureyears.Likewise,inthecasewhereimpairmentlossprovisionsaresetasideorreversedfollowingthecompari-sonbetweenthevalueinuseofanon-currentassetanditscarryingamount(Note 9),thedepreciationbasisismodifiedprospectively,i.e. thedepreciationisadjustedbasedonthenewdurationorthenewpaceofuseforthecurrentreportingperiodandfuturereportingperiods.Thedepreciationforthereportingperiodisrecognisedunderaseparateheading,Amortisationanddepreciationofnon-currentassets, whichisbetweenEBITDAandCurrentoperatingprofit(loss).

Provisions for contingencies and lossesSeeNote 12.

ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

TheERAMETgroupusestwodepreciationmethods,thestraight-linemethodandtheunits-of-productionmethod.

Straight-line depreciation methodThedepreciationofproperty,plantandequipmentiscalculatedonastraight-linebasisovertheestimateusefullifespanat31 December2015:• Buildings10-50 years• Industrialandminingfacilities5-50 years• OtherProperty,plant&equipment2-10 yearsAssetsinvestedintheSETRAGconcessionaredepreciatedovertheshorteroftheirusefullivesortheremainingperiodoftheconcession.Computersoftwareisamortisedoveravariableperiodnotexceedingfiveyears.

Units-of-production methodTheeconomicbenefitsgeneratedbytheuseofcertainindustrialassetsaredeterminedinrelationtothelevelofproduction, notablyinthestart-upphaseofnewproductionunits.Suchassetsaredepreciatedusingtheunits-of-productionmethod.Thedepreciationcalculationaccountsforthequantitiesproducedduringthereportingperiod,expressedasapercentage ofthetotalquantitiesoftheproductstoextractortoproduceinthecurrentandfuturereportingperiods.Iftheproductionisnotdeemedtofluctuatesignificantlyfromoneyeartothenext,aswiththeassetswhosemateriallifespanisshorter thanthelifeoftheplantortheminetowhichtheyrelate,theassetsaredepreciatedaccordingtothestraight-linemethodmentionedaboveoverthelifeoftheplantorthemine.

Depreciation start date for non-current assetsNon-currentassetsaredepreciatedfromthetimetheyarereadytobeputintoservice.

Revision of depreciation periodsTheresidualvaluesandusefullifeofnon-currentassetsarerevisedandadjustedasappropriate,attheendofeachreportingperiod. Changeisseenasachangeinestimates,andimpactsonlythecurrentandlaterreportingperiods.TheERAMETgroupmeasuresitsexistingassetsandthedepreciationperiodwhenreviewingminingplans(ERAMETNickelandERAMETManganese)andplantoperationplansattheendofeachreportingperiod.Whenitisestablishedthatthelifeoftheallocatedassets nolongermatchestheremainingperiodofexpectedreturns,theirdepreciationperiodismodifiedprospectively.Uncertaintiesareinherent totheestimationofreservequantities,especiallyasregardsassumptionsaboutfutureprices,thegeologyofthemines,theminingmethodsusedandassociatedcostsincurredtodevelopandminethesereserves.Changesintheseassumptionscouldleadtomajoradjustments intheestimationofreserves,whichmaybethebasisforimpairmentormodificationindepreciationexpenseinfutureperiods.

Provisions for contingencies and lossesSeeNote 12.


Intangibleassets—Note 9 (21) (21)Property,plant&equipment—Note 9 (270) (251)Amortisation and depreciation of non-current assets (291) (272)of which, amortisation and depreciation of acquisition price allocation (4) (10)Provisions 8 (5)

TOTAL (283) (277)

192


NOTE 5 NET PROFIT (LOSS) GROUP SHARE AND NON-CONTROLLING INTERESTTheNetprofit(loss)GroupshareistheNetincomefortheperiodaftertax,attributabletoERAMETshareholders,afteraccountingforthenon-controllinginterestineachoftheGroup’scompanies.

ApartfromtheCurrentoperatingprofit(loss),theNetincomefortheperiodincludesthefollowingcomponents:

– Otheroperatingincomeandexpenses(seebelow);

– Netfinancialincome(Note 6);

– Shareofincomefromjointventuresandassociates(Note 9);

– Incometax(Note 10).

5.1 CURRENT OPERATING PROFIT (LOSS)—NET PROFIT (LOSS) GROUP SHARE CROSS-REFERENCE TABLE

(€ MILLION) NOTES FY2015 FY2014

Current operating profit (loss) 3 / 4 (191) 86Otheroperatingincomeandexpenses 5 (553) (101)Operating profit (loss) 3 (744) (15)Netfinancialincome 6 (74) (60)Shareofincomefromjointventuresandassociates 9 (78) (44)Incometax 10 (9) (48)Profit (loss) for the period (905) (167)• Attributabletonon-controllinginterests 5 (191) (8)

Net profit (loss)—Group share 3 / 5 (714) (159)

5.2 OTHER OPERATING INCOME AND EXPENSES

ACCOUNTING METHOD

Otheroperatingincomeandexpensesincludeonlyverylimited,unusual,abnormalandinfrequentincomeandexpensesforparticularlymaterialamountsthattheERAMETgrouppresentsseparatelyinitsincomestatementin order to facilitate understanding of current operating performance.Theyincludethefollowingcomponentsinparticular:• restructuringcosts;• costsincurredfordevelopmentprojectswhoseprofitabilityhasyettobedemonstrated;• definedbenefitsplansettlementsandmodifications;• capitalgainsandlossesfromsalesofassets;• impairmentlossesongoodwillandnon-currentassets.

DETAIL BY CATEGORY


Otheroperatingincomeandexpensesexcludingimpairment (131) (102)Impairmentofassets (422) 1

Other operating income and expenses (553) (101)

193



Niobiumproject (36) (45)Lithiumproject (10) (4)PlantCproject (25) (1)WedaBayproject (10) -Otherprojects (16) (15)Development projects (97) (65)Restructuringandredundancyplans (12) (32)Employeebenefits—impactofrestructuring 6 3Employeebenefits—planamendment (3) 3Otheritems (25) (11)Other income and expenses (34) (37)

TOTAL (131) (102)FollowingtheGroup’sdecisiontoputmajorprojectsonhold(seeKeyeventsinthereportingperiod),theexpenditureinthe2015reportingperiodfortheconstructionofanewelectricpowerplantinNew CaledoniaandfortheWedaBayprojectinIndonesiaisnowexpensed.

IMPAIRMENT OF ASSETS AND IMPAIRMENT LOSSES


Lossesonimpairmenttests—Goodwill (6) -Lossesonimpairmenttests—Intangibleassets (241) -Lossesonimpairmenttests—Property,plant&equipment (147) (14)Reversalsonimpairmenttests—Property,plant&equipment - 15Losses on impairment tests—Intangible assets and PPE (394) 1Otherimpairmentofassets (16) -Otherprovisions (12) -

TOTAL IMPAIRMENT OF ASSETS AND IMPAIRMENT LOSSES—NOTE 9 (422) 1


ERAMETNickel (256) -ERAMETAlloys (12) 15ERAMETManganese (154) (14)

TOTAL IMPAIRMENT OF ASSETS AND IMPAIRMENT LOSSES (422) 1SeeNote 9—Investments,sectionImpairmentofassets.

5.3 NET EARNINGS PER SHARE, GROUP SHARE

ACCOUNTING METHOD

NetearningspersharecanbeobtainedbydividingtheGroupshareofnetprofit(loss)bytheaveragenumberofsharesoutstandingduringthereportingperiod.Thisaveragenumberofsharesoutstandingexcludestreasuryshares.DilutedearningspersharecanbeobtainedbyadjustingNetprofit(loss)Groupsharefortheperiodandthenumberofsharesforpotentiallydilutiveeffects,mainlyrepresentedbyemployeesharesubscriptionandpurchaseplans.

194


FY2015 FY2014

NETPROFIT(LOSS)GROUP

SHARE

AVERAGENUMBEROF

SHARESEARNINGSPER

SHARE

NETPROFIT(LOSS)GROUP

SHARE

AVERAGENUMBEROF

SHARESEARNINGSPER

SHARE

Basicearningspershare (714) 26,339,672 (27.11) (159) 26,303,185 (14.11)Dilutedearningspershare(1) (714) 26,339,672 (27.11) (159) 26,303,185 (14.11)

(1) Where basic earnings per share are negative, the diluted earnings per share are deemed equal to it, in which case the instruments are considered to be anti-dilutive.

5.4 NON-CONTROLLING INTEREST SHARE IN EARNINGS—MINORITY INTEREST

%OF NON-CONTROLLING

INTEREST

SHAREOF SHAREOF

PROFIT(LOSS)SHAREHOLDERS’

EQUITY PROFIT(LOSS)SHAREHOLDERS’

EQUITY

(€ MILLION) FY2015 31/12/2015 FY2014 31/12/2014

At beginning of period 434 476Dividendsdistributed - (25)Profit(loss)fortheperiod (191) (8)Changeinfinancialinstrumentrevaluationreserve (10) (7)

Translationadjustments (4) (2)Othermovements 93 -

At period end (191) 322 (8) 434Le Nickel-SLN 44% (170) 114 (18) 287COMILOGS.A. 36.29% (12) 195 11 211StrandMineralsInc. 33.4% - - (2) (85)Pt WedaNickelLtd 10% (9) 11 - 17Interforge 6% - 2 - 2Othercompanies - - 1 2

SeeStatementofchangesinequity.

NOTE 6 NET FINANCIAL DEBT AND SHAREHOLDER’S EQUITY

6.1 NET FINANCIAL DEBT

Netfinancialdebtrepresentsthegrossfinancialdebt(long-termandshort-termborrowings)lesscurrentfinancialassets,andcashandcashequiva-lents.Thesecomponentsincludethevaluationofhedgingderivatives(currencyandratehedges)fordebtandinvestments.

ACCOUNTING METHOD

Borrowingsareinitiallyrecognisedonthebasisoftheamountreceived,lessthecostoffinancingincurred.Borrowingsaresubsequentlymeasuredatamortisedcost.Anyvariancebetweentheamountsreceivedandtheredemptionvalueoftheborrowingisrecognisedintheincomestatement,inNetfinancialincome(Borrowingcosts)overthetermoftheborrowing,usingtheeffectiveinterestrate(EIR)method.

(€ MILLION) 31/12/2015 31/12/2014

Borrowings—long-termportion (1,163) (1,031)Borrowings—short-termportion (181) (316)Borrowings (1,344) (1,347)Cashandcashequivalents 432 516Othercurrentfinancialassets 196 420

Net financial debt (716) (411)

195


6.2 BORROWINGS

BORROWINGS BY CATEGORY

(€ MILLION) 31/12/2015 31/12/2014

Borrowingsoncapitalmarkets 691 687Bankloans 451 523Bankoverdraftsandcreditorbanks 73 24Financeleaseliabilities 49 60Otherborrowingsandfinancialliabilities 80 53

TOTAL 1,344 1,347• Long-termportion 1,163 1,031• Short-termportion 181 316

BORROWINGS ON CAPITAL MARKETS AND BANK LOANS

(€ MILLION) NOMINAL INTERESTRATE MATURITY 31/12/2015 31/12/2014

Bondissue—ERAMETS.A. €525 million 4.50% 2020 527 525Europrivateplacement—ERAMETS.A.(*) €50 million 5.29% 2026 51 52Europrivateplacement—ERAMETS.A.(*) €50 million 5.10% 2026 51 51DeutscheBank(Schuldschein)loan—ERAMETS.A. €60 million 6-monthEuribor+2% 2020 62 59

Borrowings on capital markets 691 687ICBC/BNPParibas/BGFI—COMILOGS.A.borrowings $217 million 6-monthLibor+4.3%/+2.1% 2018/2022 120 140

Issuedcommercialpaper—ERAMETS.A. €2 million Between0.45%and0.81% 1 yearmax. 2 81Borrowingbase—ERAMETS.A. €56 million 1-monthEuribor+2.1% 2017 56 73EuropeanInvestmentBank—ERAMETS.A. €80 million 1.736% July2025 80 -Otherborrowingswithcreditinstitutions 193 229

Borrowings with credit institutions 451 523(°) With investor put options that may be exercised after the 7th year.

Certainborrowingsneedtocomplywithfinancialratiosorcovenants(Note 7).

CHANGE OVER THE PERIOD


At beginning of period 1,347 1,045Newborrowings 140 482Repaymentofborrowings (220) (194)Changeinbankoverdrafts 49 (11)Otherchanges 5 10Translationadjustments 23 15

At period end 1,344 1,347

196


BORROWINGS BY CURRENCY AND BY MATURITY

(€ MILLION) 31/12/2015 31/12/2014

Euro 1,060 1,074USdollar 215 210CFAfranc 35 28Poundsterling 5 2Norwegiankrone 7 6Othercurrencies 22 27

TOTAL 1,344 1,347Lessthanoneyear 181 316Onetofiveyears 953 273Overfiveyears 210 758

TOTAL 1,344 1,347

CONFIRMED CREDIT FACILITIES

(€ MILLION) 31/12/2015 31/12/2014

Unusedconfirmedcreditfacilities(1) 981 981UndrawnBEIfinancing(2) - 80

(1) Bank covenants relating to these credit facilities are wholly satisfied. These covenants relate to the ratio of the Group’s net financial debt to shareholders’ equity.(2) This credit facility was drawn entirely in FY 2015.

BORROWINGS BY INTEREST RATE

(€ MILLION) 31/12/2015 31/12/2014

Interest-free 57 27Fixedinterestrates 864 771• Below5% 775 641• Between5%and10% 89 130• Above10% - -Variableinterestrates 423 549• Below5% 421 538• Between5%and10% 2 11• Above10% - -

TOTAL 1,344 1,347

FINANCE LEASE LIABILITIES

(€ MILLION)

31/12/2015 31/12/2014

NOMINALVALUE DISCOUNTVALUE NOMINALVALUE DISCOUNTVALUE

Lessthanoneyear 12 11 13 11Onetofiveyears 33 31 39 36Overfiveyears 8 7 14 13Total before interest expense 53 49 66 60Interestexpense - 4 - 6

TOTAL 53 53 66 66

197


6.3 CASH AND CASH EQUIVALENTS

ACCOUNTING METHOD

Cashincludescashinhandanddemanddeposits,excludingbankoverdraftswhichappearunderborrowings.Cashequivalentscorrespondtomarketablesecuritiesandconsistofinvestmentsheldtomeetshort-termcashrequirements.Marketablesecuritiesarerecognisedinthestatementoffinancialpositionattheirfairvalue.Tobeconsideredacashequivalent,theymustbereadilyconvertibletocashandsubjecttonegligibleriskoffluctuationsinvalue.ChangesinfairvaluearerecognisedintheNetincomefortheperiod.

DETAIL BY CATEGORY

(€ MILLION)NETAMOUNT31/12/2015

NETAMOUNT31/12/2014

Cash 50 77Cashequivalents 382 439

TOTAL 432 516

DETAIL BY CURRENCY

(€ MILLION) 31/12/2015 31/12/2014

Euro 301 484USdollar 91 17YuanRen-Min-Bi(China) 6 6Norwegiankrone 23 3Othercurrencies 11 6

TOTAL 432 516

DETAIL BY INTEREST RATE TYPE

(€ MILLION) 31/12/2015 31/12/2014

Interest-free 33 36Fixedinterestrates 22 68Variableinterestrates 377 412

TOTAL 432 516

Interest-freeitemsmainlyconsistofnon-inter-est-bearingsightdeposits.

Cashincludescashinhandandatbank.Cashequivalents mostly comprise the followingitemsmanagedbyMetalSecurities:

– money-marketsecuritiestotalling€173 mil-lion (ascompared to€70 millionat31 De-

cember2014)bearinginterestbasedonthe

EONIA index rate (Euribor OverNight Index

Average);

– negotiabledebtsecuritiestotalling€115 mil-

lion(ascomparedto€242 millionat31 De-

cember2014)bearinginterestbasedonthe

EONIAindexrate;

– interest-bearing bank accounts amountingto€22 million (compared to€65 millionat31 December2014).

The change from one period to the next isanalysedthroughthestatementofcashflowsdrawnupusingtheindirectmethod.

198


Non-cashincomeandexpensesbreakdownasfollows:


Depreciation,amortisation,impairmentandprovisions 689 299Accretionexpenses 9 12Financialinstruments 4 16Deferredtax (20) (65)Proceedsfromassetdisposals 1 (3)Shareofincomefromjointventuresandassociates 78 44

Non-cash income and expenses 761 303

6.4 CURRENT FINANCIAL ASSETS

ACCOUNTING METHOD

TheseassetsmostlycomprisebondsoflistedEuropeancompaniesthatdonotsatisfythecriteriatoqualifyascashequivalents.Thesebondsaremeasuredattheirfairvalueuponfirst-timerecognition.Thefairvalueusedisthestock-marketvalueforlistedbonds, andforunlistedbonds,isbasedonestimatesusingspecificfinancialcriteriareflectingthespecificsituationofeachbond(similartransac-tionsordiscountedvalueoffuturecashflows).Wherethosebondsexhibitobjectiveevidenceofsignificantorlastinglossofvalue,thecumulativeimpairmentloss,previouslyrecognisedinequity,isrecognisedinNetincomefortheperiod.

ChangesinthefairvalueoftheseinvestmentsarerecognisedintransferableequityunderChangeinfairvalueofavailable-for-salefinancialassets. Theamountrecognisedinequitywasnullforthe2014and2015reportingperiods.

Thenetchangeof€224 millionincurrentfinancialassetsbetween2014and2015isshowninthenetcashflowsrelatingtoinvestingactivities.

6.5 NET FINANCIAL INCOME


Netdebtcost (52) (33)Otherfinancialincomeandexpenses (22) (27)

Net financial income (74) (60)

NET BORROWING COST

ACCOUNTING METHOD

Thenetdebtcostsincludetheexpensesrelatingtogrossdebtandfinancialrevenueinconnectionwithbondsandinvestmentsecurities.Theborrowingcostsrelatetointerestpayableonthedebtandothercostsincurredinconnectionwiththeborrowingoffunds.Borrowingcoststhatarelinkeddirectlytotheacquisition,buildingorproductionofanassetthatrequiresmorethan12 monthstobeputintoservicearedeductedfromthefinancingexpensetowhichtheyrelate.Alltheotherborrowingcostsareexpensedinthecurrentperiodinwhichtheyareincurred.


Interestincome 11 14Interestexpense (62) (50)Netincomeonmarketablesecurities 3 1Changesinfairvalueofmarketablesecurities (1) (1)Nettranslationdifferences (3) 3

TOTAL (52) (33)

199


OTHER FINANCIAL INCOME AND EXPENSES

ACCOUNTING METHOD

TheOtherfinancialincomeandexpensesincludeallthecomponentsofNetfinancialincomeexceptforincomeandexpensesrelatingtothenetdebtcost.


Investmentanddividendincome 1 2Gains(losses)onthedisposalofinvestmentsinassociates (2) 6Employeebenefits—netinterest (6) (7)Accretionexpenses (9) (12)Financialinstrumentsineligibleashedges—currency (3) (15)Financialinstrumentsineligibleashedges—commodity (1) (1)Securitisationfinancialexpense (2) (1)Other - 1

TOTAL (22) (27)Accretionexpensesrelatetoprovisionsforminingsiterestorationandfordismantlingindustrialfacilities.

Thefinancialinstrumentsthatdonotqualifyashedgescorrespondtotheportionofhedginginstrumentsrecognisedinincome.

6.6 SHAREHOLDERS’ EQUITY

CHANGES TO THE SHARE CAPITAL

Thesharecapitalof€80,956,814.90iscomposedof26,543,218fullypaid-upshareswithaparvalueof€3.05each.

31/12/2015 31/12/2014

BREAKDOWN

SHARECAPITAL VOTINGRIGHTS SHARECAPITAL VOTINGRIGHTS

%NUMBEROF

SHARES %NUMBEROF

SHARES %NUMBEROF

SHARES %NUMBEROF

SHARES

Registered sharesSORAME&Compagnied’ÉtudesIndustriellesduRouvray(CEIR)

37.06 9,835,834 44.17 19,671,668 37.06 9,835,834 44.18 19,671,668

FSIEquation(Bpifrancesubsidiary) 25.66 6,810,317 30.58 13,620,634 25.66 6,810,317 30.59 13,620,634

S.T.C.P.I. 4.03 1,070,587 4.81 2,141,173 4.03 1,070,587 4.81 2,141,173ERAMETS.A. 0.82 218,276 - - 0.87 230,051 - -ERAMETS.A.sharefund 0.20 52,373 0.24 104,746 0.20 52,373 0.24 104,746

Other 32.23 8,555,831 20.20 8,995,747 32.19 8,544,056 20.18 8,985,301

TOTAL NUMBER OF SHARES 100.00 26,543,218 100.00 44,533,968 100.00 26,543,218 100.00 44,523,522of which, registered shares 69.27 18,387,508 82.03 36,531,116 69.51 18,449,298 82.02 36,519,203

of which, bearer shares 30.73 8,155,710 17.97 8,002,852 30.49 8,093,920 17.98 8,004,319

200


Pursuanttoashareholders’agreementsignedon16 March2012,whichenteredintoforceon16 May2012andwillexpireon31 December2016, subject of the AMF decision andnotification No. 212C0647, the Company, asof16 May2012,isunderthemajoritycontrolof a declared concert party of shareholderscomprising:

– aconcertsub-groupcomprisedofSORAMEand CEIR, companies controlled by the

Duval family, pursuant to a simultaneousshareholders’ agreement of 19 July 1999,thatcameintoeffecton21 July1999,andwasamendedbyarideron13 July2009;

– Bpifrance (public investment bank), via itssubsidiaryFSIEquation.

The provisions of the above shareholders’agreementandoftheconcertsub-groupcanbefoundinthemainextractsofthetextsofthe

AMFdecisionandnotificationNo. 212C0647andNo. 209C1013(riderof13 July2009).

Since 1 January 2002, registered sharesmeetingtherequiredconditionshavequalifiedfordoublevotingrights.

TREASURY SHARES

Thetablebelowsummarisesthetreasurysharetransactions:

PRICESUPPORT(1)AWARDSTO

EMPLOYEES(2) TOTAL

Position at 31 December 2013 106,952 177,909 284,861As a percentage of share capital 26,543,218 0.40% 0.67% 1.07%Bonussharegrants (37,459) (37,459)Purchases/Sales (17,351) (17,351)Position at 31 December 2014 89,601 140,450 230,051As a percentage of share capital 26,543,218 0.34% 0.53% 0.87%Bonussharegrants (45,393) (45,393)Purchases/Sales 33,618 33,618

Position at 31 December 2015 123,219 95,057 218,276As a percentage of share capital 26,543,218 0.46% 0.36% 0.82%

(1) Liquidity contract signed with Exane BNP Paribas.(2) Instructions to buy back 250,000 shares (ceiling reached in 2013).

ERAMETtreasurysharesareclassifiedunderOtherreservesandrecognisedatpurchasecostforanamountof€23 millionat31 December2015(€33 millionat31 December2015).Thesetransactionamountswereallocatedtoshareholders’equity.

201


NOTE 7 FINANCIAL INSTRUMENTS AND RISK MANAGEMENTThisnotegivesanoverviewofthefinancialinstrumentsoftheERAMETgroup,theassociatedrisks,itsriskmanagementobjectives,sensitivityandmonitoringofthefinancialriskmanagementstrategy.

ACCOUNTING METHOD

Financial instrumentsDerivativeassetsandliabilities,currentfinancialassets,andcashandcashequivalentsareinitiallyrecognisedinthebalancesheetattheirfairvalue(normallythetransactionprice)adjustedfortransactioncosts.Ateachperiodclosing,thechangeinfairvalueisrecognisedinincome(Otherfinancialincomeandexpenses)unlessacashflowhedgeexists.Inthatcase,thechangeisrecognisedinOthercomprehen-siveincomeandshowninequity(changeintherevaluationreserveofhedgingfinancialinstruments).

Derivative instrumentsTheERAMETgroupusesderivativestohedgecertainrisks.Tomanageitsforeigncurrencyrisk,theERAMETgroupusesforeigncurrencyforwards/futures,foreigncurrencyswapsand,toalesserextent,foreigncurrencyoptions.Foreigncurrencyforwards/futuresarerecognisedashedgeswheretheERAMETgrouphasdefinedanddocumentedthehedgingrelationshipanddemonstrateditseffectiveness.Interest-rateriskismanagedusinginterest-rateswaps.Lastly,theERAMETgroupalsousescollarsandswapswhenhedgingcommoditypurchasesandsales(nickel,fueloil,aluminiumandelectricity).Derivativesaremeasuredattheirfairvalueuponinitialrecognition.Subsequently,thefairvalueofderivativesisremeasuredateachreportingdate.Thefairvalueofforeigncurrencyforwards/futuresisestimatedonthebasisofmarketconditions.Thefairvalueofinterestratederiva-tivesisthatwhichtheERAMETgroupwouldreceive(orpay)totransfercurrentcontractsatthereportingdate.Thefairvalueofcommodityderivativesisestimatedonthebasisofmarketconditions.Derivativesareshowninthebalancesheetundercurrentassetsorliabilities.

HedgingGainsorlossesonhedginginstrumentsarerecognisedsymmetricallywiththegainsorlossesonthehedgeditems.However,thefairvaluechangesofhedges,independentlyofthehedgedtransactions,arerecognisedontheincomestatementfortheperiodunderCurrentoperatingprofit(loss)orOtherfinancialincomeandexpensesdependingonthenatureofthehedge.TheERAMETgroupidentifiesthehedgingitemandhedgeditemwhenthehedgeissetupandformallydocumentsthehedgingrelationshipbyidentifyingthehedgingstrategy,thehedgedriskandthehedgeeffectivenessmeasurementmethod:• Fairvaluehedge:thehedgeditemisremeasuredinrespectofthehedgedriskandthehedginginstrumentismeasuredandrecognisedatfairvalue.ThechangesinbothitemsarerecognisedsimultaneouslyinCurrentoperatingprofit(loss).

• Cashflowhedge:thehedgeditemisnotremeasured.Onlythehedginginstrumentisremeasuredatfairvalue.Tooffsettheremeasure-ment,theeffectiveportionofthechangeinfairvaluethatcanbeascribedtothehedgedriskisrecognisednetoftaxinshareholders’equity.Thecumulativeamountsinshareholders’equityarerecognisedinincomefortheperiodwhenincomeisaffectedbythehedgeditem.Theineffectiveportionisretainedinincomefortheperiod.

• Hedgingofnetinvestmentinforeignsubsidiaries:derivativesintendedtohedgenetforeigncurrencyinvestmentinforeignsubsidiariesaretreatedasnetforeigncurrencyinvestmenthedges.Theprofitorlossfromsuchhedges,andthechangesinfairvalue(apartfromthetimevalue)arerecognisedinequityascurrencytranslationdifferences,andtransferredtoincomewhenthesubsidiaryissold.

• Recognitionofderivativesthatdonotcomplywithhedgeaccountingconditions:theERAMETgroupusesthesederivativesonlytohedgefuturecashflows,andchangesinfairvalueareimmediatelyrecognisedinOtherfinancialincomeandexpenses.

Fair value measurementTheERAMETgroupmeasuresitsfinancialinstrumentsatfairvalueateachreportingdate.Fairvalueistheamountforwhichanassetcouldbesold,oraliabilitysettled,betweenknowledgeable,willingpartiesinanarm’slengthtransaction.Whenmeasuringfairvalue,itisassumedthatthetransactionforsellingtheassetortransferringtheliabilityiscarriedout:• inthemainmarketforthatassetorthatliability;or• ifthereisnomainmarket,inthebestmarketforthatassetorthatliability.Thefairvaluemeasurementofanon-financialassetconsidersthecapacityofamarketparticipanttogenerateeconomicbenefitsbymakingfulluseoftheassetorbysellingittoanothermarketparticipantwhowillmakefulluseoftheasset.Thefairvaluesoffinancialinstrumentsarerankedaccordingtoathree-levelhierarchy:• Level 1:Listedprices(unadjusted)onanactivemarketforthesameassetsandliabilities;• Level 2:Listedpriceonanactivemarketforasimilarinstrument,oranothermeasurementtechniquebasedonobservableparameters;• Level 3:Measurementtechniqueincorporatingnon-observableparameters.Thecriteriaforclassifyingandrecognisingfinancialassetsandliabilities,andwhereappropriate,anychangeoverfromoneleveltoanotherinthefairvaluehierarchyaregivenbelow.

202



Theuncertaintiesandestimatesaswellasthejudgementsusedareconsideredforthevaluationofforward/futurescontracts,theapplica-tionofhedgeaccountingandthevaluationofderivativesmeasuredatfairvalue.Tocontinuetoapplyhedgeaccountingtorawmaterialpurchasesandsales(nickel,fueloil,aluminium,andelectricity),theERAMETgroupestablishesthattheheadinginstrumentisefficientsoastooffset,retrospectivelyandprospectively,thecurrencyriskonitsrawmaterialpurchasesandsales,andensuresthatthedocumentationcompliesstrictlywiththerequirements.Theprocessesfortestingtheefficiencyofthehedgecallfortheuseofjudgementsandestimates.

Fair value measurementThefairvaluerepresentsanestimateatagivendateandcanchangefromoneperiodtoanotherduetomarketconditionsandotherfactors.TheERAMETgroupgivesprioritytotheassumptionsthatthemarketparticipantswouldusetodeterminethepriceoftheassetortheliability,ontheconsiderationthatthemarketparticipantsactintheirownbesteconomicinterests.TheERAMETgroupusesmeasurementtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataisavailabletodeterminethefairvalue,maximisingtheuseofpertinentobservableinputswhileminimizingtheuseofnon-observableinputs.

7.1 FINANCIAL INSTRUMENTS SHOWN IN THE BALANCE SHEET

31/12/2015 BREAKDOWNBYTYPEOFINSTRUMENT 31/12/2014 BREAKDOWNBYTYPEOFINSTRUMENT

(€ MILLION)

STATE-MENTOFFINAN-

CIALPOSITION

FAIRVALUE

THROUGHP&L

AVAIL-ABLE-FOR-SALE

ASSETS

LOANSAND

RECEIV-ABLES

LIABILI-TIESATAMOR-TISEDCOST

DERIVA-TIVES

STATE-MENTOFFINAN-

CIALPOSITION

FAIRVALUE

THROUGHP&L

AVAIL-ABLE-FOR-SALE

ASSETS

LOANSAND

RECEIV-ABLES

LIABILI-TIESATAMOR-TISEDCOST

DERIVA-TIVES

Non-consolidatedsubsidiaries 50 50 48 48

Othernon-currentfinancialassets 103 103 93 93

Othernon-currentassets 70 70 39 39

Tradereceivables 288 288 385 385Othercurrentassets 250 250 260 260

Derivatives 30 30 23 23Othercurrentfinancialassets 196 196 420 420

Cashandcashequivalents 432 432 516 516

Assets 1,419 432 246 711 - 30 1,784 516 468 777 - 23Borrowings—long-termportion 1,163 1,163 1,031 1,031

Othernon-currentliabilities 31 31 29 29

Borrowings—short-termportion

181 181 316 316

Tradepayables 406 406 418 418Othercurrentliabilities 342 342 363 363

Derivatives 187 187 141 141

Liabilities 2,310 - - 779 1,344 187 2,298 - - 810 1,347 141

203


No reclassification among categories offinancial instrumentswas carried out duringthe period. Investments in associates andOthercurrentfinancialassetsarerecognisedin the balance sheet at fair value.TheOthernon-currentfinancialassetsaremeasuredatamortisedcostcalculatedusingtheeffectiveinterestrate(EIR).

Borrowingsarerecognisedatamortisedcostmeasured at the effective interest rate (EIR).Securitiesandborrowingsmay,asappropriate,beinterest-ratehedgedandtheportionlinkedto interest-rate changes is remeasured; theirfairvalue isclosetotheirvalueshowninthebalance sheet, owing to their small amountandthehedges.

The fair value of trade receivables and tradepayables is equal to the value shown in thebalancesheet,sinceforthemostparttheyfalldueinlessthanoneyear.

Thefairvalueoffinancialinstrumentsbrokendownbyfair-valuehierarchyisasfollows:

31/12/2015BREAKDOWNBYFAIRVALUE

CATEGORY 31/12/2014BREAKDOWNBYFAIRVALUE

CATEGORY

(€ MILLION)

VALUEINTHEBALANCE

SHEET LEVEL 1 LEVEL 2

VALUEINTHEBALANCE

SHEET LEVEL 1 LEVEL 2

Currentfinancialassets 196 196 420 420Cashandcashequivalents 432 432 516 516Derivatives 30 30 23 23

Assets 658 628 30 959 936 23Derivatives 187 187 141 141

Liabilities 187 - 187 141 - 141

7.2 EFFECTS OF FINANCIAL INSTRUMENTS ON THE INCOME STATEMENT

(€ MILLION)

FY2015IMPACTON

PROFIT(LOSS)

FINANCIALINCOMEAND(EXPENSES)

AMORTISEDCOST FAIRVALUE

TRANSLATIONADJUSTMENTS

PROFIT(LOSS)ONDISPOSAL

NETIMPAIRMENT

Investmentsecurities (1) 1 (2)Otherfinancialassets 2 9 (1) (6)Derivatives (28) (28)(Netdebt)/Netcash (56) (50) (5) (2) (2) 3

TOTAL (83) (40) (5) (30) (3) 1 (6)

(€ MILLION)

FY2014IMPACTON

PROFIT(LOSS)

FINANCIALINCOMEAND(EXPENSES)

AMORTISEDCOST FAIRVALUE


PROFIT(LOSS)ONDISPOSAL

NETIMPAIRMENT

Investmentsecurities 11 2 10 (1)Otherfinancialassets (2) (1) (1)Derivatives 11 11(Netdebt)/Netcash (34) (36) (2) (1) 4 1

TOTAL (14) (35) (2) 10 4 11 (2)

204


Thefinancialrevenuefromsubsidiariesconsistsofdividends.ThegainsorlossesoncurrencyandcommodityhedgesareforthemostpartrecognisedinCurrentoperatingprofit(loss).TheportionthatdoesnotqualifyashedgesisrecognisedinOtherfinancialincomeandexpenses.

7.3 BREAKDOWN OF DERIVATIVES INCLUDED IN THE STATEMENT OF FINANCIAL POSITION

31/12/2015 31/12/2014

(€ MILLION) ASSETS LIABILITIES ASSETS LIABILITIES

At beginning of period 23 141 45 34Changeinhedginginstruments fortheperiod—shareholders’equity(1) (2) 25 (19) 62

Changeinhedginginstruments fortheperiod—financialincome/loss(2) 12 16 (4) 12

Netchangeinhedgingderivatives(3) (3) 18 1 33Othermovements - (13) - -

At period end 30 187 23 141Netpositioninhedgingderivatives(3) 7 55 10 37Financialinstruments—currencyhedges 8 94 13 83Financialinstruments—interest-ratehedges - - - 8Financialinstruments—commodityhedges 15 38 - 13

(1) The impact corresponds to the effective portion of the change in fair value of derivative instruments used to hedge foreign currency, interest rates and commodities risks.(2) The impact corresponds to the non-effective portion of the change in fair value of derivative instruments used to hedge foreign currency, interest rates and commodities risks.Foreign-currency receivables and debts are translated at the closing rate, and the difference between the closing rate and the hedging rate is recognised under “Financial instrument assets and liabilities”.

7.4 RISK MANAGEMENT

The Group uses derivatives to control itsexposuretoforeigncurrency,interest-rateandcommodity risks. The Executive Committeedelegatedthemanagementofthemainrisksto the ERAMET group Finance Department.This management is carried out directly byERAMET or via companies such as MetalCurrencies,createdspecificallytomanagetheGroup’sforeigncurrencyrisk.

TheGroup’spolicyistoreduceitsexposuretointerestrateandforeigncurrencyfluctuations,butnot tospeculate.Positionsare tradedei-theronorganisedmarkets,oroverthecounterwithtop-notchbankingcounterparties.

Gains or losses on hedging instruments arerecognised symmetrically with the gainsor losses on the hedged items. However,unrealisedlossesonfinancinghedgingtrans-actionsineligibleunderhedgingstandardsarerecognisedinNetincomefortheperiod.

All transactions outstanding at the reportingdatearerecognisedinthestatementoffinan-cialposition,withnoset-off.

FOREIGN CURRENCY RISKS

When the exposure stemming from bor-rowings taken out by Group companiesin currencies other than their functionalcurrencies is not offset by income in thosecurrencies, the Groupmay have recourse tohedging instruments. In addition, the Groupusesfinancialinstrumentstolimititsexposuretothecurrencyriskonitssalesandoncertaindollar-denominatedcosts.

TheERAMETgroupisexposedtotwotypesofforeigncurrencyrisk,namely:

– transactional foreign currency risks whereacompanyhasincomeinacurrencyotherthanitsfunctionalcurrencythatisnotoffsetbypurchasesinthatcurrency;

– foreigncurrencyrisks to thebalancesheetrelated to the changes in net assets ofsubsidiaries measured in currencies otherthantheeuro.

TheGroupcentralisesthesubsidiaries’foreigncurrencyrisk.EachGroupcompanyreportsitsexposureincurrenciesotherthanitsfunctionalcurrency,toGroupTreasury.Thismanagementis part of amultiyear policywith proceduresapproved by the Executive Committee alongwithmonthly reporting to its members. TheGroupmanages the foreign currency risk tothebalancesheetforeachcaseindividually.

205


TRANSACTIONAL RISKS

Currency hedging primarily involves the USdollarbutalsoincludestheNorwegianKrone,thepoundsterling,theSwedishKronaandtheJapanese yen. These hedges are designedtoprotect theGroup’spresentandfuturepo-sitionsontradetransactions,morethan50%

of which are invoiced in foreign currencies,whereasproductioncostsareforthemostpartdenominated in euros. The transactions arecarriedoutviathecompanyMetalCurrencies.

The subsidiaries in question determine theamount of their net exposure based onmultiyearbudgetsandforecasts.Theassoci-

atedrisksarethenhedgedwithinamaximumhorizon of thirty-six months if the amountis greater than €2 million or the equivalentthereofpercurrency,unlessexemptionsapply.TheGroupusesvariousinstrumentstohedgeagainstcurrencyrisk,suchasfutures/forwardcontractsandoptions.

BALANCE SHEET RISKS

TheERAMETgroupmanagesforeigncurrencyriskstothebalancesheet,primarilyrelatedtotheUSdollar,byissuingfinancialliabilitiesdenominatedinthesamecurrencyasthenetassetsinquestion,orviacurrencyswaps.

Thebreakdownofthehedgingportfoliobycurrencyisshownbelow:

AT31 DECEMBER2015 2015SALES 2016SALES 2017SALESANDBEYOND

(FOREIGN CURRENCY UNIT MILLION) AMOUNT CURRENCY RATE AMOUNT CURRENCY RATE AMOUNT CURRENCY RATE

Commercial hedges

EUR/USD 155 USD 1.26 297 USD 1.18 201 USD 1.18EUR/NOK 351 NOK 8.71 755 NOK 8.93 730 NOK 9.41Other hedges—total amount not detailed by year

EUR/USD 233 USD 1.15EUR/NOK 1,022 NOK 8.95

AT31 DECEMBER2014 2014SALES 2015SALES 2016SALESANDBEYOND

(FOREIGN CURRENCY UNIT MILLION) AMOUNT CURRENCY RATE AMOUNT CURRENCY RATE AMOUNT CURRENCY RATE

Commercial hedges

EUR/USD 317 USD 1.23 394 USD 1.29 213 USD 1.30EUR/NOK 46 EUR 8.34 86 EUR 8.55 70 EUR 8.82Other hedges—total amount not detailed by year

EUR/USD 582 USD 1.27EUR/NOK (1,118) NOK 8.70USD/CNY 139 CNY 6.23

206


At31 December2015,thefairvalueofcurrencyhedgescoveringtransactionalrisksrepresentedanetliabilityof€89 million(netliabilityof€71 millionat31 December2014).

Achangeofplusorminus0.10intheEUR-USDexchangeratewouldhaveapre-taximpactonthehedgesrecognisedinequityof+€55 millionshouldexchangeratesriseandapproximately-€66 millionshouldthoseratesfall.

Thenotionalamountofcurrencyhedgingcontractsbreaksdownasfollows:

31/12/2015 31/12/2014

(FOREIGN CURRENCY UNIT MILLION)

FORWARD/FUTURESALES

FORWARD/FUTURE

PURCHASESCALL

OPTIONS(1)PUT

OPTIONS(1)

FORWARD/FUTURESALES

FORWARD/FUTURE

PURCHASESCALL

OPTIONS(2)PUT

OPTIONS(2)

Currency against EUR

USD 1,732 702 416 338 870 22 589 320JPY 30 - - - 203 - - -GBP 8 - - - 9 1 - -NOK - 1,513 967 1,345 229 2,277 807 1,167Currency against SEK

JPY 166 - - - 75 - - -USD 8 - - - 14 3 - -Currency against USD

CNY - - - - - 18 68 121

(1) Not including USD88 million in exotic call options and USD38 million in exotic put options.(2) Not including USD59 million in exotic call options and USD59 million in exotic put options.

Thepre-taximpactonshareholders’equityandearningsoffinancialinstrumentshedgingforeigncurrencyrisksisshownbelow:

CURRENCYHEDGES

FY2015 FY2014

(€ MILLION)TRANSACTIONAL

RISKSBALANCESHEET

RISKSTRANSACTIONAL

RISKSBALANCESHEET

RISKS

At beginning of period (98) 1 16 (29)Changeinunexpiredhedgingportion(1) (47) (73)Changeinineffectiveportionviaincome(2) (3) (15)Changeineffectiveportionviaincome(3) 46 (26)Translationadjustmentsandothermovements (2) 26 30

At period end (104) 27 (98) 1Changesrecognisedinshareholders’equity:• Hedgingreserve (1) (99)• Translationreserve 26 30

TOTAL (1) 26 (99) 30Changesrecognisedviaincome:• Currentoperatingprofit(loss) (46) 26• Netfinancialincome (3) (15)

TOTAL (49) - 11 -(1) The impact corresponds to the effective portion of the change in fair value of derivative instruments used to hedge foreign currency risks.(2) The impact corresponds to the non-effective portion of the change in fair value of derivative instruments used to hedge foreign currency risks.(3) Foreign-currency receivables and debts are translated at the closing rate, and the difference between the closing rate and the hedging rate is recognised under “Financial instrument assets and liabilities”.

207


INTEREST RATE RISKS

Depending on market conditions and onforecast changes in Net financial debt, theFinanceDepartmentmonitorsthebreakdownbetweenfixedandfloatingratedebtandcashinvestments,anddecidesonwhetherornottosetupratehedges.Thefinancialinstrumentsusedareinterestrateswaps,caps,andfloors.TheGroup’sTreasuryDepartmentisresponsi-bleforsettinguphedges.

ThecashsurplusesmanagedbyMetalSecuri-tiesareinvestedin:

– instruments linked to the EONIA (EuroOverNightIndexAverage)orEURIBOR(EuroInterBankOfferedRate)rates;

– fixed-rateinstrumentsswappedagainsttheEURIBOR.

These instruments are classified amongOthercurrentfinancialassetsandarehedgedusinginterestratefutures(fixedratesagainst

floatingrates).OthercashsurplusesmanagedbyMetalSecuritiesareprimarilyinvestedinin-strumentslinkedtotheEONIA(EuroOverNightIndexAverage)rate.

COMMODITY RISKS

The Group is exposed to commodity pricevolatility,affectingbothitssalesasanickelandmanganeseproduceranditsproductioncosts,asaconsumerofenergy(fueloilandelectrici-ty)andcommodities(nickel,aluminium).

The Group holds derivative instruments forthe purposes of reducing its exposure. Forthispurpose,theERAMETgroupmainlyusesforwards,combinedcallandputoptions,andcalloptions.

ThemainGroupentitiesinvolvedare:

– ERAMETandLe Nickel-SLNfornickelsales;

– Aubert&Duvalfornickelpurchases;

– Le Nickel-SLNforfueloil;

– Aubert&Duvalforaluminium;

– ErasteelKlosterABandTinfosJenverkA/Sforelectricity.

Theexposurestomanganeseandcokepricevolatility are not hedged since there is noorganisedmarketinthesecommodities.

Hedges are contractedwith horizons of onetofouryears,dependingonthecommodities,andarebasedonthebudget.Onlypartoftheforecastconsumptionorproductionishedged(e.g. for fuel oil, a maximum of 80% of thebudget is hedged). The Group uses variousinstruments to hedge and limit its exposure:futuresandoptions.

At31 December2015,thefairvalueofhedgessetup for the variouscommodities stoodat€22 millioninnetliabilities(€13 millioninnetliabilitiesat31 December2014).

Themaincommoditiescontractsoutstandingaresetoutbelow:

31/12/2015 31/12/2014

(TONNES) SWAPS CALLOPTIONS PUTOPTIONS SWAPS CALLOPTIONS PUTOPTIONS

Nickel 7,949 - - 151 - -Fueloil 99,996 - - 120,000 60,000 60,000Brentcrudeoil(barrel) - 275,040 275,040 - 660,000 660,000Aluminium 2,125 - - 5,666 - -

Achangeofplusorminus10%incommoditypriceswouldhavenomaterialpre-taximpactonthehedgesrecognisedthroughsharehold-ers’equity.

LIQUIDITY RISKS

The Group is not exposed to liquidity riskgiven its substantial financial liquidity, at31 December2015,fromitscashpositions,itsinvestmentsandbondsandarevolvingcredit

facility(of€981 million).CashsurplusesoftheGroup’s subsidies are mostly transferred toMetalSecurities, theGroup’sspecialpurposeentityresponsibleforpoolingandinvestingtheGroup’scashsurpluses.

REVOLVING CREDIT FACILITY

In2012,ERAMETsignedtheextensionof itscredit facility asprovided for in themulticur-rencyrevolvingcreditfacility(RCF)agreement

up to 2017, for €800 million. In early 2013,ERAMETsignedanamendmenttothisagree-mentraisingitsamountfrom€800 millionto€981 million,andextendingitbyanotheryear,from January 2017 to January 2018. Thecredit line intended tofinance theoperationsandinvestmentsinassetswasenteredintoontermscongruentwithmarketconditionsatthetimeof itssignature.Thisfacility isgovernedbyasinglecovenant.

208


TheGroupisliabletorepayitsborrowings,primarilycomprisingfinancialmarketborrowingsandbankborrowings,anditsotherliabilitiesandderiva-tivesforwhichtheschedule(includingfutureinterest)isgivenbelow:

STATEMENTOFFINANCIALPOSITION

FUTUREPAYMENTSCHEDULE

(€ MILLION)LESSTHANONE

YEARONEYEARTOFIVEYEARS

MORETHANFIVEYEARS TOTAL

Borrowingsoncapitalmarkets 691 52 683 114 849Bankloans 451 110 360 84 554Bankoverdraftsandcreditorbanks 73 73 73Financeleaseliabilities 49 12 33 8 53Otherborrowingsandfinancialliabilities 80 14 52 32 98

TOTAL BORROWINGS 1,344 261 1,128 238 1,627Derivatives 187 187 187Tradeandotherpayables 748 748 748

TOTAL OTHER FINANCIAL LIABILITIES 935 935 - - 935

Thescheduleoffuturereceiptsonfinancialassetsissetoutbelow:

STATEMENTOFFINANCIALPOSITION

FUTURERECEIPTSSCHEDULEATFAIRVALUE

(€ MILLION)LESSTHANONE

YEARONEYEARTOFIVEYEARS

MORETHANFIVEYEARS TOTAL

Othercurrentfinancialassets 196 196 196Cashandcashequivalents 432 432 432

TOTAL CASH AND CASH EQUIVALENTS 628 628 - - 628Derivatives 30 30 30Tradeandotherreceivables 608 538 70 608

TOTAL OTHER FINANCIAL ASSETS 638 568 - 70 638

Whereappropriate,financialliabilitiesarecoveredbybankingcovenantsattheGrouplevelorlocally;themaincovenantsaredescribedbelow:

COMPANY TYPEOFCREDITLINE RATIO AMOUNT

ERAMETS.A. Revolvingcreditfacility Netdebt/Shareholder’sequity < 1 €981 million

DeutscheBank(Schuldschein)loan Restatednetdebt/Shareholder’sequity—AttributabletoGroup < 1 €60 million

Europrivateplacement Netdebt/Shareholder’sequity < 1 €100 millionEuropeanInvestmentBank Netdebt/Shareholder’sequity < 1 €80 million

COMILOGS.A. ICBC/BNPParibas/BGFIborrowings Netdebt/Shareholder’sequity < 1.15 $217 millionNetcashflow/Debtservicing > 2SalestoERAMETNorwayA/S/Debtservicing >150% (1)

(1) Covenant applicable only to one of the two $30 million borrowings subscribed by COMILOG.

ERAMET’scovenantsaredeterminedonthebasisofthepublishedconsolidatedfinancialstatements.COMILOG’scovenantsaredeterminedonthebasisofCOMILOG’sseparateandconsolidatedfinancialstatements.

At31 December2015,thecovenantsshowednocircumstancesofacceleration.

209


CREDIT OR COUNTERPARTY RISKS

TheGroupmaybeexposedtocreditriskowingtodefaultbyacounterparty—customersandfinancial partners—because of its cash sur-

pluses investedby itsdedicatedentity,MetalSecurities. The Group has several means tolimitthisrisk—gatheringinformationaheadoftransactions(fromratingagencies,publishedfinancial statements, etc.), credit insurance

and the arrangement of letters of credit anddocumentarycredits.Specificallyfortradere-ceivables,thereisadedicatedcreditmanagerforeachDivisionoftheGroup.

TheageoftheGroup’stradereceivablesandoverduereceivablesisshownbelow:

31/12/2015 31/12/2014

(€ MILLION)GROSS

AMOUNT IMPAIRMENT NETAMOUNTGROSS

AMOUNT IMPAIRMENT NETAMOUNT

On-timeornotdue 231 - 231 305 (2) 303Delays:• lessthanonemonth 37 (1) 36 63 (1) 62• onetothreemonths 10 - 10 13 - 13• threetosixmonths 9 (2) 7 7 (2) 5• sixtoninemonths 4 (4) - 3 (1) 2• ninetotwelvemonths 6 (2) 4 1 (1) -• overoneyear 5 (5) - 3 (3) -

TOTAL TRADE RECEIVABLES 302 (14) 288 395 (10) 385

Nomaterialunpaidorimpairedreceivableshavebeenrenegotiated.

EQUITY RISKS

ERAMETanditssubsidiariesdonotspeculateinthestockmarkets;theinvestmentsheldrelatetounlistedcontrolledcompaniesentirelyinlinewiththeGroup’sactivities.

NOTE 8 WORKING CAPITAL REQUIREMENT

8.1 TABLE OF PRESENTATION OF WCR

(€ MILLION) 31/12/2014CHANGEINWCR

STATEMENTOFFLOWSCHANGEINPAYABLESONASSETDISPOSALS

TRANSLATIONADJUST-MENTSANDOTHER 31/12/2015

Inventories 1,019 (94) 12 937Clients 385 (108) 11 288Suppliers (418) 21 (9) (406)Simplified WCR 986 (181) - 14 819OtheritemsofWCR (123) 50 (4) 3 (74)

TOTAL WCR 863 (131) (4) 17 745

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8.2 INVENTORIES

InventoriesaremainlycomposedoftheproductsofthethreeDivisionsoftheGroup—ERAMETNickel,ERAMETManganeseandERAMETAlloys—atdifferentstagesoftheproductionprocess,andareshownatthelowerofthecostandthenetliquidationvalue.

ACCOUNTING METHOD JUDGEMENTS

InventoriesaremeasuredusingtheweightedaverageunitcostfortheindustrialoperationsintheAlloysDivision,andonafirst-in-first-out(FIFO)basisfortheindustrialandminingoperationsintheNickelandManganeseDivisions.Inventoriesareassessedatcostpriceandonlyincludeproductioncosts,whilenotexceedingtherealisablevalue.Costsstemmingfromsub-normalcapacityusageareeliminatedfrominventorymeasurementattheendofthereportingperiod.Impairmentlossesforrawmaterialsarerecognisedwhenthenetrealisablevaluefallsbelowthecostofentryintostorage.Consumablesarefullyimpairedwherethequantitiesareinstorageoveramuchlongerperiodthantheirestimateduse.Theimpairmentofsparepartsthatdonotqualifyforcapitalisationiscalculatedonthebasisoftheiruseduringtheyear.Sparepartsinventoryinexcessofoneyear’suseisfullyimpaired.Forwork-in-process,intermediateandfinishedproductsininventoryforoverayear,theforward-lookingapproachisappliedonthebasisoftheorderbookandmarketvalidationofachievementswithinoneyear;thequantitiesbeyondoneyearofconsumptionarefullyimpaired.Fixedproductioncostsrelatingtorecognisedorplannedsub-normalcapacityusagearenotincorporat-edininventorymeasurement,andarerecognisedasordinaryoperatingexpensesfortheperiodinwhichtheyareincurred.Sub-normalcapacityusageistakenintoaccountwhentheactualproductionvolumeisconsiderablylowerthanthenormalproductionvolume(ornormativecapacity).

Judgementisexercised toestimatethenetrealisablevalue,aswellastoallocate thefixedandvariableproductionoverheadsattributabledirectly toinventories.

(€ MILLION)NETAMOUNT31/12/2015

NETAMOUNT31/12/2014

At beginning of period 1,019 965Changeingrossinventories (74) 16(Impairment)/netreversalsfortheperiod (20) 27Increase/(decrease)innetinventories—cashflows (94) 43Translationadjustmentsandothermovements 12 11

At period end 937 1,019Rawmaterials 234 277Merchandiseandfinishedproducts 282 397Work-in-progressandsemi-finishedgoods 323 298Consumablesandspareparts 98 47Breakdown of impairment losses:

• At beginning of period (125) (151)• (Impairment)/netreversalsfortheperiod (20) 27• Translationadjustmentsandothermovements (2) (1)• At period end (147) (125)

Impairmentprovisionsmainlyrelatetorawmaterialsandmerchandiseandfinishedproducts.

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8.3 TRADE AND OTHER RECEIVABLES

TradeandotherreceivablesareamountsthattheERAMETgroupexpectstocollectfromthirdparties.

ACCOUNTING METHOD ESTIMATES AND JUDGEMENTS

Receivablesarebookedattransactionvalueuponfirst-timerecognitionandaresubsequentlymeasuredateachreportingdateatamortisedcost.Foreigncurrencyreceivablesanddebtsarere-measuredattherateprevailingattheperiod-enddate.TheresultingtranslationadjustmentsarerecognisedinCurrentoperatingprofit(loss)orinNetfinancialincome(Otherfinancialincomeandexpenses)dependingonthetypeofreceivableordebt(Note 4).Impairmentlossesarerecognisedforreceivableswheretheyaremorethanlikelynottoberecoveredanditispossibletoreasonablymeasuretheamountofthelossbasedonpastexperienceoflossesonreceivables,ageingandariskassessment.Thisimpairment,offsetinCurrentoperatingprofit(loss),reducesthegrossvalueofthereceivable.ReceivablesdisposedofunderasecuritisationcontractareremovedfromthebalancesheetwheretheERAMETgrouphastransferredthecontractualrightstocollectcashflows,andwheresubstantiallyalltherisksandrewardsattachedtotheseassetshavebeentransferredtothetransferee.Wheretherisksremainwithoutprejudicingtheremovalofthereceivablesfromthebalancesheet,theyarerecognisedunderOtheroperatingreceivablestogetherwiththerelatedsecuritydeposits(Note 8).DisposalswithrecourseagainsttheERAMETgroupintheeventofdefaultonpaymentbytheclientmeansthatthesetransferredreceivablesmustberetainedinthebalancesheet.

JudgementmustbeexercisedtodeterminewhentheERAMETgroupwouldreasonablynotrecoverthereceivables. Theimpairmentlossiscalculat-edbasedonhistoricallossesonreceivables,theage ofthereceivableandtheestimatedrisks.

(€ MILLION) GROSSAMOUNT IMPAIRMENTNETAMOUNT31/12/2015

NETAMOUNT31/12/2014

At beginning of period 779 (95) 684 587Changeingrossamount (49) (49) 84Impairmentlossesfortheperiod (37) (37) (4)Changesinworkingcapitalrequirement—cashflows (86) 80Translationadjustmentsandothermovements 9 1 10 17

At period end 739 (131) 608 684Tradereceivables 302 (14) 288 385Taxandpayrollreceivables 129 (2) 127 113Securitydeposit—securitisationagreement 17 - 17 18Otheroperatingreceivables 221 (115) 106 129ReceivablesontheSETRAGconcessionagree-ment—non-currentasset 6 - 6 4

TiZirshareholdercurrentaccount—non-currentasset 55 - 55 35UKADshareholdercurrentaccount—non-currentasset 9 - 9 -

TOTAL 739 (131) 608 684• Non-currentassets 70 - 70 39• Currentassets 669 (131) 538 645

Thebulkoftradeandotherreceivablesaredueinlessthanoneyear.

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SECURITISATION OF CUSTOMER RECEIVABLES

TheERAMETgroupusesfactoringorsecuriti-zationasafundingsourceforitsreceivables.Undertheseprogrammes,certainsubsidiariesin France and in the United States havecommitted tobanking institutions to transfertheir trade receivables totalling €155 million

at31 December2015(€116 millionat31 De-cember 2014). The analysis of the transferof risks and rewards resulted in either fulldeconsolidation or partial deconsolidation.Non-deconsolidatedreceivablesamountedto€12 millionat31 December2015(comparedto€9 millionat31 December2014).

A security depositmay be required to coverthe commitments given by the transferorsubsidiaries to thefinancecompanyandwillbereturneduponthesettlementof theoper-ation.Itcomprisesreservestohedgeagainstcredit risk, delayedpayment riskanddilutionrisk.Thisdepositamountedto€17 millionat31 December2015(€18 millionat31 Decem-ber2014).

(€ MILLION) 31/12/2015 31/12/2014

Tradereceivables—Invoicesassigned (155) (116)Tradereceivables—Invoicesnotdeconsolidated 12 9Otheroperatingreceivables—Securitydeposit 17 18

8.4 TRADE AND OTHER PAYABLES

Tradeandotherpayablesmainlycomprisetheamountsowedtosuppliersandtaxauthoritiesthathavealreadybeenbilledorarealreadydue.

(€ MILLION) 31/12/2015 31/12/2014

At beginning of period 810 750Changesinworkingcapitalrequirement (37) (47)Changeinpayablesonnon-currentassets (4) (11)Translationadjustmentsandothermovements 10 118

At period end 779 810• Non-currentliabilities 31 29• Currentliabilities 748 781Tradepayables 406 418Taxandpayrollliabilities 198 208Otheroperatingpayables 77 93Payablesonnon-currentassets 57 54Unearnedincome 10 8SETRAGdebtforthepurchaseofownpropertyandinventory—non-current 4 5StranddebtforWedaBayprojectexpenses—non-current 27 24

Mostofthetradeandotherpayablesaredueinlessthanoneyear.

Foreign-currency denominated debt is trans-latedattheclosingrate.

The debts recognised under non-currentliabilitiesinclude:

– SETRAGS.A.’s25-yeardebttotheGaboneseRepublic for thepurchaseofownpropertyandforaportionofthesparepartsinventory;

– the $29 million debt recognised followingthesaleof33.4%ofStrandMineralsPteLtdsharestoMitsubishiCorporation,inconnec-tionwithminingprojectexpenses.

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NOTE 9 INVESTMENTSTheERAMETgroupgroupsitsinvestmentsintotwocategories:

– industrial investments thatareassetsrelatingtoextractionorproductionequipment; theseare intangibleassetsaswellasproperty,plantandequipment;

– financial investmentsthatmainlyrelatetointerestheldinjointventuresandnon-consolidatedcompaniesaswellasothernon-currentfinancialassets.

9.1 PAYMENTS FOR NON-CURRENT ASSETS


Capitalexpenditureonproperty,plant&equipmentfortheperiod 227 273Capitalexpenditureonintangibleassetsfortheperiod 15 32Total industrial capital expenditure 242 305Changeinpayablesfortheacquisitionofnon-currentassets 4 11Acquisitionofinvestmentsecurities 3 -

TOTAL ACQUISITION OF NON-CURRENT ASSETS—STATEMENT OF CASH FLOWS 249 316

9.2 INDUSTRIAL INVESTMENTS

PROPERTY, PLANT AND EQUIPMENT

ACCOUNTING METHOD

Property,plantandequipmentareshowninthebalancesheetattheircarryingamount,whichistheacquisitionormanufacturingcostlessdepreciationsandimpairmentoflossesincurred.Landisnotdepreciated.Sparepartsdeemedtobeitemsofproperty,plantandequipmentarecapitalisedanddepreciatedonthebasisoftheiractualuse.Toolingspecificallymanufacturedforcertaincustomersiscapitalisedanddepreciatedoveritslikelyusefullife.Majorrepairsaredeemedtobecomponentsofitemsofproperty,plantandequipment.Thecostsofborrowingthatisdirectlylinkedtotheacquisitionorproductionofanassetareincorporatedinthatasset’scost.Aprovisionisrecogniseduponstartingupoperationsfortherestorationofminingsites,offsetbyanenvironmentalanddismantlingassetdepreciatedonastraight-linebasisduringtheoperationofthemine.FinanceleasestransferringtherisksandbenefitsinherentinownershiptotheERAMETgrouparerecognisedasitemsofproperty,plantandequipment,offsetbyadebt(Note 6).Theseareamortisedovertheirexpectedusefullifeonthesamebasisastheitemsofproperty,plantandequipmentheldor,ifshorter,thetermofthecorrespondinglease.Similarly,otheragreements,andprimarilysub-contracting,involvingtheuseofaspecificassetandtherighttouseit,arereclassifiedwherenecessaryasleases.TheTrans-Gabonrailwayconcessionwasrecognisedasfollows—propertyownedbytheERAMETgroupisrecognisedasabalancesheetassetanddepreciatedovertheshorterofitsusefullifeortheremainingperiodoftheconcession.ReturnableassetsrepresentingtheassetscontributedtotheconcessionbytheGaboneseRepublicthatmustbereturnedinthesamestateuponexpiryoftheagreementarenotrecognisedinthebalancesheet.AssetsacquiredbytheERAMETgroupfollowingthesigningoftheconcessionagreementthatmustbeturnedovertotheGaboneseRepublicattheendoftheconcessionarerecognisedasproperty,plantandequipmentanddepreciatedoverthetermoftheconcession.Aprovisionismadetocovertheriskofnon-renewaloftheconcessioninlinewithinvestmentassumptions.

214



Judgementisexercisedtodeterminealltheexpensesdirectlyassociated(forexample,labour,overheads)withtheacquisition,thebuilding,theimprovementorthedevelopmentofanon-currentasset,includingthecostsofbringingittothelocationandinthestatethatisrequiredforitsuseasplannedbyManagement.Expensesfornon-currentassetsarenolongercapitalisedoncethenon-currentassetispracticallycompletedandiscapableoffunctioningasintended.Todeterminewhethertheseconditionsaremet,areviewmustbecarriedoutontheconsiderationsappliedinthesameindustries,predeterminedbytheManagement’sjudgementbyreferencetothefactorsaffectingtheexpectedproductioncapacity.Whereannon-currentassetcomprisesindividualcomponentswhichcallfordifferentmethodsordepreciationrates,judgementisexercisedtodeterminehowbesttosplittheasset.Distinguishingbetweeninspectionsandmajorrevisionsforrepairandmaintenance,anddetermin-ingtheappropriateperiodforamortisingthesecosts,areamatterofjudgement.

Property, plant and equipment by category

(€ MILLION) GROSSAMOUNTDEPRECIATION&AMORTISATION IMPAIRMENTLOSS

NETAMOUNT31/12/2015

NETAMOUNT31/12/2014

Landandbuildings 1,115 (564) (60) 491 518Industrialandminingfacilities(1) 3,625 (2,285) (195) 1,145 1,275OtherProperty,plant&equipment 878 (535) (6) 337 295

Work-in-progress,down-payments 151 (8) 143 208

TOTAL 5,769 (3,384) (269) 2,116 2,296(1) of which:

– Assets funded by finance leases 92 100

– Dismantling assets—site restoration 89 104

Change over the period


At beginning of period 2,296 2,248Capitalexpenditurefortheperiod 227 273Disposalsfortheperiod (3) (6)Amortisationanddepreciationintheperiod (270) (251)Impairmentlossesfortheperiod (147) (14)Reversalofwrite-downsfortheperiod - 15Changeinthegrossamountofdismantlingassets (4) 10Translationadjustmentsandothermovements 17 21

At period end 2,116 2,296• Grossamount 5,769 5,486• Depreciation&amortisation (3,384) (3,070)• Impairmentloss (269) (120)

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INTANGIBLE ASSETS

ACCOUNTING METHOD ESTIMATES AND JUDGEMENTS

Intangibleassetsareshowninthebalancesheetattheircarryingamount,whichistheacquisitioncostlessdepreciationsandimpairmentoflossesincurred.

GoodwillGoodwillisthedifferencebetweentheacquisitionpriceofanentityandtheERAMETgroup’sshareinthefairvalueoftheassetortheliabilitythatareidentifiable(includingpossibleliabilities)oftheacquiredentityattheacquisitiondate.Itisrecognisedatcost,lessaccumulateddepreciation.Goodwillinassociatesandjointventuresisrecognisedunderinvestmentsinassociatesandinjointventures(Note 9).

Mining reservesAmountscapitalisedwithrespecttomineraldepositsrelatetopartialassetcontributionsorpermitsacquiredsince1974.Dependingonoperatingspecificities,miningdepositsareamortisedonthebasisoftheratioofannualproductiontotheestimatedreservesorthelengthoftheconcession.

Geology, prospecting and research expensesGeology,exploration,prospectingandminingresearchexpensesincurredpriortooperationarerecognisedasintangibleassets,incompliancewithIFRS 6—ExplorationforandEvaluationofMineralResources.Theroyaltiespaidforminingprospectingandexplorationarealsorecognisedunderintangibleassets.

Judgementmustbeusedtode-terminewhethertheexpenditureonintangiblescanberecognisedasanintangibleasset.Ifitsusefullifeislimitedintime,theintangibleassetisdepreciat-edonastraight-linebasisovertheestimatedusefullife.Thegoodwillisallocatedtotheproductionsitefromwhereitarose,forthepurposesofimpairmenttesting.

Intangible assets by category

(€ MILLION) GROSSAMOUNTDEPRECIATION&AMORTISATION IMPAIRMENTLOSS

NETAMOUNT31/12/2015

NETAMOUNT31/12/2014

Goodwill 172 - (18) 154 162Indonesiaminingreserves 261 - (137) 124 234Gabonminingreserves 61 (34) - 27 29New Caledoniaminingreserves 54 (41) - 13 13Geology,prospectingandresearchexpenses 482 - (482) - 83

Othergeology,prospectingandresearchexpenses 25 (24) - 1 3

Software 94 (72) (2) 20 22Otherintangibleassets 77 (59) (2) 16 17Work-in-progress,down-payments 34 - (19) 15 30

TOTAL 1,260 (230) (660) 370 593

Change over the period


At beginning of period 593 557Capitalexpenditurefortheperiod 15 32Disposalsfortheperiod (1) -Amortisationanddepreciationintheperiod (21) (21)Impairmentlossesfortheperiod (247) -Translationadjustmentsandothermovements 31 25

At period end 370 593• Grossamount 1,260 1,174• Depreciation&amortisation (230) (213)• Impairmentloss (660) (368)

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MINING PROJECTS

Weda Bay project in Indonesia

On2 May2006,theERAMETgroupacquiredWedaBayMineralsInc.,acompanythatislist-edontheTorontostockexchange,whosesub-sidiaryPt WedaBayNickelholdsaworld-classnickeldeposit inHalmaheraisland, IndonesiaunderaContractofwork(COW)concession.Followingthisacquisition,theERAMETgrouphascarriedoutstudiestominethatdeposit.

Capitalised project expenditure mainlyconsistsofthegeology,explorationandpros-pectingcosts,andthecostsoftechnicalandeconomicstudies.

The nickelmarket conditions took a turn fortheworse in thefinancial year2015causinguncertainty in the short- and medium termoutlook.TheERAMETgroupalsodecided toputallmajorprojectsonhold(seeKeyeventsinthereportingperiod).

Negotiations with Indonesia regarding theadjustment of the terms of the COW to thenew Indonesian mining law were pursuedconcomitantlytoclarifycertainaspectsoftheregulatoryandtaxationframeworkapplicabletotheproject.

TheERAMETgroup’spartnersontheprojectare the Mitsubishi Corporation and Pacific

Metals Co Ltd groups, respectively holding30%and3.4%oftheStrandMineralsPteLtdholding company and the Pt Antam groupwhichowns10%of thePt WedaBayNickel,theownerofthedeposit.

Pt Antamhasseveralcalloptionsallowingittoincreaseitsinterest,thetermsandconditionsofexerciseofwhicharegiveninNote 14.TheERAMETgroupalsograntedputoptionswhenMitsubishiCorporationacquiredaninterestinStrandMineralsPteLtd.Theseoptionscanbeexercisedonthebasisofthefinalinvestmentdecision, under certain conditionsdetailed inNote 12.

IMPAIRMENT OF ASSETS AND IMPAIRMENT LOSSES

ACCOUNTING METHOD

Impairmenttestsareperformedregularly,systematicallyatleastonceayearattheannualreportingdateforgoodwillandintangibleassetswithindefinitelives,andwherethereareindicationsofimpairment.Forintangibleassetsanditemsofproperty,plantandequipmentwithfinitelives,impairmenttestsarecarriedoutwherethereareindicationsofimpairment.Impairmenttestingconsistsincomparingthecarryingamountofassetswiththeirrecoverableamount,whichisdefinedasthehigher ofthevalueinuse(orrecoverableamountthroughuse)orthefairvalue(orrecoverableamountthroughsale),lesssellingcosts.ImpairmentlossesarecalculatedasthedifferencebetweentherecoverableandnetbookvalueandrecognisedintheincomefortheperiodunderOtheroperatingincomeandexpenses(Note 5).Impairmentlossrecognisedongoodwillisnotreversible.Fortheotherassets,previously-recognisedimpairmentlossesaremeasured ateachreportingdatetosearchforanindicationthatthelosseshavedecreasedornolongerexist.Animpairmentlossisreversedonly ifthecarryingamountoftheassetdoesnotexceeditsnetbookvalue,asitwouldhavebeendeterminedhadnoimpairmentbeenrecognised.

217



Cashgeneratingunits(CGUs)arehomogeneousgroupsofassetswhosecontinuoususegeneratesindependentcashflows.TheERAMETgrouphasdefineditsCGUsbyreferencetothevariousproductionsites,ERAMETNickel,ERAMETManganeseandERAMETAlloys.ImpairmenttestsareperformedforeachCGU.Allintangibleassets,includinggoodwill,andallitemsofproperty,plantandequipmentareallocatedtoCGUs.Asat31 December2015,theERAMETgroupisdividedinto18 CGUs,distributedasfollows:• 3 CGUsinERAMETNickel;• 13 CGUsinERAMETManganese;• 2 CGUsinERAMETAlloys.TheexistenceofeventscallingforimpairmentlosstestingisdeterminedfollowingtheopinionoftheERAMETgroup’sGeneralManagement,basedonseveralcriteria.Impairmentlossindicatorscorrespondmainlytothechangesandfluctuationsin:• rawmaterialpricesandsellingpriceoffinishedgoods;• economicandregulatoryenvironmentandmarketconditions;• interestrates;• technologicallevel;• assetobsolescenceandperformance.AnimpairmentlosstestiscarriedoutontheCGUsorontheindividualassetsconcernedwhentheseindicatorsshowanadversechange.Inordertodeterminethevalueinuse,theERAMETgroupusesthemethodofdiscountedfuturecashflowsgeneratedfromtheuseoftheassets.ThedatausedtocalculatethediscountedforecastcashflowsistakenfromtheannualbudgetsandmultiyearplanspreparedbyManagementoftheCGUsconcerned.Theseplansarecreatedonthebasisof5-to10-yearprojections,inkeepingwithminingandindustrialcycles,plusafinalvaluecorrespondingtothecapitalisationtoinfinityofnormativecashflows.PlansforcertainCGUsarepreparedforlongerperiodsthatcorrespondtotheoperatingperiodofthesiteswithoutassigningaterminalvalue.Thegrowthratesusedarethesameasthoseusedinbudgets;thegrowthratestoinfinityusedfortheterminalvaluesaregenerallybetween1%and3%,dependingontheCGU.Thediscountrateappliedtocalculatethevalueinuseistheweightedaveragecostofcapital,whichis:• 10%forminingactivities(10%in2014);• 9%formetallurgicalactivities(9%in2014);• 11%fortheWedaBayprojectinIndonesia(11%in2014);• 11.5%fortheGrandeCôteCGU(comparedto11.0%in2014).Thegearingappliedistheaveragegearingforthesegment.CountryriskwasfactoredinfortheERAMETgroup’sminingactivityinGabon,New CaledoniaandIndonesiainthesameproportion.TheERAMETgroupmaymeasuretherecoverableamountusingothermethodsthatitdeemsrelevantinthecontextoftheCGU’sconcerned.Whateverthemethodused,theassumptionsusedarethebestestimatesofManagement.TheERAMETgroupregularlyreviewsitsesti-matesandassessmentstotakeaccountofpastexperienceandotherfactorsthataredeemedrelevantwithregardtoeconomicconditions.

Thechangeinimpairmentofassetsandotherimpairmentlossesbreakdownasfollows:

(€ MILLION) 31/12/2014IMPAIRMENTLOSS

FY2015


ANDOTHER 31/12/2015

ERAMETNickel (353) (256) (45) (654)ERAMETAlloys (58) (12) (1) (71)ERAMETManganese (77) (154) (1) (232)

TOTAL (488) (422) (47) (957)Goodwill (12) (6) - (18)Intangibles (356) (241) (45) (642)PP&E (120) (147) (2) (269)Otherprovisions - (28) - (28)

Giventheheavilydegradedmarketconditions,thedeepcrisisintheglobalmetalmarketandnotablytheall-timelowmanganeseandnickelprices,theERAMETgrouprecognisedimpairmentofassetsandimpairmentlossesof€422 million.

ThemainassetsconcernedbelongtoERAMETNickelrepresentingatotalof€256 million(notablytheWedaBayprojectinIndonesia)andtoERAMETManganesetotalling€154 million,particularlyinthemanganesealloysandrecyclingbusiness.

218


Sensitivity

Sensitivity is determined by reference tochanges in future cash flows and discountrates.

TheERAMETgroup’scashprojectionsfor itsminingandmetallurgical businessarehighlydependent on the sale price assumptions,notablythatofores(nickel,manganese,zircon,etc.), on the euro-dollar parity, and theworlddemandfortheproductssoldbytheGroup.

The concerned cash-generating units are asfollows:

– CGUsinvolvingsizeablegoodwill;

– CGUswhosetestresultisnegative,orposi-tivetoanon-significantextent.

AsfortheSLN-ERAMETNickelCGU,thevaluein use is extremely sensitive to changes innickel prices. The main assumptions madefortheimpairmenttestarebasedonthebestassessment of developments in the Nickelmarket,basedontheconsensusofthevariousindustry specialists and experts. Impairmentwould not be recognised for a fall in nickelpricesby$0.5/lborfora0.5%increaseinthediscountrateora0.5%decreaseinlong-termgrowthrateinlikeoperatingconditions.

AttheAubert&DuvalCGU,thebusinessplanexpects increased profitability in this activitybased on productivity plans, reduced struc-turalcostsand improvedsales.Theplans toreduce costs and improve productivity wereinitiated as from end-2012. A 0.5% increase

in the discount rate, a 0.5% decrease in thelong-termgrowthrateora fall in theEBITDAmarginby1%inthefinalyearwouldnotcallforimpairmenttoberecognised.

At the Gabon CGU, a 0.5% increase in thediscountrate,a0.5%decreaseinthelong-termgrowthrateorafall intheEBITDAmarginby1%inthefinalyearwouldnotcallfor impair-menttoberecognised.

AttheErasteelCGU,afallintheEBITDAmarginby1%wouldcallforadditionalimpairmentof€13 milliontoberecognised.

At the Manganese alloys CGU for whichimpairment was recognised, a fall in theEBITDAmarginby1%wouldcallforadditionalimpairmentof€10 milliontoberecognised.

9.3 FINANCIAL INVESTMENTS

INVESTMENTS IN JOINT VENTURES AND ASSOCIATES


JointventuresarecompaniesoverwhichERAMEThasjointcontrol,meaningthatthedecisionsconcerningtherelevantactivitiesrequiretheunanimousconsentofallthepartiessharingthecontrol.AssociatesarecompaniesoverwhichtheERAMETgrouphassignificantinfluence.Jointventuresandassociatesareaccountedundertheequityconsolidationmethodandinitiallyrecognisedatcost.Theircarryingamountincludesthegoodwillthatwasdeterminedattheiracquisitionlessaccumulatedimpairment.TheconsolidatedfinancialstatementsincludeERAMET’sshareinearningsandtheequitychangesofequity-consolidatedcompanies,afteradjustmentstobringtheaccountingrulesofthosecompaniesinlinewiththoseoftheERAMETgroup.Thedividendsreceivedfromjointventuresandassociatesaredeductedfromtheirbalancesheetvalue.Animpairmentlosstestiscarriedoutwhenthereareindicatorssuchasasignificantchangeintheenvironmentinwhichtheequity-consolidatedcompanyoperatesthatmaycauseitsmeasuredrecoverableamounttofallbelowitscarryingamount(Note 9).

ThereissignificantinfluencewhereERAMEThasthepowerstotakepartinfinancialandoperatingdecisionsofthecompanybutnotexercisecontrolorjointcontrolonthesepolicies.ERAMEThassignificantinfluenceifitholds20%to50%ofthevotingrightsofacompany.Theexistenceofeventscallingforimpair-mentlosstestingisdeterminedfollowingtheopinionoftheERAMETgroup’sGeneralManagement,underthesameconditionsarethosegiveninthesectiononImpairmentofassets.

219


Breakdown by entity

(€ MILLION)

SHAREOF SHAREOF

PROFIT(LOSS)SHAREHOLD-ERS’EQUITY PROFIT(LOSS)

SHAREHOLD-ERS’EQUITY

COMPANIES COUNTRY %INTEREST 2015 31/12/2015 2014 31/12/2014

TiZirsubgroup UnitedKingdom 50% (77) 155 (43) 217

Ukad France 50% - 5 (1) 5Joint ventures contribution (77) 160 (44) 222HeYeErasteelInnovativeMaterialsLtd China 49% (1) 9 - 9Total associates (1) 9 - 9

TOTAL (78) 169 (44) 231

TiZir subgroup

On27 July2011,theERAMETgroupandMineralDepositsLtd(MDL)enteredintoanagreementtocreateajointventure,theBritishcompanyTiZirLtd,bringingtogethertheNorwegiancompanyTiZirTitanium&IronA/SandtheGrandeCôteOpérationsS.A.mineralsandsprojectinSenegal.Thefinalagreementswerecompletedon25 October2011.Theramp-upbeganinJuly2014andcontinuedoverthe2015reportingperiod.

ThefullycontributorybalancesheetoftheTiZirsubgroupisasshownbelow:

(€ MILLION) 31/12/2015 31/12/2014

Non-currentassets 722 726Non-cashcurrentassets 89 78Liabilitiesexcludinggrossfinancialpayables (59) (104)Netdebt (461) (270)Non-controllinginterests 19 4Equity,attributabletoGroup 310 434

Share of shareholders’ equity 155 217

TheinvestmentsmadeforTiZirinSenegal(GrandeCôte)andNorway(TTI)totalled€48 millionin2015(€79 millionin2014).

ThefullycontributoryincomestatementoftheTiZirsubgroupisasfollows:


Sales 152 122EBITDA (6) (2)Currentoperatingprofit(loss) (35) (18)Non-controllinginterests (13) (8)Consolidatednetprofit,Groupshare (154) (86)

Share of profit (77) (43)

Translationadjustmentsof€29 millionforthefinancial year 2015 and -€36 million for thefinancialyear2014werepostedtoitemsrecy-clabletoprofitorlossintheGroup’sStatementofcomprehensiveincome.

Animpairmentlossoftheinvestmentvalueof€52 million (Groupshare)was recognisedat31 December2015giventheexpecteddeclineinzirconsaleprices(€28 millionat31 Decem-ber2014).Thesellingpriceassumptionsweredeterminedusingthemedium-andlong-termconsensusofmarketexperts.

A 0.5% increase in the discount rate wouldhave an impact of about €12 million (Groupshare)ontheimpairmentlossamount.A10%decline in the long-term zircon prices wouldhave an impact of about €17 million (Groupshare).

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NON-CURRENT FINANCIAL ASSETS

ACCOUNTING METHOD JUDGEMENTS

Othernon-currentfinancialassetsincludetheotherlong-termfinancialassetsandnon-consolidatedsubsidiaries.Otherlong-terminvestmentsrelatetoloansorcurrentaccountsextendedtonon-consolidatedcompaniesorcompaniesunderjointcontrol.Theyareinitiallyrecognisedatfairvalueplustheacquisitionexpenseandmeasuredoneachreportingdateatamortisedcostusingtheeffectiveinterestrate(EIR),lessanyimpairmentlosses,offsetinincomefortheperiodinNetfinancialincome(Otherfinancialincomeandexpenses,seeNote 6).Non-consolidatedsubsidiariesarerecognisedinthebalancesheetattheiracquisitioncostorattheirvalueonthedateoftheirdeconsolidation,lessanyprovisionforimpairmentlosses,offsetinincomefortheperiodinNetfinancialincome(Otherfinancialincomeandexpenses,seeNote 6).

TheERAMETgrouphasdivideditsnon-consolidatedsubsidiariesintotwocategories:• controlledcompaniesthatarenotconsolidatedowingtotheirlowimpactontheERAMETgroup’sfinancialstatements;

• non-controlledcompaniesthatareinterestsincompaniesoverwhichtheERAMETgrouphasnocontrolorsignificantinfluence.

By category

(€ MILLION) GROSSAMOUNT IMPAIRMENTNETAMOUNT31/12/2015

NETAMOUNT31/12/2014

Depositsandguarantees 38 (16) 22 37Shareholders’loan—TiZir 46 - 46 39Othernon-currentfinancialassets 43 (8) 35 17Total excluding non-consolidated subsidiaries 127 (24) 103 93Non-consolidatedsubsidiaries 87 (37) 50 48

TOTAL 214 (61) 153 141

Theshareholders’loantoTiZiraccountsfortheloanamountgrantedbyERAMET.

Othernon-currentfinancialassetschieflyrelatetofinancialcurrentaccountsorloansgrantedtonon-consolidatedcompanies.

Change

(€ MILLION) 31/12/2015 31/12/2014

At beginning of period 141 137Netchangeinnon-currentfinancialassets—statementofflows 29 5Acquisition/Disposalofinvestmentsecurities 2 (2)Impairment (23) -Othermovements 4 1

At period end 153 141

By currency

(€ MILLION) 31/12/2015 31/12/2014

Euro 39 21USdollar 56 62CFPfranc 6 7Othercurrencies 2 3

TOTAL 103 93

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By interest rate type

(€ MILLION) 31/12/2015 31/12/2014

Interest-free 16 31Fixedinterestrates 23 8Variableinterestrates 64 54

TOTAL 103 93

Interest-free items mainly relate to depos-its and guarantees and certain loans toemployees.

Non-consolidated subsidiaries

Non-consolidated subsidiaries mainly com-prise the companies HeYe Special Steel Ltd

(€14 million), Brown Europe (€8 million) andMaboumine(€26 million,thatisfullyprovidedfor).

Controlled but non-consolidated companiesaremainlysalesandresearch&developmententities, the services ofwhich arewholly fortheERAMETgroup,andtheindustrialsubsid-

iaries of ERAMET Holding Alliages (shaping,wire-drawing and drawing of metallurgicalproducts).

Investments in controlled companies arenotconsolidatedsincetheyhavenomaterialimpacton theGroup’s consolidatedfinancialstatements.

NOTE 10 TAXESThisnoteexplainstheincometaxexpenseandrelatedtaxamountsshownintheincomestatementandinthebalancesheet.Thesectionondeferredtaxprovidesinformationonexpectedfuturetaxpayments.


Incometaxincludesbothcurrentanddeferredtax.Theincometaxexpenseisrecognisedintheincomestatement,exceptwhereitrelatestoabusinessacquisitionoritemsrecogniseddirectlyinequityorinOthercomprehensiveincome.CurrentincometaxcomprisestaxesthattheERAMETgroupexpectstopayonitstaxableincomeforthereportingperiodattheprevailingtaxratesorratessubstantivelyenactedbythereportingdate,aswellasanyadjustmentsfortaxrelatingtopriorreportingperiods.Deferredtaxisrecognisedastemporarydifferencesbetweenthecarryingamountoftheassetsandliabilitiesmeasuredforthepurposesoffinancialdisclosureandthetaxbasisofthoseassetsandliabilitiesmeasuredattheincometaxrateandtaxlawssubstantivelyenactedbythereportingdateandeffectiveintheperiodinwhichthesetemporarydifferencesshouldbeused.Deferredtaxassets,includingthoserelatedtolosscarry-forwards,whicharedeterminedbyfiscalentity,arerecognisedwheneveritcanbeshownthattheyarelikelytoberealised.Thedeferredtaxassetsandliabilitiesareclassifiedinthebalancesheetasnon-currentitemsandareoffsetiftheentityhasalegallyenforceablerightofset-offasisthecasewiththeFrancetaxconsolidationgroup.Deferredtaxliabilitiesoninvestmentsinsubsidiaries,associatesandjointventuresarerecognisedunlesswheretheERAMETgroupcandeterminethetimetableforthereversaloftherelatedtemporarydifferences,andwhereitislikelythatsuchdifferenceswillnotreverseintheforeseeablefuture.Provisionsaremadefornon-recoverableleviesondividendsplannedintheforeseeablefuture.

TheERAMETgroupoperatesinseveralcountries.Itsincomeisthereforetaxedatvariousincometaxrates.Giventhemagnitudeoftheoperationsandthecomplexityoftaxregulations,theERAMETgroupmustassessuncertaintiesandexercisejudgementtoestimatethetaxamountthatitwilleventuallypay.Thetaxamountfinallypaiddependsonvariousfactorsthatincludenegotiationswithtaxauthoritiesandtheoutcomeoftaxaudits.TheERAMETgroupestimatesdeferredtaxbasedonthetemporarydifferencesbetweentheassetsandliabilitiesshowninitsconsolidatedfinancialstatementsandthetaxbasesoftheseassetsandliabilitiesthataredeterminedundertheapplicabletaxlaws.Thedeferredtaxassetamountisgenerallyrecognisedinsofarasaprobabletaxableprofitwillbeavailableinthefutureagainstwhichdeductibletemporarydifferencescanbeused.Thedeferredtaxassetthatisrecognisedandconsideredasrealisablecanbereducediftheprojectedprofitcannotbeobtained.Toassessthelikelihoodthattheseassetswillberealised,theERAMETgroupreviewsthefollowinginformationinparticular:• projectedfutureprofitability;• extraordinarylossesnotexpectedtorecurinthefuture;• pasttaxableprofits;and• taxstrategies.

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10.1 CORPORATE INCOME TAX


Currenttax (29) (113)Deferredtax 20 65

Tax income/(expense) (9) (48)

EFFECTIVE TAX RATE


Operatingprofit(loss) (744) (15)Netfinancialincome (74) (60)Pre-tax profit (loss) of consolidated companies (818) (75)Standard taxation rate in France (%) 34.43% 34.43%Theoretical tax income/(expense) 282 26Impactontheoreticaltaxof:• permanentdifferencesbetweenaccountingandtaxableprofit 72 (10)• impairmentofassets (87) -• standardtaxratedifferencesinforeigncountries (4) (6)• taxcredits 4 5• unrecognisedorlimiteddeferredtaxassets (282) (67)• miscellaneousitems 6 4

Actual tax income/(expense) (9) (48)

Effective tax rate before dividend payout -1% -64%

Permanentdifferencesinthe2015reportingperiodmainlyrelatetothereversalofdeferredtaxliabilities.

Unrecognisedorlimiteddeferredtaxassetsmostlyrelatetodeferredtaxassetsontaxlosscarry-forwardsofLe Nickel-SLNtotalling€194 millionat31 December2015,ofwhich€97 millionconcernedpriorperiods.ThebalanceconcernstheunrecogniseddeferredtaxassetsonlossesintheFrancetaxconsolidationgroup(€35 million)andotherlimitedorunrecogniseddeferredtaxassetsincertainsubsidiariestotalling€53 million(Guilin,GCMC,SETRAG,COMILOG-CMM).

MAIN STANDARD TAX RATES IN FOREIGN COUNTRIES

(%) FY2015 FY2014

China 12.5%-25.0% 12.5%-25.0%UnitedStates 35.0% 35.0%Gabon 35.0% 35.0%Norway 27.0% 27.0%New Caledonia 35.0% 35.0%Sweden 22.0% 22.0%

CHANGE IN TAX RECEIVABLES AND TAX PAYABLES

(€ MILLION) 31/12/2015 31/12/2014

At beginning of period (3) (25)Currenttax—incomestatement (29) (113)Taxpaid 71 59Translationadjustmentsandothermovements (12) 76

At period end 27 (3)• Taxreceivables 58 61• Taxpayables 31 64

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10.2 DEFERRED TAXES IN THE BALANCE SHEET

DETAIL BY CATEGORY

(€ MILLION) 31/12/2015 31/12/2014

Taxlosscarry-forwards(1) 38 131Non-currentassets—valuationdifference 9 10Non-currentassets—usefullife 41 41Financialinstruments 35 35Inventoryvaluation 48 49Employee-relatedliabilities 78 70Otherprovisionsforcontingenciesandlosses 50 29Otheritems 28 37Deferred tax assets before netting 327 402Deferredtaxnettingbytaxentity (319) (294)

Deferred tax assets 8 108Regulatedprovisionsandspecialamortisationanddepreciation (168) (190)Non-currentassets—valuationdifference (57) (88)Non-currentassets—usefullife (128) (121)Financialinstruments (14) (4)Inventoryvaluation (37) (42)Employee-relatedliabilities (18) (13)Otherprovisionsforcontingenciesandlosses (20) (74)Otheritems (13) (4)Deferred tax liabilities before netting (455) (536)Deferredtaxnettingbytaxentity 319 294Deferred tax liabilities (136) (242)

Net deferred tax liabilities (128) (134)(1) Limited deferred tax assets for tax loss carry-forwards 531 209

CHANGE IN DEFERRED TAXES IN THE BALANCE SHEET

(€ MILLION) ASSETS LIABILITIESNET

FY2015NET

FY2014

At beginning of period 108 (242) (134) (204)Deferredtaxoffsetinshareholders’equity (12) 15 3 16Deferredtaxonprofit(loss) (67) 87 20 65Deferredtaxnettingbytaxentity (25) 25 - -Translationadjustmentsandothermovements 4 (21) (17) (11)

At period end 8 (136) (128) (134)

Deferredtaxassetsandliabilitieshavebeenpresentedseparatelyinthebalancesheetafteroffsettingwithineachtaxentity.ExceptfortaxconsolidationinFrance,everycompanyisanindependenttaxentity.

10.3 TAX CONSOLIDATION IN FRANCE

Taxlossesof€344 million(€219 millionat31 December2014)mainlyaroseduringthepastthreereportingperiodsandhavenotbeencapitalisedasdeferredtaxassets.

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NOTE 11 PERSONNEL COSTS AND EMPLOYEE BENEFITS

11.1 WORKFORCE AND PERSONNEL COSTS

AVERAGE WORKFORCE AND WORKFORCE BY DIVISION AT END OF PERIOD

Theaverageworkforceandworkforceattheendofperiodincludeallfully-consolidatedcompaniesat31 Decemberofeachyear.

FY2015 31/12/2015 FY2014 31/12/2014

AVERAGEWORKFORCE

WORKFORCEATYEAR-END

AVERAGEWORKFORCE

WORKFORCEATYEAR-END

ERAMETNickel 2,797 2,777 2,859 2,809ERAMETManganese 5,374 5,342 5,354 5,479ERAMETAlloys 4,564 4,555 4,476 4,462ERAMETHoldingcompanyandmiscellaneous 198 200 202 196

TOTAL 12,933 12,874 12,891 12,946

ThetotalworkforcemanagedintheHRreportingimplementedbytheGroup,whichincludesnon-consolidatedcompaniesandequity-consolidatedcompanies,totalled13,938 employeesat31 December2015(13,992 employeesat31 December2014).

PERSONNEL COSTS BY CATEGORY


Wagesandsalaries (480) (465)Socialsecuritycontributionsandotherpersonnelcosts (184) (188)Profitsharing (13) (16)Share-basedpayment (5) (5)Subtotal personnel costs (682) (674)Personnelcosts—temporarystaff (28) (27)

TOTAL PERSONNEL COSTS INCLUDING TEMPORARY STAFF (710) (701)Personnelcosts(includingtemporarystaff)as%ofsales 24% 23%CICE(showndeductedfrompersonnelcosts) 7 6

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11.2 EMPLOYEE-RELATED LIABILITIES

TheERAMETgroupoffersitsemployeesseverallong-termbenefitssuchasretirementpackages,pensionplans,healthcareplansandlong-servicebonuses.Thecharacteristicsofthesebenefitsvaryinlinewiththegoverninglawsandregulationsineachcountryandtheagreementsinforceineachcompany.

ACCOUNTING METHOD

Employee-relatedliabilitiesareeitherdefinedbenefitplansordefinedcontributionplans.Definedbenefitplansspecifytheamountthatanemployeewillreceiveatthetimeofretirementwhereasdefinedcontributionplansspecifyhowthecontributionsarecalculated.

Defined contribution plansFortheseplans,theERAMETgroupmakespaymentstoafundmanagerandisundernoobligationtomakesupplementarypaymentsifthefundmanagerlackssufficientassetstopaytheemployeebenefitsdueforthecurrentperiodandpriorperiods.Asaresult,theseplansdonotshowanydeficitorsurplusandarenotincludedinthebalancesheet.Thecontributionsareexpensedwhenpaid.

Defined benefit plans and other long-term benefitsAdefinedbenefitplanisapost-employmentbenefitplanthatisdistinctfromthedefinedcontributionplan.Thecostoftheretirementbenefitsandotherbenefitsaccruedtoemployeesisestablishedactuariallyforeachplanusingtheprojectedunitcreditcostmethod. Theyareassessedannuallybyindependentactuaries.TheobligationsoftheERAMETgrouparerecognisedasbalancesheetliabilitiesandcorrespondtothedifferencebetweenthepresentvalueoftheobligationinrespectofdefinedbenefitsandthefairvalueofplanassetsatthereportingdate.Planassetscompriseassetsheldthroughapensionfundorinsurancepolicies.ThecostsofservicesarerecognisedintheCurrentoperatingprofit(loss)intheperiodinwhichtheyareincurred.ThecostsofpastservicesresultingfromplanamendmentsandcurtailmentsaswellasthegainsandlossesuponplansettlementarerecognisedinOtheroperatingincomeandexpenses.TheinterestexpensefornetobligationsisincludedinOtherfinancialincomeandexpenses.Theactuarialgains(losses)(includingtheforeigncurrencyeffect)onplanassetsandtheobligationinrespectofdefinedbenefitsarerecogniseddirectlyinOthercomprehensiveincomefortheperiodinwhichtheyarise.Theyarerecognisedimmediatelyinincomeinthecaseoflong-termbenefits.


Thecostofemployeebenefitsandthevalueoftheobligationarecalculatedusingassumptionssuchasdiscountrates,salaryincreases,retirementage,lifeexpectancy,inflation,andcostofhealthcare.TheseassumptionsaredeterminedannuallybytheERAMETgroupManagement.Thediscountratesusedaremostlycalculatedforeachzoneorcountrybasedontheaverageratesofprivateissuersobservedinthosezonesorcountriesateachreportingdate.Theratesvaryfromcountrytocountry:• intheEurozoneandintheUnitedStates,thediscountratesweredeterminedonthebasisofAA10+corporatebonds;• inNorway,thediscountrateisdeterminedbasedonsecuredbondssuchasmortgage-backedbonds;• inNew Caledonia,giventhatthecorporatebondmarketisnotliquid,asalsotheStatebondsmarket,theapproachusedtodeterminetheratesappliesamethodtoreplacereturnsfromStatebonds,i.e.theexpectedlong-termreturnofinflationinconsumerpricesplustheexpectedlong-termreturnofgrowthinGDPonamultiplicativebasis.

MAIN ACTUARIAL ASSUMPTIONS AND RELATED SENSITIVITY

Theactuarialassumptionsusedvaryaccordingtotheeconomicanddemographicconditionsexistinginthecountryinwhichtheplanisinforce.Themainactuarialassumptionsusedformeasuringtheseliabilitiesareasfollows:

31 DECEMBER2015 31 DECEMBER2014 CHANGE

RATES RATES RATES

DISCOUNT INFLATION DISCOUNT INFLATION DISCOUNT INFLATION

Eurozone 2.00% 1.90% 2.20% 1.80% -0.20% 0.10%Norway 2.50% 2.30% 3.00% 1.90% -0.50% 0.40%UnitedStates 4.00%-4.20% 2.20% 3.75%-3.90% 2.20% +0.25%/+0.30% 0.00%New Caledonia 3.20% 1.00% 3.50% 1.30% -0.30% -0.30%

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SENSITIVITY

Anincreaseordecreaseinthediscountrateorinflationrateby0.5 percentagepointwillhavethefollowingimpact,withotheractuarialassumptionsremainingconstant:

IMPACTONCOMMITMENT

DISCOUNTRATE INFLATIONRATE

INCREASEBY0.5% DECREASEBY0.5% INCREASEBY0.5% DECREASEBY0.5%

€MILLION % €MILLION % €MILLION % €MILLION %

France (8) -4.59% 9 +4.98% 4 +2.16% (3) -2.01%UnitedStates (9) -5.45% 8 +5.87% - +0.09% - -0.09%Norway (5) -8.17% 6 +9.08% - +0.05% - -0.34%New Caledonia (2) -4.43% 1 +4.65% 1 +4.45% (2) -4.24%Othercountries (2) -4.14% 2 +4.42% 1 +2.05% (1) -1.93%

TOTAL (26) -5.31% 26 +5.76% 5 +1.36% (7) -1.31%

DESCRIPTION OF THE MAIN DEFINED BENEFIT PLANS AND ASSOCIATED RISKS

The ERAMET group’s main defined benefitplans are offered in France, United States,Norway and New Caledonia. The main planassetsarethereforelocatedinthesecountries.Thefundamentalcharacteristicsof theplansdescribedbelowrelatetothesefourcountries.

Retirementpackagesaregenerallypaidasalumpsumorasannuitiesdeterminedonthebasisoftheemployee’slengthofservice,finalsalary or average final remuneration. Pre-re-tirementandadditionalhealthcarebenefitsaswellaslifeinsurancearealsoprovidedunderthepensionplan,alongwith long-servicebo-nusesthatareawardedthroughthepaymentof a lump sum that varies according to thecompletedserviceyearbrackets.

IntheUnitedStatesandNorway,mostdefinedbenefitplansarenolongeraccessibletonewemployees.Theyparticipateindefinedcontri-butionplans.

InNew Caledonia, thecommitmentsalso in-cludethepaymentofaloyaltybonusawardedafter 10 yearsof serviceand thenevery fiveyears,calculatedasapercentageofthebasicsalary,aswellasthegrantingofplaneticketswhosenumber,priceandfrequencydependsontheemployee’sprofessionalcategory.

RISKS ASSOCIATED WITH THE PLANS

TheERAMETgroupisexposedtothestandardrisks inherent to defined benefit plans, suchas higher-than-expected salary increases,increasedinflationratesorlower-than-expect-ed returns, aswell asactuarial risks, notablyinvestmentrisk,interestrateriskandlongevityrisk.Theplansarealsoexposedtotheriskofnegotiationtoreachamorefavourableinternalagreement,andtheriskofincreaseintaxesorinannuitiesforsupplementarypensionplans.

GOVERNANCE POLICY

Under the laws governing defined benefitplans, it istheERAMETgroup’sdutytoman-age the plan assets and design investmentpoliciesthatdefine,foreachprefinancedplan,theinvestmentobjectives,theassetallocationtarget, risk mitigation strategies, and othercomponentsrequiredbylawforpensionplans.

INVESTMENT POLICIES AND RISK MANAGEMENT INITIATIVES

Theinvestmentpoliciesaredesignedtoobtainlong-termreturnoninvestmentthat,combinedwith contributions, will enable the plans tohave sufficient assets to be able to pay thepromised benefits while keeping risk at anacceptablelevel.

The asset allocation target is determinedonthe basis of the expectedmarket conditionsand climate, the maturity profile of planliabilities, the level of cover of the respectiveplans, and the risk tolerance of the plans’beneficiaries.

In France, the plans are funded by insurersthrough Group life insurance contracts. Theinvestments are made by the insurers intheir respective Euro funds. These funds, ofwhich over 80% is invested in buy and holdrateproducts,sufferedfromthedeteriorationofbondreturnsforsomeyearsnowandarestillexposedtothedefaultriskonreturnsinaprotractedlowinterestrateperiod.

IntheUnitedStates,thefinancialmanagementoffundsisentrustedtovariousassetmanag-ers among the key players in the business;index-based management is used for themostpartandactivemanagementfortherest.Halfof theassetallocation is inStatebondsand American companies, denominated inUSD,withtheobjectiveofbackingtheliabilityduration. The other half is invested throughfundsinAmericanequities,worldequities,andemergingmarketequitiesandbonds.Therisksinherenttothesefinancialassetsarethereforecurverisk,durationrisk,creditriskandinflationriskasconcernsbonds,andmarket riskand

227


capital risk for equities. However, in 2015,themarkets inwhichtheassetsare investedperformedpoorly.

InNorway,theGroupchoosestheinvestmentportfoliotypefromasetofoptionsproposedby two leading insurance firms (DNB andStorebrand)—asiscustomarymarketpractice

in that country.TheERAMETgroup’s fundedplans include moderate profile investmentportfolios with slight differences in assetallocationsdependingontheassetallocationstrategy of the insurance company. In theStorebrand moderate profile portfolio, ap-proximately5%isinvestedinequities,70%in

bonds,10%inliquidassets,10%inrealestateand5%inothersecurities,whereasintheDNBmoderateprofileportfolio,approximately10%is invested in equities, 50% in bonds, 25% inliquidassetsand15%inrealestate.

OVERALL COST OF EMPLOYEE-RELATED LIABILITIES

Thecostofemployee-relatedliabilitiesisrecognisedinconsolidatedearningsandintheStatementofcomprehensiveincomebelow:

PENSIONPLANS RETIREMENTPACKAGE OTHERBENEFITSTOTALEMPLOYEE-RELATED

LIABILITIES

(€ MILLION) 2015 2014 2015 2014 2015 2014 2015 2014

Servicecost 6 6 6 5 1 4 13 15Pastservicecost(1) - - (5) (5) 2 (1) (3) (6)Netinterestexpense 2 2 3 3 1 2 6 7Cost recognised in income 8 8 4 3 4 5 16 16Impactofrevaluationoncommitments 9 31 1 1 (1) (5) 9 27

• Experience 7 (1) (2) (3) (1) (2) 4 (6)• Demographicassumptions (2) 8 (1) - - - (3) 8• Financialassumptions 4 24 4 4 - (3) 8 25Impactofrevaluationonpensionplanassets 3 (9) (2) - - - 1 (9)

Cost recognised in other comprehensive income 12 22 (1) 1 (1) (5) 10 18

TOTAL COST RECOGNISED IN COMPREHENSIVE INCOME 20 30 3 4 3 - 26 34(1) Pension plan changes and curtailments.

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CHANGE IN OBLIGATIONS AND PLAN ASSETS

Thetablebelowillustratesthechangeinobligationbyplantype,distributionbybeneficiariesandbasedonwhetherornotpre-financingisused,aswellasthechangeinthefairvalueoftheplanassetsanditsdifferentiationbycategory(listedandunlistedassets).

PENSIONPLANS RETIREMENTPACKAGE OTHERBENEFITSTOTALEMPLOYEE-RELATED

LIABILITIES

(€ MILLION) 2015 2014 2015 2014 2015 2014 2015 2014

Change in obligationObligation at beginning of period 299 254 101 101 43 46 443 401

• Costrecognisedinincome 16 15 4 4 4 5 24 24

• Impactofrevaluation 9 31 1 1 (1) (5) 9 27• Contributionsandbenefitspaid (14) (13) (4) (3) (4) (4) (22) (20)

• Translationdifferencesandothermovements 12 12 - (2) 1 1 13 11

Obligation at period end 322 299 102 101 43 43 467 443Obligation attributable to• Workingbeneficiaries 134 136 99 100 35 35 268 271• Beneficiariesentitledtodeferredbenefits 48 36 - - - - 48 36

• Pensioners 140 127 3 1 7 8 150 136322 299 102 101 42 43 466 443

Obligation• Prefinanced 291 90% 271 91% 60 59% 63 62% - - - - 351 75% 334 75%• Notfinanced 31 10% 28 9% 42 41% 38 38% 42 100% 43 100% 115 25% 109 25%

322 299 102 101 42 43 466 443Change in plan assetsFair value of plan assets at beginning of period 207 184 34 34 - - 241 218

• Interestincomerecognisedinincome 7 7 1 1 - - 8 8

• Impactofrevaluation (3) 9 2 - - - (1) 9• Contributionspaid 4 7 1 1 - - 5 8• Benefitspaid (13) (11) - (2) - - (13) (13)• Translationdifferencesandothermovements 13 11 (1) - - - 12 11

Fair value of plan assets at period end (II) 215 207 37 34 - - 252 241

Plan assets• Listedonanactivemarket 159 74% 152 73% 37 100% 34 100% - - - - 196 78% 186 77%

• Unlisted 56 26% 55 27% - - - - - - - - 56 22% 55 23%215 207 37 34 - - 252 241

Net liabilities in the balance sheet (I) - (II) 107 92 65 67 43 43 215 202

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Thetablebelowshowsthebreakdownbetweenthemaincountries,theobligationsinconnectionwithemployee-relatedliabilities,planassets,netliabilityandfinancialcoverratio.

31 DECEMBER2015 31 DECEMBER2014

(€ MILLION)

CURRENTVALUEOF

OBLIGATIONS

FAIRVALUEOFPLANASSETS

NETLIABILITIESINTHEBALANCE

SHEET

FINANCIALCOVERRATIO

CURRENTVALUEOF

OBLIGATIONS

FAIRVALUEOFPLANASSETS

NETLIABILITIESINTHEBALANCE

SHEET

FINANCIALCOVERRATIO

(A) (B) (A)+(B) -(B)/(A) (A) (B) (A)+(B) -(B)/(A)

France 176 (68) 108 38.6% 165 (63) 102 38.2%UnitedStates 152 (126) 26 82.9% 146 (121) 25 82.9%Norway 64 (37) 27 57.8% 59 (37) 22 62.7%New Caledonia 35 (11) 24 31.4% 34 (10) 24 29.4%Othercountries 40 (10) 30 25.0% 39 (10) 29 25.6%

TOTAL 467 (252) 215 54.0% 443 (241) 202 54.4%

Thechartbelowillustrateshowthefundsareinvested.

Distribution as a percentage of fund investments by asset class

20152014

2%

7%

22%

23%

39%

7%

7%

22%

43%

24%BondsEquitiesInsurance contractsCash andCash equivalentsOther investments

PROJECTED CASH OUTFLOWS

Theglobalaveragetermwas13.8 yearsat31 December2015(13.6 yearsat31 December2014).

Fortheyear2016,thecontributionsthatwillbepaidinrespectofem-ployee-relatedliabilitiesareestimatedat€5 million.FuturebenefitsthatwillbetakenfrominvestmentsorpaiddirectlybytheERAMETgroup,areestimatedat€22 million.

11.3 BONUS SHARE PLAN AND SHARE-BASED PAYMENTS

ACCOUNTING METHOD

TheERAMETgrouphasestablishedvariousshareawardplansthatareallequity-settledplans:“democratic”plansopentoallemployeesthatarenotsubjecttoperformancecriteriaand“selective”plansopentocertainemployeesandcorporateofficerssubjecttoperformancerequirements.Thefairvalueoftheservicesreceivedinconsiderationforthegrantingoftheseoptionsisdefinitivelymeasuredwithreferencetothefairvalueoftheoptionsonthegrantdateandtothenumberofoptionsthatwillhavevestedbytheendofthevestingperiod.Thetotalfairvaluetherebydeterminedisapportionedonastraight-linebasisoverthefullvestingperiodfortheplans,withthenumber ofvestedexercisableoptionsassumedatthebeginningofthevestingperiodbeingreviewedateveryreportingdate.ThisfairvalueisrecognisedinCurrentoperatingprofit(loss)asAdministrativeandsellingexpenses,offsetbyanincreaseinshareholders’equity.

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Judgementmustbeexercisedtodeterminethefairvalueofshareawardplansattheawarddate.ThefairvalueofdemocraticplansisestimatedusingtheBlack-Scholes-Mertonmodel.Selectiveplansaresubjecttotwoperformanceconditions—oneintrinsicconditionbasedontheERAMETgroup’sfinancialperformanceandoneexternalconditionbasedontheERAMETstockperformance.ThefairvalueoftheseplansismeasuredusingtheMonteCarlomodel.Theassumptionsusedtomeasuretheplansarebasedon:• expectedvolatilitydeterminedonthebasisofanobservationofthestock’shistoricperformance;• arisk-freezerocouponrateoverthetermoftheplan;• afuturedistributionratebasedontheaverageforthepastfiveyears.Thebonusshareawardstoemployeeswhoaretax-domiciledinFrancefullyvestafteratwo-yearvestingperiodfordemocraticplans,andafterthreeyearsforselectiveplans,ontheunderstandingthatthebeneficiariesmustretainthesharesawardedtothemforanadditionaltwoyears.Thebonusshareawardstoemployeeswhoaretax-domiciledoutsideFrancefullyvestandarefreelytransferableafterafour-yearperiod.

Share-based payments relate only to bonusshareplansforthebenefitofemployeesandsettledintheformofshares.Theyrepresentedanexpenseof€5 millionforthe2014and2015reportingperiods.

Shareswereallocatedunder twonewbonusshareplanson19 February2015:

– oneplanforallemployeesforaninitialtotalof27,268 shares;

– one plan open to certain employees andcorporateofficers,where:• onepart of the shares is subject to twoperformance conditions—an internal

condition and an external condition—foraninitialtotalof95,204 shares,and

• one part of the shares is not subject toperformancecriteria,foraninitialtotalof37,624 shares.

Thecriteriaforshareawardsandtheassess-mentoftheaccountingexpensearethesameasthosedescribedabove.

Thecharacteristicsofthetwonewbonusshareawardplansforthefinancialyear2015areasfollows:

NUMBEROFSHARES

EXERCISEPRICE(€)

MATURITY(YEARS) (1)

RISK-FREERATE

AVERAGEDIVIDEND

YIELDFAIRVALUEOFOPTION(€) (2)

PlanopentoallemployeesFrance 9,780 free 2+2 -0.07% 1.00% 66.96World 17,488 free 4+0 0.06% 1.00% 77.19

Planopentocertainemployeesandcorporateofficers

France 106,285 free 3+2 -0.02% 1.00% 68.44/43.46World 26,543 free 4+0 0.06% 1.00% 77.19/49.02

(1) Maturity = vesting period + lock-in period.(2) Bonus share award plans whose share awards are subject to two performance conditions have two fair values: the first being the intrinsic condition and the second being the external condition.

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Thechangeinthenumberofbonusshareawardswasasfollowsinthe2014and2015reportingperiods:

NUMBEROFBONUSSHARES 31/12/2015 31/12/2014

At beginning of period 409,940 361,005Newplans2015/2014 160,096 170,212Fullyvested (45,393) (37,459)Lapsedshares (5,544) (10,072)Expiredshares (77,908) (73,746)

At period end 441,191 409,940Distributionbyyearofvesting2015 - 73,3262016 109,683 248,4352017 141,650 74,6212018 145,974 13,5582019 43,884 -

NOTE 12 PROVISIONSAprovisionisaliabilityrecognisedinthebalancesheet.Itisanestimatedvalueowingtotheuncertaintyastothetimeofpaymentandtheamounttobepaid.ThemainprovisionssetasidebytheERAMETgrouprelatetositerestorationandenvironmentalrisks.

ACCOUNTING METHOD

TheERAMETgroupsetsasideaprovisionwhereitsamountcanbereliablyestimated,tocoverallliabilitiesarisingfrompasteventsthatareknownatthereportingdateandthesettlementofwhichislikelytoresultinanoutflowofresourcestosettletheliability.

Provisions for site restoration and dismantling, provisions for environmental risksTheprovisionsforminingsiterestorationarerecognisedwhenminingsitesareopenedandasandwhentheyshowdegradation,andarethenremeasuredandaccretedateachreportingdate.Wherethereisalegalorcontractualobligationtorestoreminingorindustrialsites,arestorationprovisionismade,offsetbyanenvironmentalanddismantlingasset.Theprovisionisbasedonsite-by-siteestimatesofthecostofthiswork.Theassetisamortisedoverthelifeoftheoperationofthemineortheindustrialsite.Restorationcostsarediscountedovertheperiodremaininguntiltheexpectedendofoperationofthemineorsite,andtheeffectsattributabletothepassageoftime(accretionexpenses)arerecognisedinNetincomefortheperiodunderOtherfinancialincomeandexpenses(Note 6).Provisionsaremadeforanyotherenvironmentalcontingenciesonthebasisofestimatedfuturecostswithout,however,makinganyallowanceforinsuranceindemnitiesreceivable.Forindustrialsitesinwhichtherearenoplanstodiscontinueoperations,noprovisionismadeforsiterestoration.Dependingonthegoverninglawsineachcountry,anenvironmentalbondissuedbyabankingorfinancialinstitutiontothebenefitoflocalauthoritiesmayneedtobesetupfortherehabilitationofminingandindustrialsites.

Restructuring and redundancy plansProvisionsaremadeforrestructuringandredundancycostswheresuchmeasureshavebeenplannedindetailandannouncedbeforethereportingdateorwhoseimplementationhasbegun.


Provisions for site restoration and dismantlingTheERAMETgroupmustmeetregulatoryandconstructiveobligationswithregardtotherestorationofcertainminingsitesattheendofoperation.Provisionsforsiterestorationanddismantlingofindustrialsitesareestimatedonthebasisofforecastcashflowsbymaturityanddiscountedusinganinflationrateandadiscountratedeterminedinaccordancewithlocaleconomicconditions.Theremainingtermtotheplannedenddateofoperationoftheminesorindustrialsitesisdefinedoveramaximumperiodnotextendingbeyondtheyear2060inNew Caledonia,theyears2032and2042inGabonandtheyear2074fortheindustrialsitesintheUnitedStates.TheERAMETgroupmeasuresitsprovisionforsiterestorationanddismantlingateachreportingdateorasnewinformationbecomesavailable.Thefinalcostsofsiterestorationareuncertain.Theseuncertaintiesmayleadtoactualexpenditureinthefuturewhoseamountmaydifferfromthecurrentprovisionamount.Majoradjustmentsmaybemadetotheprovisionsrecognised,whichmayimpactfutureincome.At31 December2015,theprovisionforsiterestorationreflectedthebestestimateofthediscountedvalueofthefuturecoststobear.

232



At beginning of period 530 471Provisions(reversals)fortheperiod (5) 27• Provisionsfortheperiod 44 54• (Reversals)intheperiod (49) (27)Accretionexpenses 9 12Dismantlingassets 2 10Translationadjustmentsandothermovements 61 10

At period end 597 530• Long-termportion 564 488• Short-termportion 33 42Environmentalcontingenciesandsiterestoration 377 369Personnel 41 41Othercontingenciesandlosses 179 120

12.1 ENVIRONMENTAL CONTINGENCIES AND SITE RESTORATION

(€ MILLION) 31/12/2015 31/12/2014

Siterestoration(1) 349 344Environmentalcontingencies 28 25

TOTAL 377 369(1) of which provisions offsetting a dismantling asset 284 313

• Long-termportion 370 358• Short-termportion 7 11

SITE RESTORATION


At beginning of period 344 322Provisions(reversals)fortheperiod (1) 9• Provisionsfortheperiod 2 1• (Reversals)intheperiod (12) (4)• Accretionexpenses 9 12Dismantlingassets 2 10Translationadjustmentsandothermovements 4 3

At period end 349 344Le Nickel-SLN(New Caledonia)—ERAMETNickel 263 263COMILOG(Gabon)—ERAMETManganese 30 29ERAMETMarietta(UnitedStates)—ERAMETManganese 28 26COMILOGFrance—ERAMETManganese 16 16GCMC(UnitedStates)—ERAMETManganese 6 6Othercompanies 6 4

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31/12/2015 31/12/2014

DISCOUNTRATE INFLATIONRATE DISCOUNTRATE INFLATIONRATE

UnitedStates 3.75%-4.00% 2.20%-2.30% 3.75% 2.20%New Caledonia 3.20% 1.00% 3.50% 1.50%Gabon 8.00% 2.50% 8.00% 2.50%

Anincreaseordecreaseby0.25%inthediscountratewouldresultinanincreaseordecreasebyabout€13 millioninprovisionsat31 December2015.

ENVIRONMENTAL CONTINGENCIES

TheprovisionrelatestoERAMETManganesefor€15 million(€16 millionat31 December2014),ERAMETAlloysfor€7 million(€6 millionat31 Decem-ber2014)andERAMETNickelfor€3 million(€3 millionat31 December2014).

12.2 PERSONNEL

(€ MILLION) 31/12/2015 31/12/2014

Restructuringandredundancyplans—ERAMETAlloys 22 15Restructuringandredundancyplans—ERAMETManganese 5 14Restructuringandredundancyplans—ERAMETHolding 7 7Restructuring and redundancy plans 34 36Otherlabourcontingenciesandlosses 7 5

TOTAL 41 41

12.3 OTHER CONTINGENCIES AND LOSSES


At beginning of period 120 102Provisions(reversals)fortheperiod 4 10• Provisionsfortheperiod 24 17• (Reversals)intheperiod (20) (7)Translationadjustmentsandothermovements 55 8

At period end 179 120FinancialrisksassociatedwiththeputoptionsgrantedbyERAMETtoMitsubishi 109 49Provisionforfreereturn—Concession 23 20Provisionsfortaxcontingencies 17 26Commercialdisputes 6 11Otherprovisionsforcontingenciesandlosses 24 14

TheERAMETgroup’sfinancialrisksonMitsub-ishiputoptionscorrespondtothevaluationoftheputoptionsgrantedbytheERAMETgroupto Mitsubishi Corporation (33.4% of StrandMinerals Pte Ltd shares). The exercising of

theseoptionsbyMitsubishi isuncertainbothintermsofthetimeframeandtheamount.

In parallel with the sale agreements, theERAMET group granted Mitsubishi Corpora-tionput options in respect of the shares ac-quired.Theseoptionsmaybeexercisedunder

certainconditions,whicharemainly linkedtothesuccessof theminingproject.Theymayalsobeexercisedduringspecificwindows.Inparticular,thedeadlineforoneoftheseoptionswas deferred from end-September 2015 toend-March2016.

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The exercise price is an agreed price thatvariesinlinewiththecircumstancesprovidedforinthecontractsplustheproceedsfromtheresaleofthereceivableowedbyStrandMiner-alsPteLtd.Inaddition,MitsubishiCorporation

hasanopen-endedoptiontosellitsinteresttotheERAMETgroupatfairvalueintheeventofachangeincontrolatERAMET.Inreturn,theERAMETgrouphasanopen-endedoptiontobuyMitsubishiCorporation’sinterestinStrand

MineralsPteLtdatfairvalueintheeventofachangeincontrolatMitsubishiCorporation.

The put option amount was estimated at$118 million (€109 million) at 31 December2015.

NOTE 13 RELATED-PARTY TRANSACTIONSACCOUNTING METHOD

Transactionswithrelatedpartiescomprisethefollowing:• ordinarytransactionswithnon-consolidatedcompaniesandassociates;• grosscompensationandbenefitstoDirectorsandmembersoftheExecutiveCommittee.

13.1 ORDINARY TRANSACTIONS WITH NON-CONSOLIDATED COMPANIES AND ASSOCIATES

INCOME STATEMENT


Sales• Non-consolidatedcontrolledsubsidiaries 29 29• Associatesandjointventures 6 4Cost of sales, administrative and selling expenses• Non-consolidatedcontrolledsubsidiaries (14) (6)• Associatesandjointventures (38) (26)Net debt cost• Non-consolidatedcontrolledsubsidiaries - -• Associatesandjointventures 2 3

BALANCE SHEET


Trade and other receivables• Non-consolidatedcontrolledsubsidiaries 11 11• Associatesandjointventures 22 25Trade and other payables• Non-consolidatedcontrolledsubsidiaries 18 13• Associatesandjointventures 5 5Net financial assets (liabilities)• Non-consolidatedcontrolledsubsidiaries (2) 15• Associatesandjointventures 47 35

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13.2 GROSS COMPENSATION AND BENEFITS TO DIRECTORS AND MEMBERS OF THE EXECUTIVE COMMITTEE

(€ THOUSAND) FY2015 FY2014

Short-term benefits• Fixedcompensation 2,727 2,893• Variablecompensation 954 2,262• Directors’fees 833 793Other benefits• Post-employmentbenefits 82 642• Retirementpackage - -• Compensationpaidinshares 2,390 1,824

TOTAL 6,986 8,414

NOTE 14 OFF-BALANCE SHEET COMMITMENTS, OTHER COMMITMENTS, CONTINGENT LIABILITIES AND OTHER DISCLOSURESTheERAMETgroupreachedagreementswiththirdpartiestocoverthegoodperformanceofitsobligations.TheseobligationsaredependentuponsubsequenteventsthatmayresultintheERAMETgroup’smakingorreceivingapayment.Theyarenotrecognisedinthebalancesheetiftheyarenotlikelytoincreasetheobligationsthatarealreadyreportedinthebalancesheet.

14.1 OFF-BALANCE SHEET COMMITMENTS

(€ MILLION) 31/12/2015 31/12/2014 (1)

Commitments given 310 209• Operatingactivities 120 124• Financingactivities 190 85Commitments received 9 14• Operatingactivities 9 14• Financingactivities - -Availablecreditfacilities 981 1,088

(1) Restatements of commitments given to third parties by fully-consolidated subsidiaries, as they do not increase the Group’s commitment beyond the liability recognised in the balance sheet.

Thesecommitmentsmostlyrelateto:

– operatingactivities:clientandenvironmentalbank guarantees, other endorsements andbank guarantees (customs, leases), lettersofcredit;

– financingactivities:guarantees,pledges,col-lateralandmortgage forexternalfinancingof equity-consolidated and non-consolidat-edcompanies.

FUNCTIONAL GUARANTEES FOR THE PERFORMANCE OF BUSINESS CONTRACTS

Functionalguaranteesareanycommitmentsrelating to business contracts, given byERAMETanditssubsidiariestoclients.

These commitments mainly comprise ad-vancepaymentbondsandproductguaranteespost-deliveryofgoods.

To finance the performance of the contract,the Group collects advance payments fromthe client. To guarantee their refund in caseofabreachof itscontractualobligations,theGroupmay,attheclient’srequest,establishanadvancepaymentbond.Thesebankguaran-

teesamountedto€20 millionat31 December2015(comparedto€25 millionat31 Decem-ber2014).

Product warranties fall under the Group’slimited liability definedcontractually for eachbusinesscontract.TheGroupdoesnotrecog-niseprovisionsforguaranteegiventhattherehasbeennowarrantyclaimfromitsclients.

TheGroupconsiders itsfinancialriskrelativetoall theaboveguarantees tobe low,basedonhistoricaldataandontheexistenceofCivilliability policies that would limit the financialconsequences on the Group’s consolidatedfinancialstatements.

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14.2 OTHER COMMITMENTS

INVESTMENT IN SENEGAL THROUGH THE TIZIR LTD JOINT VENTURE

TheERAMETgroup,togetherwith itspartnerMineral Deposit Ltd (MDL), has expandedan investment inmineral sands operation inSenegal.

Inadditiontotheinitialcontribution,eachpart-ner contributed USD 137.5 million as capitalthefullamountofwhichwaspaidout in thefinancialyear2013.Also, theERAMETgroup(viaERAMETS.A.)hadcommittedtograntingashareholders’loanof$45 milliontoTiZirLtd,thefullamountofwhichwaspaidout in thefinancialyear2013.

ThepartnerswerealsopartytoamutualUSD25 millionguaranteecoveringcertainspecificcontingencies.

The two partners contributed equally tofinancingthejointventurethroughasubordi-natedloanofUSD105 millionofwhichthelasttranchewaspaidoutinSeptember2015.

AsanadditionalcommitmenttoTiZirLtd,theERAMETgroupandMDLagreedinQ42015tograntasubordinatedloanofUSD60 million.

TheERAMETgrouphascommittedtogrant-ingaloantoMDLasthelatterwillnotbeabletohonoursomeof thecalls for funds. If theloan isnot repaidat31 December2016, theERAMETgroup’s interest inTiZirLtd’scapitalwillbeincreasedbytheremainingamountdueontheloantoMDL.

At31 December2015,theERAMETgroup(viaEralloysHolding,awholly-ownedsubsidiaryofERAMETS.A.)grantedaloanofUSD2.5 mil-lion toMDL to allow this company tomakeitscontributionfollowingthecallforfundson22 December2015.

TRANS-GABON RAILWAY CONCESSION—SETRAG

UnderthetermsoftheNovember2005agree-ment,signedforan initialperiodof30 years,SETRAG, the concession holder, is requiredtomeetoperatingcapacitytargets(volumeofgoodsandnumberofpassengers).

Theconcessionholderisfreetosetprices.Itsmainshareholder,COMILOG,iscommittedtoensuringthat thenecessary funding ismadeavailableforthecapitalexpenditurerequiredtoachievetheoperatingcapacitytargets.

On16 October2015,SETRAGandtheGabo-neseRepublicsignedaridertotheconcessionagreementforthemanagementandoperationoftheTrans-Gabonrailway.Thisriderprovidesfor a Upgrade programme with investmentssharedbySETRAGandtheGaboneseRepub-lic. The execution of these investments, asregardsSETRAG’sportion,isconditionaltoob-tainingspecificfundingforwhichnegotiationwereunderwayat31 December2015.

CALL OPTIONS ON PT WEDA BAY NICKEL IN FAVOUR OF PT ANTAM

The Indonesian State company Pt Antam,whichowns10%ofPt WedaBayNickel,hasacalloptionexercisablebetweenthesubmis-siondateofafeasibilitystudybyanindepen-dentbankinginstitutionand30 dayslater.Thisoption,whichrelates to15%ofPt WedaBayNickel’s share capital,will be priced at 150%of the expenses incurred at the time of thedecisiontobeginconstruction.Pt Antamalsohasanadditionalcalloptionexercisableduringthefirst60 daysofthe14th yearofproductiononaninterestofbetweenatleastanadditional5%andthepercentagerequiredtoholdamax-imuminterestof40%.IfPt WedaBayNickel’ssharesarelisted,thepriceoftheshareholdingwill be calculated from the average marketprice for the60 daysprecedingand60 days

followingtheoptionexercise. IfPt WedaBayNickelisnotlisted,theshareholdingvaluewillbeassignedbyindependentexperts.

AGREEMENT TO INCREASE THE GABONESE REPUBLIC’S INTEREST IN COMILOG

On 20 October 2010, ERAMET and theGaboneseRepublicconcludedanagreementtostepupGabon’sinterestintheCOMILOG’scapital. Under this agreement, from 2010 to2015, ERAMET was required to transfer instagestotheGaboneseRepublicanadditionalinterest of up to 10% of COMILOG’s capital,which would have increased the GaboneseRepublic’sshareholdinginCOMILOGS.A.from25.4%to35.4%.

Thefirst transfer stage (2010-2011) involvedthe sale of a 3.54% interest in COMILOG’scapital;2.17%ofthecapitalwastransferredinDecember2010and1.37%inJune2011.

At31 December2015, the interestownedbySociété Équatoriale desMines (SEM, a Gab-onesecompany)and theCaissedesDépôtsduGabonon theonehand,andbyERAMETontheotherhand,inCOMILOG’scapitalrepre-sented28.94%and63.71%respectively.

Thisagreementhasbeenpartiallyperformedatpresent.Nobindingdeadlinehasbeenfixedforthecontinuedincreaseininterest.ERAMETisinregularcontactwiththeGaboneseRepub-liconthissubject.

14.3 CONTINGENT LIABILITIES

Contingent liabilities arise from past events that, by nature, can be solved only if one or more unpredictable future events occur or do not occur. To measure their potential impact, the ERAMET group exercises judgement to a great extent and may rely on estimated outcomes of future events.

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ASBESTOS CLASSIFICATION OF ANCIZES

In its decision of 17 November 2015, theAdministrativeappellatecourtofLyon(contra-dictorytothecourt’srulinginMay2013)ruledthatitwasnotnecessarytoaddLes Ancizestothelistofsiteswhereemployeesareentitledtothemeasurefortheperiodafter31 December1992. The dispute regarding this point isclosed,unlessafurtherappeal isfiledbytheappellants.

FORMER EMPLOYEES OF COMILOG IN CONGO

Before the Trans-Gabon railway startedoperating,COMILOGexporteditsmanganeseoreviaCongo,whereitthenemployednearly1,000 people. Following a very serious railaccidenton5 September1991intheRepublicof Congo, COMILOG’s rail shipments of orethrough this country were suspended. Thissituationshowednosignofcomingtoanend,and led to thediscontinuationofCOMILOG’soperationsintheCongoandtheseveranceofitsCongoleseemployees.

Accordingtothememorandumofunderstand-ingof19 July2003,COMILOGandtheRepub-lic of Congo had settled all past and futuredisputes,andCOMILOGhadpaidtheRepublicofCongothesumofonebilliontwohundredmillion FCFA to compensate the employeeswhoweredismissed.ThissumwasinadditiontotherealandmovableassetstransferredfreeofchargebyCOMILOG.

Consideringthatthetermsofthisagreementwereunsatisfactory,867 formeremployeesofCOMILOGinCongosummonedthreeFrenchsubsidiariesofCOMILOGtoappearon9 Octo-ber2008beforetheConciliationBoardoftheIndustrialTribunalofParis.

Aftermanyyearsofproceedings,sixapplica-tions were examined by the Paris appellatecourt which delivered six judgements on10 September 2015. Two of them werebrought before the French courts to rule ontheclaimsagainstCOMILOG.COMILOGfiledafurtherappealintheCassationcourtagainstthesetworulings.

Atthisstageintheproceedings,theERAMETgrouphasnotsetasideanyprovision.

14.4 OTHER INFORMATION

CARLO TASSARA FRANCE QUESTIONS THE TERMS OF THE SIMA SHARE CONTRIBUTION TO ERAMET IN 1999

Carlo Tassara France (or CTF, a part ofthe Romain Zaleski group) is an ERAMETshareholderowning3,394,146 shares(namely12.87%ofthecapitalat31 December2009),accordingtoanestimatebasedonthemostrecent threshold crossing declaration by thiscompany(No. 207C0134of17 January2007).

Since17 December2009,CTFhasquestionedthe terms of the SIMA share contribution toERAMETin1999.

CTFisseekingthecancellationoftheresolu-tions of the ERAMET General Shareholders’Meeting on 21 July 1999 approving thecontributionofSIMA’ssharestoERAMET,thecancellationoftheERAMETshares issuedinconsideration for said contribution and thereduction of ERAMET’s share capital by theamountofthecancelledshares,thereturnbytheholdersof thosesharesof thedividendsearned since 1999 and estimatedbyCTFat€201 million, and the return by ERAMET tosaid contributors of theSIMA shares and ofthedividendsreceivedfromSIMAsince1999.

ThoughthesummonsisnotdirectedagainstERAMEToragainstitspastorcurrentcorpo-ratebodies,itishoweverlikelythat,wereittoprevail, itwouldhaveserious implicationsforERAMET as, in particular, it would lead to asignificant reduction in its share capital andtheexitofSIMA(andhenceofAubert&Duval)fromtheGroup’sscopeofconsolidation.

CTF’sclaimswereruledinadmissibleinseveralrulingsintheperiodfrom2010to2015,owingtothestatutesoflimitation.

In the most recent ruling on 29 September2015, the appellate court dismissed CTF’sapplicationforreview.

ICPE (FACILITIES CLASSIFIED FOR ENVIRONMENTAL PROTECTION) REGULATION APPLICABLE TO THE DONIAMBO ELECTRIC POWER PLANT

ByorderofthePresidentoftheAssemblyofSouth Province, New Caledonia on 12 No-vember 2009, new, more stringent technicaldirectives regardingairborneemissionsweredeclaredapplicableatthelatestby1 Septem-ber2013inthepresentelectricpowerplantatDoniambo.This deadlinewas then extendedfourtimes.Byorderof30 December2015,thePresidentoftheAssemblyofSouthProvincefurtherextendedthedeadlinefortheapplica-tionof thenew limits forairborneemissionsup to 30 June 2016. In the first half-year of2016, Le Nickel-SLN and the SouthProvincewillexaminethemeasuresthatcanbetakenasfrom1 July2016.

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NOTE 15 FEES PAID TO THE STATUTORY AUDITORS

(€ THOUSAND)

ERNST&YOUNG KPMG DELOITTE&ASSOCIÉS OTHER TOTAL

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Statutory audit, certification, examination of individual and consolidated financial statementsERAMETS.A. 175 192 218 N/A N/A 192 - - 393 384Fullyconsolidatedsubsidiaries 1,116 1,092 849 N/A N/A 936 133 126 2,098 2,154Sub-total 1,291 1,284 1,067 - - 1,128 133 126 2,491 2,538

87% 92% 80% 59% 96% 73% 85% 73%Other work and services directly relating to the statutory auditERAMETS.A. 13 - 37 N/A N/A 330 - - 50 330Fullyconsolidatedsubsidiaries 45 9 11 N/A N/A 20 - - 56 29Sub-total 58 9 48 - - 350 - - 106 359

4% 1% 4% 18% 0% 0% 4% 10%Other services provided by the Statutory Auditors firms to fully consolidated subsidiariesLegal,taxandemployee-related 127 101 208 N/A N/A 403 2 5 337 509Other - - 3 N/A N/A 27 4 42 7 69Sub-total 127 101 211 - - 430 6 47 344 578

9% 7% 16% 23% 4% 27% 12% 17%

TOTAL 1,476 1,394 1,326 - - 1,908 139 173 2,941 3,475

Asofthereportingperiodended31 December2015,KPMGreplacedDeloitte&AssociésintheBoardofStatutoryAuditorsforERAMETS.A.anditssubsidiaries.

NOTE 16 EVENTS AFTER THE REPORTING DATEIn early January 2016, ERAMET had drawndown€980 millionon theavailablecredit fa-cilityundertheMulticurrencyRevolvingCreditFacilityAgreement,RCF.

Tothebestof theCompany’sknowledge,noothereventshaveoccurredsincethereportingdate.

NOTE 17 BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

17.1 GENERAL PRINCIPLES AND DECLARATION OF COMPLIANCE

Pursuant toEuropeanRegulation1606/2002of19 July2002ontheapplicationofinterna-tionalaccountingstandards,theconsolidatedfinancialstatementsoftheERAMETgroupforthe financial year ended 31 December 2015have been prepared in euros rounded to thenearestmillionunlessinstructedotherwise,inaccordancewithIFRS(InternationalFinancialReportingStandards)asadoptedbytheEuro-peanUnionat31 December2015.

The accounting principles applied for thepreparation of the annual consolidated

financialstatementsareinlinewithIFRSandthe related interpretationsasadoptedby theEuropean Union at 31 December 2015 andavailableonthewebsite:http://ec.europa.eu/finance/accounting/ias/index_en.htm.

Theaccountingprinciplesandmethodsadopt-edfortheconsolidatedfinancialstatementsat31 December2015arethosethatwereusedfor the consolidated financial statementsat 31 December 2014, except for the IFRSinterpretations, standards and amendmentsadopted by the European Union and IASBwhoseapplicationismandatoryforreportingperiodsopenedasfrom1 January2015(andforwhichtheERAMETgrouphadnotoptedforearlyapplication).

ThesestandardsandamendmentshavehadnoimpactontheERAMETgroup’sconsolidat-edfinancialstatementsexceptfortheIFRIC 21interpretation.

239


The first-time adoption of this interpretationhadanimpactof€1 milliononERAMETgroupequityat1 January2015.

The ERAMET group did not adopt the stan-dards, interpretations and amendments pub-lishedrespectivelybyIASBandIFRSIC(IFRSInterpretationsCommittee)whoseapplicationwasnotmandatory for the reportingperiodsopened as of 1 January 2015. These arecurrentlybeingstudiedtobeabletoestimatetheirpotentialimpact.

17.2 CONSOLIDATION PRINCIPLES AND SCOPE

CONSOLIDATION PRINCIPLES

The consolidated financial statements com-prisethefinancialstatementsofERAMETandthoseofitsfully-consolidatedandequity-con-solidatedsubsidiaries.

The subsidiaries are fully consolidated ifERAMET holds exclusive control directly orindirectly.ERAMEThasexclusivecontrolovera subsidiary when it is exposed to variablereturnsfromitsinvolvementwiththatsubsid-iaryandhastheabilitytoaffectthosereturnsthroughitspoweroverthesubsidiary.ERAMETreassessesitscontroloverasubsidiaryiffacts

andcircumstancesindicateachangeinanyoftheelementsofcontrol.

The subsidiaries are equity-consolidated ifERAMETexercisesjointcontrolorhassignif-icant influence (Note 9).Consolidationunderthe equity method consists in replacing thecarryingamountofthesharesownedinajointventureoranassociatebytheacquisitioncostofthesesharesadjustedforERAMET’sshareintheequityatthereportingdate.

Translation of foreign currency-denominated transactions and financial statements

Foreign currency transactions are translatedat the applicable exchange rate at the timeof the transaction. Foreign currency debtsand receivables aremeasuredat the closingrate. Translation adjustments resulting fromthis translationare recognised in the incomefor the period, except those involving loansandborrowingsbetween theERAMETgroupcompaniesconsideredanintegralpartofthenet investment inaforeignsubsidiary.Thesearerecogniseddirectlyinshareholders’equityunder Translation adjustments and linked totheforeignsubsidiary.

The financial statements of foreign entitieswithfunctionalcurrenciesotherthantheeurowere translated using the official exchange

ratesat31 December2015forbalancesheetitems, except for shareholders’ equity, forwhich historical rates were applied. IncomestatementitemsandStatementofcashflowsitemsare translatedat theaverage rateovertheperiod.Translationadjustmentsstemmingfrom currency fluctuations used to translateshareholders’ equity and profit (loss) for theperiod are allocated to reserves. Translationadjustmentsarecarriedasachangetoshare-holders’ equity and broken down betweenGroup and non-controlling interests. Wherea foreign subsidiary ceases to be consoli-dated, the cumulative amount of translationadjustments is recognised inNet income forthe period underOther financial income andexpenses.

Themaincurrenciesusedpreparingthecon-solidated financial statements for the 2015reporting period are as follows (conversionintoeuro):

CURRENCY/CONVERSIONRATEFOR€1

CLOSINGRATE

AVERAGERATE

Yuanrenminbi 7,0608 6,9801Norwegiankrone 9,603 8,93646

USdollar 1,0887 1,11143CFAfranc 655,957 655,957CFPfranc 119,33174 119,33174

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SCOPE OF CONSOLIDATION

(NUMBEROFCOMPANIES) 31/12/2015 31/12/2014

Fully-consolidatedcompanies 54 56Equity-consolidatedcompanies 6 6

Number of consolidated companies 60 62

Valdi,acompanyaffiliatedin2014toERAMETManganese,wassoldbyERAMETHoldingManganesetoErasteelin2015,andisaffiliatedtoERAMETAlloysasregardsoperationsasfrom1 January2015.

Thecompanieswithoutoperations—COMILOGLausanneandGuangxiCOMILOGFerroAlloys—werewoundupinthe2015reportingperiodwithoutmaterialimpactontheERAMETgroup’sconsolidatedfinancialstatements.

Allcompanieswithinthescopeofconsolidationsharethesamereportingdateof31 December.

COMPANY COUNTRYCONSOLIDATIONMETHOD

PERCENTAGE(%)

CONTROL INTEREST

ERAMET France Consolidating entity - -Nickel

Le Nickel-SLN New Caledonia Fullyconsolidated 56 56Cominc New Caledonia Fullyconsolidated 100 56Poum New Caledonia Fullyconsolidated 100 56WedaBayMineralsInc. Canada Fullyconsolidated 100 100WedaBayMineralSingaporePteLtd Singapore Fullyconsolidated 100 100StrandMineralsPteLtd Singapore Fullyconsolidated 66.6 66.6Pt WedaNickelLtd Indonesia Fullyconsolidated 90 59.94ERAMETHoldingNickel France Fullyconsolidated 100 100EurotungstènePoudres France Fullyconsolidated 100 100Manganese

ERAMETHoldingManganese France Fullyconsolidated 100 100ERAMETCOMILOGManganese France Fullyconsolidated 100 81.86ERAMETMariettaInc. UnitedStates Fullyconsolidated 100 100ERAMETNorwayA/S Norway Fullyconsolidated 100 100EralloysHoldingA/S Norway Fullyconsolidated 100 100DNNIndustrierA/S Norway Fullyconsolidated 100 100COMILOGS.A. Gabon Fullyconsolidated 63.71 63.71SETRAGS.A. Gabon Fullyconsolidated 100 63.71Somivab Gabon Fullyconsolidated 82.98 52.86COMILOGHolding France Fullyconsolidated 100 63.71COMILOGInternational France Fullyconsolidated 100 63.71PortMinéralierd’OwendoS.A. Gabon Fullyconsolidated 97.24 61.95ERACHEMCOMILOGS.A. Belgium Fullyconsolidated 100 63.71COMILOGUS UnitedStates Fullyconsolidated 100 63.71GulfChemical&MetallurgicalCorp. UnitedStates Fullyconsolidated 100 63.71BearMetallurgicalCorp. UnitedStates Fullyconsolidated 100 63.71ERACHEMCOMILOGInc. UnitedStates Fullyconsolidated 100 63.71COMILOGFrance France Fullyconsolidated 100 63.71COMILOGDunkerque France Fullyconsolidated 100 63.71ERACHEMMexicoS.A. Mexico Fullyconsolidated 100 63.71TiZirLtd UnitedKingdom Equitymethod 50 50TiZirTitanium&IronA/S Norway Equitymethod 50 50

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COMPANY COUNTRYCONSOLIDATIONMETHOD

PERCENTAGE(%)

CONTROL INTEREST

TiZirMauritiusLtd Mauritius Equitymethod 50 50GrandeCôteOpérationsS.A. Senegal Equitymethod 45 45COMILOGAsiaLtd HongKong Fullyconsolidated 100 92.74COMILOGAsiaFerroAlloysLtd HongKong Fullyconsolidated 100 92.74GuilinCOMILOGFerroAlloysLtd China Fullyconsolidated 100 92.74GuangxiERAMETCOMILOGChemicalsLtd China Fullyconsolidated 100 92.74COMILOGFarEastDevelopmentLtd HongKong Fullyconsolidated 100 92.74ERAMETCOMILOGShanghaiTradingCo.Ltd. China Fullyconsolidated 100 92.74ERAMETCOMILOGShangaiConsultancyServicesCo.Ltd China Fullyconsolidated 100 92.74Alloys

ErasteelSAS France Fullyconsolidated 100 100ErasteelChampagnole France Fullyconsolidated 100 100Valdi France Fullyconsolidated 100 100ErasteelKlosterAB Sweden Fullyconsolidated 100 100ErasteelStubsLtd UnitedKingdom Fullyconsolidated 100 100ErasteelInc. UnitedStates Fullyconsolidated 100 100ErasteelTradingLtd China Fullyconsolidated 100 100HeYeErasteelInnovativeMaterialsCoLtd China Equitymethod 49 49ERAMETHoldingAlliages France Fullyconsolidated 100 100ERAMETAlliages France Fullyconsolidated 100 100Aubert&Duval France Fullyconsolidated 100 100Interforge France Fullyconsolidated 94 94UKAD France Equitymethod 50 50Holding co. and miscellaneous

ErasS.A. Luxembourg Fullyconsolidated 100 100MetalSecurities France Fullyconsolidated 100 100MetalCurrencies France Fullyconsolidated 100 100Eramine France Fullyconsolidated 100 100BoleraMineraS.A. Argentina Fullyconsolidated 82.43 82.43EramineSudamericaS.A. Argentina Fullyconsolidated 100 100

242


NOTE 18 CROSS-REFERENCES BETWEEN THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR 2015 AND 2014

2015NOTESACCOUNTING

METHOD

ESTIMATES,ASSUMPTIONS

ANDJUDGEMENTS 2014NOTES

Note 1 Description of the ERAMET group’s business N/ANote 2 Key events in the reporting period N/ANote 3 Operational performance of Divisions and the Group—segment reporting x x Note 2Note 4 Current operating profit (loss)

Sales x Note 25Costofsalesandotherincome x x N/AAdministrativeandsellingexpenses x N/AResearch&developmentexpenditure—expensesduringtheperiod x Note 6.3Amortisationanddepreciationofnon-currentassetsandprovisionsforcontingenciesandlosses x Note 26

Note 5 Net profit (loss) Group share and Non-controlling interestCurrentoperatingprofit(loss)—Netprofit(loss)Groupsharecross-referencetable N/A

Otheroperatingincomeandexpenses x Note 27Netearningspershare x Note 30Non-controllinginterestshareinearnings—minorityinterest Note 17

Note 6 Net financial debt and Shareholder’s equityNetfinancialdebt Note 22.7Borrowings x Note 22.1—22.6Cashandcashequivalents x Note 15.2Currentfinancialassets x Note 15.1Netfinancialincome x Note 28Shareholders’equity Note 16.1

Note 7 Financial instruments and risk management x x Note 24Note 8 Working capital requirement

WCRpresentationtable N/AInventories x x Note 13Tradeandotherreceivables x x Note 14Tradeandotherpayables Note 23

Note 9 Investments Note 24Industrial capital expenditurePaymentsfornon-currentassets Note 7.3Property,plant&equipment x x Note 7Intangibleassets(includinggoodwill) x x Note 5—6Miningprojects Note 8Impairmentofassets x x Note 9Financial investmentsInvestmentsinjointventuresandassociates x x Note 10Non-currentfinancialassets x x Note 11—12

Note 10 Taxes x x Note 29Note 11 Personnel costs and employee benefits

Workforceandpersonnelcosts Note 34Employee-relatedliabilities x x Note 18Bonusshareplanandshare-basedpayments x x Note 16.2

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2015NOTESACCOUNTING

METHOD

ESTIMATES,ASSUMPTIONS

ANDJUDGEMENTS 2014NOTES

Note 12 Provisions x x Note 19Note 13 Related-party transactions x Note 33

Note 14 Off-balance sheet commitments, other commitments, contingent liabilities and other disclosuresOff-balancesheetcommitments x Note 31Othercommitments Note 32Contingentliabilities x x Note 20Otherinformation Note 36

Note 15 Fees paid to the Statutory Auditors Note 35Note 16 Events after the reporting date Note 37Note 17 Basis of preparation of consolidated financial statements

Generalprinciplesanddeclarationofcompliance x x Note 1Consolidationprinciplesandscope x x Note 1—3

Note 18 Cross-references between the Notes to the consolidated financial statements for 2015 and 2014 N/A

NOTE 19 GLOSSARYEBITDA

Earningsbeforefinancialincomeandexpens-esandotheroperatingincomeandexpenses,income tax,provisions forcontingenciesandlosses, and depreciation and amortisationof property, plant and equipment as well asintangibleassets.

Current operating profit (loss)

GroupstogetherEBITDA,amortisationofprop-erty, plant and equipment and of intangibleassetsaswellasprovisionsforcontingenciesandlosses.Thecurrentoperatingprofit(loss)excludesmaterial transactions that are con-sideredtobeunusualinnature,notablyeventsrelating to restructuring and impairmentlosses,showninOtheroperatingincomeandexpenses.

Net profit (loss), Group share

Netincomefortheperiodaftertax,attributableto ERAMET shareholders, after accountingfor thenon-controlling interest ineachof theERAMETgroup’scompanies.

OCI (Other Comprehensive Income)

Operationsforwhichthechangeinthevalueofanassetoraliabilityisrecogniseddirectlyinequitywithouttransitingthroughtheincomestatement.This is the case, for example, forunrealisedgainsorlossesonhedgingfinancialinstruments, for actuarial gains (losses) onemployeebenefits,andforcertaintranslationdifferences.

Industrial capital expenditure

Groups together payments for PP&E andintangibleassets.

Group reporting

Financial disclosures prepared for theExecutive Committee—the main operatingdecision-maker—in which the operatingperformances of joint ventures, theTiZir Ltdsub-groupandUkad,arerecognisedaccordingto the proportional consolidation method.This information that is reconciled with thepublisheddata,isusedtomeasuretheperfor-manceoftheDivisionsandtheERAMETgroup(segment-based disclosures). It is also used

for the financial disclosure of the ERAMETgroup’sperformance.

Net financial debt

Representsthegrossfinancialdebt(long-andshort-term borrowings) less cash and cashequivalents, and current financial assets.These components include the valuation ofhedgingderivatives(currencyandratehedges)fordebtandinvestments.

Gearing

Ratio of Net financial debt to total equity(Groupandnon-controllinginterest).

Financial liquidity

Itincludescashandcashequivalents,currentfinancial assets and the available amountin the credit lines provided to the ERAMETgroup’scompanies.

244


6.1.7 STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

REPORTING PERIOD ENDED 31 DECEMBER 2015

DearShareholders,

Inaccordancewith the tasksassigned tousbytheGeneralMeeting,weherebypresentourreportfortheyearended31 December2015,on:

– theauditoftheaccompanyingconsolidatedfinancialstatementsofERAMETS.A.;

– thejustificationofourassessments;and

– thespecificverificationsrequiredbylaw.

The consolidated financial statements havebeenapprovedbytheBoardofDirectors.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.

I. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We conducted our audit in accordance withthe professional standards applicable inFrance.Thesestandardsrequireustoplanandperformourauditsoastoobtainreasonableassurance that the consolidated financialstatementsarefreeofmaterialmisstatement.Anauditconsistsofexamining,bysamplingorusing other selectionmethods, the evidencesupporting the amounts and disclosurescontained in these consolidated financialstatements.Italsoinvolvesanassessmentofthe accounting principles and significant es-timatesusedandanevaluationoftheoverallpresentation of the financial statements.Webelievethatourauditprovidesasufficientandreasonablebasisforouropinion.

WecertifythatinrespectoftheIFRSsystemadopted by the European Union, the consol-

idated financial statements for the financialyear are appropriate, accurate and give atrueandfairviewof thenetassets,financialsituationandresultsofallpersonsandentitieswithinthescopeofconsolidation.

Without qualifying our opinion expressedabove,wedrawyourattention to thesectiononthe“reinforcementoftheSLNsavingsandfinancing plan” in Note 2—Key events in thereportingperiod,regardingtherisksinherenttothecontinuityofoperationsof thesubsidiaryLe Nickel-SLN and the financing of thoseoperations.

II. JUSTIFICATION OF ASSESSMENTS

PursuanttoArticleL. 823-9oftheCommercialCodegoverningthejustificationofourassess-ments,wedrawyourattentiontothefollowingmatters:

Business continuity of Le Nickel-SLN

As described in the first part of this report,Note 2—Keyevents in thereportingperiod inthenotes to theconsolidatedfinancialstate-ments details the measures implementedby the Group to ensure the continuity andfinancing of Le Nickel-SLN operations. Westudied the plannedmeasures and reviewedtheCompany’sliquidityposition.WealsotooknoteoftheassumptionsusedsoastoassessthecontinuityofLe Nickel-SLN’soperations.

Onthebasisofourauditandtheinformationgiventoustodate,andfollowingourassess-mentsoftheaccountingprinciplesfollowedbyyourCompany,webelievethatthenotestothefinancial statements adequately disclose thefinancialpositionoftheCompany.

Intangible assets and PP&E

AsstatedinNote 2—Keyeventsinthereportingperiod andNote 9—Investments, having out-linedtheimpactofthedeteriorationinmarketconditions,yourGroupaccordinglyrevisedtherecoverablevalueofcertainassetsonwhichimpairmentlosseshadbeenrecognised.Thisnote also specifies the indeterminate natureof the assumptions made, and as a result,the future outcomes may differ from theseestimates.

We also reviewed the methods and proce-duresforimplementingimpairmenttestingongoodwillandotherlong-termassetsdescribedinNote 9,aswellastheprojectedcashflowsandtheconsistencywiththeforward-lookingdataintheassumptionsusedbyyourGroup.Weascertainedthattheinformationcontainedthereinprovidesadequatedisclosureandver-ifiedthereasonablenatureofthesemethodsandprocedures.

Provisions

AsstatedinNote 12—Provisionsinthenotesto the financial statements, your Grouprequired to perform estimates and to makeassumptions regardingprovisions forcontin-genciesandlossesandinparticularregardingthe provisions for the restoration of miningsites and for dismantling. This note outlinesthesensitivitytotheassumptionsusedandtothediscountrates.

Ourworkconsistedinappraisingtheassess-mentmethodsandproceduresusedandthedocumentationprovided.Itwasonthatbasisthatweappraisedthereasonablenatureoftheestimatesandre-examinedthemethodsandproceduresdescribedinthisNote.

245


The assessments we made are part of ourauditoftheconsolidatedfinancialstatementsasawholeandhavethereforecontributedtoouropinionexpressed inthefirstpartof thisreport.

III. SPECIFIC VERIFICATION

In accordance with professional standardsapplicable in France, we also performed thespecific verifications required by law of thedisclosures relating to Group given in themanagementreport.

Except for the probable impact of the factsoutlined in the first part of this report, wehavenoqualification tomakeregarding theiraccuracyorconsistencywiththeconsolidatedfinancialstatements.

ParisLaDéfense,18 February2016KPMGAudit Ernst&YoungAudit

Division of KPMG S.A.DenisMarangé Jean-RochVaron

Partner Partner

246

Financial statements / 2015 Separate financial statements

6.2 2015 SEPARATE FINANCIAL STATEMENTS6.2.1 INCOME STATEMENT(€ THOUSAND) NOTES FY2015 FY2014

Operating incomeSalesofgoodsandmerchandise 553,245 708,468Incomefromancillaryactivities 72,987 71,424Sales 5.1 626,232 779,892Changeininventoriesoffinishedproductsandworkin-progress 952 885Capitalisedproduction 54 603Operatingsubsidies 294 4Reversalofprovisions,excessdepreciation&amortisation,expensetransfers 16,966 12,741

Otherincome 1 36Other income 18,267 14,267

TOTAL INCOME 644,499 794,159Operating expensesPurchasesofgoods 421,809 564,421Changeininventory(merchandise) 12,835 (7,598)Rawmaterialsandothersuppliespurchased 69,857 121,995Changeininventory(rawmaterialsandsupplies) 1,064 (10,106)Externalpurchasesandexpenses 96,658 96,072Taxesotherthanonincome 3,487 4,093Wagesandsalaries 32,600 31,655Payrollcharges 11,054 25,177Depreciationandamortisationcharges 13,952 9,468Provisionsforlossesoncurrentassets 14,450 4,841Provisionsforcontingenciesandlosses 16,833 12,310Otherexpenses 1,967 2,319

TOTAL EXPENSES 696,568 854,647Operating profit (loss) (52,069) (60,498)Net financial income 5.4 (265,623) 12,271Profit (loss) before tax and extraordinary items (317,692) (48,227)Extraordinaryitems 5.5 (13,164) (23,744)Employeeprofit-sharing&incentives (1,475)Incometax 5.2 (659) 2,897

PROFIT (LOSS) FOR THE PERIOD (331,516) (70,550)

247


6.2.2 BALANCE SHEET

ASSETS

(€ THOUSAND) NOTESGROSS

AMOUNT

DEPRECIATION,AMORTISATIONAND

PROVISIONS31/12/2015

NETAMOUNT31/12/2014

NETAMOUNT

Intangible assetsPatents,rightsandsimilarassets 19,662 16,140 3,522 1,806Assetsunderconstruction 19,217 18,555 663 21,965Intangible assets 38,879 34,695 4,185 23,772Property, plant & equipmentLand 1,131 1,131 1,131Buildings 26,592 21,844 4,748 6,089Technicalinstallations,machineryandequipment 71,835 64,639 7,197 14,121Other 13,172 10,689 2,483 3,364Assetsunderconstruction 2,129 2,129 468Downpayments 11 11 0Property, plant & equipment 114,870 97,172 17,698 25,173Non-current financial assetsInvestmentsinassociates 1,638,589 537,598 1,100,991 1,106,711Receivablesoninvestmentsinassociates 4.2 1,501,736 476,051 1,025,685 1,263,804Othercapitalisedinvestments 23,475 20,154 3,320 6,968Other 9,106 9,106 11,440Non-current financial assets 3,172,906 1,033,803 2,139,103 2,388,923

Non-current assets 4.1 3,326,655 1,165,670 2,160,985 2,437,867Inventories and work-in-progressRawmaterialsandothersupplies 27,444 19,010 8,434 39,905Work-in-progress 9,083 9,083 10,622Semi-finishedandfinishedproducts 15,312 90 15,221 12,821Merchandise 27,179 27,179 28,370Inventories and work-in-progress 4.7 79,018 19,100 59,917 91,718Down payments made on orders 2,156 2,156 336Operating receivablesTradereceivables 65,471 835 64,636 73,471Otherreceivables 91,969 20,179 71,790 75,734Operating receivables 4.2 & 4.7 157,440 21,014 136,426 149,205Inter-company current accounts 0 0

Cash & cash equivalents 4.3 39,705 39,705 60,594Accruals 4.4 10,619 10,619 13,427Prepaidexpenses 5,427 5,427 5,588Deferreddebtissuecosts 5,193 5,193 7,839Bondredemptionpremiums 0 0Translationadjustmentlosses 0 0

Current assets 288,938 40,114 248,823 315,280

TOTAL ASSETS 3,615,593 1,205,784 2,409,809 2,753,148

248


LIABILITIES

(€ THOUSAND) NOTES 31/12/2015 31/12/2014

Sharecapital 80,957 80,957Issue,mergerandcontributionpremiums 373,337 373,337Legalreserve 8,096 8,096Otherreserves 253,839 253,839Retainedearnings 825,410 895,960Profit(loss)fortheperiod (331,516) (70,550)Net equity 4.5 1,210,122 1,541,638Regulatedprovisions 4.8 31,718 48,155Shareholders’ equity 1,241,840 1,589,793Provisionsforcontingencies 11,004 14,467Provisionsforlosses 18,370 16,467Provisions for contingencies and losses 4.8 29,374 30,935Bondissues 632,275 632,254Borrowingsfromandpayablestocreditinstitutions 234,442 255,515Miscellaneousborrowings 460Inter-companycurrentaccounts 137,183 96,228Long-term borrowings 1,003,900 984,457Down payments received on current orders 99 7,140Tradepayables 63,315 95,800Taxandpayrollliabilities 17,632 17,219Operating payables 80,947 113,019Liabilitiesonnon-currentassetsandrelatedpayables 283 1,664Otherliabilities 53,366 26,140Miscellaneous liabilities 53,649 27,804Liabilities 4.10&4.11 1,138,595 1,132,420

TOTAL LIABILITIES 2,409,809 2,753,148

249


6.2.3 STATEMENT OF CASH FLOWS(€ THOUSAND) FY2015 FY2014

Operating activitiesProfit(loss)fortheperiod (331,516) (70,550)Eliminationofnon-cashandnon-operatingincomeandexpenses 279,497 76,289Cash generated from operations (52,019) 5,739Changeinoperatingworkingcapitalrequirement 39,895 (38,362)Net cash generated by operating activities (12,124) (32,623)Cash flows from investing activitiesNetpaymentsfornon-currentfinancialassets (82,152) (7,146)Paymentsfornon-currentintangibleassets,PP&E (5,202) (8,811)Proceedsfromnon-currentassetdisposals 1,248 36,030DebtrepaymentsChangeinotherreceivablesanddebts (10,240) (4,606)Net cash used in investing activities (96,346) 15,467Cash flows from financing activitiesDividendspaidtoERAMETS.A.shareholders - -Sharecapitalincreases - -Changeinworkingcapitalrequirementfromfinancingactivities - -Net cash used in financing activities - -

Increase (decrease) in net cash (108,470) (17,156)Net cash (borrowings) at beginning of period 646,009 663,166

Net cash (borrowings) at period-end 537,539 646,009

250


250 NOTE 1 DESCRIPTIONOF BUSINESS250 NOTE 2 KEYEVENTSINTHE

REPORTINGPERIOD251 NOTE 3 ACCOUNTINGPRINCIPLES,

METHODSANDRULES253 NOTE 4 NOTESTOTHEBALANCE

SHEET261 NOTE 5 NOTESTOTHEINCOME

STATEMENT

264 NOTE 6 OFF-BALANCESHEETCOMMITMENTS

264 NOTE 7 RISKMANAGEMENT265 NOTE 8 CONSOLIDATIONOFTHE

SEPARATEFINANCIALSTATEMENTS265 NOTE 9 COMPENSATIONOF

MANAGEMENTANDSUPERVISORYBODIES

265 NOTE 10 BONUSSHAREAWARDPLAN

266 NOTE 11 OTHERDISCLOSURES266 NOTE 12 EVENTSAFTERTHE

REPORTINGDATE267 NOTE 13 TABLEOFSUBSIDIARIESAND

EQUITYINVESTMENTS

6.2.4 NOTES TO THE SEPARATE FINANCIAL STATEMENTS

NOTE 1 DESCRIPTION OF BUSINESSThe ERAMET group is one of the world’slargestproducersof:

– alloy metals, especially manganese andnickel, which are employed to boost thepropertiesofsteel;

– high-performance special steels and alloys usedbyindustriessuchastheaeronauticalsector,theenergyproductionsectorandthetoolingindustry.

TheparentcompanyERAMETS.A.operation-allygroupstogethertwomainfunctions:

– a pure holding company called ERAMETHolding bringing together the varioussupport departments such as GeneralManagement, Administration & Finance,Human Resources, Communications andSustainable Development, Legal Affairs,Purchasing, Information Systems, andthe Strategy, Development and InnovationDepartment;and

– a section of the Nickel Division (GeneralManagement,andtheSalesandMarketingDepartments).

The costs of these various departments arebilledbackto thethreeDivisionsunderman-agement fee contracts. The other operatingcostsrelatingtoNickelaredirectlyallocatedtotheNickelDivision.

ERAMETalsohasdirectly-ownedsubsidiaries,actingonbehalfofthevariousentitiesoroftheparentcompany.Theseare:

– ERAMETServices:companythatgroupsto-getherthepayrollaccountingandITsupportfunctionsoftheGroup’sFrenchcompanies;

– ERAMETResearch:ERAMET’sresearchcen-trethathandlesresearchanddevelopment;

– ERAMET Ingénierie: project and technolo-giesengineeringcompany;

– ERAMET International: a company thatgroupstogethertheERAMETsalesnetworkfor certain activities of the threeDivisions.ERAMET International has subsidiaries orbranchesacross theglobe. ERAMET Inter-nationalisgenerallypaidforitsworkunderagencyagreements;

– MetalSecurities:theGroup’streasuryman-agementcompanywhichpoolsthesurpluscash and short-term funding requirementsoftheGroupasawhole;

– Metal Currencies: the Group’s foreignexchange management company, whichhandlesthecurrencyhedgingoperationsfortheGroupasawhole;

– ERAS:areinsurancecompany;

– ERAMINE: a company engaged in lithiumdevelopment;

– SialeO:acompanyengagedinthedevelop-mentofsea-floormetals.

NOTE 2 KEY EVENTS IN THE REPORTING PERIODWorsening of market conditions—Group’s major projects suspended

Giventheglobalenvironmentinwhichmetalsareata15-yearlow,theERAMETgroupispar-ticularlyaffectedbythenickelandmanganesepricesthatsimultaneouslyhittheirall-timelow.

TheGroup’sBoardofDirectorsof14 October2015 decided to reinforce the operationalactionplantoimprovecashflow:

– limit capital investments to only safetyconcernsandmaintenanceofequipment;

– suspendmajorGroupprojects;

– continue to implement the ongoing assetdisposalprogramme;

– continue to strictly follow the 2014-2017plantocutcostsandimproveproductivity.

Sharp decline in net financial income following the write-down of shares and impairment of attached receivables

The highly negative net financial incomestoodat-€266 millionafterthewrite-downofsharestoreflectthedecrease inthevalueofinvestmentsinsubsidiariestoaccountforthedifficult market conditions, notably Erasteeland Eralloys, as well as the impairment ofattached receivables relating notably to thesubsidiaryStrand(NickelprojectinIndonesia)followingthedecisiontosuspendtheproject.

251


Arrangement of a loan to SLN

On23 December2015,ERAMETgrantedSLNa loan of €120 million, expiring on 31 May2016.€45 millionofthisloanhadbeenutilisedat31 December2015.Thetotalloanamountwasraisedfrom€120 millionto€150 millionfollowingthedecisionoftheERAMETBoardofDirectorson17 February2016.

Asnickelprices remained low right from thebeginningof the year 2016, SLNsteppedupitssavingsplanandwillputbefore itsBoardofDirectorsinend-April2016,aplantoadapttotheeconomicclimateinordertoensureitsbusiness continuity and the financing of itsoperations under that plan. ERAMET’sBoardof Directors will also give its opinion on theplanatthatdate.

Continuation of the Optimum project

In2015, theOptimumprojectaimedatstep-pingup theproductivityofsupport functionswaspursued.Aninitialplan,providedforsince2014,isbeingimplementedatpresent.

ThesharedservicescentrebasedinClermontFerrand that groups together the payrollaccountingandITsupportfunctionsisopera-tionalasofQ42015.

NOTE 3 ACCOUNTING PRINCIPLES, METHODS AND RULESERAMETS.A.’sfinancialstatementsat31 De-cember2015wereapprovedbytheBoardofDirectorson17 February2016.

3.1 OVERVIEW OF THE PRINCIPLES

The financial statements were prepared inaccordancewiththestipulationsofRegulation2014-09 of ANC, the accounting standardsauthority, approved by the ministerial orderof8 September2014intheGeneralChartofAccounts.

Generallyacceptedaccountingprincipleswereapplied,whilecomplyingwiththeprincipleofprudence based on the underlying assump-

tions, i.e. going concern, consistency of ac-countingmethodsfromoneperiodtoanother,application of thematching principle, and inlinewiththerulesforpreparingandpresentingseparatefinancialstatements.

Thehistoricalcostmethodisthebasicmethodusedtomeasureaccountingitems.

3.2 CHANGE IN METHODS

There has been no change inmethod com-paredto31 December2014.

3.3 RULES AND METHODS APPLIED TO THE VARIOUS BALANCE SHEET AND INCOME STATEMENT LINE ITEMS

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

The gross amount of non-current assets istheamountatwhichtheitemswerefirstrec-ognisedintheCompany’sbalancesheetandincludesanyexpensesrequiredtomakethemoperational. Unused assets or assetswhosefair market value is lower than the carryingamountaregenerallyimpairedthroughnon-re-curringdepreciationexpenseorbychargingtoprovisions.

Economically justified depreciation is cal-culated using the straight-line method. Thisdepreciationiscalculatedovertheanticipatedlifeoftheassets.

The useful lives in depreciation periods forproperty,plantandequipmentareasfollows,apartfromexceptionalcases:

– Buildings:20-30 years;

– Technicalinstallations:12-20 years;

– Machinery,equipment andtooling:3-10 years;

– Generalinstallations,fittings andfixtures:5-10 years;

– Transportationequipment:5-8 years;

– Officefurnitureandequipment, computerhardware:3-8 years.

The impact of any difference between thestraight-line and declining balance depre-ciation methods is recognised via excessdepreciation.


As from 1 January 2006, the gross amountof non-current financial assets includes thepurchase cost less incidental expenses.Bor-rowingsarerecognisedattheirnominalvalue.At the endof the reportingperiod, securitiesareestimatedattheirvalueinuse,whichtakesaccountofboththeirnetassetvalueandthelikelyreturns.Ifthevalueinuseislowerthanthe gross amount, an impairment loss isrecognisedforthedifferencebetweenthetwovalues.

DEVELOPMENT PROJECTS IN PROGRESS

Asarule,developmentprojectsareinitiatedbyERAMETas theholdingcompany.Thecostsincurred on these projects are recognisedeitherasNon-currentfinancialassetsorasas-setsiftheyaretobebilledbacktotheDivisionsor theGroup’s subsidiaries, or are expensed.For acquisitions, those costs are included inthe value of the shares. If the developmentprojectsarenotsuccessful,theircostsareim-pairedorbookedundernon-recurringlosses.

INVENTORIES

Inventoriesofnickeliferousproductsaremea-suredatcost,calculatedonafirst-in-first-out(FIFO) basis. If the value therebyobtained isgreaterthanthenetrealisablevalue(i.e.sellingprice less selling expenses), a provision isrecognisedforthedifference.

Consumablesaremeasuredatcost,whichiscalculated using the weighted average pricemethod.

Spareparts inventoriesare fully impaired forany itemwhosequantity exceedsone year’ssupply.

252


RECEIVABLES AND PAYABLES

Foreign currency receivables and payablesare remeasured at the closing rate or at theforwardhedgingrate,asappropriate.

Unrealised losses or gains on foreign ex-change arising from re-measurement at theforwardhedging rate or,where unhedged, attheclosing rate,are recognisedasexchangelossesorgainsintheincomestatement.

Impairment losses on trade receivables aremeasured for each customer individually,basedontheestimatedrisk.

INVESTMENT SECURITIES

Investmentsecuritiesaremeasuredatacquisi-tioncost,withanimpairmentlossrecognisediftheirnetassetvalue(closingprice)islower.Unrealisedcapitalgainsarenotrecognised.

PROVISIONS FOR CONTINGENCIES AND LOSSES

Provisions are recorded,where their amountcanbereliablyestimated,tocoverallliabilitiesarisingfrompasteventsthatareknownatthereporting date and the settlement of whichis likely to result in an outflow of resourcesrepresenting economic benefits in order tosettletheliability.

EMPLOYEE INDEMNITIES AND BENEFITS

ERAMET offers its employees various long-term benefits such as retirement packagesand other additional post-employment bene-fitsandlong-servicebonuses.

Someliabilitiesarewhollyorpartlycoveredbycontractstakenoutwithinsurancecompanies.Inthiscase,theliabilitiesandhedgingassets

are measured independently. A provision isthen made on the basis of the amount offinancialassetsandliabilities.

ERAMET’sliabilitiesareappraisedbyindepen-dent actuaries. The actuarial assumptionsused(likelihoodofworkingemployeesstayingwith ERAMET, mortality tables, retirementage, salary trends, etc.) vary according tothe prevailing demographic and economicconditions in thecountry.Thediscount ratesused are based on the rate of governmentbondsorbondsofblue-chipcompanieswithamaturityequivalenttothatoftheliabilitiesonthemeasurementdate.

The expected long-term return on assetswascalculatedbytakingthestructureof theinvestmentportfoliointoaccount.

Thefollowingactuarialassumptionsareusedformeasurement:

2015 2014

Discountrate 2.00% 2.20%Inflationrate 1.90% 1.80%Rateofincreaseinsalaries

Inflation+1.00%

3.00%-3.75%

Returnonplanfinancialassets 2.00% 2.20%

EMPLOYEE BONUS SHARE PLAN

TheCompanyhaseightongoingbonusshareplans:

– twoplansapprovedby theBoardofDirec-tors’meetingof15 February2012for28,620and89,720 shares;

– twoplansapprovedby theBoardofDirec-tors’meetingof21 March2013for28,706and144,840 shares;



The corresponding provision was measuredon the basis of the value of treasury shares(95,057 shares)andthestockpriceon31 De-cember2015(for346,134 shares).

Theprovisionwasstaggeredoverthevestingperiod (two or four years depending on theplan)fortheERAMETS.A.staff.Fortheotherbeneficiaries(outsideERAMETS.A.),theprovi-sionismadeasoftheplanawarddate.

Sharesunderthedemocraticplanof21 March2013 and the selective plan of 15 February2012 issued to the employees of Frenchcompanies inMarch 2015 respectively werefullyvested.

SALES

Salesconsistofthefollowing:

– ferro-nickelsales(purchaseandsaleofSLNproducts);

– nickel salts (produced at the Sandouvilleplant);

– provision of services and re-invoicing ofsharedexpenses.

Income is recognised as revenue once theCompany has transferred to the buyer themainrisksandbenefitsinherenttoownershipofthegoods.

253


NOTE 4 NOTES TO THE BALANCE SHEET

4.1 NON-CURRENT ASSETS AND DEPRECIATION

INTANGIBLE ASSETS

(€ THOUSAND)ACQUISITIONVALUES

31/12/2014 ACQUISITIONS

DISPOSALS,RETIREMENTSAND

ADJUSTMENTSACQUISITIONVALUES

31/12/2015

Patents,rightsandsimilarassets 14,805 5,693 (836) 19,662Non-currentassetsinprogress(1) 21,965 2,845 (5,593) 19,217

TOTAL 36,771 8,538 (6,429) 38,879

Theincreaseinpatentsandlicencesismainlyduetothedeploymentofthenewmanagementsoftware(ERP)asof1 January2015amountingto€3.18 million.

(€THOUSAND)

DEPRECIATION,AMORTISATION

ANDPROVISIONSAT31/12/2014


ANDPROVISIONS

REVERSALSOFDEPRECIATION,AMORTISATION

ANDPROVISIONS


ADJUSTMENTS


ANDPROVISIONSAT31/12/2015

CARRYINGAMOUNTSAT31/12/2015

Concessions,patents,licences,trademarks,processes,rightsandsimilarassets

12,999 3,141 16,140 3,522

Assetsunderconstruction 0 18,555 18,555 663

TOTAL 12,999 21,696 0 0 34,695 4,185

Theassetsunderconstructionrelatingtothedevelopmentofhydrometallurgicaltechnology(€18.5 millionat31 December2015)werefullyimpairedfollowingthedecisiontoputtheWedaBayprojectinIndonesiaonhold,for€18.5 million.

PROPERTY, PLANT AND EQUIPMENT





31/12/2015

Land 1,131 1,131Buildings 26,592 26,592Technicalinstallations,machinery(2)andequipment 71,759 76 71,835Other 14,321 509 (1,658) 13,172Assetsunderconstruction 468 2,256 (584) 2,139

TOTAL 114,271 2,841 (2,242) 114,870

254


(€ THOUSAND)


ANDPROVISIONSAT 31/12/2014


AND PROVISIONS


AND PROVISIONS


ADJUSTMENTS



CARRYINGAMOUNTS

AT 31/12/2015

Land - 0 1,131Buildings 20,503 1,341 21,844 4,748Technicalinstallations,machineryandequipment

57,638 7,086 (85) 64,639 7,197

Other 10,957 977 (1,245) 10,689 2,483Assetsunderconstruction - 0 2,139

TOTAL 89,098 9,403 (85) (1,245) 97,172 17,698

Oldcomputerhardwareamountingto€1.2 millionwasscrapped.






31/12/2015

Investmentsinassociates 1,557,049 81,540 1,638,589Receivablesoninvestmentsinassociates 1,569,873 138,092 (206,229) 1,501,736Othercapitalisedinvestments(3) 33,319 1,307 (11,152) 23,474Other 11,440 612 (2,945) 9,107

TOTAL 3,171,681 221,551 (220,326) 3,172,906

The increase in “Investments in associates”is mainly due to the capital increase of€80 millioninErasteeltooffsetaclaimonthatcompany.

The change in Receivables on investmentsinassociatesismainlyduetotheincreaseinthe loan toCOMILOGFar East Developmentamountingto€46 million,thenew€45 million

loan granted to Société Le Nickel, and theincreaseintheTiZirloanincludingcapitalisedinteresttotalling€15.3 million.

The “Other capitalised investments” lineitemrelates to treasuryshares.The increaserelatestotheacquisitionofsharesundertheprice support agreement for €1.3 million.The decrease results from the bonus share

awards to employees in the French andforeigncompaniesunder the2011and2012selectiveplansandthe2012,2013and2014democraticplans.

The shares acquired as part of the buybackinstructions (balance of 95,057 shares at31 December2015)areintendedtobedistrib-utedunderbonusshareplans.

(€ THOUSAND)




AND PROVISIONS


AND PROVISIONS


ADJUSTMENTS



CARRYINGAMOUNTS

AT 31/12/2015

Investmentsinassociates 450,338 87,260 0 537,598 1,100,991

Receivablesoninvestmentsinassociates

306,068 169,982 0 476,050 1,025,686

Othercapitalisedinvestments 26,352 4,955 (79) (11,073) 20,155 3,319

Other 0 0 0 9,107

TOTAL 782,758 262,197 (79) (11,073) 1,033,803 2,139,103

ProvisionsweresetasidefortheimpairmentlossesonequityinvestmentsforErasteelshares(€39.7 million)andEralloysHoldingshares(€47.6 million).

255


ProvisionsforimpairmentofreceivablesattachedtoequityinvestmentsweresetasidefortheStrandMineralsPte.Ltdloanrepresenting-€99.1 million,fortheCOMILOGFarEastDevelopmentloan-€65.2 millionandtheEramineloan-€5.6 milliontotakethefinancialsituationofthosecompaniesintoconsideration.

Thesharesheldinconnectionwiththepricesupportagreement,amountingto€10.6 millionwerewrittendown€7.4 millionbasedontheclosingprice.

4.2 SCHEDULE OF RECEIVABLES

(€ THOUSAND)GROSSAMOUNT

31/12/2015 1 YEARORLESS OVER1 YEARREMINDER31/12/2014

Receivablesoninvestmentsinassociates(1) 1,501,736 528,112 973,624 1,569,873Pensionplanassets(2) 536 536 1,638Otherlong-terminvestments 8,570 8,570 9,802Tradereceivables 65,471 63,918 1,553 74,306Otherreceivables(3) 91,969 91,969 90,992Prepaidexpenses 5,427 5,399 28 5,588

TOTAL 1,673,709 697,968 975,741 1,752,198(1) Receivables on investments in companies: loans to Group companies:

(€ THOUSAND) 31/12/2015 31/12/2014

StrandMineralsLtd/WedaBayMineralsSingapore 448,724 436,278EHA(2014)—Aubert&Duval(2015)(4) 253,000 251,970ErasteelSAS 80,000 128,423CFED 108,297 58,976ERAMETResearch 0 30EramineSAS 10,197 4,569MetalSecurities 457,915 615,691TiZir 98,602 73,936SLN 45,000 0

TOTAL 1,501,736 1,569,873(2) Excess contribution to defined benefit supplementary pension plan.(3) Other receivables include, among others, a receivable net of tax from the companies of €48.4 million connected with tax consolidation, and profit-sharing based on the performance of Metal Currencies amounting to €8.3 million.(4) The claim held by ERAMET Holding Alliages (EHA) was transferred to Aubert & Duval (within the Alloys Division) under an agreement signed on 27 October 2015.

4.3 CASH & CASH EQUIVALENTS

Cash&cashequivalentscomprisemarketablesecuritiesamountingto€38.2 millionanddebitbankaccountstotalling€1.5 million.

4.4 PREPAID EXPENSES AND ACCRUED INCOME

(€ THOUSAND) 31/12/2015 31/12/2014

Prepaidexpenses(1) 5,426 5,588Deferreddebtissuecosts(2) 5,193 7,839

TOTAL 10,619 13,427(1) Prepaid insurance premiums totalled €2.7 million (compared with €2.4 million at 31 December 2014) with interest on bank borrowings.(2) Debt issue costs (syndicated loan, bond issue, Schuldschein, borrowing base) staggered over the repayment period of the borrowing.

256


4.5 NET EQUITY

Thesharecapitalbreaksdownasfollows:

BREAKDOWN

FY2015 FY2014

SHARECAPITAL VOTINGRIGHTS SHARECAPITAL VOTINGRIGHTS

%NUMBER

OF SHARES %NUMBER

OF SHARES %NUMBER

OF SHARES %NUMBER

OF SHARES

Registered shares

SORAMEandCompagnied’ÉtudesIndustriellesduRouvray(CEIR)

37.06 9,835,834 44.17 19,671,668 37.06 9,835,834 44.18 19,671,668

FSIEquation(subsidi-aryofBpifrance) 25.66 6,810,317 30.58 13,620,634 25.66 6,810,317 30.59 13,620,634

S.T.C.P.I. 4.03 1,070,587 4.81 2,141,173 4.03 1,070,587 4.81 2,141,173ERAMETS.A. 0.82 218,276 - - 0.87 230,051 - -Sharefund ERAMETS.A. 0.20 52,373 0.24 104,746 0.20 52,373 0.24 104,746

Other 32.23 8,555,831 20.20 8,995,747 32.19 8,544,056 20.18 8,985,301

TOTAL NUMBER OF SHARES 100.00 26,543,218 100.00 44,533,968 100.00 26,543,218 100.00 44,523,522

of which, registered shares 69.27 18,387,508 82.03 36,531,116 69.51 18,449,298 82.02 36,519,203

of which, bearer shares 30.73 8,155,710 17.97 8,002,852 30.49 8,093,920 17.98 8,004,319


– aconcertsub-groupcomprisedofSORAMEand CEIR, companies controlled by the

Duval family, pursuant to a simultaneousshareholders’ agreement of 19 July 1999,thatcameintoeffecton21 July1999,andwasamendedbyarideron13 July2009;

– Bpifrance (public investment bank), via itssubsidiaryFSIEquation.

The provisions of the above shareholders’agreementandoftheconcertsub-groupcanbefoundinthemainextractsofthetextsofthe

AMFdecisionandnotificationNo. 212C0647andNo. 209C1013(riderof13 July2009).

Since 1 January 2002, registered sharesmeetingtherequiredconditionshavequalifiedfordoublevotingrights.

ERAMET’s distributable reserves amountedto €1,452 million prior to the allocation of2015earnings(€1,523 millionat31 December2014).

(€ THOUSAND)NUMBEROF

SHARESSHARE

CAPITAL

PREMIUMS,RESERVESAND

RETAINEDEARNINGSPROFIT(LOSS)

FORTHEPERIOD TOTAL

Net equity at 31 December 2013 26,543,218 80,957 1,664,238 (133,006) 1,612,188Profit(Loss)forthe2014financialyear (70,550) (70,550)

Net equity at 31 December 2014 26,543,218 80,957 1,664,238 (203,556) 1,541,638Profit(Loss)forthe2015financialyear (331,516) (331,516)

Net equity at 31 December 2015 26,543,218 80,957 1,664,238 (535,072) 1,210,123

Thesharecapitaliscomprisedof26,543,218fullypaid-upordinaryshares(26,543,218 ordinarysharesat31 December2015)withaparvalueof€3.05.

257


4.6 TREASURY SHARES

Thetablebelowsummarisesthetreasurysharetransactions:

PRICESUPPORTAWARDSTOEMPLOYEES TOTAL

Position at 31 December 2013 106,952 177,909 284,861As a percentage of share capital 26,543,218 0.40% 0.67% 1.07%Bonusshareawards• Bonussharegrants (37,459) (37,459)Purchases 232,759 232,759Sales (250,110) (250,110)Position at 31 December 2014 89,601 140,450 230,051As a percentage of share capital 26,543,218 0.34% 0.53% 0.87%Bonusshareawards• Bonussharegrants (45,393) (45,393)Purchases 218,088 218,088Sales (184,470) (184,470)Position at 31 December 2015 123,219 95,057 218,276As a percentage of share capital 26,543,218 0.46% 0.36% 0.82%

Thebalanceof218,276 sharescorrespondsto:

– thesharespurchasedunderthesharepricesupportagreementwithExaneBNPParibasandnotyetregisteredatthedateofdrawingupthetable;

– sharesintendedtobeawardedunderthebonusshareplans.

4.7 PROVISIONS FOR IMPAIRMENT OF CURRENT ASSETS

(€ THOUSAND) 31/12/2014 ADDITIONS REVERSALS 31/12/2015

Rawmaterialsandothersupplies(1) 4,840 14,360 (190) 19,010Tradereceivables 835 835Miscellaneousreceivables(2) 15,257 4,921 20,179

TOTAL 20,933 19,281 (190) 40,023(1) Full provisions are made for items in spare parts inventories whose rotation exceeds one year’s supply. Reversals of provisions relate to the end of the treatment works for the Sandouville plant channel.A provision of €14.3 million was set aside for impairment losses on inventory.(2) The additions to provisions are recognised mainly in the expenses recorded under Other receivables on the Lithium exploration and operation project.

258


4.8 PROVISIONS IN LIABILITIES

(€ THOUSAND)

31/12/2014 ADDITIONS REVERSALSRECLASSIFICA-

TION 31/12/2015

USEDINPERIOD

UNUSEDINPERIOD

Provisionsforpriceincreases 32,836 (16,336) 16,500Extraordinaryamortisationanddepreci-ation(2) 15,319 137 (238) 15,218

Total regulated provisions 48,155 137 (16,574) 0 0 31,718ForeigncurrencylossesEmployees(1) 15,613 8,762 (5,012) (1,102) 18,261Environment(2) 804 9 (804) 9Segment-basedcontingencies 0 0Taxes 0 0Otherprovisionsforcontingencies(3) 636 1,066 1,702Otherprovisionsforlosses(4) 13,882 2,000 (17,553) 11,073 9,402Total provisions for contingencies and charges 30,935 11,837 (23,369) 0 9,971 29,374

Provisions for liabilities 79,090 11,974 (39,943) 0 9,971 61,092(1) ERAMET makes provisions for pension and related liabilities on the basis of the actuarial appraisal by an outside firm. Detailed calculations were carried out at 31 December 2015. The excess payment of defined benefit supplementary pension plan contributions was reclassified under other non-current financial assets.The pension and related liabilities balance stood at €11.6 million at 31 December 2015. This balance also includes a provision for restructuring amounting to €6.6 million.(2) Reversal of the provision to clear the drainage channel at the Sandouville plant before its sale back to Port autonome du Havre (Le Havre Port Authority).(3) The provision for financial contingencies mainly relates to the potential loss on the Metal Securities bond portfolio secured by ERAMET.(4) A provision of €2 million was set aside for expenses relating to the discontinuation of the pilot developed for the Maboumine project.The reversals and reclassifications relate to the Bonus share award plans.

The€11.091 millionbalancebreaksdownintoa-€11.627 millionprovisionforcontingenciesandlosses,andpensionplanassetsof€536 thousandinERAMETS.A.’sbalancesheetat31 December2015.

4.9 EMPLOYEE-RELATED LIABILITIES

RETIREMENT LIABILITIES

As of 31/12/2015

(€ THOUSAND)ACTUARIALVALUE

OFLIABILITIESFAIRVALUEOFPLAN

ASSETSFINANCIALPOSITIONSURPLUS/(DEFICIT)

Retirementbenefits 85,398 (55,673) 29,725Retirementpackage 6,236 (2,447) 3,789Long-servicebonusesandawards 3,339 - 3,339Healthcareplans 5,625 - 5,625

TOTAL 100,598 (58,120) 42,478

(€)

UNRECOGNISEDACTUARIAL(GAINS)/

LOSSESUNRECOGNISEDPAST

SERVICES

BALANCESHEETPROVISION(ASSETS)/

LIABILITIES

Retirementbenefits (22,636) (4,062) 3,027Retirementpackage (2,338) (858) 593Long-servicebonusesandawards - - 3,339Healthcareplans (539) (954) 4,132

TOTAL (25,513) (5,874) 11,091

259


Actuarial assumptions

(€)

UNRECOGNISEDACTUARIAL(GAINS)/

LOSSESUNRECOGNISEDPAST

SERVICES

BALANCESHEETPROVISION(ASSETS)/

LIABILITIES

Discountrate 2.00%Inflationrate 1.90%Salaryincreaserate 3%Returnonplanfinancialassets 2.00%

Breakdown of pension fund investments

(€)INSURANCECONTRACT

OTHERINVESTMENTS TOTAL

Amount 55,673 2,447 58,120Percentage 95.8% 4.2% 100%

Change in pension liabilities

(€) FY2015

At beginning of period 7,061Expensesrecognised 4,927• servicecost 3,498• amortisationofactuarialgains(losses)andpastservicecost 1,506• interestexpenses 1,681• returnonplanassets (1,758)Contributionsandbenefitspaid (897)

At period end 11,091

4.10 BREAKDOWN OF LIABILITIES AND MATURITY SCHEDULE

NETAMOUNT(€ THOUSAND) 31/12/2015 1 YEARORLESS

OVER1 YEARTOUNDER5 YEARS OVER5 YEARS

Otherbondissues(1) 632,275 7,275 625,000Borrowingswithcreditinstitutions(2) 234,442 60,398 34,044 140,000Miscellaneouslong-termborrowings(3) 137,183 137,183Tradepayables(4) 63,315 63,315Taxandpayrollliabilities 17,632 17,632Liabilitiesonnon-currentassetsandrelatedpayables 283 283

Othermiscellaneousliabilities(5) 53,366 53,366Unearnedincome 0 0

TOTAL 1,138,496 339,452 34,044 765,000(1) Other debt issues include the various bond issues by ERAMET S.A. in 2013 totalling €400 million and in the first half-year of 2014 amounting to €225 million.(2) Bank borrowings include €2 million in commercial paper issues by ERAMET, assignment of trade receivables of €73 million, Borrowing Base amounting to €57 million, assignment of tax credit of €34 million, a Schuldschein loan of €60 million, and a loan of €80 million with the European Investment Bank.(3) ERAMET is financed by Metal Securities, its 87.92%-owned subsidiary. The amount stood at €134 million at 31 December 2015 (compared to €94 million at 31 Decem-ber 2014).(4) The Company’s supplier payables outstanding from more than 60 days as of the invoice date amount to €368 thousand.(5) In 2015, the tax-consolidated French subsidiaries paid corporate income-tax instalments to ERAMET S.A. exceeding the corporation tax payable by €23.5 million.

260


MISCELLANEOUS BORROWINGS

NETAMOUNT(€ THOUSAND) 31/12/2015 31/12/2014

CurrentaccountswithMetalSecurities 134,252 94,299BorrowingfromWedaBayMinerals,Inc. 1,795 1,929Depositsreceived 460 460Syndicatedcreditnon-utilisationfee 676 0

TOTAL 137,183 96,688

4.11 BREAKDOWN OF LIABILITIES AND ACCRUED EXPENSES

GROSSAMOUNT(€ THOUSAND) 31/12/2015 31/12/2014

Miscellaneousborrowings 137,183 96,688Tradepayables 63,315 95,800Taxandpayrollliabilities 17,632 17,219Liabilitiesonnon-currentassets 283 1,664Othermiscellaneousliabilities 53,366 26,140Unearnedincome 0 0

TOTAL 271,779 237,511

4.12 INFORMATION ON RELATED COMPANIES

BALANCE SHEET

(€ THOUSAND) 31/12/2015 31/12/2014

Investmentsinassociates 1,638,589 1,556,584Financialreceivables 1,501,736 1,569,873Tradereceivables 19,774 8,779Miscellaneousreceivables 15,648 496Miscellaneousfinancialborrowings (136,048) (96,228)Tradepayables (38,555) (74,089)Otherliabilities (36,926) (25,142)

INCOME STATEMENT

(€ THOUSAND) 31/12/2015 31/12/2014

Operatingincome 68,307 71,477Operatingexpenses (477,611) (679,340)Financial income 41,280 72,748Financialexpenses (839) (588)

261


NOTE 5 NOTES TO THE INCOME STATEMENT

5.1 SALES

(€THOUSAND) TOTAL FRANCE INTERNATIONAL

Salesofgoodsandmerchandise(1) 553,245 8,920 544,325Incomefromancillaryactivities 72,987 27,164 45,822

Sales 626,232 36,085 590,147(1) Sales include a foreign currency loss of €45.6 million resulting primarily from USD hedging.

5.2 INCREASES AND REDUCTIONS IN FUTURE TAX LIABILITIES

(€THOUSAND) 31/12/2015 31/12/2014

Increases in taxable base• Regulatedprovisions 31,718 48,155• Translationadjustmentlossesatclose• DeferredexpensesReductions in taxable base• Provisionsnotdeductibleduringthefinancialperiod (1,030,207) (768,548)• Accruedexpenses (224) (270)• Translationadjustmentgainsatclose• Unrealisedfinancialincome• Taxlosscarry-forwards (344,371) (230,328)Reductions in taxable base (1,343,084) (950,991)

Increase in future taxation (462,424) (327,426)34% 34%

(€THOUSAND) GROSSAMOUNT TAXOWEDPROFIT(LOSS)

FORTHEPERIOD

Currentprofit(loss) (317,692) (317,692)Extraordinaryitems (13,164) (13,164)Employeeprofit-sharingandincentives 0 0Impactoftaxconsolidationandresearchtaxcredit (659) (659)

TOTAL (330,856) (659) (331,516)

Corporation tax

The tax consolidation agreement signed byERAMETanditssubsidiariescomplieswiththeprincipleofneutralityandplacesthesubsidiar-ies in thesituation inwhich theywouldhavebeen in the absence of such consolidation.EachsubsidiarycalculatesitstaxasifitdidnotformpartofaconsolidatedtaxgroupandpaysitscorporationtaxcontributiontoERAMETasGroupparentcompany.Thesubsidiariesretain

their losses to determine the amount of thecorporation tax contribution they should payERAMET.

Asa resultof taxconsolidation, thecorpora-tiontaxlineitembreaksdownasfollows:Anincome tax revenueof €9 million for the taxconsolidation group (of which €7.7 millionin taxcredits for2015,€1.3 million inadjust-mentstothe2011and2014Grouptaxcredits),€2.1 millioninincomefromtaxconsolidation

(of which €1.4 million in 2015 corporationtaxforconsolidatedsubsidiaries,€0.7 millionin 2013 corporation tax for the subsidiariesfollowing taxaudit and -€4.2 million in2011,2012and2013corporationtaxrefundforsub-sidiaries)and-€7.6 millionintaxconsolidationexpenses[includingtaxcreditspassedbacktothe subsidiaries: -€0.9 million in adjustmentsfor2014and-€6.7 millioninresearchtaxcreditfor2015].

262


5.3 TAX CONSOLIDATION

AllFrenchsubsidiariesinwhichERAMETholdsatleasta95%interestareconsolidatedfortaxpurposes,ERAMETbeingtheGroupparent.

ThetaxconsolidationscopeinFrancecomprisesthefollowingcompanies:

TAX-CONSOLIDATEDCOMPANIES 31/12/2015 31/12/2014 31/12/2013 31/12/2012

Consolidated companies

ERAMET x x x xMetalSecurities x x x xERAMETHoldingNickel(EHN) x x x xEramine x x x xEurotungstènePoudres x x x xERAMETHoldingManganèse(EHM) x x x xERAMETHoldingAlliages(formerlySIMA) x x x xERAMETAlliages x x x xAubert&Duval(AD) x x x xAirforge x xErasteel x x x xErasteelChampagnole x x x xValdi x x x xNon-consolidated companies

ERAMETInternational x x x xERAMETIngénierie(formerlyTEC) x x x xERAMETResearch(formerlyCRT) x x x xForgesdeMontplaisir x x x xSupa x x x xMetalCurrencies x x x xBrownEurope x x x xERAMETServices x x x xADTAF x x x xCampusAlliages x x x

EligibleGrouplossesfromtaxconsolidationat31 December2015amountedto€344.37 million.

263


5.4 NET FINANCIAL INCOME

(€ THOUSAND) 31/12/2015 31/12/2014

Dividendsfromassociates 37 40,579Interestfromassociates(1) 45,840 32,225Otherdividendsandinterest 3,659 879Reversalsofprovisions(2) 360 36,329Foreigncurrencygains(3) 68,586 18,502Netgainsondisposalofmarketablesecurities 247 105Financial income 118,729 128,619Depreciationandamortisationexpenseandadditiontoprovisions(4) (263,496) (69,582)Interestandsimilarexpenses(5) (46,661) (36,512)Foreigncurrencygains(3) (74,195) (10,254)Financial expenses (384,353) (116,348)

Net financial income (265,623) 12,271(1) Interest income on Group current-account loans (€45.84 million).(2) Reversal of pension hedging assets.(3) Net exchange loss of -€5.6 million resulting mainly from the remeasurement of the Group’s loans and borrowings in foreign currencies.(4) Provisions for pensions and retirement schemes (€1.3 million), provisions for write-down of subsidiaries’ shares (€87.3 million) and treasury stock owned (€4.9 million), provision for the impairment of receivables from equity interests (€170 million).(5) Interest expenses on debt (syndicated credit facility, Metal Securities, bond issue, Schuldschein).

5.5 EXTRAORDINARY ITEMS

(€ THOUSAND) 31/12/2015 31/12/2014

Hedginggains 0 30Gainsonsharecapitaltransactions(1) 1,248 36,032Reversalofprovisionsandexpensetransfer(2) 30,829 31,990Non-recurring income 32,077 68,053Hedginglosses(3) (3,207) (22,408)Expensesonsharecapitaltransactions(4) (12,405) (58,923)Extraordinarydepreciationandamortisationexpenseandadditiontoprovisions(5) (29,629) (10,467)Extraordinary expenses (45,241) (91,797)

Extraordinary items (13,164) (23,744)(1) Income from disposals of long-term computer assets.(2) Reversal of provisions for price hikes in 2009 amounting to €16.3 million, reversal of provisions for the bonus share award plan totalling €13.7 million, and reversal of provisions for the initial plan to the extent of the expenses incurred.(3) Extraordinary expense of costs of the 2015 initial plan amounting to -€2.6 million recognised.(4) Net book value of capitalised asset disposals and impact of the disposal of free shares under the plan vested in 2015.(5) Additions to regulated provisions totalling -€0.6 million, depreciation and amortisation for the Maboumine pilot totalling -€1.2 million, additions to provisions for restructuring amounting to -€2.3 million, additions to provisions for the discontinuation of the Maboumine project pilot for -€2 million, additions to provisions for impairment losses on hydrometallurgical technology assets under construction -€18.6 million and additions to provisions for sundry receivables totalling -€4.9 million for the Lithium exploration and operation project.

5.6 HEADCOUNT

FY2015 FY2014

Management 177 185Supervisorystaff 171 176Workers 41 40Workforce at period-end 389 401Average No. of employees 388 418

264


NOTE 6 OFF-BALANCE SHEET COMMITMENTS(€ THOUSAND) 31/12/2015 31/12/2014

Commitments given

Endorsements,guaranteesanddeposits 100,681 121,936Collateralsecurity - -Forward/futuresalesinUSD - -Commitments received

Endorsements,guaranteesanddeposits - -Collateralsecurity - -Creditfacilities 1,038,000 1,061,000Reciprocal commitments

CurrencyhedgeviaMetalCurrencies 52,747 105,428

The above table does not include current business orders or liabilities stemming from orders for non-current assets under capital expenditureprogrammes.

NOTE 7 RISK MANAGEMENT

7.1 FOREIGN EXCHANGE RISK

ERAMEThastwolevelsofexposuretocurren-cyrisk:

– AllNickelearningsare invoiced incurrency(for themost part in US dollars), whereasits costs aremainly denominated in euros(SandouvilleplantexpensesandpurchasesofnickelandmattefromSLN).Accordingly,hedgingtransactionsareperformedonthebasis ofmulti-year budgets and forecasts,withinamaximum36-monthhorizon.

Under the technical support arrangementsbetweenERAMETanditssubsidiarySLN,allcommercialhedgingisperformedonbehalfofSLNandbilledbackdirectlytoSLNunderthemarketingagreement.

– Forallothercurrencytransactions,particu-larly long-term loans to Group companies,ERAMETmayberequiredtosetupcurrencyhedges according to the loan repaymentschedules.At31 December2015,therewasnocurrencyhedgingonlong-termloans.

7.2 COMMODITY RISK

ERAMET is exposed to commodity pricevolatility,impactingitssales.ERAMEThedgespartofitsnickelsalesonthebasisofone-ortwo-year budget forecasts. The hedges inquestion are contracted on behalf of SLN,whichproducesferronickelandmatte.Underthe technical support agreement, the profitor losson thesehedges ispassedon in themonthly invoicing to SLN. At 31 December2015,443 tonneswerehedgedforafairvalueof(€1,566)thousand(fortherecord, in2014:151 tonnesforafairvalueof($249 thousand).ERAMETmainlyusesforwardpurchasesandsales,combinedcallandputoptions,andcalloptions.

7.3 CREDIT OR COUNTERPARTY RISKS

ERAMET’scounterpartyrisksmainlyrelatetoitscommercialtransactionsand,byextension,to trade receivables. ERAMET may thus beexposed tocredit risk in theeventofdefaultby a counterparty. ERAMET has variousmeans at its disposal to limit this risk, forwhichthemaximumexposureisequaltothenet amount of receivables recognised in the

balance sheet—gathering information aheadoffinancialtransactions(fromratingagencies,published financial statements, etc.), creditinsurance and the arrangement of lettersof credit and documentary credits to hedgecertain specific inherent risks, such as thegeographic location of its customers. In anyevent, ERAMET’s customer base is primarilycomposedofleadinginternationalmetallurgygroupsforwhichinsolvencyrisksarelimited.

7.4 INTEREST RATE RISK

At 31 December 2015, ERAMET had nointerest rate hedges in place on its debt. Itssurpluses invested withMetal Securities areremuneratedat(floating)marketrates.

7.5 LIQUIDITY RISK

ERAMET’s financial situation renders it rela-tivelyimmunetoliquidityrisk.Infact,ERAMETS.A.’snetcashpositionat31 December2015stood at €537.54 million (as opposed to netcashof€646.01 millionat31 December2014).AllofitsdebtistowardsMetalSecurities,theGroup’sspecial-purposecompanyinchargeofpoolingandmanagingGroupsurpluses.

265


Furthermore, theCompanymay ifnecessaryresorttothefollowingtwoadditionalsourcesoffinancing:

Revolving credit facilities

– In 2012, ERAMET signed the extensionof its credit facility as provided for in themulticurrency revolving facility agreementup to2017, for€800 million. Inearly2013,ERAMET signed an amendment to thisagreementraisingitsamountfrom€800 mil-lion to €981 million, and extending it byanotheryear,fromJanuary2017toJanuary

2018.Thecreditlineintendedtofinancetheoperations and investments in assetswasenteredintoontermscongruentwithmarketconditionsatthetimeofitssignature.Thisfacilityisgovernedbyasinglecovenant.

– In2015,ERAMEThaddrawndown€80 mil-liononthecreditfacilitywiththeEuropeanInvestmentBank.

Commercial paper

– In 2005, ERAMET set up a €400 millioncommercial paper programme, of which

€2 millionhadbeenraisedat31 December2015(€81 millionwasraisedin2014).

NOTE 8 CONSOLIDATION OF THE SEPARATE FINANCIAL STATEMENTSThe Company is consolidated within theERAMET group, of which it is the parentcompany.

NOTE 9 COMPENSATION OF MANAGEMENT AND SUPERVISORY BODIES (€ THOUSAND) FY2015 FY2014

Short-term benefits• Fixedcompensation 2,727 2,893• Variablecompensation 954 2,262• Directors’fees 700 600Other benefits• Post-employmentbenefits 82 642

TOTAL 4,463 6,397Thetenhighestpaidindividualsreceivedatotalof€5.9 millionin2015.

NOTE 10 BONUS SHARE AWARD PLANShareswereallocatedunder twonewbonusshare plans on 19 February 2015 to all theemployeesoftheERAMETgroup:

– oneplanforallemployeesforaninitialtotalof27,268 shares;

– one plan open to certain employees andcorporateofficers,where:• onepart of the shares is subject to twoperformance conditions—an internalcondition and an external condition—foraninitialtotalof95,204 shares,and

• one part of the shares is not subject toperformancecriteria,foraninitialtotalof37,624 shares.

Thechangeinthenumberofbonusshareawardswasasfollowsinthe2014and2015reportingperiods:

(NUMBEROFBONUSSHARES) 31/12/2015 31/12/2014

At beginning of period 409,940 361,005Newplans2015/2014 160,096 170,212Fullyvested (45,393) (37,459)Lapsedshares (5,544) (10,072)Expiredshares (77,908) (73,746)

At period end 441,191 409,940Distribution by year of vesting

2015 - 73,3262016 109,683 248,4352017 141,650 74,6212018 145,974 13,5582019 43,884 -

266


NOTE 11 OTHER DISCLOSURESCarlo Tassara France (or CTF, a part ofthe Romain Zaleski group) is an ERAMETshareholderowning3,394,146 shares(namely12.87%ofthecapitalat31 December2009),accordingtoanestimatebasedonthemostrecent threshold crossing declaration by thiscompany(No. 207C0134of17 January2007).

Since17 December2009,CTFhasquestionedthe terms of the SIMA share contribution toERAMETin1999.

CTFisseekingthecancellationoftheresolu-tions of the ERAMET General Shareholders’Meeting on 21 July 1999 approving thecontributionofSIMA’ssharestoERAMET,the

cancellationoftheERAMETshares issuedinconsideration for said contribution and thereduction of ERAMET’s share capital by theamountofthecancelledshares,thereturnbytheholdersof thosesharesof thedividendsearned since 1999 and estimatedbyCTFat€201 million, and the return by ERAMET tosaid contributors of theSIMA shares and ofthedividendsreceivedfromSIMAsince1999.

ThoughthesummonsisnotdirectedagainstERAMEToragainstitspastorcurrentcorpo-ratebodies,itishoweverlikelythat,wereittoprevail, itwouldhaveserious implicationsforERAMET as, in particular, it would lead to asignificant reduction in its share capital andtheexitofSIMA(andhenceofAubert&Duval)fromtheGroup’sscopeofconsolidation.

CTF’sclaimswereruledinadmissibleinseveralrulingsintheperiodfrom2010to2015,owingtothestatutesoflimitation.

In the most recent ruling on 29 September2015, the appellate court dismissed CTF’sapplicationforreview.

NOTE 12 EVENTS AFTER THE REPORTING DATEInearlyJanuary 2016,ERAMETS.A.hadfullydrawndownitsmulticurrencyrevolvingcreditfacilityfor€980 million.

Tothebestof theCompany’sknowledge,noothereventshaveoccurredsincethereportingdate.

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NOTE 13 TABLE OF SUBSIDIARIES AND EQUITY INVESTMENTSAt31 December2015

(THOUSAND EUROS OR FOREIGN CURRENCY UNITS EXCEPT XAF IN MILLIONS)

SHARECAPITAL

OWNFUNDSOTHERTHAN

CAPITAL

SHAREOF

CAP-ITALHELD

GROSSCARRYING

AMOUNTOFSHARESHELD

NETCARRYING

AMOUNTOFSHARESHELD

LOANSAND

ADVANCESGRANTEDANDNOTREPAID

EN-DORSE-MENTS

ANDGUAR-

ANTEESGIVEN

DIVI-DENDS

RE-CEIVEDINTHEPERIOD

TOTALSALES

OFPASTFINAN-

CIALYEAR

PROFIT(LOSS)

INLASTFINAN-

CIALYEAR

CLOSING

CUR-RENCY

CURREN-CY % EUR EUR EUR EUR EUR

CUR-RENCY

CUR-RENCY

I. Detailed information on each stock (gross amount exceeding 1% of the Company’s share capital)

Subsidiaries (at least 50% of share capital owned)Eras EUR 2,000 0 100.00 1,986 1,986 0 0ERAMETIngénierie EUR 525 2,796 100.00 838 838 8,964 280ERAMETResearch EUR 1,410 28,607 100.00 1,161 1,161 26,616 1,564ERAMETInternational EUR 160 2,346 100.00 892 892 8,150 87ERAMETHoldingNickel EUR 227,104 16,946 100.00 229,652 229,652 0 (7,199)

WedaBayMineralInc. USD 35,505 682 100.00 3,616 0 0 0WedaBayMineralSingaporeLtd USD 347,743 (347,795) 19.75 52,570 0 0 (8)

ERAMETHoldingManganese EUR 310,156 121,521 100.00 310,156 310,156 0 (66,236)

EralloysHolding NOK 12,800 1,412,926 100.00 419,445 155,346 487 (80,049)ERAMETHoldingAlliages(formerlySIMA)

EUR 148,000 23,643 100.00 329,584 305,100 4,746 2,584

Erasteel EUR 75,661 8,704 100.00 223,169 40,339 80,000 146,555 (18,522)1,573,069 1,045,471

Investments in companies (between 10% and 50% owned)COMILOG XAF 40,812 240,213 23.22 53,407 53,407 308,183 (42,803)

53,407 53,407II. General information on other stock (gross amount not exceeding 1% of the Company’s share capital)

Frenchsubsidiaries EUR 11,657 1,657 468,112Foreignsubsidiaries EURInvestmentsinassociates EUR 456 456 17,356 37

TOTAL 1,638,589 1,100,991 548,112 17,356 37

268


SIRENBUSINESSIDENTIFIER ADDRESSOFREGISTEREDOFFICE

I. Detailed information on each stock (gross amount exceeding 1% of the Company’s share capital)

Subsidiaries (at least 50% of share capital owned)Eras N/A 6B,routedeTrèvesL—2633SenningerbergR.C.LuxembourgB35.721ERAMETIngénierie 301 570 214 1,avenueAlbertEinstein78190Trappes,FranceERAMETResearch 301 608 634 1,avenueAlbertEinsteinBP 12078193Trappes,France

ERAMETInternational 398 932 939 TourMaineMontparnasse33,avenueduMaine 75755ParisCedex 15France

ERAMETHoldingNickel 335 120 515 TourMaineMontparnasse33,avenueduMaine 75755ParisCedex 15France

WedaBayMineralInc. N/A 14th Floor,220 BayStreetTorontoOntario,M5J2W4Canada

WedaBayMineralSingaporeLtd N/A 8 MarinaBoulevard#05-02—MarinaBayFinancialCentre— Singapore018981

ERAMETHoldingManganese 414 947 275 TourMaineMontparnasse33,avenueduMaine 75755ParisCedex 15France

EralloysHolding N/A EralloysHoldingASStrandv501366LysakerNorway

ERAMETHoldingAlliages(formerlySIMA) 562 013 995 TourMaineMontparnasse33,avenueduMaine 75755ParisCedex 15France

Erasteel 352 849 137 TourMaineMontparnasse33,avenueduMaine 75755ParisCedex 15France

Investments in companies (between 10% and 50% owned)COMILOG N/A CompagnieMinièredel’OgoouéZ.I.deMoandaBP 27-28Gabon

269


6.2.5 STATUTORY AUDITORS’ REPORT ON THE ANNUAL FINANCIAL STATEMENTS


DearShareholders,

IncompliancewiththeassignmententrustedtousbyyourGeneralMeetingofShareholders,we hereby report to you, for the year ended31 December2015,on:

– theauditoftheaccompanyingannualfinan-cialstatementsofERAMETS.A.;

– thejustificationofourassessments;and

– the specific verifications and disclosuresrequiredbylaw.

The annual financial statements were ap-provedbytheBoardofDirectors.Ourresponsi-bilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.

I. OPINION ON THE ANNUAL FINANCIAL STATEMENTS

We conducted our audit in accordance withprofessional standards applicable in France;thosestandardsrequirethatweplanandper-formtheaudittoobtainreasonableassurancethat theannualfinancial statementsare freeof material misstatement. An audit consistsof examining, by sampling or using otherselection methods, the evidence supportingthe amounts and disclosures given in theseannualfinancialstatements.Italsoinvolvesanassessmentoftheaccountingprinciplesandsignificantestimatesusedandanevaluationof the overall presentation of the financialstatements.Webelievethatourauditprovides

a sufficient and reasonable basis for ouropinion.

Inouropinion,theannualfinancialstatementsareappropriate,accurateandgiveatrueandfair viewof the income from theCompany’soperationsintheperiodelapsedaswellasitsfinancialpositionandnetassetsattheendofthisperiodinaccordancewithFrenchaccount-ingprinciplesandstandards.

Without qualifying our opinion expressedabove,wedrawyourattentiontothesectiononthe“ArrangementofaloantoSLN”inNote 2—Keyeventsinthereportingperiodinthenotestothefinancialstatements,regardingtherisksinherenttothecontinuityofoperationsofthesubsidiaryLe Nickel-SLNandthefinancingofthoseoperations.

II. JUSTIFICATION OF ASSESSMENTS

PursuanttoArticleL. 823-9oftheCommercialCodegoverningthejustificationofourassess-ments,wedrawyourattentiontothefollowingmatters:

Business continuity of Le Nickel-SLN

As described in the first part of this report,Note 2—Keyevents in thereportingperiod inthenotes to the annual financial statementsdetails themeasures implemented toensurethecontinuityandfinancingofLe Nickel-SLNoperations.WestudiedtheplannedmeasuresandreviewedtheCompany’sliquidityposition.Wealsotooknoteoftheassumptionsusedso

astoassessthecontinuityofLe Nickel-SLN’soperations.

Onthebasisofourauditandtheinformationgiventoustodate,andfollowingourassess-mentsoftheaccountingprinciplesfollowedbyyourCompany,webelievethatthenotestothefinancial statements adequately disclose thefinancialpositionoftheCompany.

Investments in subsidiaries

Investments in subsidiaries are measuredat theiracquisitioncostand impairedon thebasisoftheirvalueinuseusingthemethodsandproceduressetoutinNote 3.2.Ourworkconsistedinappraisingthedatathatprovidesthebasisforthesevaluesinuse,inparticularthelikelyreturnsestimatedbytheoperationaldivisionsoftheCompany,andinre-examiningthecalculationsmadebytheCompany.Duringour audit, we satisfied ourselves as to thereasonablenatureofthoseestimates.

The assessments we made are part of ourauditoftheannualfinancialstatementsasawhole and have therefore contributed to ouropinionexpressedinthefirstpartofthisreport.

III. SPECIFIC VERIFICATIONS AND DISCLOSURES

In accordance with professional standardsof practice applicable in France, we alsoperformed the specific verifications requiredbylaw.

Wehavenoqualificationtomakeregardingtheaccuracyorconsistencywiththeannualfinan-

270


cialstatementsofthedisclosuresmadeintheBoardofDirectors’management reportor inthedocumentsaddressedtotheshareholderswithregardtothefinancialpositionandannualfinancialstatements.

Regardingthedisclosuresmadeinaccordancewith Article L. 225-102-1 of the CommercialCodeonthecompensationandbenefitspaid

to the corporate officers and the commit-mentsgrantedintheirfavour,weverifiedtheirconsistencywith the financial statements orwiththedatausedforpreparingthesefinancialstatements and, where appropriate, with theinformationgatheredbyyourCompany fromthe companies controlling your Company orcontrolledbyit.Onthebasisofouraudit,we

certify that this information is accurate andfairlypresented.

In accordance with the law, we obtainedreasonable assurance that themanagementreportcontainstheappropriatedisclosuresastotheidentityoftheownersofthecapitalorvotingrights.

Paris-LaDéfense,18 February2016KPMGAudit Ernst&YoungAudit

Division of KPMG S.A.DenisMarangé Jean-RochVaron

Partner Partner

271


6.2.6 REPORT OF THE STATUTORY AUDITORS ON REGULATED AGREEMENTS AND COMMITMENTS


This is a free translation into English of the “Report of the Statutory Auditors on regulated agreements and commitments” issued in French and provided solely for the convenience of English speaking users. This report includes information specifically required by French law in such reports, and should be read in conjunc-tion and construed in accordance with French law and professional standards applicable in France.

TotheShareholders,

InourcapacityasStatutoryAuditorsof yourCompany,weherebyreporttoyouonregulat-edagreementsandcommitments.

The terms of our engagement require us tocommunicate to you, based on informationprovidedtous,theprincipalterms,conditionsandthereasonsfortheCompany’sinterestofthoseagreementsandcommitmentsbroughttoourattentionorwhichwemayhavediscov-ered during the course of our audit, withoutexpressing an opinion on their usefulnessandappropriatenessoridentifyingsuchothercommitments and agreements, if any. It isyourresponsibility,pursuanttoArticleR. 225-31oftheFrenchCommercialCode(Code de commerce),toassesstheinterestinvolvedinrespectoftheconclusionoftheseagreementsandcommitmentsforthepurposeofapprov-ingthem.

Ourroleisalsotoprovideyouwiththeinforma-tionstipulatedinArticleR. 225-31oftheFrenchCommercialCode(Code de commerce)relat-ingtotheimplementationduringthepastyearof agreements and commitments previouslyapprovedbytheShareholders’Meeting,ifany.

We conducted the procedures we deemednecessaryinaccordancewiththeprofessionalguidelinesof theFrenchNational InstituteofStatutory Auditors (Compagnie nationale des commissaires aux comptes) relating to thisengagement.

These procedures consisted in agreeing theinformation provided to us with the relevantsourcedocuments.

AGREEMENTS AND COMMITMENTS SUBMITTED TO THE APPROVAL OF THE SHAREHOLDERS’ MEETING

Agreements and commitments authorized during the year

PursuanttoArticleL. 225-40oftheFrenchCommercialCode(Code de commerce),wehavebeenadvisedoftheagreementdescribedbelowwhichwassubjecttopriorauthorizationbytheBoardofDirectors.

With SociétéLeNickel-SLN.Nature and purpose Intercompanyloanofaninitialamountof€120 millionandincreasedto€150 million.

Persons concernedPersonsholdingadirectorshiporaGeneralManagementposition inbothcompanies:Messrs. PatrickBuffet,ÉdouardDuval.

Terms and conditions

Witheffectfrom23 December2015.

Maturity:31 May2016.

Interestchargesforthefiscalyear2015amountedto€55,479.

Justification

TheBoardnotes that theconclusionand implementationof theabove-mentionedtransactionsarecompliantwith thecorporateinterestsofERAMET:sincethesetransactionsallowtheSociétéLe Nickel-SLNtocopewiththesharpdeterio-rationofcashand,withtheincreasedfindingrequirementsforoperationalactivity,theycorrespondtocommoneconomicinterestsofthebothentities.

272


AGREEMENTS AND COMMITMENTS PREVIOUSLY APPROVED BY THE SHAREHOLDERS’ MEETING

Agreements and commitments approved in prior years

a) which remained in force during the year

PursuanttoArticleR. 225-30oftheFrenchCommercialCode(Code de commerce),wehavebeeninformedthatthefollowingagreementsandcom-mitments,previouslyapprovedbytheShareholders‘Meetingsofprioryears,haveremainedinforceduringtheyear.

With Le Nickel-SLN

1/ Technical assistance contract

Nature and purpose

Pursuant to the technicalassistancecontractsigned in1999,ERAMETprovidesstrategic, industrial, financial, taxandhumanresourcemanagementassistancetoLe Nickel-SLN.

Thisagreementwasamendedwithretroactiveeffectfrom1 January2010.

Persons concernedPersonsholdingadirectorshiporaGeneralManagementpositioninbothcompanies:Messrs. PatrickBuffet,ÉdouardDuvalandBertrandMadelin.

Terms and conditionsTheseservicesareremuneratedbasedonactualcostsincurredbyERAMETtoperformsuchservices,plusan8%margin.

In2015,theamountinvoicedtotaled€7,896,322comparedto€8,120,450in2014.

2/ Marketing agreement

Nature and purposeThemarketingagreemententeredintobetweenERAMETandLe Nickel-SLNin1985pursuanttowhichERAMETensuresthemarketingofLe Nickel-SLNproducts(excludingore)wasalsoamendedwithretroactiveeffectfrom1 January2010.

Persons concernedPersonsholdingadirectorshiporaGeneralManagementpositioninbothcompanies:Messrs. PatrickBuffet,ÉdouardDuvalandBertrandMadelin.


Pursuanttothisagreement,ERAMETpurchasednickelandferronickelmattefromLe Nickel-SLNatasellingpricethatallowedERAMETtomakea3%margin,plusapremiumthecalculationmethodsandtriggerpriceofwhichhavebeenredefined.

ThetotalamountinvoicedbyLe Nickel-SLNtoERAMETwas€472,730,620in2015comparedto€674,072,507in2014.

Underthissameagreement,ERAMETinvoicedtoLe Nickel-SLNacontributiontoothercostsinsteadofaflatratefee,intendedtocoverstandardnickelmattetransformationcostsincurredbyERAMETpriortothemarketingofthefinishedproducts.ThetotalamountinvoicedtoLe Nickel-SLNwas€17,965,798in2015,comparedto€22,330,281in2014.

With Messrs. Patrick Buffet, Georges Duval, Bertrand Madelin and Philippe Vecten

Membership of the ERAMET corporate officers in an ERAMET group complementary health, disability and death benefit plan

Nature and purposeTheBoardofDirectorsMeetingof17 February2010andShareholders’MeetingauthorizedandapprovedMessrs. Pat-rickBuffet,GeorgesDuval,BertrandMadelinandPhilippeVecten,corporateofficers,tojointheGroup’scomplementaryhealth,disabilityanddeathplan.

Terms and conditionsAccordingtothelaw,weinformyouthattheBoarddidnotconducttheannualreviewoftheagreementsandcommit-mentsenteredintoandauthorizedovertheprioryearswhichwascontinuedduringthelastyearrequiredbyArticleL. 225-40-1oftheFrenchCommercialCode.

273


With Mr. Patrick Buffet, CEO

Termination benefits

PursuanttoArticleL. 225-42-1oftheFrenchCommercial Code, the termination benefitswere authorized by the Board of Directorson 20 February 2008 and approved by theShareholders’ Meeting on 16 April 2008(4th resolution), then following the renewalof the term of office of the Chairman andCEO, they were authorized by the Board ofDirectors on27 July 2011andapprovedbythe Shareholders’Meeting on 15 May 2012(4th resolution).FollowingthereappointmentoftheCEOdecidedbytheGoverningCouncilof 29 May 2015, and on recommendationof the Remuneration Committee, the Boardof Directors on 29 May 2015 decided,unanimously,theCEOabstaining,tokeepall

theelementsofhisremunerationandalltheprovisions of its corporate officer contractof 20 February 2008 (taking into accountall changes since decided by the Board ofDirectors of the Company on the proposalof the Remuneration Committee). However,twochangesweremadetothebenefitofendoftermoftheCEOdueincaseofdepartureof CEO (following dismissal or resignationcaused, non-reappointment or changingconditions consideration ofwhich he joinedtheERAMETgroup):

– Theamountofcompensationthatmaybepayable is equal to two times—instead ofthreeasbefore—thelastgrossannualfixedremuneration to which will be added anamount equal to twice—instead of three—theaverage receivedgrossvariableannual

remunerationoverthelastthreefullfinancialyearsprecedingthedeparture.

– The benefit of severance pay provided forhis corporate officer contract is subject toperformanceconditionstorespect:thesumofgrossvariablecompensation(themselvessubjecttospecificperformanceconditions)received during the last three years fullmandatemustbegreaterorequalto35%ofthesumofgrossfixedannualremunerationreceivedduringthesameyears—insteadof20%asbefore.Thisdevicethusexcludesthepaymentofsuchcompensationintheeventoffailuresituation.

Pursuant toArticleL. 225-42-1of theFrenchCommercialCode,thismodifieddevicewillbearesolutionpresentedtoshareholdersattheAnnualGeneralMeetingof29 May2016.

b) which have not been enforced during the year

Moreover,wehavebeeninformedthatthefollowingagreementsandcommitments,previouslyapprovedbyShareholders’Meetingsofprioryears,havenotbeenenforcedduringtheyear.

With Messrs. Patrick Buffet, Georges Duval, Bertrand Madelin and Philippe Vecten, corporate officers

Defined benefits retirement plan

Nature and purpose Definedbenefitretirementplan.ThisplanisapplicabletoallERAMETgroupcorporateofficers.

Terms and conditions / justification

ThisplanhasbeenauthorizedbytheBoardofDirectorson30July2008andapprovedbytheShareholders’Meetingon13May2009(thirdresolution),onproposaloftheRemunerationCommittee,toreflectregulatorychangestopensionplanswithdefinedbenefits,called“Article39”.

274


Agreements and commitments approved during the year

Wehavealsobeeninformedoftheexecution,duringthepastyearofagreementsandcommitmentsalreadyapprovedbytheGeneralMeetingof29 May2015onthereportoftheAuditorsof20 February2015.

Amendment to the marketing agreement between ERAMET and Société Le Nickel-SLN with effect from 1 January 2015

Nature and purposeTheamendmenttothemarketingagreementbetweenERAMETandSociétéLe Nickel-SLNin1985coversthetermsunderwhichERAMETprovidessupporttothemarketingofmineralswithloworintermediategradeorlaundry-productsproducedbytheSociétéLe Nickel-SLNwitheffectfrom1 January2015.


Pursuanttothisamendment,ERAMETrealizesmarketingofmineralswithloworintermediategradeorlaundry-productsasanagentofSociétéLe Nickel-SLNatarateof1.5%commissionoftheturnoversoldores.

Theamountchargedassuchamountedto€374,204in2015.

JustificationThisamendmentallowstheSociétéLe Nickel-SLNtousetheexpertiseofthesalesteamsandtheinternationalERAMETnetwork tooptimizeandbetterpromotesalesoforesand thusderiveadditionalfinancialprofitafterdeductionof thecommissionofERAMETpaidagentof1.5%inlinewithmarketpracticesforthistypeofservice.

Paris-LaDéfense,22 February2016TheStatutoryAuditors

French original signed by:KPMGAudit Ernst&YoungAudit

Division of KPMG S.A.DenisMarangé JeanRochVaron

Partner Partner

275


6.2.7 SEPARATE FINANCIAL RESULTS OVER THE PAST FIVE FINANCIAL YEARS2011 2012 2013 2014 2015

Share capital at financial year-end

a) Sharecapital(€) 80,883,304 80,956,815 80,956,815 80,956,815 80,956,815b) Numberofsharesissued 26,519,116 26,543,218 26,543,218 26,543,218 26,543,218Transactionsandprofit(loss)forthefinancialyear(€ thousand)

a) Salesexcl.tax 1,043,590 880,306 707,732 779,892 626,232b) Profit(loss)beforetax,employeeprofit-sharing,depreciation,amortisationandprovisions 608,704 278,523 243,083 (40,061) (43,866)

c) Incometax (9,641) (27,790) (9,594) (2,897) 659d) Employeeprofit-sharing 0 0 0 0 0e) Profit(loss)aftertax,employeeprofit-sharing,depreciation,amortisationandprovisions 340,942 321,062 (133,006) (70,550) (331,516)

f) Proposeddividendamount 59,668 34,506 0 0 0Earnings per share (€)

a) Profit(loss)aftertax,employeeprofit-sharing,butbeforedepreciation,amortisationandprovisions 23.32 11.54 9.52 -1.40 -1.68

b) Profit(loss)aftertax,employeeprofit-sharing,depreciation,amortisationandprovisions 12.86 12.10 (5.01) (2.66) (12.49)

c) Proposeddividendpershare 2.25 1.30 0 0 0Personnel

a) Averagenumberofemployees 402 432 439 418 388b) Totalwagebill(€ thousand) 32,573 33,259 34,373 33,141 32,600c) Amountpaidoutinemployeebenefits(€ thousand) 50,189 27,845 23,716 25,177 11,054

SUPPLIER PAYMENT TIMES

TheCompany’sSupplierpayablesoutstandingfrommorethan60 daysasoftheinvoicedateamountto€368 thousand.

ADD-BACK OF OVERHEADS AND LUXURY EXPENSES

Notapplicable.

276

Financial statements / Consolidated financial statements for 2014 and 2013

6.3 CONSOLIDATED FINANCIAL STATEMENTS FOR 2014 AND 2013

Pursuant to Article 28 of EC RegulationNo. 809/2004oftheCommission,thefollow-inginformationisincludedbyreferenceinthisRegistrationDocument:

a)the2014consolidatedfinancialstatements,the related audit report and the overviewof the items included respectively in Sec-tions 6.1,6.1.3and2ofthe2014RegistrationDocumentfiledwiththeAMFon25 March2015;

b)the2013consolidatedfinancialstatements,the related audit report and the overviewof the items included respectively in Sec-tions 6.1,6.1.3and2ofthe2013RegistrationDocumentfiledwiththeAMFon26 March2014.

Thesectionsofthe2014and2013Registra-tion Documents not included are thereforeeitherofnorelevancetoinvestorsorcoveredelsewhereinthisRegistrationDocument.

The two Registration DocumentsmentionedabovecanbefoundontheCompany’swebsite(www.eramet.com)andonthatofAMF(www.amf-france.org).

6.4 DIVIDEND POLICY6.4.1 DIVIDEND PAYOUT ARRANGEMENTSDividendsarepaidannuallyat the timesandin theplacesspecifiedby theGeneralShare-holders’Meeting,or failing thatby theBoardofDirectors,withinninemonthsoftheendofthefinancialyear.Dividendspaidundernormalconditionscannotberepeated.

InterimdividendpaymentsmaybemadepriortothedateoftheMeetingsettingtheamountthereof,attheinitiativeoftheBoardofDirectorspursuanttotheprovisionsofsub-paragraph 2ofArticleL. 232-12oftheFrenchCommercialCode.

Shareholdersmaybegiventheoptionofpay-mentwhollyorpartlyinnewCompanyshares,pursuant to theprovisionsofparagraph 1ofArticle L. 232-18 of the French CommercialCode.

In accordance with applicable provisionsin France, unclaimed dividends lapse fiveyears from the date of payment. UnclaimedamountsarepaidovertotheFrenchStateinkeepingwiththeapplicableprovisions.

6.4.2 ALLOCATION AND DISTRIBUTION OF EARNINGS (ARTICLE 24 OF THE ARTICLES OF ASSOCIATION)“5% of earnings, as defined by law, less anypastlosses,whereapplicable,arewithheldto

makeupthelegalreserve,untilsuchtimeasthereserveisequalto10%ofthesharecapital.

Distributableearningsconsistofearningsforthe financial year, less any past losses andthe abovementioned withheld amount, plusanyretainedearnings.Outofthedistributableearnings, the Ordinary General Shareholders’Meeting may deduct any sum it deemsappropriate,eithertobecarriedforwardtothefollowingfinancialyearortobeaddedtooneormorespecialorgeneralreserves,ofwhichitdeterminestheallocationoruse.

Any surplus is divided equally between allshares.

TheGeneralShareholders’Meetingmaygranteachshareholder,forallorpartofthedividendbeing distributed, the option to be paid insharesinthelegallyestablishedmanner,orincash.”

6.4.3 BREAKDOWN OF 2015 EARNINGS ALLOCATIONTheproposedallocationofthe2015earningscanbefoundinResolution 2oftheupcomingGeneralShareholders’Meeting,inChapter 8ofthisdocument.

6.4.4 DIVIDEND POLICY

PAYMENT ARRANGEMENTS

As the Company does not usually makeinterimpayments,dividendsarepaidannuallyaftertheGeneralShareholders’Meetingcalledto approve the management activities andfinancialstatementsforthepastfinancialyear.Mixed payments, in cash and shares, maysometimes be offered at the shareholder’soption.

277


AMOUNT OF DIVIDEND

TheCompanyendeavourstopayaregularandsubstantialdividend.NoproposalfordividendpayouthasbeenmadetotheGeneralMeetingofMay2016.

Dividends paid out over the last three years

2015 2014 2013 2012

Numberofsharesreceivingdividends 26,543,218 26,543,218 26,543,218 26,543,218Consolidatednetprofit,Groupshare -€714 million -€159 million -€370 million €8 millionDividendspershare €0 €0 €0 €1.30

TOTAL PAYOUT €0 million €0 million €0 million €34.5 million

6.5 FEES PAID TO THE STATUTORY AUDITORS

Fulldetailsofthefeespaidforthepasttwoyearstothevariousauditfirms,withthebreakdownbytypeofservice,canbefoundinNote 15totheconsolidatedfinancialstatements.

278

Chapter 7

CORPORATE AND SHARE CAPITAL INFORMATION280 7.1 MARKET IN THE COMPANY’S

SHARES280 7.1.1 MARKETONWHICHSHARESARE

LISTED280 7.1.2 SHAREPRICEPERFORMANCE282 7.1.3 SECURITIESSERVICES282 7.2 SHARE CAPITAL282 7.2.1 SUBSCRIBEDCAPITAL282 7.2.2 SECURITIESNOTREPRESENTING

SHARECAPITAL282 7.2.3 CHANGESINSHARECAPITAL

ANDBREAKDOWNOVERTHEPASTTHREEYEARS

283 7.2.4 SHAREOWNERSHIP286 7.2.5 STOCKOPTIONPLANAND

BONUSSHARES287 7.2.6 SUMMARYTABLEOFFINANCIAL

AUTHORISATIONS288 7.2.7 DESCRIPTIONOFTHESHARE

BUYBACKPROGRAMME290 7.3 COMPANY INFORMATION290 7.3.1 COMPANYNAME(ARTICLE 2OF

THEARTICLESOFASSOCIATION)290 7.3.2 COMPANYREGISTRATION

NUMBER

290 7.3.3 DATEOFINCORPORATIONANDTERMOFTHECOMPANY(ARTICLE 5OFTHEARTICLESOFASSOCIATION)

290 7.3.4 REGISTEREDOFFICE(ARTICLE 4OFTHEARTICLESOFASSOCIATION)

290 7.3.5 LEGALFORMANDAPPLICABLELEGISLATION

290 7.3.6 STATUTORYAUDITINGOFTHECOMPANY(ARTICLE 19OFTHEARTICLESOFASSOCIATION)

290 7.3.7 CORPORATEOBJECT(ARTICLE 3OFTHEARTICLESOFASSOCIATION)

290 7.3.8 FINANCIALYEAR(ARTICLE 23OFTHEARTICLESOFASSOCIATION)

291 7.3.9 GENERALSHAREHOLDERS’MEETING

292 7.3.10 TRANSFEROF SHARES292 7.3.11 IDENTIFICATION

OF SHAREHOLDERS293 7.3.12 FACTORSLIKELYTOINFLUENCE

APUBLICOFFER294 7.4 SHAREHOLDERS’ AGREEMENTS294 7.4.1 DECISIONANDNOTIFICATION

NO. 212C0486OF12 APRIL2012295 7.4.2 DECISIONANDNOTIFICATION

NO. 209C1013OF21 JULY2009

279

280

Corporate and share capital information / Market in the Company’s shares

7.1 MARKET IN THE COMPANY’S SHARES7.1.1 MARKET ON WHICH SHARES ARE LISTEDThe Company’s shares are traded onthe Euronext Paris market (ISIN code:FR0000131757).

NosecuritiesofanyotherGroupcompanyaretradedonanyotherstockexchange.

7.1.2 SHARE PRICE PERFORMANCEERAMETsharesclosedtheyear2015at€29.5per share, down 65% over the year. Shareperformance was particularly affected bythe commodities markets dropping to theirlowest in over 15 years. This was due to aslowdown in industrial production in Chinaandthepersistenceofsluggishworldgrowth.The ERAMETgroupmetalswere particularly

and simultaneously impacted. The price ofnickelandmanganeseoreprices fellby42%and49%respectivelyfromDecember2014toDecember2015.

Aftera relativelystablespelluntilJune2015,ERAMET shares bore the full brunt of thesharpdeteriorationinthemetalssectorcrisisduringthesummerof2015.Asaresultofthebearish trend in theshareprice, thevolumesprocessedincreasedfrom5,859,835 sharesin2014to8,234,536 sharesin2015,representingapproximately 32,000 shares tradedper ses-sion(comparedto23,000 sharespersessionreportedin2014).

Changes in trading volumes and ERAMET share price performance

0

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

20152014201320122011201020092008200720062005

VOLUME (THOUSAND SHARES) STOCK PRICE (€)

0

100

200

300

400

500

600

700

800

20152014201320122011201020092008200720062005

Volume (monthly average) Stock price (monthly average)

281


Stock market data

PRICE(€)

EXTREMESFORTHEPERIOD YEARENDED31/12STOCK-MARKET

CAPITALISATIONAT31/12NUMBER

OFSHARESTRADED

HIGH LOW (€ MILLION) (DAILY AVERAGE)

2004 72.90 36.70 66.20 1,704 15,9532005 94.90 66.10 81.00 2,089 19,3192006 147.40 79.00 121.40 3,142 14,8062007 391.26 114.00 350.00 9,067 24,0222008 669.98 96.06 138.00 3,618 52,9452009 272.30 108.00 220.75 5,821 47,5892010 298.40 193.70 256.50 6,801 33,4192011 276.65 80.05 94.50 2,505 46,4022012 139.90 75.95 110.95 2,944 36,7422013 116.00 63.76 70.29 1,866 22,9272014 102.00 65.85 76.50 2,031 22,9802015 94.390 23.05 29.50 583.7 32,166

PRICE(€) VOLUME(X1000)

LOW HIGHAVERAGE

(YEAR-END) (MONTHLY AVERAGE)

2015

December 23.05 32.60 26.93 1,139.9November 28.75 37.48 31.81 1,087.8October 32.06 44.44 37.88 925.9September 32.97 50.89 40.47 780.4August 45.08 60.70 53.89 501.8July 59.76 70.44 63.24 499.0June 69.48 76.36 72.80 395.0May 73.00 79.00 75.08 498.0April 73.06 86.15 78.62 820.7March 84.75 94.25 88.87 590.7February 71.40 94.39 81.78 594.6January 69.06 80.1 72.99 400.62014

December 69.75 83.57 77.75 345.0November 71.55 82.50 76.09 334.7October 69.00 83.52 74.55 543.2September 79.63 90.42 84.63 449.2August 80.00 93.00 86.39 323.5July 85.14 98.00 89.92 287.9June 86.52 99.00 93.67 332.5May 89.15 102.00 94.60 444.1April 87.71 100.50 94.14 639.3March 68.82 89.00 76.34 967.8February 65.85 72.10 69.88 462.1January 67.60 77.49 71.89 731.1

Source: NYSE Euronext.

282

Corporate and share capital information / Share capital

7.1.3 SECURITIES SERVICESTheCompany’sshareregisterismaintainedby:

BNPParibasSecuritiesServicesGCT—IssuerServicesGrandsMoulinsdePantin—9,rueduDébarcadère—93761PantinCedex,France

ExaneBNPParibaswascommissionedtoimplementtheliquiditycontract.

7.2 SHARE CAPITAL7.2.1 SUBSCRIBED CAPITAL

7.2.1.1 AMOUNT AND SHARES

At31 December2015,sharecapitalamountedto €80,956,814.90 in the form of 26,543,218fullypaid-upsharesinthesameclass,withaparvalueof€3.05each.

7.2.1.2 RIGHTS ATTACHED TO THE SHARES

Everyshareprovidesentitlementtoownershipin the Company’s assets and a share of itsearnings, in an amount proportional to thepercentageof thesharecapital it represents,taking into account, as appropriate, theredeemed and unredeemed share capital,paid-upandunpaidsharecapital,andtheparvalueandrightsofthevariousshareclasses.

Everyshareprovidesentitlement,whetherasagoingconcernorintheeventofliquidation,topaymentofthesamenetsumforanydis-tributionorredemption,insuchawaythatanytaxexemptionsortaxtowhichtheCompanymaybeentitledorliableshallbeappliedtoallshares.

7.2.1.3 SUBSCRIBED UNPAID CAPITAL

None.

7.2.2 SECURITIES NOT REPRESENTING SHARE CAPITAL

7.2.2.1 FOUNDERS’ SHARES, VOTING RIGHT CERTIFICATES

None.

7.2.2.2 OTHER SECURITIES

TheCompanyhasnot issuedanyother cur-rently valid financial instruments that do notrepresentsharecapitalbutwhichmayprovideentitlement to the share capital in the futureorbywayofoptions.However,authorisationsexist forsuch issues,uponadecisionof theBoard. No use has yet been made of suchauthorisations.

7.2.3 CHANGES IN SHARE CAPITAL AND BREAKDOWN OVER THE PAST THREE YEARSDetailsofsharecapitalaregiveninNote 16.1to the consolidated financial statements inChapter 6 of this document. The Companyhasnotbeennotifiedofanymaterialchangeinshareholdingssincetheendoftheyear.

283


7.2.4 SHARE OWNERSHIP

7.2.4.1 OWNERSHIP STRUCTURE

Company shareholders as at 31 December 2015 (% OF SHARES)

Concert party*62.71%

Other shareholders37.29%

Concert sub-group FSI Equation

SORAME

STCPI

CEIR

Treasury stock

Other registered shareholders

Bearer shares of which:

Carlo Tassara France (12.79%)

Blackrock (2.04%)

BRGM (1.34 %)

30.34% 6.72% 37.06%

25.66%30.73%

0.82%

4.03%

1.71%ERAMET

* Pursuant to a shareholders’ agreement, subject of the AMF decision and notification No. 212C0486 published on 12 April 2012.

284


7.2.4.2 AT 31 DECEMBER 2015 (INCLUDING SHAREHOLDERS HOLDING—OR POTENTIALLY HOLDING—AT LEAST 1% OF THE SHARE CAPITAL OR VOTING RIGHTS AND OF WHICH THE COMPANY IS AWARE)

MAINSHAREHOLDERS EQUITIESPERCENTAGEOF

CAPITALTHEORETICAL

VOTINGRIGHTS

PERCENTAGEOFTHEORETICAL

VOTINGRIGHTS

VOTINGRIGHTSEXERCISABLE

ATGSM

PERCENTAGEOFVOTINGRIGHTSEXERCISABLE

ATGSM

SORAME(1) 8,051,838 30.33% 16,103,676 35.98% 16,103,676 36.16%CEIR(1) 1,783,996 6.72% 3,567,992 7.97% 3,567,992 (a) 8.01%Total for the SORAME/CEIR (1) concert sub-group 9,835,834 37.06% 19,671,668 43.96% 19,671,668 44.17%

FSIEquation (Bpifrancesubsidiary)(1) 6,810,317 25.66% 13,620,634 30.44% 13,620,634 (b) 30.58%

Total concert party (SORAME/CEIR/Bpifrance) (1) 16,646,151 62.71% 33,292,302 74.39% 33,292,302 (c) 74.76%

CarloTassaraFrance (RomainZaleskigroupcompany)(2) 3,394,146 12.79% 3,394,146 7.58% 3,394,146 7.62%

STCPI 1,070,587 4.03% 2,141,173 4.78% 2,141,173 4.81%BRGM(3) 356,044 1.34% 356,044 0.80% 356,044 0.80%BlackRockInvestment ManagementUKLtd(3) 541,866 2.04% 541,866 1.21% 541,866 1.22%

Employees(ERAMETsharefund) 52,373 0.20% 104,746 0.23% 104,746 0.24%Corporateofficers 27,504 Notsignificant 44,536 Notsignificant 44,536 NotsignificantERAMETtreasuryshares 218,276 0.82% 218,276 0.49% 0 0.00%Others 4,236,271 16.06% 4,659,155 10.51% 4,659,155 10.56%

TOTAL SHARES 26,543,218 100.00% 44,752,244 100.00% 44,533,968 100.00%

TOTAL REGISTERED SHARES 18,387,508 69.27% 36,596,534 81.78% 36,501,477 81.96%

TOTAL BEARER SHARES 8,155,710 30.73% 8,155,710 18.22% 8,032,491 18.04%(1) SORAME, CEIR and FSI Equation are party to a Shareholders’ Agreement constituting a concert party, subject of the AMF decision and notification No. 212C0486.(2) Since the latest declaration by Carlo Tassara France of its crossing a significant-shareholding threshold, No. 207C0134 of 17 January 2007.(3) Estimate on the basis of the most recent Thomson Reuters survey.(4 )vIn keeping with the redrafted version of Article L. 225-102 of the Commercial Code, as stipulated in Article 135 of law No. 2015-990 of 6 August 2015 (Macron Law), the portion of the share capital held by employees at the reporting date includes not only the shares allotted to an employee savings plan or employee shareholding funds (FCPE) but also registered bonus shares and bonus shares awarded under the authorisation of the General Meeting of Shareholders after the law came into force on 8 August 2015. At 31 December 2015, there were no bonus shares that fit this definition. The portion of the share capital held by employees at 31 December 2015 totalled 52,373 shares representing 0.20% of the capital.(a) Of which, 720,866 voting rights cannot be exercised until 21 July 2016 (see AMF Decision 214C1461 of 21 July 2014).(b) Of which, 2,751,872 voting rights cannot be exercised until 21 July 2016 (see AMF Decision 214C1461 of 21 July 2014).(c) Of which, 3,472,738 voting rights cannot be exercised until 21 July 2016 (see AMF Decision 214C1461 of 21 July 2014).

285




CAPITALTHEORETICAL

VOTINGRIGHTS


VOTINGRIGHTS


ATGSM


ATGSM

SORAME(1) 8,051,838 30.33% 16,103,676 35.98% 16,103,676 36.17%CEIR(1) 1,783,996 6.72% 3,567,992 7.97% 3,567,992 8.01%Total for the SORAME/CEIR (1) concert sub-group 9,835,834 37.06% 19,671,668 43.96% 19,671,668 44.18%

FSIEquation (Bpifrancesubsidiary)(1) 6,810,317 25.66% 13,620,634 30.43% 13,620,634 30.59%

Total concert party (SORAME/CEIR/Bpifrance) (1) 16,646,151 62.71% 33,292,302 74.39% 33,292,302 74.77%


STCPI 1,070,587 4.03% 2,141,173 4.78% 2,141,173 4.81%BRGM(3) 356,044 1.34% 356,044 0.80% 356,044 0.80%BlackRockInvestment ManagementUKLtd(3) 1,165,441 4.39% 1,165,441 2.60% 1,165,441 2.62%

Employees(ERAMETsharefund) 52,373 0.20% 104,746 0.23% 104,746 0.24%Corporateofficers 23,127 Notsignificant 36,603 Notsignificant 36,603 NotsignificantERAMETtreasuryshares 230,051 0.87% 230,051 0.51% 0 0.00%Others 3,605,298 13.67% 4,033,067 9.09% 4,033,067 9.14%

TOTAL SHARES 26,543,218 100.00% 44,753,573 100.00% 44,523,522 100.00%


TOTAL BEARER SHARES 8,093,920 30.49% 8,093,920 18.09% 8,004,319 17.98%(1) SORAME, CEIR and FSI Equation are party to a Shareholders’ Agreement constituting a concert party, subject of the AMF decision and notification No. 212C0486.(2) Since the latest declaration by Carlo Tassara France of its crossing a significant-shareholding threshold, No. 207C0134 of 17 January 2007.(3) Estimate on the basis of the most recent Thomson Reuters survey. BlackRock Investment Management (UK) Ltd stated that BlackRock Global Funds controlled 1,303,888 shares (4.92% of the capital) as from 13 March 2012.

286




CAPITALTHEORETICAL

VOTINGRIGHTS


VOTINGRIGHTS


ATGSM


ATGSM

SORAME(1) 8,051,838 30.33% 13,558,933 40.46% 13,558,933 40.81%CEIR(1) 1,783,996 6.72% 1,783,996 5.32% 1,783,996 5.37%Total for the SORAME/CEIR (1) concert sub-group 9,835,834 37.06% 15,342,929 45.79% 15,342,929 46.18%

FSIEquation (Bpifrancesubsidiary)(1) 6,810,317 25.66% 6,810,317 20.32% 6,810,317 20.50%

Total concert party (SORAME/CEIR/Bpifrance) (1) 16,646,151 62.71% 22,153,246 66.11% 22,153,246 66.68%


STCPI 1,070,586 4.03% 2,141,172 6.39% 2,141,172 6.44%BRGM(3) 356,044 1.34% 356,044 1.06% 356,044 1.07%BlackRockInvestment ManagementUKLtd(3) 987,240 3.72% 987,240 2.95% 987,240 2.97%

Employees(ERAMETsharefund) 52,373 0.20% 86,227 0.26% 86,227 0.26%Corporateofficers 21,855 Notsignificant 35,667 Notsignificant 35,667 NotsignificantERAMETtreasuryshares 284,861 1.07% 284,861 0.85% 0 0.00%Other 3,729,962 14.13% 4,069,261 12.25% 4,069,261 12.36%

TOTAL SHARES 26,543,218 100.00% 33,507,864 100.00% 33,223,003 100.00%


TOTAL BEARER SHARES 8,085,232 30.46% 7,978,238 23.81% 7,978,238 24.01%(1) SORAME, CEIR and FSI Equation are party to a Shareholders’ Agreement constituting a concert party, subject of the AMF decision and notification No. 212C0486.(2) Since the latest declaration by Carlo Tassara France of its crossing a significant-shareholding threshold, No. 207C0134 of 17 January 2007.(3) Estimate on the basis of the most recent Thomson Reuters survey. BlackRock Investment Management (UK) Ltd stated that BlackRock Global Funds controlled 1,303,888 shares (4.92% of the capital) as from 13 March 2012.

Tothebestof theCompany’sknowledge,noother shareholders directly or indirectly holdmore than 1% of the share capital or votingrightsintheCompanyandtherearenopledgedshares.Apartfromthetreasurysharesreferredto in theabovetable, theCompanydoesnotownanyotherof itsownshares.Theshare-holdingsof corporate officers are detailed inthechapteronCorporateGovernance.

7.2.4.5 FORESEEABLE CHANGES IN VOTING RIGHTS

At31 December2015,atotalof83,425 regis-teredshares,registeredforlessthantwoyears,did not enjoy double voting rights. If thosesharesweretoenjoydoublevotingrights,thetotalofdoublevotingrightswouldbeincreasedto36,585,000plus thesinglevoting rightsofbearer shares, making 8,032,491 additionalrightsat31 December2015.

7.2.5 STOCK OPTION PLAN AND BONUS SHARESAt the time this registration document wassubmitted,theCompanyhadissuednodilutiveinstrument (no convertible or exchangeablesecurityorsecuritywithwarrants).

The bonus shares granted and still open at31 December2015,whoseplandetailsaregiv-en inNote 16.2totheERAMETconsolidatedfinancial statements set out in Chapter 6 ofthisdocument,aresharesinexistence.Therearenocurrentstockoptions.

287


7.2.6 SUMMARY TABLE OF FINANCIAL AUTHORISATIONSShare capital increases authorisedA. By issuing shares, various transferable securities and/or subscription warrants, with shareholders’ preferential subscription rights. Art. L. 225-129 of the French Commercial CodeBytheEGMforanamountof€24,000,000 29 May2015(Resolution 27)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneB. By issuing shares, various transferable securities and/or subscription warrants, with waiver of shareholders’ preferential subscription rights, through a public offer.BytheEGMforanamountof€16,000,000 29 May2015(Resolution 28)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneC. By issuing shares, various transferable securities and/or subscription warrants, with waiver of shareholders’ preferential subscription rights, in connection with an offer specified in section II of Article L. 411-2 of the French Monetary and Financial Code.BytheEGMforanamountof€16,000,000 29 May2015(Resolution 29)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneD. By issuing shares, with waiver of preferential shareholder rights, resulting from the issue, by subsidiaries, of marketable securities granting access to the Company’s share capital.BytheEGMforanamountof€16,000,000 29 May2015(Resolution 30)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneE. By capitalising reserves, earnings, premiums or other capitalisable items.BytheEGMforanamountof€24,000,000 29 May2015(Resolution 26)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneF. By issuing shares or miscellaneous marketable securities, in consideration of non-cash transfers of assets to the Company, without shareholders’ preferential subscription rights. Art. L. 225-147, sub-paragraph 6 of the French Commercial CodeBytheEGMfor10%ofthesharecapital,inanamountof€8,086,607. 29 May2015(Resolution 31)Termofdelegation 26 monthsuntil28/07/2017Useoftheauthorisation NoneTotal issues limit (total A+B+C+D+F)BytheEGM 29 May2015(Resolution 32)Maximumamount €24,000,000Useoftheauthorisations NoneShare capital increase reserved for employeesG. By the EGM 29 May2015(Resolution 33)Termofdelegation 26 monthsuntil28/07/2017Maximumamount €500,000Useoftheauthorisation NoneShare capital reductionH. By the EGM 29 May2015(Resolution 34)Termofdelegation 26 monthsuntil28/07/2017Maximumamount 10%ofsharecapitalUseoftheauthorisation NoneBonus share awards (Art. L. 225-197-1 and L. 225-197-2 of the French Commercial Code)BytheEGM 29 May2015(Resolution 35)Maximumtotalnumber 550,000 shares.Lengthofauthorisation 38 monthsuntil28/07/2017Usedin2015 0Balanceavailable 550,000

288


7.2.7 DESCRIPTION OF THE SHARE BUYBACK PROGRAMME

7.2.7.1 REPORT ON THE 2015 BUYBACK PROGRAMME

The Combined Ordinary and ExtraordinaryGeneralMeetingof Shareholders on 29 May2015 authorised the Company to buy backits own shares representing up to 10% ofthe share capital, for a maximum purchasepriceof€300pershare,therebyauthorisingamaximum total expenditure of €796,296,300by the Company. This authorisation expiresattheOrdinaryGeneralShareholders’Meetingcalledtoapprovethefinancialstatementsfor

the2015financialyearandwasgrantedforthefollowingpurposes:

– support the share price via a liquidity con-tractwithaninvestmentservicesprovider,inaccordancewiththeAMAFIcodeofconductrecognisedbytheAMF;

– retainordeliverthem(bywayofexchange,inpaymentorotherwise)inconnectionwithexternal-growthtransactions;

– deliver shares upon the exercise of rightsattached to marketable securities givingaccesstocapitalbyredemption,conversion,exchangeorotherwise;

– implement any purchase options planconcerningtheCompany’ssharesunderthe

termsofArticles L. 225-177 et seq. of theFrenchCommercialCode;

– award bonus shares under the terms ofArticles L. 225-197-1 et seq. of theFrenchCommercialCode;

– grant or transfer shares to employees astheirshareintheprofitsofthebusinessorforthepurposeofimplementinganyemployeesavingsplanunderthestatutoryprovisions,withparticularreferencetoArticlesL. 3332-1 et seq.oftheFrenchLabourCode;

– cancel them, in accordance with the34th resolution put to the Shareholders’GeneralMeetingof29 May2015authorisinga reduction in theCompany’s capital for aperiodof26 months.

7.2.7.2 DETAILS OF TREASURY SHARES TRADED OVER THE YEAR (ARTICLE L. 225-211 OF THE FRENCH COMMERCIAL CODE)

ThefollowingtablesummarisestreasurysharetransactionscarriedoutbytheCompanybetween1 Januaryand31 December2015.

PRICESUPPORTAWARDSTOEMPLOYEES TOTAL

Position at 31 December 2013 106,952 177,909 284,861As a percentage of share capital 26,543,218 0.40% 0.67% 1.07%Bonussharegrants (37,459) (37,459)Purchases 232,759 232,759Sales (250,110) (250,110)Position at 31 December 2014 89,601 140,450 230,051As a percentage of share capital 26,543,218 0.34% 0.53% 0.87%Bonussharegrants (45,393) (45,393)Purchases 218,088 218,088Sales (184,470) (184,470)Position at 31 December 2015 123,219 95,057 218,276As a percentage of share capital 26,543,218 0.46% 0.36% 0.82%

Over the course of the year, 218,088 shareswerepurchasedatanaveragesharepriceof€58.08 and 184,470 shares were sold at anaveragepriceof€61.58.

The carrying amount of the portfolio of218,276 shareswithaparvalueof€3.05each,heldat31 December2015,was€23.5 million,withamarketvalueof€29.50pershareatthatsamedate,representingatotalof€6.4 million.

The Company did not use any derivativesduringtheyear.

7.2.7.3 LIQUIDITY CONTRACT

Inordertoensureminimumliquiditylevelsforitsstockatalltimes,theCompanyimplementsaliquiditycontractwithEXANEBNPPARIBASas of 18 July 2003. This liquidity contract

complieswiththeAMAFIcharter.Asummaryof share price support transactions can befound in thedetailsof tradingsetoutabove.Atthesettlementdateof31 December2015,thefollowingresourceswereavailableontheliquidityaccount:125,469ERAMETsharesand€2,024,743.

289


7.2.7.4 DESCRIPTION OF THE 2016 SHARE BUYBACK PROGRAMME

LEGAL FRAMEWORK

In accordance with the provisions ofArticle 241-2 of the general regulationsof the AMF and European RegulationNo. 2273/2003 of 22 December 2003, thepurpose of this section is to describe theterms and goals of the Company’s sharebuybackprogramme.Thisprogramme,whichfallswithinthescopeofArticleL. 225-209oftheFrenchCommercialCode,shallbeputtotheShareholders’GeneralMeetingof27 May2016,votingunderthequorumandmajorityconditionsforshareholders’ordinarygeneralmeetings.

NUMBER OF SHARES AND PROPORTION OF CAPITAL HELD BY THE COMPANY

At31 December2015,theCompany’scapitalcomprised26,543,218 shares.

Onthatdate,theCompanyheld218,276 trea-suryshares,equivalentto0.82%ofthesharecapital.

BREAKDOWN BY PURPOSE OF THE EQUITY SECURITIES HELD BY THE COMPANY

Asat31 December2015,the218,276 treasurysharesheldbytheCompanywereallocatedasfollows,bypurpose:

– share price support (liquidity contract):123,219 shares;

– grantstoemployees:95,057 shares.

GOALS OF THE NEW BUYBACK PROGRAMME

Theintendedgoalsofthisprogrammeareto:

– support the share price via a liquidity con-tractwithaninvestmentservicesprovider,inaccordancewiththeAMAFIcodeofconductrecognisedbytheAMF;

– retainordeliverthem(bywayofexchange,inpaymentorotherwise)inconnectionwithexternal-growthtransactions;

– deliver shares upon the exercise of rightsattached to marketable securities givingaccesstocapitalbyredemption,conversion,exchangeorotherwise;

– implement any purchase options planconcerningtheCompany’ssharesunderthetermsofArticles L. 225-177 et seq. of theFrenchCommercialCode;

– award bonus shares under the terms ofArticles L. 225-197-1 et seq. of theFrenchCommercialCode;

– grant or transfer shares to employees astheirshareintheprofitsofthebusinessorforthepurposeofimplementinganyemployeesavingsplanunderthestatutoryprovisions,withparticularreferencetoArticlesL. 3332-1 et seq.oftheFrenchLabourCode;

– cancel them, in accordance with the34th resolution put to the Shareholders’GeneralMeetingof29 May2015authorisinga reduction in theCompany’s capital for aperiodof26 months.

MAXIMUM PORTION OF THE CAPITAL, MAXIMUM NUMBER AND CHARACTERISTICS OF THE EQUITY SECURITIES

10%oftheregisteredcapitalat31 December2015, representing 2,654,321 shares, before

deductionof the treasurysharesheldby theCompany.

ERAMETsharesaretradedonEuronextParis(ISINcode:FR0000131757).

The intended maximum purchase price is€300pershare.

The intended maximum total amount to beused in thesepurchases is€796,296,300 for2,654,321 shares representing 10% of theCompany’ssharecapital.

BUYBACK TERMS

Sharepurchases,salesandtransfersmaybecarriedoutbyanymeansinthemarketoroverthecounter,includingshareblocktransactionsor via derivatives, on the understanding thatthe resolution put to shareholders does notlimittheportionoftheprogrammethatcanbecarriedoutviashareblockpurchases.

The Company notes that if derivatives areused, theCompany’sgoalwouldbe tocovertheoptionpositionstakenbytheissuer(sharepurchase or subscription options granted toGroup employees, debt instruments grantingequity rights). More specifically, the use ofderivativesshallconsistofbuyingcalloptionsandtheCompanyshouldnothaveoccasiontosellputoptions.

LENGTH OF THE BUYBACK PROGRAMME

Thevalidityof theprogramme is limited toaperiodthatwillendattheShareholders’Gener-alMeetingapprovingthefinancialstatementsforthe2016financialyear.

290

Corporate and share capital information / Company information

7.3 COMPANY INFORMATION7.3.1 COMPANY NAME (ARTICLE 2 OF THE ARTICLES OF ASSOCIATION)ERAMET.Inthisdocument,thecompanyisre-ferredtoas“theCompany”or“theIssuer”;thegroupformedbyERAMETanditssubsidiariesisreferredtoas“theGroup”.

7.3.2 COMPANY REGISTRATION NUMBERTheCompany isregistered intheParis traderegister under number 632 045 381 andunder SIRET business identification num-ber 632 045 381 000 27.Itsbusinessconsistsinexploringforandoperatingminingdepositsofanykind,metallurgyofallmetalsandalloys,andtradinginthem.

7.3.3 DATE OF INCORPORATION AND TERM OF THE COMPANY (ARTICLE 5 OF THE ARTICLES OF ASSOCIATION)TheCompanywasincorporatedforatermof99 years from 23 September 1963, expiringon23 September2062,exceptintheeventofearlydissolutionorextension.

7.3.4 REGISTERED OFFICE (ARTICLE 4 OF THE ARTICLES OF ASSOCIATION)TourMaine-Montparnasse33,avenueduMaine75015Paris,FranceTelephone:+33 (0)1 45 38 42 42Fax:+33 (0)1 45 38 41 28Website:www.eramet.com

7.3.5 LEGAL FORM AND APPLICABLE LEGISLATIONERAMET isaFrenchpublic limitedcompanywithaBoardofDirectors,governedbythepro-visionsofArticlesL. 224-1 et seq.oftheFrenchCommercial Code (legislative and regulatorypart)aswellasbytheprovisionsofitsArticlesofAssociation.

7.3.6 STATUTORY AUDITING OF THE COMPANY (ARTICLE 19 OF THE ARTICLES OF ASSOCIATION)As required by law, the Company is auditedbytwoIncumbentStatutoryAuditorsandtwoAlternateStatutoryAuditors.

PursuanttoArticle 19oftheArticlesofAssoci-ation,thestatutoryauditorsmustbenationalsofoneoftheMemberStatesoftheEuropeanUnion.

7.3.7 CORPORATE OBJECT (ARTICLE 3 OF THE ARTICLES OF ASSOCIATION)“TheobjectoftheCompany,inallcountries,isexploringforandoperatingminingdepositsofallkinds,themetallurgyofallmetalsandalloysandtradinginthem.

Forthispurpose,itisinvolvedinthefollowingactivities,whetherdirectly,orindirectlythroughinvestments:

– theuncovering,acquisition,farmout,dispos-al,concessionandexploitationofallminesandquarriesofanykindwhatsoever;

– the processing, transformation of andtrading in all ores,mineral andmetal sub-stances and their by-products, alloys andanyderivatives;

– the manufacture and marketing of anyproducts of which the above-mentionedmaterialsorsubstancesarecomponents;

– more generally, any transactions directlyor indirectlyrelatedtotheaboveobjectsorthat may be conducive to developing theCompany’sbusiness.

Toachieve this object, theCompanymay, inparticular:

– create,acquire,sell,exchange,takeonleaseor lease-out, with or without a purchaseundertaking, manage and operate directlyor indirectly any industrial or commercialcompanies, plant, construction sites andpremiseswhatsoever,andanymovableandtangibleobjects;

– obtain or acquire any patents, licences,processesandtrademarks,exploit,transferorcontribute themascapital,andgrantallmannerofoperatinglicencesinanycountry;

– and, in general, carry out any commercial,industrial, financial, property or chatteltransactions thatmay directly or indirectlyrelateorcontributetothecorporateobjectorthatmayfacilitatetheachievementthereof.Itmay directly or indirectly act on its ownbehalforonbehalfofthirdparties,whetheralone or via a partnership, joint venture orcompany,withanyothercompanyorperson,andcarryout,directlyorindirectly,inFranceorabroad,inanyformwhatsoever,alltrans-actions or other operations that arewithinthescopeofitscorporateobject.Itmaytakeanyinterestorstake,inanyformandinanyFrenchorforeigncompanythatmayaidthedevelopmentofitsownbusiness.”

7.3.8 FINANCIAL YEAR (ARTICLE 23 OF THE ARTICLES OF ASSOCIATION)Thefinancialyearrunsfor12 months,begin-ningon1 Januaryandendingon31 Decemberofeachyear.

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7.3.9 GENERAL SHAREHOLDERS’ MEETING

7.3.9.1 CALLING OF MEETINGS AND TERMS OF ADMISSION (ARTICLES 20 TO 22 OF THE ARTICLES OF ASSOCIATION)

COMPOSITION

Shareholders’ GeneralMeetings comprise allshareholders in the Company, regardless ofthenumberofsharestheyhold.

MEETING NOTICE

Shareholders’GeneralMeetingsarecalledandheldpursuanttotheprovisionsoftheFrenchCommercialCodeandArticles 20to22oftheArticlesofAssociation.

Meetings are held either at the registeredofficeoratanyothervenueinthesameFrenchregionspecifiedinthemeetingnotice.

TERMS OF ADMISSION

All shareholders are entitled to take part inShareholders’ General Meetings, subject toproof of their identity, either in person or byproxy through another shareholder or theirspouse, the partner with whom they haveconcluded a civil-union pact or by any otherindividualorlegalentitytheychooseundertheconditionsprescribedbycurrentregulations.

Holders of registered shares and holders ofbearer sharesmust carry out the formalitiesprovided for in the applicable regulations.These formalities must be completed bymidnight, Paris time, at least two businessdaysprior to theMeeting.Shareholdersmayalsovotebycorrespondencepursuanttotheprovisions of Article L. 225-107 and R. 225-75 et seq. of the French Commercial Code,using a form thatmust reach the Companyat least three days prior to the date of theMeeting.

WheretheBoardofDirectorssoresolveswhencallingtheMeeting,shareholdersmaypartici-pate intheMeetingusingvideo-conferencing

oranyothermeansoftelecommunicationsorremotetransmission,includingtheInternet,inaccordancewith theprovisionsofapplicableregulations. Where applicable, mention ofthisdecisionisincludedinthemeetingnoticepublishedintheBALO(Bulletin des annonces légales obligatoires—Frenchofficialbulletinoflegalnotices).

SHARES THAT ARE JOINTLY-OWNED, SPLIT, PLEDGED OR UNDER ESCROW

In the absence of specific provisions of theArticles of Association, and pursuant to theprovisionsofArticleL. 225-110oftheFrenchCommercial Code, any holder of a jointlyowned share, a split share—bare ownershipandusufruct,apledgedshareorashareunderescrow,isinvitedtotheMeetingandmayat-tend,subjecttocompliancewiththefollowinglegal provisions or provisions of the ArticlesofAssociationwith regard to theexerciseofvotingrights.

7.3.9.2 TERMS OF EXERCISE OF VOTING RIGHTS (ARTICLES 8 AND 20 OF THE ARTICLES OF ASSOCIATION)

Shareholdershavethesamenumberofvotingrights as the shares they own or represent,subject to the double voting rights attachedto some shares. The Extraordinary GeneralShareholders’Meetingof21 July1999grantedadoublevotingright,witheffectfrom1 Janu-ary2002,toeveryfullypaid-upshareforwhichitcanbedemonstratedthatithasbeenregis-teredinthenameofthesameshareholderformorethantwoyears.

Bonussharesgrantedthroughthe incorpora-tionof reserves,earningsor issuepremiumson the basis of old shares benefiting fromdoublevotingrights,alsogainsuchrightsaftertwoyears.

Doublevotingrightsceaseforanysharesthatareconvertedtobearersharesortransferred,except,inaccordancewiththelaw,anytrans-fer by succession, settlement of communalproperty between spouses or family gift, orthroughthemergerordemergeroftheshare-holdercompany.

In accordance with the law, double votingrights may be cancelled only by a decisionof the Shareholders’ Extraordinary GeneralMeetingandfollowingapprovalbytheSpecialMeetingofBeneficiaryShareholders.

ELECTRONIC VOTING

Shareholders may also, where the Board ofDirectorssoresolveswhencallingtheMeeting,vote by correspondence or appoint a proxyusing any means of remote transmission,includingtheInternet, inaccordancewiththeregulatoryprovisionsapplicablewhenused.

Where an electronic form is used, theshareholder’ssignaturemaytaketheformofeither a secure digital signature or a reliableidentificationprocess thatprovidesa failsafelinkwith the instrument inquestion,possiblyconsisting of a username and a password.Whereapplicable,mentionof thisdecision isincludedinthemeetingnoticepublishedintheBALO (Bulletin des annonces légales obliga-toires—Frenchofficialbulletinoflegalnotices).

Theproxygivenorvotecastelectronicallypriorto themeeting, aswell as the acknowledge-mentofreceiptgiven,shallbedeemedirrevo-cablewritteninstrumentsthatarebindingonallparties,itbeingnotedthatwherethesharesare sold at least two business days prior tomidnight (00:00)on thedateof themeeting,Paris time, the Company shall cancel or, asthecasemaybe,amendaccordinglytheproxygivenorvotecastpriortothatdateandtime.

SHARES THAT ARE JOINTLY-OWNED, SPLIT, PLEDGED OR UNDER ESCROW

In the absence of specific provisions of theArticlesofAssociationandpursuanttoArticleL. 225-110 of the French Commercial Code,thevotingrightisexercisedbytheusufructu-aryatordinaryshareholders’generalmeetings,by the bare owner at extraordinary generalshareholders’ meetings, by one of the jointownersorbyasoleproxyinthecaseofsharesjointlyownedinindivisum,andbytheownerofpledgedsharesorsharesunderescrow.

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Corporate and share capital information / Company information

7.3.10 TRANSFER OF SHARESSince the removal of the approval clause bytheGeneralMeetingof15 June1994,sharesmay be traded freely, subject to compliancewiththerulesapplicabletocompanieswhosesharesareadmittedtotradingonaregulatedmarket.

7.3.11 IDENTIFICATION OF SHAREHOLDERS

7.3.11.1 CROSSING SIGNIFICANT-SHAREHOLDING THRESHOLDS/DECLARATION OF INTENT

LEGAL DECLARATIONS

Pursuant toArticlesL. 233-7 toL. 233-11oftheFrenchCommercialCode,anyindividualorlegalentity,whetheractingaloneorinconcert,acquiring ownership of a number of sharesrepresenting more than one-twentieth, one-tenth, three-twentieths, one-fifth, one-quarter,three-tenths, one-third, one-half, two-thirds,eighteen-twentieths or nineteen-twentieths

oftheCompany’ssharecapitaland/orvotingrights,mustinformtheAMFandtheCompanywithin the prescribed period, by registeredletterwithacknowledgementofreceipt,ofthetotal number of shares and/or voting rightsowned.Thesamepersonsorentitiesarealsorequired to inform the Company whenevertheirinterestfallsbelowanyoftheabove-men-tionedthresholds.

Finally, inadditiontothis legaldutyofdisclo-sure, any person crossing above or belowtheabovementioned thresholdsofone-tenth,three-twentieths, one-fifth or one-quarter ofthesharecapitalislegallyrequiredtodeclarewithin the prescribed period, their intentionsforthecomingsixmonths.

In the event of non-compliance with thesedisclosureobligations,theprovisionsofArticleL. 233-14of thesaidCommercialCodeshallapply.

ADDITIONAL DISCLOSURES IN ACCORDANCE WITH THE ARTICLES OF ASSOCIATION

Since the amendment of Article 9 of theArticlesofAssociationbytheGeneralMeeting

of15 June1994,anyindividualorlegalentity,whetheractingaloneor inconcert,acquiringor ceasing to own a fraction equal to 1% ofthesharecapitaland/orvoting rights,oranymultipleof thatpercentage,must inform theCompanywithintendays,byregisteredletterwithacknowledgementofreceipt,senttotheCompany’sregisteredoffice,statingthenum-berofsharesandvotingrightsheld.

Failure tomake thisdisclosureshall result inalossofvotingrightsforthesharesorvotingrights in excess of the fraction that shouldhavebeendisclosed,foraperiodoftwoyearsfrom the datewhen the situation is rectifiedand upon themere request of one ormoreshareholdersholding5%of thesharecapitalorvotingrights,ataGeneralMeeting.

7.3.11.2 IDENTIFIABLE BEARER SHARES

Pursuant to Article L. 228-2 of the FrenchCommercialCodeandArticle 9oftheArticlesofAssociation,theCompanymayatanytimeaskEuroclearS.A.tocarryoutthe“identifiablebearer share” (IBS) procedure to identify theholdersofsuchshares.

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7.3.11.3 PUBLISHED DECLARATIONS OF SIGNIFICANT-SHAREHOLDING THRESHOLD CROSSINGS

DATEAMFDECISIONNO. OBJECT

03/08/1999 199C1045

Declarationofthecrossingofasignificant-shareholdingthreshold(ERAP-CEIR-SORAME).Declarationofintent.Appointmentoffivequalifiedpersonsasdirectors.Reminder:dispensationfromobligationtofileanintendedpublicoffer.

29/12/1999 199C2064 Declarationofthecrossingofasignificant-shareholdingthreshold.COGEMAsubstitutedforERAP.30/12/1999 199C2068 Declarationofthecrossingofasignificant-shareholdingthreshold.AFDsubstitutedforERAP.

25/07/2001 199C0921 Proposedamendmenttoshareholders’agreement:assigningERAMETsharesheldbyCOGEMAtoCEAIndustrie.

12/09/2001 201C1140 Declarationofthecrossingofasignificant-shareholdingthreshold.Amendmenttotheshareholders’agreementfollowingthesubstitutionofAREVAforCOGEMA.

20/12/2004 204C1559 Declarationofthecrossingofasignificant-shareholdingthresholdanddeclarationofintent.SubstitutionofCarloTassaraInternationalforMaaldriftBV.

14/02/2006 206C0296 Declarationofcrossingaboveasignificant-shareholdingthresholdbyM&GInvestmentManagementLimitedto5.0034%ofthesharecapitaland2.98%ofthevotingrights.

17/01/2007 207C0134 Declarationofcrossingaboveasignificant-shareholdingthreshold,to13.16%ofthesharecapitaland7.74%ofthevotingrights,anddeclarationofintentbyCarloTassaraFrance.

18/01/2007 207C0137 Declarationofcrossingbelowasignificant-shareholdingthreshold(0%)byCarloTassaraFrance.

24/07/2007 207C1569 Declarationofcrossingbelowasignificant-shareholdingthresholdto4.14%ofthesharecapitaland4.81%ofthevotingrightsbySTCPI.

30/05/2008 208C1042 Amendmenttothe(CEIR-SORAME-AREVA)shareholders’agreementof17 June1999

03/06/2008 208C1083 Declarationofcrossingbelowasignificant-shareholdingthresholdbyM&GInvestmentManagementLimitedto4.95%ofthesharecapitaland2.93%ofthevotingrights.

21/07/2009 209C1013 AmendmenttotheSORAME-CEIRshareholders’agreementof19 July1999.

20/03/2012 212C0416 Declarationofcrossingaboveasignificant-shareholdingthresholdandthenbelow,byBlackRockInc.(4.92%ofthesharecapitaland2.94%ofthevotingrights).

12/04/2012 212C0486 AdvertisementoftheSORAME-CEIR-FSIshareholders’agreementclauses.

21/05/2012 212C0634 Declarationofcrossingbelowasignificant-shareholdingthresholdbyAREVA—EndoftheSO-RAME-CEIR-AREVAshareholders’agreement.

23/05/2012 212C0647 Declarationofcrossingaboveasignificant-shareholdingthresholdbyFSI.

22/07/2013 213C1027 Declarationofcrossingaboveasignificant-shareholdingthresholdbyBPIGroupeviaBpifranceParticipa-tions(formerlyFSI)

22/07/2013 213C1028 StatementofshareholdingbyCaissedesDépôtsetConsignationsviaBPIGroupe

21/07/2014 214C1461 Declarationofcrossingaboveasignificant-shareholdingthresholdbyCaissedesDépôtsetConsignationsandBPIGroupe,viaBpifranceParticipations,asaresultofthedoublevotingrightsgranted.

7.3.12 FACTORS LIKELY TO INFLUENCE A PUBLIC OFFERInadditiontotheinformationrelatingtosignif-icant-shareholdingthresholdcrossing,doublevoting rights, shareholders’ agreements andundertakings detailed in this Chapter, thefollowingfactorsshouldbenoted.

POSSIBILITY OF USING CAPITAL INCREASE AUTHORISATIONS DURING A PUBLIC OFFER

InaccordancewiththenewwordingofarticleL. 233-32oftheFrenchCommercialCode,pur-suanttolawNo. 2014-384of29 March2014,thecapital increaseauthorisationssetout inresolutions 27 to 31 put forward for votingattheGeneralMeetingofMay2015,namely,the authorisation of a capital increase withpreferential subscription rights (27th),withno

subscriptionrightsbyapublicoffer(28th),byaprivateplacement(29th),bysubsidiaries(30th)orbycontributionsinkind(31st),withinalimitonthetotalnominalamountof€24 millionforresolutions 27to31,(thatis,slightlylessthanonethirdofthesharecapital),maybeusedbytheBoardofDirectorsduringapublicofferforpurchaseorshareswap,subjecttothepowersexpressly granted to general shareholders’meetingsandinsofarassuchactionisintheinterestsoftheCompany.

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Corporate and share capital information / Shareholders’ agreements

7.4 SHAREHOLDERS’ AGREEMENTS


– aconcertsub-groupcomprisedofSORAMEand CEIR, companies controlled by theDuval family, pursuant to a simultaneousshareholders’ agreement of 19 July 1999,thatcameintoeffecton21 July1999,andwasamendedbyarideron13 July2009;

– Bpifrance Participations (formerly FSI), viaitssubsidiaryFSIEquation.

In a rider dated 21 March 2013, the partiesto the shareholders’ agreement agreed thatas from the 2013 General Shareholders’Meeting, the Board of Directors shall com-prise five directors proposed by SORAME/CEIR, three directors proposed by BpifranceParticipations, five directors who must beindividuals, of whom three are proposed bythe SORAME-CEIR concert sub-group andtwoareproposedbyBpifranceParticipationsonthegroundsoftheircompetenceandtheirindependence,twodirectorsproposedbySo-ciétéTerritorialeCalédoniennedeParticipationIndustrielle (STCPI), one director nominatedjointlybySORAME/CEIRandBpifrancePartici-pations,andonedirectortochairtheERAMETBoardofDirectors.

The provisions of the aforementionedshareholders’ agreement and those of theconcertsub-grouparecontained in themain

extractsofthetextsoftheAMFdecisionandnotificationNo. 212C0486andNo. 209C1013(amendmentof13 July2009)givenbelow(thefull versionof these texts is availableon theAMFwebsite).

7.4.1 DECISION AND NOTIFICATION NO. 212C0486 OF 12 APRIL 2012Themainclausesoftheshareholders’agree-mentareasfollows:

Composition of the ERAMET Board of Directors

The Board of Directors shall comprise fivedirectors proposed by SORAME/CEIR, threedirectorsproposedbyFSI,fourdirectorswhomustbeindividuals,ofwhomtwoareproposedby theSORAME-CEIRconcertsub-groupandtwo are proposed by FSI on the grounds oftheir competence and their independence,twodirectorsproposedbySociétéTerritorialeCalédonienne de Participation Industrielle(STCPI),andonedirectortochairtheERAMETBoardofDirectors.

Thiscompositionshallbemaintainedexceptintheeventof(i) achangebymorethan10%inERAMET’ssharecapitalorintheinterestsheldatthetimeofthesigningoftheshareholders’agreement, either by SORAME and CEIR, orbyFSI,or(ii) amaterialchangeinthecapitalinterestheldbySTCPIinERAMET,resultinginareductiontounder635,372 ERAMETshares.

Chairmanship, Board of Directors committees

The parties (namely SORAME, CEIR andFSI) intend to consult each other before theappointment of a Chairman of the Boardof Directors, a Chief Executive Officer, or aDeputyCEO,ortheappointmentoftheDivisionmanagers of each of the ERAMET group’sthree business divisions. The membershipandworkingsoftheBoardofDirectors’com-mitteesarealsosetout,namelytheSelection

Committee,theRemunerationCommitteeandtheAuditCommittee.Iftheconsultationweretobeunsuccessful, the rulesofordinary lawshallapply.

CONCERT STABILITY

Covenant to consult

The parties undertake to consult each otherpriortotheBoardofDirectors’meetingandtheERAMET General Shareholders’ meeting, toensuretheconcordantexerciseoftheirvotingrights and to implement a joint policy withrespect to theCompany,and laysdown thatifitfailstoreachanagreementonanymatterbroughtbeforetheBoardofDirectors,itshallensurethatitsdecisionisdeferredtotheverynextmeeting (1).

Commitment to hold

SORAMEandCEIRundertaketohold,atleast70%fortheformerandupto30%forthelatter,oftheoverallinterestinERAMET,andsolongasFSIdoesnotincreaseitsoverallinterestinERAMET,tohold2%moreofERAMET’scapitalthanFSI,sothattheoverallconcertpartyholds51% of voting rights in ERAMET, providedthat FSI’s stake in ERAMET remains equalto 25.68% of the capital. The SORAME-CEIRconcert sub-group however remains free totransferatleast80%ofitsinterestinERAMET,and its commitment to hold shall lapse ifFSI were to exercise its option to purchaseERAMETsharesfromSORAME.

Obligations in the event of a public bid or offer

Each party undertakes to file the reports orperformtheobligationsrequiredofitwithintheprescribedperiod,tosolelybearanysanctionsarisingfromthefailuretodoso,andtofileandsingly undertake the public bid or offer thatwould have becomemandatory owing to itsacquisition, ifany,ofERAMETshares,oranyof itsactions,or thefailure to fulfilanyof itsobligations.

(1) It is stated that, in this event, the parties are not required to reach an agreement and can exercise their voting rights freely, and notably that the parties have not laid down any power of veto.

295


ERAMET stock options granted by SORAME and CEIR

SORAMEgrantsFSIastockpurchaseoptionon its ERAMET shares which shall be indi-visible, exercisable in the event of a transferof shares or of one ormore general partnersharesorany transaction involvingSORAMEthat would result in the Duval family losingits control over SORAME. CEIR grants FSI astock purchase option of all of its ERAMETshareswhichwillbeindivisible,andFSIgrantsCEIRastocksaleoptionofallofitsERAMETshares,which shall be indivisible.These twooptionscanbeexercisedintheeventthatFSIexercisesitspurchaseoptionontheERAMETsharesheldbySORAME.

Reciprocal pre-emptive right

Thepartiesagreetoareciprocalrightoffirstrefusal, (i) in the event of a firm intention tosell a specified number of ERAMET shareson the market to unidentified third parties,piecemeal or by accelerated bookbuilding(ABB) or through a fully marketed offering(FMO); (ii) in theeventofaproposedsaleofoneormoreblocksofERAMETsharestooneor more identified third parties, by matchedbids or off-market; and in the event of anintendedcontributionascapitalofallorpartofitsinterestinERAMET,inconsiderationforsharesinthetransfereecompany.

Therightoffirstrefusaldoesnotapplyto:

– transfersundertheagreement:forSORAMEandCEIRaslongastheycomplywiththeircommitment to hold, and for FSI providedthatitretains20%ofERAMETcapital;

– transfers to one or more identified thirdparties or for an intended contribution ascapital: for SORAME andCEIR, as long astheycomplywiththeircommitmenttohold,and that no block of shares representingover5%of thecapital is transferredtoanyoneinvestorgroup,andforFSI,providedthatit retains20%ofERAMETcapital and thatnoblockofsharesrepresentingover5%ofthecapitalistransferredtoanyoneinvestorgroup.

The notification requirements and rights ofrefusal generally do not apply to (i) transferwithout charge to natural persons, mortiscausaeor inter vivos; (ii) transferswithin theSORAME-CEIR concert sub-group, subjectto the former’s holdingat least 70%and thelatter’s holding not more than 30% of theiroverallinterestinERAMET;(iii) intheeventofamergerbetweenSORAMEandCEIR, ifSO-RAMEistheacquiringcompanyandremainsundertheDuvalfamily’scontrol;and(iv) intheeventoftransferofitsERAMETsharesbyFSItooneofitssubsidiaries,orbywayofacapitalcontributioninoneofitssubsidiaries,providedthat the transferee enters the shareholders’agreement and takes over FSI’s rights anddutiesresultingfromthetransfer.

Term

Theshareholders’ agreementshall enter intoforcewhenthetransferbyAREVAtoFSIofitsinterest inERAMETtakeseffect. It isenteredintoforafixedtermexpiringon31 December2016, and may be extended thereafter bytacit renewal for one year periods, unlessterminated by means of a notice served byanypartytotheothernolessthanonemonthbeforetheexpirationofthecurrentperiod.Theagreementshallceaseimmediatelyandasofright in theeventof (i) achangeofpredomi-nancewithin theoverall concert partyowingtoacquisitionsorsharesubscriptionsbyFSI;(ii) thedisposalorcontributionor transferbyanyofthepartiesofover80%ofitsinterestinERAMET;or(iii) FSI’sdirectorindirectinterestinERAMETcapitalfallsbelow15%.

SORAMEandCEIR thereforedecidedtosigntheamendmentNo. 2on16 March2012totheterm clause of the shareholders’ agreementsignedon17 June1999andamendedearlierbyamendmentNo. 1on13 July2009.

ItisnoteworthythatSORAMEandCEIRhavegivenacommitmenttoFSItoconvertthere-quirednumberofERAMETsharesintobearershares so that the SORAME-CEIR concertsub-group’s current interest is not accretivebymorethan2%owingtothelossofdoublevotingrightsattachedtotheERAMETsharestransferred toFSI.Once theERAMETshares

havebeentransferred,SORAME,CEIRandFSIshall request ERAMET to re-enter all of theirERAMETsharesasregisteredsharesinordertorecovertheirdoublevotingrightstwoyearslater.

7.4.2 DECISION AND NOTIFICATION NO. 209C1013 OF 21 JULY 2009Under cover of a letter dated 16 July 2009,theAMF(FrenchFinancialMarketsAuthority)was sent a shareholders’ agreement entitled“AmendmentNo. 1totheagreementof19 July1999 among the shareholders in ERAMETbetween SORAME and CEIR”, concluded on13 July2009betweenSORAMEbeingapart-nership limited by shares and the simplifiedjoint-stockcorporation,CEIR.

A/It is hereby recalled that on 19 July 1999,SORAME and CEIR (being companiescontrolled by the Duval family) concludeda shareholders’ agreement instituting aconcertpartybetween themfora termof10 yearsasfrom21 July1999.

This shareholders’ agreement providednotablyforthefollowing:• the non-transferability of their ERAMETsharesforfiveyears,exceptwithinamax-imum1.5%ofERAMET’ssharecapitalforeachofthem;

• full freedom for them to transfer theirERAMET shares among themselvesprovidedSORAMEcontinues toholdnotlessthan70%oftheERAMETsharesheldbytheirconcertparty,andCEIRcontinuesto hold a maximum of 30%, with theundertaking to maintain this distributionamongthemintheeventthattheir inter-estsincrease;

• reciprocalrightsofpre-emptionovertheirERAMETshares;

• an undertaking to consult before anyShareholders’GeneralMeeting,toensureconcordantexerciseoftheirvotingrightsfor the implementation of a commonpolicyasregardsERAMET.

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Corporate and share capital information / Shareholders’ agreements

B/Itmust be noted that SORAMEandCEIR,certain members of the Duval family andAREVA are joined in a concert party vis-à-vis ERAMET, pursuant to a private deeddated17 June1999asamendedon27 July2001 substituting AREVA for COGEMA,itself previously substituted for ERAP on1 December 1999 under the terms of theaforesaidshareholders’agreement.

Asecondridertotheprivatedeedof17 June

1999wassignedon29 May2008,inwhich

the parties extended their concert agree-

mentuntil31 December2008withvarious

amendments, accordingly substituting as

from 29 May 2008 a redrafted version for

the earlier version of their shareholders’

agreementof17 June1999.

Intheabsenceofrenunciationbytheparties

by15 December2008,andagainby15 June

2009, this new shareholders’ agreement

wastacitlyextendedtwice.Thelastrenewal

was for six months from 1 July 2009 to

31 December2009.

On16 July2009,thepartiestotheshareholders’agreement,asaconcertparty,held61.57%ofthecapitaland73.57%ofthevotingrightsofERAMET,whichbrokedownasfollows:

EQUITIESPERCENTAGEOF

CAPITAL VOTINGRIGHTS %VOTINGRIGHTS

SORAME 7,818,919 29.37 15,637,838 35.16CEIR 1,783,996 6.70 3,567,992 8.02Sub-total SORAME/CEIR 9,602,915 36.07 19,205,830 43.18AREVA 6,787,277 25.39 13,514,554 30.63

TOTAL CONCERT PARTY 16,390,192 61.57 32,720,384 73.57

C/On 13 July 2009, SORAME and CEIRsignedanamendmenttotheshareholders’agreement of 19 July 1999 described inpoint A above, extending their concertagreementuntil21 July2014withvariousamendments, accordingly substituting asfrom13 July 2009 a redrafted version forthe earlier version of their shareholders’agreementof19 July1999.

The following are the main terms of theamendment concluded between SORAMEandCEIR:• stability of the SORAME-CEIR concertparty:exceptintheeventofadisposalofnot lessthan80%of the interestof theirconcertpartyinERAMET,andforaslongasAREVAdoesnotincreaseitsinterestinERAMETbymorethan2%,thepartiesun-dertaketomaintainthenumberofsharesandvotingrightsinERAMETrequiredfor

theconcertsub-grouptoremainpredomi-nantintheoverallconcertparty;

• transfer of ERAMET shares betweenSORAME and CEIR: the parties mayfreely transfer ERAMET shares amongthemselves,providedSORAMEcontinuestoholdnotlessthan70%oftheERAMETsharesheldbytheconcertsub-groupandCEIR continues to hold a maximum of30%;

• increase of SORAME and CEIR share-holdings in ERAMET: the parties mayfreely increase their interest in ERAMET,providedtheydonotincreasetheinterestbymorethan2%of thecapitalorvotingrightswithinlessthantwelvemonths;

• an undertaking to consult before anyShareholders’GeneralMeeting,toensureconcordantexerciseoftheirvotingrightsfor the implementation of a commonpolicyasregardsERAMET.

Thisagreementsupersedestheshareholders’agreementof19 July1999.Itisconcludedfora term expiring on 21 July 2014, renewablethereafter by tacit extension for successivetwo-yearperiods,unlessdenouncedbyeitherparty serving notice one month before theexpiryofthecurrentperiod.

It shall cease, as shall the concert partybetween the parties, in the event that eitherpartydisposesofmorethan80%ofitsinterestinERAMET.

ThedistributionofthedirectorsontheBoardofDirectorsandonthecommitteesisfurtherdetailedinChapter 4ofthisdocument,entitledCorporateGovernance.

TothebestofERAMET’sknowledge,therearenoothershareholders’agreements.

297

298

300 8.1 EXPLANATORY NOTE302 8.2 WORDING OF DRAFT

RESOLUTIONS

308 8.3 STATUTORY AUDITORS’ REPORTS ON THE RESOLUTIONS PRESENTED TO THE GENERAL SHAREHOLDERS’ MEETING

Chapter 8

GENERAL SHAREHOLDERS’ MEETING—WORDING OF DRAFT RESOLUTIONS

299

300

General Shareholders’ Meeting—Wording of draft resolutions / Explanatory Note

8.1 EXPLANATORY NOTEWe have set out below, for your attention, an explanatory note regarding the resolutions proposed for voting at the General Meeting:

The 1st and 2nd resolutions concern the approval of the individual and consolidated financial statements. The financial statements are set out in detail in the documents submit-ted to shareholders and are also commented on in the management report.

In the 3rd resolution, you are asked to approve the special report prepared by the Company’s Statutory Auditors concerning the agreements referred to in Articles L. 225-38 et seq. of the French Commercial Code.

This report provides an account of related-par-ty agreements previously authorised by a General Shareholders’ Meeting which were ongoing in 2015. Having already received ap-proval from a General Shareholders’ Meeting, those agreements will not be submitted to a vote at this Meeting.

The purpose of the 4th resolution is to propose that the losses for the 2015 financial year be carried forward to retained earnings.

In the 5th resolution, pursuant to Article L. 225-42-1 of the French Commercial Code, you are asked to approve the arrangements for severance pay falling due or which may fall due to Patrick Buffet in the event of termination of his term of office as Chairman and CEO, as ap-proved by the Board of Directors at its meeting of 29 May 2015.

Following the reappointment of the Chairman and CEO to that role, decided by the Board of Directors on 29 May 2015, and at the recommendation of the Remuneration Com-mittee, on 29 May 2015 the Board of Directors voted unanimously, with the abstention of the Chairman and CEO, to retain all elements of the remuneration of the Chairman and CEO

and all the provisions of his corporate officer’s contract dated 20 February 2008 (incorporat-ing all the amendments decided since then by the Company’s Board of Directors at the recommendation of the Remuneration Com-mittee). However, two changes were made to the severance pay falling due to the Chairman and CEO in the event of his departure from the Company (as a result of forced resignation, cancellation or non-renewal of his term of office or modification of the conditions under which he originally joined the ERAMET group):

– The amount of severance pay which may fall due is equal to twice—instead of three times, as it was previously—the last gross annual fixed remuneration, plus twice—instead of three times—the average gross annual variable remuneration received in the last three complete years prior to his departure.

– The severance pay benefit specified in his corporate officer contract is conditional upon the fulfilment of performance condi-tions: the total gross variable remuneration (itself subject to specific performance conditions) received over the final three full financial years of his term of office must be 35% or more of the total gross annual fixed remuneration received during the same three-year period—instead of 20% as it was previously. Consequently, these arrange-ments rule out payment of such a benefit should the Chairman and CEO fail to achieve his targets.

In addition, in accordance with AFEP/MEDEF Code recommendations, Patrick Buffet does not hold a contract of employment binding him with the Company.

The Statutory Auditors have drawn up a spe-cial report concerning this undertaking.

The 6th resolution concerns ratification of the co-option of Catherine Ronge, who was pro-posed by Bpifrance, as a member of the Board of Directors, in line with the decision taken by the Board of Directors on 17 February 2016.

Ms. Ronge is Chairperson of Weave Air, a strategic consultancy firm.

In the 7th, 8th, 9th and 10th resolutions you are asked to approve the remuneration items fall-ing due or granted to each Executive Corporate Officer of the Company for the financial year ended 31 December 2015.

Pursuant to recommendation 24.3 of the AFEP/MEDEF code dated June 2013 as amended in November 2015, which, in accordance with article L. 225-37 of the French Commercial Code is the code of reference applicable to the Company, remuneration items falling due or granted to each Executive Corporate Officer of the Company for the financial year ended, set out in detail in Chapter 4 “Corporate Governance” of this registration document, are subject to shareholder approval.

Consequently, in the 7th resolution you are asked to approve the remuneration items falling due or granted in the past financial year to Patrick Buffet, Chairman and CEO.

Furthermore, in the 8th resolution you are asked to approve the remuneration items falling due or granted in the past financial year to Georges Duval, Deputy CEO.

In the 9th resolution you are asked to approve the remuneration items falling due or granted in the past financial year to Bertrand Madelin, Deputy CEO, whose term of office came to an end on 27 November 2015.

In the 10th resolution you are asked to approve the remuneration items falling due or granted in the past financial year to Philippe Vecten, Deputy CEO.

Pursuant to the provisions of Article L. 225-209 of the French Commercial Code, the 11th res-olution requests the General Shareholders’ Meeting to authorise the Board to renew the Company’s share buyback programme, in accordance with all legal and regulatory conditions, allowing the repurchase of shares, by any means, including during a public offer period. The maximum amount of the share buyback is 10% of the share capital and the maximum purchase price is €300 per share. What is at issue here is the annual renewal of that authorisation. The purpose of this authori-sation is to allow the existing liquidity contract

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to continue and to implement bonus share awards to employees through the allocation of existing shares.

Pursuant to the new provisions of the French Law on economic growth, activity and equal opportunities, Law No. 2015-990 dated 6 August 2015, the purpose of the 12th reso-lution is to authorise the Board of Directors of ERAMET to grant a number of existing shares, not exceeding 550,000, as bonus shares, over a three-year period (2016, 2017 and 2018) in accordance with the following conditions:

– all Group employees (provided the applica-ble local legal, accounting and tax provisions so permit), to be granted bonus shares that are not contingent upon performance conditions;

– all key executives of the Group, that is, around 280 individuals (provided the applicable local legal, accounting and tax provisions so per-mit), to be granted bonus shares that are, for the most part, contingent upon performance conditions;

– executive Committee members (including those who are corporate officers) to be granted bonus shares that are fully contin-gent upon performance conditions.

The maximum portion of the overall amount of bonus shares that may be received by execu-tive corporate officers is one third.

The performance conditions for the first year of utilisation (2016) of this authorisation to implement a selective performance share plan shall be as follows:

– relative performance of the ERAMET share price for one third of the share grant. This involves comparing the change in total shareholder return over a three-year period with that of a panel of comparable compa-nies on the Euromoney Global Mining Index for Diversified Metals & Mining in the Steel segment, with the performance conditions being fully achieved if the ERAMET perfor-mance ranks among the top 15% of the panel);

– intrinsic performance according to the fol-lowing financial indicators, for two-thirds of the share grant (the performance conditions only being fully achieved when these targets are significantly out-performed):• 50%: current operating income to sales,

fully achieved if the ratio is positive,• 50%: operating cash-flow, calculated

according to the budget.

The 550,000 bonus shares represent 2% of the share capital at 31 December 2015.

The purpose of resolutions 13 and 14 is to update the Company’s articles of association to include the applicable legal provisions. The 13th resolution proposes amendment of Arti-cle 17 of the articles of association related to regulated agreements, in line with the wording of Ordinance No.°2014-863 dated 31 July 2014. The 14th resolution proposes modifica-tion of Article 20.4 of the articles of association with regard to voting procedures prior to the General Shareholders’ Meeting (in line with Article R. 225-77 of the French Commercial Code amended by Decree No.°2011-1473 dated 9 November 2011) and the procedures for drawing up the list of persons authorised to take part in general shareholders’ meetings (in accordance with Article R. 225-85 of the French Commercial Code amended by Decree No.°2014-1466 dated 8 December 2014).

The 15th resolution authorises fulfilment of the formalities involved in implementing the other resolutions passed by the combined Ordinary and Extraordinary General Shareholders’ Meeting.

The Board of Directors

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General Shareholders’ Meeting—Wording of draft resolutions / Wording of draft resolutions

8.2 WORDING OF DRAFT RESOLUTIONS

WITHIN THE REMIT OF THE ORDINARY GENERAL SHAREHOLDERS’ MEETING

FIRST RESOLUTION

(2015 ANNUAL FINANCIAL STATEMENTS)

Having heard the Report from the Board of Directors and the Report from the Statutory Auditors on the financial statements for the year ended 31 December 2015, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, approves the financial statements for said financial year as presented to it and the transactions reflected in those financial statements or summarised in those reports.

SECOND RESOLUTION

(2015 CONSOLIDATED FINANCIAL STATEMENTS)

Having heard the Report from the Board of Directors and the Report from the Statutory Auditors on the consolidated financial state-ments for the year ended 31 December 2015, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, approves the con-solidated financial statements as presented to it and the transactions reflected in those financial statements or summarised in those reports.

THIRD RESOLUTION

(RELATED-PARTY AGREEMENTS)

Having heard the special report of the Statu-tory Auditors on the agreements covered by Articles L. 225-38 et seq. of the French Com-mercial Code, the General Shareholders’ Meet-ing, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, approves that report and the agreements listed therein.

FOURTH RESOLUTION

(ALLOCATION OF EARNINGS—SETTING THE DIVIDEND)

The General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, resolves to allocate the losses for the past financial year, amounting to €331,515,590.34, to retained earnings, thus increasing the amount set aside in that account from €825,409,780.31 to €493,894,189.97.

The General Shareholders’ Meeting, acting as an Ordinary General Shareholders’ Meeting, notes that the dividends per share paid out with respect to the past financial year and the three previous financial years, were as follows:

2012 2013 2014 2015

Number of shares subject to dividends 26,543,218 26,543,218 26,543,218 26,543,218Dividend €1.30 €0 €0 €0

FIFTH RESOLUTION

(UNDERTAKINGS PURSUANT TO ARTICLE L. 225-42-1 OF THE FRENCH COMMERCIAL CODE)

Having reviewed the special report prepared by the Statutory Auditors concerning the agreements referred to in Articles L. 225-38 et seq., of the French Commercial Code and in accordance with the provisions of Article L. 225-42-1 of the aforesaid Code, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, approves the aforesaid report, and all provisions referred to therein, related to the severance pay that may fall due to Patrick Buffet, Chairman and CEO.

SIXTH RESOLUTION

(RATIFICATION OF THE CO-OPTION OF A DIRECTOR)

The General Shareholders’ Meeting ratifies the co-option of Catherine Ronge as director, approved by the Board of Directors at its meet-ing of 17 February 2016. Ms. Ronge replaces Thierry Le Hénaff, who resigned with effect from 17 February 2016, for the remaining term of office of the latter, specifically, until the end of the General Shareholders’ Meeting called to approve the financial statements for the 2016 financial year.

SEVENTH RESOLUTION

(APPROVAL OF REMUNERATION ITEMS FALLING DUE OR GRANTED TO PATRICK BUFFET, CHAIRMAN AND CEO, FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015)

Adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, the General Shareholders’ Meeting, consulted pursuant to recommendation 24.3 of the June 2013 AFEP/

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MEDEF Code, as amended in November 2015, which, in accordance with article L. 225-37 of the French Commercial Code, is the code of reference applicable to the Company, approves the remuneration items falling due or granted for the financial year ended 31 December 2015 to Patrick Buffet, Chairman and CEO, as set out in the 2015 registration document in Section 4 “Corporate Governance”, under the paragraph heading “remuneration of corporate officers”, on pages 106 to 108.

EIGHTH RESOLUTION

(APPROVAL OF REMUNERATION ITEMS FALLING DUE OR GRANTED TO GEORGES DUVAL, DEPUTY CHIEF EXECUTIVE OFFICER, FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015)

Adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, the General Shareholders’ Meeting, consulted pursuant to recommendation 24.3 of the June 2013 AFEP/MEDEF Code, as amended in November 2015, which, in accordance with article L. 225-37 of the French Commercial Code, is the code of reference applicable to the Company, approves the remuneration items falling due or granted for the financial year ended 31 December 2015 to Georges Duval, Deputy CEO, as set out in the 2015 registration document in Section 4 “Corporate Governance”, under the paragraph heading “remuneration of corporate officers”, on pages 109 to 111.

NINTH RESOLUTION

(APPROVAL OF REMUNERATION ITEMS FALLING DUE OR GRANTED TO BERTRAND MADELIN, DEPUTY CHIEF EXECUTIVE OFFICER, FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015)

Adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, the General Shareholders’ Meeting, consulted pursuant to recommendation 24.3 of the June 2013 AFEP/MEDEF Code, as amended in November 2015, which, in accordance with article L. 225-37 of the French Commercial Code, is the code of

reference applicable to the Company, approves the remuneration items falling due or granted for the financial year ended 31 December 2015 to Bertrand Madelin, Deputy CEO, as set out in the 2015 registration document in Section 4 “Corporate Governance”, under the paragraph heading “remuneration of corporate officers”, on pages 112 to 114.

TENTH RESOLUTION

(APPROVAL OF REMUNERATION ITEMS FALLING DUE OR GRANTED TO PHILIPPE VECTEN, DEPUTY CHIEF EXECUTIVE OFFICER, FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015)

Adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings, the General Shareholders’ Meeting, consulted pursuant to recommendation 24.3 of the June 2013 AFEP/MEDEF Code, as amended in November 2015, which, in accordance with article L. 225-37 of the French Commercial Code, is the code of reference applicable to the Company, approves the remuneration items falling due or granted for the financial year ended 31 December 2015 to Philippe Vecten, Deputy CEO, as set out in the 2015 registration document in Section 4 “Corporate Governance”, under the paragraph heading “remuneration of corporate officers”, on pages 115 to 117.

ELEVENTH RESOLUTION

(AUTHORISATION TO TRADE IN THE COMPANY’S SHARES)

Having familiarised itself with the report from the Board of Directors and the description of the Company’s share buyback programme, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for ordinary general shareholders’ meetings and making use of the powers provided by Article L. 225-209 of the French Commercial Code, authorises the Board of Directors to buy, or to arrange the

purchase of, the Company’s shares up to a limit of 10% of the share capital, in order to:

– support the share price via a liquidity con-tract with a market maker, in accordance with the AMAFI code of conduct recognised by the AMF;

– retain or contribute them (by way of a stock swap, against payment, or otherwise) in connection with acquisition transactions;

– provide shares upon the exercise of rights attached to marketable securities granting access to the share capital by redemption, conversion, stock swap or by any other manner;

– implement any share purchase option plan concerning the Company’s shares within the terms of Articles L. 225-177 et seq. of the French Commercial Code;

– allocate bonus shares pursuant to the provi-sions of Articles L. 225-197-1 et seq. of the French Commercial Code;

– allocate or transfer shares to employees as their share in the profits of the business or for the purpose of implementing any employee savings plan under the statutory provisions, with particular reference to Articles L. 3332-1 et seq. of the French Labour Code;

– cancel those shares, in accordance with the 34th resolution of the General Shareholders’ Meeting of 29 May 2015, authorising a reduction in the Company’s share capital for a period of 26 months.

Such shares may be purchased, sold, transferred or swapped, by any means, in the market or over the counter, including, where appropriate, by means of derivatives and the whole of the authorised share buyback programme may be acquired or transferred in the form of share blocks.

Such transactions may also be carried out during a public offer period if the purchase offer for the Company’s shares is fully paid in cash.

Payment may be made by any means.

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The maximum purchase price may not exceed €300 per share.

This authorisation is granted for a period that will end at the General Shareholders’ Meeting called to approve the financial statements for the 2016 financial year.

Based on the number of shares comprising the share capital at 31 December 2015, assuming a price of €300 per share, the maxi-mum theoretical investment would amount to €796,296,300.

For the purposes of implementing this resolution, the Board of Directors is granted full powers and may, in turn, delegate those powers, in order to:

– place any stock market orders, entering into any agreements particularly with regard to the keeping of share purchase and sale records;

– make all relevant filings with the AMF;

– assign or reassign the acquired shares to various objectives in line with the applicable legal or regulatory provisions;

– carry out all other formalities and generally do as necessary.

WITHIN THE REMIT OF THE EXTRAORDINARY GENERAL SHAREHOLDERS’ MEETING

TWELFTH RESOLUTION

(ALLOCATION OF BONUS SHARES)

Having noted the report from the Board of Di-rectors and the special report from the Statuto-ry Auditors, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for extraordinary general shareholders’ meetings, authorises the Board of Directors to grant, on one or more occasions, existing shares as bonus shares to employees and executive corporate officers of the Company and of its related companies, within the meaning of article L. 225-197-2 of

the French Commercial Code, in accordance with articles L. 225-197-1 et seq. of the French Commercial Code.

The General Shareholders’ Meeting decides that the total number of bonus shares that may be granted under this authorisation may not exceed 550,000 shares.

In accordance with regulations, this upper limit does not include additional shares to be issued or granted in order to preserve the rights of beneficiaries in the event of transactions involving the Company’s share capital.

Share grants carried out pursuant to this authorisation may be awarded, under the con-ditions prescribed in law, to eligible executive corporate officers of the Company, provided that the vesting of these shares is conditional upon the attainment of one or more perfor-mance conditions, established by the Board of Directors, when the share grant is decided, and provided that the number of shares granted does not represent more than one third of the upper limit specified above.

The allocation of shares to beneficiaries shall be definitive at the end of a vesting period of at least two years.

In addition, beneficiaries may not sell the shares granted to them under this authori-sation for a minimum of two years from the definitive share grant.

However, given that the vesting period for all or part of one or several share grants is at least four years, the General Shareholders’ Meeting authorises the Board of Directors to refrain from imposing any holding period for the shares in question, such that the aforesaid shares shall be freely transferable once vested.

As an exception to the foregoing, the aforesaid shares may be vested by beneficiaries prior to the end of the vesting period specified here above in the event that the beneficiary sustains a disability classified as category 2 or 3 under Articles L. 341-4 et seq. of the French Social Security Code; the aforesaid shares shall also be freely transferable in the event that the

beneficiary sustains a disability corresponding to the above-mentioned categories under the French Social Security Code.

Bonus shares granted shall consist of existing shares.

As the decision to grant bonus shares falls to the Board of Directors, it shall determine the identity of the share grant beneficiaries and shall establish the terms and, where appropri-ate, the share grant criteria.

The Board of Directors may make use of this authorisation, on one or more occasions, for a period of thirty-eight months from this meeting.

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THIRTEENTH RESOLUTION

(AMENDMENT OF ARTICLE 17 OF THE ARTICLES OF ASSOCIATION—REGULATED AGREEMENTS)

Having noted the report from the Board of Directors and the provisions of Article L. 225-38 of the French Commercial Code as amended by Ordinance No. 2014-863 dated 31 July 2014, modifying the arrangements for the prior authorisation of regulated agreements by the Board of Directors of a limited company (société anonyme) and those of Article L. 225-39 of the French Commercial Code as amended by Law No. 2011-525 dated 17 May 2011, modifying the arrangements for providing information concerning current agreements concluded under normal conditions, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for extraordinary general shareholders’ meetings, decides to modify Article 17 of the articles of association related to regulated agreements, by adopting the following text:

CURRENT VERSION NEW VERSION

Article 17: agreements between the Company and one of its directors or shareholders, CEO or deputy CEO

All agreements entered into under the conditions set forth in Articles L. 225-38 or L. 225-39 of the French Commercial Code are subject to the information, authorisation and/or approval procedures stipulated by law.

The Chairman of the Board of Directors must notify the Statutory Auditors of any authorised agreements. The Statutory Auditors then present a special report on those agreements to the General Shareholders’ Meeting and the latter approves that report.

Agreements concerning current operations concluded under normal conditions are notified, by the person concerned, to the Chairman of the Board of Directors who passes on a list of such agreements and their purposes to the Statutory Auditors and the Board of Directors.

Article 17: Regulated agreements

All agreements entered into under the condi-tions set forth in Articles L. 225-38 of the French Commercial Code are subject to the procedures stipulated by law and in the regulations.

The Chairman of the Board of Directors must notify the Statutory Auditors of any authorised agreements. The Statutory Auditors then present a special report on those agreements to the General Shareholders’ Meeting and the latter approves that report.

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FOURTEENTH RESOLUTION

(MODIFICATION OF ARTICLE 20.4 OF THE ARTICLES OF ASSOCIATION—COMMON RULES FOR GENERAL SHAREHOLDERS’ MEETINGS)

Having noted the report from the Board of Directors and the provisions of Article R. 225-77 of the French Commercial Code as amended by Decree No. 2014-1473 dated 9 November 2011, modifying the voting arrangements prior to a General Shareholders’ Meeting, and those of Article R. 225-85 of the French Commercial Code as amended by Decree No. 2014-1466 dated 8 December 2014, modifying the date and procedures for drawing up the list of persons authorised to participate at shareholders’ meetings of commercial companies, the General Shareholders’ Meeting, adopting resolutions under the conditions of quorum and majority required for extraordinary general shareholders’ meetings, decides to modify Article 20.4 of the articles of association related to general shareholders’ meetings, by adopting the following text:

CURRENT VERSION NEW VERSION

4. The General Shareholders’ Meeting is open to all Shareholders, regardless of the number of shares they hold. A shareholder may be represented at the General Shareholders’ Meeting under the applicable legal and regulatory conditions.

The right to participate at Shareholders’ meetings is conditional upon the shareholder’s registration in the register of shares, no less than five days prior to the date of the Shareholders’ meeting.

To have the right to attend a Shareholders’ meeting, owners of shares must fulfil the formalities laid down by the applicable regulations in force.

All Shareholders may vote by mail using a form for that purpose which must be received by the Company no less than three days prior to the date of the Shareholders’ meeting.

Where the Board of Directors so resolves when calling the Meeting, shareholders may participate in the Meeting using video-conferencing or any other means of telecommunications or remote transmission, including the Internet, in accor-dance with the provisions of applicable regulations. Where applicable, mention of this decision is included in the meeting notice published in the BALO (Bulletin des annonces légales obligatoires—French official bulletin of legal notices).

Shareholders may also, where the Board of Directors so resolves when calling the Meeting, vote by correspondence or appoint a proxy using any means of remote transmission, including the Internet, in accordance with the regulatory provisions applicable when used.

Where an electronic form is used, the shareholder’s signature may take the form of either a secure digital signature or a reliable identification process that provides a fail-safe link with the instrument in question, possibly consisting of a user name and a password. Where applicable, mention of this decision is included in the meeting notice published in the BALO (Bulletin des annonces légales obligatoires—French official bulletin of legal notices).

The proxy given or vote cast electronically prior to the meeting, as well as the acknowledgement of receipt given, shall be deemed irrevocable written instruments that are binding on all parties, it being noted that where the shares are sold at least three business days prior to midnight (00:00) on the date of the meeting, Paris time, the Company shall cancel or, as the case may be, amend accordingly the proxy given or vote cast prior to that date and time.

4. The General Shareholders’ Meeting is open to all shareholders, regardless of the number of shares they hold. A shareholder may be represented at the General Shareholders’ Meeting under the applicable legal and regulatory conditions.

To have the right to attend a Shareholders’ meeting, owners of shares must fulfil the formalities laid down by the applicable regulations in force.

All Shareholders may vote remotely using a form for that purpose, under the conditions stipulated by law and by the applicable regulations in force.

Where the Board of Directors so resolves when calling the Meeting, shareholders may participate in the Meeting using video-conferencing or any other means of telecommunications or remote transmission, including the Internet, in accordance with the provisions of applicable regulations. Where applicable, mention of this decision is included in the meeting notice published in the BALO (Bulletin des annonces légales obligatoires—French official bulletin of legal notices).

Shareholders may also, where the Board of Directors so resolves when calling the Meeting, vote by correspondence or appoint a proxy using any means of remote transmission, including the Internet, in accordance with the regulatory provisions applicable when used.

Where an electronic form is used, the shareholder’s signature may be derived from a reliable identification process that provides a fail-safe link with the instrument in question, possibly consisting of a user name and a password. Where applicable, mention of this decision is included in the meeting notice published in the BALO (Bulletin des annonces légales obligatoires—French official bulletin of legal notices).

The proxy given or vote cast electronically prior to the meeting, as well as the acknowledgement of receipt given, shall be deemed irrevocable written instruments that are binding on all parties, it being noted that where share ownership is transferred before the second business day prior to midnight (00:00) on the date of the meeting, Paris time, the Company shall cancel or amend, as the case may be, in accordance with the legal conditions, the proxy given or vote cast, prior to that date and time.

The rest of Article 20 of the articles of association remains unchanged.

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FIFTEENTH RESOLUTION

(POWERS)

The Combined Ordinary and Extraordinary General Shareholders’ Meeting fully empowers the bearer of an original, an extract or a copy of the minutes of this meeting to carry out any filing or formality that may be necessary.

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General Shareholders’ Meeting—Wording of draft resolutions / Statutory Auditors’ reports

8.3 STATUTORY AUDITORS’ REPORTS ON THE RESOLUTIONS PRESENTED TO THE GENERAL SHAREHOLDERS’ MEETINGSTATUTORY AUDITORS’ REPORT ON THE AUTHORISATION TO GRANT EXISTING SHARES AS BONUS SHARES

GENERAL SHAREHOLDERS’ MEETING OF 27 MAY 2016—12TH RESOLUTION

To the Shareholders,

In our capacity as statutory auditors of your Company and in compliance with article L. 225-197-1 of the French Commercial Code

(Code de commerce), we hereby report on the proposed free allocation of existing shares, reserved for employees and directors of your Company, an operation upon which you are called to vote.

Your Board of Directors proposes that on the basis of its report it be authorised for a period of 36 months to allocate, for free, existing shares. It is the responsibility of the Board of Directors to prepare a report on the proposed operation. Our role is to report on any matters relating to the information regarding the pro-posed operation.

We have performed those procedures which we considered necessary to comply with the professional guidance issued by the French national auditing body (Compagnie nationale des commissaires aux comptes) for this type of engagement. These procedures consisted mainly in verifying that the proposed methods described in the Board of Directors’ report comply with the legal provisions governing such operations.

We have no matters to report as to the information provided in the Board of Directors’ report relating to the proposed free allocation of shares.

Paris-La Défense, 22 February 2016

The statutory auditors

French original signed by

KPMG S.A. Ernst & Young AuditDenis Marangé Jean-Roch Varon

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310

Chapter 9

ADDITIONAL INFORMATION312 9.1 PERSONS RESPONSIBLE FOR

THE REGISTRATION DOCUMENT312 9.1.1 NAMEANDPOSITIONSOF

PERSONSRESPONSIBLE312 9.1.2 DECLARATIONBYTHEPERSONS

RESPONSIBLEFORTHEREGISTRATIONDOCUMENT

313 9.2 AUDITORS313 9.2.1 STATUTORYAUDITORS313 9.2.2 SUBSTITUTEAUDITORS

314 9.3 FINANCIAL INFORMATION314 9.3.1 NAMEOFTHEPERSON

RESPONSIBLEFORINFORMATIONRELEASE

314 9.3.2 COMMUNICATIONPROCEDURES314 9.3.3 LISTOFFINANCIAL-

INFORMATIONRELEASES,INCLUDINGPRESSRELEASES

315 9.4 CONCORDANCE TABLE FOR THE ANNUAL FINANCIAL REPORT

316 9.5 MANAGEMENT REPORT CONCORDANCE TABLE

318 9.6 TABLE OF CONCORDANCE WITH EUROPEAN REGULATION 809-2004

311

312

Additional information / Persons responsible for the Registration Document

9.1 PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT

9.1.1 NAME AND POSITIONS OF PERSONS RESPONSIBLEMr. Patrick Buffet

ChairmanandCEOofERAMET

Mr. Thomas Devedjian

ChiefFinancialOfficer

9.1.2 DECLARATION BY THE PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENTWedeclarethattothebestofourknowledge,having takenall reasonablemeasures in this

regard, the information in this RegistrationDocument is accurate and does not containanyomissionthatcouldaffectitsscope.

Wedeclarethattoourknowledgethefinancialstatementsweredrawnupinaccordancewithapplicable accounting standards and give atrueandfairviewoftheassetsandliabilities,financialpositionandearningsoftheCompa-nyandofallthecompanieswithinthescopeofconsolidation, and that theManagementRe-port(assetoutinChapters 1—Groupoverview,2—Activities, 3—Risk factors, 4—Corporategovernance,5—Sustainabledevelopmentand7—Corporate and share capital information)presents a true and fair image of businessdevelopments, earnings and the financialpositionoftheCompanyandofallcompanieswithin the scope of consolidation, and adescriptionofthemainrisksanduncertaintiestheyface.

The Auditors have provided us with a letterof completion of assignment in which theystate that theychecked the informationcon-cerningthefinancialpositionandthefinancialstatements presented in this RegistrationDocument, and that they read thedocumentinitsentirety.

The auditors have drawn up a report on the2015 consolidated financial statementspresented in the registration document, onpage 244of thedocument,withanobserva-tionconcerningtheriskofcontinuedoperationof Le Nickel-SLN and the financing of thissubsidiarysetoutinNote 2totheannextotheconsolidatedfinancialstatements.

The auditors have drawn up a report on the2014 consolidated financial statements pre-sentedintheregistrationdocument,onpage244 of the document, with an observationconcerning the effects of application as of1 January 2014 of IFRS 11—Joint arrange-ments, in Note 4 on restated 2013 financialstatements in the annex to the consolidatedfinancialstatements.

The auditors have drawn up a report on the2013 consolidated financial statements pre-sentedintheregistrationdocumentregisteredwith the AMF finance markets regulator, onpage 260 of the document, with an obser-vation concerning the effects of applicationas of 1 January 2013 of IAS 19—Employeebenefits, inNote 4onrestated2012financialstatementsintheannex.

Paris,7April2016

ThomasDevedjian PatrickBuffetChiefFinancialOfficer ChairmanandCEO

313


9.2 AUDITORSTheCompany’sindividualandconsolidatedfi-nancialstatementsareauditedbytheAuditorslistedbelow:

9.2.1 STATUTORY AUDITORS

9.2.1.1 ERNST & YOUNG AUDIT

Address: Tour First—1, place des Saisons,92400 Courbevoie, No. 344 366 315 in theNanterretradeandcorporateregister(RCS).

Partner responsible for the audit: Jean-RochVaron.

Date of appointment: General Shareholders’Meeting of 29 May 2015, replacing Ernst &YoungetAutres.

Termexpirydate:GeneralShareholders’Meet-ingcalledin2021toapprovethe2020financialstatements.

9.2.1.2 KPMG

Address:ImmeubleLePalatin—3,coursduTri-angle,92800Puteaux,No. 775 726 417intheNanterretradeandcorporateregister(RCS).

Partner responsible for the audit: DenisMarangé.

Date of appointment: General Shareholders’Meetingof29 May2015.

Termexpirydate:GeneralShareholders’Meet-ingcalledin2021toruleonthe2020financialstatements.

9.2.2 SUBSTITUTE AUDITORS

9.2.2.1 AUDITEX

Address: Tour First—1, place des Saisons92400 Courbevoie, No. 377 652 938 in theNanterretradeandcorporateregister(RCS).

Date of appointment: General Shareholders’Meetingof13 May2009,renewedattheGen-eralShareholders’Meetingof29 May2015.


9.2.2.2 SALUSTRO REYDEL

Address:ImmeubleLePalatin—3,coursduTri-angle92800Puteaux,No. 652 044 371intheNanterretradeandcorporateregister(RCS).

Date of appointment: General Shareholders’Meetingof29 May2015.


314

Additional information / Financial information

9.3 FINANCIAL INFORMATION

9.3.1 NAME OF THE PERSON RESPONSIBLE FOR INFORMATION RELEASEPersonresponsible: Mr. PhilippeGundermannPosition: StrategyandFinancialCommunicationsManagerAddress: ERAMET

TourMaine-Montparnasse33,avenueduMaine75755ParisCedex 15Telephone:+33 (0)1 45 38 42 78

9.3.2 COMMUNICATION PROCEDURESFrequency: in accordance with regulations,ERAMET publishes its annual and interimresultsandreleasesquarterlysalesfigures.

Informationrelease: inadditionto legalpubli-cationinfinancialpublications,pressreleasesand all regulated financial information aremadeavailabletothepublicontheCompany’swebsite (http://www.eramet.fr—in the Inves-torssection),andreleasedinaccordancewithAMFregulations.

The Articles of Association, minutes ofAGMs, Company and consolidated financialstatements, reports by the auditors and alldocuments made available to shareholderscanbeconsultedattheCompany’sregisteredoffice.

Alldata indicatedinthisdocumentforwhichnosourceisspecificallyindicatedarefromtheCompany’sinternalreportinganddata.

All copies of documents included in thisReference Documentmay be viewed on theERAMETwebsite(http://www.eramet.com)orconsultedonrequesttotheCompany’sDirec-torofLegalAffairsatitsregisteredoffice:TourMaine-Montparnasse—33, avenue du Maine,75015Paris.

9.3.3 LIST OF FINANCIAL-INFORMATION RELEASES, INCLUDING PRESS RELEASES19 February 2016:2015annualresults

7 December 2015:Officialdenialofrumoursofashutdownofnickelproduction

27 November 2015:Rearrangementofdele-gateCEOsatminingbranches

29 October 2015: Sales in third quarter of2015

14 October 2015:PressreleasefollowingtheBoardmeetingon14 October2015

15 September 2015:ThomasDevedjianjoinstheERAMETgroup

29 July 2015:2015interimfinancialreport

29 July 2015:Resultsforfirsthalfof2015

16 June 2015: MKAD: Aubert & Duval andMécachromesetuptheMKADjointventure

15 June 2015: Inauguration of the MoandaMetallurgyComplex(Gabon)

29 May 2015:GeneralShareholders’Meeting

13 May 2015: Information concerning the2015GeneralShareholders’Meeting

29 April 2015:Salesinfirstquarterof2015

27 April 2015:Ecotitaniumproject:firststonelaid

26 March 2015:2014registrationdocument

20 February 2015:2014annualresults

Publications in the “BALO” mandatory legal notice bulletin

AnnouncementofGeneralShareholders’Meeting: 13 April2015

NoticecallingtheGeneralShareholders’Meeting: 13 May2015

Noticeofapprovaloffinancialstatementswithoutamendment:

10 June2015

315


9.4 CONCORDANCE TABLE FOR THE ANNUAL FINANCIAL REPORT

ThisRegistrationDocumentcontainsalltheinformationrequiredinannualfinancialreportspursuanttoArticleL. 451-1-2oftheFrenchMonetaryandFinancialCodeandArticle 222-3oftheGeneralRegulationsoftheAMF.

Inordertofacilitatethereadingofthisannualfinancialreport,theconcordancetablebelowidentifiesthesectionscontainedherein.

N° INFORMATIONINTHEANNUALFINANCIALREPORT REGISTRATIONDOCUMENT

1 Declarationbycorporateofficersattestingtothetruthfulnessofinformation Section 9.12 Consolidatedfinancialstatements Section 6.13 Auditors’Reportontheconsolidatedfinancialstatements Section 6.1.34 Parent’sfinancialstatements Section 6.25 Auditors’reportonthefinancialstatements Sections 6.2.4and6.2.5

6 Managementreport: Seemanagementreportconcordancetable

7 FeespaidtotheAuditors Section 6.1

8 ReportbytheChairmanoftheERAMETBoard—ReportbytheAuditorsdrawnuppursuanttoArticleL. 225-235oftheFrenchCommercialCodeonthereportoftheChairmanoftheERAMETBoard Chapter 4

316

Additional information / Management report concordance table

9.5 MANAGEMENT REPORT CONCORDANCE TABLE

TheconcordancetablebelowidentifiesthemainsectionsrequiredbytheFrenchCommercialCode,theFrenchMonetaryandFinancialCode,theFrenchGeneralTaxCodeandtheAMF’sGeneralRegulations.

ACTIVITY REGISTRATIONDOCUMENT

Analysisofbusinessdevelopments,resultsandthefinancialpositionoftheGroupinthecourseoftheyear Chapter 1Majoreventsafterthereportingdate Chapter 1Foreseeableoutlook Chapter 1Resultsofsubsidiariesandcompaniescontrolled,byareasofactivity Chapter 2—Chapter 6Researchanddevelopment Chapter 2Descriptionofmainrisksanduncertainties Chapter 6Grouppolicyconcerningmanagementoffinancialrisks,exposuretoprice,credit,liquidityandcashrisk Chapter 6Analysisofbusinessdevelopments,resultsandthefinancialpositionoftheCompanyinthecourseoftheyear Chapter 6StakesorcontrollinginterestsincompaniesbasedinFrance Chapter 6Informationonsupplierpaymentperiods Chapter 6TableofCompanyresultsoverthelastfivefinancialyears Chapter 6Reincorporationofgeneralcostsandsumptuaryexpenses Chapter 6Legal and information and information concerning shareholder structureSumofdividendspaidoutoverthelastthreefinancialyears Chapter 6Identityofshareholderswithmorethan5%ofequity Chapter 7Employeesharesheldonthelastdayoftheyear Chapter 7Informationonsharebuybacksduringtheyear—treasuryshares Chapter 7TablesummarisingvalidauthorisationsgrantedtotheBoardbytheGeneralMeetingconcerningsharecapitalincreases,andtheusemadeoftheseauthorisationsduringtheyear Chapter 7

Factorslikelytoinfluenceapublicoffer Chapter 7Information concerning corporate officersTermsandfunctionsofmembersoftheBoardofDirectorsandGeneralManagement Chapter 4Totalremunerationandanybenefitsgrantedtoeachcorporateofficer—Decreen°2016-182(articleR.225-104-1) Chapter 4Internal Company informationEmployment

Totalheadcount(distributionofemployeesbysex,ageandgeographicarea) 5.7.2.1to5.7.2.5and5.7.7.1

Staffengaged 5.7.2.6Redundancies 5.7.2.7Remunerationanddevelopmentsinpay 5.7.4Organisation of workOrganisationofworkinghours 5.7.3Absenteeism 5.7.3.3Company relationsOrganisationofsocialdialogue(proceduresforinformation,consultationandnegotiationvis-à-visstaff) 5.7.5ListofcollectiveCompanyagreements 5.7.5Health and safetyOccupationalhealthandsafetyconditions 5.6.1and5.6.2

317


ACTIVITY REGISTRATIONDOCUMENT

Agreementssignedwithtradeunionorganisationsoremployeerepresentativesinconnectionwithoccupationalhealthandsafety 5.7.4.2

Frequencyandseriousnessofoccupationalaccidentsandaccountingforprofessionalillnesses 5.6.3TrainingTotalnumberoftraininghours 5.7.6.4Trainingpoliciesimplemented 5.7.6.4Diversity and equality (policy implemented and measures taken to boost both)Equalitybetweenmenandwomen 5.7.7.1Employmentandintegrationofthedisabled 5.7.7.3Anti-discrimination 5.7.7Prevention and compliance with the provisions of basic ILO agreements 5.7.7.5Environmental informationGeneral environmental policyOrganisationoftheCompanyandproceduresforassessmentorcertification 5.1/5.2.1/5.2.2Stafftrainingandinformationconcerningprotectionoftheenvironment 5.2.1Resourcesallocatedtopreventionofenvironmentalcontingenciesandpollution 5.2.1Provisionsandcovertoguardagainstenvironmentalcontingencies 6.1Pollution and waste managementPrevention,reductionorrectificationofwasteinair,waterorsoilwithaseriousimpactontheenvironment 5.2.3Preventionofwasteproduction,wasterecyclinganddisposal 5.2.3Considerationofnoisepollutionandanyotherkindofpollutionspecificallyrelatedtoacertainactivity 5.2.1Sustainable use of resourcesWaterconsumptionandsupplyinaccordancewithlocalconstraints 5.2.4Consumptionofrawmaterialsandmeasurestakentoboostefficiencyofconsumption 5.2.4and5.2.6Energyconsumption,measurestakentoboostenergyefficiencyanduseofrenewableenergies 5.2.5Usageofsoil 5.2.6and5.2.7Contribution to adaptation and prevention of global warmingGreenhousegasemissions 5.2.5Adaptationtotheconsequencesofclimatechange 5.2.5Protection of biodiversityMeasurestakentopreserveordevelopbiodiversity 5.2.7Information concerning corporate commitmentsTerritorial, social and economic impact of the businessImpactofthebusinessonemploymentandregionaldevelopment 5.3.1Impactofthebusinessonneighbouringandlocalpopulations 5.3.1Relations with stakeholdersConditionsofdialoguewithstakeholders 5.3.2Solidarity,partnershipsandsponsorships 5.3.2Subcontracting and suppliersConsiderationofsocialandenvironmentalfactorsinpurchasingpolicy 5.3.4Importanceofsubcontracting 5.3.4Socialandenvironmentalresponsibilityinrelationswithsuppliersandsubcontractors 5.3.4Solidarity in corporate practicesActiontakentopreventallformsofcorruption 5.3.3Measurestakentoprotecthealthandsafetyofconsumers 5.5and5.3.3Other action taken to protect human rights 5.7.7.5

318

Additional information / Table of concordance with European Regulation 809-2004

9.6 TABLE OF CONCORDANCE WITH EUROPEAN REGULATION 809-2004

ThefollowingcorrespondencetableidentifiesthemainsectionsrequiredunderEuropeanRegulationNo. 809-2004,implementingthe“Prospectus”directive.

CHAPTER INFORMATION REGISTRATIONDOCUMENT

1 Persons responsible 9.11.1 Personsresponsible 9.11.2 Declarationbythepersonsresponsible 9.12 Auditors 9.22.1 Informationconcerningtheauditors 9.22.2 Changes 9.23 Selected financial information 13.1 Selectedfinancialinformation 13.2 Interimperiods Notapplicable4 Risk factors 35 Information concerning the issuer5.1 HistoryanddevelopmentoftheCompany 1.35.2 Capitalexpenditure 1.2.36 Business overview6.1 Mainactivities 26.2 Mainmarkets 26.3 Exceptionalevents,ifany,likelytoaffectactivitiesandmarkets 26.4 Likelydependence 26.5 Competitiveposition 27 Organisational structure7.1 Group 2.12.17.2 Majorsubsidiaries8 Real estate, production sites and equipment8.1 Majorproperty,plantandequipment 2.68.2 Environmentalaspectsoftheequipment 5.49 Examination of financial position and earnings9.1 Financialposition 1.29.2 Operatingprofit 1.210 Cash and capital10.1 Capital 1.210.2 Cashflows 1.210.3 Financingstructure 1.210.4 Anyrestrictionsontheuseofcapital 1.210.5 Sourcesoffinance 1.211 Research and development—Patents and licences 2.7

319



12 Information on trends12.1 Trends 112.2 Anylikelyinfluence 113 Profit forecasts or estimates13.1 Assumptions Notapplicable13.2 Report Notapplicable13.3 Comparison Notapplicable13.4 Updating Notapplicable14 Administrative, managerial and supervisory bodies, and General Management14.1 Informationonmembers 414.2 Conflictsofinterest 415 Remuneration and benefits15.1 Remuneration 415.2 Pensionsandotherretirementschemes,otherbenefits 416 Functioning of administrative and management bodies 416.1 Termofofficeexpirydate 416.2 Servicecontracts 416.3 Committees 416.4 Corporategovernancedeclaration 417 Employees17.1 Employeeinformation 5.717.2 Profit-sharingandshareoptions 5.717.3 Employeeprofit-sharing 5.718 Main shareholders18.1 Shareholders 7.218.2 Votingrights 7.218.3 Shareholdingsandcontrol 7.218.4 Control-relatedagreements 7.419 Related-party transactions 6.220 Financial information concerning the issuer’s net assets, financial position and results20.1 Historicfinancialinformation 620.2 Proformafinancialinformation Notapplicable20.3 Financialstatements 620.4 Checkingofhistoricfinancialinformation 620.5 Dateoflatestfinancialinformation 620.6 Interimandotherfinancialinformation Notapplicable20.7 Dividenddistributionpolicy 6.420.8 Judicialandarbitrationproceedings 3and620.9 Significantchangesintheissuer’sfinancialorcommercialsituation Notapplicable

320

Additional information / Table of concordance with European Regulation 809-2004


21 Additional information21.1 Sharecapital 7.221.1.1 Subscribedcapital 7.221.1.2 Othernon-equityshares 7.221.1.3 Treasuryshares 7.221.1.4 Convertibleorexchangeablesecurities,orsecuritieswithsubscriptionwarrants 7.221.1.5 Acquisitionconditions 7.221.1.6 Optionsoragreements 4.5

21.1.7 Recordofchangesinsharecapital Note 6Consolidated financialstatements

21.2 Certificateofincorporationandarticlesofassociation 7.321.2.1 Corporatepurpose 7.321.2.2 Regulationsofmanagementandcontrolbodies 4.221.2.3 Rightsandprivilegesattachedtoshares 7.221.2.4 Changestotherightsofshareholders 7.321.2.5 GeneralMeetings 7.321.2.6 Changeofcontrol 7.321.2.7 Shareholdingthresholds 7.321.2.8 Conditionsgoverningamendmentstothearticlesofassociation 7.322 Significant contracts 323 Third-party information, statements by experts and declarations of interests23.1 Declarationsofinterests Notapplicable23.2 Certificate Notapplicable24 Public documents 925 Information on equity investments 2 and 6

Design and layout:

Photos credits: Phototèque ERAMET, Istock

Tour Maine-Montparnasse33, avenue du Maine

F-75755 Paris Cedex 15Tel.: 00 33 1 45 38 42 42Fax: 00 33 1 45 38 41 28

www.eramet.com