Eramet, the French mining and metallurgical company, might just be the best-kept secret in the burgeoning lithium market. While other analysts focus on established players, a careful examination of Eramet's recent financial data reveals compelling signs of a potential lithium boom waiting to happen.

Eramet's core business has traditionally revolved around manganese and nickel, but its recent foray into lithium has been largely overlooked. This strategic shift, however, is starting to show real promise in their financials.

While direct management commentary on lithium is limited due to the absence of transcript data, the financial figures themselves speak volumes. Notably, Eramet's balance sheet for the quarter ending September 30, 2023, shows a significant increase in 'non-current assets other,' jumping to 211 million euros compared to 82 million euros the previous quarter.

This leap, coupled with the simultaneous increase in long-term debt (from 1,578 million to an undisclosed figure exceeding 2,201 million euros), strongly suggests a substantial investment in a long-term asset. Given Eramet's declared focus on expanding its lithium activities, it's highly likely that this investment is directed towards their lithium projects.

Eramet's venture into lithium is centered around two key projects: the Centenario-Ratones salt flat project in Argentina (a joint venture with Tsingshan) and the development of a lithium extraction process from their existing hard rock resources. The company aims to become a major lithium producer by 2028, targeting an annual production capacity of 15,000 tonnes of lithium carbonate equivalent.

To grasp the potential magnitude of Eramet's lithium ambitions, let's compare it to Livent Corporation, a dedicated lithium producer. Livent's current market capitalization stands at approximately 5.5 billion USD, boasting a lithium carbonate equivalent production capacity of roughly 30,000 tonnes per year.

Should Eramet successfully achieve its 15,000-tonne production target, it could potentially command a market capitalization exceeding 2.7 billion USD based solely on its lithium operations. This represents a substantial addition to its current market cap of roughly 3 billion USD.

Moreover, Eramet's existing expertise in manganese and nickel offers valuable synergies. Manganese is a crucial component of electric vehicle batteries, enabling Eramet to potentially become a vertically integrated supplier to the EV industry.

"Although lithium represents a long-term endeavor for Eramet, the company is already strategically positioned to capitalize on the surging demand for electric vehicle batteries. This strategic foresight, coupled with the potential scale of their lithium projects and the advantages of their existing mining operations, sets Eramet up as a potential market leader in the lithium space."

The investment community seems to be underestimating the scale and impact of Eramet's lithium push. Limited analyst coverage and the absence of a 'WallStreetTargetPrice' in the data suggest that Eramet is flying under the radar. However, the company's strategic actions and financial data tell a different story.

Eramet's Potential Lithium Market Capitalization

The following chart illustrates Eramet's potential market capitalization based on its lithium operations if it achieves its production target, compared to Livent Corporation.

Eramet's quiet moves in the lithium market could be setting the stage for a dramatic revaluation of the company in the coming years. Investors seeking exposure to the lithium boom should keep a close eye on this sleeping giant as it begins to awaken.

"Fun Fact: Eramet's manganese mining operations in Gabon contribute to roughly 8% of global manganese production, demonstrating the company's significant presence in the mining industry. Learn more"