Good morning, everybody, and welcome to this presentation of the half-year results for the Eramet Group. I know that this is a very busy day for most of you. There's a record number of results being released around the world today, so thank you very much for being with us. I will be giving you our comments on the results of the company with our new CFO, Nicolas Carré. I'm going to make a brief introduction to recall the highlights of the results, and Nicolas will present the operating and financial performance. I'll conclude with our strategic roadmap and our outlook for the year. By way of an introduction, clearly Eramet's results for the first half are good. In fact, they are historically speaking, the best that the group has ever posted over a six-month period.
EBITDA was close to EUR 1 billion, posting EUR 982 million. We beat our production records in our mines. Safety has continued to improve, and it is important to beat financial production records, but this has to be done while ensuring safety. Free cash flow is at a record level at close to EUR 500 million. We'll be going back on that, and the debt ratio is significantly down. These results were achieved against the backdrop of high prices, both on our sales prices and also on our costs, notwithstanding the slowdown in China, which, as you know, is our biggest market. These results were not merely financial results.
As I've said, we've continued to improve on our RSC and CSR and strategic roadmap, and our stronger capital base enables us to face headwinds while ensuring future growth. Now, there are some items which I would like to emphasize in the introduction. Number one, it's the particularly favorable price environment in the first half. We produced at a high level, which has enabled us to benefit from the very high cobalt price level at the beginning of the year. As you can see on this slide, overall, all the external factors were positive in excess of EUR 700 million over the first half of last year.
This is a very big rise with over EUR 800 million simply from the price environment, half of which came from manganese alloys, and that's a very important point. We're publishing for the first time the EBITDA for the manganese BU. This is a very high EBITDA for the first half due to the positive squeeze effect on manganese alloys. A very specific feature of the first half. We also had the favorable impact of foreign exchange, EUR 85 million, due to the dollar exchange rate. We also suffered from higher prices across the board, in particular on input cost, because energy and coke cost almost EUR 150 million over the first half, and we also had higher freight costs compared to the first half of last year.
Although the freight level is below its peak of autumn 2021, it's nevertheless very high and higher than the first half of last year. The second point I wish to emphasize is that we're continuing to make progress on our CSR roadmap. As you know, Eramet's raison d'être is to become the key reference for the responsible use of the planet's resources for the well-being of mankind, and we are among the leaders on most CSR issues. We're continuing to make headway. On the slide, you can see some of our achievements in the first half. I've spoken about safety. We have reached very low levels in accident frequency. We're among the top of the class in terms of the number of accidents, down 20% on the first half 2021.
The overall rate of accidents stands at 1.8 year- to- date. Looking only at mines and metallurgical activity, we're even as low as 1.2, which really puts us in the top performers in the industry. We've continued to make progress on climate issues. All our group mining and metallurgical sites are ISO 50001 certified. We are continuing to put ourselves on the best standards in terms of CSR, and our reference for this is the IRMA standard. We've started with the first self-assessment of our mine at Centenario in Argentina. This is a project which is in the process of being built. It's going to accelerate energy preservation. It's very important that we be among the top performers in this area.
Extra-financial performance continues to be well-rated by the market. EcoVadis confirmed our gold level with a slight increase. In fact, the gold level, it's the top three companies within the top three companies in the sector of the best-performing companies in our sector. Meaning that Eramet is a reference which is consistent with our mission in its industry for everything related to sustainability. We have also improved in terms of social impact on communities, with a renewed agreement with the host communities in Argentina. Now that the lithium project construction is underway, we have worked several years very hard with the communities on the basis of regarding the new site. We have two CSR funds which we've created with the Gabonese government.
CSR funds which have an allocation of over an endowment of over EUR 11 million with substantial impact both on local infrastructures and on the local economy. We've focused very much on non-mining activities. We've launched an initiative called Women for the Future, which is a program that seeks to promote women's entrepreneurship in Gabon with incubators and help for women entrepreneurs. In terms of biodiversity, we are continuing with our initiative. Just one point on this, we have plant nurseries on each of our mining sites, where we have all the endemic species, which means that we can ensure the recovery of endemic species in our.
We have a 0.98 ratio in the first half, close to 1, and in actual fact, we want to be above 1 on rehabilitating more than we clear on our mining sites. For the past two and a half years, we were in fact in excess of 1 at 1.09 over the period. The second point concerns the progress on our strategic roadmap. As you know, the refocusing of our portfolio on mining and metals is almost completed. Sandouville closing is almost completed. We've signed the MoU for the sale of Aubert & Duval. We've signed a binding agreement for the sale of the A&D site.
This should be completed by the end of the year, as soon as we have the relevant antitrust authorizations from the various countries. We are going ahead with the sale of Erasteel, which is beginning as we speak. Now, this refocusing will be completed by the end of the year. This enables us to focus on our growth projects. The first one is to be well-positioned on our historical sites, long-standing sites, and also on the energy transition.
We have moved and made quite good progress because as we announced, we've launched the construction of the lithium plant in Argentina, which is going according to plan, and should be commissioned by April 2024. We're making good progress, and I'll go back on this on the project with BASF, with the nickel cobalt project in Indonesia, Weda Bay. We're in a position to make a decision by the end of this year or the first few weeks of next year. We're making very good progress on all these fronts. That's what I wanted to say by way of an introduction, and I will now give the floor to Nicolas, who will present the financial results and the operating performance.
Thank you, Christel. Good morning, everybody. Well, I'm going to give you some details on the financial performance for the first half of 2022. Now, all the figures that I'm going to present are figures on the basis of IFRS 5, taking into consideration the new scope of Eramet, unless otherwise specified. The first chart sums up the figures on which Christel has already made some comments, with very strong growth in sales.
EBITDA close to EUR 1 billion for the first half of the year. The important point here is that the EUR 982 million EBITDA represents a 37% margin on our sales, which is almost double that of the first half of 2021. This enabled us to generate a net income which is at a record level in the first half of 2022, EUR 783 million versus EUR 123 million in the first half of 2021. Looking at the net income group share result, we're close to EUR 677 million, which is a record level.
In terms of balance sheet, this excellent financial performance, I'll go back, I'll give you some details on the cash flow, enabled us to reduce the debt load to EUR 748 million, which is approximately EUR 200 million yet less than the level of end of 2021. This has enabled us, as Christel has pointed out, to achieve leverage of 0.4%, which is the lowest level over the past five years. Now, going into further detail, the bridge, which enables us to explain the results from the first half. Well, quite a lot has been said already. One point that should be highlighted is that the first half saw very strong external factors with a positive impact, as Christel pointed out.
The price effect, which accounts for over EUR 800 million versus the first half of 2021, and this is positive impact for all of our business units, as you can see in the detail. I'll go into further detail for each market as we go through the presentation. With some impact with an increase for inflation in the first half, our energy costs were up and also the costs of reductants for our metallurgical processes, also freight cost. The net result is still very favorable, EUR 700 million, just above. This is fluctuating and very important for the outlook for the second half. Looking at our intrinsic performance, EUR 37 million.
The reason that accounts for this negative figure in the first half is that we continued to invest in structural costs in order to be able to not only deliver current growth, but future growth, in particular on our business in Gabon. This was a part of our outlook. This accounts for the negative impact. The other point here, we've spoken about cost inflation on index-linked factors such as energy, freight, et cetera. We also had inflation on our structural costs, and this applies to almost the whole of the market, in actual fact. We should emphasize that looking at our intrinsic operating performance, we include this inflationary impact, which is perhaps not quite right in terms of our own performance.
Now, looking at net income, as indicated, our net income is at a record level because net income, Group share is close to EUR 700 million versus virtual breakeven last year, first half. What I would emphasize is the share of income from associates. This is generated by our minority interest, and this concerns Weda Bay. We note that for the first half of 2022, the result virtually doubled on the result of the first half of last year. You'll see to what extent this is important for the generation of cash flow in the group. This is something that is going to persist. Looking at the first half, we invested to the tune of EUR 677 million, excluding lithium. This EUR 217 million.
Now for lithium, almost the whole of the project is being funded by Tsingshan, and this is wholly funded by our partner on the project. That's why we track this separately in our results. In absolute terms, including the EUR 33 million of CapEx for the lithium project, we stand at EUR 250 million of current CapEx. Given the backdrop, which I'll go into a bit later, regarding the uncertainty surrounding the market, we decided to slightly review our guidance for the whole of 2022 to the tune of EUR 500 million. It was previously EUR 550 million. We intend to continue to invest in growth.
This does not call into question our growth prospects and to continue to invest on those investments which would enable us to create value quickly, and that is why we've maintained a significant amount of CapEx, and we decided to emphasize on those parts which were not most necessary for 2022. The last point on this side is the amount of CapEx which is being invested in Gabon. This breaks down into two parts. The investment in the Moanda mine, we're continuing to increase our production, and also on a rail network which enables us to transport all of the production and also other activities in the country. Another point which we should specify is our working capital requirement, which has improved in recent years, on which we worked very hard.
It's increased quite significantly in the first half because it stands at EUR 361 million. Now, there are different ways of reading the figure, so I think we should dwell on this for a few moments. Firstly, there is direct impact, the activity on prices. Prices are higher and with higher prices, higher production. This increases working capital, mainly customer receivables. The same goes for volumes and also the impact of the cost on inventory, and volume can have an impact on inventories. So this accounts for well over a half. That's the first point. The other point that we should emphasize, and that's why we indicated the number of days that this represents in terms of sales.
At the 30th of June, we have a seasonal impact, and traditionally, we have a working capital requirement which is higher in the first half. For example, 47 days at the end of the first half of 2021, whereas it was at 39 days at the end of the year. Forty-five percent increase is due to the increase in the number of days, but there's also a seasonal impact, which is due to production methods with a higher increase in the first half.
In any case, this is clearly going to be a focus for us. The mechanism that I described before and also changes in the market environments. As a result, we're going to generate cash in H2, and that's the important thing you should note with the mechanical reduction in WCR. We are undertaking a number of initiatives so as to improve DSO and also improve cash generation in H2. In absolute terms, when I talk about H2, we need to recognize that our performance has been really good in terms of cash generation in H1. Christel talked about that. If we consider our IFRS 5 scope, that is all of the activities of the new Eramet group, free cash flow is higher than EUR 400 million.
Because this includes CapEx invested into lithium, as I said before, the free cash flow amount does not include the financing from Tsingshan for EUR 48 million in H1. If we do include it, economic terms, we stand at EUR 477 million, which is close to the EUR 500 million that we talked about before. This includes Tsingshan financing. In absolute terms, this is a 2.5 times increase in cash generation relative to H1 2021. Our performance is excellent in terms of cash generation. The last point, when it comes to net profit, our activity in Weda Bay has generated EUR 121 million in H1. This is increasingly significant when it comes to cash generation cash flow generation from our activities.
Needless to say, all of that cash generation means that we are able to deleverage. We are able to reduce our debt. This is the continuation of what we already generated in 2021. As a reminder, in 2021, we reduced debt by about EUR 350 million, so this is an additional amount. For the IFRS 5 scope, about EUR 200 million. When it comes to the entire group scope, a little over EUR 200 million, so EUR 220 million to be more specific. I already detailed our EBITDA, which is a main contributor to cash. Our working capital requirement as well. The CapEx amount, which comes to EUR 250 million in H1 in total.
Also, the contribution from dividends and loan repayments for our activity in Weda Bay in H1. All of those items mean that we're able to generate that level of free cash flow. The other thing you need to bear in mind, because it's important in terms of our H1 performance. All of the divestments that are underway and the cash burn, EUR 136 million that you can see on the right-hand side of the curve, and this is mostly A&D and also the partial impact of Erasteel. The important point here is that while we talked about the increase in energy costs, in commodity prices, the counterbalance is more than favorable when it comes to our mining authorities, our mining activities, pardon me.
However, it's not the case, not entirely the case for the HPA division or high-performance alloys division, where we really bore the brunt of those cost increases from a cash point of view. We need to make an effort in order to pass on those increased costs. It's not automatic, and implementation takes a while. There's a lag effect, and the timing is negative when it comes to our cash burn. EUR 40 million net, that's the estimate for A&D alone. When it comes to Erasteel, we stand at about EUR 20 million. This is much of the explanation for the cash burn on those activities in H1.
In absolute terms, bearing in mind all of those positive impacts on our financial performance, we have maintained a very high level of liquidity, higher than EUR 2 billion. Bearing in mind that we have repaid the last tranche of our revolving credit facility in early 2022. The other good news from Q1 is the RCF refinancing. This is a syndicated loan, and we're working with a new pool of banks. 10 banks now. Maturity is five years, at least for now, this brings us to 2027. There are two potential options, and the decision will be made in 2023 and 2024. We may push the maturity further to 2029, this means we can further secure our balance sheet.
As you can see, in the sky blue color, so EUR 935 million, that's the amount of our new RCF. We have adjustment mechanisms in place. Our margin adjustment mechanism ties in with our roadmap, our CSR roadmap. This is in relation to two CSR key performance indicators because we wanna evidence, we wanna showcase all of the work we're doing on that subject, CSR, corporate social responsibility. No major debt maturity, not until 2024. Obviously, we have the bond which will reach maturity and about EUR 500 million in 2024. This does not mean that we are not already looking at possibilities for refinancing that debt.
We're listening to what the market has to say all the time so that we can avail ourselves at the best possible terms and conditions, particularly when it comes to the changes in our financial performance in H1. In absolute terms, again, and this reflects our financial strategy, a strategy that we already presented to you on closing day when we presented our annual performance for 2021. What are our objectives in terms of cash allocation? Point number one, and it is important that you note that. This is a very positive aspect for H1, significant drop in our net debt. Like I said, we have deleveraged to the tune of over EUR 200 million in H1 2022. Our target through this cycle is to maintain an average leverage of under 1x.
We have achieved that target already because we stand at 0.4x, which is pretty good. This means we are able to maintain a strong balance sheet. The goal being to continue to investigate and explore potential growth opportunities. Now, talking about growth, obviously this includes organic growth, and this means we're able to maintain our investments into new projects which provide a lot of value added. This is true for our existing activities, particularly manganese ore in Gabon. This is also true for development projects, our greenfield projects. We'll tell you more about that later today. Our greenfield projects on nickel, cobalt for batteries and also lithium. Obviously, we want to keep our shareholders happy.
We want to reward them for the long-term commitment, so we decided to pay out a 2.5 EUR dividend per share for a total amount of EUR 72 million. This was cashed out in H1 2022. Now let me tell you a bit more about our operational performance in H1. Item one, as Christel said by way of introduction, throughout our activities, growth in production is over 20% relative to H1 last year, 23% actually, and this is generated by a number of activities that you can see on the screen. First of all, manganese. Manganese ore. I'll get back to that in a minute.
Now when it comes to Weda Bay, we're seeing strong continuous growth there, 33% growth actually, and also SLN in New Caledonia, despite operating difficulties, adverse weather effects, etc., growth came to 6% relative to H1 2021. Lastly, our mineral sands business unit in Senegal, 7% growth in H1. In addition, we're seeing strong production performance in metal working, this is true for manganese alloys and also our titanium oxide activity in TTI. Now this is a summary that's important to understand because this summarizes changes in prices over the past three semesters, the past three half years. If you make a comparison relative to H1 2021, for example or even H2 2021, with one exception, it's important that you bear that in mind, manganese alloys.
As you can see, except for manganese alloys, we find that there is a peak between the end of last year and the beginning of this year. Bear in mind that this peak is being turned around, and we know this is gonna happen. We anticipate this is gonna happen. This favorable situation that impacted all products in H1 will be turned around and the trend will be unfavorable in H2. I'll give you more details on all of our product lines in a moment. There are two different ways you can understand this. You can see this as a positive thing because our performance has been strong, but we need to pay close attention to this downward trend that we saw happening at the end of H1 and which will continue in H2. Meanwhile, back at the ranch.
Now we saw in H1 a strong increase in input costs, fuel in particular, coal and all reductants and also energy prices. Please note, because it's important that I clarify this, when it comes to energy prices, we are pretty well protected, particularly when it comes to our manganese alloy business in Norway but also in the U.S. because we have long-term contracts there, and this means we're able to minimize the massive impact that we have seen based on energy prices in recent months. This is not true for the A&D activities as I said before. The other aspect is energy costs have increased, but let's not anticipate a drop in those prices in H2.
We're expecting a balance between selling prices that are peaking, that have peaked and that are on a downward trend and also the input costs which are already having an impact on H1. Of course, this is more than offset by the increase in selling prices, but input costs will remain high in H2. Freight costs, transport costs. The main aspect that I would like to emphasize here, and this was true in the past semesters, we've seen a strong increase in freight costs and this is why throughout our activities in Gabon, in particular, particularly our manganese ore business, we have a transshipment project, so we can load up those vessels and the cargo is four times what it used to be and this has an added benefit.
We're able to reduce transport costs, freight costs, and in absolute terms, we're able to partially offset the surge in costs. This is also a target productivity gain that I wanted to emphasize. This demonstrates our agility under difficult circumstances. Well, potentially difficult circumstances when it comes to higher input costs. This project, the transshipment project began in January. We continued it in H1 and now we have entered our nominal performance phase, and this means we're able to fully offset the surge in freight costs. Let me give you more details on each business unit. Let's start with manganese. As Christel rightly said, this is important and we wanted to show more transparency in terms of our financial performance on the manganese front.
If we look at our history, we used to report year to date the ore and alloy activities, and for the first time in H1 2022, we have identified the two main activities separately. As we clarified a number of times before, we're seeing strong financial performance for manganese alloys. As you can see on the screen, this is an activity that generated EBITDA of EUR 128 million in H1 2021, close to EUR 500 million in H1 2022. We have increased EBITDA by a factor of four, and this is part and parcel of our excellent financial performance in H1. Same thing out of the EUR 395 million in cash generated by all of our manganese activities.
We have EUR 324 million generated by the manganese alloy business, compared with less than EUR 100 million in H1 2021. A more than 3x increase. It is to say, we're riding on the back of particularly high freight cost. Rather, this is happening despite the significant surge in freight cost, as we said before. Now, also on manganese, another important part, 3.6 million tons, that's the output in H1, so +17% relative to H1 2021. Bearing in mind that 2021 was a significant year of growth relative to the year before, 2020. We're seeing continuous growth. This is a remarkable performance for manganese, and as I was saying before, this is being confirmed on the transport front.
This is an important point when it comes to the business unit's overall performance. Now, the market environment, I'm not going to dwell on that because I kinda touched upon that already. The market environment is showing a recession or at the very least a decline from the point of view of global output of carbon steel in H1, particularly as a result of the lockdowns in China, and this has led to negative growth. Obviously, this has an impact on the markets. The good news is, as far as we're concerned, and we're expecting that good news to continue, this strengthens the quality of our ore, the quality of our grades between 42%-44% on average.
One of the aspects that we have identified, which is very important when it comes to H1 2022, is the price differential between the two types of grades. On our end, this means that we're able to benefit from robust prices despite the unfavorable carbon steel price environment, which can be a little difficult. This is not something that we expect to continue, not at the same level.
At the moment, the spread between the two ore grades is about $2 per dry metric ton unit. It's going to be reduced. By how much, we don't know yet, but it's pretty unlikely that this will go back to its historical levels. As you can see on the graph on the right-hand side, we were closer to a spread of about $0.5 per dmtu, and this means that the spread has increased fourfold, and we anticipate that it will remain higher than $1.
I was referring to the mineral business, so here we are. This highlights that since 2018, compared to our estimated targets for 2022, we've generated growth of 63% versus 2018, which is excellent performance. The trend is being borne out, as you can see, for the first half of 2022, growth of 17%, as you can see. I wanted to dwell on transport volumes. The fundamental point is the 63% increase from 2018 to 2021. Bearing in mind that in the first half we had a 16% increase on first half 2021. This is excellent operational performance, confirming our capacity to transport volumes. It's crucial in order to enable us to completely transform the value of our mining business on manganese ore.
Regarding the cash cost, and the quality of information, the high quality of information we're trying to provide, we've been trying to provide since the beginning of the year, this highlights the favorable trend in our cash costs, which has declined versus the first half of 2021. Admittedly, there's a favorable currency, impact. The reason why we have incurred higher cash costs, in particular on, tax and royalties, this is a mechanical effect due to volume and price. This is why we have the EUR 0.18 increase, taking into account currency impact and the increase in costs. As I was explaining earlier when I was talking about the group EBITDA, is that these cost increases are, underpinning our growth, which has been consistent over the past four years and is likely to and will continue in the years ahead.
On manganese alloys, this is an important point. Our production performance was strong in the first half with 4% growth, but the sales performance was down due to the market. It's not our sales performance here, it's the impact of the market and demand, in particular, the demand for steel in Europe, and we expect this to continue to worsen in the second half. Why is it important to mention this? Because when production is up and sales become more difficult in terms of outlets and are down on the previous year, that means inventories are up. This is also one of the reasons why we have a higher WCR for the first half and against the backdrop of prices and the cost situation, which is going to remain difficult for the second half.
In the second half, we're going to make every effort to adjust as best we can our production in terms of demand. Nickel business unit, we have very strong financial results. EBITDA marked up fivefold on the first half of 2021, and EBITDA only includes the SLN performance regarding free cash flow. Free cash flow includes Weda Bay thanks to the dividend impact and the loan repayment. Cash was up from EUR 21 million - EUR 99 million, almost fivefold. Market situation is very favorable. In operating terms, Weda Bay increased its production by 33%. Nickel ore production was up 6%, and exports of nickel through SLN were up 31% on the first half of last year. The same, as for carbon steel.
Stainless steel had a difficult time, mainly due to China, with China down 7%. I should have pointed out earlier on carbon steel in China. We expect a recovery pick up in the second half, which will enable us to support our manganese business. We don't necessarily expect the same pickup on stainless steel, which may remain difficult in the second half. This is something we have to look at closely. Looking at LME prices and nickel prices, I won't go back in detail on what happened on the LME in March, but what created tensions on the market and difficulties for our clients, because the LME has historically speaking, been considered as the reference for setting prices. We're faced with a lot of.
Faced lots of problems in holding down LME prices with our clients. I would draw your attention to the lower chart with the lag between the LME and the SMM. What we've pointed out in our press release is that our prices were between the two. This trend will not only continue, but it will be accentuated. Weda Bay first half performance was significant. Since the launch of the activity and the production of NPI from 2020 and 2021 for the full year production. Full year production is up fourfold on 2021, and we expect growth to continue in 2022. Looking at NPI, 67% between both years.
To be precise, 2021 was not a full year because the launch of the activity was at end of April, and that's why we've pointed out that the growth between a normal year and 2021 stood at 10%, and this enabled us to prove just how strong the ramp-up was on this plant at the beginning of its production. Looking at SLN, and this is good news, a lot of positive figures on the slide with figures up on the first half of 2021.
We are aware of the fact that 2021 saw a difficult first half due to weather conditions, and other factors. In the first half of 2022, the weather conditions due to the La Niña effect were adverse, and they in fact worsened in the first half of this year compared to last year since we had rainfall 50% higher. If you compare over the last six years, it's over 50%. Numbers of days of rain up 13% versus the first half. The impact on production was 6% overall, and 31%. Looking at ferronickel, the other problem that we encountered was the energy supply, which is.
Which reflects the problems on one of the turbines providing power for the plant in the first half of 2021, and therefore we decided, and we've communicated on this, to have a temporary power plant, an offshore power plant, which should be commissioned in September, which will enable us to ensure a proper supply of electricity. This means that we suffered from the energy supply problem in the first half. Although 2021 was a difficult base, the growth was restricted to 10%. Briefly, we announced that we were revising our 2022 target by over 45,000 tons, reflecting the difficulties we encountered in the first half. Mineral sands, very good figures here too. Exceptional financial performance. EBITDA doubled on the first half. Cash flow figures may.
The main point is, this was consistent with the previous comment on the group's overall WCR, a major part of the growth happened at the end of the first half in June. June was exceptional, and this is just to say that this exceptionally high level of cash flow is not a normal level and will have cash generation, particularly through our Senegal activity. In terms of production, I'll go back to TiO₂ in Senegal with a growth of 7%, both for the whole of the mining activity and for zircon production, which is our highest value generating product.
Looking at prices, we expect a relatively stable second half with strong demand, and we are still working on a market which is suffering from a shortfall due to production constraints, and this means that we are quite confident about the high prices that we saw in the first half. We expect them to continue in the second half. In terms of production, I've made the key points. Why do we have a 3% decline on TiO₂? This is mainly due to the maintenance operations that took place in May. Apart from that, we had very stable production, which, in historical terms, has not always been the case, and strong operational performance on this particular plant, reflecting the momentum that began in 2021's growth of 5% in 2021.
I'm gonna finish this very long presentation on our operational performance with lithium, the lithium BU. The first point is our market expectation. We expect the market to continue to grow significantly in the years ahead. This will enable you to visualize the specific figures on the chart. Our project should come on stream in 2024, coming from a peak in demand. Clearly this is why we are continuing to step up the development of these projects with price outlook, which is exceptional, $70,000 a ton at the end of July. That doesn't mean that we will stay for a long time at this level, and we recall our assumption which reflects analyst consensus $12,700. This is a very conservative estimate, both against the backdrop of current prices.
We don't think it will stay at these levels, which is going to be a very difficult level to accept for the end user market. It also reflects a strong demand for the end of the year. This brings us to a step up in our project, which should be commissioned at the beginning of 2024 and completed by 2025. I recall the quality of our processes since the recovery rate of our processes enables us to recover 90% of lithium, which versus other projects which are underway, is absolutely exceptionally high. One of the items on which we have communicated is the increase in expected CapEx for the project to the tune of $65 million.
As for other activities, the increase in freight cost has a direct impact on this CapEx estimate. We have expected EBITDA, which is very strong. A very high rate of return is expected. The strong EBITDA forecast in particular is based on very conservative price estimates. In all likelihood, our profitability will be well above expectation. That's it for my section. I'll hand the floor over to Christel, who will talk about the strategic roadmap.
Merci, Nicolas. Thank you, Nicolas. Let me say a few words about our strategic roadmap before we conclude this presentation. As you well know, we have refocused our strategy. Earlier this year, we published this new strategic roadmap, which is in line with our new position as a pure player in mining and metals, M&M. This roadmap has two main priorities. Number one, we intend to continue to provide the metals that support global economic development. We're talking about markets that are resilient, that grow on a par with the global economy. Those markets include manganese ore in particular. There's still significant potential for organic growth in Gabon and also manganese alloys. For those alloys, we have a value over volume strategy.
In particular, we are concentrating on a mix that is much richer, much more premium, much more concentrated in refined products, and we have a much greener product with a lower carbon content than the competition. We are well-positioned when it comes to the whole green steel wave. We are a preferred provider of green steel for our customers. We also seek to develop nickel ore out of Weda Bay mines. This mine still has significant potential growth, and it has sustained and robust growth already. Nickel production in Weda Bay and also mineral sands. There's a lot of potential in this business as well, in terms of reducing bottlenecks, mining bottlenecks in Senegal, but also our plant in Norway. These projects are not really capital-intensive. Less capital is required.
These are smaller mines than for other types of ore, so we're able to position ourselves pretty easily and there are growth opportunities we can seize. Now, the second priority of our roadmap, as you know, is something that we're going to fast-track. Development of critical metals that are essential to the energy transition. Eramet is particularly well-positioned, thanks to our mining portfolio. By essential metals, I mean lithium. We are busy building phase one of our project. We're thinking of the new phases as well. We have a lithium deposit in Argentina, which has significant potential, huge potential. There will be several stages during which we can ramp up production for that deposit in Argentina, but also other deposits in the same area. Then there are other projects that we'll get back to. Nickel, cobalt, salts for batteries and also battery recycling projects.
What is important? All of our assets that are part of our roadmap are well-positioned. Within the first quartile, the only exception being the SLN plant. Now, our operations are based on some of the best CSR practices found on the market. The carbon content is lower than the competition's, and this means we are well-positioned, particularly since, in most of our metalworking activities, we use low-carbon energy sources, mostly hydro. We are developing renewable energy sources both for our projects and our processes, using bioreductants in particular. As a result, our ambition is to truly be a force to be reckoned with in this new era that is beginning in terms of essential metals. This is where we have the most projects.
Our position boils down to staying upstream from the whole battery life cycle, so we position ourselves in mining and first processing, so nickel and cobalt from Indonesia and lithium from Argentina, and potentially also from other deposits in future. Also we position ourselves at the end of the circular economy cycle. We recycle batteries when they come to the end of their lives. Now, our nickel cobalt project. Battery-grade nickel cobalt. We jointly developed this project with BASF. It's proceeding apace. We have clarified the scope. HPAL only. It's a high-pressure acid leaching process that we use to produce MHP, mixed hydroxide precipitate. Our capacity has been revisited. This HPAL should come to 67 million tons per year of nickel and produce 7.7 million tons per year of cobalt.
The project ownership structure is 51% Eramet, 49% BASF, and we should be in a position to make a decision at the very end of 2023 if all goes well. FID will take place at the end of this year and maybe in the early days of 2023, and this means we should start production in early 2026. Obviously, most importantly, we will work in line with the best environmental and societal standards and also our own values. We are working in line with the IRMA standard as well. No waste discharge at sea. That is our commitment. We're lobbying across the world to make sure that no nickel cobalt operation would lead to such waste discharge at sea.
Those environmental standards mean that, actually the standard is in good stead when it comes to all of the HPAL projects that have developed and are continuing to develop in the region. When it comes to the other project, battery recycling, we are working in partnership with, SUEZ for the inbound phase of the process. We're initiating the pre-industrial phase of a black mass production process. If we clear all of the different milestones, we should be able to start production of black mass in 2024. When it comes to the outbound or downstream segment, when it comes to refining the black mass, we're working alone. This is a 100% Eramet project.
In 2022, we're starting construction and operation of a pre-industrial demo plant at our R&I center in Trappes in France, and it should continue to operate over the next 18 months. Our goal is to start refining operations, assuming again that we clear all the necessary milestones, at the end of 2025, early 2026. This about wraps up what we wanted to say to you. To conclude our presentation, I would say that clearly in H1, we delivered excellent results riding on the back of a very favorable price environment. As we explained to you, but this is something that you well know, H2 is going to be much more complicated. There's going to be a lot of uncertainty when it comes to demand, particularly, depending on how quickly the Chinese economy starts up again. China is our main market.
There is a significant slowdown in the European economy. We need to bear that in mind. We're working in line with price consensus. We expect prices to go down in H2. Particularly, manganese alloy prices, as you can see, this trend began in Q2. We're seeing this in July as well. Manganese alloy prices were extremely high in H1, as you saw. However, as Nicolas said, input costs, energy in particular and coke, should remain extremely high. When we combine these two contradictory trends, there's a strong negative impact of all externalities in H2 relative to H1. When it comes to our internal objectives, well, we're maintaining our output targets except for SLN, which simply cannot catch up with the volumes lost in H1.
Of course, we are still all hands on deck when it comes to operational excellence, cost control, and cash flow optimization. The goal being to ensure that we can keep inflation under control. Inflation is taking place across the board, impacting all of our costs. All of our costs are increasing, maintenance, transport costs, subcontracting costs as well. We are faced with generalized cost inflation. We managed to keep a lid on it by increasing productivity and volumes in H1, but we are strengthening our cost control efforts because it's still a priority in H2. Despite that inflationary environment that is also fraught with uncertainty and bearing in mind our good performance in H1, we have slightly revised our guidance upwards. EUR 1.6 billion approximately instead of EUR 1.5 billion.
That was our previous guidance in terms of our EBITDA target. One last thing. The group expects to generate a lot of cash in H2, so strong cash generation. There's a seasonal effect, a favorable seasonal impact. It's a better half year in terms of working capital requirements, so which we expect to generate a lot of cash in H2, and we will continue to deleverage significantly, which is important, obviously, in order to maintain our financial robustness. In order to weather those times of uncertainty, it's important to have a strong financial structure. That's it for us. If you have any questions, we are on hand. Do we have any questions? I can't see the crowd because of the spotlight. Please raise your hand, wait for the roaming microphone.
Hello. I have a question regarding the state of supply when it comes to manganese ore and manganese alloys. Earlier this year, you talked about the difficulties experienced by some of your competitors when it comes to ore, in particular in Brazil. But when it comes to alloys, we know that Ukraine is having a hard time continuing to produce silicomanganese. So, in what ways is that impacting the market?
You're absolutely right. Nicolas did not comment upon that, but you may have noticed on that slide that we showed you, the slide on manganese. It's true. If we take manganese ore, output of carbon steel is down, and so manganese demand is down. However, there have also been supply constraints in H1, particularly in South Africa.
There were logistics problems, transport problems, railway problems, loading problems in ports as well, and also cost inflation led to a significant surge in operational costs and transport costs as well. As a result, the players that stand on the right-hand side of the cost curve tended to reduce their production costs. There have been disruptions. They have a bit affected some of our competitors, particularly in Brazil and supply constraints in South Africa. As a result, inventories tended to go down in Chinese ports, and also because of the surge in energy prices, the market demand for ore, high-grade ore, is even higher, and our main competitor there has also seen its output go down. As a result, the 17% increase in Comilog output was a welcome factor on the market.
We were able to benefit from that despite the drop in demand and despite the supply constraints. Much for ore. When it comes to alloys, the situation is different from one country to another. Demand for manganese alloys was down by 18% in China, so a significant drop in demand. Demand was pretty low. Yes, this means the market is contracting, but also more supply constraints. Privat is a major producer in Europe. They operate out of Ukraine, and their output was well, their production facility shut down, and they started again, but the volumes were much lower than usual. Feel free to take a closer look at our different documents, but the manganese alloy price plummeted as early as Q2 and even in H1 relative to the peak that we reached in the fall of 2021.
This is not true of silicon manganese, actually, which is what Privat is producing. Silicon manganese prices did not go as high. We need to bear that in mind. They were not affected downward in the same way because there was a shortage of silicon manganese on the market, so we took advantage of that. We shifted output to silicon manganese. We switched from refined products to silicon manganese. You got to bear in mind that this is less lucrative. Silicon manganese is a commodity. It's a much more standard product than refined products, for example, low carbon products for the automotive industry. In volume terms, this helped us, but the mix is less lucrative as far as we're concerned.
Are you going to stick to a 50/50 split, refined versus silicon manganese?
The share of refined products is going to drop relative to standard products, commodity products.
I have another question regarding the impact of the new vessels you referred to. The new vessels that you're using to transport ore. How much are we talking about? I'm sure there's going to be an impact in value or relative terms.
Well, first of all, not everything can be transported via these huge vessels because the ports have to agree with the quantities and the customers as well. So those large vessels can only sail to specific ports. Obviously, the volume transported on those large vessels is increased fourfold. So we're anticipating 3 million tons. Nicolas, if you can tell us more.
3 million tons to be transported via these large vessels. The expected output is a little over 7.5 million. Only part of our business is affected, but on that part of our business, the gain is rather significant.
Yes, I second the motion. I agree that the potential volume that can be transported, well, the potential volume is 200,000 tons, and the total capacity is 3 million tons. Now, regarding your question on prices, what are the estimated savings relative to the amount we would have paid if nothing had changed? 25% savings, pretty much. Net savings. Now, we need to be careful because if we look at the market spread, the shipping market spread between Capesize and Supramax. There are fluctuations, very high at the beginning of the year, and then it went back down again.
Depending on exactly what time of year you look at, the spread will be different and so the gain will be different. It's pretty much the same order of magnitude as what Nicolas described. Are there any other questions online, maybe? Anybody else is raising their hands? Hello.
We'll take the online questions.
Going back to SLN, do you expect an improvement in the cash cost for the years ahead? In the near term, can you specify the ramp-up to achieve the 6.8 million export in ore?
Cash cost, well, difficult to say how this will move. It's very much dependent on energy cost. It's even more important in Doniambo than elsewhere. At present, our energy cost is approximately $220 per MW. So having electro-intensive with that level is rather difficult. This brings down the cash cost. We had some disruption, as Nicolas said, due to the fact that we have a shortage of power today because the plant that provided us with power had to stop. It was a very old plant, and the Caledonian power grid has many problems.
The problem of availability should improve, and only from September, and it will gradually be ramped up. It's very good that that decision was made because otherwise this really would have been a threat to the plant. We have a strong variation in external cost, in particular that of coke. Coke prices went up fourfold, so cash costs are very much dependent on external factors, irrespective of our productivity. We're not giving any absolute figure for the cash cost for the SLN, nor others. Regarding the 6 million ton exports, well, that would be very much dependent on a number of factors, external factors, as, for example, weather conditions, social problems in Caledonia. We had problems in Poum, elsewhere with our contractor, our local contractor.
Increase was not planned, in fact, for the 6 million target is only expected from 2025, 2026. We'll have to see whether we can go through the various steps and this will be dependent on the local situation.
Carrying on with energy matters, what is your present exposure to gas in terms of consumption? Do you have a supply problem? In the longer term, I think you plan to use gas in your electro-intensive project in Weda Bay and for the new plant expected in New Caledonia. Does this call into question future developments given the price of gas?
Well, I'll let Nicolas answer that question regarding consumption.
Just for projects, we don't have any electro-intensive projects on nickel in Indonesia because the plant there, unlike pyro plants, makes very little use of energy. It's not energy intensive at all, and we plan to have renewable sources of energy. We'll have some fossil energy, but we're establishing solar power to be used for the new project. That wouldn't apply here. Regarding the SLN, there is a plan which is to step up the availability of renewable energy under the new energy plan in New Caledonia, which should provide us an increasing amount of renewable energy, part of which will indeed be gas in order to offset the lack of sufficient renewable energy.
We have a memorandum of understanding with the New Caledonian government on this, and this will be dependent on the speed at which New Caledonia provides us with its new capacities. Bearing in mind that the offshore plant will start off using fuel, no gas is available in New Caledonia, and it can switch to gas as soon as gas becomes available in New Caledonia. Regarding the current exposure to gas on our current operations, this is mainly in our Aubert & Duval business. This is one of the reasons why we had such a large impact of the costs which were not covered by our customers. That's where our main exposure lies. We don't have a supply problem. It really is an issue related to cost.
As I've said, we're talking about hydrometallurgy across almost all of our plants for manganese alloy production, apart from the United States plants. In France, we have a mix which is. Well, we don't have much exposure to gas on our ongoing business for the time being.
Regarding your lithium project, Argentina is a high-risk country in terms of currency and repatriating income. How will you manage the risk, and how do you expect to be able to have access to the cash?
Well, I would ask the person who asked the question to look at the decrees which have been adopted some time ago, on our initiative, in actual fact, in Argentina on the extractive industries, in particular lithium.
Which, as an exception for this industry and for these projects, authorizes cash transfers, and this does not cover all of the cash, but depending on the size of the project, it enables a fairly significant amount of cash arising from the depending on the CapEx. That should enable us to repatriate a large part of the cash flow under current Argentine legislation contrary to other sectors in Argentina. As I have said, our policy is to continue to invest in order to have incremental phases starting off with the initial source that we're going to invest in Argentina going ahead. Part of this will be used for reinvestment and for the rest, this can be transferred through based on the legislation for extractive industry.
Regarding cash generation, looking at your WCR, you've announced an improvement for the second half. What are the concrete steps you're going to take to improve the WCR in the second half?
Nicolas?
Well, this is one of the points I mentioned during the presentation, namely that, given current uncertainty surrounding the manganese business, is to adjust our production when and where necessary in order to avoid producing quantities that the market does not have any need for. We'll select the plants where we have higher input costs. That'll be the first measure. Secondly, and I didn't mention this in the presentation, but secondly, we suffered somewhat in the first half from the administrative slowness due to lockdown in China regarding letters of credit.
This improved at the end of the first half, but there's still some problems there, and we're going to continue to have to make more efforts to step up, accelerate these processes in order to make sure that we get paid as quickly as possible. That's the second measure. In any event, we will continue to work on our inventories and our suppliers to avoid having excess inventory of raw materials in the event of a slowdown in our business. This concerns our metallurgy. That's for the...
Regarding your investment, several questions. First of all, you mentioned a decline in your investment projects. Can you specify the reasons for this decision? On CapEx, there is a CapEx increase in CapEx growth on manganese. Can you state the areas where there will be a step up in CapEx, for example, to build up the new platform in Gabon and what are your priorities for cash flow for this year?
For the first question, if I understood correctly, this was on versus regarding our guidance, the fact that we cut back by EUR 50 million. I think I answered the question during the presentation. To summarize, focusing our investment efforts on projects that create value quickly, given current uncertainty. This does not call into question our growth plans. Specifically regarding the second question, which is what are we doing regarding the continued developments for manganese ore in Gabon, we're going to continue to invest. That's very clear.
We're going to continue to work on our productivity, on the efficient use of our plants. We have a specific effort to make here regarding our growth in Gabon. We're gonna continue to do that, perhaps with slightly less emphasis, because in 2022, we've devoted very significant funds to this. Regarding our capital allocation project, I tried to answer the question during the presentation, and that was the slide that set out our priorities. The first was to continue to strengthen the balance sheet of Eramet, which was the case in the first half, and this will continue in the second half. The idea being to continue to bolster our position to ensure our strategic transformation. The second priority is to invest in value-creating projects which reflect our strategic roadmap.
That's the second part of slide number 20, both on brownfield projects I've spoken about in Gabon. We'll continue to do that once again. Also on a greenfield deployment, and we spoke at length about that in the presentation, both on projects in Indonesia for the HPAL plant and also the project regarding lithium. The third priority, of course, is to continue to pay out dividends to our shareholders. Just one point perhaps here to shed some light on the reduction in CapEx guidance. This was partly answered in the question on SLN. The plan was to have stronger CapEx to reach the 6 million ton mark. At present, given current difficulties, some of these CapEx targets have been pushed back because it's difficult for us to ramp up at the speed that we had planned for.
This is part of the CapEx cuts that we decided on as part of the new guidance.
To conclude, two questions on funding. You've established a new RCF. Can you estimate the cost on your financial interest expense? For 2024, you have a bond maturing. Are you going to refinance this because the window of opportunity may well be closing faster than in plan?
First question, that shouldn't have any impact on cost. Our RCF target is to have it secured depending on the outlook and backdrop. That's the first reason for having an RCF. The RCF has not been drawn down at all in June. The financial impact for the time being is zero.
We've not drawn it down, and we have readjusted it, reset it under very similar terms if we were to draw down. Now, regarding the bond issue which matures in 2024, I tried to answer the question during the presentation. At present, we're very sensitive to market conditions. Market conditions have been extremely difficult in recent weeks. We're not going to wait probably for the maturity in 2023 to look for a refinancing of this particular bond issue. We're going to continue to look very closely at this in the weeks ahead. We might launch a new bond issue if we feel it's appropriate, dependent on market conditions.
There are no other questions online. Is there any further questions in the room? No. Well, thank you very much. Thank you all very much. See you very soon because we'll be seeing some of you again in the days and months ahead. Thank you.