October 24, 2017 / 10:03 AM / 2 years ago

UPDATE 1-French miner Eramet sees improving nickel demand

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Oct 24 (Reuters) - French miner Eramet said on Tuesday that it expects a significant increase in current operating income for 2017 due to progress in cutting costs, increasing productivity and rising nickel prices.

It reported a 23 percent rise in third quarter sales to 877 million euros, helping send its shares up 5 percent at 1001 GMT.

While Eramet said prices remain low, the improving outlook for nickel will be welcome news for a company which last year needed a loan from the French state to allow its nickel business in New Caledonia to survive a severe market downturn.

Nickel prices have fallen around 75 percent over the last decade, and in 2017 cheap ore from Indonesia and the Philippines has put pressure on prices.

However, Eramet said it sees growing demand for nickel in 2017 driven by a ramp-up in stainless steel production and increased demand for lithium-ion batteries used in electric and hybrid vehicles.

Interest in electric vehicles is growing after Britain and France committed to ending the sale of petrol and diesel cars from 2040 while leaders of a number of cities want to ban diesel vehicles.

Nickel prices rose 2.4 percent to $4.77 a pound in the third quarter, Eramet said.

The company has set a target to cut nickel production cash costs at its Societe Le Nickel (SLN) unit in New Caledonia to $4.50 a pound by the end of 2017 and to $4.00 a pound by the end of 2020.

Although sales in its nickel division fell 7 percent in the third quarter, they were up 11 percent for the first nine months at 455 million euros ($535 million).

Sales at its manganese division, which accounts for around half of its revenue, rose 39 percent to 492 million euros as strong demand in China, Europe and India led to increased global production of carbon steel.

Eramet reported a 23 percent increase in total third quarter sales, which came in at 877 million euros.

Shares in the company were up 3.5 percent at 0858 GMT.

$1 = 0.8504 euros $1 = 0.8502 euros Reporting by Alan Charlish; editing by Jason Neely

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