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Eramet shares plunge after sudden CEO dismissal rattles investors

Eramet fell on the Paris Stock Exchange on Monday after the sudden firing of its CEO, just months into his term, caught investors off guard and raised concerns about governance at the nickel-manganese-lithium miner owned in part by the French state.

Eramet announced on Sunday that it had fired Paulo Castellari because of disagreements over "operating methods". It temporarily reappointed Christel Bories as Chairwoman, a role she had handed to Castellari in May last year.

Analysts were stunned by the decision, and credited Castellari for his early efforts in restructuring the group. The group had?faced declining profits and rising debt over the last year due to the weak metal markets and investments in lithium.

Eramet shares fell by a little over 8% in the late morning. This was the largest fall on?the SBF 120 Index in Paris.

Maxime Kogge, an Oddo BHF Analyst, said in a note that the announcement was a "shock". Eramet will enter another transition phase with his departure. This will make it harder to achieve much-needed?cost savings and operational improvements.

Castellari unveiled its initial plans for a performance boost in December, which included a higher productivity in its manganese operations in Gabon.

Bories said to reporters that the dismissal of Castellari had nothing whatsoever to do with the financial results, and that the strategy of the group remained the same.

Sources within the company said that Bories' and Castellari's disagreements over decisions were well-known, but that the CEO was sacked as a result of this.

A finance ministry official, who did not comment on Castellari’s dismissal, said that the French state "reaffirms" its commitment to Eramet's stability and performance.

Eramet is owned by the state, which is Eramet’s second largest shareholder after the Duval family.

Kogge stated that while the decision to remove Castellari may have been a collective one, the conflicting interests of the Duvals who are keen on shareholder payments and the state which is focused on growth investment could "drag" on the process.

In 2021, the main shareholders were at odds over Bories' reappointment as chair and CEO for a second tenure. The Duvals wanted to replace Bories prior to agreeing to Bories' new term.

(source: Reuters)