Metlen is entering a new phase of growth, spearheaded by critical minerals and the restructuring of its operations.
Bank of America maintains a positive stance on Metlen Energy & Metals, retaining its Buy rating and a target price of 52 euros, following a series of meetings with the group's management in Greece and a visit to its aluminum and gallium production facilities. In its report titled "Postcard from Greece: Critical minerals and gallium in the spotlight," the American bank points out that Metlen is entering a new phase of growth, focusing on critical minerals and the restructuring of its activities following profit warnings in 2025.
Betting on critical minerals
Bank of America analysts met with top company executives, including Chairman Evangelos Mytilineos and CEO Christos Gavalas. As they note, Metlen's business plan for critical minerals has evolved significantly since the 2025 Capital Markets Day. The company’s pilot plant has demonstrated that its proprietary hydrometallurgical technology can recover economically exploitable quantities of metals from non-traditional raw materials, primarily from metallurgical slag. Initial utilization will concern historical slag stockpiles at a company facility in Romania that has ceased operations, while the use of raw materials from third-party suppliers is also being examined.
Industrial gallium production by 2027
Bank of America places particular emphasis on gallium, which is considered a critical metal for technological applications and European strategic autonomy. Gallium extraction at Metlen's aluminum facilities is already in the industrial application phase, with full production capacity expected to reach 50 tons per year by the end of 2027. Analysts even see room to exceed the estimate for annual operating profits of 40 million euros, due to higher spot prices recorded in the market. At the same time, they noted that the expansion of the alumina refinery is underway, supported by a relevant agreement with Rio Tinto.
New strategy following the 2025 warnings
The report also refers to the profit warnings issued by Metlen in 2025, which were linked to EPCM contracts that experienced cost overruns. According to management, the company has proceeded with a restructuring, integrating construction activities into a different division of the group. Bank of America notes that management believes it has formed sufficient provisions for all potential cost overruns, with most problematic projects scheduled for completion within 2026 and 2027.
Model change in RES
Particular importance is also attached to the new development strategy for renewable energy sources (RES). Metlen no longer intends to build RES projects without a secured buyer, with the aim of selling them at a later stage and at an unknown valuation. Instead, it will proceed with project development only after an agreed assignment and at a pre-determined price, significantly limiting exposure to investment risk. At the same time, the company is turning towards hybrid projects, which combine photovoltaic parks with large-scale energy storage systems, improving the financial return of investments in an environment of electricity oversupply during midday hours.
Maintaining the "Buy" rating
Bank of America reiterates its positive view on Metlen, maintaining the target price at 52 euros per share, which is based on a valuation of 7 times the estimated 2027 EBITDA and the discounted cash flow (DCF) method. As the report concludes, the shift to critical minerals, industrial gallium production, and a more disciplined approach to construction and RES compose a new investment narrative for Metlen, which, according to Bank of America, has not yet been fully priced in by the market.
www.bankingnews.gr
Readers’ Comments