Presentation title second line

Global Steel and Mining Conference 2013
A platform for value creation
Aditya Mittal, Chief Financial Officer
18-19 September 2013
Disclaimer
Forward-Looking Statements
This presentation may contain forward-looking information and statements about
ArcelorMittal and its subsidiaries. These statements include financial projections and estimates
and their underlying assumptions, statements regarding plans, objectives and expectations with
respect to future operations, products and services, and statements regarding future performance.
Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,”
“target” or similar expressions. Although ArcelorMittal‟s management believes that the
expectations reflected in such forward-looking statements are reasonable, investors and holders
of ArcelorMittal‟s securities are cautioned that forward-looking information and statements are
subject to numerous risks and uncertainties, many of which are difficult to predict and generally
beyond the control of ArcelorMittal, that could cause actual results and developments to differ
materially and adversely from those expressed in, or implied or projected by, the forward-looking
information and statements. These risks and uncertainties include those discussed or identified in
the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de
Surveillance du Secteur Financier) and the United States Securities and Exchange Commission
(the “SEC”) made or to be made by ArcelorMittal, including ArcelorMittal‟s Annual Report on Form
20-F for the year ended December 31, 2012 filed with the SEC. ArcelorMittal undertakes no
obligation to publicly update its forward-looking statements, whether as a result of new
information, future events, or otherwise.
Non-GAAP Financial Measures
This presentation may contain supplemental financial measures that are or may be nonGAAP financial measures. Definitions of such supplemental financial measures and a discussion
of the most directly comparable IFRS financial measures can be found on ArcelorMittal's website
at http://www.arcelormittal.com/corp/investors/presentations/.
1
Takeaways
• ArcelorMittal retains the core attributes to deliver value through
the cycle
• The balance sheet is repositioned
• Our West European business is optimised and delivering
improved results
• We are focussed on protecting our global cost position with a
new $3bn Management Gains program by end 2015
• Mining growth capex now delivering growth volumes
• Concentrating our investments to protect and expand our
“franchise businesses” such as Global autos, Mining and Brazil
• We have a roadmap to normalised EBITDA of $150/t
ArcelorMittal: the industry leader with a global presence backed by raw materials
2
Progress
• Safety improvement
• Balance sheet repositioned
Focus
• Footprint optimisation
• Cost improvement
• Franchise development
Outlook
• Roadmap to $150/t EBITDA
3
Progress
Improving LTIF rate reflects
group-wide focus on Safety
Health and safety frequency rate* for mining and steel
• Significant improvement in injury frequency
reflects a Group-wide focus on safety
3.1
2.5
1.9
• The Group‟s focus is now on further
reducing severity and fatality rates
1.8
2013
target
1.4
1.0
1.0
2007
2008
2009
2010
2011
2012
0.9
0.9
1Q 2013 2Q 2013
Safety of our employees remains the No1 priority
LTIF = Lost time injury frequency defined as Lost Time Injuries per 1.000.000 worked hours; based on own personnel and contractors
4
Balance sheet repositioned
Progress
Net debt progression $billion
-8.7
25
20
15
24.9
21.8
10
18.0
16.2
15.0
Medium
term target
5
0
Net debt/LTM
EBITDA*
3Q‟11
4Q‟12
1Q‟13
2Q‟13
2.3x
2.8x
2.5x
2.6x
Significant net debt reduction achieved  medium term target of $15bn
* Ratio of Net debt/LTM EBITDA is based on last twelve months reported EBITDA. Figures based on recast EBITDA as per new accounting standards adopted.
5
Progress
• Safety improvement
• Balance sheet repositioned
Focus
• Footprint optimisation
• Cost improvement
• Franchise development
Outlook
• Roadmap to $150/t EBITDA
6
German IFO reading
Signs that Europe was
returning to “crisis”
prompted internal reassessment
60
55
50
Asset Optimisation
announced
45
40
35
Nov-12
Jul-12
Mar-12
Nov-11
Jul-11
Mar-11
Nov-10
Jul-10
Mar-10
Nov-09
Jul-09
Mar-09
Nov-08
Jul-08
Mar-08
Nov-07
30
Jul-07
• We responded quickly to the
deepening crisis in Europe
• We responded appropriately by
seeking to remove unproductive
capacity through Asset
Optimization
• We have maintained our
course, taking those actions
necessary to protect our
business
• $1bn targeted savings achieved
Mar-07
Focus
Footprint optimisation
creates value
Management responded quickly and decisively to the deepening crisis in Europe
7
– Dunkirk
– Ghent
– Bremen
– FOS
– Asturias
New “Footprint” in Western Europe*:
# Blast furnaces
# Hot strip mills
# Cold rolling mills
• Idled least competitive rolling & coating lines
• Asset optimization ensures FCE achieves:
– Savings through fixed cost removal
– Well loaded assets with stable working points
 Lower variable cost
 Lower and more stable working capital requirements
 Better service and quality
 Reduce capex requirements
2011
15
8
18
2013
11
7
16
Working Cap needs
• Concentrated slab production in 5
coastal sites:
Transformation costs
Focus
Western Europe Footprint now
Optimised
Post optimization: FCF positive in current market environment
* Note: this is the prospective footprint once all proposals implemented
8
Relentless cost focus – new $3bn
cost improvement underway
Focus
New $3bn management gains program ($ billion)
Annualized savings
3.0
Savings targets
2Q 13 achieved
2.0
3.0
1.0
 Bottom up plan across the group
 Leveraging extensive
benchmarking opportunities within
the group
 Improvements in reliability, fuel
rate, yield, productivity, etc.
2.0
0.4
0.6
2013F
2014F
2015F
 Business units plans rolled out and
key personnel accountable for
delivery
Gap analysis completed in 2012 defined the priorities for 2013-2015 plan
9
Focus
Steel capex must be disciplined in
order to create value
• The economics of building new steel
capacity have not changed
ArcelorMittal growth capex split
– Typical Greenfield capacity would require
$250 EBITDA/t to deliver 15% post tax ROI
– Margins need to improve before new
capacity is built outside China
– As a result we expect ex-China capacity
growth to lag growth in demand
• We must be disciplined in allocating
capital to growth in steel
• Our focus is to back our franchise
businesses to protect our developed
market position and expand in new
markets e.g. Autos and Brazil
2010A
2011A
Steel
2012A
2013F
Mining
We continue to have options to invest in steel growth and create value
10
• The growth plan to 84Mt own
capacity is on track
• AMMC expansion from 16Mt to
24Mt ramping up
• Sale of 15% stake in AMMC for
crystallizes value that is to be
re-invested in the growth plan
• $1.1bn represents ~75% of
required capex to add 15Mt of
concentrate capacity in Liberia
• Liberia Phase 1 achieving
production and shipment
records in 2013
Own iron ore growth plan – production and capacity (Mt)
84
54
56
2011
2012
CAPACITY
Focus
Mining expansions now
delivering growth and value
49
2010
2013
2015
The Group‟s progress on
deleveraging has not come at
the expense of the Group‟s
Mining growth plans
Capex investments made in 2011/12 now driving shipment growth in 2013/14
11
Focus
Automotive steel is a franchise
business: we will invest
• ArcelorMittal is the leading supplier to the automotive industry
• We will continue to invest in R&D to stay ahead of the product
development curve
• We will increase participation in emerging markets to maintain
global market share
Market share* – Automotive Steel (indexed 2008 = 100)
ArcelorMittal JV partnership in China
120
•
110
Overall market share growing in US
and stable in EU
•
100
90
US
80
2008
2009
2010
2011
EU
2012
Market share* – Advanced High Strength Steels (indexed 2008 = 100)
130
120
Share of fast-growing HSS market has
increased since 2008
110
100
90
US
80
2008
2009
2010
2011
EU
2012
China‟s automotive market expected to grow
by >50% to ~25mn vehicles by 2018**
ArcelorMittal to participate in this market by:
 JV with Hunan Valin (VAMA)
 Expansion of exports of auto steel into China
 Local presence of commercial and technical
teams
VAMA:
1.5Mtpa facility due to start
production in 2015. Main
components are state-of-theart pickling tandem CRM,
continuous annealing line and
hot dip galvanizing line
We will continue to invest to protect and grow our Automotive steel franchise
* Based on ArcelorMittal estimates; Regional ArcelorMittal Auto market intelligence; LMC auto/CSM
** Source: LMC auto
12
Progress
• Safety improvement
• Balance sheet repositioned
Focus
• Footprint optimisation
• Cost improvement
• Franchise development
Outlook
• Roadmap to $150/t EBITDA
13
Outlook
Demand prospects improving
• Leading indicators have rebounded early
2H‟13, particularly in developed markets.
AM weighted global PMI highest since 1H‟11
• US manufacturing up y-o-y having stabilised
during H1‟13. However, Aug PMI suggests
rising output in H2‟13 supported by robust
automotive sales and rising manufacturing
orders
55
Expansion
• 2H2‟13 outlook improving with Czech
Republic, Poland & UK PMI >50. Eurozone
PMI at 51.4 the highest since June‟11, albeit
only modestly expanding
60
Contraction
• European manufacturing output began to
increase in 2Q‟13, with June‟13 output up yo-y, the first time since 2011
ArcelorMittal weighted global manufacturing PMI*
50
45
40
• Chinese industrial output growth slowed
during Q2‟13 but output growth rebounded
in July‟13 and PMI moved back above 50
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
35
Global indicators signal improved 3Q‟13 growth particularly in developed markets
Source: *Markit. ArcelorMittal estimates
14
Outlook
Prices supported by low inventories &
recovering raw materials
Key benchmark HRC prices ($/tonne)*
1300
China domestic Shanghai (Inc 17% VAT)
N.America FOB Midwest
N.Europe domestic ex-works
1200
1100
130
120
110
100
90
80
70
60
50
40
30
Spot Iron Ore
Coaking Coal
Scrap
Jan 08
Apr 08
Jul 08
Oct 08
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
1000
Key raw material prices (index 1H 2008=100)*
900
US service centre inventories (000 MT)
800
3.6
14000
700
12000
10000
600
USA (MSCI)
Months Supply
2.8
6000
2.6
4000
2.4
2000
2.2
0
2
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Jan 08
Apr 08
Jul 08
Oct 08
400
3.2
3
8000
500
3.4
Destocking in Q2‟13 has provided stronger foundations for 2H‟13
* Source: SBB; prices are monthly average
15
Outlook
2H‟13 should be significantly
better than 2H‟12
• We are guiding to FY‟13 EBITDA greater than $6.5bn
• This implies 2H‟13 EBITDA at or above 1H‟13 levels
• This is contrary to the normal “seasonal” pattern of
EBITDA…
• … and very different to the experiences of 2011 and 2012
where 2H EBITDA was significantly lower than 1H levels
• 2H EBITDA at or above $3.2bn would compare to an
underlying level of $2.3bn* in 2H 2012
We continue to believe that 2H‟12 represents the low point in this cycle
* 2H 2012 reported EBITDA of $3.0bn includes $0.7bn one-off adjustments including gains from CO2 sale, Paul Wurth divestment and DDH income offset by USW labour
agreement adjustment. The underlying 2H 2012 EBITDA is therefore $2.3bn.
16
Outlook
Roadmap back to normalised
profitability
$150/t
• If steel shipments increase by ~15% then we
believe $150/t EBITDA is achievable
• Driven by:
– Leverage to incremental volumes ($200250/t margin on incremental tonne given
limited additional fixed cost)
– Cost benefits from Asset Optimisation
(completed  $1bn sustainable savings)
– Cost benefit from new $3bn Management
gains 2013-2015
– Execution of mining growth plan (+28MT
new production capacity by 2015)
– Offsetting impact of lower iron ore price
– Improved industry utilization rates driving
higher margins and profitability
Management
Gains (cost
cutting)
Steel Volume
Recovery
Mining Volume
Growth
Asset
Optimization
Average EBITDA/tonne
2010-2012*
$90/t
We believe EBITDA/tonne of $150 is an achievable normalized target
* Note: EBITDA is underlying number excluding one-time items, CO2 gains and DDH
17
ArcelorMittal is in a position of strength to
capitalise on opportunities & deliver value
Cost
competitive
assets
Exposed to
fastest
growing
markets
Industry
leading
returns
World-class
mining
business
Leading
supplier to
automotive
industry
Components are in place to deliver industry leading returns and value
18
Q&A
19
Strategy
20
ArcelorMittal‟s strategy
Our strategy is to leverage our distinctive attributes that enable us to achieve a
leading position in the most attractive components of the steel value chain
In steel, capture a leading
position in attractive businesses
by leveraging our technical
capabilities and global scale
and scope
• Be the supplier of choice for
customers who value
distinctive products and
services
• Grow in markets with attractive
structures
• Minimize costs in commodity
businesses to lower risks and
capture boom-market potential
Enablers
A clear
licence to
operate
In operations, achieve bestin-class competitiveness by
leveraging our technical
capabilities and diverse
portfolio of assets and
businesses
• Be the safest
• Concentrate production
at the best assets and run
them well
• Be cost competitive by
benchmarking, sharing best
practices, and investing to
optimize our multi-site footprint
• Innovate (product/process)
A strong
balance
sheet
An effective
organisational
structure
In mining, grow a world-class
business utilising our financial
strength and diverse portfolio of
assets and businesses
• Invest to expand output at Tier I
and Tier II assets
• Optimize the value proposition
associated with our products‟
value in use
• Be the supplier of choice for a
balanced mix of internal and
external customers
• Provide a natural hedge against
market volatility and potential
oligopolies
Active
portfolio
management
The
best
talent
French Media Day - Sept 2013
Positioned for industry-leading returns
and value
• A global champion well positioned for new market opportunities
and servicing globalising customer industries
Leading market
position in
developed world
Access to high
growth markets
Ability to service
global customers
 Diversified
Leading supplier to
 premium markets
Leading supplier to
 high-growth markets
Significant self sufficiency in raw
materials
Higher and
more stable
returns
through the
cycle
Access to own
raw materials
ArcelorMittal: the industry leader with a global presence backed by raw materials
22
Focussing on value drivers
New $3bn management gains plan
Cost
Leadership
Product
Leadership
Improved
EBITDA/tonne
($150/t normalised
target)
Best-in-class
service
Portfolio
Optimisation
Returns > WACC
Capital
Efficiency
Focussed
investment
Focussing on “Franchise” businesses
All levels of ArcelorMittal aligned with one goal  improved returns on Capital
23
Focussed capital allocation
• We are backing our franchise businesses with capital
Franchise steel
Approximate EBITDA split:
55% of steel shipments
from businesses identified
as “Franchise” e.g.
• Global Autos,
• Brazil long,
• Sheet Piles
“Franchise” businesses
contribute 80% of “steel
EBITDA
Other steel
Mining
Non-Franchise
Other steel
Franchise
Steel shipment split:
Capital priority
Invest to protect
and expand
Focus on cost
cutting and
optimisation
Franchise steel
Franchise businesses are receiving the required capital to protect and expand
24
Cost cutting is in our DNA
• In addition to the >$1.6bn merger synergies achieved
• A further $4.8bn of “Management Gains” have been achieved
Management gains savings plan achieved since
2008 (USD billion annualized)
Variable cost savings breakdown
4.8
Other
35%
Variable cost
Fixed cost
37%
Yield
3.4
9%
Energy
Fixed cost per ton (index 100 = 2008)*
Productivity
100
110
80
100
90
60
80
40
70
20
0
60
2008
2009
shipments
2010
2011
19%
2012
Fixed cost per tonne lower than
2008 levels despite lower
shipments
50
Fixed cost per ton
Focus on achieving internal best practice remains a source of opportunity
* On actual dollar basis and excludes mining
25
Cost improvement underway
New $3bn management gains program ($ billion)
Annualized savings
3.0
Savings targets
Gap Analysis for Cost Savings per Main Drivers
Others
Yield
2Q 13 achieved
28%
29%
2.0
3.0
1.0
0.4
•
•
•
•
•
22%
2.0
Productivity
Energy
0.6
2013F
21%
Gap Analysis for Cost Savings by Process
2014F
2015F
Bottom up plan across the group
2/3 variable cost and 1/3 fixed cost focussed
Improvements in reliability, fuel rate, yield, productivity etc
Business units plans rolled out and key personnel
accountable for delivery
Leveraging extensive benchmarking opportunities within
the group
Others
Cold rolling
mill & HDG
Sinter & BF
11%
10%
34%
20%
Hot strip mill
25%
Steel shop
Gap analysis completed in 2012 defined the priorities for 2013-2015 plan
26
Capex and growth plans
•
STEEL
•
Most steel growth capex remains
temporarily suspended
•
Monlevade expansion project in Brazil
restarted in 2 phases:
–
–
Phase 1 focuses on downstream
facilities:
• a new wire rod mill in Monlevade
(additional capacity of 1050 ktpy of
coils) with capex estimate of
$140m;
• Juiz de Fora rebar capacity
increase from 50 to 400 ktpy and
meltshop capacity increase by 200
ktpy with capex estimate of $40m
Phase 2 will focus on the upstream
facilities in Monlevade (sinter plant,
blast furnace and melt shop – additional
crude steel capacity of 1.2mtpa).
Restart decision to be taken in future
.
MINING
•
AMMC: Expansion from 16mtpa iron ore to
24mtpa by 2013 – completed 1H‟13. Capex
of $1.6bn
•
AMMC: Further expansion to 30mtpa iron
ore under study
•
Liberia: Phase 2 project underway for
15mtpa premium sinter feed to replace
4Mtpa DSO by 2015.
•
Baffinland: Early Revenue Phase (ERP)
underway: 3.5mtpa production capacity by
2015
Upgrade railway line linking mine to port in Liberia
Capex focus remains on iron ore growth plan
27
Market outlook
28
Outlook and guidance framework
– In line with our guidance framework, underlying profitability is still expected to improve
in 2013, driven by three factors:
a) a 1-2% increase in steel shipments;
b) an approximate 20% increase in marketable iron ore shipments; and
c) the realized benefits from Asset Optimization and Management Gains initiatives
– Nevertheless, due largely to lower than forecast apparent demand and lower than
anticipated raw material prices, the Company now expects to report 2013 EBITDA
greater than $6.5 billion
– Due to an expected investment in working capital and the payment of the annual
dividend, net debt is expected to increase in 2H 2013 to approximately $17 billion; the
$15 billion medium term net debt target is unchanged
– 2013 capital expenditures are now expected to be approximately $3.7 billion
The Company expects to report FY 2013 EBITDA greater than $6.5 billion
29
Strong rise in developed markets indicators
• Leading indicators have rebounded early
2H‟13, particularly in developed markets.
AM weighted global PMI highest since 1H‟11
• US manufacturing up y-o-y having stabilised
during H1‟13. However, Aug PMI suggests
rising output in H2‟13 supported by robust
automotive sales and rising manufacturing
orders
55
Expansion
• 2H2‟13 outlook improving with Czech
Republic, Poland & UK PMI >50. Eurozone
PMI at 51.4 the highest since June‟11, albeit
only modestly expanding
60
Contraction
• European manufacturing output began to
increase in 2Q‟13, with June‟13 output up yo-y, the first time since 2011
ArcelorMittal weighted global manufacturing PMI*
50
45
40
• Chinese industrial output growth slowed
during Q2‟13 but output growth rebounded
in July‟13 and PMI moved back above 50
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
35
Global indicators signal improved 3Q‟13 growth particularly in developed markets
Source: *Markit. ArcelorMittal estimates
30
Inventory levels during 2Q‟13
US service centre total steel Inventories (000 MT)
Europe service centre inventories (000 MT)*
3.6
Mo n th s S u p p ly
3.4
2200
3.2
12000
2000
3
10000
2.8
1800
2.6
1600
2.4
1400
1200
3.2
2.8
2.6
2.2
4000
2.4
2
2000
2.2
0
China service centre inventories (Mt/mth) with ASC%
Brazil service centre inventories (000 MT)
Flat stocks at service centres
Months of supply (RHS)
1,300
1,200
1,100
1,000
900
800
700
4.5 22
20
4.0
18
16
3.5
14
3.0 12
10
2.5
8
600
500
2.0
400
1.5
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
2
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Nov-12
Jun-12
Jan-12
Aug-11
Mar-11
Oct-10
May-10
Dec-09
Jul-09
Feb-09
Sep-08
Apr-08
Nov-07
Jun-07
Jan-07
3.4
3
6000
1.6
1,400
USA (MSCI)
Months Supply
8000
1.8
1000
3.6
14000
Flat and Long
% of ASC (RHS)
6
4
2
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
2400
EU (EA S S C)
Inventory drawdown in US and China during 2Q‟13
* Europe inventory updated data not available. Latest data point December 2012
31
Raw material prices have strengthened
Spot iron ore, coking coal and scrap price
(index IH 2008=100)*
Regional steel price HRC ($/t)*
130
Spot Iron Ore
Coaking Coal
Scrap
120
110
1300
China domestic Shanghai (Inc 17% VAT)
N.America FOB Midwest
N.Europe domestic ex-works
1200
1100
100
1000
90
900
80
800
70
700
60
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
400
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
30
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
500
Jan 08
Apr 08
Jul 08
Oct 08
40
Jan 08
Apr 08
Jul 08
Oct 08
600
50
Raw material prices have rebounded from end 2Q‟13 lows
* Source Steel Business Briefing. Note prices shown reflect average of the latest month:
32
Global apparent steel consumption
+55%
China
+4.5 to +5.5%
+2%
700
EU27
-30%
-1.5 to -2.5%
200
600
180
500
160
-9%
140
400
120
300
100
200
80
100
60
0
40
2007 2008 2009 2010 2011
2012
2013F
NAFTA
2007 2008 2009 2010 2011
2012
2013F
Rest of World
+9%
160
-8%
+1%
+7%
140
120
100
80
60
40
2007 2008 2009 2010 2011
2012
2013F
+2%
+4%
550
500
450
400
350
300
250
200
150
100
50
2007 2008 2009 2010 2011
2012
2013F
Global ASC growth of +1.6% 2012; estimated 2013 ASC growth of ~3%
ArcelorMittal estimates; 2013 figures shown mid range expectations
33
2Q‟13 apparent demand growth driven by robust
China demand
Global apparent steel consumption (ASC)*
(million tonnes per month)
60
US and European apparent steel consumption (ASC)**
(million tonnes per month)
Developing ex China
China
Developed
55
17
50
15
45
13
40
11
35
9
30
7
•
•
•
•
Global ASC +2.7% in 2Q‟13 vs. 1Q‟13
Global ASC +3.1% in 2Q‟13 vs. 2Q‟12
China ASC +2.2% in 2Q‟13 vs. 1Q‟13
China ASC +8.2% in 2Q‟13 vs. 2Q‟12
EU27
•
•
•
•
May-13
Jan-13
Sep-12
May-12
Jan-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
Sep-07
USA
May-07
May-13
Jan-13
Sep-12
May-12
Jan-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
3
Sep-07
15
May-07
5
Jan-07
20
Jan-07
25
US ASC +1.3% in 2Q‟13 vs. 1Q‟13
US ASC -5.6% in 2Q‟13 vs. 2Q‟12
EU ASC +0.3% in 2Q‟13 vs. 1Q‟13
EU ASC -4.1% in 2Q‟13 vs. 2Q‟12
Europe and US declined YoY in 2Q; developed market growth expected in 2H‟13
* ArcelorMittal estimates
** AISI, Eurofer and ArcelorMittal estimates
34
US construction improving; Europe beginning to
stabilise
US residential and non-residential construction indicators
(SAAR) $bn*
• Pickup in USA strengthening
– US residential construction continues to grow
strongly (up 20% y-o-y Jan-July‟13). Housing
permits back to highest level since H1‟08,
underpinned by home sales at H1‟07 levels
750
700
650
600
550
500
450
400
350
300
250
200
– Public non-residential output declining,
private slowly improving; Architectural
Billings index (ABI) remains >50 suggesting
pickup into 2014
Residential
• In Europe, weak demand continues to impact
construction, but output stabilising
Sep-13
Feb-13
Jul-12
Dec-11
May-11
Oct-10
Mar-10
Aug-09
Jan-09
Jun-08
Nov-07
Apr-07
Sep-06
Feb-06
Jul-05
Dec-04
May-04
Oct-03
Mar-03
Aug-02
Jan-02
Non-residential
– Construction PMI almost 48  suggesting
output continues to contract but at a reduced
rate
Expansion
Eurozone and US construction indicators**
65
Eurozone construction PMI
60
USA Architectural Billings Index
– German construction output rebounded in
2Q‟13 from weather related 1Q‟13
weakness, supported by strong labour and
residential markets
55
50
– Construction markets in South continue to be
weak, with double digit declines in 1H‟13 in
Greece, Italy and Portugal
40
35
Jul-13
Feb-13
Sep-12
Apr-12
Nov-11
Jun-11
Jan-11
Aug-10
Mar-10
Oct-09
May-09
Dec-08
Jul-08
Feb-08
Sep-07
Apr-07
Nov-06
Jun-06
30
Jan-06
Contraction
45
– Official data indicates construction stabilised
in Q2‟13 over 1Q‟13, but steel intensity
declines due to increased share of
renovation
US residential construction improving, early signs of stabilisation in Europe
* Source: US Census Bureau
** Source: Markit and The American Institute of Architects
35
Chinese steel demand recovery in 3Q‟13
China infrastructure investment 3mma* (Y-o-Y)
75%
•
Recent data shows industrial output
slowed in 2Q‟13 to 9.1% y-o-y (4Q‟12
+10%) impacted by weaker exports.
However, growth in July has rebounded
and PMI signal a recovery in 3Q‟13
•
Infrastructure investment growth
continues to be robust but we expect
growth to slow into 2014
•
Rebound in newly started construction
has picked-up pace with starts up 16.7%
y-o-y in 3 mths to July as strong
residential sales have cut developers
inventory and improved cash flows
•
Flat products demand is robust, despite
shipping weakness, as both automotive
and domestic appliances grow strongly
•
Despite high 1H‟13 steel production, steel
inventory particularly longs, has declined
due to seasonality, down y-o-y in August
•
Mill inventories have declined as well, as
demand has improved, supporting
stronger steel production during 2H‟13
than previously expected
60%
45%
30%
15%
0%
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
-15%
100
Steel inventory at warehouses (RHS)
Crude steel finished production and inventory (mmt)**
90
Finished steel production (LHS)
80
Steel inventory at mills (RHS)
21
18
70
15
60
12
50
9
40
30
6
20
3
10
Jul-13
Apr-13
Oct-12
Jan-13
Jul-12
Apr-12
Jan-12
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Oct-10
Apr-10
Jan-10
Jul-09
Oct-09
Apr-09
Jan-09
Jul-08
Oct-08
Apr-08
Jan-08
Jul-07
Oct-07
Apr-07
0
Jan-07
0
Underlying demand robust in China, supporting elevated production levels
* Mma refer to months moving average
** Source: China Iron and Steel Association: Steel inventory in warehouse in 35 cities; steel inventory in 70 mills
36
Balance Sheet
37
Cash flow priorities
Maintain
competitive
position
Fund
Mining
growth plan
Reduce
NFD to
target level
Strong operations
with sustainable
balance sheet
Increase
Dividends
Increase
CAPEX
Further
reduce
NFD
Dividends and growth capex will only be increased further once NFD ≤$15bn
38
Balance sheet  structurally improved
Average maturity (years)
Net debt ($ billion)
32.5
6.4
-50%
16.2
2.6
3Q 2008
Liquidity ($ billion)
2Q 2013
16.9
3Q 2008
2Q 2013
Bank debt as component of total debt* (%)
84%
12.0
10%
3Q 2008
2Q 2013
3Q 2008
2Q 2013
Balance sheet fundamentals improved
* ArcelorMittal estimates
39
Deleveraging progress
Net debt progression $billion
-8.7
25
20
15
24.9
21.8
10
18.0
16.2
15.0
Medium
term target
5
0
Net debt/LTM
EBITDA*
3Q‟11
4Q‟12
1Q‟13
2Q‟13
2.3x
2.8x
2.5x
2.6x
Significant net debt reduction achieved  medium term target of $15bn
* Ratio of Net debt/LTM EBITDA is based on last twelve months reported EBITDA. Figures based on recast EBITDA as per new accounting standards adopted.
40
Liquidity and debt maturity profile
Liquidity at June 30, 2013 ($ billion)
Debt maturities ($ billion)
16.9
12
10.1
10
Unused credit lines
10.0
8
6
3.5
4
Cash
6.9
1.4
0.8
0.1
0.5
Liquidity
at 30/6/13
2.7
2.5
2015
2016
Short term & others
Commercial paper
2
2.9
1.4
Bonds
Debt due
in 2013
0
2013
2014
Commercial Paper
Other
2017
Convertibles
>2017
Bonds
Liquidity lines:
Debt maturity:
Ratings
• $4bn syndicated credit facility matures 06/05/15
• $6bn syndicated credit facility matures 18/03/16
• Continued strong liquidity
• Average debt maturity  6.4 years
• S&P – BB+, negative outlook
• Moody‟s – Ba1, negative outlook
• Fitch – BB+, stable outlook
Continued strong liquidity position and average debt maturity of 6.4 years
41
Working capital is fuel for our business
OWCR and rotation days* ($ billion and days)
28
24
Working capital ($ billion) - LHS
Rotation days - RHS
• Current working capital at
low levels
90
20
16
120
55
60
• 55 days is record low
12
8
30
4
0
1Q 07
2Q 07
3Q 07
4Q 07
1Q 08
2Q 08
3Q 08
4Q 08
1Q 09
2Q 09
3Q 09
4Q 09
1Q 10
2Q 10
3Q 10
4Q 10
1Q 11
2Q 11
3Q 11
4Q 11
1Q 12
2Q 12
3Q 12
4Q 12
1Q 13
2Q 13
0
• Expectation that 3Q‟13
levels to increase due to
seasonal factors
• We will invest in working capital as required
– Higher sales volumes requires more working capital (but same days)
– Days can be impacted by price
Business will invest in working capital as conditions necessitate
* Rotation days are defined as days of accounts receivable plus days of inventory minus days of accounts payable. Days of accounts payable and inventory are a function
of cost of goods sold of the quarter on an annualized basis. Days of accounts receivable are a function of sales of the quarter on an annualized basis.
42
Asset disposal program
• Asset sales of $4.2 billion* since Sept 2011 (non-comprehensive list):
 MacArthur Coal and BNA stake disposals, $0.9 billion in 4Q‟11
 Erdemir: 1/4 of 25% stake sold raising $264 million cash in 1Q‟12
 Skyline: sale to Nucor of 100% of ArcelorMittal‟s stake in Skyline Steel‟s
operations in NAFTA/Caribbean for $684 million in 2Q‟12
 Enovos: sale to AXA of 23.5% interest for €330 million (Initial 50% payment
received in 3Q‟12 with balance (+ interest) over subsequent periods)
 Paul Wurth**: sale to SMS Holding of 48.1% interest for €300 million
 Kalagadi: agreed sale of 50% stake for R3.9 billion (approximately $460 million)
 AMMC: agreed sale of 15% stake with off take agreement to Posco and China
Steel for $1.1 billion
 Reduced ownership of Baffinland to 50% with Nunavut Iron ore increasing its
share of funding for the project
Asset sales of $4.2 billion since September 2011
* Includes Macarthur, Boasteel-NSC/Arcelor (BNA) Automotive, Erdemir, Skyline, Enovos, Kalagadi, AMMC and Paul Wurth .
** Paul Wurth divestment had $70 million impact on ArcelorMittal net debt as sale cash proceeds were more than offset by the deconsolidation of Paul Wurth‟s cash balance minus its debt
on balance sheet . Paul Wurth‟s cash balance primarily represented customer advances held by customers of Paul Wurth.
43
China
44
China‟s steel demand following
precedents
Economic development is characterized by strong, early phase steel demand
growth – China is no different
Cumulative crude steel apparent consumption (kg/capita)
40000
Germany
35000
30000
USA
25000
S. Korea
France
20000
15000
10000
China
5000
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1925
1920
1915
1910
1905
1900
0
China steel demand grwoth is sustainable near term
Note: Between 1900 and 1949 crude steel production per capita as approximation for demand as no data available
Sources: WSA for crude steel ASC; IHS Global Insight and UN Data statistics for population; ArcelorMittal Corporate Strategy team analysis
45
Steel demand growth rates in China
have trended down
China annual growth rates of GDP and
ASC (apparent crude steel consumption), (%)
Ratio ASC/GDP Growth (LHS)
ASC growth (RHS)
The announced slowing of China‟s GDP
growth rate is consistent with 12th 5-Year Plan
14.2%
Real GDP growth (RHS)
3.5
35
3
30
2.5
25
12.7%
11.3%
10.5%
9.6%
2
20
1.5
15
1
10
0.5
5
0
0
2001
2002
2003
2004
2005
2006
2007 '08/09 2010
2011
2012 2013F
9.3%
9.2%
7.8% 7.8%
7.5%
7.0%
11th
plan
2005
2006
2007
2008
2009
2010
12th
plan
2011
2012
2013F
China‟s steel demand growth have trended down
Source: GDP: IHS Global Insight, ASC: ArcelorMittal Corporate Strategy estimates (Q2‟2012)
46
China still has some way to go on its
infrastructure development path
USA, 2008
China, 2008
China, 2011
Key development parameters China vs USA
Absolute levels
Per capita/Per land area
Urban
residential
floor space
(billion m2)
23.8
18.7
21.7
227
Railway
(thousand
km)
Subway
(thousand
km)
79.7
94
1.2
0.8
1.9
Airport*
(units)
3730
4146
1452
160
175
78
16
19
8.3
9.7
3.9
0.6
1.4
658
Total road (km per 1000
sq km)
Airport transport
passenger carried (bln)
Equal to 30, 33,
m2 per urban
residential
23
Railway (km per 1000 sq
km)
Subway per 1000 capita
(m)
6466
Total road
(thousand
km)
Urban residential floor
space (m2 per capita)
390
430
1.5
0.2
0.3
* Airport of USA is for paved runways > 1524 to 2437 m
Sources: China National Bureau of Statistics; Macquarie Research, ArcelorMittal Corporate Strategy
47
China will keep global raw material
supplies tight
• China steel demand growth is expected to continue to absorb
new supply of iron ore, keeping global supply/demand tight
Global iron ore supply/demand outlook (Mn tonnes)
3300
Iron Ore Demand/Production
World Iron Ore Demand
World Iron Ore Production
2800
2300
1800
1300
800
2010
2011
2012
2013
2014
2015
2016
Supply/Demand projections
Iron ore supply forecast to keep pace with demand, with no significant excess
Source: ArcelorMittal Corporate Strategy
48
China net export data
•
China net exports of 4.8mt In August.
•
China net exports up 23% m-o-m and up 61% YoY
Chinese imports rising
49
Mining
Mont Wright, Canada
50
Mining business portfolio
Key assets and projects
Canada
Baffinland 50%(1)
Ukraine
Iron Ore
95.13%
Bosnia
Iron Ore
51%
Russian Coal
98.64%
Kazakhstan
Iron Ore
4 mines 100%
Canada
AMMC 100% (2)
USA Coal
100%
USA Iron Ore
Minorca 100%
Hibbing 62.31%*
Non ferrous mine
Mexico Iron Ore
Las Truchas &
Volcan 100%;
Pena 50%*
Kazakhstan
Coal
8 mines 100%
Algeria
Iron Ore
70%
Mauritania
Iron Ore
exploration
license
Indian Iron
Ore & Coal
exploration
license
Liberia
Iron Ore 70%
Iron ore mine
Coal of Africa
15.75%
Coal mine
Existing mines
New projects /
exploration
Brazil
Iron Ore
100%
South Africa
Manganese
50% (3)
South Africa
Iron Ore**
Geographically diversified mining assets
* Includes share of production
** Includes purchases made under July 2010 interim agreement with Kumba (South Africa)
(1) Following an agreement signed off in December 2012, on February 20th, 2013, Nunavut Iron Ore subscribed for new shares in Baffinland Iron Mines Corporation which diluted AM‟s stake to 50%
(2) January 2nd, 2013 AM entered into an agreement to sell 15% of its stake in AM Mines Canada to a consortium lead POSCO and China Steel Corporation (CSC).
(3) In November 2012, ArcelorMittal signed a share purchase agreement with Mrs. Mashile-Nkosi providing, subject to various conditions, for the acquisition by her or her nominee of ArcelorMittal‟s 50% interest in
51
Kalagadi Manganese.
Iron ore reserve and resource estimates
Strong reserve and resource basis to support sustainable growth
2012 Iron ore reserves and resources (million metric tonnes)
Region
Proven &
probable
reserves
Mtonnes %Fe
Measured &
Inferred
indicated
resources
resources
Mtonnes %Fe Mtonnes %Fe
Canada (AMMC)
1,952
28
4,931
29
1,082
29
Canada (Baffinland)
375
65
41
65
444
66
USA
Central America
South America
West Africa
Eastern Europe
Central Asia
TOTAL
473
395
121
526
301
188
4,331
20
26
58
48
36
40
35
421
146
321
39
866
1,455
8,219
20
26
38
44
38
40
32
92
78
131
2,061
0
123
4,010
23
27
36
41
0
34
39
2012 Geographical breakdown of iron ore reserves & resources
Eastern Europe
Central Asia
7%
West Africa
4%
12%
45% Canada (AMMC)
South America 3%
9%
Central America
11%
USA
9%
Canada (Baffinland)
• Highlights of 2012:
– Resource to Reserve conversion
exceeded mining depletion to
provide a net increase of ~500Mt
in iron ore reserves
– Resource to reserve conversion
was largely offset by resource
additions due to exploration and
re-evaluation of known
mineralization
• Resource and reserve estimates
supported by internal technical
reports
• Updated life of mine plans with
discounted cash flows to support
demonstration of economic viability
for all ore reserve estimates
• All resource estimates have potential
for economic extraction to support
future potential growth
2012 Iron ore reserves of 4.3bn metric tonnes
52
Comparable margin to peers
ArcelorMittal Mining EBITDA ($ Millions)
Iron ore EBITDA margin 2012 FY*
100%
3,500
90%
80%
3,000
70%
2,500
60%
2,000
50%
40%
1,500
30%
1,000
2009
2010
2011
2012
ArcelorMittal*
2008
Producer 5
0%
Producer 4
0
Producer 3
10%
Producer 2
500
Producer 1
20%
ArcelorMittal Mining is competitive on cost and quality
* Notes: ArcelorMittal EBITDA margin based on market-priced tonnes (i.e. excludes cost-plus tonnes from Revenue and EBITDA); “Producers” include BHP, Fortescue, Kumba, Rio Tinto
and Vale. Competitor data sourced from public information and has been prepared on a comparable periodic basis.
53
Iron ore growing; plans on track
CAPACITY
AMMC
• Spirals replacement project completed in 1Q‟13
• Capacity expansion from 16Mt to 24Mt:
• In June 2013 first concentrate from new Line 7
produced
• Ramp up underway
• Capex of $1.6bn
Liberia
• Phase 1 achieved new production record in 2Q‟13 at 1.1Mt
• Phase 2 project underway for 15Mtpa premium sinter feed to
replace 4Mtpa DSO by 2015
• Product specification changed to sinter feed; engineering
scope change required
• Major equipment procurement complete
• Civil works at the port are advancing and will be completed
this year
Baffinland
• Early Revenue Phase underway
• 3.5Mtpa of DSO trucked to Milne Inlet for export during openwater season by 2015
• $700m* project capex in 50:50 JV
Iron ore growth target on track – 84MT capacity by 2015
* Includes consideration from JV partner (Nunavut Iron Ore) for additional equity stake increase from 30% to 50%.
54
ArcelorMittal Mines Canada
(AMMC)
AMMC expansion from 16Mt to 24Mt complete
•
•
•
Iron ore production and capacity (million Mt)
Expansion of Mont Wright mine at AMMC and
concentrate capacity to total 24Mt p.a. (from 16Mtpa
post operational improvements) concentrate and
pellets
•
Potential for future expansion given size of resource
base and existing infrastructure
•
Port infrastructure 30-32Mtpa without significant
additional capex
•
Ability to expand production capacity beyond
30Mtpa
24
Spirals
6
8
Expansion capitalising on existing infrastructure,
product quality, experienced workforce and
advantageously located with easy access to
European/US markets
Capex $1.6bn* for mine, concentrator plant
expansion and infrastructure upgrade with cash cost
of circa $38/tonne post expansion
30
Concentrator
15
1
2012
2013F
Potential
Expansion
•
Low cost, efficient operations with further
improvement potential
•
Ongoing initiatives to continue improving
operating equipment efficiency
•
Access to low-cost, long-term hydro electric
generating station
Strategic advantage from exclusive use of own rail and port facilities
* Capex of $1.6bn excludes expansion of Pellet line which has not yet been committed to.
55
ArcelorMittal Mines Canada (AMMC)
Expansion from 16Mt to 24Mt complete
Expansion
• Commission of new spirals line at concentrator
• New trucks operational
• Additional rail sidings completed
Railway
• Wholly-owned 420-km railway infrastructure
• Longer train with two locomotives commenced
• Linking mining operations to Port-Cartier
Port-Cartier
• One of Canada‟s largest private ports
• Handling 160,000+ tonne ships
• Currently running at ~350 vessels per year
• Ability to handle cape-size vessels all year
round
Expansion supported by captive infrastructure with operating leverage
56
56
Liberia Phase 1 completed
Phase 1 DSO („Direct Shipping Ore‟)
Industrial location of mine
Guinea
•
Construction:
• 240km rail rehabilitation completed
• Buchanan port and material handling
facilities initial upgrade completed
•
Shipment details
• First DSO product shipped Sept 2011
• 40% to Europe (natural market), 60% to Asia
•
Costs
• Competitive cash cost
• Cape size trans-shipment facilities started
•
Offshore loader
• Commenced cape size off shore loading Dec
2012 to further increase margins
• Scheduled to load largest cape size in
Western Africa
• Focus on long haul customers
All marketable tonnes
Sierra Leone
Atlantic Ocean
Yekepa
Ivory Coast
Buchanan
Railway link from Yekepa
to Buchanan (240km)
Liberia
Liberia trans-shipment
Liberia expansion progress on track
57
Liberia Phase 2 rationale
Phase 2 – Higher grade material
• Expansion to 15mtpa capacity by 2015
• Investment in a concentrator approved
• Project and mine planning currently
underway
Production capacity (Million tonnes)
Phase 1
60%
60% grade
grade
(highsilica)
silica) DSO
(high
DSO
capex $0.7bn
capex $0.7bn
Phase 2
66%grade
grade
66%
(low silica)
(low
silica)
concentrate
Sinter
feed
capex ~$1.5bn
• Fully utilizing our wholly owned infrastructure
• Managing project implementation to reduce
near term capex without compromising
Phase 2
15
• Staged approach
4
• Align product to market
2012
2015
Focus on Phase 2 to develop 15Mt of higher quality sinter feed
58
Baffinland Iron Ore Mines expansion
update
Background
• In Dec. 2012, ArcelorMittal agreed with
minority shareholder Nunavut Iron Ore (NIO)
to increase NIO‟s interest in Baffinland from
30% to 50%
• ArcelorMittal will retain a 50% interest in the
project as well as operator and marketing
rights
Project progress
• In Dec. 2012, completed the environment
assessment process and received approval of
“The Project Certificate”* by the Canadian
government
• Negotiations are progressing with the
Qikiqtani Inuit Assoc. on the completion of the
Inuit Impact and Benefits Agreement (IIBA),
prioritizing Inuit participation in the project
Early Revenue Phase (ERP) underway:
Road route 3.5MT production capacity p.a. in 2015
ERP phase
underway : Road
route
Proposed phase 2: Rail
Foxe Basin
Product
• High grade: 66%+ Fe iron – „direct shipping pellet‟
and fine ore (no processing or pelletization required)
• Products expected to achieve full premium value
Early Revenue Phase (ERP) has been approved
* The Project Certificate relates to the full original scope of the Mary River project expansion
59
Baffinland Early Revenue Phase:
3.5MT production rate in 2015
Proposed Early Revenue Phase rationale
• ERP budget approx. US$700m commenced in 1Q 2013
• Enables an early mining phase that requires less capital investment than
full project, creating training, employment, business opportunities for local
region
• ERP will demonstrate quality of product and ability to operate
ERP components and difference between full rail project
• ERP requires trucking of ore to Milne Inlet, loading of ore in Milne Inlet,
and shipping of ore from Milne Inlet to markets
• Requires upgrades of the road connecting Milne Inlet and mine site
• Mining and trucking of 3.5mtpa from Deposit 1 to Milne Inlet throughout
the year
• Shipping of ore from Milne Inlet during “open water season”
• Anticipate first ore to be shipped in 2H 2015, all product tonnage targeted
for Europe
Environment permitting
• Existing permits allow work to commence in 3Q‟13
•
Planned modification to existing permit to allow further
optimization: doubling of fuel capacity at Milne Inlet in 2013
• Completion of ERP amendments to “The Project Certificate” and licenses
scheduled in 1H 2014
Mary River Project is now a phased project –
ERP underway, Rail Phase to be considered according to market conditions
60
Potential growth beyond current plan
Growth project pipeline (million tonnes)
160,000
Cost plus tonnage
Marketable tonnage
Total Potential
140,000
120,000
Tonnes
100,000
Potential
brownfield and
greenfield
projects under
study,
primarily
marketable
2015 iron ore target of 84MT production capacity
(excluding “potential” projects and strategic
contracts)
80,000
60,000
40,000
20,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Growth supported by pipeline of brownfield and greenfield projects
2010 to 2012 represents actual production. 2013 onwards, capacity is being reflected in the above graph.
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Focus on cost as well as growth
Illustrative cash cost curve (marketable tonnes)
post expansion
US$ FOB Cost per ton
Positioning key assets low on the cost curve
Focus on value
and OEE
initiatives
Focus on
quality
1st
2nd
ArcelorMittal
Liberia
3rd
AMMC
4th
Relentless focus on cost control
• Operational excellence, rigour and discipline
underway across assets
• Share and apply best practice leveraging internal
and external benchmarks
• Key focal points:
• Labour productivity
• Maintenance and reliability
• Mining plan optimization
Rigorous capex investment management
• Focus on on-time and budget delivery
• Central project management office
• Regular expert project reviews
• Standardised projects controls
• Tracking time/cost divergence and risks
Quartile
Post capex FOB cash cost
Relentless focus on costs and capex monitoring
* Focus on AMMC and ArcelorMittal Liberia as our largest marketable tonnes assets. Illustrative for post expansion of AMMC
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Coal business
Key assets and projects for coal business
Coal mine
Existing mines
Russian Coal
98.64%
USA Coal
100%
New projects
Kazakhstan
Coal
8 mines 100%
Indian
Iron Ore &
Steam Coal
2012 Coal reserves and resources (Million metric tonnes)
Region
Mtonnes
Kazakhstan
Kuzbass
Princeton
TOTAL
%Yield
Measured &
indicated
resources
Mtonnes
48
64
59
53
551
60
92
703
Proven & probable
reserves
173
29
116
318
Inferred
resources
Mtonnes
8
38
4
50
Coal of Africa
15.75%
interest
Coal asset geographically diversified  318 million tonnes of reserves
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Auto
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Steel grades and process optimization support OEMs‟
effort towards safety, fuel economy and reduced CO²
emission
Global CO2 (or equivalent) regulation trends
No 1 in automotive steel
Grams CO²/km normalised to NEDC*
•
•
•
•
•
•
Global automotive manufacturing presence through own facilities
and JVs
Global distribution network
Unique product offerings to meet OEMs demand for safety, fuel
economy and reduced CO2 emission  (S-in Motion 20% weight
reduction)
Relative stability of margin: 20-30% of average selling price is
attributable to the value added nature of the product
Strong market share in our core markets
Strong and consistent investment in R&D
2012 auto shipment by geography
Europe
54%
Source: ICCT
Nafta
38%
South America 6%
South Africa 2%
Worldwide ArcelorMittal R&D involving automotive suppliers / industrial partners
*New European Driving Cycle is designed to assess the emission levels of car engines and fuel economy in passenger cars
New ultra lightweight car door solutions
C-segment vehicle
Baseline
Front Door
Door
Baseline
Front
18.3kg
S-in motion
motion S1 S1
S-in
14.5kg
Lightweight steel door
13.3kg
10.5-12kg
Short term
Medium term
Medium-term steel solutions for C & D-segment cars to get closer to Aluminum
Thin gauge approach:
•
•
•
29% to 34% weight savings for D & C segment doors
Performance validation of thin gauge outer till 0.5mm thanks to multilayered patch for
stiffness purpose
New steel grades development identified for outer panel, door beam
New design approach:
•
•
•
•
28% weight savings for D segment door
Structural holistic load path optimization
Use of available steel grades
Accent on manufacturing technologies development
1. Door inner AM05 0.8mm /0.6mm
2. Waist beam MS1500 0.9mm & DP780
3. Door beam Usibor®1500P
4. Hinge reinforcements Usibor®1500P
5. Outer panel FF280DP (490DP) 0.6mm
Short & medium term ULSS show that steel remains the most cost-effective
material for automotive applications
Source: AM estimates as per annual report
Contacts
Daniel Fairclough – Global Head Investor Relations
daniel.fairclough@arcelormittal.com
+44 207 543 1105
Thomas A McCue – US Investor Relations
thomas.mccue@arcelormittal.com
+312-899-3927
Hetal Patel – UK/European Investor Relations
hetal.patel@arcelormittal.com
+44 207 543 1128
Lisa Fortuna – US Investor Relations
lisa.fortuna@arcelormittal.com
+312-899-3985
Valérie Mella – European and Retail Investor Relations
valerie.mella@arcelormittal.com
+44 207 543 1156
Maureen Baker – Fixed Income/Debt Investor Relations
maureen.baker@arcelormittal.com
+33 1 71 92 10 26
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