Mining Strategic Progress - Exploiting our potential ArcelorMittal Mines Canada, June 29, 2015 Simon Wandke, Vice President Commercial

Transcription

1 Mining Strategic Progress - Exploiting our potential ArcelorMittal Mines Canada, June 29, 2015 Simon Wandke, Vice President Commercial

2 Disclaimer Forward-Looking Statements This document 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, 2014 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. 1

3 Key themes Customer focus Market optionality Growing value Strong brand Exploiting our commercial potential 2

4 Despite 2015 weakness, emerging markets expected to drive a pick up in global growth Real GDP, year-on-year percentage change 8 World Advanced Economies Emerging Markets Developing economies expected to support global growth Source: IHS Global Insight 3

5 Other emerging economies have strong potential for continued steel demand growth Crude steel consumption per capita 2014 (kg) Developing world ex-china: Over 4.7 billion people Large populations in India, MENA, CIS, Brazil, parts of SE Asia Many of these countries are well on industrialization and urbanization growth path Ca. 490m tonnes steel consumption in % CAGR If India and other developing markets demand rose to only to 200kg per head this is another 350mt more than EU28, USA and Japan combined India Other developing world 555 China 429 Developed world* Developed world: Ca. 1bn people Low population growth Post-industrial service based economies Flat steel consumption Growth potential in developing regions ex-china Sources: WSA, ArcelorMittal Corporate Strategy team analysis; * US, Canada, EU-15, Japan, Korea, Taiwan, Oceania 4

6 Global iron ore supply/demand needs to be considered, specifically at the product level Top 3 likely to increase seaborne market share China domestic ore share declining High cost producers closed; marginal producers on watch. Investment slowdown globally on brown and greenfield investment Direct charge lump quality decreasing Low impurity fines in short supply Higher blast furnace pellet rates to complement sinter quality. Value can be generated at product level even in a well supplied market 5

7 And whilst demand is growing, the supply curve is also growing and flattening Global FOB cost curve US$ / DMT AMMC FOB concentrate 40% cost reduction since 2012 Aggressive cost reduction Sources: AME and ArcelorMittal analysis. Nominal 6

8 Iron ore consumption (tonnes) But it is not simply about cost Transition: Carajas S11D delay Ultrafines with attractive chemistry counteracts VIU demerits. Mills in developed countries using much higher ratios. Consumption rates in sinter plants up significantly since 2012 Pricing of sinter fines likely to bifurcate: coarse sinter fines with low gangue versus finer sinter fines with high gangue. Growing market demand for direct charge materials: competent lump & pellets 1990 s Concentrate oversupply Demerits ~$10-15/t versus sinter fines 2002 to 2012 China rapid growth Imported ore growth Volume more important than price Historic ultrafine demerits vastly reduced/removed Years 2013 to 2019 China slowing Ore and coal cost curves flattening Greater raw materials quality and price focus Greater demand growth in ultra-fine ores; mills in certain market learning to use higher ratio Increased product focus; lower emissions, BF productivity etc increase in supply to seaborne market of higher gangue sinter fines from Australia India s limited re-entry to seaborne supply Detailed product consumption understanding is critical 7

9 Product value in the market needs to be understood Market willing to pay more for quality; 65% index premia is on upward-trend relative to 62% index Lower ocean freight rates since late 2014; opportunity for lower freight rates to be captured in annual new business Higher quality ores capturing higher value in market 8

10 Our commercial marketing approach is founded on Value in Use (VIU) principles Value-in-use pricing Determining the value above the CFR price that a raw material will deliver to a customer Creates: Sustainable market share Shareholder value Detailed understanding of ore body: Chemistry Metallurgical properties Sizing and handling Performance in a blend: carry value Combined with: Inhouse raw materials consumption expertise Drives: Our product portfolio Marketing strategy Customer portfolio Optimizing product performance in conjunction with customers Commercial price negotiating strategy Leveraging in-house knowledge for determining value 9

11 Allowing AMMC to enhance it s value proposition AMMC: Even stronger brand Known to be lowest cost in Canada and long haul competitive Quality compliance and reliability Concentrate: Proven use at high percentages in sinter plants Significant work by ArcelorMittal Steel Europe, Japan, S Korea all moving in same direction Cycle proofing Concentrate: Low gangue / high Fe CON is a chemical sweetener for sinter blends and valued in Europe / North Asia Very low phosphate. Platts now recognise value Transitioning to 65% index and where possible adding other NRP gains Concentrate: Strategy can be grown and defended Coarse and ultra fines in sinter. Carajas + AMMC CON. Blend. Low phos contributor by AMMC Applying the right premias Pellets: Pellet plant tonnage outperform Adding margin value to CON production High quality conformance Shareholder value enhanced 10

12 To create a winning AMMC scorecard Broad market and customer portfolio Right products Right markets and customers Right value Brand reputation Progress global customer trials completed Sinter plant consumption levels. Fungibility In progress: Type, mix, pellets, CON Low China reliance. Many trials now converted to new term contacts in market which value and pay for quality 65% index for concentrate sinter fines Pursuing other commercial value levers Proven independence as Mining entity Scorecard Performing in a challenging market 11

13 Recap We are customer focused: We work with customers to increase concentrate reliance We leverage our Research & Steel side raw material core competencies We offer a range of product solutions We continue to build in market optionality: Wide acceptance testing in global markets largely completed We are growing value: Right products for targeted markets at the right price Focus on markets who recognise and pay for VIU We have built a strong brand: Through reliability and outstanding quality conformance Exploiting our commercial potential 12