Jefferies First Annual Spring Steel & Metals Summit, Chicago

Transcription

1 Jefferies First Annual Spring Steel & Metals Summit, Chicago Tom McCue, Vice President North American Investor Relations and Treasurer, USA April 10, 2013

2 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. 1

3 Agenda Company Overview Franchise Businesses and Company Priorities Mining Global Automotive Balance Sheet Cost Cutting Outlook 2

4 Improving LTIF rate reflects group-wide focus on Safety Significant improvement in injury frequency reflects Group-wide focus on Safety The Group s focus is now on further reducing severity and fatality rates Target Safety of our employees remains the No1 priority LTIF = Lost time injury frequency defined as Lost Time Injuries per worked hours; based on own personnel and contractors 3

5 ArcelorMittal: The world s leading steel and mining company ArcelorMittal is the world's number one steel and mining company, with 245,000 employees in more than 60 countries. ArcelorMittal is the leader in all major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. An industrial presence in 20 countries exposes the company to all major markets, from emerging to mature. ArcelorMittal values scale, vertical integration and product diversity. Approximately 38% of our steel is produced in the Americas, 46% in Europe and 16% in other countries such as Kazakhstan, South Africa and Ukraine. Underpinning all our operations is a philosophy to produce safe, sustainable steel 4

6 ArcelorMittal No. 1 steel company #1 in North America #1 in Western Europe #1 in Eastern Europe and CIS 47% 35% #1 in South America #1 in Africa 18% Largest foreign steel producer in China 245,000 employees in more than 60 countries 11/04/2013 5

7 ArcelorMittal main markets Automotive Worldwide no.1 supplier for automotive steels with a leading market share of around 18%. Worldwide industrial presence via about 40 coating lines in Europe, North America, South America and Africa Construction Globally, the largest single market for steel: a 715 million ton steel consumption market comprised of diversified products Emerging markets represent more than 50% of the square meters constructed each year globally ArcelorMittal is a world leader in products delivered to the building and construction sector Packaging New packaging concepts constantly designed to achieve differentiation by steel solution (bottle can, easy open end...) Complementary industrial network in Europe with production plants and service centers near customers' can making facilities The leader in automotive steels 6

8 Focussing on value drivers New $3bn management gains plan Cost Leadership Product Leadership Best-in-class service Portfolio Optimisation Focussed investment Improved EBITDA/tonne ($150/t normalised target) Capital Efficiency Returns > WACC Focussing on Franchise businesses All levels of ArcelorMittal aligned with one goal improved returns on Capital 7

9 Non-Franchise Franchise Focussed capital allocation We are backing our franchise businesses with capital Steel shipment split: Other steel Franchise steel Approximate EBITDA split: 55% of steel shipments from businesses identified as Franchise e.g. Global Autos, Brazil long, Sheet Piles Capital priority Invest to protect and expand Other steel Mining Franchise businesses contribute 80% of steel EBITDA Focus on cost cutting and optimisation Franchise steel Franchise businesses are receiving the required capital to protect and expand 8

10 Mining is a franchise business: a cornerstone of our value creation CAPACITY The growth plan to 84Mt own capacity is on track Sale of 15% stake in AMMC* 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 expected to be a similar product as AMMC concentrate but with lower FOB cost and lower freight to Asian market Own iron ore growth plan production and capacity (Mt) The Group s progress on deleveraging has not come at the expense of the Group s Mining growth plans Crystallising value in AMMC finances value creation in Liberia * Subject to closing conditions 9

11 ArcelorMittal Mines Canada (AMMC) Expansion from 16Mt to 24Mt near completion 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 10 10

12 Liberia Phase 1 completed Industrial location of mine Phase 1 DSO ( Direct Shipping Ore ) Guinea All marketable tonnes Construction: 240km rail rehabilitation completed Buchanan port and material handling facilities initial upgrade completed Atlantic Ocean Sierra Leone Yekepa Ivory Coast Shipment details First DSO product shipped Sept 2011 Buchanan 40% to Europe (natural market), 60% to Asia Railway link from Yekepa to Buchanan (240km) Liberia trans-shipment Liberia Costs Competitive cash cost Cape size trans-shipment facilities started Offshore loader Liberia expansion progress on track 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 11

13 Liberia Phase 2 rationale Phase 2 Higher grade material Expansion to 15mtpa capacity by 2015 Production capacity (Million tonnes) Phase 1 Phase 2 Investment in a concentrator approved at capex estimate of circa $1.5 billion Project and mine planning currently underway Fully utilizing our wholly owned infrastructure 60% grade (high silica) DSO capex $0.7bn 66% 66% grade grade (low silica) concentrate capex ~$1.5bn capex ~$1.5bn Managing project implementation to reduce near term capex without compromising Phase 2 15 Staged approach Align product to market Focus on Phase 2 to develop 15Mt of higher quality product 12

14 Baffinland Early Revenue Phase: 3.5MT production rate in 2015 Proposed Early Revenue Phase rationale ERP budget approx. US$700m commencing 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 13

15 Automotive steel is a franchise business: we will continue to 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) Market share* High Strength Steels (indexed 2008 = 100) Overall market share growing in US and stable in EU US EU Share of fast-growing HSS market has increased since 2008 US EU ArcelorMittal JV partnership in China China s automotive market expected to grow by >50% to 22mn 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 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; JD Power/CSM ** Source: JDE Power 14

16 Balance sheet structurally improved Net debt ($ billion) 32.5 Cash inflow of ~$5.0bn expected following completed capital raise (cash received in 1Q 13) and agreed sale of 15% stake in AMMC (cash expected in 1H 13) Average maturity (years) ~(5.0) 2.6 3Q Q Q Q 2012 Liquidity ($ billion) Bank debt as component of total debt* (%) % % 3Q Q Q Q 2012 Balance sheet fundamentals improved * ArcelorMittal estimates 15

17 The path to $15bn net financial debt Improved EBITDA Investment in working capital Limited capex Minor M&A 1.1 NFD end 2012 Capital increase AMMC expected proceeds * FCF 1H 13 target NFD Mid 2013 target FCF target NFD medium term target All capital raised in Jan 2013 to be used for NFD reduction ** On March 15, 2013 ArcelorMittal received $810million for the first instalment for the investment by a consortium led by POSCO and China Steel Corporation (CSC) to acquire a 15% JV interest in ArcelorMittal Mines Canada. The second instalment of the investment by the consortium, which will increase the consortium s interest from 11.05% to 15%, remains subject to various conditions and is expected to close in 2Q 13 16

18 Managing debt profile and maturities Debt maturities($ billion) Commercial Paper Other Convertibles Current credit ratings: S&P BB+, negative outlook Moody s Ba1, negative outlook Fitch BB+, stable outlook Bonds 10.1 >2017 Liquidity at Dec 31, 2012 of $14.5bn Proforma liquidity of $19.6bn including capital raise and AMMC 15% stake sale proceeds Average maturity of 6.1 years Demonstrated policy of proactively managing debt profile Will continue to capitalise on good windows of opportunity No structural subordination for creditors Assets are unencumbered Continued focus on improving credit metrics through the cycle Solid Investment Grade rating targeted Upcoming maturities covered by existing liquidity 17

19 Asset disposal process has been successful Since Sept 2011, a range of assets and stakes have been sold at values in line with or at premiums to book value Macarthur Coal & BNA stakes Erdemir: 1/4 of 25% stake Skyline Enovos stake Book value of investments in affiliates & JVs ($ billion) Paul Wurth stake Kalagadi: agreed stake sale* AMMC: agreed 15% stake sale** Value released from the Balance Sheet Significant value released from the balance sheet since June 2011 Asset sales achieved premiums to book value Opportunities for further asset sales but only at the right price June 2011 Dec 2012 Asset disposal process has released value from the balance sheet * Not yet closed and subject to closing conditions, including for Kalagadi a financing condition ** On March 15, 2013 ArcelorMittal received $810million for the first instalment for the investment by a consortium led by POSCO and China Steel Corporation (CSC) to acquire a 15% JV interest in ArcelorMittal Mines Canada. The second instalment of the investment by the consortium, which will increase the consortium s interest from 11.05% to 15%, remains subject to various conditions and is expected to close in 2Q 13 18

20 Asset optimization successful Asset Optimization steps taken since Sept 2011: 4Q 11 Extended idling of electric arc furnace in Madrid Restructuring costs at certain other Spanish, Czech Republic and AMDS operations 1Q 2012 Extended idling of electric arc furnace and continuous caster at the Schifflange site (Luxembourg) Further optimization in Poland and Spain 4Q 2012 Closure of two blast furnaces, a sinter plant, a steel shop and continuous casters in Liege, Belgium decided Long term idling of liquid phase at the Florange site in France announced 1Q 2013 Announced intention to permanently close the coke plant and six finishing lines in Liege, Belgium 7Mt European capacity reduced by 7Mt (11%) Essential components of Asset Optimization have been announced 19

21 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q A 2012A 2013E 2014E Savings realised from Asset Optimization Including residual costs, the targeted run-rate savings of $1bn has been achieved Some residual costs will remain in the system during 2013 Asset Optimization savings achieved ($ million) Asset Optimization contribution to EBITDA ($ million) Residual Costs Run Rate-Savings Residual costs should disappear from the system by

22 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 Variable cost Fixed cost Other 35% 37% Yield 3.4 Fixed cost per ton (index 100 = 2008)* Energy 9% 19% Productivity Fixed cost per tonne lower than 2008 levels despite lower shipments shipments Fixed cost per ton Focus on achieving internal best practice remains a source of opportunity * On actual dollar basis and excludes mining 21

23 New $3bn Management Gains plan Gap Analysis for Cost Savings by Process Cold rolling mill & HDG Hot strip mill 10% 20% Others 11% Sinter & BF 25% 34% Steel shop Gap Analysis for Cost Savings per Main Drivers Others 28% Energy 21% 29% 22% Yield Productivity Blast furnaces Reliability (avoiding chilled hearths) Management at end of campaign Fuel rate Productivity Raw materials flexibility Steel shops Yield TCO for EAF Hot strip mills Yield Reliability Energy Productivity Long rolling mills Yield Productivity Cold rolling mills and coatings Quality Productivity A gap analysis done in 2012 defined the priorities for our plan 22

24 We are forecasting an improving outlook Global apparent steel consumption (ASC) growth forecast in 2013 (v 2012) Potential for 40Mt of demand recovery in EU and North America over next 5 years US EU % +3-4% North America +20Mt* China % Brazil +4-5% EU27 +20Mt** CIS % Global % ArcelorMittal has the industrial capacity to capture this demand recovery Margins will improve as fixed costs spread across increasing tonnes 2013 expected to represent the low point in EU steel demand * Note: * ArcelorMittal estimates, represents a CAGR ( ) of 3.4% for North America; **: ArcelorMittal estimates, represents a CAGR ( ) of 3.0% for EU27 23

25 Steel-only average Mining average Group Average Asset Optimization Impact of mining growth Impact of incremental volumes (assuming 95Mt shipments) Impact from Normalization of iron ore prices Impact of new management gains program Impact of Industry profitability at higher utilization rates TARGET The path to $150/t group EBITDA If our markets expand by ~15% (i.e. global shipments back to >95mt) then we believe $150/t EBITDA is achievable $132/t $150/t $87/t 11 $62/t 25 We believe EBITDA/tonne of $150 is an achievable normalized target 24

26 Takeaways Our primary focus is on the Safety of our employees Our responsive strategy ensures that ArcelorMittal retains the core attributes to deliver value through the cycle and the management team are incentivised as owners While the balance sheet has been repositioned the targets of $17bn by mid year and $15bn medium term remain a priority We are focussed on protecting our cost position with a new $3bn Management Gains program by end 2015 We are concentrating our investments to protect and expand our franchise businesses such as Global autos, Mining and Brazil Together with a constructive medium term outlook on shipments, we have a roadmap to normalised EBITDA of $150/t ArcelorMittal: the industry leader with a global presence backed by raw materials 25

27 Questions

28 Market outlook 27

29 Contraction Expansion We are at the demand trough We believe that the low point of the demand cycle is behind us China is many years away from its demand peak US is in a new phase of growth Europe s rate of decline is slowing and demand is expected to improve in the medium term ArcelorMittal weighted global manufacturing PMI* The average of 40 country-specific PMI readings weighted by share of ArcelorMittal deliveries bottomed in mid-2012 We believe that the low point of the demand cycle is behind us *Purchasing managers Indices for over 40 countries weighted by share of ArcelorMittal finished steel deliveries. Source: Markit 28

30 Jan-07 PMIs suggest manufacturing declining slowly in Europe but rebounding elsewhere 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 Expansion Contraction Jan-06 Apr-06 Jul-06 Oct-06 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 Eurozone credit (%, y-o-y) Eurozone Manufacturing Output 1H vs. PMI 16% 14% Business 12% Consumer 10% 8% 6% 4% ,449 1,972 1, ,336 12% 8% 4% 0% -4% 1,354-8% 2% 40-12% 0% -2% -4% PMI Manu % (RHS) -16% -20% -24% Credit to businesses continues to decline - especially in Southern Europe consumer credit stable Manufacturing decline has slowed - PMI closer to 50 and market sentiment improves slowly Manufacturing orders have started to stabilize after declining from Mid 11 to Sept 12, expect a slow rebound during 2013 as risk of Eurozone exit has diminished Source: Credit: ECB; IP: Eurostat, PMI: Markit 29

31 EU27 construction and auto output continues to decline Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 EU 27: Construction Output (SA, 2005=100) EU27 auto sales (mil units annual 1H rate) ,714 1,972 2,449 1,336 1, Construction output has continuously declined since Jan 08. Decline expected in 2013, to stabilize in 2014, supported by mild growth in Germany and signs of stabilisation in Italy/Spain EU27 auto sales down 8% in 2012, further decline likely in 2013 with rebound expected in 2014 Machinery weak during 1H 13 due to decline of orders end 11 and H1 12 but orders and sentiment improving, due to lead times output to see a rebound late 2013 and stronger growth expected during 2014 Source: Eurostat; ACEA 30

32 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 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 Europe: Slower decline in real demand and less de-stocking to support 2013 steel demand Service centre inventories (000 MT) Regional Steel prices, HRC ($/t) 1H 2,400 2,200 EU (EASSC) Months Supply N.Europe domestic ex-works S. Europe domestic ex-works China domestic Shanghai (ex. 17% VAT) 2, ,800 1, ,714 1,972 2,449 1,336 1,354 1, , , Service centre stocks declined strongly in 2H 12. Restocking in 2014 expected as real demand grows leading to a stronger rebound in ASC 1Q 13 prices rose due to higher raw material prices and stockist restocking. Weak underlying demand and a mild stock cycle limits the scope for further price rises supports stronger 2014 rebound. Source: EASSC; Steel Business Briefing 31

33 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jan-06 Apr-06 Jul-06 Oct-06 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 US manufacturing near pre-crisis peak Retail sales (2007 = 100) 105 USA Manufacturing orders* ($Bln) 480 1H Eurozone ,714 1,972 2,449 1,336 1, US retail sales back above 2007 levels and growing, unlike continued decline in Eurozone Manufacturing orders back to 2008 peak levels and rebounded over the past few months PMI has remained above 50 for past three months highest rate since 2011 in Feb 13 Private sector employment growing >175k and enough momentum to support demand despite federal budget cuts * New manufacturing orders ex defense, ex aircrafts and parts Source: Retail sales: Bureau of Economic analysis (USA), Eurostat (Europe); Orders: Census Bureau 32

34 US construction showing modest gains; auto sales rebounding Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jan-06 Apr-06 Jul-06 Oct-06 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 US construction output (SAAR, $Bln) Auto sales (SAAR, Mln units) 1H ,714 1,972 2,449 1,336 1, Residential Non-residential Non-residential construction has grown moderately since 2011 as credit markets improved Architecture Billings Index (ABI) back to its highest level since Nov 07 suggesting a pickup toward end 13 Pent-up demand and rising permits should support strong growth in residential in 2013/14 Auto sales have grown strongly and are likely to reach 2006/07 levels in 2014/15 Source: Census Bureau; Bureau of Economic analysis 33

35 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 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 US: De-stocking has slowed since end 2012 steel prices are starting to pick up Inventory (2007 = 100) Steel prices, HRC ($/t) 1H USA (MSCI) Months Supply ,714 1,972 N.American domestic (Midwest mill) China domestic Shanghai (ex. 17% VAT) 2,449 1,336 1, After reaching a peak in 1Q 12 inventory declined as demand slowed during the 2H 12 Volatility in US steel prices has been more pronounced than Chinese prices due to local pricing dynamics Pricing likely to improve as demand increases sequentially through 2013 Source: MSCI Metals Activity Report, Steel Business Briefing 34

36 Chinese output starting to see the impact of additional infrastructure projects Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jan-06 Apr-06 Jul-06 Oct-06 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 Interest rate and inflation Monthly total social financing, (12mma 1H Rmb Bln) 8.0 Policy interest rate 9% Inflation rate (y-o-y) 8% % % 7.0 5% % 3% 2% 1% 0% -1% -2% Interest rates cut twice as inflation fell. Interest rates could be increased as inflation rising However, conditions are supportive of a strengthening of near term growth as financing has become more accommodative supporting a rebound in real demand Source: Interest rate: China Office of National Statistics, Inflation: China National Bureau of Statistics; social financing: The People s Bank of China 35

37 Recent China contraction in new starts expected to reverse in 2013 as real estate inventories decline 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 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 Infrastructure investment (3mma y-o-y%) 75% 60% 45% 30% 15% 0% -15% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% -20% -30% Construction indicators (3mma y-o-y%) 1H Commodity buildings sold Newly started construction with 6m lag (RHS) 110% 90% 70% 50% 30% 10% -10% -30% Acceleration in infrastructure approvals during 2H 12 leading to a rebound in infrastructure investment after declines post stimulus boom over 2009/10 Construction new starts grow in line with transactions but with a lag. The strength of transactions during 2H 12, as starts declined allowed developers to reduce unsold inventory, leading to a mild rebound in 2013 Source: The People s Bank of China; China National Bureau of Statistics, China Index Academy / Soufun 36

38 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 China: Seasonal build up on inventory ahead of pick up in stronger demand 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 Steel production and inventories, Mln tonnes Steel prices and spot and raw material 1H costs* ($/t) Steel inventory at warehouses (RHS) Finished steel production (LHS) Steel inventory at mills (RHS) , ,972 China domestic Shanghai (ex. 17% VAT) Spot raw material costs 2,449 1,336 1, Inventory at mills back under control - Although inventory at traders has risen strongly, following usual seasonal pattern, these are mainly long products, in anticipation of stronger construction post CNY Chinese steel prices move in line with raw material prices, but with low margin over transformation costs * Warehouse stocks collected for 35 cities starting in Jan 2013, historical data for 25 cities has been revised up to 35-cities equivalent ** [Platts IODEX CFR China * (HCC FOB Australia + Freight to China) * Scrap CFR East Asia * 0.15] Source: Production and Mill inventory: CISA, Warehouse inventory: MySteel; Prices: Steel Business Briefing 37

39 Expansion Contraction Brazil indicators picking up on lower rates and government stimulus Jan-06 Apr-06 Jul-06 Oct-06 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 Jan-06 Apr-06 Jul-06 Oct-06 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 Brazil: Manufacturing Output vs. PMI Brazil: Auto Sales, 6mma, thousands 1H of units 60 20% % % -10% ,714 1,972 2,449 1,336 1, PMI Manu % (RHS) -20% % 175 Manufacturing sentiment rising as interest rates cut to record low and weaker exchange rate Auto sales have picked up in recent months (up 8% y-o-y in 4Q 12) on the back of Government stimulus and rising incomes Source: PMI: HSBC/Markit, Manufacturing: instituto Brasileiro de Geografia e Estatistica; Auto: ANFAVEA 38

40 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 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 Brazil inventory and price Steel inventory (Kt) Steel prices, HRC ($/t) 1H 1,400 1,300 1,200 Flat stocks at service centres Months of supply (RHS) Brazil domestic delivered HRC (ex-18% ICMS tax) China domestic Shanghai (ex. 17% VAT) 1,100 1, ,714 1,972 2,449 1,336 1, As demand growth disappointed through 2012, inventory levels were cut back to around 2.5 months of supply. Low level of stocks will support ASC growth in 2013 Brazilian steel prices have begun to rise supported by low inventory and declining imports Source: Inventory: IABr; Prices: Steel Business Briefings 39

41 Financial results 40

42 EBITDA bridge from 3Q 12 to 4Q 12 ($million) Steel impact 1, Includes $220 million CO2 gain 248 1, Mining impact 2, Q1'11 EBITDA Volume & Mix Sellin -11 3Q 12 EBITDA Volume & Mix - Steel Price / Cost - Steel Volume & Mix - Mining Price / Cost - Mining Non Steel EBITDA Paul Wurth gain Others* * Others primarily represents CO2 gain, DDH income, benefits charge and forex (net impact on revenue and costs). The proceeds from the sale of carbon dioxide credits will be re-invested in energy saving projects 4Q 12 EBITDA 4Q 12 EBITDA positively impacted by gains on CO2 sales/paul Wurth divestment, partially offset by negative impact of one-time employee benefit charges 41

43 3Q Q 2012 EBITDA to net loss Depreciation: (1,236) Impairment: (4,836) ($ million) Interest: (478) 1,323 Restructuring: (192) Forex and other: (366) Current tax: (94) Deferred tax: 1,653 Non-controlling: 97 Weighted Avg No of shares: 1,549 Diluted Weighted Avg No of shares: 1,549 EPS = $ (2.58)/share Diluted EPS = $ (2.58)/share -6,264-4,941-5,643-3, ,656 ($ million) EBITD A 1,336 Depreciation impairment and restructuring charges -1,385 Operating Income/ (loss) Depreciation: (1,157) Impairment: (130) Restructuring: (98) Income from Equity Finance Cost Interest: (479) Forex and other: (103) Pre-tax Profit /loss) Current tax: (101) Deferred tax: 58 Non-controlling: 20 Taxes and noncontrolling Interest Weighted Avg No of shares: 1,549 Diluted Weighted Avg No of shares:1,549 EPS = Net income / (Ioss) $ (0.46)/share Diluted EPS = $ (0.46)/share Net loss of $4.0bn in 4Q 12 primarily due to $5.0bn charges including $4.3bn goodwill write down 42

44 EBITDA to free cash flow Q free cashflow waterfall ($ million) ,052 Net financial cost, tax expense, and others -1,124 2,886 Capex 1,323 Change in working capital 1,762 EBITDA Cashflow from operations Free cashflow Positive EBITDA and working capital release resulted in $1.8bn free cashflow 43

45 Net debt bridge Q net debt analysis ($ million) -1,436 1,762 23, ,768 Net debt at 3Q 12 Free cashflow Paul Wurth* Dividends Forex & others** Net debt at 4Q 12 Net debt decreased by $1.4bn primarily due to positive free cash flow Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale). *Net cash outflow (cash consideration received minus cash on balance sheet) less debt on balance sheet; **Includes recovery of subsidiary finance ($0.3 billion) 44

46 Outlook and guidance Company expects 2013 EBITDA above the $7.1bn reported in 2012 Steel: - Steel shipments are expected to increase by approximately 2-3% in 2013 as compared to Per-tonne steel margins are expected to improve marginally with the full benefits of Asset Optimisation expected in 2H 2013 Mining: - Marketable iron ore shipments are expected to increase by approximately 20%; ArcelorMittal Mines Canada expansion to 24mtpa on track for ramp up during 1H 2013 Capex: capex is expected to be approximately $3.5bn (of which approximately $2.7bn is maintenance) Debt: - Approximately $5bn of cash receipts expected from the capital raise in January 2013 and the announced agreed sale of a 15% stake in AMMC (assuming completion on schedule), should enable net debt to decline to approximately $17bn by June 30, Company expects reported EBITDA to be higher in 2013 Vs

47 Segmental 46

48 Segment highlights Segmental EBITDA (US$mn) FCA 4Q 11 FCE 1Q 12 Long 2Q 12 AACIS 3Q 12 AMDS 4Q 12 Mining FCA: EBITDA -60.8% y-o-y; $17 EBITDA/t ASP -$53/t compared to 3Q 12 Shipments +1.4% higher than 4Q 11 FCE: 4Q 12 $52 EBITDA/t ASP -$9/t compared to 3Q 12 Shipments -3.7% lower than 4Q 11 Long: EBITDA +18.9% y-o-y; $73 EBITDA/t ASP -4$/t compared to 3Q 12 Shipments -5.2% lower than 4Q 11 Segmental EBITDA/tonne (US$/t) Q 11 1Q 12 FCA FCE 2Q 12 Long 3Q 12 AACIS 4Q 12 AMDS AACIS: EBITDA -7.6% y-o-y; $74 EBITDA/t ASP -$47/t compared to 3Q 12 Shipments -2.8% lower than 4Q 11 AMDS: 4Q 12 EBITDA (-$24m) ASP -$35/t compared to 3Q 12 Shipments -10% lower than 4Q 11 Mining: EBITDA -59.6% y-o-y Sales -2.6% lower than 3Q 12 Own iron ore production -7.5% lower than 4Q 11 Own coal production -11.1% lower than 4Q 11 4Q 12 EBITDA flat Vs 3Q 12 * Segmental figures shown include one time adjustments 47

49 Flat Carbon Americas (FCA) EBITDA* (US$mn, LHS) and ASP (US$/t, RHS) % % Q11 1Q12 2Q12 3Q12 4Q12 Flat Carbon Americas steel shipments (000 t) 5,800 5,700 5,600 +3% 5,500 5,735 5,672 5,400 5,533 5,458 5, Q11 1Q12 2Q12 3Q12 4Q12 1, EBITDA* in 4Q 12 decreased by 60.6% compared to 3Q 12. EBITDA in 4Q 12 was negatively impacted by $110m for the recognition of actuarial losses accrued on post retirement benefits following changes to year end actuarial assumptions. Crude steel production increased by 3.6% in 4Q 12, as compared to 3Q 12, driven primarily by higher production in South America post blast furnace #1 reline in Tubarao, Brazil, partially offset by lower production in North America. Steel shipments in 4Q 12 were 3.4% higher than 3Q 12, primarily driven by higher production post Tubarao reline, partially offset by lower shipment volumes in North America as a result of lower demand. Sales were impacted by lower average steel selling prices (ASP) in North America (particularly plate) and weak slab pricing in Brazil and Mexico. ASP were impacted by a weaker mix with lower North American volumes offset by higher sales from South America following the BF reline in Tubarao, Brazil. Lower profitability in 4Q 12 was primarily driven by lower profitability from North American operations due to a negative price-cost squeeze as lower ASP were not fully compensated by lower costs. FCA profitability declined in 4Q 12 Vs 3Q 12 * EBITDA in 4Q 12 was negatively impacted by $110m for the recognition of additional actuarial losses accrued on post retirement benefits following changes to year end actuarial assumptions. EBITDA in 3Q 12 was negatively impacted by $72m related to one-time signing bonus and post retirement benefit costs following entry into the new US labor contract. EBITDA in 1Q 12 was positively impacted by $241m related to curtailment gain in ArcelorMittal Dofasco 48

50 Flat Carbon Europe (FCE) EBITDA* (US$mn, LHS) and ASP (US$/t, RHS) % % Q11 1Q12 2Q12 3Q12 4Q12 Flat Carbon Europe steel shipments (000 t) 7,500 1, EBITDA in 4Q 12 includes $141m of DDH income as compared to $131m in 3Q 12. EBITDA in 4Q 12 included $210m related to a net gain recorded on the sale of CO2 credits. Steel margins were negatively impacted by price costs squeeze following a drop in ASP not fully compensated by lower costs. Crude steel production decreased by 5.1% in 4Q 12 as compared 3Q 12 as inventory levels were reduced and output aligned with local market levels. Steel shipments in 4Q 12 increased by 2.1% as compared to 3Q 12 due to a mild pick up following the seasonally weaker summer period. Sales benefitted from higher steel shipment volumes offset in part by lower ASP (-1.1%) in dollar terms. 7,000 6,500 6, ,188 4Q11 7,461 1Q12 6,771 2Q12 +2% 5,957 5,837 3Q12 4Q12 Operating results in 4Q 12 included a $2.5bn noncash write down of goodwill and $0.3bn non-cash impairment charge related to the intention to permanently close the coke plant and six finishing lines in Liege, Belgium. Excluding Co2 gain, FCE profitability declined 4Q 12 Vs 3Q 12 * EBITDA in 4Q 11 included $93 million related to a net gain recorded on the sale of CO2 credits; EBITDA in 4Q 12 included $210 million related to a net gain recorded on the sale of CO2 credits 49

51 Long Carbon Americas & Europe (LCAE) EBITDA (US$mn, LHS) and ASP (US$/t, RHS) Long Carbon steel shipments (000 t) 5,850 5,800 5,750 5,700 5,650 5,600 5, Q11 5,846 4Q Q12 5,738 1Q Q12 5,839 2Q Q12 5,508 3Q12 +22% +1% Q12 5,543 4Q12 1, EBITDA in 4Q 12 was $402m, a 21.8% increase as compared to $330m in 3Q 12, primarily driven by improved profitability in Europe, North American and Tubular business on account of positive price-cost effects. Crude steel production amounted to 5.2mt in 4Q 12, a decrease of 8.3% as compared to 5.7mt in 3Q 12. Production was lower in both the American and European operations due to lower market demand and further operational issues impacted output in Poland. Steel shipments in 4Q 12 were essentially flat at 5.5mt as compared to 3Q 12, as marginally lower volumes in Europe were offset by slightly higher North American volumes, primarily in Mexico. Sales were flat at $5.2bn in 4Q 12 as compared to 3Q 12 due to a decrease in ASP (-0.5%) offset in part by marginally higher steel shipment volumes. The operating result for 4Q 12 included a $1.0bn non-cash write down of goodwill (Long Carbon Europe) and non-cash asset impairments totalling $0.2 billion for Spanish and North African operations. Long carbon profitability improved 4Q 12 Vs 3Q 12 50

52 3,400 Asia, Africa and CIS (AACIS) EBITDA (US$mn, LHS) and ASP (US$/t, RHS) Q11 1Q12 2Q12 AACIS steel shipments (000 t) Q12-7% Q12* EBITDA in 4Q 12 was $220m, as compared to $70m in 3Q 12. EBITDA in 4Q 12 includes the positive impact from the Paul Wurth asset divestment (a gain of $242m). Excluding this gain, profitability dropped significantly during the quarter due to negative price-cost squeeze and lower volumes. Crude steel production was 3.2mt in 4Q 12, a decrease of 12.9% as compared to 3.7mt in 3Q 12 due to lower production in South Africa following blast furnace and maintenance repair work as well as lower production in Kazakhstan due to operational issues. Steel shipments in 4Q 12 decreased 6.3% as compared to 3Q 12, reflecting lower levels of production. 3,300 3,200 3,100 3, ,065 4Q11 3,353 1Q12 3,321 2Q12 3,178 3Q12-6% 2,978 4Q12 Sales were $2.1bn in 4Q 12, a decrease of 13.3% as compared to $2.5bn in 3Q 12. Lower sales reflected lower steel shipments and lower ASP (-7.1%). ASP in Kazakhstan was impacted by a weak Russian market and mix effects; ASP in Ukraine was as a result of declining long product pricing; and in South Africa lower US dollar prices were realised due to the weaker rand (4.9% depreciation against the US dollar). Excluding Paul Wurth gain, AACIS profitability declined 4Q 12 Vs 3Q 12 * EBITDA in 4Q 12 includes the positive impact from the Paul Wurth asset divestment (a gain of $242 million). 51

53 Distribution Solutions (AMDS) EBITDA (US$mn, LHS) and ASP (US$/t, RHS) % 834 1, EBITDA in 4Q 12 was $(24)m, as compared to EBITDA of $11m in 3Q 12, primarily due to negative price cost impact in Europe Q11 1Q12 2Q12* 3Q12 Distribution Solutions steel shipments (000 t) 5, Q Shipments 4Q 12 increased 8.4% as compared to 3Q 12. Sales in 4Q 12 were $3.9bn, an increase of 3.7% as compared to $3.7bn in 3Q 12, primarily due to higher steel shipment volumes offset in part by lower ASP (-4.0%). Operating results in 4Q 12 included $0.8bn non-cash write down of goodwill and $101m restructuring charges relating to the asset optimisation. 4,800 4,600 +8% 4,400 4,957 4,200 4,589 4,523 4, ,118 4Q11 1Q12 2Q12 3Q12 4Q12 AMDS profitability declined 4Q 12 Vs 3Q 12 * EBITDA in 2Q 12 includes $339m gain from Skyline divestment 52

54 Mining EBITDA ($ million) Q11 1Q Q12-19% Q12 4Q12 Own iron ore production in Q4 12 was 14.0Mt, 2.1% lower than 3Q 12. Shipments at market price declined (6.7%) over 3Q 12 due to continued heavy monsoon in Liberia and operational issues at Ukraine. Own coal production in 4Q 12 of 2.0Mt decreased 3.6% as compared 3Q 12 and 11.1% lower as compared to 2.2Mt in 4Q 11. EBITDA for 4Q 12 was $315m, 19.4% lower versus 3Q 12. This decline was primarily due to the effect of lagged pricing in iron ore (a portion of iron ore shipments from Canada and Mexico reference quarter-lagged prices) and lower coal realisations driven by weaker seaborne market prices. Iron ore (million tonnes) Coal (million tonnes) Q11 1Q12 2Q12 3Q12 4Q Q11 1Q12 2Q12 3Q12 4Q Own iron ore prod Shipped at market price Shipped at cost plus Own coal prod Shipped at market price Shipped at cost plus EBITDA for 4Q 12 was 19.4% lower Vs 3Q 12 Definitions: Market priced tonnes represent amounts of iron ore or other raw materials from ArcelorMittal mines that could be sold to third parties on the open market. Market priced tonnes that are not sold to third parties are transferred from the Mining segment to the Company s steel producing segments at the prevailing market price. Shipments of raw materials that do not constitute market price tonnes are transferred internally on a cost-plus basis. Own iron ore production and own coal production excludes supplies under strategic long-term contracts ) 53

55 Balance Sheet 54

56 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 55

57 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 Working capital is fuel for our business OWCR and rotation days* ($ billion and days) $12.7bn 64 Days Current working capital is lowest absolute level since 4Q days is slightly below the average of last 3 years (67 days) Each day represents ~$200mn Working capital ($ billion) - LHS Rotation days - RHS We will invest in working capital as required Higher sales volumes requires more working capital (but same days) Days can be impacted by price 1/3 of inventory is raw materials, the remainder is mainly metal stock 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. 56

58 Maintenance spend is sufficient Maintenance capex and R&M are and will remain sufficient to sustain our competitive position Total of Maintenance Capex plus Repairs & Maintenance Opex spend ($ million) Total maintenance capex and opex has been quite consistent except catch-up spend in maintenance capex was ~$2.9bn This will decline by $0.2bn in 2013 due to smaller steel footprint 2010A 2011A 2012A 2013F Mining Steel Company caught up maintenance capex and R&M in 2011; stable going forward 57

59 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. 58

60 Footprint 59

61 Transformation costs Working Cap needs FCE focussed on competitive assets ArcelorMittal has been proactive to adjust industrial footprint in core European markets Concentrated slab production in 5 coastal sites: Dunkirk Ghent Bremen FOS Asturias 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 New Footprint in Western Europe*: # Blast furnaces # Hot strip mills 8 7 # Cold rolling mills Post optimization: FCE EBITDA and FCF positive in current market environment * Note: this is the prospective footprint once all proposals implemented 60

62 LCE also optimized for lower demand In 2012, ArcelorMittal LCE has idled: EAFs of Madrid and Schifflange Rolling mills of Madrid (sections) and Schifflange (wire rod) Warsaw old mill (bars) Besides above, 2 rolling mills in Luxembourg (Mill A and Mill C of Rodange) work at a reduced load with common crews to produce special bars and sections. Focus on mix enrichment New Footprint of LCE (EU27 only): Q 2013 # active EAFs 11 9 # active rolling mills Concentration of production on core assets with best costs Elimination of fixed costs in idled mills Working capital requirements reduced together with production concentration LCE footprint concentrated on most competitive cost assets 61

63 China 62

64 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) Germany USA S. Korea France China 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 63

65 Steel demand growth rates in China have trended down China annual growth rates of GDP and ASC (apparent crude steel consumption), (%) The announced slowing of China s GDP growth rate is consistent with 12th 5-Year Plan Ratio ASC/GDP Growth (LHS) ASC growth (RHS) Real GDP growth (RHS) 14.2% % % 11.3% 9.6% 9.2% 10.5% 7.0% 9.3% 7.8% 8.2% '08/ e 2013f 0 11th plan th plan e 2013f China s steel demand growth have trended down Source: GDP: IHS Global Insight, ASC: ArcelorMittal Corporate Strategy estimates (Q2 2012) 64

66 China still has some way to go on its infrastructure development path Key development parameters China vs USA USA, 2008 China, 2008 China, 2011 Absolute levels Per capita/per land area Urban 23.8 residential 18.7 Urban residential floor floor space 16 space (m2 per capita) 21.7 (billion m2) 19 Railway (thousand km) Railway (km per 1000 sq km) Equal to 30, 33, m 2 per urban residential Subway (thousand km) Subway per 1000 capita (m) Total road (thousand km) Total road (km per 1000 sq km) Airport (units) * Airport transport passenger carried (bln) * Airport of USA is for paved runways > 1524 to 2437 m Sources: China National Bureau of Statistics; Macquarie Research, ArcelorMittal Corporate Strategy 65

67 China demand growth remains solid Steel consumption per capita in 2011 (kg) Western China (288 kg) Central China (475 kg) Coastal China (629kg) Development and growth potential Population migration Solid Chinese steel demand Sources: WSA, SBB and ArcelorMittal estimates 66

68 Iron Ore Demand/Production 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) World Iron Ore Demand World Iron Ore Production Supply/Demand projections Iron ore supply forecast to keep pace with demand, with no significant excess Source: ArcelorMittal Corporate Strategy 67

69 Mining Mont Wright, Canada 68

70 Mining business portfolio Key assets and projects Canada Baffinland 70% (1) Bosnia Iron Ore 51% Ukraine Iron Ore 95.13% Russian Coal 98.64% USA Iron Ore Minorca 100% Hibbing 62.31%* Non ferrous mine Iron ore mine Mexico Iron Ore Las Truchas & Volcan 100%; Pena 50%* Canada AMMC 100% (2) USA Coal 100% Mauritania Iron Ore exploration license Liberia Iron Ore 70% Algeria Iron Ore 70% Kazakhstan Coal 8 mines 100% Indian Iron Ore & Coal exploration license Kazakhstan Iron Ore 4 mines 100% Coal mine Existing mines New projects / exploration Brazil Iron Ore 100% South Africa Manganese 50% (3) South Africa Iron Ore** Coal of Africa 15.75% 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 Kalagadi Manganese. 69

71 Core mining strengths Able to leverage entrepreneurial spirit of ArcelorMittal Management Strong leadership team Significant reserve and resource base with tier 1 bias Scalable infrastructure Competitive position in terms of cost and product quality Appetite for challenging opportunities: risk/reward strategy World class project control and management Knowledge from operating in diverse political & geographical environments Core strenghts support development of a world class business 70

72 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 Measured & indicated resources Inferred resources Mtonnes %Fe Mtonnes %Fe Mtonnes %Fe Canada (AMMC) 1, , , Canada (Baffinland) USA Central America South America West Africa , Eastern Europe Central Asia , TOTAL 4, , , Geographical breakdown of iron ore reserves & resources Central Asia Eastern Europe 7% West Africa 4% 12% South America 3% 45% 9% Central America 11% 9% USA Canada (Baffinland) Canada (AMMC) 2012 Iron ore reserves of 4.3bn metric tonnes 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 71

73 Producer 1 Producer 2 Producer 3 Producer 4 Producer 5 ArcelorMittal* Comparable margin to peers ArcelorMittal Mining EBITDA ($ Millions) Iron ore EBITDA margin 2012 FY* 3, % 90% 3,000 80% 2,500 2,000 70% 60% 50% 1,500 40% 1, % 20% 10% 0 0% 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. 72

74 Iron ore growth Target 84MT capacity in 2015 CAPACITY Iron ore production and capacity (million Mt) Production Liberia Phase 1 - Complete Phase 1 completed: 4mtpa DSO capacity - Rail and port upgrade completed - Trans-shipment facility implemented Dec 2012 for capesize loading ArcelorMittal Mines Canada Near completion Spirals upgrade adds 0.8mtpa capacity AMMC expanding nominal capacity from 16-24mtpa - New concentrator, mine and rail expansion - On track for 1H 2013 completion H F 2H F Mining growth plan capex ($ billion) on 100% basis Liberia Phase 2 - Approved New 15mtpa concentrator capacity to replace existing 4mtpa Direct Shipped Ore (DSO) operation by end Higher quality product will command higher price compared with current DSO (60% Fe) - Cash costs similar to current level, leveraging economies of scale Liberia Phase 1 ($0.7bn), AMMC Spirals ($0.2bn), AMMC ($1.4bn) Liberia Phase 2 (~$1.5bn), Baffinland ERP ($0.7bn)* Baffinland Early Revenue Phase (ERP) approved 3.5MT production in $700 million capex Low cash cost and 66%+ premium product Focus on Value and Growth Growth plan remains on track for 84MT capacity by 2015 * Includes consideration from JV partner (Nunavut Iron Ore) for additional equity stake increase from 30% to 50%. 73

75 ArcelorMittal Mines Canada (AMMC) AMMC expansion from 16Mt to 24Mt near completion Iron ore production and capacity (million Mt) Expansion of Mont Wright mine at AMMC and concentrate capacity to total 24Mt p.a. due 1H 13 (from 16Mtpa post operational improvements) concentrate and pellets Spirals Concentrator Expansion capitalising on existing infrastructure, product quality, experienced workforce and advantageously located with easy access to European/US markets Capex US$1.4bn* for mine, concentrator plant expansion and infrastructure upgrade with cash cost of circa $38/tonne post expansion 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 2012 Low cost, efficient operations with further improvement potential 2013F Ongoing initiatives to continue improving operating equipment efficiency Access to low-cost, long-term hydro electric generating station Potential Expansion Strategic advantage from exclusive use of own rail and port facilities * Capex of $1.4bn excludes expansion of Pellet line which has not yet been committed to. 74

76 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 Proposed phase 2: Rail ERP phase underway : Road route 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 Product Foxe Basin 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 75

77 US$ FOB Cost per ton Focus on cost as well as growth Illustrative cash cost curve (marketable tonnes) post expansion Positioning key assets low on the cost curve 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 1st Focus on quality ArcelorMittal Liberia AMMC Focus on value and OEE initiatives 2nd 3rd 4th Quartile 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 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 76

78 Coal business Key assets and projects for coal business Coal mine USA Coal 100% Russian Coal 98.64% Existing mines New projects Kazakhstan Coal 8 mines 100% 2012 Coal reserves and resources (Million metric tonnes) Region Proven & probable reserves Measured & indicated resources Inferred resources Mtonnes %Yield Mtonnes Mtonnes Kazakhstan Kuzbass Princeton TOTAL Coal of Africa 15.75% interest Indian Iron Ore & Steam Coal Coal asset geographically diversified 318 million tonnes of reserves 77

79 Tonnes Potential growth beyond current plan Growth project pipeline (million tonnes) 160, , , ,000 Cost plus tonnage Marketable tonnage Total Potential 2015 iron ore target of 84MT production capacity (excluding potential projects and strategic contracts) Potential brownfield and greenfield projects under study, primarily marketable 80,000 60,000 40,000 20, Growth supported by pipeline of brownfield and greenfield projects 2010 to 2012 represents actual production onwards, capacity is being reflected in the above graph. 78

80 Auto 79

81 Our Leadership in automotive steel ArcelorMittal s industrial and commercial network Automotive production facilities Alliances & JV Commercial Teams Automotive steel strengths Global automotive manufacturing presence through own facilities, alliances and JVs Proximity to the customer by global presence of commercial teams Global distribution network Unique product offerings to meet OEMs demand for safety, fuel economy and reduced CO 2 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 40% market share in our core markets Strong investment in R&D Barriers of entry due to technical knowhow requirements for value-added products and customer relationships We are serving globally while developing industrial assets in emerging markets 80

82 No 1 in automotive steel Global automotive manufacturing presence through own facilities and JVs 2012 auto shipment by geography 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 Europe 54% South Africa 2% Nafta 38% South America 6% Worldwide ArcelorMittal R&D involving automotive suppliers / industrial partners Source: AM estimates as per annual report 81

83 Other topics 82