ArcelorMittal Italia S.p.A. 2 | ArcelorMittal Italia | | Italy | | | | | | ITEM 16G.Africa and Commonwealth of Independent States ("ACIS") | CORPORATE GOVERNANCE |
There are no significant differences between the corporate governance practices of ArcelorMittal and those required of a U.S. domestic issuer under the Listed Company Manual of the New York Stock Exchange.
| | | ITEM 16H.ArcelorMittal South Africa Ltd. | MINE SAFETY DISCLOSURE | ArcelorMittal South Africa | | South Africa |
The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 16.1 to this annual report on Form 20-F.
PART III
JSC ArcelorMittal Temirtau | | ArcelorMittal Temirtau | | Kazakhstan | PJSC ArcelorMittal Kryvyi Rih | | ArcelorMittal Kryvyi Rih | | Ukraine | | | | | | ITEM 17.Mining | FINANCIAL STATEMENTS |
The Company has responded to Item 18 in lieu of responding to this Item.
| | | ITEM 18.ArcelorMittal Mining Canada G.P. and ArcelorMittal Infrastructure Canada G.P. | FINANCIAL STATEMENTS |
Reference is made to pages F-1 to F-134.
| ArcelorMittal Mines and Infrastructure Canada ("AMMC") | | Canada | ITEM 19.ArcelorMittal Liberia Ltd | EXHIBITS | ArcelorMittal Liberia | | Liberia | JSC ArcelorMittal Temirtau | | ArcelorMittal Temirtau | | Kazakhstan | PJSC ArcelorMittal Kryvyi Rih | | ArcelorMittal Kryvyi Rih | | Ukraine |
EXHIBIT INDEX1.On December 9, 2020, the Company completed the sale of ArcelorMittal USA. See "—Key transactions and events in 2020" and note 2.3.1 to the consolidated financial statements.
2.On December 10, 2020, the Company signed a binding agreement with Invitalia, an Italian state-owned company, to form a public-private partnership between the parties. As a result, the carrying amount of the assets and liabilities of ArcelorMittal Italia was classified as held for sale at December 31, 2020 and will be accounted for under the equity method upon closing of the first investment (expected in the first quarter of 2021). See "Introduction—Key transactions and events in 2020" and note 2.3.2 for further information.
In addition, unless indicated otherwise, or the context otherwise requires, references in this annual report to abbreviations or terms shown below have the following definitions: | | | | | | | | | | | | | | | ARS | Argentine Peso, the official currency of Argentina
| | GMB | the Group Management Board, the former senior management body which was replaced by the CEO Office as of January 1, 2016. The CEO Office, supported by five Executive Officers, makes up the Company’s senior management | Articles of Association | the amended and restated articles of association of ArcelorMittal, dated June 13, 2020 filed as Exhibit 1.1 hereto | | Greenfield project | the development of a new project | AUD$ or AUD | Australian dollars, the official currency of Australia | | Green steel | tonnes with an auditor verified certification of the CO2 savings achieved | Brownfield project | the expansion of an existing operation | | INR | Indian rupee, the official currency of India | C$ or CAD | Canadian dollars, the official currency of Canada | | Iron pellets | agglomerated ultra-fine iron ore particles of a size and quality suitable for use in steel-making processes | CEO Office | the Chairman and Chief Executive Officer, Mr. Lakshmi N. Mittal, and the President and Chief Financial Officer, Mr. Aditya Mittal | | Kilometers | measures of distance are stated in kilometers, each of which equals approximately 0.62 miles, or 1000 in meters, each of which equals approximately 3.28 feet | CIS | the countries of the Commonwealth of Independent States | | KZT | the Kazakhstani tenge, the official currency of Kazakhstan | CNY | Chinese yuan, the official currency of China | | Metallurgical coal | a broader term than coking coal that includes all coals used in steelmaking, such as coal used for the pulverized coal injection (“PCI”) process | Coking coal | coal that, by virtue of its coking properties, is used in the manufacture of coke, which is used in the steelmaking process | | PLN | Polish złoty, the offcial currency of Poland | Crude steel | the first solid steel product upon solidification of liquid steel, including ingots from conventional mills and semis (e.g., slab, billet and blooms) from continuous casters | | Production capacity | the annual production capacity of plant and equipment based on existing technical parameters as estimated by management | Downstream | finishing operations: flat products - the process after the production of hot-rolled coil/plates, and long products - the process after the production of blooms/billets (including production of bars, wire rods, SBQ, etc.) | | Ps or MXN | the Mexican peso, the official currency of the United Mexican States | DMTU or dmtu | dry metric tonne unit | | Real, reais or R$ | Brazilian reais, the official currency of Brazil | DRI | direct reduced iron, a metallic iron formed by removing oxygen from iron ore without the formation of, or passage through, a smelting phase. DRI can be used as feedstock for steel production | | ROM | run of mine - mined iron ore or coal to be fed to a preparation and/or concentration process | Energy coal | coal used as a fuel source in electrical power generation, cement manufacture and various industrial applications. Energy coal may also be referred to as steam or thermal coal | | Sales | include shipping and handling fees and costs billed to a customer in a sales transaction | Euro, euros, EUR or € | the official currency of the European Union (“EU”) member states participating in the European Monetary Union | | SBQ | special bar quality steel, a high-quality long product | Sinter | a metallic input used in the blast furnace steel-making process, which aggregates fines, binder and other materials into a coherent mass by heating without melting | | Significant Shareholder | a trust (HSBC Trustee (C.I.) Limited, as trustee), of which Mr. Lakshmi N. Mittal, Mrs. Usha Mittal and their children are the beneficiaries | Spanish Stock Exchanges | the stock exchanges of Madrid, Barcelona, Bilbao and Valencia | | UAH | Ukrainian hryvnia, the official currency of Ukraine | Steel products | finished and semi-finished steel products, and exclude raw materials (including those described under “upstream” below), direct reduced iron (“DRI”), hot metal, coke, etc. | | US$, $, dollars, USD or U.S. dollars | United States dollars, the official currency of the United States | Tons, net tons or ST | short tons are used in measurements involving steel products as well as crude steel, iron ore, iron ore pellets, DRI, hot metal, coke, coal, pig iron and scrap (a short ton is equal to 907.2 kilograms or 2,000 pounds) | | Upstream | operations that precede downstream steel-making, coking coal, coke, sinter, DRI, blast furnace, basic oxygen furnace (“BOF”), electric arc furnace (“EAF”), casters & hot rolling/plate mill | Metric Tonnes or MT | metric tonnes and are used in measurements involving steel products, as well as crude steel, iron ore, iron ore pellets, DRI, hot metal, coke, coal, pig iron and scrap (a metric tonne is equal to 1,000 kilograms or 2,204.62 pounds) | | Wet recoverable | a quantity of iron ore or coal recovered after the material from the mine has gone through a preparation and/or concentration process excluding drying | Executive Officers | those executives of the Company who are supporting the CEO Office and jointly with the CEO Office represent the senior management of the Company | | ZAR | South African rand, the official currency of the Republic of South Africa |
EXHIBITS EXHIBIT INDEX | | | | | | Exhibit | Description | Number | | | Exhibit | Description | Number | | | 1.1 | Amended and Restated Articles of Association of ArcelorMittal dated May 16, 2018 andJune 13, 2020 available at Exhibit 1.1.
| 2.1 | The total amount of long-term debt securities authorized under any instrument does not exceed 10% of the total assets of ArcelorMittal and its subsidiaries on a consolidated basis. ArcelorMittal hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of long-term debt of ArcelorMittal or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. | 2.2 | Description of ArcelorMittal securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 2.2) | 4.1* | Shareholder’s agreement dated as of August 13, 1997 among Ispat International N.V., LNM Holdings S.L. (renamed Ispat International Investments S.L.) and Mr. Lakshmi N. Mittal (filed as Exhibit 4.3 to Mittal Steel Company N.V.’s annual report on Form 20-F for the year ended December 31, 2004 (File No. 001-14666), and incorporated by reference herein) and available at: http://www.sec.gov/Archives/edgar/data/1041989/000095012305003893/y07225exv4w3.txt. | 4.2* | | 4.3* | | 4.4*4.3* | | 4.5* | Supplemental Terms for 2013-2014 Restricted Share Units and Performance Share Units Plan to the ArcelorMittal Equity Incentive Plan effective May 8, 2013 (filed as Exhibit 4.6 to the annual report on Form 20-F filed on February 25, 2014 (File No. 001-35788) and incorporated by reference herein) and available at: 4.4*http://www.sec.gov/Archives/edgar/data/1243429/000124342914000002/exhibit46.htm. | 4.6* | | 4.7* | Supplemental Terms for 2014-2015 Restricted Share Units and Performance Share Units Plan to the ArcelorMittal Equity Incentive Plan effective May 8, 2014 (filed as Exhibit 4.8 to ArcelorMittal’s annual report on Form 20-F for the year ended December 31, 2014 (File No. 001-35788), and incorporated by reference herein) and available at: 4.5*http://www.sec.gov/Archives/edgar/data/1243429/000124342915000002/Exhibit48.htm. |
| | | 4.8* | | 4.9* | | 4.10*4.6* | | 4.11*4.7* | | 4.12*4.8* | | 4.134.9* | | 4.144.10* | | 4.11* | | 4.12* | | 4.13 | Supplemental Terms for 2020-2021 Group Management Board Performance Share Units Plan effective December 12, 2020 available at Exhibit 4.13 | 4.14 | Supplemental Terms for 2020-2021 Restricted Share Units and Performance Share Units effective December 12, 2020 available at Exhibit 4.14 | 8.1 | | 12.1 | Certifications of ArcelorMittal’s Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act and available at Exhibit 12.112.1.. | 13.1 | Certifications of ArcelorMittal’s Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code and available at Exhibit 13.113.1.. | 15.1 | | 15.2 | Consent of Gustavson Associates - Mexico (Las Truchas and San Jose) and available at Exhibit 15.215.2.. | 15.3 | Consent of KAI Ltd. - Ukraine (ArecelorMittal Kryvyi Rih Open Pit) and available at Exhibit 15.3. |
| | | | | | 15.4 | Consent of SRK Consulting (UK) Limited - iron ore and available at Exhibit 15.315.4.. | 15.415.5 | | 15.515.6 | Consent of SRK Consulting (Canada) Inc. - Ukraine (ArcelorMittal Kryvyi Rih Open Pit) and available at Exhibit 15.5.15.6. | 15.615.7 | Consent of SRK Consultores do Brasil Ltda.Consulting (Canada) Inc. - AMMC and available at Exhibit 15.615.7. | 15.8 | Consent of Breton, Banville and Associates and available at Exhibit 15.8. | 15.9 | Consent of BMRC Geomining Solutions LLP and available at Exhibit 15.9 | 16.1 | | 101.INS | XBRL Instance Document
- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | 101.SCH | XBRL Taxonomy Extension Schema Document
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
* Previously filed
SIGNATURES
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. | | | ARCELORMITTAL | | ARCELORMITTAL | | /s/ Henk Scheffer | Henk Scheffer | Company Secretary |
Date: February 22, 2019March 8, 2021
ARCELORMITTAL AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 2018 and 2017 and
for each of the three years in the period ended December 31, 2018
INDEX
| | | | | Page | | | 210 Report of Independent Registered Public Accounting Firm | | | | Consolidated Statements of Operations | | | | Consolidated Statements of Other Comprehensive Income | | | | Consolidated Statements of Financial Position | | | | Consolidated Statements of Changes in Equity | | | | Consolidated Statements of Cash Flows | | | | Notes to Consolidated Financial Statements | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholdersand the Board of Directors of ArcelorMittal Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of ArcelorMittal and subsidiaries (the "Company") as of December 31, 20182020 and 2017,2019, the related consolidated statements of operations, other comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2018,2020, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2020, in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB)(“PCAOB”), the Company'sCompany’s internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control -— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2019, March 8, 2021, expressed an unqualified opinion on the Company'sCompany’s internal control over financial reporting. Adoption of New Accounting Standard As discussed in Note 7 to the consolidated financial statements, effective January 1, 2019, the Company adopted IFRS 16, Leases, using the modified retrospective transition approach. Basis for Opinion These consolidated financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Goodwill and Property, Plant and Equipment – Refer to Note 5.3 to the Consolidated Financial Statements Critical Audit Matter Description The Company’s evaluation of goodwill for impairment at the group of cash-generating units (“GCGU”) level, and property, plant and equipment (“PP&E”) as part of the relevant cash-generating unit (“CGU”), involves a comparison of the recoverable amount of each GCGU or CGU to its carrying amount. Recoverable amount is defined as the higher of fair value less costs of disposal and the value-in-use for each GCGU or CGU. The Company primarily used a discounted cash flow approach to determine the recoverable amounts, which required management to make significant assumptions related to estimates of future cash flows.
| | | | | | | | | Report of Independent Registered Public Accounting Firm 211 | | | | | | | | | |
The goodwill balance as of December 31, 2020, was $3,992 million. There was no impairment of goodwill recorded as of and for the year ended December 31, 2020. The PP&E balance of the Company as of December 31, 2020, was $30,622 million. The Company recognized a net reversal of impairment charges relating to PP&E amounting to $133 million for the year ended December 31, 2020. This was comprised of the reversal of previously recognized impairment charges of $660 million related to PP&E of ArcelorMittal USA upon classification as assets held for sale, impairment charges of $331 million related to PP&E of the plate business in the Europe segment upon classification as assets held for sale, impairment charges of $92 million and $104 million related to PP&E upon permanent closure of the coke plant at the Florange site and part of a blast furnace and steel plant in Krakow, respectively. In developing the estimates of future cash flows of its GCGUs and CGUs, the Company considered its exposure to certain climate-related risks which could affect the recoverable amount of a GCGU or CGU. Estimates of future cash flows include near-to-medium-term investment commitments for low emission technologies, as well as estimated costs expected to be incurred to acquire emission allowances. Estimates of future cash flows do not include longer-term investments which would be required to achieve carbon related goals given uncertainties around the requirements for such longer-term investments. The assumptions used to estimate future cash flows are inherently uncertain in the context of the COVID-19 pandemic and require management judgment. The Company's process includes specific consideration given to the most recent short-, medium- and long-term price forecasts and discount rates consistent with external information, expected production and shipment volumes and updated development plans, operating costs and capital expenditure plans. Key assumptions that had a significant impact on the Company’s estimate of the recoverable amounts of the relevant GCGUs and CGUs included volume of shipments and the discount rate. Changes in these assumptions could have a significant impact on the recoverable amount of a GCGU or CGU. Given the significant judgments made by management to estimate the recoverable amounts of the relevant GCGUs and CGUs, performing audit procedures to evaluate the reasonableness of management’s estimates related to volume of shipments and the discount rate, specifically due to the sensitivity of these key assumptions, required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to volume of shipments and discount rate used by management to estimate future cash flows of the GCGUs and CGUs included the following, among others: •We tested the effectiveness of internal controls over management’s valuation methodology and assumptions used, and estimates of future cash flows, including controls over the determination of the recoverable amount of the GCGUs and CGUs. •We evaluated management’s ability to reasonably estimate future cash flows by comparing actual results to management’s historical forecasts. •We evaluated the reasonableness of management’s estimates of future cash flows considering macroeconomic conditions, effects related to the COVID-19 pandemic and effects of climate-related matters, and the consistency of the estimates of future cash flows to internal and external communications of management and the Board of Directors and holding discussions with relevant personnel. •With the assistance of fair value specialists, we evaluated the reasonableness of the discount rate by: ◦Evaluating the reasonableness of the methodology used and underlying source information used in the Company’s calculation of the discount rate. ◦Testing the mathematical accuracy of the calculation. ◦Developing an independent range of estimates and comparing the discount rate selected by management to our range.
| | | | | | 212 Report of Independent Registered Public Accounting Firm |
•We evaluated the impact of any changes in management’s cash flow forecasts from October 1, 2020, the annual measurement date for testing impairment of goodwill, to December 31, 2020. Deferred Tax Assets - Refer to Note 10.4 to the Consolidated Financial Statements Critical Audit Matter Description ArcelorMittal S.A. (parent company) has deferred tax assets primarily related to tax losses and other tax benefits carried forward. Under current tax law in Luxembourg, tax losses accumulated before January 1, 2017, do not expire and are recoverable against future taxable income. The valuation of deferred tax assets requires management to make significant estimates related to the future taxable income to be derived from entities within the Luxembourg tax integration and, as a result, the amounts of deferred tax assets expected to be realized by ArcelorMittal S.A. The assessment of the likelihood of future taxable profits being available, specifically the length of the forecast periods utilized, requires significant management judgment. The deferred tax asset balance as of December 31, 2020, was $7,866 million, which is mainly related to the Luxembourg tax integration. Given the complexity of management’s valuation process, auditing management’s estimates of future taxable income, the forecast period, and the determination of whether it is probable that the deferred tax assets will be realized involved a high degree of auditor judgment and an increased extent of effort, including the need to involve tax specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to estimates of future taxable income and determination of whether it is probable that the deferred tax assets will be realized included the following, among others: •We tested the effectiveness of internal controls over management’s valuation of deferred tax assets, including the controls over the assessment of the likelihood of future taxable profits being available and the length of the forecast periods. •With the assistance of tax specialists knowledgeable in Luxembourg-specific and international tax planning matters, we evaluated whether management’s estimates of future taxable income were consistent with available evidence related to management’s assessment of the likelihood of future taxable profits being available and the length of the forecast periods. •We evaluated management’s ability to estimate future taxable income by comparing actual results to management’s historical forecasts, and considered the results in evaluating the current-year estimated future taxable income. •We evaluated management’s proposed tax planning strategies, potential tax implications of material current year or future planned transactions (acquisitions, divestitures, finance and shareholding restructuring) and the related impact on management’s determination of the forecast periods and amounts of deferred tax assets recognized.
/s/ Deloitte Audit S.à r.l.
Luxembourg, Grand Duchy of Luxembourg February 22, 2019March 8, 2021
We have served as the Company'sCompany’s auditor since 2007.
ARCELORMITTAL AND SUBSIDIARIES
Consolidated Statements of Operations
(millions of U.S. dollars, except share and per share data)
| | | | | | | | | | | | | | | Year Ended December 31, | | Notes | | 2018 |
| 2017 |
| 2016 | Sales | 4.1 and 11.1 | | 76,033 |
| | 68,679 |
| | 56,791 |
| (including 8,259, 7,503 and 5,634 of sales to related parties for 2018, 2017 and 2016, respectively) | | | | | | | | Cost of sales | 4.2 and 11.2 | | 67,025 |
| | 60,876 |
| | 50,428 |
| (including 1,116, 1,033 and 1,390 of purchases from related parties for 2018, 2017 and 2016, respectively) | | | | | | | | Gross margin | | | 9,008 |
| | 7,803 |
| | 6,363 |
| Selling, general and administrative expenses | | | 2,469 |
| | 2,369 |
| | 2,202 |
| Operating income | | | 6,539 |
| | 5,434 |
| | 4,161 |
| Income from investments in associates, joint ventures and other investments | 2.6 | | 652 |
| | 448 |
| | 615 |
| Financing costs - net | 6.2 | | (2,210 | ) | | (875 | ) | | (2,056 | ) | Income before taxes | | | 4,981 |
| | 5,007 |
| | 2,720 |
| Income tax (benefit) / expense | 9.1 | | (349 | ) | | 432 |
| | 986 |
| Net income (including non-controlling interests) | | | 5,330 |
| | 4,575 |
| | 1,734 |
| | | | | | | | | | | | | | | | | Net income attributable to equity holders of the parent | | | 5,149 |
| | 4,568 |
| | 1,779 |
| Net income / (loss) attributable to non-controlling interests | | | 181 |
| | 7 |
| | (45 | ) | Net income (including non-controlling interests) | | | 5,330 |
| | 4,575 |
| | 1,734 |
|
| | | | | | | | | | | | | | | Year Ended December 31, | | | | 2018 |
| 2017 |
| 2016 | Earnings per common share (in U.S. dollars) 1 | | | | | | | | Basic | | | 5.07 |
| | 4.48 |
| | 1.87 |
| Diluted | | | 5.04 |
| | 4.46 |
| | 1.86 |
| Weighted average common shares outstanding (in millions) | 10.3 | | | | | | | Basic | | | 1,015 |
| | 1,020 |
| | 953 |
| Diluted | | | 1,021 |
| | 1,024 |
| | 955 |
|
| | | | | | | | | 1 | | Consolidated financial statements 213 | Following the completionArcelorMittal and Subsidiaries | | | Consolidated Statements of the Company’s share consolidationOperations | | (millions of each three existing shares into one share without nominal value on May 22, 2017, the earnings (loss) per commonU.S. dollars, except share and corresponding basic and diluted weighted average common shares outstanding for prior periods has been recast in accordance with IFRS. Please refer to note 10 for more information.per share data) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | Notes | | 2020 | | 2019 | | 2018 | Sales | 4.1 and 12.1 | | 53,270 | | | 70,615 | | | 76,033 | | (including 5,142, 7,442 and 8,259 of sales to related parties for 2020, 2019 and 2018, respectively) | | | | | | | | Cost of sales | 4.2 and 12.2 | | 49,138 | | | 68,887 | | | 67,025 | | (including 1,151, 1,092 and 1,116 of purchases from related parties for 2020, 2019 and 2018, respectively) | | | | | | | | Gross margin | | | 4,132 | | | 1,728 | | | 9,008 | | Selling, general and administrative expenses | | | 2,022 | | | 2,355 | | | 2,469 | | Operating income / (loss) | | | 2,110 | | | (627) | | | 6,539 | | Income from investments in associates, joint ventures and other investments | 2.6 | | 234 | | | 347 | | | 652 | | Financing costs - net | 6.2 | | (1,256) | | | (1,652) | | | (2,210) | | Income / (loss) before taxes | | | 1,088 | | | (1,932) | | | 4,981 | | Income tax expense / (benefit) | 10.1 | | 1,666 | | | 459 | | | (349) | | Net (loss) / income (including non-controlling interests) | | | (578) | | | (2,391) | | | 5,330 | | Net (loss) / income attributable to equity holders of the parent | | | (733) | | | (2,454) | | | 5,149 | | Net income attributable to non-controlling interests | | | 155 | | | 63 | | | 181 | | Net (loss) / income (including non-controlling interests) | | | (578) | | | (2,391) | | | 5,330 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | 2020 | | 2019 | | 2018 | (Loss) / earning per common share (in U.S. dollars) | | | | | | | | Basic | | | (0.64) | | | (2.42) | | | 5.07 | | Diluted | | | (0.64) | | | (2.42) | | | 5.04 | | Weighted average common shares outstanding (in millions) | 11.3 | | | | | | | Basic | | | 1,140 | | | 1,013 | | | 1,015 | | Diluted | | | 1,140 | | | 1,013 | | | 1,021 | |
The accompanying notes are an integral part of these consolidated financial statements.
ARCELORMITTAL AND SUBSIDIARIES
Consolidated Statements of Other Comprehensive Income
(millions of U.S. dollars, except share and per share data)
| | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | 2018 | | 2017 | | 2016 | Net income (including non-controlling interests) | | | 5,330 |
| | | | 4,575 |
| | | | 1,734 |
| Items that can be recycled to the consolidated statements of operations | | | | | | | | | | | | Available-for-sale-investments: | | | | | | | | | | | | Gain arising during the period | — |
| | | | 497 |
| | | | 333 |
| | | Reclassification adjustments for loss (gain) included in the consolidated statements of operations | — |
| | | | — |
| | | | (74 | ) | | | | — |
| | | | 497 |
| | | | 259 |
| | | Derivative financial instruments: | | | | | | | | | | | | Gain (loss) arising during the period | 755 |
| | | | (340 | ) | | | | 40 |
| | | Reclassification adjustments for loss (gain) included in the consolidated statements of operations | 353 |
| | | | 28 |
| | | | (14 | ) | | | | 1,108 |
| | | | (312 | ) | | | | 26 |
| | | Exchange differences arising on translation of foreign operations: | | | | | | | | | | | | (Loss) gain arising during the period | (1,996 | ) | | | | 2,025 |
| | | | (398 | ) | | | Reclassification adjustments for gain included in the consolidated statements of operations | (15 | ) | | | | (21 | ) | | | | (13 | ) | | | | (2,011 | ) | | | | 2,004 |
| | | | (411 | ) | | | Share of other comprehensive income (loss) related to associates and joint ventures | | | | | | | | | | | | (Loss) gain arising during the period | (239 | ) | | | | 341 |
| | | | (79 | ) | | | Reclassification adjustments for (gain) loss included in the consolidated statements of operations | (123 | ) | | | | 217 |
| | | | 86 |
| | | | (362 | ) | | | | 558 |
| | | | 7 |
| | | Income tax benefit (expense) related to components of other comprehensive income (loss) that can be recycled to the consolidated statements of operations | (274 | ) | | | | 167 |
| | | | (26 | ) | | | | | | | | | | | | | | | Items that cannot be recycled to the consolidated statements of operations | | | | | | | | | | | | | | | | | | | | | | | | Investments in equity instruments at FVOCI: | |
| | | | | | | | | | Loss arising during the period | (603 | ) | | | | — |
| | | | — |
| | | Share of other comprehensive loss related to associates and joint ventures | (5 | ) | | | | — |
| | | | — |
| | |
| (608 | ) | | | | — |
| | | | — |
| | | Employee benefits - Recognized actuarial gains | 344 |
| | | | 1,098 |
| | | | 9 |
| | | Share of other comprehensive income (loss) related to associates and joint ventures | — |
| | | | 29 |
| | | | (24 | ) | | | Income tax benefit related to components of other comprehensive income that cannot be recycled to the consolidated statements of operations | 228 |
| | | | 42 |
| | | | 1 |
| | | Total other comprehensive (loss) income | (1,575 | ) | | | | 4,083 |
| | | | (159 | ) | | | Total other comprehensive (loss) income attributable to: | | | | | | | | | | | | Equity holders of the parent | (1,478 | ) | | | | 4,037 |
| | | | (186 | ) | | | Non-controlling interests | (97 | ) | | | | 46 |
| | | | 27 |
| | | | | | (1,575 | ) | | | | 4,083 |
| | | | (159 | ) | Total comprehensive income | | | 3,755 |
| | | | 8,658 |
| | | | 1,575 |
| Total comprehensive income attributable to: | | | | | | | | | | | | Equity holders of the parent | | | 3,671 |
| | | | 8,605 |
| | | | 1,593 |
| Non-controlling interests | | | 84 |
| | | | 53 |
| | | | (18 | ) | Total comprehensive income | | | 3,755 |
| | | | 8,658 |
| | | | 1,575 |
|
| | | | | | | | | 214 Consolidated financial statements | | | ArcelorMittal and Subsidiaries | | | Consolidated Statements of Other Comprehensive Income | | | (millions of U.S. dollars, except share and per share data) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Net (loss) income (including non-controlling interests) | | | (578) | | | | | (2,391) | | | | | 5,330 | | Items that can be recycled to the consolidated statements of operations | | | | | | | | | | | | Derivative financial instruments: | | | | | | | | | | | | Gain arising during the period | 52 | | | | | 354 | | | | | 755 | | | | Reclassification adjustments for (gain) loss included in the consolidated statements of operations and financial position (basis adjustments) | (119) | | | | | (1,004) | | | | | 353 | | | | | (67) | | | | | (650) | | | | | 1,108 | | | | Exchange differences arising on translation of foreign operations: | | | | | | | | | | | | (Loss) gain arising during the period | (1,388) | | | | | 177 | | | | | (1,996) | | | | Reclassification adjustments for gain included in the consolidated statements of operations | 0 | | | | | (105) | | | | | (15) | | | | | (1,388) | | | | | 72 | | | | | (2,011) | | | | Share of other comprehensive income (loss) related to associates and joint ventures | | | | | | | | | | | | Gain (loss) arising during the period | 98 | | | | | (82) | | | | | (239) | | | | Reclassification adjustments for loss (gain) included in the consolidated statements of operations | 0 | | | | | 10 | | | | | (123) | | | | | 98 | | | | | (72) | | | | | (362) | | | | Income tax benefit (expense) related to components of other comprehensive income (loss) that can be recycled to the consolidated statements of operations | 363 | | | | | 279 | | | | | (274) | | | | Items that cannot be recycled to the consolidated statements of operations | | | | | | | | | | | | Investments in equity instruments at FVOCI: | | | | | | | | | | | | Gain (loss) arising during the period | 486 | | | | | 28 | | | | | (603) | | | | Share of other comprehensive gain (loss) related to associates and joint ventures | 16 | | | | | 10 | | | | | (5) | | | | | 502 | | | | | 38 | | | | | (608) | | | | Employee benefits - Recognized actuarial (losses) gains | (333) | | | | | (259) | | | | | 344 | | | | Share of other comprehensive (loss) income related to associates and joint ventures | (14) | | | | | 0 | | | | | 0 | | | | Income tax benefit (expense) related to components of other comprehensive income that cannot be recycled to the consolidated statements of operations | 13 | | | | | (32) | | | | | 228 | | | | Total other comprehensive (loss) income | (826) | | | | | (624) | | | | | (1,575) | | | | Total other comprehensive (loss) income attributable to: | | | | | | | | | | | | Equity holders of the parent | (781) | | | | | (666) | | | | | (1,478) | | | | Non-controlling interests | (45) | | | | | 42 | | | | | (97) | | | | | | | (826) | | | | | (624) | | | | | (1,575) | | Total comprehensive (loss) income | | | (1,404) | | | | | (3,015) | | | | | 3,755 | | Total comprehensive (loss) income attributable to: | | | | | | | | | | | | Equity holders of the parent | | | (1,514) | | | | | (3,120) | | | | | 3,671 | | Non-controlling interests | | | 110 | | | | | 105 | | | | | 84 | | Total comprehensive (loss) income | | | (1,404) | | | | | (3,015) | | | | | 3,755 | |
The accompanying notes are an integral part of these consolidated financial statements.
ARCELORMITTAL AND SUBSIDIARIES
Consolidated Statements of Financial Position
(millions of U.S. dollars, except share data)
| | | | | | | | | | | | December 31, | | Notes | | 2018 | | 2017 | ASSETS | | | | | | Current assets: | | | | | | Cash and cash equivalents | 6.1.3 | | 2,172 |
| | 2,574 |
| Restricted cash | 6.1.3 | | 182 |
| | 212 |
| Trade accounts receivable and other (including 366 and 406 from related parties at December 31, 2018 and 2017, respectively) | 4.3 and 11.1 | | 4,432 |
| | 3,863 |
| Inventories | 4.4 | | 20,744 |
| | 17,986 |
| Prepaid expenses and other current assets | 4.5 | | 2,834 |
| | 1,931 |
| Assets held for sale | 2.3.2 | | 2,111 |
| | 179 |
| Total current assets | | | 32,475 |
| | 26,745 |
| Non-current assets: | | | | | | Goodwill and intangible assets | 5.1 | | 5,728 |
| | 5,737 |
| Property, plant and equipment and biological assets | 5.2 | | 35,638 |
| | 36,971 |
| Investments in associates and joint ventures | 2.4 | | 4,906 |
| | 5,084 |
| Other investments | 2.5 | | 855 |
| | 1,471 |
| Deferred tax assets | 9.4 | | 8,287 |
| | 7,055 |
| Other assets
| 4.6 | | 3,360 |
| | 2,234 |
| Total non-current assets | | | 58,774 |
| | 58,552 |
| Total assets | | | 91,249 |
| | 85,297 |
| | | | | | | LIABILITIES AND EQUITY | | | | | | Current liabilities: | | | | | | Short-term debt and current portion of long-term debt | 6.1.2.1 | | 3,167 |
| | 2,785 |
| Trade accounts payable and other (including 201 and 260 to related parties at December 31, 2018 and 2017, respectively) | 4.7 and 11.2 | | 13,981 |
| | 13,428 |
| Short-term provisions | 8.1 | | 539 |
| | 410 |
| Accrued expenses and other liabilities | 4.8 | | 4,709 |
| | 4,505 |
| Income tax liabilities | | | 238 |
| | 232 |
| Liabilities held for sale | 2.3.2 | | 821 |
| | 50 |
| Total current liabilities | | | 23,455 |
| | 21,410 |
| Non-current liabilities: | | | | | | Long-term debt, net of current portion | 6.1.2.2 | | 9,316 |
| | 10,143 |
| Deferred tax liabilities | 9.4 | | 2,374 |
| | 2,684 |
| Deferred employee benefits | 7.2 | | 6,982 |
| | 7,630 |
| Long-term provisions | 8.1 | | 1,995 |
| | 1,612 |
| Other long-term obligations | 8.2 | | 3,019 |
| | 963 |
| Total non-current liabilities | | | 23,686 |
| | 23,032 |
| Total liabilities | | | 47,141 |
| | 44,442 |
| | | | | | | Contingencies and commitments | 8.3 and 8.4 | | | | | | | | | | | Equity: | 10 | | | | | Common shares (no par value, 1,151,576,921 and 1,151,576,921 shares authorized, 1,021,903,623 and 1,021,903,623 shares issued, and 1,013,568,258 and 1,019,916,787 shares outstanding at December 31, 2018 and 2017, respectively) | | | 364 |
| | 401 |
| Treasury shares (8,335,365 and 1,986,836 common shares at December 31, 2018 and 2017, respectively, at cost) | | | (569 | ) | | (362 | ) | Additional paid-in capital | | | 34,894 |
| | 34,848 |
| Retained earnings | | | 25,611 |
| | 20,635 |
| Reserves | | | (18,214 | ) | | (16,733 | ) | Equity attributable to the equity holders of the parent | | | 42,086 |
| | 38,789 |
| Non-controlling interests | | | 2,022 |
| | 2,066 |
| Total equity | | | 44,108 |
| | 40,855 |
| Total liabilities and equity | | | 91,249 |
| | 85,297 |
|
| | | | | | | | | | | Consolidated financial statements 215 | ArcelorMittal and Subsidiaries | | | Consolidated Statements of Financial Position | | (millions of U.S. dollars, except share and per share data) | | |
| | | | | | | | | | | | | | | | | | | | | December 31, | | Notes | | 2020 | | 2019 | ASSETS | | | | | | Current assets: | | | | | | Cash and cash equivalents | 6.1.3 | | 5,600 | | | 4,867 | | Restricted cash and other restricted funds | 6.1.3 | | 363 | | | 128 | | Trade accounts receivable and other (including 269 and 298 from related parties at December 31, 2020 and 2019, respectively) | 4.3 and 12.1 | | 3,072 | | | 3,569 | | Inventories | 4.4 | | | 12,328 | | | 17,296 | | Prepaid expenses and other current assets | 4.5 | | | 2,281 | | | 2,756 | | Assets held for sale | 2.3.2 | | 4,329 | | | 0 | | Total current assets | | | 27,973 | | | 28,616 | | Non-current assets: | | | | | | Goodwill and intangible assets | 5.1 and 5.3 | | 4,312 | | | 5,432 | | Property, plant and equipment and biological assets | 5.2, 5.3 and 7 | | 30,622 | | | 36,231 | | Investments in associates and joint ventures | 2.4 | | | 6,817 | | | 6,529 | | Other investments | 2.5 | | | 2,980 | | | 772 | | Deferred tax assets | 10.4 | | | 7,866 | | | 8,680 | | Other assets | 4.6 | | | 1,482 | | | 1,648 | | Total non-current assets | | | 54,079 | | | 59,292 | | Total assets | | | 82,052 | | | 87,908 | | | | | | | | LIABILITIES AND EQUITY | | | | | | Current liabilities: | | | | | | Short-term debt and current portion of long-term debt | 6.1.2.1 and 7 | | 2,507 | | | 2,869 | | Trade accounts payable and other (including 272 and 251 to related parties at December 31, 2020 and 2019, respectively) | 4.7 and 12.2 | | 11,525 | | | 12,614 | | Short-term provisions | 9.1 | | 935 | | | 516 | | Accrued expenses and other liabilities | 4.8 | | | 4,197 | | | 4,910 | | Income tax liabilities | | | 464 | | | 378 | | Liabilities held for sale | 2.3.2 | | 3,039 | | | 0 | | Total current liabilities | | | 22,667 | | | 21,287 | | Non-current liabilities: | | | | | | Long-term debt, net of current portion | 6.1.2.2 and 7 | | 9,815 | | | 11,471 | | Deferred tax liabilities | 10.4 | | | 1,832 | | | 2,331 | | Deferred employee benefits | 8.2 | | | 4,656 | | | 7,343 | | Long-term provisions | 9.1 | | | 1,697 | | | 2,475 | | Other long-term obligations | 9.2 | | 1,148 | | | 2,518 | | Total non-current liabilities | | | 19,148 | | | 26,138 | | Total liabilities | | | 41,815 | | | 47,425 | | | | | | | | Contingencies and commitments | 9.3 and 9.4 | | | | | Equity: | 11 | | | | | | Common shares (no par value, 1,361,418,599 and 1,151,576,921 shares authorized, 1,102,809,772 and 1,021,903,623 shares issued, and 1,080,734,413 and 1,012,079,421 shares outstanding at December 31, 2020 and 2019, respectively) | | | 393 | | | 364 | | Treasury shares (22,075,359 and 9,824,202 common shares at December 31, 2020 and 2019, respectively, at cost) | | | (538) | | | (602) | | Additional paid-in capital | | | 35,247 | | | 34,826 | | Mandatorily convertible notes | 11.2 | | 840 | | | 0 | | Retained earnings | | | 22,097 | | | 22,883 | | Reserves | | | (19,759) | | | (18,950) | | Equity attributable to the equity holders of the parent | | | 38,280 | | | 38,521 | | Non-controlling interests | | | 1,957 | | | 1,962 | | Total equity | | | 40,237 | | | 40,483 | | Total liabilities and equity | | | 82,052 | | | 87,908 | |
The accompanying notes are an integral part of these consolidated financial statements.
ARCELORMITTAL AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
(millions of U.S. dollars, except share and per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
| Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Items that can be recycled to the Consolidated Statements of Operations |
| Items that cannot be recycled to the Consolidated Statements of Operations |
|
|
|
|
|
|
| Shares1 |
| Share capital |
| Treasury Shares |
| Mandatorily convertible notes |
| Additional Paid-in Capital |
| Retained Earnings |
| Foreign Currency Translation Adjustments |
| Unrealized Gains (Losses) on Derivative Financial Instruments |
| Unrealized Gains (Losses) on Investments in Equity Instruments at FVOCI |
| Recognized actuarial (losses) gains |
| Equity attributable to the equity holders of the parent |
| Non-controlling interests |
| Total Equity | Balance at December 31, 2015 | 553 |
|
| 10,011 |
|
| (377 | ) |
| 1,800 |
|
| 20,294 |
|
| 13,902 |
|
| (15,793 | ) |
| 114 |
|
| 51 |
|
| (4,730 | ) |
| 25,272 |
|
| 2,298 |
|
| 27,570 |
| Net income (including non-controlling interests) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,779 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,779 |
|
| (45 | ) |
| 1,734 |
| Other comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| |
|
| (471 | ) |
| 28 |
|
| 271 |
|
| (14 | ) |
| (186 | ) |
| 27 |
|
| (159 | ) | Total comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 1,779 |
|
| (471 | ) |
| 28 |
|
| 271 |
|
| (14 | ) |
| 1,593 |
|
| (18 | ) |
| 1,575 |
| Equity offering (note 10.1) | 421 |
|
| 144 |
|
| — |
|
| — |
|
| 2,971 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 3,115 |
|
| — |
|
| 3,115 |
| Reduction of the share capital par value (note 10.1) | — |
|
| (10,376 | ) |
| — |
|
| — |
|
| 10,376 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| Conversion of the mandatorily convertible notes (note 10.2) | 46 |
|
| 622 |
|
| — |
|
| (1,800 | ) |
| 1,178 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| Recognition of share-based payments (note 7.3) | — |
|
| — |
|
| 6 |
|
| — |
|
| 7 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 13 |
|
| — |
|
| 13 |
| Dividend (note 10.4) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (63 | ) |
| (63 | ) | Equity offering in ArcelorMittal South Africa ("AMSA") (note 10.5.2) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 437 |
|
| (301 | ) |
| — |
|
| — |
|
| — |
|
| 136 |
|
| (80 | ) |
| 56 |
| Equity share option plan in AMSA (note 10.5.2) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (36 | ) |
| 21 |
|
| — |
|
| — |
|
| — |
|
| (15 | ) |
| 15 |
|
| — |
| AMSA B-BBEE transaction (note 10.5.2) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 44 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 44 |
|
| 19 |
|
| 63 |
| Other movements | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (77 | ) |
| — |
|
| — |
|
| — |
|
| 54 |
|
| (23 | ) |
| 19 |
|
| (4 | ) | Balance at December 31, 2016 | 1,020 |
|
| 401 |
|
| (371 | ) |
| — |
|
| 34,826 |
|
| 16,049 |
|
| (16,544 | ) |
| 142 |
|
| 322 |
|
| (4,690 | ) |
| 30,135 |
|
| 2,190 |
|
| 32,325 |
| Net income (including non-controlling interests) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4,568 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4,568 |
|
| 7 |
|
| 4,575 |
| Other comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,602 |
|
| (235 | ) |
| 501 |
|
| 1,169 |
|
| 4,037 |
|
| 46 |
|
| 4,083 |
| Total comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 4,568 |
|
| 2,602 |
|
| (235 | ) |
| 501 |
|
| 1,169 |
|
| 8,605 |
|
| 53 |
|
| 8,658 |
| Recognition of share-based payments (note 7.3) | — |
|
| — |
|
| 9 |
|
| — |
|
| 22 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 31 |
|
| — |
|
| 31 |
| Dividend (note 10.4) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (145 | ) |
| (145 | ) | Acquisition of Sumaré (note 2.2.4) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 48 |
|
| 48 |
| Mandatory convertible bonds extension (note 10.2) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (83 | ) |
| (83 | ) | Other movements | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 18 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 18 |
|
| 3 |
|
| 21 |
| Balance at December 31, 2017 | 1,020 |
|
| 401 |
|
| (362 | ) |
| — |
|
| 34,848 |
|
| 20,635 |
|
| (13,942 | ) |
| (93 | ) |
| 823 |
|
| (3,521 | ) |
| 38,789 |
|
| 2,066 |
|
| 40,855 |
| Net income (including non-controlling interests) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,149 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,149 |
|
| 181 |
|
| 5,330 |
| Other comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (2,174 | ) |
| 732 |
|
| (608 | ) |
| 572 |
|
| (1,478 | ) |
| (97 | ) |
| (1,575 | ) | Total comprehensive income (loss) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 5,149 |
|
| (2,174 | ) |
| 732 |
|
| (608 | ) |
| 572 |
|
| 3,671 |
|
| 84 |
|
| 3,755 |
| Recognition of share-based payments (note 7.3) | — |
|
| — |
|
| 19 |
|
| — |
|
| 9 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 28 |
|
| — |
|
| 28 |
| Dividend (note 10.4) | — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (101 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| (101 | ) |
| (115 | ) |
| (216 | ) | Share buyback (note 10.1) | (7 | ) |
| — |
|
| (226 | ) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (226 | ) |
| — |
|
| (226 | ) | Change in share capital currency (note 10.1) | — |
|
| (37 | ) |
| — |
|
| — |
|
| 37 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| Acquisition of non-controlling interests (note 10.5) | — |
| | — |
| | — |
| | — |
| | — |
| | (55 | ) | | — |
| | — |
| | — |
| | — |
| | (55 | ) | | (13 | ) | | (68 | ) | Other movements | 1 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| (17 | ) |
| — |
|
| — |
|
| (3 | ) |
| — |
|
| (20 | ) |
| — |
|
| (20 | ) | Balance at December 31, 2018 | 1,014 |
|
| 364 |
|
| (569 | ) |
| — |
|
| 34,894 |
|
| 25,611 |
|
| (16,116 | ) |
| 639 |
|
| 212 |
|
| (2,949 | ) |
| 42,086 |
|
| 2,022 |
|
| 44,108 |
|
| | | | | | 1.216 Consolidated financial statements | Amounts are | | ArcelorMittal and Subsidiaries | | | Consolidated Statements of Changes in Equity | | | (millions of shares (treasury shares are excluded). On May 22, 2017, ArcelorMittal completed the consolidation of each three existing shares in ArcelorMittal without nominal value into oneU.S. dollars, except share without nominal value. As a result of this reverse stock split, the number of outstanding shares decreased from 3,058 to 1,020 and all prior periods have been recast in accordance with IFRS. Please refer to note 10 for further information.per share data) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reserves | | | | | | | | | | | | | | | | | | | | Items that can be recycled to the Consolidated Statements of Operations | | Items that cannot be recycled to the Consolidated Statements of Operations | | | | | | | | Shares1 | | Share Capital | | Treasury Shares | | Mandatorily Convertible Notes | | Additional Paid-in Capital | | Retained Earnings | | Foreign Currency Translation Adjustments | | Unrealized Gains (Losses) on Derivative Financial Instruments relating to CFH | | Unrealized Gains (Losses) on Investments in Equity Instruments at FVOCI | | Recognized actuarial (losses) gains | | Equity attributable to the equity holders of the parent | | Non-controlling interests | | Total Equity | Balance at December 31, 2017 | 1,020 | | | 401 | | | (362) | | | 0 | | | 34,848 | | | 20,635 | | | (13,942) | | | (93) | | | 823 | | | (3,521) | | | 38,789 | | | 2,066 | | | 40,855 | | Net income (including non-controlling interests) | — | | | — | | | — | | | — | | | — | | | 5,149 | | | — | | | — | | | — | | | — | | | 5,149 | | | 181 | | | 5,330 | | Other comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | (2,174) | | | 732 | | | (608) | | | 572 | | | (1,478) | | | (97) | | | (1,575) | | Total comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | 5,149 | | | (2,174) | | | 732 | | | (608) | | | 572 | | | 3,671 | | | 84 | | | 3,755 | | Recognition of share-based payments (note 8.3) | — | | | — | | | 19 | | | — | | | 9 | | | — | | | — | | | — | | | — | | | — | | | 28 | | | — | | | 28 | | Dividend (notes 11.4 and 11.5) | — | | | — | | | — | | | — | | | — | | | (101) | | | — | | | — | | | — | | | — | | | (101) | | | (115) | | | (216) | | Share buyback (note 11.1) | (7) | | | — | | | (226) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (226) | | | — | | | (226) | | Change in share capital currency (note 11.1) | — | | | (37) | | | — | | | — | | | 37 | | | — | | | — | | | — | | | — | | | — | | | 0 | | | — | | | 0 | | Acquisition of non-controlling interests (note 11.5) | — | | | — | | | — | | | — | | | — | | | (55) | | | — | | | — | | | — | | | — | | | (55) | | | (13) | | | (68) | | Other movements | 1 | | | — | | | — | | | — | | | — | | | (17) | | | — | | | — | | | (3) | | | — | | | (20) | | | 0 | | | (20) | | Balance at December 31, 2018 | 1,014 | | | 364 | | | (569) | | | 0 | | | 34,894 | | | 25,611 | | | (16,116) | | | 639 | | | 212 | | | (2,949) | | | 42,086 | | | 2,022 | | | 44,108 | | Net (loss) income (including non-controlling interests) | — | | | — | | | — | | | — | | | — | | | (2,454) | | | — | | | — | | | — | | | — | | | (2,454) | | | 63 | | | (2,391) | | Other comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | (9) | | | (404) | | | 38 | | | (291) | | | (666) | | | 42 | | | (624) | | Total comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | (2,454) | | | (9) | | | (404) | | | 38 | | | (291) | | | (3,120) | | | 105 | | | (3,015) | | Recognition of share-based payments (note 8.3) | 2 | | | — | | | 57 | | | — | | | (68) | | | — | | | — | | | — | | | — | | | — | | | (11) | | | — | | | (11) | | Dividend (notes 11.4 and 11.5) | — | | | — | | | — | | | — | | | — | | | (203) | | | — | | | — | | | — | | | — | | | (203) | | | (154) | | | (357) | | Share buyback (note 11.1) | (4) | | | — | | | (90) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (90) | | | — | | | (90) | | Sharing of cash flow hedge (gain) from INR/USD hedging programs related to AMNS India (note 2.4.1) | — | | | — | | | — | | | — | | | — | | | (141) | | | — | | | — | | | — | | | — | | | (141) | | | — | | | (141) | | Transfer of fair value reserve of equity instruments designated at FVOCI (note 2.5) | — | | | — | | | — | | | — | | | — | | | 70 | | | — | | | — | | | (70) | | | — | | | 0 | | | — | | | 0 | | Other movements | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (11) | | | (11) | | Balance at December 31, 2019 | 1,012 | | | 364 | | | (602) | | | 0 | | | 34,826 | | | 22,883 | | | (16,125) | | | 235 | | | 180 | | | (3,240) | | | 38,521 | | | 1,962 | | | 40,483 | | Net (loss) income (including non-controlling interests) | — | | | — | | | — | | | — | | | — | | | (733) | | | — | | | — | | | — | | | — | | | (733) | | | 155 | | | (578) | | Other comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | (928) | | | (6) | | | 431 | | | (278) | | | (781) | | | (45) | | | (826) | | Total comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | (733) | | | (928) | | | (6) | | | 431 | | | (278) | | | (1,514) | | | 110 | | | (1,404) | | Offering of common shares (note 11.1) | 81 | | | 29 | | | — | | | — | | | 711 | | | — | | | — | | | — | | | — | | | — | | | 740 | | | — | | | 740 | | Mandatorily convertible notes (note 11.2) | 23 | | | — | | | 549 | | | 840 | | | (305) | | | (28) | | | — | | | — | | | — | | | — | | | 1,056 | | | — | | | 1,056 | | Recognition of share-based payments (note 8.3) | 1 | | | — | | | 15 | | | — | | | 15 | | | — | | | — | | | — | | | — | | | — | | | 30 | | | — | | | 30 | | Dividend (notes 11.4 and 11.5) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (162) | | | (162) | | Share buyback (note 11.1) | (36) | | | — | | | (500) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (500) | | | — | | | (500) | | Transfer of fair value reserve of equity instruments designated at FVOCI (note 2.5) | — | | | — | | | — | | | — | | | — | | | 28 | | | — | | | — | | | (28) | | | — | | | 0 | | | — | | | 0 | | Mandatorily convertible bonds extension (note 11.2) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 53 | | | 53 | | Other movements | — | | | — | | | — | | | — | | | — | | | (53) | | | — | | | — | | | — | | | — | | | (53) | | | (6) | | | (59) | | Balance at Balance at December 31, 2020 | 1,081 | | | 393 | | | (538) | | | 840 | | | 35,247 | | | 22,097 | | | (17,053) | | | 229 | | | 583 | | | (3,518) | | | 38,280 | | | 1,957 | | | 40,237 | |
1.Amounts are in millions of shares (treasury shares are excluded). The accompanying notes are an integral part of these consolidated financial statements.
ARCELORMITTAL AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(millions of U.S. dollars, except share and per share data) | | | | | | | | | | | | | | | Year Ended December 31, | | Notes | | 2018 | | 2017 | | 2016 | Operating activities: | | | | | | | | Net income (including non-controlling interests) | | | 5,330 |
| | 4,575 |
| | 1,734 |
| Adjustments to reconcile net income to net cash provided by operations: | | | | | | | | Depreciation and amortization | 5.1 and 5.2 | | 2,799 |
| | 2,768 |
| | 2,721 |
| Impairment | 5.2 and 5.3 | | 994 |
| | 206 |
| | 205 |
| Bargain purchase gain | 2.2.4 |
| (209 | ) |
| — |
|
| — |
| Interest expense | 6.2 | | 687 |
| | 879 |
| | 1,172 |
| Interest income | 6.2 | | (72 | ) | | (56 | ) | | (58 | ) | Income tax (benefit)/ expense | 9.1 | | (349 | ) | | 432 |
| | 986 |
| Remeasurement loss (gain) relating to US deferred employee benefits | 7.2 | | 15 |
| | — |
| | (832 | ) | Net gain on disposal of subsidiaries | 2.3.1 | | (16 | ) | | (18 | ) | | (23 | ) | Income from investments in associates, joint ventures and other investments | 2.6 | | (652 | ) | | (448 | ) | | (615 | ) | Provision on pensions and OPEB | 7.2 | | 463 |
| | 555 |
| | 439 |
| Change in fair value adjustment on call option on mandatory convertible bonds and pellet purchase agreement | 6.2 | | 572 |
| | (578 | ) | | (138 | ) | Unrealized foreign exchange effects | | | 152 |
| | (541 | ) | | 486 |
| Write-downs (reversal) of inventories to net realizable value, provisions and other non-cash operating expenses net | 4.4 | | 789 |
| | 781 |
| | (201 | ) | Changes in assets and liabilities that provided (required) cash, net of acquisitions: | | | | | | | | Trade accounts receivable | | | (646 | ) | | (620 | ) | | (373 | ) | Inventories | 4.4 | | (4,652 | ) | | (2,347 | ) | | (2,055 | ) | Trade accounts payable and other | 4.7 | | 914 |
| | 1,094 |
| | 1,405 |
| Interest paid | | | (749 | ) | | (947 | ) | | (1,354 | ) | Interest received | | | 67 |
| | 57 |
| | 60 |
| Income taxes paid | | | (629 | ) | | (506 | ) | | (296 | ) | Dividends received from associates, joint ventures and other investments | | | 360 |
| | 232 |
| | 176 |
| Cash contributions to plan assets and benefits paid for pensions and OPEB | 7.2 | | (472 | ) | | (496 | ) | | (395 | ) | VAT and other amounts received (paid) from/to public authorities | | | (544 | ) | | (177 | ) | | 46 |
| Other working capital and provisions movements | | | 44 |
| | (282 | ) | | (382 | ) | Net cash provided by operating activities | | | 4,196 |
| | 4,563 |
| | 2,708 |
| Investing activities: | | | | | | | | Purchase of property, plant and equipment and intangibles | | | (3,305 | ) | | (2,819 | ) | | (2,444 | ) | Disposals of net assets of subsidiaries, net of cash disposed of 1, 13 and nil in 2018, 2017 and 2016, respectively | 2.3.1 | | 65 |
| | 6 |
| | 185 |
| Acquisitions of net assets of subsidiaries, net of cash acquired of 13, 617 and 63 in 2018, 2017 and 2016, respectively | 2.2.4 | | (39 | ) | | 16 |
| | 7 |
| Acquisition of Uttam Galva and KSS Petron debt | 4.6 | | (1,001 | ) | | — |
| | — |
| Disposals of associates and joint ventures | 2.4.1 and 2.5 | | 220 |
| | — |
| | 1,017 |
| Disposals of financial assets | 2.6 | | 44 |
| | 44 |
| | 165 |
| Other investing activities net | | | 257 |
| | (77 | ) | | (73 | ) | Net cash used in investing activities | | | (3,759 | ) | | (2,830 | ) | | (1,143 | ) | Financing activities: | | | | | | | | (Acquisition)/ Disposal of non-controlling interests | 10.5.2 | | (68 | ) | | — |
| | 56 |
| Proceeds from put and call option on shares
| 2.2.4 | | 115 |
| | — |
| | — |
| Proceeds from short-term debt | 6.1.3 | | 2,319 |
| | 1,859 |
| | 1,516 |
| Proceeds from long-term debt | 6.1.3 | | 1,138 |
| | 1,407 |
| | 110 |
| Payments of short-term debt | 6.1.3 | | (2,871 | ) | | (2,102 | ) | | (2,721 | ) | Payments of long-term debt | 6.1.3 | | (798 | ) | | (2,691 | ) | | (4,912 | ) | Equity offering | 10.1 | | — |
| | — |
| | 3,115 |
| Share buyback | 10.1 | | (226 | ) | | — |
| | — |
| Dividends paid (includes 119, 141 and 61 of dividends paid to non-controlling shareholders in 2018, 2017 and 2016, respectively) | | | (220 | ) | | (141 | ) | | (61 | ) | Other financing activities net | 6.1.3 | | (78 | ) | | (63 | ) | | (29 | ) | Net cash used in financing activities | | | (689 | ) | | (1,731 | ) | | (2,926 | ) | Net increase (decrease) in cash and cash equivalents | | | (252 | ) | | 2 |
| | (1,361 | ) | Effect of exchange rate changes on cash | | | (140 | ) | | 58 |
| | (127 | ) | Cash and cash equivalents: | | | | | | | | At the beginning of the year | | | 2,574 |
| | 2,501 |
| | 4,002 |
| Reclassification of the period-end cash and cash equivalents from (to) held for sale | 2.3 | | (10 | ) | | 13 |
| | (13 | ) | At the end of the year | | | 2,172 |
| | 2,574 |
| | 2,501 |
|
| | | | | | | | | | | Consolidated financial statements 217 | ArcelorMittal and Subsidiaries | | | Consolidated Statements of Cash Flows | | (millions of U.S. dollars, except share and per share data) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended December 31, | | | | | Notes | | 2020 | | 2019 | | 2018 | | | | Operating activities: | | | | | | | | | | | Net (loss) income (including non-controlling interests) | | | (578) | | | (2,391) | | | 5,330 | | | | | Adjustments to reconcile net income to net cash provided by operations: | | | | | | | | | | | Depreciation and amortization | 5.1 and 5.2 | | 2,960 | | | 3,067 | | | 2,799 | | | | | Impairment (reversal of impairment) | 5.3 | | (133) | | | 1,927 | | | 994 | | | | | Bargain purchase gain | 2.2.4 | | 0 | | | 0 | | | (209) | | | | | Interest expense | 6.2 | | 477 | | | 695 | | | 687 | | | | | Interest income | 6.2 | | (56) | | | (88) | | | (72) | | | | | Income tax expense/ (benefit) | 10.1 | | 1,666 | | | 459 | | | (349) | | | | | | | | | | | | | | | | Remeasurement loss relating to US deferred employee benefits | 8.2 | | 0 | | | 0 | | | 15 | | | | | Net gain on disposal of subsidiaries | 2.3.1 | | (1,460) | | | (101) | | | (16) | | | | | Income from investments in associates, joint ventures and other investments | 2.6 | | (234) | | | (347) | | | (652) | | | | | | | | | | | | | | | | Provision on pensions and OPEB | 8.2 | | 430 | | | 435 | | | 463 | | | | | Change in fair value adjustment on call option on mandatory convertible bonds and pellet purchase agreement | 6.2 | | 143 | | | 320 | | | 572 | | | | | | | | | | | | | | | | Unrealized foreign exchange effects | | | 321 | | | 7 | | | 152 | | | | | Write-downs (reversal) of inventories to net realizable value, provisions and other non-cash operating expenses net | 4.4 | | 597 | | | 818 | | | 789 | | | | | Changes in assets and liabilities that provided (required) cash, net of acquisitions and disposals: | | | | | | | | | | | Trade accounts receivable and other | | | (76) | | | 964 | | | (646) | | | | | Inventories | 4.4 | | 1,786 | | | 2,469 | | | (4,652) | | | | | Trade accounts payable and other | 4.7 | | (214) | | | (1,236) | | | 914 | | | | | Interest paid | | | (604) | | | (723) | | | (749) | | | | | Interest received | | | 69 | | | 118 | | | 67 | | | | | Income taxes paid | | | (705) | | | (484) | | | (629) | | | | | Dividends received from associates, joint ventures and other investments | | | 189 | | | 370 | | | 360 | | | | | Cash contributions to plan assets and benefits paid for pensions and OPEB | 8.2 | | (332) | | | (348) | | | (472) | | | | | VAT and other amounts received (paid) from/to public authorities | | | 400 | | | 196 | | | (544) | | | | | Other working capital and provisions movements | | | (564) | | | (110) | | | 44 | | | | | Net cash provided by operating activities | | | 4,082 | | | 6,017 | | | 4,196 | | | | | Investing activities: | | | | | | | | | | | Purchase of property, plant and equipment and intangibles | | | (2,439) | | | (3,572) | | | (3,305) | | | | | Disposals of net assets of subsidiaries, net of cash disposed of 7, 38 and 1 in 2020, 2019 and 2018, respectively | 2.3.1 | | 497 | | | 514 | | | 65 | | | | | Acquisitions of net assets of subsidiaries, net of cash acquired of 0, 3 and 13 in 2020, 2019 and 2018, respectively | 2.2.4 | | 0 | | | (46) | | | (39) | | | | | | | | | | | | | | | | Lease installments and capital expenditure refund relating to ArcelorMittal Italia acquisition | | | (139) | | | (200) | | | 0 | | | | | Acquisition of AMNS India | 2.4.1 | | 0 | | | (755) | | | 0 | | | | | Acquisition of Uttam Galva and KSS Petron debt | 4.6 | | 0 | | | (83) | | | (1,001) | | | | | Cash collateral for the TSR receivables retained in ArcelorMittal USA after disposal | 6.1.3 | | (260) | | | 0 | | | 0 | | | | | Disposals of associates and joint ventures | 2.4.1 | | 0 | | | 0 | | | 220 | | | | | Disposals of financial assets | 2.5 and 2.6 | | 59 | | | 196 | | | 44 | | | | | Other investing activities net | | | 271 | | | 122 | | | 257 | | | | | Net cash used in investing activities | | | (2,011) | | | (3,824) | | | (3,759) | | | | | Financing activities: | | | | | | | | | | | Proceeds from mandatorily convertible subordinated notes | 11.2 | | 1,237 | | | 0 | | | 0 | | | | | Acquisition of non-controlling interests | | | 0 | | | 0 | | | (68) | | | | | (Payments)/ proceeds from put and call option on shares | 2.3.2 | | (135) | | | 0 | | | 115 | | | | | Proceeds from short-term debt | 6.1.3 | | 430 | | | 600 | | | 2,319 | | | | | Proceeds from long-term debt | 6.1.3 | | 323 | | | 5,772 | | | 1,138 | | | | | Payments of short-term debt | 6.1.3 | | (1,503) | | | (1,811) | | | (2,871) | | | | | Payments of long-term debt | 6.1.3 | | (1,645) | | | (3,299) | | | (798) | | | | | Equity offering | 11.1 | | 740 | | | 0 | | | 0 | | | | | Share buyback | 11.1 | | (500) | | | (90) | | | (226) | | | | | Dividends paid (includes 181, 129 and 119 of dividends paid to non-controlling shareholders in 2020, 2019 and 2018, respectively) | | | (181) | | | (332) | | | (220) | | | | | Payment of principal portion of lease liabilities and other financing activities | 6.1.3 | | (264) | | | (326) | | | (78) | | | | | Net cash (used in) provided by financing activities | | | (1,498) | | | 514 | | | (689) | | | | | Net increase (decrease) in cash and cash equivalents | | | 573 | | | 2,707 | | | (252) | | | | | Effect of exchange rate changes on cash | | | 163 | | | (22) | | | (140) | | | | | Cash and cash equivalents: | | | | | | | | | | | At the beginning of the year | | | 4,867 | | | 2,172 | | | 2,574 | | | | | Reclassification of the period-end cash and cash equivalents (to) from held for sale | 2.3 | | (3) | | | 10 | | | (10) | | | | | At the end of the year | | | 5,600 | | | 4,867 | | | 2,172 | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
| | | 218 Consolidated financial statements |
SUMMARY OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | | | | | | NoteNOTE 1: Accounting principlesACCOUNTING PRINCIPLES | 1.1 | Basis of presentation | 1.2 | Use of judgment and estimates | 1.3 | Accounting standards applied | NoteNOTE 2: Scope of consolidationSCOPE OF CONSOLIDATION | 2.1 | Basis of consolidation | 2.2 | Investments in subsidiaries | 2.3 | Divestments and assets held for sale | 2.4 | Investments in associates and joint arrangements | 2.5 | Other investments | 2.6 | Income (loss) from investments in associates, joint ventures and other investments | NoteNOTE 3: Segment reportingSEGMENT REPORTING | 3.1 | Reportable segments | 3.2 | Geographical information | 3.3 | Sales by type of products | Note 4: Operating data3.4 | Disaggregated revenue | 4.1 | RevenueNOTE 4: OPERATING DATA | 4.24.1 | Revenue | 4.2 | Cost of sales | 4.3 | Trade accounts receivable and other | 4.4 | Inventories | 4.5 | Prepaid expenses and other current assets | 4.6 | Other assets | 4.7 | Trade accounts payable and other | 4.8 | Accrued expenses and other liabilities | NoteNOTE 5: Goodwill, intangible and tangible assetsGOODWILL, INTANGIBLE AND TANGIBLE ASSETS | 5.1 | Goodwill and intangible assets | 5.2 | Property, plant and equipment and biological assets | 5.3 | Impairment of intangible assets, including goodwill, and tangible assets | NoteNOTE 6: Financing and financial instrumentsFINANCING AND FINANCIAL INSTRUMENTS | 6.1 | Financial assets and liabilities | 6.2 | Financing costs - net | 6.3 | Risk management policy | NoteNOTE 7: Personnel expenses and deferred employee benefitsLEASES | 7.1NOTE 8: PERSONNEL EXPENSES AND DEFERRED EMPLOYEE BENEFITS | 8.1 | Employees and key management personnel | 7.28.2 | Deferred employee benefits | 7.38.3 | Share-based payments | Note 8: Provisions, contingencies and commitmentsNOTE 9: PROVISIONS, CONTINGENCIES AND COMMITMENTS | 8.19.1 | Provisions overview | 8.29.2 | Other long-term obligations | 8.39.3 | Environmental liabilities, asset retirement obligations and legal proceedings | 8.49.4 | Commitments | Note 9: Income taxesNOTE 10: INCOME TAXES | 9.110.1 | Income tax expense (benefit) | 9.210.2 | Income tax recorded directly in equity and/or other comprehensive income | 9.310.3 | Uncertain tax positions | 9.410.4 | Deferred tax assets and liabilities | 9.510.5 | Tax losses, tax credits and other tax benefits carried forward | Note 10: EquityNOTE 11: EQUITY | 10.111.1 | Share details | 10.211.2 | Equity instruments and hybrid instruments | 10.311.3 | Earnings per common share | 10.411.4 | Dividends | 10.511.5 | Non-controlling interests | Note 11: Related partiesNOTE 12: RELATED PARTIES | 11.112.1 | Sales and trade receivables | 11.212.2 | Purchases and trade payables | 11.312.3 | Other transactions with related parties | Note 12: Subsequent eventNOTE 13: SUBSEQUENT EVENTS |
| | | Consolidated financial statements 219 | (millions of U.S. dollars, except share and per share data) |
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
NOTE 1: ACCOUNTING PRINCIPLES ArcelorMittal (“ArcelorMittal” or the “Company”), together with its subsidiaries, owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia and Africa. Collectively, these subsidiaries and facilities are referred to in the consolidated financial statements as the “operating subsidiaries”. These consolidated financial statements were authorized for issuance on February 22, 2019March 8, 2021 by the Company’s Board of Directors.
1.1Basis of presentation The consolidated financial statements have been prepared on a historical cost basis, except for equity instruments and certain trade receivables at fair value through other comprehensive income ("FVOCI"), financial assets at fair value through profit or loss ("FVTPL"), derivative financial instruments, biological assets and certain assets and liabilities held for sale, which are measured at fair value less cost to sell, inventories, which are measured at the lower of net realizable value or cost, and the financial statements of the Company’s Venezuelan tubular production facilities Industrias Unicon CA (“Unicon”) and the Company's Argentinian operation Acindar Industria Argentina de Aceros S.A. ("Acindar"), for which hyperinflationary accounting is applied (see note 2.2.2). The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and are presented in U.S. dollars with all amounts rounded to the nearest million, except for share and per share data. 1.2Use of judgment and estimates The preparation of consolidated financial statements in conformity with IFRS recognition and measurement principles and, in particular, making the critical accounting judgments requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances or obtaining new information or more experience may result in revised estimates, and actual results could differ from those estimates. The following summary provides further information about the Company’s critical accounting policies under which significant judgments, estimates and assumptions are made. It should be read in conjunction with the notes mentioned in the summary: •Deferred tax assets (note 10.4): The Company assesses the recoverability of deferred tax assets based on future taxable income projections, which are inherently uncertain and may be subject to changes over time. Judgment is required to assess the impact of such | | • | Deferred tax assets (note 9.4): The Company assesses the recoverability of deferred tax assets based on future taxable income projections, which are inherently uncertain and may be subject to changes over time. Judgment is required to assess the impact of such changes on the measurement of these assets and the time frame for their utilization. In addition, the Company applies judgment to recognize income tax liabilities when they are probable and can be reasonably estimated depending on the interpretation, which may be uncertain, of applicable tax laws and regulations. ArcelorMittal periodically reviews its estimates to reflect changes in facts and circumstances.
•Provisions for pensions and other post-employment benefits (note 8.2): Benefit obligations and plan assets can be subject to significant volatility, in particular due to changes in market conditions and actuarial assumptions. Such assumptions differ by plan, take local conditions into account and include discount rates, expected rates of compensation increases, health care cost trend rates, mortality and retirement rates. They are determined following a formal process involving the Company's expertise and independent actuaries. Assumptions are reviewed annually and adjusted following actuarial and experience changes. •Provisions (note 9): Provisions, which result from legal or constructive obligations arising as a result of past events, are recognized based on the Company's, and in certain instances, third-party's best estimate of costs when the obligation arises. They are reviewed periodically to take into consideration changes in laws and regulations and underlying facts and circumstances. • |
| | • | Provisions for pensions and other post-employment benefits (note 7.2): Benefit obligations and plan assets can be subject to significant volatility, in particular due to changes in market conditions and actuarial assumptions. Such assumptions differ by plan, take local conditions into account and include discount rates, expected rates of compensation increases, health care cost trend rates, mortality and retirement rates. They are determined following a formal process involving the Company's expertise and independent actuaries. Assumptions are reviewed annually and adjusted following actuarial and experience changes.
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| | • | Provisions (note 8): Provisions, which result from legal or constructive obligations arising as a result of past events, are recognized based on the Company's, and in certain instances, third-party's best estimate of costs when the obligation arises. They are reviewed periodically to take into consideration changes in laws and regulations and underlying facts and circumstances.
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Impairment of tangible and intangible assets, including goodwill (note 5.3): In the framework of the determination of the recoverable amount of assets, the estimates, judgments and assumptions applied for the value in use calculations relate primarily to growth rates, expected changes to average selling prices, shipments and direct costs.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
Assumptions for average selling prices and shipments are based on historical experience and expectations of future changes in the market. Discount rates are reviewed annually. •Business combinations (note 2.2.3): Assets acquired and liabilities assumed as part of a business combination are recorded at their acquisition-date fair values. Similarly, consideration including consideration receivable and contingent consideration is measured at fair value. Determining the fair value of identifiable assets and liabilities requires the use of valuation techniques which may include judgment and estimates and which may affect the allocation of the amount of consideration paid to the assets and liabilities acquired and goodwill or gain from a bargain purchase recorded as part of the business combination.
| | | • | Business combinations (note 2.2.4): Assets acquired and liabilities assumed as part of a business combination are recorded at their acquisition-date fair values. Similarly, consideration including consideration receivable and contingent consideration is measured at fair value. Determining the fair value of identifiable assets and liabilities requires the use of valuation techniques which may include judgment and estimates and which may affect the allocation of the amount of consideration paid to the assets and liabilities acquired and goodwill or gain from a bargain purchase recorded as part of the business combination. 220 Consolidated financial statements |
| | • | •Financial instruments (note 6.1.5) and financial amounts receivable (note 4.6): Certain of the Company's financial instruments are classified as Level 3 as they include unobservable inputs. In particular, the Company uses estimates to compute unobservable historical volatility based on movements of stock market prices for the fair valuation of the call option on the 1,000 mandatory convertible bonds and unobservable inputs such as discounted cash flow model for the fair valuation of financial amounts receivable relating to Uttam Galva and KSS Petron. •Mining reserve estimates (note 5.2): Proven iron ore and coal reserves are those quantities whose recoverability can be determined with reasonable certainty from a given date forward and under existing government regulations, economic and operating conditions; probable reserves have a lower degree of assurance but high enough to assume continuity between points of observation. Their estimates and the estimates of mine life have been prepared by ArcelorMittal experienced engineers and geologists and detailed independent verifications of the methods and procedures are conducted on a regular basis by external consultants. Reserves are updated annually and calculated using a reference price duly adjusted for quality, ore content, logistics and other considerations. In order to estimate reserves, estimates are required for a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies to be determined by analyzing geological data such as drilling samples. This process may require complex and difficult geological judgments to interpret the data. Because the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period. 1.3 Accounting standards applied Financial instruments (note 6.1.5) and financial amounts receivable (note 4.6): Certain of the Company's financial instruments are classified as Level 3 as they include unobservable inputs. In particular, the Company uses estimates to compute unobservable historical volatility based on movements of stock market prices for the fair valuation of the call option on the 1,000 mandatory convertible bonds and unobservable inputs such as discounted cash flow model for the fair valuation of financial amounts receivable relating to Uttam Galva and KSS Petron.
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| | • | Mining reserve estimates (note 5.2): Proven iron ore and coal reserves are those quantities whose recoverability can be determined with reasonable certainty from a given date forward and under existing government regulations, economic and operating conditions; probable reserves have a lower degree of assurance but high enough to assume continuity between points of observation. Their estimates and the estimates of mine lives have been prepared by ArcelorMittal experienced engineers and geologists and detailed independent verifications of the methods and procedures are conducted on a regular basis by external consultants. Reserves are updated annually and calculated using a 3-year average reference price duly adjusted for quality, ore content, logistics and other considerations. In order to estimate reserves, estimates are required for a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies to be determined by analyzing geological data such as drilling samples. This process may require complex and difficult geological judgments to interpret the data. Because the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period.
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| | 1.3 | Accounting standards applied
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1.3.1Adoption of new IFRS standards, amendments and interpretations applicable from January 1, 20182020 On January 1, 2018,2020, the Company adopted the following standardsamendments which have an impact on the disclosures in the consolidated financial statements of the Company: | | • | IFRS 9 “Financial Instruments” issued on July 24, 2014, which replaces IAS 39 and modifies substantially the classification and measurement of financial instruments. The final version of the standard contains requirements in the following areas:
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| | • | Classification and measurement: Financial assets are classified and measured by reference to the business model within which they are held and their contractual cash flow characteristics. Financial liabilities are classified in a similar manner to IAS 39, however there are differences in the requirements regarding the recognition of an entity's own credit risk for financial liabilities designated as FVTPL.
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| | • | Impairment: The standard introduces an 'expected credit loss' model replacing the current incurred loss model for the measurement of the impairment of financial assets; it is therefore no longer necessary for a credit event to have occurred before a credit loss is recognized.
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| | • | Hedge accounting: The standard introduces a new hedge accounting model that is designed to more closely align with how entities undertake risk management activities when hedging financial and non-financial risk exposures, which may result in the increased application of hedge accounting.
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Derecognition: The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39. Accordingly, the Company has applied the requirements of IFRS 9 to instruments that have not been derecognized at January 1, 2018 and has not applied the requirements to instruments that have already been
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
derecognized at January 1, 2018. Comparative amounts in relation to instruments that have not been derecognized at January 1, 2018 have been recast where appropriate.
The classification, measurement and impairment requirements of IFRS 9 have been applied retrospectively while hedge accounting requirements have been applied prospectively. The adoption of IFRS 9 did not result in a material impact on the consolidated financial statements of the Company. Unrealized gains and losses from investments in equity instruments at FVOCI are no longer recycled to the consolidated statement of operations upon disposal. Furthermore, trade receivables subject to programs for sales without recourse (see note 4.3) have changed from loans and receivables measured at amortized cost to fair value through other comprehensive income. Additional required disclosures are presented in note 6. As permitted by the transition provisions of IFRS 9, the Company has not restated comparatives.
IFRS 15 “Revenue from Contracts with Customers” issued on May 28, 2014, which provides a unified five-step model for determining the timing, measurement and recognition of revenue. The focus of the new standard is to recognize revenue as performance obligations are met rather than based on the transfer of risks and rewards. IFRS 15 includes a comprehensive set of disclosure requirements including qualitative and quantitative information about contracts with customers to understand the nature, amount, timing and uncertainty of revenue. The standard supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. On April 12, 2016, the IASB issued amendments to IFRS 15 which clarify how to identify a performance obligation, determine whether a company is a principal or an agent. The Company’s revenue is predominantly derived from the single performance obligation to transfer steel and mining products under arrangements in which the transfer of risks and rewards of ownership and the fulfillment of the Company’s performance obligation occur at the same time. As part of the adoption process, the Company established revised processes and controls and assessed its performance obligations underlying the revenue recognition, estimation of variable considerations including rebates, methods for estimating warranties, customized products and principal versus agent considerations. The adoption of this standard did not have a material impact on the consolidated financial statements of the Company. The additional required disclosures are presentedCompany:
•Revised "Conceptual Framework for Financial Reporting" published by the IASB on March 29, 2018, which includes revised definitions of an asset and a liability as well as new guidance on measurement and derecognition, presentation and disclosure and must be applied retrospectively unless retrospective application would be impracticable or involve undue cost or effort. •Amendments to IFRS 3 "Business Combinations" issued by the IASB on October 22, 2018, which include the definition of a business aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. •Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in note 3.4Accounting Estimates and 4.1.Errors" issued by the IASB on October 31, 2018 to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. •Interest Rate Benchmark Reform, amendments to IFRS 9, IAS 39 and IFRS 7 published by the IASB on September 26, 2019. These amendments provide relief from the specific hedge accounting requirements and must be applied retrospectively, so that entities would apply those hedge accounting requirements (highly probable forecast transaction and prospective effectiveness test under IFRS 9 which is applied by the Company) assuming that the interest rate benchmark is not altered as a result of the interest rate benchmark reform. On JanuaryJune 1, 2018,2020, the Company adopted the following amendments whichamendment to IFRS 16 "Leases" issued by the IASB on May 28, 2020 addressing COVID-19 related rent concessions. The amendment allows entities to elect, as a practical expedient and if certain criteria are met, not to assess whether a rent concession is a lease modification, therefore recognizing the change in lease expense immediately in the statement of profit or loss. ArcelorMittal elected to apply the practical expedient and applied it retrospectively in accordance with IAS 8, without any restatement of prior period figures. The amendment did not have anya material impact on the consolidated financial statements of the Company: | | • | Amendments to IFRS 2 “Share-based Payment” issued on June 20, 2016, which clarify the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; the treatment of share-based payment transactions with a net settlement feature for withholding tax obligations; and the treatment of a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.
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Amendments to IFRS 4 “Insurance Contracts” issued on September 12, 2016, which propose two approaches (an overlay approach and a deferral approach) in order to address temporary volatility in reported results arising from the timing difference between the implementation of IFRS 9 and IFRS 17 "Insurance Contracts" that will replace IFRS 4. These amendments to IFRS 4 supplement existing options in the standard that can already be used to address the temporary volatility.
| | • | IFRIC 22 “Foreign Currency Transactions and Advance Consideration” issued on December 8, 2016. This interpretation provides guidance about which exchange rate to use in reporting foreign currency transactions (such as revenue transactions) when payment is made or received in advance.
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1.3.2 New IFRS standards,, amendments and interpretations applicable from 20192021 onward On January 13, 2016, the IASB issued IFRS 16 “Leases” which will replace IAS 17 “Leases”. This new standard specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. This standard is effective for annual periods beginning on or after January 1, 2019, with early application permitted if IFRS 15 "Revenue from Contracts with Customers" has also been applied. At December 31, 2018 and 2017, the Company has non-cancellable operating lease commitments on an undiscounted basis of 1,869 and 1,311, respectively (see note 8.4). A review and assessment of the Company's lease arrangements indicates that most of these arrangements will meet the definition of a lease under IFRS 16. The Company will apply the modified retrospective transition approach with right-of-use
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
assets measured at an amount equal to the lease liability recognized at January 1, 2019. In addition, it will apply the practical expedient to grandfather the definition of a lease on transition and accordingly apply IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4. Hence, the Company will recognize a right-of-use asset and corresponding liability in respect of the net present value of these leases unless they qualify for short-term leases or relate to low-value assets upon the application of IFRS 16.
As at December 31, 2018 the above mentioned operating lease commitments of 1,869 includes undiscounted amounts of 20 for short-term leases and 58 of leases of low-value assets that will remain being recognized on a straight-line basis as expenses in profit and loss. For the remaining undiscounted operating lease commitments of 1,791 (of which 29 relating to entities presented as held for sale), the Company expects to recognize on January 1, 2019 additional lease liabilities (discounted at the incremental borrowing rates at that date) and right-of-use assets for an amount of 1.1 billion.
On May 18, 2017, the IASB issued IFRS 17 "Insurance "Insurance Contracts", which is designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance
| | | Consolidated financial statements 221 | (millions of U.S. dollars, except share and per share data) |
contracts. IFRS 17 supersedes IFRS 4 "Insurance Contracts" and related interpretations and isinterpretations. On June 25, 2020, the IASB issued amendments to IFRS 17, including a deferral of the effective fordate to periods beginning on or after January 1, 2021,2023 and should be applied retrospectively unless impracticable, with earlier adoption permitted if both IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" have also been applied. The Company does not expect that the adoption of this interpretationstandard, amendments and related interpretations will have a material impact to its consolidated financial statements.
On June 7, 2017,January 23, 2020, the IASB issued IFRIC 23 “Uncertainty over Income Tax Treatments”. This interpretation addressesnarrow-scope amendments to IAS 1 to clarify how to classify debt and other liabilities as current or non-current. The amendments aim to promote consistency in applying the determinationrequirements by helping companies determine whether, in the statement of taxable profit (tax loss), tax bases, unused tax losses, unused tax creditsfinancial position, debt and tax rates when there is uncertainty over income tax treatments under IAS 12. This interpretation is effectiveother liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for annual periods beginning on or after January 1, 2019, with early application permitted. The Company does not expect that the adoption of this interpretation will havedebt a material impact to its consolidated financial statements. company might settle by converting it into equity. On October 12, 2017,July 15, 2020, the IASB issued an amendment to IFRS 9 in respect of prepayment features with negative compensation, which amendspostponed the existing requirements in IFRS 9 regarding termination rights in order to allow measurement at amortized cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. This amendment is effective for annual periods beginning on or after January 1, 2019, with early application permitted. The Company does not expect that the adoption of this interpretation will have a material impact to its consolidated financial statements. Also, on October 12, 2017, the IASB issued an amendment to IAS 28 “Investments in Associates and Joint Ventures” in relation to long-term interests in associates and joint ventures. The amendment clarifies that an entity applies IFRS 9 to long-term interests in an associate or joint venture that form partdate of the net investment in the associate or joint venture but to which the equity method is not applied. This amendment is effective for annual periods beginning on or after January 1, 2019, with early application permitted.amendments. The Company does not expect that the adoption of this amendment will have a material impact to its consolidated financial statements.
On December 12, 2017 the IASB issued Annual Improvements 2015–2017 to make amendments to the following standards:
| | • | IFRS 3 "Business Combinations" clarifies that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business.
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| | • | IFRS 11 "Joint Arrangements" clarifies that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
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| | • | IAS 12 "Income Taxes" clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.
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IAS 23 "Borrowing Costs" clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
These amendments are effective for annual periods beginning on or after January 1, 2019,2023 and are to be applied retrospectively, with early applicationadoption permitted. On February 12, 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2. The amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements and gives further clarity on the materiality assessment of accounting policies. The amendments are effective for annual periods beginning on or after January 1, 2023 and are to be applied prospectively, with early adoption permitted.The Company does not expect that the adoption of these amendments will have a material impact to its consolidated financial statements.
On May 14, 2020, the IASB issued the following narrow-scope amendments : •Amendments to IFRS 3 "Business Combinations" updated the reference to the Conceptual Framework for financial reporting, without changing the accounting requirements for business combinations. •Amendments to IAS 16 "Property, Plant and Equipment" prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items and related cost in profit or loss. The amendments are applied retrospectively, •Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" clarify that the cost of fulfilling a contract comprises the costs a company includes when assessing whether a contract will be loss-making are costs that relate directly to the contract. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling the contract. •Minor amendments as part of the Annual Improvements 2018-2020 to: •IFRS 1 "First-time Adoption of International Financial Reporting Standards" related to cumulative translation differences for a subsidiary as a first time user. •IFRS 9 "Financial Instruments" related to which fees an entity includes when it applies the ‘10 per cent’ test in assessing whether to derecognize a financial liability. ▪IFRS 16 "Leases" removing the reimbursement of leasehold improvements by the lessor from illustrative example 13 in order to resolve any potential confusion regarding the treatment of lease incentives and ▪IAS 41 "Agriculture" removing the requirement for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique to ensure consistency with the requirements in IFRS 13. The Company does not expect that the adoption of these amendments will have a material impact to its consolidated financial statements which are effective for annual periods beginning on or after January 1, 2022. On June 25, 2020, the IASB issued amendments to IFRS 4 Insurance contracts" which provides an extension of the temporary exemption from applying IFRS 9 until January 1, 2023 in order to align with the effective date of IFRS 17 "Insurance Contracts". On August 27, 2020, the IASB published Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) of the Interest Rate Benchmark Reform. The amendments complement those issued in 2019 described above and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The amendments in this final phase relate to: •changes to contractual cash flows—a company will not have to derecognize or adjust the carrying amount of financial instruments for changes required by the reform,
| | | 222 Consolidated financial statements |
but will instead update the effective interest rate to reflect the change to the alternative benchmark rate; •hedge accounting—a company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and •disclosures—a company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates. The amendments are effective for annual periods beginning on or after January 1, 2021 and are to be applied retrospectively, with early adoption permitted. The Company does not expect that the adoption of these amendments will have a material impact to its consolidated financial statements. On February 7, 2018,12, 2021, the IASB issued amendments to IAS 19 “Employee benefits” which clarify that current service cost8. The amendments are intended to help entities distinguish between accounting policies and net interest after a remeasurement resulting from a plan amendment, curtailment or settlement should be determined using the assumptions applied for the remeasurement. In addition, the amendments clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. Theseaccounting estimates. The amendments are effective for annual periods beginning on or after January 1, 2019,2023 and changes in accounting policies or accounting estimates on or after the start of that period with early applicationadoption permitted. The Company does not expect that the adoption of these amendments will have a material impact to its consolidated financial statements. On March 29, 2018, the IASB published its revised 'Conceptual Framework for Financial Reporting', which includes revised definitions of an asset and a liability as well as new guidance on measurement and derecognition, presentation and disclosure. The Company does not expect that the adoption of this amendment, which are effective for annual periods beginning on or after January 1, 2020, will have a material impact to its consolidated financial statements.
On October 22, 2018, the IASB issued amendments to IFRS 3 'Business Combinations', which includes the definition of a business aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The Company does not expect that the adoption of these amendments, which are effective for annual periods beginning on or after January 1, 2020, will have a material impact to its consolidated financial statements.
On October 31, 2018, the IASB issued amendments to IAS 1 'Presentation of Financial Statements' and IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' to clarify the definition of ‘material’ and to align the definition used in the Conceptual Framework and the standards themselves. The Company does not expect that the adoption of these amendments, which are effective for annual periods beginning on or after January 1, 2020, will have a material impact to its consolidated financial statements.
The Company does not plan to early adopt the new accounting standards, amendments and interpretations.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
NOTE 2: SCOPE OF CONSOLIDATION 2.1 Basis of consolidation The consolidated financial statements include the accounts of the Company, its subsidiaries and its interests in associated companies and joint arrangements. Subsidiaries are consolidated from the date the Company obtains control (ordinarily the date of acquisition) until the date control ceases. The Company controls an entity when the Company is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Associated companiesAssociates are those companies over which the Company has the ability to exercise significant influence on the financial and operating policy decisions, which it does not control. Generally, significant influence is presumed to exist when the Company holds more than 20% of the voting rights. Joint arrangements, which include joint ventures and joint operations, are those over whose activities the Company has joint control, typically under a contractual arrangement. In joint ventures, ArcelorMittal exercises joint control and has rights to the net assets of the arrangement. The investment is accounted for under the equity
method and therefore recognized at cost at the date of acquisition and subsequently adjusted for ArcelorMittal’s share in undistributed earnings or losses since acquisition, less any impairment incurred. Any excess of the cost of the acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities, and contingent liabilities of the associate or joint venture recognized at the date of acquisition is considered as goodwill. The goodwill, if any, is included in the carrying amount of the investment and is evaluated for impairment as part of the investment. The consolidated statements of operations include the Company’s share of the profit or loss of associates and joint ventures from the date that significant influence or joint control commences until the date significant influence or joint control ceases, adjusted for any impairment losses. Adjustments to the carrying amount may also be necessary for changes in the Company’s proportionate interest in the investee arising from changes in the investee’s equity that have not been recognized in the investee’s profit or loss. The Company’s share of those changes is recognized directly in the relevant reserve within equity. The Company assesses the recoverability of its investments accounted for under the equity method whenever there is an indication of impairment. In determining the value in use of its investments, the Company estimates its share in the present value of the projected future cash flows expected to be generated by operations of associates and joint ventures. The amount of any impairment is included in income (loss) from investments in associates, joint ventures and other investments in the consolidated statements of operations (see also note 2.6). For investments in joint operations, in which ArcelorMittal exercises joint control and has rights to the assets and obligations for the liabilities relating to the arrangement, the Company recognizes its assets, liabilities and transactions, including its share of those incurred jointly. Investments in other entities, over which the Company and/or its operating subsidiaries do not have the ability to exercise significant influence, are accounted for as investments in equity instruments at FVOCI with any resulting gain or loss, net of related tax effect, recognized in the consolidated statements of other comprehensive income. Realized gains and losses from the sale of investments in equity instruments at FVOCI are reclassified from other comprehensive income to retained earnings within equity upon disposal. While there are certain limitations on the Company’s operating and financial flexibility arising from the restrictive and financial covenants of the Company’s principal credit facilities described in note 6.1.2, there are no significant restrictions resulting from borrowing agreements or regulatory requirements on the ability of consolidated subsidiaries, associates and jointly controlled
| | | Consolidated financial statements 223 | (millions of U.S. dollars, except share and per share data) |
entities to transfer funds to the parent in the form of cash dividends to pay commitments as they come due. Intercompany balances and transactions, including income, expenses and dividends, are eliminated in the consolidated financial statements. Gains and losses resulting from intercompany transactions are also eliminated. Non-controlling interests represent the portion of profit or loss and net assets not held by the Company and are presented separately in the consolidated statements of operations, in the consolidated statements of other comprehensive income and within equity in the consolidated statements of financial position.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
2.2 Investments in subsidiaries
2.2.1 List of subsidiaries The table below provides a list of the Company’s principal operating subsidiaries at December 31, 2018.2020. Unless otherwise stated, the subsidiaries listed below have share capital consisting solely of ordinary shares or voting interests in the case of partnerships, which are held directly or indirectly by the Company and the proportion of ownership interests held equals to the voting rights held by the Company. The country of incorporation corresponds to their principal place of operations. | | | | | | | | | | | | | | | Name of Subsidiary | | Country | | % of Ownership | | NAFTA | | | | | | ArcelorMittal Dofasco G.P. | | Canada | | 100.00% | | ArcelorMittal México S.A. de C.V. | | Mexico | | 100.00% | | ArcelorMittal USA LLC1 | | United States | | 100.00% | Sold | ArcelorMittal Long Products Canada G.P. | | Canada | | 100.00% | | Brazil and neighboring countries ("Brazil") | | | | | | ArcelorMittal Brasil S.A. | | Brazil | | 97.01% | 1
| Acindar Industria Argentina de Aceros S.A. ("Acindar") | | Argentina | | 100.00% | | Europe | | | | | | ArcelorMittal Atlantique et LorraineFrance S.A.S. | | France | | 100.00% | | ArcelorMittal Belgium N.V. | | Belgium | | 100.00% | | ArcelorMittal España S.A. | | Spain | | 99.85% | | ArcelorMittal Flat Carbon Europe S.A. | | Luxembourg | | 100.00% | | ArcelorMittal Galati S.A. | | Romania | | 99.70% | 2
| ArcelorMittal Poland S.A. | | Poland | | 100.00% | | ArcelorMittal Eisenhüttenstadt GmbH | | Germany | | 100.00% | | ArcelorMittal Bremen GmbH | | Germany | | 100.00% | | ArcelorMittal Méditerranée S.A.S. | | France | | 100.00% | | ArcelorMittal Belval & Differdange S.A. | | Luxembourg | | 100.00% | | ArcelorMittal Hamburg GmbH | | Germany | | 100.00% | | ArcelorMittal Ostrava a.s. | | Czech Republic | | 100.00% | 2
| ArcelorMittal Duisburg GmbH | | Germany | | 100.00% | | ArcelorMittal International Luxembourg S.A. | | Luxembourg | | 100.00% | | ArcelorMittal Italia S.p.A.2 | | Italy | | 94.45% | 3100.00%
| Africa and Commonwealth of Independent States ("ACIS") | | | | | | ArcelorMittal South Africa Ltd. ("AMSA") | | South Africa | | 69.22% |
| JSC ArcelorMittal Temirtau | | Kazakhstan | | 100.00% | | PJSC ArcelorMittal Kryvyi Rih ("AM Kryvyi Rih") | | Ukraine | | 95.13% | | Mining | | | | | | ArcelorMittal Mining Canada G.P. and ArcelorMittal Infrastructure G.P.("AMMIC"AMMC") | | Canada | | 85.00% | | ArcelorMittal Liberia Ltd | | Liberia | | 85.00% | | JSC ArcelorMittal Temirtau | | Kazakhstan | | 100.00% | | PJSC ArcelorMittal Kryvyi Rih | | Ukraine | | 95.13% | |
1. On December 9, 2020, the Company completed the sale of ArcelorMittal USA (see note 2.3.1). 2. On December 10, 2020, the Company signed a binding agreement with Invitalia, an Italian state-owned company, forming a public-private joint venture between the parties. As a result, the carrying amount of the assets and liabilities of ArcelorMittal Italia was classified as held for sale and the Company's investment in ArcelorMittal Italia will be accounted for under the equity method upon closing of the first investment (expected in the first quarter of 2021) (see note 2.3.2).
| | | 1. | On April 1, 2018, ArcelorMittal Brasil issued preferred shares to Votorantim S.A. representing a 2.99% ownership interest. See note 2.2.4. 224 Consolidated financial statements |
| | 2. | ArcelorMittal Galati S.A. and ArcelorMittal Ostrava a.s. are classified held for sale as of December 31, 2018. See note 2.3.2.
|
| | 3. | On November 1, 2018, ArcelorMittal completed the acquisition of Ilva S.p.A. subsequently renamed ArcelorMittal Italia S.p.A. See note 2.2.4.
|
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
2.2.2 Translation of financial statements denominated in foreign currency The functional currency of ArcelorMittal S.A. is the U.S. dollar. The functional currency of each of the principal operating subsidiaries is the local currency, except for ArcelorMittal México, AMMICAMMC and ArcelorMittal International Luxembourg, whose functional currency is the U.S. dollar and ArcelorMittal Poland, ArcelorMittal Ostrava and ArcelorMittal Galati, whose functional currency is the euro. Transactions in currencies other than the functional currency of a subsidiary are recorded at the rates of exchange prevailing at the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are remeasured at the rates of exchange prevailing on the date of the consolidated statements of financial position and the related translation gains and losses are reported within financing costs in the consolidated statements of operations. Non-monetary items that are carried at cost are translated using the rate of exchange prevailing at the date of the transaction. Non-monetary items that are carried at fair value are translated using the exchange rate prevailing when the fair value was determined and the related translation gains and losses are reported in the consolidated statements of comprehensive income. Upon consolidation, the results of operations of ArcelorMittal’s subsidiaries, associates and joint arrangements whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the monthly average exchange rates and assets and liabilities are translated at the year-end exchange rates. Translation adjustments are recognized directly in other comprehensive income and are included in net income (including non-controlling interests) only upon sale or liquidation of the underlying foreign subsidiary, associate or joint arrangement. As ofSince July 1, 2018, Argentina has been considered a highly inflationary country and therefore the financial statements of the Company's long production facilities Acindar Industria Argentina de Aceros S.A. ("Acindar") in Argentina, using a historical cost approach, are adjusted prospectively to reflect the changes in the general purchasing power of the local currency before being translated into U.S. dollars at the year end exchange rate. The Company used an estimated general price index (Consumer Price Index "IPC") of 47.9%which changed by 36.1% and 54.7% for the year ended December 31, 20182020 and 2019, respectively, for this purpose. As a result of the inflation-related adjustments on non-monetary items, a gain of 4530 and 64 was recognized in net financing costs for the year ended December 31, 2018. 2020 and 2019, respectively.
Since 2010 Venezuela has been considered a hyperinflationary economy and therefore the financial statements of Unicon are adjusted to reflect the changes in the general purchasing power of the local currency before being translated into U.S. dollars. The Company used estimated general price indices of 213,605%which changed by 2.667%, 2,056%12.922% and 534%213.605% for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively, for this purpose. As a result of the inflation-related adjustments on non-monetary items, losses of 6, 31 and 8 were recognized in net financing costs for the years ended December 31, 2018, 2017 and 2016, respectively. Effective January 1, 2016, the Company applied the DICOM rate to translate its Venezuelan operations. As a result of this change, ArcelorMittal’s net equity in Unicon decreased from 628 to 43 at January 1, 2016. The DICOM rate was originally set at 206 bolivars per U.S. dollar on March 10, 2016, before falling to 674 bolivars per U.S. dollar at December 31, 2016. The DICOM rate continued to weaken during 2017 to 3,345 bolivars per U.S. dollar on August 31, 2017, when the Venezuelan government temporarily suspended the sale of U.S. dollars through its DICOM auction system. On February 5, 2018, the Venezuelan government reopened the auction at the new DICOM rate of 30,987 bolivars per euro (25,000 bolivars per U.S. dollar). On August 20, 2018, the Venezuelan government launched the new bolivar soberano currency, with one bolivar soberano worth 100,000 previous bolivars.
The Company continued to translate its Unicon's operations at the DICOM rate. At December 31, 2018, ArcelorMittal’s net investment in Unicon was 8. The foreign exchange controls in Venezuela may limit the ability to repatriate earnings and ArcelorMittal’s Venezuelan operations’ ability to remit dividends and pay intercompany balances at any official exchange rate or at all.
2.2.3 Business combinations Business combinations are accounted for using the acquisition method as of the acquisition date, which is the date on which control is transferred to ArcelorMittal. The Company controls an entity when it is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
The Company measures goodwill at the acquisition date as the total of the fair value of consideration transferred, plus the proportionate amount of any non-controlling interest, plus the fair value of any previously held equity interest in the acquiree, if any, less the net recognized amount (generally at fair value) of the identifiable assets acquired and liabilities assumed. In a business combination in which the fair value of the identifiable net assets acquired exceeds the cost of the acquired business, the Company reassesses the fair value of the assets acquired and liabilities assumed. If, after reassessment, ArcelorMittal’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess (bargain purchase) is recognized immediately as a reduction of cost of sales in the consolidated statements of operations. Any contingent consideration payable is recognized at fair value at the acquisition date and any costs directly attributable to the business combination are expensed as incurred. 2.2.4 Acquisitions Ilva (renamed ArcelorMittal Italia) On November 1, 2018, ArcelorMittal completed the acquisition of Ilva S.p.A. and certain of its subsidiaries ("Ilva") following the signaturesigning on June 28, 2017 of a lease agreement with ana conditional obligation to purchase between the Italian Governmentcommissioners appointed in the ongoing extraordinary administration proceedings to which the former Ilva business is subject and AM InvestCo Italy S.r.l.S.p.A. ("AM InvestCo"), a consortium formed by ArcelorMittal and Intesa San Paolo S.p.A. ("ISP") with respective interests of 94.45% and 5.55% .The. The completion of the acquisition followed ArcelorMittal's notification to the European Commission ("EC") of AM InvestCo's proposed acquisition of Ilva on September 21, 2017 and the submission of commitments on October 19, 2017. The European CommissionEC initiated a Phase II review of AM InvestCo’s proposed acquisition of Ilva on November 8, 2017 and approved the transaction on May 7, 2018 subject to the fulfillment of divestment commitments (see note 2.3.2)2.3.1) and the exit of Marcegaglia from AM InvestCo (Marcegaglia
| | | Consolidated financial statements 225 | (millions of U.S. dollars, except share and per share data) |
(Marcegaglia initially held initially a 15% interest in AM InvestCo) completed on November 9, 2018 (see note 10.5.2).2018. Ilva (now ArcelorMittal Italia) is Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. IlvaArcelorMittal Italia also has significant steel finishing capacity in Taranto, Novi Ligure and Genova. As a result of the lease agreement, the assets and liabilities subject to the transaction are leased by subsidiaries of AM InvestCo, including ArcelorMittal Italia S.p.A., which combines the sites of Taranto, Novi Ligure and Genova. The nominal purchase price amountsamounted to €1.8 billion (2.1 billion) subject to certain adjustments including working capital adjustment, with annual leasing costs of €180 million (206) to be paid in quarterly installments resulting in a present value of 1,540 at acquisition date. The total consideration includesincluded a 54 liability corresponding to environmental capital expenditures already completed by the former Ilva business and which will bewas refunded by ArcelorMittal to Ilva.the latter. In September 2018, Ilva'sthe former Ilva business' trade unions ratified a labourlabor agreement following which ArcelorMittal committed to initially hire 10,700 workers based on their existing contractual terms of employment. In addition, between 2023 and 2025, the Company has committed to hire any workers who remain under Ilva’sthe former Ilva business’ extraordinary administration. Ilva’sThe business units are initially leased with rental payments qualifying as down payments against the purchase price and are part of the Europe reportable segment. The lease period is for a minimum of four years followed by a subsequentconditional purchase obligation.obligation, subject to certain conditions precedent (see note 9.3). The Company accounted for this transaction as a business combination as it obtained control of the business subject to the lease. ISP's interest iswas subject to put and call option arrangements exercisable by ArcelorMittalISP and ISPArcelorMittal between November 1, 2020 and November 1, 2025 and between November 1, 2021 and November 1, 2025, respectively. The Company determined that it has a present ownership interest in the shares subject to the put option. Accordingly, it recognized at acquisition date a 122 financial liability measured at the present value of the redemption amount. The put option was subsequently exercised in December 2020 simultaneous to the signing of an investment agreement, see note 2.3.2. Following the recent closing of the transaction, the acquisition-date fair value of the identifiable assets and liabilities of Ilva has beenArcelorMittal Italia was determined on a provisional basis as of December 31, 2018, in particular with respect to property, plant and equipment, environmental provisions, indemnification asset, tax implications and working capital balances at closing date. The Company expects to complete its accountingArcelorMittal finalized the acquisition-date fair values during the first halffourth quarter of 2019. ArcelorMittal recognized provisions of 517397 in connection with environmental remediation obligations. As the latter will be funded with funds seized by the Italian Government from the former shareholder, the Company recognized an indemnification asset for the same amount, of which 365359 was classified as non-current assets. Current assets include trade receivables of 439437 with gross contract amounts receivable of 503501 and contractual cash flows not expected to be collected of 64. Intangible assets include 201 relating to CO2CO2 emission rights held by the former Ilva business at acquisition date (the Company also recognized liabilities of 158 relating to estimated emissions for the first 10 months of 2018) and favorable land lease contracts for 76.61. ArcelorMittal recognized a 209 bargain purchase gain in cost of sales in 2018 mainly as a
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
result of the preliminary €0.4 billion (0.5 billion) working capital reduction while the total fair value of net assets acquired remained substantially driven by the economic obsolescence applied to property, plant and equipment. Following the finalization of the acquisition-date fair values, the bargain purchase gain decreased by 28 mainly as a result of the finalization of the environmental provisions (118 decrease of both environmental provision and indemnification asset), tax implications (74) and working capital balances. Property, plant and equipment increased by 92. Revenue and net loss of IlvaArcelorMittal Italia for the year ended December 31, 2018 since acquisition date were 398 and (49), respectively. The Company recognized acquisition-related costs of 25 in selling, general and administrative expenses.expenses for the year ended December 31, 2018. The agreement includesincluded industrial capital expenditure commitments of approximately €1.3 billion (1.4 billion) over a seven-year period focused on blast furnaces, steel shops and finishing lines and environmental capital expenditure commitments of approximately €0.8 billion (0.9 billion).
Following the signing of an investment agreement in December 2020, the carrying amounts of ArcelorMittal Italia's assets and liabilities were classified as held for sale as of December 31, 2020, see note 2.3.2.
Votorantim (renamed AMSF) On April 1, 2018, ArcelorMittal completed the acquisition of Votorantim Siderurgia (subsequently renamed ArcelorMittal Sul Fluminense "AMSF"), Votorantim S.A.'s long steel business in Brazil pursuant to which Votorantim Siderurgia became a wholly-owned subsidiary of ArcelorMittal Brasil. The combination of ArcelorMittal Brasil's long steel business and AMSF aims to create cost, logistical and operational synergies. The combined operations include ArcelorMittal Brasil’s production sites at Monlevade, Juiz de Fora and Piracicaba, and AMSF’s production sites at Barra Mansa, Resende and its 50% interest in the joint venture Sitrel in Três Lagoas. On February 7, 2018, the Brazilian antitrust authority CADE approved the transaction, conditioned to the fulfillment of divestment commitments by ArcelorMittal Brasil which were completed in May 2018 (see note 2.3).
| | | 226 Consolidated financial statements |
The acquisition was completed through the issuance of preferred shares to Votorantim S.A. representing a 2.99% interest in ArcelorMittal Brasil. Pursuant to the shareholders' agreement, such preferred shares are subject to put and call option arrangements exercisable by Votorantim S.A. and ArcelorMittal Brasil between July 1, 2019 and December 31, 2022 and between January 1, 2023 and December 31, 2024, respectively. The Company determined that it has a present ownership interest in the preferred shares subject to the put option. Accordingly, it recognized at acquisition date a 328 financial liability at amortized cost and measured at the present value of the redemption amount. Following the recent closing of the transaction, theThe Company completed its acquisition-date fair value of the identifiable assets and liabilities of AMSF has been determined onin the first half of 2019 and recognized an increase of 8 in goodwill and other liabilities following a provisional basis asrevised measurement of December 31, 2018, in particular with respect to unfavorable contracts and contingent liabilities. Other non-current assets include an 83 indemnification asset towards Votorantim S.A. relating to contingent liabilities of 8593 and an 82 investment in Sitrel. Other liabilities include unfavorable contracts for 293 and borrowings of 211. Current assets include cash and receivables for 13 and 141, respectively (including trade receivable of 92 with gross contractual amounts of 108 and contractual cash flows not expected to be collected of 16). The Company expects to complete its accounting during the first quarter of 2019. Revenue and net loss of AMSF for the year ended December 31, 2018 since acquisition date were 285 and (108), respectively. The Company recognized acquisition-related costs of 8 in selling, general and administrative expenses.
expenses in 2018.
Revenue and net income attributable to the equity holders of the parent of the Company for the year ended December 31, 2018 were 79,192 and 4,801 respectively, as though the acquisition date for IlvaArcelorMittal Italia and VotorantimAMSF had been as of January 1, 2018. Other On December 21, 2017,June 4, 2019, the Company acquired from Alcatel Lucentcompleted the reinsurance company Electro-Re S.A.acquisition of Münker Metallprofile GmbH ("Münker") for total consideration of €246€48 million (290; cash inflow was 35(54) of which €44 million (46 net of cash acquired of 325). On June 21, 2017, as a result of the extension of the partnership between ArcelorMittal and Bekaert Group ("Bekaert") in the steel cord business in Brazil, the Company completed the acquisition from Bekaert of a 55.5% controlling interest in Bekaert Sumaré Ltda. subsequently renamed ArcelorMittal Bekaert Sumaré Ltda. ("Sumaré"), which subsequently merged into Belgo-Mineira Bekaert Artefatos de Arames Ltda. a manufacturer of metal ropes for automotive tires located in the municipality of Sumaré/SP, Brazil. The Company agreed to pay total cash consideration of €56 million (63; 49, net of cash acquired of 14) of which €52 million (58) settled on3) was paid at closing date and €4 million (5) to be paid subsequentlypayable contingent upon conclusioncertain criteria. The acquisition of certainMünker will strengthen ArcelorMittal Downstream Solutions' construction business restructuring measures by Bekaert. Sumaré is partwithin the Europe segment. The Company completed its acquisition-date fair value of the Brazil reportable segment.identifiable assets and liabilities of Münker in the second half of 2019. It recognized 6 of goodwill and 34, 11 and 22 of property, plant and equipment, intangible assets and current assets, respectively, following the final measurement. Revenue and net income since acquisition date were 45 and 2, respectively.
On May 18, 2017,Revenue and net loss attributable to the equity holders of the parent of the Company, acquired from Crédit Agricole Assurances the reinsurance company Crédit Agricole Reinsurance S.A. for consideration of €186 million (208; cash inflow was 20, net of cash acquired of 228). On January 18, 2017, the Company acquired from Parfinada B.V. the reinsurance company Artzare S.A. for total consideration of €43 million (45; cash inflow was 5, net of cash acquired of 50). The reinsurance company is incorporated in Luxembourgyear ended December 31, 2019 were 70,646 and operates through a series of reinsurance agreements with the Company’s subsidiaries.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
On December 21, 2016, ArcelorMittal acquired from Skanska Financial Services AB the reinsurance company SCEM Reinsurance S.A. (“SCEM”) for total consideration of €54 million (56; cash inflow was 7, net of cash acquired of 63).
The Company concluded that the acquisitions of Electro-Re S.A., SCEM, Artzare S.A. and Crédit Agricole Reinsurance S.A. were not business combinations mainly2,454, respectively, as the transactions did not includethough the acquisition date of any strategic management processes, operational processes and resource management processes.Münker had been as of January 1, 2019.
The table below summarizes the estimatedfinal acquisition-date fair value of the assets acquired and liabilities assumed in respect of Ilva,Münker, AMSF and Sumaréthe former Ilva business in 2018 and 2017:2019: | | | 2018 | | 2017 | | | AMSF | | Ilva | | Sumaré | | Münker | | AMSF | | Ilva | Current assets | 262 |
| | 1,273 |
| | 50 |
| Current assets | 22 | | | 262 | | | 1,156 | | Property, plant and equipment | 600 |
| | 1,026 |
| | 69 |
| Property, plant and equipment | 34 | | | 600 | | | 1,118 | | Intangible assets | 19 |
| | 300 |
| | 21 |
| Intangible assets | 11 | | | 19 | | | 267 | | Other non-current assets | 252 |
| | 375 |
| | 7 |
| Other non-current assets | 0 | | | 252 | | | 369 | | Total assets acquired | 1,133 |
| | 2,974 |
| | 147 |
| Total assets acquired | 67 | | | 1,133 | | | 2,910 | | Deferred tax liabilities | (45 | ) | | — |
| | (23 | ) | Deferred tax liabilities | (8) | | | (45) | | | (74) | | Other liabilities | (784 | ) | | (1,225 | ) | | (29 | ) | Other liabilities | (14) | | | (792) | | | (1,113) | | Total liabilities acquired | (829 | ) | | (1,225 | ) | | (52 | ) | Total liabilities acquired | (22) | | | (837) | | | (1,187) | | Net assets acquired | 304 |
| | 1,749 |
| | 95 |
| Net assets acquired | 45 | | | 296 | | | 1,723 | | Non-controlling interests | — |
| | — |
| | (48 | ) | | Consideration paid, net | — |
| | 52 |
| | 44 |
| Consideration paid, net | 46 | | | 0 | | | 52 | | Consideration payable | 328 |
| | 1,488 |
| | 5 |
| Consideration payable | 5 | | | 328 | | | 1,490 | | Goodwill/(bargain purchase gain) | 24 |
| | (209 | ) | | 2 |
| Goodwill/(bargain purchase gain) | 6 | | | 32 | | | (181) | |
2.3 Divestments and assets held for sale Non-current assets and disposal groups that are classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. The non-current asset, or disposal group, is classified as held for sale only when the sale is highly probable and is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. Assets held for sale are presented separately in the consolidated statements of financial position and are not depreciated. Gains (losses) on disposal of subsidiaries are recognized in cost of sales, whereas gains (losses) on disposal of investments accounted for under the equity method are recognized in income (loss) from investments in associates, joint ventures and other investments.
Divestment in 2020 On December 9, 2020, the Company completed the sale of 100% of the shares of ArcelorMittal USA, ArcelorMittal Princeton and ArcelorMittal Monessen, their subsidiaries and certain other subsidiaries as well as the joint operations of Hibbing Taconite Mines, Double G Coatings and I/N Tek and the joint venture I/N Kote, together the “ ArcelorMittal USA Divestment Business” to Cleveland-Cliffs Inc. (“Cleveland-Cliffs”) for a combination of cash and shares. ArcelorMittal retained certain intellectual property assets and office space.
| | | Consolidated financial statements 227 | (millions of U.S. dollars, except share and per share data) |
In addition, Nippon Steel Corporation ("NSC"), the co-shareholder of I/N Tek and I/N Kote simultaneously exited from such entities, which were transferred in full to Cleveland-Cliffs. The consideration (net of transaction fees of 21 and estimated working capital adjustment of 50) was 2,219 and included: 2.3.1 Divestments•Cash of 509 (497 net of 7 cash disposed of and 5 transaction fees paid) subject to a working capital adjustment;
•78,186,671 common shares of Cleveland-Cliffs with value of 1,020 and representing a 16% stake in Cleveland-Cliffs; and •583,273 non-voting preferred shares redeemable, at Cleveland-Cliff's option, for 58,327,300 of its common shares with a value of 761 or an equivalent amount in cash. In addition, Cleveland-Cliffs assumed certain liabilities of the ArcelorMittal USA Divestment Business, including pensions and other post-employment benefit liabilities net of pension fund assets with a carrying amount of 3.2 billion in ArcelorMittal's consolidated statement of financial position upon disposal. The resulting net gain on disposal was 1,460. The ArcelorMittal USA Divestment Business was part of the NAFTA reportable segment. Immediately prior to classification as held for sale as of September 30, 2020, the Company assessed whether there was an indication that the impairment loss recognized in 2019 may have decreased. The Company calculated the fair value less cost of disposal using a market approach with market multiples derived from comparable transactions, a Level 3 unobservable input. As a result, the Company reversed 660, in cost of sales, of impairment charges of property, plant and equipment previously recognized. The Company allocated 672 of the NAFTA segment goodwill to the disposal group based on the relative values of the operations disposed of and the portion of the group of cash-generating units retained. Divestments in 20182019
ArcelorMittal Italia remedies
On May 7, 2018, the EC approved the acquisition of Ilva (renamed "ArcelorMittal Italia"). As part of the approval, ArcelorMittal agreed to divest certain of its European assets (“ArcelorMittal Italia remedies”) which were part of the Europe reportable segment. The ArcelorMittal Italia remedies included the following 3 divestment packages. The Dudelange and Liège divestment package was composed of ArcelorMittal Dudelange and certain finishing facilities of ArcelorMittal Liège in Belgium including the hot dipped galvanizing lines 4 and 5 in Flémalle, hot-rolled pickling, cold rolling and tin packaging lines in Tilleur. The Galati divestment package was mainly composed of the integrated steel making site of ArcelorMittal Galati S.A., ArcelorMittal Tubular Products Galati SRL, both in Romania, ArcelorMittal Skopje AD in North Macedonia and ArcelorMittal Piombino S.p.A. in Italy, the Company’s only galvanizing steel plant in Italy. The Ostrava divestment package was mainly composed of the integrated steel making site of ArcelorMittal Ostrava a.s. and its subsidiary, ArcelorMittal Tubular Products Ostrava a.s. On June 30, 2019, ArcelorMittal completed the sale of the ArcelorMittal Italia remedies to Liberty House Group ("Liberty"). The total consideration which consisted of amounts payable upon closing and deferred consideration in part contingent upon certain criteria, net of €110 million (125) deposited in escrow was €740 million (842) subject to customary closing adjustments. Of this total amount, €610 million (694) was received on June 28, 2019. The escrow which was subsequently drawn was to be used by Liberty for certain capital expenditure projects to satisfy commitments given in the EC approval process. During 2019, prior to the completion of the disposal, the Company recorded an impairment charge in cost of sales of 497 to adjust the carrying amount of the disposal group to the sale proceeds of 692 including a cash consideration of 518 (694, net of cash disposed of 34, the escrow deposit of 125 and proceeds of 17 paid to a joint venture of the Company) and 174 of deferred consideration (of which 161 was outstanding as of December 31, 2019 following subsequent receipt of a portion of the consideration receivable) recognized at present value and fair value of contingent consideration. The Company also assigned receivables of 404 mainly comprised of cash pooling balances to Liberty. The fair value measurement of ArcelorMittal Italia remedies was determined using the contract price, a Level 3 unobservable input, which was revised in the first half of 2019. Global Chartering On December 31, 2019, ArcelorMittal completed the sale of a 50% controlling interest in Global Chartering Ltd. ("Global Chartering") to DryLog Ltd. ("DryLog") for total deferred consideration of 6. The resulting net gain on disposal was 29 including the reclassification from other comprehensive income to the consolidated statements of operations of 33 foreign exchange translation gains. In connection with the disposal, the Company derecognized right-of-use assets and lease liabilities of 390 and 400, respectively. Global Chartering is a Mauritius-based shipping company that handles shipping for a portion of the Company's raw materials through the chartering of vessels on a short- to long-term basis. Global Chartering's fleet includes owned and leased Capesize, Panamax and Supramax vessels on a medium- to long-term
| | | 228 Consolidated financial statements |
charter. Simultaneously, ArcelorMittal entered into a joint venture agreement with DryLog to operate jointly the Global Chartering fleet and certain other vessels chartered from DryLog. Accordingly, the Company's remaining 50% interest in Global Chartering is accounted for under the equity method. The fair value measurement was determined using the selling price, a Level 3 unobservable input. At inception of the joint venture, certain of Global Chartering's lease terms were unfavorable compared to market rates and therefore the Company agreed to indemnify the joint venture for operating losses that could potentially arise within an agreed time frame if market rates do not improve and recognized accordingly in cost of sales a 126 provision (see note 9.1) representing the net present value of the maximum amount agreed. Divestments in 2018 On February 28, 2018, ArcelorMittal completed the sale of Go Steel Frýdek Místek ("Frýdek Místek"), for consideration of 49 (net of cash disposed of 1) of which 10 remained outstanding at December 31, 2018. Frýdek Místek was part of the Europe segment. The fair value measurement was determined using the contract price, a Level 3 unobservable input. On February 7, 2018, the Brazilian Antitrust Authority (CADE) approved the acquisition of Votorantim subject to divestment commitments (see note 2.2.4). Accordingly, in May 2018, ArcelorMittal Brasil disposed of its two2 production sites Cariacica and Itaúna as well as some wire drawing equipment in Brazil (the “Votorantim remedies”), which were part of the Brazil reportable segment. Prior to the disposal, the Company recorded an impairment charge in cost of sales of 86 to adjust the carrying amount of the disposal group to the sale proceeds of 84 (net of cash disposed of 1) of which 58 remained outstanding
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
as of December 31, 2018. The fair value measurement of these Votorantim remedies was determined using the contract price, a Level 3 unobservable input.
Divestments in 2017
On December 15, 2017, ArcelorMittal completed the sale of its 100% shareholding in ArcelorMittal Georgetown Inc. ("Georgetown"), a wire rod mill in Georgetown in the United States for total cash consideration of 19 and the result on disposal was 18. The fair value measurement of Georgetown, which was part of the NAFTA reportable segment, was determined using the contract price, a Level 3 unobservable input.
On March 13, 2017, ArcelorMittal and the management of ArcelorMittal Tailored Blanks Americas (“AMTBA”), comprising the Company’s tailored blanks operations in Canada, Mexico and the United States, entered into a joint venture agreement following which the Company recognized an investment of 65 in AMTBA accounted for under the equity method. AMTBA was part of the NAFTA reportable segment and was classified as held for sale at December 31, 2016.
On February 10, 2017, ArcelorMittal completed the sale of certain ArcelorMittal Downstream Solutions entities in the Europe segment following its commitment to sell such operations in December 2015. The Company recorded an impairment charge of 18 in cost of sales in 2015. The assets and liabilities subject to the sale were classified as held for sale at December 31, 2016. The fair value measurement of these operations, which were part of the Europe reportable segment, was determined using the contract price, a Level 3 unobservable input.
Divestments in 2016
On September 30, 2016, ArcelorMittal completed the sale of its wholly owned subsidiary ArcelorMittal Zaragoza in Spain to Megasa Siderúrgica S.L. for total consideration of €80 million (89). Prior to the disposal, the Company recorded an impairment charge of 49 (of which 2 related to allocated goodwill) in cost of sales to write the net carrying amount down to the net proceeds from the sale. The fair value measurement of ArcelorMittal Zaragoza was determined using the contract price, a Level 3 unobservable input. ArcelorMittal Zaragoza was part of the Europe reportable segment.
On August 7, 2016, ArcelorMittal completed the sale of the Company’s 49% interest in its associates ArcelorMittal Algérie and ArcelorMittal Tebessa and its 70% interest in its subsidiary ArcelorMittal Pipes and Tubes Algeria, which was announced on October 7, 2015 as part of an outline agreement for restructuring the shareholding of its Algerian activities. As part of the agreement, ArcelorMittal transferred such interests to IMETAL, an Algerian state-owned entity. ArcelorMittal Pipes and Tubes Algeria and ArcelorMittal Algérie were part of the ACIS reportable segment while ArcelorMittal Tebessa was part of the Mining reportable segment.
On April 4, 2016, ArcelorMittal completed the sale of the LaPlace and Vinton Long Carbon facilities in the United States. The total consideration was 96 and the result on disposal was nil. In 2015, the Company recorded an impairment charge of 231 (of which 13 relating to allocated goodwill) in cost of sales to write the carrying amount of the LaPlace, Steelton and Vinton facilities down to the expected net proceeds from the sale. The fair value measurement of the Long Carbon facilities in the United States was determined using the contract price, a Level 3 unobservable input. These facilities were part of the NAFTA reportable segment. The assets and liabilities of the Steelton facility remained classified as held for sale at December 31, 2017 and 2016 (see note 2.3.2).
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
The table below summarizes the significant divestments: | | | 2018 | | 2017 | | 2016 | | 2020 | | 2019 | 2018 | | Frýdek Místek | | Votorantim remedies | | AMTBA | | Downstream Solutions Europe | | Georgetown | | ArcelorMittal Zaragoza | | ArcelorMittal Tubular Products Algeria | | LaPlace and Vinton Long Carbon facilities | | ArcelorMittal USA Divestment Business | | Global Chartering Limited | | ArcelorMittal Italia remedies | | Frýdek Místek | | Votorantim remedies | Cash and cash equivalents | — |
| | — |
| | 13 |
| | — |
| | — |
| | — |
| | — |
| | — |
| Cash and cash equivalents | 7 | | | 0 | | | 0 | | | 0 | | | 0 | | Other current assets | 48 |
| | 40 |
| | 46 |
| | 38 |
| | — |
| | 53 |
| | 15 |
| | 118 |
| Other current assets | 2,105 | | | 14 | | | 1,386 | | | 48 | | | 40 | | Goodwill and intangible assets | | Goodwill and intangible assets | 684 | | | 0 | | | 0 | | | 0 | | | 0 | | Property, plant and equipment | 35 |
| | 48 |
| | 55 |
| | 2 |
| | 4 |
| | 74 |
| | 2 |
| | 13 |
| Property, plant and equipment | 3,341 | | | 517 | | | 178 | | | 35 | | | 48 | | Other assets | — |
| | — |
| | 10 |
| | 17 |
| | — |
| | — |
| | — |
| | 7 |
| Other assets | 166 | | | 21 | | | 11 | | | 0 | | | 0 | | Total assets | 83 |
| | 88 |
| | 124 |
| | 57 |
| | 4 |
| | 127 |
| | 17 |
| | 138 |
| Total assets | 6,303 | | | 552 | | | 1,575 | | | 83 | | | 88 | | Current liabilities | 31 |
| | 4 |
| | 52 |
| | 18 |
| | 1 |
| | 38 |
| | 16 |
| | 33 |
| Current liabilities | 1,604 | | | 229 | | | 1,046 | | | 31 | | | 4 | | Other long-term liabilities | 4 |
| | — |
| | 7 |
| | 12 |
| | 2 |
| | — |
| | 12 |
| | 9 |
| Other long-term liabilities | 3,938 | | | 311 | | | 241 | | | 4 | | | 0 | | Total liabilities | 35 |
| | 4 |
| | 59 |
| | 30 |
| | 3 |
| | 38 |
| | 28 |
| | 42 |
| Total liabilities | 5,542 | | | 540 | | | 1,287 | | | 35 | | | 4 | | Total net assets/(liabilities) | 48 |
| | 84 |
| | 65 |
| | 27 |
| | 1 |
| | 89 |
| | (11 | ) | | 96 |
| | Total net assets | | Total net assets | 761 | | | 12 | | | 288 | | | 48 | | | 84 | | Assigned receivables | | Assigned receivables | 0 | | | 0 | | | 404 | | | 0 | | | 0 | | % of net assets sold | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | | 100 | % | % of net assets sold | 100 | % | | 50 | % | | 100 | % | | 100 | % | | 100 | % | Total net assets/(liabilities) disposed of | 48 |
| | 84 |
| | 65 |
| | 27 |
| | 1 |
| | 89 |
| | (11 | ) | | 96 |
| | Cash consideration | 39 |
| | 26 |
| | 65 |
| | 6 |
| | 19 |
| | 89 |
| | — |
| | 96 |
| | Total net assets disposed of | | Total net assets disposed of | 761 | | | 6 | | | 692 | | | 48 | | | 84 | | Consideration | | Consideration | 2,219 | | | (4) | | | 518 | | | 39 | | | 26 | | Consideration receivable | 10 |
| | 58 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Consideration receivable | 0 | | | 6 | | | 174 | | | 10 | | | 58 | | Reclassification of foreign exchange translation difference | 15 |
| | — |
| | — |
| | 21 |
| | — |
| | 8 |
| | 4 |
| | — |
| | Reclassification of foreign exchange and other reserves | | Reclassification of foreign exchange and other reserves | 2 | | | 33 | | | 72 | | | 15 | | | 0 | | Gain on disposal | 16 |
| | — |
| | — |
| | — |
| | 18 |
| | 8 |
| | 15 |
| | — |
| Gain on disposal | 1,460 | | | 29 | | | 72 | | | 16 | | | 0 | |
2.3.2 Assets held for sale On March 4, 2020, ArcelorMittal executed an amendment (the “Amendment Agreement”) to the original lease agreement with the Ilva Commissioners with a conditional obligation to purchase the former Ilva business units ("ArcelorMittal Italia") in an extraordinary administration insolvency procedure. The Amendment Agreement outlined the terms for a significant
| | | Consolidated financial statements 229 | (millions of U.S. dollars, except share and per share data) |
equity investment by an Italian state-sponsored entity, thereby forming the basis for an important new partnership between ArcelorMittal and the Italian government, with the investment agreement to be executed by November 30, 2020. The Amendment Agreement also provided for a 50% reduction in the quarterly rental payments payable by ArcelorMittal, with the balance being due upon closing of the purchase obligation. On May 7, 2018,December 10, 2020, the European Commission approvedCompany entered into an investment agreement with Invitalia - Agenzia nazionale per l'attrazione degli investimenti e lo sviluppo d'impresa S.P.A (“Invitalia”), the party designated by the Italian government to be the government-sponsored investor as contemplated in the Amendment Agreement, in order to create a partnership between Invitalia and the Company to support the completion of the purchase obligation. On December 14, 2020, ISP exercised its put option for €111 million (135) to sell its share in ArcelorMittal Italia to the Company and the liability it had recognized upon acquisition of IlvaArcelorMittal Italia was derecognized (see note 2.2.4). As part The investment agreement includes 2 capital increases: •The first investment of €400 million which was contractually expected to be completed by the end of February following EU antitrust authorization on January 28, 2021 is currently expected to be made in the first quarter of 2021. This will provide Invitalia with 50% voting and governance rights and therefore joint control over AM InvestCo; •The second investment of up to €680 million is payable on closing of the approval,purchase obligation, which is subject to the satisfaction of various conditions precedent by May 2022, at which point Invitalia’s shareholding in ArcelorMittal agreedItalia is expected to divest certain of its European assets (“Ilva remedies”) which are partreach 60%. ArcelorMittal may need to invest up to €70 million, to the extent necessary to retain a 40% shareholding and joint control over the company. As a result of the Europe reportable segment.
The Ilva remedies are comprised of the following three divestment packages.
The Dudelange and Liège divestment package is composed of ArcelorMittal Dudelange and certain finishing facilities including the hot dipped galvanizing lines 4 and 5 in Flémalle, hot-rolled pickling, cold rolling and tin packaging lines in Tilleur of ArcelorMittal Liège in Belgium.
The Galati divestment package is mainly composed of the integrated steel making site of ArcelorMittal Galati S.A., ArcelorMittal Tubular Products Galati SRL, both in Romania, ArcelorMittal Skopje AD in North Macedonia and ArcelorMittal Piombino S.p.A. in Italy, the Company’s only galvanizing steel plant in Italy.
The Ostrava divestment package is mainly composed of the integrated steel making site of ArcelorMittal Ostrava a.s. and its subsidiaries, ArcelorMittal Tubular Products Ostrava a.s.
On October 12, 2018 and November 2, 2018, ArcelorMittal received two binding offers from Liberty House Group ("Liberty") for the acquisition of the combined Ostrava and Galati divestment package and the Dudelange and Liège divestment package, respectively. The European Commission is currently reviewing revised offers from Liberty submitted by the Company on January 23, 2019. Transaction closing is conditional on EU approval and the conclusion of information consultations with local and European Works Councils.
At December 31, 2018,investment agreement, the carrying amount of assets and liabilities subject to the Ilva remediestransaction including a 45 allocation of Europe segment goodwill was classified as held for sale. Based on the offers received, the Company recorded an impairment charge (see note 5.3) in costsale as of sales of 888 to adjust the carrying amountDecember 31, 2020. ArcelorMittal Italia is part of the disposal group toEurope reportable segment. The fair value of the expectedassets and
liabilities classified as held for sale proceeds.were in line with their carrying value. The fair value measurement was determined using the sellingcontract price and a discounted cash flow model, both Level 3 unobservable input. The Company expects to completeinputs. In addition, in the disposalcontext of the Company's divestment packages duringprocess with respect to its plate operations in the first halfEurope reportable segment, the carrying amount of 2019.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
In addition, thesuch assets and liabilities of the Steelton facility in the United States remainedwas classified as held for sale atas of December 31, 2018 (see note 2.3.1).2020. The Company recorded an impairment charge in cost of sales of 331.
The table below provides the details for the entities classified as held for sale as at December 31, 2017, which have been disposed during 2018 are disclosed in note 2.3.1.
The tables below provide details of the2020. There were no assets and liabilitiesclassified as held for sale after elimination of intra-group balances in the consolidated statements of financial position:at December 31, 2019.
| | | | | | | | | | | | | | | | | December 31, 2020 | | | ArcelorMittal Italia and plate operations in Europe | | | | | Current Assets: | | | | | | | Cash and cash equivalents | | 3 | | | | | | Trade accounts receivable, prepaid expenses and other current assets | | 635 | | | | | | Inventories | | 1,446 | | | | | | Total Current Assets | | 2,084 | | | | | | Non-current Assets: | | | | | | | Property, plant and equipment | | 1,843 | | | | | | Other assets | | 402 | | | | | | Total Non-current Assets | | 2,245 | | | | | | Total Assets | | 4,329 | | | | | | | | | | | | | Current Liabilities: | | | | | | | Trade accounts payables, accrued expenses and other liabilities | | 1,236 | | | | | | Total Current Liabilities | | 1,236 | | | | | | Non-current Liabilities: | | | | | | | Long-term debt | | 21 | | | | | | Other long-term liabilities | | 1,782 | | | | | | Total Non-current Liabilities | | 1,803 | | | | | | Total Liabilities | | 3,039 | | | | | |
| | | | | | | | | | | | | December 31, 2018 | | | Ilva remedies | | Steelton | | Total | Current Assets: | | | | | | | Cash and cash equivalents | | 10 |
| | — |
| | 10 |
| Trade accounts receivable, prepaid expenses and other current assets | | 291 |
| | 28 |
| | 319 |
| Inventories | | 1,011 |
| | 23 |
| | 1,034 |
| Total Current Assets | | 1,312 |
| | 51 |
| | 1,363 |
| Non-current Assets: | | | | | | — |
| Property, plant and equipment | | 638 |
| | 78 |
| | 716 |
| Other assets | | 32 |
| | — |
| | 32 |
| Total Non-current Assets | | 670 |
| | 78 |
| | 748 |
| Total Assets | | 1,982 |
| | 129 |
| | 2,111 |
| | | | | | |
| Current Liabilities: | | | | | |
| Trade accounts payables, accrued expenses and other liabilities | | 542 |
| | 21 |
| | 563 |
| Total Current Liabilities | | 542 |
| | 21 |
| | 563 |
| Non-current Liabilities: | | | | | |
| Long-term debt | | 77 |
| | — |
| | 77 |
| Other long-term liabilities | | 164 |
| | 17 |
| | 181 |
| Total Non-current Liabilities | | 241 |
| | 17 |
| | 258 |
| Total Liabilities | | 783 |
| | 38 |
| | 821 |
|
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
The tables below provide details of the assets and liabilities held for sale after elimination of intra-group balances in the consolidated statements of financial position:
| | | | | | | | | | | December 31, 2017 | | Frýdek Místek | | Steelton | | Total | ASSETS | | | | | | Current assets: | | | | | | Trade accounts receivable and other | — |
| | 23 |
| | 23 |
| Inventories | 25 |
| | 21 |
| | 46 |
| Total current assets | 25 |
| | 44 |
| | 69 |
| Non-current assets: | | | | | | Property, plant and equipment | 34 |
| | 76 |
| | 110 |
| Total non-current assets | 34 |
| | 76 |
| | 110 |
| Total assets | 59 |
| | 120 |
| | 179 |
| | | | | | | LIABILITIES | | | | | | Current liabilities: | | | | | | Trade accounts payable and other | 5 |
| | 17 |
| | 22 |
| Accrued expenses and other liabilities | 2 |
| | 5 |
| | 7 |
| Total current liabilities | 7 |
| | 22 |
| | 29 |
| Non-current liabilities: | | | | | | Long-term provisions | 4 |
| | 17 |
| | 21 |
| Total non-current liabilities | 4 |
| | 17 |
| | 21 |
| Total liabilities | 11 |
| | 39 |
| | 50 |
|
2.4 Investments in associates and joint arrangements The carrying amounts of the Company’s investments accounted for under the equity method were as follows: | | | | | | | | | | | | | December 31, | Category | 2020 | | 2019 | Joint ventures | 3,006 | | | 2,586 | | Associates | 2,847 | | | 2,859 | | Individually immaterial joint ventures and associates1 | 964 | | | 1,084 | | Total | 6,817 | | | 6,529 | |
1.Individually immaterial joint ventures and associates represent in aggregate less than 20% of the total carrying amount of investments in joint ventures and associates at December 31, 2020 and 2019, and none of them have a carrying value exceeding 100 at December 31, 2020 and 2019.
| | | | | | | | December 31, | Category | 2018 | | 2017 | Joint ventures | 1,011 |
| | 1,249 |
| Associates | 2,871 |
| | 2,854 |
| Individually immaterial joint ventures and associates1 | 1,024 |
| | 981 |
| Total | 4,906 |
| | 5,084 |
|
| | | 1. | Individually immaterial joint ventures and associates represent in aggregate less than 20% of the total carrying amount of investments in joint ventures and associates at December 31, 2018 and 2017, and none of them have a carrying value exceeding 100 at December 31, 2018 and 2017. 230 Consolidated financial statements |
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
2.4.1 Joint ventures The following tables summarize the latest available financial information and reconcile it to the carrying value of each of the Company’s material joint ventures, as well as the income statement of the Company’s material joint ventures: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2020 | Joint Ventures | | AMNS India | | Calvert | | | | VAMA | | Tameh | | Borçelik | | Total | Place of incorporation and operation 1 | | India | | United States | | | | China | | Poland | | Turkey | | | Principal Activity | | Integrated flat steel producer 5,6 | | Automotive steel finishing | | | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel 2,3,4 | | | Ownership and voting rights at December 31, 2020 | | 60.00 | % | | 50.00 | % | | | | 50.00 | % | | 50.00 | % | | 50.00 | % | | | Current assets | | 3,528 | | | 1,236 | | | | | 252 | | | 175 | | | 510 | | | 5,701 | | of which cash and cash equivalents | | 1,137 | | | 53 | | | | | 77 | | | 43 | | | 82 | | | 1,392 | | Non-current assets | | 5,745 | | | 1,261 | | | | | 669 | | | 570 | | | 257 | | | 8,502 | | Current liabilities | | 657 | | | 805 | | | | | 511 | | | 180 | | | 283 | | | 2,436 | | of which trade and other payables and provisions | | 524 | | | 138 | | | | | 232 | | | 132 | | | 271 | | | 1,297 | | Non-current liabilities | | 5,604 | | | 662 | | | | | 23 | | | 226 | | | 127 | | | 6,642 | | of which trade and other payables and provisions | | 67 | | | 0 | | | | | 0 | | | 26 | | | 47 | | | 140 | | Net assets | | 3,012 | | | 1,030 | | | | | 387 | | | 339 | | | 357 | | | 5,125 | | Company's share of net assets | | 1,807 | | | 515 | | | | | 194 | | | 170 | | | 179 | | | 2,865 | | Adjustments for differences in accounting policies and other | | 149 | | | 24 | | | | | 0 | | | 0 | | | (32) | | | 141 | | Carrying amount in the statements of financial position | | 1,956 | | | 539 | | | | | 194 | | | 170 | | | 147 | | | 3,006 | | Revenue | | 3,992 | | | 2,693 | | | | | 1,001 | | | 420 | | | 1,055 | | | 9,161 | | Depreciation and amortization | | (371) | | | (61) | | | | | (41) | | | (48) | | | (24) | | | (545) | | Interest income | | 43 | | | 0 | | | | | 1 | | | 0 | | | 1 | | | 45 | | Interest expense | | (135) | | | (33) | | | | | (16) | | | (8) | | | (12) | | | (204) | | Income tax benefit (expense) | | 318 | | | 0 | | | | | (6) | | | (2) | | | (17) | | | 293 | | Profit (loss) from continuing operations | | 472 | | | 9 | | | | | 47 | | | 7 | | | 29 | | | 564 | | Other comprehensive income (loss) | | (98) | | | 0 | | | | | 0 | | | 6 | | | (4) | | | (96) | | Total comprehensive income (loss) | | 374 | | | 9 | | | | | 47 | | | 13 | | | 25 | | | 468 | | Cash dividends received by the Company | | 0 | | | 58 | | | | | 0 | | | 0 | | | 9 | | | 67 | |
1.The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic. 2.Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2020; voting interest was 48.01% at December 31, 2020. 3.The non-current liabilities include 39 deferred tax liability. 4.Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets. 5.Adjustments in AMNS India correspond primarily to transaction costs incurred to set up the joint venture and the fair value of the guarantee of the joint venture's debt (see note 9.4). 6.Includes AMNS Luxembourg, AMNS India and intermediate holding entities.
| | | | | | | | | | | | | | | | | | | December 31, 2018 | Joint Ventures | | Calvert | | VAMA | | Tameh | | Borçelik | | Total | Place of incorporation and operation 1 | | United States | | China | | Poland | | Turkey | | | Principal Activity | | Automotive steel finishing | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel 2,3,4 | | | Ownership and voting rights at December 31, 2018 | | 50.00% | | 50.00% | | 50.00% | | 50.00% | | | Current assets | | 1,490 |
| | 329 |
| | 205 |
| | 519 |
| | 2,543 |
| of which cash and cash equivalents | | 76 |
| | 85 |
| | 90 |
| | 67 |
| | 318 |
| Non-current assets | | 1,282 |
| | 688 |
| | 540 |
| | 282 |
| | 2,792 |
| Current liabilities | | 824 |
| | 491 |
| | 208 |
| | 398 |
| | 1,921 |
| of which trade and other payables and provisions | | 173 |
| | 180 |
| | 176 |
| | 263 |
| | 792 |
| Non-current liabilities | | 853 |
| | 217 |
| | 226 |
| | 49 |
| | 1,345 |
| of which trade and other payables and provisions | | — |
| | — |
| | 22 |
| | — |
| | 22 |
| Net assets | | 1,095 |
| | 309 |
| | 311 |
| | 354 |
| | 2,069 |
| Company's share of net assets | | 548 |
| | 156 |
| | 156 |
| | 177 |
| | 1,037 |
| Adjustments for differences in accounting policies and other | | 6 |
| | — |
| | — |
| | (32 | ) | | (26 | ) | Carrying amount in the statements of financial position | | 554 |
| | 156 |
| | 156 |
| | 145 |
| | 1,011 |
| Revenue | | 3,295 |
| | 625 |
| | 467 |
| | 1,328 |
| | 5,715 |
| Depreciation and amortization | | (62 | ) | | (32 | ) | | (31 | ) | | (22 | ) | | (147 | ) | Interest income | | 1 |
| | 1 |
| | — |
| | 2 |
| | 4 |
| Interest expense | | (40 | ) | | (26 | ) | | (4 | ) | | (20 | ) | | (90 | ) | Income tax benefit (expense) | | — |
| | (1 | ) | | (8 | ) | | (18 | ) | | (27 | ) | Profit or loss from continuing operations | | 312 |
| | 5 |
| | 30 |
| | 6 |
| | 353 |
| Other comprehensive income (loss) | | — |
| | — |
| | 3 |
| | 1 |
| | 4 |
| Total comprehensive income (loss) | | 312 |
| | 5 |
| | 33 |
| | 7 |
| | 357 |
| Cash dividends received by the Company | | 48 |
| | — |
| | 4 |
| | 34 |
| | 86 |
|
| | | 1.Consolidated financial statements 231 | The country(millions of incorporation corresponds to the country of operationU.S. dollars, except for Tameh whose country of operation is also the Czech Republic.share and per share data)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2019 | Joint Ventures | | AMNS India | | Calvert | | | | VAMA | | Tameh | | Borçelik | | | Place of incorporation and operation 1 | | India | | United States | | | | China | | Poland | | Turkey | | | Principal Activity | | Flat carbon steel manufacture 5,6 | | Automotive steel finishing | | | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel 2,3,4 | | Total | Ownership and voting rights at December 31, 2019 | | 60.00 | % | | 50.00 | % | | | | 50.00 | % | | 50.00 | % | | 50.00 | % | | | Current assets | | 2,318 | | | 1,604 | | | | | 313 | | | 171 | | | 508 | | | 4,914 | | of which cash and cash equivalents | | 444 | | | 62 | | | | | 81 | | | 75 | | | 106 | | | 768 | | Non-current assets | | 6,295 | | | 1,282 | | | | | 637 | | | 580 | | | 267 | | | 9,061 | | Current liabilities | | 5,922 | | | 984 | | | | | 485 | | | 183 | | | 378 | | | 7,952 | | of which trade and other payables and provisions | | 670 | | | 144 | | | | | 226 | | | 139 | | | 274 | | | 1,453 | | Non-current liabilities | | 189 | | | 764 | | | | | 147 | | | 244 | | | 49 | | | 1,393 | | of which trade and other payables and provisions | | 46 | | | 0 | | | | | 0 | | | 26 | | | 49 | | | 121 | | Net assets | | 2,502 | | | 1,138 | | | | | 318 | | | 324 | | | 348 | | | 4,630 | | Company's share of net assets | | 1,501 | | | 569 | | | | | 159 | | | 162 | | | 174 | | | 2,565 | | Adjustments for differences in accounting policies and other | | 48 | | | 6 | | | | | 0 | | | 0 | | | (33) | | | 21 | | Carrying amount in the statements of financial position | | 1,549 | | | 575 | | | | | 159 | | | 162 | | | 141 | | | 2,586 | | Revenue | | 0 | | | 3,504 | | | | | 772 | | | 499 | | | 1,141 | | | 5,916 | | Depreciation and amortization | | 0 | | | (63) | | | | | (31) | | | (37) | | | (24) | | | (155) | | Interest income | | 2 | | | 2 | | | | | 1 | | | 0 | | | 1 | | | 6 | | Interest expense | | (10) | | | (48) | | | | | (23) | | | (7) | | | (19) | | | (107) | | Income tax benefit (expense) | | (83) | | | 0 | | | | | (22) | | | (7) | | | (10) | | | (122) | | Profit (loss) from continuing operations | | (116) | | | 156 | | | | | 10 | | | 28 | | | 19 | | | 97 | | | | | | | | | | | | | | | | | Total comprehensive income (loss) | | (116) | | | 156 | | | | | 10 | | | 28 | | | 19 | | | 97 | | Cash dividends received by the Company | | 0 | | | 57 | | | | | 0 | | | 9 | | | 12 | | | 78 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1.The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic. 2.Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2019; voting interest was 48.01% at December 31, 2019. 3.The non-current liabilities include 42 deferred tax liability. 4.Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets. 5.Adjustments in AMNS India correspond to transaction costs incurred to set up the joint venture. 6.Includes AMNS Luxembourg, AMNS India and intermediate holding entities.
| | | 2. | Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2018; voting interest was 48.01% at December 31, 2018. 232 Consolidated financial statements |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | Joint Ventures | | Calvert | | | | | VAMA | | Tameh | | Borçelik | | Total | Place of incorporation and operation1 | | United States | | | | | China | | Poland | | Turkey | | | Principal Activity | | Automotive steel finishing | | | | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel 2,3,4 | | | Ownership and voting rights at December 31, 2018 | | 50.00 | % | | | | | 50.00 | % | | 50.00 | % | | 50.00 | % | | | Current assets | | 1,490 | | | | | | 329 | | | 205 | | | 519 | | | 2,543 | | of which cash and cash equivalents | | 76 | | | | | | 85 | | | 90 | | | 67 | | | 318 | | Non-current assets | | 1,282 | | | | | | 688 | | | 540 | | | 282 | | | 2,792 | | Current liabilities | | 824 | | | | | | 491 | | | 208 | | | 398 | | | 1,921 | | of which trade and other payables and provisions | | 173 | | | | | | 180 | | | 176 | | | 263 | | | 792 | | Non-current liabilities | | 853 | | | | | | 217 | | | 226 | | | 49 | | | 1,345 | | of which trade and other payables and provisions | | 0 | | | | | | 0 | | | 22 | | | 0 | | | 22 | | Net assets | | 1,095 | | | | | | 309 | | | 311 | | | 354 | | | 2,069 | | Company's share of net assets | | 548 | | | | | | 156 | | | 156 | | | 177 | | | 1,037 | | Adjustments for differences in accounting policies and other | | 6 | | | | | | 0 | | | 0 | | | (32) | | | (26) | | Carrying amount in the statements of financial position | | 554 | | | | | | 156 | | | 156 | | | 145 | | | 1,011 | | Revenue | | 3,295 | | | | | | 625 | | | 467 | | | 1,328 | | | 5,715 | | Depreciation and amortization | | (62) | | | | | | (32) | | | (31) | | | (22) | | | (147) | | Interest income | | 1 | | | | | | 1 | | | 0 | | | 2 | | | 4 | | Interest expense | | (40) | | | | | | (26) | | | (4) | | | (20) | | | (90) | | Income tax benefit (expense) | | 0 | | | | | | (1) | | | (8) | | | (18) | | | (27) | | Profit (loss) from continuing operations | | 312 | | | | | | 5 | | | 30 | | | 6 | | | 353 | | Other comprehensive income (loss) | | 0 | | | | | | 0 | | | 3 | | | 1 | | | 4 | | Total comprehensive income (loss) | | 312 | | | | | | 5 | | | 33 | | | 7 | | | 357 | | Cash dividends received by the Company | | 48 | | | | | | 0 | | | 4 | | | 34 | | | 86 | |
1.The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic. 2.Ownership interest in Borçelik was 45.33% and 50.00% based on issued shares and outstanding shares, respectively, at December 31, 2018; voting interest was 48.01% at December 31, 2018. 3.The non-current liabilities include 43 deferred tax liability. 4.Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets. AMNS India On December 11, 2019, following the unconditional approval received by the Indian Supreme Court of ArcelorMittal's acquisition plan ("the Resolution Plan") for Essar Steel India Limited ("ESIL") subsequently renamed AMNS India Limited ("AMNS India") on November 15, 2019, ArcelorMittal and Nippon Steel Corporation ("NSC"), Japan’s largest steel producer and the third largest steel producer in the world, created a joint venture to own and operate AMNS India with ArcelorMittal holding a 60% interest and NSC holding 40% in accordance with the second amended joint venture formation agreement signed as of December 8, 2019. Through the agreement, both ArcelorMittal and NSC are guaranteed equal board representation and participation in all significant financial and operating decisions. The group has therefore determined that it does not control the entity, even though it holds 60% of the voting rights. ArcelorMittal and NSC contributed their respective initial equity funding of 1,362 and 891 into AMNS Luxembourg Holding S.A. ("AMNS Luxembourg"), the parent company of the joint venture. ArcelorMittal's 60% interest is accounted for under the equity method. ArcelorMittal also transferred 360 cash proceeds (of which 293 was recognized in 2019 and the remainder in 2018), including through a 193 equity contribution, into the joint venture following hedging programs entered into to hedge the volatility between the Indian Rupee and the U.S. dollar in relation to the acquisition of AMNS India. The total cash proceeds included 353 designated as cash flow hedge gains and the Company reflected in retained earnings NSC's 40% entitlement in the amount of 141 in accordance with the final joint venture formation agreement.
| | | 3. | The non-current liabilities include 43 deferred tax liability. |
| Consolidated financial statements 233 | 4. | Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation(millions of fixed assets.U.S. dollars, except share and per share data)
|
ARCELORMITTAL AND SUBSIDIARIESOn December 16, 2019, AMNS Luxembourg completed the acquisition of AMNS India. ArcelorMittal and NSC financed the joint venture for the acquisition of AMNS India through a combination of partnership equity of 2,253 and debt of 3,679 including 2,204 drawn by the joint venture under the 7 billion term facility agreement (see note 6.1.2) and 1,475 shareholder loan from NSC. The joint venture accounted for the acquisition of AMNS India as a business combination. The joint venture completed its purchase price accounting during 2020.
AMNS India is an integrated flat steel producer, and the largest steel company in western India. AMNS India’s main steel manufacturing facility is located at Hazira, Gujarat in western India. It also has: Notes–2 iron ore beneficiation plants close to Consolidated Financial Statements
(millions of U.S. dollars, except sharethe mines in Kirandul and per share data)
| | | | | | | | | | | | | | | | | | | | | | December 31, 2017 | Joint Ventures | | Calvert | | Macsteel | | VAMA | | Tameh | | Borçelik | | Total | Place of incorporation and operation1 | | United States | | Netherlands | | China | | Poland | | Turkey | | | Principal Activity | | Automotive steel finishing | | Steel trading and shipping | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel2, 3 | | | Ownership and voting rights at December 31, 2017 | | 50.00% | | 50.00% | | 49.00% | | 50.00% | | 45.33% | | | Current assets | | 1,135 |
| | 739 |
| | 283 |
| | 158 |
| | 519 |
| | 2,834 |
| of which cash and cash equivalents | | 13 |
| | 95 |
| | 71 |
| | 57 |
| | 7 |
| | 243 |
| Non-current assets | | 1,303 |
| | 389 |
| | 754 |
| | 476 |
| | 296 |
| | 3,218 |
| Current liabilities | | 612 |
| | 404 |
| | 449 |
| | 132 |
| | 357 |
| | 1,954 |
| of which trade and other payables and provisions | | 118 |
| | 235 |
| | 190 |
| | 118 |
| | 244 |
| | 905 |
| Non-current liabilities | | 947 |
| | 43 |
| | 277 |
| | 189 |
| | 46 |
| | 1,502 |
| of which trade and other payables and provisions | | — |
| | 3 |
| | — |
| | 20 |
| | — |
| | 23 |
| Net assets | | 879 |
| | 681 |
| | 311 |
| | 313 |
| | 412 |
| | 2,596 |
| Company's share of net assets | | 440 |
| | 341 |
| | 152 |
| | 156 |
| | 187 |
| | 1,276 |
| Adjustments for differences in accounting policies and other | | 6 |
| | (3 | ) | | — |
| | — |
| | (30 | ) | | (27 | ) | Carrying amount in the statements of financial position | | 446 |
| | 338 |
| | 152 |
| | 156 |
| | 157 |
| | 1,249 |
| Revenue | | 2,870 |
| | 2,775 |
| | 489 |
| | 330 |
| | 1,234 |
| | 7,698 |
| Depreciation and amortization | | (62 | ) | | (1 | ) | | (30 | ) | | (27 | ) | | (22 | ) | | (142 | ) | Interest income | | — |
| | 14 |
| | 1 |
| | — |
| | 1 |
| | 16 |
| Interest expense | | (35 | ) | | (10 | ) | | (28 | ) | | 4 |
| | (12 | ) | | (81 | ) | Income tax benefit (expense) | | — |
| | (5 | ) | | — |
| | (7 | ) | | (20 | ) | | (32 | ) | Profit or loss from continuing operations | | 270 |
| | 31 |
| | 5 |
| | 42 |
| | 65 |
| | 413 |
| Other comprehensive income (loss) | | — |
| | 2 |
| | — |
| | (1 | ) | | (1 | ) | | — |
| Total comprehensive income (loss) | | 270 |
| | 33 |
| | 5 |
| | 41 |
| | 64 |
| | 413 |
| Cash dividends received by the Company | | 20 |
| | — |
| | — |
| | 4 |
| | 30 |
| | 54 |
|
| | 1. | The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republic and Macsteel whose countries of operation are mainly the United States, the United Arab Emirates and China.
|
| | 2. | The non-current liabilities include 40 deferred tax liability.
|
| | 3. | Adjustment in Borçelik relates primarily to differences in accounting policies regarding revaluation of fixed assets.
|
ARCELORMITTAL AND SUBSIDIARIESDabuna, with slurry pipelines that then transport the beneficiated iron ore slurry to the pellet plants in the Kirandul-Vizag and Dabuna-Paradeep systems;
Notes to Consolidated Financial Statements–
(millions of U.S. dollars, except sharea downstream facility in Pune (including a pickling line, a cold rolling mill, a galvanizing mill, a color coating mill and per share data)
| | | | | | | | | | | | | | | | | | | | | | | | December 31, 2016 | Joint Ventures | | Calvert | | Macsteel | | Baffinland | | VAMA | | Tameh | | Borçelik | | Total | Place of incorporation and operation1 | | United States | | Netherlands | | Canada | | China | | Poland | | Turkey | | | Principal Activity | | Automotive steel finishing | | Steel trading and shipping | | Extraction of iron ore2 | | Automotive steel finishing | | Energy production and supply | | Manufacturing and sale of steel | | | Ownership and voting rights at December 31, 2016 | | 50.00% | | 50.00% | | 44.54% | | 49.00% | | 50.00% | | 45.33% | | | Revenue | | 2,358 |
| | 2,353 |
| | 116 |
| | 335 |
| | 254 |
| | 845 |
| | 6,261 | Depreciation and amortization | | (59) |
| | (1) |
| | (3) |
| | (30) |
| | (20) |
| | (20) |
| | (133) | Interest income | | — |
| | 12 |
| | — |
| | 1 |
| | — |
| | 1 |
| | 14 | Interest expense | | (31) |
| | (9) |
| | (20) |
| | (28) |
| | (1) |
| | (7) |
| | (96) | Income tax benefit (expense) | | — |
| | (4) |
| | (26) |
| | 18 |
| | (10) |
| | (28) |
| | (50) | Profit or loss from continuing operations | | 148 |
| | 15 |
| | (43) |
| | (58) |
| | 29 |
| | 75 |
| | 166 | Other comprehensive income (loss) | | — |
| | 10 |
| | — |
| | — |
| | 3 |
| | — |
| | 13 | Total comprehensive income (loss) | | 148 |
| | 25 |
| | (43) |
| | (58) |
| | 32 |
| | 75 |
| | 179 | Cash dividends received by the Company | | 19 |
| | — |
| | — |
| | — |
| | 6 |
| | 16 |
| | 41 |
| | 1. | The country of incorporation corresponds to the country of operation except for Tameh whose country of operation is also the Czech Republica batch annealing plant); and Macsteel whose countries of operation are mainly the United States, the United Arab Emirates and China.
|
| | 2. | During 2017, ArcelorMittal lost joint control but maintained significant influence over Baffinland and as such the investment was reclassified to an associate (refer to note 2.4.2) |
Macsteel
–7 service centers in the industrial clusters of Hazira, Bhuj, Indore, Bahadurgarh, Chennai, Kolkata and Pune. It has a complete range of flat rolled steel products, including value added products, and significant iron ore pellet capacity with 2 main pellet plant systems in Kirandul-Vizag and Dabuna-Paradeep, which have the potential for expansion. Its facilities are located close to ports with deep draft for movement of raw materials and finished goods. The Resolution Plan which was approved for the acquisition of AMNS India included an upfront payment of 6.0 billion towards AMNS India’s debt resolution, with a further 1.1 billion of capital injection into AMNS India to support operational improvements, increase production levels and deliver enhanced levels of profitability. The Company provided a 0.6 billion performance guarantee in connection with the execution of the Resolution Plan, which terminated on December 31, 2019. In addition, the Resolution Plan includes a capital expenditure plan of 2.6 billion to be implemented in 2 stages over six years. In the context of the creation of the AMNS India joint venture, the Company transferred the Uttam Galva Steels Ltd. payments (see note 4.6) to the joint venture. ArcelorMittal and NSC financed such payments through a combination of equity contributions into the joint venture of 173 and 115, respectively, and debt of 597 including 367 drawn by the joint venture under the 7 billion term facility agreement and a 230 shareholder loan from NSC. The joint venture used such proceeds to repay the loan granted by ArcelorMittal for an amount of 680 on December 31, 2019. On February 13, 2020 and pursuant to the follow-on funding requirement in accordance with the second amended joint venture formation agreement, AMNS Luxembourg completed an additional equity injection into AMNS India of 840 mainly through an additional 475 drawn under the 7 billion term facility agreement and a 325 shareholder loan from NSC. On March 16, 2020, AMNS Luxembourg entered into a 5.1 billion ten-year term loan agreement with various Japanese banks which is guaranteed by ArcelorMittal and NSC in proportion to their interests in the joint venture.The proceeds of the loan were used on March 27, 2020 to refinance in full the amounts borrowed by the Company in connection with the acquisition of AMNS India, including the amounts borrowed under the 7 billion bridge term facilities agreement guaranteed by ArcelorMittal. On July 7, 2020, AMNS India acquired the Odisha Slurry Pipeline infrastructure Limited ("OSPIL") for a net consideration of 245 which secures an important infrastructure asset for raw material supply to the Hazira steel plant. On July 23, 2020, AMNS India commenced mining operations after having been selected preferred bidder for the Thakurani iron ore mine license with estimated reserves of approximately 85 million tonnes in Keonjhar district of Odisha following an auction process facilitated by the state government in February 2020. Macsteel On May 28, 2018, ArcelorMittal announced the sale of its 50% shareholding in Macsteel International Holdings B.V. (“Macsteel”), a joint venture between Macsteel Holdings Luxembourg S.à r.l. and ArcelorMittal South Africa, which provided the Company with an international network of traders and trading channels including the shipping of steel. The Company recorded a 132 impairment to adjust the carrying amount of the investment to the expected sale proceeds partially offset by a 142 gain following the recycling upon closing of the sale on October 31, 2018 of accumulated foreign exchange translation gains from other comprehensive income to income (loss) from investments in associates, joint ventures and other investments. The fair value measurement was determined using the contract price, a Level 3 unobservable input. VAMA Valin ArcelorMittal Automotive Steel (“VAMA”) is a joint venture between ArcelorMittal and Hunan Valin which produces steel for high-end applications in the automobile industry. VAMA supplies international automakers and first-tier suppliers as well as Chinese car manufacturers and their supplier networks.
| | | 234 Consolidated financial statements |
Calvert AM/NS Calvert ("Calvert"), a joint venture between the Company and Nippon Steel & Sumitomo Metal Corporation ("NSSMC"),NSC, is a steel processing plant in Calvert, Alabama, United States. Calvert had a 6-year agreement to purchase 2 million tonnes of slabs annually from ThyssenKrupp Steel USA ("TK CSA"), an integrated steel mill complex located in Rio de Janeiro, Brazil, using a market-based price formula. TK CSA had an option to extend the agreement for an additional 3 years on terms that are more favorable to the joint venture, as compared with the initial 6-year period. In December 2017 and in connection with the acquisition of TK CSA by Ternium S.A., the agreement was amended to (i) extend the term of the agreement to December 31, 2020, (ii) make a corresponding reduction in the annual slab purchase obligation so that the aggregate slab purchase obligation over the full term of the agreement remained the same and (iii) eliminate TK CSA’s extension option. The remaining slabs for Calvert's operations are sourced from ArcelorMittal plants in the United States, Brazil and Mexico.Mexico and from ArcelorMittal USA, which following the divestment to Cleveland-Cliffs, entered on December 9, 2020 into a new five year agreement with Calvert (with an automatic three year extension unless either party provides notice of intent to terminate) for 1.5 million tonnes annually for the initial term and 0.55 million tonnes annually under the extension and which can be reduced with a six month notice. ArcelorMittal is principally responsible for marketing the product on behalf of the joint venture. Calvert serves the automotive, construction, pipe and tube, service center and appliance/ HVAC industries.
Tameh
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
Tameh
Tameh is a joint venture between ArcelorMittal and Tauron Group including four4 energy production facilities located in Poland and the Czech Republic. Tameh’s objective is to ensure energy supply to the Company’s steel plants in these countriesPoland and external customers in the Czech Republic as well as the utilization of steel plant gases for energy production processes. Borçelik Borçelik Çelik Sanayii Ticaret Anonim Şirketi ("Borçelik"), incorporated and located in Turkey, is a joint venture between ArcelorMittal and Borusan Holding involved in the manufacturing and sale of cold-rolled and galvanized flat steel products.
| | | Consolidated financial statements 235 | (millions of U.S. dollars, except share and per share data) |
2.4.2 Associates The following table summarizes the financial information and reconciles it to the carrying amount of each of the Company’s material associates, as well as the income statement of the Company’s material associates: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2020 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Baffinland 6 | | Total | Financial statements reporting date | | June 30, 2020 | | September 30, 2020 | | September 30, 2020 | | December 31, 2020 | | | Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | | Canada | | | Principal Activity | | Iron and steel manufacturing | | Steel manufacturing 3 | | Steel manufacturing 4 | | Extraction of iron ore 5 | | | Ownership and voting rights at December 31, 2020 | | 37.02 | % | | 33.43 | % | | 35.00 | % | | 25.23 | % | | | Current assets | | 3,611 | | | 1,330 | | | 2,233 | | | 538 | | | 7,712 | | Non-current assets | | 2,507 | | | 2,810 | | | 1,675 | | | 8,295 | | | 15,287 | | Current liabilities | | 2,780 | | | 364 | | | 1,087 | | | 479 | | | 4,710 | | Non-current liabilities | | 454 | | | 1,165 | | | 772 | | | 1,050 | | | 3,441 | | Non-controlling interests | | 46 | | | 112 | | | 288 | | | 1 | | | 447 | | Net assets attributable to equity holders of the parent | | 2,838 | | | 2,499 | | | 1,761 | | | 7,303 | | | 14,401 | | Company's share of net assets | | 1,050 | | | 835 | | | 616 | | | 1,843 | | | 4,344 | | Adjustments for differences in accounting policies and other | | 0 | | | 38 | | | (49) | | | (1,456) | | | (1,467) | | Other adjustments2 | | 112 | | | (201) | | | 59 | | | 0 | | | (30) | | Carrying amount in the statements of financial position | | 1,162 | | | 672 | | | 626 | | | 387 | | | 2,847 | | Revenue | | 2,420 | | | 1,428 | | | 3,065 | | | 772 | | | 7,685 | | | | | | | | | | | | | Profit (loss) from continuing operations | | 112 | | | (244) | | | 86 | | | 73 | | | 27 | | Other comprehensive income (loss) | | 16 | | | (5) | | | (67) | | | 0 | | | (56) | | Total comprehensive income (loss) | | 128 | | | (249) | | | 19 | | | 73 | | | (29) | | Cash dividends received by the Company | | 28 | | | 0 | | | 15 | | | 0 | | | 43 | |
1.The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China. 2.Other adjustments correspond to the difference between the carrying amount at December 31, 2020 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose translated with closing rates as of the reporting dates described in the table above. For the year ended December 31, 2020, the Company recognized a 211 impairment loss with respect to its investment in DHS. 3.The amount for DHS Group includes an adjustment to align the German GAAP financial information with the Company’s accounting policies and is mainly linked to property, plant and equipment, inventory and pension. 4.Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets. 5.Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and locally recognized goodwill. In September 2020, following a legal reorganization that was not a business combination for the Company, its share of provisional fair value remeasurement of 1.5 billion was not recognized in the carrying amount of Baffinland. 6.Following a legal reorganization in September 2020, the Company holds an indirect interest in Baffinland through Nunavut Iron Ore Inc. The summarized statement of comprehensive income presents full year result for Baffinland (direct owner and operator of Mary River project).
| | | | | | | | | | | | | | | | | | | December 31, 2018 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Baffinland | | Total | Financial statements reporting date | | June 30, 2018 | | September 30, 2018 | | September 30, 2018 | | December 31, 2018 | | | Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | | Canada | | | Principal Activity | | Iron and steel manufacturing | | Steel manufacturing 3 | | Steel manufacturing 4 | | Extraction of iron ore 5 | | | Ownership and voting rights at December 31, 2018 | | 37.02% | | 33.43% | | 35.00% | | 28.76% | | | Current assets | | 2,516 |
| | 1,528 |
| | 2,183 |
| | 390 |
| | 6,617 |
| Non-current assets | | 1,443 |
| | 3,062 |
| | 1,526 |
| | 1,949 |
| | 7,980 |
| Current liabilities | | 1,426 |
| | 480 |
| | 1,134 |
| | 399 |
| | 3,439 |
| Non-current liabilities | | 35 |
| | 1,005 |
| | 677 |
| | 694 |
| | 2,411 |
| Non-controlling interests | | 45 |
| | 136 |
| | 219 |
| | — |
| | 400 |
| Net assets attributable to equity holders of the parent | | 2,453 |
| | 2,969 |
| | 1,679 |
| | 1,246 |
| | 8,347 |
| Company's share of net assets | | 908 |
| | 992 |
| | 588 |
| | 358 |
| | 2,846 |
| Adjustments for differences in accounting policies and other | | — |
| | 27 |
| | (52 | ) | | 22 |
| | (3 | ) | Other adjustments2 | | 44 |
| | (4 | ) | | (12 | ) | | — |
| | 28 |
| Carrying amount in the statements of financial position | | 952 |
| | 1,015 |
| | 524 |
| | 380 |
| | 2,871 |
| Revenue | | 3,370 |
| | 1,959 |
| | 3,544 |
| | 320 |
| | 9,193 |
| Profit or loss from continuing operations | | 474 |
| | 20 |
| | 60 |
| | (98 | ) | | 456 |
| Other comprehensive income (loss) | | — |
| | 5 |
| | (37 | ) | | — |
| | (32 | ) | Total comprehensive income (loss) | | 474 |
| | 25 |
| | 23 |
| | (98 | ) | | 424 |
| Cash dividends received by the Company | �� | 92 |
| | 5 |
| | 16 |
| | — |
| | 113 |
|
| | | 1. | The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China. 236 Consolidated financial statements |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2019 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Baffinland | | Total | Financial statements reporting date | | June 30, 2019 | | September 30, 2019 | | September 30, 2019 | | December 31, 2019 | | | Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | | Canada | | | Principal Activity | | Iron and steel manufacturing | | Steel manufacturing 3 | | Steel manufacturing 4 | | Extraction of iron ore 5 | | | Ownership and voting rights at December 31, 2019 | | 37.02 | % | | 33.43 | % | | 35.00 | % | | 25.70 | % | | | Current assets | | 2,920 | | | 1,385 | | | 2,062 | | | 479 | | | 6,846 | | Non-current assets | | 1,797 | | | 2,794 | | | 1,628 | | | 2,403 | | | 8,622 | | Current liabilities | | 1,837 | | | 402 | | | 1,038 | | | 663 | | | 3,940 | | Non-current liabilities | | 150 | | | 979 | | | 795 | | | 891 | | | 2,815 | | Non-controlling interests | | 44 | | | 122 | | | 218 | | | 0 | | | 384 | | Net assets attributable to equity holders of the parent | | 2,686 | | | 2,676 | | | 1,639 | | | 1,328 | | | 8,329 | | Company's share of net assets | | 994 | | | 895 | | | 574 | | | 341 | | | 2,804 | | Adjustments for differences in accounting policies and other | | 0 | | | 43 | | | (49) | | | 7 | | | 1 | | Other adjustments2 | | 5 | | | 27 | | | 22 | | | 0 | | | 54 | | Carrying amount in the statements of financial position | | 999 | | | 965 | | | 547 | | | 348 | | | 2,859 | | Revenue | | 3,102 | | | 1,795 | | | 3,724 | | | 454 | | | 9,075 | | | | | | | | | | | | | Profit (loss) from continuing operations | | 249 | | | (116) | | | 82 | | | (72) | | | 143 | | Other comprehensive income (loss) | | 0 | | | 8 | | | (7) | | | 0 | | | 1 | | Total comprehensive income (loss) | | 249 | | | (108) | | | 75 | | | (72) | | | 144 | | Cash dividends received by the Company | | 57 | | | 0 | | | 13 | | | 0 | | | 70 | |
1.The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China. 2.Other adjustments correspond to the difference between the carrying amount at December 31, 2019 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose as of the reporting dates described in the table above. 3.The amount for DHS Group includes an adjustment to align the German GAAP financial information with the Company’s accounting policies and is mainly linked to property, plant and equipment, inventory and pension. 4.Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets. 5.Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and locally recognized goodwill.
| | | 2. | Other adjustments correspond to the difference between the carrying amount at December 31, 2018 and the net assets situation corresponding to the latestConsolidated financial statements ArcelorMittal is permitted to disclose as of the reporting dates described in the table above.
|
| 237 | 3. | The amount for DHS Group includes an adjustment to align the German GAAP financial information with the Company’s accounting policies(millions of U.S. dollars, except share and is mainly linked to property, plant and equipment, inventory and pension.per share data)
|
| | 4. | Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets.
|
| | 5. | Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and locally recognized goodwill.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Baffinland | | Total | Financial statements reporting date | | June 30, 2018 | | September 30, 2018 | | September 30, 2018 | | December 31, 2018 | | | Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | | Canada | | | Principal Activity | | Iron and steel manufacturing | | Steel manufacturing 3 | | Steel manufacturing 4 | | Extraction of iron ore 5 | | | Ownership and voting rights at December 31, 2018 | | 37.02 | % | | 33.43 | % | | 35.00 | % | | 28.76 | % | | | Current assets | | 2,516 | | | 1,528 | | | 2,183 | | | 390 | | | 6,617 | | Non-current assets | | 1,443 | | | 3,062 | | | 1,526 | | | 1,949 | | | 7,980 | | Current liabilities | | 1,426 | | | 480 | | | 1,134 | | | 399 | | | 3,439 | | Non-current liabilities | | 35 | | | 1,005 | | | 677 | | | 694 | | | 2,411 | | Non-controlling interests | | 45 | | | 136 | | | 219 | | | 0 | | | 400 | | Net assets attributable to equity holders of the parent | | 2,453 | | | 2,969 | | | 1,679 | | | 1,246 | | | 8,347 | | Company's share of net assets | | 908 | | | 992 | | | 588 | | | 358 | | | 2,846 | | Adjustments for differences in accounting policies and other | | 0 | | | 27 | | | (52) | | | 22 | | | (3) | | Other adjustments2 | | 44 | | | (4) | | | (12) | | | 0 | | | 28 | | Carrying amount in the statements of financial position | | 952 | | | 1,015 | | | 524 | | | 380 | | | 2,871 | | Revenue | | 3,370 | | | 1,959 | | | 3,544 | | | 320 | | | 9,193 | | | | | | | | | | | | | Profit (loss) from continuing operations | | 474 | | | 20 | | | 60 | | | (98) | | | 456 | | Other comprehensive income (loss) | | 0 | | | 5 | | | (37) | | | 0 | | | (32) | | Total comprehensive income (loss) | | 474 | | | 25 | | | 23 | | | (98) | | | 424 | | Cash dividends received by the Company | | 92 | | | 5 | | | 16 | | | 0 | | | 113 | |
ARCELORMITTAL AND SUBSIDIARIES1.The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
Notes2.Other adjustments correspond to Consolidated Financial Statementsthe difference between the carrying amount at December 31, 2018 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose as of the reporting dates described in the table above.
(millions3.The amount for DHS Group includes an adjustment to align the German GAAP financial information with the Company’s accounting policies, and is mainly linked to property, plant and equipment, inventory and pension.
4.Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of U.S. dollars, except sharefixed assets. 5.Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and per share data)
locally recognized goodwill.
| | | | | | | | | | | | | | | | | | | December 31, 2017 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Baffinland | | Total | Financial statements reporting date | | June 30, 2017 | | September 30, 2017 | | September 30, 2017 | | December 31, 2017 | | | Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | | Canada | | | Principal Activity | | Iron and steel manufacturing | | Steel manufacturing3 | | Steel manufacturing4 | | Extraction of iron ore5 | | | Ownership and voting rights at December 31, 2017 | | 39.02% | | 33.43% | | 35.00% | | 31.07% | | | Current assets | | 1,737 |
| | 1,699 |
| | 1,967 |
| | 355 |
| | 5,758 |
| Non-current assets | | 1,336 |
| | 3,096 |
| | 1,372 |
| | 1,698 |
| | 7,502 |
| Current liabilities | | 1,261 |
| | 555 |
| | 889 |
| | 302 |
| | 3,007 |
| Non-current liabilities | | 119 |
| | 1,121 |
| | 446 |
| | 531 |
| | 2,217 |
| Non-controlling interests | | 23 |
| | 136 |
| | 220 |
| | — |
| | 379 |
| Net assets attributable to equity holders of the parent | | 1,670 |
| | 2,983 |
| | 1,784 |
| | 1,220 |
| | 7,657 |
| Company's share of net assets | | 652 |
| | 997 |
| | 624 |
| | 379 |
| | 2,652 |
| Adjustments for differences in accounting policies and other | | — |
| | 32 |
| | (54 | ) | | 23 |
| | 1 |
| Other adjustments2 | | 183 |
| | 22 |
| | (4 | ) | | — |
| | 201 |
| Carrying amount in the statements of financial position | | 835 |
| | 1,051 |
| | 566 |
| | 402 |
| | 2,854 |
| Revenue | | 2,944 |
| | 1,773 |
| | 2,862 |
| | 341 |
| | 7,920 |
| Profit or loss from continuing operations | | 275 |
| | (4 | ) | | 122 |
| | (20 | ) | | 373 |
| Other comprehensive income (loss) | | (1 | ) | | (5 | ) | | (9 | ) | | — |
| | (15 | ) | Total comprehensive income (loss) | | 274 |
| | (9 | ) | | 113 |
| | (20 | ) | | 358 |
| Cash dividends received by the Company | | 49 |
| | — |
| | 18 |
| | — |
| | 67 |
|
| | 1. | The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China. |
| | 2. | Other adjustments correspond to the difference between the carrying amount at December 31, 2017 and the net assets situation corresponding to the latest financial statements ArcelorMittal is permitted to disclose.
|
| | 3. | The amount for DHS Group includes an adjustment to align the German GAAP financial information with the Company’s accounting policies, and is mainly linked to property, plant and equipment, inventory and pension.
|
| | 4. | Adjustments in Gonvarri Steel Industries primarily relate to differences in accounting policies regarding revaluation of fixed assets.
|
| | 5. | Adjustments in Baffinland primarily relate to differences in accounting policies regarding revaluation of fixed assets and locally recognized goodwill.
|
| | | | | | | | | | | | | | | | December 31, 2016 | Associates | | China Oriental | | DHS Group | | Gonvarri Steel Industries | | Total | Financial statements reporting date | | June 30, 2016 | | September 30, 2016 | | September 30, 2016 | |
| Place of incorporation and operation1 | | Bermuda | | Germany | | Spain | |
| Principal Activity | | Iron and steel manufacturing | | Steel manufacturing | | Steel manufacturing | |
| Ownership and voting rights at December 31, 2016 | | 46.99% | | 33.43% | | 35.00% | | | Revenue | | 1,751 |
| | 1,396 |
| | 2,258 |
| | 5,405 |
| Profit or loss from continuing operations | | 83 |
| | (96 | ) | | 145 |
| | 132 |
| Other comprehensive income (loss) | | — |
| | (3 | ) | | 4 |
| | 1 |
| Total comprehensive income (loss) | | 83 |
| | (99 | ) | | 149 |
| | 133 |
| Cash dividends received by the Company | | — |
| | — |
| | 16 |
| | 16 |
|
| | 1. | The country of incorporation corresponds to the country of operation except for China Oriental whose country of operation is China.
|
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
China Oriental
China Oriental Group Company Limited (“China Oriental”) is a Chinese integrated iron and steel company listed on the Hong Kong Stock Exchange (“HKEx”). On January 27, 2017, in order to restore the minimum free float requirement, China Oriental issued 586,284,000 new shares resulting in a decrease of the Company’s interest from 46.99% to 39.02%. As a result, ArcelorMittal recorded a loss of 67 upon dilution partially offset by a gain of 23 following the recycling of accumulated foreign exchange translation gains from other comprehensive income to income from investments in associates, joint ventures and other investments. The trading of China Oriental’s shares, which had been suspended since April 29, 2014, resumed on February 1, 2017. In January 2018, China Oriental issued 192 million new shares to fulfill its obligations under its share-based compensation plans. As a result, ArcelorMittal’s interest in China Oriental decreased to 37.02%. ArcelorMittal recorded a loss of 20 upon dilution partially offset by a gain of 8 following the recycling of accumulated foreign exchange translation gains in income from investments in associates, joint ventures and other investments. DHS Group DHS - Dillinger Hütte Saarstahl AG (“DHS Group”), incorporated and located in Germany, is a leading producer of heavy steel plates, cast slag pots and semi-finished products, such as pressings, pressure vessel heads and shell sections in Europe. The DHS Group also includes a further rolling mill operated by Dillinger France in Dunkirk (France). As of December 31, 2020, as a result of lower cash flow projections resulting from weaker market conditions partially linked to the COVID-19 pandemic, the Company identified an impairment trigger with respect to its investment in DHS and recognized accordingly a 211 impairment charge. The Company calculated the fair value of its investment in DHS using a discounted cash flow model (using a discount rate of 7.24%), a level 3 unobservable input.
| | | 238 Consolidated financial statements |
Gonvarri Steel Industries Holding Gonvarri SL (“Gonvarri Steel Industries”) is dedicated to the processing of steel. The entity is a European leader in steel service centers and renewable energy components, with strong presence in Europe and Latin America. Baffinland Baffinland owns the Mary River project, which has direct shipping, high grade iron ore on Baffin Island in Nunavut (Canada). During 2017,2020, ArcelorMittal's shareholding in Baffinland slightly decreased from 44.54%25.70% to 31.07%25.23% following capital calls exclusively fulfilled by Nunavut Iron Ore (''NIO''Inc. ("NIO"), the other shareholder,shareholder. In September 2020, the corporate structure was reorganized whereby NIO became the parent company of Baffinland, and ArcelorMittal together with The Energy and Minerals Group ("EMG") became shareholders of NIO with ArcelorMittal's share in NIO and thus Baffinland unchanged at 25.23%. NIO accounted for the acquisition of Baffinland as a business combination and the conversionacquisition-date fair value of preferred shares heldassets and liabilities is provisional at December 31, 2020. This legal reorganization was not a business combination for the Company which accordingly did not recognize its share of the provisional fair value measurement in the carrying amount of Baffinland. During 2018 and 2019 the Company's shareholding in Baffinland decreased from 31.07% to 28.76% and 25.70%, respectively, following capital calls exclusively fulfilled by NIO into equity. As a result ArcelorMittalNIO. The Company recognized a losslosses in 2018 and 2019 on dilution of 223 and 4 including the recycling of accumulated foreign exchange translation losses of 52 loss9 and 12, respectively, in income (loss) from investments in associates, joint ventures and other investments. During 2018, ArcelorMittal’s shareholding in Baffinland decreased from 31.07% to 28.76% following capital calls exclusively fulfilled by NIO.
2.4.3 Other associates and joint ventures that are not individually material The Company has interests in a number of other joint ventures and associates, none of which are regarded as individually material. The following table summarizes the financial information of all individually immaterial joint ventures and associates that are accounted for using the equity method: | | | | | | | | | | | | | | | | | | December 31, 2018 | | December 31, 2017 | | | Associates | | Joint Ventures | | Total | | Associates | | Joint Ventures | | Total | Carrying amount of interests in associates and joint ventures | | 310 | | 714 | | 1,024 |
| | 337 | | 644 | | 981 |
| Share of: | | | | | | | | | | | | | Income (loss) from continuing operations | | 8 | | 80 | | 88 |
| | 16 | | 23 | | 39 |
| Other comprehensive income (loss) | | (5) | | 2 | | (3 | ) | | — | | 10 | | 10 |
| Total comprehensive income (loss) | | 3 | | 82 | | 85 |
| | 16 | | 33 | | 49 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2020 | | December 31, 2019 | | | Associates | | Joint Ventures | | Total | | Associates | | Joint Ventures | | Total | Carrying amount of interests in associates and joint ventures | | 328 | | | 636 | | | 964 | | | 304 | | | 780 | | | 1,084 | | Share of: | | | | | | | | | | | | | Income from continuing operations | | 15 | | | 33 | | | 48 | | | 26 | | | 87 | | | 113 | | Other comprehensive income (loss) | | (8) | | | (20) | | | (28) | | | 1 | | | 2 | | | 3 | | Total comprehensive income | | 7 | | | 13 | | | 20 | | | 27 | | | 89 | | | 116 | |
In 2018,During 2019, the Company’s shareCompany converted 31 of net losses reduced the carrying amountshareholders loans into equity and made an additional cash injection of 30 to its 40.80% interest in the joint venture ArcelorMittal Tubular Products Jubail (“Al Jubail”) to nil. Furthermore,maintain 40.80% interest in the Company granted shareholder loans to Al Jubail for 140 and 140joint venture in line with shareholding restructuring, which resulted in an increase of carrying amount of the investment from NaN as of December 31, 2018 and 2017, respectively. During 2018,to 26 as of December 31, 2019 including the Company’sCompany's share of accumulated net losses, reduced thewhich were recognized against shareholder loans as of December 31, 2018 (as carrying amount of its investment inwas NaN). The Company had outstanding shareholder loans given to Al Jubail to nil and 9 were recognized against the Company's shareholder loans in Al Jubail reducing the total carrying amount to 131 atfor 109 as of December 31, 2018 as compared to 152 at December 31, 2017.2020 and 2019.
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
2.4.4 Impairment of associates and joint ventures For the year ended December 31, 2020, the Company recognized a 211 impairment loss with respect to its investment in DHS. For the years ended December 31, 20182020, 2019 and 2017,2018, the Company identified an impairment indicator with respect to its investment and shareholder loans in Al Jubail. Accordingly, it performed a value in use calculation and concluded the carrying amount of the investment and shareholder loans was recoverable. For the remaining investments, the Company concluded there were no impairment triggers. For the year ended December 31, 2016, the Company recorded an impairment charge of 14 of its shareholder loan to Kalagadi Manganese (Proprietary) Ltd ("Kalagadi Manganese"). The Company sold its 50% interest in this joint venture with Kalahari Resource (Proprietary) Ltd that is engaged in exploring, mining, ore processing and smelting manganese in the Kalahari Basin in South Africa in 2017. In addition, the Company recorded an impairment charge of 14 of its 28.24% interest in Comvex, a deep sea harbor facility on the Black Sea in Romania. For the remaining investments, the Company concluded there were no impairment triggers.
For the year ended December 31, 2016, the Company’s unrecognized share of accumulated losses in Kalagadi Manganese was 9.
The Company is not aware of any material contingent liabilities related to associates and joint ventures for which it is severally liable for all or part of the liabilities of the associates, nor are there any contingent liabilities incurred jointly with other investors. See note 8.49.4 for disclosure of commitments related to associates and joint ventures. 2.4.5 Investments in joint operations The Company had investments in the following joint operations as of December 31, 20182020 and 2017:2019: Peña Colorada Peña Colorada is an iron ore mine located in Mexico in which ArcelorMittal holds a 50.00% interest. Peña Colorada operates an open pit mine as well as concentrating facility and two-line pelletizing facility. Hibbing Taconite Mines The Hibbing Taconite Mines in which the Company holdsheld a 62.31% interest are iron ore mines located in the USA and
| | | Consolidated financial statements 239 | (millions of U.S. dollars, except share and per share data) |
operations consist of open pit mining, crushing, concentrating and pelletizing. The Company assumed the managing partner role of Hibbing Taconite company in August 2019 following the resignation of Cleveland-Cliffs without changes in the ownership group. I/N Tek I/N Tek in which the Company holdsheld a 60.00% interest operates a cold-rolling mill in the United States. Double G CoatingsCoating ArcelorMittal holdsheld a 50.00% interest in Double G Coating, a hot dip galvanizing and Galvalume facility in the United States. On December 9, 2020, the Company completed the sale of its interests in Hibbing Taconite Mines, I/N Tek and Double G Coating to Cleveland-Cliffs as part of the ArcelorMittal USA Divestment Business (note 2.3.1). Peña Colorada areis part of the Mining segment; Hibbing Taconite Mines was part of the Mining segment and other joint operations arewere part of NAFTA. 2.5 Other investments Other investments include those investments in equity instruments for which the Company does not have significant influence. Following the adoption of IFRS 9 as of January 1, 2018, theThe Company irrevocably elected to present the changes in fair value of such equity instruments, which are not held for trading, in other comprehensive income, (see detailbecause these investments are held as long-term strategic investments that are not expected to be sold in note 6.1.
ARCELORMITTAL AND SUBSIDIARIES
Notesthe short to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
1).medium term. Other investments include the following: | | | | | | | | December 31, |
| 2018 | | 20171
| Erdemir | 577 |
| | — |
| Stalprodukt S.A. | 101 |
| | — |
| Gerdau | 115 |
| | — |
| Other investments | 62 |
| | — |
| Investments in equity instruments at FVOCI | 855 |
| | — |
| Erdemir | — |
| | 1,118 |
| Stalprodukt S.A. | — |
| | 171 |
| Gerdau | — |
| | 112 |
| Other investments | — |
| | 43 |
| Available-for-sale securities (at fair value) | — |
| | 1,444 |
| Investments in equity instruments at cost | — |
| | 27 |
| Total | 855 |
| | 1,471 |
|
1. Following the adoption of IFRS 9, available-for-sale investments are classified as investments in equity instruments at FVOCI as of January 1, 2018. | | | | | | | | | | | | | December 31, | | 2020 | | 2019 | Cleveland-Cliffs | 1,988 | | | 0 | | Erdemir | 850 | | | 642 | | Stalprodukt S.A. | 96 | | | 57 | | Powercell Sweden | 0 | | | 23 | | Others | 46 | | | 50 | | Investments in equity instruments at FVOCI | 2,980 | | | 772 | |
The Company’s significant investments in equity instruments at FVOCI at December 31, 20182020 and 20172019 are the following: Cleveland-Cliffs Cleveland-Cliffs was historically the largest and oldest independent iron ore mining company in the United States and it became the largest flat-rolled steel company and largest iron ore pellet producer in North America in 2020 after the acquisition of AK Steel and ArcelorMittal USA Divestment Business. It is vertically integrated from mining through iron making, steelmaking, rolling, finishing and downstream with hot and cold stamping of steel parts and components. As part of the consideration for the sale of ArcelorMittal USA Divestment Business to Cleveland-Cliffs as described in note 2.3.1, on December 9, 2020, ArcelorMittal received 78,186,671 common shares with a value of 1,020 and representing a 16% stake in Cleveland-Cliffs and 583,273 non-voting preferred shares with a value of 761. The non-voting preferred shares are redeemable at Cleveland-Cliff’s option for 58,327,300 of its common shares or an equivalent amount in cash. Unrealized gains recognized in other comprehensive income were 119 for the common shares and 88 preferred shares for the year ended December 31, 2020. On February 9, 2021, ArcelorMittal announced an agreement to sell 40 million Cleveland-Cliffs' common shares for total gross proceeds of 652 (net proceeds of $16.12 per share) as part of a combined primary and secondary public offering of Cleveland-Cliffs' shares. Following the sale, ArcelorMittal continues to hold 38 million common shares in addition to the preferred shares described above. The proceeds from the sale of Cleveland-Cliffs' common shares will be used for a new share buyback program of ArcelorMittal common shares. The accumulated gain of 123 recognized in other comprehensive income was transferred to retained earnings in February 2021. Ereĝli Demir ve Çelik Fabrikalari T.A.S. (“Erdemir”) ErdermirErdemir is the leading steel producer in Turkey and produces plates, hot and cold rolled, tin chromium and zinc coated flat steel and supplies basic inputs to automotive, white goods, pipes and tubes, rolling, manufacturing, electrics-electronics, mechanical engineering, energy, heating equipment, shipbuilding, defense and packaging industries. Unrealized gains (losses) recognized in other comprehensive income were 127 were 386 and 658196 for the year ended December 31, 20182020 and 2017,2019, respectively.
Stalprodukt S.A. Stalprodukt S.A. is a leading manufacturer and exporter of highly processed steel products based in Poland. Following the sale of 729,643 shares including the subsequent capital reduction of Stalprodukt S.A. during the first six months of 2016, for total cash consideration of 46, ArcelorMittal’s ownership interest and voting rights in Stalprodukt S.A. decreased from 28.47% to 21.20% and from 28.26% to 11.61%, respectively.
As of December 31, 2018 and 2017, the fair value of ArcelorMittal’s stake in Stalprodukt S.A. was 101 and 171, respectively. Unrealized gains(losses) recognized in other comprehensive income were 11(1) and 77 (32) for the year ended December 31, 20182020 and 2017,2019, respectively.
Powercell Sweden AB Powercell Sweden AB is the leading developer and producer of fuel cell stacks and systems, powered by hydrogen, and produce electricity and heat with no emissions other than water. In 2019 and 2020 the Company sold in aggregate 3.4 million and 1.8 million remaining shares of Powercell Sweden AB for total consideration of 36 and 59, respectively. The accumulated gain recognized in other comprehensive income of 19 and 28, respectively was transferred to retained earnings.
| | | 240 Consolidated financial statements |
Gerdau Gerdau is the largest producer of long steel in the Americas and is headquartered in Brazil. Unrealized gainsThe accumulated gain recognized in other comprehensive income werewas 48 and 42 for the year endedat December 31, 20182018. On July 16, 2019, the Company sold its 30 million shares, representing a 2.6% stake of preferred shares for 116 in line with Company's ongoing efforts to optimize and 2017, respectively.unlock value from its asset portfolio that no longer coincides with the Company's investment strategy. The accumulated gain recognized in other comprehensive income of 51 was transferred to retained earnings. Unconsolidated structured entities ArcelorMittalGlobal Chartering has operating lease arrangements for two2 vessels (Panamax Bulk Carriers) involving structured entities whose main purpose is to hold legal title of the two2 vessels and to lease them to the Company.Global Chartering. Such entities are wholly-owned and controlled by a financial institution and are funded through equity instruments by the financial institution. Operating leaseLease arrangements began for one vessel in 2013 and for the second vessel in 2014.
The aforesaid operating leases have been agreed On December 31, 2019, following the sale of a 50% controlling interest in Global Chartering to DryLog (see note 2.3.1), the Company's remaining 50% interest in Global Chartering is accounted for a 12 year period, during whichunder the Company is obliged to payequity method and therefore ArcelorMittal no longer has any involvement with the structured entities minimum fees equivalent to approximately 4 per year and per vessel. In addition, ArcelorMittal holds cal
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
l options to buy each of the two vessels from the structured entities at pre-determined dates and prices as presented in the table below. The structured entities hold put options enabling them to sell each of the vessels at the end of the lease terms at 6 each to the Company. | | | | | | | | | | | | | | | | | | | | | | | | | | Call option strike prices | Exercise dates | at the 60th month | | at the 72nd month | | at the 84th month | | at the 96th month | | at the 108th month | | at the 120th month | | at the 132nd month | | at the 144th month | Amounts per vessel 1 | | | | | | | | | | | | | | | | First vessel | 29 |
| | 27 |
| | 26 |
| | 24 |
| | 22 |
| | 20 |
| | 17 |
| | 14 |
| Second vessel | 31 |
| | 30 |
| | 28 |
| | 27 |
| | 26 |
| | 24 |
| | 20 |
| | 14 |
|
1. If the actual fair value of each vessel is higher than the strike price at each of the exercise dates, ArcelorMittal is obliged to share 50% of the gain with the structured entities.
In addition, pursuant to these arrangements, the Company had a receivable (classified as “Other assets”) of 22 and 26 atsince December 31, 2018 and 2017, respectively, which does not bear interest, is forgiven upon default and will be repaid by the structured entities quarterly in arrears throughout the lease term. The outstanding balance will be used to offset payment of any interim call options, if exercised.2019.
2.6 Income (loss) from investments in associates, joint ventures and other investments Income (loss) from investments in associates, joint ventures and other investments consisted of the following: | | | | | | | | | | | Year Ended December 31, | | 2018 | | 2017 | | 2016 | Share in net earnings of equity-accounted companies | 567 |
| | 537 |
| | 207 |
| Impairment charges | (132 | ) | | (26 | ) | | (28 | ) | Gain (loss) on disposal | 126 |
| | (117 | ) | | 377 |
| Dividend income | 91 |
| | 54 |
| | 59 |
| Total | 652 |
| | 448 |
| | 615 |
|
| | | | | | | | | | | | | | | | | | | Year ended December 31, | | 2020 | | 2019 | | 2018 | Share in net earnings of equity-accounted companies | 430 | | | 252 | | | 567 | | Impairment charges | (211) | | | 0 | | | (132) | | Gain (loss) on disposal | 0 | | | (4) | | | 126 | | Dividend income | 15 | | | 99 | | | 91 | | Total | 234 | | | 347 | | | 652 | |
For the year ended December 31, 2020, impairment charges of 211 related to DHS where the carrying value of the investment exceeded its fair value (see note 2.4.2). For the year ended December 31, 2019, the loss on disposal corresponded to the loss on dilution of the Company's interest in Baffinland (see note 2.4.2). For the year ended December 31, 2018, impairment charges includeincluded 132 relating to Macsteel in connection with the sale completed on October 31, 2018 (see note 2.4.1). For the year ended December 31, 2017, impairment charges include 17 and 9 relating to the write down of receivables from associates and joint ventures.
For the year ended December 31, 2016, impairment charges include 14 and 14 relating to Kalagadi Manganese and Comvex, respectively (see note 2.4.4).
For the year ended December 31, 2018, gain (loss) on disposal included mainly a 142 gain from the recycling of the currency translation reserve following the sale of Macsteel and a 12 loss on the dilution of the Company's interest from 39.02% to 37.02% in China Oriental (see note 2.4). ForDuring 2017, the year ended December 31, 2017, gain (loss) on disposal includes a gain of 133 (the cash settlement occurs through three annual installments of 44 of which one is outstanding as of December 31, 2018) on the disposal of the Company'sCompany sold its 21% shareholding in Empire Iron Mining Partnership ("EIMP"), a loss to Cleveland-Cliffs for total consideration of 133, whereas the cash settlement occurred through three annual installments of which 44 on dilution of the Company's share in China Oriental (see note 2.4), a loss of 22 on dilution of the Company's interest in Baffinland (see note 2.4), a loss of 187 as a result of the reclassification of the accumulated foreign exchange translation losses from other comprehensive income to the statements of operations following the completion of the sale of the Company's 50% shareholding in Kalagadi Manganese to Kgalagadi Alloys (Proprietary) Ltd on August 25, 2017. As per sales agreement signed on October 21, 2016, ArcelorMittal received a contingent consideration to be paid during the life of the mine, which is capped at 1502019 and contingent upon the financial performance of the mine and cash flow availability.2018, respectively.
For the year ended December 31, 2016, gain (loss) on disposal mainly includes a gain of 329 relating to the disposal of Gestamp (see note 2.4), a loss of 26 relating to the disposal of Stalprodukt S.A. shares (see note 2.5) and a gain of 74 following
ARCELORMITTAL AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(millions of U.S. dollars, except share and per share data)
the sale of its 10.08% interest in Hunan Valin to a private equity fund. The Company transferred the Hunan Valin shares and simultaneously received the full proceeds of 165 (RMB1,103 million) on September 14, 2016.
NOTE 3: SEGMENT REPORTING 3.1 Reportable segments The Company is organized in five5 operating and reportable segments, which are components engaged in business activities from which they may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Company), for which discrete financial information is available and whose operating results are evaluated regularly by the chief operating decision maker “CODM” to make decisions about resources to be allocated to the segment and assess its performance. AsThe Company's CODM as of January 1, 2016, the Group Management Board “GMB” (ArcelorMittal’s previous CODM)December 31, 2020 was replaced by the CEO Office - comprising the CEO,Chairman and Chief Executive Officer, Mr. Lakshmi N. Mittal and the President and CFO,Chief Financial Officer of ArcelorMittal, Mr. Aditya Mittal. On February 11, 2021, the Board of Directors of ArcelorMittal announced that Aditya Mittal became Chief Executive Officer of the Company (see note 13). These operating segments include the attributable goodwill, intangible assets, property, plant and equipment, and certain equity method investments. They do not include cash and short-term deposits, short-term investments, tax assets and other current financial assets. Attributable liabilities are also those resulting from the normal activities of the segment, excluding tax liabilities and indebtedness but including post retirement obligations where directly attributable to the segment. The treasury function is managed centrally for the Company and is not directly attributable to individual operating segments or geographical areas. ArcelorMittal’s segments are structured as follows: •NAFTA represents the flat, long and tubular facilities of the Company located in Canada, Mexico and the United States (on December 9, 2020, the Company divested ArcelorMittal USA see note 2.3.1). NAFTA produces flat products such as slabs, hot-rolled coil, cold-rolled coil, coated steel and plate. These products are sold primarily to customers in the following sectors: automotive, energy, construction, packaging and appliances and via distributors or processors. NAFTA
| | | • | NAFTA represents the flat, long and tubular facilities of the Company located in North America (Canada, United States and Mexico). NAFTA produces flat products such as slabs, hot-rolled coil, cold-rolled coil, coated steel and plate. These products are sold primarily to customers in the following sectors: automotive, energy, construction, packaging and appliances and via distributors or processors. NAFTA also produces long products such as wire rod, sections, rebar, billets, blooms and wire drawing, and tubular products;
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| Consolidated financial statements 241 | •(millions of U.S. dollars, except share and per share data) | |
also produces long products such as wire rod, sections, rebar, billets, blooms and wire drawing, and tubular products; •Brazil includes the flat operations of Brazil and the long and tubular operations of Brazil and neighboring countries including Argentina, Costa Rica and Venezuela. Flat products include slabs, hot-rolled coil, cold-rolled coil and coated steel. Long products consist of wire rod, sections, bar and rebar, billets, blooms and wire drawing; |