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MT ArcelorMittal - New York Shares - Level III

Filed: 8 Mar 21, 2:51pm
0001243429mt:DerivativefinancialliabilitiesnoncurrentMemberifrs-full:RecurringFairValueMeasurementMember2020-12-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35788
ARCELORMITTAL
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Grand Duchy of Luxembourg
(Jurisdiction of incorporation or organization)
 24-26, Boulevard d’Avranches, L-1160 Luxembourg,
Grand Duchy of Luxembourg
(Address of principal executive offices)
 Henk Scheffer, Company Secretary, 24-26, Boulevard d’Avranches, L-1160 Luxembourg,
Grand Duchy of Luxembourg. Fax: +352 4792 2235
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary SharesMTNew York Stock Exchange
5.5% Mandatorily convertible subordinated notes due 2023MTCNNew York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is reporting obligation pursuant to Section 15(d) of the Act:
None 
Indicate the number of outstanding shares of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Ordinary Shares
1,080,734,413
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  ☒    No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‐T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “accelerated filer, large accelerated filer and emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☒        Accelerated filer  ☐        Non-accelerated filer  ☐        Emerging growth company  ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act. ☐
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  ☐  International Financial Reporting Standards as issued by the International Accounting Standards
Board  ☒   Other  ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17  ☐   Item 18  ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ☐    No  ☒



mt-20201231_g1.jpg




Form 20-F Cross Reference Guide
ItemForm 20-F CaptionReference in current reportPage
Glossary - definitions, terminology and principal subsidiaries
Cautionary statement regarding forward-looking statementsCautionary statement regarding forward-looking statements
Part I
Item 1.Identity of Directors, senior management and advisersNot applicable
Item 2.Offers statistics and expected timetableNot applicable
Item 3.Key information
A.Selected financial dataNot applicable
B.Capitalization and indebtednessNot applicable
C.Reasons for the offer and use of proceedsNot applicable
Risk Factors
Item 4.Information on the Company
History and development of the Company, Key transactions and events in 2020
Business strategy, Competitive strengths, Sustainable development, Products, Sales and marketing, Insurance, Intellectual property, Government regulations and Market information
38, 7, 43, 57, 61, 62, 62, 63, and 182
Organizational structure
Property, plant and equipment, Capital expenditures, Reserves (iron ore and coal)
72, 94 and 96
Item 4A.Unresolved staff commentsNone
Item 5.
Economic conditions, Operating results
100 and 121
Liquidity and capital resources and Contractual obligations
C.Research and development, patents and licensesCompetitive strengths, Research and development
7, 39
Outlook
E.Off-balance sheet arrangementsContractual obligations
Contractual obligations
G.Safe harborForward-looking statements
Item 6.
Directors and senior management
Compensation
Corporate governance
Employees
Management share ownership
Item 7.
Major shareholders
Related party transactions
C.Interest of experts and counselNot applicable
Item 8.
Financial information
A.Consolidated statements and other financial informationConsolidated financial statements as of and for the year ended December 31, 2020
B.Significant changesNot applicable
Item 9.The offer and listing



A.Offer and listing detailsMarkets
B.Plan of distributionNot applicable
Markets
D.Selling shareholdersNot applicable
E.DilutionNot applicable
F.Expenses of the issueNot applicable
Item 10.Additional information
Share capital
Memorandum and Articles of Association
Material contracts
Exchange controls and other limitations
affecting security holders
Taxation
F.Dividends and paying agentsPaying agents and Earnings distribution
G.Statements by expertsReserves (iron ore and coal) and Exhibits
H.Documents on displayHistory and development of the Company
I.Subsidiary informationNot applicable
Item 11.
Disclosures about market risk
Item 12.Description of securities other than equity securities
A.Debt securitiesNot applicable
B.Warrants and rightsNot applicable
C.Other securitiesNot applicable
New York Registry Shares
Part II 
Item 13.Defaults, Dividend arrearages and DelinquenciesNone
Item 14.Material modifications to the rights of security holders and use of proceedsNone
Item 15.
Evaluation of disclosure controls and
procedures, Management’s report on internal control
over financial reporting
200 and 200
Item 16A.Audit & Risk Committee Financial ExpertCorporate governance
Item 16B.Code of ethicsCorporate governance
Item 16C.
Principal accountant fees and services
Item 16D.Exemptions from the listing standards for audit committeesNone
Item 16E.
Purchases of equity securities by the issuer and affiliated purchasers
Item 16F.Change in registrant’s certifying accountantNone
Item 16G.Corporate governanceCorporate governance
Item 16H.Mine safety disclosure
Health and safety and Exhibit 16.1
Part III
 
Item 17.Financial statementsConsolidated financial statements
Item 18.Financial statementsConsolidated financial statements
Item 19.
ExhibitsExhibits



Table of contents
Page
Management report
Introduction
Company overview
History and development of the Company
Cautionary Statement regarding forward-looking statements
Key transactions and events in 2020
Risk Factors
Business overview
Business strategy
Research and development
Sustainable development
Products
Sales and marketing
Insurance
Intellectual property
Government regulations
Organizational structure
Properties and capital expenditures
Property, plant and equipment
Capital expenditures
Reserves (iron ore and coal)
Operating and financial review
Economic conditions
Operating results
Liquidity and capital resources
Disclosures about market risk
Contractual obligations
Outlook
Management and employees
Directors and senior management
Compensation
Corporate governance
Employees
Shareholders and markets
Major shareholders
Related party transactions
Page
Markets
New York Registry Shares
Purchases of equity securities by the issuer and affiliated purchasers
Share capital
Additional information
Memorandum and Articles of Association
Material contracts
Exchange controls and other limitations affecting security holders
Taxation
Evaluation of disclosure controls and procedures
Management’s report on internal control over financial reporting
Principal accountant fees and services
Glossary - definitions, terminology and principal subsidiaries
Exhibits
Signature
 
Report of Independent Registered Public Accounting Firm
Consolidated financial statements
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 the consolidated financial statements





6Management report
Introduction
Company overview
ArcelorMittal is one of the world’s leading integrated steel and mining companies. ArcelorMittal is the largest steel producer in the Americas and Europe, second largest in Africa and the sixth largest steel producer in the CIS region and has a smaller but growing presence in Asia.
mt-20201231_g2.jpg
The Company's key metrics above include the U.S. operations prior to its sale (see "—Key transactions and events in 2020"):
U.S. operations
(in million tonnes)
Crude steelIron oreCoal
Production9.935.831.39
Shipments9.145.531.47
ArcelorMittal has steel-making operations in 17 countries on four continents, including 38 integrated and mini-mill steel-making facilities following the sale of ArcelorMittal USA. As of December 31, 2020, ArcelorMittal had approximately 168,000 employees.
ArcelorMittal produces a broad range of high-quality finished and semi-finished steel products ("semis"). Specifically, ArcelorMittal produces flat products, including sheet and plate, and long products, including bars, rods and structural shapes. It also produces pipes and tubes for various applications. ArcelorMittal sells its products primarily in local markets and to a diverse range of customers in approximately 160 countries, including the automotive, appliance, engineering, construction and machinery industries. ArcelorMittal’s mining operations produce various types of mining products including iron ore lump, fines, concentrate and sinter feed, as well as coking, PCI and thermal coal for consumption at its steel-making facilities
some of which are also for sale commercially outside of the Group.
As a global steel producer, the Company is able to meet the needs of different markets. Steel consumption and product requirements clearly differ between developed markets and developing markets. Steel consumption in developed economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. To meet these diverse needs, the Company maintains a high degree of product diversification and seeks opportunities to increase the proportion of higher value-added products in its product mix.
History and development of the Company
ArcelorMittal results from the merger in 2007 of its predecessor companies Mittal Steel Company N.V. and Arcelor, each of which had grown through acquisitions over many years. Since its creation ArcelorMittal has experienced periods of external growth as well consolidation and deleveraging (including through divestment).
ArcelorMittal's success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, redoubled its efforts to control costs and repositioned its operations with a view toward outperforming its competitors. ArcelorMittal’s research and development capability is strong and includes several major research centers as well as strong academic partnerships with universities and other scientific bodies.
Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry’s value chain, from mining at one end to distribution and first-stage processing at the other: global scale and scope; superior technical capabilities; a diverse portfolio of steel and related businesses, one of which is mining; and financial capabilities. The Company’s strategy is further detailed under “Business overview—Business strategy”.
ArcelorMittal’s steel-making operations have a high degree of geographic diversification. Approximately 38% of its crude steel was produced in the Americas, approximately 47% was produced in Europe and approximately 15% was produced in other countries, such as Kazakhstan, South Africa and Ukraine


Management report7
in 2020. In addition, ArcelorMittal’s sales of steel products are spread over both developed and developing markets, which have different consumption characteristics. ArcelorMittal’s mining operations, present in South America, Africa, Europe and the CIS region, are integrated with its global steel-making facilities and are important producers of iron ore and coal in their own right.

Competitive strengths
As shown by the following graph, ArcelorMittal has a diversified portfolio of steel and mining products to meet a wide range of customer needs across many steel-consuming sectors, including automotive, appliance, engineering, construction, energy and machinery and via distributors.
mt-20201231_g3.jpg    
* Other steel sales mainly represent metal processing, machinery, electrical equipment and domestic appliances
**Other sales mainly represent mining, chemicals & water, slag, waste, sale of energy and shipping
The Company believes that the following factors contribute to ArcelorMittal’s success in the global steel and mining industry:
Market leader in steel. ArcelorMittal had annual achievable production capacity of approximately 108 million tonnes of crude steel (92 million tonnes of crude steel after the sale of ArcelorMittal USA as described in Key transactions and events
in 2020) for the year ended December 31, 2020. Steel shipments for the year ended December 31, 2020 totaled 69.1 million tonnes. ArcelorMittal has significant operations in many countries which are described in "Properties and capital expenditures". In addition, many of ArcelorMittal’s operating units have access to developing markets that are expected to experience, over time, above-average growth in steel consumption (such as Central and Eastern Europe, South America, India, Africa, CIS and Southeast Asia).
The Company sells its products in local markets and through a centralized marketing organization to customers in approximately 160 countries. ArcelorMittal’s diversified product offering, together with its distribution network and research and development (“R&D”) programs, enable it to build strong relationships with customers, which include many of the world’s major automobile and appliance manufacturers. The Company is a strategic partner to several of the major original equipment manufacturers (“OEMs”) and has the capability to build long-term contractual relationships with them based on early vendor involvement, contributions to global OEM platforms and common value-creation programs.
A world-class mining business. ArcelorMittal has a global portfolio of 10 operating units with mines in operation and development and is among the largest iron ore producers in the world. In 2020, ArcelorMittal sourced a large portion of its raw materials from its own mines and facilities including finance leases. The table below reflects ArcelorMittal's self-sufficiency through its mining operations in 2020.
Millions of metric tonnesConsumption
Sourced from own mines/facilities2
Other sourcesSelf-sufficiency %
Iron ore89.958.131.865%
PCI & coal1
36.45.131.314%
Coke22.020.91.195%
Scrap & DRI28.615.613.055%
1.Includes coal only for the steelmaking process and excludes a small proportion of weak metallurgical coals for boiler power generation. ArcelorMittal's consumption of PCI and coal was 6.75 million tonnes and 29.6 million tonnes, respectively, for the year ended December 31, 2020.
2.Assumes 100% consumption of ArcelorMittal's iron ore and coal production.
The Company has iron ore mining activities in Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine, the United States (until the divestment of ArcelorMittal USA see "—Key transactions and events in 2020") and through its joint venture in India. It has coal mining activities in Kazakhstan and the United States (until the divestment of ArcelorMittal Princeton see "—Key transactions and events in 2020"). ArcelorMittal’s main mining products include iron ore lump, fines, concentrate, pellets, sinter feed, metallurgical coals including hard, weak and PCI suitable coals. In addition, ArcelorMittal produces substantial amounts of direct reduced iron, or DRI, which is a


8Management report
scrap substitute used in its mini-mill facilities to supplement external metallic purchases. As of December 31, 2020, ArcelorMittal’s iron ore reserves (including 100% of reserves at mines where ArcelorMittal owns less than 100%, and reserves for which use is restricted) were estimated at 4,089 million tonnes run of mine and its total coking coal reserves were estimated at 101 million tonnes run of mine or 58 million wet recoverable tonnes. See “Property and capital expenditures—Reserves (iron ore and coal)” for a detailed list of the entities with reserves and ownership structure. The Company’s long-life iron ore and coal reserves provide a measure of security of supply and an important natural hedge against raw material volatility and global supply constraints. The mining business is managed as a separate segment which enhances ArcelorMittal’s ability to optimize capital allocation.
ArcelorMittal’s facilities have good access to shipping facilities, including through ArcelorMittal’s own, or partially owned, 15 deep-water port facilities and linked railway sidings.
Market-leading automotive steel business. ArcelorMittal has a leading market share with approximately 17% of the worldwide market share in the automotive steel business as of December 31, 2020, and is a leader in the fast-growing advanced high strength steels ("AHSS") segment, specifically for flat products. Following the sale of ArcelorMittal USA at the end of 2020, the Company's automotive market share is expected to decrease in the U.S.. ArcelorMittal is the first steel company in the world to embed its own engineers within an automotive customer to provide engineering support. The Company begins working with OEMs as early as five years before a vehicle reaches the showroom, to provide generic steel solutions, co-engineering and help with the industrialization of the project. These relationships are founded on the Company’s continuing investment in R&D and its ability to provide well-engineered solutions that help make vehicles lighter, safer and more fuel-efficient.
In 2010, ArcelorMittal initiated a development effort of dedicated S-in motion® engineering projects. Its S-in motion® line (B,C&D car segments, SUV, pick-up trucks, light commercial vehicles, truck cabs, hybrid vehicles, battery electric vehicles ("BEVs")) is a unique offering for the automotive market that respond to OEMs’ requirements for safety, fuel economy and reduced CO2 emissions. By utilizing AHSS in the S-in motion® projects, OEMs can achieve significant weight reduction using the Company's emerging grades solutions such as Fortiform®, the Company's third generation AHSS for cold forming, or Usibor® 2000 and Ductibor® 1000, the Company's latest AHSS grades for hot stamping.
In November 2016, ArcelorMittal introduced a new generation of AHSS, including new press hardenable steels and martensitic steels. Together, these new steel grades aim to help automakers
further reduce body-in-white weight to improve fuel economy without compromising vehicle safety or performance. In November 2017, ArcelorMittal launched the second generation of its iCARe® electrical steels which play a central role in the construction of electric motors which are used in BEVs, hybrid vehicles ("HV"), plug in hybrid vehicles ("PHEV") and mild hybrid vehicles ("MHV"). This new iCARe® generation features optimized mechanical, magnetic and thermal properties of the steel as compared to the first generation of iCARe® electrical steels. Further, S-in motion® projects for electrical cars in the C segment as well as for the plug-in hybrid C-segment were completed in 2019. There are multiple specificities for BEVs: shorter front module, necessity to protect batteries against crash, lowering of the center of gravity, huge additional weight due to batteries, etc. These specificities require rethinking crash management. S-in Motion® BEV for SUV is a catalog of steel solutions adapted to this new type of vehicles. Advanced and especially ultra-high strength steels, innovative press hardened steels, laser welded blanks are especially highlighted as key solutions for an optimal performance (safety/weight) and battery safety. The growth of various types of electric vehicles will impact design and manufacturing. For instance, new large mass batteries change the mass distribution of a vehicle and impact the design and manufacturing of the chassis and wheels. Battery protection provides another example: both the battery box and body structure have to protect the battery in the event of a crash. AHSS products are among the most affordable solutions on the market for these specific applications. In a context where the supply of electric vehicles, and especially BEVs are expected to grow quickly, new projects have been launched to address these new trends.
In the automotive industry, ArcelorMittal mainly supplies the geographic markets where its production facilities are located in Europe, North and South America, South Africa and China through Valin ArcelorMittal Automotive Steel Co., Ltd (“VAMA”), its joint venture with Hunan Valin. VAMA’s product mix is oriented toward higher value products and mainly toward the OEMs to which the Company sells tailored solutions based on its products. With sales and service offices worldwide, production facilities in North and South America, South Africa, Europe and China, ArcelorMittal believes it is uniquely positioned to supply global automotive customers with the same products worldwide. The Company has multiple joint ventures and has also developed a global downstream network of partners through its distribution solutions activities. This provides the Company with a proximity advantage in virtually all regions where its global customers are present.
In 2020, ArcelorMittal was OEM qualified for galvanized Fortiform® 980 material, and sourced for the first time ever on all new vehicle platforms launching throughout 2021. Fortiform® 980 is an advanced grade of steel designed


Management report9
specifically for the auto industry, it offers leading-edge formability and strength with superior weldability. It is produced at the Company's joint venture facility in Calvert, Alabama, USA.
For further details on the new products under development, see "Business overview—Research and development”.
Diversified and efficient producer. As a global steel manufacturer with a leading position in many markets, ArcelorMittal benefits from scale and production cost efficiencies in various markets and a measure of protection against the cyclicality of the steel industry and raw materials prices.
Diversified production process. In 2020, approximately 57.1 million tonnes of crude steel were produced through the basic oxygen furnace process (9.55 million tonnes of which were produced by ArcelorMittal USA), approximately 14.2 million tonnes through the electric arc furnace process (0.38 million tonnes of which were produced by ArcelorMittal USA) and approximately 0.2 million tonnes of crude steel through the open hearth furnace process. This provides ArcelorMittal with greater flexibility in its raw material and energy use, and increased ability to meet varying customer requirements in the markets it serves.
Product and geographic diversification. By operating a portfolio of assets diversified across product segments and geographic areas, ArcelorMittal benefits from a number of natural hedges. As a global steel producer with a broad range of high-quality finished and semi-finished steel products, ArcelorMittal is able to meet the needs of diverse markets. Steel consumption and product requirements vary between mature economy markets and developing economy markets. Steel consumption in mature economies is largely from flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. As developing economies mature and as market needs evolve, local customers will require increasingly advanced steel products. To meet these diverse needs, ArcelorMittal maintains a high degree of product diversification and seeks opportunities to increase the proportion of its product mix consisting of higher value-added products.
Upstream integration. ArcelorMittal believes that its own raw material production provides it with a competitive advantage over time. Additionally, ArcelorMittal benefits from the ability to optimize its steel-making facilities’ efficient use of raw materials, its global procurement strategy and the implementation of company-wide knowledge management practices with respect to raw materials. Certain of the Company’s
operating units also have access to infrastructure, such as deep-water port facilities, railway sidings and engineering workshops that lower transportation and logistics costs.
Downstream integration. ArcelorMittal’s downstream integration, primarily through its Europe segment for distribution solutions, enables it to provide customized steel solutions to its customers more effectively. The Company’s downstream assets have cut-to-length, slitting and other processing facilities, which provide value additions and help it to maximize operational efficiencies.
Dynamic responses to market challenges and opportunities. ArcelorMittal’s management team has a strong track record and extensive experience in the steel and mining industries. In line with its deleveraging focus at the time, it announced in August 2019 that it had identified opportunities to unlock up to $2 billion in value from its asset portfolio over the next two years. In 2019, the Company made progress toward this goal with the sale of a 50% stake in Global Chartering Limited, its wholly owned shipping business which decreased ArcelorMittal's debt by $0.5 billion, and therefore net debt. In 2020, the Company completed its goal of unlocking $2 billion in value from its asset portfolio with the sale of ArcelorMittal USA to Cleveland-Cliffs (see transaction details in " —Key transactions and events in 2020").
In 2020, the Company successfully reduced fixed costs, including through temporary measures, in line with lower production resulting from the impacts of the COVID-19 pandemic. This reduction was achieved through significant savings in labor cost (including temporary salary reductions, utilizing the available economic unemployment schemes to match workforce to operating rates, temporary layoffs, reduction/elimination of contractors, reduced overtime, etc.), reduction in repairs and maintenance expenses (given lower operating rates) and savings in selling, general and administrative expenses. The comprehensive measures taken to “variabilize” fixed costs were critical to protecting profitability and cash flows. As economic activity recovered during the year, the Company responded by restarting or increasing production, leading to the reversal of some of these temporary savings. At the same time, the Company remained focused on structural cost improvements to appropriately position its fixed cost base for the post-COVID-19 operating environment. These savings are expected to limit the increase in fixed costs as activity and production levels recover, thus leading to lower fixed costs per tonne. In total, $1.0 billion of structural cost improvements are identified within this fixed cost reduction program which is expected to be fully realized in 2022 relative to the 2019 scale of operation and capacity utilization (adjusted for entities sold or deconsolidated). Fixed costs related to the functional area of


10Management report
production and logistics are expected to provide approximately 40% of the retained savings through continuous improvement programs, improvements in productivity and maintenance efficiency and the rationalization of support functions. Fixed costs related to repairs and maintenance will contribute approximately 35% of the savings through insourcing and reduction of subcontracting and reallocation of internal resources. Savings in selling, general and administrative expenses will contribute the remaining 25% of savings, including a 20% reduction in corporate office headcount. These improvements will augment those achieved under the Action 2020 program, which was superseded at the onset of the COVID-19 pandemic. These savings also include those realized from rationalization of the Company's operating footprint, including the permanent closure of the blast furnace and steel plant at Krakow (Poland), the permanent closure of the Florange coke oven battery and the closure of the Saldana facility in South Africa (see "Properties and capital expenditures—Property, plant and equipment—Europe" for further details).
Proven expertise in acquisitions and turnarounds. ArcelorMittal’s management team has proven expertise in successfully acquiring and subsequently integrating operations, as well as turning around underperforming assets within tight timeframes. The Company takes a disciplined approach to investing and uses teams with diverse areas of expertise from different business units across the Company to evaluate new assets, conduct due diligence and monitor integration and post-acquisition performance. The Company has grown through a series of acquisitions and by improving the operating performance and financial management at acquired facilities. In particular, ArcelorMittal seeks to improve acquired businesses by eliminating operational bottlenecks, addressing any historical under-investments and increasing the capability of acquired facilities to produce higher quality steel. The Company introduces focused capital expenditure programs, implements company-wide best practices, balances working capital, ensures adequate management resources and introduces safety and environmental improvements at acquired facilities. ArcelorMittal believes that these operating and financial measures have improved the operating performance and the quality of steel produced at such facilities.
In recent years, the Company has focused on improving its costs through its Action 2020 program and non-core asset disposals as well as through some strategic M&A activity. In 2018, the Company completed the acquisition of AMSF in Brazil and the acquisition of ArcelorMittal Italia in Italy and in 2019 the Company completed the acquisition of AMNS India through a joint venture with NSC. In 2020, the Company sold ArcelorMittal USA and entered into an agreement to create a joint venture with the Italian government for ArcelorMittal Italia. See
"Introduction—Key transactions and events in 2020" for further information.
Other information
ArcelorMittal is a public limited liability company (société anonyme) that was incorporated for an unlimited period under the laws of the Grand Duchy of Luxembourg on June 8, 2001. ArcelorMittal is registered at the R.C.S. Luxembourg under number B 82.454.
The mailing address and telephone number of ArcelorMittal’s registered office are:
ArcelorMittal
24-26, Boulevard d’Avranches
L-1160 Luxembourg
Grand Duchy of Luxembourg
Telephone: +352 4792-1
ArcelorMittal’s agent for U.S. federal securities law purposes is:
ArcelorMittal Sales & Administration LLC
1 South Dearborn Street, 13th Floor
Chicago, Illinois, 60603
Telephone: +1 312 899 3866
Internet site
ArcelorMittal maintains an Internet site at www.arcelormittal.com. Information contained on or otherwise accessible through this Internet site is not a part of this annual report. All references in this annual report to this Internet site are inactive textual references to this URL and are for information only.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
ArcelorMittal produces a range of publications to inform its shareholders. These documents are available in various formats: they can be viewed online, downloaded or obtained, on request, in paper format. Please refer to www.arcelormittal.com, where they can be located within the Investors menu, under Financial Reports, or within the Corporate Library.
Any request for documents may be sent to: company.secretary@arcelormittal.com or at ArcelorMittal’s registered office.
Sustainable development
ArcelorMittal’s sustainable development information is detailed in the Integrated Annual Review that will be published during the second quarter of 2021 and will be available within the Corporate Library on www.arcelormittal.com.


Management report11
ArcelorMittal as parent company of the ArcelorMittal group
ArcelorMittal, incorporated under the laws of Luxembourg, is the parent company of the ArcelorMittal group and is expected to continue this role during the coming years. The Company has no branch offices.
Listings
ArcelorMittal’s shares (also referred to as "ordinary shares" or "common shares" throughout this report) are traded on several exchanges: New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). Its primary stock exchange regulator is the Luxembourg CSSF (Commission de Surveillance du Secteur Financier). ArcelorMittal’s CSSF issuer number is E-0001.
ArcelorMittal’s 5.50% Mandatorily Convertible Subordinated Notes Due 2023 issued in May 2020 are listed on the New York Stock Exchange.


Indexes
ArcelorMittal is a member of more than 145 indices including: STOXX Europe 600, S&P Europe 350, CAC40, MSCI Pan-Euro, Bloomberg World Index, IBEX 35, Euronext Paris CAC Basic Materials Index, DAXglobal Steel EUR Price and Euronext Amsterdam AEX Basic Materials Index . Recognized for its commitments to sustainable development, ArcelorMittal is also included in the FTSE4Good Index, Euronext Vigeo Europe 120 and the STOXX® Global ESG Leaders Index. Further, ArcelorMittal has been participating in CDP since 2005 (currently a ‘A-’ grade) and the United National Global Compact since 2003.
Share price performance
During 2020, the price of ArcelorMittal shares increased by 32% in dollar terms compared to 2019 year on year; the chart below shows a comparison between the performance of ArcelorMittal’s shares and the Eurostoxx600 Basic Resource (SXPP).
mt-20201231_g4.jpg
Capital return policy
On June 13, 2020, at the annual general meeting of shareholders, as proposed by the Board of Directors, in response to the COVID-19 pandemic, the dividend payment was suspended until the operating environment normalizes.
Following the achievement of the Group’s net debt target, and in line with its previous statements, the Board of Directors will
propose a new capital return policy at the next annual general meeting of shareholders. Going forward, the Company expects to pay a base annual dividend (to be progressively increased over time). In addition, 50% of the amount of free cash flow (calculated as net cash provided by operating activities less purchases of property, plant and equipment and intangibles


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("capital expenditures") less dividends paid to non-controlling shareholders) remaining after paying the base annual dividend will be allocated to a share buyback program to be completed over the subsequent 12 month period. Should the ratio of net debt to operating income (loss) less depreciation, impairment and special items be greater than 1.5x then the share buyback will not be made. According to this policy, the Board will recommend a $0.30 per share base dividend be paid in June 2021. It has also approved a $570 million share buyback program to be completed within 2021. This buyback is in addition to the $650 million share buyback announced on February 15, 2021 to return the proceeds of the partial sell-down of the Company’s equity stake in Cleveland-Cliffs announced on February 9, 2021.
Investor relations
ArcelorMittal has a dedicated investor relations team at the disposal of analysts and investors. By implementing high standards of financial information disclosure and providing clear, regular, transparent and even-handed information to all its shareholders, ArcelorMittal aims to be the first choice for investors in the sector.
To meet this objective and provide information to fit the needs of all parties, ArcelorMittal implements an active and broad investor communications policy: conference calls, road shows with the financial community, regular participation at investor conferences, plant visits and meetings with individual investors.
ArcelorMittal’s senior management plans to meet investors and shareholder associations in road shows throughout 2021.
Depending on their geographical location, investors may use the following e-mails or contact numbers to reach the investor relations team:
investor.relations@arcelormittal.com
'+44 203 214 2893
privateinvestors@arcelormittal.com
'+44 203 214 2893
creditfixedincome@arcelormittal.com+33 1 7192 1026
Sustainable responsible investors
The Investor Relations team is also a source of information for the growing sustainable responsible investment community. The team organizes special events on ArcelorMittal’s corporate responsibility strategy and answers all requests for information sent to the Group crteam@arcelormittal.com or may be contacted at +44 207 543 1132.
Financial calendar
The schedule is available on ArcelorMittal’s website www.arcelormittal.com under Investors>Financial calendar.
Financial results*:
Results for the 1st quarter 2021May 6, 2021
Results for the 2nd quarter 2021 and 6 months 2021July 29, 2021
Results for the 3rd quarter 2021.November 11, 2021
Meeting of shareholders:
Annual general meeting of shareholdersMay 4, 2021
* Earnings results are issued before the opening of the stock exchanges on which ArcelorMittal is listed.
Contact the investor relations team on the information detailed above or please visit www.arcelormittal.com/corp/investors/contact.
Cautionary Statement Regarding Forward-Looking Statements
This annual report and the documents incorporated by reference in this annual report contain forward-looking statements based on estimates and assumptions. This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among other things, statements concerning the business, future financial condition, results of operations and prospects of ArcelorMittal, including its subsidiaries. These statements usually contain the words “believes”, “plans”, “expects”, “anticipates”, “intends”, “estimates” or other similar expressions. For each of these statements, you should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although it is believed that the expectations reflected in these forward-looking statements are reasonable, there is no assurance that the actual results or developments anticipated will be realized or, even if realized, that they will have the expected effects on the business, financial condition, results of operations or prospects of ArcelorMittal.
These forward-looking statements speak only as of the date on which the statements were made, and no obligation has been undertaken to publicly update or revise any forward-looking statements made in this annual report or elsewhere as a result of new information, future events or otherwise, except as required by applicable laws and regulations. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk factors”. The Company undertakes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.
All information that is not historical in nature and disclosed under “Operating and financial review ” is deemed to be a forward-looking statement.


Management report13
Market information
This annual report includes industry data and projections about the Company’s markets obtained from industry surveys, market research, publicly available information and industry publications. Statements on ArcelorMittal’s competitive position contained in this annual report are based primarily on public sources including, but not limited to, published information from the Company's competitors. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. The Company has not independently verified this data or determined the reasonableness of such assumptions. In addition, in many cases the Company has made statements in this annual report regarding its industry and its position in the industry based on internal surveys, industry forecasts and market research, as well as the Company’s experience. While these statements are believed to be reliable, they have not been independently verified.
Financial information
This annual report contains the audited consolidated financial statements of ArcelorMittal and its consolidated subsidiaries, including the consolidated statements of financial position as of December 31, 2020 and 2019, and the consolidated statements of operations, other comprehensive income, changes in equity and cash flows for each of the years ended December 31, 2020, 2019 and 2018. ArcelorMittal’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
The financial information and certain other information presented in a number of tables in this annual report have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this annual report reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based on the rounded numbers. This annual report includes net debt, operating working capital and free cash flow, which are non-GAAP financial measures. ArcelorMittal believes net debt, operating working capital and free cash flow to be relevant to enhance the understanding of its financial position and provides additional information to investors and management with respect to the Company’s operating cash flows, capital structure and credit assessment. In addition, it refers to “special” items in its capital return policy which will be used to determine if the base dividend will be paid. “Special”
items relate to events or charges that the Company does not consider to be part of the normal income generating potential of the business. Items may qualify as “special” although they may have occurred in prior years or are likely to recur in following years. Non-GAAP financial measures should be read in conjunction with and not as an alternative for, ArcelorMittal’s financial information prepared in accordance with IFRS. Such non-GAAP measures may not be comparable to similarly titled measures applied by other companies.
Key transactions and events in 2020
ArcelorMittal Italia
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 certain business units of Ilva in an extraordinary administration insolvency procedure (the “Ilva Agreement”). The Amendment Agreement outlined the terms for a significant equity investment by Italian state-sponsored entities, 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 provided that the equity investment would be for a percentage of the equity of ArcelorMittal Italia in an amount at least equal to ArcelorMittal Italia’s remaining liabilities against the original purchase price under the amended Ilva Agreement. The Amendment Agreement also provided for a 50% reduction in the quarterly rental payments payable by ArcelorMittal under the Ilva Agreement, with the balance being due upon closing of the purchase obligation of the former Ilva business.
The Amendment Agreement had also provided that in the event that the investment agreement were not executed by November 30, 2020, ArcelorMittal had a right to withdraw, subject to the payment of €500 million (€350 million was payable by December 31, 2020 as a condition for the withdrawal to become effective and the remainder payable upon restitution of the business units, potentially subject to certain settlement, or offsetting mechanisms).
On March 4, 2020, simultaneously with the execution of the Amendment Agreement, ArcelorMittal and the Ilva Commissioners also entered into a separate settlement agreement whereby ArcelorMittal agreed to revoke its notice to withdraw from the original Ilva Agreement and the Ilva Commissioners agreed to withdraw their request to enjoin such withdrawal, which was scheduled to be heard in the Civil Court of Milan on March 6, 2020.
On December 10, 2020, ArcelorMittal signed a binding agreement (the “Investment Agreement”) with Invitalia, the party designated by the Italian government to be the government-sponsored investor as contemplated in the March amendment,


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in order to create a partnership between Invitalia and the Company to support the completion of the purchase obligation. Among other things, the Investment Agreement provides for Invitalia to invest up to €1.105 billion in ArcelorMittal Italia in two tranches:
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; in return, Invitalia will receive shares in ArcelorMittal Italia with 50% of the voting rights that, along with governance rights, will provide it with joint control over ArcelorMittal Italia;
The second tranche (consisting of up to €680 million in equity and a shareholder loan of up to €25 million) is payable on closing of the purchase obligation under the Ilva Agreement, which itself is subject to the satisfaction of various conditions precedent by May 2022. This second investment is expected to bring Invitalia’s shareholding in ArcelorMittal Italia to 60%. ArcelorMittal may need to invest up to €70 million to retain a 40% shareholding and equivalent voting rights. The conditions precedent to closing under the Ilva Agreement include: the amendment of the existing environmental plan for the Taranto plant to account for changes in the new industrial plan (as described below); the lifting of all criminal seizures on the Taranto plant; the absence of restrictive measures – in the context of criminal proceedings where Ilva is a defendant – being imposed against ArcelorMittal Italia; and a new agreement with trade unions. If these conditions precedent are not fulfilled by May 2022, the joint venture will not be required to purchase the business units and instead will be required to return them to Ilva, which in turn will be required to pay an end-of-lease adjustment determined on the basis of the equity capital injected by its shareholders and its net financial position. In turn, if the conditions precedent are not fulfilled, Invitalia will also not be required to make the second tranche of its investment and the joint venture would be liquidated.
The updated industrial plan agreed between ArcelorMittal and Invitalia as part of the Investment Agreement involves investment in lower-carbon steelmaking technologies, including the construction of a 2.5 million tonne electric arc furnace, which is expected to open in mid-2024, and the relining of blast furnace #5, which is expected to begin production in 2024. This industrial plan, which targets reaching 8 million tonnes of production in 2025 (crude steel production is limited to 6 million tonnes until the environmental plan is completed), will become effective upon the closing of the first investment. It integrates a
series of public support measures including ongoing government funded employment support and includes, for the period between 2021 and 2025, environmental capital expenditures of €345 million and industrial capital expenditures of €1,051 million as well as capital expenditures of €226 million for the revamp of blast furnace #5 and €260 million for the construction of the electric arc furnace. Going forward, the joint venture will be responsible for funding the future capital expenditure payments and lease rentals (to May 2022).
ArcelorMittal Italia’s governance will be based on the principle of joint control starting from Invitalia’s first investment; accordingly upon closing of the first investment, ArcelorMittal Italia will no longer be included in ArcelorMittal’s scope of consolidation and the carrying amount of its assets and liabilities were classified as held for sale as of December 31, 2020. See note 2.3.2 to the consolidated financial statements.
ArcelorMittal USA disposal
On December 9, 2020, pursuant to the terms of the transaction agreement, dated as of September 28, 2020, the Company sold substantially all of its U.S. operations (notably other than its interest in the Calvert joint venture, as noted below) to Cleveland-Cliffs Inc. (“Cleveland-Cliffs”), including all of the outstanding equity interests of ArcelorMittal USA, ArcelorMittal Monessen and ArcelorMittal Princeton, their subsidiaries, certain other subsidiaries and the joint operations of Hibbing Taconite Mines, Double G Coatings and I/N Tek and the joint venture I/N Kote (ArcelorMittal retained certain intellectual property assets and office space), for an aggregate total consideration of $2.2 billion (the "ArcelorMittal USA Transaction"). The total consideration included $509 million in cash (subject to a working capital adjustment), 78 million common shares of Cleveland-Cliffs (representing a 16% stake and valued at approximately $1,020 million, as of December 9, 2020, see also "—Recent developments") and 583,273 non-voting preferred shares (valued at approximately $761 million, as of December 9, 2020), redeemable at Cleveland-Cliffs’ option at any time from 180 days from the issue date at a redemption price per share (payable in cash or, subject to certain conditions, in Cleveland-Cliffs’ common shares) equal to an initial multiple (subject to anti-dilution provisions) of 100 times the volume-weighted average price of the Cleveland-Cliffs’ common shares for the 20 consecutive trading days ending on the trading day immediately preceding the date fixed for redemption, plus accumulated and unpaid dividends to, but not including, the redemption date (subject to mandatory redemption upon a change of control of Cleveland-Cliffs). In addition, from and after the 24-month anniversary of the issue date, a holder of the preferred stock will be entitled to receive additional cash dividends accruing and compounding on a daily basis at the initial rate of 10% per year on the sum of (i) the redemption price as of the 24-month anniversary and (ii) the amount of accumulated and unpaid


Management report15
dividends on the preferred stock, if any, which rate will increase by 2% per annum at the end of each six-month period following the 24-month anniversary. ArcelorMittal's voting power with respect to Cleveland-Cliffs’ common shares and ability to transfer such shares are subject to certain limitations (summarized below). In addition, Cleveland-Cliffs assumed certain liabilities of ArcelorMittal USA, including pensions and other post-employment benefit liabilities net of plan assets which had a carrying value as of the disposal date of $3.2 billion. The assets of the disposal group were re-measured prior to classification as held for sale at September 30, 2020 and as a result the Company reversed $660 million of prior asset impairments. For further information, see note 2.3.1 to the consolidated financial statements and, for further details about the assets impacted, "Properties and capital expenditures—Property, plant and equipment—NAFTA" .
In addition, NSC, the co-shareholder of I/N Tek and I/N Kote simultaneously exited from such entities, which were therefore transferred in full to Cleveland-Cliffs. ArcelorMittal continues to hold its investment in Calvert, a joint venture with Nippon Steel Corporation in Calvert, Alabama. See note 2.4 to the consolidated financial statements and "Properties and capital expenditures—Property, plant and equipment—Investments in joint ventures" for further information.
In connection with the ArcelorMittal USA Transaction, ArcelorMittal and Cleveland-Cliffs entered into certain other agreements, including a license agreement, mutual transition services agreement for a twelve-month period, and a slab supply agreement with Calvert as customer for an initial term of five years, subject to an automatic renewal for three years (unless either party provides notice of intent to terminate at least twelve-months prior to the end of the initial term). ArcelorMittal agreed to purchase 1.5 million tons of slabs each year for the initial five year term and 0.6 million tons of slabs each year under the renewal. The commitment for both these terms can be canceled or reduced with a six month notice for each of these terms.
ArcelorMittal is subject to certain restrictions on transfer of its Cleveland-Cliffs’ common shares to persons whose beneficial ownership of Cleveland-Cliffs’ common shares following any such transfer would exceed 5% or, in the case of a passive holder, 10%, of the then-outstanding common shares of Cleveland-Cliffs. ArcelorMittal is also subject, for a five-year period, to certain standstill restrictions, including not to acquire beneficial ownership of 20% or more of the then-outstanding common shares of Cleveland-Cliffs or act to control or influence the board of directors or management of Cleveland-Cliffs, and certain voting restrictions on its common shares that limit its voting discretion and in particular align it with Board recommendations and/or other shareholder votes. ArcelorMittal has customary “demand” SEC registration rights for 50% of its
Cleveland-Cliffs' common shares starting March 9, 2021 and for all of such shares starting June 9, 2021, as well as "piggy back" registration rights (i.e., to sell shares in an SEC-registered offering of shares by Cleveland-Cliffs, as occurred in February 2021).
Other events in 2020
During 2020, ArcelorMittal completed several debt transactions see "Operating and financial review—Liquidity and capital resources" and note 6.1.2 to the consolidated financial statements.
On May 14, 2020 and May 18, 2020, respectively, the Company completed an offering of common shares, without nominal value, and mandatorily convertible subordinated notes ("MCNs"). The aggregate gross proceeds from the offerings were $2.0 billion (before deduction of commissions). The share offering was for an aggregate amount of $750 million, representing 80.9 million common shares at an offering price of $9.27 (€8.57 at a EUR/USD conversion rate of 1.0816) per share. The MCNs offering was for an aggregate principal amount of $1.25 billion, issued at 100% of the principal amount and have a maturity of 3 years. The MCNs are mandatorily converted into common shares of the Company upon maturity (unless earlier converted at the option of the holders or ArcelorMittal or upon certain specified events). The MCNs will pay a coupon of 5.50% per annum, payable quarterly in arrears. The minimum conversion price of the MCNs is equal to $9.27, corresponding to the offering price of the shares, and the maximum conversion price is 117.5% of the minimum conversion price (corresponding to $10.89), subject to certain defined adjustments. See note 11.2 to the consolidated financial statements for further information. A Mittal family trust participated in the offerings by purchasing $100 million of MCNs and $100 million of shares.
On October 30, 2020, the Company completed a share buyback program in connection with the announced sale of 100% of the shares of ArcelorMittal USA. ArcelorMittal repurchased 35,636,253 shares at an average price per share of €11.92 (equivalent to $14.03) for a total value of €425 million ($500 million).
On December 15, 2020, ArcelorMittal signed separate, privately negotiated exchange agreements with a limited number of holders of the MCNs to exchange $247 million in aggregate principal amount of MCNs for an aggregate of 22,653,933 shares at the minimum conversion ratio plus $25 million (including accrued interest on the exchanged MCNs up to, but excluding, the settlement date). See note 11.2 to the consolidated financial statements.


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On December 22, 2020, ArcelorMittal announced the extension of the conversion date for the $1 billion privately placed mandatory convertible bond ("MCB") issued on December 28, 2009 until January 31, 2024. The other main features of the MCB remain unchanged. See note 11.2 to the consolidated financial statements.
Recent developments
On February 9, 2021, ArcelorMittal announced an agreement to sell 40 million Cleveland-Cliffs' common shares for total gross proceeds of $652 million (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 million recognized in other comprehensive income was transferred to retained earnings in February 2021.
On February 11, 2021, the Board of Directors of ArcelorMittal announced, effective immediately, that Aditya Mittal, currently President, CFO and CEO ArcelorMittal Europe, will become Chief Executive Officer of the Company. Mr. Mittal, who founded the Company in 1976 and is currently Chairman and CEO will become Executive Chairman. In this position, he will continue to lead the Board of Directors and work together with the CEO and management team. The CEO Office will be renamed Executive Office, consisting of the Executive Chairman and the CEO. As a result of these developments, Genuino Christino, who joined the Company in 2003 and has held the position of Head of Finance since 2016, will become Chief Financial Officer.
On February 15, 2021, ArcelorMittal announced a share buyback program under the authorization given by the annual
general meeting of shareholders held on June 13, 2020. ArcelorMittal intends to repurchase shares for an aggregate maximum amount of $650 million under the program. On completion of the program, ArcelorMittal will commence a further share buyback program for an aggregate amount of $570 million, in-line with the Company’s new capital returns policy announced on February 11, 2021. Both share buyback programs will be completed by December 31, 2021. To maintain its current level of voting rights, on February 12, 2021, the Significant Shareholder entered into a share repurchase agreement with ArcelorMittal to sell, on each trading day which ArcelorMittal purchases shares under the programs, an equivalent number of shares in the proportion of the Significant Shareholder’s 36.34% of outstanding shares of ArcelorMittal. The sale will be at the same price as the shares repurchased on the market. The share buyback program was completed on March 3, 2021 with 27,113,321 million shares repurchased (9,852,980 of which were repurchased from the Significant Shareholder for purposes of maintaining its voting rights for €195 million ($236 million)) for a total value of approximately €537 million ($650 million) at an approximate average price per share of €19.79.
On March 4, 2021, ArcelorMittal commenced a second share buyback program for an aggregate amount of $570 million, in-line with the Company’s new capital returns policy. This share buyback program will be completed by December 31, 2021.
For further information on ArcelorMittal’s ongoing capital expenditure projects, see “Properties and capital expenditures—Capital expenditures”.



Management report17
Risk factors
ArcelorMittal’s business, financial condition, results of operations, reputation or prospects could be materially and adversely affected by one or more of the risks and uncertainties described below.
Summary
Our business is subject to numerous risks and uncertainties, including those highlighted under “Detailed risk factors” below. These risks include, but are not limited to, the following:
I.Risks related to the global economy and the mining and steel industry
a)Prolonged low steel and (to a lesser extent) iron ore prices and/or low steel demand would likely have an adverse effect on ArcelorMittal’s results of operations.   
b)Volatility in the supply and prices of raw materials, energy and transportation, and volatility in steel prices or mismatches between steel prices and raw material prices could adversely affect ArcelorMittal’s results of operations.
c)Excess capacity and oversupply in the steel industry and in the iron ore mining industry have in the past and may continue in the future to weigh on the profitability of steel producers, including ArcelorMittal.
d)Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and ArcelorMittal’s results of operations in various markets.
e)Developments in the competitive environment in the steel industry could have an adverse effect on ArcelorMittal’s competitive position and hence its business, financial condition, results of operations or prospects.
f)Competition from other materials and alternative steel based technologies could reduce market prices and demand for steel products and thereby reduce ArcelorMittal’s cash flows and profitability.
II.Risks related to ArcelorMittal's operations
a)ArcelorMittal’s level of profitability and cash flow currently is and, depending on market and operating conditions, may in the future be, substantially affected by its ability to reduce costs and improve operating efficiency.
b)ArcelorMittal has incurred and may incur in the future operating costs when production capacity is idled or increased costs to resume production at idled facilities. 
c)ArcelorMittal could experience labor disputes that may disrupt its operations and its relationships with its customers and its ability to rationalize operations and reduce labor costs in certain markets may be limited in practice or encounter implementation difficulties.
d)Disruptions to ArcelorMittal’s manufacturing processes caused for example by equipment failures, natural disasters, epidemics or pandemics or extreme weather events could adversely affect its operations, customer service levels and financial results.
e)ArcelorMittal’s insurance policies provide limited coverage, potentially leaving it uninsured against some business risks.
f)ArcelorMittal’s reputation and business could be materially harmed as a result of data breaches, data theft, unauthorized access or successful hacking.
III.Risks related to ArcelorMittal’s Mining activities
a)ArcelorMittal’s mining operations are subject to risks associated with mining activities.
b)ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine.
c)ArcelorMittal faces rising extraction costs over time as reserves deplete.
IV.Risks related to ArcelorMittal’s acquisitions and investments
a)ArcelorMittal has grown through acquisitions and may continue to do so. Failure to manage external growth and difficulties completing planned acquisitions or integrating acquired companies could harm ArcelorMittal’s future results of operations, financial condition and prospects.
b)ArcelorMittal may fail or encounter further difficulties to implement its strategy with respect to ArcelorMittal Italia and incur further losses. 
c)ArcelorMittal faces risks associated with its acquisition, via a joint venture, of AMNS India.
d)ArcelorMittal’s greenfield, brownfield and other investment projects are subject to financing, execution and completion risks.
e)ArcelorMittal faces risks associated with its investments in joint ventures and associates.
V.Risks related to ArcelorMittal’s financial position and organizational structure
a)Changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions, could result in the impairment of such assets, including intangible assets such as goodwill.
b)ArcelorMittal has a substantial amount of indebtedness, which could make it more difficult or expensive to refinance its maturing debt, incur new debt and/or flexibly manage its business and the market's perception of ArcelorMittal's leverage may affect its share price.
c)ArcelorMittal’s ability to fully utilize its recognized deferred tax assets depends on its profitability and future cash flows.
d)Underfunding of pension and other post-retirement benefit plans at some of ArcelorMittal’s operating subsidiaries could require the Company to make substantial cash contributions to pension plans or to pay for employee healthcare, which may reduce the cash available for ArcelorMittal’s business. 
e)ArcelorMittal’s results of operations could be affected by fluctuations in foreign exchange rates, particularly the euro to U.S. dollar exchange rate, as well as by exchange controls imposed by governmental authorities in the countries where it operates.


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f)The Significant Shareholder has the ability to exercise significant influence over the outcome of shareholder votes.
g)ArcelorMittal is a holding company that depends on the earnings and cash flows of its operating subsidiaries, which may not be sufficient to meet future operational needs or for shareholder distributions, and loss-making subsidiaries may drain cash flow necessary for such needs or distributions.
VI.Legal and regulatory risks
a)ArcelorMittal is subject to strict environmental, health and safety laws and regulations that could give rise to a significant increase in costs and liabilities.
b)Laws and regulations restricting emissions of greenhouse gases could force ArcelorMittal to incur increased capital and operating costs and could have a material adverse effect on ArcelorMittal’s results of operations, financial condition and reputation.
c)The income tax liability of ArcelorMittal may substantially increase if the tax laws and regulations in countries in which it operates change or become subject to adverse interpretations or inconsistent enforcement.
d)ArcelorMittal is subject to economic policy, political, social and legal risks and uncertainties in the emerging markets in which it operates or proposes to operate, and these uncertainties may have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects.
e)ArcelorMittal is subject to an extensive, complex and evolving regulatory framework which may expose it and its subsidiaries, joint ventures and associates to investigations by governmental authorities, litigation and fines, in relation, among other things, to antitrust and compliance matters. The resolution of such matters could negatively affect the Company’s profitability and cash flows in a particular period or harm its reputation.
f)ArcelorMittal is currently and in the future may be subject to legal proceedings or product liability claims, the resolution of which could negatively affect the Company’s profitability and cash flows in a particular period.
g)Changes to global data privacy laws and cross-border personal data transfer requirements could adversely affect ArcelorMittal's business and operations. 
h)U.S. investors may have difficulty enforcing civil liabilities against ArcelorMittal and its directors and senior management.
Detailed risk factors
I. Risks related to the global economy and the mining and steel industry
Prolonged low steel and (to a lesser extent) iron ore prices and/or low steel demand would likely have an adverse effect on ArcelorMittal’s results of operations.   
As an integrated producer of steel and iron ore, ArcelorMittal’s results of operations are sensitive to the market prices of, and demand for, steel and iron ore in its markets and globally. The impact of market steel prices on its results is direct while the impact of market iron ore prices is both direct and indirect, as ArcelorMittal sells iron ore on the market to third parties (in which case it benefits from higher iron ore market prices), and indirect, as iron ore is a principal raw material used in steel production and fluctuations in its market price are typically and eventually (with the timing dependent on steel market conditions) passed through to steel prices (with any lags in passing on higher prices "squeezing" steel margins, as discussed below). Steel and iron ore prices are affected by supply and demand trends and inventory cycles. In terms of demand, steel and iron ore prices are sensitive to trends in cyclical industries, such as the automotive, construction, appliance, machinery, equipment and transportation industries, which are significant markets for ArcelorMittal’s products. More generally, steel and iron ore prices are sensitive to macroeconomic fluctuations in the global economy which are impacted by many factors ranging from trade and geopolitical tensions to global and regional monetary policy to specific disruptive events such as pandemics and natural disasters. In the past, substantial price decreases during periods of economic weakness have not always been offset by commensurate price
increases during periods of economic strength. In addition, as further discussed below, excess supply relative to demand for steel in local markets generally results in increased exports and drives down global prices. In terms of inventory, steel stocking and destocking cycles affect apparent demand for steel and hence steel prices and steel producers’ profitability. For example, steel distributors may accumulate substantial steel inventories in periods of low prices and, in periods of rising real demand for steel from end-users, steel distributors may sell steel from inventory (destock), thereby delaying the effective implementation of steel price increases. Conversely, steel price decreases can sometimes develop their own momentum, as customers adopt a “wait and see” attitude and destock in the expectation of further price decreases.
As a result of these factors, steel and iron ore prices have come under pressure at various points in recent periods. In 2019, steel market conditions deteriorated significantly due to a decline in steel prices (lower demand in Europe and the U.S., higher imports in Europe and additional domestic supply and the effect of customer destocking in the U.S.) and higher raw material costs (particularly in iron ore due to supply-side developments in Brazil and Australia), resulting in a negative price-cost effect. As a result, ArcelorMittal’s steel segments recorded significantly lower operating income in 2019, including charges of $0.8 billion primarily related to inventory and impairment charges of $1.9 billion. Steel market conditions deteriorated further in 2020 due to the COVID-19 pandemic and its economic ramifications. For example, apparent steel consumption in the EU fell 18.4% year-on-year in the first half of 2020 and, ArcelorMittal reduced production and temporarily idled steelmaking and finishing assets, with corresponding adverse volume and (as discussed below) price effects. This weighed on the Company’s results in


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2020, especially in the second quarter of 2020 when steel shipments were down 34.7% compared to the second quarter of 2019.
Steel and iron ore price trends are difficult to predict, due in particular to their sensitivity to the geopolitical and macro-economic environment. Trade relations also affect the supply-demand relationship and hence prices. For example, while the imposition of tariffs in the United States at a rate of 25% supported local market steel prices in 2018, further tariffs and retaliatory protectionist measures by other countries, particularly in the broader context of global trade tensions (especially between the United States and China), may at any point in the future have a significant negative impact on global trade and ultimately economic growth, steel demand and steel and iron ore prices. A significant example of the impact of the macro-economic trends on steel prices has been the ongoing COVID-19 pandemic and its economic ramifications. The overall effect in 2020 (subject to some specific geographic exceptions) was a decline which began towards the end of the first quarter of 2020 (after prices had generally improved in the beginning of the year) and which then began to improve during the third quarter of 2020. The impact on prices going forward will be determined by such factors as the duration of the pandemic, the industry supply response and any impacts on input costs, including potential changes in raw material input prices (the latter having increased in the second and third quarters of 2020 due to improved demand conditions (e.g., renewed economic activity in China) and supply constraints in Brazil due to the impact of COVID-19). The extent of the economic damage attributable to the COVID-19 pandemic is highly uncertain, differs from country to country due to the duration and scope of the restrictions put in place to reduce the rate of infections and hospitalizations, the development and spread of variants of COVID-19 and both health and regulatory dynamics until effective vaccines are widely available. While activity in steel consuming industries recommenced or increased during the second and third quarters due to the partial or complete lifting of restrictions (or the exception of industrial activity from them), new restrictions were implemented in the fourth quarter of 2020 due to second waves and are expected to continue or to be implemented in the first part of 2021. Nonetheless, the activity in steel consuming industries continued to strengthen in the fourth quarter. GDP and steel demand contracted in 2020. While GDP and steel demand are expected to improve in 2021 in most regions, uncertainty is high and the speed and duration of any recovery will depend on a number of factors beyond the Company’s control, including the nature and duration of restrictions that remain in place or may be reinstituted, the effectiveness of vaccines as new variants of COVID-19 appear and spread, levels of unemployment, the decrease in wider corporate profitability as a result, and the level of fiscal policy support available. The Company has therefore made and will
continue to need to make ongoing decisions to adjust production in various geographies in accordance with the level of steel demand and government requirements. A scenario of prolonged low steel and (to a lesser extent or if simultaneous) iron ore prices whether or not combined with low steel demand, including as a result of such macroeconomic trends described above and geopolitical issues, would have a material adverse effect on ArcelorMittal’s results of operations and financial condition.
Volatility in the supply and prices of raw materials, energy and transportation, and volatility in steel prices or mismatches between steel prices and raw material prices could adversely affect ArcelorMittal’s results of operations. 
The prices of steel, iron ore, coking coal and scrap have been highly volatile in recent years. Volatility in steel and raw material prices can result from many factors including: trends in demand for iron ore in the steel industry itself, and particularly from Chinese steel producers (as the largest group of producers); industry structural factors (including the oligopolistic nature of the seaborne iron ore industry and the fragmented nature of the steel industry); the expectation or imposition of corrective trade measures such as tariffs; massive stocking and destocking activities (sudden drops in prices can lead end-users to delay orders pushing prices down further); speculation; new laws or regulations; changes in the supply of iron ore, in particular due to new mines coming into operation; business continuity of suppliers; changes in pricing models or contract arrangements; expansion projects of suppliers; worldwide production, including interruptions thereof by suppliers; capacity-utilization rates; accidents or other similar events at suppliers’ premises or along the supply chain as occurred in 2019; wars, natural disasters, public health epidemics (such as the outbreak of COVID-19, which reached a pandemic level in early 2020 and substantially depressed demand for steel for an extended period), political disruption and other similar events; fluctuations in exchange rates; the bargaining power of raw material suppliers and the availability and cost of transportation. For further information on the movement of raw material prices in recent years, see "Operating and financial review—Economic conditions—Raw materials."
As a producer and seller of steel, the Company is directly exposed to fluctuations in the market price for steel, iron ore, coking coal and other raw materials, energy and transportation. In particular, steel production consumes substantial amounts of raw materials including iron ore, coking coal and coke, and the production of direct reduced iron, the production of steel in EAFs and the re-heating of steel involve the use of significant amounts of energy, making steel companies dependent on the price of and their reliable access to supplies of raw materials and energy. Although ArcelorMittal has substantial sources of iron ore and coal from its own mines (the Company’s self-sufficiency


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rates were 65% for iron ore and 14% for PCI and coal in 2020), it nevertheless remains exposed to volatility in the supply and price of iron ore and coking coal given that it obtains a significant portion of such raw materials under supply contracts from third parties. For additional details on ArcelorMittal’s raw materials supply and self-sufficiency, see “Business overview—Products—Mining products—Other raw materials and energy”.
Furthermore, while steel and raw material (in particular iron ore and coking coal) price trends have historically been correlated, a lack of correlation or an abnormal lag in the corollary relationship between raw material and steel prices may also occur and result in a “price-cost effect” in the steel industry. ArcelorMittal has experienced negative price-cost effects (or "squeezes") at various points in recent years including in 2019 and 2020 and may continue to do so. In some of ArcelorMittal’s segments, in particular Europe and NAFTA, there are several months between raw material purchases and sales of steel products incorporating those materials, rendering them particularly susceptible to price-cost effect. For example, coking coal sourced from Australia takes several weeks to reach Europe (e.g. ~4 weeks sailing time, plus loading/unloading time at ports), creating a structural lag. Sudden spikes in raw materials, such as coking coal, have occurred in the past and may occur in the future. Because ArcelorMittal sources a substantial portion of its raw materials through long-term contracts with quarterly (or more frequent) formula-based or negotiated price adjustments and as a steel producer sells a substantial part of its steel products at spot prices, it faces the risk of adverse differentials between its own production costs, which are affected by global raw materials and scrap prices, on the one hand, and trends for steel prices in regional markets, on the other hand. In 2019, the significant decline in steel prices (due to lower demand and higher imports, among other things) and significant increase of iron ore prices among other trends due in part to supply shocks following the collapse of the Brumadinho dam owned by Vale in Brazil and a heavy cyclone season in Australia weighed heavily on the profitability of the Company's steel business. In 2020, the negative impact of the COVID-19 pandemic restrictions on steel demand led to lower spreads as steel prices declined, in particular in the second quarter of 2020. Prices remained low in the third quarter of 2020 (due in part to price lag), while raw material costs, especially iron ore, remained broadly stable, underpinned by the strong rebound in Chinese demand, resulting in a price-cost squeeze. In the fourth quarter, with the recovery of steel demand in the world ex-China, there was a recovery in steel and iron ore prices, while prices for coking coal decreased and remained stable throughout the fourth quarter due to the Chinese ban on Australian coals. While the significant increase in steel prices in the fourth quarter of 2020 resulted in a multi-year high in steel spreads (which was not fully reflected in the Company’s performance due to lag effect), the duration of these favorable
conditions is highly uncertain. If raw material prices were to increase substantially while demand for steel were to decrease, the steel sector would again experience a negative price-cost effect.
Another area of exposure to price volatility is transportation. Freight costs (i.e., shipping) are an important component of ArcelorMittal’s cost of goods sold. In particular, if freight costs were to increase before iron ore or steel prices or if transportation is significantly disrupted as a result of new measures implemented to limit the spread of COVID-19 or for any other reason, this would directly and mechanically weigh on ArcelorMittal’s profitability (although it would make imports into its markets less competitive).
Excess capacity and oversupply in the steel industry and in the iron ore mining industry have in the past and may continue in the future to weigh on the profitability of steel producers, including ArcelorMittal.
The steel industry is affected by global and regional production capacity and fluctuations in steel imports and exports, which are themselves affected by the existence and amounts of tariffs and customer stocking and destocking cycles. The steel industry has historically suffered from structural overcapacity globally, and the current global steelmaking capacity exceeds the current global consumption of steel. This overcapacity is affected by global macroeconomic trends and amplified during periods of global or regional economic weakness, leading to weaker global or regional demand. In particular, China is both the largest global steel consumer and the largest global steel producer by a large margin, and the balance between its domestic production and consumption has been an important factor influencing global steel prices, such as in 2015, when Chinese domestic steel demand weakened resulting in a surge in Chinese steel exports. While the structural imbalance between Chinese supply and demand has been reduced by capacity eliminations in recent years, less strict capacity constraints and capacity creep may result in increasing overcapacity. In addition, a significant increase in Chinese capacity and/or a significant decrease in Chinese demand could lead to a renewed flood of Chinese steel exports. In the long-term, Chinese steel demand is expected to decline, as the economy slows, the need for large infrastructure projects wanes and pace of urbanization moderates. In addition, other developing markets (such as Brazil, Russia and Ukraine) continue to periodically show structural overcapacity when experiencing decreased domestic demand as a result of weakening economic conditions, and developed Asia continues to exhibit overcapacity and the need to export significant volumes. Regional steel markets are also vulnerable at times of economic crisis in countries with significant steelmaking capacity. One such example is Turkey where a currency crisis caused domestic demand to decline sharply during the second half of 2018 and led to an increase in exports, particularly long


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steel products. The European steel market is particularly sensitive to decreases in demand as well as supply spikes from imports due to remaining structural overcapacity. For example, in response to a weak demand environment in Europe in the first half of 2019, the Company announced that it would temporarily reduce its European steelmaking capacity with total annualized production cuts of 4.2 million tonnes. In 2020, steel demand decreased substantially in response to the economic ramifications of the lockdowns imposed to restrict the spread of COVID-19 infections. Steel demand in EU28 fell by around 25% year-on-year during the second quarter of 2020 at the height of the restrictions but improved sharply during the second half of the year. Despite new restrictions being implemented in the fourth quarter of 2020 and expectation that restrictions will continue or be implemented in the first part of 2021, manufacturing has been broadly unaffected, and steel supply has failed to keep pace with the growth in underlying steel demand, causing prices to increase. However, there is uncertainty as to how long restrictions will remain in place and whether they may be tightened, and the impact on the level and stability of GDP and steel demand in 2021 will be dependent on factors beyond the Company’s control as described earlier. The Company's sales and profitability may be materially or adversely affected the longer restrictions remain in place and the extent to which they are tightened and accordingly the greater the impact on employment and corporate profitability.
The overcapacity of steel production in the developing world and in China in particular has weighed on global steel prices at times over the past decade, as exports have surged to Europe and NAFTA, ArcelorMittal’s principal markets, often at low prices that may be at or below the cost of production, depressing steel prices in regional markets world-wide (See the following risk factor). If global demand continues to weaken or does not improve, the effects of such a phenomenon could increase.
Finally, excess iron ore supply coupled with decreased demand in iron ore consuming industries, such as steel, led to a prolonged depression of iron ore prices at various points in recent years, for example in 2015, which in turn weighed on steel prices as iron ore is a principal raw material in steelmaking. While the iron ore supply/demand balance was more favorable in subsequent periods and iron ore prices were strong in 2019 and 2020, no assurance can be given that it will not deteriorate again, particularly if Chinese steel demand declines, worldwide capacity increases due to new construction, production is restarted or steel demand declines again due to the COVID-19 pandemic (the extent and duration of which are highly uncertain and may be prolonged). A renewed phase of steel and iron ore oversupply would likely have a material adverse effect on ArcelorMittal’s results of operations and financial condition.
Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and ArcelorMittal’s results of operations in various markets.
ArcelorMittal is exposed to the effects of “dumping” and other unfair trade and pricing practices by competitors. Moreover, government subsidies to the steel industry remain widespread in certain countries, particularly those with centrally-controlled economies such as China. In periods of lower global demand for steel, there is an increased risk of additional volumes of unfairly-traded steel exports into various markets, including North America and Europe and other markets such as South Africa, in which ArcelorMittal produces and sells its products. Such imports have had and could in the future have the effect of further reducing prices and demand for ArcelorMittal’s products.
Exports of low-cost steel products from developing countries, along with a lack of effective remedial trade policies, can depress steel prices in various markets globally, including in ArcelorMittal’s key markets. Conversely, ArcelorMittal is exposed to the effects of import tariffs, other trade barriers and protectionist policies more generally due to the global nature of its operations. Various countries have instituted, and may institute import tariffs and barriers that could, depending on the nature of the measures adopted, adversely affect ArcelorMittal’s business by limiting the Company’s access to or competitiveness in steel markets. While such protectionist measures can help the producers in the adopting country, they may be ineffective, raise the risk of exports being directed to markets where no such measures are in place or are less effective and/or result in retaliatory measures. Moreover, absent government intervention, European steel producers who will bear increasingly high costs to reduce carbon emissions (or pay for allowances) will be at a competitive disadvantage versus importers from developing countries with lower environmental standards. In addition, the economic ramifications of the COVID-19 pandemic have increased the risk of steel imports into ArcelorMittal’s principal markets.
More generally, the current state of trade relations globally with trade disputes leading to the imposition of tariffs and then retaliatory measures, as seen in the recent period in various markets (U.S./China, U.S./Europe, etc.) has and could continue to directly (in the case of tariffs) or indirectly (in the case of economic growth generally) have a significant adverse effect on demand for and the price of steel and hence on ArcelorMittal’s results of operations and financial condition.


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Developments in the competitive environment in the steel industry could have an adverse effect on ArcelorMittal’s competitive position and hence its business, financial condition, results of operations or prospects.
The markets in which steel companies operate are highly competitive. Competition, in the form of established producers expanding in new markets, smaller producers increasing production in anticipation of demand increases or amid recoveries, or exporters selling excess capacity from markets such as China, could cause ArcelorMittal to lose market share, increase expenditures or reduce pricing. For example, in the CIS, as regional competitors improve operational efficiency and increase capacity, ArcelorMittal’s market share may be affected. Any of these developments could have a material adverse effect on its business, financial condition, results of operations or prospects.
Competition from other materials and alternative steel based technologies could reduce market prices and demand for steel products and thereby reduce ArcelorMittal’s cash flows and profitability.
In many applications, steel competes with other materials that may be used as substitutes, such as aluminum, concrete, composites, glass, plastic and wood. In particular, as a result of increasingly stringent regulatory requirements, as well as developments in alternative materials, designers, engineers and industrial manufacturers, especially those in the automotive industry have increased their use of lighter weight and alternative materials, such as aluminum and plastics in their products.
In the automotive area, ArcelorMittal has introduced new advanced high-strength steel products, such as Usibor® 2000, Ductibor® 1000 and Fortiform® a new 3rd generation advanced high strength steel for cold stamping, new engineering S-in motion® projects and a dedicated electric iCARe® range to respond to the shift toward electric cars. In the construction area, ArcelorMittal launched Steligence®, a unique holistic commercial approach with a complete set of products, services and solutions. See “Business overview—Research and development”. Despite these product innovations, a loss of market share to substitute materials, increased government regulatory initiatives favoring the use of alternative materials, as well as the development of additional new substitutes for steel products could significantly reduce market prices and demand for steel products and thereby reduce ArcelorMittal’s cash flows and profitability.
While in 2020, the Company started to offer its customers equivalent green steel tonnes by way of a certification system linked to CO2 savings, achieved through investment in decarbonization technologies, additive manufacturing or new
technologies such as carbon free steelmaking could result in a loss of market share if competitors develop and deploy this kind of technology before ArcelorMittal. In addition, ArcelorMittal may not invest as efficiently or rapidly as its competitors in low carbon steel projects. For example, certain of ArcelorMittal’s competitors have commissioned projects with the goal of offering significant amounts of low CO2 steel in the medium term. In addition, to the extent regulatory requirements and/or customer demand for low carbon or carbon neutral steel increase, competition with respect to low CO2 steel technologies may become more significant.
II. Risks related to ArcelorMittal's operations
ArcelorMittal’s level of profitability and cash flow currently is and, depending on market and operating conditions, may in the future be, substantially affected by its ability to reduce costs and improve operating efficiency.
The steel industry has historically been cyclical, periodically experiencing difficult operating conditions. In light of this, ArcelorMittal has historically and increasingly in recent periods, taken initiatives to reduce its costs and increase its operating efficiency including through various asset optimization and other programs. The most recent of these programs is the $1.0 billion cost reduction program announced in February 2021 to ensure that a significant portion of cost savings achieved during the COVID-19 crisis are sustained. The cost reduction plan includes footprint optimization with Krakow's steel shop closure, productivity improvements from maintenance in South Africa, digital transformation and restructuring to improve productivity in Brazil and insourcing high cost downstream activities in Brazil. It also includes selling, general and administrative savings through a 20% corporate headcount reduction, the sale of ArcelorMittal USA to Cleveland-Cliffs and further savings in Mexico (headcount savings and optimization, work outsourcing, optimization of office space and activity centralization). Failure to implement the Company’s announced cost-saving initiatives fully could have a material adverse effect on the Company’s profitability and cash flows.
ArcelorMittal has incurred and may incur in the future operating costs when production capacity is idled or increased costs to resume production at idled facilities. 
ArcelorMittal’s decisions about which facilities to operate and at which levels are made based upon customers’ orders for products as well as the capabilities and cost performance of the Company’s facilities. Considering temporary or structural overcapacity in the current market situation, production operations are concentrated at several plant locations and certain facilities are idled in response to customer demand, although operating costs are still incurred at such idled facilities. When idled facilities are restarted, ArcelorMittal incurs costs to replenish raw material inventories, prepare the previously idled


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facilities for operation, perform the required repair and maintenance activities and prepare employees to return to work safely and resume production responsibilities. Such costs could have an adverse effect on its results of operations or financial condition. In particular, given the significant deterioration in economic activity and steel market conditions since measures to contain the COVID-19 pandemic were introduced, the Company was required to adapt its operations for much of 2020, in particular temporarily idling production during lockdown and with a leaner cost structure. The Company began taking actions during the third quarter of 2020, including the announced permanent closure of the blast furnace in Kraków, Poland.
ArcelorMittal could experience labor disputes that may disrupt its operations and its relationships with its customers and its ability to rationalize operations and reduce labor costs in certain markets may be limited in practice or encounter implementation difficulties.
A majority of the employees of ArcelorMittal and of its contractors are represented by labor unions and are covered by collective bargaining or similar agreements, which are subject to periodic renegotiation. Strikes or work stoppages could occur prior to, or during, negotiations preceding new collective bargaining agreements, during wage and benefits negotiations or during other periods for other reasons, in particular in connection with any announced intentions to adapt the footprint. ArcelorMittal may experience strikes and work stoppages at various facilities. Prolonged strikes or work stoppages, which may increase in their severity and frequency, may have an adverse effect on the operations and financial results of ArcelorMittal. The depressed economic environment in recent years in South Africa led ArcelorMittal South Africa to initiate workforce reorganizations and reductions in 2018, 2019 and 2020 (see also "Management and employees—Employees"). As a result, ArcelorMittal South Africa sought to rationalize operations through temporary or permanent idling and/or closure of plants, with for example the closure of Saldanha operations. Matters related to remuneration for 2020 were significantly affected by the economic impacts of recession and the COVID-19 pandemic and lockdown and are subject to ongoing engagements with employee representatives.
In Italy, given the ongoing challenges faced by steelmakers at ArcelorMittal Italia, the unions made claims for urgent measures to ensure the health and safety of the workers and the resumption of stable social relations.
Most recently, in response to the economic ramifications of the COVID-19 pandemic, throughout much of 2020, ArcelorMittal has reduced production and implemented, and continues to implement, cost reduction measures, including temporary and permanent workforce reductions. Initiatives such as these have in the past and may in the future lead to protracted labor
disputes and political controversy. For example, ArcelorMittal France faced an unlimited strike beginning on October 5, 2020 in response to continued work throughout the COVID-19 pandemic, including requests for hazard pay and continued pay in the event of idled production. No assurance can be given that further labor disputes relating to the health crisis and its ramifications will not arise in the future, in particular if additional measures are implemented or are prolonged.
Disruptions to ArcelorMittal’s manufacturing processes caused for example by equipment failures, natural disasters, epidemics or pandemics or extreme weather events could adversely affect its operations, customer service levels and financial results.
Steel manufacturing processes are dependent on critical steel-making equipment, such as furnaces, continuous casters, rolling mills and electrical equipment (such as transformers), and such equipment may incur downtime as a result of unanticipated failures or other events, such as fires, explosions, furnace breakdowns or as a result of natural disasters, epidemics or pandemics or severe weather conditions. ArcelorMittal’s manufacturing plants have experienced, and may in the future experience, plant shutdowns or periods of reduced production as a result of such equipment failures or other events, for example the collapse of the oxygen and nitrogen pipelines in November 2018 at ArcelorMittal Temirtau, the fire in a conveyor belt of the coke plant in ArcelorMittal Asturias in Aviles in October 2018, an electrical failure resulting in the temporary stoppage of the concentrator at AMMC in 2019, a fire in the gas cleaning section of the coke plant in Dunkirk in 2020 and the hot blast stove explosion in Burns Harbor in 2020.
In 2020, in response to the economic ramifications of the COVID-19 pandemic, ArcelorMittal reduced production. To the extent that lost production as a result of such disruptions cannot be compensated for by unaffected facilities, such disruptions could have an adverse effect on ArcelorMittal’s operations, customer service levels and results of operations.
Additionally, ArcelorMittal operates in Liberia, which underwent an Ebola virus epidemic in 2014 and 2015; its operations and projects in the country were substantially affected. Currently, the COVID-19 pandemic has been and continues to affect many regions of the world with differing degrees of severity and viral peaks possibly still to come in emerging market regions, and its economic ramifications have provoked regional and global recessions. The COVID-19 pandemic is having, and future epidemics or pandemics, may have, a material adverse effect on ArcelorMittal’s operations, production targets and expansion plans in the markets in which it operates and, more generally, on its results of operations and financial condition.


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In addition, natural disasters and severe weather conditions could lead to significant damage at ArcelorMittal’s production facilities and general infrastructure. For example, ArcelorMittal Mexico’s production facilities located in Lázaro Cárdenas, Michoacán, Mexico are located in or close to areas prone to earthquakes. The Lázaro Cárdenas area has, in addition, been subject to a number of tsunamis in the past. The site of the joint venture AM/NS Calvert (���Calvert”) in the United States is located in an area subject to tornados and hurricanes. ArcelorMittal also has assets in locations subject to bush fires, specifically in Kazakhstan and South Africa, and to Arctic freeze. More generally, changing weather patterns and climatic conditions in recent years, possibly due to global warming, have added to the unpredictability and frequency of natural disasters.
For example, on July 10, 2019 an extreme storm disabled a crane that unloads from ships iron ore used in the blast furnaces at the Taranto plant in Italy, causing a fatality and subsequently affecting a portion of its raw material supply. Severe weather conditions can also affect ArcelorMittal’s operations in particular due to the long supply chain for certain of its operations and the location of certain operations in areas subject to harsh winter conditions (i.e., Canada and Kazakhstan) or areas that are susceptible to droughts (i.e., South Africa and Brazil). Flooding has also affected ArcelorMittal's operations, including at ArcelorMittal Asturias in Aviles, Spain in June 2018 and in Liberia in the third quarter of 2018, when heavy rains during the wet season caused handling and logistic constraints that impacted shipment volumes. Damage to ArcelorMittal production facilities due to natural disasters and severe weather conditions could, to the extent that lost production cannot be compensated for by unaffected facilities, adversely affect its business, results of operations or financial condition.
ArcelorMittal’s insurance policies provide limited coverage, potentially leaving it uninsured against some business risks.
The occurrence of an event that is uninsurable or not fully insured could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects. ArcelorMittal maintains insurance on property and equipment in amounts believed to be consistent with industry practices, but it is not fully insured against all such risks. ArcelorMittal’s insurance policies cover physical loss or damage to its property and equipment on a reinstatement basis as arising from a number of specified risks and certain consequential losses, including business interruption arising from the occurrence of an insured event under the policies. Under ArcelorMittal’s property and equipment policies, damages and losses caused by certain natural disasters, such as earthquakes, floods and windstorms, are also covered.
ArcelorMittal also purchases worldwide third-party public and product liability insurance coverage for all of its subsidiaries. Various other types of insurance are also maintained, such as comprehensive construction and contractor insurance for its greenfield and major capital expenditures projects, directors and officers liability, transport, and charterers’ liability, as well as other customary policies such as car insurance, travel assistance and medical insurance.
In addition, ArcelorMittal maintains trade credit insurance on receivables from selected customers, subject to limits that it believes are consistent with those in the industry, in order to protect it against the risk of non-payment due to customers’ insolvency or other causes. Not all of ArcelorMittal’s customers are or can be insured, and even when insurance is available, it may not fully cover the exposure.
Notwithstanding the insurance coverage that ArcelorMittal and its subsidiaries carry, the occurrence of an event or series of events (such as, among others, a pandemic) that may result in losses in excess of limits specified under the relevant policy, or losses not covered by insurance policies, could materially harm ArcelorMittal’s financial condition and future operating results.
ArcelorMittal’s reputation and business could be materially harmed as a result of data breaches, data theft, unauthorized access or successful hacking.
ArcelorMittal’s operations depend on the secure and reliable performance of its information technology systems. An increasing number of companies, including ArcelorMittal, have recently experienced intrusion attempts or even breaches of their information technology security, some of which have involved sophisticated and highly targeted attacks on their computer networks. ArcelorMittal’s corporate website was the target of a hacking attack in January 2012, which brought the website down for several days, and phishing, ransomware and virus attacks have been increasing in more recent years through 2020, with WannaCry impacting the Company in March 2018 and ransomware Eight in South Africa in 2020. Adverse consequences of technological advances like Industry 4.0, Cloud computing, Internet of Things, and Blockchain may increase threats or cause damage to ArcelorMittal, for example by impacting shop-floor systems supporting production and maintenance and thereby forcing plant operations revert to manual mode with loss of production, resulting in new risks to ArcelorMittal's operations and systems.
Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or to implement in a timely manner effective and efficient countermeasures.


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If unauthorized parties attempt or manage to bring down the Company’s website or force access into its information technology systems, they may be able to misappropriate confidential information, cause interruptions in the Company’s operations, damage its computers or process control systems or otherwise damage its reputation and business. In such circumstances, the Company could be held liable or be subject to regulatory or other actions for breaching confidentiality and personal data protection rules. Any compromise of the security of the Company’s information technology systems could result in a loss of confidence in the Company’s security measures and subject it to litigation, civil or criminal penalties, and adverse publicity that could adversely affect its reputation, financial condition and results of operations.
III. Risks related to ArcelorMittal’s Mining activities
ArcelorMittal’s mining operations are subject to risks associated with mining activities.
ArcelorMittal's mining operations are subject to the hazards and risks usually associated with the exploration, development and production of natural resources, any of which could result in production shortfalls or damage to persons or property. In particular, the hazards associated with open-pit mining operations include, among others:
flooding of the open pit;
collapse of the open-pit wall;
accidents associated with the operation of large open-pit mining and rock transportation equipment;
accidents associated with the preparation and ignition of large-scale open-pit blasting operations;
production disruptions or difficulties associated with mining in extreme weather conditions;
hazards associated with the disposal of mineralized waste water, such as groundwater and waterway contamination; and
collapse of tailings ponds dams.
Hazards associated with underground mining operations, of which ArcelorMittal has several, include, among others:
underground fires and explosions, including those caused by flammable gas;
gas and coal outbursts;
cave-ins or falls of ground;
discharges of gases and toxic chemicals;
flooding;
sinkhole formation and ground subsidence; and
blasting, removing, and processing material from an underground mine.
ArcelorMittal is exposed to all of these hazards. The occurrence of any of the events listed above could delay production, increase production costs and result in death or injury to persons, damage to property and liability for ArcelorMittal, some or all of which may not be covered by insurance, as well as substantially harm ArcelorMittal’s reputation, both as a Company focused on ensuring the health and safety of its employees and more generally.
ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine.
ArcelorMittal’s reported reserves are estimated quantities of the ore and metallurgical coal that it has determined can be economically mined and processed under present and anticipated conditions to extract their mineral content. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including factors beyond ArcelorMittal’s control. The process of estimating reserves involves estimating deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. As a result, no assurance can be given that the estimated amounts of iron ore and coal will be recovered or that it will be recovered at the anticipated rates. Estimates may vary, and results of mining and production subsequent to the date of an estimate may lead to revisions of estimates. Reserve estimates and estimates of mine life may require revisions based on actual market conditions, production experience and other factors. Fluctuations in the market prices of minerals and metals, reduced recovery rates or increased operating and capital costs due to inflation, exchange rates, mining duties, changes in regulatory requirements or other factors may render proven and probable reserves uneconomic to exploit and may ultimately result in a revision of reserves. In particular, a prolonged period of low prices or other indicators could lead to a review of the Group’s reserves. Such review would reflect the Company’s view based on estimates, assumptions and judgments and could result in a reduction in the Group’s reported reserves. The Group’s reserve estimates do not exceed the quantities that the Company estimates could be extracted economically if future prices were at similar levels to


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the average contracted price for the previous three years. As a result, if the average contracted prices decline in the subsequent period, including sharply (given the historical volatility and wide swings in iron ore prices), the Company’s estimates of its reserves at year-end may decline.
In addition, substantial time and expenditures are required to:
establish mineral reserves through drilling;
determine appropriate mining and metallurgical processes for optimizing the recovery of saleable product from iron ore and coal reserves;
obtain environmental and other licenses or securing surface rights with local communities;
construct mining and processing facilities and the infrastructure required for greenfield properties;
extract the saleable products from the mined iron ore or coal; and
maintain the appropriate blend of ore to ensure the final product qualities expected by the customer are achieved.
If a project proves not to be economically feasible by the time ArcelorMittal is able to exploit it, ArcelorMittal may incur substantial losses and be obliged to recognize impairments. In addition, potential changes or complications involving metallurgical and other technological processes that arise during the life of a project may result in delays and cost overruns that may render the project not economically feasible.
ArcelorMittal faces rising extraction costs over time as reserves deplete.
Reserves are gradually depleted in the ordinary course of a given mining operation. As mining progresses, distances to the primary crusher and to waste deposits become longer, pits become steeper and underground operations become deeper, all of which are considered in reserve estimates. As a result, ArcelorMittal usually experiences rising unit extraction costs over time with respect to each of its mines.
IV. Risks related to ArcelorMittal’s acquisitions and investments
ArcelorMittal has grown through acquisitions and may continue to do so. Failure to manage external growth and difficulties completing planned acquisitions or integrating acquired companies could harm ArcelorMittal’s future results of operations, financial condition and prospects.
The Company was formed and subsequently grew through mergers and acquisitions. After curtailing its large-scale M&A activity for several years following the 2008 financial crisis, it has made several large acquisitions in recent years, including its acquisition (via a joint venture) of Calvert in 2014, of a long steel business ArcelorMittal Sul Fluminense ("AMSF") in 2018, ArcelorMittal Italia via a long-term lease and conditional purchase agreement in 2018 and AMNS India via a joint venture in 2019.
To the extent ArcelorMittal continues to pursue significant acquisitions, financing of such acquisitions may (depending on the structure) result in increased debt, leverage and gearing. Acquisitions also entail increased operating costs, as well as greater allocation of management resources away from daily operations. Managing acquisitions requires the continued development of ArcelorMittal’s financial and management information control systems, the integration of acquired assets with existing operations, the adoption of manufacturing best practices, handling any labor disruptions that may arise, attracting and retaining qualified management and personnel as well as the continued training and supervision of such personnel, and the ability to manage the risks and liabilities associated with the acquired businesses. Failure to manage acquisitions could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects.
ArcelorMittal may fail or encounter further difficulties to implement its strategy with respect to ArcelorMittal Italia and incur further losses. 
The Company has encountered and may continue to encounter difficulties in implementing its strategy with respect to ArcelorMittal Italia. In particular, pursuant to the initial agreement for the lease and subsequent conditional purchase of the business, ArcelorMittal Italia has been implementing major improvements involving substantial capital expenditures designed to bring ArcelorMittal Italia up to and beyond EU environmental standards, to improve its operational performance, to rebuild client confidence and to integrate personnel and apply the Company’s best practices and expertise. The implementation of these improvements has been subject to various obstacles, including the unexpected legal, regulatory and operational developments encountered in 2019 and the impact of the COVID-19 pandemic in Italy, which led to a significant reduction in the Taranto plant’s production


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beginning mid-March 2020. These delays were particularly costly as ArcelorMittal Italia has been loss-making since its consolidation in ArcelorMittal's results in November 2018, particularly in light of the recent market environment.
On November 4, 2019, ArcelorMittal sent to the Commissioners managing the Ilva insolvency procedure (the “Commissioners”) a notice to withdraw from or terminate lease and conditional purchase agreement and return the business units to Ilva. This notice was based, among other things, on provisions of the agreement that allow withdrawal in the event that a new law affects the environmental plan for the Taranto plant in such a way that materially impairs the ability to operate the plant or implement the industrial plan; these provisions were triggered following the Italian Parliament’s removal, on November 3, 2019, of the legal protection necessary for ArcelorMittal Italia to implement its environmental plan without risk of criminal liability. In response, the Commissioners filed suit in Milan seeking an injunction to prevent ArcelorMittal’s withdrawal and termination of the agreement. Following negotiation between the parties, on March 4, 2020, ArcelorMittal and the Commissioners agreed to settle this litigation and signed an amendment to the agreement.
The amendment included terms for investment by Italian state-sponsored and other private entities into ArcelorMittal Italia, a new industrial plan involving lower-carbon steelmaking technologies, a revised lease payment structure and certain revised commitments and additional conditions precedent related to the completion of the obligation to purchase. The Investment Agreement was signed on December 10, 2020, providing for Invitalia, an Italian state-owned company, to invest up to €1.105 billion in ArcelorMittal Italia, in two tranches (equity and €25 million as a loan). While the first investment is currently expected to be made in the first quarter of 2021 (after having contractually been expected to be made by the end of February following EU merger antitrust authorization in late January), no assurance can be given that it will be made or that the conditions precedent to the second investment and the purchase obligation under the lease agreement itself will be fulfilled or that further operational, financial, legal, regulatory, labor-related or political difficulties will not arise, potentially resulting in the failure to achieve the anticipated benefits of the project, further losses, renewed litigation and payments of substantial amounts or other damages. For more information see “Introduction—Key transactions and events in 2020” and note 9.3 to the consolidated financial statements.
ArcelorMittal faces risks associated with its acquisition, via a joint venture, of AMNS India.
ArcelorMittal acquired, via a joint venture with Nippon Steel Corporation (“NSC”), AMNS India Limited ("AMNS India") on December 16, 2019, in a bankruptcy resolution process. The joint venture’s proposal, set out in a resolution plan (the
“Resolution Plan”) that detailed among other things the amount to be paid to existing creditors and towards capital infusion (totaling $7.1 billion and including $417 million of guaranteed working capital adjustment) and the improvements and related capital expenditures (totaling $2.6 billion) to be made over the medium-term, was approved by the Indian Supreme Court on November 15, 2019.
The implementation of the Resolution Plan subjects ArcelorMittal to various risks. On the operational front, the industrial project to turnaround AMNS India and further improve operational profitability is large-scale and ambitious. While ArcelorMittal has substantial experience in turnaround situations, the scale of this one is particularly large and it is the Company’s inaugural large-scale acquisition in India, an emerging market. However, AMNS India’s assets do not include certain assets that are ancillary to the steel plant, such as port facilities. While AMNS India has since made additional acquisitions, such as the Odisha Slurry Pipeline and a power plant, without requiring additional shareholder funding, it is possible that the joint venture may make additional acquisitions financed in a manner similar to that of the AMNS India acquisition and subject the Company to similar risks. Capital expenditure in excess of budgeted amounts, delays and difficulties in achieving commercial objectives therefore cannot be ruled out. The risks in this respect are compounded to an extent by the fact that AMNS India is emerging from bankruptcy (meaning, among other things, that maintenance capital expenditures were deferred) and is owned and operated by a joint venture with attendant risks around strategic alignment, potential discord and deadlock. ArcelorMittal is exposed to the extent of its equity investment and its guarantees of the financings of the joint venture. On March 16, 2020, AMNS Luxembourg, the parent company of the joint venture AMNS India, entered into a $5.1 billion ten-year term loan agreement with several Japanese banks which is guaranteed by ArcelorMittal and NSC in proportion to their interests in the joint venture. See further information in note 2.4 to the consolidated financial statements.
ArcelorMittal’s greenfield, brownfield and other investment projects are subject to financing, execution and completion risks.
The Company has announced a number of greenfield or brownfield development projects, in addition to ArcelorMittal Italia and AMNS India, as well as other significant investment projects which are capital intensive. See “Properties and capital expenditures—Property, plant and equipment—Investments in joint ventures” and "Properties and capital expenditures—Property, plant and equipment—Capital expenditure projects" for further information on projects the Company has announced. To the extent these projects go forward, they would entail substantial capital expenditures, and their timely completion and


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successful operation may be affected by factors beyond the control of ArcelorMittal, including delays and measures related to the COVID-19 pandemic. These factors include receiving financing on reasonable terms, obtaining or renewing required regulatory approvals and licenses, securing and maintaining adequate property rights to land and mineral resources, local opposition to land acquisition or project development, managing relationships with or obtaining consents from other shareholders, revision of economic viability projections, demand for the Company’s products, local environmental or health-related conditions, and general economic conditions. Any of these factors may cause the Company to delay, modify or forego some or all aspects of its development projects. For investment projects that the Company expects to fund primarily through internal sources, these sources may prove insufficient depending on the amount of internally generated cash flows and other uses of cash, and the Company may need to choose between incurring external financing or foregoing the investment. The Company cannot guarantee that it will be able to execute its greenfield, brownfield or other investment projects, and to the extent that they proceed, that it will be able to complete them on schedule, within budget, or achieve an adequate return on its investment. Conversely, should the Company decide to postpone or cancel development projects, it could incur various negative consequences such as litigation or impairment charges.
ArcelorMittal faces risks associated with its investments in joint ventures and associates.
ArcelorMittal has investments in various joint ventures and associates. See “Properties and capital expenditures—Property, plant and equipment—Investments in joint ventures” and note 2.4 to ArcelorMittal’s consolidated financial statements. In particular, it has structured significant growth transactions in recent years, including Calvert and AMNS India as joint ventures, and recently restructured ArcelorMittal Italia as a joint venture. Joint ventures and associates may be controlled and managed by joint venture or controlling partners that may not fully comply with ArcelorMittal’s standards, controls and procedures, including ArcelorMittal’s health, safety, environment and community standards, which could lead to higher costs, reduced production or environmental, health and safety incidents or accidents, which could adversely affect ArcelorMittal’s results and reputation. Joint ventures are also subject to the risk of dead-lock and/or coordination issues affecting the implementation of strategy.
In addition, certain of these joint ventures and associates are currently experiencing, or may in the future experience, difficult operating conditions and/or incur losses. Difficult operating conditions in joint ventures and associates in which ArcelorMittal has invested may expose it to loss of its investment, requirements for additional investments or calls on guarantees.
For example, ArcelorMittal’s joint venture Al Jubail’s financial situation has been negatively impacted by a slower than expected ramp-up of operations and required further funding in 2018 and 2019 and may require additional funding in the future. ArcelorMittal has provided shareholder loans to assist with funding and additional equity funding from the other partners was completed in the fourth quarter of 2019. ArcelorMittal’s loans to the joint venture were $109 million at December 31, 2020. The Company has also guaranteed $347 million of Al Jubail’s external debt (including shareholder loan). As of December 31, 2020, ArcelorMittal had given $4.5 billion in guarantees on behalf of associates and joint ventures including $3.1 billion issued on behalf of AMNS India, $226 million issued on behalf of Calvert and the above mentioned Al Jubail guarantee. See notes 2.4.1, 2.4.2 and 9.4 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal’s investments in joint ventures and associates may also result in impairments. In 2020, as a result of lower cash flow projections resulting from weaker market conditions partially linked to the COVID-19 pandemic, the Company recognized a $211 million impairment charge with respect to its associate DHS Group. As of December 31, 2020, ArcelorMittal’s investments accounted for under the equity method had a book value of $6.8 billion, including AMNS India ($2.0 billion), DHS Group ($672 million), China Oriental ($1.2 billion), Gonvarri ($626 million), Calvert ($539 million), Baffinland ($387 million) and VAMA ($194 million).
V. Risks related to ArcelorMittal’s financial position and organizational structure
Changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions, could result in the impairment of such assets, including intangible assets such as goodwill.
At each reporting date, in accordance with the Company’s accounting policy described in note 5.3 to ArcelorMittal’s consolidated financial statements, ArcelorMittal reviews the carrying amounts of its tangible and intangible assets (goodwill is reviewed annually or whenever changes in circumstances indicate that the carrying amount may not be recoverable) to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset (or cash generating unit) is reviewed in order to determine the amount of the impairment, if any.
If certain of management’s estimates change during a given period, such as the discount rate, capital expenditures, expected changes to average selling prices, growth rates, shipments and direct costs, the estimate of the recoverable amount of goodwill or the asset could fall significantly and result in impairment. While impairment does not affect reported cash flows, the


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decrease of the estimated recoverable amount and the related non-cash charge in the consolidated statements of operations could have a material adverse effect on ArcelorMittal’s results of operations. For example, in 2019, the Company recognized $1.3 billion of impairments on the fixed assets of ArcelorMittal USA (of which $660 million were reversed in 2020 in connection with the agreed sale to Cleveland-Cliffs) and a $75 million impairment at ArcelorMittal South Africa following downward revisions of cash flow projections. In 2020, the Company recorded impairment charges of $196 million, including $92 million related to the permanent closure of the coke plant in Florange (France) in the first quarter and $104 million following the permanent closure of a blast furnace and steel plant in Krakow (Poland) in the third quarter. The Company also recognizes impairment in connection with intended sales, when the carrying amount of the disposal group is higher than the fair value less cost to sell. In this context, the Company recognized a total impairment charge of $994 million (including $888 million in connection with the intended sale of the ArcelorMittal Italia remedies and $86 million in relation to the sale of the Votorantim remedies) in 2018, an additional impairment of $497 million in 2019 related to the remedy asset sales for the ArcelorMittal Italia acquisition and a $331 million impairment charge with respect the Company's plate assets in Europe in 2020. Substantial amounts of goodwill, tangible and intangible assets remain recorded on the Company's balance sheet. As of December 31, 2020, the Company's balance sheet included $4.0 billion of goodwill. More generally, no assurance can be given as to the absence of significant further impairment losses in future periods, particularly if market conditions deteriorate further. In particular, changes in key assumptions used in the Group’s impairment tests, due to market conditions, regulations (including environmental regulations) or other reasons may result in additional impairment losses being recognized in the future. For example, the ongoing COVID-19 pandemic and its impact on macroeconomic conditions (including steel demand and steel prices) may result in changes in the key assumptions used in the Group’s impairment tests. In particular, the Company's assumptions are based on its belief that the COVID-19 pandemic has not structurally altered the long-term outlook of operations and subject to certain differences by geographical areas, its expectation that shipments will return to pre-COVID-19 levels by 2022 with the benefit from a favorable supply demand balance following a prolonged period of destocking and a restoration of operating margins in 2021 with the benefit of improved selling prices and structural cost improvements sustained from the Company's response to the COVID-19 crisis. Changes in these assumptions could result in additional impairment losses. In addition, the Company's assumptions do not include the significant long-term investments necessary to reach the Group's announced carbon emissions goals, given the uncertainties around the requirements needed for the transition to low-emission
technologies. The Company’s assumptions for future cash flows include an estimate for costs that the Company expects to incur to acquire emission allowances, which primarily impacts the flat steel operations in Europe. The assumption for carbon emission cost is based on historical experience, expected opportunities to mitigate or otherwise offset such future costs and information available of future changes. Due to economic developments, uncertainties over the pace of transition to low-emission technologies, political and environmental actions that will be taken to meet the carbon reduction goals, regulatory changes and emissions activity arising from climate-related matters, the Company’s assumptions used in the recoverable amount calculations, such as capital expenditure, carbon emission costs and other assumptions are inherently uncertain and may ultimately differ from actual amounts.
ArcelorMittal has a substantial amount of indebtedness, which could make it more difficult or expensive to refinance its maturing debt, incur new debt and/or flexibly manage its business and the market's perception of ArcelorMittal's leverage may affect its share price.
As of December 31, 2020, ArcelorMittal had total debt outstanding of $12.3 billion, including $2.5 billion of short-term indebtedness (including payables to banks and the current portion of long-term debt) and $9.8 billion of long-term indebtedness. As of December 31, 2020, ArcelorMittal had $6.0 billion of cash and cash equivalents, restricted cash and other restricted funds, and $5.5 billion available to be drawn under existing credit facilities. The Company also relies on its true sale of receivables programs ($3.8 billion of trade receivables sold at December 31, 2020), as a way to manage its working capital cycle.
An increase in ArcelorMittal’s level of debt outstanding could have adverse consequences, including impairing its ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes, and limiting its flexibility to adjust to changing market conditions or withstand competitive pressures, resulting in greater vulnerability to a downturn in general economic conditions. Substantial increases in the Company's gearing could affect its ability to, and the conditions under which it might, access financial markets to refinance maturing debt on acceptable terms. ArcelorMittal’s access to financial markets for refinancing also depends on the conditions in the global capital and credit markets, which are volatile. 
Moreover, ArcelorMittal could, in order to increase its financial flexibility and strengthen its balance sheet, implement capital raising measures such as equity offerings (as was done in May 2009, January 2013, April 2016 and May 2020), which could (depending on how they are structured) dilute the interests of existing shareholders or require them to invest further funds to


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avoid such dilution. In addition, ArcelorMittal has undertaken and may undertake further asset disposals in order to reduce debt. For example, ArcelorMittal announced in August 2019 that it had identified opportunities to unlock up to $2 billion in value from its asset portfolio over the next two years; it completed this optimization with the sale of ArcelorMittal USA in December 2020. Asset disposals are subject to execution risk and may fail to materialize, and the proceeds received from such disposals may not reflect values that management believes are achievable and/or cause substantial accounting losses (particularly if the disposals are done in difficult market conditions). In addition, to the extent that the asset disposals include the sale of all or part of core assets (including through an increase in the share of non-controlling interests), this could reduce ArcelorMittal’s consolidated cash flows and/or the economic interest of ArcelorMittal shareholders in such assets, which may be cash-generative and profitable ones.
In addition, credit rating agencies could downgrade ArcelorMittal’s ratings either due to factors specific to ArcelorMittal, a prolonged cyclical downturn in the steel industry and mining industries, macroeconomic trends (such as global or regional recessions or economic shocks such as that resulting from the COVID-19 pandemic) or trends in credit and capital markets more generally, and any future downgrades could lead to an increase in its cost of borrowing. The margin under ArcelorMittal’s principal credit facilities and certain of its outstanding bonds is subject to adjustment in the event of a change in its long-term credit ratings, and downgrades that occurred in 2012, 2015 and 2020 resulted in increased interest expense. In April 2020 Fitch Ratings changed its long-term issuer credit rating from BBB- to BB+ with negative outlook, citing the negative impact of the COVID-19 pandemic on steel market conditions (expected decreases in demand and prices and continued margin pressure), and in October 2020, Fitch released a report indicating that it forecasts the steel market to recover only by 2022 after a coronavirus pandemic-induced fall in demand, existing overcapacity, and low margins in many steel-producing regions, and highlighting ArcelorMittal’s exposure to weak steel-market conditions, exacerbated by the pandemic and weak auto-sector performance. In May 2020, Moody’s changed its long-term issuer credit rating from Baa3 to Ba1, with stable outlook, citing, among other points, the negative impact of the COVID-19 pandemic and the Company’s exposure to cyclical end-markets such as the automotive, machinery and construction industries. In May 2020, in light of the announced share and mandatorily convertible subordinated note offerings, S&P confirmed the Company’s rating of BBB- and negative outlook but indicated that a downgrade could occur if it saw delays or hurdles in the recovery of ArcelorMittal’s credit metrics, such as a slower than anticipated recovery of the steel industry or material delays in the execution of the Company’s announced $2 billion divestment program. In
February 2021, S&P revised the outlook of the Company's rating from negative to stable and reaffirmed the BBB- long-term issuer credit rating. In light of the high level of uncertainty around the pandemic’s remaining course and the continued duration and extent of its economic ramifications in general and potential adverse effect on the steel industry in particular, further actions by the ratings agencies cannot be ruled out.
ArcelorMittal’s principal credit facilities contain restrictive covenants. These covenants limit, inter alia, encumbrances on the assets of ArcelorMittal and its subsidiaries, the ability of ArcelorMittal’s subsidiaries to incur debt and the ability of ArcelorMittal and its subsidiaries to dispose of assets in certain circumstances. ArcelorMittal’s principal credit facilities also include the following financial covenant: ArcelorMittal must ensure that the “Leverage Ratio”, being the ratio of “Consolidated Total Net Borrowings” (consolidated total borrowings less consolidated cash and cash equivalents) to “Consolidated EBITDA” (the consolidated net pre-taxation profits of the ArcelorMittal group for a Measurement Period, subject to certain adjustments as defined in the facilities), at the end of each “Measurement Period” (each period of 12 months ending on the last day of a financial half-year or a financial year of ArcelorMittal), is not greater than a ratio of 4.25 to one. As of December 31, 2020, the Company was in compliance with the Leverage Ratio.
These restrictive and financial covenants could limit ArcelorMittal’s operating and financial flexibility. Failure to comply with any covenant would enable the lenders to accelerate ArcelorMittal’s repayment obligations. Moreover, ArcelorMittal’s debt facilities have provisions whereby certain events relating to other borrowers within the ArcelorMittal group could, under certain circumstances, lead to acceleration of debt repayment under the credit facilities. Any invocation of these cross-acceleration clauses could cause some or all of the other debt to accelerate, creating liquidity pressures. In addition, the mere market perception of a potential breach of any financial covenant could have a negative impact on ArcelorMittal’s ability to refinance its indebtedness on acceptable conditions.
Furthermore, some of ArcelorMittal’s debt is subject to floating rates of interest and thereby exposes ArcelorMittal to interest rate risk (i.e., if interest rates rise, ArcelorMittal’s debt service obligations on its floating rate indebtedness would increase). Depending on market conditions, ArcelorMittal from time to time uses interest-rate swaps or other financial instruments to hedge a portion of its interest rate exposure either from fixed to floating or from floating to fixed. ArcelorMittal had exposure to 86% of its long-term debt at fixed interest rates and 14% at floating rates as of December 31, 2020.
In addition to the foregoing specific risks relating to ArcelorMittal’s indebtedness, its share price is affected by the


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markets’ perception of its leverage. Announcements relating to growth or expansion initiatives, depending in part on their financing structure, could affect this perception and hence weigh on ArcelorMittal’s share price.
For further information on ArcelorMittal's indebtedness see “Operating and financial review—Liquidity and capital resources” and note 6.1.2 to the consolidated financial statements.
ArcelorMittal’s ability to fully utilize its recognized deferred tax assets depends on its profitability and future cash flows.
At December 31, 2020, ArcelorMittal had $7.9 billion recorded as deferred tax assets on its consolidated statement of financial position, which decreased $0.8 billion in 2020 as compared to an increase of $0.4 billion in 2019 primarily due to the changes in the expectation of future profits mainly in Luxembourg. In 2020, the Company recorded deferred tax expense of $0.8 billion mainly due to the derecognition of deferred tax assets in Luxembourg following the sale of ArcelorMittal USA. The deferred tax assets can be utilized only if, and only to the extent that, ArcelorMittal’s operating subsidiaries generate adequate levels of taxable income in future periods to offset the tax loss carry forwards and reverse the temporary differences prior to expiration. At December 31, 2020, the amount of future income required to recover ArcelorMittal’s deferred tax assets of $7.9 billion was at least $31.5 billion at certain operating subsidiaries.
ArcelorMittal’s ability to generate taxable income is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. If ArcelorMittal generates lower taxable income than the amount it has assumed in determining its deferred tax assets, then the value of deferred tax assets will be reduced. In addition, assumptions regarding the future recoverability of deferred tax assets depend on management’s estimates of future taxable income in accordance with the tax laws applicable to ArcelorMittal’s subsidiaries in the countries in which they operate. If in the course of its assessments management determines that the carrying amount of any of its deferred tax assets may not be recoverable pursuant to such prevailing tax laws, the recoverable amount of such deferred tax assets may be impaired.
Underfunding of pension and other post-retirement benefit plans at some of ArcelorMittal’s operating subsidiaries could require the Company to make substantial cash contributions to pension plans or to pay for employee healthcare, which may reduce the cash available for ArcelorMittal’s business. 
ArcelorMittal’s principal operating subsidiaries in Brazil, Canada, Europe and South Africa provide defined benefit pension and other post-retirement benefit plans to their employees. Some of these plans are currently underfunded, see note 8.2 to ArcelorMittal’s consolidated financial statements for the total value of plan assets and any deficit.
ArcelorMittal’s funding obligations depend upon future asset performance, which is tied to equity and debt markets to a substantial extent, the level of interest rates used to discount future liabilities, actuarial assumptions and experience, benefit plan changes and government regulation. Because of the large number of variables that determine pension funding requirements, which are difficult to predict, as well as any legislative action, future cash funding requirements for ArcelorMittal’s pension plans and other post-employment benefit plans could be significantly higher than current estimates. Increases in the general life expectancy assumption have contributed to increases in the defined benefit obligation. In these circumstances, funding requirements could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects. 
ArcelorMittal’s results of operations could be affected by fluctuations in foreign exchange rates, particularly the euro to U.S. dollar exchange rate, as well as by exchange controls imposed by governmental authorities in the countries where it operates.
ArcelorMittal operates and sells products globally and as a result, its business, financial condition, results of operations or prospects could be adversely affected by fluctuations in exchange rates. A substantial portion of ArcelorMittal’s assets, liabilities, operating costs, sales and earnings are denominated in currencies other than the U.S. dollar (ArcelorMittal’s reporting currency). Accordingly, its results of operations are subject to translation risk (i.e., the USD value of the revenues and profits generated in other currencies and its debt denominated in other currencies) and transaction risk (i.e., a mismatch between the currency of costs and revenues). Foreign exchange gains for the year ended December 31, 2020 and 2019 were $107 million, and $4 million, respectively. As of April 1, 2018, the Company’s statement of operations no longer includes foreign exchange exposure on the euro denominated debt following the designation of the euro denominated debt as a hedge of certain euro denominated net investments in foreign operations. See note 6.3 to ArcelorMittal’s consolidated financial statements.


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Moreover, ArcelorMittal operates in several countries whose currencies are, or have in the past been, subject to limitations imposed by those countries’ central banks, or which have experienced sudden and significant devaluations. In emerging countries where ArcelorMittal has operations and/or generates substantial revenue, such as Argentina, Brazil, India, South Africa, Venezuela, Kazakhstan and Ukraine, the risk of significant currency devaluation is high. For example, the Argentinian peso has continued to substantially depreciated since 2018, and in 2020 it has depreciated approximately 40% versus the U.S dollar. Moreover, inflation in 2019 reached its highest point since 1991 at 53.8% attesting the hyperinflationary dimension of Argentina's economy. In order to slow peso depreciation, and in response to the economic situation, the Argentine government enacted a series of currency controls which require central bank permission to exchange pesos for foreign currency.
Currency devaluations, the imposition of new exchange controls or other similar restrictions on currency convertibility, or the tightening of existing controls in the countries in which ArcelorMittal operates could adversely affect its business, financial condition, results of operations or prospects. See “Business overview—Government regulations—Key currency regulations and exchange controls” and “Operating and financial review—Economic conditions—Impact of exchange rate movements”.
The Significant Shareholder has the ability to exercise significant influence over the outcome of shareholder votes.
At December 31, 2020, a trust (HSBC Trustee (C.I.) Limited, as trustee), of which Mr. Lakshmi N. Mittal, Mrs. Usha Mittal and their children are the beneficiaries (referred to as the "Significant Shareholder"), beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) ordinary shares amounting (when aggregated with ordinary shares of ArcelorMittal held directly by Mr. and Mrs. Mittal) to 393,046,404 in the aggregate, representing 36.37% of ArcelorMittal’s outstanding shares. The foregoing statement does not give effect to the ordinary shares resulting from the conversion of the mandatorily convertible subordinated notes issued in May 2020 outstanding as of December 31, 2020. Assuming conversion of all such outstanding mandatorily convertible subordinated notes (including those held by the Significant Shareholder), the Significant Shareholder would, together with Mr. and Mrs. Mittal, beneficially own 34.0% (assuming conversion of all notes at the maximum conversion ratio) or 34.3% (assuming conversion of all notes at the minimum conversion ratio) of outstanding shares. As a result, the Significant Shareholder has the ability to significantly influence the decisions adopted at the ArcelorMittal general meetings of shareholders, including matters involving mergers
or other business combinations, the acquisition or disposition of assets, issuances of equity and obtaining funding through debt. The Significant Shareholder also has the ability to significantly influence a change of control of ArcelorMittal. For further information on the Company’s major shareholders, see “Shareholders and markets—Major shareholders”.
ArcelorMittal is a holding company that depends on the earnings and cash flows of its operating subsidiaries, which may not be sufficient to meet future operational needs or for shareholder distributions, and loss-making subsidiaries may drain cash flow necessary for such needs or distributions.
As a holding company, ArcelorMittal is dependent on the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses, meet its debt service obligations, pay any cash dividends or distributions on its ordinary shares or conduct share buy-backs. Cash and cash equivalents are primarily centralized at the parent level and are managed by ArcelorMittal Treasury SNC, although from time to time cash or cash equivalent balances may be held at the Company’s international subsidiaries or its holding companies. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions on such operating subsidiaries’ ability to pay dividends, but such restrictions are not significant in the context of ArcelorMittal’s overall liquidity. These subsidiaries may also experience operating difficulties that impact their cash flows. For example, ArcelorMittal South Africa has been experiencing significant difficulties in recent years. In order to decrease its significant outstanding debt, in January 2016, ArcelorMittal South Africa conducted a rights offering entirely underwritten by ArcelorMittal that resulted, via the repayment of an intragroup loan of R3.2 billion (R4.7 billion or $0.3 billion outstanding as of December 31, 2020) and an additional cash injection by ArcelorMittal of R0.5 billion, in ArcelorMittal’s shareholding in ArcelorMittal South Africa increasing from 52% to 71%. For additional information on current ownership, see note 2.2.1 to the consolidated financial statements. The reports of ArcelorMittal South Africa’s auditors as of and for the year ended December 31, 2019, for the six months ended June 30, 2020 and for the preliminary condensed consolidated financial statements as of December 31, 2020 included a material uncertainty related to going concern. In this respect, ArcelorMittal South Africa’s 2019 financial statements and the interim condensed consolidated financial statements for the first half of 2020 noted that factors which are outside the control of management have a significant impact on the business, specifically, market demand, supply chain interruptions and commodity and steel prices as well as the volatility in the rand vs. U.S. dollar exchange rate and the unpredictable effects of the COVID-19 pandemic and national lockdown in South Africa, and the preliminary condensed


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consolidated financial statements as of December 31, 2020 note COVID-19 and exchange rate volatility. In May 2020, ArcelorMittal South Africa announced that it would only fully restart operations once the demand for steel becomes visible, and in July 2020, announced that it had decided to idle Blast Furnace C (“BF C”) at Vanderbijlpark until demand recovered. Given the improvement in demand, BF C was restarted in December 2020, earlier than expected.
Repatriation of funds from operating subsidiaries may also be affected by tax and foreign exchange policies in place from time to time in the various countries where the Company operates, though none of these policies are currently significant in the context of ArcelorMittal’s overall liquidity. Under the laws of Luxembourg, ArcelorMittal will be able to pay dividends or distributions through income from industrial franchise fees or to the extent that it is entitled to receive cash dividend distributions from its subsidiaries, recognize gains from the sale of its assets or record share premium from the issuance of shares.
If the earnings and cash flows of its operating subsidiaries are substantially reduced, ArcelorMittal may not be in a position to meet its operational needs or to make shareholder distributions in line with announced proposals.
VI. Legal and regulatory risks
ArcelorMittal is subject to strict environmental, health and safety laws and regulations that could give rise to a significant increase in costs and liabilities. 
ArcelorMittal is subject to a broad range of environmental, health and safety laws and regulations in each of the jurisdictions in which it operates. These laws and regulations impose increasingly stringent standards regarding general health and safety, air emissions, wastewater storage, treatment and discharges, the use, handling and transportation of hazardous, toxic or dangerous materials, waste disposal practices and the remediation of environmental contamination, and health and safety matters, among other things. The costs of complying with, and the imposition of liabilities pursuant to these laws and regulations can be significant, and compliance with new and more stringent obligations may require additional capital expenditures or modifications in operating practices. Failure to comply can result in civil and or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations and lawsuits by third parties.
In the EU, the Industrial Emissions Directive (IED) defines the so called Best Available Techniques (BAT) and sets the ranges of values that need to be established as limits in the environmental permits. The BAT are also used in other regions as reference, and are periodically reviewed (in theory, an 8 year cycle) to ensure a continuous improvement of environmental performance. The EU Commission has started the review of the
IED, with a proposal expected in 2021, which might lead to the strengthening of the permitting framework, supported by growing general concerns on the effects of pollution on the environment and human health.
Despite ArcelorMittal’s efforts to comply with environmental, health and safety laws and regulations, and monitor and reduce accidents at its facilities, health, safety and environmental incidents or accidents do occur, some of which may result in costs and liabilities and negatively impact the Company’s reputation or the operations of the affected facility. Such accidents could include explosions or gas leaks, fires or collapses in underground mining operations, vehicular accidents, and other accidents involving mobile equipment, or exposure to radioactive or other potentially hazardous, toxic or dangerous materials, which could have significant adverse consequences for the Company’s workers and facilities, as well as the environment. Such accidents could lead to production stoppages, loss of key personnel, the loss of key assets, or put at risk employees (and those of sub-contractors and suppliers) or persons living near affected sites.
ArcelorMittal also incurs costs and liabilities associated with the assessment and remediation of contaminated sites, and in its mining activities, those resulting from tailings and sludge disposal, effluent management, and rehabilitation of land disturbed during mining processes. In addition to the impact on current facilities and operations, environmental remediation obligations can give rise to substantial liabilities in respect of divested assets and past activities. This may also be the case for acquisitions when liabilities for past acts or omissions are not adequately reflected in the terms and price of the acquisition. ArcelorMittal could become subject to further remediation obligations in the future, as additional contamination is discovered or cleanup standards become more stringent.
ArcelorMittal could become subject to unidentified liabilities in the future, such as those relating to uncontrolled tailings breaches or other future events or to underestimated emissions of polluting substances. For example, mining companies have incurred substantial liabilities in connection with the failure of tailing pond dams. In February 2019, the Company decided as a precautionary measure to implement its plan to evacuate the community situated downstream of its dormant Serra Azul tailing dam with a 5.8Mm3 tailings volume in Brazil. The decision was based on an updated site-based assessment following recent incidents in the Brazilian mining sector pending further testing and implementation of any necessary mitigation measures. See "Business overview—Sustainable development—Management Theme #4: Environment—Responsible water use".
ArcelorMittal’s operations may also be located in areas where individuals or communities could regard its activities as having a detrimental effect on their natural environment and conditions of


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life. Any actions taken by such individuals or communities in response to such concerns could compromise ArcelorMittal’s profitability or, in extreme cases, the viability of an operation or the development of new activities in the relevant region or country.
For further information, see “Business overview—Government regulations—Health and safety laws and regulations” and “Business overview—Government regulations—Environmental laws and regulations” and note 9.3 to ArcelorMittal’s consolidated financial statements.
Laws and regulations restricting emissions of greenhouse gases could force ArcelorMittal to incur increased capital and operating costs and could have a material adverse effect on ArcelorMittal’s results of operations, financial condition and reputation. 
Compliance with new and more stringent environmental obligations relating to greenhouse gas emissions may require additional capital expenditures or modifications in operating practices, as well as additional reporting obligations. The integrated steel process involves carbon and creates carbon dioxide (“CO2”), which distinguishes integrated steel producers from mini-mills and many other industries where CO2 generation is primarily linked to energy use. The EU has established greenhouse gas regulations and has revised its emission trading system for the period after 2020 in a manner that may require ArcelorMittal to incur additional costs to acquire emissions allowances. Delegated regulations in this regard are about to be finalized (covering topics such as benchmark values, cross sectoral correction factor and free allocation). In addition, in December 2020, the EU reached agreement on a new EU climate ambition target aiming at achieving at least a 55% reduction in greenhouse gases ("GHG") emissions in 2030 versus 1990 (compared with the current ambition of a 40% reduction) and being carbon neutral by 2050. A new review of the European Union’s Emission Trading Scheme (“ETS”) framework and rules, addressing the new target, is expected in 2021. Other jurisdictions have also started to enact similar regulations, including South Africa, where a CO2 tax system was introduced in 2019 and in Kazakhstan, where the Emission Trading Scheme restarted operation on January 1, 2018 with new trading procedures and allocation methods supported by an online platform for monitoring, reporting and verifying emission sources and GHG.
Other regulations have been implemented in Argentina, Ukraine and Canada and additional measures may be enacted in the future in other jurisdictions, further increasing the complexity of compliance with environmental laws and regulations.
Following the international agreement reached by the United Nations Framework Convention on Climate Change in
December 2015 with the aim to implement the necessary drivers to achieve drastic reductions of carbon emissions (the "Paris Agreement"), the environmental regulatory system has become more complex worldwide and the Company has taken steps to reduce its emission footprint, which in 2019 totaled approximately 196 million tonnes through various research and development initiatives, announcing a commitment for its European business to reduce emissions by 30% by 2030 and a group-wide commitment to be carbon neutral by 2050. Whether in the form of a national or international cap-and-trade emissions permit system, a carbon tax or acquisition of emission rights at market prices, emissions controls, reporting requirements, or other regulatory initiatives, such environmental regulations could have a negative effect on ArcelorMittal’s production levels, income and cash flows. These laws could also negatively affect the Company’s suppliers and customers, which could translate into higher costs and lower sales. In particular, the EU Commission’s decision to further reduce the allocation of CO2 emission rights to companies could negatively impact the global steel industry, as the amount of such rights is currently at the limit of technically achievable operating conditions. CO2 emissions regulations have already resulted in increased costs in Europe, and ArcelorMittal expects costs will continue to increase with the implementation of Phase IV of the ETS starting in 2021. In addition, the COVID-19 pandemic and its economic consequences caused a decline in production at most EU sites in 2020. Given that, under phase IV rules, the activity level in 2020 has an effect on the calculation of the allocation in 2021 and 2022 and also on the sub-period 2 (2026-2030), the lower production levels might lead to reduced allocation.
Furthermore, many developing nations have not yet instituted significant greenhouse gas regulations, and the Paris Agreement specifically recognizes that greenhouse gas emissions will peak later in developing countries. As the Intended Nationally Determined Contributions (“INDC”) for developing nations under the Paris Agreement may be less stringent than for developed nations in light of different national circumstances, ArcelorMittal may be at a competitive disadvantage relative to steelmakers having more or all of their production in developing countries. Depending on the extent of the difference between the requirements in developed regions (such as Europe) and developing regions (such as China or the CIS), this competitive disadvantage could be severe and render production in the developed region structurally unprofitable. High carbon costs in combination with weakening demand, rising imports, high energy costs and high iron ore prices was one of the factors underlying the Company’s decision to implement production cuts in Europe in 2019. To address the resulting competitive disadvantage compared to imports, which is expected to increase in the future absent government intervention, the Company has lobbied the European


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Commission to introduce a carbon border adjustment mechanism to the safeguard measures on steel imports in order to ensure that imports into Europe face the same carbon costs as producers in Europe. The European Commission is currently working on the design of the instrument with a proposal expected to be presented in June 2021, although no assurance can be given as to the timing of such proposal or its implementation.
In addition, as regulators and investors increasingly focus on climate change issues, the Company is exposed to the risk of frameworks and regulations being adopted that are ill-adapted to its operations. For example, the most established framework for carbon pricing and emissions trading schemes is currently the European Union's ETS discussed above. As mentioned above, the Company has highlighted the importance that a carbon border adjustment be included in this system in order to avoid competitive distortions such as European steel becoming overpriced due to European carbon policy, prompting the market to outsource its steel from other regions where carbon is less expensive. With respect to investors, the European Union has reached a political agreement on a package of measures to implement key actions with respect to its sustainable finance plan, and, in June 2020, the European Commission published the EU Taxonomy for Sustainable Finance, a unified classification system to define what can be considered an environmentally sustainable economic activity, as a step in the efforts to channel investments into sustainable activities. This regulation is going to be complemented with Delegated Regulations that will establish the technical screening criteria for each of the six environmental sustainable objectives set by the Regulation, starting by climate change mitigation and adaptation. If the metrics adopted in the taxonomy are not appropriate for the Company or if investors, financial institutions or other stakeholders, including the public, begin to view investments in steel and mining as undesirable, it may become more difficult and/or more expensive for the Company to obtain financing. While the Company has taken significant steps and continues to adapt its operations in light of climate change and the need for sustainability, such steps may not be in line with future frameworks or regulations or market views of investment suitability. In particular, the Company expects to need to make significant investments in order to reach its announced goals with respect to reducing its carbon emissions in Europe by 30% by 2030 and to being carbon neutral Group-wide by 2050. It has to be recognized that a significant investment will have to be made in the infrastructure needed to provide ArcelorMittal with the necessary clean energy, hydrogen and carbon capture and storage ("CCS") capacity. All such investment programs will require support from host countries, first and foremost from the European Union and it member states, through supportive policies designed to provide compensation for the significantly higher costs, while at the same time maintaining a fair and
competitive landscape. The necessary support may not be available in a timely manner or at all (with implementation of a carbon border adjustment or equivalent only expected by 2026 based on current timetables).
For further information on environmental laws and regulations and how they affect the Company's operations, see “Business overview—Government regulations—Environmental laws and regulations” and note 9.3 to ArcelorMittal’s consolidated financial statements.
The income tax liability of ArcelorMittal may substantially increase if the tax laws and regulations in countries in which it operates change or become subject to adverse interpretations or inconsistent enforcement.
Taxes payable by companies in many of the countries in which ArcelorMittal operates are substantial and include value-added tax, excise duties, profit taxes, payroll-related taxes, property taxes, mining taxes and other taxes. Tax laws and regulations in some of these countries may be subject to frequent change, varying interpretation and inconsistent enforcement. Ineffective tax collection systems and national or local government budget requirements may increase the likelihood of the imposition of arbitrary or onerous taxes and penalties, which could have a material adverse effect on ArcelorMittal’s financial condition and results of operations. In addition to the usual tax burden imposed on taxpayers, these conditions create uncertainty as to the tax implications of various business decisions. This uncertainty could expose ArcelorMittal to significant fines and penalties and to enforcement measures despite its best efforts at compliance, and could result in a greater than expected tax burden. See note 10 to ArcelorMittal’s consolidated financial statements.
In addition, many of the jurisdictions in which ArcelorMittal operates have adopted transfer pricing legislation. If tax authorities impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse effect on ArcelorMittal’s financial condition and results of operations.
It is possible that tax authorities in the countries in which ArcelorMittal operates will introduce additional revenue raising measures. The introduction of any such provisions may affect the overall tax efficiency of ArcelorMittal and may result in significant additional taxes becoming payable. Any such additional tax exposure could have a material adverse effect on the Company’s financial condition and results of operations.
ArcelorMittal may face a significant increase in its income taxes if tax rates increase or the tax laws or regulations in the jurisdictions in which it operates, or treaties between those jurisdictions, are modified in an adverse manner. This may


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adversely affect ArcelorMittal’s cash flows, liquidity and ability to pay dividends.
ArcelorMittal is subject to economic policy, political, social and legal risks and uncertainties in the emerging markets in which it operates or proposes to operate, and these uncertainties may have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects.
ArcelorMittal operates, or proposes to operate, in a large number of emerging markets. In recent years, many of these countries have implemented measures aimed at improving the business environment and providing a stable platform for economic development. ArcelorMittal’s business strategy has been developed partly on the assumption that this modernization, restructuring and upgrading of the business climate and physical infrastructure will continue, but this cannot be guaranteed. Any slowdown in the development of these economies could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects, as could insufficient investment by government agencies or the private sector in physical infrastructure. For example, the failure of a country to develop reliable electricity and natural gas supplies and networks, and any resulting shortages or rationing, could lead to disruptions in ArcelorMittal’s production.
Moreover, some of the countries in which ArcelorMittal operates have been undergoing substantial political transformations from centrally-controlled command economies to market-oriented systems or from authoritarian regimes to democratically-elected governments and vice-versa. Political, economic and legal reforms necessary to complete such transformation may not progress sufficiently. On occasion, ethnic, religious, historical and other divisions have given rise to tensions and, in certain cases, wide-scale civil disturbances and military conflict. The political systems in these countries are vulnerable to their populations’ dissatisfaction with their government, reforms or the lack thereof, social and ethnic unrest and changes in governmental policies, any of which could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects and its ability to continue to do business in these countries. For example, in Ukraine, political unrest and intermittent combats between the Ukrainian army and pro-Russian rebels in the Donbass region have occurred since Russia’s purported annexation of Crimea in March 2014. In addition, certain of ArcelorMittal’s operations are also located in areas where acute drug-related violence (including executions and kidnappings of non-gang civilians) occurs and the largest drug cartels operate, such as the states of Michoacan, Sinaloa and Sonora in Mexico.
Certain emerging markets where ArcelorMittal has operations have experienced or are experiencing particularly difficult operating conditions. Brazil, for example, is emerging from a period of severe recession and political uncertainty. South Africa entered a recession in the second quarter of 2018, and prior to this recession, the South African steel and mining industries have been subject to a challenging operating environment characterized by lower local demand, increased cheap imports and higher costs, resulting in losses in recent years for ArcelorMittal South Africa. Many emerging markets are also at risk of economic crises (be it external debt, currency, domestic corporate, household or public debt crises) usually brought on by an economic or political shock which can exacerbate existing domestic structural imbalances. Crises in Argentina and Turkey in 2018/19 were examples and had negative impacts on the Company’s core markets in Brazil and the EU, respectively. Other countries at risk of further economic crises include, for example, South Africa (in relation to its public debt), Ukraine (in relation to its external debt) and to a lesser extent India (in relation to its public debt).
In addition, epidemics and/or pandemics may affect ArcelorMittal’s operations in certain regions and, in some cases, globally. See "Disruptions to ArcelorMittal’s manufacturing processes caused for example by equipment failures, natural disasters, epidemics or pandemics or extreme weather events could adversely affect its operations, customer service levels and financial results."
In addition, the legal systems in some of the countries in which ArcelorMittal operates remain less than fully developed, particularly with respect to the independence of the judiciary, property rights, the protection of foreign investment and bankruptcy proceedings, generally resulting in a lower level of legal certainty or security for foreign investment than in more developed countries. ArcelorMittal may encounter difficulties in enforcing court judgments or arbitral awards in some countries in which it operates because, among other reasons, those countries may not be parties to treaties that recognize the mutual enforcement of court judgments. Assets in certain countries where ArcelorMittal operates could also be at risk of expropriation or nationalization, and compensation for such assets may be below fair value. For example, the Venezuelan government has implemented a number of selective nationalizations of companies operating in the country to date. Although ArcelorMittal believes that the long-term growth potential in emerging markets is strong, and intends them to be the focus of the majority of its near-term growth capital expenditures, legal obstacles could have a material adverse effect on the implementation of ArcelorMittal’s growth plans and its operations in such countries.


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ArcelorMittal is subject to an extensive, complex and evolving regulatory framework which may expose it and its subsidiaries, joint ventures and associates to investigations by governmental authorities, litigation and fines, in relation, among other things, to antitrust and compliance matters. The resolution of such matters could negatively affect the Company’s profitability and cash flows in a particular period or harm its reputation.
ArcelorMittal's business encompasses multiple jurisdictions and complex regulatory frameworks, including in relation to antitrust, and economic sanctions, anti-corruption and anti-money laundering matters. Laws and regulations in these areas are complex and constantly evolving and enforcement of them continues to increase. ArcelorMittal may as a result become subject to increasing limitations on its business activities and to the risk of fines or other sanctions for non-compliance. As a result of its position in the steel industry and its historical growth through acquisitions, ArcelorMittal could be subject to governmental investigations and lawsuits by private parties based on antitrust laws. These could require significant expenditures and result in liabilities or governmental orders that could have a material adverse effect on ArcelorMittal’s business, operating results, financial condition and prospects. ArcelorMittal and certain of its subsidiaries are currently under investigation by governmental entities in several countries, and are named as defendants in a number of lawsuits relating to various antitrust matters. See note 9.3 to ArcelorMittal’s consolidated financial statements. Antitrust proceedings, investigations and follow-on claims involving ArcelorMittal subsidiaries are also currently pending in various countries including Brazil and Spain. Because of the fact-intensive nature of the issues involved and the inherent uncertainty of such litigation and investigations, the nature of the resolutions of such proceedings are difficult to forecast but negative outcomes are possible. An adverse ruling in the proceedings described above or in other similar proceedings in the future could subject ArcelorMittal to substantial administrative penalties and/or civil damages.
ArcelorMittal's governance and compliance processes, which include the review of internal controls over financial reporting as well as a Code of Business Conduct and other rules and protocols for the conduct of business, may not prevent breaches of laws and regulations or internal policies relating to compliance matters at ArcelorMittal or its subsidiaries, as well as to instances of non-compliant behavior by its employees, contractors or other agents. This risk is also present at ArcelorMittal’s joint ventures and associates where ArcelorMittal has a non-controlling stake and does not control governance practices or accounting and reporting procedures.
Unfavorable outcomes in current and potential future litigation and investigations relating to anti-trust and compliance matters could reduce ArcelorMittal’s liquidity and negatively affect its
profitability, cash flows, results of operations and financial condition, as well as harm its reputation.
ArcelorMittal is currently and in the future may be subject to legal proceedings or product liability claims, the resolution of which could negatively affect the Company’s profitability and cash flows in a particular period.
ArcelorMittal’s profitability or cash flows in a particular period could be affected by adverse rulings in current and future legal proceedings against the Company. See note 9.3 to ArcelorMittal’s consolidated financial statements.
In addition, ArcelorMittal sells products to major manufacturers engaged in manufacturing and selling a wide range of end products, including products used in certain safety-critical applications, such as, for example, pipes used in gas or oil pipelines and in automotive applications. ArcelorMittal also from time to time offers advice to these manufacturers. There could be significant consequential damages resulting from the use of or defects in such products. While ArcelorMittal has a limited amount of product liability insurance coverage, a major claim for damages related to ArcelorMittal products sold and, as the case may be, advice given in connection with such products, could leave ArcelorMittal uninsured against a portion or the entirety of such an award and materially harm its financial condition and future operating results.
Changes to global data privacy laws and cross-border personal data transfer requirements could adversely affect ArcelorMittal's business and operations. 
ArcelorMittal's business depends on the transfer of data between its affiliated entities, to and from its business partners, and with third-party service providers, which may be subject to global data privacy laws and cross-border transfer restrictions. While ArcelorMittal takes steps to comply with these legal requirements, the volatility and changes to the applicability of those laws, as well as evolving standards and judicial and regulatory interpretations of such laws may impact ArcelorMittal’s ability to effectively transfer data across borders in support of its business operations that may lead to possible administrative, civil, or criminal liability, as well as reputational harm to the Company and its employees. ArcelorMittal has taken actions necessary to comply with the European Union’s General Data Protection Regulation ("GDPR"), which became enforceable in May 2018. The GDPR creates a range of compliance obligations for subject companies and increases financial penalties for non-compliance. Other countries in which ArcelorMittal operates or has a presence such as Brazil, India and South Africa have or are in the process of adopting similar legislation for the protection of personal information. Ensuring compliance will require investments to improve business processes, IT solutions and security solutions. The costs of


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compliance with GDPR and similar legislation for the protection of personal data and the potential for fines and penalties in the event of a breach of these laws may have an adverse effect on ArcelorMittal's business and operations.
U.S. investors may have difficulty enforcing civil liabilities against ArcelorMittal and its directors and senior management.
ArcelorMittal is incorporated under the laws of the Grand Duchy of Luxembourg with its principal executive offices and corporate headquarters in Luxembourg. The majority of ArcelorMittal’s directors and senior management are residents of jurisdictions outside of the United States. The majority of ArcelorMittal’s assets and the assets of these persons are located outside the United States. As a result, U.S. investors may find it difficult to effect service of process within the United States upon ArcelorMittal or these persons or to enforce outside the United States judgments obtained against ArcelorMittal or these persons in U.S. courts, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against ArcelorMittal or these persons in courts in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for a U.S. investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against ArcelorMittal’s directors and senior management and non-U.S. experts named in this annual report.
Business overview
Business strategy
ArcelorMittal’s success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, intensified its efforts to control costs and repositioned its operations to outperform its competitors.
Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry value chain, from mining at one end to distribution and first-stage processing at the other:
Global scale and scope
Unmatched technical capabilities
Diverse portfolio of steel and related businesses, particularly mining
Financial capability.
Three themes
Steel. ArcelorMittal looks to expand its leadership role in attractive markets and segments by leveraging the Company’s technical capabilities and its global scale and scope. These are critical differentiators for sophisticated customers that value the distinctive technical and service capabilities the Company offers. Such customers are typically found in the automotive, energy, infrastructure and a number of smaller markets where ArcelorMittal is a market leader. In addition, the Company is present in, and will further develop, attractive steel businesses that benefit from favorable market structures or geographies. In developing attractive steel businesses, ArcelorMittal’s goal is to be the supplier of choice by anticipating customers’ requirements and exceeding their expectations. It will invest to develop and grow these businesses and enhance its ability to serve its customers. Given the current environment, that investment will be highly disciplined, balancing financial and sustaining considerations with targeted strategic opportunities. Commodity steel markets will inevitably remain an important part of ArcelorMittal’s steel portfolio. Here, a lean cost structure should limit the downside in weak markets while allowing the Company to capture the upside in strong markets.
Mining. ArcelorMittal is working to continue to create value from its world-class mining business. Mining forms part of the steel value chain but typically enjoys a number of structural advantages, such as a steeper cost curve. The Company's strategy is to create value from its most significant assets, through selective expansion/de-bottlenecking, by controlling cost and capital expenditure, and by supplying products that are highly valued by steel producers. ArcelorMittal's financial capability allowed it to continue to invest in key mining assets (notably ArcelorMittal Mines and Infrastructure Canada),  while the diversity of its steel and mining portfolio facilitates the ability of the mining business to optimize the value of its products in the steelmaking process. The Company's mining business aspires to be the supplier of choice for a balanced mix of both internal and external customers, while at the same time providing a natural hedge against market volatility for its steel operations.
All operations. ArcelorMittal strives to achieve best-in-class competitiveness. Operational excellence, including health and safety, the number one priority, is at the core of the Company's strategy in both steel and mining. The Company steadily optimizes its asset base to ensure it is achieving high operating rates at its best assets. Its technical capabilities and the diversity of its portfolio of businesses underpin a strong


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commitment to institutional learning and continuous improvement through measures such as benchmarking and best-practice sharing. Innovation in products and processes also plays an important role while supporting overall competitiveness.
Five key strategic enablers
Critical to implementing this strategy are five key enablers:
A clear license to operate. Many of ArcelorMittal's businesses are located in regions that are in the early stages of economic development. Practically all are resource-intensive. The Company recognizes that it has an obligation to act responsibly towards all stakeholders.  ArcelorMittal's commitment to sustainability is outlined below. See "Business overview—Sustainable development". Sustainability is a core value that underlies ArcelorMittal's efforts to be both the world’s safest steel and mining company and a responsible environmental steward.
A strong balance sheet. The Company has made good progress in recent years in strengthening its balance sheet. The progress achieved to date means that the Company is now in a position to have more balance and flexibility in its capital allocation and the Company can, on a selective basis, pursue organic or acquisitive growth opportunities.
A decentralized organizational structure. ArcelorMittal's scale and scope are defining characteristics that give it a competitive advantage. They also introduce complexity and the risks of inefficiency, bureaucracy and diffuse accountability. To manage these risks, the Company favors a structure in which the responsibility for profit and loss is focused on business units aligned with markets.
Active portfolio management. Throughout the Company's history, it has sought to grow and strengthen the business through acquisitions. That remains the case. The acquisition of existing assets and businesses is typically seen as a more attractive growth path than greenfield investment. The Company is, however, also willing to dispose of businesses that cannot meet its performance standards or that have more value to others.
The best talent. ArcelorMittal's success will depend on the quality of its people, and its ability to engage, motivate and reward them. As detailed below, the Company is committed to investing in its people and ensuring a strong leadership pipeline. See "Management and Employees—Employees—Employee development". It will continue to improve its processes to attract, develop and retain the best talent.
Research and development
The Company’s Global Research and Development ("R&D") division provides the technical foundation for the sustainability and commercial success of the Company by stimulating innovative thinking and the continuous improvement of products and processes.
ArcelorMittal believes it possesses leading R&D capabilities among steel producers and is committed to maintaining and extending this advantage by anticipating and responding to major technological, sustainability and social trends, while also making a significant contribution towards achieving the Company’s 10 Sustainable Development Outcomes (see “—Sustainable development” below).
To support this commitment, the Company operates 12 research sites around the world, and in 2020, ArcelorMittal’s R&D expense was $245 million (compared to $301 million and $290 million in 2019 and 2018, respectively).
Among its R&D initiatives, ArcelorMittal has developed a 15 year expertise in Lifecycle Analysis ("LCA"), which analyzes the environmental impact of products during their production, use and disposal. In 2020, the Company undertook a total of 28 LCA studies related to steel products and the processes used to produce them, all guided by the relevant standard (ISO 14040-44).
The Company’s expertise in LCA is an important asset in all of its global markets. For example, LCA is a requirement of Environmental Product Declarations ("EPD") for construction products in Europe, and contributes to increasing the Company’s competitiveness in the construction sector. The Company’s EPDs are reviewed by third parties and validated by the "Institut Bauen und Umwelt", the Institute of Construction and Environment, and are made available via ArcelorMittal Europe’s Constructalia website. The Company is also leading the development of a methodological framework for EPDs in Brazil, where it published its first EPD in 2019.
ArcelorMittal is a member of the CIRAIG International Lifecycle Chair, an international reference center for the lifecycle of products, processes and services, and the world largest research center on the topic. ArcelorMittal is active in particular in their circular economy working group and is also a member of the Roundtable for Product Social Metrics.
ArcelorMittal’s R&D strategy focuses on six main pillars:
Maintaining the competitiveness of the Company’s steel among its unique automotive customer base.
R&D continually drives innovation that enables the Company’s strategic focus on higher-added-value products. A key focus is


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products designed to meet the complex and changing needs of the automotive industry.
ArcelorMittal developed its S-in motion® range of solutions, which showcased the benefits of Advanced High Strength Steel ("AHSS") grades and manufacturing processes that continue to help automotive customers meet demanding targets for fuel economy, and thereby drive improvements in CO2 emissions.
In 2020, ArcelorMittal celebrated the 10th anniversary of S-in Motion®. This concept has proven to adapt to the evolving needs of the automotive market, with its most recent developments in 2019 including a catalog of solutions for the booming electrified vehicles market. The Company's S-in Motion® projects for Hybrid vehicles, BEVs and battery packs are being rolled out. A specific S-in motion® project dedicated to chassis of electric vehicles has also been developed. It demonstrates that the best steel solutions might be as light as aluminum while reducing CO2 equivalent emissions up to 58%.
The results of the ArcelorMittal S-in motion® BEV study on a Sports Utility Vehicle demonstrated why steel is expected to remain the dominant auto body metal for the growing electrified vehicle market. Steel will allow original equipment manufacturers to achieve the goals of creating more light weight vehicles with increased driving ranges in a more cost-effective manner. More than ever, steel is the material of choice for automotive customers as it combines the ability to meet stringent expectations for passenger safety with the best price on the market.
With total life cycle emissions of BEVs expected to decrease compared to internal combustion engine vehicles, BEVs’ embedded carbon from metal production and its end-of-life impacts will become increasingly relevant. A comprehensive LCA study encompassing the vehicle’s production and end-of-life phases has been made on the Company's S-in motion® BEV. It concluded that while light-weighting still improves BEVs’ lifecycle performance, gains in powertrain efficiency will have much greater benefits. The most sensitive aspects of BEVs’ lifecycle are the environmental footprint of battery production and that of the electricity grid. Current battery production impacts are greater than those of steel body production. For BEVs to reach legislated CO2 targets, the electricity grid needs to be decarbonized much more quickly. Between 2000 and 2015, the grid decarbonized at a rate of 2%. For large cars to meet CO2 targets, progress will need to triple by 2035.
Creating a robust and diverse portfolio of niche non-automotive steel products to serve customers across multiple sectors.
Customers in many sectors share the automotive industry’s demand for innovative products and processes. The Company
aims to deliver similar breakthrough advances in these sectors by creating differentiated products and unique engineering solutions, all designed to ensure that steel is the customer's material of choice.
ArcelorMittal is fully involved in the development of solutions dedicated to the Global Energy Transition. The Company's patented anti-corrosion steel coating Magnelis® which is used extensively in framing solutions for the photovoltaic module is an emblematic solution for renewable energy. Additionally, the Company is also working on the development of solutions for Hydrogen and liquified natural gas ("LNG"), for wind applications, electricity grids, carbon capture and bioenergy.
Packaging is, in the Company’s view, another important opportunity. ArcelorMittal continues to respond to the need to meet evolving health and safety regulations, to achieve lightweight, cost-saving design, and to develop new functionalities. A major opportunity is also presented by the increasing pressure to reduce packaging made of plastics, as society becomes less and less accepting of packaging that is not in line with sustainable development objectives. With its ability to be recycled and to eliminate hazardous elements, steel is well-positioned to extend its applications in packaging and replace an increasing volume of plastic packaging.
In 2020, R&D launched 29 new products and solutions to accelerate sustainable lifestyles, while also progressing further on 16 such product development programs.
The R&D division also launched 27 products and solutions this year to support sustainable construction, infrastructure and energy generation, while also progressing further on 17 such product development programs.
Fully capitalizing on the capacity of Steligence® - a holistic platform for environmentally-friendly, cost-effective construction - to create higher-added-value products and solutions for the construction market is being deployed in a variety of markets.
Construction is one of the key sectors for ArcelorMittal. The Company’s R&D effort is focused on providing higher-added-value products that meet customer needs, including their sustainable development objectives.
Steligence® highlights the innovations the Company’s steel has to offer in the design and performance of a building, and to support its customers in their use of its products. Steligence® adds value through its holistic approach of helping specialists in the architectural and engineering disciplines to meet the increasing demand for sustainability, flexibility, creativity and cost in high-performance building design by harnessing the credentials of steel through its potential for recyclability and the reduction of materials used.


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A key concept within Steligence® is to make buildings easier to assemble and dismantle. As a result, buildings become quicker to construct, leading to significant efficiencies and cost savings while also creating the potential for re-use. This reflects ArcelorMittal’s wider interest in modularization and the potential re-use of steel components - a field it is discussing with customers and in its LCA assessments. The approach is demonstrated in the Company’s planned new Luxembourg headquarters, which has been designed so that nearly all the steel components can be dismantled and re-used in a new building without the need for recycling.
The use of ArcelorMittal’s innovative Grade 80 steels is an integral element of the Company’s industry-leading, independently peer-reviewed Steligence® concept. It is being used for the first time in the USA in the 51 story Canal office building in Chicago. The superior 80ksi strength of this steel used in the columns of the upper section of the building enabled the design team to reduce the overall amount of structural steel used by almost 20%, and its slimmer profile allowed the developer-owner to offer more open space on upper floors to tenants.
Developing breakthrough process innovations to deliver cost reduction, sustainability benefits to meet current and emerging environmental challenges, and new product development.
The creation of unique processes creates value for the Company and its stakeholders by: enhancing the performance of operations through cost efficiency and improved product quality; promoting process-driven product development; and enabling environmental improvements, including carbon reductions and improvements in air, land and water. Process improvements contribute decisively to the future of the Company, both helping to preserve its license to operate and ensuring its financial sustainability through important management gains.
By-products and circular economy. Work in this area includes the re-use of slag as a valuable product for many applications, which reduces waste while avoiding the ecosystem disruption that can result from the extraction of other materials such as natural stone or sand. For example, the Company is making innovative re-use of slag in the following applications: ballast in offshore wind turbine foundations to replace natural ballast; a construction material for building protection walls to reduce noise and dust; a fertilizer source for agriculture; and the potential re-use of slag from furnaces in water filtration and greenhouse gas capture. Other circular economy initiatives include: working on the use of mining tailings as a secondary raw material, either by finding marketable solutions or generating valuable products to be used in-house; and improving the quality of the scrap the Company uses, as well as exploring automated sorting processes for treating scrap.
Improvement in air, land, water. Work in this area includes research in technology for cleaning fumes from stacks, reducing dust diffusive emissions, cleaning water discharges, and solving water scarcity issues. In 2020, the Company developed new slag applications for road construction and made progress in Circular Carbon Economy in the use of waste as an alternative solid fuel to reduce CO2 emissions.
Progress against air pollution. In 2020, ArcelorMittal's global R&D division has performed intensive work to identify the sources of all kinds of dust emissions and define the best methods to quantify them in order to assess the actual impact of ArcelorMittal's plants on the surroundings. In parallel, the Company has continued to research technologies to control de-dusting in yards and open areas and continued with the industrialization of advanced filtration technologies to reduce emissions at stacks.
Reduction of carbon emissions and energy use. ArcelorMittal’s global R&D division also continues to research processes to support carbon neutrality and energy efficiency. In 2020, significant progress was made in ArcelorMittal's key projects aimed at reaching CO2 neutrality in 2050. For the Hamburg Hydrogen project, the main operating parameters of the H2 MIDREX direct reduction process were defined in order to mitigate the risk of spontaneous ignition of the C-free DRI pellets. The pilot for cold electrolysis of iron, the "SIDERWIN" project, has been fully designed and is under construction. Its commissioning is scheduled in 2021. For the conventional integrated steel production route, significant progress was made in the development of the VeLoSint (very low sintering) sintering technology to replace up to 50% of fossil C fuel with hot bio-fumes while maintaining the metallurgical properties. The IGAR blast furnace technology lay-out including gas separation technology was fully defined based on R&D simulation and active benchmarking to identify some promising technologies. Concerning the steelmaking, the feasibility of implementing a pre-melter to reduce hot metal ratio at BOF both in Eisenhüttenstadt and Bremen was completed and the analysis of OEMs proposals are ongoing.
Confirmation of success of our product driven process research. The volumes of Magnelis® delivered have continued to increase even during the pandemic. While it is in high demand, it is hard to manufacture. In addition, despite the disruptions caused by the COVID-19 pandemic, the Company has continued to develop its breakthrough casting technology in 2020.
Mining process improvements. Global R&D has developed the capabilities to upgrade and digitalize its systems using satellites, drones, wireless sensors and robots to feed a geographic information system for detailed monitoring of tailings dams, which forms part of the Company’s mining circular economy initiative. In the future, this will be extended to both plants and


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wildlife, thus helping the Company respond to increasing expectations from stakeholders looking for reassurance that biodiversity hotspots are not negatively impacted by the Company’s mining operations.
For more details on environmental impact, delivering energy saving programs and lowering emissions of solids, water and gases, see “Sustainable development—Management Theme #2: Climate change and Management Theme #4: Environment”.
Fully capitalizing on opportunities from the digital economy.
ArcelorMittal envisages itself as a fully digital enterprise where everything is connected. ArcelorMittal invested early and significantly in automation systems, and for decades the Company has been a pioneer in the introduction and use of artificial neural networks. ArcelorMittal is currently fully committed to a total digital transformation, including significant advances in a number of fields and relies on the secure and reliable performance of its digital technology platforms, information technology systems, continuously updating its security measures to avoid data breaches or data theft (see also “Introduction—Risk factors”). The Company is focusing its efforts on:
Global platforms (Big Data, Internet of Things ("IoT"), Collaborative Digital Product Development);
Manufacturing digitalization (Production, Quality and Maintenance); and
Business digitalization (Procurement, Commercial, Supply Chain, Strategy, Finance).
The Company's global standard platform for Big Data storage and analytics (ARTHUR) and IoT (DASHIELL) avoids the use of a mosaic of technologies and facilitates the global sharing and rapid implementation of Artificial Intelligence ("AI") models with proven results among all units. This approach makes the Company’s size a key advantage.
In its digital strategy, the Company makes use of solutions that are directly acquired in the market, solutions that are co-developed with technology suppliers, and solutions that are fully developed internally to take advantage of the rich knowledge interfaces the Company has (process, product, AI, math optimization). This combination leads to performance superiority.
The main driver for digitalization at ArcelorMittal is a competitive advantage, with new technologies and especially cutting-edge AI and mathematical optimization tools contributing to ensure:
The best product quality, through better prediction using advanced analytics made possible through Big Data and distributed computing. This means production
issues can be detected before they happen, enabling adjustments to be made to production parameters to avoid them.
Maximizing equipment operational time and avoiding unplanned stoppages via predictive maintenance. The Company is already seeing positive results in several production units and is further deploying these solutions across the Company.
Cost efficiency in production and logistics. For example, the R&D division has developed a unique, breakthrough technology for line scheduling - inspired by studying and mimicking the movements in ant colonies - that has significantly improved productivity. In addition, the deployment of automated stockyards, linked to line scheduling and transport devices such as autonomous cranes, means less stock is needed and lead times are cut, yielding two major supply chain benefits.
Enlarge the offer to ArcelorMittal's customers via new web sales platforms. Together with ArcelorMittal’s commercial workforce, the R&D division has developed specific algorithms and recommendation systems that are implemented in new IT commercial platforms adding value to its customers, who are also increasing the digital nature of their activities and ways of doing business.
While the implementation of large-scale digital and industry 4.0 projects is challenging in a company of ArcelorMittal’s size, once implemented these projects bring major benefits and value because of the Company’s scale and complexity. The global standard platforms strategy has contributed significantly to this initiative.
ArcelorMittal’s approach is to work with a broad range of entities, thus maximizing the knowledge transference into its teams, avoiding black-boxes, and increasing its development capabilities. This has led to the development of new algorithms using Big Data technologies that can solve problems in ways that were not possible before, mainly due to limitations in the manipulation of large volumes of data.
Seizing the potential of additive manufacturing. ArcelorMittal sees significant potential in additive manufacturing and 3D printing. For example, within the Company’s operations, it will be possible to ‘print’ spare parts when predictive analytics show that equipment needs replacing, thus reducing disruptions. As 3D technology matures, it will have an increasing impact on the way the Company and its customers do business. ArcelorMittal’s R&D teams are exploring opportunities and partnering in this field. In response to the COVID-19 pandemic, the Company


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was able to collaborate to address the severe lack of required safety and medical equipment for the public health effort by 3D printing face shields and ventilators in Europe and Brazil.
Sustainable development
ArcelorMittal recognizes the important contribution its products and processes make to Sustainable Development (“SD”) and aims to ensure that its steels are the material of choice in the transition towards a circular and low-carbon economy. This means preparing for and responding to the most significant long-term environmental and social trends that are transforming the context in which the Company operates. These include sector-focused decarbonization ambitions aligned with the Paris Agreement, the transformation of society towards a circular economy and the growing demand from customers for adherence to sustainability standards from their entire supply chains, from mine sites to delivery of products.
The Company’s SD framework, launched in 2015, sets out the 10 SD outcomes it needs to achieve in order to protect and grow long-term value for its stakeholders. These outcomes are aligned with, and aim to contribute to, many of the United Nation’s Sustainable Development Goals (“SDGs"). Details of the relationship between the 10 SD outcomes and the SDGs are included in the reporting index to ArcelorMittal's Integrated Annual Review 2019, which is available on the Company's website. The outcomes provide the basis for engaging the Company’s workforce on SD issues, and support the development, management and reporting of sustainability across its operations.
ArcelorMittal's 10 SD Outcomes:
1Safe, healthy, quality working lives for ArcelorMittal’s people
2Products that accelerate more sustainable lifestyles
3Products that create sustainable infrastructure
4Efficient use of resources and high recycling rates
5Trusted user of air, land and water
6Responsible energy user that helps create a lower-carbon future
7Supply chains that ArcelorMittal’s customers trust
8Active and welcomed member of the community
9A pipeline of talented scientists and engineers for tomorrow
10ArcelorMittal’s contribution to society measured, shared and valued
To drive its goal of inventing smarter steels for a better world, the Company recognizes the value in creating an integrated marketing offer that combines many aspects of these 10 SD outcomes. These include being the supplier of choice for innovative products while maintaining steel and mine sites that operate to standards that meet and exceed the sustainability expectations of customers and investors. This is at the heart of the Company’s approach to SD.
ArcelorMittal listens carefully to stakeholders, both locally and globally, and recognizes a trend of rising expectations among stakeholders regarding local community issues as well as the global transition toward a circular economy and the steel industry’s critical role within it. The Company assesses stakeholder trust to be a key value driver, and accordingly adopts a Board-led strategic approach to deepening trust through stakeholder engagement.
Integration of SD into the business is therefore essential for ArcelorMittal to achieve long-term value for its shareholders and other stakeholders while maintaining a profitable market share. Over the last five years, the Company has been integrating the SD outcomes into the business, beginning at the site level by explaining the need for integrating SD into planning and reporting of results. In 2018, the Company’s Board of Directors established the Appointments, Remuneration & Corporate Governance and Sustainability Committee of the Board (the "ARCGS"), an expansion of the previous Appointments, Remuneration & Corporate Governance Committee, which monitors the performance of corporate functions and business segments against the 10 SD outcomes pursuant to the five management themes discussed below. This integration of SD was fully embedded in 2019 with the implementation of theme dashboards and quarterly reporting from local sites to the ARCGS.
The ARCGS organizes its governance of SD through five management themes, which helps deepen the Company’s strategic approach towards each one.
The themes (and the relevant SD outcomes to which they relate) are:
Management ThemeRelevant SD Outcome
1Safety1
2Climate change6
3Customer reassurance7
4Environment4, 5
5Social1, 8, 9, 10
The ARCGS's oversight underpins the Company’s strategy to ensure that both corporate functions and business segments contribute to achieving the 10 SD outcomes with the following elements:
Each business segment, acting on its understanding of SD trends and through its engagement with stakeholders, develops a plan in pursuit of the 10 SD outcomes as a priority, with a set of key performance indicators (“KPIs") established against which they must report quarterly to the ARCGS committee;


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Corporate functions lead on key areas including: progress towards low-carbon steelmaking, innovating steel solutions and steelmaking technologies with a positive SD impact, and developing a ‘mine to metal’ chain of assurance against multi-stakeholder environmental and social standards; and
A robust articulation of the Company's approach and progress through clear narrative and transparent, third-party assured reporting.
The Company is committed to transparency as evidenced by the comprehensive SD disclosures made in the Integrated Annual Review and Factbook each year, and by the publication of its first Group Climate Action Report in May 2019, and subsequent Climate Action in Europe report in 2020, which serve as the Company’s response to the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”). The second Group Climate Action Report is planned to be published in the second quarter of 2021.
The Company now sees the need to go beyond transparency and invest in stakeholder dialogue by leading collaborative conversations with stakeholders on climate action and multi-stakeholder standard setting processes and certification for both steel sites and mines (see “Management Theme #3: Customer reassurance" below).
The Company is leading the steel industry’s first global certification standard, ResponsibleSteel™, to provide customers, investors and stakeholders with reassurance on sustainability throughout the steel value chain and inform them about the credibility and rigor that has gone into auditing the Company's social and environmental performance at its steel plants and mines.
The ResponsibleSteel™ performance standard audits operations against the 12 environmental, social and governance principles. The Company has started certifying various sites across the Group in 2020, including the ArcelorMittal Europe – Flat Products sites. The Company has also committed to external certification by Initiative for Responsible Mining Assurance ("IRMA"), an internationally recognized third-party verification and certification standard. The intention is to achieve accreditation in Liberia and Brazil in three to five years and implement IRMA across other mines in the coming years as well. See "Customer reassurance".
Both schemes will provide additional level of reassurance of the Company’s sustainability standards and will also strengthen the Company's governance standards.
The Company’s management of SD is summarized along the five management themes in the following pages.
Management Theme #1: Safety
ArcelorMittal's employees are essential to its ambition to build a high-performing organization. The Company wants all its employees to be safe and healthy, committed to ArcelorMittal's success and to act with integrity in everything they do. ArcelorMittal aims to build an inclusive culture in which diversity is valued, and every individual is respected and their potential developed. Safety is the number one priority.
Health and Safety – managing response to the COVID-19 pandemic
The COVID-19 outbreak has impacted many countries around the world, and disrupted the lives of many millions of people. The Company has been taking the risks associated with the outbreak extremely seriously, and the safety and wellbeing of its employees is of paramount importance.
The Company continues to follow the recommendations of governments from around the world and managing response in line with the World Health Organization (WHO) guidelines. It has implemented measures to reduce the risk of the virus spreading at its operations. These include introduction of pandemic safety protocols, ensuring sufficient supplies of sanitation products and essential personal protective equipment, strictly following social distancing procedures, conducting enhanced and regular cleaning operations and monitoring the health of employees when they enter and exit work premises. Wherever possible, the Company implemented remote working. Employees were provided support, advice and guidance they needed to adjust to working in challenging times. The Company’s pandemic crisis management team has been in continuous contact with leadership teams in all the regions where it operates to ensure the right decisions are being taken for the wellbeing of employees.
At the onset of the crisis, the Company’s global Health and Occupational Hygiene and Health and Safety Councils have issued ‘COVID-19 safety principles’ designed to guide and provide global consistency in the Company’s health and safety response to the COVID-19 pandemic. It outlined best practices and the minimum requirements with the recommendation to always follow best practice and it has been implemented at all of ArcelorMittal’s operations. To ensure good compliance with these principles and to foster continuous improvement of the preventive measures, regular field audits are conducted.
ArcelorMittal Mexico, located in one of the most severely impacted countries at a time, commissioned DNV GL to conduct a comprehensive infection risk assessment and provide recommendations for process improvements regarding COVID-19 exposure at the Lázaro Cárdenas complex in Mexico. Recommendations from the audit were implemented not only in


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the Mexican operations but they were shared with other operations as well for consideration.
Whilst the clear priority has been the safety and well-being of employees, the Company has been providing support to the extent required in the communities in which it operates (for more details see section Management theme #5: Social).
Safety
The Company-wide safety program, “Journey to Zero”, introduced in 2007, aims to achieve zero fatalities and severe lost-time injuries by creating a culture of shared vigilance in which risks and hazards are understood and monitored, best practices are shared, and appropriate action is taken at every level. The Company's remuneration policy links 10% of the bonuses of its leadership - from managers to the CEO - to safety KPIs (i.e., fatalities, lost-time injury frequency rate ("LTIFR") and frequency rate (FR’)) in the business where he or she works, where relevant. The Company works with trade unions to drive safety improvements through a global partnership, which includes joint local Health and Safety Committees at every production unit and a Global Health and Safety Committee (“GHSC”) which is made up of representatives from both the trade union IndustriALL and union members from ArcelorMittal, together with senior ArcelorMittal managers. This is supported internally by the ArcelorMittal Health and Safety Council.
It is with deep regret that the Company reported 17 fatalities during 2020, including 14 in steel and 3 in mining operations. Any fatality is a cause of great distress to families, friends, ArcelorMittal's leadership and the entire workforce. The Company's leadership is driving a campaign to ensure that a culture of vigilance and mutual accountability, in which every individual takes responsibility for their own actions, and the actions of those around them, prevails everywhere it operates. ArcelorMittal recognizes that, more than improving its performance against LTIFR, it must work harder to ensure that its safety culture prevents fatalities and serious incidents. There are operations at ArcelorMittal that have gone years without a single injury or death and this proves that zero fatality is possible and that the Company has capabilities to realize this ambition. For example, in South America, with the safety-first culture instilled and leadership trainings implemented, the Company is achieving solid safety performance. The aim is to learn from best performing sites as well as from the Company's external benchmarking exercises. With this in mind, the Company has formed a revised Health and Safety Council of Chief Operating Officers from each business, chaired by the CEO of the segment with the best performance in the Group. It is important each business focuses on peer to peer gap analysis, effective implementation of best practice tools and leading KPIs focused on severe injuries and fatality prevention.
During the year, the Company implemented the following measures:
The Safety Leadership program and Take Care training continued with remote sessions being introduced due to the COVID-19 pandemic. This program aims at developing the skills of middle and upper management to influence people's safety behavior and improve the safety culture within their teams. It has been implemented over the past years across ArcelorMittal’s European operations and long operations in Latin America;
Strengthened health and safety policy on vehicles and driving;
Improved detection, recording, and understanding of hazards and risks through potential severe injuries and fatalities ("PSIF"s) in order to prevent severe incidents;
Strengthened Health and Safety leadership teams in CIS (Ukraine and Kazakhstan);
Continued strengthening safety through the use of best practice tools: HIRA-Lite: hazard identification and risk analysis, undertaken before performing any non-standard task; pre-shift safety meetings, shop floor audits.
The LTIFR for the Company, defined as the number of injuries per million hours worked that result in employees or contractors taking time off work, was at 0.61 (0.92 including ArcelorMittal Italia) in 2020 compared with 0.75 in 2019 (1.21 including ArcelorMittal Italia). For comparison, ArcelorMittal recorded an LTIFR of 3.1 incidents per million hours worked in 2007, the year after the Company's formation. The table below shows the LTIFR by segment for the years ended December 31, 2020 and 2019:
For the year ended December 31,
Lost time injury frequency rate*20202019
Mining0.610.97
NAFTA0.530.58
Brazil0.290.36
Europe1.081.00*
ACIS0.610.69
Total Steel0.62 *0.73*
Total (Steel and Mining)0.61*0.75*
ArcelorMittal Italia9.4611.13
Total (Steel and Mining) including ArcelorMittal Italia0.921.21
*Data does not include the LTIFR for Ilva (subsequently renamed ArcelorMittal Italia) which was acquired on November 1, 2018.


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Improving workers’ ability to monitor and analyze PSIFs is also a key focus, as it provides a deeper understanding of how safety incidents can arise and therefore be avoided. Results show that sites with no fatalities proactively detect and manage twice as many PSIFs as sites that have one or more. The volume of proactive PSIFs logged across the Company has increased more than five times since 2016, and 3,600 situations have been proactively detected and addressed in 2020. In addition, the Company is specifically focusing on improving the quality of its analysis and actions, including by sharing best practices across the Company, which has been further facilitated this year through the use of the intra-organization, social networking online tool Yammer.
PSIF is now a KPI for the Company and, alongside fatalities and LTIFR, is reported monthly to leadership as part of the governance process. Health and safety is reviewed by the GHSC and overseen by the ARCGS, which meets quarterly. When a fatality occurs, all levels of management are informed of the circumstances and the incident is subject to a comprehensive review process. The Company supports sites where fatalities have occurred to ensure stronger alignment between Group-level safety strategy and site-level implementation.
Management Theme #2: Climate change
ArcelorMittal is committed to the objectives of the Paris Agreement. In 2020, the Company announced a group-wide commitment to being carbon neutral by 2050, building on the commitment made in 2019 for its European business to reduce CO2 emissions by 30% by 2030, and be carbon neutral by 2050.
In June 2020, the Company released its ‘Climate Action in Europe’ report, laying out the European roadmap to reach these targets, and is planning to publish the Group's second Climate Action Report in the second quarter of 2021, where it will announce its CO2 emissions reduction target by 2030.
In 2020, the Company also announced the launch of a green steel offer for the first time using a system of certificates. An independent auditor, will verify the tonnes of CO2 savings achieved through the Company’s investment in decarbonization technologies in Europe, in accordance with the GHG Protocol Project Accounting standard. These CO2 savings can then be passed onto customers in the form of verified certificates. The certificates will relate to the tonnes of CO2 saved in total, as a direct result of the decarbonization projects being implemented across a number of its European sites. The certificates can be used by customers to report an equivalent reduction in their Scope 3 emissions, in accordance with the GHG Protocol Corporate Accounting and Reporting Standard.
The Company plans to scale up the offering from 30,000 tonnes in 2020 to reach 120,000 tonnes in 2021 and 600,000 tonnes by 2022.
The Company sees the low-carbon transition as presenting significant opportunities as steel will remain a vital material in the application of new industrial technologies and the transition of the energy, transport and packaging industries, and the future construction sector. ArcelorMittal develops innovative products and processes that help its customers reduce their carbon footprint in all these sectors, including S-in motion® for automotive, Steligence® for construction, and glass granulated blast furnace slag as a low carbon alternative for use in place of cement.
The Company views steel as having many advantages in a decarbonizing world in which demand for materials will continue to grow. Steel is 100% recyclable without quality loss, and in many applications, it is a lower-carbon alternative over its lifecycle than other materials such as aluminum and concrete. However, modelling shows that global stocks of scrap will be insufficient to meet global demand for steel from secondary, recycled sources for many decades to come, so the world will continue to rely on primary steelmaking for decades to come. Existing primary steelmaking processes are carbon intensive, and therefore the route to decarbonizing steel will be through developing new low-emissions technologies. The Company has identified two pathways to achieving this:
a.The Hydrogen-DRI route, which uses hydrogen as a reducing agent. A demonstration plant in Hamburg, where ArcelorMittal owns Europe’s only operational DRI-EAF plant, is currently planned with a targeted start-up in 2023-2025, depending on funding. The pilot plant will initially produce 100,000 tonnes of pig iron a year. In the short to medium term, the Company could use ‘blue hydrogen’, sourced by extracting hydrogen from natural gas, and capturing and storing the CO2 generated in the process. In the long term, the Company plans to use ‘green hydrogen’, sourced by extracting hydrogen from water via electrolysis using clean energy.
b.The Smart Carbon route is centered around modifying the blast furnace route to create carbon neutral steelmaking through the use of circular carbon - in the form of sustainable biomass or carbon containing waste streams - and carbon capture and use ("CCU") and storage ("CCS"). ArcelorMittal is well advanced on constructing several commercial-scale projects to test and prove a range of Smart Carbon technologies (examples below). Start-up target for key projects is targeted in 2022.


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The Company is also collaborating with 11 partners on a project called Siderwin to build a three-meter industrial cell which will test iron ore reduction via electrolysis in Maizières, France. See further information in "—Research and development".
Carbon neutrality in the Smart Carbon route can be achieved by relying on the earth’s natural carbon cycle and making use of biowaste materials, such as sustainable forestry and agriculture residues, to produce bio-energy for steelmaking. Other biomaterials such as waste plastics can also be used, thus helping address the world’s waste challenge. Steelmaking’s carbon by-products can further be converted back into biomaterials at the end of the steelmaking process in a fully circular fashion. Through a process called Torero (€50 million investment), ArcelorMittal will reduce iron ore with waste carbon rather than fossil fuel coal in a demonstration plant in Ghent, Belgium, with production expected to start via reactor #1 in 2022 and reactor #2 in 2024. Meanwhile, the Company’s campus in Dunkirk, France is piloting the IGAR (Injection de Gaz Réformé) project (€20 million investment) which reforms carbon from the blast furnace, converting it into a synthetic gas to reduce iron ore, which is expected to be completed in 2022.
Fossil fuels can continue to be used for steelmaking with carbon neutrality achieved by using CCS, capturing CO2 emissions, transporting them and storing them safely underground. Combining CCS techniques with circular carbon energy sources can even move the steel industry beyond carbon neutrality, and turn steel production into a means to remove CO2 from the atmosphere. The Group's Carbalyst® project, in partnership with LanzaTech, will capture carbon gas and recycle it into chemicals. Pilot plants for both technologies are under construction at the Company’s plant in Ghent, Belgium. An investment of €165 million in Carbalyst® started in 2018 and is expected to be completed in 2022. The technology is expected to capture approximately 15% of available waste gases at the demonstration plant and convert them into 80 million litres of ethanol annually. Also, at ArcelorMittal Dunkirk, the Company is developing a carbon capture and storage pilot project (€20 million investment) to bring down the costs of capturing, purifying and liquifying CO2 from waste gases. The technology is expected to allow capturing 0.5 metric tonnes of CO2 an hour from steelmaking off-gases by 2021. The Company is also involved in the Northern Lights and Porthos carbon transport and storage projects.
These pathways could all lead to low-emissions steelmaking. However, they pose significant challenges in terms of new technology, expanded clean energy infrastructure and infrastructure for the transport and storage of CO2. They also lead to structurally higher costs of steelmaking and therefore, for them to become a reality, the right market conditions are required. The Company has identified five key requirements for the transition to a low-emissions steel industry, and for
delivering on the ambitions of the Paris Agreement (see details below).
Through its innovative low-emissions steelmaking program (which is a multi-year budget covering the Company’s low carbon development and demonstration program with partners, aimed at building industrial pilots and demonstrations and is additional to its annual R&D expenditure), ArcelorMittal is actively testing technologies across each of these pathways, and developing a broad portfolio of breakthrough low-carbon steelmaking processes. The Company believes that some of these new technologies could reach commercial maturity before 2025, and that by 2030 many will be mature and partially deployed across its facilities in Europe. They will play a critical role in achieving the Company’s target of a 30% reduction in CO2 emissions in Europe by 2030.
The Company believes that these initiatives present significant opportunities for the decarbonization of steelmaking provided the correct regulatory and investment environment exists.
ArcelorMittal has identified that its most substantial climate-related risk stems from a policy environment that does not enable the industry to cover the higher structural costs that new low-emissions technologies bring, and it has identified five key requirements for the transition to a low-emissions steel industry, and for delivering on the ambitions of the Paris Agreement.
1. Global level playing field: a global framework to create a level playing field is needed to avoid the risk of carbon leakage. This can be achieved through carbon border adjustments ("CBA"s) or other government interventions, which ensure that steelmakers bearing the structurally higher operating capital costs of low-emissions technologies can compete with imports from higher-emissions steelmakers. This is particularly relevant in Europe, where EU steel producers are increasingly exposed to costs of carbon through the European Emissions Trading Scheme ("ETS"), while imports are exempt yet continue to be responsible for a significant proportion of the carbon emissions of steel used in Europe. The ETC estimates that the total annual investment required to decarbonize the steel industry globally is around $80 billion. A well designed and fair CBA and public and private financing to roll out the technology, would be a big step closer to making this happen.
2. Access to abundant and affordable clean energy: policies giving the steel industry improved access to renewable electricity will be key, as this is currently neither sufficiently available nor economically viable to enable the roll out of low-emissions steelmaking technologies that use this energy source. For the acceleration of technologies using circular carbon energy sources, the steel industry requires priority access to biomass and waste.


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3. Facilitating necessary energy infrastructure: in addition to abundant renewable electricity, policies to support investments in hydrogen infrastructure will be needed to advance large-scale hydrogen-based processes. Similarly, for the use of fossil fuels with CCS, policies are required to enable the accelerated development of carbon transport and storage infrastructure and services.
4. Access to sustainable finance for low-emissions steelmaking: the scale of the challenge requires an acceleration of technology development and roll out. Breakthrough steelmaking technologies need to be identified as a key priority area for public funding. Some of the Company's current R&D projects are funded by EU Horizon 2020, and further public funding through, for example, the EU ETS Innovation Fund will be required to continue developing and rolling out low-emissions steelmaking. Finance legislation should enable these investments to make a positive contribution to the low-carbon circular economy, with realistic criteria.
5. Accelerate transition to a circular economy: climate and materials policy should be integrated, taking a lifecycle perspective to ensure that materials are used in as circular a way as possible. There should be a focus on driving the recycling and reuse of all waste streams, and incentivizing the use of waste streams as inputs in manufacturing processes. Products should be rewarded for their lifecycle reusability and recyclability.
ArcelorMittal is also actively engaging in analyses, with customers, investors, policymakers and global think tanks, on what policy mechanisms could be created to make low-emissions steelmaking more competitive. For example, the Company has been collaborating with the Energy Transitions Commission’s Mission Possible initiative on pursuing net-zero carbon emissions from harder-to-abate sectors, and with the Science-Based Targets initiative (“SBTi”) on the steel sector decarbonization approach. The Company is also an active member of the ETC’s Net Zero Steel Initiative underway in partnership with the World Economic Forum.
ArcelorMittal has also been driving multi-stakeholder efforts through ResponsibleSteel™ to develop standards on greenhouse gas emissions (“GHG”) for steel (see “—Management Theme #3: Customer Reassurance” below).
In addition to new technologies and policy work, ArcelorMittal’s low emissions strategy focuses on energy efficiency in its existing steelmaking operations across the globe, and on expanding opportunities for further steel production using end-of-life scrap. Each year, the Company’s Investment Allocation Committee (“IAC”) approves a number of capital investments that will bring significant energy and carbon efficiency improvements, enabling the Company to meet its medium-term
emissions reduction targets. In 2020, the IAC allocated a total of $248 million in capital expenditures to 20 projects with energy and/or carbon benefits to be spent in the coming years.
The Company has once again been recognized by CDP for its strong performance in corporate transparency and action on climate change. ArcelorMittal successfully retained its A- score in the 2020 CDP Climate Change assessment, putting the Company within the top quartile of all metal smelting, refining and forming companies and the top 10% of the steel industry.
The Company has been recognized as a Steel Sustainability Champion for the third year running by the World Steel Association and its "Climate Action Report 1" won the CRRA Award for Best Climate Report in July 2020.
The Company also published its first report on the climate-related policy positions of its membership associations in 2020.
Following the sale of ArcelorMittal Princeton in December 2020, the Company’s sole coal mining operations located in Kazakhstan, Karaganda region, are exploited for the purposes of the Termitau steel plant. External sales of coal from these mines are negligible and represent less than 0.1% of ArcelorMittal's sales.
Management Theme #3: Customer reassurance
The Company envisions the momentum behind supply chain accountability continuing to grow, with a particular focus on mined raw materials. Consumer-facing brands want to demonstrate responsible sourcing, and customers are joining together to demand, and validate, higher standards in their supply chains, driven by their own due diligence processes. This is expressed through growing demand from the Company's customers for reassurance on environmental and social standards. As a result, ArcelorMittal regards supply chain certification and reassurance as a vital commercial opportunity to forge closer links with customers and believes that taking a leading role in multi-stakeholder engagement is one of the most effective ways to achieve results. It is working with peers in the steel and mining industries, and with other stakeholders, to advance the development of new third-party standards.
To establish a single, global standard for the entire ‘mine-to-metal’ steel value chain, and in response to the strong trend of rising assurance expectations from customers, ArcelorMittal has been playing a leading role in developing ResponsibleSteel™ since 2015. ResponsibleSteel™ is the steel industry’s only global multi-stakeholder certification initiative, which has over 70 members and associates as including steel producers, mining companies, NGOs, steel-consuming customers, financial institutions, and industry bodies. It enables steel producers to prove their production processes and products meet rigorously defined standards across a broad range of social, environmental


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and ethical criteria. It also improves responsible sourcing of the raw materials used in steelmaking and reduces supply-chain risk.
In November 2019, following a robust accreditation process, ResponsibleSteel™ launched its first site certification standard. The standard presents 12 principles underpinned by over 50 criteria and over 200 auditable requirements, addressing: health and safety, human rights, local communities, biodiversity and GHG among other sustainability and assurance issues. A full product certification standard, which will also cover the mining of raw materials before they arrive on site, and the full chain of custody from mine to site to final customer, has been under development in 2020 and is expected to launch in 2021.
ArcelorMittal has carried out readiness assessments against the ResponsibleSteel™ site standard across nearly all its European flat products production sites with positive results. It is currently working on a site assessment and verification plan and is on track to seek certification for its European Flat sites next year. ArcelorMittal believes that its leading role in the development of ResponsibleSteel™, and its commitment to achieve certification, will enable the Company to improve customer relations, increase market share among customers already seeking certification, and create demand for certified products.
Reassurance needs to cover the full steel value chain, including sourcing of primary raw materials. This is why ArcelorMittal also plays a leading role in the wider movement towards establishing social and environmental standards for mining that stakeholders recognize and value. As a member of the IRMA, steering committee, ArcelorMittal participates in the multi-stakeholder expert panels shaping its standards. ArcelorMittal Mining’s operations in Liberia and Brazil are investigating assessments by IRMA and the intention is to achieve accreditation for these operations in three to five years. The Company is also looking into implementing IRMA across all the mines in the coming years to ensure its customers that all raw materials have been sourced and produced responsibly. Another example is its commitment to the Mining Association of Canada’s Towards Sustainable Mining initiative at its mines in Canada, which helps the Company to monitor and improve performance and customer reassurance.
Both schemes will provide customers, investors and stakeholders with reassurance on sustainability throughout the steel value chain and inform them about the credibility and rigor that has gone into auditing our social and environmental performance at our steel plants and mines. (see description above and "Sustainable development governance" below).
The Company engages directly on responsible supply chain issues with customers from the automotive, rail and other sectors, including construction, household goods and
packaging, as well as with initiatives used by customers to share their processes for assessing supply chain risk, such as DRIVE Sustainability, Electronic Industry Citizen Coalition, Railsponsible, EcoVadis and the Green Building Council.
Alongside these multi-stakeholder, customer-focused initiatives, the Company is committed to driving standards in its own supply chain. The Company has been engaging with its key raw materials suppliers and recommending that they follow one of the certification routes. Implementing certification standards in mining is the best way to improve responsible sourcing of the raw materials used in steelmaking and reduce supply-chain risk.
Since 2011, the Company’s Code for Responsible Sourcing has set out minimum standards for its suppliers and described how it will work with suppliers to achieve them. The Company assesses its suppliers against this code every year.
In 2019, the Company continued to ask all new global suppliers to sign the Code and surveyed key suppliers for their implementation of the Code (for example, 96.3% of the Company’s raw materials suppliers have signed the Code).
At the same time, it reinforced its ESG risk mapping analyses, with particular reference to its raw material suppliers. This process aims to identify social and environmental areas of concern, and the key hotspots for further due diligence and engagement with suppliers; the Company is developing action plans where these are needed and encourages all suppliers to take part in certification schemes.
Overall, the Company is also aligned to the Organization for Economic Co-operation and Development (“OECD”) guidelines on due diligence on supply chains, in particular for conflict minerals, which reflect continued concern that some conflicts around the world are being financed by the trade in minerals such as tin, tantalum, tungsten and gold. Only a very limited number of ArcelorMittal products contain tin and tungsten, which are necessary for the functionality or production of certain products. The Company also publishes a Special Disclosure Report in compliance with the US Dodd Frank Act Section 1502, and has done work to meet the requirements of the EU's new conflict minerals regulation.
Management Theme #4: Environment
Behind the SDGs to which ArcelorMittal is committed, is a vision of progress that leaves no-one behind. The Company therefore focuses on making steel in ways that work for society, without creating harmful carbon footprints (as discussed in “Management Theme #2: Climate Change" above), or other negative environmental impacts. The Company aims to meet stakeholders’ expectations around the use of shared resources, particularly natural capital in the form of air, land and water.


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Operating transparently and responsibly in these areas is essential for retaining stakeholders’ trust.
The Company continues to make significant environmental investments, and in 2020, ArcelorMittal’s IAC has approved expected capital expenditures totaling $396 million relating to 32 projects with environmental benefits.
Some of the challenges affecting air, land and water are global in nature, and ArcelorMittal engages in multi-stakeholder forums aimed at addressing them. Where the issues and the means of addressing them are local, country managers engage with stakeholders at every level, including site-by-site. Before developing any new mine or steel plant, the Company carries out detailed environmental impact assessments, and establishes an environmental management plan. At all existing production sites, it monitors air, water, energy and residue data, and publishes data annually in its Integrated Annual Review and country level sustainability reports.
The Company monitors regulatory developments and aims to be fully compliant with regulatory standards. See “Business overview—Government regulations". The Company also aims to listen to concerns wherever they are raised, and to respond appropriately, including by acknowledging where its standards have fallen short.
In 2020, the Company’s focus on responding to environmental issues continued to be centered on addressing air quality concerns, managing tailing storage facilities and tailings transition plans, improving land use and biodiversity, responsible water use and reducing waste disposal, as further discussed below.
Addressing air quality concerns
ArcelorMittal understands that air quality is among the most salient issues for the communities around its operations. It is also a continuing focus for regulators, and the Company’s goal is to comply fully with regulatory standards. Although the specific sources of pollutants, particularly in urban and industrial areas, are not always identifiable, the Company aims to listen to concerns wherever they are raised, and to respond appropriately. The Company also continues to make significant environmental investments that address air quality.
In 2020, the following sites raised particular air quality concerns, which were addressed by the Company:
ArcelorMittal USA
The Company worked collaboratively with the U.S. Department of Justice ("DOJ"), the U.S. Environmental Protection Agency ("EPA"), Indiana Department of Environmental Management and Ohio EPA to reach a comprehensive settlement agreement, or consent decree, and resolve Title V air permit issues reflected in
Notices of Violations issued in 2011 and 2019. The consent decree resolved Title V air permit issues, the majority of which were self-reported, that occurred at five of the Company’s U.S. facilities - Burns Harbor, Cleveland, Indiana Harbor East and West, and the former Indiana Harbor Long Carbon operation. The Company agreed to pay $5 million to settle the claims. See "Introduction—Key transactions and events in 2020" for a description of the subsequent sale of ArcelorMittal USA.
Kryvyi Rih (Ukraine)
The Company is also responding to concerns raised by local stakeholders in Ukraine and Kazakhstan. In Ukraine, over almost 15 years of operating in Kryvyi Rih, the Company has invested over $5 billion in production development, which resulted not only in improving the Company’s competitiveness but also reduced environmental footprint: total reduction of emissions is over 42% since 2005 (including CO2, Nox and Sox emissions).
ArcelorMittal Kryvyi Rih's strategy to further reduce their environmental impact from dust covers all the main types of production - mining, coke, steelmaking, rolling and sintering. The latter is of key importance, since it accounts for about 75% of the plant's total dust emissions. The Company is planning to build a pellet plant to replace the sinter plant at the steel production site and sinter plant number 1 located at the mining production site, as well as modernizing sinter plant number 2 located at the mining production site. As a result of these investments, the total volume of pollutant emissions is expected to decrease by 78 thousand metric tonnes per year, as well as decrease of the total volume of CO2 emissions by 800 thousand metric tonnes per year. The commissioning of pellet plant and the future reconstruction of blast furnace No. 9 will make it possible to achieve a significant reduction in coke consumption in sinter-blast process that will also entail a decrease in pollutant emissions. Investments over the next few years in the project to build a new pellet plant will exceed $250 million. The Company has also finished the construction of two modern continuous casting machines and a new rolling mill which will further reduce the environmental footprint of the operations.
Since 2006, over 130 highly efficient gas cleaning plants have been constructed and revamped. From the date of the plant's privatization, total air emissions were reduced by 42.7%, waste water discharge – by 78.4%, waste disposal volume – by 23.7%. In the next 3-4 years, the Company is going to implement significant investment projects, including allocation of $700 million in capital expenditures for projects which include some environmental benefits (including the pellet plant described above), which are an integral part of key investment projects.
Kazakhstan
In Kazakhstan, where emissions and their impact on air quality is the most pressing concern for local communities, ArcelorMittal


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has built a comprehensive environmental plan with local stakeholders. As part of this plan, the Company has launched a $211 million environmental investment program over 2018-2025. The projects in its scope will result in a series of incremental performance improvements throughout the investment plan’s implementation period to 2025. The program is focused on removing dust from a range of facilities including the lime plant, the coke shop and related processes, the sinter plant, the steel shop, blast furnace 2 and its associated storage area.
In the last three years the Company has implemented ESP for SM 5, phase 1.2 of ash pond extension, dedusting units of sinter plant, BOF mixer, coke plant, construction of new chimney in coke shop along with battery repairs. Implementation of these projects has resulted in dust reduction by 443 tons per annum along with prevention of soil contamination and reduction in fugitive emissions. In the next years, the Company will continue investing in projects with expected reduction of dust emissions by further 3500 (by 4011 including BF#2 dedusting) tons per year.
Managing tailings storage facilities
The Company’s strong governance model has recently been updated to take into account the principles laid out in the Global Industry Standard for Tailings Management. The governance model aims to ensure that our tailings storage facilities ("TSF"s) are structurally sound and safe, with all efforts directed at minimizing the risks of wet tailings.
The Company’s tailings strategy is continually benchmarked against the best industry guidelines: Mining Association of Canada (MAC), Canadian Dam Association (CDA). The Company's strong and evolving governance model aims to ensure that its TSFs are structurally sound and safe, with all efforts directed at minimizing the risks. The Company has 23 TSFs (Tailings Storage Facilities), including dry-stack, paste and in-pit disposals, of which 15 are active, seven inactive and one is in preparation for construction.
To ensure the safety of all of these, and in addition to the local 'Engineer of Record' inspections, ArcelorMittal applies two types of audit: an internal audit at corporate level to assess compliance with the company's standard and an independent audit conducted by an internationally recognised tailings consultant. These are benchmarked against the international guidelines and are considered best practice.
ArcelorMittal is also seeking continuous improvement in its tailings management program to reduce its exposure to risks associated with conventional tailings facilities, principally via:
The Company is reducing the risk of existing conventional operations by promoting the use of reduced moisture
disposal methodologies, such as high density thickened tailings (paste) or filtered tailings where appropriate.
The Company is using latest and proven new technologies such as high precision radars, remote sensors and InSAR satellite monitoring on all its TSFs to monitor facilities globally in real time.
The Company is currently assessing all its mining operations for transition in line with these principles, and developing customized design solutions for non-conventional tailings system management. ArcelorMittal has already implemented tailings thickening steps in its assets in Mexico, Brazil and Canada, with further studies ongoing across the Company.
The Serra Azul TSF had been dormant since 2012 but in February 2019, following the Brumadinho failure, the stability of the dam was revised, taking into account the failure mode specific to Brumadinho. Based on the results, the Company decided to evacuate the local community downstream of the dam pro-actively as a precaution, enabling the Company to carry out further testing/analysis and safely implement any mitigation measures required by new Brazilian legislation implemented after the Brumadinho accident.
Following an update of the dam break analysis, and adopting the most conservative assumptions, the potential area of impact has been expanded, in order to keep a greater margin of safety. In response, ArcelorMittal relocated 54 families from two communities to temporary homes as a precautionary measure. Monthly emergency payments have been made to the relocated families as well as to people who temporarily lost access to their land – in total 174 families have been directly impacted. For safety reasons, access to the evacuated area continues to be restricted and controlled according to guidance from local authorities.
ArcelorMittal is currently reviewing its approach to safely deconstruct the Serra Azul TSF as per its original plans. Serra Azul is working directly with the public prosecutor’s office in Minas Gerais on this process. Continuous 24/7 monitoring of the tailings storage facility continues via radar, accelerometers, online water level, piezometers and imaging.
Since population downstream evacuation of the Serra Azul Dam in 2019, preventative background studies of the flora, fauna, soil, sediments and constant water resources within the dam break area have been carried out, and in 2020, these studies were intensified according to the demands of environmental agencies.
Improving land use and biodiversity
ArcelorMittal aims to practice good land use management, and to protect biodiversity in the environments where it operates,


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including through partnerships with local environmental organizations and others to improve and research local biodiversity.
Mining is a key focus both in terms of responsible land management and biodiversity.
ArcelorMittal Liberia ("AML") operates a comprehensive Biodiversity Conservation Program ("BCP") to limit and mitigate the interface with agriculture and mining.
The Nimba Mountains are renowned for their biodiversity, but unfortunately have been impacted over many years by agricultural practices and overhunting, beginning well before the commencement of mining. AML takes its social and environmental responsibilities and stewardship of the land very seriously. The Company’s BCP launched in 2011, has been focused on developing sustainable forest management throughout the area.
The AML BCP process has since its inception, included partnering with authorities and communities to create a healthy ecosystem and sustainable livelihoods across the region. For years, the Company has been working with international NGOs, local authorities and communities while also training and developing its employees to be part of the program. ArcelorMittal is now partnering with the University of Liberia, local NGOs such as RICCE/ARS and local independent researchers on implementing the BCP.
This shift in strategy to partner with local organizations and interest groups is aligned with the Company's commitment to uplifting the local population by prioritizing working with local stakeholders and building Liberian capacity in environmental management while ensuring the high quality of ArcelorMittal's work.
Some of the projects ArcelorMittal continues working on through the BCP include: East Nimba Nature Reserve ("ENNR") supporting day to day conservation activities and research activities such as reforestation, biomonitoring, capacity building and training; conservation projects with communities neighboring the ENNR; continuation of various activities of conservation agriculture such as farmer schools, lowland farming, dry season vegetables and tree crops programs; and species specific research.
The impact of the Company’s steelmaking activities on biodiversity can be less apparent than mining, given that most steel operations are located in urban areas. Nonetheless, ArcelorMittal runs a range of programs aimed at protecting and enhancing ecosystems. For example, ArcelorMittal Tubarão celebrated 20 years of partnership in the TAMAR project, a Brazilian not for profit organization coordinated by the Chico Mendes Institute for Biodiversity Conservation. The project
focuses on the conservation of marine life, particularly by protecting sea turtles from extinction on the Brazilian coastline, including a colony of turtles that call ArcelorMittal Tubarão home.
At Serra Azul, the area of environmental preservation is five times larger than the area destined for the extraction of iron ore. There are more than 1,000 hectares of Atlantic forest, which extend through the municipalities of Itatiaiuçu, Rio Manso, Mateus Leme and Formoso, in the North of Minas.
Another example is at ArcelorMittal USA which, prior to the sale (see "Introduction—Key transactions and events in 2020"), was a founding funder in a new, National Fish and Wildlife Foundation ("NFWF") public-private partnership created in 2018 to support community and habitat resilience in Southeast Michigan. Work supported by the fund improves resilience in the face of intensifying environmental stressors related to development, climate, invasive species, non-point source pollution and other factors. Since 2018, the Southeast Michigan Resilience Fund has awarded 13 grants totaling $2.9 million. Together, these projects are: adding 3.75 million gallons of stormwater storage, restoring and enhancing over 830 acres of wildlife habitat, improving and creating 16 acres of neighborhood green space and adding 20 new public access points.
Responsible water use
Water is a vital resource to the Company and its stakeholders, and ArcelorMittal aims to be responsible both in the amount of water it consumes, and in the quality of the water discharged by its sites into the environment. Its work in the area is aligned to the UN's SDG 6 (Clean water and sanitation), with particular reference to the target 6.3 on water recycling, target 6.4 on water efficiency, and target 6.5 on water management.
The Company's net water use in steelmaking, defined as the difference between the water it withdraws and the water discharged, is measured, monitored and managed at each site by a dedicated team. In general, steel plants treat and recycle the same intake of water repeatedly, losing water only through evaporation. Water withdrawn from groundwater sources makes up less than 1% of the Company's water intake. Water treatment facilities play a vital role in managing the Company’s emissions to water, and in improving the water efficiency of its operations.
Unlike reducing carbon emissions, which is a global challenge, water use is a more localized issue. Where freshwater is scarce, or when there is a drought, the Company works with local municipal and water authorities to explore the best sources for water, including seawater, rainwater and wastewater from water treatment plants. When issues occur, ArcelorMittal aims to act swiftly and cooperatively with local authorities.


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In August 2019, ArcelorMittal Burns Harbor experienced a failure at the pump station for the blast furnace process water recycle system, which is believed to have contributed to the reported excess of Ammonia-N and cyanide at two outfalls and impacted aquatic wildlife near those outfalls. ArcelorMittal Burns Harbor continued to daily sample for cyanide and ammonia and other regulated pollutants prior to the sale see ("Introduction—Key transactions and events in 2020"). The results are provided to the state regulatory authority responsible for water issues. The Company believes the circumstances leading up to the station failure were unique and it worked with regulatory authorities to address issues related to the incident. Significant measures to prevent recurrence of the failure were implemented.
ArcelorMittal Burns Harbor had two permits which imposed monitoring requirements and established certain limits for pollutants regulated under those permits. Any violations of permit requirements are reported to the state water authority. While any instance of non-compliance is concerning, the Company does not believe that the reported noncompliance with the permit requirements reflected systemic issues. Any instances of non-compliance are investigated, and appropriate actions are taken in response.
The Company’s application of new water technologies is responsive to local conditions. For example, at Tubarão Brazil, the Company is constructing an award-winning seawater desalination plant with the aim to increase water security and ensure stability of operations. This innovative $17 million project will collect seawater and transform it into industrial water using the reverse osmosis process. With an initial capacity to produce 12,000 m3/day, and with the potential for subsequent expansion, the plant will provide ArcelorMittal's steelmaking in Tubarão with this guaranteed water source for the future, reducing the use of water resources shared with society. And to further enhance the sustainability and circularity of the project, the energy consumed in the desalination process will be produced by the Tubarão site.
Recognizing the importance of water within ArcelorMittal's business and the surrounding communities, the Company has continued its leadership role in Sustain Our Great Lakes ("SOGL") in 2020, a public-private partnership with the NFWF, U.S. EPA, U.S. Fish and Wildlife Service, U.S.D.A. Forest Service, the National Oceanic and Atmospheric Administration, and U.S.D.A. Natural Resources Conservation Service. SOGL’s mission is to restore and protect fish, wildlife and habitat throughout the basin by leveraging funding, building conservation capacity and focusing partners and their resources on key ecological issues. Since 2006, the program has resulted in a total conservation investment of more than $189 million in
the region. These investments have supported the restoration of:
2,145 stream miles of aquatic connectivity,
281 miles of stream and riparian habitat,
228 million gallons of stormwater storage and
42,878 acres of wetland and associated upland habitat.
ArcelorMittal and its partners have built upon the success of SOGL with the Chi-Cal Rivers Fund. Also a public-private partnership administered by NFWF, the Fund restores the health, vitality and accessibility of the waterways in the Chicago and Calumet region by supporting green stormwater infrastructure, habitat enhancement and public use improvements. Since 2013, the Chi-Cal Rivers Fund has awarded 41 grants totaling $8.3 million, which when combined with $20.2 million in grantee match, has resulted in a total conservation investment of more than $28.5 million in the region. These investments have resulted in:
5.7 million gallons of additional stormwater storage capacity;
92 acres of new public park space added or improved; and
2,900 acres of riparian, wetland and upland habitat enhanced.
The Company seeks to improve water use and the quality of effluent discharge at its mine sites and conducts regular water quality monitoring as standard at all operations. Run-off from the Company's mining operations is treated either chemically or through sediment control dams and tested before being released into surface water bodies or reused elsewhere at the mine.
Where possible, water is reused for processing, for example, as part of the cooling process during pellet production. At AMMC, a multi-year holistic water management project aimed at controlling the surface effluents on the waste rock piles and to achieve compliance with federal regulations is ongoing. This consists of the construction of collector ditches on the perimeter of the waste rock piles and the installation of temporary and permanent water treatment units in Mont Wright and Fire-Lake.
ArcelorMittal Brazil has one of the highest rates of water recirculation amongst Brazilian steelmakers, of approximately 98%. ArcelorMittal João Monlevade, in partnership with the João Monlevade City Hall and the Minas Gerais State University ("UEMG"), installed ecobarriers on the Piracicaba River to retain solid waste from the river, facilitate cleaning and reduce water resource pollution. The collection of the residues will be done weekly and directed to the Association of Cleaning Workers and Recyclable Materials, which will be responsible for the destination of the materials.


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Between 2015 and 2017, ArcelorMittal Mineração Serra Azul managed to reduce water consumption by more than 50%, from efficiencies in both mining and processing. The management of water resources at the ArcelorMittal Mineração Serra Azul plant offers high rates of water recirculation in the processing of iron ore. The index (representing the percentage of reused water, that is, water from the production process itself, which was treated by the Company and used again for processing, versus the amount of new water; the higher the percentage the less use of new water) was 87.69% and 82.97% in 2020 and 2019, respectively.
By-products and waste
The Company aims to maximize use of by-products in its own processes with the ambition to eliminate all unnecessary landfilling of residues.
Slag, the main by-product, can be blended in cement, where it reduces CO2 emissions as described below. Cement is in great demand around the world, but its production accounts for over 8% of global carbon emissions. The Company is selling 10-15 million tonnes of blast furnace slag as cement each year, thus saving 8-11 million tonnes of CO2 emissions.
The Company’s partnership with Ecocem is one example of the initiatives being pursued globally to market its blast furnace slag for reuse.
Ecocem's innovative process offers a superior quality, low-carbon alternative by using blast furnace slag, a by-product from steelmaking, to create Ground-Granulated Blast Furnance Slag ("GGBS"). GGBS is a prime example of the circular economy in action. Its declared carbon footprint is only a fraction of traditional cement and, as a construction material, it offers significant technical and architectural advantages such as strength and longevity. And by reusing a steelmaking by-product, it reduces waste, saves energy and emissions, and eliminates the disruption caused to ecosystems by the extraction of fresh raw materials.
By-product is also used as ballast for offshore wind turbines and in road-making, as a fertilizer (it is rich in phosphate, silicate, magnesium, lime, manganese and iron), and in coastal marine blocks that facilitate coral growth. Other by-products include dust and sludge, which are rich in iron and recycled back through the process.
Management Theme #5: Social
ArcelorMittal wants communities to recognize it as a good neighbor, that actively engages with local stakeholders to make a positive contribution in terms of creating economic and social value through employment, procurement, taxation and sustainable development initiatives and through strong risk management and respect for human rights. To do this, the
Company understands it must take a partnership approach, listening to the concerns of stakeholders at the site, country and segment levels, to give them the confidence that ArcelorMittal will address the impacts it has on them and their environment.
ArcelorMittal wants to be a pro-active partner in local socio-economic development; one which is trusted to have an open dialogue and find constructive solutions when challenges arise. This approach is an essential part of the Company’s integrated approach to managing risks and impacts, and thus maintaining the Company’s social license to operate.
Direct management of community issues, monitoring of local risks and opportunities and how these are being addressed is led by local operations. In 2019, community dashboards were established with the ARCGS Committee to oversee the significance of a site’s risks and opportunities.
The aim is to use the dashboards to improve performance at sites identified as being at risk, in particular those considered to be high risk. For all sites that are considered ‘high risk’, a deeper dive is performed by the corporate responsibility team, to understand the underlying factors behind the site’s situation. This root cause analysis is used to identify trends and patterns in the factors behind poor community relations. A similar but less in-depth approach is taken with 'medium risk' sites.
The Company is leading the steel industry’s first global certification standard, ResponsibleSteel, and IRMA for its mining operations, to provide stakeholders with reassurance on sustainability throughout the steel value chain and inform them about the credibility and rigor that has gone into auditing our social and environmental performance at our steel plants and mines. See "Management Theme #3: Customer reassurance" above and "Sustainable Development Governance below".
Responding to the COVID-19 pandemic
Like many in the private sector, the Company has been attempting to harness skills and resources in a useful and collaborative way to help address the challenges presented by COVID-19 and provide social and humanitarian support during this time.
The Company has been collaborating to address the severe lack of the required safety and medical equipment, including face masks and ventilators. Its businesses across the world have collectively donated to various initiatives, including financial donations to healthcare facilities in communities where the Company operates. Where excess capacity existed, the Company was offering space to medical facilities to host additional wards.
For example, ArcelorMittal’s Global R&D New Frontier center responded to the COVID-19 pandemic by focusing on making


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use of internal know-how and technology to support regional hospitals, healthcare centers and employees. From March to September, 14,540 face shield masks (of which, half were 3D printed) were delivered to ArcelorMittal sites and were donated regionally. ArcelorMittal R&D teams also designed and produced two models of ventilators. Both models obtained the technical approval of the Spanish Drug Agency and Ethical Committee for entering clinical research with COVID-19 patients. Moreover, the R&D team in Asturias, Spain produced and delivered 27 ventilators to Liberia, Brazil and the Dominican Republic.
ArcelorMittal Brazil made a number of contributions to support society as part of its response to the pandemic. In addition to community-based initiatives, it joined the government, class entities and other companies to be part of extensive, collaborative networks to help fight the virus. It contributed over $3.5 million (BRL 18 million) to initiatives across the country. These included a contribution of over $750,000 (BRL 4 million) to the Margarida Hospital in João Monlevade (MG); the repair of mechanical ventilators in partnership with Senai and other large industries; construction of a laboratory in Belo Horizonte to carry out COVID-19 tests; the donation of hygiene materials and hospital supplies in the states of Espírito Santo, Minas Gerais and Santa Catarina; support in the manufacturing of 150,000 masks for health professionals from Espírito Santo, and 50,000 face shield masks for hospitals in Minas Gerais; the purchase of PCR and rapid tests for the identification of COVID-19 cases; and it launched a fundraising campaign targeted at its employees and family members to donate resources to social entities that serve the community. ArcelorMittal Brazil contributed by matching each donation made.
AMNS India, a joint venture between ArcelorMittal and Nippon Steel (see note 2.4.1 to the consolidated financial statements), collaborated with HMEL, a partnership between Hindustan Petroleum and Mittal Energy Investments, to provide a response package meant to strengthen India’s capacity to protect impacted communities. Both operations committed INR 100 Crores to Prime Minister’s Citizen Assistance and Relief in Emergency Situation Fund (PM-CARES), which provided countrywide relief. In addition, both operations contributed through the support of daily meals for over 5,000 individuals, as well as the provision of food kits to more than 30,000 individuals; increased the number of ambulance services available and prepared care centers near their production facilities; shared knowledge on preventive measures and provided sanitation kits and PPE in the communities in which they operate.
In CIS, the Company worked closely with authorities to contribute medical supplies and equipment. In Ukraine, the Company purchased personal protective equipment for the medical staff of Gorbachevskiy Khersonsk Regional Infectious Diseases Hospital, a facility central to the region ArcelorMittal
Kryvyi Rih operates in. It also provided 12,000 protective masks to pharmacies in Kryvyi Rih and made its six ambulances, all fully equipped with personal protective equipment, available to safely transport people with suspected cases of COVID-19. It also purchased three ventilator units for medical facilities in Kryvyi Rih, converted its Kryvyi Rih sanatorium into an observational facility for people in quarantine, and ran online activities to keep children entertained when school is out. In Kazakhstan, the Company made two of its local health facilities available to house up to 450 people who needed to be quarantined. ArcelorMittal Temirtau assumed all expenses for the maintenance of those facilities and for catering for those quarantined there, as well as the doctors who monitored them. It also provided financial support for PCR testing in the Karaganda region, increasing the number of daily tests from 1,200 to 3,000.
In Liberia, the Company contributed urgent medical supplies to the value of $100,000 to Liberia’s Ministry of Health to support the government’s efforts to curb the spread of COVID-19. The Company also procured medical equipment for its own hospitals, which serve its employees and the communities in which it operates. ArcelorMittal has actively ensured that its response is coordinated with that of other stakeholders, with the overarching goal of decreasing inefficiencies at a time where resources are in short supply and critical.
The Company has also catalyzed collaboration in Liberia and West Africa. When the World Health Organization officially declared COVID-19 a pandemic, ArcelorMittal set up the Liberia and West Africa Private Sector Coronavirus Platform (WAPSCON19), replicating the model created during the Ebola crisis, aiming to share and identify ideas and resources to assist vulnerable communities and business and help governments combat the crisis. The platform brought together interested stakeholders including the World Economic Forum (WEF) and other NGOs, government representatives and companies representing many industries active in the region, totaling 30-40 voices across West Africa. The diversity of players, covering sectors as wide-ranging as natural resources, banking, logistics and even management consultancy, demonstrated the power of collectives like this. The objective of the WAPSCON19 country group was to coordinate the efficient use of resources, be that financial, or in-kind by way of goods and services, to:
Support communications and community outreach, by raising awareness among the general population of how to recognize COVID-19 symptoms and prevent the spread of the disease, as well as debunking false remedies.
Help measure the spread of the disease by scaling up testing capacity in local communities and work to minimize under or misdiagnosis of COVID-19 cases, thereby curtailing its spread. Through enhanced data


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collection and analysis, the private sector can support effective decision making on managing the disease.
Seek to better manage movement within and between countries to minimize disease transmission over wide areas by localizing testing efforts, while mitigating supply issues arising from border closures by leveraging trusted private sector supply chains to centralize purchasing of goods such as testing kits, life support equipment and personal protective equipment. For instance, ArcelorMittal Liberia worked on bringing in rapid diagnostic tests and was looking at how it can use its supply chains and technical expertise to boost local laboratory capacity, as well as offering up its distribution channels to deliver those tests across the country.
Support the equitable distribution of medical supplies, including any vaccine.
Help support economic recovery through continuity of business and employment, to prevent lockdown measures turning a medical emergency into a humanitarian disaster.
Seek to leverage any external support which may be available, such as aid from development agencies, including the package offered by USAID (U.S. Agency for International Development).
STEM
Alongside responding to communities’ needs and concerns, the Company’s community investment strategy focuses on developing skills in STEM (science, technology, engineering and mathematics). This reflects the important role scientists and engineers will play in building a sustainable future for society at large, for the steel industry and for the Company. The strategy is delivered in many ways: from providing teaching aids and technological support, through inviting students to steel plants, to the Company's long-term partnerships with leading academic organizations around the world.
For details about human resource related matters and building the workplace of tomorrow, which is part of Management Theme #5: Social, see "Management and employees—Employees".
Sustainable development governance
The Company’s commitment to integrity is enshrined in its code of business conduct and is supported by a comprehensive framework of policies in areas such as human rights, anti-corruption and insider dealing. These reflect the principles and concepts of the UN Global Compact, the OECD Guidelines on Multinational Enterprises and UN Sustainable Development
Goal 16 ("Peace, justice and strong institutions"). See also “Management and employees—Corporate governance”.
Listening, learning, respect and transparency are key to the integrity of the Company’s leadership and governance, which helps ensure ArcelorMittal operates effectively and ethically in all parts of the world.
ArcelorMittal considers its relationships with its various stakeholders to be vital to its success. Conducted in the right way, these relationships help the Company know how best to respond to challenges, to anticipate future problems, and to earn trust.
ArcelorMittal’s operations in each country are encouraged to assess their stakeholders' expectations and concerns, in order to inform their approach to the 10 SD outcomes and 5 management themes. Working with customers, suppliers, unions and others can also contribute to UN SDG 17 (Partnership for the goals).
Fully integrating SD into the business is essential to reach the Company’s aim of achieving long-term value for its shareholders and other stakeholders, while maintaining a profitable market share. As discussed above, ArcelorMittal introduced a sustainable development framework including 10 SD outcomes in 2015 and the ARCGS oversees the Company's progress towards these outcomes, as well as the Company's overarching strategy towards SD according to the five management themes described above. The Company's approach to meeting its SD targets includes:
Key Performance Indicators. A set of KPIs for every business segment to report against, overseen by the ARCGS;
SD-focused Business Plans. An expectation that SD is integrated into each business segment plan, acting on the relevant SD issues material to its business;
SD-focused Corporate Initiatives. Developing a ‘mine to metal’ chain of assurances measured against multi-stakeholder environmental and social standards, to provide customers, investors and stakeholders with reassurance on sustainability throughout the steel value chain and inform them about the credibility and rigor that has gone into auditing our social and environmental performance at our steel plants and mines. Corporate initiatives on SD for the benefit of the Group, which include, for example, accelerating progress towards low-carbon steelmaking; innovating steel solutions for a positive SD impact;
SD-focused Reporting. A robust articulation of the Company’s approach and progress through clear narrative and transparent, third-party assured reporting. In 2020, the


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Company also continued to deepen its understanding of the relevant risks in its supply chain by strengthening its supply chain risk management and audit processes, focusing on its work to develop ResponsibleSteel™ (see “—Management Theme #3: Customer reassuranceabove) at the steel sites and IRMA at the mining sites, both standards aimed at ensuring that both its own sites and its supply chain uphold international human rights, environmental and governance standards.
ArcelorMittal continues to work with external organizations on SD issues, and is a member of the Extractive Industries Transparency Initiative.
In Brazil, where transparency is of particular stakeholder concern, ArcelorMittal partners with the non-governmental organization Transparency International.
ArcelorMittal's human rights policy draws on the UN Universal Declaration of Human Rights, the International Bill of Human Rights, the core conventions of the International Labor Organization and the UN Global Compact; it also aims to contribute to UN SDG 8 (Decent work and economic growth) focus on decent working conditions, including target 8.7 on modern slavery. The policy includes commitments to workers, local communities and business partners, and covers health and safety, labor rights and the rights of indigenous people. Employees working in relevant functions are required to undertake training in the Company’s policy every three years, and in 2020, 89.5% of the Company’s relevant workforce had completed up-to-date human rights training, down from 90.1% in 2019. Where appropriate, ArcelorMittal provides face-to-face training for employees on human rights. The Company also conducts wider ethical and integrity training: in 2020, 88.5% of ArcelorMittal's employees had completed up to date training in the Code of Business Conduct, and 96.0% had completed their Anti-Corruption training. Training compliance decreased slightly in 2020 due to the unusual working circumstances following the COVID-19 pandemic. The Company will focus on increasing training compliance in 2021.
Products
Information regarding segment sales by geographic area and sales by type of products can be found in note 3 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal has a high degree of product diversification relative to other steel companies. Its plants manufacture a broad range of finished and semi-finished steel products with different specifications, including many complex and highly technical and sophisticated products that it sells to demanding customers for use in high-end applications.
ArcelorMittal’s principal steel products include:
semi-finished flat products such as slabs;
finished flat products such as plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate and color coated coils and sheets;
semi-finished long products such as blooms and billets;
finished long products such as bars, wire-rods, structural sections, rails, sheet piles and wire-products; and
seamless and welded pipes and tubes.
ArcelorMittal’s main mining products include:
iron ore lump, fines, concentrate, pellets and sinter feed; and
coking and PCI coal.
Steel-making process
Historically, primary steel producers have been divided into “integrated” and “mini-mill” producers. Over the past few decades, a third type of steel producer has emerged that combines the strengths of both the integrated and the mini-mill processes. These producers are referred to as “integrated mini-mill producers”.
Integrated steel-making
In integrated steel production, coal is converted to coke in a coke oven, and then combined in a blast furnace with iron ore and limestone to produce hot metal. This is then combined with scrap in a converter, which is mainly a basic oxygen or more seldom through a tandem furnace, to produce raw or liquid steel. Once produced, the liquid steel is metallurgically refined and then transported to a continuous caster for casting into a slab, bloom or billet or cast directly as ingots. The cast steel is then further shaped or rolled into its final form. Various finishing or coating processes may follow this casting and rolling. Recent modernization efforts by integrated steel producers have focused on cutting costs through eliminating unnecessary production steps, reducing manning levels through automation, and decreasing waste generation. Integrated mills are substantially dependent upon iron ore and coking coal which, due to supply and demand imbalances, shortening of contract durations and the linkage between contract prices and spot prices, have been characterized by price volatility in recent years.
Mini-mills
A mini-mill employs an electric arc furnace to directly melt scrap and/or scrap substitutes such as direct reduced iron, thus entirely replacing all of the steps up to and including the energy-intensive blast furnace. A mini-mill incorporates the melt shop, ladle metallurgical station, casting, and rolling into a unified


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continuous flow. Mini-mills are generally characterized by lower costs of production and higher productivity than integrated steel-makers. These attributes are due in part to the lower capital costs and lower operating costs resulting from the streamlined melting process and the more efficient plant layouts of mini-mills. The quality of steel produced by mini-mills is primarily limited by the quality of the metallic raw materials used in liquid steel-making, which in turn is affected by the limited availability of high-quality scrap or virgin ore-based metallics for use in the electric arc furnaces. Mini-mills are substantially dependent on scrap, which has been characterized by price volatility in recent years, and the cost of electricity.
Integrated mini-mills
Integrated mini-mills are mini-mills that produce their own metallic raw materials consisting of high-quality scrap substitutes, such as direct reduced iron. Unlike most mini-mills, integrated mini-mills are able to produce steel with the quality of an integrated producer, since scrap substitutes, such as direct reduced iron, are derived from virgin iron ore, which has fewer impurities. The internal production of scrap substitutes as the primary metallic feedstock provides integrated mini-mills with a competitive advantage over traditional scrap-based mini-mills by insulating the integrated mini-mills from their dependence on scrap, which continues to be subject to price volatility. The internal production of metallic feedstock also enables integrated mini-mills to reduce handling and transportation costs. The high percentage use of scrap substitutes such as direct reduced iron also allows the integrated mini-mills to take advantage of periods of low scrap prices by procuring a wide variety of lower-cost scrap grades, which can be blended with the higher-purity direct reduced iron charge. Because the production of direct reduced iron involves the use of significant amounts of natural gas, integrated mini-mills are more sensitive to the price of natural gas than are mini-mills using scrap.
Key steel products
Steel-makers primarily produce two types of steel products: flat products and long products. Flat products, such as sheet or plate, are produced from slabs. Long products, such as bars, rods and structural shapes, are rolled from blooms and/or billets.
Flat products
Slab. A slab is a semi-finished steel product obtained by the continuous casting of steel or rolling ingots on a rolling mill and cutting them into various lengths. A slab has a rectangular cross-section and is used as a starting material in the production process of other flat products (e.g., hot-rolled sheet, plates). Slabs are typically between 200 and 250mm thick.
Hot-rolled sheet. Hot-rolled sheet is minimally processed steel that is used in the manufacture of various non-surface critical applications, such as automobile suspension arms, frames, wheels, and other unexposed parts in auto and truck bodies,
agricultural equipment, construction products, machinery, tubing, pipe and guard rails. All flat-rolled steel sheet is initially hot-rolled, a process that consists of passing a cast slab through a multi-stand rolling mill to reduce its thickness to typically between 2 and 25 millimeters, depending on the final product. Flat-rolled steel sheet that has been wound is referred to as “coiled”. Alternatively, hot-rolled sheet can be produced using the thin slab casting and rolling process, where the hot-rolled sheet thickness produced can be less than one millimeter. This process is generally used in a flat products mini-mill, but some integrated examples exist as well.
Cold-rolled sheet. Cold-rolled sheet is hot-rolled sheet that has been further processed through a pickle line, which is an acid bath that removes scaling from steel’s surface, and then successively passed through a rolling mill without reheating until the desired gauge, or thickness, and other physical properties have been achieved. Cold-rolling reduces gauge and hardens the steel and, when further processed through an annealing furnace and a temper mill, improves uniformity, ductility and formability. Cold-rolling can also impart various surface finishes and textures. Cold-rolled steel is used in applications that demand higher surface quality or finish, such as exposed automobile and appliance panels. As a result, the prices of cold-rolled sheet are higher than the prices of hot-rolled sheet. Typically, cold-rolled sheet is coated or painted prior to sale to an end-user.
Coated sheet. Coated sheet is generally cold-rolled steel that has been coated with zinc, aluminum or a combination thereof to render it corrosion-resistant and to improve its paintability. Hot-dipped galvanized, electro-galvanized and aluminized products are types of coated sheet. These are also the highest value-added sheet products because they require the greatest degree of processing and tend to have the strictest quality requirements. Coated sheet is used for many applications, often where exposed to the elements, such as automobile exteriors, major household appliances, roofing and siding, heating and air conditioning equipment, air ducts and switch boxes, as well as in certain packaging applications, such as food containers.
Plates. Plates are produced by hot-rolling either reheated slabs or ingots. The principal end uses for plates include various structural products such as for bridge construction, storage vessels, tanks, shipbuilding, line pipe, industrial machinery and equipment.
Tinplate. Tinplate is a light-gauge, cold-rolled, low-carbon steel usually coated with a micro-thin layer of tin. Tinplate is usually between 0.14 millimeters and 0.84 millimeters thick and offers particular advantages for packaging, such as strength, workability, corrosion resistance, weldability and ease in decoration. Food and general line steel containers are made from tinplate.


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Electrical steels. There are three principal types of electrical steel: grain-oriented steels, non-grain oriented fully processed steels and non-grain oriented semi-processed steels. Grain-oriented steels are 3% silicon-iron alloys developed with a grain orientation to provide very low power loss and high permeability in the rolling direction, for high efficiency transformers. Non-grain oriented fully processed steels are iron-silicon alloys with varying silicon contents and have similar magnetic properties in all directions in the plane of the sheet. They are principally used for motors, generators, alternators, ballasts, small transformers and a variety of other electromagnetic applications. A wide range of products, including a newly developed thin gauge material for high frequency applications, are available. Non-grain oriented semi-processed steels are largely non-silicon alloys sold in the not finally annealed condition to enhance punchability. Low power loss and good permeability properties are developed after final annealing of the laminations. These materials are sold under the Newcor and Polycor trademarks.
Long products
Billets/Blooms. Billets and blooms are semi-finished steel products. Billets generally have square cross-sections up to 180 millimeters by 180 millimeters, and blooms generally have square or rectangular cross-sections greater than 180 millimeters by 180 millimeters. These products are either continuously cast or rolled from ingots and are used for further processing by rolling to produce finished products like bars, wire rod and sections.
Bars. Bars are long steel products that are rolled from billets. Merchant bar and reinforcing bar (rebar) are two common categories of bars. Merchant bars include rounds, flats, angles, squares, and channels that are used by fabricators to manufacture a wide variety of products such as furniture, stair railings, and farm equipment. Rebar is used to strengthen concrete in highways, bridges and buildings.
Special bar quality (“SBQ”) steel. SBQ steel is the highest quality steel long product and is typically used in safety-critical applications by manufacturers of engineered products. SBQ steel must meet specific applications’ needs for strength, toughness, fatigue life and other engineering parameters. SBQ steel is the only bar product that typically requires customer qualification and is generally sold under contract to long-term customers. End-markets are principally the automotive, heavy truck and agricultural sectors, and products made with SBQ steel include axles, crankshafts, transmission gears, bearings and seamless tubes.
Wire rods. Wire rod is ring-shaped coiled steel with diameters ranging from 5.5 to 42 millimeters. Wire rod is used in the automotive, construction, welding and engineering sectors.
Wire products. Wire products include a broad range of products produced by cold reducing wire rod through a series of dies to improve surface finish, dimensional accuracy and physical properties. Wire products are used in a variety of applications such as fasteners, springs, concrete wire, electrical conductors and structural cables.
Structural sections. Structural sections or shapes are the general terms for rolled flanged shapes with at least one dimension of their cross-section of 80 millimeters or greater. They are produced in a rolling mill from reheated blooms or billets. Structural sections include wide-flange beams, bearing piles, channels, angles and tees. They are used mainly in the construction industry and in many other structural applications.
Rails. Rails are hot-rolled from a reheated bloom. They are used mainly for railway rails but they also have many industrial applications, including rails for construction cranes.
Seamless tubes. Seamless tubes have outer dimensions of approximately 25 millimeters to 508 millimeters. They are produced by piercing solid steel cylinders in a forging operation in which the metal is worked from both the inside and outside. The final product is a tube with uniform properties from the surface through the wall and from one end to the other.
Steel sheet piles. Steel sheet piles are hot rolled products used in civil engineering for permanent and temporary retaining structures. Main applications are the construction of quay walls, jetties, breakwaters, locks and dams, river reinforcement and channel embankments, as well as bridge abutments and underpasses. Temporary structures like river cofferdams are made with steel sheet piles. A special combination of H beams and steel sheet piles are sometimes used for the construction of large container terminals and similar port structures.  
Welded pipes and tubes. Welded pipes and tubes are manufactured from steel sheet that is bent into a cylinder and welded either longitudinally or helically.
Mining products
ArcelorMittal’s principal mining products and raw material input items for steel operations include iron ore, solid fuels (coking coal and PCI coal), metallics, alloys, base metals, energy and industrial gases.
ArcelorMittal’s mining and raw materials supply strategy consists of:
Acquiring and expanding production of certain raw materials, in particular iron ore, coal and manufacturing refractory products and developing diverse third-party customer relationships;


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Exploiting its global purchasing reach, pursuing the lowest unit price available based on the principles of total cost of ownership and value-in-use through aggregated purchasing, supply chain and consumption optimization; and
Leveraging local and low cost advantages on a global scale.
Faced with more volatile raw materials prices in recent years, ArcelorMittal’s priority has been to optimize output and production from its existing sources focused mainly on iron ore and coking coal rather than to further expand its portfolio of mining assets. Iron ore and coking coal are its two most important inputs in the iron-making process.
ArcelorMittal is a party to contracts with other mining companies that provide long-term, stable sources of raw materials. The Company's largest iron ore supply contracts with Vale were renewed in 2017. ArcelorMittal's principal international iron ore suppliers include Vale in Brazil, Cleveland-Cliffs Inc. in the United States (prior to the sale of ArcelorMittal USA - see "—Key transactions and events in 2020"), Metinvest in Ukraine, Metalloinvest in Russia, Luossavaara-Kirunavaara AB in Sweden, IOC (Rio Tinto Ltd.) and Baffinland iron mine (BIM) in Canada and Sishen in South Africa. ArcelorMittal’s principal coal suppliers include the BHP Billiton Mitsubishi Alliance (“BMA”), Rio Tinto, Anglo Coal, Glencore and Peabody in Australia, Contura and Warrior in the United States, Teck Coal in Canada and Vale in Mozambique.
ArcelorMittal believes that its portfolio of long-term supply contracts can play an important role in preventing disruptions in the production process. (see “Operating and financial review —Economic conditions—Raw materials”).
Iron ore
ArcelorMittal sources significant portions of its iron ore needs from its own mines in Kazakhstan, Ukraine, Bosnia, Canada, the United States (prior to the sale of ArcelorMittal USA), Mexico, Liberia and Brazil. Several of ArcelorMittal’s steel plants also have in place off-take arrangements with mineral suppliers located near its production facilities.
For further information on iron-ore production, see “Operating and financial review—Operating results”. For further information on each of ArcelorMittal’s principal iron ore mining operations, see “Properties and capital expenditures—Property, plant and equipment”.
Solid fuels
Coking coal
As with iron ore, ArcelorMittal sources a percentage of its coking coal from its own coal mines in Kazakhstan. The Company’s mines in Kazakhstan supply substantially all of its requirements for its steelmaking operations at ArcelorMittal Temirtau, while the mines in the United States (prior to the sale of ArcelorMittal Princeton) supplied other steel plants within the ArcelorMittal group together with external customers.
For further information on coking coal mining production, see “Operating and financial review—Operating results.”
Coke
ArcelorMittal has its own coke-making facilities at most of its integrated mill sites, including in Bosnia, the United States (prior to the sale of ArcelorMittal USA), Canada, Mexico, Brazil, Spain, France, Germany, Belgium, Poland, Kazakhstan, South Africa and Ukraine. While ArcelorMittal meets most of its own coke requirements, certain of ArcelorMittal’s operating subsidiaries buy coke from mostly domestic or regional sources to optimize cost savings from transport efficiencies, and certain of its subsidiaries sell, on occasion, excess coke at market prices to third parties. The remainder of the spot purchases of coke are made from China and Colombia and the United States (prior to the sale of ArcelorMittal USA).
Other raw materials and energy
Metallics (scrap)
ArcelorMittal procures the majority of its scrap requirements locally and regionally, optimizing transport costs. Typically, scrap purchases are made in the spot market on a monthly/weekly basis or with short-term contracts.
Alloys
ArcelorMittal purchases its requirements of bulk and noble alloys from a number of global, regional and local suppliers on contracts that are linked to generally-accepted indices or negotiated on a quarterly basis.
Base metals
The majority of the Company’s base metal needs, including zinc, tin, aluminum and nickel are purchased under annual volume contracts. Pricing is based on the market-accepted indices. Material is sourced from both local and global producers.
Electricity
ArcelorMittal generally procures its electricity through tariff-based systems in regulated areas such as parts of the United States and South Africa, through direct access to markets in most of its European mills or through bilateral contracts


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elsewhere. The duration of these contracts varies significantly depending on the area and type of arrangement.
For integrated steel mills, plant off-gases from various process steps are utilized to generate a significant portion of the plant’s electricity requirements and lower the purchase volumes from the grid. This is either produced by the plant itself or with a partner in the form of a co-generation contract.
Natural gas
ArcelorMittal procures much of its natural gas requirements for its Canadian and Mexican operations (and prior to the ArcelorMittal USA Transaction, its US operations) from the natural gas spot market or through short-term contracts entered into with local suppliers, with prices fixed either by contract or tariff-based spot market prices. For its European and Ukrainian operations, with a contractual mix of “all-in” bilateral supply and direct access to the market, ArcelorMittal sources its natural gas requirements under the prevailing mix of oil-based pricing systems and European short term/spot-indexed supply contracts. The remainder of ArcelorMittal’s natural gas consumption represents approximately 20% of ArcelorMittal’s total consumption and is generally sourced from regulated markets.
Industrial gases
Most of ArcelorMittal’s industrial gas requirements are produced and supplied under long-term contracts with various suppliers in different geographical regions.
Shipping
ArcelorMittal Shipping ("AM Shipping") provides ocean transportation solutions to ArcelorMittal’s manufacturing subsidiaries and affiliates. AM Shipping determines cost-efficient and timely approaches for the transport of raw materials, such as iron ore, coal, coke and scrap, and semi-finished and finished products. AM Shipping is also responsible for providing shipping services to the Company’s sales organizations. It provides complete logistics solutions from plants to customer locations using various modes of transport.
In 2020, AM Shipping arranged transportation for approximately 54.90 million tonnes of raw materials and about 9.97 million tonnes of finished products. The key objectives of AM Shipping are to ensure cost-effective and timely shipping services to all units. AM Shipping acts as the coordinator for the Company's joint venture with DryLog, a Monaco based Shipping Company.
Purchasing
ArcelorMittal has implemented a global procurement process for its major procurement requirements, including raw materials, capital expenditure items, energy and shipping. ArcelorMittal’s centralized procurement teams also provide services such as
optimization of contracts and the supply base, logistics and optimizing different qualities of materials suitable for different plants and low cost sourcing.
By engaging in these processes, ArcelorMittal seeks to benefit from economies of scale in a number of ways, including by establishing long-term relationships with suppliers that sometimes allow for advantageous input pricing, pooling its knowledge of the market fundamentals and drivers for inputs and deploying specialized technical knowledge. This enables ArcelorMittal to achieve a balanced supply portfolio in terms of diversification of sourcing risk in conjunction with the ability to benefit from a number of its own raw materials sources.
ArcelorMittal has institutionalized the “total cost of ownership” methodology as its way of conducting its procurement activities across the Group. This methodology focuses on the total cost of ownership for decision making, with the goal of lowering the total cost of production through minimization of waste, improved input material recovery rates and higher rates of recycling.
Sales and marketing
In 2020, ArcelorMittal sold 69.1 million tonnes of steel products.
Sales
The majority of steel sales from ArcelorMittal are destined for domestic markets. For these domestic markets, sales are usually approached as a decentralized activity that is managed either at the business unit or at the production unit level. For certain specific markets, such as automotive, there is a global approach offering similar products manufactured in different production units around the world. In instances where production facilities are in relatively close proximity to one another, and where the market requirements are similar, the sales function is aggregated to serve a number of production units. In the EU region and in South America, ArcelorMittal owns a large number of service and distribution centers. Depending on the level of complexity of the product, or the level of service required by the customer, the service center operations form an integral part of the supply chain to ArcelorMittal’s customers. Distribution centers provide access to ArcelorMittal’s products to smaller customers that cannot or do not want to buy directly from the operating facility.
The Group prefers to sell exports through its international network of sales agencies to ensure that all ArcelorMittal products are presented to the market in a cost-efficient and coordinated manner.
Sales are executed at the local level, but are conducted in accordance with the Group’s sales and marketing and code of conduct policies.


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For some global industries with customers in more than one of the geographical areas that ArcelorMittal serves, the Company has established customized sales and service functions. This is particularly the case for the automotive industry. Sales through this channel are coordinated at the Group level with respect to contract, price and payment conditions.
Marketing
Marketing follows the sales activity very closely and is by preference executed at the local level. In practice, this leads to a focus on regional marketing competencies, particularly where there are similarities among regional markets in close geographical proximity. Local marketing provides guidance to sales on forecasting and pricing. At the global level, the objective is to share marketing intelligence with a view towards identifying new opportunities, either in new products or applications, new product requirements or new geographical demand. Where a new product application is involved, the in-house research and development unit of ArcelorMittal is involved in developing the appropriate products.
An important part of the marketing function at ArcelorMittal is to develop short-range outlooks that provide future perspectives on the state of market demand and supply. These outlooks are shared with the sales team in the process of finalizing the sales strategy for the immediate future and with senior management when market conditions call for production adjustments.
Globally, sales and marketing activities are coordinated to ensure a harmonized approach to the market. The objective is to provide similar service experiences to all customers of ArcelorMittal in each market.
Insurance
ArcelorMittal maintains insurance policies to cover physical loss or damage to its property and equipment on a reinstatement basis arising from a number of specified risks, including certain natural disasters, such as earthquakes, floods or windstorms, acts of terrorism and certain consequential losses, including business interruption arising from the occurrence of an insured event under the said policies.
ArcelorMittal also purchases worldwide third-party public and product liability insurance coverage for all of its subsidiaries.
Various other types of insurance are also maintained, such as comprehensive construction and contractor insurance for its greenfield and major capital expenditures projects, directors and officers liability, transport, and charterers’ liability, as well as other customary policies such as car insurance, travel assistance and medical insurance.
Each of the operating subsidiaries of ArcelorMittal maintains various local insurance policies that are mandatory at the local
level, such as employer liability, workers compensation and auto liability, as well as specific insurance such as public liability to comply with local regulations.
In addition, ArcelorMittal maintains trade credit insurance on receivables from selected customers, subject to limits that it believes are consistent with those in the industry, in order to protect it against the risk of non-payment due to customers’ insolvency or other causes. Not all of ArcelorMittal’s customers are or can be insured, and even when insurance is available, it may not fully cover the exposure.
ArcelorMittal believes that its insurance coverage is in line with industry practice and sufficient to cover normal risks in its operations. Notwithstanding the insurance coverage that ArcelorMittal and its subsidiaries carry, the occurrence of an event that causes losses in excess of limits specified under the relevant policy, or losses arising from events not covered by insurance policies, could materially harm ArcelorMittal’s financial condition and future operating results.
Intellectual property
ArcelorMittal owns and maintains a patent portfolio covering processes and steel products, including uses and applications that it creates, develops and implements in territories throughout the world. Such patents and inventions primarily relate to steel solutions with new or enhanced properties, as well as new technologies that generate greater cost-efficiencies.
ArcelorMittal also owns trademarks, both registered and unregistered, relating to the names and logos of its companies and the brands of its products. ArcelorMittal has policies and systems in place to monitor and protect the confidentiality of its know-how and proprietary information. The Company applies a general policy for patenting selected new inventions, and its committees organize an annual patent portfolio screening by individuals from the Company’s R&D and business sectors in order to optimize the global efficiency of the Company’s patent portfolio. The Company’s patent portfolio includes more than 9,500 patents and patent applications, mostly recent and medium term, for more than 706 patent families, with 79 inventions newly-protected in 2020. Because of this constant innovation, the Company does not expect the lapse of patents that protect older technology to materially affect current revenue.
In addition to its patent portfolio, ArcelorMittal is constantly developing technical know-how and other unpatented proprietary information related to design, production process, and use of high quality steel products, leading to development of new applications or to improvement of steel solutions proposed to its customers, such as the ones aiming at weight reduction for vehicles. ArcelorMittal has also been granted licenses for technologies developed by third parties in order to allow it to


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propose comprehensive steel solutions to its customers. ArcelorMittal is not aware of any pending lawsuits alleging infringement on others’ intellectual property rights that could materially harm its business.
Government regulations
ArcelorMittal’s operations are subject to various regulatory regimes in the regions in which it conducts its operations. The following is an overview of the principal features of the Company's regulatory regimes, as of December 31, 2020, that affect or are likely to affect the Company's operations.
See “Risk factors” and note 9.3 to ArcelorMittal’s consolidated financial statements.
Environmental laws and regulations
ArcelorMittal’s operations are subject to a broad range of laws, directives and regulations relating to air emissions, surface and groundwater protection, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste management, recycling, treatment and disposal practices, the remediation of environmental contamination, the protection of soil, biodiversity and ecosystems or rehabilitation (including in mining). As these laws and regulations in the EU and other jurisdictions continue to become more stringent, ArcelorMittal expects to expend substantial resources including operating and capital expenditures to achieve or maintain ongoing compliance. Further details regarding specific environmental proceedings involving ArcelorMittal, including provisions to cover environmental remedial activities and liabilities, decommissioning and asset retirement obligations are described in notes 9.1 and 9.3 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal anticipates that its expenditures with respect to environmental matters in the EU over the next several years will relate primarily to installations of additional air emission controls, to requirements imposed in the course of renewal of permits and authorizations, including those pursuant to ongoing implementation of Directive 2010/75/EU of November 24, 2010 on Industrial Emissions, respecting achievement of NOx and SO2 limits when using liquid and gaseous fuels (including iron and steel process gases) in boilers, gas engines and gas turbines, and to address GHG issues, including the reduction of emissions and purchase of allowances.
In relation to ArcelorMittal Italia, certain environmental obligations (decontamination and environmental capital expenditures) regarding the Taranto plant of the previous owners have been transferred to ArcelorMittal Italia, which operates the Taranto plant as lessee and, as such, is required to implement an “environmental plan”. This will require significant capital investments by ArcelorMittal Italia, which to such end would also rely on the support of its shareholders, which upon
closing of the investment agreement may be in the form of, among other things, funds coming from Invitalia’s investment, see note 9.4 to the consolidated financial statements for further information. Significant issues that need to be addressed include reduction of diffuse dust emissions (from storage yards) and channeled emissions (such as sinter primary de-dusting system and coke plant de-dusting systems), the treatment of process waste waters and implementation of rain water collection, separation and treatment. Following the Amendment Agreement, ArcelorMittal Italia continues to be subject to these obligations and will submit a request to amend the environmental plan to reflect the contents of the new industrial plan, with the approval of such amendment a condition precedent to the closing under the Ilva Agreement.
Environmental requirements impacting industrial operations also are becoming more stringent in other jurisdictions. For example, in Canada, ArcelorMittal has incurred considerable investments for emissions reductions required by the national regulation addressing Criteria Air Contaminants, which covers steel sector, emissions of NOX, SO2, VOCs and fugitive particulates, and further investments will be needed including installation of full coke oven gas desulphurization at ArcelorMittal Dofasco by December 31, 2025. Provincial regulations in Ontario and Quebec also will be requiring further emissions reductions of SO2, particulates and other pollutants. Permits for water discharges in Canada are becoming more stringent and it is possible that ArcelorMittal Dofasco may be required to treat for ammonia discharge from its Primary Water Treatment Plant to the Hamilton Harbor. In Kazakhstan, beginning in 2025, complex ecological permits for emissions into the environment will impose more stringent emissions standards and also outline measures for reducing emissions (production improvements). In South Africa, the National Environmental Management: Air Quality Act, 39 of 2004 (“NEM:AQA”) introduced strict air emission standards introduced impacting ArcelorMittal’s coke making and other operations.
ArcelorMittal’s mining activities also are subject to increasingly stringent environmental and safety requirements. For example, in Brazil, the state of Minas Gerais has issued decrees and resolutions requiring extraordinary audits of tailings dams, generating increased costs for compliance and a number of surveillance visits from federal and state agencies (environment, geology and police departments). Furthermore, the Brumadinho accident has triggered new environmental rules for mining activities with increased restrictions on waste management and tailings dams, including an August 2019 resolution from the National Mining Agency that establishes regulatory measures to ensure the stability of mining dams, and that requires the Serra Azul mine to complete the works of the existing dam stabilization system or the construction of a new downstream containment structure by September 15, 2021, and to complete


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the de-characterization of the dam by September 15, 2022. In Québec Canada, renewed depollution permits that will apply to AMMC and ArcelorMittal Long Products Canada are under negotiation and are expected to establish more stringent targets for water, air, soil and waste management, as well as the monitoring and reporting frequencies and requirements, including implementation of a storm water treatment system at the AMMC pellet plant and assessment of former EAF dust stock pile site restoration and former slag management areas at ArcelorMittal Long Products Canada. Other required investments include a water management multi-year project aimed at controlling the surface effluents on the waste rock piles and achieving compliance with the applicable federal regulation on the metal and diamond mines effluent regulations and implantation of a decree issued in August 2018 for the tailings expansion consisting of construction of a water containment basin (B+ basin) and the new tailings impoundments and more restrictive environmental goals at the final mine effluent for total suspended solids, metals and nitrates.
It is difficult to fully assess the extent to which additional operating or capital expenditures will be required to comply with pending or recently-enacted amendments to environmental laws, directives and regulations or what effect they will have on the Company’s business, financial results or cash flow from operations. In 2020, ArcelorMittal approved 32 multi-year projects with identified environmental benefits and expected capital expenditures of $396 million and 20 multi-year projects with the identified energy benefits and expected capital expenditures of $248 million. See also further information on key environmental projects in "—Sustainable development" and "—Capital expenditure projects".
Industrial emissions regulation: climate change
In December 2015, 195 countries participating in the United Nations Framework Convention on Climate Change (“UNFCC”), at its COP21 held in Paris, adopted a global agreement on the reduction of climate change (the “Paris Agreement”). The Paris Agreement sets a goal to limit the increase in global average temperature to well below 2 degrees Celsius and pursues efforts to limit the increase to 1.5 degrees Celsius, to be achieved by getting global GHG emissions to peak as soon as possible. The Paris Agreement consists of two elements: a legally binding commitment by each participating country to set an emissions reduction target, referred to as “nationally determined contributions” or “NDCs”, with a review of the NDCs that could lead to updates and enhancements every five years beginning in 2023 (Article 4) and a transparency commitment requiring participating countries to disclose in full their progress (Article 13). The majority of countries have issued their intended NDCs.
ArcelorMittal’s activities in the 27 member states of the EU are subject to the EU Emissions Trading Scheme (“EU-ETS”), which was launched in 2005 pursuant to European Directive 2003/87/
EC, relating to GHG emissions. The EU-ETS is based on a cap and trade principle, setting a cap on GHG emissions from covered installations that is then reduced over time. Within this cap, companies receive emission allowances which they can sell to or buy from one another as needed. The limit on the total number of allowances available ensures that they have a value. The Commission implemented the current Phase 3 of the EU-ETS, which ran through 2020, in a manner that increased costs for the Group to obtain sufficient emission allowances for its European operations depending on steel production levels and the market price of emission allowances. The EU is implementing its more stringent Phase 4 EU-ETS for the 2021 to 2030 period in a manner that may require ArcelorMittal to incur additional costs to acquire emissions allowances. In particular, further implementation rules are expected to reduce current benchmark and free allocation levels could result in an increase of marginal production costs by approximately €40 per tonne (assuming a price of €25/tCO2) , which would put the European steel industry at a significant disadvantage versus global competition (see notes 6.3 and 9.1 to the consolidated financial statements). The EU also is implementing a revised Renewable Energy Directive, along with revised renewable energy targets for 2030, to support Europe's commitment to complete clean energy transition and meet the goals set by the Paris Agreement. In December 2019, the Commission presented the Communication on The European Green Deal announcing several upcoming legislative proposals for the EU 2050 climate neutrality objective and to increase the EU 2030 GHG emissions reduction target, which on December 11, 2020 the Commission announced it was setting at 55% (increased from the earlier 50%) compared to 1990 levels. On September 17, 2020 the Commission presented the communication on stepping up Europe’s 2030 ambition and the proposal for regulations establishing the framework for achieving climate change neutrality, indicating the ambition to reach a 55% reduction of GHG in 2030 compared to 1990 levels. To achieve this, the EU is revising its relevant climate-related policy instruments with proposals to be presented by June 2021.
GHG emissions regulations are being implemented in an increasing number of other jurisdictions where ArcelorMittal operates. For example, in South Africa, legislation to tax carbon dioxide emissions was adopted and came into effect in 2019. In Kazakhstan, where the Emission Trading Scheme restarted operation on January 1, 2018 with new trading procedures and allocation methods supported by an online platform for monitoring, reporting and verifying emission sources and greenhouse gases. In the United Kingdom, ArcelorMittal’s activities are subject to the Carbon Reduction Energy Efficiency Scheme. In Canada, Ontario operations are currently subject to output based pricing system regulations until a new emissions performance standard which has been accepted is transitioned which is expected to be effective January 1, 2022 or


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retroactively to January 1. 2021. A cap and trade program is in effect in Quebec with a second more stringent compliance period becoming effective in 2021, a federal backstop program consisting of a fossil fuel levy and an emissions based pricing system applies in provinces without approved GHG regulations, and clean fuel standards are to come into effect in 2022 and 2023. In Mexico and Brazil, new regulatory initiatives are being discussed by the different government authorities. Ukraine has approved the concept of implementing a state policy in the sphere of climate change for the period until 2030 that will create and implement an internal trading system for greenhouse gas emission quotas.
ArcelorMittal is closely monitoring local, national and international negotiations, regulatory and legislative developments and is endeavoring to reduce its own emissions where appropriate.
Health and safety laws and regulations
ArcelorMittal’s operations are subject to a broad range of laws and regulations relating to the protection of human health and safety. As these laws and regulations in the United States, the EU and other jurisdictions continue to become more stringent, ArcelorMittal expects to expend substantial amounts to achieve or maintain compliance. See “Risk factors—Legal and regulatory risks—ArcelorMittal is subject to strict environmental, health and safety laws and regulations that could give rise to a significant increase in costs and liabilities.” ArcelorMittal has established health and safety guidelines requiring each of its business units and sites to comply with all applicable laws and regulations. Compliance with such laws and regulations and monitoring changes to them are addressed primarily at the business unit level. ArcelorMittal has a clear and strong health and safety policy, aimed at reducing on a continuing basis the severity and frequency of accidents; through its Health & Safety Council and Management Committee, the Company reinforces the penetration of the safety culture in the Company. The effective policy outlines the commitment ArcelorMittal has made to the health and safety of all employees and reinforces the accountability of the local management and encourages the continuous improvement in health and safety performance at unit level, which permits the Health & Safety Council and Management Committee to define and track performance targets and monitor results from every business unit and sites. See "Business overview—Sustainable development—Management Theme #1: Health and safety" for further information.
Mine safety disclosure
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), each reporting operator of a coal or other mine is required to include certain mine safety information within its periodic reports filed with the SEC. The Company presents the information concerning mining safety
violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act for each of its U.S. mine locations in exhibit 16.1 of this annual report.
Foreign trade
ArcelorMittal has manufacturing operations in many countries and sells its products worldwide. In 2020, certain countries and communities, such as Canada, the European Union, Egypt, India, Mexico, Philippines, South Africa, Thailand, Turkey, and the United States of America continued or launched investigations into whether to impose/continue imposing trade remedies (usually anti-dumping or safeguard measures) against injury, or the threat thereof, caused by increasing steel imports originating from various steel producing countries.
Under both international agreements and the domestic trade laws of most countries, trade remedies are available to domestic industries where imports are “dumped” or “subsidized” and such imports cause injury, or a threat thereof, to a domestic industry. Although there are differences in how trade remedies are assessed, such laws have common features established in accordance with World Trade Organization (“WTO”) standards. Dumping involves exporting a product at a price lower than that at which the same or similar product is sold in the home market of the exporter, or where the export prices are lower than a value that typically must be at or above the full cost of production (including sales and marketing costs) plus a reasonable amount for profit. Subsidies from governments (including, among others, grants and loans at artificially low interest rates) are similarly actionable under certain circumstances. The trade remedies available are typically (i) an antidumping duty order where injurious dumping is found and (ii) a countervailing duty order or suspension agreement where injurious subsidization is found. Normally, the duty is equal to the amount of dumping or subsidization that is generally imposed on the imported product (other than in the European Union where the lesser duty rule is applied). Accordingly, such orders and suspension agreements do not prevent the importation of a product, but rather require that either the product be priced at a non-dumped level or without the benefit of subsidies, or that the importer pay the difference between such dumped or subsidized price and the actual price to the government as a duty.
Safeguard measures are addressed more generally to a particular product, irrespective of its country of origin, to protect domestic production against serious injury caused by unforeseen, sharp and sudden increase of imports.
All WTO members are required to review antidumping duty and countervailing duty orders every five years to determine if they should be maintained, revised or revoked. This requires a review of whether the dumping or subsidization is likely to continue or recur if the order/suspension agreement is revoked


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and whether a domestic industry in the country is likely to suffer the continuation or recurrence of the injury within the reasonably foreseeable future if the orders are revoked. If the government finds dumping or subsidization and the injury is likely to continue or recur, then the orders continue. In the case of safeguard measures enduring for greater than three years, all WTO members are required to review the imposed measures in the mid-term of the relevant measure. After a review, safeguard measures may be extended if they continue to be required, but the total period for the application of safeguard measures may not exceed eight years.
Final affirmative determinations were reached in anti-circumvention petitions filed in September 2016 by U.S. industry related to cold rolled coil and corrosion resistant steel from China (via Vietnam) and affirmative preliminary decisions have been reached in similar petitions filed by U.S. industry in June 2018 related to cold rolled coil and corrosion resistant steel imports from Korea and Taiwan (through Vietnam), with duties applied based on the exporters’ certification of the source of the substrate. Similarly, the European Commission started a circumvention investigation in July 2019, concerning the EU anti-dumping measures on imports of cold rolled steel from China, and the resolution was published in the Official Journal on August 4, 2020, extending the duties to the modified products.
In a number of markets in which ArcelorMittal has manufacturing operations, it may be the beneficiary of trade actions intended to address trade distortions consistent with WTO regulations, such as the examples mentioned above. In other situations, certain operations of ArcelorMittal may be a respondent to antidumping and countervailing duty cases and its exported products might be subject to antidumping and countervailing duties or other trade restrictions, for example antidumping duties imposed in 2017 by the Egyptian government against rebar imports from Ukraine, Turkey and China affecting exports from ArcelorMittal operations in Ukraine.
USA Section 232:
On March 23, 2018, after a section 232 national security investigation with respect to steel imports, the Trump Administration imposed tariffs of 25% on steel products from all but a select list of countries, with a temporary suspension applied for Canada, Mexico, Argentina, South Korea, Brazil and the EU until May 1, 2018. Since then, Australia has obtained a full exemption, imports from Argentina, Brazil, and South Korea are subject to annual quotas, and steel imports from the EU remain subject to the 25% tariff. In addition, as of May 16, 2019, Turkish imports are subject to a 25% tariff after having been subject to 50% tariffs since August 2018. Tariffs on imports of steel products from Canada and Mexico were eliminated on May 17, 2019, which led to positive impacts in the Company’s
NAFTA business units; imports from Canada and Mexico are monitored to identify if imported volumes surge meaningfully beyond historic levels. On August 28, 2020, President Trump closed the fourth quarter of 2020 Brazilian quota (no further imports allowed) on semi-finished steel although the Company received an expedited exclusion to import 40,000 metric tons of semi-finished steel in the fourth quarter; the 2021 quota will revert to the original aggregate 3.5 million tonnes volume.
The USA Section 232 tariffs have triggered concerns of trade deflection worldwide and several countries initiated domestic remediation measures. On March 26, 2018, the EU Commission opened ex-officio a safeguard investigation on 26 products (including 19 long, flat and stainless steel products and 7 tubes and other steel products). On July 18, 2018, the EU Commission published provisional measures which entered into force on July 19, 2018 based on global tariff quotas with a 100% quota based on average imports over the past 3 years on 23 product categories. Imports that exceeded the above quotas would face a 25% tariff but certain 'developing' countries were exempt when their import share was below 3%. The EU’s provisional safeguard measures were replaced by definitive safeguard measures approved by EU member states on January 16, 2019 and went into effect on February 2, 2019, which cover the full steel product scope, setting country-based quotas for larger importers on all product categories, except for hot rolled (global), and quarterly quota calculations for residual volumes of all products. The measures also include three phases of 5% quota relaxations in February 2019, July 2019 and July 2020, which can be adapted to market conditions for each product individually. Countries subject to quotas have an incentive to frontload the consumption of their national quota in order to benefit from the residual quotas in the final quarter of the period, thus ensuring full quota consumptions. In July 2019, the EU commission completed a review investigation of these safeguard measures and proposed modifications, which were implemented on October 1, 2019. The main changes include:
a reduction of quotas to 3% (from the 5% quotas applicable since July 1, 2019),
inclusion of additional countries in the developing country quota list which had met the 3% import levels,
a quarterly cap of 30% of the HRC global applicable to each country's total import cap for hot rolled coil, and
a 30% cap applicable to the last quarter per period of a country's total cap on wire rod and rebar imports, as well as a new requirement that end users (product purchasers) validate any imports of category 4B products (hot dip galvanized products used in the auto industry).


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In February 2020, the EU Commission started a second review of the EU Steel Safeguards to consider adjustments to the tariff-rate quota considering changes since the last review in 2019. On June 12, 2020, Member States voted in favor of the Commission’s revised measures. These were implemented from July 1, 2020.The main changes include:
Quarterly management of country specific quotas;
Country-specific quotas for hot rolled flat products ("HRF");
Access to residual quotas prohibited for organic coated, wire rod, gas pipes, and cold finished bars;
Access to residual quotas more restricted for most long products; and
30% cap per country accessing the residual quotas for hot dip galvanized 4B (automotive grade material) and HRF in the fourth quarter of 2020.
ArcelorMittal welcomed the changes approved to the final safeguard measures in Europe, however the Company considers that the applicable relaxation clauses, which increase the level of quotas currently in place, still weaken the efficiency of these measures considering the current conditions of the market.
In response to the measures adopted by the U.S. and the EU, Turkey opened a safeguard investigation on May 2, 2018 with provisional measures effective as of October 17, 2018. Turkey’s safeguard investigation on iron and steel products, which was supposed to be concluded by January 26, 2019, was extended for six months, i.e., until July 26, 2019, with provisional safeguard measures that remained in effect until May 5, 2019. The investigation covered hot-rolled, cold-rolled, coated, hot-dipped galvanized, bars and rods, angles, shapes and sections, wire rod, rails, tubes and hollow profiles and stainless steel and the provisional measures were in the form of a free tariff quota with 25% duties. Such investigation was terminated on May 7, 2019 without permanent safeguard measures being imposed. In Canada, as a result of the opening of a safeguard investigation on certain flat and long products, provisional measures were put in place on October 25, 2018 in the form of quotas and a 25% tariff on steel imports. Final safeguard measures were subsequently implemented in relation to plate and stainless wire, but not rebar, hot rolled, prepaint, wire rod and energy tubulars. The Eurasian economic union led by Russia also opened a safeguard investigation on August 7, 2018 covering some flat steel products only and on August 8, 2019, safeguard measures covering hot-rolled steel were put in place, imposing 20% tariffs above relevant quotas.
Key currency regulations and exchange controls
As a holding company, ArcelorMittal is dependent on the industrial franchise fees from, earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses, meet its debt service obligations, pay any cash dividends or distributions on its ordinary shares or conduct share buy-backs. Significant cash or cash equivalent balances may be held from time to time at subsidiaries where repatriation of funds may be affected by tax and foreign exchange policies, including in Argentina, Brazil, China, Kazakhstan, South Africa, Ukraine and Venezuela. Such policies are briefly summarized below; however, none of these are currently significant in the context of ArcelorMittal’s overall liquidity.
Argentina
The Argentinian foreign exchange market is regulated by the Argentine Central Bank ("BCRA"). The BCRA allows the local currency to free-float against the USD, however, capital controls have reduced volatility in an effort to provide stability to the currency. The Argentinian peso (“ARS”) is not fully convertible and is most commonly traded as a non-deliverable forward (NDF), both onshore and offshore. As of July 1, 2018, Argentina has been considered a hyperinflationary economy. Since the re-imposition of capital controls in September 2019, local restrictions on obtaining foreign currencies have tightened, requiring the BCRA's approval for all transfers to and from the local market for companies and for financial outflows, such as dividend payments. The BCRA has set a limit of 5 days for exporters to convert foreign currency, while institutions will need authorization of the bank to buy USD in the foreign exchange market, except in the case of foreign trade, according to a statement from the BCRA. In September 2020, the BCRA intensified Forex regulation once again, instituting a 30% tax on purchases made abroad and restricting withdrawals to USD 200 per month. See also note 2.2.2 to the consolidated financial statements.
Brazil
The central bank of Brazil operates a managed floating foreign exchange regime, although intervention has become more regular in recent years. The Brazilian real is fully deliverable onshore (i.e., physical settlement of the designated currency at maturity), but is non-deliverable offshore. With proper documentation, the repatriation of registered invested capital and remittance of profits do not require prior approval from the central bank of Brazil. Profits can be freely remitted as dividends or as interest on capital to foreign shareholders or portfolio investors.
China
China’s foreign exchange regime has undergone significant liberalization in recent years. The People’s Bank of China (“PBOC”) maintains the Chinese renminbi in a managed float with reference to a basket of currencies. The CNY, which refers


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to the Chinese renminbi on the onshore market, is partially convertible and has a non-deliverable offshore market. All transactions involving foreign exchange are strictly controlled by the State Administration of Foreign Exchange. The CNH, which is the Chinese renminbi traded offshore, became deliverable in Hong Kong in July 2010. The CNH can generally be transferred freely between offshore accounts and interaction with the onshore market is growing, although transfers of CNH from Hong Kong to onshore China are subject to regulations and approval by the PBOC. Moreover, in July 2020, integration of the interbank and exchange bond markets, as well as wider participation in the treasury bond futures market, suggest that more progress is likely to be made by the PBOC to move for more internalization of the Chinese market.
India
The Reserve Bank of India ("RBI") maintains the Indian rupee (“INR”) in a managed floating regime. The INR is partially convertible and has a non-deliverable offshore market. Onshore deliverable forwards are also available out to 10 years. The most common tenor with the best liquidity in the forwards market is one year or less. The INR is convertible for exports and imports of goods and services as well as unilateral transfers, including repatriating profits from foreign-funded companies, as well as for daily recurring transactions in the ordinary course of business. However, the INR is restricted on the capital account (purchase and sale transactions of foreign assets and liabilities) and there are specific transactions that have to be authorized by the RBI or other relevant government departments for routine capital account transactions, e.g. foreign currency borrowings under the approval route or foreign direct investments that are not permitted under the automatic route. Other permitted capital account transactions that are allowed, subject to compliance with local applicable regulations, include foreign direct investment, foreign currency loans and bonds, securities and equity investments overseas. In April 2020, the RBI issued final guidelines on “Hedging of foreign exchange risk by Residents and Non-Residents”. The simplified guidelines are expected to have a positive material impact on product suite, procedures and requirements for hedging requests which will impact both local and global franchises.
Kazakhstan
In August 2015, the National Bank of Kazakhstan devalued the Kazakhstan tenge and introduced a free-floating exchange rate with an inflation targeting regime. The National Oil Fund conducts open market operations to finance economic programs, hence the current exchange rate regime may be best described as a managed float. Liquidity in foreign exchange markets is limited and mainly non-deliverable forwards are traded on offshore markets. There are no restrictions on tenge convertibility, but domestic legal entities must state their reasons
for buying foreign currency and may only trade with authorized banks.
South Africa
The South African Reserve Bank operates a managed floating exchange rate system. The South African rand (“ZAR”) is deliverable and largely convertible, and the reserve bank is gradually relaxing exchange rate controls. Since January 1, 2014, companies may apply for approval to establish a holding company to hold their offshore investments. Subject to certain conditions, listed companies may place ZAR 3 billion per year with such holding companies, which can be transferred offshore without exchange control approval, and unlisted companies may transfer ZAR 2 billion per year.
Ukraine
The National Bank of Ukraine ("NBU") is responsible for the country’s monetary policy. The exchange rate system has gone through significant liberalization during 2018-2019, though currency control for foreign currency purchases still remains in place. Deliverable forwards and foreign currency swaps are allowed on the onshore market, with an improvement in liquidity. Non-deliverable forwards are not allowed onshore, however the local market is still in a preparatory phase. On the offshore market, UAH Non-Deliverable Forwards are traded with good liquidity from both sides, with tenors of up to 1 year. Since August 2016, foreign investors are entitled to repatriate profits, income or other funds relating to investments without any restrictions, after the payment of applicable taxes. In 2019, the NBU lifted all restrictions for dividends on securities, assets repatriated by corporates, decreases in share capital or exits from local legal entities.
Venezuela
Venezuela’s foreign exchange regime has been characterized by governmental devaluation and legislative changes. DICOM is the country’s official exchange rate. On August 20, 2018, the bolivar soberano ("VES") replaced the bolivar fuerte ("VEF") at a rate of 1 VES to 100,000 VEF. The only way to convert the VES is through the DICOM rate, which sets an exchange limit of €340,000 per month for domestic legal entities. Since September 7, 2018, currency purchase and sale transactions can be freely converted by direct agreement between the parties, provided they do so through the exchange operators of the Central Bank, however, the Central Bank of Venezuela can intervene in these operations whenever it deems necessary to avoid distortions of the exchange value of the national currency. Since this regime's effective date, the foreign exchange market has been characterized by limited existence of customers and transactions for insignificant amounts. Transactions are allowed on a non-deliverable offshore market, but liquidity is very limited.


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Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)ArcelorMittal’s business with customers in Iran
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act). Section 13(r) requires an issuer to disclose in its annual reports whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran. Disclosure is required even where the activities, transactions or dealings are conducted outside the United States by non-US persons in compliance with applicable law, and whether or not the activities are sanctionable under US law.
In 2020, neither ArcelorMittal nor any of its affiliates engaged in activities, transactions or dealings relating to Iran triggering disclosure under Section 13(r).
ArcelorMittal continues to monitor developments in this area, in particular the status of U.S. Sanctions, the Joint Comprehensive Plan of Action ("JCPOA") and EU Sanctions, and the expansion of the EU Blocking Regulation (Council Regulation (EC) 2271/96). ArcelorMittal carefully monitors political risk and sanctions exposure and has procedures and systems in place intended to manage those risks.
However, ArcelorMittal’s business is subject to an extensive, complex and evolving regulatory framework. It is possible that ArcelorMittal may face conflicting obligations or risks under U.S. direct and secondary sanctions and the EU Blocking Regulation, or other conflicting instruments. Despite its governance, compliance policies and procedures and continuous efforts to comply with all applicable sanctions regimes, its systems and procedures may not always prevent the occurrence of violations which may lead to regulatory penalties or cause reputational harm to operating subsidiaries, joint ventures or associates. See “Risk factors.”



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Organizational structure
ArcelorMittal is a holding company with no business operations of its own. All of ArcelorMittal’s significant operating subsidiaries are indirectly owned by ArcelorMittal through intermediate holding companies. The following chart represents the operational structure of the Company, including ArcelorMittal’s significant operating subsidiaries and not its legal or ownership structure.
mt-20201231_g5.jpg
*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.
** 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 ArcelorMittal Italia will be accounted for under the equity method upon closing of the first Investment from Invitalia (expected to be in the first quarter of 2021). See "Introduction—Key transactions and events in 2020" and note 2.3.2 for further information.




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Please refer to the "Glossary - definitions, terminology and principal subsidiaries" for a listing of the Company’s principal subsidiaries, including country of incorporation. Please refer to note 2.2.1 of the consolidated financial statements for the ownership percentages of these subsidiaries. Unless otherwise stated, the subsidiaries as listed have share capital consisting solely of ordinary shares, 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.
Investments accounted for under the equity method ArcelorMittal has investments in entities accounted for under the equity method as detailed in note 2.4 to ArcelorMittal’s consolidated financial statements. The Company's key investments in joint ventures are AMNS India, Calvert and VAMA for which the Company holds 60%, 50% and 50%, respectively. See section “Property, plant and equipment—Investments in joint ventures” for further details.
Reportable segments
ArcelorMittal reports its business in the following five reportable segments corresponding to continuing activities: NAFTA, Brazil, Europe, ACIS and Mining.
NAFTA produces flat, long and tubular products. Flat products include slabs, hot-rolled coil, cold-rolled coil, coated steel products and plate and are sold primarily to customers in the following sectors: automotive, energy, construction packaging and appliances and via distributors and processors. Flat product facilities are located at seven integrated and mini-mill sites located in three countries. Long products include wire rod, sections, rebar, billets, blooms and wire drawing. Long production facilities are located at three integrated and mini-mill sites located in three countries. In 2020, shipments from NAFTA totaled 17.9 million tonnes.
Brazil produces flat, long and tubular products. Flat products include slabs, hot-rolled coil, cold-rolled coil and coated steel. Long products comprise sections, wire rod, bar and rebars, billets and wire drawing. In 2020, shipments from Brazil totaled 9.4 million tonnes.
Europe produces flat, long and tubular products. Flat products include hot-rolled coil, cold-rolled coil, coated products, tinplate, plate and slab. These products are sold primarily to customers in the automotive, general and packaging sectors. Flat product facilities are located at 12 integrated and mini-mill sites located in five countries. Long products include sections, wire rod, rebar, billets, blooms and wire drawing. Long product facilities are located at 10 integrated and mini-mill sites in seven countries. In addition, Europe includes downstream solutions, which provides
primarily distribution of long and flat products as well as value-added and customized steel solutions through further processing to meet specific customer requirements. In 2020, shipments from Europe totaled 32.9 million tonnes.
ACIS produces a combination of flat, long and tubular products. It has five flat and long production facilities in three countries. In 2020, shipments from ACIS totaled 9.9 million tonnes, with shipments made on a worldwide basis.
Mining provides the Company’s steel operations with high quality and low-cost iron ore and coal reserves and also sells limited amounts of mineral products to third parties. The Company’s mines are located in North and South America, Europe, Africa and CIS. In 2020, iron ore and coal production from own mines totaled approximately 58.0 million tonnes and 5.0 million tonnes, respectively.
Properties and capital expenditures
Property, plant and equipment
ArcelorMittal has steel production facilities, as well as iron ore and coal mining operations, in North and South America, Europe, Asia and Africa.
All of ArcelorMittal's operating subsidiaries are substantially owned by ArcelorMittal through intermediate holding companies, and are grouped into the five reportable segments described above. Unless otherwise stated, ArcelorMittal owns all of the assets described in this section.
For further information on environmental issues that may affect ArcelorMittal’s utilization of its assets, see “Business overview—Government regulations”, "Business overview—Sustainable development" and note 9.3 to ArcelorMittal’s consolidated financial statements.
The Company acted swiftly and rapidly to adapt production in-line with the reduced demand environment caused by the COVID-19 pandemic which started to affect the Group’s main operations from the middle of the first quarter of 2020 onwards. Production was impacted across all segments and regions.
Steel production facilities of ArcelorMittal
The following table provides an overview by type of steel facility of the principal production units of ArcelorMittal’s operations. While all of the Group’s facilities are shown in the tables, only the facilities of significant subsidiaries are described textually for each segment. The facilities included in the tables are listed from upstream to downstream in the steel-making process.


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Facility 3
Number of Facilities 3
Capacity (in million tonnes per year)1 3
Production in 2020 (in million tonnes)2 3
Coke Oven Battery6031.018.5
Sinter Plant2893.452.8
Blast Furnace4789.053.4
Basic Oxygen Furnace (including Tandem Furnace)6392.858.2
DRI Plant128.65.3
Electric Arc Furnace3226.814.6
Continuous Caster—Slabs4285.149.6
Hot Rolling Mill1973.242.2
Pickling Line3032.912.9
Tandem Mill3440.521.3
Annealing Line (continuous / batch)4319.98.5
Skin Pass Mill2616.06.3
Plate Mill105.31.9
Continuous Caster—Bloom / Billet3332.519.8
Breakdown Mill (Blooming / Slabbing Mill)26.72.2
Billet Rolling Mill32.60.7
Section Mill2212.26.0
Bar Mill218.25.2
Wire Rod Mill1610.56.6
Hot Dip Galvanizing Line5220.813.2
Electro Galvanizing Line112.00.7
Tinplate Mill153.11.6
Tin Free Steel (TFS)20.40.1
Color Coating Line172.81.6
Seamless Pipes40.50.1
Welded Pipes764.70.8
1.Reflects design capacity and does not take into account other constraints in the production process (such as, upstream and downstream bottlenecks and product mix changes). As a result, in some cases, design capacity may be different from the current achievable capacity.
2.Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Therefore, the sum of the production numbers does not equal the quantity of sellable finished steel products.
3.On December 9, 2020, ArcelorMittal completed the sale of ArcelorMittal USA’s operations- four integrated facilities, two mini-mills, six downstream and two coke-making facilities, see note 2.3.1 to the consolidated financial statements and “Introduction—Key transactions and events in 2020". The number of lines and their respective capacities, as well as their production through the transaction closing date are included in the table above.


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NAFTACrude Steel
UnitCountryLocations
Production in 2020 (in million tonnes per year)1
Type of plantProducts
ArcelorMittal USA ²USAWarren, OHn/aCoke-MakingCoke
ArcelorMittal USA ²USAMonessen, PAn/aCoke-MakingCoke
ArcelorMittal USA ² ³USAEast Chicago, IN3.4IntegratedFlat
ArcelorMittal USA ²USABurns Harbor, IN3.6IntegratedFlat
ArcelorMittal USA 2 5
USACleveland, OH2.0IntegratedFlat
ArcelorMittal USA ²USARiverdale, IL0.6IntegratedFlat
ArcelorMittal USA ²USACoatesville, PA0.2Mini-millFlat
ArcelorMittal USA ²USAColumbus, OHn/aDownstreamFlat
I/N Tek ²USANew Carlisle, INn/aDownstreamFlat
ArcelorMittal USA ²USAConshohocken, PAn/aDownstreamFlat
ArcelorMittal USA ²USAWeirton, WVn/aDownstreamFlat
ArcelorMittal USA 2 4
USAGary, INn/aDownstreamFlat
Double G ²USAJackson, MSn/aDownstreamFlat
ArcelorMittal Dofasco 6
CanadaHamilton2.7Integrated, Mini-millFlat
ArcelorMittal MexicoMexicoLázaro Cárdenas, Celaya3.6Mini-mill, Integrated, and DownstreamFlat, Long/ Bar, Wire Rod
ArcelorMittal Long Products CanadaCanadaContrecoeur East, West1.6Mini-millLong/ Wire Rod, Bars, Slabs
ArcelorMittal USA ²USASteelton, PA0.1Mini-millLong/ Rail
ArcelorMittal Tubular ProductsCanadaBramptonn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsCanadaLondonn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsCanadaWoodstockn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsCanadaHamiltonn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsUSAShelbyn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsUSAMarionn/aDownstreamPipes and Tubes
ArcelorMittal Tubular ProductsMexicoMonterreyn/aDownstreamPipes and Tubes
1.Note: n/a = not applicable (no crude steel production).
2.On December 9, 2020, ArcelorMittal completed the sale of ArcelorMittal USA’s operations, including all facilities listed above - four integrated facilities, two mini-mills, six downstream and two coke-making facilities, see note 2.3.1 to the consolidated financial statements and “Introduction—Key transactions and events in 2020". Their production is included in the table through the transaction closing date.
3.Referred to as Indiana Harbor. ArcelorMittal USA idled its #3 blast furnace at Indiana Harbor in November 2019.
4.The rolling mill in Gary has been permanently idled. The facility only does heat treating.
5.Cleveland's 84 Inch Temper Mill was permanently idled in 2020.
6.ArcelorMittal Dofasco idled HDG lines #1&2 in 2017 and permanently discontinued their operation in 2019.

Production for the second quarter of 2020 in the NAFTA segment was impacted by the COVID-19 pandemic.
After the restrictions were imposed by the local government in Canada, impacting the construction and automotive markets, the Company took action to reduce production in late March both for flat products (blast furnace#3 banked and reduced production rhythm) and long products (stoppage in Contrecoeur West and slab production in Contrecoeur East) which returned in June.
In the U.S., in the first quarter of 2020, the Company announced the safe and orderly temporary blow down of blast furnace #6 at Cleveland and blast furnace #4 at Indiana Harbor with the necessary precautions taken to preserve the assets for future production. Following the gradual improvement in demand, particularly automotive, ArcelorMittal restarted blast furnace #4 at Indiana Harbor during the third quarter and blast furnace #D at Burns Harbor following repairs undertaken mid-July.


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ArcelorMittal Dofasco
ArcelorMittal Dofasco (“Dofasco”) is a leading North American steel solution provider and Canada’s largest manufacturer of flat rolled steels. Dofasco’s steel-making plant in Hamilton, Ontario is adjacent to water, rail and highway transportation. The plant uses both integrated and EAF-based steelmaking processes. Its products include hot-rolled, cold-rolled, galvanized and tinplate. Dofasco supplies these products to the automotive, construction, packaging, manufacturing, pipe and tube and steel distribution markets.
ArcelorMittal USA
On December 9, 2020, ArcelorMittal completed the sale of ArcelorMittal USA’s operations, including four integrated facilities, two mini-mills, six downstream and two coke-making facilities, listed in the table above and described below.
ArcelorMittal USA mainly produced flat products at its steelmaking facilities located at Indiana Harbor, Burns Harbor, Cleveland, Riverdale and Coatesville.
Indiana Harbor is a fully integrated steelmaker, strategically located on the southern shore of Lake Michigan in East Chicago, Indiana and benefits from Great Lakes shipping as well as highway and railroad transportation access. The Indiana Harbor facilities produce hot-rolled sheet, cold-rolled sheet and hot dip galvanized sheet for use in automotive, appliance, service center, tubular, strip converters and contractor applications.
Burns Harbor is strategically located on Lake Michigan in northwestern Indiana approximately 50 miles southeast of Chicago, Illinois. The area allows for shipping access to the Port of Indiana-Burns Harbor, as well as highway and railroad access. Burns Harbor produces hot-rolled sheet, cold-rolled sheet, hot dip galvanized sheet and steel plate for use in automotive, appliance, service center, construction and shipbuilding applications.
The Cleveland facility is located on the Cuyahoga River in Cleveland, Ohio with access to the Port of Cleveland and Great Lakes shipping, as well as highway and railroad transportation routes. The Cleveland plant serves the automotive, service centers, converters and tubular applications markets.
The Riverdale facility is located near the Indiana border in Riverdale, Illinois, with access to Lake Michigan, and highway and railroad networks. It produces hot-rolled strip for strip converter and service center applications, and obtains supplies
of hot metal for its basic oxygen furnaces from the Burns Harbor or Indiana Harbor locations.
The Coatesville facility is located in Pennsylvania and produces plate products for use in rail transportation, pipes & tubes and distribution segments. The Conshohocken facility (which has been idled except for heat treating operations since August 2018) and the Gary facility provide heat treating of plates produced at either Burns Harbor or Coatesville.
ArcelorMittal USA had standalone finishing facilities in Weirton, West Virginia making tin products and in Columbus, Ohio making coated products. It had coke plants at Burns Harbor and Warren that supply coke to its production facilities.
ArcelorMittal USA, through various subsidiaries, owned interests in joint operations, including (i) I/N Tek L.P. (60% interest), a cold-rolling mill near New Carlisle, Indiana; (ii) Double G Coatings (50% interest), a coating line producing galvanized and Galvalume steel near Jackson, Mississippi, and (iii) Hibbing Taconite Company, which is described under “—Mining” below, all of which were included in the sale to Cleveland-Cliffs. The Company retained its interest in the Calvert joint venture (see "—Investments in joint ventures" below).
ArcelorMittal Mexico
ArcelorMittal Mexico produces both flat and long steel products and operates an integrated route and EAF route using DRI. It produces higher quality slabs for use in specialized steel applications in the automotive, line pipe manufacturing, shipbuilding and appliance industries. It is also one of the largest single rebar and wire rod production facilities in Mexico and mainly uses the integrated route for steelmaking. The facility is located in Lazaro Cardenas in the Michoacán state by the Pacific coast and is highly accessible by ocean, rail, and other means. It also operates a rebar mill at Celaya with billets sourced from the Lazaro facility.
ArcelorMittal Long Products Canada
ArcelorMittal Long Products Canada is the largest mini-mill in Canada and has the flexibility to use either DRI or scrap, depending on their respective economics. It produces wire rods, wire products and bars, primarily sold in Canada and the United States and principally serves the automotive, appliance, transportation, machinery and construction industries. It also produces slabs that are used within ArcelorMittal.



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BRAZILCrude Steel
UnitCountryLocations
Production in 2020 (in million tonnes per year) 1
Type of plantProducts
SolBrazilVitorian/aCoke-MakingCoke
ArcelorMittal Tubarão 2
BrazilVitoria5.0IntegratedFlat
ArcelorMittal VegaBrazilSão Francisco do Suln/aDownstreamFlat
ArcelorMittal BrasilBrazilJoão Monlevade1.2IntegratedLong/ Wire Rod
ArcelorMittal BrasilBrazilJuiz de Fora, Piracicaba1.8Mini-millLong/ Bar, Wire Rod
ArcelorMittal Brasil 3
BrazilBarra Mansa,
Resende    
0.7Mini-millLong/Rebar, Wire rod, Bars, Sections, Wires
AcindarArgentinaVilla Constitucion0.8Mini-millLong/ Wire Rod, Bar
ArcelorMittal Costa RicaCosta RicaCosta Rican/aDownstreamLong/ Wire Rod
Industrias UniconVenezuelaBarquisimeto, Matanzas, La Victorian/aDownstreamPipes and Tubes
1.Note: n/a = not applicable (no crude steel production)
2.ArcelorMittal Tubarão completed the reline of its BF #2 in December 2019. The blast furnace remained idled due to market conditions until its restart in July 2020.
3.ArcelorMittal Brasil temporarily idled its electric arc furnaces #1 & #2, billet caster and long rolling mill #2 at Barra Mansa in February 2019 in response to market conditions.

Due to the outbreak of the COVID-19 pandemic in 2020, the Brazil segment production was adversely impacted, primarily for flat products.
As domestic demand improved following the initial impact of the COVID-19 pandemic during the second quarter of 2020, the Company restarted blast furnace #2 at ArcelorMittal Tubarão at the end of July 2020 (idled since June 2019) and blast furnace #3 (idled since April 2020) in the fourth quarter of 2020 to match demand levels.
Similarly, production curtailments were incurred in Argentina and in long product capacity in Brazil. A V-shape recovery of market demand, particularly in construction, better operational performance and other managerial actions were able to largely offset the production curtailments, limiting the impact on production volume for long products.
ArcelorMittal Brasil
ArcelorMittal Brasil produces both flat and long steel products. Flat products are manufactured at ArcelorMittal Tubarão and ArcelorMittal Vega. Its products include slabs, hot-rolled coil, cold-rolled coil and galvanized steel, and serve customers in automotive, appliances, construction and distribution segments. The Tubarão complex uses the integrated steelmaking route to produce slabs and rolling hot-rolled coils and is strategically located with access to the Praia Mole Marine Terminal as well as road and railway systems. The Vega facility has cold-rolling and coating facilities and easy access to the port of São Francisco do Sul.
ArcelorMittal Brasil’s long products include wire rod and wire, sections, merchant bars, special bars and rebars, for use in civil construction, industrial manufacturing, agricultural and distribution sectors. It produces transformed products including, among others, welded mesh, trusses, annealed wire and nails. It owns upstream and downstream steel facilities in Monlevade, Juiz de Fora, Piracicaba, Barra Mansa and Resende and operates an extensive distribution network across the country selling to retail customers. It owns interests in two subsidiaries, Belgo Bekaert Arames Ltda. ("BBA"), which manufactures wire products for agricultural and industrial end-users, and Belgo-Mineira Bekaert Artefatos de Arame Ltda., which produces steel cords used in the tire industry. It also owns forests, and ArcelorMittal Bioflorestas produces charcoal from eucalyptus forestry operations that is used to fuel its furnaces in Juiz de Fora and to exchange for pig iron with local producers.
Acindar
Acindar is the largest long steel producer in Argentina. It manufactures and distributes products to meet the needs of the construction, industrial, and agricultural sectors. It produces rebars, square, round, drawn and flat bars, meshes, nails, preassembled and welded cages, structural sections, piles, wire rod and barbed wire. It has an in-house distribution network that serves end-users across Argentina.





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EUROPECrude Steel
UnitCountryLocations
Production in 2020 (in million tonnes per year) 1
Type of plantProducts
ArcelorMittal BremenGermanyBremen, Bottrop2.8IntegratedFlat
ArcelorMittal EisenhüttenstadtGermanyEisenhüttenstadt1.9IntegratedFlat
ArcelorMittal BelgiumBelgiumGent, Geel, Genk, Liège4.1Integrated and DownstreamFlat
ArcelorMittal France 5
FranceDunkirk,
Mardyck,
Montataire,
Desvres,
Florange, Mouzon, 
Basse- Indre
4.9Integrated and DownstreamFlat
ArcelorMittal MéditerranéeFranceFos-sur-Mer,
Saint-Chély
3.0Integrated and DownstreamFlat
ArcelorMittal EspañaSpainAvilés, Gijón, Etxebarri, Lesaka, Sagunto3.0Integrated and DownstreamFlat, Long, Rails, Wire Rod
ArcelorMittal ItalyItalyTaranto, Genova, Novi Ligure, Raconiggi, Salerno3.4Integrated and DownstreamFlat, Pipes and Tubes
ArcelorMittal Avellino & CanossaItalyAvellinon/aDownstreamFlat
ArcelorMittal Poland 2
PolandKrakow, Swietochlowice, Dabrowa Gornicza,
Chorzow,
Sosnowiec,
Zdzieszowice
3.9Integrated and DownstreamFlat, Long, Coke/ Sections, Wire Rod, Sheet Piles, Rails
ArcelorMittal SestaoSpainBilbao0.2Mini-millFlat
IndusteelFrance, BelgiumCharleroi, Le Creusot, Chateauneuf,
Saint-Chamond,
Seraing, Dunkirk
0.3Mini-mill and DownstreamFlat
ArcelorMittal Belval & DifferdangeLuxembourgEsch-Belval, Differdange, Rodange1.9Mini-millLong /Sheet Piles, Rails, Sections & Special Sections
ArcelorMittal Olaberria-BergaraSpainOlaberría, Bergara0.9Mini-millLong/ Sections
ArcelorMittal GandrangeFranceGandrangen/aDownstreamLong/ Wire Rod, Bars
ArcelorMittal WarszawaPolandWarsaw0.5Mini-millLong/ Bars
ArcelorMittal HamburgGermanyHamburg0.9Mini-millLong/ Wire Rods
ArcelorMittal DuisburgGermanyRuhrort, Hochfeld0.9IntegratedLong/ Billets, Wire Rod
ArcelorMittal HunedoaraRomaniaHunedoara0.2Mini-millLong/ Sections
SonasidMoroccoNador, Jorf Lasfar0.5Mini-millLong/ Wire Rod, Bars, Rebars in Coil
ArcelorMittal ZenicaBosnia and HerzegovinaZenica0.7Mini-mill / IntegratedLong/ Wire Rod, Bars
ArcelorMittal Tubular Products Roman SA 6
RomaniaRomann/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products Iasi SA 3
RomaniaIasin/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products Karvina a.s. 7
Czech RepublicKarvinan/aDownstreamPipes and Tubes


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EUROPE (continued)Crude Steel
UnitCountryLocations
Production in 2020 (in million tonnes per year) 1
Type of plantProducts
ArcelorMittal Tubular Products KrakówPolandKrakown/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products HautmontFranceHautmontn/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products VitryFrance Vitryn/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products ChevillonFranceChevillonn/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products Lexy 4
FranceLexy, Rettel,Vincey, Fresnoy-le-Grandn/aDownstreamPipes and Tubes
ArcelorMittal Tubular Products FranceFranceSocovan/aDownstreamPipes and Tubes
1.n/a = Not applicable (no crude steel production)
2.ArcelorMittal Poland permanently idled its coke oven batteries #3 & #4 at the Zdzieszowice coke plant in April 2019. The blast furnace, basic oxygen furnaces and slab caster at Krakow were temporarily idled in the fourth quarter of 2019 due to market conditions. A new organic coating line at Krakow was commissioned in mid-2019. On October 8, 2020, ArcelorMittal Poland announced that it intended to permanently close its primary steelmaking operations at its unit in Kraków (except the coke battery which remains in operation), and the shutdown process in the blast furnace and the steel shop was completed in November 2020.
3.ArcelorMittal Tubular Products Iasi commissioned a new pipe mill #6 in the first quarter of 2019.
4.ArcelorMittal Tubular Products Lexy decommissioned its pipe mill #1 at Lexy site in 2019.
5.The coke oven battery in Florange was permanently closed in the second quarter of 2020. The new HDG 2 line (Galsa2) in Florange ramped up production in early 2020.
6.ArcelorMittal Tubular Products Roman decommissioned its seamless pipe mill #6 in 2020.
7.ArcelorMIttal Tubular Products Karvina decommissioned its welded pipe mill #9 in 2020.

The COVID-19 pandemic containment measures began impacting European industrial activity in mid-March. The Company first announced measures on March 19, 2020 to reduce production and to temporarily idle steelmaking and finishing assets across its European operations. Production reduction measures were undertaken in Italy, France, Spain, Germany, Belgium and Poland.
In the third quarter of 2020, the Company resumed some steel-making capacity in France, Spain and Germany, some of which were required to ensure continuity of supply to customers during the period of planned major reline of a blast furnace at Gent, Belgium that began late August 2020.
ArcelorMittal France
ArcelorMittal France has locations in Dunkirk, Mardyck, Montataire, Desvres, Florange, Mouzon and Basse-Indre. ArcelorMittal France produces and markets a large range of products, including slabs, hot-rolled, pickled, galvanized, color-coated and tin-plated coils. ArcelorMittal France’s products are sold principally in the regional market in France and Western Europe, particularly in the automotive and packaging market. The Dunkirk site has primary facilities and produces slabs for other ArcelorMittal France sites as well as supplies hot rolled coils to the sites of Desvres, Mardyck and Liège. The Mardyck site has finishing facilities and supplies the hot dip coating lines of Montataire.
The Florange site supplies through its hot strip mill and 2 cold rolling mills: the 2 hot dip lines of Florange (GALSA 1 & 2), the continuous annealing of Florange, the hot dip coating lines of Mouzon, as well as the tinplate facilities of Florange and Basse-Indre. Mouzon is specialized in finishing hot dip coating operations.
The Florange site has primary and finishing facilities that are located mainly along the Fensch River in Lorraine. The liquid phase of Florange has been idled since October 2011 and the Company began the definitive closure and dismantling of this facility in 2018. The finishing plant of Florange idled one continuous annealing line in September 2013, a tinplate mill in January 2012 and an organic coating line in June 2011.
The Florange coke oven battery was permanently closed in the second quarter of 2020.
The site of Basse-Indre is specialized in packaging activities. Its pickling line and cold-rolling mill are both idled since April 2014.
The sites of ArcelorMittal France produce and deliver a range of flat steel high-value finished products to customers, including cold-rolled, hot dip galvanized, aluminized and organic-coated material, tinplate, draw wall ironed tin plate ("DWI") and tin free steel. Certain of its products are designed for the automotive market, such as Ultragal®, Extragal®, galfan, Usibor® (hot dip),


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while others are designed for the appliances market, such as Solfer® (cold-rolled) for enameling applications.
ArcelorMittal Belgium
ArcelorMittal Gent
ArcelorMittal Gent is a fully integrated steel plant which is located along the Gent-Terneuzen canal, approximately 17 kilometers from the Terneuzen sea lock, which links the works directly with the North Sea. The canal is of the Panamax type and can accommodate ships of up to 65,000 tonnes. ArcelorMittal Gent produces flat steel products with high added value. A significant part of the production is coated, either by hot dip galvanizing, electro galvanizing or organic coating. ArcelorMittal Gent also includes one organic coating line located in Geel and one electro galvanizing line located in Genk. ArcelorMittal Gent’s products are mainly used in the automotive industry and in household appliances, tubes, containers, radiators and construction. In 2018, ArcelorMittal Gent invested €65 million in a new furnace at Sidgal 3 line to produce Fortiform ® grades for automotives. The blow-in of blast furnace B in Gent occurred on March 1, 2021, after the completion of the reline which commenced late August 2020.
ArcelorMittal Liège
The finishing facilities of ArcelorMittal Liège are located south of Liège. ArcelorMittal Liège produces a wide range of innovative products to meet the demanding needs of companies in the automotive industry and industrial domestic appliances. The operating assets in Liège include the continuous annealing line 1, hot dip galvanizing line 7 (combiline) and line 8 (Eurogal), the electrogalvanzing line 5, and the two organic coating lines 2 and 7 (combiline hot dip galvanizing line 7). It also includes the JVD (Jet Vapor Deposition) line inaugurated on February 3, 2017. This world-class innovative line coats moving strips of steel in a vacuum chamber by vaporizing zinc onto the steel at high speed to produce coated steels for automotive and other industrial applications.
ArcelorMittal Bremen
ArcelorMittal Bremen is situated on the bank of the Weser River north of Bremen, Germany. ArcelorMittal Bremen produces and sells a wide range of products including slab, hot-rolled, pickled, cold-rolled and hot dip galvanized rolls to the automotive and primary transformation sectors.
ArcelorMittal Méditerranée
ArcelorMittal Méditerranée operates a flat carbon steel plant in Fos-sur-Mer. It also operates a finishing facility for electrical steel located in Saint-Chély, 300 kilometers northwest of Fos-sur-Mer. The Fos-sur-Mer plant is located 50 kilometers west of Marseille on the Mediterranean Sea.
ArcelorMittal Méditerranée’s products include coils to be made into wheels, pipes for energy transport and coils for finishing facilities for exposed and non-exposed parts of car bodies, as well as for the construction, home appliance, packaging, pipe and tube, engine and office material industries.
The Saint-Chély plant produces electrical steel (with up to 3.2% silicon content), mainly for electrical motors. About 60% of its products are shipped from a private wharf, in part through a shuttle system and 30% of its products are shipped by rail, with the remaining amount transported by truck.
ArcelorMittal España
ArcelorMittal España’s Avilés and Gijón facilities, which are by far the largest of its facilities, are connected by ArcelorMittal España’s own railway system. These two facilities operate as a single integrated steel plant. The product range of ArcelorMittal España includes rail, wire rod, heavy plates and hot-rolled coil, as well as more highly processed products such as hot dip and electrogalvanized sheet, tinplate and organic-coated sheet. The facilities are also connected by rail to the region’s two main ports, Avilés and Gijón. Raw materials are received at the port of Gijón, where they are unloaded at dedicated dry-bulk terminal, which is linked to steel-making facilities by conveyor belt. A variety of products are shipped through the Avilés port facilities to other units of the Group and to ArcelorMittal España’s customers.
ArcelorMittal España is connected to the other ArcelorMittal facilities in Spain by wide-gauge and narrow-gauge rail networks. Shuttle trains link the ArcelorMittal España facilities directly to the ArcelorMittal Sagunto plant, which it supplies with hot-rolled coils for subsequent processing into cold-rolled, galvanized and electro galvanized sheet.
ArcelorMittal España production is primarily sold to the railway, automotive and construction industries.
ArcelorMittal España’s Gijón coke plant was idled in 2013. On September 23, 2015, ArcelorMittal announced an investment of over €100 million in the refurbishment of the coke oven batteries in Gijón. The main part of the approved investment focuses on the re-construction of two 45-oven batteries at ArcelorMittal Asturias’ coke plant in Gijón, installation of a state-of-the-art emission collection and scrubbing system, and implementation of efficient by-product management systems. The refurbishment work started in 2016. The refurbished coke oven battery number 1 in Gijón started its heating in the last quarter of 2019. The first coke from coke oven battery #1 was produced at the beginning of 2020. The start of the coke oven battery #2 was delayed due to the COVID-19 crisis and the first coke was produced on February 13, 2021. In October 2019, the coke oven batteries of Aviles were decommissioned with the aim to be demolished and


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their coke output was then supplied by the refurbished Gijón coke batteries located near the two blast furnaces.
ArcelorMittal Italia
On November 1, 2018, ArcelorMittal leased and subsequently consolidated the business units of Ilva S.p.A. ("Ilva") following the signing on June 28, 2017 of a lease agreement with a conditional obligation to purchase. See “Introduction—Key transactions and events in 2020—ArcelorMittal Italia”.
ArcelorMittal Italia is the leading steel producer in Italy, Europe’s second largest steel consuming economy. ArcelorMittal Italia produces high-quality and sustainable steel to be used in a range of vital industry sectors across the domestic steel market such as construction, energy, automotive, home appliances, packaging and transport and for international export. ArcelorMittal Italia has operations across various structurally linked operating sites including Europe’s biggest single-site integrated steel facility in Taranto and rolling mills in Genoa and Novi Ligure. Genoa is also an important hub in terms of intermodal logistics.
The updated industrial plan agreed between ArcelorMittal and Invitalia involves investment in lower-carbon steelmaking technologies, including the construction of a 2.5 million tonne electric arc furnace, which is expected to open in mid-2024, and the relining of BF #5, which is expected to start production in 2024. This industrial plan, which targets reaching 8 million tonnes of production in 2025 (crude steel production is limited to 6 million tonnes until the environmental plan is completed), will become effective upon the closing of the first investment of Invitalia. It integrates a series of public support measures including ongoing government funded employment support and includes, for the period between 2021 and 2025, environmental capital expenditures of €345 million and industrial capital expenditures of €1,051 million as well as capital expenditures of €226 million for the revamp of blast furnace #5 and €260 million for the construction of the electric arc furnace.
ArcelorMittal Poland
ArcelorMittal Poland is the largest steel producer in Poland. ArcelorMittal Poland’s Zdzieszowice coke plant produces and supplies coke to ArcelorMittal subsidiaries and third parties.
ArcelorMittal Poland produces coke and a wide range of steel products, including both long and flat products such as slabs, billets, blooms, sections, sheet piles, rails up to 120 meters long, railway accessories, mining supports sections, hot-rolled coils, sheets and strips, cold-rolled coils, sheets and strips, hot dip galvanized coils and sheets, wire-rods and organic coated sheets and coils. Products are mainly sold in the domestic Polish market, while the remainder is exported, primarily to customers located in other EU member states. ArcelorMittal Poland’s principal customers are in the construction,
engineering, transport, mining and automotive industries. In the fourth quarter of 2019, ArcelorMittal Poland temporarily idled its blast furnace and steel plant in Krakow as a result of the market downturn, high energy costs and large volumes of steel imports from outside the EU. The coke plant in Kraków will continue to operate as well as the downstream operations (two rolling mills, the hot dip galvanizing line and the new organic coating line). The slabs for the rolling mills in Kraków will come mainly from the steel shop in Dabrowa Gornicza where the company will invest in debottlenecking projects, and to produce special grades for further processing into grain-oriented steel. On October 8, 2020, ArcelorMittal Poland announced that it intended to permanently close its primary steelmaking operations (except the coke battery which remains in operation), at its unit in Kraków, and the shutdown process in the blast furnace and the steel shop was completed in November 2020.
ArcelorMittal Eisenhüttenstadt
ArcelorMittal Eisenhüttenstadt is situated on the Oder river near the German-Polish border, 110 kilometers southeast of Berlin. ArcelorMittal Eisenhüttenstadt is a fully integrated and highly-automated flat steel producing plant. The facility is run with one medium-sized blast furnace. In the third quarter of 2019, primary steel production was reduced at ArcelorMittal Eisenhüttenstadt in line with the May 2019 announcement, and was subsequently brought back to normal levels towards end of 2019.
ArcelorMittal Eisenhüttenstadt produces and sells a wide range of flat steel products, including hot-rolled, cold-rolled, electrical and hot dip galvanized and organic-coated coils to automotive, distribution, metal processing, construction and appliances industry customers in Germany, Central and Eastern Europe.
ArcelorMittal Belval & Differdange
ArcelorMittal Belval & Differdange produces a wide range of sections and sheets piles which are sold to the local European construction market as well as for export. With its Rodange facilities, it also produces a wide range of rails, special sections and heavy angles. ArcelorMittal announced a collaboration with Vow ASA (company listed on Oslo Stock Exchange and specialized in world leading solutions to convert biomass and waste into valuable resources) to build the first dedicated industrial scale biogas plant for the steel industry at Rodange, with the aim of starting production in 2022. The plant will convert sustainable biomass into biogas to replace the use of natural gas at the plant’s rolling mill reheating furnace, so reducing CO2 emissions from the production of steel.
ArcelorMittal Hamburg
ArcelorMittal Hamburg produces billet and high quality wire rod and its production is mainly sold in the European market, primarily to automotive and engineering customers.


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ArcelorMittal Olaberria-Bergara
The Olaberría-Bergara facilities produce billets and sections. The Olaberría facility's production is sold to the local construction market as well as for export, while the Bergara facility’s production is sold primarily to the local European construction market. 
ArcelorMittal Duisburg
ArcelorMittal Duisburg produces blooms, billets, bars and high quality wire rod and its production is mainly sold in the European market primarily to automotive, railway and engineering customers.
ArcelorMittal Downstream Solutions (AMDS)
The Europe segment also includes ArcelorMittal Downstream Solutions (“AMDS”), which primarily covers the downstream activities of ArcelorMittal in Europe. It provides distribution of long and flat products as well as value-added and customized steel solutions through further processing to meet specific
customer requirements. In addition, specific solutions are dispatched through other business lines, primarily ArcelorMittal Construction, ArcelorMittal Projects, ArcelorMittal Tubular Products, ArcelorMittal Wire Solutions and ArcelorMittal International.
AMDS also includes Industeel, with facilities in Belgium and in France. Industeel Belgium and Industeel Creusot are designed to produce special steel plates, ranging from 5 to 180 millimeters in thickness, including stainless steel products, while Industeel Loire is dedicated to extra heavy gauge products of alloyed carbon steel. Euroform operates hot forming facilities, mainly to transform extra heavy gauge products received from Industeel Loire. The R&D center in Le Creusot, France is fully dedicated to special plate products development.


ACISCrude Steel
UnitCountryLocations
Production in 2020 (in million tonnes per year) 1
Type of plantProducts
ArcelorMittal Temirtau JSCKazakhstanTemirtau3.2IntegratedFlat, Long, Pipes and Tubes
ArcelorMittal Kryvyi Rih 2
UkraineKryvyi Rih4.7IntegratedLong
ArcelorMittal South Africa 3
South AfricaVanderbijlpark, Saldanha, Newcastle, Vereeniging, Pretoria2.3Integrated Mini-mill DownstreamFlat, Long, Pipes and Tubes
JSC ArcelorMittal Tubular Products AktauKazakhstanAktaun/aDownstreamPipes and Tubes
1.Note: n/a = not applicable (no crude steel production).
2.ArcelorMittal Kryvyi Rih temporarily idled its BF #8 in October 2019 for planned maintenance and also in response to market conditions. ArcelorMittal Kryvyi Rih commissioned its new billet caster #3 in June 2019 and new billet caster #2 in the first quarter of 2020. The blast furnace #5, open hearth shop, blooming shop #1 and wire rod mill #250-3 were definitely closed in 2020.
3.ArcelorMittal South Africa temporarily idled some of its downstream production lines at Vanderbijlpark (batch annealing lines, continuous annealing line, temper mills and the tinning line) in the course of 2019. The lines were permanently closed in 2020. ArcelorMittal South Africa restarted the melt shop at Vereeniging in January 2019. Vereeniging Bar Mill (16 inch) was permanently closed in 2020. ArcelorMittal South Africa put its Saldanha operations under care and maintenance beginning in the second quarter of 2020. Coke oven battery #5 within the Coke and Chemicals division was closed in the fourth quarter 2020.

The major impact of the COVID-19 pandemic on the CIS region was incurred in the second quarter of 2020 although more stringent lockdown measures were implemented after the first quarter, and production was reduced in the Ukraine and Kazakhstan due to demand weakness. The situation improved in the third quarter.
ArcelorMittal South Africa took several steps (including significant production cuts across all operations) to support the country's lockdown (i.e. restrictions on activity limited only to essential services) that ended on April 30, 2020, which required the closure of all offices and operations across the country, except essential operational staff required for care and
maintenance to avoid damage. Since May 1, 2020, the operations in South Africa were operating within a partial lockdown environment which was lifted in phases: mid June for crude steel production, whereas rolling re-started beginning of May. ArcelorMittal adopted a phased response to restarting operations and will ramp up production as the demand for steel returns.
On July 16, 2020, shareholders were informed that, having reassessed its strategic asset footprint for 2020, ArcelorMittal South Africa had decided to idle Blast Furnace C (“BF C”) at Vanderbijlpark and the Vereeniging Electric Arc Furnace until


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demand recovered. Responding to the increased demand ArcelorMittal restarted BF C in December 2020.
ArcelorMittal South Africa
ArcelorMittal South Africa is the largest steel producer in Africa and its common shares are listed on the JSE Limited in South Africa under the symbol “ACL”. ArcelorMittal South Africa has four main steel production facilities of which Vanderbijlpark, Newcastle and Vereeniging (melt shop restarted in January 2019) are located inland, while Saldanha (under care and maintenance beginning in the second quarter of 2020 due to the current depressed economic environment) is close to a deep-water port, which is supported by a metallurgical by-products division (Coke and Chemicals) that has been closed in the fourth quarter 2020. ArcelorMittal South Africa has a diversified range of products and includes hot-rolled plates and sheet in coil form, cold-rolled sheet, coated sheet, wire-rod and sections, as well as forgings. During 2020, approximately 85% of its products were sold in the South African domestic market, while Africa is its largest export market. It also sells into Asia and has minor tonnages into Europe and the Americas.
The Thabazimbi Iron Ore Mine was taken over by ArcelorMittal South Africa in 2018, and commenced dry screening of a calcite hematite stockpile in September 2019 in order to recover fine iron ore (-8mm) for use at its Vanderbijlpark Works. The screened material is quality controlled in order to ensure suitability of use in conjunction with its other fine iron ore sources.
ArcelorMittal Temirtau
ArcelorMittal Temirtau’s product range of flat and long steel products includes pig iron, continuous caster slabs, continuous caster billets, hot- and cold-rolled coils and sheets, black plates, covers, tin plates, hot dipped galvanized products, color coated products, welded pipes and rebars. ArcelorMittal Temirtau also
has iron ore mines and coal mines (see “—Mining” below for further information).
ArcelorMittal Temirtau sells steel products to a range of industries, including the tube- and pipe-making sectors, as well as manufacturers of consumer goods and appliances. The markets for its products include Kazakhstan, CIS, Russia and South-East Asia.
ArcelorMittal Kryvyi Rih
ArcelorMittal Kryvyi Rih’s product range includes billets, rebars and wire rods, light sections (angles) and merchant bars (rounds, squares and strips). ArcelorMittal Kryvyi Rih also has iron ore mines (see “—Mining” below for further information). Its products are sold to a range of industries such as hardware, construction, re-rolling and fabrication. The markets for its products include Ukraine, CIS and Russia, North West and East Africa, Middle East and Gulf countries, Europe, Latin America and South East Asia.
In addition, ArcelorMittal Kryvyi Rih includes an export sales network which supplies a complete range of steel products not only from Kryvyi Rih but also from other plants of the Group to customers outside of their respective home markets.

Mining
Following the sale of the ArcelorMittal USA and certain other subsidiaries as described in "Introduction—Key transactions and events in 2020", ArcelorMittal’s mining segment has production facilities in Canada, South America, Europe, Africa and CIS and in India through its joint venture AMNS India. The following table provides an overview by type of facility of ArcelorMittal’s principal mining operations. The production of the ArcelorMittal USA mines is indicated below until December 9, 2020.


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UnitCountryLocationsArcelorMittal Interest (%)Type of MineProduct
Iron Ore
ArcelorMittal Mines and Infrastructure CanadaCanadaMt Wright, Fire Lake and Port Cartier, Qc85.0Iron Ore Mine (open pit), pellet plant, railway and portConcentrate and pellets
Minorca Mines 1
USAVirginia, MN100.0 Iron Ore Mine (open pit)Pellets
Hibbing Taconite Mines 1
USAHibbing, MN62.3Iron Ore Mine (open pit)Pellets
ArcelorMittal Mexico (excluding Peña Colorada)MexicoSonora, Sinaloa and Michoacán100.0 Iron Ore Mine (open pit)Concentrate, lump and fines
ArcelorMittal Mexico Peña ColoradaMexicoMinatitlán50.0 Iron Ore Mine (open pit)Concentrate and pellets
ArcelorMittal Brasil Andrade MineBrazilState of Minas Gerais100.0 Iron Ore Mine (open pit)Fines
ArcelorMittal Mineração Serra AzulBrazilState of Minas Gerais100.0 Iron Ore Mine (open pit)Lump and fines
ArcelorMittal PrijedorBosnia and HerzegovinaPrijedor51.0Iron Ore Mine (open pit)Concentrate and lump
ArcelorMittal Kryvyi RihUkraineKryvyi Rih95.1Iron Ore Mine (open pit and underground)Concentrate, lump and sinter feed
ArcelorMittal TemirtauKazakhstanLisakovsk, Kentobe, Atasu, Atansore100.0Iron Ore Mine (open pit and underground)Concentrate, lump and fines
ArcelorMittal LiberiaLiberiaYekepa85.0Iron Ore Mine (open pit)Fines
AMNS India 2
IndiaOdisha60.0%
Iron Ore Mine (open pit)3
Pellet, lump and fines
Coal
ArcelorMittal Princeton 1
USAMcDowell, WV, Tazewell, VA100.0Coal Mine (surface and underground)Coking and PCI coal
ArcelorMittal TemirtauKazakhstanKaraganda100.0Coal Mine (underground)Coking coal and thermal coal
1.The mining operations in the United States were sold on December 9, 2020, see "Introduction—Key transactions and events in 2020".
2.During 2020, the Company's joint venture AMNS India (equity method investment) began mining operations. See note 2.4.1 to the consolidated financial statements.
3.Note that all mine production in India is permitted for internal consumption only. Until June 27, 2021, all production must be consumed by specified AMNS India end use plants, after which up to 25% of production may be sold to third parties.

Iron Ore
ArcelorMittal Mines and Infrastructure Canada
ArcelorMittal Mines and Infrastructure Canada ("AMMC") is a major Canadian producer of iron ore concentrate and several types of pellets. It holds mineral rights over 33,069 hectares of land in the province of Québec, Canada. ArcelorMittal Mines and Infrastructure Canada operates the Mont-Wright Mine and concentrator near Fermont in northeastern Québec. Mont-Wright is located 416 kilometers north of the port of Port-Cartier, the site of the pelletizing plant and shipping terminal on the north shore of the Gulf of St. Lawrence, and approximately 1,000 kilometers northeast of Montreal. A private railway connects the mine and concentrator with Port-Cartier. The railway and the port are owned and operated by the infrastructure operations of AMMC. The Mont-Wright mine and the town of Fermont are connected by Highway 389 to Baie
Comeau on the North Shore of the Gulf of St. Lawrence, a distance of 570 kilometers. ArcelorMittal Mines and Infrastructure Canada also holds mineral rights to iron ore deposits in Fire Lake and Mont Reed. Fire Lake, which is an open pit mine located approximately 53 kilometers south of Mont-Wright, dispatched approximately 15.8 million tonnes of crude ore by rail to the Mont-Wright concentrator in 2020. The Fire Lake deposit was first mined in 1977 and the Mont Reed deposit is currently not developed. In addition, ArcelorMittal Mines and Infrastructure Canada holds surface rights over the land on which the Mont-Wright and Port Cartier installations are located, with the exception of a small area which remains the property of the Quebec Government but in no way compromises the mineral rights. The property began operating in 1976.
The expiration dates of the mining leases range from 2025 to 2033. According to the Quebec Mining Act, a mining lease is renewable for at least three periods of ten years, provided the


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lessee has performed mining operations for at least two years in the previous ten years of the lease.
The Mont-Wright and Fire Lake mines are part of the highly-folded and metamorphosed southwestern branch of the Labrador Trough. The most important rock type in the area is the specular hematite iron formation forming wide, massive deposits that often form the crest of high ridges extending for many kilometers in the Quebec-Labrador area.
The Fire Lake operation produces run of mine ore for transport to Mont Wright by rail. The site has a maintenance facility and workers camp that support the mining activity. The Mont-Wright operation consists of open pit mines and a concentrator. The ore is crushed in two gyratory crushers and the concentrator operates with seven lines of three stage spiral classifiers and horizontal filters. The mining complex and infrastructure has a production capacity of approximately 26 million tonnes of concentrate per year. The Port-Cartier pellet plant produces acid and flux pellets that operate six ball mills, ten balling discs and two induration furnaces. The pelletizing plant has a capacity of 10 million tonnes of pellets per year.
The COVID-19 pandemic impacted production at ArcelorMittal Mines and Infrastructure Canada early in 2020. A directive from the Quebec Government restricted mining activities to a minimum level in the province of Quebec, Canada beginning March 24, 2020. As restrictions subsequently eased, normal operations resumed on May 3, 2020. The pelletizing plant produced 8.7 million tonnes of pellets in addition to 14.5 million tonnes of concentrate in 2020.
Electric power for Mont-Wright and the town of Fermont is supplied by Hydro-Quebec via a 157 kilometer line. In the event of an emergency, the Hart Jaune Power plant, also connected to the Hydro-Quebec grid, can supply sufficient power to maintain the operations of the essential processing facilities.
ArcelorMittal USA Iron Ore Mines
ArcelorMittal USA operated an iron ore mine through its wholly-owned subsidiary ArcelorMittal Minorca and owned a majority stake in Hibbing Taconite Company, which was managed by ArcelorMittal USA from August 12, 2019 (previously managed by Cleveland-Cliffs Inc). The mining operations of ArcelorMittal USA, including all subsidiaries and investments, were sold to Cleveland-Cliffs on December 9, 2020 as referenced above.
ArcelorMittal Minorca held the mineral rights on more than 2,800 acres necessary to mine the stated reserves. Minorca's owned/leased lands increased to approximately 17,478 acres, which includes 4,039 acres of leased land and takes into account the purchase of 160 acres of land in Meadowlands, MN for construction of wetlands as required by the State of Minnesota. The operations are located approximately three kilometers north
of the town of Virginia in the northeast of Minnesota, which are accessible by road and rail. The Minorca Mine controls through leases, all the mineral and surface rights needed to mine and process its estimated 2020 iron ore reserves. The expiration dates of the mining leases range from 2035 to 2056. ArcelorMittal Minorca operated a concentrating and pelletizing facility, along with two open pit iron ore mines - Laurentian, and East Pits - located 12 kilometers from the processing facilities. The processing operations consist of a crushing facility, a three-line concentration facility and a single-line straight grate pelletizing plant. The Minorca pelletizing facility produced 2.7 million metric tonnes of taconite pellets in 2020. Pellets are transported by rail to ports on Lake Superior. Lake vessels are used to transport the pellets to Indiana Harbor. The Minorca taconite plant was constructed and operated by Inland Steel from 1977 until 1998 when it was purchased by then ISPAT International, a predecessor company of ArcelorMittal.
The Hibbing Taconite Company owns 30,561 acres and holds mineral rights over 7,465 acres through mineral leases, which are located mainly within the City of Hibbing with a processing facility located five kilometers north of the town center in the northeast of Minnesota and which is accessible by road and rail. The Hibbing operations were jointly owned by subsidiaries of ArcelorMittal USA (62.3%), Cleveland-Cliffs Inc. (23.0%) and U.S. Steel (14.7%), with ArcelorMittal USA as the managing agent of the mine and processing facilities. The Hibbing Taconite Company, through leases, controls the mineral and surface rights needed to mine and process its estimated 2020 iron ore reserves. The expiration dates of the mining leases range from 2022 to 2056. These leases can be renewed through negotiations with the mineral owners, though no obligations to renew exist for the mineral owners. The operations consist of open pit mining, crushing, concentrating and pelletizing. The finished pellets are then transported by rail to the port of Allouez at Superior, Wisconsin, a distance of 130 kilometers, and then over the Great Lakes by lake vessels to ArcelorMittal’s integrated steelmaking plants, principally Burns Harbor. The Hibbing Taconite Company began operating in the third quarter of 1976.
As a result of the reduction in internal requirements due to the COVID-19 pandemic, the Hibbing operations were idled in early May 2020. Operations resumed in July 2020 and the mine produced 5.0 million wet metric tonnes of taconite pellets for 2020, of which approximately 3.1 million wet metric tonnes were ArcelorMittal’s share.
Both the Minorca and Hibbing mines are located in the Mesabi iron range where iron ore has been extracted for over 100 years. The ore bodies are within the Biwabik Iron Formation, a series of shallow dipping Precambrian sedimentary rocks known as taconite with a total thickness in excess of 200 meters and running for approximately 200 kilometers. Although the first


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deposits mined in the Mesabi iron range consisted of oxidized hematite ores, production was shortened in the mid-1950 to low grade magnetic taconite ores. The processing of this ore involves a series of grinding and magnetic separation stages to remove the magnetite from the silica. Natural gas and electric power constitute the main sources of energy for both Minorca and Hibbing. The electric power is provided by the Minnesota Power company.
ArcelorMittal Mexico Mining Assets
ArcelorMittal Mexico operates three iron ore mines in Mexico, the San Jose and Las Truchas mines, and, through a joint operation with Ternium S.A., the Peña Colorada mine. In 2019, the El Volcan mine was closed and ArcelorMittal continues to operate certain parts of the El Volcan facilities with material coming from the San Jose mine.
Peña Colorada
Consorcio Minero Benito Juarez Peña Colorada, S.A. de C.V. (Peña Colorada), operating since 1974, holds mineral rights over 99,188 acres located at about 60 kilometers by highway to the northeast of the port city of Manzanillo, in the province of Minatitlán in the northwestern part of the State of Colima, Mexico. ArcelorMittal owns 50% of Peña Colorada Ltd., and Ternium S.A. owns the other 50% of the company. The Peña Colorada mine receives electrical power from the Comisión Federal de Electricidad (CFE), which is a state-owned company that serves customers across the entire country.
Peña Colorada operates an open pit mine as well as a concentrating facility and a two-line pelletizing facility. The beneficiation plant is located at the mine, whereas the pelletizing plant is located in Manzanillo. Major processing facilities include a primary crusher, a dry cobbing plant, two autogenous mills, three horizontal and two vertical ball mills and several stages of magnetic separation. The concentrate is sent as a pulp through a pipeline from the mineral processing plant to pelletizing facilities.
Government concessions are granted by the Mexican federal government for a period of 50 years and are renewable. The expiration dates of the current mining concessions range from 2021 to 2062.
The Peña Colorada pelletizing facility produced 3.8 million tonnes of pellets in 2020. The magnetite concentrate is shipped from Manzanillo to ArcelorMittal Mexico, as well as to Ternium’s steel plants, by ship and by rail.
Peña Colorada is a complex polyphase iron ore deposit. The iron mineralization at Peña Colorada consists of banded to massive concentrations of magnetite within breccia zones and results from several magmatic, metamorphic and hydrothermal
mineralization stages with associated skarns, dykes and late faults sectioning the entire deposit.
El Volcan & San Jose
ArcelorMittal holds mineral rights over 1,053 hectares which previously supported its El Volcan operations located approximately 68 kilometers northwest of the city of Obregon and 250 kilometers from the Guaymas port facility in the state of Sonora, Mexico. The El Volcan operations controlled all of the mineral rights and surface rights needed to mine and process iron ore, however the mine stopped production in April 2019 due to depletion of reserves. The El Volcan site is accessible by a 90-kilometer road from the city of Obregon, where the concentrator is located.
The El Volcan facilities that are continuing to be used with materials from the San Jose mine include the concentration plant and port installations. The concentration plant includes two ball mills on line, a magnetic separation circuit, flotation systems, a belt conveyor filter and a disposal area for tails. The major port installations include a tippler for railroad cars, a conveyor, transfer towers and two ship loading systems. San Jose material is fed into the El Volcan plant and concentrate produced is transported by rail to the Pacific port of Guaymas and then shipped to the steel plant in Lázaro Cárdenas. The concentration facility uses electric power from the national grid.
Government concessions are granted by the Mexican federal government for a period of 50 years and are renewable. The expiration dates of the current concessions at El Volcan range from 2055 to 2061.
The exploitation of the San José mine began in 1946 and was handled by multiple owners until 2019, when ArcelorMittal secured a lease agreement and initiated mining and pre-concentration in the same year. ArcelorMittal secured the mineral rights to the San José operations and has a land lease agreement for both the land and the San José facilities, which is in place for a period of 3 years from March 22, 2019 to March 21, 2022.
The San José mine is part of a broad geological formation, where there are several metasomatic iron deposits produced by hydrothermal replacement at various spots within the Sinaloa State.
The San Jose facilities are located approximately 40 kilometers from Culiacán City, in the south of the Sinaloa State, being accessible by Highway 15, a paved 4-lane highway heading south toward Mazatlan. The mine is open pit and exploitation, as well as crushing operations and all transport activities are performed by contractors. Electrical power is supplied by the regional grid. The pre-concentration facilities at the mine include


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one primary crusher, one secondary crusher, a dry cobbling high-intensity magnetic pulley and one tertiary crusher.
The pre-concentrate produced is transported by truck to the Quila railroad station for loading and is then sent to the El Volcan Concentration plant owned by ArcelorMittal. The concentrate produced is then transported by rail to the Pacific port of Guaymas to be shipped to the steel plant in Lázaro Cardenas. In 2020, San José produced 1.2 million tonnes of concentrate.
Las Truchas
ArcelorMittal holds mineral rights over 53,942 hectares, of which 4,261 support the Las Truchas operations in Mexico. The Las Truchas mine is located approximately 27 kilometres southeast of the town of Lázaro Cárdenas in the State of Michoacán, Mexico. The Las Truchas operations are accessible by public highway and control all the mineral rights needed to mine and process its estimated 2020 iron ore reserves. Part of the surface rights expired in 2018 and have since been re-negotiated. An extension of 10 years was agreed and the executed agreement will expire in May 2029.
Government concessions are granted by the Mexican federal government for a period of 50 years and are renewable. The expiration dates of the current mining concessions range from 2044 to 2059.
The Las Truchas mine is an integrated iron ore operation. It began operating in 1976 as a government enterprise (Sicartsa), and its mining activities consist of an open pit mine exploitation, crushing, dry cobbing preconcentrate and concentration plant. The aggregate 2020 production of concentrate and lumps totaled 1.6 million tonnes. The concentrator includes one primary crusher, two secondary crushers and three tertiary crushers, two ball mill and two bar mill and two wet magnetic separation circuits. The electrical energy supplier for the Las Truchas mine is the state-owned power company, Comisión Federal de Electricidad (CFE). The concentrated ore is pumped from the mine site through a 26-kilometer slurry pipeline to the steel plant facility in Lázaro Cárdenas.
The Las Truchas deposits consist of massive concentrations of magnetite of irregular morphology. The main Las Truchas deposits occur along a geological trend that is about seven kilometers long and about two kilometers wide. The Las Truchas mineral deposits have been classified as hydrothermal deposits, which may have originated from late-stage plutonic activity injecting through older sedimentary rocks. The mineralization of the Las Truchas iron deposits occurs in disseminated and irregular massive concentrations of magnetite within metamorphic rocks and skarns. The mineralization also occurs as fillings of faults, breccia zones, and fractures.
ArcelorMittal Brasil - Andrade Mine
ArcelorMittal Brasil holds mineral rights of over 2,421 hectares located in the Iron Quadrangle (Quadrilátero Ferrífero), in the Andrade Mine area, a widely-explored and mined region located approximately 80 kilometers east of Belo Horizonte in the Minas Gerais State of Brazil. ArcelorMittal’s operations control all of the mineral rights and surface rights needed to mine and process its estimated 2020 iron ore reserves, dominated by directly shippable hematite ore. Mining legislation in Brazil does not predetermine the duration of mineral rights and as such these rights are considered valid to the point of mine exhaustion, contingent on maintaining compliance to set conditions. In addition to the open pit mine, ArcelorMittal operates a crushing and screening facility. Feed ore is transported to Monlevade plant through a private railway line. Power is mostly generated from hydroelectric power plants and supplied by Companhia Energética de Minas Gerais ("CEMIG"), a publicly traded company controlled by the Government of the State of Minas Gerais.
Companhia Siderúrgica Belgo-Mineira (“CSBM”) initiated mining operations at the property in 1944 in order to facilitate the supply of ore to its steel plant in João Monlevade. The mine was managed by CSBM until the end of 2004. In January 2005, Vale signed a leasing agreement with CSBM for management and operation. In December 2005, CSBM changed its name to Arcelor Brasil S.A. which was then merged in August 2007 into Belgo Siderurgia S.A. The latter then changed its name to ArcelorMittal Brasil S.A. In November 2009, Vale returned the Andrade mine to ArcelorMittal Brasil S.A. In 2020, the Andrade mine produced 1.6 million tonnes of sinter feed and concentrate. An increase of the crushing and screening facility production capacity to 3.5 million tonnes per year of sinter feed was completed in 2012. In 2013, a cross road was built in order to improve shipments to the local Brazilian market. In 2018, Andrade started development of a concentration plant to improve the quality of the sinter feed to the Monlevade plant and positively impact costs and life span. This plant commenced production in early 2020 and concentrates the itabirite ores, enabling mixing with the higher grade hematite ores.
ArcelorMittal Brasil - Serra Azul Mine
ArcelorMittal Brasil holds mineral rights over the central and east claims of the Serra Azul deposit of over 375 hectares, located approximately 50 kilometers southwest of the town of Belo Horizonte in the Minas Gerais State of Brazil and accessible by public highway. ArcelorMittal’s operations control all of the mineral rights and surface rights needed to mine and process its estimated 2020 iron ore reserves. Mining legislation in Brazil does not predetermine the duration of mineral rights and as such these rights are considered valid to the point of mine exhaustion, contingent on maintaining compliance to set conditions. ArcelorMittal operates an open pit mine and a


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concentrating facility. The mine site is accessible by 80 kilometers of public highway from Belo Horizonte.
In addition to the open pit mine, processing operations consist of a crushing facility and a three-line concentration facility including screening, magnetic separation, spirals separators and jigging. Production is transported either by truck for local clients of lump, or by truck to two railway terminals located 35 and 50 kilometers, respectively, from the mine site for selling to local clients of sinter feed or for export through third-party port facilities located in the Rio de Janeiro State. Production is shipped mainly to local Brazilian market including the ArcelorMittal Brasil integrated plants. CEMIG supplies power through a 13,800 volt line from Mateus Leme, located 20 kilometers from the mine. The electricity is locally transformed into 380 volts by six transformers spread around the operation. Minas Itatiauçu (MIL) initiated mining operations at the property in 1946. In 2007, London Mining Brazil Mineração Ltda (London Mining) purchased the mineral rights from MIL. Following the acquisition of the property from London Mining, ArcelorMittal has operated the mine since 2008. In the same year, London Mining Brazil Mineração Ltda was merged into London Mining Participações Ltda, which changed its corporate name to ArcelorMittal Mineração Serra Azul. In April 2016, ArcelorMittal Mineração Serra Azul was merged into ArcelorMittal Brasil. In 2020, ArcelorMittal Brasil - Serra Azul Mine produced 1.6 million tonnes of lumps and concentrate.
In February 2019, the Company decided to implement the evacuation plan related to its dormant Serra Azul tailing dam. The community situated downstream to the dam was evacuated as a precautionary measure based on an updated stability report following incidents in the Brazilian mining sector. This was done to enable further testing and implementation of any additional mitigating measures. As a result, the Company has executed an agreement with the Federal and State Public Prosecutors Offices and affected families to provide temporary assistance to the families and set technical measures required to re-establish factor of safety standards. Such agreement was extended in February 2020 and negotiations regarding compensation are expected for 2021.
Both the Andrade and Serra Azul mines are located in the Iron Quadrangle (Quadrilátero Ferrífero), a widely-explored and mined region. The mineralization occurs as Itabirites, banded hematite-silica rocks, with varying weathering degrees. While the Serra Azul ore reserve estimates are constituted of rich friable Itabirites requiring some beneficiation, the Andrade ore reserve estimates are dominated by directly shippable hematite ore. From early 2020, Andrade was able to concentrate Itabirite and hematite fines as described above.
ArcelorMittal Prijedor
ArcelorMittal Prijedor, based in Bosnia and Herzegovina near Prijedor, is an iron ore mining operation in which ArcelorMittal owns 51%. ArcelorMittal Prijedor holds mineral rights over approximately 2,000 hectares, with the current concession signed in 2018 for a period of 6 years. The mine was formed in 2004 as a joint venture between ArcelorMittal and a local mining company that held the mining rights previously, Iron Ore Mines Ljubija. From a historical perspective, industrial iron ore mining in the area of the mine was first established by an Austrian mining company in 1916. The mines were nationalized in the 1950s and were then owned by the Iron Ore Mines Ljubija until 2004.
The ore is excavated at the open pit Buvac of the Omarska mine and processed in the processing plant. The processing plant involves crushing, screening, gravity separation, magnetic separation and filtration. The plant is close to the mine site and crude ore is transported to the plant through a conveyor. Power is supplied from the national grid through a local power distribution company. The mine is in close proximity to public roads and a state railway, which is used for transporting the final product to the customer. Additionally, ArcelorMittal Prijedor operates a limestone quarry, from which the output is used for filling of the roads in the mine, as well as product for external customers.
The Omarska deposit was originally comprised out of three ore bodies: Jezero, Buvac and a small ore body known as Mamuze. Ore reserves from Jezero and Mamuze have already been fully excavated. Since 2011, only the Buvac pit is in operation. It is formed within a carboniferous clastic and carbonate sediments. The genesis of this deposit is attributed to hydrothermal replacement and syn-sedimentary processes. The ore body is mainly composed of limonite-goethite mineralization, which was formed during weathering and oxidization of the primary siderite bodies.
In 2020, ArcelorMittal Prijedor produced and dispatched 1.4 million tonnes of final product, iron ore concentrate. The mine supplies iron ore concentrate to ArcelorMittal's steel plant, ArcelorMittal Zenica, based approximately 250 kilometers from Prijedor in central Bosnia.
ArcelorMittal Kryvyi Rih
ArcelorMittal Kryvyi Rih ("AMKR") holds mineral rights over 1,383 hectares to support its operations located roughly within the borders of the city of Kryvyi Rih, 150 kilometers southwest of Dnipro, Ukraine. AMKR's operations control all of the mineral rights and surface rights needed to mine and process its estimated 2020 iron ore reserves. AMKR operates a concentrating facility, along with two open pit sites and one underground iron ore mine. The iron ore deposits are located within the southern part of the Krivorozhsky iron-ore basin.


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Access to the mines is via public roads, which are connected by a paved highway to Dnipro. The area is well served by rail. ArcelorMittal Kryvyi Rih receives electrical power from the Kryvyi Rih thermal power plants, Zelenodolsk thermal power plants looped into common Dniproenergo system with hydro power plants of Dnepr cascade. AMKR's iron ore material base is represented by ferruginous quartzite of Novokryvorizke and Valyavkinske deposits being mined through two open pits: #2-bis and #3 and a high-grade iron ore of Kirova deposit which is processed into lump and sinter ore. In 2020, actual production was at the level of 10.7 million tonnes of concentrate and 0.6 million tonnes of sinter feed. Operations began at the Kryvyi Rih open cast in 1959 and at the Kryvyi Rih underground mine in 1933. ArcelorMittal acquired the operations in 2005.
The expiration of the agreements on the subsoil use conditions and the subsoil use permits range from 2021 for underground mine to 2038 for open pits, while the expiration of the land lease agreements ranges from 2060 to 2061.
The iron ore extracted from the Kryvyi Rih open cast is first processed at the mine site through primary crushing. After initial processing, the product is loaded on a rail-loading facility and transported to the concentrator. The concentrator production process includes crushing, grinding, classification, magnetic separation and filtering. The iron ore extracted from the Kryvyi Rih’s underground mine by a modified sub-level caving method is crushed on surface and transported by rail to the steel plant. The main consumer of the sinter and concentrate products is the ArcelorMittal Kryvyi Rih steel plant, with some concentrate being shipped to other ArcelorMittal affiliates in Eastern Europe, as well as to third parties. The iron mineralization is hosted by early Proterozoic rocks containing seven altered ferruginous quartzite strata with shale layers. The major iron ore bearing units in the open pit mines have carbonate-silicate-magnetite composition. In addition, oxidized quartzite is mined simultaneously with primary ore but cannot be processed at present and is stored separately for future possible processing. Only the magnetite mineralization is included in the 2020 open pit iron ore reserve estimates. The underground mine is hosted by a ferruginous quartzite with martite and jaspilite.
Lisakovsk, Kentobe, Atasu, Atansore (Temirtau Iron Ore)
ArcelorMittal Temirtau has four iron ore mining operations in Kazakhstan. The mines are Lisakovsk, Kentobe, Atasu and Atansore. Transport of concentrate from these mines to the ArcelorMittal steel plant is by railway. ArcelorMittal Termitau’s operations control all of the mineral rights and surface rights needed to mine and process its estimated 2020 iron ore reserves.
Lisakovsk is an open pit operation located in northwest Kazakhstan about 1,100 kilometers from Temirtau, with production of 1.0 million tonnes of concentrate in 2020. The
mine was initially commissioned in 1969 and was acquired by ArcelorMittal in 2000. The existing subsoil agreement was extended in September 2020 for 25 years. The production process comprises crushing, screening, grinding, wet jigging and wet magnetic separation. The iron mineralization at Lisakovsk occurs as oolite containing mainly hygogoethite and goethite. The phosphorous content in the mineralization limits its utilization in the steel-making process. At Lisakovsk, natural gas is supplied by KazTransGazAimak JSC and transmitted through the local grid. Electric power for the other facilities is supplied by Promsnab Astana LLP.
Kentobe is an open pit operation, initially started in 1983 and acquired by ArcelorMittal in 2002, located about 300 kilometers southeast of Temirtau, with production of 0.3 million tonnes of concentrate in 2020. Clearance for extension of the existing subsoil agreement until the end of 2026 was given by Kazakhstan Ministry of innovation and development and the addendum was signed on November 23, 2017. Ore processing is performed by crushing and dry magnetic separation, producing coarse concentrate. The Kentobe mine is located in the Balkhash metallogenic province hosting numerous volcanic, sedimentary and hydrothermal deposits. The mineralization at Kentobe includes two types of iron ore: oxidized and primary magnetite. The magnetite mineralization constitutes all the 2020 estimated ore reserves. Electric power is supplied to the Kentobe operations by Karaganda Energosbyt LLP.
Atasu is an underground mine operation located about 400 kilometers south/southwest from Temirtau with production of 1.3 million tonnes of lump and fines in 2020. The mine began operating in 1956 with open pit exploitation of near surface reserves. Surface operations ended in 1980. Underground operations commenced in 1976. The mining lease was obtained in 2003. The existing subsoil agreement expires at the end of 2026. Processing comprises of crushing and wet jigging. The Atasu mine is hosted by the West Karazhal deposit, which is a primary hematite ore with associated manganese mineralization. Studies have indicated that the deposit could have a sedimentary-volcanogenic origin caused by underwater hydrothermal activity. The mine receives electric power from the ABB Energo LLP.
Atansore is an open pit operation located about 500 kilometers northeast of Temirtau with production of 0.6 million tonnes of concentrate in 2020. Mining of the deposit commenced in 1996 and it was subsequently acquired by ArcelorMittal in 2004. The existing subsoil agreement expires at the end of 2029. The Atansor deposit is located within skarn zones related to a volcanic intrusion that can be traced for more than 1.5 kilometers. The mineralization includes both martitic oxidized ore and primary magnetite ore. Ore processing is performed by crushing and dry magnetic separation. At the Atansore


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operations, electric power is provided from the Kokshetauenergo center LLP.
ArcelorMittal Liberia
ArcelorMittal Liberia Holdings Limited (“AMLH”), through its agent (and subsidiary) ArcelorMittal Liberia Limited (“AML”), has been mining ‘direct shipping ore, or DSO’ from the Mt. Tokadeh and Mt. Gangra deposits in northern Nimba, Liberia since June 2011. AML signed a Mineral Development Agreement (“MDA”) in 2005 with the Government of Liberia (“GOL”) that is valid for 25 years and renewable for an additional 25-year period. The mining operations are located approximately 300 kilometers northeast of Monrovia, Liberia. Three deposits within the MDA are grouped under the name “Western Range Project”, which includes the Mt. Tokadeh, Mt. Gangra and Mt Yuelliton deposits, covering 51,651.5 hectares. In addition to the rights to explore and mine iron ore, the GOL has granted the right to develop, use, operate and maintain the Buchanan to Yekepa railroad and the Buchanan port. A phased approach has been taken to establish the final project configuration. Currently, only high grade ore reserves of oxidized iron ore (DSO) are mined. This ore only requires crushing and screening to make it suitable for export. The materials-handling operation consists of stockyards at both the mine and port areas, linked by a 250-kilometer single track railway running from Tokadeh to the port of Buchanan. Production in 2020 was at 5.1 million tonnes, focused on the Atlantic markets. The power for the current Liberia DSO operations was previously obtained from on-site diesel based power generation. In 2019, the Company completed construction of a powerline in order to switch to a cleaner grid supply (mix of hydropower and gas). From early 2019, the mine commenced partial reliance on the grid power supply but continues to use partial diesel gensets to prevent disruption to production.
The Nimba Itabirites is a 250 to 450 meter thick recrystallized iron formation. Although the iron deposits at Mt. Tokadeh, Mt. Gangra and Mt Yuelliton fit the general definition of Itabirite as laminated metamorphosed oxide-facies iron formation, they are of lower iron grade than the ore previously mined at Mount Nimba. Tropical weather effects have caused the decomposition of the rock forming minerals resulting in enrichment in the iron content that is sufficient to support a DSO operation.
Planning and construction of the project were commenced in 1960 by a group of Swedish companies, which ultimately became the Liberian American-Swedish Minerals Company (“LAMCO”), and production commenced on the Nimba deposit in 1963. Production reached a peak of 12 million metric tonnes in 1974 but subsequently declined due to market conditions. Production started at Mt. Tokadeh in 1985 to extend the life of the Nimba ore bodies to 1992 when operations ceased due to the Liberian civil war. In 2005, Mittal Steel won a bid to resume operations and signed the MDA with the GOL. Rehabilitation
work on the railway started in 2008 and, in June 2011, ArcelorMittal started mining operations at Tokadeh, followed by a first shipment of iron ore in September 2011.
In 2013, AML had started construction of a Phase 2 project that envisaged the construction of 15 million tonnes of concentrate sinter fines capacity and associated infrastructure; this project was then suspended due to the onset of Ebola in West Africa and the subsequent force majeure declaration by the onsite contracting companies. AML has now completed the revised detailed feasibility study (which was updated in 2019 to apply best available technology and replace wet with dry stack tailings treatment) for building a 15 million tonne concentrator (Phase 2), with aligned mine, concentrate, rail and port capacity. The plan is now to recommence the project in 2021, with first concentrate expected in the fourth quarter of 2023. The capital expenditures required to conclude the project are expected to total approximately $0.8 billion as the project is effectively a brownfield opportunity given that 85% of the procurement has already been done (with the equipment on site) and 60% of the civil construction complete.
AMNS India
AMNS India operates the Thakurani Iron Ore mine in the Odisha state of India. AMNS India holds surface mineral rights over 228 hectares to support its Thakurani operations, located 320km to the north of the Odisha capital Bhubaneswar and 4km east of the town of Barbil.
The operation and mining rights to the Thakurani operations were obtained by AMNS India in February 2020 through the Indian Government Mining Block auction scheme. The Thakurani open pit mine has been operated since 1961 and has both mature mining pits and undeveloped resource areas. AMNS India commenced mining operations in mid-2020, producing 1.6 million tonnes of DSO product in 2020, following the demobilization of the previous claim holder, Kaypee Enterprises. At the commencement of mining, AMNS India has a permit in place for 5.5 million tonnes per year of ore production for internal consumption only, and the ramp-up to capacity of 5 million tonnes per year is expected to be completed by the end of the first quarter of 2021. The mining lease deed was executed on June 27, 2020 for a period of 50 years to June 26, 2070. Until June 27, 2021 all production from the mine must be consumed by specified AMNS India end use plants, after which up to 25% of production may be sold to a third party. A submission approved by the Indian Bureau of Mines in late 2020, will increase the permitted production rate to 7.99 million tonnes per year from 2023.
Ore from the Thakurani operation is crushed and screened on site before being transported by road to the Dabuna beneficiation plant located approximately 40km to the south. Beneficiated material is then transported by slurry pipeline to the


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pelletizing plant at Paradip, located on the coast. Power requirements for the site infrastructure at Thakurani, including crushing and screening units, workshop and site offices is supplied by a combination of 11kV electricity grid power and diesel generators.
The Thakurani operations lie in the south eastern part of the Singhbhum-Keonjhar-Bonai iron ore belt, a narrow NNE-SSW directional trending folded syncline that runs through northern Odisha, India and southern Jharkhand, India. The Precambrian horseshoe shaped belt is a well known iron ore province hosting many iron ore deposits. The enriched sequence is a traditional Banded Iron Formation that has been subject to significant weathering that has enriched the iron ore deposits. Ore is generally of the friable hematite type however more competent hematite ores and friable goethite ores are also present.
Coal
ArcelorMittal Princeton
The ArcelorMittal Princeton (“AMP”) properties are located in McDowell County, West Virginia and Tazewell County, Virginia, approximately 30 miles west of the city of Princeton, West Virginia, where AMP’s corporate office is located. The mining operations of AMP were sold to Cleveland-Cliffs on December 9, 2020 as referenced above. AMP was created in 2008 when the Mid-Vol Coal Group and the Concept Mining Group were integrated. The properties are located in the Pocahontas Coalfields of the Central Appalachian Coal Basin. The Carboniferous age coal deposits are situated in the Pottsville Group, New River and Pocahontas Formations. The rock strata, including the coal deposits, are sedimentary rocks formed by alluvial, fluvial and deltaic sediments deposited in a shallow, subsiding basin. The most common rock types are various types of sandstone and shale, with the coal deposits typically in multiple seams in relatively thin coal beds, one to five feet thick. The property has a long history of coal mining, mostly by predecessors in title to AMP. Significant underground mining of some of the deeper coal seams on the properties have occurred, notably the Pocahontas seams nos. 3 and 4, along with the no. 11 seam. In addition, a substantial amount of the thicker coal outcrops has been contour mined previously, providing access for highwall mining and on-bench storage of excess spoil from future surface mining. The properties consist of two operating areas: the Low Vol operations to the north and the Mid Vol operations to the south. 138kV high-voltage power lines deliver power to the company’s new 138/13kV substation where transformers reduce voltage for specific equipment requirements.
The Low Vol operations are located in McDowell County, West Virginia, near the communities of Northfork, Keystone, Eckman, Gary, and Welch. The Eckman Coal Preparation Plant and Dan’s Branch Loadout are also located there, as well as the
following underground mines: XMV Mine Nos. 35, 39, and 43.  XMV Mine No. 32 was sold in 2017, and No. 42 was mined out and closed in 2018. The Red Hawk surface mine and Berwind Loadout finished primary reclamation in 2018. Nearby surface operations include Easter Ridge, Mill Branch and Blue Eagle, producing coal from the upper portion of the Pocahontas Formation in seams 9-14.
The Mid Vol operations are in southeastern McDowell County, West Virginia and northwestern Tazewell County, Virginia. The nearest communities are Horsepen and Abbs Valley, Virginia as well as Anawalt, West Virginia.
All mid-vol coal production is from the surface operations of Virginia Point, Low Group and Stateline. The Roadfork Loadout is located there, providing a separate shipping point for the mid-vol metallurgical coal, as well as the oxidized (non-metallurgical) coal for the steam and PCI markets. The Red Hawk surface mine and Berwind Loadout in this area finished primary reclamation in 2018.
There were three active leases across the AMP operations which cover approximately 50% of the annual production. One of these expires in 2025 and could be renewed at the sole option of ArcelorMittal. The other two expire in 2027 and can continue to be extended until all merchantable coal is mined, subject to an amendment agreement being executed. The remaining 50% of the annual production is covered by land that is owned by Imperial Resources (an AMP entity).
The combined production of the mines in 2020 was 1.4 million tonnes of washed and direct shippable coal.
ArcelorMittal Temirtau (Karaganda Coal Mines)
ArcelorMittal Temirtau has eight underground coal mines and two coal preparation plants (CPP “Vostochnaya” and Temirtau Washery-2). In 1996 the mines entered into the structure of Ispat-Karmet JSC, Coal Division (now ArcelorMittal Temirtau JSC, Coal Division). The coal mines of ArcelorMittal Temirtau are located in the Karaganda Coal Basin. The basin is more than 3,000 square kilometers and was formed by strata of Upper Devonian and Carbonic ages, Mesozoic and Cainozoic formations. Due to structural peculiarities, the coal basin is divided into three geology-based mining areas: Karagandinskiy, Sherubay-Nurinskiy and Tentekskiy.
The mines are located in an area with well-developed infrastructure around the regional center of Karaganda city. Within a distance of 10 to 60 kilometers are the following satellite towns: Shakhtinsk, Saran and Abay, as well as Shakhan and Aktas. All mines are connected to the main railway, and coal is transported by railway to the coal wash plants and power stations. Electric power is supplied to the Karaganda coal mines, via the ArcelorMittal Temirtau Steel division, by


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commercial electricity suppliers TOO KaragandaEnergoSbyt and TOO AV-Energo. ArcelorMittal owns and operates significant electricity infrastructure for power distribution across its properties.
The Kostenko mine merged with the neighboring Stakhanovskaya mine in 1998. The field of Kostenko mine falls within the Oktyabrskiy district of Karaganda city.
The Kuzembaeva mine was established in 1959. Later in 1998, 50-letiya SSSR mine was merged with Kuzembaeva mine. The eastern part of the mine borders with Karaganda City.
The Saranskaya mine began operations in 1955. It merged with the Sokurskaya mine in mid-1997 and the Aktasskaya mine in 1998. Karaganda City is located approximately 12 kilometers to the northeast.
The Abayskaya mine began operations in 1961. In 1996, it was merged with the Kalinina mine. Karaganda City is located approximately 25 kilometers to the northeast.
The Kazakhstanskaya mine began operations in 1969. Karaganda City is located approximately 40 kilometers to the northeast. The railway station at MPS-Karabas is located approximately 30 kilometers to the southeast.
The Lenina mine was put in operation in 1964 and was subsequently merged with Naklonnaya no. 1/2 mine in 1968. Karaganda City, located 50 kilometers to the northeast. The railway station MPS-Karabas is located 38 kilometers to the southeast.
The Shakhtinskaya mine began operations in 1973. Karaganda City is located approximately 35 kilometers to the northeast.
The Tentekskaya mine began operations in 1979. Karaganda City is located approximately 40 kilometers to the northeast. The railway station MPS-Karabas is located approximately 39 kilometers to the southeast.
The Kostenko, Kuzembaeva, Saranskaya, Abayskaya, Kazakhstanskaya, Lenina, Shakhtinskaya and Tentekskaya mines, together with the Vostochnaya wash plant, receive energy from the high-voltage transmission lines of Karaganda.
The subsoil use contract and license (all coal mines in Temirtau) will be valid until January 21, 2022. The process of renewal is in progress and due for completion in late 2021. Total area under mineral rights is 28,638 hectares after a small portion of land was returned to the State.
The mines produce primarily coking coal used in steel-making at ArcelorMittal Temirtau as well as thermal coal for ArcelorMittal Temirtau’s power plants. For beneficiation of coking coal, two washeries are operated. Surplus coal concentrate is supplied to ArcelorMittal Kryvyi Rih in Ukraine, and to external customers in Russia and China. In 2020, the Karaganda Coal Mines produced 3.6 million tonnes of metallurgical coal concentrate and approximately 2.4 million tonnes was consumed by the Temirtau steel operations.

Investments in joint ventures
UnitCountryLocations
Capacity in 2020 (in million tonnes per year) 1
Type of plantProducts
AMNS IndiaIndiaHazira, Gujarat
9 1
IntegratedFlat
AMNS CalvertUnited StatesCalvert
5.3 2
Steel processingSteel finishing
VAMAChinaLoudi, Hunan
1.5 3
Steel processingAutomotive steel finishing
1.Crude steel capacity
2.Flat-rolled carbon steel products production capacity
3.Cold rolled coils, aluminum coils, hot-dip galvanized coils production capacity.
AMNS India
On December 11, 2019, following the unconditional approval received by the Indian Supreme Court of ArcelorMittal's Resolution Plan for Essar Steel India Limited ("ESIL" subsequently renamed AMNS India) on November 15, 2019, ArcelorMittal and 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.
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:


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two iron ore beneficiation plants close to the mines in Kirandul and Dabuna, with slurry pipelines that then transport the beneficiated iron ore slurry to the pellet plants in the Kirandul-Vizag and Dabuna-Paradeep systems;
a downstream facility in Pune (including a pickling line, a cold rolling mill, a galvanizing mill, a color coating mill and a batch annealing plant); and
seven 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 two 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.
In terms of iron ore pellet capacity, the Kirandul-Vizag system has 8 million tonnes of annual pellet capacity; and the Dabuna-Paradeep system has 6 million tonnes of annual pellet capacity, which is in the process of being expanded to a new capacity level of 12 million tonnes (with the completion expected by the end of the first quarter of 2021). This expansion would bring pellet capacity above AMNS India’s own requirements and provide the opportunity to improve operating income by fully utilizing such pellet capacity. AMNS India has also made acquisitions of certain ancillary assets including, in February 2020, the acquisition of the Thakurani iron ore block (which is expected to operate at full capacity by the end of the first quarter of 2021) and, in July 2020, the acquisition of the Odisha Slurry Pipeline infrastructure Limited for a net acquisition price of $245 million, which secures an important infrastructure asset for raw material supply to the Hazira steel plant. AMNS India also intends to debottleneck the existing operations (steel shop and rolling parts) to increase production to 8.6 million tonnes of rolled products. Over the next 5 years, the production capacity at the Hazira facility is planned to increase further from 8.6 million tonnes to 14 million tonnes of rolled products following the construction of coke oven, sinter plant, blast furnace, basic oxygen furnace and hot strip mill. Finally, AMNS India is evaluating downstream auto product expansion at the Hazira site to improve its product portfolio and serve the growing automotive demand in India.
On March 4, 2021, AMNS India and the Odisha government signed a memorandum of understanding for setting up a 12 million tonne integrated steel plant in Kendrapara district of Odisha with an investment of INR 50,000 Crore, subject to several pre-conditions, including making provisions for land and iron ore mines.
In the context of the creation of the joint venture, the Company has also transferred certain payments it had been required to
make in 2018 and 2019 to the financial creditors of Uttam Galva in order that the Resolution Plan would be eligible for consideration by ESIL's Committee of Creditors. The joint venture partners continue to assess various options to secure the availability of additional ancillary assets, such as port facilities.
The Resolution Plan includes a capital expenditure plan of approximately $2.6 billion to be implemented in two stages over six years. The first stage involves investments to increase the production of finished steel goods sustainably to 6.5 million tonnes per annum and includes completion of ongoing capital expenditure projects with respect to a coke oven, second sinter plant, third line CSP caster, Paradeep pellet plant and Dabuna beneficiation plant. The first stage will also include investment in maintenance to restore current assets, the implementation of an environmental management plan and the implementation of ArcelorMittal’s best practices on raw material sourcing, plant operations, sales and product mix (in particular through greater sophistication of the quality and markets of the steel produced with a focus on developing sales to the automotive industry), people management and health & safety. The second stage will involve investments to increase the production of finished steel goods from 6.5 million tonnes per annum to 8.5 million tonnes per annum by the end of 2024, including asset reconfiguration and the addition of a coke oven, blast furnace and basic oven furnace.
Calvert
AMNS Calvert ("Calvert"), a joint venture between the Company and NSC, is a steel processing plant in Calvert, Alabama, United States. It's 2,500 acre property layout allows for optimal product flow and room to expand. It has a HSM with 5.3 million tonnes capacity, pickling and cold rolling facilities with 3.6 million tonnes capacity and finishing facilities with a total capacity of 2.1 million tonnes. 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 Brazil and 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


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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, in each case, 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.
Calvert plans to invest $775 million for an on-site steelmaking facility through a 1.5 million tonne capacity EAF (produce slabs for the existing operations, replacing part of the purchased slabs). The environmental permitting has been submitted, equipment manufacturer selection is ongoing and pre-construction activities are underway. Construction is expected to commence in 2021 and the facility is expected to start in the first half of 2023. The plan includes an option to add further capacity at lower capital expenditure intensity.
VAMA
Valin ArcelorMittal Automotive Steel (“VAMA”) is a joint venture between ArcelorMittal and Hunan Valin which produces steel (1.5 million tonne capacity) for high-end applications in the automotive industry. VAMA supplies international automakers and first-tier suppliers as well as Chinese car manufacturers and their supplier networks. It is well positioned to take advantage of the growing electric vehicle market and has plans to increase capacity by 40% in the next two years to 2 million tonnes with self-funded expansion capital expenditures expected to be $160 million.


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Capital expenditures
The Company’s capital expenditures were $2.4 billion, $3.6 billion and $3.3 billion for the years ended December 31, 2020, 2019 and 2018, respectively. The Company responded to the COVID-19 impact with actions taken to reduce production and adapt its costs to the operating environment. All non-essential capital expenditures were suspended, while the Mexico hot strip mill project, the agreed Italian projects and certain projects to reduce CO2 emissions continued, and maintenance capital expenditures were intended to match reduced operating rates. The following tables summarize the Company’s principal investment projects involving significant capital expenditures completed in 2020 and those that are currently ongoing. In 2021, capital expenditures are expected to be approximately $2.8 billion. ArcelorMittal expects to fund these capital expenditures primarily through internal sources. See “Operating and financial review—Liquidity and capital resources—Sources and uses of cash—Net cash used in investing activities” and note 3.1 to the consolidated financial statements for further information, including capital expenditures by segment.
Completed projects in the past year
RegionSiteProjectCapacity / particularsActual completionNote #
ACISArcelorMittal Kryvyi Rih (Ukraine)New LF&CC 2Facilities upgrade to switch from ingot to continuous caster route. Additional billets of 145 thousand tonnes over ingot route through yield increaseQ1 2020
Ongoing Projects*
RegionSiteProjectCapacity / particularsForecast completionNote #
NAFTAMexicoNew Hot Strip MillProduction capacity of 2.5 million tonnes per year2021a
NAFTA
ArcelorMittal Dofasco (Canada)

Hot Strip Mill Modernization

Replace existing three end of life coilers with two state of the art coilers and new runout tables.2021b
NAFTAArcelorMittal Dofasco (Canada)#5 CGL conversion to AluSi®Addition of up to 160 thousand tonnes per year Aluminum Silicon (AluSi®) coating capability to #5 Hot-Dip Galvanizing Line for the production of Usibor® steelsH2 2022c
BrazilArcelorMittal Vega do SulExpansion projectIncrease hot dipped/cold rolled coil capacity and construction of a new 700 thousand tonne continuous annealing line (CAL) and continuous galvanizing line (CGL) combilineQ4 2023d
MiningLiberiaPhase 2 premium product expansion projectIncrease production capacity to 15 million tonnes per yearQ4 2023e
BrazilJuiz de ForaMelt shop expansionIncrease in melt shop capacity by 0.2 million tonnes/yearOn holdf
BrazilMonlevadeSinter plant, blast furnace and melt shopIncrease in liquid steel capacity by 1.2 million tonnes/year;On holdf
* Ongoing projects refer to projects for which construction has begun (excluding various projects that are under development), even if such projects have been placed on hold pending improved operating conditions.
a.On September 28, 2017, ArcelorMittal announced a major $1 billion, investment program at its Mexican operations, which is focused on building ArcelorMittal Mexico’s downstream capabilities, sustaining the competitiveness of its mining operations and modernizing its existing asset base. The program is designed to enable ArcelorMittal Mexico to meet the anticipated increased demand requirements from domestic customers, realize in full ArcelorMittal Mexico’s production capacity of 5.3 million tonnes and significantly enhance the proportion of higher added-value products in its product mix. The main investment will be the construction of a new hot strip mill. Upon completion, the project will enable ArcelorMittal Mexico to produce approximately 2.5 million tonnes of flat rolled steel, long steel approximately 1.8 million tonnes and the remainder made up of semi-finished slabs. Coils from the new hot strip mill will be supplied to domestic, non-auto, general industry customers. The hot strip mill project commenced late in the fourth quarter of 2017 and is expected to be completed at the end of 2021 (with capital expenditures of approximately $0.2 billion in 2021).
b.Investment in ArcelorMittal Dofasco (Canada) to modernize the hot strip mill. The project is to install two new state of the art coilers and runout tables to replace three end of life coilers. The strip cooling system will be upgraded and include innovative power cooling technology to improve product capability. The project is expected to be completed in 2021.
c.Investment of approximately $0.1 billion to replace #5 Hot-Dip Galvanizing Line Galvanneal coating capability with 160 thousand tonnes per year Aluminum Silicon (AluSi®) capability for the production of ArcelorMittal’s patented Usibor® Press Hardenable Steel for automotive structural and safety components. With the investment, ArcelorMittal Dofasco will become the only Canadian producer of AluSi® coated Usibor®. This investment complements additional strategic North America developments, including a new EAF at Calvert in the US and a new hot strip mill in Mexico, and will allow to capitalize on increasing Auto Aluminized PHS demand in North America. The project is expected to be completed in 2022, with the first coil planned for the second half of 2022.


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d.In February 2021, ArcelorMittal announced the resumption of the Vega Do Sul expansion to provide an additional 700 thousand tonnes of cold-rolled annealed and galvanized capacity to serve the growing domestic market. The approximately $0.35 billion investment program to increase rolling capacity with construction of a new continuous annealing line and CGL combiline (and the option to add an approximately 100 thousand tonnes organic coating line to serve construction and appliance segments), and upon completion, will strengthen ArcelorMittal’s position in the fast growing automotive and industry markets through AHSS products. The investments will look to facilitate a wide range of products and applications whilst further optimizing current ArcelorMittal Vega facilities to maximize site capacity and its competitiveness, considering comprehensive digital and automation technology. The project is expected to be completed the fourth quarter of 2023.
e.ArcelorMittal Liberia has been operating a 5 million tonnes direct shipping ore (DSO) since 2011 (Phase 1). In 2013, the Company had started construction of a Phase 2 project that envisaged the construction of 15 million tonnes of concentrate sinter fines capacity and associated infrastructure; this project was then suspended due to the onset of Ebola in West Africa and the subsequent force-majeure declaration by the onsite contracting companies. ArcelorMittal Liberia has now completed the revised detailed feasibility study (which was updated in 2019 to apply best available technology and replace wet with dry stack tailings treatment) for the modular build of a 15 million tonne concentrator (Phase 2), with aligned mine, concentrator, rail and port capacity. The plan is now to recommence the project in 2021, with first concentrate expected in the fourth quarter of 2023. The capital expenditures required to conclude the project are estimated at approximately $0.8 billion as the project is effectively a brownfield opportunity given that 85% of the procurement has already been done (with the equipment on site) and 60% of the civil construction complete.
f.Although the Monlevade wire rod expansion project and Juiz de Fora rebar expansion were completed in 2015, both the melt shop expansion (in Juiz de Fora) and the sinter plant, blast furnace and meltshop (in Monlevade) projects are currently on hold and are expected to be completed upon Brazil domestic market recovery.

In addition, in 2020 the Company approved 32 multi-year projects with identified environmental benefits and involving capital expenditures of $396 million and 20 multi-year projects with the identified energy benefits and involving capital expenditures of $248 million. See also further information on key environmental projects in "—Sustainable development".
ArcelorMittal's joint ventures have also announced significant capital expenditure projects. See "Property, plant and equipment—Investments in joint ventures".
Updates on previously announced investment projects
In addition to the significant investment projects presented in the above table, the Company had previously announced several large investment projects. The status of certain of such projects as of the date of this annual report is described below. While the Company continues to study certain of its key previously announced investment projects summarized below, no assurance can be given that they will proceed.
India greenfield projects. The Company explored investment opportunities in India and in June 2010, entered into a memorandum of understanding with authorities in the state of Karnataka in South India that envisaged the construction of a six million tonnes steel plant with a captive 750 megawatt power plant, representing a potential aggregate investment of $6.5 billion. The Company completed all the necessary formalities for acquiring the land by signing and executing a lease cum sale agreement for 2643.25 acres of land on December 26, 2018 and the project is currently under review.
Baffinland (Canada). In March 2011, ArcelorMittal acquired 70% of the Mary River mine project, with Nunavut Iron Ore Inc. (“NIO”), an affiliate of The Energy and Minerals Group (“EMG”), owning the remaining 30%. This project consists of an open pit high-grade iron ore mine located in the Mary River area of Baffin Island, Nunavut (Canada). In February 2013, ArcelorMittal and
NIO entered into a joint arrangement and equalized their shareholdings at 50/50. The project began commercial production in 2016. Subsequently, following equity funding commitments and conversion of preferred shares into equity, both exercised by NIO only, ArcelorMittal’s share over time decreased to 25.70% as of December 31, 2019 and 25.23% as of December 31, 2020. In September 2020, the corporate structure was reorganized whereby NIO became the parent company of Baffinland, while ArcelorMittal together with EMG became shareholders of NIO with ArcelorMittal’s share in NIO. Following this reorganization, ArcelorMittal retained its participation in the project, holding a 25.23% share in NIO.
Baffinland has also approved Phase 3 of the project, which involves the construction of a railway, to replace the existing truck-haul operation for transport of iron ore from Mary River to Milne Inlet, as well as expansion of mining, crushing and screening operations and port ship loading capacity. Approximately $1,385 million of capital expenditures were budgeted for Phase 3, to be funded with operating cash flows, additional equity and new debt. By mid-2020, NIO completed its exclusive equity funding commitment of $575 million towards Phase 3. Subject to certain conditions, ArcelorMittal has an option to provide up to $85 million of equity funding, which expires on March 31, 2023 (as agreed as part of the reorganization described above).
Between August 2016 and June 2018, ArcelorMittal and EMG shared operator rights for Baffinland’s operations. Since July 2018 the project has been operated by EMG. ArcelorMittal’s marketing rights expired at the end of 2019. For the duration of 2020, ArcelorMittal provided transitional marketing services to Baffinland.



96Management report
Reserves (iron ore and coal)
Introduction
ArcelorMittal has both iron ore and metallurgical coal reserves. The Company’s iron ore mining operations are located in Canada, Mexico, Brazil, Liberia, India (via a joint venture), Bosnia, Ukraine and Kazakhstan. The Company’s metallurgical coal mining operations are located in Kazakhstan. The iron ore and coal mining operations in the United States were sold on December 9, 2020, see "Introduction–Key transactions and events in 2020" for further information.
The estimates of proven and probable mineral reserves at the Company’s mines and projects and the estimates of the mine life included in this annual report have been prepared by ArcelorMittal experienced engineers and geologists, with the exception of the Las Truchas and San Jose mines in 2019 and 2020 (consolidated as Mexico, excluding Peña Colorada in the tables below) where the mineral reserve estimates were prepared by Gustavson Associates, the Thakurani Iron Ore Mine in 2020 (consolidated as India in the tables below) where the mineral reserve estimate was prepared by BMRC Geomining Solutions LLP, and Ukraine open pit (ArcelorMittal Kryvyi Rih Open Pit), where 2019 mineral reserve estimates considering full life of mine design were prepared by KAI Ltd. All mineral reserve estimates as of December 31, 2019 and 2020 were prepared in compliance with the requirements of SEC Industry Guide 7.
In the CIS, ArcelorMittal has conducted in-house and independent reconciliations of ore reserve estimate classifications based on SEC Industry Guide 7 and standards used by the State Committee on Reserves, known as the GKZ, or its national equivalent, in the former Soviet Union countries. The GKZ, or its national equivalent, constitutes the legal framework for ore reserve reporting in former Soviet Union countries, where ArcelorMittal operates mines. Based on these reconciliations, ArcelorMittal’s mineral reserves have been estimated by applying mine planning, technical and economic assessments defined as categories A, B and C1 according to the GKZ standards. In general, provided Industry Guide 7’s economic criteria are met (which is the case here), Category A+B is equivalent to “proven” and C1 is equivalent to “probable” reserves.
Reserves are the part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination.
Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and
measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
The demonstration of economic viability is established through the application of a life of mine plan for each operation or project providing a positive net present value on a cash-forward looking basis, considering the entire value chain. Economic viability is demonstrated using forecasts of operating and capital costs based on historical performance, with forward adjustments based on planned process improvements, changes in production volumes and in fixed and variable proportions of costs, and forecasted fluctuations in costs of raw material, supplies, energy and wages. Mineral reserve estimates are updated annually in order to reflect new geological information and current mine plan and business strategies. The Company’s reserve estimates are of in-place material after adjustments for mining depletion and mining losses and recoveries, with no adjustments made for metal losses due to processing. For a description of risks relating to reserves and reserve estimates, see “Introduction—Risk factors—Risks related to ArcelorMittal’s Mining Activities—ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine”.
Detailed independent verifications of the methods and procedures used are conducted on a regular basis by external consultants and mineral reserves are reviewed on a rotating basis. In 2019, SRK Consulting (UK) Limited conducted the independent audit of the mineral reserve estimates for ArcelorMittal Kazakhstan's iron ore open pit and underground operations confirming the accuracy of the 2018 iron ore estimates. SRK Consulting (UK) Limited also conducted the review of the life of mine plan that was used as a basis for the 2019 and 2020 coal mineral reserves estimates for ArcelorMittal Kazakhstan's Karaganda coal operations. Recommendations made by SRK Consulting (UK) Limited in relation to the mineral reserves estimate for 2019 are being implemented by ArcelorMittal, and confirmation of reserves will be completed in 2021 following implementation of recommendations. Furthermore, in 2019, the mineral reserve estimates for ArcelorMittal Ukraine's open pit (ArcelorMittal Kryvyi Rih Open


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Pit), considering full life of mine design, were prepared by KAI with support from ArcelorMittal's local team. These estimates were independently reviewed by SRK Consulting (Canada) Inc. in 2019 and improvement actions were proposed. The improvement actions have been progressively implemented during 2020, with the support of SRK Consulting (Canada) Inc. Following recommendations made in 2018 regarding the Fire Lake and Mont Wright deposits in Canada, in 2019 SRK Consulting (Canada) Inc. conducted pit optimization and strategic mine planning, designed ultimate pits and phases, and assisted in developing a long-term production schedule with up to date technical and economical parameters with respect to AMMC's 2019 iron ore mineral reserve estimates. A second independent consultant BBA Inc. conducted a review of the overall work performed by SRK Consulting (Canada) Inc., completed further detailed design work and confirmed increased iron ore mineral reserves for Canada in 2019, which were used as a base for 2020 iron ore mineral reserve estimates.
ArcelorMittal owns less than 100% of certain mining operations; mineral reserve estimates have not been adjusted to reflect ownership interests and therefore reflect 100% of mineral reserves of each mine. Please see the table below for ArcelorMittal’s ownership interest in each mine. All of the reserves presented are estimates at December 31, 2020 (unless otherwise stated).
Mine life is derived from the life of mine plans and corresponds to the duration of the mine production scheduled from mineral reserve estimates only.
The Company’s mineral leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all ore reserves on the leased properties to be mined in accordance with current production schedules. The Company’s mineral reserves may include areas where some additional approvals remain outstanding but where, based on the technical investigations the Company carries out as part of its mine planning process and its knowledge and experience of the approvals process, the Company expects that such approvals will be obtained as part of the normal course of business and within the timeframe required by the current life of mine schedule.
The reported iron ore and coal reserves contained in this annual report do not exceed the quantities that the Company estimates could be extracted economically if future prices were at similar levels to the average contracted price for the three years ended December 31, 2020. The average iron ore spot reference price for the last three years (2018-2020) was $90.81 per tonne (delivered to China, Qingdao 62% Fe US $ per tonne, Metal Bulletin). For the same period, the average coal spot reference price was $168.86 per tonne (Premium HCC FOB Aus, Metal Bulletin). The Company establishes optimum design and future operating cut-off grade based on its forecast of commodity prices and operating and sustaining capital costs. The cut-off grade varies from operation to operation and during the life of each operation in order to optimize cash flow, return on investments and the sustainability of the mining operations. Such sustainability in turn depends on expected future operating and capital costs. The reserve base can vary from year to year due to the revision of mine plans in response to market and operational conditions, in particular market price. See “Introduction—Risk factors—Risks related to ArcelorMittal’s Mining Activities—ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine”.
Tonnage and grade estimates are reported as ‘Run of Mine’. Tonnage is reported on a wet metric basis.
Iron ore reserve estimates
The tables below detail ArcelorMittal’s estimated iron ore reserves as of December 31, 2020. The classification of the iron ore reserve estimates as proven or probable reflects the variability in the mineralization at the selected cut-off grade, the mining selectivity and the production rate and ability of the operation to blend the different ore types that may occur within each deposit.  At ArcelorMittal mining operations, proven iron ore reserve estimates are typically based on drill hole spacing ranging from 25m x 25m to 100m x 100m, and probable iron ore reserve estimates are based on drill hole spacing ranging from 50m x 50m to 300m x 300m.


98Management report
As of December 31, 2020As of December 31, 2019
Proven Ore ReservesProbable Ore ReservesTotal Ore ReservesTotal Ore Reserves
Millions of Tonnes
% Fe1
Millions of Tonnes
% Fe1
Millions of Tonnes
% Fe1
Millions of Tonnes
% Fe1
Canada2,118 29.3 190 29.0 2,308 29.3 2,405 29.5 
Minorca - USA2
— — — — — — 130 23.7 
Hibbing - USA2
— — — — — — 131 19.8 
Mexico (Excluding Peña Colorada)11 37.7 109 31.0 120 31.6 116 31.2 
Peña Colorada - Mexico104 22.4 150 21.2 254 21.7 201 21.5 
Brazil50 55.2 40 49.4 90 52.6 93 52.8 
Liberia52.1 468 47.7 475 47.7 480 47.9 
India3,4
— — 85 61.1 85 61.1 — — 
Bosnia48.9 45.7 10 47.3 12 47.0 
Ukraine Open Pit75 33.2 508 34.5 583 34.3 609 34.4 
Ukraine Underground54.4 19 54.4 27 54.4 27 54.4 
Kazakhstan Open Pit37.0 117 39.3 118 39.2 122 39.3 
Kazakhstan Underground41.6 19 45.4 20 45.2 22 45.2 
Total4,089 33.5 4,348 32.4 
1.% Fe represents total Fe content for all sites except Pena Colorada - Mexico where it represents magnetic Fe content only
2.The mining operations in the United States were sold on December 9, 2020, see "Introduction—Key transactions and events in 2020".
3.During 2020, the Company's joint venture AMNS India began operating the mine presented under India (no data available for 2019). See note 2.4.1 to the consolidated financial statements
4.Production from the Thakurani mine presented under India is permitted for internal consumption only. Until June 27 2021 all production from the mine must be consumed by specified AMNS India end use plant, after which up to 25% of production may be sold to a third party
Supplemental information on iron ore operations
The table below provides supplemental information on the producing mines.
Operations/Projects% OwnershipIn Operation Since
2020 Run of Mine Production
(Million Tonnes)3
2020 Saleable Production (Million Tonnes)1, 3
Estimated Mine Life (Years)2
Canada85197667.0 23.2 32
Minorca - USASold19778.1 2.7 NA
Hibbing - USASold197619.7 5.0 NA
Mexico (Excluding Peña Colorada)10019767.4 2.8 16
Peña Colorada - Mexico50197411.4 3.8 18
Brazil10019444.5 3.2 42
Liberia8520115.3 5.1 24
India6019611.8 1.6 11
Bosnia5120081.9 1.4 7
Ukraine Open Pit95195924.9 10.7 25
Ukraine Underground9519330.6 0.6 31
Kazakhstan Open Pit10019763.3 2.0 44
Kazakhstan Underground10019561.8 1.3 9
1.Saleable production is constituted of a mix of direct shipping ore, concentrate, pellet feed and pellet products which have an iron content of approximately 64% to 66%. Exceptions in 2020 included the shipping of ore produced in Bosnia, Ukraine Underground and the Kazakhstan mines which have an iron content ranging between approximately 50% to 60% and are solely for internal use at ArcelorMittal’s regional steel plants. The direct shipping ore produced from Liberia had an average iron content of approximately 62% in 2020 while the sinter fines produced for external customers in Brazil from the Serra Azul operations averaged approximately 63% and the lumps averaged 54%.
2.The estimated mine life reported in this table corresponds to the duration of the production schedule of each operation based on the 2020 year-end iron ore reserve estimates only. The production varies for each operation during the mine life and as a result the mine life is not the total reserve tonnage divided by the 2020 production. ArcelorMittal believes that the life of these operations will be maintained as exploration and engineering studies confirm the economic potential of the additional mineralization already known to exist in the vicinity of these iron ore reserve estimates.
3.Represents 100% of production.
Changes in iron ore mineral reserve estimates: 2020 versus 2019
The Company’s iron ore mineral reserve estimates had a net decrease of 259 million metric tonnes of Run of Mine and a 1.1% increase in iron ore content between December 31, 2019 and 2020. This decrease in reserves includes a reduction of 261 million metric tonnes


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of Run of Mine due to the sale of Minorca and Hibbing and a net 97 million metric tonnes of Run of Mine reduction in Canada due to production of 67 million tonnes and a decrease in reserves by 30 million tonnes attributed to updated resource modelling and estimation being incorporated into the life of mine plan. These decreases were partially offset by an increase of 53 million tonnes for Pena Colorada and 4 million tonnes for Mexico (excl. Pena Colorada), both due to new interpretations and life of mine design, and an increase of 84.5 million tonnes from the inclusion of the Thakurani mine in India.
Metallurgical Coal Reserve Estimates
The table below details ArcelorMittal’s estimated metallurgical coal reserves as of December 31, 2020. The classification of coal reserve estimates as proven or probable reflects the variability in the coal seams thickness and quality, the mining selectivity and the planned production rate for each deposit. Proven coal reserve estimates are based on drill hole spacing ranging from 50m x 50m to 500m x 500m, and probable coal reserve estimates are based on drill hole spacing ranging from 100m x100m to 1,000m x 1,000m.
As of December 31, 2020As of December 31, 2019
Proven Coal ReservesProbable Coal ReservesTotal Coal ReservesTotal Coal Reserves
ROM Millions of TonnesWet Recoverable Million TonnesROM Millions of TonnesWet Recoverable Million TonnesROM Millions of TonnesWet Recoverable Million TonnesAsh
(%)
Sulfur (%)Volatile (%)Millions of TonnesWet Recoverable Million Tonnes
Princeton - USA9052
Karaganda - Kazakhstan114905410158370.72911050
Total10158370.729200102
Note: Ash (%), Sulfur (%) and Volatile (%) for Karaganda - Kazakhstan are Run of Mine coal qualities. See also note 2 to the iron ore reserve estimates..
The table below provides supplemental information on the producing mines.
Operations/Projects% OwnershipIn Operation Since2020 Run of Mine Production
(Million Tonnes)
2020 Wet Recoverable production
(Million Tonnes)
Estimated Mine Life (Years)1
Princeton - USASold19952.8 1.4 NA
Karaganda - Kazakhstan10019349.5 3.6 10
1.The estimated mine life reported in this table corresponds to the duration of the production schedule of each operation based on the 2020 year-end metallurgical coal reserve estimates only. The production varies for each operation during the mine life and as a result the mine life is not the total reserve tonnage divided by the 2020 production. ArcelorMittal believes that the life of these operations will be significantly expanded as exploration and engineering studies confirm the economic potential of the additional mineralization already known to exist in the vicinity of these estimated coal reserves.
Changes in Metallurgical Coal Reserve Estimates: 2020 versus 2019
The Company’s metallurgical coal reserve estimates had a net decrease of 99 million tonnes of Run of Mine coal between December 31, 2019 and 2020. This decrease includes the sale of the mining assets of ArcelorMittal USA, accounting for 90 million tonnes of the total variance. The additional 9 million tonnes decrease was attributable to mining depletion at the Karaganda coal operations in Kazakhstan. The reporting of recoverable coal reserves from Kazakhstan excludes the recoverable coal which in theory could be used for metallurgical applications, but which in practice is sold and used as thermal coal by ArcelorMittal at its steel plant facilities.





100Management report
Operating and financial review
Economic conditions
Key factors affecting results of operations
The steel industry, and the iron ore and coal mining industries, which provide its principal raw materials, have historically been highly cyclical. They are significantly affected by general economic conditions, consumption trends as well as by worldwide production capacity and fluctuations in international steel trade and tariffs. This is due to the cyclical nature of the automotive, construction, machinery and equipment and transportation industries that are the principal consumers of steel. A telling example of the industry cyclicality was the sharp downturn in 2008/2009 after several strong years, which was a result of the global economic crisis. Similarly, the current COVID-19 pandemic caused a sudden and sharp decline in economic activity and steel consumption globally and particularly in the Company's core developed markets.
The COVID-19 pandemic had a significant impact on ArcelorMittal’s results in 2020. In the European Union (“EU”), the impact of widespread national lockdowns during March, April and into May had a significant negative effect on output across the major steel consuming industries. Manufacturing declined sharply, with almost all automotive plants closed during the early part of the lockdown with production down over 60% year-on-year during the second quarter. Industrial activity recovered sharply from April lows, and steel demand also recovered strongly through the second half of 2020, with consumption estimated to have declined by just over 10% year-on-year in 2020. While demand did not fall as low as seen in 2009 as inventory levels were much leaner than prior to the global financial crisis, demand declined to levels not seen since the Eurozone debt crisis in 2012, with a significant impact on profitability in 2020 from the Company’s largest market. Underlying steel demand in the United States was similarly impacted by the fall-out from the COVID-19 pandemic, with manufacturing output down over 15% year-on-year in the second quarter of 2020, especially light vehicle (-61% year-on-year) and machinery output (-19%). While construction was less affected, remaining close to 2019 levels, energy markets remained subdued and overall steel consumption is estimated to have declined by 18% in 2020, negatively impacting the Company’s deliveries and profitability.
The sharp global recession in 2020 significantly reduced global demand for steel but the impact on demand was not prolonged, with output in developed markets rebounding strongly during the second half of 2020. Indeed, output of key steel consuming sectors in the U.S. were almost back to pre-pandemic levels by December (e.g., machinery down around 2% from January/February 2020 levels). While the risk of continued restrictions on physical interaction through the first and into the second quarter
of 2021 is significant, due to the current high level of COVID-19 infections, the Company still believes that these will predominantly impact services while manufacturing and construction should remain relatively unscathed. Risks remain higher in developing markets, where cases and fatalities are still growing overall and are less likely to have systems to manage any surge in cases and to vaccinate a significant proportion of the population quickly through 2021. The Company’s sales and profitability have been significantly affected in its developing markets by the global nature of this pandemic. However, although cases appear to still be on an upward trajectory, underlying steel demand has in many markets rebounded strongly through the second half of 2020 to be above pre-pandemic levels in many cases (e.g. Brazil and Turkey).
Historically, demand dynamics in China have also substantially affected the global steel business, mainly due to significant changes in net steel exports. Despite the pandemic impacting China significantly in February and March 2020, increased government use of special local and sovereign bonds to fund increased investment, mainly infrastructure projects, supported a robust recovery in steel consumption. Manufacturing output also rebounded strongly and was back to trend growth early into the second half of 2020. Indeed, Chinese steel demand surprised on the upside in 2020 overall, growing around 9% year-on-year, supported by policy that mandates an increase in the steel intensity of construction. While demand is likely to grow further in 2021, it is eventually expected to decline as infrastructure spending has been front-loaded and real estate demand structurally weakens due to lower levels of rural-urban migration. If this does not coincide with renewed capacity closures, this is expected to have a negative impact on steel prices and spreads. See “Risk Factors—Risks related to the global economy and mining and steel industry—Excess capacity and oversupply in the steel industry and in the iron ore mining industry have in the past and may continue in the future to weigh on the profitability of steel producers, including ArcelorMittal”.
Unlike many commodities, steel is not completely fungible due to wide differences in its shape, chemical composition, quality, specifications and application, all of which affect sales prices. Accordingly, there is still limited exchange trading and uniform pricing of steel, whereas there is an increase in trading of steel raw materials, particularly iron ore. Commodity spot prices can vary, which causes sales prices from exports to fluctuate as a function of the worldwide balance of supply and demand at the time sales are made.
ArcelorMittal’s sales are made based on shorter-term purchase orders as well as some longer-term contracts to certain industrial customers, particularly in the automotive industry. Steel price surcharges are often implemented on steel sold pursuant to long-term contracts to recover increases in input


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costs. However, longer-term contracts with low steel prices will not reflect increases in spot steel prices that occur after contract negotiation. Spot market steel, iron ore and coal prices and short-term contracts are more driven by market conditions.
One of the principal factors affecting the Company’s operating profitability is the relationship between raw material prices and steel selling prices. Profitability depends in part on the extent to which steel selling prices exceed raw material prices, and specifically the extent to which changes in raw material prices are passed through to customers in steel selling prices. Complicating factors include the extent of the time lag between (a) the raw material price change and the steel selling price change and (b) the date of the raw material purchase and of the actual sale of the steel product in which the raw material was used (average cost basis). In recent periods, steel selling prices have not always been correlated with changes in raw material prices, although steel selling prices may also be impacted quickly due in part to the tendency of distributors to increase purchases of steel products early in a rising cycle of raw material prices and to hold back from purchasing as raw material prices decline. With respect to (b), as average cost basis is used to determine the cost of the raw materials incorporated, inventories must first be worked through before a decrease in raw material prices translates into decreased operating costs. In some of ArcelorMittal’s segments, in particular Europe and NAFTA, there are several months between raw material purchases and sales of steel products incorporating those materials. Although this lag has been reduced in recent years by changes to the timing of pricing adjustments in iron ore contracts, it cannot be eliminated and exposes these segments’ margins to changes in steel selling prices in the interim (known as a “price-cost squeeze”). This lag can result in inventory write-downs, as occurred in 2015 and 2019 due to sharp declines in steel prices. In addition, decreases in steel prices may outstrip decreases in raw material costs in absolute terms, as has occurred numerous times over the past few years, for example throughout 2019 as well as the fourth quarters of 2015, 2016 and 2018. In early 2020, steel spreads improved from the weak levels during the second half of 2019 but the negative impact of the pandemic on steel demand in the second quarter of 2020 led to lower spreads as steel prices declined, while raw material costs, especially iron ore, remained broadly stable underpinned by the strong rebound in Chinese demand. In the fourth quarter of 2020, global steel prices surged toward historical highs in many markets, due in part to increased demand and a slower increase in supply, resulting in increased steel spreads and higher profitability. If, however demand wanes, and steel capacity continues to increase, steel prices would likely decline. Raw material and steel price changes in 2018, 2019 and 2020 are described below.
The Company’s operating profitability has been particularly sensitive to fluctuations in raw material prices, which have become more volatile since the iron ore industry moved away from annual benchmark pricing to quarterly pricing in 2010. Volatility on steel margins aside, the results of the Company’s mining segment (which sells externally as well as internally) are directly impacted by iron ore prices. The disaster at Vale’s Brumadinho dam at the end of January 2019, coupled with strong steel production in China during the first half of 2019, pushed the price up to highs above $120 per tonne ("/t") in July 2019. Vale brought back 35 million tonnes of supply by the end of 2019, allowing the price to decline to an average of $92/t in December 2019 as supply better matched levels of demand. Despite the significant hit to Chinese downstream steel consumption in February and March 2020, iron ore prices fell only mildly to average $87/t in February and remained relatively stable through March and April. However, the strong recovery of Chinese steel consumption, and the beginnings of a rebound in demand in developed markets, coupled with some supply issues saw prices rebound to over $100/t by June. As world ex-China demand and production rebounded during the second half of 2020, alongside continued strong steel production in China, iron ore prices continued to climb, rising to an average of $134/t in the fourth quarter of 2020 and ending 2020 at over $160/t and increasing the profitability of ArcelorMittal’s mining operations. A significant decrease in iron ore prices as further supply is brought online, especially if Chinese demand weakens, would negatively impact ArcelorMittal’s revenues and profitability. See “Introduction—Risk factors—Risks related to the global economy and the mining and steel industry—Protracted low steel and iron ore prices would likely have an adverse effect on ArcelorMittal’s results of operations.”
Economic environment
The COVID-19 pandemic has caused the largest economic shock the world economy has witnessed in decades, causing a collapse in global activity. This followed weak global growth in 2019, which had only been 2.6% compared to 2018. The subdued growth in 2019 had been a consequence of rising trade barriers, elevated uncertainty surrounding trade and geopolitical issues and the impact of prior U.S. interest rate increases which had a tightening effect on financing conditions in emerging economies ("EM"s), as well as a sharp and geographically broad-based slowdown in manufacturing and global trade (due in particular to higher tariffs and prolonged uncertainty surrounding trade policy which dented investment and demand for capital goods that are heavily traded) and a contraction in the automobile industry due to distinct reasons, including lower demand and disruptions from new emission standards in Europe and China. The global economy is estimated to have contracted by 3.9% in 2020 compared to 2019, the largest decline since the global financial crisis (“GFC”) in 2008/09. While the initial impact of the pandemic on global economy during the first half of 2020


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was much sharper than during GFC, the immediate recovery throughout the third quarter of 2020 was a lot faster, before moderating in the fourth quarter of 2020 as momentum was dampened by a resurgence of infections. Specifically, almost all major economies, including both advanced and emerging economies, are expecting a decline in GDP in 2020, with the main exception being China whose strong recovery throughout the later half of 2020 was supported by central government infrastructure spending. Globally, while both services and manufacturing sectors were initially impacted by various social restrictions implemented in order to curb the spread of the virus, manufacturing has continued to recover more strongly throughout 2020. This is particularly apparent in advanced economies, where a renewed wave of infections led to re-imposition of lockdown measures during the fourth quarter of the year, impacting services more significantly than manufacturing and construction output.
In the U.S., the number of COVID-19 cases has been persistently elevated since the outbreak of the pandemic, with approximately 20 million cases of infection and approximately 350,000 deaths attributed to the virus at the end of 2020 (over 500,000 deaths and 29 million cases currently). As a result of lockdown measures, the fall in U.S. activity in the first half of 2020 was nearly three times as large as the peak decline during the GFC, underscoring the unusual depth of the recession. Monetary policy was, however, quickly loosened to support the economy and fiscal spending far exceeded similar measures delivered during the global financial crisis, which cushioned the impact of the pandemic on household incomes and contributed to a robust rebound in economic activity. As a result, U.S. GDP in 2020 is estimated to have fallen by only 3.5% (compared to growth of 2.4% in 2019 and 2.9% in 2018, impacted by slowing investment and exports as the heightened uncertainty due to trade policy and increasing perceived risk of recession caused businesses to scale back investment). Large fiscal spending also had a positive impact on the labor market, limiting the loss of employment due to lockdown, with unemployment ending 2020 at 8.1%, a significant improvement from its April peak of 14.8%. Cases have surged since mid-September, and in response, new restrictions related to indoor gatherings and public spaces have been imposed in some states. Service sectors have been impacted the most, particularly retail sales, which declined through the fourth quarter of 2020, after recovering quickly to pre-virus levels by July. On the other hand, supported by lean inventory, industrial activity has continued to recover with manufacturing output almost recovering to pre-virus levels by the end of the year, from a level 20% below in April.
After a slowdown in growth in 2019 to 1.6% (compared to 2.0% in 2018), due to weaker external demand, including from Turkey and Asia, especially China, Brexit-related uncertainty and disruption to the automotive sector caused by emission
standards, EU27 (EU excluding the UK) GDP growth is estimated to have contracted by 6.7% in 2020 due to the impacts of the first and second waves of the virus. Following the end of lockdown measures related to the first wave, activity rebounded vigorously until mid-summer, although performance varied widely among sectors. Retail sales caught up to, and even exceeded, pre-pandemic levels during the third quarter, partly reflecting pent-up demand. In contrast, the recovery in industrial production was initially slower. After a marked epidemiological improvement from May to July, COVID-19 infections flared up again across Europe in the fall, which prompted many EU countries to tighten social restrictions, with some major countries, such as Germany, France and Netherlands, re-imposing lockdown measures (often less severe than in the first wave, however). As a result, retail sales declined during the fourth quarter of 2020, while manufacturing output continued to recover to within 3% of pre-pandemic levels. Several service sectors vital to the EU economy (for example, tourism in Southern EU countries) remain depressed and are not expected to recover until effective management of the pandemic improves confidence in the safety of face-to-face interactions. Throughout 2020, despite varying across countries, the size of the fiscal support across EU has been more substantial than during the GFC. A significant focus of spending has been to preserve employment, helping EU27 unemployment to rise more slowly than in the U.S., with the unemployment rate estimated to have risen to only 7.2% in 2020 from 6.7% in 2019. In addition, from 2021 national fiscal support packages will be bolstered by grants from the European Union of €750 billion ($859 billion) to the hardest-hit member countries.
China’s economy was the first to suffer from COVID-19, experiencing a sharp contraction in January and February, with first quarter GDP declining by 6.8% year-on-year, due to lockdown measures implemented. The strength of the recovery was then robust in 2020, and China is one of the only major economies to have grown in 2020, with GDP growing 2.3% year-on-year (compared to growth of 6.2% in 2019 and 6.6% in 2018). Despite being the epicenter of the outbreak early on, by the end of 2020, unlike in the EU and U.S., new COVID-19 cases have only been reported sporadically, and the coronavirus outbreak seems largely under control in most of the country. Investment, in particular stimulus-fuelled infrastructure spending from the government, remains the main engine of growth throughout the year. Chinese exports have also supported the recovery on the back of pent-up foreign demand for masks and other COVID-19-related materials and equipment, as well as strong demand for teleworking-related goods and domestic appliances. As a result, the recovery in the services sector lagged construction and industry in 2020, with industrial output returning to pre-pandemic trend growth in July, while retail sales did not return to trend growth until the end of the year.


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In Brazil, the economy was recovering gradually from a long recession that started in 2015 when the COVID-19 pandemic hit. Despite contracting by more than 10% year-on-year in second quarter of 2020 due to COVID-19’s impact, the recovery was strong across a wide range of sectors and GDP is estimated to contract by approximately 4.7% in 2020 (compared to growth of 1.2% in 2019 and 1.3% in 2018). The key driver of growth has been a sizable fiscal response supporting the economy (exceeding 6% of GDP), significantly larger than other countries’ spending in the Latin American region. Strong stimulus cushioned the impact of the COVID-19 pandemic in April and underpinned a strong recovery thereafter. Retail sales had recovered completely by August and rose to levels around 6% above pre-virus level by the end of 2020. Similarly, manufacturing output was above pre-pandemic levels before the end of 2020, supported by a sharp recovery in auto production toward the end of the year. In Russia, COVID-19 dealt a heavy blow to the economy during the second quarter of 2020, when GDP declined 8% year-on-year. The recovery in the second half of the year, while resilient, was constrained by low oil exports and weak consumption with retail sales unable to recover to pre-virus levels. GDP is estimated to have declined by 3.8% in Russia in 2020 (compared to growth of 1.3% in 2019 and 2.3% in 2018). In Turkey, despite the drastic fall in GDP during the second quarter of 2020 (-8.5% year-on-year), a very sharp recovery followed in the third quarter of 2020 (5.4% growth year-on-year). Turkish GDP is estimated to have expanded by 1.3% year-on-year in 2020. The main driver of growth was a large credit-push from the state government, in addition to strong export demand, which benefited from a large exchange rate depreciation. Ample liquidity has boosted both consumer spending and industrial activity, with both retail sales and manufacturing output recovering to pre-virus levels in August and around 10% above by year-end. In South Africa, an early and long lockdown to tackle the virus outbreak led to a significant decrease in economic activity in the first half of 2020 (second quarter GDP fell by 17% year-on-year). A substantial rebound in the second half of the year, driven by high demand and favorable prices for South Africa’s exports, resulted in an estimated contraction of GDP of around 7% in 2020 (compared to growth of 0.3% in 2019 and 0.8% in 2018).
World manufacturing production had already registered an overall slowdown in 2019 due to slowing global trade, weakness in global automotive sales and a destocking cycle, which was then further exacerbated by the economic crisis triggered by COVID-19 pandemic. In the first half of 2020, the slump in industrial production was severe but expected given the lockdowns imposed around the world to contain the virus, which caused a near complete shutdown in automotive plants and many other factories in April. Though lagging consumption, industrial production recovery was strong during the third quarter of 2020 and toward the end of the year, with world ex-
China manufacturing output back to only approximately 2% below pre-virus levels from a decline of almost 25% in April. While a new wave of COVID-19 infections led to re-tightening of social restrictions, which have negatively impacted services, the recovery in industrial output has continued. For 2020 overall, global manufacturing output declined by an estimated 3.5%, mainly due to world ex-China output declining by 7%. In China, the world's largest manufacturer, despite being hit hard by the pandemic in the first quarter, activity has bounced back more strongly, and manufacturing output estimated to increase by over 2%. Due to the impact of lockdowns during first half of the year, and subsequent re-imposition of lockdowns toward year-end to curb a second wave of infections, European manufacturing is estimated to have declined by approximately 8% year-on-year. In the U.S., though restrictions were less stringent, manufacturing output was also significantly negatively impacted, declining by approximately 6.6% year-on-year.
Global apparent steel consumption (“ASC”) is estimated to have grown by 0.8% year-on-year in 2019, following strong growth of 2.4% in 2018. In 2019, ASC growth in China had remained resilient at 3%, primarily driven by construction, supporting robust machinery output, offsetting declining automotive output and slower growth in infrastructure. World-ex China ASC was down by around 0.8% year-on-year. Demand in developing ex-China is estimated to have declined by an estimated 1.2% year-on-year in 2019, due to domestic crises in some large emerging markets causing steel demand to decline sharply in Turkey (-10% year-on-year), Iran (-7% year-on-year) and Argentina (-14% year-on-year). This more than offset growth in India (+4% year-on-year), ASEAN (+3% year-on-year) and Russia (+4% year-on-year). In EU28 (EU including the UK), underlying demand for steel was impacted by weak manufacturing, particularly automotive and machinery, due to weaker external demand and heightened uncertainty related to both the U.S.-China trade conflict and Brexit. Weakness in real demand led to inventory destocking, causing ASC to decline by over 4% in 2019. While underlying demand for steel in the U.S. performed better than EU28, U.S. ASC is estimated to have declined by around 2% year-on-year, with construction performing better than manufacturing. Indeed, due to weaker than expected manufacturing output, and prices declining from elevated levels, stockists reduced inventory levels causing demand for flat products to decline over 4% year-on-year, more than offsetting continued growth in longs.
Global ASC is then estimated to have declined by approximately 1% in 2020 – the first decline since 2015 – as steel demand was significantly impacted by the global COVID-19 pandemic. In China, despite being the country impacted first by the virus, the subsequent recovery in economic activity was strong, particularly in construction driven by infrastructure, supporting robust ASC growth of approximately 9% year-on-year. In


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contrast, the negative impact of widespread lockdowns meant most other major economies saw ASC decline, resulting in world-ex China ASC down by around 11% year-on-year in 2020. In EU28, lockdowns from March to May caused ASC to decline by approximately 10%, with demand for flat products declining more than longs, as manufacturing was impacted more severely than construction. U.S. steel demand declined more sharply, by approximately 16% year-on-year in 2020, due to the weakness of energy demand impacting pipes and tube, coupled with double digit declines in both flats and longs demand. Most developing markets also saw ASC decline in 2020, particularly India (-17% year-on-year), and to lesser extent, Russia (-5% year-on-year) and ASEAN (-6% year-on-year) where impact of the virus on economic activities were less severe. Despite the pandemic, a few markets still managed to show growth in steel demand in 2020, particularly Turkey (+13% year-on-year), where demand was rebounding from the Lira crisis which caused demand to collapse in 2018/19 and Brazil (+1% year-on-year) where the economy rebounded strongly from the lows seen in April.
Source: GDP and industrial production data and estimates sourced from Oxford Economics January 7, 2021. ASC data for U.S. from American Iron and Steel Institute (AISI) to Nov 2020, estimates for December 2020. ASC data for Brazil from Brazilian Steel Institute to November 2020, estimates for December 2020. ASC data for EU28 from Eurofer to October 2020, estimates for November and December 2020. All estimates are internal ArcelorMittal estimates.
Steel production
World steel production grew 2.8% in 2019, an increase of approximately 50 million tonnes to 1.84 billion tonnes, primarily driven by a 7.9% year-on-year increase in Chinese production, whereas world ex-China production fell 2.5% year-on-year, according to World Steel figures, as production in all major regions either fell or stagnated, except for ASEAN and the Middle East, where production grew. In 2018, production in the EU28 (168 million tonnes) was curtailed by increased import penetration despite continued demand growth and due to weakness in German steel production. In 2019, while a sharp fall in domestic European steel prices led to lower import penetration, steel production in EU28 declined by approximately 10 million tonnes to 157 million tonnes as the weakness in industrial output, particularly automotive production, led to much weaker steel demand. In North America, strong production growth in 2018 (4.4% year-on-year) was driven by U.S. fiscal stimulus and supported by Section 232 applied tariffs and quotas on steel imports. As the impact of the U.S. fiscal stimulus faded and North America steel demand fell, steel production in 2019 declined slightly (-0.8% year-on-year) due to weaker manufacturing with lower production in Mexico (-8.0%) and Canada (-4.9%) more than offsetting growth in the U.S. (+1.5%). The decline in steel output in South America was mainly caused by a 9% decline in Brazil production (down 3.2 million tonnes). Production in developed Asia fell by 3.7% year-on-year (down 7
million tonnes), particularly Japan (-4.8%) and South Korea (-1.5%). Weakness in CIS steel production is due to persistent weakness in Ukrainian steel production (2019 production of 21 million tonnes is one third below the 2011 peak of 35 million tonnes), while Russian production declined slightly to 71.7 million tonnes from its historically high production in 2018 (72.1 million tonnes). Turkish steel production fell significantly to 33.7 million tonnes in 2019 as the economy suffered from a domestic recession triggered by a lira crisis in late 2018 which led to a collapse in domestic demand, especially in the construction sector.
In 2020, world steel production declined by approximately 0.9% year-on-year – the first decline since 2015 - as a result of demand disruption caused by the global COVID-19 pandemic. Despite being initially impacted, strong demand recovery in China throughout 2020, boosted by infrastructure spending, led to a 5.9% increase in steel production in 2020. On the other hand, world ex-China production was over 10% below 2018 levels at 775 million tonnes, representing a decline of 75 million tonnes (or 8.8%) compared to 2018. Production declined in every developed market in 2020 compared to 2019, particularly the U.S. (-17%), Japan (-16%) and EU28 (-12%), as well as most major emerging markets such as India (-11%) and South America (-8.6%). Turkey was the main exception with output growing by 5.5%, and the CIS to a lesser extent with output growth of 1.4% compared to 2019. As a result, China increased its share of global steel production to 58% (2019: 54%) while others’ share declined, including East Asia (9% from 11%), EU28 (8% from 9%), NAFTA (5% from 6%), India (5% from 6%), except CIS whose share remained broadly stable at around 5%.
The COVID-19 pandemic and subsequent policy of lockdowns to control infections, caused steel production in almost all major markets to decline in 2020, except for Turkey and Vietnam where strong demand recoveries through 2020 has supported steel production. In Europe, steel production declined by approximately 19 million tonnes, to 139 million tonnes in 2020. Steel production declined mainly during the second quarter of the year (-26% year-on-year), due to widespread lockdowns from around mid-March and into May. Thereafter, the easing of restrictions led to a recovery in real demand and subsequently a rebound in steel production in the second half of 2020 (-5% year-on-year). In North America, steel production is estimated to have declined by 15% year-on-year as some production facilities were idled due to widespread lockdowns, which caused factory shutdowns especially automotive plants during the second quarter of 2020. Production was down the most in the U.S. (17% year-on-year), with Canada down by 14% and Mexico the least impacted down only 8%. Steel output in South America declined by 9% year-on-year, despite the major steel producer in the region, Brazil, accounting for around 80% of regional production seeing output decline by only 5% year-on-


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year. Brazil was supported by a relatively strong fiscal stimulus leading to Brazil manufacturing and construction output up strongly year-on-year during the second half of 2020, whereas continued weakness elsewhere in the region led to steel production declining by 21% year-on-year. Production in developed Asia fell by 11% year-on-year (down more than 20 million tonnes), particularly in Japan (-16%), as South Korea (-6%) and Taiwan (-6%) were able to control COVID-19 infections more effectively. Relative to other parts of the world, C.I.S (Kazakhstan, Russia and Ukraine) production was not hit as heavily and the recovery post lockdown was relatively strong, with production increasing by 1 million tonne in 2020, with Russian production supported by increased exports. After increasing to a record 37.5 million tonnes in 2017, Turkish steel production fell significantly to 33.7 million tonnes in 2019 as the economy suffered from a domestic recession triggered by a lira crisis in late 2018 which led to a collapse in domestic demand, especially in the construction sector. In 2020, despite an initial decline earlier in the year, Turkey steel production recovered very strongly, as domestic demand was boosted by credit stimulated by government policy, with supporting an increase in steel production of approximately 2 million tonnes to 35.8 million tonnes in 2020.
Source: Steel production data are compiled using World Steel data for 61 countries for which monthly data is available (which together account for 97% of World production). Production data is available for all months of 2020.
Trade and import competition
Europe
There has been a trend of imports growing more strongly than domestic demand in Europe since 2012. Apparent steel consumption (“ASC”) increased approximately 14% between 2012 and 2019, while finished steel imports increased by approximately 80%, taking market share from domestic producers. Over this period, total finished imports have risen from just over 15 million tonnes in 2012 to around 27 million tonnes in 2019, causing import penetration to rise to 17% in 2019 from 11% in 2012.
In 2020, widespread lockdowns across Europe in March/April in order to curb the spread of COVID-19 infections led to an almost 25% year-on-year decline in steel demand during the second quarter of 2020, before recovering during the second half of the year. Overall steel demand in 2020 is estimated to have fallen by around 11% year-on-year, with imports falling similarly by 11%, to approximately 24 million tonnes in 2020, leading to a broadly stable import penetration. Flat imports decreased by approximately 12% year-on-year, in line with the decline in demand, with flat import share stable at 21%. Long product demand declined less at approximately 8% year-on-year, as lockdown impacted industrial sectors, particularly automotive sectors, more than construction. However, long product imports
fell a similar amount (-8% year-on-year) leaving import share for long products at 13%.
Traditionally, imports into Europe have come from Commonwealth of Independent States (“CIS”), China, Turkey and developed Asia, with these regions accounting for approximately 73% of imports over the past six years. In 2020, except for CIS, imports into EU28 from other major regions decreased year-on-year as a result of the contraction in demand from EU28. Following a sharp decline of 14% in 2019 due to weak domestic European steel prices, imports from CIS rose slightly in 2020 despite the fall in EU28 ASC, increasing the share of CIS imports to approximately 28% from 24% in 2019. Import share from developed Asia also rose to 17% in 2020 from 16% in 2019, despite a 4% year-on-year decline. Similarly, while Indian imports were down approximately 6% year-on-year in 2020, India’s market share in Europe increased slightly to 9% from 8% in 2019. On the other hand, the share of Chinese origin imports continued to decline from its peak of 28% in 2015 to only 6% in 2020, with Chinese imports having fallen by almost 40% year-on-year as the recovery in domestic China demand was much stronger than in Europe. Similarly, Turkey’s market share fell from 25% in 2019 to 21% in 2020 as imports declined more than 25% year-on-year, as Turkish domestic demand recovered from its domestic recession in 2018/19 and from the relative strength of Turkey’s demand recovery from the pandemic-induced lockdown in early 2020. See “Business overview—Government regulations—Foreign trade” and “Risk factors—Risks related to the global economy and the mining and steel industry—Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and ArcelorMittal’s results of operations in various markets.”
Source: Eurostat imports to November 2020, estimate for December 2020. ASC data from Eurofer to October 2020, internal company estimates for November and December 2020
United States
Finished steel imports peaked in 2014 at almost 30 million tonnes, declining to approximately 18 million tonnes in 2019 (or an import penetration of 19%). The decline in finished steel imports was mainly due to section 232 implemented in 2018 adding a 25% tariff on most imports outside NAFTA. In 2020, like Europe, widespread lockdowns were imposed across most U.S. states between late March until May, causing a sharp decline in economic activity, particularly on automotive production as auto plants were shut down. The weakness of the energy sector and an approximate 45% reduction in demand for pipes and tubes caused ASC to decline approximately 18% year-on-year in 2020. The decline in real steel demand helped push finished steels imports to fall by approximately 25% year-on-year to approximately 14 million tonnes (2019 imports 18 million tonnes), with import penetration declining to 17%,


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particularly in pipe and tube and flat products, while remaining broadly stable for long products.
Traditionally, the majority of U.S. finished steel imports come from NAFTA, accounting for approximately one-third of total imports. In 2020, while imports to the U.S. declined in almost all major markets, imports from NAFTA remained relatively stable at around 6 million tonnes – similar to 2019 levels. As the result, the share of U.S. finished steel imports coming from NAFTA increased further from 35% in 2019 to 45% in 2020, with a large increase in imports share from Canada to 33% (2019: 26%) and to a lesser extent, Mexico (12% from 9% in 2019). The increase in import penetration from NAFTA comes at the expense of imports from EU28, whose import share declined from 19% to 15%, as well as CIS (3% to 1%) and ASEAN (5% to 3%). Only Turkey saw a rising import share to 4% (from 1% in 2019), while import shares from other regions remained broadly stable, including developed Asia (approximately 20%), India (1%) and China (2%). See “Business overview—Government regulations—Foreign trade” and “Risk factors—Risks related to the global economy and the mining and steel industry—Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and ArcelorMittal’s results of operations in various markets.”
Sources: American Iron and Steel Association total/regional imports data and ASC data to November 2020, internal Company estimate for December 2020.
Steel prices
Flat products
In the first quarter of 2018, steel prices for flat products in Europe continued their steady upward trend which started in November 2017. HRC prices peaked towards the end of March at €574/t in Northern Europe. In Southern Europe, HRC prices increased from €519/t in January to €558/t at the beginning of March. In the second quarter of 2018, prices decreased sharply in USD terms following the international market trend. However, the depreciation of the euro against the USD helped sustain domestic HRC prices in euro terms, with a low of €561/t in Northern Europe at the beginning of June 2018, €13 below its peak in April 2018. In Southern Europe, HRC prices bottomed out at €514/t by mid-June 2018 from a peak of €544/t in April 2018. Average HRC prices were €564/t in Northern Europe and €538/t in Southern Europe for the first half of 2018, compared to €545/t in Northern Europe and €513/t in Southern Europe for the first half of 2017. The provisional safeguard measures and tariff rate quotas implemented in July 2018 did not create a tangible effect on market protection in Europe and there was very limited improvement in flat products prices during the third quarter of 2018. In Northern Europe HRC prices increased slightly in euro terms compared to the June level but only to reach a quarterly average of €566/t representing a €1/t decrease quarter-on-quarter, while in Southern Europe the price improvement
averaged at €537/t representing a €7/t increase over the second quarter level. In USD terms, however, prices declined across the regions due to further euro depreciation against USD. Market seasonality, high inventory levels and imports pressured prices during the fourth quarter of 2018 and HRC prices declined in euro and USD terms both in Northern Europe by €18/t to €548/t and in Southern Europe by €38/t to €499/t compared to the third quarter of 2018 average levels. Overall, the second half 2018 HRC prices averaged at €557/t in Northern Europe and at €518/t in Southern Europe, corresponding to a €30/t and €13/t year-on-year increase, respectively.
In the first quarter of 2019, steel prices for flat products in Europe continued their steady downward trend which started in September 2018. The prices of HRC in Northern Europe reached €517/t in January 2019, finishing the quarter €8/t lower, at €509/t. The decrease was attributable to weak domestic demand in the beginning of the year, high levels of inventories and the influence of declining international steel prices. In Southern Europe, HRC prices followed an inverse trend starting at €470/t in January and closing the quarter at €486/t, €16/t higher. This inverse trend was partially driven by a stronger demand in Southern Europe and partially by the Turkish imports that were entering the Italian market with higher price ranges between €495/t - €500/t Cost, Insurance and Freight Free Out (“CIFFO”) effective. Domestic mills followed the Turkish import prices.
In the second quarter of 2019, prices in Northern Europe continued to decrease and ended the quarter at €487/t, which was €11/t lower compared to April 2019. HRC prices in the Southern regions followed the same trend from the previous quarter peaking in June at €472/t, from €469/t in April. Turkish suppliers continued with their export offers of €470/t - €480/t CIFFO effective into Italy and Iberia, providing room for further increases in Southern European domestic prices, given there was no import price pressure. The average HRC prices for the first half of 2019 were €499/t in Northern Europe and €472/t in Southern Europe, which were accordingly €65/t and €66/t lower than in the first half of 2018.
Flat products prices continued to slide down in the third quarter of 2019, impacted by soft demand and weakening international raw material prices. HRC in Northern Europe had several trenches of price drops, ending the quarter at €469/t, which was €18/t lower versus the previous quarter. In Southern Europe the price of HRC averaged €453/t, which was €19/t lower compared to the second quarter of 2019. Market seasonality, high inventory levels and import pressure during the fourth quarter of 2019 pushed the HRC prices on a downward spiral. Several attempts of price increases were rejected by the market, as real demand in Europe was weak. In Northern Europe, HRC prices ended the fourth quarter at €431/t, which was €38/t lower quarter-on-quarter and in Southern Europe, HRC averaged


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€413/t in the fourth quarter of 2019, €40/t lower than the previous quarter. In the second half of 2019, HRC prices averaged €450/t in Northern Europe and €433/t in Southern Europe respectively €107/t and €85/t lower than the second half of 2018.
Steel prices for flat products in Europe gradually deteriorated during 2019, bottoming toward the end of the year. Prices began recovering late in November 2019. Fueled by a positive market outlook and absence of attractive imports, especially in Northern Europe, HRC spot prices improved until the end of February 2020, reaching €485/t in Northern Europe and €456/t in Southern Europe (+€47/t and +€23/t vs. beginning of January, respectively). However, with the COVID-19 outbreak becoming a pandemic and industries starting their preparation for shutdown, prices began softening, decreasing to €473/t in Northern Europe and €443/t in Southern Europe by the end of March 2020.
During the second quarter of 2020, steel prices in Europe significantly declined due to uncertainties around the pandemic crisis, decreased demand, a focus on inventory depletion and high premium over imports. HRC prices dropped at the beginning of June to €396/t in Northern Europe (-€89/t vs. Feb 2020) and €390/t in Southern Europe (-€66/t vs. Feb 2020). As lockdown measures eased, steel prices partially rebounded across all European markets toward the end of June 2020.
In the first half of 2020, HRC prices averaged €449/t in Northern Europe and €431/t in Southern Europe, in line with the second half of 2019, but remained below the first half of 2019, down by €50/t in Northern Europe and €41/t in Southern Europe.
During the third quarter of 2020, steel activity, especially in Northern Europe, gradually picked up, demand from all sectors strengthened, inventories quickly declined, while imports in South Europe remained limited and not competitive. In addition, customers anticipated a supply deficit for the first quarter of 2021. This, coupled with the strong increase in raw material cost, supported a rebound in flat steel product prices in Europe by the end of 2020, to a 12-year high.
The HRC spot price increased by €100/t during the third quarter of 2020 in Northern Europe, and a further €166/t during the fourth quarter of 2020 (from €399/t on July 1, 2020 to €499/t on October 1, 2020 and then to €665/t on December 31, 2020). Similar increases in Southern Europe of €106/t and €170/t, in the third and fourth quarter, respectively (from €381/t on July 1, 2020 to €487/t on October 1, 2020 and then to €657/t on December 31, 2020), with the strongest day-on-day increases seen during August and December.
In the second half of 2020, HRC prices averaged €494/t in Northern Europe and €482/t in Southern Europe, an increase of
€45/t and €51/t above the level in the first half of 2020, and €44/t and €49/t above the levels in the third and fourth quarter of 2019, respectively.
In the United States, as a consequence of the then-ongoing Section 232 national security investigation which started in April 2017 and the expectation of the imminent implementation of import tariffs on steel, spot HRC prices increased sharply during the first quarter of 2018. Before the release of the investigation report by the Department of Commerce on February 16, 2018, HRC prices reached $830/t from $723/t at the beginning of January 2018. After the release of the report that recommended tariffs in the range of 24 to 53%, prices spiked further to $936/t at the beginning of March 2018. The increase slowed down as 25% tariffs and exceptions went into effect during March 2018, closing the month at a high of $960/t. In the second quarter of 2018, HRC prices surpassed the $1,000/t level in the United States, peaking at $1,012/t by the end of June. The average HRC prices were $907/t for the first half of 2018 in the United States, as compared to $688/t for the first half of 2017, corresponding to a $219/t increase year-on-year. HRC prices hit a 10 year high of $1,014/t at the beginning of July 2018 in the United States. However, market seasonality and weakening of international prices in the second part of the year coupled with an increase in the domestic capacity utilization rate (thus an increase in domestic supply), resulted in consistent price deterioration, with HRC prices falling to $799/t by the end of the year. Third quarter HRC prices averaged $982/t, still $2/t above the second quarter level, while average prices declined in the fourth quarter by $99/t quarter-on-quarter to $883/t. Overall, average HRC prices for the second half of 2018 were $932/t as compared to $686/t for the second half of 2017 corresponding to a $246/t increase year-on-year.
In the United States, domestic HRC prices in the first half of 2019 continued the downward trend that began in July 2018. The first quarter of 2019 started with prices at $776/t in January and in March reached $767/t ($9/t lower). Prices in the second quarter of 2019 plunged even deeper - from $749/t in April to $598/t in June (a drop of $151/t), well below import parity levels. This descent represents the market’s search for an equilibrium point after additional local capacity came on-stream in the second half of 2018. This additional supply availability added pressure on domestic prices at the same time as domestic mills were fighting imports. U.S. suppliers' short lead time combined with comfortable inventory levels at customers contributed to the downward trend in domestic prices.
The average HRC price for the first half of 2019 in the United States was $723/t, as compared to $907/t for the first half of 2018 (a drop of $184/t). The anticipated decline in imports, as an outcome of the implementation of the Section 232 import tariffs was not as strong as expected. Therefore, import prices continued to add pressure on the domestic pricing. The HRC


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import Houston DDP index continued to decline over the first half of 2019, from $746/t in the first quarter to $685/t in the second quarter.
In the second half of 2019, the average HRC price in the United States was $603/t, $330/t below the second half of 2018. The dramatic decrease is due to 2018 having been a record year in which prices were inflated by Section 232 import tariffs on steel. In 2019, prices fell due to weak real demand and decreasing scrap prices. The average HRC price for the third quarter was $627/t, a drop of $52/t versus the previous quarter which was mainly due to the scrap USA #1 Busheling price dropping by $33/t, to $290/t and pressure from destocking at both Steel Service Centers (“SSCs”) and Original Equipment Manufacturers (“OEMs”).
Prices in the fourth quarter of 2019 averaged at $579/t, which is $48/t lower versus the third quarter. The situation further deteriorated in October due to the strike at General Motors that added to the market's negative sentiment. From November onwards, some relief came as scrap started an upward trend and international prices began to show signs of recovery. As a result, the fourth quarter ended in December at $623/t from the yearly low of $545/t, recorded in October.
In the United States, domestic HRC prices continued their upward trend which started in November 2019 through January 2020. However, prices fluctuated downwards in February and March 2020, first due to weak scrap exports and the Scrap USA #1 Busheling index price decline and, towards the end of the second quarter of 2020, due to the COVID-19 pandemic related market restrictions. HRC prices then lost $79/t between the beginning of January ($661/t) and the end of March 2020 ($582/t).
During the second quarter of 2020, prices fluctuated, seeing a low level at the end of April 2020 at $507/t, followed by an uptick during May to $559/t, supported by improvement in the scrap price then in supply scarcity, as well as good activity in non-auto segments. HRC prices deteriorated again toward the end of June to $524/t, as mini-mills were seeking volumes to fill available capacities.
Domestic HRC prices in the United States averaged $593/t during the first half of 2020, a $130/t drop compared to the first half of 2019, but just a $10/t decline compared to the second half of 2019.
Flat steel prices continued to decline in the United States at the beginning of the third quarter of 2020, as the COVID-19 pandemic and presidential election related uncertainties weighed on the market. High scrap supply and weak steel demand pressured prices and HRC reached at a 4-year low of
$485/t by end of July, however, only to increase afterwards in a trend that continued until the end of 2020.
Improved buying activity during the fourth quarter of 2020, tight supply and production outage concerns pushed prices higher, while an expansion of the overall economy toward the year end, with good expectations for the first half of 2021, provided continuous support for domestic HRC to reach $1,113/t by end of December 2020 (+130% price increase). This is a historical high, only inferior to the pre-2008 economic crisis level of $1,185/t in July 2008.
Domestic HRC prices in the United States averaged $681/t during the second half of 2020, representing an $88/t improvement compared to the first half of 2020 and a $78/t increase compared to the second half of 2019.
In China, spot HRC prices fluctuated during the first quarter of 2018, peaking at $562/t VAT excluded at the end of February, followed by a sharp decline due to weak demand and high inventories. HRC prices bottomed out at the end of March at $507/t VAT excluded. Production cuts in several regions and mill inspections to ensure compliance with pollution emission standards impacted supply during the second quarter of 2018. These measures supported HRC prices in China, which increased from $524/t VAT excluded at the beginning of April to a high of $581/t VAT excluded by mid-June. However, due to improvements in production levels and seasonal weak demand, HRC prices declined at the end of the month. In China, HRC domestic prices averaged $555/t VAT excluded for the first half of 2018, as compared to $427/t VAT excluded for the first half of 2017.
Despite the implementation of tough environmental controls and positive fiscal policies to expand domestic demand, production continued to increase, sustained by attractive margins, while consumption remained flat during the second half of 2018. This resulted in further pressure on HRC prices in China, which declined by $15/t (during the third quarter of 2018) as compared to the second quarter average level to $546/t VAT excluded and by an additional $58/t to $488/t VAT excluded during the fourth quarter of 2018. HRC domestic prices averaged $517/t VAT excluded for the second half of 2018, representing a $7/t decline as compared to $524/t VAT excluded for the second half of 2017.
In China, spot HRC prices averaged at $482/t VAT excluded in the first quarter of 2019. The year started in January with prices at $467/t, strengthening to $494/t by March, as a result of the market’s resumed activity following the Chinese New Year. In the second quarter of 2019, due to Brazil's major accident at one of its largest iron ore mining facilities, as well as due to the market seasonality, the peak prices were reached in April at $523/t VAT excluded. The second quarter of 2019 closed in at


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an average of $512/t VAT excluded. Despite the governmental measures targeting production cuts due to overcapacity and environmental issues, domestic mills have reacted slowly to the indications, driving the domestic price by end of June 2019 to $493/t VAT excluded, i.e. on a downward trajectory. The HRC domestic price in China averaged $497/t VAT excluded for the first half of 2019, compared to $557/t VAT excluded for the first half of 2018.
The downward spiral of the Chinese HRC price continued in the third quarter of 2019 reaching $474/t, which was $38/t lower versus the previous quarter, with increased inventory levels of both raw materials and finished products. Domestic demand was impacted by seasonality. The fourth quarter of 2019 began with further weakening of Chinese HRC prices, with October being the weakest month at an average of $441/t. The Purchasing Managers’ Index (“PMI”) dropped to its lowest point in four years, with the rate of new order intake dropping by over 5% for both domestic and exports. However, the market started to improve from November onwards when the 7-month downward spiral reversed. Better domestic demand and a decrease in finished product inventory (-10% month-on-month) helped improve the prices in November. In December, international steel prices started to improve, which also supported a positive price environment in China. The fourth quarter of 2019 ended at $462/t, $12/t lower than in the third quarter. HRC spot prices in China averaged $468/t, VAT excluded in the second half of 2019, a decrease of $50/t, VAT excluded from the second half of 2018.
At the beginning of 2020, steel prices in China continued their upward trend which started in December 2019, although peaking mid-January at $496/t VAT excluded. With HRC inventory on the rise, ahead of the Lunar New Year holidays (January 24-30), prices declined and continued the trend throughout the first quarter 2020. After the Lunar New Year holidays, due to the COVID-19 outbreak, the Chinese market opened to a reality of movement restrictions and delayed enterprise activity. By the end of March 2020, HRC prices decreased $97/t VAT excluded compared to the January peak, at $399/t VAT excluded.
At the beginning of the second quarter of 2020, HRC prices in China began to improve following the ease in restrictions and gradual release in activities and local demand. HRC prices gained $58/t from $408/t VAT excluded at the beginning of April to $466/t VAT excluded by mid-June.
HRC prices in China averaged at $445/t VAT excluded, for the first half of 2020, remaining $52/t below the average of the first half of 2019 and $23/t below the second half of 2019.
In the beginning of the third quarter of 2020, prices continued to improve with domestic HRC reaching $520/t, VAT excluded, by
August 31, 2020. However, September was marked by a price decline, with HRC losing $23/t decreasing to $497/t, VAT excluded by the end of September, as production continued at high level, exports stayed low and imports increased.
Steel prices spiked in China during the fourth quarter of 2020, as domestic demand continued strongly, while air pollution measures and production limitations in some regions fueled supply concerns. This, coupled with increases in raw material costs, pushed domestic HRC prices to $652/t VAT excluded (+$155/t compared to the end of September), the highest level since September 2011.
For the second half of 2020, HRC prices in China averaged at $534/t VAT excluded, representing an $89/t increase compared to the average of the first half of 2020 and a $66/t increase compared to the second half of 2019.
Flat products
Source: Steel Business Briefing (SBB)Northern EuropeSouthern EuropeUnited StatesChina
Spot HRC average price per tonneSpot HRC average price per tonneSpot HRC average price per tonneSpot HRC average price per tonne, VAT excluded
Q1 2018€561€545$834$549
Q2 2018€567€530$980$565
Q3 2018€566€537$982$546
Q4 2018€548€499$883$489
Q1 2019€510€477$766$482
Q2 2019€487€467$679$512
Q3 2019€469€453$627$474
Q4 2019€431€413$579$462
Q1 2020€469€450$643$456
Q2 2020€428€412$543$435
Q3 2020€436€427$548$504
Q4 2020€551€537$853$563

Long products
Long steel product prices remained relatively stable in Europe in euro terms at the beginning of 2018 compared to the peak level in December 2017, but continued their upward trend in USD terms as the euro strengthened. Prices weakened from mid-February and towards the end of the first quarter of 2018 with inventories reaching comfortable levels and a cautious market following the volatility in raw material costs. Medium sections prices declined from €625/t in January to €600/t by the end of March. Similarly, rebar prices declined from €568/t in January to


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€553/t in March. Prices remained stable again during April 2018 but followed a downward trend until mid-June when medium sections bottomed out at €585/t and rebar at €528/t. Average medium sections prices were €603/t in Europe for the first half of 2018. Average rebar prices were €552/t in Europe for the first half of 2018. Good market sentiment and strong demand supported an improvement of long product prices during the third quarter of 2018, with medium sections reaching €620/t and rebars €560/t by September corresponding to a €35/t and €32/t increase, respectively, as compared to the bottom level in June, and representing a quarter-on-quarter average improvement of €20/t for medium sections and €6 for rebars. Prices remained relatively stable during the fourth quarter of 2018 as compared to the levels at the end of September despite some weakening in rebars with a quarterly average of €538/t representing a €13/t decrease quarter-on-quarter. The average medium sections prices were €618/t in Europe for the second half of 2018. The average rebar prices were €545/t in Europe for the second half of 2018.
Prices of long steel products in Europe continued their steady downward trend in 2019. In January 2019, rebar price and medium sections price reached €528/t and €624/t, respectively. The rebar price decline started in August 2018, while the medium sections price decline started in January 2019. By the end of March 2019, the rebar price and the medium section price dropped to €526/t and €588/t, respectively, reaching a quarterly average of €526/t and €605/t, respectively. In June 2019, prices bottomed further to €501/t for rebar and €579/t for medium sections. The falling domestic pricing environment followed the trend of weakening world scrap prices on international markets.
In Europe, the average medium sections price for the first half of 2019 was €595/t as compared to an average of €603/t for the first half of 2018. The average rebar price for the first half of 2019 was €521/t as compared to €552/t for the first half of 2018.
Prices for long steel products in Europe continued their steady downward trend in the second half of 2019. The prices reached a floor in November 2019 at €452/t for rebar and €521/t for medium sections, the lowest over the last two years. The average medium sections price in Europe for the second half of 2019 was €548/t as compared to €619/t for the second half of 2018, representing a drop of €71/t year-on-year. The average rebar price in Europe for the second half of 2019 was €476/t as compared to €545/t for the second half of 2018, a decrease of €69/t year-on-year.
Steel prices for long products in Europe rebounded in November 2019 and peaked by mid-January 2020 at €540/t for medium sections and €480/t for rebars. Finished steel products prices declined throughout February, alongside scrap Turkey HMS 1&2 index correction, with medium sections reaching €525/t and
rebars at €453/t, although the first quarter of 2020 ended with similar price levels as the beginning of the year.
During the second quarter of 2020, despite a stable scrap price, long steel product prices in Europe continued declining, due to the impact of the pandemic on the market and weak downstream demand. By mid-June, medium sections reached €500/t and rebars €430/t, stabilizing at this level toward the end of the quarter. The average medium sections price for the first half of 2020 was €527/t, representing a decrease of €67/t compared to the first half of 2019 and a decrease of €21/t compared to the second half of 2019.
The average rebars price for the first half of 2020 was €461/t, a drop of €60/t compared to the first half of 2019 and a drop of €15/t compared to the second half of 2019.
During the third quarter of 2020, as market sentiment and demand improved in July, steel prices for Long products in Europe started recovering, however rather slowly, fluctuating on an upward trend alongside scrap HMS 1&2 Turkey CFR index. From the June level, at a 3-year low, the medium sections and rebar price gained €20/t and €28/t by the end of September, reaching €522/t and €458/t, respectively.
Prices plateaued at this level during October, but spiked in November and December, pushed by an increase in the scrap index to a 9-year high. Long finished product spreads compared to the raw material basket squeezed towards the end of 2020, despite medium sections and rebars prices reaching highs of €640/t and €545/t, respectively.
The average medium sections price for the second half of 2020 was €532/t, representing a mere €5/t improvement compared to the first half of 2020, while prices declined €15/t compared to the second half of 2019.
The average rebars price for the second half of 2020 was €465/t, a mere €4/t increase compared to the first half of 2020 and decrease of €10/t compared to the second half of 2019.
In the first quarter of 2018, the price of imported scrap HMS 1&2 in Turkey improved by $40/t to an average level of $363/t CFR as compared to the fourth quarter of 2017. Rebar export prices closely followed the evolution of Turkey imported scrap HMS 1&2, declining from $573/t FOB at the beginning of January to $555/t FOB by the end of the month. Rebar export prices then increased to a peak of $590/t FOB by the end of February followed by a downward trend reaching $568/t FOB at the end of March. During the second quarter of 2018, the Turkish export rebar price continued to follow a downward trend alongside the scrap HMS 1&2 index, ranging between $565/t FOB at the beginning of April to $540/t FOB at the end of May. The average Turkish export rebar price for the first half of 2018 was $562/t FOB. With US and European markets blocked for Turkish


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exporters due to EU safeguard measures and doubling of the Section 232 import tariffs into the U.S., Turkish producers faced increased competition on alternative markets resulting in further pressure on export rebar prices during the first part of the third quarter. Prices seemed to bottom out mid-August at $523/t; however they continued to deteriorate during October to a $500/t level. After a small uptick in November supported by an improvement in scrap prices as well as a strengthening of the Turkish Lira, Turkish export rebar prices dropped by the end of the fourth quarter of 2018 to $455/t, the lowest level since July 2017. The average Turkish export rebar price for the second half of 2018 was $507/t FOB.
In Turkey, rebar export prices continue to align closely with the evolution of world scrap prices. The first quarter of 2019 started for Turkish rebar at one of the lowest points compared to the previous six quarters, being at $466/t FOB, which is in line with the bottomed HMS 1&2 index at $310/t CFR. However, the March 2019 rebar export price was $482/t FOB, higher by $36/t compared to January at $446/t. During the second quarter of 2019, the Turkish export rebar price followed a month over month downward trend alongside scrap HMS 1&2 index, from a high of $480/t FOB at beginning of April down to $468/t FOB at the end of June. Nevertheless, the average for the second quarter, at $473/t, was higher than the average for the previous quarter at $466/t. In the first half of 2019, the Turkish export rebar price averaged $470/t FOB compared to $562/t FOB average during the first half of 2018.
In the third quarter of 2019, the price of Turkish rebar continued the downward trend from the previous quarter, reaching $441/t FOB, which is a $32/t decrease quarter-on-quarter. July opened the quarter at $461/t, while September closed at $413/t, representing a drop of $48/t driven by the seasonally limited demand. In October, prices reached a floor for the year at $405/t, which was also the lowest point over the last three years. The prices subsequently increased with the overall fourth quarter of 2019 averaging at $421/t. The year closed in December with a price of $442/t, $37/t higher versus the low reached in October. The increase in prices was driven by the U.S. scrap price improvement from early November, which recovered the $40/t lost in September/October and ended the year in December at $290/t, although not enough to surpass the level from the first half of the year at $348/t. The average Turkish rebar export price for the second half of 2019 was $431/t FOB as compared to $508/t FOB for the second half of 2018.
In Turkey, rebar export prices continued to evolve alongside scrap HMS 1&2 index trend. After recovering since September 2019, the first quarter of 2020 started with the rebar Turkey export price at a peak level of $445/t Free on Board (“FOB”). It soon began fluctuating on a downward trend, hitting a four year low at the end of March at $380/t.
At the beginning of the second quarter of 2020, as signs of scrap shortages encouraged U.S. traders to increase scrap offers into Turkey, the rebar Turkey export price fluctuated upward, reaching its highest level mid-June at €419/t.
In the first half of 2020, the Turkish export rebar price averaged $416/t FOB compared to an average of $470/t FOB for the first half of 2019 and $431/t FOB for the second half of 2019.
During the third quarter of 2020, scrap costs increased and Billet Turkey CFR price saw an uptick due to tight supply ex CIS and improved demand in Asia. This provided support for Turkey rebar export price references, which continued to improve, reaching another peak at $460/t FOB by mid-September (+$41/t compared to the June level). Slight price declines were noted during October, but the price increase was evident during November and December 2020, in line with a strong increase in scrap costs, as well as improved export and domestic demand, while material was in shortage. Rebar Turkey export price gained another $180/t by the end of the fourth quarter of 2020, to $640/t level.
In the second half of 2020, the Turkish export rebar price averaged $473/t FOB, representing a $57/t increase compared to the first half of 2020 and s $42/t increase compared to the second half of 2019.
Long products
Source: Steel Business Briefing (SBB)Europe medium sectionsEurope rebarTurkish rebar
Spot average price per tonneSpot average price per tonneSpot FOB average price per tonne
Q1 2018€614€558$572
Q2 2018€592€545$552
Q3 2018€611€551$525
Q4 2018€626€538$490
Q1 2019€605€526$466
Q2 2019€583€515$473
Q3 2019€567€490$441
Q4 2019€529€461$421
Q1 2020€533€468$426
Q2 2020€520€453$406
Q3 2020€513€442$438
Q4 2020€554€488$507

Raw materials
The primary raw material inputs for a steelmaker are iron ore, coking coal, solid fuels, metallics (e.g., scrap), alloys, electricity, natural gas and base metals. ArcelorMittal is exposed to price volatility in each of these raw materials with respect to its


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purchases in the spot market and under its long-term supply contracts. In the longer term, demand for raw materials is expected to continue to correlate closely with the steel market, with prices fluctuating according to supply and demand dynamics. Since most of the minerals used in the steel-making process are finite resources, their prices may also rise in response to any perceived scarcity of remaining accessible supplies, combined with the evolution of the pipeline of new exploration projects to replace depleted resources. In the first quarter of 2018, iron ore market reference prices increased following a decrease in the fourth quarter of 2017, averaging $74.39/t, up 13.6% compared to the fourth quarter of 2017 (Metal Bulletin 2018 vs. 2017), supported by robust crude steel production in China. For the full year 2018, the strong steel production in China amid its fight against air pollution and overcapacity kept iron ore and coking coal prices at elevated levels and boosted prices for high-grade qualities as steel mills chased productivity. Though prices for the most common qualities of iron ore decreased 2.2% year-on-year in 2018, the high-grade qualities of iron ore posted a price increase on an annual basis. Coking coal prices increased 10.3% compared to 2017 (Metal Bulletin 2018 vs. 2017).
In 2019, iron ore market reference prices increased following a supply disruption caused by the collapse of the Brumadinho dam owned by Vale in Brazil on January 25, 2019 and the cyclone in Australia mining region (end of March 2019), averaging $93.63/t, up 34% compared to 2018 (Metal Bulletin 2019 vs. 2018).
In 2020, China’s demand has proven a strong price driver with crude steel production set to exceed the record 1 billion ton per year in 2020. Manufacturing activity in China continued to expand in 2020 compared to 2019 and its economy showed an enduring V-shape recovery after Covid-19. Iron ore market reference prices increased to an average of $109.03, up by 16.5% compared to an average of $93.63 in 2019.
Coking coal prices in 2018 averaged $206.58/t (compared to $187.31/t in 2017) and were supported by robust crude steel production in China as well as bullish market sentiment from risk of lower Australian supply due to the announcement of changes in the maintenance schedule by the main local rail network operator. Coking coal prices in 2019 averaged $177.36/t (compared to $206.58/t in 2018) and were initially supported by incidents in Australia (heavy rains, accident at Anglo’s Moranbah mine) and the local Australian rail network operator trade union’s industrial action and maintenance works, however, in the second half of 2019, the prices decreased, driven by coking coal import restrictions at key Chinese ports and a weak demand from India amid domestic slowdown.
Coking coal prices in 2020 averaged $123.46/t (compared to $177.36/t in 2019 ) and were initially supported in the first
quarter of 2020 by the reduction of coal production in China related to the COVID-19 pandemic and to Mongolia’s decision to close its border with China which boosted China’s import of seaborne traded coking coal. Coking coal prices then deteriorated from the second quarter of 2020 onwards after the global steel production collapsed ex-China due to the COVID-19 pandemic and has maintained low price levels due to the Chinese restrictions on imports of Australian coal that started in October 2020.
As for pricing mechanisms, since 2012, quarterly and monthly pricing systems have been the main type of contract pricing mechanisms, but spot purchases also appear to have gained a greater share as steelmakers have developed strategies to benefit from increasing spot market liquidity and volatility. In 2018, 2019 and 2020, the trend for using shorter-term pricing cycles continued. Pricing is generally linked to market price indexes and uses a variety of mechanisms, including current spot prices and average prices over specified periods. Therefore, there may not be a direct correlation between market reference prices and actual selling prices in various regions at a given time.
Iron ore
In the first quarter of 2018 iron ore prices recovered at $74.39/t, up 13.6% compared to the fourth quarter of 2017. However, great price disparities were observed. Seaborne iron ore demand was hit by a persistent weakness in downstream steel demand, the trade war developing between China and the U.S. and the extension of winter restrictions in China beyond March 15, 2018 all of which had a significant impact. In March, prices plummeted from the highest quarter price of $79.39/t in the beginning of the month to $64.99/t at the end of the month (Metal Bulletin 2017 & 2018). In the second quarter of 2018, prices decreased and remained stable at an average $65.30/t despite strong steel demand over the period. China iron ore port stocks remained high and concentrate production sharply decreased year-over-year as a result of mine inspections. However, steel PMI remained in expansion at 51.6 points in June. In the third quarter of 2018, prices were fairly stable, averaging $66.8/t. Low prices on the seaborne market found support in the fear of an intensification of the trade war between China and the U.S., depreciation of the Chinese currency, low future prices and environmental restriction in China. The last quarter of 2018 saw the iron ore price jumping and averaging $71.6/t. It reached $76.75/t on November 12, 2018 amid strong steel margins depleting stocks at Chinese ports and restocking demand in China before the start of the winter period. Also, the derailment of a BHP train carrying iron ore in Australia in the beginning of November 2018 provided some short-term support to the iron ore price that boosted the November average. However, prices dropped at the end of November, and in the beginning of December 2018, mills corrected for weak off-


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season demand and reduced steel margins due to less stringent winter restrictions, which led to prices at the end of 2018 at $72.70/t.
In the first quarter of 2019, following the Vale owned Brumadinho dam disaster in Brazil, the seaborne iron ore market surged to $82.41/t on average, up 15% compared to the last quarter of 2018. The supply shock was aggravated by the cyclone season in Australia with some Australian iron ore producers lowering their output guidance for the year, which contributed to reaching $100.92/t on average in the second quarter of 2019 with a peak of $125.77/t observed on July 2 (Metal Bulletin) also supported by lower inventories at Chinese ports. Prices remained elevated in July at $119.93/t in average and sharply decreased in August to $90.69/t following expectations of weaker demand as well as the impact of currency risks which were exacerbated by the decision of China’s central bank to depreciate the yuan in response to decision of the U.S. government to extend punitive tariffs, both of which cast uncertainty on the iron ore future market, along with supply recovery. In September 2019, iron ore prices rose again on the back of a supportive paper market and expectations of increased end-user restocking activity. The average price for the third quarter of 2019 was $102.03/t. October 2019 was bearish with continued lack of end-user demand for iron ore fines ahead of announcements for winter production cuts. However, prices recovered sharply in November amid higher end-user demand for high-grade materials and supportive futures market for steel. The fourth quarter of 2019 average price was $88.97/t and the average price for 2019 was $93.63/t (Metal Bulletin).
In the first quarter of 2020, despite the COVID-19 pandemic's impact on demand, iron ore prices were supported by increased supply issues such as a partial halt of Vale’s Brucutu mine, linked to safety issues at their waste management dams, heavy rainfalls in Brazil affecting the shipments of Vale’s Northern System (Carajas) and two tropical cyclones near iron ore ports in Australia. In the second quarter of 2020, supply from both Brazil and Australia improved but it was offset by a very strong recovery of crude steel production in China in May. Iron ore reference prices increased in the second quarter of 2020 supported by supply risk due to the severe outbreak of COVID-19 in Brazil and low iron ore inventories at Chinese ports and steel mills.
In the third quarter of 2020, V-shaped recovery continued in China with increasing crude steel production in the month of July and August. The strong demand in China together with partial recovery ex-China and restocking ahead of the week-long National Day holidays in China supported Iron Ore prices that reached a multi-year high of $130.17/t in September 2020, ending the quarter with an average of $118.06/t (Metal Bulletin).
There was a gradual recovery in ex-China demand in the fourth quarter of 2020: major steelmakers such as Germany and India grew their output year-on-year in October 2020 for the first time since the COVID-19 pandemic began. At the same time, there was a disappointing supply from major iron ore suppliers in the fourth quarter: weaker shipments from Australian companies on deferred maintenance, some operational issues and tropical storms in December in Australia and lower production from Brazilian companies on delays in restarting stalled capacity and weather impacts with heavier than normal rainfalls in December. As a result, prices in the fourth quarter of 2020 increased to $133.35/t
Coking coal
Coking coal prices entered 2018 as a bullish market with record high vessel queues at a key port in Queensland, Australia and Chinese restocking demand high ahead of the Chinese New Year holiday. The spot prices (Metal Bulletin Premium HCC FOB Australia index) averaged $228.48/t in the first quarter of 2018 increasing 36.8% year-on-year and 12.2% as compared to the fourth quarter of 2017. The elevated prices were then corrected in the second quarter and reached $188.89/t (quarterly average) due to the extension of Chinese winter restrictions until April and delayed increase of steel demand in China. However, the downward movement was limited by a continued threat of supply disruptions due to Aurizon’s announced change in the maintenance plan at its rail system in Australia, and safety check at Chinese mines. The price also found support from Chinese coke prices as domestic coke producers faced environmental crackdowns. In the third quarter, coking coal prices averaged $184/t and $183/t in July and August respectively with no major supply disruption and less demand during Indian monsoon season. The prices rose again in September to $198/t with demand from strong steel production in China amid healthy margins and tight supply of low-Sulphur coking coal in the Chinese domestic market. Prices kept on increasing in the last quarter on the back of strong steel production and threat of supply issues from scheduled maintenance at key Australian ports which increased port queues again to the record levels seen at the end of 2017. The bullish sentiment found support from the breakout of a fire at one Australian mine, rendering it idle for at least six months. The coking coal spot prices increased to a quarterly average of $220.79/t in the fourth quarter of 2018.
In the first quarter of 2019, coking coal prices were volatile ranging from $190/t to $217/t. The volatility was supported by incidents in Australia, including heavy rains, an accident at Anglo’s Moranbah mine and a trade union's industrial action at a local rail network operator. The average spot price in the first quarter of 2019 was $206.33/t (Metal Bulletin Premium HCC FOB Australia index). In the second quarter of 2019, prices first increased to the quarter’s high of $213.16/t on May 13, 2019


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fueled by the increased sentiment of potential less availability of metallurgical coal railroad capacity in Australia due to maintenance at a local rail network operator in April. Prices then decreased to $191.61/t on June 28, 2019 due to reduced steel margins putting pressure on coke prices. The average spot price in the second quarter of 2019 was $202.85/t. In the third quarter of 2019, tightening of coking coal import restrictions at key Chinese ports and weak demand from India during the monsoon season led to a decrease in prices with the average spot price at $161.03/t (Metal Bulletin Premium HCC FOB Australia index). In the fourth quarter of 2019, the bearish trend in the coking coal market continued driven by a slowdown in Chinese imports including a ban on imports at China’s largest coking coal handling port in Jingtang effective from October 1, 2019. Weak demand from India post the monsoon season amid domestic slowdown contributed to this bearish trend. The average coking coal spot price decreased to $139.27/t in the fourth quarter of 2019.
In the first quarter of 2020, coking coal prices ranged from $150/t to $158/t (Metal Bulletin Premium HCC FOB Australia index). Coking coal prices gradually increased in the first quarter to an average of $154.80/t with a reset of Chinese import quotas at the start of the year amid price arbitrage between domestic and imported coal and the cyclone season in Australia. However, the first quarter price rally reversed in the second quarter as ex-China market demand was severely hit by the COVID-19 outbreak with a sharp drop in crude steel production in the main coking coal import regions. Consequently, the coking coal reference price dropped in the second quarter of 2020 to an average of $117.08/t. In the third quarter of 2020, limited demand from India due to the monsoon season led to a further decrease and the average coking coal spot price fell to $112.32/t. The bearish trend in the coking coal market continued in the fourth quarter of 2020. This was influenced by the Chinese ban on import of Australian coals since October, which resulted in oversupplied high-quality Australian Hard Coking Coal in the seaborne market. The average coking coal spot price decreased to $109.88/t in the fourth quarter of 2020.
ArcelorMittal has continued to leverage its iron ore and coking coal supply chain and diversified supply portfolio as well as the flexibility provided by contractual terms to mitigate regional supply disruptions and also mitigate part of the market price volatility.
Iron oreCoking coal
Source: Metal Bulletinaverage price per tonne (Delivered to China, Metal Bulletin index, 62% Fe)average price per tonne (Premium Hard Coking Coal FOB Australia index)
Q1 201874.39228.48
Q2 201865.97188.89
Q3 201866.86188.17
Q4 201871.56220.79
Q1 201982.41206.33
Q2 2019100.92202.85
Q3 2019102.03161.03
Q4 201988.97139.27
Q1 202089.94154.80
Q2 202093.52117.08
Q3 2020118.06112.32
Q4 2020133.35109.88

Scrap
The Company considers the German suppliers’ index (“BDSV”) Delivered at Place (“DAP”) as market reference.
During 2020, the “BDSV” for reference grade E3 started in January at €258/t. From February to June, it was between €229/t and €241/t reaching the lowest for the year in July at €219/t. Beginning with August, prices increased month by month reaching €246/t in November with a maximum for 2020 at €278/t at the end of December.
The average index price for 2020 was €239/t as compared to €252/t in 2019, a decrease of €13 or 5% less as compared to 2019. The average index price for 2018 was €285/t.
Turkey’s scrap imports increased by 12% in the first ten months of 2020 compared to the same period of 2019, and it remains by far the main scrap buying country in the international market. Turkish EAF steel production share dropped from 68% in 2019 to 67% in the first 10 months of 2020 while total crude steel production was up by 4.6% in the same period.
Scrap Index HMS 1&2 CFR Turkey, North Europe origin, started January 2020 at $284/t then steadily declined until reaching the 2020 low of $238/t in April. From May onwards there was a steady increase until reaching $295/t in September. In October, it went down to $281/t and towards year end increased until reaching the 2020 high in December at $413/t. This was due to lockdown measures announced in Europe in December which negatively affected the scrap generation/ availability.
The average yearly prices were $281/t in 2020, $281/t in 2019 and $334/t in 2018.


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In the domestic U.S. market, HMS 1 delivered Midwest index was $10/t lower in 2020 than in 2019. The Midwest Index for HMS 1 decreased from an average of $247/t in 2019 to $237/t in 2020.
On the export market, HMS export FOB New York average prices of 2020 were at $265/t as compared to $266/t in 2019.
Ferro alloys and base metals
Ferro alloys
The underlying price driver for manganese alloys is the price of manganese ore which was at the level of $4.58 per dry metric tonne unit (“dmt”) (for 44% lump ore) on Cost, Insurance and Freight (“CIF”) China for 2020, representing a 19% decrease from $5.63/dmt in 2019 ($7.16/dmt in 2018) mainly attributed to low demand due to the COVID-19 pandemic and high stock levels at Chinese ports.
Manganese alloys prices also followed a downward trend where high carbon ferro manganese decreased by 9% from $1,203/t in 2019 to $1,099/t in 2020 ($1,330/t in 2018), silicon manganese decreased by 10% from $1,234/t in 2019 to $1,116/t in 2020 ($1,325/t in 2018) and medium carbon ferro manganese decreased by 12% from $1,780t in 2019 to $1,567/t in 2020 ($1,930/t in 2018).
Base metals
Base metals used by ArcelorMittal are zinc, tin and aluminum for coating, aluminum for deoxidization of liquid steel and nickel for producing stainless or special steels. ArcelorMittal partially hedges its exposure to its base metal inputs in accordance with its risk management policies.
The average price of zinc for 2020 was $2,265/t, representing a 11% decrease as compared to the 2019 average of $2,549/t (the 2018 average was $2,926/t). Stocks registered at the London Metal Exchange (“LME”) warehouses stood at 202,225 tonnes as of December 31, 2020, representing a almost 400% increase compared to December 31, 2019 when registered stocks stood at 51,225 tonnes (129,325 tonnes in 2018).
The average price of tin for 2020 was $17,135/t, 8.2% lower than the 2019 average of $18,671/t (2018 average was $20,167/t).
The average price of aluminum for 2020 was $1,702/t, representing a 5% decrease compared to the 2019 average of $1,792/t (the 2018 average was $2,110/t).
The average price of nickel for 2020 was $13,789/t, representing a 1.05% decrease compared to the 2019 average of $13,936/t (the 2018 average was $13,118/t).
Energy market
Solid fuels, electricity and natural gas are some of the primary raw material inputs for a steelmaker. ArcelorMittal is exposed to price volatility in each of these raw materials with respect to its purchases in the spot market and under its long-term supply contracts.
Oil
The oil price averaged $71.6/bbl and peak just above $86/bbl in early October 2018 dropping afterwards and finishing the year at a yearly low of $53.8/bbl. In 2019, the oil market tightened throughout the first and second quarter, finishing the first half of the year just higher than $65/bbl, but almost $10/bbl lower than its mid-April peak of $75/bbl. While tensions grew in the Middle East fueled by renewed sanctions on