Q4 2022 ArcelorMittal SA Earnings Call

Turning to the European Union, it's been a while.

But.

For them to grant us the approval, but from what we understand.

The approval should be granted shortly.

And as many shortly in the next few months.

Okay, that's a good well.

They take.

This is one for the four initiatives combine or will it be.

Individual decision for each of them.

It's a very good question from what we understand that's an individual decision making process.

Maybe two out of the floor will be done first.

And then the other two later on.

Okay. That's helpful. Thank you.

Okay.

So we will now move to the next question from Phil at Keybanc Go ahead Phil.

Hi, Thanks, very much a question on the NAFTA segment.

How is the ramp of the Mexican Hot strip mill, Don maybe you could give us capacity utilization or some progression there.

Update on your plans to support Calvert with with a look at Eas.

Yes, sorry.

Take this one.

So we have a quite pleased with the evolution of the hot strip mill in Mexico.

So we have.

<unk> ended the year with.

Our run rate of about 50% of the capacity.

So we had a record in December so the team.

Quite excited about the progress over there so it's about 50% and that's how we'll run rate today.

We will continue to ramp up.

So with the new focus has also moved a little bit now.

March was also product development and litigation with customers. So that we can enlarge.

The customer base.

So I think it's progressing well and we have actually release.

Provided the contribution on the Hot strip mill. So we are already at a run rate of about $100 million of.

Additional EBITDA.

Which is in line with what we had anticipated before or after the full ramp up to be yet.

About 250 million of contribution so I think we are moving in the right direction there.

And covered we are progressing well also with the.

Yes.

So expecting to our expected completion date is end of the year and then we'll take it from there and I think it's.

Well I mean as we.

We.

Stop and covered then we should also be making progress.

Ramp up of the <unk>.

Sure Neal.

In Mexico, So I think it's a good balance.

These labs.

They're being transferred domestically and then state and the World and.

And sold domestically message.

Thank you and just a follow up if I could any any update on what your automotive customers or Tom you may.

In NAFTA and Europe in terms of how they expect.

The year to play out or.

Anything there in terms of what you're seeing as well in your order book I appreciate it.

Yes.

I think we saw it.

The second half of last year ended.

A relatively well right, especially in Europe , we had a very bad first half.

Slowly improve in the second half.

So I think we ended the year with a little bit of an improvement in terms of production and we had also similar production increases in NAFTA.

And.

And we believe that the <unk>.

Demand for automotive.

As long as the low levels of inventory should continue to support.

Production.

So our expectations that we will continue to see programs and increasing production.

Automotive production in 2023, so that should be.

And I think at this point in time I think we are looking at something in the range of 5% increase for them too.

2023.

Okay.

Thanks, Phil we will move now to Andrew Jones at UBS go ahead.

Hi, Thanks for taking the questions just a follow up on the comp.

Can you just remind us of what you.

We are expecting from those.

That growth potential.

Central subsidies I think he took my pleasure you've picked up some of the capex coming from essentially coming from government sources. What exactly are you asking for and can you remind us what the expected sort of capex is likely to be on those 40 out of high performance and how much do you think.

She could come from a couple of those things.

Sure. Thank you so we have not specifically broken down the Capex project.

But I would refer to our climate action report.

And that actually report, we talked about reducing our overall carbon footprint by 25% between 30, and 35% and our European footprint.

Footprint.

We outlined the capex of $10 billion to achieve that.

And we suggested that Kevin and brands.

Approximately 50% stake net capex to us it's about flexibility.

That remains the plan and as these projects get approved and finalized in terms of engineering design and scope.

Our mature we will be updating you on all of your other questions that you have asked.

Okay.

Okay. Thank you.

Yeah.

Thanks, Amit So we won't move now to our final question from Bastian at Deutsche Bank Go ahead question.

Yes, Thanks, David and good afternoon all.

My question is on the regulatory side and keep them, specifically and I think we just have the votes from the European Parliament today could.

Could you please give us your view on the outcome of the trial the trial of meeting in December .

That's really good enough what else needs to be addressed to shape, the regulatory environment in a way.

It makes it suitable for you to get the decarbonization target.

Thank you.

Sorry could you just repeat the last bit of your question, what do we need done.

You get here.

Hi.

So we obviously have to see them, maybe you have some color on the funding support we will also be discussing capex.

I guess I'll try to maybe the.

Keep them at what is decided here so far what what else.

If he needs to be done to basically give you enough confidence that you can go ahead with the decarbonization and make these projects.

Actually approved the two for two on projected and not just the biggest one.

Okay, Great. That's very clear. Thank you. So you look at you highlighted a lot of it already and I was just a little bit more detail.

So the first thing is the previous question on <unk>.

Expecting funding support from the European Union European Union will be prove it in the various countries are actually providing that.

Lending support so if you have a bunch of Tianjin is actually the German government et cetera et cetera.

So that's the first that's capex support the second the C band is important to create a level playing field a bit.

Because in Europe as you know there is a.

<unk>.

ETS system, the emissions trading system, which imposes costs on people, who weren't met <unk> and steel coming into the country should have the equivalent cost the same in terms of exports we need some export relief. So there is a C band legislation and it does need to be a trial and I think that's a great development because it's good to see.

The trial will be longer than in developed from it and there'll be more clarity.

On the C band and I think it's clear that the intent is to make it effective clearly the trial and the details below.

Long way and determine how effective that actually yes.

The third thing is.

Really the iras in the United States.

So you can see there's an active dialogue in the European Union to ensure that the EU remains globally cost competitive.

It is the cost of energy or the cost of hydrogen or the cost of Ccs and I agree that that's another very important element because the change since we've announced all of these projects has been.

The United States, which creates a very favorable climate in North America. So trying to bring some of those advantages into Europe is also very important.

Having said that I would.

Just add that one of the strengths of our cemetery was the fact that it is global.

We have assets in the U S. We have assets in.

In Europe , we have assets.

In Brazil. These are all centers, which have access to and mixes in Europe .

Two locations, which have access to low cost energy or can benefit from <unk>. So the Texas acquisition that you made in Corpus Christi is a great example.

There are a lot of Ccs projects a lot of hydrogen projects. It is really the basin of energy and so we have a very good strategic asset there, which we can grow and develop to supply low carbon metallics in a global basis.

Question was on returns.

That is the most important as.

As we Decarbonize our business, we have to generate an adequate return you have to make sure. The business is stronger not weaker post this investment.

And as we implement these investments and.

Getting back to the previous question, providing details on the Capex, where it's being executed first what is the level of government support we will provide a yeah. We will provide you with a clarity on what is the return profile just like what we've done with our strategic Capex.

You talked about $4 $2 billion.

Capex $1 $3 billion of EBITDA in my opening remark seems to hurt the highlight that this is based on long term steel spreads long term iron ore prices, which are much lower than what we're seeing the market. Today. So we will provide you with that framework as we embark on these large scale <unk>.

<unk> in our facilities.

Thanks, Thanks for detail for that color.

Just a very quick follow up on the I O N E.

I guess just strategic envelope is basically at least from that slide unchanged. Your EDA to approach it in France, but at least it is unchanged wirelessly potentially that <unk> give you some.

Some potential for other projects maybe too also.

Those funds.

Is there anything which you are working on it which you have in mind or.

Do you actually see the Iia more if the case well.

She's going to drive demand and support it nicely.

You're not really going to go off and try to develop the larger scale project to take advantage of it.

Yeah.

Yes.

That's a good question.

So we all see the demand impact.

I think that's something that has been widely discussed as always by American provision and the impacts that can that can have and how does that.

U S steel industry.

I would say there is an investment opportunity that is absolutely clear.

I think the determinant on those investment opportunities are twofold, there will be some investment ideas and that's where the strategic capital.

Into play, which which are great on the Standalone, North American perspective, and others, which are global.

And I think for that we have to have clarity on the IRA rule. So the IRA has been passed as a law.

Actual detailing the rules will be decided the summer of this year and I think very soon after they would be a similar exercise.

Europe I think post that clarity you could may be appropriate investment decisions at this point in time, there's nothing imminent, but clearly something that we're looking at very actively.

Okay perfect. Thank you.

Okay, great. So, let's let's conclude thank you very much everyone. I think we have covered a lot of ground on the call today, if you need any more any more clarifications. Please do reach out to Daniel and his team are always available.

We will conclude this call stays safe and keep those around usage as well. Thank you and all the best.

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