Q4 2023 ArcelorMittal SA Earnings Call
Okay.
Speaker Change: Ladies and gentlemen, welcome to the analyst call Q4, 2023 reserve ocular Victor corporate at school.
Operator: Ladies and gentlemen, welcome to the Analyst Call Q4 2023 Results ArcelorMittal Conference. I am George, the course co-operator.
Speaker Change: I haven't talked to the chorus call operator, I would like to remind you that all participants will be in listen only mode and the conference is being recorded.
Operator: I would like to remind you that all participants will be listened to remotely and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Operator Assistants, please press star and zero. The conference must not be recorded for publication or broadcast.
Speaker Change: The presentation will be followed by Q&A session.
Speaker Change: Congrats to you for questions at any time by pressing star and one on your telephone.
Speaker Change: Operator assistance. Please press Star Zero, the conference must not be recorded for publication or broadcast.
Daniel Fairclough: At this time, it's my pleasure to hand over to Daniel Fairclough, Vice President, IR. Please go ahead, sir. Thank you, George. Good afternoon, everyone. This is Daniel Fairclough from ArcelorMittal Investor Relations. Thank you for joining this call to discuss our performance and progress in 2023. Present on the call today are Mr. Mittal, our Executive Chairman; our CEO, Aditya Mittal, and our CFO, Germina Cristina. Before we begin, I would like to mention a few housekeeping items.
Speaker Change: This time, it's my pleasure to hand over to Tonya surplus Vice President IR. Please go ahead Sir.
Tonya: Thank you Josh.
Tonya: Good afternoon, everyone. This is Daniel for me for my Investor Relations team.
Tonya: Thank you for joining this call to discuss our performance and progress in 2023.
Tonya: On the call today, we have Mr. Mitchell, our executive Chairman.
Tonya: Detrimental I'm a CFO Kristina.
Speaker Change: Before we begin I would like to mention a few housekeeping items as usual, we will not be going through the results presentation that we published this morning on our website, but I do want to draw your attention to the disclaimers on slide two of that presentation.
Daniel Fairclough: As usual, we will not be going through the results presentation that we published this morning on our website, but I do want to draw your attention to the disclaimers on slide two of that presentation. We will be moving directly to the Q&A session, following some opening remarks, so if you would like to ask a question, then please do press star 1 on your keypad to join the Q&A. With that, I will hand over to Mr. Mittal to begin the opening remarks. Thank you, Daniel, and welcome everyone.
Speaker Change: We won't be moving directly to the Q&A session.
Speaker Change: So my opening remarks, I would like to ask a question. Please press star one on your keypad to join the queue.
Speaker Change: I will hand over to Mr. <unk> to begin the opening remarks.
<unk>: Thank you Danielle.
Speaker Change: And welcome everyone.
Aditya Mittal: We are working tirelessly to improve our safety performance, and I'm convinced that we are on the right path. We must achieve our target of zero fatalities and serious injuries as quickly as possible, against the backdrop of a challenging economic and geopolitical environment. Our financial results for 2023 are commendable, and this shows the benefits of the actions we have been taking in recent years to structurally improve our business. De-stalking is showing signs of coming to an end, and we are predicting growth this year in our coal markets. Interest rates have peaked, and there is confidence they will come down this year. Inflation has already started to ease, and energy prices have retreated from record highs.
Speaker Change: Bill what do you guys actually to improve our safety performance.
Speaker Change: Convinced we are on the right path.
Speaker Change: It must achieve target zero.
Speaker Change: Fatalities.
Speaker Change: And serious injuries.
Speaker Change: Quickly.
Speaker Change: Against the backdrop of a challenging economic and geopolitical environment.
Speaker Change: Our financial results in 2023.
Speaker Change: Come and Debbie.
Speaker Change: This shows the benefits of the actions we have been digging in recent years to structurally improve our business.
Speaker Change: Destocking is showing signs of coming to an end.
Speaker Change: VF predicting growth this year.
Speaker Change: Thanks.
Speaker Change: It just creates a beat and basic confidence they will come down this year.
Speaker Change: Inflation has already started to ease.
Speaker Change: Energy prices have retreated from record highs.
Aditya Mittal: I look to ArcelorMittal's future with great optimism. Our asset portfolio is lean and focused. Our recent acquisitions are performing strongly, and the capital projects in which we have been investing will soon begin making a significant contribution to our region. I want to take this opportunity to thank all our employees for their efforts and contributions. Over to you, Aditya. Thank you and welcome everyone.
Speaker Change: I looked at some of the future with great optimism.
Speaker Change: Our portfolio is believe in focus.
Speaker Change: Our recent acquisitions are performing strongly.
Speaker Change: And the capital projects in which we are investing.
Speaker Change: We will begin making a significant contribution to our agents.
Speaker Change: I want to take this opportunity to thank all our employees for their efforts and contributions.
Speaker Change: Over to you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you and welcome everyone.
Aditya Mittal: I want to talk first about safety and then the subject of growth and capital return. Beginning with safety, as we committed in our third quarter results, we have now commissioned a comprehensive, third-party, independent audit of our safety practices and governance. There are three work streams well underway. The first is the on-site audit of our fatality prevention standards. The second stream is reviewing our process safety management systems.
Speaker Change: I want to talk first about safety and then the subject of growth and capital returns.
Speaker Change: Beginning with safety as we commit committed that our third quarter results. We have now commissioned the comprehensive third party independent audit of our safety practices and governance.
Speaker Change: There are three work streams well underway. The first is the onsite audit work fatality prevention standards. The second stream is reviewing our process safety management systems and the third Street is your view of all of our safety governance practices.
Aditya Mittal: And the third stream is a review of all of our safety governance practices. I'm confident that DSS will support us in achieving our target of zero fatalities and serious injuries. Everyone at ArcelorMittal is fully aligned behind this objective. After allocating significant capital to organic growth over the past three years, ArcelorMittal is now on the cusp of a step change in profitability. This year, we will commission high-value-added lines in Brazil, a new electric furnace in the U.S., new electrical steel capabilities in Europe, and iron ore projects in Brazil and Liberia. These projects represent the bulk of our strategic growth envelope, which is expected to add $1.8 billion to our EBITDA. Today, our asset portfolio is de-risked and well-positioned to capture the medium to long-term demand that we forecast. Steel is a vital enabler of the transition to new energy sources.
Speaker Change: I'm confident the DSS will support us in achieving our target of zero fatalities and serious injuries, everyone at our summit, though it's fully aligned behind this objective.
Speaker Change: After allocating significant capital to organic growth over the past three years. Our submental is now on the cusp of a step change in profitability.
Speaker Change: This year, we will commission high value added lines in Brazil.
Speaker Change: New electric furnace in the U S new electrical steel capabilities in Europe, and iron ore projects in Brazil in Liberia.
Speaker Change: These projects represent the bulk of our strategic growth envelope, which in total is expected to add one $8 billion to our EBITDA.
Speaker Change: Today, our asset portfolio is de risked and well positioned to capture the medium to long term demand that we forecast steel is a vital enabler of the transition to new energy systems.
Aditya Mittal: Steel will be the foundation on which supply chain security is built, and steel is vital to improving the living standards of growing populations in large parts of the world. We estimate that these megatrends will drive approximately 300 million tons of additional steel demand ex-China over the next decade, with the biggest contributors being India, Brazil, and North America. Our asset portfolio is well-aligned to these growth benefits. Going forward, we will define EBITDA including the share of JV net income.
Speaker Change: Steel will be the foundation on which supply chain security is built and steel is vital to improving living standards are growing populations in large parts of the world.
Speaker Change: We estimate that these mega trends will drive approximately 300 million tons of additional steel demand ex China over the next decade with the biggest contributors being India, Brazil, and North America.
Speaker Change: Our asset portfolio is well aligned to these growth vectors.
Speaker Change: Going forward, we will define our EBITDA, including the share of JV net income.
Aditya Mittal: What you should appreciate is that 60% of our EBITDA is driven by assets in North America, India, and Brazil. And if you include our Canadian mining operations, it is almost 75%. We have excellent market positions, and we have attractive opportunities to continue to invest and capture the growth in demand. In North America, we're developing our plans to add another electric furnace at Calvert and double the scale of our asset in... In India, we're currently doubling our capacity to 15 million tons, with plans under development to eventually grow to 40 million. In Brazil, we have a fantastic primary steelmaking position with opportunities to add finishing capacity as domestic demand grows. In terms of capital returns,
Speaker Change: What you should appreciate is that 60% of our EBITDA is driven by assets in North America, India and Brazil.
Speaker Change: And if you include our Canadian mining operations it is almost 75%.
Speaker Change: We have excellent market positions and we have attractive attractive opportunities to continue to invest and capture the growth in demand.
Speaker Change: North America, we are developing our plans to add another electric furnaces at Calvert and double the scale of our assets in Texas.
Speaker Change: In India. We are currently doubling our capacity to 15 million tonnes with plans under development to eventually grow to 40 million tons in.
Speaker Change: In Brazil, we have a fantastic primary steelmaking position with your opportunities to add finishing capacity as domestic demand growth.
Speaker Change: In terms of capital returns.
Gennarino: The Value-Creating Impact that our growth investment has on every ArcelorMittal share has been significantly increased by our share buyback program. It really is a massive achievement that we have repurchased one-third of our equity over the last three years. We still have a large buyback program outstanding, and with a positive outlook for cash flow generation, we're well positioned to continue taking advantage of our discounted valuation. The structural improvements we are making to profitability are feeding through to our base dividends. The change in our portfolio over the past 12 months supports a further increase in the base dividends. Again, this should be seen as a clear statement of the progress we are making and the confidence we have in our. I will now hand it over to Gennarino to talk more about our financial portfolio. Thank you, Aditya, and hello, everyone.
Speaker Change: The value, creating impact that's a growth investment has on every or certain that those share has been significantly increased by our share buyback programs.
Speaker Change: It really is a massive achievement that we have repurchased one third of our equity over the last three years.
Speaker Change: We still have a large buyback program outstanding and with a positive outlook for cash flow generation, we are well positioned to continue taking advantage of our discounted valuation.
Speaker Change: Structural improvements, we're making to profitability are feeding through into our base dividend.
Speaker Change: The change in our portfolio over the past 12 months supports a further increase in the base dividend again this should be seen as a clear statement on the progress we are making and the confidence we have in our outlook.
Speaker Change: I will now hand, it over to Jim.
Jim: More about our financial performance.
Jim: Yeah.
Jim: Thank you Ron and Hello, everyone.
Gennarino: There is much to be pleased about with our financial performance in 2023. We generated 7.6 billion EBITDA. This is the 136th edition of Epidarther Township, which compares very well with our history and highlights the inherent strength that we have built into our business in recent years, the quality of our asset base and the value we are deriving from our recent acquisitions and strategic growth projects. Net income was impacted by non-recurring impacts related to the sale of our operations in Kazakhstan and the impairment of our investment in Italy.
Jim: There is much to be pleased about our financial performance in 2023.
Jim: We generated $7 6 billion EBITDA.
Speaker Change: This is 136 of EBITDA per ton shipped which compares very well with our history and highlights.
Speaker Change: Inherent strengths that we have built into our business in recent years, the quality of our asset base and the value. We are deriving from our recent acquisitions and strategic growth projects.
Speaker Change: Net income was impacted by nonrecurring impacts related to the sale of our operations in Kazakhstan, and the impairment of all the investment in Italy.
Gennarino: But adjusted for these factors, net income of just under $5 billion also compares very well with our history and illustrates not only the structural improvement to EBITDA but also the growing contribution from our JVs and the effect of our lower cost balance sheet. And then these impacts are being further exacerbated by our consistent share buyback. The value we are creating is clear; we are consistently delivering a solid return on our book value, which has grown to $66 per share. Moving to cash flow, 2023 was yet another strong year. We generated $2.9 billion of free cash flow.
Speaker Change: Adjusted for these factors net income of just under 5 billion also compares very well with our history and illustrates not only the structural improvement to EBITDA, but also the growing contribution from our JV and the impact of our lower cost balance sheets.
Speaker Change: And then these impacts are being further geared by our consistent share buybacks.
Speaker Change: The value we are creating is clear we are consistently delivering a solid return on our book value, which has grown to $66 per share.
Speaker Change: Moving to cash flow 2023 was yet again, another strong year, we generated $2 9 billion of free cash flow and this is after spending $1 4 billion funding the growth projects that added jet referred to in his remarks.
Gennarino: And this is after spending $1.4 billion funding the growth projects that Aditya referred to in his remarks. Looking to the year ahead, we have seen an end to the de-stocking headwind that impacted markets in the second half of last year. As a result, fuel stress has improved in recent months.
Speaker Change: Looking to the head we have seen an end to the destocking headwind that impacted markets in the second half of last year as.
Speaker Change: As a result steel spreads have improved in recent months.
Daniel Fairclough: And we are forecasting apparent demand growth in all our core markets in 2024, which should support growth in our shipments. To conclude, I believe our performance continues to provide evidence that ArcelorMittal can deliver value through all aspects of the steel cycle. We are consistently generating good levels of cash. We are investing in high-return projects, several of which will be concluded as we move through 2024, and to reiterate Aditya's message. This project will structurally increase our EBITDA by at least 1.8 billion. And finally, we are achieving all of this while consistently returning capital to our shareholders. With that, Daniel, I believe we can. Start the Q&A. Great. Thank you, Gemmina.
Speaker Change: And we are forecasting apparent demand growth in all our core markets in 2024, which should support growth in our shipments.
Speaker Change: To conclude my remarks, I believe our performance continues to provide evidence that oscillometer can deliver value through all aspects of the steam cycle.
Speaker Change: We are consistently generating good levels of cash flow.
Speaker Change: Investing in high return projects several of which will be concluded as we move through 2024.
Speaker Change: And to reiterate <unk> message.
Speaker Change: <unk> projects, we will structurally increase our EBITDA by at least one.
Speaker Change: And finally, we are achieving all of this while consistently returning capital to our shareholders.
Dan: With that Dan.
Dan: I believe we can.
Dan: Start the Q&A.
Dan: Yeah.
Dan: Great. Thank you Jeremy.
Alain: Just to remind everybody, if you would like to ask a question, please press star 1 on your keypad. But we already have a good queue, so we will take the first question, please, from Alain at Morgan Stanley. Good afternoon, and thank you for taking my questions.
Dan: Mind, everybody if she would like to ask a question. Please press star one on your keypad.
Dan: We already have the queue. So we will take the first question previous strong alright at Morgan Stanley.
Morgan Stanley: Hey, good afternoon, and thank you for thank you for taking my questions first question is on.
Aditya Mittal: The first question is on your new accounting practices. So you decided to change your definition of EBITDA to better reflect growth in India that I would argue was overlooked by the market. Do you think that is enough to change the market's perception of your India business? And then, what was your share of net debt at AMNS India on December 23? Some skeptics would argue that you have decided to consolidate net income to keep your JV net debt out of sight.
Morgan Stanley: On your on your accounting practices. So you decided to change our definition of EBITDA to better reflect growth in India that I would argue what's opened up the market do you think that there's enough to change the market perception around your India business and then what was your share it off at that.
Morgan Stanley: Sandy up and December 'twenty three is some skeptics would argue that you have decided to consolidate net income to keep your JV net debt.
Speaker Change: Aldo side basically that's the first question.
Aditya Mittal: That's the first question. Sure. First of all, I would just say that overall, I don't think it's enough to highlight the value of our India joint venture and other joint ventures. These joint ventures have done incredibly well over the years. They have market-leading positions. A lot of these joint ventures actually don't have much debt.
Morgan Stanley: Sure.
Speaker Change: First of all I would just say that overall I don't think it's enough to highlight the value of our engagement mentioned those are joint ventures. These joint ventures over the years have done incredibly well.
Speaker Change: We have market leading positions.
Speaker Change: A lot of these joint ventures actually don't have much debt to give you a flavor. The actual combined EBITDA of these joint ventures is about $4 $7 billion. So we are not reporting $4 7 billion. We are just including our share of net income and as you know net income is after financing.
Aditya Mittal: To give you a flavor, the actual combined EBITDA of these joint ventures is about $4.7 billion. So we are not reporting $4.7 billion. We are just including our share of net income. And as you know, net income is after financing costs, depreciation, and taxes.
Speaker Change: Costs depreciation taxes. So it really is the value that is accruing.
Aditya Mittal: So it really is the value that is accruing to our strong net book. In terms of the future, I do believe that these joint ventures, especially India, will continue to perform in Calvert. We have talked about how we're doubling capacity in India by 2026. Our share of net income is about $400 million from that. Clearly, the EBITDA generation is much greater.
Speaker Change: The two are thrown at them.
Dan: In terms of the future I do believe that these joint ventures, especially India will continue to perform in Calgary.
Dan: <unk> talked about how the doubling capacity in India by 2026 that our share of net income is about 400 million from that clear.
Dan: Clearly the EBITDA generation is much greater.
Aditya Mittal: And in Calvert, we are commissioning our first EEF by the end of the year, and we're progressing with plans to set up a second EEF at our Calvert facility. So the idea of including the results of our equity income into the EBITDA is to highlight it, but I still believe that we need to do more in terms of really educating and demonstrating the true value of these joint ventures, which I think is a unique asset that ArcelorMittal owns. But what about the net debt sitting at the MNS, in the end? So, we have talked about it before; it's about 4.5 billion. , and others
Dan: And then Calvert, we are commissioning our first ETF by end of the year and we're.
Dan: Progressing on plans on setting up the second year in a cowboy facility. So the idea of including the results from our equity income.
Dan: The EBITDA is to highlight but I still believe that we need to do more in terms of really educating demonstrating the true value of these joint ventures, which I think is a unique asset that are sort of Mcdonald's.
Speaker Change: Okay, but what about the net debt sitting at the <unk>.
Speaker Change: India.
Speaker Change: So we have talked about it before it's about $4 5 billion.
Speaker Change: Okay.
Speaker Change: And that's both the infrastructure asset acquisition of $2 4 billion.
Aditya Mittal: And that's both the infrastructure asset acquisition of $2.4 billion that we preceded at 22 minutes. Yep. And my second question is about your M&A approach. If you've done a few deals over the last couple of years, like CSP, HBI, and so on, how much of your EBITDA today is generated by these assets? And what is the upside from here, from the M&A that you have already done? And, on the flip side, is there a case for a more radical approach to assets that you own, like ACES or South Africa, or some JVs that are non-core, to better streamline and optimize your portfolio?
Speaker Change: Okay.
Speaker Change: <unk> yeah.
Speaker Change: Thank you and my second question is on your.
Speaker Change: M&A approach if you've done a few deals over the last couple of years like <unk> and so on how much of your EBIT that today is generated by these assets and what is the upside from here from the M&A that you have already done.
Speaker Change: Side is there a case for a more radical approach towards assets that you own like SaaS or South Africa, or some JV that are non core to better streamline optimize your portfolio. Thank you.
Aditya Mittal: Thank you. Sure. Just on the net debt of AMNS, that's on a 100% basis, right? So it's not our share, just so that everyone is clear on that. So, as I mentioned earlier, a lot of these joint ventures have strong balance sheets, and they continue to perform well. Coming back to the overall question, look, I think this quarter we announced that we had increased our base dividend, and we alluded directly to the PESM acquisition and what we've done in Texas. I think it's clear, reading between the lines, that we're doing really well. Petzen is outperforming our expectations.
Speaker Change: Sure.
Speaker Change: Just on net debt.
Speaker Change: That's on 100% basis right. So it's not our share.
Speaker Change: Just so that everyone is clear on that so as I mentioned earlier a lot of these joint ventures have strong balance sheets and they continue to perform well coming back to the overall question look I think this quarter, we announced that we have increased our base dividend and related directly to the best of an acquisition you look they've done in Texas.
Dan: I think it's clear reading between the lines were doing really well.
Dan: Persimmon is outperforming our expectations, Texas is outperforming our expectations in fact, we've talked about in the presentation, how we intend to double the productive capacity of our facility in <unk>.
Aditya Mittal: Texas is outperforming our expectations. In fact, we talked about in the presentation how we intend to double the productive capacity of our facility in Corpus Christi. We are achieving our synergy numbers ahead of schedule. These facilities are running at higher capacities than we thought. In the past, we have guided to EBITDA numbers of 350 for PESN, 150 more in Texas, and these facilities are running at those levels.
Dan: Switching to Texas.
Dan: We are achieving our synergy numbers are ahead of schedule. These facilities are achieving more capacity than you thought in.
Dan: In the past, we have guided to EBITDA numbers of $3 54.
Dan: 150 more.
Dan: Texas and its subsidiaries are run rating at those levels in 2024, we can see the benefit of persons on full year basis, because in 2023 as you know we acquired it towards the end of Q1. So that's another benefit we should see 2024 apart from our growth projects.
Aditya Mittal: In 2024, we will see the benefit of PESN on a full-year basis because, in 2023, as you know, we acquired it towards the end of Q1. So that's another benefit we should see in 2024, apart from all of the growth projects which are expected to be commissioned. Thank you. Thanks, Aditya. So we'll now move to the next question, please, from Tristan at BNP Paribas. Yes, hi. Thank you for taking my questions. The first one is on HBI growth.
Dan: Should I expect it to be commissioned.
Speaker Change: Thank you.
Speaker Change: Actually this is I will now move to the next question. Please from Tristan at BMP Alright.
Tristan: Yes, hi, Thank you for taking my questions.
Tristan: First one is on HPA growth, you've announced plans to build.
Aditya Mittal: You've announced plans to build five DRI plants in Europe, I think, in around 10 years. But you have now announced plans to double HBI capacity in the U.S. So I'm curious why you shouldn't or couldn't triple capacity in Texas and maybe drop one or two DRI projects in Europe where the economics are less favorable? Or do you really need those DRI plants in Europe?
Tristan: In Europe, five dry plant site thinking around 10, yes.
Tristan: You've now announced plans to double H by capacity in the U S. So I'm curious to why you shouldn't or couldn't triple capacity in Texas, and maybe dropped one or two derived projects in Europe, where the economy sort of less favorable or do you really need those to you Ray practice in Europe.
Aditya Mittal: And to add to that question from a bigger picture perspective, can you see a future European footprint without iron making, or is it impossible due to CBAM and taxes on DRI imports? That's my first question. Yeah, thank you. Look, it's a great question.
Speaker Change: And to add up to that question.
Speaker Change: Picture can you see a future European footprint without iron, making or is it impossible GTC bama in Texas on the Orion ports. That's my first question.
Speaker Change: Got it.
Speaker Change: Yes. Thank you look it's a great question I will provide an overall context.
Aditya Mittal: I will provide an overall context and then provide a little bit more of a specific answer to your question. Fundamentally, when we think of decarbonizing our business, there are two things that we are absolutely focused on in terms of ArcelorMittal. The first, as you know, we have been a technology leader, and we will continue to be a technology leader. And we will do that also in how we should decarbonize the steel business. We have identified three routes: DRIEF, smart carbon, and electrolysis.
Speaker Change: Then.
Speaker Change: Providing a little bit more of a specific answer to your question fundamentally when we think of.
Speaker Change: Decarbonizing our business.
Speaker Change: There are two things that we are absolutely focused on in terms of our circuit.
Speaker Change: As you know we had been technology leader and we will continue to be technology leader and we will do that also in how we should decarbonize steam business. We have identified three routes do you right, yes, smart carbon electrolysis, we continued to invest in these three routes we continue to develop knowhow.
Aditya Mittal: We continue to invest in these three routes. We continue to develop know-how, process knowledge, and capital expenditure knowledge, and that strategy will continue. The second is that we need, and we will maintain, our relevant market share in terms of low-carbon products in the markets in which we operate. And so we look at both those strategies, technological leadership, market leadership in terms of low-carbon products, and what that means for our business. As a result of that, we have embarked on examining DRIE projects both in Canada as well as in Europe. The advantage of ArcelorMittal is that we are global. The fact that we are global means we can access energy sources which are global or iron ore sources which are global and use that to our advantage as we plan a low-cost approach or a relatively lower-cost approach to the market and supply of these products.
Speaker Change: Process knowledge, Capex knowledge and that strategy will continue.
Speaker Change: Second is that we need and we will maintain a relevant market share in terms of low carbon products and the markets in which we are present.
Speaker Change: And so we look at both of those strategies technology leadership market leadership in terms of low carbon products and what does that mean for our business.
Speaker Change: As a result of that we have embarked on examining DRAM projects, both in Canada as well as in Europe.
Speaker Change: The advantage of our strong it tells us that we are global.
Speaker Change: The fact that we have globally, we can access energy sources, which are global or iron ore sources, which are global and use that to our advantage as we plan a low cost approach or a relatively lower cost approach to the market and supply of these products and it's not just about the opex cost. It's also about.
Aditya Mittal: And it's not just about the OPEX cost; it's also about the CAPEX. And without getting into specifics of which project we will start on first, I want to provide you with a framework.
Speaker Change: The capex cost and without getting into specifics of which project we will start up first.
Speaker Change: I want to provide you with the framework. The framework is technology leadership market leadership, and ensuring that we use our asset base. The fact that we are a global presence in various markets to ensure that we deliver to the market relatively the lowest cost most capex efficient decarbonize product.
Aditya Mittal: The framework is technology leadership, market leadership, and ensuring that we use our asset base, the fact that we are global, present in various markets, to ensure that we deliver to the market relatively the lowest cost, most CapEx efficient decarbonized product. All right, that's, that's helpful. So maybe as a follow-up to that, and as my second question, if you do plan to maintain market share in your current market, notably in Europe, you're seeing competitors moving a bit faster on, on, you know, building those EF, building those TRI plants. So, when you look at the budget and the plan, the decarbonization plan, do you see a risk to the budget and also the timeline as you may be losing, you know, the first mover advantage in the region?
Speaker Change: Alright.
Speaker Change: That's helpful.
Speaker Change: So maybe as a follow up to that and as my second question.
Speaker Change: If you do a plan.
Speaker Change: Plenty to maintain market share.
Speaker Change: Current market, notably in Europe.
Speaker Change: Are you seeing competitors are moving a bit faster.
Speaker Change: <unk>.
Speaker Change: When you look at the budget and the plan did you Carbonization plan, how do you see risk there.
Speaker Change: To the budget and also the timeline.
Speaker Change: As you may be losing you know first mover advantage in the region.
Speaker Change: Yeah.
Speaker Change: Okay.
Aditya Mittal: And just on that, look, we have today over 1.8 million tons of HBI sitting in. Some of that will go into Calvert as we start up the Calvert project, but we still have quite a significant amount. I mean, if you look at the bigger picture, we are the world's largest producer of DRI. We actually produce, we're the only steel producer which is producing DRI in Europe, in Germany, in Hamburg, and we have plants where we can dial up the capacity and use that and bring it to Europe if that is what the market is demanding. We also have electric furnace capability in Europe.
Speaker Change: Yes, just on that.
Speaker Change: Today over one 8 million tons of HDI.
Speaker Change: Sitting in Texas some of that will go into Calvert as we startup the Calvert project, because we still have quite a significant amount I mean, if you look bigger picture. We are the world's largest producer of derived we actually produce ready with steel producer.
Speaker Change: Producing <unk> in Europe and Germany.
Speaker Change: And we have clients, where we can dial up the capacity and use that and bring it to Europe. If that is what the market is demanding and we also have electric furnace capability in Europe, we actually have a flat E.
Aditya Mittal: We actually have a flat EEF-based facility in Europe, in Sestau, Spain. So if you just look at our technology basis, we have the DRI already, and we have an electric furnace and a caster that can produce flat products. So I don't believe that we will be behind from a relative perspective in bringing products to the market. I think we will be right in front with the rest of the European steel industry. In terms of the overall budget, yes, you're right, there has been capex inflation. But our focus is to remain within that target and ensure that we redesign or use our advantages, whether it is global or whether it is our scale advantages, to achieve the same targets within the budget that we have announced. All right, that's really clear. Thank you. Thanks Justin. So we'll move now to the next question from Miles at UBS. Go ahead, Miles.
Speaker Change: Based facility in Europe, and CIS now, Spain. So if you just look at our technology basis, we have the <unk> already and we have an electric furnace.
Speaker Change: Casters can produce black products. So I don't believe that we will be behind from a relative perspective, and bringing product to the market.
Speaker Change: We will be right in front.
Speaker Change: The rest of the European steel industry.
Speaker Change: In terms of the overall budget, yes, you're right there has been capex inflation.
Speaker Change: But our focus is to remain within that target.
Speaker Change: And then sure that we redesign or use our advantages whether it is global or whether it gets our scale advantages to achieve the same target within the budget that we have announced.
Speaker Change: Alright.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Thanks, Jason.
Speaker Change: To our next question from Myles at UBS go ahead Mark.
Aditya Mittal: Great, thank you. There are a couple of questions. Maybe, can you talk about the growth you expect in India, sort of medium term, you know, it's growing, sort of, 8% or so this year. What do you see over the next sort of 5-10 years as a sustainable level of demand growth in India and other parts of Southeast Asia? Yeah, so India has surprised us all positively. We were always very constructive in our outlook.
Myles: Great. Thanks, a couple of questions. Maybe can you talk about the growth you expect in India sort of medium time, it's Greg.
Mark: 8% to say this year, what do you see over the next 510 years as a sustainable level of demand growth.
Myles: In India and other parts of Southeast Asia.
Myles: The first question.
Mark: Yeah.
Mark: Yes.
Speaker Change: So India has surprised us positively.
Speaker Change: Always very constructive on the outlook.
Aditya Mittal: We felt that India is really a growth vector. If you just look at the numbers coming out of India in 2023-2024, I mean, in 2023, apparent steel consumption grew by 12 percent. The year before, by 9 percent.
Speaker Change: We felt that India is really a growth vector, but if you just look at the numbers coming out of India.
Speaker Change: In 'twenty three 'twenty four 'twenty three apparent steel consumption grew by 12%.
Speaker Change: The year before by 9% this year, we're projecting six and a half to agent odd percent growth. So really strong numbers that are coming out of India and clearly that's benefiting our joint venture and supporting our growth plans. We are in the process of doubling capacity zero today, we have 20000 people.
Aditya Mittal: This year we're projecting six and a half to eight and a half percent growth. So really strong numbers that are coming out of India, and clearly that's benefiting our joint venture and supporting our growth plan. We are in the process of doubling capacity in Hazira. Today we have 20,000 people who are working there, and we should hit 15 million tons of capacity by 2026. We are not stopping there.
Speaker Change: We're working there and we should hit 15 million tons of capacity by 2026, we're not stopping there we are.
Aditya Mittal: We intend to take that site to 20 million tons before the end of this decade, and we have plans on the west coast of the country as well. In terms of overall demand, we have talked about growth of 300 million tons on a global basis in terms of the steel business. A significant portion of that is coming from India, in excess of 100 million tons.
Speaker Change: 10 two.
Speaker Change: Take that site to 20 million tonnes before the end of this decade, and we have plans on the west coast of the country as well.
Speaker Change: Terms of overall demand numbers I mean, we've talked about a growth of 300 million tons on a global basis.
Speaker Change: So the steel business and significant portion of that is coming from India and in excess of 100 million tonnes.
Aditya Mittal: Obviously, there is also growth in Brazil and North America, all of which are core markets for us. And that 300 million tons, is that by 2030, or what is the time frame that you're thinking of going back on that? Thank you. It's actually the next 10 years. So, 30 part of 26.
Speaker Change: Do you see there is also growth in Brazil, and North America, all of which are core markets for us.
Speaker Change: And that 300 million tons is up by 27, what was the timeframe. It was in Q4.
Speaker Change: Yes. It is.
Speaker Change: The next 10 years.
Speaker Change: So early part of 2013.
Aditya Mittal: Okay, the second question's on Liberia. How confident are you that the new concentrator will start up in Q4, and what sort of ramp-up profile and cost position will that operation have? Yeah, so the concentrator will start up at the end of the year. The ramp-up obviously will take a longer period of time. At this point in time, unless Jane Reno has more specifics to provide you, we have not provided that guidance.
Speaker Change: Okay.
Speaker Change: The second question is on Liberia.
Speaker Change: How confident are you that the new concentrator will start up in Q4, and what sort of ramp up profile cost position, though that operation in house.
Speaker Change: Yes.
Speaker Change: Yes, so the concentrated will start up.
Speaker Change: End of the year the ramp up obviously, let's take a longer period of time at this point in time, unless Jean Reno has more specifics to provide you we have not provided that guidance.
Aditya Mittal: In terms of cost position, look, it's a very low-cost mine. We have a very good and extensive ore body. Costs are low in Liberia.
Speaker Change: In terms of cost position look it's a very low cost mine.
Speaker Change: We have a very good and extensive ore body.
Speaker Change: Costs are low in Liberia, we own a rail line, we have the port facility. So even the long green line, rather than the short rate line and so when you look at it will be cost it's super competitive.
Aditya Mittal: We own the rail line. We have the port facility. It's not even a long rail line; it's a relatively short rail line.
Aditya Mittal: And so when we look at FOB costs, it's super competitive. Jim, you know, perhaps you can add a little bit more detail. Yeah, Aditya, I think you're absolutely right. So we should start the first war by the end of this year.
Speaker Change: Jamie perhaps you can add a little bit more detail.
Jamie: Yes, I think you're absolutely right. So we should start.
Speaker Change: The first war.
Jamie: By the end of this year and then the idea is that we start we will have three models. So plus 5 million tons and then by the end of 2025, we should be at the run rate of.
Aditya Mittal: And then the idea is that we start with, we will have three models. So the first 5 million tons. And then by the end of 2025, we should be at a run rate of 15 million tons. So that's the plan. And then the teams are also exploring the possibility that we can keep the DSO for some more time so that we can also maybe add some more value to the project. And what's the capacity of the rail, if you're thinking about long-term options there?
Jamie: 15 million tons. So that's the plan and then the teams are also exploring the possibility that we can keep the DSO.
Jamie: Some more time, so that we can also maybe add some more value to the project.
Jamie: And what's the capacity of our rail thinking about longer term options.
Speaker Change: Good morning, Meiocyte cannot.
Speaker Change: So I was just thinking about the capacity of the rail line.
Aditya Mittal: I was just thinking about the capacity of the rail line for optionality in the future. Yeah, so as we keep the project now, we are actually taking the capacity of the rail from about 30 million tons. So we will have the capacity to go to a second wave as and when we feel it's appropriate.
Speaker Change: There is the optionality in the future.
Speaker Change: Yeah.
Meiocyte: As we execute the project now we are actually taking capacity of the radio from.
Meiocyte: To about 30 million tonnes.
Meiocyte: So we will have capacity that's true.
Speaker Change: Roche was second wave as and when.
Speaker Change: We feel it's appropriate.
Speaker Change: Alright, thank you.
Aditya Mittal: Great, thanks Mavs. So we'll now move to a question from Tom at Barclays. Hi everyone, thanks very much for taking our questions. The first one is just on the U.S. business in Calvert.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Great. Thanks, Bob.
Speaker Change: Two question from Tom at Barclays.
Tom: Hi, everyone. Thanks, very much for taking my questions.
Tom: First one just on the U S business in Calvert.
Tom: Maybe just any thoughts on how you see the U S system evolving given your partner at Calvert is potentially taking off.
Aditya Mittal: Maybe just any thoughts on how you see the US system evolving, given your partner at Calvert is potentially taking on quite a lot of US footprint, basically, whether or not you see any opportunities with Calvert into those US CLSs? Yeah, sure. Miles, we have...
Speaker Change: Quite a lot of <unk>.
Tom: U S footprint, basically whether or not you see any opportunities with Calvert as U S steel assets.
Tom: Thanks.
Speaker Change: Okay.
Speaker Change: Yes sure.
Myles: Myles we have sorry.
Aditya Mittal: Anyway, let me answer the question. In terms of CalVERT, we are very focused on increasing and growing our business. We have talked about the first year being commissioned in 2024, and we're committed to doubling the electric capacity at CalVERT, and we have plans for a second year. If you look on a broader basis, you will notice that we have renamed our NAFTA segment. I mean, NAFTA no longer exists as USMCA, so now it's called North America, which is a core growth region for the company. But what does that really mean?
Speaker Change: Anyway, let me.
Speaker Change: And so.
Speaker Change: The question.
Speaker Change: In terms of Calvert, we are very focused on.
Speaker Change: Increasing and growing our business, we have talked about.
Speaker Change: The <unk> being commissioned in 2024.
Speaker Change: And we're committed to doubling that capacity electric capacity at Calvert and the plans for a second.
Speaker Change: If you look on a broader basis, even though it is that we have renamed NAFTA segment, I mean, NAFTA. It no longer existed the Usmc Ace announced called North America, which is a core growth region with the company what does that really mean it means that we have world class assets.
Aditya Mittal: It means that we have world-class assets, an excellent team, and the best automotive franchise. We have almost 13.8 million tons of hortal capacity in North America, and if you include our Canadian mining business, almost 40% of group EBITDA is coming from North America. The other very interesting aspect of our business is that we are decarbonized to a large degree. If you look at our Mexican business, it's operating with DRI and EES.
Speaker Change: Excellent team and the best automotive franchise.
Speaker Change: Almost $13 8 million tons of ultra capacity.
Speaker Change: In North America, and if you include our Canadian mining business, almost 40% of group EBITDA is coming from North America. The other very interesting aspect of our business.
Speaker Change: Is that we are de carbonized to a large degree if you look at our Mexican business is operating with a D. Orion Es Calvert as you know is electric and we have plans.
Aditya Mittal: Calvert, as you know, is electric, and we have plans to decarbonize to Fasco. So we have a very strong platform to continue to grow and develop the business. In terms of Calvert's role in the future, I think the role really is to expand and develop the business of Calvert. And then the second one, just on the strategic envelope, you've sort of given the waterfall charts of various projects all coming online, the various stages of 24, maybe more of a sort of housekeeping question, but what's the sort of phasing of earnings from these projects? Because I guess a lot of them will come online in 2024, but there are various ramp-up stages.
Speaker Change: To Decarbonize dofasco. So we have a very strong platform to continue to grow and develop the business in terms of calverts role.
Speaker Change: In the future I think that will really is to expand and develop.
Speaker Change: The business of the Calvert site.
Speaker Change: Understood Fair enough and then the second one just on the strategic envelope.
Speaker Change: Sort of given the waterfall charts of various projects.
Speaker Change: Coming online at various stages of 24, maybe more of a sort of housekeeping question, but what's the sort of phasing of earnings from these projects because I guess a lot of them come on line in 2024, but as far as ramp up stages, I guess library or is the main one way I get that youre not seeing full impact until probably 2026 correct.
Aditya Mittal: I guess Liberia is the main one where, you know, you're not seeing full impact until probably 2026, right, when it's at full run rate. Yeah, if you have a sort of number of or percentage of this 850 million that's coming online next year, how much of that is actually recognized in 24? How much is 25? How much is 26?
Speaker Change: Full run rate so.
Speaker Change: If you have a sort of number of what percentage of this $850 million.
Speaker Change: That's coming online next year, how much of that is actually recognized in 24, how much is 25, how much was 26.
Speaker Change: Yes, Thomas leading to that.
Speaker Change: Thank you.
Aditya Mittal: Yeah Thomas, Thank you. Tom, I mean, we, as you can see here, so we are guiding for about 900 million worth of EBITDA in projects to be completed this year, right? I mean, some of them really towards the end of the year.
Speaker Change: Tom.
Tom: As you can see there so.
Speaker Change: Youre guiding for about $9 900 million worth of EBITDA and projects should be completed this year right I mean, some of them really towards the end of the year.
Aditya Mittal: So we should not really see a significant impact from the projects in 2024. But I would expect to see a large part of it already in 2025, with the exception of Liberia, as we discussed, Liberia being, of course, about 300 million of the total. I would expect to see perhaps half of it in 2025 and then the full benefit in 2020. Thank you. So, sorry, just to clarify, half in 2025, that means half of the Liberian benefit or half of the... That's what I would... that's what I would guide today. Got it. Thank you. I'll turn it back.
Tom: So we should not really see a significant impact from the project in 2024.
Speaker Change: But I would expect to see a large part of it already in 2025 with the exception of Iberia as we discussed in February the theme.
Speaker Change: Of course about 300 million out of the total I would expect to see perhaps half of it in 2000 2025.
Speaker Change: And then the full benefit in 2026.
Speaker Change: Thank you sorry, just to clarify Hoffman in 2025 that means half, the liberia benefit or half of that.
Hoffman: That's what I would that's what I would guide today.
Speaker Change: Thank you I'll turn it back.
Speaker Change: Alright, Thanks, Tom.
Aditya Mittal: Great, thanks Tom. So we will move now to a question from Max at Otto. Yeah, good afternoon.
Speaker Change: We will move now to a question from Max Alright.
Max: Yeah. Good afternoon. Thanks for taking my question. So Yeah. First question is on U S steel now that the processes behind the Oliver.
Aditya Mittal: Thanks for taking my question. So, yeah, my first question is on US Steel. Now that the process is behind all of us, can you confirm that you have made an offer for the unit?
Max: Can you confirm that you had met and ofer.
Aditya Mittal: And can you give us, can you tell us also, I mean, why you think it was not retained by US Steel? Next, thank you for your question. As you know, ArcelorMittal has a long-standing policy of not commenting on M&A.
Max: For the unit and can you give us can you tell us also I mean.
Max: Why do you think it was not a retained by yet.
Max: My first question.
Max: Okay.
Speaker Change: Thank you for your question as you know our swimming pool has a long standing policy of not commenting on M&A. So we have not commented in the past you won't be commenting now I think there had been a lot of questions on North America. So I won't repeat what I just said.
Aditya Mittal: So we have not commented in the past, and we won't be commenting now. I think there have been a lot of questions about North America, so I won't repeat what I just said, but suffice to say we are committed to our business with North America. We have a very strong platform, and we intend to build on that. Okay, fair enough. So my second question is about ACI.
Speaker Change: Let's just say we are committed to our business in North America, we have a very strong platform and we intend to build on that.
Speaker Change: Okay, Okay fair enough.
Speaker Change: Second question is on I guess is it didn't know move to also so is it fair to assume that basically for the foreseeable future. The two remaining units for the Africa, and Ukraine will remain lossmaking.
Aditya Mittal: So is it fair to assume that, basically, for the foreseeable future, the two remaining units, South Africa and Ukraine, will remain loss-making? I think that in Ukraine, local management was hopeful that production could increase quite significantly this year versus 2023. I mean, what's your view on that? And in South Africa, are you still committed to... Thank you very much.
Speaker Change: I think that in Ukraine.
Speaker Change: Instrument was helpful that production could increase quite significantly this year versus 2023 is I mean, what's your view on that and in South Africa, you're still committed to them.
Speaker Change: Withdrawing from the long segment.
Speaker Change: And what would be the benefits in terms of margins from that cohort.
Aditya Mittal: Yeah, sure, so let me address your question. So first of all, South Africa is not a bit negative in 2023. We do have, of course, issues and problems with the loan business.
Max: Yes.
Speaker Change: Sure. So let me let me address your question. So first of all of South Africa is not a bit negative.
Speaker Change: In 2023, we do have of course issues problems with the long business that's why we.
Aditya Mittal: That's why we took an impairment there, and we are in discussions with the government in South Africa, with various stakeholders, to try to preserve the business, the loan business, uh... South Africa is a bit positive, uh... Ukraine and Kazakhstan, as we know, were a bit negative in 2023. Kazakhstan is now out, so that's about 100 million of a bit of a loss that we should not see again repeating in 20 And I think the Ukrainian team is doing a great job minimizing their losses.
Speaker Change: We took an impairment there and we are in discussions with the government in South Africa with BARDA stakeholders to try to preserve the business among business.
Aditya Mittal: So south Africa is a bit of positive.
Aditya Mittal: Ukraine, and Kazakhstan as we know.
Speaker Change: EBITDA negative in 2023, because I expanded out that's about 100 million OIBDA loss that we should not see again repeating in 2024 and I think the Ukrainian team is doing a great job minimizing the losses.
Aditya Mittal: Today we are below, really, $100 million, even less when it comes to free cash. So I think it's, given the circumstances, it's going relatively well. What we have seen more recently, which gives us some optimism, is that the Black Sea is showing signs of normalizing, or at least there are some routes that our unit can now start to use. So that should provide a boost to our exports. If that materializes, if that is sustainable, we will see. Thank you very much. Okay, and the last one, if I may, on ADI, what's your course of action, and what's your residual exposure to the unit? I mean, would you... use any cash if you need, went untouched.
Speaker Change: Today, we are below $100 million.
Aditya Mittal: Even less when it comes to free cash.
Aditya Mittal: So I think it's.
Aditya Mittal: It's difficult to say if asbestos.
Speaker Change: It's growing relatively well what we've seen more recently, which give US also some optimism is the black sea is showing.
Aditya Mittal: Showing signs of normalizing or at least some routes that Oh unit can now start to use so that should provide a boost to our exports if that materializes.
Aditya Mittal: Painful, but we'll see.
Speaker Change: That is right.
Aditya Mittal: Well, then we should not forget that.
Aditya Mittal: We see Ukraine.
Aditya Mittal: In future with situation normalize, giving the strong.
Aditya Mittal: Asset base the.
Aditya Mittal: Quality of the iron ore that we have available can be an important part of our European strategy.
Speaker Change: Okay. Okay.
Speaker Change: Last one if I may.
Aditya Mittal: What's your course of action and whats your rest of your exposure to the unit I mean would you would you would you.
Speaker Change: I mean lose any cash.
Aditya Mittal: Well, as you know, we have taken the impairment now in Q4, and we are not today subject to any other commitment. So at this stage, we don't expect any more liabilities or costs associated with that. Great, thank you Bax.
Aditya Mittal: If the unit.
Speaker Change: Winton Todd Ministration.
Aditya Mittal: Well as you know we have taken the impairment now in the in Q.
Aditya Mittal: Q4.
Aditya Mittal: And we are not today subject to any of the commitment.
Aditya Mittal: So at this stage, we don't expect any more.
Speaker Change: Our liabilities or costs associated with it.
Okay. Thanks, So I'd go back to the queue.
Speaker Change: Alright, thank you.
Aditya Mittal: So we'll move now to a question from Moses at J.P. Morgan. Hi everyone, thank you very much for taking my question. So the first one I had, please, is just on the ongoing share buyback with the materially strong free cash flow generation in this quarter. Just wanted to understand if the May 2025 target for the completion of the ongoing share buyback remains relevant or if there perhaps is a case for reauthorization sooner. That's my first question. Yeah, Moses.
Merchandize: So we'll move now to a question from merchandize at J P. Morgan.
Speaker Change: Hi, everyone. Thank you very much for taking my question. So the first one.
Moses: I mean this is just on the ongoing share buyback with.
Aditya Mittal: With the materially strong free cash flow generation in this quarter just wanted to understand if the may 2025.
Aditya Mittal: Target for the completion of the ongoing share buyback remains relevant.
Aditya Mittal: Or is there perhaps grades.
Speaker Change: Our case for reauthorization SATA. That's my first question. Please.
Aditya Mittal: Yes.
Aditya Mittal: So look, I think we have, I think I was very pleased with what we achieved in quarter four. We did well, we took advantage of the very weak share price. We continue to buy back as we speak, and you can see the disclosures on a weekly basis.
Speaker Change: So I think we have.
Aditya Mittal: I think I was very pleased with what we achieved in quarter. Four so we said well we took advantage of the very weak share price.
Aditya Mittal: We continue to buy back as we speak you can see the disclosures on a weekly basis.
Aditya Mittal: We will continue that, so we are very confident that the group will continue to generate good levels of free cash this year. We have said that we want to keep, and we will keep, our capital allocation policy, so 50% of that will continue to be dedicated, and a minimum of 50% will be dedicated to the buyback. So at this point, we feel confident that, first of all, we're going to be able to complete the program by May next year at the latest, and we'll see as we and when we cross that page. We will then, of course, ask for a new authorization for more violence. Okay, thank you.
Aditya Mittal: We will continue that so we have.
Aditya Mittal: Very confident that the group will continue to generate good levels of free cash this year.
Aditya Mittal: We have said that we want to keep and we will keep our capital allocation policy. So 50% of that will continue to be.
Aditya Mittal: Very minimal 50% will be dedicated to the buybacks. So at this point, we feel confident that first of all we're going to be able to complete the program.
Aditya Mittal: By May next year at the latest and then let's see.
Aditya Mittal: And then when we cross that bridge, we'll then of course ask for new authorization for more buybacks.
Speaker Change: Okay. Thank you my second question just on pricing power here in Europe, we've seen.
Aditya Mittal: So my second question is just on pricing power here in Europe. We've seen disruptions to the Red Sea, imports, and lower demand for imports. I just wanted to see, from what you're seeing currently, if you're seeing greater pricing power due to greater demand for domestic materials, and how that weighs versus potential demand destruction, if any, as well. Yeah, I think you're right. We are seeing that there is a little bit more reluctance from importers because of all the disruptions that we are seeing. That's clearly, clearly positive. It's difficult, really, to isolate all the elements.
Aditya Mittal: Disruptions at the let's see.
Aditya Mittal: Imports.
Aditya Mittal: It lowered demand for imports.
Aditya Mittal: Wanted to see from what Youre seeing currently.
Aditya Mittal: You are seeing.
Aditya Mittal: Greater pricing power due to greater demand for domestic material and how that weighs versus potential demand destruction.
Aditya Mittal: If any as well.
Aditya Mittal: Okay.
Speaker Change: Yes, I think you're right.
Aditya Mittal: We have seen them. So there is a little bit more reluctance from importance because of all the disruptions that we've seen that's clearly clearly positive it's difficult really to isolate all of the elements. What we have seen Europe is.
Aditya Mittal: What we are seeing in Europe is that we are really coming from, again, a severe destock phase in the second half of 2023, especially Q4. Q4 was, again, a quarter where we saw a high level of destock. With that now, hopefully, behind us, we have started to see prices recovering, and spreads recovering. So that gives us good hope for 2024. Now, you saw our currency consumption forecast for the year. So, but the reality is that imports in Europe continue to be high, I mean, lower than 2022 overall. Aditya Mittal is a veterinary biologist.
Aditya Mittal: We are really coming from.
Aditya Mittal: Again, a severe destock phase in the second half of two.
Aditya Mittal: 2023, especially Q4 Q4 once again.
Aditya Mittal: Yes.
Aditya Mittal: A quarter, where we saw a high level of destock.
Aditya Mittal: The debt now hopefully behind US we started to see prices recovering.
Aditya Mittal: Spreads recovery so that was.
Aditya Mittal: Good hope for 2024.
Aditya Mittal: You saw what Princeton consumption forecast for the year.
Aditya Mittal: So, but the reality is that imports in Europe continued to be high.
Aditya Mittal: Lower than 2022 overall.
Aditya Mittal: But it's still in terms of market share imports basically kept the market share that they had in 2022. So remains remains a point of concern we have continuously.
Aditya Mittal: We are highlighting to develop on governance.
Aditya Mittal: It's something to.
Speaker Change: Be watchful.
Aditya Mittal: And finally, from me, just thinking about..., and others. Thank you. As you look to continue decarbonizing the business and we see the capital intensity required for low CO2 steel assets, how do you weigh that versus the ability to maybe purchase some low CO2 steel assets versus essentially building them out currently? Sure. Look, that's an ongoing dialogue, right, internally.
Aditya Mittal: Thank you.
Speaker Change: Finally from me.
Aditya Mittal: Thinking about M&A here and how essentially.
Aditya Mittal: Look too.
Aditya Mittal: Continued decarbonising.
Aditya Mittal: The business and we see the capital intensity required for the COC steel assets, how do you weigh that versus the ability to maybe purchase some of those tier two steel steel assets versus essentially.
Aditya Mittal: Building them out.
Speaker Change: Thank you.
Aditya Mittal: Sure.
Aditya Mittal: That's an ongoing dialogue right internally, some elevated assessing opportunities and reviewing it versus our ability to decarbonize outerwear business.
Aditya Mittal: So we're always assessing opportunities and reviewing them versus our ability to decarbonize our own business. And a case in point is, in some sense, we're doing both. We acquired a facility in Texas, which allows us to have, today, HPI capacity.
Aditya Mittal: Case in point as we in some sense, we're doing both we acquired a facility in Texas.
Aditya Mittal: Which allows us to have today HVAC capacity, we have over.
Aditya Mittal: We have a facility that can do more than 2 million tons, and our share of capacity is more than 1.8. We intend to double that facility as a good example, in which we have bought something, and then we're doubling it, and we're going to use that product within our plan. In terms of G-Carb, I think we've made some important investments already; we have made progress in capturing CO2 from our blast furnace. So we have a flagship project in Belgium, which we started up this year. It's a 200 million Euro project. We actually take the off-gases, convert them into bio-ethanol, and therefore allow the CO2 to be reused.
Aditya Mittal: Facility, which can do more than 2 million tons, an hour show capacity is more than one eight we intend to double that facility is a good example in English we have bought something and they are doubling in humans that product.
Aditya Mittal: Within our plants in terms of <unk> I think we've made some important investments already.
Aditya Mittal: We have made progress in capturing.
Aditya Mittal: <unk> from our blast furnaces. So we have a flagship project in Belgium, which has started up this year. It's a 200 million Euro project, we actually take the.
Aditya Mittal: The off gases are converted into bioethanol.
Aditya Mittal: And therefore, it allows us to.
Aditya Mittal: <unk> to be reuse. So I think it's an ongoing dialogue I think we're very focused as a company that we ensure that as we decarbonize. We generated a return on that and I think that becomes critical as we navigate the future and how we continue to generate value for all stakeholders.
Aditya Mittal: So I think it's an ongoing dialogue. I think we're very focused as a company on ensuring that as we deparbonize, we generate a return on that. And I think that becomes critical as we navigate the future and as we continue to generate value for all stakeholders. Thank you.
Speaker Change: Thank you.
Speaker Change: Thanks, guys, we will move now to a question from.
Aditya Mittal: We will move now to a question from Timnit at Balfour East. Yeah, hey, thanks for taking my question. I really wanted to follow up if I could about the mention of the core growth region in North America and particularly the comments about automotive exposure. Can you talk and expand, perhaps, on the opportunities in Canada, Mexico, and the U.S. and maybe, you know, downstream versus, you know, build versus buy? Just that you did divest some automotive exposed assets to CLIFS a couple years ago, so I was just wondering what type of growth you're looking at. If you could just give us some high-level thoughts, Sure. Thank you so much.
Aditya Mittal: Wolfe research.
Aditya Mittal: Yeah, Hey, Thanks for taking my question I really wanted to follow up if I could about the mention of the core growth region in North America.
Aditya Mittal: Kelly the comments about automotive exposure can you talk and expand perhaps on the opportunities in Canada, and Mexico U S and maybe you know downstream versus.
Aditya Mittal: Build versus buy.
Aditya Mittal: But you did divest some automotive exposed assets to click a couple of years ago. So just wondering what type of.
Aditya Mittal: Growth Youre looking at if you could just give us some high level thoughts.
Speaker Change: Sure. Thank you Timna.
Aditya Mittal: So just overall, starting with the basic facts, I think I mentioned this already, but we have about 14 million tons of hot-roll capacity. So just starting with Mexico, we just commissioned a new hot-strip mill, and it's doing really well. It has hit, it's doing better than the ramp-up that we had anticipated, so the young team has done a fabulous job there.
Aditya Mittal: Just overall.
Aditya Mittal: <unk> with the.
Aditya Mittal: The basic fact that I think I mentioned this already but we have about 14 million tons of hardwood capacity. So just starting with Mexico. We just commissioned a new hot strip mill, that's doing really well.
Aditya Mittal: It has hit its being better than then.
Aditya Mittal: Ramp up that we had anticipated the young team has done a fabulous job that we have the ability to continue to invest downstream right citizen value add finishing projects and that opportunity exists. We continue to invest in our finishing operations. When you look at North America, we were increasing automotive capacity to use.
Aditya Mittal: We have the ability to continue to invest downstream, right, so these are value-add finishing projects, and that opportunity exists. We continue to invest in our finishing operations. When you look at North America, we are increasing automotive capacity through Yusabour investments and other investments that we continue to make in our finishing lines. Moving up, moving to Calvert, in Alabama.
Aditya Mittal: Investments and other investments that we continue to make in our in our.
Aditya Mittal: Finishing lines moving up or.
Aditya Mittal: Moving to Calgary.
Aditya Mittal: In Alabama, clearly our focus right now.
Aditya Mittal: Clearly, our focus right now is to invest in electrifying our primary operations to date purchase of slabs. We have the opportunity to do almost 3 million tons of electric furnace capacity there, which not only supports the automotive franchise but also helps our presence in the market. As we complete those projects, I think we will update the market on future expansion opportunities that we may have in the U.S. Moving on to Canada, I think the biggest opportunity there is how do we decarbonize. Otherwise, if you look at the Defasco asset, it's a flagship asset.
Aditya Mittal: As to invest in electrifying, our primary operations to date bushes of slabs, we have the opportunity to do almost 3 million tons of electric furnace.
Aditya Mittal: Capacity that which which not only supports the automotive franchise, but also helps our presence in the market.
Aditya Mittal: As we complete those projects I think we will update the market on future expansion opportunities that we may have in the U S and moving on to Canada, I think the biggest opportunity there is how do we decarbonize.
Aditya Mittal: If you look at Dofasco asset, it's a flagship asset.
Aditya Mittal: It has a lot of value-add capability. It continues to generate very good margins, remains a low-cost, high-quality producer, and we have the opportunity to now move into low-carbon production routes and also reduce its cost. If you look at the energy mix in Canada, I think there are some opportunities to decarbonize and also find cost savings.
Aditya Mittal: It has a lot of value add capability that continues to generate.
Aditya Mittal: Very good margins remains a low cost high quality producer and we have the opportunity to now moving to the low carbon.
Aditya Mittal: Low carbon production routes and also reduce its cost.
Aditya Mittal: If you look at the energy mix in Canada, I think there's some opportunities.
Aditya Mittal: To Decarbonize and also Frank.
Aditya Mittal: Cost savings.
Aditya Mittal: I hope that gives you a flavor of how we intend to develop upstream as well as downstream capacity in our North American business. I've not talked about metallics, but just very quickly to complete the picture, we intend to double our capacity of HBI in Texas, and we have a flagship mining business in Canada. We should not lose sight of that.
Aditya Mittal: I hope that gives you a flavor on how we intend to develop.
Aditya Mittal: Upstream as well as downstream capacity in our North American business have not talked about metallics, but just very quickly to complete the picture.
Aditya Mittal: Where we tend to double our capacity of HBO in Texas, and we have a flagship mining business in Canada, we should not lose sight of that.
Aditya Mittal: That's a 24 million ton business that has a 10 million ton pelletizer, and that pelletizer is being converted to full DRI capability as we speak. Then we will have 10 million tons of DR pellets available in Canada, which obviously is a good location to supply to various of our facilities. That's a great overview, and there's a lot of demand for a second or third alternative in the market for cars, so that all sounds great. I just wanted to shift, if I could, on the second question. On the Brazilian market, it's been kind of plagued by cheap Chinese imports or other imports because it doesn't have as many trade barriers.
Aditya Mittal: 24 million ton business. It has a 10 million tonne pelletizing and Pelletizing is being converted to food Youre right capability as we speak. So then we will have 10 million tons of Dr. Pellet.
Aditya Mittal: <unk> in Canada, which obviously.
Aditya Mittal: It's a good location to supply to various of our facilities.
Aditya Mittal: That's a great overview on Theres, a lot of demand for that second or third alternative in the market for automotive said that that all sounds great I just wanted to shift if I could on the second question.
Aditya Mittal: Joanne market, that's been kind of plagued by Chinese imports or other imports. It doesn't have as many trade Barry I was just wondering if you see any room for hope there obviously the demand is it felt like longer term, but any signs of.
Aditya Mittal: Just wondering if you see any room for hope there. Obviously, the demand is solid longer term, but, you know, any signs of greater protection going forward from those imports? Thanks.
Aditya Mittal: Greater protection going forward from that standpoint. Thanks.
Aditya Mittal: So that remains a live discussion with the Brazilian government. We remain focused on ensuring that there is a fair trade environment, a level playing field. At this point in time, I don't have an update.
Aditya Mittal: Yes, I think you said remains a live discussion with the Brazilian government, we remain focused on ensuring that there's a fair trade environment a level playing field.
Aditya Mittal: At this point in time I don't have an update.
Aditya Mittal: But what I would add is that our Brazilian business is going through a growth phase. There are a number of projects which are being commissioned. You asked about the automotive industry.
Aditya Mittal: I would add is that our <unk>.
Aditya Mittal: Resilient business is going through a growth phase there are none.
Aditya Mittal: There are projects, which are being commission you asked about automotive we are expanding our automotive capability there too.
Aditya Mittal: We are expanding our automotive capability there through the expansion of Vega, which is our downstream coal and galvanizing facility. We're also growing our long products capability, and growing our mining business. And so when you look at Brazil in 2024, we actually think it'll do better than 2023.
Aditya Mittal: Expansion on Vega, which is our downstream cold rolling and galvanizing facility. We're also growing our long products capability equaling our mining business and so when you look at Brazil. In 2020, we actually think we'll do better than 2023 also the inclusion of pets in this the acquisition that we made in the northeastern Brazil is doing really well.
Aditya Mittal: Also, the inclusion of Pessim, the acquisition that we made in the northeast of Brazil, is doing really well, and we have the benefit of four years of results from Pessim. So I do see higher Chinese imports into the Brazilian market. We clearly are working with relevant stakeholders to ensure there's a level playing field. But in spite of that, just because of the strength, resilience, and high quality, low cost nature of our business, we will continue to do well in 2024 relative to 2023. Okay, great. Thanks again for everything. Thanks so much.
Aditya Mittal: And the benefit of full year results from person so I do see.
Aditya Mittal: Higher Chinese imports into the Brazilian market, we clearly are working with relevant stakeholders to ensure there is a level playing field, but in spite of that just because of the strength and resilience of high quality low cost nature of our business will continue to do well in 2024 relative to 2023.
Aditya Mittal: Okay, great. Thanks again.
Aditya Mittal: Sure.
Speaker Change: Thanks, very much and we will move now to a question from Patrick at Bank of America.
Aditya Mittal: So we'll move now to a question from Patrick at Bank of America. Thank you very much for the presentation. Two questions, please. One is just what percentage of EBITDA do you think your strategic projects will be once they ramp up? So we've had quite a few moving parts and now a change in disclosure as well with ACIS basically gone. So the $1.8 billion that normalized spreads, what would that kind of be of your group total?
Patrick: Thank you very much for the presentation.
Patrick: Two questions. Please one is just what percentage of EBITDA do you think your strategic projects will be once they ramp up so we've had quite a few moving parts in our change in disclosure is always ICIS.
Aditya Mittal: Acyclic going.
Patrick: So the $1 8 billion that normalized spreads what put that kind of be of your group's total and then the second question I think there's probably a follow on from problems, but a bit of a different angle. So some new partners. Your JV partner with Covid, but if they take over U S steel, which seems very likely then they.
Aditya Mittal: And then the second question, which is probably a follow-on from Tom's, but from a bit of a different angle. So Nippon is your JV partner at Culvert, but if they take over US Steel, which seems very likely, then they end up being quite a significant competitor in terms of the automotive industry. Is that a conflict of interest at all, and how do you manage it?
Aditya Mittal: They end up being quite a significant competitor in terms of automotive is that a is that a conflict of interest at all and how do you manage it.
Aditya Mittal: Or are you comfortable that the JV is sufficiently independent that it's not going to be an issue at all? Thank you. Sure. I'll take the second question.
Aditya Mittal: Or are you comfortable that the JV is sufficiently independent, but it's not going to be an issue at all thank you.
Aditya Mittal: Sure.
Speaker Change: I'll take the second question I am not sure. If he you know he will answer your first question.
Aditya Mittal: And I'm not sure Janino will answer your first question. I think you're almost asking for guidance, but I will leave it up to him. In terms of your second question, look, I'm not going to comment on the specific provisions of our joint venture, but typically, in such situations, when there is a selling partner, they sell it to the other partner in the joint venture, right? So I could imagine such a situation would develop. Janino?
Janino: I think you're almost asking for guidance, but I will I believe and I'll leave it up to him.
Janino: In terms of your second question look I'm not going to comment on the specific provisions of our joint venture, but typically in such situations.
Janino: When there is a selling bought.
Janino: Sell it to the other partner in the joint venture right. So I could imagine such a such a situation with gabelli.
Gennarino: Yep. So, Patrick, I mean, as you can see, I mean, all the advantages that we are providing for the project are based on, I would say, conservative assumptions. These two projects are based on the average stress that we saw during 2015 to 2020, and in the mining projects, we have long-term assumptions that are, as we all know, much lower than what we have seen in the last couple of years. So I would say that today we see, if you were to do a mark-to-market of these projects, I would see a lot of upside in the mining projects. But it's not our intention to be providing this mark-to-mark service.
Aditya Mittal: <unk>.
Aditya Mittal: Yes.
Gennarino: So Patrick I mean, as you can see I mean, all of the IP that we are providing for the projects. They are based on I would say conservative assumptions.
Gennarino: Two projects are based on the average spreads that we saw.
Gennarino: During 2015 to 2020.
Gennarino: And.
Gennarino: And the mining projects, we have long term.
Gennarino: The assumptions that are as we all know are much lower than what we have seen in the last couple of years. So I would say that today, we see if you want to do a mark to market of these projects I would say a lot of upside in the mining projects.
Speaker Change: It's not our intention.
Gennarino: To be providing it is mark to market, we will see when we start to.
Gennarino: We will see when we start to produce and sell the products, but clearly today, based on the assumptions today, that is a good upside to the numbers that we are providing. Got it. Thanks, Patrick. So we'll move to Bastian at Deutsche Bank. Go ahead, Bastian.
Bastian: To produce and sell the products, but clearly today based on the assumptions today that is a good upside to the numbers that we that we are providing them bill.
Bastian: Got it thank you.
Gennarino: Yeah.
Bastian: Thanks, Patrick So we'll move to <unk>.
Gennarino: Bastian at Deutsche Bank Gotcha Gotcha.
Aditya Mittal: Yeah, thanks, Daniel. Thanks for taking my questions. I've got two left, actually, and the first one is on the new sustainable solution segment, which is something you're moving into the focus here as well. So, will you report on the green steel cells under this new segment as well, or is it mostly just renewables which will drive growth here? And then also, maybe in that context, is this an area where you're looking for M&A? Because even after doubling MBTA, it will obviously still be pretty small in the group content. Thank you. Thank you very much. Yeah, hi. So in terms of sustainable solutions, it's actually a business that we own, businesses that we own. It is not meant to capture our low-carbon product.
Bastian: Yes, Thanks, Dan Thanks for taking my questions.
Aditya Mittal: I've got two left actually and the first one is on the new sustainable solutions segment, which is something that you are moving into the focus here school. So will you report the Greenfield sales under this new segment as well or is it mostly just the renewables, which will drive growth yet and then also maybe in that context is this an area. We are looking for M&A, because even after doubling EBITDA.
Aditya Mittal: It will obviously be still pretty pretty small in the group context.
Aditya Mittal: My first question.
Speaker Change: Yes, hi.
Aditya Mittal: <unk>.
Speaker Change: In terms of sustainable solutions, that's actually a business that we own.
Aditya Mittal: Businesses that we own it is not meant to capture our low carbon product. So maybe I'll just first address the low carbon product offerings that we have so as you know we're already selling various products under our X X car branding they'd be well in this in this earnings presentation that highlighted how schneider.
Aditya Mittal: So maybe I'll just first address the low-carbon product offerings that we have. As you know, we're already selling various products under our X-Carb branding, and they're doing well in this earnings presentation.
Aditya Mittal: We've highlighted how Schneider and Vestas are procuring our items and using them, and providing them in their low-carbon solutions. So I think we continue to do well. I think as we decarbonize, the product that we will sell from a low-carbon standpoint is part of our core business. Right, so that's not changing. So as the market develops and our customers, whether it's auto or otherwise, will be demanding these products, they will be supplied by a North America segment, by a Europe segment, by Brazil, etc., etc. The sustainable services are really a bunch of businesses which have a fundamentally different character to the businesses that we own. A lot of them are downstream.
Aditya Mittal: And best Us are procuring our items and using them and providing them the real carbon solutions. So I think we'll continue to do well and I think as we decarbonize.
Aditya Mittal: The product that we will sell.
Aditya Mittal: From a low carbon standpoint, as part of our core business right. So that's not changing so as the market develops and our customers, whether it's auto or otherwise will be demanding these products. They will be furnished by North America segment, our Europe segment by Brazil, et cetera et cetera.
Aditya Mittal: These sustainable services is really a bunch of businesses, which have a fundamentally different character to the businesses that we own a lot of them are downstream so.
Aditya Mittal: So, for example, our construction business, which we call Internally, is really supporting the manufacturing of buildings and systems. We have project engineering, in which we supply products for energy infrastructure requirements. We have an EEF-based facility called Industry which provides really niche, high-quality plates, whether it's to the nuclear industry or to low-cost, not low cost, low carbon segments of the industrial landscape. Included in this will be the scrap, the metallics, which is recycled steel, as well as our renewable investments. So really, what we want to highlight is that we have a bunch of high growth. Thank you very much.
Aditya Mittal: For example, our construction business that we call internally is really <unk>.
Aditya Mittal: Supporting manufacturing buildings and systems.
Aditya Mittal: We have project engineering and wish we supply.
Aditya Mittal: Product for energy infrastructure requirements, we have in EES based facility called <unk>, which provides a really niche high quality plates.
Aditya Mittal: Whether it's to the nuclear industry or to low cost.
Aditya Mittal: Not a low cost low carbon.
Aditya Mittal: Segments of the industrial landscape included in this will be the scrap and metallics, which is recycled steel as well as.
Aditya Mittal: Our renewable investments so really what we want to highlight is that we have a bunch of them.
Aditya Mittal: High growth niche capital light businesses, which are playing an important.
Aditya Mittal: Role in supporting climate action.
Aditya Mittal: We intend to double this based on the existing plans that we have, and to the extent that it makes sense to acquire and further boost the growth, we will examine it. Okay, great. That's great, Kalle.
Aditya Mittal: And how the different Ah.
Aditya Mittal: Profile in terms of the capital that is deployed in return on capital and the stability of earnings.
Aditya Mittal: We intend to double this based on the existing plans that we had and to the extent that it makes sense to acquire and further boost the growth we have been examined.
Kalle: Okay, Great. That's great color. Thanks for detail then my second question is one on the Adi actually so I'm wondering what was the recent underlying run rate for the loss in the fourth quarter. If you were to X out the impairment.
Aditya Mittal: Thanks, Aditya. Then my second question is one on ADI, actually. So I'm wondering, what was the recent underlying run rate for the loss in the fourth quarter if you were to exaggerate the impairment? And then maybe also, is there still a realistic pathway for you to retain an involvement? I guess I'm asking that because if you're not able to run it on your platform as a European market leader, I'm not quite sure who will be capable or willing to take it on.
Aditya Mittal: And then maybe also if there's still a realistic pathway for you have to re tenant of Goldman and I guess I'm asking that because.
Aditya Mittal: I guess, if you are not able to run it on your platform as a European market leader I'm, not quite sure who will be capable or willing to take on that risk.
Aditya Mittal: Yeah, sure. I will answer the second part of your question. And then, maybe Janina would like to add something.
Janina: Yes, sure I will.
Janina: And for the second part of your question.
Janina: And then maybe jamey and I would like to add something.
Aditya Mittal: As you know, and as you have alluded to, the troubles of IWA are well documented, don't they? We have entered into a public-private partnership with the government to ensure that the asset remains sustainable and viable. On our part, we have invested a significant amount of capital. We have completed all of the environmental investments which were mandated.
Janina: As you know and as you have alluded to the troubles.
Speaker Change: Well documented right.
Aditya Mittal: Entered into a public private partnership with the government.
Aditya Mittal: To ensure that the ASIC remains sustainable and viable.
Aditya Mittal: On our part we have invested significant amount of capital. We have completed all of the environmental investments, which were mandated we have actually even spent more than $1 billion in capital equipment or capex and improving the performance of the existing.
Aditya Mittal: We have actually even spent more than a billion in capital equipment, or CapEx, to improve the performance of existing assets. I believe that today we are in a discussion with the government on the appropriate way forward. The energy crisis that has occurred in Europe over the last 18 months has exacerbated the viability of this asset, or has diminished, I should say, the viability of this asset, and therefore, we remain in discussions on the appropriate way forward. This is a live discussion, as you are aware, and to the extent that there are developments, we will immediately keep you informed. In terms of impairment, it was proven to impair our assets in Europe.
Aditya Mittal: Assets.
Aditya Mittal: I believe that today, we are in a discussion with the government on the appropriate way forward.
Aditya Mittal: Energy crisis that occurred in Europe over the last 18 months since exacerbated the viability of this asset or has diminished I should say the viability of this asset and therefore, we remain in discussions on the appropriate way forward. This is a live discussion as you are aware and to the extent that there are developments.
Aditya Mittal: Immediately keeps the performed in terms of the impediment it was prudent to impair our assets in ilva.
Aditya Mittal: Based on our future cash earning projections, as well as the potential settlement, we're not expecting any further impacts from ILVA or ADI going forward. Okay, and yeah, again, just on the, thanks Aditya, and then on the run rate, loss run rate contribution, excluding the impairment, I guess if you were to consolidate it, you would probably get a relief on the. Sorry, Bastian, can you repeat your question again? Yeah, sure, sure. Geno Naluka, I think in the fourth quarter, you've been impairing ILVA, but I guess you, on an underlying basis, have also been loss-making. And so if you just exclude the impairment effect from the net loss, what would have been the loss contribution to the associates and joint venture line? And I guess if you were to deconsolidate it, just to gauge what the effect could be, so what would have been the underlying loss before impairment?
Aditya Mittal: Based on our future cash, earning projections as well as the potential settlement, we're not expecting any further impacts from a low adi going forward.
Aditya Mittal: Okay.
Bastian: Yes, again, just somebody you. Thanks, and then on the run rate loss run rate contribution excluding the impairment I guess, if you were to consolidate it.
Bastian: Probably get a relief on me.
Speaker Change: Sofie apply.
Bastian: So your question can you can you repeat the answer your question, Yes sure sure.
Bastian: I think in the fourth quarter, you've been impairing silver, but I guess he also on an underlying basis has been loss, making and so if you want.
Bastian: Excluding the impairment effect from the net loss would have been the loss contribution to the associates and joint venture line and I guess, if you were to be consolidated just to gauge what the if it could be <unk> what has been the underlying loss before impairment in Q4.
Gennarino: Right. Yeah, so for food here. So that would, I mean, of course, you don't have the losses of Q4 because we have impaired the assets, right? So then we, but we are, so it would have improved our results in JVs by about $50 million.
Aditya Mittal: Right.
Aditya Mittal: Yeah.
Speaker Change: Yes, so for full year.
Bastian: So that would I mean of course, you don't have the losses up to Q4, because we haven't been there since right.
Bastian: So then.
Geno Naluka: So it would have improved our results in jv's by about $50 million.
Gennarino: Great, thank you. Thanks, Bastian. So we have about five minutes left, Aditya, and a question about... Three more people to ask questions, so hopefully we can get through this, but we'll take the next question from Andrew at UBS. Go ahead, Andrew. Thanks, Daniel. I think a lot of the questions have already been answered, but just for the first quarter. I'm just curious if you could just talk us through some of the main divisions, your expectations for sort of... Broadly, volume change, spread, you know, spread, mix, or rest.
Speaker Change: Okay, great. Thank you.
Gennarino: Thanks, Bastian, so we have about five minutes left with their children.
Andrew: Question about.
Gennarino: Three more people to ask questions. So hopefully we can capture of that title.
Andrew: We'll take the next question from.
Andrew: UBS go ahead Andrew.
Andrew: Yeah. Thanks Danielle.
Gennarino: A lot of the questions have already been answered, but just for the first quarter. I was curious if you could just help us through some of the main.
Gennarino: Division still expectations vessels.
Gennarino: Courtney volume change spread spread mix the rest of it.
Gennarino: And just a quick comment on, you know, the European market. I'm just wondering if you're seeing the end of that restocking bounce, or, in your view, what's driving that? Is it a blasphemous restocking or just a bit of color about how you see the European HRC. Yeah, sure, Andrew. Let me take this one.
Andrew: And just a quick comment on the European market I mean, we're seeing prices just ticking down a little down plants last couple of days.
Gennarino: Wondering.
Gennarino: If you're saying the end of that restocking bounce. So in your view, what's sort of driving that is popular with last month's restyled angle can you just give us that color about how you see the European HSA Your question. Thanks.
Gennarino: Yeah.
Andrew: Yes, Sean let me take this one so in terms of the moving parts for for quarter one.
Gennarino: So in terms of the moving parts for quarter one, clearly, we want to see the benefits of the higher prices that we started to see reading in the second part of Q4. So that will impact our, positively impact our results in quarter one, so higher prices, especially in NAFTA, and to some extent also in Europe. We should also see better shipments. We will see improvements, of course, as we all know, Q4 is a seasonally weak quarter in some regions, and we also face de-stocking in most parts of our business. So we'll see a recovery in shipments. We will see better prices, but at the same time, we're also going to see some pressure on costs. As we all know, we have also seen raw materials rising, especially cork and coal, so that should also be taken into account. So that's in terms of the moving parts, Europe. I think I touched on it already, the fact that we had this very serious talk again in Q4. Thank you very much.
Gennarino: Clearly, we are going to see the benefits of the.
Gennarino: Higher prices that we find interesting reading the second part of Q4, So thats building back our positively impact our results in quarter, one so higher price, especially in NAFTA to some extent also also in Europe. We should also see better shipments that we will.
Gennarino: See improvements of course as we all know Q4 is seasonally.
Gennarino: A weak quarter in some regions and also we face the destocking.
Gennarino: In most parts of our business.
Gennarino: So we will see a recovery in shipments we will see better prices, but at same time, we also going to see some pressure from costs as we all as we all know we have also seen raw materials.
Gennarino: Rising, especially coking coal so that should also be taken into account.
Gennarino: So that's in terms of the moving parts Europe, I think I touched on it already the fact that we have this very severe they start again in Q4.
Gennarino: Put us in a good place in terms of our parents to consumption going forward in Q1, we start to see price of cost recovery and we start to see.
Gennarino: The spreads improving as well.
Gennarino: So that looks that looks positive for.
Gennarino: But of course, we also need to take into account that raw material costs are also increasing, as I talked about. And do you see a threat from imports in the near term, just given these red sea issues? Is that likely to keep supply tight into 2Q, or can you see... I see prices sort of starting to drift. Well, as you know, Andrew, we cannot really comment much on future prices; we're not allowed to do that. So we will, I guess we'll have to wait and see. But I, the point is that we have highlighted in our earnings, I guess they're all positive, right? The fact that passive consumption for you should be positive this year. The fact that inventory levels are at a low level.
Gennarino: For quarter one.
Gennarino: Of course, we also need to take into account that.
Gennarino: Raw material costs also increased as I talked about.
Gennarino: And do you see a threat from imports in the in the near term just given me. So that's the issue so.
Gennarino: Spot likely to keep supply tight in <unk> or can you see.
Gennarino: When you see prices starting to drift.
Gennarino: Well.
Speaker Change: You know Andrew we cannot really comment much on the on future prices, you're not allowed to do that.
Gennarino: I guess, we will have to wait and see but the point is that we have highlighted in our earnings I guess they all.
Gennarino: Positive ride the effect of the past and Thats subject for you should be positive this year.
Gennarino: Fact that inventory levels are.
Gennarino: I'll have to low levels.
Gennarino: So we talked about some of the disruptions also impacting the Red Sea, the shipments. We'll see, right? But I think the evidence that we have today in front of us is good.
Gennarino: So we talked about some of the disruption is also impacting.
Gennarino: See the shipments.
Gennarino: We will see right, but I.
Gennarino: I think the evidence that we have today in front of us.
Gennarino: It's it's it's good.
Gennarino: Thanks, Andrew. So we've got a couple of follow-ups. We'll take the first from Max.
Max: Okay. Thank you.
Max: Thanks, Andrew So we've got a couple of follow ups will take the first remarks.
Aditya Mittal: Yeah, thank you for taking this one. Maybe, given the results of recovery, you think, what do you think of reopening a fossil mare? There's still one blasphemous idol there.
Max: Yes. Thank you for taking this one yes.
Max: Given the recovery you're seeing what do you think of the reopening of question. There, yes. They are still one blast furnace.
Aditya Mittal: So, what can you say on this topic? Yeah, for now, there is no decision yet to restart. Okay, and I think the iron ore production last year was really soft. Can you give some kind of self-guidance? Do you think you can come back? levels in terms of iron oxides.
Max: So what can you say on this topic.
Speaker Change: Yes for now there is no decision yet.
Aditya Mittal: Restart costs.
Aditya Mittal: Okay.
Speaker Change: Thank you I will now put the 10 last year with.
Aditya Mittal: With was really soft.
Aditya Mittal: Could you give some kind of soft guidance on 2024 do you think you can come back to the principal levers in terms of a firewall no prediction.
Aditya Mittal: Well, absolutely. I think that's absolutely the target. So unfortunately, we had the bridge failure in Liberia. It will still impact us in January, but after that, we have restarted again. College we should be up and running again.
Aditya Mittal: Well, absolutely I think thats absolutely target.
Aditya Mittal: So unfortunately, we had the the <unk>.
Aditya Mittal: Bridge failure in Liberia.
Aditya Mittal: We will still impact us.
Aditya Mittal: In January but after that we have restarted again, although it shouldn't be we shouldn't be up and running again and.
Aditya Mittal: And MindsCanada, in January, we are doing well in terms of material movement, so we believe the whole team's committed to getting back to the 24 million. Okay. And lastly, you don't have any coal assets anymore. And in that situation, it could be interesting to have some, given how high prices are.
Aditya Mittal: And and minus Canada.
Aditya Mittal: In general we are doing well.
Aditya Mittal: With material movements, so I think the whole teams committed to.
Aditya Mittal: We'll be back to the 24 million tonnes.
Aditya Mittal: Okay.
Aditya Mittal: You don't have any coal assets anymore.
Aditya Mittal: That situation this could be interesting to watch something given how high your prices.
Aditya Mittal: Are you willing to come back into that area alongside iron ore, where you have a significant presence, or is it too difficult to handle given the security? Yeah, thank you. We do not operate any coal mines globally today, and that will be the case for the foreseeable future.
Aditya Mittal: Are you are you willing to come back into that area.
Aditya Mittal: I will now you will have a significant presence or is it too difficult to handle document security constraints.
Speaker Change: Yes. Thank you.
Aditya Mittal: We.
Aditya Mittal: So looking today, we do not operate any coal mines globally.
Aditya Mittal: Uh huh.
Aditya Mittal: That will be the case in the foreseeable future I do not rule out equity investments.
Aditya Mittal: I do not rule out equity investments to secure our supply chain, but not a direct operating coal mine under our ownership. I think we remain very focused on expanding our existing iron ore business. We have flagship assets both in Canada and with the investments we're making in Liberia. It's a Tier 1 high-quality deposit that we're running at 15 million tons. As you heard from Jim Reno, we can take the rail line to a capacity of 30 million tons, and the deposit there can support that output. Really, our focus in terms of the mining business is growing and developing our existing mining assets, i.e. iron ore, and not focused on developing or acquiring coal assets in which we are the operator.
Aditya Mittal: To secure our supply chain.
Aditya Mittal: But not a direct operating mine not a direct operating coal mine under our ownership.
Aditya Mittal: We remain very focused on expanding our existing iron ore business, we had some extra baskets both than in.
Aditya Mittal: In Canada, and with the investments, we're making in Liberia, It's a tier one high quality deposit to be running at 15 million tonnes and you heard from Jim you know we can keep the rail line has a capacity of 30 million tons and the deposit there can support that output. So really our focus in terms of the mining businesses is growing.
Aditya Mittal: In developing our existing mining assets.
Aditya Mittal: Iron ore and not focused on developing.
Aditya Mittal: When acquiring core assets in which we are the operator.
Aditya Mittal: Okay. Okay. Thank you. Thank you for taking the time. Great, thanks Max. So Aditya, we'll take the last question now from, it's a follow-up from Alain at Morgan Stanley, and then I'll hand it back to you. Thanks. Just one quick question.
Speaker Change: Okay. Okay. Thank you and thank you for taking my questions.
Aditya Mittal: Alright, Thanks box. So that you will take our last question from it's a follow up from Alain at Morgan Stanley and I'll come back to you.
Alain: Thanks. So just one quick question is on the slab market in Europe, and do you see it structurally changing with the planned closure of course Talbot then all the trouble that they invite the progressive sanctions on unimportant attraction slides and how well are you positioned to capitalize on this new and evolving dynamic. Thanks.
Aditya Mittal: On the slab market in Europe, do you see it structurally changing with the planned closure of Port Talbot and all the troubles at Ilva and the progressive sanctions on imported Russian slabs? And how well are you positioned to capitalize on this new and evolving dynamic? Well, Alain, the whole team is focused on, of course, making sure that we, [inaudible] We are capturing all the opportunities, right? So unfortunately, as we know, the Russian slavs, they continue to flow into Europe.
Aditya Mittal: Well, we are the whole teams are focused sort of course, making sure that we are.
Aditya Mittal: Uh huh.
Aditya Mittal: We are capturing all of you all of the opportunities right. So unfortunately, as we know the Russians labs, they continue to flow into Europe.
Aditya Mittal: There is quite a long transition period. We will see when that happens. I think we're going to be in a position to be an important supplier to the market if that happens. I think we will have the capacity to do that. But we'll see how it develops, right? Because we know it has been extended at least once.
Aditya Mittal: There is a quite a long transition period, we'll see when that happens right I think we're going to gain a position to then to be unimportant supply into the market. If that happens I think we will have the capacity to do that.
Aditya Mittal: But we'll see how it develops right because we know that has that got extended at least for US we will see how it develops.
Aditya Mittal: We'll see how it develops. Thank you. Okay. Great. I'll conclude the call. Thank you, everyone. We've covered a lot of ground on today's call, but I hope your takeaways are clear. We are on the cusp of a step change in our profitability. The outlook for steam demand is positive, and we are well positioned to capitalize on the growth vector that exists within our industry.
Speaker Change: Thank you.
Speaker Change: Okay, Great I'll conclude the call. Thank you.
Aditya Mittal: Everyone.
Aditya Mittal: We've covered a lot of grasp on the call today, but I hope you articulate a clear.
Aditya Mittal: We are on the cusp of a step change in our profitability. The outlook. We're seeing demand is positive and we are well positioned to capitalize on the growth vector that exists within our industry. We're organizing various events. This year to provide you with more insight on these dynamics, including a trip to visit our operations in India at the end of <unk>.
We are organizing various events this year to provide you with more insight on these dynamics, including a trip to visit our operations in India at the end of September, where you can see firsthand all the positive developments that are occurring at the facility and the potential facility as well as the. More details will follow soon, I'm sure. In the meantime, if you need anything, please do reach out to Daniel and his team. With that, I conclude the call. I wish you all the best in the year ahead. Stay safe and keep those around you safe as well. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscant and thank you for participating in the conference. The Human Alchemy of Your Life Aryan Naderi, Leivit Nadiering, Albert Planng, Vice President for International Affairs and Youth Affairs, Frameworks Research Center and Managing Director, Phil Gove Ediya Babensky, Professor of Philosophy, European Universities Graduate School of Law
Aditya Mittal: September where you can see firsthand.
Aditya Mittal: All of the positive developments that are occurring at the facility and the potential.
Aditya Mittal: The facility as well as the country.
Aditya Mittal: More details will follow soon I'm sure in the meantime, if you need anything please do reach out to Daniela and his team with that I conclude the call I wish you all the best in the year ahead stay safe and keep those around you safe as well. Thank you.
Speaker Change: Ladies and gentlemen, the conference is now over thank you for two quarters and thank you for participating in the conference you May now disconnect your lines Goodbye.
Aditya Mittal: Yeah.
Aditya Mittal: Okay.
Aditya Mittal: Okay.
Aditya Mittal: [noise].