20-F 1 mt-31122017x20xfdocument.htm 20-F Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 20-F
 
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35788
 
ARCELORMITTAL
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
 
Grand Duchy of Luxembourg
(Jurisdiction of incorporation or organization)
 
24-26, Boulevard d’Avranches, L-1160 Luxembourg,
Grand Duchy of Luxembourg
(Address of Registrant’s principal executive offices)
 
Henk Scheffer, Company Secretary, 24-26, Boulevard d’Avranches, L-1160 Luxembourg,
Grand Duchy of Luxembourg. Fax: +352 4792 89 3746
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
Ordinary Shares
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is reporting obligation pursuant to Section 15(d) of the Act:
None
 
Indicate the number of outstanding shares of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
Ordinary Shares
1,019,916,787
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes  x    No  ¨ 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes  ¨    No  x 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  x    No  ¨ 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‐T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “accelerated filer, large accelerated filer and emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
Accelerated filer  ¨
Non-accelerated filer  ¨
 
Emerging growth company  ¨
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  ☐  International Financial Reporting Standards as issued by the International Accounting Standards
Board  x   Other  ¨
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17  ¨    Item 18  ¨
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨    No  x
 




TABLE OF CONTENTS
 
 
Page
 



 
 




PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION
Definitions and terminology
Unless indicated otherwise, or the context otherwise requires, references herein to “ArcelorMittal”, “we”, “us”, “our” and the “Company” or similar terms are to ArcelorMittal, formerly known as Mittal Steel Company N.V. (“Mittal Steel”), having its registered office at 24-26, Boulevard d’Avranches, L-1160 Luxembourg, Grand Duchy of Luxembourg, and, where the context requires, its consolidated subsidiaries. References to the “ArcelorMittal group” and the “Group” are to ArcelorMittal and its consolidated subsidiaries. ArcelorMittal’s principal subsidiaries, categorized by reporting segment and location, are listed below.
For the purposes of this annual report, the names of the following ArcelorMittal subsidiaries as abbreviated below will be used where applicable.
 
Name of Subsidiary
 
Abbreviation
 
Country
 
NAFTA
 
 
 
 
 
ArcelorMittal Dofasco G.P.
 
ArcelorMittal Dofasco
 
Canada
 
ArcelorMittal México S.A. de C.V.
 
ArcelorMittal Mexico
 
Mexico
 
ArcelorMittal USA LLC
 
ArcelorMittal USA
 
USA
 
ArcelorMittal Long Products Canada G.P.
 
ArcelorMittal Long Products Canada
 
Canada
 
 
 
 
 
 
 
Brazil and neighboring countries ("Brazil")
 
 
 
 
 
ArcelorMittal Brasil S.A.
 
ArcelorMittal Brasil
 
Brazil
 
Acindar Industria Argentina de Aceros S.A.
 
Acindar
 
Argentina
 
 
 
 
 
 
 
Europe
 
 
 
 
 
ArcelorMittal Atlantique et Lorraine S.A.S.
 
ArcelorMittal Atlantique & Lorraine
 
France
 
ArcelorMittal Belgium N.V.
 
ArcelorMittal Belgium
 
Belgium
 
ArcelorMittal España S.A.
 
ArcelorMittal España
 
Spain
 
ArcelorMittal Flat Carbon Europe S.A.
 
AMFCE
 
Luxembourg
 
ArcelorMittal Galati S.A.
 
ArcelorMittal Galati
 
Romania
 
ArcelorMittal Poland S.A.
 
ArcelorMittal Poland
 
Poland
 
ArcelorMittal Eisenhüttenstadt GmbH
 
ArcelorMittal Eisenhüttenstadt
 
Germany
 
ArcelorMittal Bremen GmbH
 
ArcelorMittal Bremen
 
Germany
 
ArcelorMittal Méditerranée S.A.S.
 
ArcelorMittal Méditerranée
 
France
 
ArcelorMittal Belval & Differdange S.A.
 
ArcelorMittal Belval & Differdange
 
Luxembourg
 
ArcelorMittal Hamburg GmbH
 
ArcelorMittal Hamburg
 
Germany
 
ArcelorMittal Ostrava a.s.
 
ArcelorMittal Ostrava
 
Czech Republic
 
ArcelorMittal Duisburg GmbH
 
ArcelorMittal Duisburg
 
Germany
 
ArcelorMittal International Luxembourg S.A.1
 
ArcelorMittal International Luxembourg
 
Luxembourg
 
 
 
 
 
 
 
Africa and Commonwealth of Independent States ("ACIS")
 
 
 
 
 
ArcelorMittal South Africa Ltd.
 
ArcelorMittal South Africa
 
South Africa
 
JSC ArcelorMittal Temirtau
 
ArcelorMittal Temirtau
 
Kazakhstan
 
PJSC ArcelorMittal Kryvyi Rih
 
ArcelorMittal Kryvyi Rih
 
Ukraine
 
 
 
 
 
 
 
Mining
 
 
 
 
 
ArcelorMittal Mining Canada G.P. and ArcelorMittal Infrastructure Canada G.P.
 
ArcelorMittal Mines and Infrastructure Canada
 
Canada
 
ArcelorMittal Liberia Ltd
 
ArcelorMittal Liberia
 
Liberia
 
JSC ArcelorMittal Temirtau
 
ArcelorMittal Temirtau
 
Kazakhstan
 
PJSC ArcelorMittal Kryvyi Rih
 
ArcelorMittal Kryvyi Rih
 
Ukraine
1.
ArcelorMittal International Luxembourg is managed as part of the Europe segment as of January 1, 2017.

4


In addition, unless indicated otherwise, or the context otherwise requires, references in this annual report to:
“production capacity” are to the annual production capacity of plant and equipment based on existing technical parameters as estimated by management;
“steel products” are to finished and semi-finished steel products, and exclude raw materials (including those described under “upstream” below), direct reduced iron (“DRI”), hot metal, coke, etc.;
“sales” include shipping and handling fees and costs billed to a customer in a sales transaction;
“tons”, “net tons” or “ST” are to short tons and are used in measurements involving steel products (a short ton is equal to 907.2 kilograms or 2,000 pounds);
“tonnes” or “MT” are to metric tonnes and are used in measurements involving steel products, as well as crude steel, iron ore, iron ore pellets, DRI, hot metal, coke, coal, pig iron and scrap (a metric tonne is equal to 1,000 kilograms or 2,204.62 pounds);
“Articles of Association” are to the amended and restated articles of association of ArcelorMittal, dated May 22, 2017;
“crude steel” are to the first solid steel product upon solidification of liquid steel, including ingots from conventional mills and semis (e.g., slab, billet and blooms) from continuous casters;
measures of distance are stated in kilometers, each of which equals approximately 0.62 miles, or in meters, each of which equals approximately 3.28 feet;
“DMTU” or “dmtu” stands for dry metric tonne unit;
“real”, “reais” or “R$” are to Brazilian reais, the official currency of Brazil;
“US$”, “$”, “dollars”, “USD” or “U.S. dollars” are to United States dollars, the official currency of the United States;
“AUD$” or “AUD” are to Australian dollars, the official currency of Australia;
“C$” or “CAD” are to Canadian dollars, the official currency of Canada;
“CNY” are to Chinese yuan, the official currency of China;
“KZT” are to the Kazakhstani tenge, the official currency of Kazakhstan;
“UAH” are to the Ukrainian Hryvnia, the official currency of Ukraine;
“euro”, “euros”, “EUR” or “€” are to the official currency of the European Union (“EU”) member states participating in the European Monetary Union;
“ZAR” are to South African rand, the official currency of the Republic of South Africa;
“Ps.” or “MXN” are to the Mexican peso, the official currency of the United Mexican States;
“special bar quality” (“SBQ”) are to special bar quality steel, a high-quality long product;
“downstream” are to finishing operations, for example in the case of flat products, the process after the production of hot-rolled coil/plates, and in case of long products, the process after the production of blooms/billets (including production of bars, wire rods, SBQ, etc.);
“upstream” are to operations that precede downstream steel-making, coking coal, coke, sinter, DRI, blast furnace, basic oxygen furnace (“BOF”), electric arc furnace (“EAF”), casters & hot rolling/plate mill;
“number of employees” are to employees on the payroll of the Company;
“Significant Shareholder” are to a trust (HSBC Trustee (C.I.) Limited, as trustee), of which Mr. Lakshmi N. Mittal, Mrs. Usha Mittal and their children are the beneficiaries, or (where the context requires) prior owners of the Significant Shareholder’s stake in ArcelorMittal;

5


“GMB” are to the Group Management Board, the former senior management body which was replaced by the CEO Office as of January 1, 2016. The CEO Office, supported by six Executive Officers, makes up the Company’s senior management;
“CEO Office” are to the Chief Executive Officer, Mr. Lakshmi N. Mittal, and the Chief Financial Officer, Mr. Aditya Mittal;
“Executive Officers” are to those executives of the Company who are supporting the CEO Office and jointly with the CEO Office represent the senior management of the Company;
“brownfield project” are to the expansion of an existing operation;
“greenfield project” are to the development of a new project;
“coking coal” are to coal that, by virtue of its coking properties, is used in the manufacture of coke, which is used in the steelmaking process;
“direct reduced iron” or “DRI” are to metallic iron formed by removing oxygen from iron ore without the formation of, or passage through, a smelting phase. DRI can be used as feedstock for steel production;
“iron ore fines” are to ultra-fine iron ore generated by mining and grinding processes, that are aggregated into iron ore pellets through an agglomeration process or used as sinter feed;
“iron pellets” are to agglomerated ultra-fine iron ore particles of a size and quality suitable for use in steel-making processes;
“sinter” are to a metallic input used in the blast furnace steel-making process, which aggregates fines, binder and other materials into a coherent mass by heating without melting;
“energy coal” are to coal used as a fuel source in electrical power generation, cement manufacture and various industrial applications. Energy coal may also be referred to as steam or thermal coal;
“metallurgical coal” are to a broader term than coking coal that includes all coals used in steelmaking, such as coal used for the pulverized coal injection (“PCI”) process;
“run of mine” or “ROM” are to mined iron ore or coal to be fed to a preparation and/or concentration process;
“wet recoverable” are to a quantity of iron ore or coal recovered after the material from the mine has gone through a preparation and/or concentration process excluding drying;
“CIS” are to the countries of the Commonwealth of Independent States; and
the “Spanish Stock Exchanges” are to the stock exchanges of Madrid, Barcelona, Bilbao and Valencia.
Financial information
This annual report contains the audited consolidated financial statements of ArcelorMittal and its consolidated subsidiaries, including the consolidated statements of financial position as of December 31, 2017 and 2016, and the consolidated statements of operations, other comprehensive income, changes in equity and cash flows for each of the years ended December 31, 2017, 2016 and 2015. ArcelorMittal’s consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

6


The financial information and certain other information presented in a number of tables in this annual report have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this annual report reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. This annual report on Form 20-F includes net debt and operating working capital, which are non-GAAP financial measures. ArcelorMittal believes net debt and operating working capital to be relevant to enhance the understanding of its financial position and provides additional information to investors and management with respect to the Company’s operating cash flows, capital structure and credit assessment. Non-GAAP financial measures should be read in conjunction with and not as an alternative for, ArcelorMittal’s financial information prepared in accordance with IFRS. Such non-GAAP measures may not be comparable to similarly titled measures applied by other companies.
Market information
This annual report includes industry data and projections about the Company’s markets obtained from industry surveys, market research, publicly available information and industry publications. Statements on ArcelorMittal’s competitive position contained in this annual report are based primarily on public sources including, but not limited to, publications of the World Steel Association. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. The Company has not independently verified this data or determined the reasonableness of such assumptions. In addition, in many cases the Company has made statements in this annual report regarding its industry and its position in the industry based on internal surveys, industry forecasts and market research, as well as the Company’s experience. While these statements are believed to be reliable, they have not been independently verified.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This annual report and the documents incorporated by reference in this annual report contain forward-looking statements based on estimates and assumptions. This annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among other things, statements concerning the business, future financial condition, results of operations and prospects of ArcelorMittal, including its subsidiaries. These statements usually contain the words “believes”, “plans”, “expects”, “anticipates”, “intends”, “estimates” or other similar expressions. For each of these statements, you should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although it is believed that the expectations reflected in these forward-looking statements are reasonable, there is no assurance that the actual results or developments anticipated will be realized or, even if realized, that they will have the expected effects on the business, financial condition, results of operations or prospects of ArcelorMittal.
These forward-looking statements speak only as of the date on which the statements were made, and no obligation has been undertaken to publicly update or revise any forward-looking statements made in this annual report or elsewhere as a result of new information, future events or otherwise, except as required by applicable laws and regulations. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk factors” (Part I, Item 3D of this Annual Report on Form 20-F). The Company undertakes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.
KEY INFORMATION

7


A.    Selected financial data
The following tables present selected consolidated financial information of ArcelorMittal as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, prepared in accordance with IFRS as issued by the IASB. This selected consolidated financial information should be read in conjunction with ArcelorMittal’s consolidated financial statements, including the notes thereto, included elsewhere herein.
Consolidated Statements of Operations
(Amounts in $ millions except per share data)
Year ended December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
Sales
68,679
 
56,791
 
63,578
 
79,282
 
79,440
Operating income/(loss)
5,434
 
4,161
 
(4,161)
 
3,034
 
1,197
Net income/(loss) from continuing operations (including non-controlling interest)
4,575
 
1,734
 
(8,423)
 
(974)
 
(2,575)
Net income/(loss) attributable to equity holders of the parent
4,568
 
1,779
 
(7,946)
 
(1,086)
 
(2,545)
Net income/(loss) (including non-controlling interest)
4,575
 
1,734
 
(8,423)
 
(974)
 
(2,575)
Earnings per common share (in U.S. dollars)
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per common share1, 2
4.48
 
1.87
 
(10.29)
 
(1.43)
 
(3.40)
Diluted earnings (loss) per common share1, 2
4.47
 
1.86
 
(10.29)
 
(1.43)
 
(3.40)
Dividends declared per share3,4
0.10
 
 
 
0.45
 
0.45
Consolidated Statements of Financial Position
(Amounts in $ millions except share data)
As of December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
Total assets
85,297
 
75,142
 
76,846
 
99,179
 
112,308
Net assets
40,855
 
32,325
 
27,570
 
45,160
 
53,173
Share capital
401
 
401
 
10,011
 
10,011
 
10,011
Basic weighted average common shares outstanding (millions)2
1,020
 
953
 
772
 
771
 
766
Diluted weighted average common shares outstanding (millions)2
1,024
 
955
 
772
 
771
 
766
 
1
Basic earnings per common share are computed by dividing net income attributable to equity holders of ArcelorMittal by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per common share include assumed shares from stock options, shares from restricted stock units and convertible debt (if dilutive) in the weighted average number of common shares outstanding during the periods presented. See note 10.3 to the consolidated financial statements for further information.
2
Following the Company’s equity offering in April 2016, the earnings (loss) per share for prior periods have been recast in accordance with IFRS for the years ended December 31, 2015, 2014 and 2013, respectively, to include the bonus element derived from the 35% discount to the theoretical ex-right price included in the subscription price. Following the completion of the Company's share consolidation of each three existing shares into one share without nominal value on May 22, 2017, the earnings (loss) per share and corresponding basic and diluted weighted average common shares outstanding for the years ended December 31, 2016, 2015, 2014 and 2013, respectively, have been recast in accordance with IFRS.
3
Following the Company’s equity offering in April 2016, the dividends declared per share for prior periods have been recast for the years ended December 31, 2014 and 2013, respectively, to include the bonus element derived from the 35% discount to the theoretical ex-right price included in the subscription price. The actual dividends paid were $0.20 and $0.20 per issued share as of December 31, 2014 and 2013, respectively. Following the completion of the Company's share consolidation of each three existing shares into one share without nominal value on May 22, 2017, the dividends declared per share for the years ended December 31, 2014 and 2013, respectively, have been recast.
4
The Board has agreed on a new dividend policy which will be proposed to shareholders at the AGM in May 2018. Given the current deleveraging focus, dividends will begin at $0.10/share in 2018 (paid from 2017 results).

B.    Capitalization and indebtedness
Not applicable.
C.    Reasons for the offer and use of proceeds
Not applicable.

8


D.    Risk factors
ArcelorMittal’s business, financial condition, results of operations, reputation or prospects could be materially adversely affected by one or more of the risks and uncertainties described below.
Risks related to the global economy and the mining and steel industry
Excess capacity, oversupply and destocking cycles in the steel industry and in the iron ore mining industry have in the past and may continue in the future to weigh on the profitability of steel producers, including ArcelorMittal.
The steel industry is affected by global and regional production capacity and fluctuations in steel imports and exports, which are themselves affected by the existence and amounts of tariffs and customer stocking and destocking cycles. The steel industry globally has historically suffered from structural overcapacity, and the current global steelmaking capacity exceeds the current global consumption of steel. This overcapacity is amplified during periods of global or regional economic weakness due to weaker global or regional demand. In particular, China is both the largest global steel consumer and the largest global steel producer by a large margin, and the balance between its domestic production and consumption has been an important factor influencing global steel prices in recent years. In 2015, for example, Chinese steel demand declined as a result of weaker real estate sector construction and machinery production, leading to a surge in Chinese steel exports, which more than doubled between 2012 and 2015, increasing by over 56 million tonnes to 112 million tonnes in 2015. The balance between Chinese domestic production and consumption improved in 2017, reflecting improved domestic demand compared to a relatively small increase in production and resulting in a significant decrease in exports. In 2017, overcapacity was reduced somewhat due to the ongoing plan to reduce steel production capacity by 100-150 million tonnes by 2020 announced in 2016 being coupled with the closure of illegal electric induction furnaces forced by the Chinese government and temporary production limits due to environmental policies. These capacity cuts combined with relatively strong domestic demand led to a corresponding reduction in steel exports, down over 30% in 2017. However, should Chinese domestic demand weaken significantly, further rationalization of capacity would likely be needed to avoid exports rising strongly. In addition to China, other developing markets (such as Brazil, Russia and Ukraine) continue to show structural overcapacity after domestic demand fell sharply during recent recessions. Finally, certain developed markets, particularly developed Asia and to a lesser degree Europe, remain in a position of structural overcapacity notwithstanding rationalization steps taken (in particular in Europe) by ArcelorMittal and other producers in recent years.
The overcapacity of steel production in the developing world and in China in particular has weighed on global steel prices in recent years, since China is the largest global steel consumer and, even more directly, by leading to massive exports to developed markets globally and in particular Europe and NAFTA, ArcelorMittal’s principal markets. These exports, often at low prices that may be at or below the cost of production, have depressed steel prices in regional markets world-wide. See “Unfair trade practices in ArcelorMittal’s home markets could negatively affect steel prices and reduce ArcelorMittal’s profitability.”
In addition, excess iron ore supply coupled with decreased demand in iron ore consuming industries, such as steel, led to a prolonged depression of iron ore prices in recent years, which in turn weighed on steel prices as iron ore is a principal raw material in steelmaking. While the supply/demand balance improved in 2017, no assurance can be given that it will not deteriorate again, particularly if Chinese steel demand declines.
A renewed phase of steel and iron ore oversupply, if not counterbalanced by effective trade measures and/or demand increases, would have a material adverse effect on ArcelorMittal’s results of operations and financial condition.
Protracted low steel and iron ore prices would be likely to have an adverse effect on ArcelorMittal’s results of operations.   
As an integrated producer of steel and iron ore, ArcelorMittal’s results of operations are sensitive to the market prices of steel and iron ore in its markets and globally. The impact of market steel prices on its results is direct. The impact of market iron ore prices is both direct, as ArcelorMittal sells iron ore on the market to third parties, and indirect as iron ore is a principal raw material used in steel production and fluctuations in its market price are typically and eventually passed through to steel prices. Steel prices and iron ore prices are affected by supply trends (see above), demand trends and inventory cycles. In terms of demand, steel and iron ore prices are sensitive to trends in cyclical industries, such as the automotive, construction, appliance, machinery, equipment and transportation industries, which are significant markets for ArcelorMittal’s products. In the past, substantial price decreases during periods of economic weakness have not always been offset by commensurate price increases during periods of economic strength. In addition, as indicated above, excess supply relative to demand in local markets generally results in increased exports and drives down global prices. In terms of inventory, steel stocking and destocking cycles affect apparent demand for steel and hence steel prices and steel producers’ profitability.  For example, steel

9


distributors may accumulate substantial steel inventories in periods of low prices and, in periods of rising real demand for steel from end-users, steel distributors may sell steel from inventory (destock), thereby delaying the effective implementation of steel price increases. Conversely, steel price decreases can sometimes develop their own momentum, as customers adopt a “wait and see” attitude and destock in the expectation of further price decreases.
As a result of these factors, steel and iron ore prices were under pressure in recent periods and particularly in 2015, with both steel and iron ore reaching lows in 2015 over the last decade. This had a pronounced negative effect on ArcelorMittal’s results of operations, in the form of significant declines in revenues and operating income for 2015. Moreover, the particularly sharp decline in steel prices in the second half of 2015 triggered inventory related losses of $1.3 billion, and the significant decline in iron ore and coal prices led to a $3.4 billion impairment of mining assets and goodwill in the fourth quarter of 2015. Steel prices improved in 2016 compared to the low levels of 2015, but with a high level of volatility, particularly in the fourth quarter of 2016. The significant overall trend in steel prices seen during the fourth quarter of 2016, continued during the first quarter of 2017, followed by a decline during the second quarter of 2017 and a strong rebound in the second half of 2017. Iron ore prices were highly volatile in 2016, hitting a low of $39.51 per tonne on January 13, 2016 and a high of $83.58 per tonne on December 12, 2016. Iron ore prices continued to be volatile in 2017, with a high of $94.86 per tonne on February 21, 2017 and a low of $53.36 on June 13, 2017. Despite the improved prices seen in 2016 and 2017, iron ore prices are expected to remain under pressure from the expected continued oversupply as well as from lower Chinese iron ore demand due to steel capacity cuts.
In addition, while the steel price increases and iron ore price recovery in the second half of 2016 and in 2017 may well be supported by underlying demand trends, the timing and extent of continued price recovery, maintenance of improved price levels or return to prior levels cannot be predicted. In response to the difficult steel and iron ore price environment in recent past years, the Company has implemented a number of cost-saving measures intended to improve operating income (refer to “Item 4B–Information on the Company–Business overview–Competitive strengths–Dynamic responses to market challenges and opportunities” and “Item 4B–Information on the Company–Business overview–Business strategy–Action 2020 plan”), and the Company's resilience to difficult price environments, as well as measures to reduce its cash requirements, including through lower capital expenditures, interest expense and the suspension of dividend payments for the financial years 2015 and 2016. These actions may not prove sufficient to maintain profitability or cash flows, particularly in a renewed scenario of prolonged low steel and iron ore prices, in which case, ArcelorMittal’s results of operations and financial condition would be adversely affected.
Volatility in the supply and prices of raw materials, energy and transportation, and volatility in steel prices or mismatches between steel prices and raw material prices could adversely affect ArcelorMittal’s results of operations. 
The prices of steel, iron ore, coking coal, coke and scrap have been highly volatile in recent years. Iron ore spot prices reached a low at the end of December 2015 of $38.50 per tonne. In the second half of 2016, coking coal prices rose sharply and suddenly, largely driven by a sharp drop in Chinese domestic coking coal production as well as maintenance and operational production issues in Australian coking coal mines during the period. Hard coking coal (“HCC”) spot prices rose from $92 per tonne at the beginning of July to $212.50 per tonne on September 29, 2016 and a maximum of $310 per tonne on November 8, 2016, and finally closing the fourth quarter with a spot average at $266.15 per tonne. In 2017, coking coal prices were again highly volatile, dropping to a monthly average of $155.18 per tonne in March 2017 and then spiking to $300.04 per tonne on April 17, 2017 due to supply disruptions.
Steel prices have also demonstrated significant volatility. Steel prices dropped to $353 per tonne at the end of 2015, exceeding historical lows. Steel prices rebounded strongly in 2016, from a low of $338 per tonne in January up to a peak of $506 per tonne in June 2016. The second half of 2016 started with a short-lived price softening to $452 per tonne in July, followed by a steady increase towards year end reaching $595 per tonne in December 2016. The average hot rolled coil price for the first half of 2017 in the United States was $688 per tonne as compared to $547 per tonne (an increase of $141 per tonne year-on-year) for the first half of 2016 and in the second half of 2017 prices averaged at $686 per tonne representing a $68 per tonne increase compared to the second half of 2016. See “Item 5—Operating and financial review and prospects—Steel prices” for more information.

10


Volatility in steel and raw material prices can result from many factors including: trends in demand for iron ore in the steel industry itself, and particularly from Chinese steel producers (as the largest group of producers); industry structural factors (including the oligopolistic nature of the sea-borne iron ore industry and the fragmented nature of the steel industry); the expectation or imposition of corrective trade measures; massive stocking and destocking activities (sudden drops in prices can lead end-users to delay orders pushing prices down further), as occurred most recently toward the end of 2015 and early 2016 ; speculation; new laws or regulations; changes in the supply of iron ore, in particular due to new mines coming into operation; business continuity of suppliers; changes in pricing models or contract arrangements; expansion projects of suppliers; worldwide production, including interruptions thereof by suppliers; capacity-utilization rates; accidents or other similar events at suppliers’ premises or along the supply chain; wars, natural disasters, political disruption and other similar events; fluctuations in exchange rates; the bargaining power of raw material suppliers and the availability and cost of transportation.
As a producer and seller of steel, the Company is directly exposed to fluctuations in the market price for steel, iron ore, coking coal and other raw materials, energy and transportation. In particular, steel production consumes substantial amounts of raw materials including iron ore, coking coal and coke, and the production of direct reduced iron, the production of steel in EAFs and the re-heating of steel involve the use of significant amounts of energy, making steel companies dependent on the price of and their reliable access to supplies of raw materials and energy. Although ArcelorMittal has substantial sources of iron ore and coal from its own mines (the Company’s self-sufficiency rates were 50% for iron ore and 13% for PCI and coal in 2017), it nevertheless remains exposed to volatility in the supply and price of iron ore, coking coal and coke given that it obtains a significant portion of such raw materials under supply contracts from third parties. For additional details on ArcelorMittal’s raw materials supply and self-sufficiency, see “Item 4.B—Information on the Company—Business overview—Mining products—Other raw materials and energy”.
Furthermore, while steel and raw material (in particular iron ore and coking coal) price trends have historically been correlated, a lack of correlation or an abnormal lag in the corollary relationship between raw material and steel prices may also occur and result in a “price-cost squeeze” in the steel industry. ArcelorMittal has experienced price-cost squeezes at various points in recent years and may continue to do so. In some of ArcelorMittal’s segments, in particular Europe and NAFTA, there are several months between raw material purchases and sales of steel products incorporating those materials, rendering them particularly susceptible to price-cost squeeze. This lag and the resulting price-cost squeeze due to the increase in coking coal prices, among other factors, resulted in a decline in profitability in the fourth quarter of 2016. Because ArcelorMittal sources a substantial portion of its raw materials through long-term contracts with quarterly (or more frequent) formula-based or negotiated price adjustments and as a steel producer sells a substantial part of its steel products at spot prices, it faces the risk of adverse differentials between its own production costs, which are affected by global raw materials and scrap prices, on the one hand, and trends for steel prices in regional markets, on the other hand. 
Another area of exposure to price volatility is energy and transportation. Freight costs (i.e., shipping) are a substantial component of ArcelorMittal’s cost of goods sold. Freight costs were particularly low in the second half of 2015 due, among other things, to depressed oil prices and demand. Ocean freight market rates for dry cargo remained low but volatile during 2016 with the Baltic Dry Index (“BDI”) reaching its lowest value historically in February 2016 at 290 points but recovering during the year driven by heavy demolition of ships and an increase in Chinese demand in the fourth quarter of 2016. Ocean freight prices then increased significantly in the first half of 2017 to an average of 975 points, reflecting increased iron ore activity from Brazil and increased imports of iron ore and coal into China and overall the BDI increased by 70% year-on-year and averaged 1,145 points in 2017, primarily due to an increase in iron ore, coal and grain cargoes into China. If freight costs were to increase before iron ore or steel prices, this would directly and mechanically weigh on ArcelorMittal’s profitability (although it would make imports less competitive).
ArcelorMittal’s business and results are substantially affected by regional and global macroeconomic conditions. Recessions or prolonged periods of weak growth in the global economy or the economies of ArcelorMittal’s key selling markets have in the past had and in the future would be likely to have a material adverse effect on the mining and steel industries and on ArcelorMittal’s results of operations and financial condition.
The mining and steel industries have historically been highly volatile largely due to the cyclical nature of the business sectors that are the principal consumers of steel as described above. Demand for minerals, metals and steel products thus generally correlates to macroeconomic fluctuations in the global economy. For example, this correlation and the adverse effect of macroeconomic downturns on metal mining companies and steel producers were evidenced in the 2008/2009 financial and subsequent economic crisis. The results of both mining companies and steel producers were substantially affected, with many steel producers (including ArcelorMittal) recording sharply reduced revenues and operating losses. Economic growth (and hence steel and minerals demand) trends have varied across such markets since such period. 

11


In 2015, global apparent steel consumption contracted notably in China and most of ArcelorMittal’s core markets except Europe. In 2016, global steel demand improved particularly in China where demand grew slightly. This was due to a rebound in real estate sales leading to growth in newly started floor space, the strength of auto and the rebound of machinery from declines seen in 2015. Growth continued in China in 2017, but is expected to continue to moderate as monetary policy tightens, net exports decrease and fiscal policies used to support growth become more intermittent. Europe is a major market for ArcelorMittal, whose results have suffered in prior years from recession and stagnation. European demand has grown since 2013 as the steel consuming sectors, particularly automotive, have gradually improved. Indications are that 2017 has seen the strongest GDP growth in a decade driven by a broad-based recovery in all sectors of the economy. However, risks remain due to policy uncertainty, still unsolved sovereign debt issues in many southern European countries and the direction of the Brexit negotiations. The process and the economic effects of Brexit are uncertain, and its consequences are expected to be far-reaching and include potential trade barriers, custom duties, logistic issues and restrictions to the free movement of people. Economic conditions have also improved in many of ArcelorMittal’s other markets, including Brazil and the CIS, but such improvements may prove fragile; and economic conditions have remained difficult in South Africa.
The short-term outlook for 2018 global GDP growth is to continue to strengthen to 3.2%, the best since 2011 and up from 3% in 2017. Leading indicators support a pick-up in U.S. growth, continued growth over 2% in Europe, a modest slowdown in China and increasing growth in emerging markets supported by buoyant capital inflows and firm commodity prices. However, there remains many risks to the global outlook including (among other things) geopolitical tensions globally; political tensions in Europe; threats to globalization by renewed protectionism; high debt and an aging population causing Chinese growth to slow sharply. A materialization of these risks could depress demand for (and hence the price of) steel and iron ore and therefore have a material adverse effect on ArcelorMittal’s results of operations and financial condition.
Unfair trade practices in ArcelorMittal’s home markets could negatively affect steel prices and reduce ArcelorMittal’s profitability.
ArcelorMittal is exposed to the effects of “dumping” and other unfair trade and pricing practices by competitors. Moreover, government subsidization of the steel industry remains widespread in certain countries, particularly those with centrally-controlled economies such as China. In periods of lower global demand for steel, there is an increased risk of additional volumes of unfairly-traded steel exports into various markets, including North America and Europe and other markets such as South Africa, in which ArcelorMittal produces and sells its products. Such imports have had and could in the future have the effect of further reducing prices and demand for ArcelorMittal’s products.
Instances of such perceived dumping have been especially acute in recent years, and China has been accused by several countries and market participants of engaging in the widespread dumping of significant amounts of low-cost steel products in several markets. Chinese imports in key ArcelorMittal markets increased significantly since 2009 but peaked in 2014 into the U.S. and 2015 into EU28 and globally fell a further 30% in 2017. Chinese finished steel exports to the EU increased from 1.5 million tonnes in 2009 to 7.0 million tonnes in 2015. Since 2015, the exports have fallen by over 45%, to 5.8 million tonnes in 2016 and 3.8 million in  2017 and imports remain above the average since 2000. Chinese exports into North America increased from under 1 million tonnes in 2010 to 3.4 million tonnes in 2014 before declining to 1.1 million tonnes in 2016 due in particular to the imposition of duties (as noted below) before increasing to around 1.3 million tonnes in 2017. Industry studies suggest that Chinese low-cost steel exports benefit from significant state support, which allows for the sale of such steel products at artificially low prices, including at a loss to producers, which has a significant negative impact on global steel prices and the industry more generally. Moreover, while China is widely considered the most significant exporter of artificially low-cost steel products, several other countries are suspected to engage in similar unfair trade and pricing practices in the steel industry. In response, in the United States, final affirmative duty measures have been adopted with respect to all four of ArcelorMittal’s flat products categories: corrosion-resistance steel, cold-rolled coil, hot-rolled coil and plate. Anti-circumvention investigations on cold-rolled coils and corrosion-resistant steel products from China (through Vietnam) are ongoing: the Department of Commerce (the "DOC") announced an affirmative preliminary determination on December 6, 2017 and importers are required to post cash deposits for potential AD/CVD duties. On April 20, 2017, a national security investigation (Section 232) with respect to steel imports was initiated in the United States. The DOC report was sent to the Trump Administration on January 11, 2018, after which the administration has 90 days to decide what action to take, if any. In Europe, definitive measures have been adopted for cold-rolled coils versus China and Russia, for hot-rolled coil and heavy plate imports from China. The European Commission has also adopted duties for four of the five countries subject to hot-rolled coil anti-dumping investigations (Brazil, Iran, Ukraine and Russia, with Serbia excluded), and final measures were approved in December 2017 on imports from China of corrosion resistant steel (HDG non-auto).
Additionally, the Company has collaborated to pursue anti-dumping actions in Canada, Mexico and Brazil (See “Item 4.B—Information on the Company—Business overview—Government regulations—Foreign trade”). 

12


Against this backdrop of increasing dumping and other unfair trade and pricing pressures, China is lobbying members of the World Trade Organization (“WTO”) for immediate “Market Economy Status” (“MES”) in light of the expiry on December 11, 2016 of certain protocols to its 2001 accession to the WTO. MES is a bilateral designation that is granted individually by a given country and can be made on the basis of a legal or political determination. Several countries, including several in markets in which ArcelorMittal operates, have already granted China MES and a day after the expiration of the subparagraph “a” of article 15 (December 12, 2016) of  the accession protocol of China to the WTO regarding the methodology for calculating the dumping margins, China notified the WTO Secretariat that it had requested dispute consultations with the United States and the European Union regarding special calculation methodologies used by the U.S. and EU in anti-dumping proceedings. The WTO established a panel to review the dispute with respect to the EU. In November 2017, the United States submitted a statement to the WTO, as a third party brief in support of the European Union in a dispute with China, formally opposing granting China market economy status; the dispute is ongoing at the WTO. On December 19, 2017, the EU published its approved amendments of the Anti-Dumping Regulation (EU) 2016/1036 (New Antidumping Methodology-NADM), which changes the way the EU will treat China in new Anti-Dumping cases. No assurance can be given as to whether or when the U.S., Brazil or other countries will grant MES to China. A country’s decision to grant MES to China would substantially reduce the anti-dumping duty margins that it may apply against China pursuant to the rules of WTO, which would encourage or at least fail to discourage China’s exportation of unfairly traded steel products into several markets in which ArcelorMittal operates. See “Item 4.B-Information on the Company-Business overview-Foreign trade” for more information.
A continuation or an increase in exports of low-cost steel products from developing countries, along with a lack of effective remedial trade policies, would continue to depress steel prices in various markets globally, including in ArcelorMittal’s key markets.  See “Item 4.B—Information on the Company—Business overview—Government regulations”.
Conversely, ArcelorMittal has exposure to the effects of trade sanctions and barriers due to the global nature of its operations. Various countries have in the past instituted trade sanctions and barriers and the recurrence of such measures, or the imposition of the above-mentioned anti-dumping legislation, could adversely affect ArcelorMittal’s business by limiting the Company’s access to steel markets. In the United States, the U.S. Congress and Trump administration may make substantial changes in legislation, regulation and government policy directly affecting ArcelorMittal’s business (in particular exports from Canada or Mexico into the United States) or indirectly affecting the Company because of impacts on its customers and suppliers. In particular, President Trump has initiated renegotiations of the NAFTA trade agreement and has made comments suggesting that he may negotiate other free trade agreements. It remains unclear to what extent such negotiations will result in a modification or termination of such agreements by the United States.
Developments in the competitive environment in the steel industry could have an adverse effect on ArcelorMittal’s competitive position and hence its business, financial condition, results of operations or prospects.
The markets in which steel companies operate are highly competitive. Competition—in the form of established producers expanding in new markets, smaller producers increasing production in anticipation of demand increases or amid recoveries, or exporters selling excess capacity from markets such as China—could cause ArcelorMittal to lose market share, increase expenditures or reduce pricing. Any of these developments could have a material adverse effect on its business, financial condition, results of operations or prospects.
Competition from other materials could reduce market prices and demand for steel products and thereby reduce ArcelorMittal’s cash flows and profitability. 
In many applications, steel competes with other materials that may be used as substitutes, such as aluminum (particularly in the automobile industry), concrete, composites, glass, plastic and wood. In particular, as a result of increasingly stringent regulatory requirements, as well as developments in alternative materials, designers, engineers and industrial manufacturers, especially those in the automotive industry, are increasing their use of lighter weight and alternative materials, such as aluminum, composites and plastics in their products. For example, carmakers are using more aluminum than in the past although this trend is limited to premium vehicles and to specific parts like doors and hoods.
While ArcelorMittal has introduced new advanced high-strength steel products, such as Usibor® 2000, Ductibor® 1000 and new 3rd generation AHSS for cold stamping in the range Fortiform®, new engineering S-in motion® projects and a dedicated electric iCARe® range to respond to the shift toward electric cars (see “Item 4.B—Information on the Company—Business overview—Sustainable development—Competitive strengths—Outcome 2: Products that accelerate more sustainable lifestyles”), loss of market share to substitute materials, increased government regulatory initiatives favoring the use of alternative materials, as well as the development of additional new substitutes for steel products could significantly reduce market prices and demand for steel products and thereby reduce ArcelorMittal’s cash flows and profitability.

13


ArcelorMittal is subject to strict environmental laws and regulations that could give rise to a significant increase in costs and liabilities. 
ArcelorMittal is subject to a broad range of environmental laws and regulations in each of the jurisdictions in which it operates. These laws and regulations impose increasingly stringent environmental protection standards regarding, among others, air emissions, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste disposal practices and the remediation of environmental contamination. The costs of complying with, and the imposition of liabilities pursuant to, environmental laws and regulations can be significant, and compliance with new and more stringent obligations may require additional capital expenditures or modifications in operating practices. Failure to comply can result in civil and or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations and lawsuits by third parties. Despite ArcelorMittal’s efforts to comply with environmental laws and regulations, environmental incidents or accidents may occur that negatively affect the Company’s reputation or the operations of key facilities.
ArcelorMittal also incurs costs and liabilities associated with the assessment and remediation of contaminated sites. In addition to the impact on current facilities and operations, environmental remediation obligations can give rise to substantial liabilities in respect of divested assets and past activities. This may also be the case for acquisitions when liabilities for past acts or omissions are not adequately reflected in the terms and price of the acquisition. ArcelorMittal could become subject to further remediation obligations in the future, as additional contamination is discovered or cleanup standards become more stringent.
Costs and liabilities associated with mining activities include those resulting from tailings and sludge disposal, effluent management, and rehabilitation of land disturbed during mining processes. ArcelorMittal could become subject to unidentified liabilities in the future, such as those relating to uncontrolled tailings breaches or other future events or to underestimated emissions of polluting substances. For example, the failure of a tailings ponds dam at ArcelorMittal’s mines could cause significant damage, including death, injury and environmental harm. While the Company carries out assessments of its facilities, it cannot guarantee that failures or breaches of a tailings ponds dam will not occur in the future.
ArcelorMittal’s operations may be located in areas where individuals or communities may regard its activities as having a detrimental effect on their natural environment and conditions of life. Any actions taken by such individuals or communities in response to such concerns could compromise ArcelorMittal’s profitability or, in extreme cases, the viability of an operation or the development of new activities in the relevant region or country.
See “Item 4.B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations” and note 8.2 to ArcelorMittal’s consolidated financial statements.
Laws and regulations restricting emissions of greenhouse gases could force ArcelorMittal to incur increased capital and operating costs and could have a material adverse effect on ArcelorMittal’s results of operations and financial condition.  
Compliance with new and more stringent environmental obligations relating to greenhouse gas emissions may require additional capital expenditures or modifications in operating practices, as well as additional reporting obligations. The integrated steel process involves carbon and creates carbon dioxide (“CO2”), which distinguishes integrated steel producers from mini-mills and many other industries where CO2 generation is primarily linked to energy use. The EU has established greenhouse gas regulations and is revising its emission trading system for the period after 2020 in a manner that may require ArcelorMittal to incur additional costs to acquire emissions allowances. In Kazakhstan the government has installed a domestic trading system which currently is in a pilot phase but would be similar to the EU system. South Africa envisages to start with a CO2 tax system in 2018. The United States required reporting of greenhouse gas emissions from certain large sources beginning in 2011. Although at the federal level the current administration is seeking to delay further regulation of greenhouse gas emissions, emissions trading regimes and other initiatives are continuing to be pursued at the state and regional level. Various regulations are in consideration or recently implemented in Argentina, Ukraine and Canada as further described in “Item 4B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations”.
Further measures may be enacted in the future. In particular, in December 2015, the 195 countries participating in the United National Framework Convention on Climate Change reached an international agreement, the Paris Agreement. The Paris Agreement aims to implement the necessary drivers to achieve drastic reductions of carbon emissions. The Company takes this message seriously and investigates its possibilities to contribute to this by developing research and development programs, investigating its technical possibilities to reduce emissions (the Company’s emission footprint in 2016 was approximately 200 million tonnes) and following the state of knowledge on climate change closely. Please refer to “Item 4B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations” for further detail on the objectives.

14


Such obligations, whether in the form of a national or international cap-and-trade emissions permit system, a carbon tax or acquisition of emission rights at market prices, emissions controls, reporting requirements, or other regulatory initiatives, could have a negative effect on ArcelorMittal’s production levels, income and cash flows. Such regulations could also have a negative effect on the Company’s suppliers and customers, which could result in higher costs and lower sales. Moreover, the EU Commission’s decision to further reduce the allocation of CO2 emission rights to companies could negatively impact the global industry, as the amount of such rights is currently at the edge of covering technically achievable operating conditions. ArcelorMittal currently expects that CO2 emissions regulations will result in increased costs in Europe starting in 2020.
Furthermore, many developing nations have not yet instituted significant greenhouse gas regulations, and the Paris Agreement specifically recognized that peaking of greenhouse gas emissions will occur later in developing countries. As the Paris Agreement recognizes that the Intended Nationally Determined Contributions (“INDC”) for developing nations may be less stringent in light of different national circumstances, ArcelorMittal may be at a competitive disadvantage relative to steelmakers having more or all of their production in such countries. Depending on the extent of the difference between the requirements in developed regions (such as Europe) and developing regions (such as China or the CIS), this competitive disadvantage could be severe and render production in the developed region structurally unprofitable.
See “Item 4.B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations” and note 8.2 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal is subject to stringent health and safety laws and regulations that give rise to significant costs and could give rise to significant liabilities.
ArcelorMittal is subject to a broad range of health and safety laws and regulations in each of the jurisdictions in which it operates. These laws and regulations, as interpreted by relevant agencies and the courts, impose increasingly stringent health and safety protection standards. The costs of complying with, and the imposition of liabilities pursuant to, health and safety laws and regulations could be significant, and failure to comply could result in the assessment of civil and criminal penalties, the suspension of permits or operations, and lawsuits by third parties. In addition, under certain circumstances authorities could require ArcelorMittal facilities to curtail or suspend operations based on health and safety concerns.
Despite ArcelorMittal’s efforts to monitor and reduce accidents at its facilities (see “Item 4.B—Information on the Company—Business overview—Government regulations—Health and safety laws and regulations”), health and safety incidents do occur, some of which may result in costs and liabilities and negatively impact ArcelorMittal’s reputation or the operations of the affected facility. Such accidents could include explosions or gas leaks, fires or collapses in underground mining operations, vehicular accidents, and other accidents involving mobile equipment, or exposure to radioactive or other potentially hazardous materials. Some of ArcelorMittal’s industrial activities involve the use, storage and transport of dangerous chemicals and toxic substances, and ArcelorMittal is therefore subject to the risk of industrial accidents which could have significant adverse consequences for the Company’s workers and facilities, as well as the environment. Such accidents could lead to production stoppages, loss of key personnel, the loss of key assets, or put at risk employees (and those of sub-contractors and suppliers) or persons living near affected sites.
See “Item 4.B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations” and note 8.2 to ArcelorMittal’s consolidated financial statements.
Risks related to ArcelorMittal
ArcelorMittal has a substantial amount of indebtedness, which could make it more difficult or expensive to refinance its maturing debt, incur new debt and/or flexibly manage its business.
As of December 31, 2017, ArcelorMittal had total debt outstanding of $12.9 billion, including $2.8 billion of short-term indebtedness (including payables to banks and the current portion of long-term debt) and $10.1 billion of long-term indebtedness. As of December 31, 2017, ArcelorMittal had $2.8 billion of cash and cash equivalents, including restricted cash of $0.2 billion, and $5.5 billion available to be drawn under existing credit facilities. The Company also relies on its true sale of receivables programs ($5.0 billion of trade receivables sold and outstanding at December 31, 2017), as a way to manage its working capital cycle.
An increase in ArcelorMittal’s level of debt outstanding could have adverse consequences, including impairing its ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes, and limiting its flexibility to adjust to changing market conditions or withstand competitive pressures, resulting in greater vulnerability to a downturn in general economic conditions. Substantial increases in the Company's gearing could affect its ability to, and the conditions under which it might, access financial markets to refinance maturing debt on acceptable terms.

15


ArcelorMittal’s access to financial markets for refinancing also depends on the conditions in the global capital and credit markets, which are volatile. Under such circumstances as occurred during the 2008/2009 financial and economic crisis and again at the height of the eurozone sovereign debt crisis in 2012, the Company could experience difficulties in accessing the financial markets on acceptable terms or at all. While ArcelorMittal has made substantial progress in deleveraging, further reductions in “net debt” (i.e., long-term debt net of current portion plus payables to banks and current portion of long-term debt, less cash and cash equivalents, restricted cash and short-term investments) continues to be a key focus, and no assurance may be given that it will succeed.
Moreover, ArcelorMittal could, in order to increase its financial flexibility and strengthen its balance sheet, implement capital raising measures such as equity offerings (as was done in May 2009, January 2013 and April 2016), which could (depending on how they are structured) dilute the interests of existing shareholders or require them to invest further funds to avoid such dilution. In addition, ArcelorMittal has undertaken and may undertake further asset disposals in order to reduce debt. These asset disposals are subject to execution risk and may fail to materialize, and the proceeds received from such disposals may not reflect values that management believes are achievable and/or cause substantial accounting losses (particularly if the disposals are done in difficult market conditions). In addition, to the extent that the asset disposals include the sale of all or part of core assets (including through an increase in the share of non-controlling interests), this could reduce ArcelorMittal’s consolidated cash flows and/or the economic interest of ArcelorMittal shareholders in such assets, which may be cash-generative and profitable ones.
In addition, credit rating agencies could downgrade ArcelorMittal’s ratings either due to factors specific to ArcelorMittal, a prolonged cyclical downturn in the steel industry and mining industries, macroeconomic trends (such as global or regional recessions) or trends in credit and capital markets more generally, and any future downgrades could lead to an increase in its cost of borrowing. The margin under ArcelorMittal’s principal credit facilities and certain of its outstanding bonds is subject to adjustment in the event of a change in its long-term credit ratings, and downgrades that occurred in 2012 and 2015 resulted in increased interest expense.
ArcelorMittal’s principal credit facilities contain restrictive covenants. These covenants limit, inter alia, encumbrances on the assets of ArcelorMittal and its subsidiaries, the ability of ArcelorMittal’s subsidiaries to incur debt and the ability of ArcelorMittal and its subsidiaries to dispose of assets in certain circumstances. ArcelorMittal’s principal credit facilities also include the following financial covenant: ArcelorMittal must ensure that the “Leverage Ratio”, being the ratio of “Consolidated Total Net Borrowings” (consolidated total borrowings less consolidated cash and cash equivalents) to “Consolidated EBITDA” (the consolidated net pre-taxation profits of the ArcelorMittal group for a Measurement Period, subject to certain adjustments as defined in the facilities), at the end of each “Measurement Period” (each period of 12 months ending on the last day of a financial half-year or a financial year of ArcelorMittal), is not greater than a ratio of 4.25 to one (See “Item 5.B—Operating and financial review and prospects—Liquidity and capital resources”). As of December 31, 2017, the Company was in compliance with the Leverage Ratio.
These restrictive and financial covenants could limit ArcelorMittal’s operating and financial flexibility. Failure to comply with any covenant would enable the lenders to accelerate ArcelorMittal’s repayment obligations. Moreover, ArcelorMittal’s debt facilities have provisions whereby certain events relating to other borrowers within the ArcelorMittal group could, under certain circumstances, lead to acceleration of debt repayment under the credit facilities. Any invocation of these cross-acceleration clauses could cause some or all of the other debt to accelerate, creating liquidity pressures. In addition, the mere market perception of a potential breach of any financial covenant could have a negative impact on ArcelorMittal’s ability to refinance its indebtedness on acceptable conditions.
Furthermore, some of ArcelorMittal’s debt is subject to floating rates of interest and thereby exposes ArcelorMittal to interest rate risk (i.e., if interest rates rise, ArcelorMittal’s debt service obligations on its floating rate indebtedness would increase). Depending on market conditions, ArcelorMittal from time to time uses interest-rate swaps or other financial instruments to hedge a portion of its interest rate exposure either from fixed to floating or from floating to fixed. ArcelorMittal had exposure to 88% of its long-term debt at fixed interest rates and 12% at floating rates as of December 31, 2017.
Finally, ArcelorMittal has foreign exchange exposure in relation to its debt, approximately 52% of which is denominated in euros as of December 31, 2017, while its financial statements are denominated in U.S. dollars. This creates balance sheet and income statement exposure, with a depreciation of the U.S. dollar against the euro leading to an increase in debt (including for covenant compliance measurement purposes) and the recognition of foreign exchange losses.
See “Item 5.B—Operating and financial review and prospects—Liquidity and capital resources”.

16


ArcelorMittal’s level of profitability and cash flow currently is and, depending on market and operating conditions, may in the future be, substantially affected by its ability to reduce costs and improve operating efficiency.
Difficult operating conditions in recent years, due in particular to macroeconomic conditions and supply/demand trends, have reduced ArcelorMittal’s operating profitability, decreased its positive cash flows and reduced its profitability. The steel industry has historically been cyclical, periodically experiencing difficult operating conditions. In light of this, ArcelorMittal has historically and increasingly in recent periods, taken initiatives to reduce its costs and increase its operating efficiency. These initiatives have included various asset optimization and other programs throughout the Company. The most recent of these programs is the Action 2020 plan announced in February 2016 that includes, among other aspects, several efficiency improvement initiatives. While the Company has partially implemented the plan across all segments, continued implementation of cost saving and efficiency improvement initiatives is subject to operational challenges and limitations. Failure to implement fully such initiatives would prevent the attainment of announced profitability or cash flow improvement targets, and more generally could have a material adverse effect on the Company’s profitability and cash flow.
ArcelorMittal’s mining operations are subject to risks associated with mining activities.
ArcelorMittal's mining operations are subject to the hazards and risks usually associated with the exploration, development and production of natural resources, any of which could result in production shortfalls or damage to persons or property. In particular, the hazards associated with open-pit mining operations include, among others:
flooding of the open pit;
collapse of the open-pit wall;
accidents associated with the operation of large open-pit mining and rock transportation equipment;
accidents associated with the preparation and ignition of large-scale open-pit blasting operations;
production disruptions due to weather;
hazards associated with the disposal of mineralized waste water, such as groundwater and waterway contamination; and
collapse of tailings ponds dams or dams.
Hazards associated with underground mining operations, of which ArcelorMittal has several, include, among others:
underground fires and explosions, including those caused by flammable gas;
gas and coal outbursts;
cave-ins or falls of ground;
discharges of gases and toxic chemicals;
flooding;
sinkhole formation and ground subsidence;
difficulties associated with mining in extreme weather conditions, such as the Arctic; and
blasting, removing, and processing material from an underground mine.
ArcelorMittal is exposed to all of these hazards. The occurrence of any of the events listed above could delay production, increase production costs and result in death or injury to persons, damage to property and liability for ArcelorMittal, some or all of which may not be covered by insurance, as well as substantially harm ArcelorMittal’s reputation, both as a company focused on ensuring the health and safety of its employees and more generally.

17


ArcelorMittal’s reserve estimates may materially differ from mineral quantities that it may be able to actually recover; ArcelorMittal’s estimates of mine life may prove inaccurate; and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine.
ArcelorMittal’s reported reserves are estimated quantities of the ore and metallurgical coal that it has determined can be economically mined and processed under present and anticipated conditions to extract their mineral content. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including factors beyond ArcelorMittal’s control. The process of estimating reserves involves estimating deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. As a result, no assurance can be given that the estimated amounts of ore or coal will be recovered or that it will be recovered at the anticipated rates. Estimates may vary, and results of mining and production subsequent to the date of an estimate may lead to revisions of estimates. Reserve estimates and estimates of mine life may require revisions based on actual market conditions, production experience and other factors. Fluctuations in the market prices of minerals and metals, reduced recovery rates or increased operating and capital costs due to inflation, exchange rates, mining duties, changes in regulatory requirements or other factors may render proven and probable reserves uneconomic to exploit and may ultimately result in a revision of reserves. In particular, a prolonged period of low prices or other indicators could lead to a review of the Group’s reserves. Such review would reflect the Company’s view based on estimates, assumptions and judgments and could result in a reduction in the Group’s reported reserves. The Group’s reserve estimates reported in this annual report do not exceed the quantities that the Company estimates could be extracted economically if future prices were at similar levels to the average contracted price for the three years ended December 31, 2017. As a result, if the average contracted prices remain in 2018 at, near or below the low levels in the fourth quarter of 2015 and in the first half of 2016, the Company’s estimates of its reserves at year-end 2018 may decline.
Drilling and production risks could adversely affect the mining process.
Substantial time and expenditures are required to:
establish mineral reserves through drilling;
determine appropriate mining and metallurgical processes for optimizing the recovery of saleable product from iron ore and coal reserves;
obtain environmental and other licenses;
construct mining and processing facilities and the infrastructure required for greenfield properties;
extract the saleable products from the mined iron ore or coal; and
maintain the appropriate blend of ore to ensure the final product qualities expected by the customer are achieved.
If a project proves not to be economically feasible by the time ArcelorMittal is able to exploit it, ArcelorMittal may incur substantial losses and be obliged to recognize impairments. In addition, potential changes or complications involving metallurgical and other technological processes that arise during the life of a project may result in delays and cost overruns that may render the project not economically feasible.
ArcelorMittal faces rising extraction costs over time as reserves deplete.
Reserves are gradually depleted in the ordinary course of a given mining operation. As mining progresses, distances to the primary crusher and to waste deposits become longer, pits become steeper and underground operations become deeper. As a result, ArcelorMittal usually experiences rising unit extraction costs over time with respect to each of its mines.

18


ArcelorMittal has incurred and may incur in the future operating costs when production capacity is idled or increased costs to resume production at idled facilities. 
ArcelorMittal’s decisions about which facilities to operate and at which levels are made based upon customers’ orders for products as well as the capabilities and cost performance of the Company’s facilities. Considering temporary or structural overcapacity in the current market situation, production operations are concentrated at several plant locations and certain facilities are idled in response to customer demand, although operating costs are still incurred at such idled facilities. When idled facilities are restarted, ArcelorMittal incurs costs to replenish raw material inventories, prepare the previously idled facilities for operation, perform the required repair and maintenance activities and prepare employees to return to work safely and resume production responsibilities. Such costs could have an adverse effect on its results of operations or financial condition.
ArcelorMittal has grown through acquisitions and may continue to do so. Failure to manage external growth and difficulties completing planned acquisitions or integrating acquired companies could harm ArcelorMittal’s future results of operations, financial condition and prospects.

The Company was formed and subsequently grew through mergers and acquisitions. It curtailed large-scale M&A activity for years following the 2008 financial crisis. More recently, it has resumed targeted acquisitions, including its acquisition (via a joint venture) of Calvert, its proposed acquisition of Votorantim and its proposed acquisition of Ilva S.p.A. and certain of its subsidiaries (“Ilva”), Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. See “ArcelorMittal may fail to realize the acquisition of Ilva, and, if the acquisition is completed, ArcelorMittal may fail to implement its strategy with respect to Ilva." Both of the proposed acquisitions are subject to condition, including receipt of antitrust approvals.
 
To the extent ArcelorMittal continues to pursue significant acquisitions, financing of such acquisitions may result in increased debt, leverage and gearing. Acquisitions also entail increased operating costs, as well as greater allocation of management resources away from daily operations. Managing acquisitions requires the continued development of ArcelorMittal’s financial and management information control systems, the integration of acquired assets with existing operations, the adoption of manufacturing best practices, handling any labor disruptions that may arise, attracting and retaining qualified management and personnel (particularly to work at more remote sites where there is a shortage of skilled personnel) as well as the continued training and supervision of such personnel, and the ability to manage the risks and liabilities associated with the acquired businesses. Failure to manage acquisitions could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects.

ArcelorMittal may fail to realize the acquisition of Ilva, and, if the acquisition is completed, ArcelorMittal may fail to implement its strategy with respect to Ilva.

The acquisition of Ilva is subject to certain conditions precedent, including receipt of antitrust approvals. There is no guarantee the acquisition will be completed or will not entail substantial divestitures as antitrust remedies. ArcelorMittal notified AM InvestCo’s proposed acquisition of Ilva to the European Commission on September 21, 2017, and submitted commitments on October 19, 2017. On November 8, 2017, the European Commission indicated it was initiating a Phase II review of the proposed acquisition and would request that ArcelorMittal offer more concessions to address competition concerns. If the Company is unable to complete the acquisition of Ilva, it could incur breakage costs and liabilities and its European market strategy would be adversely affected.

If the acquisition of Ilva is completed, the Company may encounter difficulties in integrating Ilva or in implementing its strategy with respect to Ilva. In particular, ArcelorMittal plans to implement a significant environmental plan to bring Ilva up to and beyond EU environmental standards, to invest to improve the operational performance of Ilva’s assets, to rebuild client confidence and to integrate Ilva’s personnel and apply the Company’s best practices and expertise. There is no guarantee that the Company will be successful in implementing its strategy or in realizing the expected benefits of the acquisition in full or at all.


19


ArcelorMittal’s greenfield and brownfield investment projects are inherently subject to financing, execution and completion risks.
The Company has announced a number of greenfield or brownfield development projects, some of which are or may be ongoing. Please refer to “Item 4.A—Information on the Company—History and development of the Company—Updates on previously announced investment projects” for further information on greenfield projects the Company has announced. To the extent these projects go forward, they would entail substantial capital expenditures, and their timely completion and successful operation may be affected by factors beyond the control of ArcelorMittal. These factors include receiving financing on reasonable terms, obtaining or renewing required regulatory approvals and licenses, securing and maintaining adequate property rights to land and mineral resources, local opposition to land acquisition or project development, managing relationships with or obtaining consents from other shareholders, revision of economic viability projections, demand for the Company’s products, local environmental or health-related conditions (such as the Ebola epidemic in Liberia in 2014-2015), and general economic conditions. Any of these factors may cause the Company to delay, modify or forego some or all aspects of its development projects. The Company cannot guarantee that it will be able to execute its greenfield or brownfield development projects, and to the extent that they proceed, that it will be able to complete them on schedule, within budget, or achieve an adequate return on its investment. Conversely, should the Company decide to postpone or cancel development projects, it could incur various negative consequences such as litigation or impairment charges.
ArcelorMittal faces risks associated with its investments in joint ventures and associates.
ArcelorMittal has investments in various joint ventures and associates. See note 2.4 to ArcelorMittal’s consolidated financial statements. Joint ventures and associates may be controlled and managed by joint venture or controlling partners that may not fully comply with ArcelorMittal’s standards, controls and procedures, including ArcelorMittal’s health, safety, environment and community standards, which could lead to higher costs, reduced production or environmental, health and safety incidents or accidents, which could adversely affect ArcelorMittal’s results and reputation.
In addition, certain of these joint ventures and associates are currently experiencing, or may in the future experience, difficult operating conditions and/or incur losses. Difficult operating conditions in joint ventures and associates in which ArcelorMittal has invested may expose it to loss of its investment, requirements for additional investments or calls on guarantees. For example, ArcelorMittal’s joint venture Al Jubail’s financial situation has been negatively impacted by a slower than expected ramp-up of operations and may require further funding. ArcelorMittal has provided shareholder loans to assist with funding and additional equity funding is expected from the other partners. ArcelorMittal’s investment in and loans to the joint venture was $152 million at December 31, 2017 following the recognition of its share in net losses. The Company has also guaranteed $382 million of Al Jubail’s external debt. In addition, as of December 31, 2017, ArcelorMittal had given $1.0 billion in guarantees on behalf of other associates and joint ventures including $406 million issued on behalf of Calvert. See notes 2.4.1, 2.4.2 and 8.3 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal’s investments in joint ventures and associates may also result in impairments. For example, in 2014, the Company recorded an impairment charge of $621 million on its investment in China Oriental, following a revision of business assumptions in the context of an economic slowdown in China. In 2015, the Company also recorded an impairment charge of $283 million in respect of its joint venture investment in Kalagadi Manganese (Proprietary) Ltd, reflecting a write down of the full carrying amount of the investment and loans as a result of a downward revision of cash flow projections resulting from the expectation of the persistence of a lower manganese price outlook. As of December 31, 2017, ArcelorMittal’s investments accounted for under the equity method had a book value of $5.1 billion, including DHS Group ($1,051 million), China Oriental ($835 million), Gonvarri ($566 million) and Baffinland ($402 million).
A Mittal family trust has the ability to exercise significant influence over the outcome of shareholder votes.
As of December 31, 2017, a trust (HSBC Trustee (C.I.) Limited, as trustee), of which Mr. Lakshmi N. Mittal and Mrs. Usha Mittal and their children are the beneficiaries, beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) shares amounting (when aggregated with ordinary shares of ArcelorMittal and options to acquire ordinary shares held directly by Mr. and Mrs. Mittal) to 382,241,301 shares, representing 37.41% of ArcelorMittal’s outstanding shares. See “Item 7.A—Major shareholders and related party transactions—Major shareholders”. As a result, the trust has the ability to significantly influence the decisions adopted at the ArcelorMittal general meetings of shareholders, including matters involving mergers or other business combinations, the acquisition or disposition of assets, issuances of equity and the incurrence of indebtedness. The trust also has the ability to significantly influence a change of control of ArcelorMittal.

20


The loss or diminution of the services of the Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal could have an adverse effect on its business and prospects.
The Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal, Mr. Lakshmi N. Mittal, has for over 30 years contributed significantly to shaping and implementing the business strategy of Mittal Steel and subsequently ArcelorMittal. His strategic vision was instrumental in the creation of the world’s largest and most global steel group. The loss or any diminution of the services of the Chairman of the Board of Directors and Chief Executive Officer could have an adverse effect on ArcelorMittal’s business and prospects. ArcelorMittal does not maintain key person life insurance on its Chairman of the Board of Directors and Chief Executive Officer.
ArcelorMittal is a holding company that depends on the earnings and cash flows of its operating subsidiaries, which may not be sufficient to meet future operational needs or for shareholder distributions and loss-making subsidiaries may drain cash flow necessary for such needs or distributions.
As a holding company, ArcelorMittal is dependent on the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses, meet its debt service obligations, pay any cash dividends or distributions on its ordinary shares or conduct share buy-backs. Significant cash or cash equivalent balances may be held from time to time at the Company’s international operating subsidiaries, including in particular those in France and the United States, where the Company maintains cash management systems under which most of its cash and cash equivalents are centralized, and in Argentina, Brazil, Canada, Morocco, South Africa and Ukraine. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions on such operating subsidiaries’ ability to pay dividends, but such restrictions are not significant in the context of ArcelorMittal’s overall liquidity. These subsidiaries may also experience operating difficulties that impact their cash flows. ArcelorMittal South Africa, for example, has been experiencing significant difficulties in recent years. In order to decrease its significant outstanding debt, in January 2016, ArcelorMittal South Africa conducted a rights offering entirely underwritten by ArcelorMittal that resulted, via the repayment of an outstanding intragroup loan of R3.2 billion and an additional cash injection by ArcelorMittal of approximately R460 million, in ArcelorMittal’s shareholding in ArcelorMittal South Africa increasing from 52% to 71%.
Repatriation of funds from operating subsidiaries may also be affected by tax and foreign exchange policies in place from time to time in the various countries where the Company operates, though none of these policies are currently significant in the context of ArcelorMittal’s overall liquidity. Under the laws of Luxembourg, ArcelorMittal will be able to pay dividends or distributions only to the extent that it is entitled to receive cash dividend distributions from its subsidiaries, recognize gains from the sale of its assets or record share premium from the issuance of shares.
If the earnings and cash flows of its operating subsidiaries are substantially reduced, ArcelorMittal may not be in a position to meet its operational needs or to make shareholder distributions in line with announced proposals.
Changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions, could result in the impairment of such assets, including intangible assets such as goodwill.
At each reporting date, in accordance with the Company’s accounting policy described in note 5.3 to ArcelorMittal’s consolidated financial statements, ArcelorMittal reviews the carrying amounts of its tangible and intangible assets (goodwill is reviewed annually or whenever changes in circumstances indicate that the carrying amount may not be recoverable) to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset (or cash generating unit) is reviewed in order to determine the amount of the impairment, if any.

21


If certain of management’s estimates change during a given period, such as the discount rate, capital expenditures, expected changes to average selling prices, growth rates, shipments and direct costs, the estimate of the recoverable amount of goodwill or the asset could fall significantly and result in impairment. While impairment does not affect reported cash flows, the decrease of the estimated recoverable amount and the related non-cash charge in the consolidated statements of operations could have a material adverse effect on ArcelorMittal’s results of operations. For example, in 2017 and 2016, the Company recorded impairment charges as a result of the annual impairment test of $160 million and $156 million, respectively, related to tangible assets in the ACIS segment. In 2015, the Company recorded an impairment charge of $3.7 billion including $0.9 billion with respect to the Mining segment goodwill and $2.8 billion related to tangible and intangible assets ($2.5 billion and $0.3 billion in the Mining and ACIS segments, respectively). Following these impairment charges, substantial amounts of goodwill, tangible and intangible assets remain recorded on its balance sheet (there was $5.3 billion of goodwill for the Company, $3.3 billion of tangible assets and $0.8 billion of goodwill for ACIS on the balance sheet at December 31, 2017). No assurance can be given as to the absence of significant further impairment losses in future periods, particularly if market conditions deteriorate. In particular, changes in the key assumptions utilized in the impairment test would cause an impairment loss to be recognized in respect of the Brazil segment and an additional impairment loss to be recognized in respect of ACIS. See note 5.3 to ArcelorMittal’s 2017 consolidated financial statements, in particular for a discussion of the assumptions used for determining the Brazil and ACIS segment’s value in use.
ArcelorMittal’s ability to fully utilize its recognized deferred tax assets depends on its profitability and future cash flows.
At December 31, 2017, ArcelorMittal had $7.1 billion recorded as deferred tax assets on its consolidated statements of financial position. These assets can be utilized only if, and only to the extent that, ArcelorMittal’s operating subsidiaries generate adequate levels of taxable income in future periods to offset the tax loss carry forwards and reverse the temporary differences prior to expiration. At December 31, 2017, the amount of future income required to recover ArcelorMittal’s deferred tax assets of $7.1 billion was at least $31.3 billion at certain operating subsidiaries.
ArcelorMittal’s ability to generate taxable income is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. If ArcelorMittal generates lower taxable income than the amount it has assumed in determining its deferred tax assets, then the value of deferred tax assets will be reduced. In addition, assumptions regarding the future recoverability of deferred tax assets depend on management’s estimates of future taxable income in accordance with the tax laws applicable to ArcelorMittal’s subsidiaries in the countries in which they operate. If in the course of its assessments management determines that the carrying amount of any of its deferred tax assets may not be recoverable pursuant to such prevailing tax laws, the recoverable amount of such deferred tax assets may be impaired. ArcelorMittal’s assumptions regarding its ability to generate future taxable income changed during 2016, resulting in a $0.7 billion derecognition of deferred tax assets in Luxembourg related to revised expectations of the deferred tax asset recoverability in U.S. dollar terms.
The Company’s investment projects may add to its financing requirements and adversely affect its cash flows and results of operations.
The steelmaking and mining businesses are capital intensive requiring substantial ongoing maintenance capital expenditure. In addition, ArcelorMittal has announced significant investment projects in the past and some are or may be ongoing. See “Item 4.D—Information on the Company—Property, plant and equipment—Capital expenditure projects”, “Item 5.F—Operating and financial review and prospects—Tabular disclosure of contractual obligations” and note 8.3 to ArcelorMittal’s consolidated financial statements. ArcelorMittal expects to fund these capital expenditures primarily through internal sources. Such sources may not suffice, however, depending on the amount of internally generated cash flows and other uses of cash, which may require ArcelorMittal to choose between incurring external financing, further increasing the Company’s level of indebtedness, or foregoing investments in projects targeted for profitable growth.
See “Item 4.A—Information on the Company—History and development of the Company—Updates on previously announced investment projects”.

22


Underfunding of pension and other post-retirement benefit plans at some of ArcelorMittal’s operating subsidiaries could require the Company to make substantial cash contributions to pension plans or to pay for employee healthcare, which may reduce the cash available for ArcelorMittal’s business. 
ArcelorMittal’s principal operating subsidiaries in Brazil, Canada, Europe, South Africa and the United States provide defined benefit pension and other post-retirement benefit plans to their employees. Some of these plans are currently underfunded, see note 7.2 to ArcelorMittal’s consolidated financial statements for the total value of plan assets and any deficit.
ArcelorMittal’s funding obligations depend upon future asset performance, which is tied to equity and debt markets to a substantial extent, the level of interest rates used to discount future liabilities, actuarial assumptions and experience, benefit plan changes and government regulation. Because of the large number of variables that determine pension funding requirements, which are difficult to predict, as well as any legislative action, future cash funding requirements for ArcelorMittal’s pension plans and other post-employment benefit plans could be significantly higher than current estimates. Increases in the general life expectancy assumption have contributed to increases in the defined benefit obligation. ArcelorMittal also makes contributions to a multi-employer pension plan in the U.S. (the Steelworkers Pension Trust) for which it is one of the largest employers. If the other contributors were to default on their obligations, ArcelorMittal would become liable for the plan. In these circumstances, funding requirements could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects. 
ArcelorMittal could experience labor disputes that may disrupt its operations and its relationships with its customers and its ability to rationalize operations and reduce labor costs in certain markets may be limited in practice or encounter implementation difficulties.
A majority of the employees of ArcelorMittal and of its contractors are represented by labor unions and are covered by collective bargaining or similar agreements, which are subject to periodic renegotiation. Strikes or work stoppages could occur prior to, or during, negotiations preceding new collective bargaining agreements, during wage and benefits negotiations or during other periods for other reasons, in particular in connection with any announced intentions to adapt the footprint. ArcelorMittal may experience strikes and work stoppages at various facilities. Prolonged strikes or work stoppages, which may increase in their severity and frequency, may have an adverse effect on the operations and financial results of ArcelorMittal. The risk of strikes and work stoppages is particularly acute during collective bargaining agreement negotiations. For example, in 2017, there was a 72-hour strike notice given at ArcelorMittal Mont Wright (an iron ore mine in Northern Quebec) after the Company's contract offer was rejected.
Faced with temporary or structural overcapacity in various markets, particularly developed ones, ArcelorMittal has in the past sought and may in the future seek to rationalize operations through temporary or permanent idling and/or closure of plants. These initiatives have in the past and may in the future lead to protracted labor disputes and political controversy. For example, in 2017, the announcement of potential restructuring after the completion of the acquisition of Ilva by AM InvestCo (see "Item 4.A Information on the Company—History and development of the Company—Key transactions and events in 2017") led to a 24-hour strike.
ArcelorMittal is subject to economic policy, political, social and legal risks and uncertainties in the emerging markets in which it operates or proposes to operate, and these uncertainties may have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects.
ArcelorMittal operates, or proposes to operate, in a large number of emerging markets. In recent years, many of these countries have implemented measures aimed at improving the business environment and providing a stable platform for economic development. ArcelorMittal’s business strategy has been developed partly on the assumption that this modernization, restructuring and upgrading of the business climate and physical infrastructure will continue, but this cannot be guaranteed. Any slowdown in the development of these economies could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects, as could insufficient investment by government agencies or the private sector in physical infrastructure. For example, the failure of a country to develop reliable electricity and natural gas supplies and networks, and any resulting shortages or rationing, could lead to disruptions in ArcelorMittal’s production.

23


Moreover, some of the countries in which ArcelorMittal operates have been undergoing substantial political transformations from centrally-controlled command economies to market-oriented systems or from authoritarian regimes to democratically-elected governments and vice-versa. Political, economic and legal reforms necessary to complete such transformation may not progress sufficiently. On occasion, ethnic, religious, historical and other divisions have given rise to tensions and, in certain cases, wide-scale civil disturbances and military conflict. The political systems in these countries are vulnerable to their populations’ dissatisfaction with their government, reforms or the lack thereof, social and ethnic unrest and changes in governmental policies, any of which could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects and its ability to continue to do business in these countries. For example, in Ukraine, a period of widespread civil unrest resulted in the removal of the President from office in February 2014 and the establishment of an interim government, which has been followed by ongoing conflict in Crimea and the Donbass region, with Russia purportedly annexing Crimea in March 2014, a disputed referendum approving independence of Crimea from Ukraine in May 2014 and intermittent combats between the Ukrainian army and pro-Russian rebels in the Donbass region. In addition, certain of ArcelorMittal’s operations are also located in areas where acute drug-related violence (including executions and kidnappings of non-gang civilians) occurs and the largest drug cartels operate, such as the states of Michoacan, Sinaloa and Sonora in Mexico.
Certain emerging markets where ArcelorMittal has operations have experienced or are experiencing particularly difficult operating conditions. Brazil, for example, is currently emerging from a severe recession, but its recovery is marred by political uncertainty. Recession continues to loom in South Africa, where the steel and mining industries are subject to a challenging operating environment characterized by lower local demand, increased cheap imports and higher costs, resulting in losses in recent years for ArcelorMittal South Africa.
In addition, epidemics may affect ArcelorMittal’s operations in certain regions. For example, ArcelorMittal operates in Liberia, which underwent an Ebola virus disease epidemic in 2014 and 2015. This affected ArcelorMittal’s operations and projects in Liberia.  There can be no assurance that other epidemics will not adversely affect ArcelorMittal’s ongoing operations, production targets and expansion plans, if any, in other markets in which it operates.
In addition, the legal systems in some of the countries in which ArcelorMittal operates remain less than fully developed, particularly with respect to the independence of the judiciary, property rights, the protection of foreign investment and bankruptcy proceedings, generally resulting in a lower level of legal certainty or security for foreign investment than in more developed countries. ArcelorMittal may encounter difficulties in enforcing court judgments or arbitral awards in some countries in which it operates because, among other reasons, those countries may not be parties to treaties that recognize the mutual enforcement of court judgments. Assets in certain countries where ArcelorMittal operates could also be at risk of expropriation or nationalization, and compensation for such assets may be below fair value. For example, the Venezuelan government has implemented a number of selective nationalizations of companies operating in the country to date. Although ArcelorMittal believes that the long-term growth potential in emerging markets is strong, and intends them to be the focus of the majority of its near-term growth capital expenditures, legal obstacles could have a material adverse effect on the implementation of ArcelorMittal’s growth plans and its operations in such countries.
ArcelorMittal’s results of operations could be affected by fluctuations in foreign exchange rates, particularly the euro to U.S. dollar exchange rate, as well as by exchange controls imposed by governmental authorities in the countries where it operates.
ArcelorMittal operates and sells products globally and as a result, its business, financial condition, results of operations or prospects could be adversely affected by fluctuations in exchange rates. A substantial portion of ArcelorMittal’s assets, liabilities, operating costs, sales and earnings are denominated in currencies other than the U.S. dollar (ArcelorMittal’s reporting currency). Accordingly, its results of operations are subject to translation risk (i.e., the USD value of the revenues and profits generated in other currencies and its debt denominated in other currencies) and transaction risk (i.e., a mismatch between the currency of costs and revenues). For example, in 2015 ArcelorMittal recognized a $0.7 billion foreign exchange loss primarily due to the decrease in euro denominated deferred tax assets and debt as a result of the sharp appreciation of the USD versus the euro.
Moreover, ArcelorMittal operates in several countries whose currencies are, or have in the past been, subject to limitations imposed by those countries’ central banks, or which have experienced sudden and significant devaluations. In emerging countries where ArcelorMittal has operations and/or generates substantial revenue, such as Argentina, Brazil, Venezuela, Kazakhstan and Ukraine, the risk of significant currency devaluation is high. (See “Item 4.B—Information on the Company—Business overview—Government regulations—Key currency regulations and exchange controls”).

24


Currency devaluations, the imposition of new exchange controls or other similar restrictions on currency convertibility, or the tightening of existing controls in the countries in which ArcelorMittal operates could adversely affect its business, financial condition, results of operations or prospects. See “Item 4.B—Information on the Company—Business overview—Government regulations—Key currency regulations and exchange controls”.
Disruptions to ArcelorMittal’s manufacturing processes could adversely affect its operations, customer service levels and financial results.
Steel manufacturing processes are dependent on critical steel-making equipment, such as furnaces, continuous casters, rolling mills and electrical equipment (such as transformers), and such equipment may incur downtime as a result of unanticipated failures or other events, such as fires, explosions or furnace breakdowns. ArcelorMittal’s manufacturing plants have experienced, and may in the future experience, plant shutdowns or periods of reduced production as a result of such equipment failures or other events, one example being the damage to the steam boilers in the site in Fos-sur-Mer in March 2016 or the loss of steam to the ArcelorMittal Burns Harbor site in May 2016. To the extent that lost production as a result of such a disruption cannot be compensated for by unaffected facilities, such disruptions could have an adverse effect on ArcelorMittal’s operations, customer service levels and results of operations.
Natural disasters or severe weather conditions could damage ArcelorMittal’s production facilities or adversely affect its operations.
Natural disasters could significantly damage ArcelorMittal’s production facilities and general infrastructure. For example, ArcelorMittal Mexico’s production facilities located in Lázaro Cárdenas, Michoacán, Mexico and ArcelorMittal Galati’s production facilities in Romania are located in or close to regions prone to earthquakes. The Lázaro Cárdenas area has, in addition, been subject to a number of tsunamis in the past. The site of the joint venture AM/NS Calvert (“Calvert”) in the United States is located in an area subject to tornados and hurricanes. ArcelorMittal also has assets in locations subject to Arctic freeze such as the mining facilities through its associate Baffinland and to bush fires, specifically in Kazakhstan and South Africa. More generally, changing weather patterns and climatic conditions in recent years, possibly due to the phenomenon of global warming, have added to the unpredictability and frequency of natural disasters. Damage to ArcelorMittal production facilities due to natural disasters could, to the extent that lost production cannot be compensated for by unaffected facilities, adversely affect its business, results of operations or financial condition.
In addition to natural disasters, ArcelorMittal’s operations can be affected by severe weather conditions. This is due in particular to the long supply chain for certain of its operations and the location of certain operations in areas subject to harsh winter conditions (i.e., the Great Lakes Region, Canada and Kazakhstan). For example, supply chain issues caused by a particularly harsh winter (causing in particular the closure of the Great Lakes shipping lanes) negatively affected operations in Canada and the Northeastern United States during the first quarter of 2014.
ArcelorMittal’s insurance policies provide limited coverage, potentially leaving it uninsured against some business risks.
The occurrence of an event that is uninsurable or not fully insured could have a material adverse effect on ArcelorMittal’s business, financial condition, results of operations or prospects. ArcelorMittal maintains insurance on property and equipment in amounts believed to be consistent with industry practices, but it is not fully insured against all such risks. ArcelorMittal’s insurance policies cover physical loss or damage to its property and equipment on a reinstatement basis as arising from a number of specified risks and certain consequential losses, including business interruption arising from the occurrence of an insured event under the policies. Under ArcelorMittal’s property and equipment policies, damages and losses caused by certain natural disasters, such as earthquakes, floods and windstorms, are also covered.
ArcelorMittal also purchases worldwide third-party public and product liability insurance coverage for all of its subsidiaries. Various other types of insurance are also maintained, such as comprehensive construction and contractor insurance for its greenfield and major capital expenditures projects, directors and officers liability, transport, and charterers’ liability, as well as other customary policies such as car insurance, travel assistance and medical insurance.
In addition, ArcelorMittal maintains trade credit insurance on receivables from selected customers, subject to limits that it believes are consistent with those in the industry, in order to protect it against the risk of non-payment due to customers’ insolvency or other causes. Not all of ArcelorMittal’s customers are or can be insured, and even when insurance is available, it may not fully cover the exposure.
Notwithstanding the insurance coverage that ArcelorMittal and its subsidiaries carry, the occurrence of an event that causes losses in excess of limits specified under the relevant policy, or losses arising from events not covered by insurance policies, could materially harm ArcelorMittal’s financial condition and future operating results.

25


Product liability claims could have a significant adverse financial impact on ArcelorMittal.
ArcelorMittal sells products to major manufacturers engaged in manufacturing and selling a wide range of end products. ArcelorMittal also from time to time offers advice to these manufacturers. Furthermore, ArcelorMittal’s products are also sold to, and used in, certain safety-critical applications, such as, for example, pipes used in gas or oil pipelines and in automotive applications. There could be significant consequential damages resulting from the use of or defects in such products. ArcelorMittal has a limited amount of product liability insurance coverage, and a major claim for damages related to ArcelorMittal products sold and, as the case may be, advice given in connection with such products could leave ArcelorMittal uninsured against a portion or the entirety of the award and, as a result, materially harm its financial condition and future operating results.
ArcelorMittal is subject to regulatory and compliance risks, which may expose it to investigations by governmental authorities, litigation and fines, in relation, among other things, to its pricing and marketing practices or other antitrust matters. The resolution of such matters could negatively affect the Company’s profitability and cash flows in a particular period or harm its reputation.
ArcelorMittal is the largest steel producer in the world. As a result, ArcelorMittal may be subject to exacting scrutiny from regulatory authorities and private parties, particularly regarding its trade practices and dealings with customers and counterparties. As a result of its position in steel markets and its historically acquisitive growth strategy, ArcelorMittal could be subject to governmental investigations and lawsuits based on antitrust laws in particular. These could require significant expenditures and result in liabilities or governmental orders that could have a material adverse effect on ArcelorMittal’s business, operating results, financial condition and prospects. ArcelorMittal and certain of its subsidiaries are currently under investigation by governmental entities in several countries, and are named as defendants in a number of lawsuits relating to various antitrust matters. See note 8.2 to ArcelorMittal’s consolidated financial statements. Antitrust proceedings, investigations and follow-on claims involving ArcelorMittal subsidiaries are also currently pending in various countries including Brazil and Germany.
Because of the fact-intensive nature of the issues involved and the inherent uncertainty of such litigation and investigations, the nature of the resolutions of such proceedings are difficult to forecast but negative outcomes are possible. An adverse ruling in the proceedings described above or in other similar proceedings in the future could subject ArcelorMittal to substantial administrative penalties and/or civil damages. In cases relating to other companies, civil damages have been as high as hundreds of millions of U.S. dollars in major civil antitrust proceedings during the last decade. In addition, ArcelorMittal operates in many jurisdictions around the world, increasing the risk of non-compliance with laws and regulations in relation to anti-corruption, economic sanctions and other ethical matters, despite its compliance policies and procedures. Unfavorable outcomes in current and potential future litigation and investigations could reduce ArcelorMittal’s liquidity and negatively affect its profitability, cash flows, results of operations and financial condition, as well as harm its reputation.
ArcelorMittal is currently and in the future may be subject to legal proceedings, the resolution of which could negatively affect the Company’s profitability and cash flows in a particular period.
ArcelorMittal’s profitability or cash flows in a particular period could be affected by adverse rulings in legal proceedings currently pending or by legal proceedings that may be filed against the Company in the future. See note 8.2 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal’s business is subject to an extensive, complex and evolving regulatory framework and its governance and compliance processes may fail to prevent regulatory penalties and reputational harm, whether at operating subsidiaries, joint ventures or associates.
ArcelorMittal operates in a global environment, and, at a time of increased enforcement activity and enforcement initiatives worldwide, its business straddles multiple jurisdictions and complex regulatory frameworks. Such regulatory frameworks, including but not limited to the area of economic sanctions, are constantly evolving, and ArcelorMittal may as a result become subject to increasing limitations on its business activities and to the risk of fines or other sanctions for non-compliance. Moreover, ArcelorMittal’s governance and compliance processes, which include the review of internal controls over financial reporting, may not prevent breaches of law or accounting or governance standards at the Company or its subsidiaries. The risk of violation is also present at the Company’s joint ventures and associates where ArcelorMittal has only a non-controlling stake and does not control governance practices or accounting and reporting procedures.

26


In addition, ArcelorMittal may be subject to breaches of its Code of Business Conduct, other rules and protocols for the conduct of business, as well as to instances of fraudulent behavior and dishonesty by its employees, contractors or other agents. The Company’s failure to comply with applicable laws and other standards could subject it to fines, litigation, loss of operating licenses and reputational harm.
The income tax liability of ArcelorMittal may substantially increase if the tax laws and regulations in countries in which it operates change or become subject to adverse interpretations or inconsistent enforcement.
Taxes payable by companies in many of the countries in which ArcelorMittal operates are substantial and include value-added tax, excise duties, profit taxes, payroll-related taxes, property taxes, mining taxes and other taxes. Tax laws and regulations in some of these countries may be subject to frequent change, varying interpretation and inconsistent enforcement. Ineffective tax collection systems and national or local government budget requirements may increase the likelihood of the imposition of arbitrary or onerous taxes and penalties, which could have a material adverse effect on ArcelorMittal’s financial condition and results of operations. In addition to the usual tax burden imposed on taxpayers, these conditions create uncertainty as to the tax implications of various business decisions. This uncertainty could expose ArcelorMittal to significant fines and penalties and to enforcement measures despite its best efforts at compliance, and could result in a greater than expected tax burden. See note 9 to ArcelorMittal’s consolidated financial statements.
In addition, many of the jurisdictions in which ArcelorMittal operates have adopted transfer pricing legislation. If tax authorities impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse effect on ArcelorMittal’s financial condition and results of operations.
It is possible that tax authorities in the countries in which ArcelorMittal operates will introduce additional revenue raising measures. The introduction of any such provisions may affect the overall tax efficiency of ArcelorMittal and may result in significant additional taxes becoming payable. Any such additional tax exposure could have a material adverse effect on the Company’s financial condition and results of operations.
ArcelorMittal may face a significant increase in its income taxes if tax rates increase or the tax laws or regulations in the jurisdictions in which it operates, or treaties between those jurisdictions, are modified in an adverse manner. This may adversely affect ArcelorMittal’s cash flows, liquidity and ability to pay dividends.
On December 22, 2017, in the United States, the president signed into law the Tax Cuts and Jobs Act of 2017, which includes substantial changes to the U.S. federal income taxation of individuals and businesses, including decreased tax rates applicable to corporations.  Given the swift enactment late in the year, it is possible that the Company has not yet fully considered potential implications of the new legislation, including any unintended consequences. Such tax reform efforts could lead to an increased risk of international tax disputes and an increase in its effective tax rate, which could adversely affect its financial results.
ArcelorMittal’s reputation and business could be materially harmed as a result of data breaches, data theft, unauthorized access or successful hacking.
ArcelorMittal’s operations depend on the secure and reliable performance of its information technology systems. An increasing number of companies, including ArcelorMittal, have recently experienced intrusion attempts or even breaches of their information technology security, some of which have involved sophisticated and highly targeted attacks on their computer networks. ArcelorMittal’s corporate website was the target of a hacking attack in January 2012, which brought the website down for several days, and phishing, ransomware and virus attacks have been increasing in more recent years through 2017; for example WannaCry in May 2017 and NotPetya in June 2017 severely impacted various companies worldwide.
Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or to implement in a timely manner effective and efficient countermeasures.
If unauthorized parties attempt or manage to bring down the Company’s website or force access into its information technology systems, they may be able to misappropriate confidential information, cause interruptions in the Company’s operations, damage its computers or process control systems or otherwise damage its reputation and business. In such circumstances, the Company could be held liable or be subject to regulatory or other actions for breaching confidentiality and personal data protection rules. Any compromise of the security of the Company’s information technology systems could result in a loss of confidence in the Company’s security measures and subject it to litigation, civil or criminal penalties, and adverse publicity that could adversely affect its reputation, financial condition and results of operations.

27


U.S. investors may have difficulty enforcing civil liabilities against ArcelorMittal and its directors and senior management.
ArcelorMittal is incorporated under the laws of the Grand Duchy of Luxembourg with its principal executive offices and corporate headquarters in Luxembourg. The majority of ArcelorMittal’s directors and senior management are residents of jurisdictions outside of the United States. The majority of ArcelorMittal’s assets and the assets of these persons are located outside the United States. As a result, U.S. investors may find it difficult to effect service of process within the United States upon ArcelorMittal or these persons or to enforce outside the United States judgments obtained against ArcelorMittal or these persons in U.S. courts, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against ArcelorMittal or these persons in courts in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for a U.S. investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against ArcelorMittal’s directors and senior management and non-U.S. experts named in this annual report.
ITEM 4.
INFORMATION ON THE COMPANY
A.    History and development of the Company
ArcelorMittal is the world’s leading integrated steel and mining company. Since the creation of ArcelorMittal in 2006 (through the combination of Mittal Steel Company N.V. and Arcelor) and continuing through 2008, ArcelorMittal has pursued a disciplined growth strategy, with transactions in Argentina, Australia, Austria, Brazil, Canada, Costa Rica, China, Estonia, France, Germany, Italy, Mexico, Poland, Russia, Slovakia, South Africa, Sweden, Turkey, the United Kingdom, Uruguay, United Arab Emirates, the United States and Venezuela. Beginning in the latter part of 2008, ArcelorMittal largely suspended mergers and acquisitions activity in light of the deteriorating economic and market environment, and sharply curtailed its investment activities, with the exception of the acquisition (along with a partner) of Baffinland in 2011.
Since September 2011, ArcelorMittal has been undergoing a deleveraging process to reduce its indebtedness including numerous divestments of non-core assets (see note 2.3 to the consolidated financial statements for the divestments made in 2015 and 2016). Despite ArcelorMittal’s overall strategy of deleveraging, the Company completed an acquisition through a 50/50 joint venture partnership of Calvert in 2014. In 2017, the Company continued to take some strategic investment initiatives, including the signing of a purchase agreement for Votorantim S.A.'s long business and of a lease and obligation to purchase agreement with the Italian Government for Ilva S.p.A.
ArcelorMittal's success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, redoubled its efforts to control costs and repositioned its operations with a view toward outperforming its competitors. ArcelorMittal’s research and development capability is strong and includes several major research centers as well as strong academic partnerships with universities and other scientific bodies.
Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry’s value chain, from mining at one end to distribution and first-stage processing at the other: global scale and scope; superior technical capabilities; a diverse portfolio of steel and related businesses, one of which is mining; and financial capabilities. The Company’s strategy is further detailed under “Item 4.B—Information on the Company—Business overview—Business strategy”.
Geography:  ArcelorMittal is the largest steel producer in the Americas, Africa and Europe and is the fifth largest steel producer in the CIS region. ArcelorMittal has steel-making operations in 18 countries on four continents, including 47 integrated and mini-mill steel-making facilities. As of December 31, 2017, ArcelorMittal had approximately 197,000 employees.
ArcelorMittal’s steel-making operations have a high degree of geographic diversification. Approximately 37% of its crude steel is produced in the Americas, approximately 46% is produced in Europe and approximately 16% is produced in other countries, such as Kazakhstan, South Africa and Ukraine. In addition, ArcelorMittal’s sales of steel products are spread over both developed and developing markets, which have different consumption characteristics. ArcelorMittal’s mining operations, present in North and South America, Africa, Europe and the CIS region, are integrated with its global steel-making facilities and are important producers of iron ore and coal in their own right.

28


Products: ArcelorMittal produces a broad range of high-quality finished and semi-finished steel products (“semis”). Specifically, ArcelorMittal produces flat steel products, including sheet and plate, and long steel products, including bars, rods and structural shapes. In addition, ArcelorMittal produces pipes and tubes for various applications. ArcelorMittal sells its steel products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 160 countries including the automotive, appliance, engineering, construction and machinery industries. The Company also produces various types of mining products including iron ore lump, fines, concentrate and sinter feed, as well as coking, PCI and thermal coal.
As a global steel producer, the Company is able to meet the needs of different markets. Steel consumption and product requirements clearly differ between developed markets and developing markets. Steel consumption in developed economies is weighted towards flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. To meet these diverse needs, the Company maintains a high degree of product diversification and seeks opportunities to increase the proportion of higher value-added products in its product mix.
Automotive focus: ArcelorMittal has a leading market share in its core markets in the automotive steel business and is a leader in the fast-growing advanced high strength steels segment. ArcelorMittal is the first steel company in the world to embed its own engineers within an automotive customer to provide engineering support. The Company begins working with original equipment manufacturers (“OEMs”) as early as five years before a vehicle reaches the showroom, to provide generic steel solutions, co-engineering and help with the industrialization of the project. In November 2016, ArcelorMittal introduced a new generation of advanced high strength steels, including new press hardenable steels and martensitic steels. Together, these new steel grades aim to help automakers further reduce body-in-white weight to improve fuel economy without compromising vehicle safety or performance. In November 2017, ArcelorMittal launched the second generation of its iCARe® electrical steels. iCARe® steel grades play a central role in the construction of electric motors. See­ “Item 4.B— Information on the Company—Business overview—Competitive strengths—Research and development” below for further detail.
Mining Value Chain: ArcelorMittal has a significant portfolio of raw material and mining assets, as well as certain strategic long-term contracts with external suppliers. In 2017, approximately 50% of ArcelorMittal’s iron-ore requirements and approximately 13% of its PCI and coal requirements were supplied from its own mines. The Company currently has iron ore mining activities in Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine and the United States. The Company currently has coal mining activities in Kazakhstan and the United States.
In addition, ArcelorMittal produces substantial amounts of direct reduced iron, or DRI, which is a scrap substitute used in its mini-mill facilities to supplement external metallics purchases. ArcelorMittal is also a significant producer of coke, which is produced from metallurgical coal and is a critical raw material for steel-making, satisfying 94% of its coke needs through its own production facilities. ArcelorMittal’s facilities have good access to shipping facilities, including through ArcelorMittal’s own 16 deep-water port facilities and linked railway sidings.
ArcelorMittal has its own downstream steel distribution business, primarily run through its Europe segment. It also provides value-added and customized steel solutions through additional processing activities to meet specific customer requirements.
Updates on previously announced investment projects
In the strong market environment that prevailed from 2005 through 2008, the Company announced a series of proposed greenfield and brownfield investment projects. As a result of the severe market downturn in 2008-2009, the Company re-examined its investment projects involving significant capital expenditure and subsequently has continued to reassess the cost-benefit and feasibility calculations of these projects. The Company has adjusted its investment priorities in recent years and has sought to reduce its capital expenditures. In 2018, capital expenditures are expected to be approximately $3.8 billion as compared to capital expenditures of $2.8 billion for the year ended December 31, 2017. Accordingly, while the Company continues to study certain of its key previously announced investment projects summarized below, no assurance can be given that they will proceed. Certain investment projects are highlighted below. For further information on the investment projects underway, please see “Item 4.D—Information on the Company—Property, plant and equipment—Capital expenditure projects”.

29


India greenfield projects. The Company explored investment opportunities in India and in June 2010, entered into a memorandum of understanding with authorities in the state of Karnataka in South India that envisaged the construction of a six million tonne steel plant with a captive 750 megawatt power plant, representing a potential aggregate investment of $6.5 billion. The Company has completed all of the necessary steps to acquire the land. ArcelorMittal India Limited received possession certificates for 2,659 acres of private land following the acquisition of 1,827 acres and 832 acres in December 2011 and October 2012, respectively, leaving a balance of 136.33 acres of land owned by the Karnataka Government, which is being processed for allocation.
However, in view of excess capacity of steel worldwide and uncertainty in iron ore availability locally, the Company is also exploring the possibility of utilizing the land in Karnataka for the establishment of a solar farm for generating solar energy. This would contribute to the mitigation of Karnataka's power crisis and to the participation in the National Solar Energy mission of the Government of India. In this regard, the Company has sought the State Government's permission to set up a solar farm of up to 600 MW. The State Government is considering ArcelorMittal’s proposal and the Company is hopeful of receiving a favorable response to the proposal.
Brazil. During the second quarter of 2013, ArcelorMittal restarted its Monlevade expansion project, which was initially expected to be completed in two phases, with the first phase focused mainly on downstream facilities consisting of a new wire rod mill with additional capacity of 1.05 million tonnes of coils per year and estimated investment of $280 million. The investment also included a rebar revamping in Juiz de Fora to increase rebar production from 50,000 to 400,000 tonnes per year replacing equivalent wire rod production capacity that would be transferred to Monlevade. The Monlevade wire rod expansion project was completed in the fourth quarter of 2015 and the Juiz de Fora rebar revamping was concluded in the last quarter of 2014, each in line with its respective budget. The Company does not expect to increase shipments from Monlevade until domestic demand improves. The Juiz de Fora meltshop expansion project to increase meltshop capacity by 200,000 tonnes is currently on hold. A decision regarding the execution of the second phase of the projects (for upstream facilities) will be taken at a later date.
Liberia. In December 2006, the Government of Liberia and ArcelorMittal announced the finalization of a first amendment to agreements relating to an iron ore mining and infrastructure development project entered into in 2005. A further amendment to the 2006 Mineral Development Agreement was negotiated and ratified in September 2013. The project consists of reopening mines in Nimba County, rehabilitating 260 kilometers of abandoned railway, developing the Buchanan port for shipping traffic and includes a number of important social initiatives, including providing training and health facilities for employees. Production of direct shipping ore (“DSO”) commenced in the second half of 2011 which increased to a capacity of five million tonnes in 2013 and produced 4.3 million tonnes in 2015. In the current DSO phase, significant cost reductions and re-structuring has continued to ensure competitiveness at current prices. Drilling for orebody extensions commenced and in 2016 the operation was right sized to 2 to 3 million tonnes to focus on its natural Atlantic markets. This repositioning for size and competitiveness also extends the life of the DSO phase at its ageing Tokadeh deposit. In the second half of 2017, ArcelorMittal started DSO operations from the Gangra deposit, which has a lower strip ratio and higher grade DSO. The full annual rate capacity of 5 million tonnes was reached in December 2017.
ArcelorMittal had previously announced a Phase 2 project that envisaged the construction of 15 million tonnes of concentrate sinter fines capacity and associated infrastructure. The phase 2 project was initially delayed due to the declaration of force majeure by contractors in August 2014 due to the Ebola virus outbreak in West Africa. While rapid price declines over the period since the force majeure have led to a reassessment of the project, ArcelorMittal is considering transitioning production to a higher grade sinter fines product but in a phased approach as opposed to a major step-up as originally envisaged in phase 2. Extensive tonnage of concentrator feed material is already exposed in readiness for concentrated sinter fines and a feasibility study will begin in 2018 to determine the best business option.
Baffinland (Canada). In March 2011, ArcelorMittal acquired 70% of Baffinland Iron Mines Corp. (“Baffinland”), with Nunavut Iron Ore Inc. (“Nunavut Iron Ore”) owning the remaining 30%. In February 2013, ArcelorMittal and Nunavut Iron Ore entered into a joint arrangement and equalized their shareholdings at 50/50. ArcelorMittal retained operator and marketing rights and, in consideration for its increased shareholding, Nunavut Iron Ore assumed certain project funding obligations. During 2015, 2016 and 2017, following part of the capital increases being subscribed only by Nunavut Iron Ore, ArcelorMittal’s shareholding decreased to 46.08%, 44.54% and 31.07%, respectively. The project began commercial production in 2016 (for further details, see “Item 4.D–Information on the Company—Property, plant and equipment”).

30


Baffinland also has unconditionally approved Phase 3 of the project, which involves the construction of a railway to replace the existing truck-haul operation for transport of iron ore from Mary River to Milne Inlet, as well as expansion of mining, crushing and screening operations and port shiploading capacity. The objective of Phase 3 is to increase production capacity to 12 million tonnes per year. Baffinland has budgeted approximately $936.8 million of capital expenditures for Phase 3, which will be funded with operating cash flows, additional equity and new debt. Nunavut Iron Ore has committed to provide up to $450 million of equity funding for Phase 3.ArcelorMittal had an option to provide up to $85 million of equity funding for Phase 3 which expired on October 31, 2017 and was not exercised, resulting in a subsequent dilution of ArcelorMittal’s shareholding, the details and implementation of which are currently being finalized. If Nunavut or other parties fund further phases, it would result in further dilution of ArcelorMittal’s shareholding. Since August 2016, ArcelorMittal and Nunavut Iron Ore share operator rights for Baffinland’s operations. Subject to completion of Phase 3, ArcelorMittal maintains shared operator rights until June 30, 2018 (which could be extended to December 31, 2018) and will continue to retain marketing rights until December 31, 2019.
Key transactions and events in 2017
ArcelorMittal’s principal investments, acquisitions and disposals, and other key events that occurred during the year ended December 31, 2017 are summarized below:
During 2017, ArcelorMittal completed several financing and repayment transactions. Please refer to “Item 5B—Operating and financial review and prospects—Liquidity and capital resources—Financings” for a summary of the transactions.
During 2017, ArcelorMittal completed certain divestment and other investment transactions not listed below. Please refer to notes 2.3 and 2.5 to the consolidated financial statements within this report for a summary of the transactions.
On August 25, 2017, ArcelorMittal completed the sale (per a sales agreement entered into in October 2016) of its 50% shareholding in Kalagadi Manganese (Proprietary) Limited to Kgalagadi Alloys (Proprietary) Limited for consideration to be paid during the life of the mine, which is contingent on the financial performance of the mine and cash flow availability.
On August 7, 2017, ArcelorMittal USA and Cliffs Natural Resources (“Cliffs”) agreed that Cliffs would acquire ArcelorMittal USA’s 21% ownership interest in the Empire Iron Mining Partnership for $133 million plus the assumption of all partnership liabilities. The payment of $133 million will be in three equal installments with the first payment of $44 million in August 2017, and the two subsequent payments to be received in August of 2018 and 2019.
On June 28, 2017, the consortium formed by ArcelorMittal and Marcegaglia signed a lease and obligation to purchase agreement with the Italian Government for Ilva S.p.A. and certain of its subsidiaries (“Ilva”). Intesa Sanpaolo will formally join the consortium before the transaction closes. Ilva is Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. Ilva also has significant steel finishing capacity in Taranto, Novi Ligure and Genova. The purchase price amounts to €1.8 billion, with annual leasing costs of €180 million to be paid in quarterly installments. The assets will be transferred to AM InvestCo Italy Srl ("AM InvestCo") free of long term liabilities and financial debt and include €1 billion of net working capital, subject to adjustment. Ilva’s assets will be initially leased with rental payments qualifying as down payments against the purchase price. The lease is for a minimum period of two years. The closing of the transaction is subject to certain conditions precedent, including receipt of antitrust approvals. With respect to antitrust approvals, ArcelorMittal notified the European Commission of AM InvestCo's proposed acquisition of Ilva on September 21, 2017, and submitted commitments on October 19, 2017. On November 8, 2017, the European Commission initiated a Phase II review of AM InvestCo’s proposed acquisition of Ilva and ArcelorMittal confirmed it will continue to work closely and constructively with the Commission to explain the dynamics of the steel industry, the rationale of the proposed acquisition and the benefits it will bring to industry, customers, the environment and the local economy. The Company continues to engage in dialogue with the Commission seeking to secure approval for this transaction.
The agreement includes industrial capital expenditure commitments over a seven-year period of approximately €1.3 billion with an investment program focused on blast furnaces, steel shops and finishing lines. It also includes environmental capital expenditure commitments of approximately €0.8 billion and environmental remediation commitments of approximately €0.3 billion, the latter of which will be funded with funds seized by the Italian Government from the former shareholder.

31


The Company has identified synergies of €310 million which are targeted by 2020 (excluding impact from fixed cost reductions and volume improvements).
On June 21, 2017, as a result of the extension of the partnership between ArcelorMittal and the Bekaert Group in the steel cord business in Brazil, the Company completed the acquisition of a 55.5% controlling interest in Bekaert Sumaré Ltda. from the Bekaert Group and renamed it ArcelorMittal Bekaert Sumaré Ltda., a manufacturer of metal ropes for automotive tires located in the municipality of Sumaré/SP, Brazil. The Company agreed to pay a total cash consideration of €56 million ($63 million) of which €52 million ($58 million) settled on closing date and €4 million ($5 million) to be paid subsequently upon conclusion of certain business restructuring measures by Bekaert.
On May 22, 2017, following the approval of the Extraordinary General Meeting of shareholders of ArcelorMittal held on May 10, 2017, ArcelorMittal completed a reverse stock split and consolidated each three existing shares in the Company without nominal value into one share without nominal value. See “Item 10.A—Additional information—Share capital.”
On March 1, 2017, ArcelorMittal’s Board of Directors took note of Mr. Wilbur Ross’ resignation from the Board as a consequence of his confirmation as United States Secretary of Commerce.
On February 23, 2017, ArcelorMittal and Votorantim S.A. announced the signing of an agreement, pursuant to which Votorantim’s long steel businesses in Brazil, Votorantim Siderurgia, will become a subsidiary of ArcelorMittal Brasil and Votorantim will hold a non-controlling interest in ArcelorMittal Brasil. Votorantim’s long steel operations in Argentina (Acerbrag) and Colombia (PazdelRío) were not included in the transaction. The combination of the businesses is expected to result in a long product steel producer with annual crude steel capacity of 5.6 million tonnes and annual rolling capacity of 5.4 million tonnes. The combined operations include ArcelorMittal Brasil’s production sites at Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itaúna, and Votorantim Siderurgia’s production sites at Barra Mansa, Resende and its participation in Sitrel, in Três Lagoas. The merger is expected to generate cost, logistical and operational synergies. The combined businesses’ production facilities are geographically complementary, enabling closer proximity and higher levels of service to its customer base. On February 7, 2018, the Brazilian antitrust authority CADE approved the transaction, which is expected to close during the first half of 2018, subject to the fulfillment of divestment commitments by ArcelorMittal Brasil. Until closing, ArcelorMittal Brasil and Votorantim Siderurgia will remain fully separate and independent companies.
On January 27, 2017, China Oriental, a Chinese integrated iron and steel conglomerate listed on the Hong Kong Stock Exchange (“HKEx”) in which ArcelorMittal held a 47% associated interest, announced the completion of a share placement order to restore the minimum 25% free float requirement as per the HKEx listing requirement. The trading of China Oriental’s shares, which had been suspended since April 29, 2014, resumed on February 1, 2017. Following this share placing, ArcelorMittal’s interest in China Oriental decreased to 39%.
Recent developments
On February 12, 2018, ArcelorMittal announced that its subsidiary ArcelorMittal India Private Limited ("AMIPL") has submitted an offer for Essar Steel India Limited ("Essar"), an Indian steel company, in the framework of the corporate insolvency resolution process. In its offer, AMIPL set out a detailed industrial plan for Essar aimed at improving its performance and profitability and ensuring it can participate in the anticipated growth of steel demand in India. Essar is an integrated flat steel producer, with its main production facility in Gujarat.  It has a nameplate crude steel capacity of 9.6 million tonnes per year, although the current maximum achievable crude steel production level is 6.1 million tonnes per year, due to a bottleneck in the steelmaking and casting process.

32


Other information
ArcelorMittal is a public limited liability company (société anonyme) that was incorporated for an unlimited period under the laws of the Grand Duchy of Luxembourg on June 8, 2001. ArcelorMittal is registered at the R.C.S. Luxembourg under number B 82.454.
The mailing address and telephone number of ArcelorMittal’s registered office are:
ArcelorMittal
24-26, Boulevard d’Avranches
L-1160 Luxembourg
Grand Duchy of Luxembourg
Telephone: +352 4792-1
ArcelorMittal’s agent for U.S. federal securities law purposes is:
ArcelorMittal USA LLC
1 South Dearborn Street, 19th floor
Chicago, Illinois 60603
United States of America
Telephone: + 1 312 899-3985
Internet site
ArcelorMittal maintains an Internet site at www.arcelormittal.com. Information contained on or otherwise accessible through this Internet site is not a part of this annual report. All references in this annual report to this Internet site are inactive textual references to this URL and are for information only.
B. Business overview
Business strategy
ArcelorMittal’s success is built on its core values of sustainability, quality and leadership and the entrepreneurial boldness that has empowered its emergence as the first truly global steel and mining company. Acknowledging that a combination of structural issues and macroeconomic conditions will continue to challenge returns in its sector, the Company has adapted its footprint to the new demand realities, intensified its efforts to control costs and repositioned its operations to outperform its competitors.
Against this backdrop, ArcelorMittal's strategy is to leverage four distinctive attributes that will enable it to capture leading positions in the most attractive areas of the steel industry value chain, from mining at one end to distribution and first-stage processing at the other:
Global scale and scope
Unmatched technical capabilities
Diverse portfolio of steel and related businesses, particularly mining
Financial capability.
Three themes
Steel. ArcelorMittal looks to expand its leadership role in attractive markets and segments by leveraging the Company’s technical capabilities and its global scale and scope. These are critical differentiators for sophisticated customers that value the distinctive technical and service capabilities the Company offers. Such customers are typically found in the automotive, energy, infrastructure and a number of smaller markets where ArcelorMittal is a market leader. In addition, the Company is present in, and will further develop, attractive steel businesses that benefit from favorable market structures or geographies. In developing attractive steel businesses, ArcelorMittal’s goal is to be the supplier of choice by anticipating customers’ requirements and exceeding their expectations. It will invest to develop and grow these businesses and enhance its ability to serve its customers. Given the current environment, that investment will be highly disciplined. Commodity steel markets will inevitably remain an

33


important part of ArcelorMittal’s steel portfolio. Here, a lean cost structure should limit the downside in weak markets while allowing the Company to capture the upside in strong markets.
Mining. ArcelorMittal is working to continue to create value from its world-class mining business. Mining forms part of the steel value chain but typically enjoys a number of structural advantages, such as a steeper cost curve. The Company's strategy is to create value from its most significant assets, through selective expansion/de-bottlenecking, by controlling cost and capital expenditure, and by supplying products that are highly valued by steel producers. ArcelorMittal's financial capability allowed it to continue to invest in key mining assets (notably ArcelorMittal Mines and Infrastructure Canada),  while the diversity of its steel and mining portfolio facilitates the ability of the mining business to optimize the value of its products in the steelmaking process. The Company's mining business aspires to be the supplier of choice for a balanced mix of both internal and external customers, while at the same time providing a natural hedge against market volatility for its steel operations.
All operations. ArcelorMittal strives to achieve best-in-class competitiveness. Operational excellence, including health and safety, the number one priority, is at the core of the Company's strategy in both steel and mining. The Company steadily optimizes its asset base to ensure it is achieving high operating rates at its best assets. Its technical capabilities and the diversity of its portfolio of businesses underpin a strong commitment to institutional learning and continuous improvement through measures such as benchmarking and best-practice sharing. Innovation in products and processes also plays an important role while supporting overall competitiveness.
Five key strategic enablers
Critical to implementing this strategy are five key enablers:
A clear license to operate. Many of ArcelorMittal's businesses are located in regions that are in the early stages of economic development. Practically all are resource-intensive. The Company recognizes that it has an obligation to act responsibly towards all stakeholders.  ArcelorMittal's commitment to sustainability is outlined below. See "Item 4.B—Information on the Company—Business overview—Competitive strengths—Sustainable development." Sustainability is a core value that underlies ArcelorMittal's efforts to be both the world’s safest steel and mining company and a responsible environmental steward.
A strong balance sheet. The Company has made good progress in recent years in strengthening its balance sheet. Although further deleveraging remains a priority, the progress achieved to date means that the Company is now in a position to have more balance and flexibility in its capital allocation and the Company can, on a selective basis, pursue organic or acquisitive growth opportunities.
A decentralized organizational structure. ArcelorMittal's scale and scope are defining characteristics that give it a competitive advantage. They also introduce complexity and the risks of inefficiency, bureaucracy and diffuse accountability. To manage these risks, the Company favors a structure in which the responsibility for profit and loss is focused on business units aligned with markets.
Active portfolio management. Throughout the Company's history, it has sought to grow and strengthen the business through acquisitions. That remains the case. The acquisition of existing assets and businesses is typically seen as a more attractive growth path than greenfield investment. The Company is, however, also willing to dispose of businesses that cannot meet its performance standards or that have more value to others.
The best talent. ArcelorMittal's success will depend on the quality of its people, and its ability to engage, motivate and reward them. As detailed below, the Company is committed to investing in its people and ensuring a strong leadership pipeline. See "Item 4.B.—Information on the Company—Business overview—Employee development." It will continue to improve its processes to attract, develop and retain the best talent.
Action 2020 Plan
On February 5, 2016, the Company announced its Action 2020 plan, which represents a strategic roadmap for each of ArcelorMittal’s main business segments. The Action 2020 plan is over and above the Company’s ongoing management gains plan and seeks to deliver real structural improvements unique to ArcelorMittal’s business. The Action 2020 plan targets to improve the Company’s operating income by $3 billion, absent any recovery in steel spreads and raw materials prices from the levels at the beginning of 2016.
Some of the key segment initiatives included in the Action 2020 plan at the time of launch were as follows:

34


Europe: The Company plans to continue its successful asset optimization as an ongoing transformation plan, involving continued optimization, and the clustering of finishing sites to remove substantial overhead, centralize activities (including procurement) and improve logistics and service. Together with expected higher added value (HAV) mix and volume gains, this targets delivering a $1 billion improvement in operating income over the period.
NAFTA: The downstream footprint optimization in the U.S. has been completed and targets yielding a minimum of $250 million improvement in operating income. The Company intends to continue to ramp-up Calvert to full capacity during 2016 and 2017 and this is anticipated to deliver a minimum of $250 million operating income improvement. Other projects are expected to boost the HAV mix and generate further improvement.
Brazil: The Company plans to execute its value plan and targets an improvement in sales mix including a recovery of a share of higher margin domestic volumes and improved HAV mix by the end of 2020.
ACIS: The Company plans to continue its strategic focus on operational excellence to deliver volumes that will leverage the new competitive cost base it has in the CIS (following competitive currency devaluation) and execute on the improved competitiveness plan in South Africa.
The above statements regarding Action 2020 are objectives. They constitute forward-looking statements and are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon various assumptions including with respect to future decisions, which are subject to change, and the Company's ability to implement its strategy and in particular cost saving and efficiency improvement initiatives, which are subject to operational challenges and limitations. Actual results may vary and those variations may be material. See “—Dynamic responses to market challenges and opportunities” for the Company’s progress against these objectives.
Competitive strengths
As shown by the following graph, ArcelorMittal has a diversified portfolio of steel and mining products to meet a wide range of customer needs across many steel-consuming sectors, including automotive, appliance, engineering, construction, energy and machinery and via distributors.
chart-650a88a3b16f520db80.jpg
* Other steel sales mainly represent metal processing, machinery, electrical equipment and domestic appliances
**Other sales mainly represent slag, waste, sale of energy, transport services

35


The Company believes that the following factors contribute to ArcelorMittal’s success in the global steel and mining industry:
Market leader in steel.  ArcelorMittal is the world’s largest steel producer, with annual achievable production capacity of approximately 113 million tonnes of crude steel for the year ended December 31, 2017. Steel shipments for the year ended December 31, 2017 totaled 85.2 million tonnes.
ArcelorMittal is the largest producer of steel in North and South America and Africa and the fifth largest steel producer in the CIS region. It is also the largest steel producer in the EU, with significant operations in France, Germany, Belgium, Spain, Luxembourg, Poland, the Czech Republic and Romania. In addition, many of ArcelorMittal’s operating units have access to developing markets that are expected to experience, over time, above-average growth in steel consumption (such as Central and Eastern Europe, South America, India, Africa, CIS and Southeast Asia).
The Company sells its products in local markets and through a centralized marketing organization to customers in approximately 160 countries. ArcelorMittal’s diversified product offering, together with its distribution network and research and development (“R&D”) programs, enable it to build strong relationships with customers, which include many of the world’s major automobile and appliance manufacturers. The Company is a strategic partner to several of the major original equipment manufacturers (“OEMs”) and has the capability to build long-term contractual relationships with them based on early vendor involvement, contributions to global OEM platforms and common value-creation programs.
A world-class mining business.  ArcelorMittal has a global portfolio of 14 operating units with mines in operation and development and is among the largest iron ore producers in the world. In the year ended December 31, 2017, ArcelorMittal mines produced 57 million tonnes of iron ore which supplied 50% of the Company’s iron ore requirements, and also produced 6 million tonnes of coking coal and PCI which supplied 13% of the Company’s PCI and metallurgical coal requirements.
The Company has iron ore mining activities in Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine and the United States. The Company has coal mining activities in Kazakhstan and the United States. ArcelorMittal’s main mining products include iron ore lump, fines, concentrate, pellets, sinter feed, coking coal, PCI and thermal coal. As of December 31, 2017, ArcelorMittal’s iron ore reserves were estimated at 4,090 million tonnes run of mine and its total coking coal reserves were estimated at 224 million tonnes run of mine or 114 million wet recoverable tonnes. See “Item 4D—Information on the Company—Property, plant and equipment—Reserves (iron ore and coal)” for a detailed list of the entities providing reserves and the ownership structure.
The Company’s long-life iron ore and coal reserves provide a measure of security of supply and an important natural hedge against raw material volatility and global supply constraints. The mining business is managed as a separate segment which enhances ArcelorMittal’s ability to optimize capital allocation.
Market-leading automotive steel business. The Company estimates that it has approximately 17% of the worldwide market share for the automotive industry, specifically for flat products.
Long-term contracts add to the stability of the business. ArcelorMittal has built close relationships with its customers, often working with them at the vehicle design stage. These relationships are founded on the Company’s continuing investment in R&D and its ability to provide well-engineered solutions that help make vehicles lighter, safer and more fuel-efficient.
ArcelorMittal has a leading market share in its core markets and is a leader in the fast-growing advanced high strength steels segment. Its S-in motion® line of solutions is a unique offering to the automotive market that is responsive to OEMs’ requirements for safety, fuel economy and reduced CO2 emissions. By utilizing advanced high strength steels promoted in the S-in motion® projects, OEMs can achieve weight reduction with the solutions offered. ArcelorMittal’s new S-in motion® D-Segment project demonstrated that up to 25% weight saving compared to typical 2013 D-Segment vehicles can be reached with the Company's emerging grades such as Fortiform®, the Company's 3rd generation AHSS for cold forming, Usibor® 2000 and Ductibor® 1000, the Company's latest AHSS grades for hot stamping. ArcelorMittal’s automotive products include an innovative ultra-lightweight steel car door, which is less expensive than an aluminum door. Further solutions developed for the pick-up truck market offer weight savings. ArcelorMittal has launched the second generation of its iCARe® electrical steels. iCARe® steel grades play a central role in the construction of electric motors which are used in battery electric vehicles ("BEV"), hybrid vehicles ("HV"), plug in hybrid vehicles ("PHEV") and mild hybrid vehicles ("MHV"). Compared to the first generation, this new iCARe® generation features optimized mechanical, magnetic and thermal properties of the steel.

36


ArcelorMittal’s product development efforts are not limited to electrical steels for electric motors. The growth of various types of electric vehicles will impact design and manufacturing. For instance, new large mass batteries change the mass distribution of a vehicle and impact the design and manufacturing of the chassis and wheels. Battery protection provides another example: both battery boxes and body structure have to protect batteries in the event of a crash. For these specific cases, AHSS and especially Ultra High Strength Steels will play a major role. AHSS products are among the most affordable solutions on the market for these specific applications. In 2012, ArcelorMittal initiated a development effort for hybrid vehicles with a dedicated S-in Motion project. In a context where the supply of electric vehicles, and especially Battery Electric Vehicles are expected to grow quickly, new projects have been launched to address these new trends. For further details on the new products under development, see "Item 4.B—Information on the Company—Business overview—Competitive strengths—Research and development.”
In the automotive industry, ArcelorMittal mainly supplies the geographic markets where its production facilities are located in Europe, North and South America and South Africa. The Company expanded its automotive footprint to China through VAMA, its joint venture with Hunan Valin, which has obtained approvals from international and domestic car manufacturers. VAMA’s product mix is oriented toward higher value products and mainly toward the OEMs to which the Company sells tailored solutions based on its products. With sales and service offices worldwide, production facilities in North and South America, South Africa and Europe and China, ArcelorMittal believes it is uniquely positioned to supply global automotive customers with the same products worldwide. The Company has multiple joint ventures and has also developed a global downstream network of partners through its distribution solutions activities. This provides the Company with a proximity advantage in virtually all regions where its global customers are present.
Research and development. Research and Development (“R&D”) provides the technical foundation for the sustainability and commercial success of the Company by stimulating innovative thinking and the continuous improvement of products and processes.
ArcelorMittal believes it possesses leading R&D capabilities among steel producers. Its R&D function aims to develop products that create value for customers, improve ArcelorMittal's competitiveness through process optimization, and make a significant contribution to a sustainable future through the innovation of products and processes that support the Company's 10 Sustainable Development outcomes. It also aims to attract technical talent to the Company. The Company maintains strong academic partnerships with universities and other scientific bodies, and works closely with customers to foster the development of new steel products and solutions that support ArcelorMittal's aim of being the supplier of choice for its customers.
The Company operates 12 research sites around the world, and in 2017, ArcelorMittal's R&D expense was $278 million.
ArcelorMittal's R&D focuses on three main areas:
Maintaining the competitiveness of steel versus alternative materials, particularly among the Company's unique automotive customer base. R&D plays a vital role in supporting the Company's focus on higher-added-value products, especially those designed to meet the evolving needs of the automotive industry - a sector that contributed approximately 18% of the Company’s revenues in 2017, including both flat and long products. ArcelorMittal has pioneered Advanced High Strength Steel (“AHSS”) grades and manufacturing processes that help automotive customers meet demanding new targets for the fuel economy. In 2017, the Company’s R&D activities for automotive focused on the commercialization of new Press Hardened Steels (“PHS”), new grades of third generation AHSS for cold stamping and new coatings. There were also significant design innovations, including the application to front car seats as part of ArcelorMittal's S-in motion® solutions.
The Company works closely with automotive customers, and in 2017 expanded its co-engineering efforts with North American and European car makers. This gives customers the technology and information they need to use the Company's engineering solutions efficiently, as well as a holistic lifecycle analysis that details the environmental footprint of the product from manufacture through use to final disposal and recycling, including CO2 emissions.
For further details of developments in more sustainable solutions for the automotive sector in 2017, see “Item 4.B-Information on the Company-Business overview-Competitive strengths-Sustainable development-Outcome 2: Products that accelerate more sustainable lifestyles”.
Creating niche products to grow ArcelorMittal's non-auto segments. Customers in many industries share the automotive industry's demand for innovative products and processes. The Company aims to deliver similar breakthrough advances in these sectors by creating differentiated products and unique design solutions, all designed to ensure that steel is the customers' material of choice.

37


Construction is a key sector for ArcelorMittal, accounting for approximately 18% of the Company's direct sales in 2017, and the Company's R&D effort is focused on providing higher value added products which meet customer needs, including their sustainable development objectives. In 2017, the Company finalized its 'steel in modern construction' initiative, which will be rolled out in 2018 and is already providing steel solutions for construction projects in Europe and Brazil. These and other projects are described further in “Item 4.B-Information on the Company-Business overview-Competitive strengths-Sustainable development-Outcome 3: Products that create sustainable infrastructure”.
The Company also continues to respond to the expectations of its customers in the packaging and appliances markets; see “Item 4.B-Information on the Company-Business overview-Competitive strengths-Sustainable development-Outcome 2: Products that accelerate more sustainable lifestyles”.
ArcelorMittal is also developing innovative solutions for the energy segment, both renewable and conventional. For example, ArcelorMittal has improved the corrosion resistance of its line pipe steel. In 2017, the Company made its first successful delivery of an advanced line pipe steel, which comes with the Company's guarantee of the superior properties and service from its steel. The Company also developed a high-strength pressure vessel steel which allows weight savings when used in offshore processing facilities.
Ensuring a continuing and growing contribution to ArcelorMittal's management gains program and environmental footprint through research dedicated to improving the Company's steelmaking processes. The creation of unique processes helps maintain the Company's competitiveness, promote process-driven product development, and drive environmental improvements. In 2017, a number of innovative research-developed technical solutions were deployed across the Company's sites.
In 2017, the Company industrialized its hybrid filtration ("HF") process in Zenica (Bosnia) and Gent (Belgium), and hot commissioning in Dabrowa (Poland). The Company also implemented and industrialized its Accelerated Cooling Technology ("ACCtec"), developed by R&D at ArcelorMittal's Burns Harbor plate mill. ACCtec provides enhanced plate flatness control and superior microstructure, and enables stronger plates for line pipe, offshore structures, as well as for applications in shipbuilding, bridges, buildings, storage tanks and earth-moving equipment.
Numerous additional projects are planned for 2018. For these and other details of R&D's role in reducing ArcelorMittal's environmental impact, delivering energy saving programs and lowering emissions of solids, water and gases, see “Item 4.B—Information on the Company—Business overview—Competitive strengths—Sustainable development—Outcome 5: Trusted user of air, land and water” and “Outcome 6: Responsible energy user that helps create a lower carbon future”.
Diversified and efficient producer. As a global steel manufacturer with a leading position in many markets, ArcelorMittal benefits from scale and production cost efficiencies in various markets and a measure of protection against the cyclicality of the steel industry and raw materials prices.
Diversified production process. In 2017, approximately 74 million tonnes of crude steel were produced through the basic oxygen furnace process, approximately 17 million tonnes through the electric arc furnace process and approximately 3 million tonnes of crude steel through the open hearth furnace process. This provides ArcelorMittal with greater flexibility in its raw material and energy use, and increased ability to meet varying customer requirements in the markets it serves.
Product and geographic diversification. By operating a portfolio of assets diversified across product segments and geographic areas, ArcelorMittal benefits from a number of natural hedges. As a global steel producer with a broad range of high-quality finished and semi-finished steel products, ArcelorMittal is able to meet the needs of diverse markets. Steel consumption and product requirements vary between mature economy markets and developing economy markets. Steel consumption in mature economies is largely from flat products and a higher value-added mix, while developing markets utilize a higher proportion of long products and commodity grades. As developing economies mature and as market needs evolve, local customers will require increasingly advanced steel products. To meet these diverse needs, ArcelorMittal maintains a high degree of product diversification and seeks opportunities to increase the proportion of its product mix consisting of higher value-added products.
Upstream integration. ArcelorMittal believes that its own raw material production provides it with a competitive advantage over time. Additionally, ArcelorMittal benefits from the ability to optimize its steel-making facilities’ efficient use of raw materials, its global procurement strategy and the implementation of company-wide knowledge management practices with respect to raw materials. Certain of the Company’s operating units also have access to infrastructure, such as deep-water port facilities, railway sidings and engineering workshops that lower transportation and logistics costs.

38


Downstream integration. ArcelorMittal’s downstream integration, primarily through its Europe segment for distribution solutions, enables it to provide customized steel solutions to its customers more effectively. The Company’s downstream assets have cut-to-length, slitting and other processing facilities, which provide value additions and help it to maximize operational efficiencies.
Dynamic responses to market challenges and opportunities. ArcelorMittal’s management team has a strong track record and extensive experience in the steel and mining industries. In March 2013, in response to worsening market conditions in the steel industry over recent years, the Company announced a management gains improvement target of $3 billion from sustainable selling, general and administrative expenses (“SG&A”), and fixed and variable cost reductions by the end of 2015. Action plans and detailed targets were set and rolled out to the various business units, and progress was monitored and reported upon. In 2015, the Company completed the management gains program, which generated savings of $3 billion. The program targeted cost savings related to reliability, fuel rate, yield and productivity with two-thirds of targeted costs being variable costs.
From late 2011 until 2015, the Company implemented an asset optimization initiative in Europe aimed at maximizing steel production at its lowest cost facilities. Implementation costs (consisting principally of restructuring costs and fixed asset impairments) totaled $2.1 billion (of which $0.8 billion was non-cash). Among other things, the initiatives included mothballing the liquid phase at the Florange site of ArcelorMittal Atlantique & Lorraine, France in 2012 and restructuring ArcelorMittal Liège. In February 2016, the Company announced its Action 2020 plan (see “Item 4.B—Information on the Company––Business overview––Business strategy”) which targets an improvement in operating income of $3 billion, absent any recovery in steel spreads and raw materials prices from the levels at the beginning of 2016.
The Company has made measurable progress on its strategic Action 2020 plan resulting in a $0.9 billion contribution to 2016 operating income and $0.6 billion contribution to 2017 operating income, bringing the cumulative benefit to $1.5 billion. The Company is approximately one-half of the way along the Action 2020 journey with all segments contributing to the progress. The savings achieved in 2017 include volume contribution ($0.3 billion) as well as a combination of cost and product mix improvements ($0.3 billion). Volume is a key component of Action 2020 (5 million tonne volume improvement) and the Company expects to see more progress in this area in 2018 and beyond, assuming market conditions remain favorable.
Europe: The transformation program has progressed well. Savings at the cluster-leading plants continue to be made, with changes to the operating model to restructure and modernize the organization now well embedded. The organization is benefiting from a more integrated, centrally coordinated approach, further reducing costs. Additional gains are being made with enhanced use of and investment in digitalization in the manufacturing process, supply chain and commercial teams. Overall, net volume gains and improved mix contributed with higher hot strip mill production, offset in part by lower volumes caused by operational issues primarily in the long business.
NAFTA: Indiana Harbor footprint optimization has been completed: Savings achieved came from headcount rationalization and efficiencies following closure of its 84” hot strip mill ("HSM"), idling of the No.2 steel shop, and ongoing benefits from a new caster at No.3 steel shop. Restoration of the 80” HSM and Indiana Harbor finishing will continue in 2018.
NAFTA: Calvert ramp up is advancing with automotive qualifications proceeding and increased capacity utilization (up 10% year-on-year).
Brazil: Structural cost reductions are being implemented; improved HAV mix from flat business.
ACIS: Ukraine benefited from the construction of a new coke oven battery #6 and other PCI/energy saving initiatives. Improving operational performance in Kazakhstan with production records during the year offset by lower shipment volumes in Ukraine.
Mining: The business remains focused on service, quality and asset reliability. Cost focus maintained: net cash provided by operating activities and capital expenditures breakeven point remains $40/t China CFR 62% Fe.

Proven expertise in acquisitions and turnarounds. ArcelorMittal’s management team has proven expertise in successfully acquiring and subsequently integrating operations, as well as turning around underperforming assets within tight timeframes. The Company takes a disciplined approach to investing and uses teams with diverse areas of expertise from different business units across the Company to evaluate new assets, conduct due diligence and monitor integration and post-acquisition performance. The Company has grown through a series of acquisitions and by improving the operating performance and financial management at acquired facilities. In particular, ArcelorMittal seeks to improve acquired businesses by eliminating operational bottlenecks, addressing any historical under-investments and increasing the capability of acquired facilities to produce higher quality steel. The Company introduces focused capital expenditure programs, implements company-wide best practices, balances working capital, ensures adequate management resources and introduces safety and environmental improvements at acquired facilities. ArcelorMittal believes that these operating and financial measures have improved the operating performance and quality of steel produced at such facilities.

39


In past years ArcelorMittal has largely curtailed M&A and greenfield investment activity due to difficult economic and market conditions. The Company has focused on improving its costs through its management gains program, non-core asset disposals and resizing its operational footprint through asset optimization. The Company has continued its strategy to dispose of non-core assets, including for example, the disposal of Gallatin, Circuit Foil Luxembourg, the steel cord business and ATIC in 2014 and others. In 2016, the Company sold its minority shareholding in Gestamp and the Laplace and Vinton Long Carbon facilities in the United States as part of this strategy. In addition, as global market conditions gradually improve, the Company has taken advantage of select growth opportunities, including completing a 50/50 joint venture of Calvert in partnership with NSSMC in prior years and signing a purchase agreement for Votorantim S.A.'s long business and a lease and obligation to purchase agreement for Ilva in 2017.

Sustainable development. Sustainable development (“SD”) is central to ArcelorMittal's aim of creating long term value for shareholders and other stakeholders, and maintaining profitable market share. The Company’s ambition is to ensure its steel plays an essential part in a circular, low-carbon economy, which contributes to the creation of high quality and sustainable lives in the coming decades. The Company considers its approach to SD as critical to preventing business disruptions, and to maintaining and winning trust among its key stakeholders. It believes SD helps it earn supplier of choice status among the growing number of customers who share its commitment to higher environmental and social standards, and retain favor among investors looking for long-term value creation.
The Company's SD framework, launched in 2015, outlines the 10 SD outcomes ArcelorMittal needs to achieve in order to create long-term value for all its stakeholders. In 2017, the Company worked to create the building blocks of an overarching strategy to ensure that the business is acting on its understanding of SD trends through its engagement with stakeholders, its business practices and business plans at the segment level. This work reflects several key themes that the Company expects to continue:
as customers' demand for reassurance on product and supply chain sustainability standards continues to grow, the value of an industry-wide sustainability certification scheme for steel increases;
the Company faces both financial risks and opportunities relating to climate change and acknowledges the needs for a detailed climate strategy;
the increasing focus on building a circular, low-carbon economy will highlight the vital role steel has to play and continue to stimulate demand for new kinds of sustainable steel solutions; and
sustainable development is an appropriate business response to the dynamics of its key markets over the long-term.

The 10 outcomes, and the Company’s progress towards them, are summarized below.

Outcome 1: Safe, healthy, quality working lives for ArcelorMittal’s people
The Company regards its employees as a highly-valued resource. Its intended outcome is that its workforce is safe and healthy, is committed to the Company’s success, and operates with integrity. Diversity is valued, and every individual is respected and their potential developed.
Safety 
The Company-wide safety program, “Journey to Zero,” aims to achieve zero fatalities and lost-time injuries by creating a culture of shared vigilance in which risks and hazards are understood and monitored, best practices are shared, and appropriate action is taken at every level. The Company's remuneration policy links 10% of the bonuses of the Group, where applicable, to the lost-time injury frequency rate in the business where he or she works, including for the CEO and CFO.
Since Journey to Zero was introduced in 2007, the Company has seen significant improvements in safety performance, as measured by tracking the number of injuries per million hours worked that result in employees or contractors taking time off work (the “lost-time injury frequency rate” or “LTIFR”), as well as the number of restricted work injuries per million hours worked that result in employees or contractors not being able to perform their normal tasks. The LTIFR was 0.78 incidents per million hours worked in 2017 compared with 0.82 in 2016, in marked contrast with the 3.1 recorded in 2007, the first year in which the Company recorded safety data after its formation. ArcelorMittal's performance is significantly better than the steel industry average of 1.0, the World Steel Association figure for 2016.

40


Own personnel and contractors
 
 
For the year ended December 31,
Lost time injury frequency rate
 
2017
 
2016
Mining
 
0.77
 
1.07
 
 
 
 
 
NAFTA
 
0.73
 
0.95
Brazil
 
0.43
 
0.37
Europe
 
1.03
 
1.01
ACIS
 
0.61
 
0.58
Total Steel
 
0.78
 
0.78
 
 
 
 
 
Total (Steel and Mining)
 
0.78
 
0.82
The Company recognizes, however, that alongside improving its performance against LTIFR, it must do more to ensure that its safety culture addresses fatalities and serious incidents. It is with deep regret that the Company reported 23 fatalities during 2017. Of these, four occurred in its mining operations. Any fatality is a cause of great distress to the Company leadership and the entire workforce. The leadership of the Company is committed to preventing these tragedies and is focused on reinforcing its culture of accountability, based on improved data collection, analysis and understanding, and the sharing of lessons within the steel and other heavy industries.
Specifically, the Company is building on three ways in which data can be deployed more efficiently to avoid accidents: first, by deepening the skills of its employees to detect, analyze, report and share learning about ‘serious occurrences and potential severe injuries and fatalities’; second, by improving the quality of key tools, such as hazard identification and risks analysis, shop floor audits, or pre-shift meetings; and third, by continuing to develop a caring culture through effective communication and regular hands-on training. In 2017, the Company significantly improved the quality of its monitoring and understanding of serious occurrences and potential severe injuries and fatalities. The volume of incidents logged more than doubled compared to the previous year, and 87% of these were recorded pro-actively rather than reactively - meaning potential, rather than actual, accidents. This provides the Company with a deeper understanding of how safety incidents can arise and therefore be avoided.
These measures are designed to reinforce ArcelorMittal's existing safety monitoring and management system, which takes into account both the physical and human aspects of workplace safety. The system includes safety leadership and awareness programs, which are backed up by workshops, training sessions and ongoing communication programs. An annual health and safety day provides an opportunity for best-practice sharing across the Company and in 2017 saw 210,492 participants actively involved in workshops and activities. The Company continued to deliver "experiential" training, through modules designed to embed an instinctive safety culture. Employees and contractors are also encouraged to engage in a dialogue on safety issues during regular shop floor audits, "safety moments" at the start of a shift, or during monthly review meetings.
The Company works closely with its trade unions to drive safety improvements through a global partnership consisting of local Health and Safety Committees at every production unit. The Company's Global Health and Safety Committee provides oversight on matters arising from the local committees, and is supported internally by the Health and Safety Council.
All accidents are investigated, and designated members of senior management review all fatalities to ensure lessons are learned throughout the Company. The Company provides specific support to sites where fatalities have occurred to ensure stronger alignment between Group level safety strategy and site level implementation.
Health
ArcelorMittal’s management takes a proactive approach to the health of employees. In addition to its objective of eliminating accidents, the Company’s Journey to Zero also aims to encourage healthy lifestyles and foster wellbeing, and to reduce occupational diseases to zero. Initiatives are run at the local level to prevent health issues arising from microclimatic conditions and the handling of chemicals, as well as those arising from personal behaviors, such as smoking, or drug and alcohol use. Wellbeing programs are also run to help employees address stress and fatigue, and to encourage physical activity. The Company aims to continuously improve the hygiene standards within its facilities, and is a member of the International Occupational Hygiene Association. An annual health week provides activities with a local focus on these issues.

41


In recent years, the Company has run a program in Europe to improve the health of the workforce in its coke plants, by sharing good practices in health management. Bio-monitoring has been used to detect anomalies, measure the effect of the improvements being made, and as an employee engagement tool.
Employee relations and engagement
ArcelorMittal prioritizes finding and keeping the right people, and aims to build a culture that keeps employees motivated, committed and performing at their best. The Company views employee engagement as a key component of this culture, and in all engagement practices, the Company seeks to integrate feedback into action plans to address employees’ concerns. Every two years, ArcelorMittal undertakes a Company-wide survey to gauge employees’ opinions, attitudes and levels of satisfaction. This "Speak up!" survey looks at a variety of key dimensions including organizational direction, leadership and professional deployment and development. It allows employees to relay feedback anonymously to the executive leadership. The results of the 2017 Speak Up survey will be reported in the Company's online Annual Review which is available on its website. A representative, random sample of Company employees are also included in ArcelorMittal's reputation surveys, which canvas the views of a wide range of stakeholders. In 2017, surveys were undertaken in Belgium and France, and follow-up action plans are in development.
The Company conducts open and continuous dialogue to create a working environment based on mutual trust, understanding and respect so that the rights of its workers are protected. It prides itself on productive working relationships with unions: the Company works to maintain collective bargaining agreements with employees in all countries of production. See “Item 6.D––Directors, senior management and employees––Employees”.
Diversity and inclusion
ArcelorMittal values diversity as a way of bringing fresh perspectives and experiences to the business, and for the contribution it makes to the Company's ambition to be an employer of choice within the industry. The Company has a presence in over 60 countries and employees from many more, and its diversity and inclusion policy reflects an effort to encompass different cultures, generations, genders, ethnic groups, nationalities, abilities and social backgrounds.
Supporting and fostering its female leaders is an important aspect of the Company's ethos, and this overlaps with the Company's ambition to support future leaders in science, technology, engineering and maths ("STEM"): in 2017, the Company ran initiatives in France and the U.S. specifically designed to attract women applicants with STEM backgrounds.
ArcelorMittal’s senior management is committed to creating and maintaining a more inclusive culture and ensuring that the Company attracts talented women. A number of programs are in place to develop women as leaders, supported by various initiatives including the development of training programs for women employees, mentoring and coaching, networking and role model involvement. There is also an important focus given to the career evolution of women and succession planning. Women now make up 15% of the succession plans for senior management positions. In line with the worldwide effort to increase gender diversity on the boards of listed and unlisted companies, ArcelorMittal met its goal of increasing the number of women on the Board of Directors to at least three by the end of 2015 with the appointment of Karyn Ovelmen in May 2015. Out of 9 members of the Board of Directors, 33.33% were women in 2017. Women accounted for 12% of employees in management positions (manager and above): 6% at Vice-President level, 6% at General Manager level and 14% of Managers.
In 2017, the ArcelorMittal University successfully launched its new program, Women@ArcelorMittal, which replaces the previous programs, Women In Leadership and Women Evolving in Leadership. The new design includes an online learning channel, webinars and a face-to-face session, providing an efficient solution for global and local delivery and the potential to reach all women employees in the future.

The University runs several training programs for employees to build their understanding of how cultural orientations affect attitudes and actions, and of how to manage conflict and misunderstandings that may arise from different cultural perspectives and communication styles.  
To support people with disabilities in the workplace, the Company has developed broad-ranging initiatives in a number of countries. In France, for example, the seven sites of ArcelorMittal Atlantique & Lorraine have an agreement with three unions to promote the vocational integration of workers with disabilities, and they run a dedicated awareness week for the workforce. In Brazil, the Company has developed an inclusion program that includes a workforce target for people with disabilities. The Company's Fos-sur-Mer site runs a training program aimed at qualifying unemployed people with disabilities to work in metallurgical roles, in partnership with Agefiph (Fund for the Integration of the Disabled).

42


Employee development  
The Company recognizes that employee development, including succession planning and developing young talent, is crucial to its future success. Across its operations, programs are in place which are designed to spot people with potential, and manage the succession of key roles as part of the Company's overall workforce planning process. The Appointments, Remuneration and Corporate Governance Committee is responsible for this process, and strategic workforce planning is now a key element of business unit quarterly reviews. Between 2016 and 2017, the top 300 leaders in the Company underwent a "360º review", and the Company is incorporating feedback into its leadership programs.
ArcelorMittal's employees chart their personal and professional progress through a performance review process with their line manager. This is tracked centrally for non-hourly employees, of whom 97.2% had twice yearly reviews in 2017, up from 96.7% in 2016.
Employees can select online and classroom training courses from the ArcelorMittal University, as well as a range of leadership, management, functional, technical and bespoke programs for lifelong learning and professional progression. The University's network of campuses is strategically located across the world in Temirtau and Karaganda (Kazakhstan), Hamilton (Canada), Avilès (Spain), Ostrava (Czech Republic), Vanderbijlpark (South Africa) and Kryvyi Rih (Ukraine). Two new campus locations in Brazil were inaugurated in 2017.
Career committees oversee the management and development of individuals, the improvement of competency levels across the organization, and the availability of a pipeline of talent for key positions. Each year, senior management reviews succession plans for around 300 key positions within the Company. See “Item 6.C— Directors, senior management and employees—Board practices/Corporate governance—Succession management”.
Outcome 2: Products that accelerate more sustainable lifestyles
The Company aims for steel to be the material of choice for the designers and manufacturers of automotive products, appliances and packaging, because it is strong, durable and innovative, and its robust sustainability credentials over its full lifecycle are widely understood and recognized.
ArcelorMittal continues to work closely with car-makers and automotive suppliers to understand and apply steel solutions to future vehicle design. It also provides innovations in coating techniques for appliances and packaging to improve their durability and effectiveness in ways that are beneficial to sustainable development.
The Company observes increasing expectations for sustainability performance from both customers and regulators. It aims to meet and exceed those expectations, and to support its customers to design products that contribute to sustainable development through energy efficiency, materials re-use, recyclability, resource efficiency, reduced negative consequences for the environment or society, and affordability. ArcelorMittal also observes that its customers are increasingly looking for social and environmental standards in their supply chain, and seeks to gain competitive advantage by certifying the sustainability standards of the Company’s operations. See “Item 4B—Information on the Company—Business overview—Competitive strengths—Sustainable development–Outcome 7: Supply chains that ArcelorMittal’s customers trust.”
Since 2005, the Company has developed deep expertise in lifecycle analysis (“LCA”), which is designed to analyze and reduce the environmental impact of products during their production, use and disposal. LCA helps assess the sustainability value at the product development stage, particularly in comparison to competing materials - such as, in the case of steel, materials including concrete and aluminum. The Company undertook 23 LCA studies in 2017, of which six related to automotive and packaging products, and five to the processes used to produce such products. LCA is integral to ISO14040-44 and is a requirement of environmental product declarations for construction products in Europe. ArcelorMittal participates in the Worldsteel LCA expert group and the SOVAMAT initiative (SOcial VAlue of MATerials), an international network of experts on the social and environmental impacts of materials.
Innovation is key to accelerating sustainable lifestyles, and the Company’s R&D teams seek to improve the social and environmental value of its products. The Company's new Sustainable Innovation ("SI") tool, developed in 2016, enables its researchers to analyze potential new products for their contribution to sustainable development with the aim of creating a pipeline of products with proven sustainability benefits. The SI Program was piloted in 2017 on R&D projects for the automotive sector. Overall, in 2017, the Company’s global R&D division launched a number of new products which make contributions to more sustainable lifestyles through the automotive, packaging and appliances markets, and worked on a variety of related product development programs.

43


The Company believes it is viewed as a leader in technology by most automotive customers, with a global market share of around 17%. Through its S-in motion® projects, it offers automotive customers solutions that deliver improved safety, fuel economy and reduced CO2 emissions, supported by a significant R&D program which constantly anticipates societal expectations. An example is in the evolution of electric vehicles, for which the Company has been developing a range of solutions since 2012.
ArcelorMittal has continued to expand its global portfolio of automotive steels by introducing a new generation of AHSS steels. Two new Press Hardenable Steel ("PHS") products, Ductibor® 1000 and Usibor® 2000, were commercialized in 2017 and are already qualified by some customers. The Company commercialized further new products in its third generation, highly formable ("HF") Advanced High Strength Steel ("AHSS") range, including HF1050 and HF1180, as well as other specialized, weight saving steel grades for automotive customers including DP780 DH GI, MS1500JVD and Zagnelis® surface top exposed. New transmission materials also reached industrialization with the Company's EU carmaking customers. Together, these new steel grades and applications will help carmakers further reduce the weight of the basic vehicle frame - technically, the 'body-in-white' - to improve fuel economy without compromising vehicle safety or performance. For example, the Company expanded its S-in motion® range of solutions with the launch of a new front seat design for cars. By using new advanced steel products and design and engineering processes, S-in motion® for front seat design has demonstrated opportunities to save up to 18% weight in comparison with conventional seat solutions.
The Company has invested significantly in enabling existing facilities in Europe and the U.S. to produce new PHS and third generation AHSS steels. The Company’s first unique jet vapor deposition ("JVD") line was inaugurated in February 2017 in Liege. It is designed to create a new generation of coated products with improved quality and enhanced functionality (Jetgal®). To enable increased production of the fortiform line of automotive products, the Company is continuing to develop quenching and partitioning ("Q&P") technology, which is already installed at its facilities in Gent and Liege, Belgium, and at the Company's AM/NS Calvert joint venture with Nippon Steel and Sumitomo Metals Corp in Alabama, U.S.
In the packaging sector, the Company continues to respond to pending or anticipated new legislation requiring ecologically-friendly coatings with the development of steel for food packaging that avoids the need to use chromium VI and bisphenol A.
Outcome 3: Products that create sustainable infrastructure
Steel is strong, flexible and durable, and it can be infinitely recycled without losing its key qualities. These virtues all lend themselves to low impact solutions, and the Company is engaging with customers in the construction, energy, public transport and general industrial markets to raise understanding of the important contribution steel can make to sustainable development.
ArcelorMittal's customers in the construction sector increasingly consider sustainability value across the whole life of a project. The Company is providing solutions at every stage of the process, and across the entire lifecycle, including customer engagement at the design stage of a construction project, product development, and ways for customers to access quality information about the sustainability impacts of the Company's products.
In 2017, its global R&D division launched a number of product solutions and development programs to support sustainable construction and infrastructure to achieve outcome 3. The R&D division also piloted the use of its new SI program, described above in Outcome 2, to assess the potential sustainability impact of R&D projects for the construction sector.
The Company believes the circular economy is vital to a low-carbon future and has established an internal forum for exchange on the opportunities presented by circular approaches. ArcelorMittal is also a member of the CIRAIG International Lifecycle Chair and the international reference center for the lifecycle of products, processes and services, and is active in particular in their circular economy working group. ArcelorMittal's global R&D division completed 12 lifecycle assessments of products for construction and infrastructure in 2017.
As well as being recyclable, steel's long lifespan also creates the potential for re-use. The Company is exploring the possibilities for re-usable steel components with customers. In 2017, the Company's R&D division worked closely with architects Wilmotte & Associés in their design for the Company’s new Luxembourg headquarters. The design ensures that the building can be dismantled, and nearly all the steel products re-used in a new building without the need for recycling. It is intended to demonstrate the full potential of steel in a modern, sustainable building, and underlines the Company's commitment to promoting the role of steel in the circular economy.

44


The Company’s global R&D division offers the AMECO software package to assist architects and engineers with sustainable design and choice of components, enabling them to assess the relative lifecycle impacts of their bridges and building designs based on their choice of materials in terms of CO2 emissions, energy and water consumption and waste generation. In 2017, the Company finalized its Steel in Modern Construction initiative, a platform which quantitatively and explicitly assesses the impact of different material solutions on the performance of a full office building. It provides customers and stakeholders in the construction sector with information that supports them in choosing architectural layout, structural systems and facade engineering. The Company intends to launch it in Europe in 2018.
The Company continues to innovate solutions to improve durability, reduce weight, cut pollution, or reduce construction times. In 2017, the Company's global R&D division secured a strong partnership with U.S. safety barrier manufacturer Gregory Industries to develop a new high-containment steel median safety barrier for use in North America. This patented steel solution has received approval from the U.S. Federal Highway Administration. The containment will begin to be installed in 2018.
In Brazil, the Company developed a new offer of pre-fabricated reinforcement technology for construction which improves worker safety and reduces customers' construction time by reducing the amount of earth removal required to lay foundations.
In 2017, the Intersolar Awards recognized a new framing solution for photovoltaic ("PV") modules using Magnelis®, a patented steel coating developed by ArcelorMittal. The PV solution was noted for its "combination of innovative design with a strong focus on product sustainability". Magnelis® offers corrosion and abrasion resistance, and has self-healing properties to protect deformed zones, edges and perforations, particularly valuable in the sandy desert environments where solar energy systems are frequently deployed. Hanwha Q CELLS, which developed the system with technical advice from ArcelorMittal R&D, estimates that the frame will reduce the module’s carbon footprint by around 15% compared to the traditional aluminum frames in use today.
ArcelorMittal continues to innovate in organic coating steels at the production stage, thus reducing energy and labor costs for customers in the construction and domestic appliance sectors, while improving durability. Similarly, metallic coatings such as the Company's Jetskin® offer, applied by Jet Vapor Deposition ("JVD") and launched in 2017, and the zinc magnesium coatings that continue to be deployed across several plants offer reduced equipment maintenance and key environmental benefits.
Increasingly, environmental data for products are required by companies working in, and supplying to, the construction industry. This is often in the form of an Environmental Product Declaration ("EPD"), a standards-based report detailing information on a construction product's environmental footprint over its lifecycle. Building on its LCA expertise, the Company’s global R&D division completed several EPDs in 2017 - for its steel reinforced bars, structural sections and sheet piles, with plans to create further EPDs for structural beams, road safety barriers and coated coils. These EPDs are reviewed by third parties and validated by the Institut Bauen und Umwelt (“IBU”), the Institute of Construction and Environment, recognized worldwide for its sustainability labeling program for construction products. ArcelorMittal Europe's new online resource, Constructalia, provides customers and other stakeholders with EPD reports as part of a range of tools relating to ArcelorMittal products for the construction sector.  
Outcome 4: Efficient use of resources and high recycling rates
ArcelorMittal aims to be acknowledged for using resources in the most efficient and effective way, so that it creates significant value for customers and shareholders as well as for the environment. The Company is currently one of the world's biggest recyclers, predominantly because of the scrap steel used in its integrated plants and as feedstock in its electric arc furnaces, and it sees steel and steelmaking by-products as having a far larger role to play in the circular economy.
In December 2017, the Circulars 2018, an initiative of the World Economic Forum and the Forum of Young Global Leaders, commended ArcelorMittal for demonstrating leadership and innovation by applying circular economy principles to its business models.
The Company considers its resource efficiency efforts to take two main forms within its own operations: making the steelmaking process more efficient by re-using by-products, solids and waste gases, both internally within the steelmaking process and externally in other industries; and utilizing scrap from steel that has already been used. While these efforts provide scope for creating considerable value in themselves, ArcelorMittal is also working with others within the industry and beyond to build a wider understanding of steel's potential for re-use, recovery and recycling. This includes work with Worldsteel on steel product lifespans, and with customers and others to help identify obstacles to recycling, and ways to resolve them.

45


Steelmaking produces a range of valuable by-products and the Company is intensifying its efforts to ensure that they are used to create value within and beyond the business. Wherever possible, by-products are re-used within the steelmaking process. This applies especially to gases, which can be re-used as energy for the Company's operations as well as for neighboring communities, but also to dust, slag and sludges, which can all be used in either the integrated steelmaking route (with sinter plant, blast furnaces and BOF) or the electric arc furnace (“EAF”) route. This reduces the amount of virgin inputs the Company needs, reducing raw material costs as well as environmental impact. 
The Company is exploring innovative uses for by-products which create social value. In 2017, ArcelorMittal Tubarão won the World Steel Association's Excellence in Sustainability award (Steelie Award) for its program of repaving rural roads in Brazil using steel by-products. The "New Paths" program was made possible by the Company's R&D department, which developed REVSOL® and REVSOL Plus®, which turn steel slag into a primary road, car park and storage yard coating, replacing the use of non-renewable sources in road building and significantly reducing the need for road maintenance.
By-products are also sold to other industries. Better known examples include the use of slag by-products in road construction, fertilizer and the cement industry; the Company has an investment in Europe with the cement group Ecocem. The Company also sells blast furnace slag for use in the production of stonewool, a fire retardant and insulator; some European sites supply blast furnace slag to the glass-making industry. The Company is developing markets for calcium carbonate residues, including in the paint manufacture industry. The Company's R&D function is investigating the potential use of slag from furnaces in water filtration and greenhouse gas capture.
Scrap is an important resource for steelmaking. The Company’s research indicates that global recycling rates for obsolete steel currently stand at 87%, which is the highest recycling rate for an obsolete material. Over recent years, the scrap input rate of the Company’s steel stands at around 28%. ArcelorMittal produces steel both via the EAF route, using scrap, and the integral iron ore-based blast furnace route, and the Company optimizes the relative share of each in response to market conditions. As global demand for scrap outstrips supply it generally means that the cost of scrap for EAF is higher than that of iron ore in the integrated blast furnace process, which can be a major factor in determining the Company’s production balance, and therefore the carbon intensity of the steel it produces. See “Item 5–Operating and financial review and prospects–Key factor affecting results of operations—Scrap” for further details on the use of scrap and the price differential.
In order to inform long-term production strategy, the Company is working with customers and others to create an authoritative source of data on steel stocks, recovery and recycling rates across the world. The Company is exploring its scrap supply chain to identify any areas of concern, and commissioned a third party study in 2016 aimed at identifying the impacts the increasing availability of scrap may have on the steel industry. The study showed that the emergence of developing economies - where steel used for construction will play an important role - will be heavily influenced by scrap availability, transportation and trade. It found that shortly after 2050 there is expected to be enough obsolete scrap to enable its use for making flat products, and that steel made from scrap is expected to become predominant by 2070.
ArcelorMittal is collaborating with the University of Cambridge and customers to look at the efficiencies of steel flows downstream from its operations, and identify where there is potential for greater carbon- and cost- efficiencies through the reduction of pre-consumer scrap.
The use of obsolete scrap in steel production is made more attractive where its impurities from other materials are easily accommodated, typically in construction and infrastructure products, which are usually made via the EAF route. ArcelorMittal seeks to improve the quality of the scrap it uses, and the global R&D division is exploring the viability of automated sorting processes for treating scrap by removing non-magnetic material. This could increase the Company's capacity to recycle scrap in its production processes.   
Outcome 5: Trusted user of air, land and water
ArcelorMittal understands that it shares natural capital such as air, land and water with many stakeholders, and aims to win stakeholder trust by operating transparently and responsibly. Some of the challenges affecting air, land and water are global in nature, and the Company engages in multi-stakeholder forums aimed at addressing them; in many cases, however, the issues and the means of addressing them are local, and the Company's country managers engage with stakeholders at every level, including site-by-site.
The Company monitors regulatory developments and aims to be in compliance with all regulatory standards. See "Item 4B—Information on the Company—Business overview —Government regulations."

46


ArcelorMittal acknowledges that air quality continues to be one of the most salient issues for local communities where it operates. In 2017, ArcelorMittal's Investment Allocation Committee approved a total of $158 million for new investment in environmental capital projects. Half of these are aimed at air quality improvements. Projects approved include a new coke gas cleaning plant and an upgrade to the sinter plant at the Company's operations in Termitau, Kazakhstan. During the year, the Company also applied its innovations aimed at reducing air emissions in 2017. Its new hybrid filtration technology for the sintering process was piloted at its Zenica site in Bosnia & Herzegovina, and extended to its Gent site in Belgium. A new bag filtration system, already in use at the Company's Bremen, Fos, Dunkirk and Ostrava sites, was installed at the sinter plant at the Company's Tubarão site in Brazil. The system will reduce 90% of visible emissions and is the first installation of its kind at a sinter plant in South America.
Although the specific sources of pollutants, particularly in urban and industrial areas, are not always identifiable, the Company aims to listen to concerns wherever they are raised and respond appropriately. For example, during 2017 the Company received concerns from stakeholders that high ambient levels of pollutants may have been caused by ArcelorMittal Asturias. Investigations as to the source of these air emissions continue. During the year, ArcelorMittal Asturias established a Community Liaison Committee with the Gijon community. The group will meet quarterly to analyze environmental incidents and to share information and concerns relating to pollution. During 2017, the Company also invested in a range of the best techniques available in Spain to ensure that its emissions are below regulatory levels. In December 2017, ArcelorMittal Asturias commissioned the installation of a new electro-filter system, which will enable it to surpass the current air emission regulations and prepare it for more restrictive regulations expected in the coming years. At the end of the year, it announced a €200 million Environmental Improvement Plan. This will mainly focus on air emissions for both stack and diffuse emissions. It includes 26 projects over the next five years, including the re-modeling of the coke batteries in Asturias, which is already underway.
Before developing any new mine or steel plant, the Company carries out detailed environmental impact assessments, and establishes an environmental management plan. At all existing production sites, it monitors air, water, energy and residue data, and publishes data annually at a corporate level in its online Annual Review and country level sustainability reports, of which 15 were published in 2017. The Company's Serra Azul and Andrade mines in Brazil achieved ISO14001 certification in 2017.
The Company aims to practice good land use management, and to protect biodiversity in the environments where it operates, including through partnerships with local environmental organizations and others to improve and research local biodiversity. In Luxembourg, the Company is exploring the use of an external land management agency to improve its sites. At the Mont Wright mine in Canada, the Company has been conducting research to improve dust control, tailings stabilization and the potential for carbon sequestration through tree-planting on its site. It is working in collaboration with the Universities of Chicoutimi and Sherbrooke and CO2 Green Tree. During the 2017 campaign, a total of 4,800 trees were planted, bringing the total to 18,000 trees at the site to date.
At the Company's Liberia iron ore mines, which are close to both mountain and lowland rainforests, it is engaged in major biodiversity investments. In 2017, the Company renewed its environmental permit and updated its environmental and social impact assessment. This includes increased requirements for sediment control, water discharge and biodiversity conservation.
Water is a vital resource to both the Company and its stakeholders, and ArcelorMittal aims to be responsible both in the amount of water it consumes, and in the quality of the water discharged by its sites into the environment. In general, steel plants treat and recycle the same intake of water repeatedly. Water withdrawn from groundwater sources makes up less than 1% of the Company's water intake. The Company is currently reviewing best practices across its sites following a strategic review of its water use in 2016. The Company is working with local stakeholders to explore the use of alternative sources where water is scarce, including seawater, rainwater, and wastewater from water treatment plants.
In order to improve water use and the quality of effluent discharge at its mining sites, the Company developed a "water assessment for improvement" tool in 2016. The tool enables sites to develop process flow sheets and assess mass balances, giving them greater insight into water use and the ability to detect and address shortcomings. The tool has been implemented at the Company's Las Truchas site in Mexico, and its Serra Azul and Andrade sites in Brazil; the Company plans further implementation in Kazakhstan.
ArcelorMittal understands the importance of managing tailings ponds carefully to ensure they are structurally sound and have adequate water management arrangements, and continues to enhance its corporate tailings stewardship program. Since introducing new tailings storage facilities ("TSF") surveillance guidance in 2015, the Company has conducted further inspection and monitoring, including third party dam safety reviews and independent audits. In 2017, ArcelorMittal initiated “deep dive” internal audits of TSFs to ensure dam safety, as well as the quality and robustness of its systems. In 2017, the Company allocated $61 million in investment to projects that will improve tailings management across its operations.

47


Outcome 6: Responsible energy user that helps create a lower carbon future

ArcelorMittal wants to be trusted by its stakeholders to make a positive contribution to a lower-carbon future, both by cutting energy use and carbon emissions, and by developing innovative products that help customers and other industries do the same.
The Company believes it plays an important role in carbon reduction, since modern specialist steels are helping make products and materials more carbon-efficient. Lifecycle analysis studies show steel is a lower-carbon alternative over its lifecycle compared to other materials such as aluminum and concrete in many applications. Nonetheless, ArcelorMittal recognizes that it must go further to reduce its own emissions, both through energy efficiencies and through piloting breakthrough low-carbon technologies.
The Company considers carbon capture and utilization ("CCU"), which converts waste carbon gases into commercially viable products such as bio-oils, chemicals, plastics and fuels, to be the most promising technology to date. These products can be used in place of those made from fossil fuels, with the net effect of reducing greenhouse gas emissions. For example, at Fos-sur-Mer, the Company is conducting an experiment to test the viability of using flue gases to grow microalgae, which could be converted into bio-crude or valuable chemicals.
At its Gent steel plant in Belgium, the Company is building an industrial-scale plant to demonstrate the viability of a CCU technology, which aims to use waste carbon monoxide from steelmaking to produce ethanol on a commercial basis. This process, undertaken in partnership with carbon-recycling pioneer LanzaTech, requires low-energy input and generates high greenhouse gas savings when the resulting fuel is used in place of fossil-based commodities such as transport fuels. The Gent demonstration project will yield an annual CO2 saving equivalent to 600 Boeing 747 flights between London and New York. During 2017, the project engineering phase was finalized and all necessary permits obtained. The Company is exploring the potential for scaling up the process at its other blast furnaces.
Another approach to CCU is to recycle waste carbon within the steelmaking process. One such project, IGAR, captures CO2 and reforms it with plasma torch technology into a hot reductant gas, which is injected in the blast furnace, reducing the requirement for fossil coal use and mitigating the emission of CO2 into the atmosphere. This project is being developed from results obtained in the Low Impact Steel program executed in the ArcelorMittal R&D Maizieres labs. It aims to reach the industrial demonstration phase in 2020.

Energy efficiency remains a key focus. The Company's global R&D division continues to develop new energy efficiency processes across the Company’s operations. The Company applies an energy audit process which assesses performance and identifies areas for improvement. The majority of ArcelorMittal’s large sites are ISO50001 standard certified or equivalent. These measures have enabled all European sites to comply with the requirements of the EU Energy Directive. In 2017, the Company's Dofasco site became the first integrated steel mill in North America to attain ISO50001 standard. In the U.S., the Company is working to reduce energy consumption at all of its facilities by 10% over a ten year period, with 2013 as the baseline year. This objective is aligned with the Company's voluntary agreement under the U.S. Department of Energy's Better Plants Partnership.
Each year, the Company’s Investment Allocation Committee approves a number of capital investments that will bring significant energy and carbon efficiency improvements. In 2017, 17 further projects were approved, involving a capital expenditure of $373 million, including improvements to the reheating furnaces at Burns Harbour (USA), Montreal (Canada) and Gent (Belgium), as well as improvements to the power plant at Dofasco (Canada), and a reline of the blast furnace at Lazaro Cardenas (Mexico).
In addition, the Company's mining unit in Canada, with the support of the Quebec Government, installed a cryogenic storage system in 2017 to test natural gas replacement in its iron ore pellet plant. The project will enter its test phase in 2018, which is expected to enable 5,000 tonnes of CO2 to be avoided in 2018.
The Company also continues to seek ways in which waste energy from the steel-making process can be either recycled within its own operations or exported as heat, steam or electricity. Some of these are longstanding: for example, ArcelorMittal owns or co-owns power plants that supply heating to the cities of Zenica in Bosnia and Herzegovina, Dabrowa Gornicza in Poland and Ostrava in the Czech Republic.

48


Renewable energy is also generated at the Company's sites, including through wind turbines at its Gent plant, and through 15 hectares of solar panels at Fos-sur-Mer. At the Company's Hamburg plant, which is close to coastal wind power facilities, a "time shift" process regulates the power consumption of the electric arc furnace to absorb surplus electricity from wind power generation. ArcelorMittal Hamburg has also formed a partnership with provider Hamburg Energie, which built three wind turbines on the plant's site in 2017.
The Company is working to encourage policymakers to adopt the right public policy frameworks to deliver substantial carbon reductions from the steel industry globally. It acknowledges the reputational as well as regulatory risks that it may face if stakeholders do not understand or trust the Company's commitment to contribute to a low-carbon future. Its role in engaging stakeholders on the issues surrounding carbon has broadened, and it is engaged in continuing and constructive dialogue with customers and investors. The Company's Board of Directors and Audit and Risk Committee also recognize the growing importance of climate-related financial disclosures, and are enhancing their understanding of the Company's relevant risks and opportunities. The company has initiated a project to explore the implications for the Company of the Task Force on Climate-related Disclosures (“TCFD”).
At the end of 2017, the Company remained concerned about the agreed changes to the proposed 2021-2030 EU Emissions Trading Scheme (“ETS”). While the agreed reforms to the ETS suggest some marginal improvement compared with the original reform proposal on the table - for example, the share of free allowances has been increased by up to 3.5% - the impact of these changes on the steel sector will depend on how the benchmark reductions for each industry are set, and on levels of steel production. Where European steelmakers face a shortage, there is a risk that foreign competitors who do not face the associated carbon costs will displace European steel, even if it is produced more carbon-intensively. The potential impact on both European jobs and global climate change remains a significant cause for concern.
Outcome 7: Supply chains that ArcelorMittal’s customers trust

ArcelorMittal considers responsible supply chain management to be a commercial and logistical necessity if it is to meet the growing expectations of its customers. It therefore aims to win the trust of its customers by meeting or surpassing their standards, both in its own steel and mining operations, and in its supply chain.
Since 2011, the Company’s Code for Responsible Sourcing has set out minimum standards for its suppliers, and described how the Company will work with suppliers to achieve them. In 2017, the Company continued to ask all new global suppliers to sign the Code, and surveyed all strategic and core suppliers for their implementation of the Code. The Company continues to map its supply chain for social and environmental areas of concern, and to identify the key hotspots for further due diligence. The Company has also been engaging its key suppliers to discuss ways in which its Code can be refreshed to reflect trends among regulators and customers, as well as to understand suppliers' views on the opportunities presented by certification.
The Company continues to see growing demand from its customers for reassurance on environmental and social standards in their supply chains. This is expressed both in the number and the detail of customer requests, with the result that the Company is directly engaged on supply chain standards with more customers from the automotive, rail and other sectors, including construction, household goods and packaging. The Company's customers are also increasingly coming together to share processes for assessing supply chain risk through initiatives such as DRIVE Sustainability, Electronic Industry Citizen Coalition, Railsponsible, EcoVadis and the Green Building Council.
This supports the Company's belief that interest in supply chain certification and assurance is growing, that this trend will continue, and that it presents a commercial opportunity to forge closer links with customers. The Company aims to win the trust of all customers by demonstrating transparency and accountability, thus becoming each customer’s supplier of choice.
ArcelorMittal is working with peers in the steel and mining industries, and with other stakeholders, to advance the development of third party standards. It has taken a leading role in creating two new assurance organizations: IRMA and ResponsibleSteel™. ArcelorMittal is a member of the IRMA steering committee and participates in the multi-stakeholder expert panels shaping its standards. Both organizations have already received supportive engagement from a number of high profile customers. In preparation, the Company began piloting the ResponsibleSteel™ standard at several of its operations in 2017.
ArcelorMittal Mines and Infrastructure Canada ("AMMIC") is also a member of the Mining Association of Canada ("MAC"), and is part of the Toward Sustainable Mining ("TSM") program. In April 2017, AMMIC completed the independent verification review of its TSM performance, which the program requires every three years. AMMIC's annual performance results are published on the MAC website.

49


In 2015, ArcelorMittal joined a multi-stakeholder working group on sustainable tin production in Indonesia. In 2017, the group established good practice principles for worker safety and land reclamation. In 2018 the group will work closely with local stakeholders to support the implementation of these good practices.
Outcome 8: Active and welcomed member of the community

The Company wants communities to have confidence that it will address the impacts it has on the local community or environment, and to see ArcelorMittal as a partner in local socio-economic development which is trusted to have an open dialogue when challenges arise.
To achieve this, the Company aims to:

Understand its context and impacts - from land and water use, to air pollution, taxes paid, and employment provided;
Listen to communities to understand what they think is important, and how they want to engage;
Develop environmental and social programs that best meet the objectives of the community and the Company's operations; and
Communicate regularly and accessibly with communities.

ArcelorMittal employs approximately 197,000 people directly, as well as many more contractors; it has significant procurement spend, and in 2017 paid $506 million in income tax and more in other taxes. The Company recognizes, however, that not all of this contribution is felt directly in the communities where it works, so to support economic development in the countries where it operates, the Company has established a number of local supplier initiatives, including the Integrated Program for Supplier Development and Qualification in Brazil, the Minority and Women Business Enterprises Program in the U.S., and the Enterprise and Supplier Development Program in South Africa, which is supported by the Company’s "incubation hub."
In the United States, ArcelorMittal has developed public-private partnerships near its joint venture facility AM/NS Calvert with Mobile Baykeeper, Mobile Area Education Foundation and Exploreum, combining the work of environmental stewardship and STEM education to encourage students, community members and government officials to care for waterways near the Gulf Coast in Alabama. Public and private partnerships are also in place in Romania, Ukraine, and Poland.
The Company encourages people to share their concerns, and aims to understand in detail what its community impacts are, both positive and negative, so that it can adapt, prevent issues from arising where possible, and respond to those which have escalated. Where stakeholders have a grievance, ArcelorMittal is committed to giving them a fair hearing and, where the grievance is legitimate and concerns something in the Company's control, providing access to remedies.
The Company recognizes community partnership as a key driver for employee retention and engagement. Annual external reputation surveys specifically highlight the importance of community investment in employees’ sentiment about the Company. To drive this sense of shared value for employees, the Company actively encourages employee volunteering.
Outcome 9: Pipeline of talented scientists and engineers for tomorrow

Talented scientists and engineers will play a critical part in building a sustainable future for society at large, for the steel industry, and for the Company. Developing skills in STEM (science, technology, engineering and mathematics) is the global theme for the Company’s community investment strategy, reflecting the importance of these skills to the Company's own business future and to society more widely.
The Company plans its investment in STEM based on the need for people both with professional skills and the ability to adapt to change, exploit new technology and thrive in an increasingly complex workplace. The strategy is locally led according to the needs of country operations, and is intended to build a long talent pipeline by reaching various age groups. Overall, it seeks to inspire children to explore STEM concepts, offer guidance and encouragement to school students considering STEM, and support and attract undergraduates and graduates with relevant skills, including in areas such as lifecycle analysis, robotics, data analysis, nanotechnologies, circular economics, and 3D metallurgy.

50


The strategy is delivered in many ways: from providing teaching aids and technological support, through inviting students to steel plants, to the Company's long-term partnerships with leading academic organizations around the world, including the universities of Stanford and MIT in the U.S., Cambridge in the UK, Lausanne in Switzerland, McMasters in Canada, and the China Central University. The Company wants to encourage and attract talent as widely as possible, and it has developed STEM initiatives that specifically focus on women and girls, who are historically underrepresented in STEM professions. In 2017, a Company survey of these activities indicated that 64% of its countries were running STEM projects focused on women and girls.
In 2017, the Company launched or supported a wide range of programs and initiatives. These include the ArcelorMittal Science program in Brazil, and in Liberia, support for the Annual Leadership Camp run by the Society of Women Engineers at the University of Michigan in the USA (SWE at UM), which helps Liberian female undergraduate engineering students develop engineering leadership and organizational development skills.
The Company also offers internships and sponsorship of PhDs through joint research projects. These partnerships are designed to develop productive collaboration on specific issues, and help ensure the Company can attract the best graduates. In 2017, in R&D alone, the Company hosted more than 102 engineering students in their final year on long-term internships, and 44 PhD students on a variety of different programs.
ArcelorMittal also supports a number of awards aimed at promoting STEM. These include the ArcelorMittal Environment Award in Brazil, which has been dedicated to raising awareness of environmental issues among elementary school students and employees’ children for 26 years. In 2017, the topic of this award was "Environment and Science: energy in my city". In France, the Company's Prix des Innovateurs rewards young entrepreneurs, students and researchers who have developed innovative science or engineering projects. In 2017, ArcelorMittal Belgium organized a hackathon called "The Challenge," in which 65 participants were given 48 hours to come up with a creative solution for an industry-based problem, focused on welding fractures, for a share in €8,500 of prize money.
Outcome 10: ArcelorMittal’s contribution to society measured, shared and valued

ArcelorMittal recognizes that both the Company and its stakeholders can benefit from understanding the broader social and economic value and impacts the Company creates, both directly and indirectly, and the connection between this shared value and its financial results.
In 2017, the Company began its third year of transition to integrated reporting of its operational, financial, and non-financial performance, reflected in its integrated Annual Review. The Company sought feedback from internal and external stakeholders on the integrated Annual Reviews of 2015 and 2016, including from a number of investors, as well as a specialist panel and an investor panel of the International Integrated Reporting Council. This has informed and encouraged further efforts - and the Company was awarded silver for the ‘Best online annual report’ in the Digital Impact Awards for its 2016 annual review, ‘Sustainable progress’.
The Company aims to deepen its capacity to understand and report non-financial performance through its social impact framework, which it developed and mapped against the UN's Sustainable Development Goals in 2017, and will pilot in 2018. The Company's R&D division has also joined an industry consortium to examine the social impact of new products.
The impact of the Company's social license continues to be measured and reported at the country level, through a number of country-level sustainable development reports which include basic data on direct economic contributions, the balance between positive and negative impacts, and the importance of demonstrating shared value as part of maintaining the Company's social license to operate. Recent reports include those from the Company's operations in South Africa, Poland, Mexico, France and the Czech Republic.
These outcomes are underpinned by Transparent Good Governance
Listening, learning, respect and transparency are key to the integrity of the Company’s leadership and governance, ensuring the Company operates effectively and ethically in all parts of the world. In 2017, 85% of ArcelorMittal's employees had completed up to date training in the Code of Business Conduct, and 82% had completed their Anti- Corruption training. See also “Item 16.B—Code of Ethics” and “Item 6.C—Directors, senior management and employees—Board practices/corporate governance”.

51


ArcelorMittal considers its relationships with its various stakeholders to be vital across its operations. Conducted in the right way, these relationships help the Company know how best to respond to challenges, to anticipate future problems, and to earn trust. ArcelorMittal’s operations in each country are encouraged to assess their stakeholders' expectations, in order to inform their approach to the 10 SD outcomes.
The Company believes that stakeholder trust will be enhanced through transparency about the social and environmental impacts of its operations. The Company is continuously enhancing its disclosures through its journey to integrated reporting in its corporate Annual Review, country level reports, as well as its disclosures to the Carbon Disclosure Project and a number of investor and customer surveys. The Company published its Report on Payments to Governments in respect of Extractive Activities in 2017, for the year ended December 31, 2016, and continues to be a member of the Extractive Industries Transparency Initiative.
In Brazil, where transparency is of particular stakeholder concern, ArcelorMittal partners with the non-governmental organization Transparency International as a reinforcement of its commitment to ethical business practices.
The Company’s human rights policy draws on the UN Universal Declaration of Human Rights, the International Bill of Human Rights, the core conventions of the International Labor Organization, and the UN Global Compact. It includes commitments to the Company’s workforce, local communities and business partners, and covers health and safety, labor rights and the rights of indigenous people. Employees are required to undertake training in the Company’s policy every three years, and in 2017, 66% of the Company’s relevant workforce had completed up-to-date human rights training, down from 84% in 2016. Where appropriate, ArcelorMittal provides face-to-face training for employees on human rights. In 2017, the Company also ran an anti-harassment awareness campaign for all employees.
The Company completed a review of its human rights program, a gap analysis and dashboard assessment of SD outcome 1 (people) and 8 (communities) in all countries in 2016. In 2017, the Company continued to deepen its understanding of the relevant risks in its supply chain by strengthening its supply chain risk management processes, and to develop ResponsibleSteel, a third party certification described in outcome 7, to ensure standards in both its own sites and its supply chain.
See also “Item 6.C—Directors, senior management and employees—Board practices/corporate governance—Ethics and conflicts of interest”.

Products
Information regarding segment sales by geographic area and sales by type of products can be found in note 3 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal has a high degree of product diversification relative to other steel companies. Its plants manufacture a broad range of finished and semi-finished steel products with different specifications, including many complex and highly technical and sophisticated products that it sells to demanding customers for use in high-end applications.
ArcelorMittal’s principal steel products include:
semi-finished flat products such as slabs;
finished flat products such as plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate and color coated coils and sheets;
semi-finished long products such as blooms and billets;
finished long products such as bars, wire-rods, structural sections, rails, sheet piles and wire-products; and
seamless and welded pipes and tubes.
ArcelorMittal’s main mining products include:
iron ore lump, fines, concentrate, pellets and sinter feed; and
coking, PCI and thermal coal.

52


Steel-making process
Historically, primary steel producers have been divided into “integrated” and “mini-mill” producers. Over the past few decades, a third type of steel producer has emerged that combines the strengths of both the integrated and the mini-mill processes. These producers are referred to as “integrated mini-mill producers”.
Integrated steel-making
In integrated steel production, coal is converted to coke in a coke oven, and then combined in a blast furnace with iron ore and limestone to produce pig iron. Pig iron is then combined with scrap in a converter, which is generally a basic oxygen or tandem furnace, to produce raw or liquid steel. Once produced, the liquid steel is metallurgically refined and then transported to a continuous caster for casting into a slab, bloom or billet, which is then further shaped or rolled into its final form. Various finishing or coating processes may follow this casting and rolling. Recent modernization efforts by integrated steel producers have focused on cutting costs through eliminating unnecessary production steps, reducing manning levels through automation, and decreasing waste generation. Integrated mills are substantially dependent upon iron ore and coking coal which, due to supply and demand imbalances, shortening of contract durations and the linkage between contract prices and spot prices, have been characterized by price volatility in recent years.
Mini-mills
A mini-mill employs an electric arc furnace to directly melt scrap and/or scrap substitutes such as direct reduced iron, thus entirely replacing all of the steps up to and including the energy-intensive blast furnace. A mini-mill incorporates the melt shop, ladle metallurgical station, casting, and rolling into a unified continuous flow. Mini-mills are generally characterized by lower costs of production and higher productivity than integrated steel-makers. These attributes are due in part to the lower capital costs and lower operating costs resulting from the streamlined melting process and the more efficient plant layouts of mini-mills. The quality of steel produced by mini-mills is primarily limited by the quality of the metallic raw materials used in liquid steel-making, which in turn is affected by the limited availability of high-quality scrap or virgin ore-based metallics for use in the electric arc furnaces. Mini-mills are substantially dependent on scrap, which has been characterized by price volatility in recent years, and the cost of electricity.
Integrated mini-mills
Integrated mini-mills are mini-mills that produce their own metallic raw materials consisting of high-quality scrap substitutes, such as direct reduced iron. Unlike most mini-mills, integrated mini-mills are able to produce steel with the quality of an integrated producer, since scrap substitutes, such as direct reduced iron, are derived from virgin iron ore, which has fewer impurities. The internal production of scrap substitutes as the primary metallic feedstock provides integrated mini-mills with a competitive advantage over traditional scrap-based mini-mills by insulating the integrated mini-mills from their dependence on scrap, which continues to be subject to price volatility. The internal production of metallic feedstock also enables integrated mini-mills to reduce handling and transportation costs. The high percentage use of scrap substitutes such as direct reduced iron also allows the integrated mini-mills to take advantage of periods of low scrap prices by procuring a wide variety of lower-cost scrap grades, which can be blended with the higher-purity direct reduced iron charge. Because the production of direct reduced iron involves the use of significant amounts of natural gas, integrated mini-mills are more sensitive to the price of natural gas than are mini-mills using scrap.
Key steel products
Steel-makers primarily produce two types of steel products: flat products and long products. Flat products, such as sheet or plate, are produced from slabs. Long products, such as bars, rods and structural shapes, are rolled from blooms and/or billets.
Flat products
Slab. A slab is a semi-finished steel product obtained by the continuous casting of steel or rolling ingots on a rolling mill and cutting them into various lengths. A slab has a rectangular cross-section and is used as a starting material in the production process of other flat products (e.g., hot-rolled sheet, plates).
Hot-rolled sheet. Hot-rolled sheet is minimally processed steel that is used in the manufacture of various non-surface critical applications, such as automobile suspension arms, frames, wheels, and other unexposed parts in auto and truck bodies, agricultural equipment, construction products, machinery, tubing, pipe and guard rails. All flat-rolled steel sheet is initially hot-rolled, a process that consists of passing a cast slab through a multi-stand rolling mill to reduce its thickness to less than 12 millimeters. Flat-rolled steel sheet that has been wound is referred to as “coiled”.

53


Cold-rolled sheet. Cold-rolled sheet is hot-rolled sheet that has been further processed through a pickle line, which is an acid bath that removes scaling from steel’s surface, and then successively passed through a rolling mill without reheating until the desired gauge, or thickness, and other physical properties have been achieved. Cold-rolling reduces gauge and hardens the steel and, when further processed through an annealing furnace and a temper mill, improves uniformity, ductility and formability. Cold-rolling can also impart various surface finishes and textures. Cold-rolled steel is used in applications that demand higher surface quality or finish, such as exposed automobile and appliance panels. As a result, the prices of cold-rolled sheet are higher than the prices of hot-rolled sheet. Typically, cold-rolled sheet is coated or painted prior to sale to an end-user.
Coated sheet. Coated sheet is generally cold-rolled steel that has been coated with zinc, aluminum or a combination thereof to render it corrosion-resistant and to improve its paintability. Hot-dipped galvanized, electro-galvanized and aluminized products are types of coated sheet. These are also the highest value-added sheet products because they require the greatest degree of processing and tend to have the strictest quality requirements. Coated sheet is used for many applications, often where exposed to the elements, such as automobile exteriors, major household appliances, roofing and siding, heating and air conditioning equipment, air ducts and switch boxes, as well as in certain packaging applications, such as food containers.
Plates. Plates are produced by hot-rolling either reheated slabs or ingots. The principal end uses for plates include various structural products such as for bridge construction, storage vessels, tanks, shipbuilding, line pipe, industrial machinery and equipment.
Tinplate. Tinplate is a light-gauge, cold-rolled, low-carbon steel usually coated with a micro-thin layer of tin. Tinplate is usually between 0.14 millimeters and 0.84 millimeters thick and offers particular advantages for packaging, such as strength, workability, corrosion resistance, weldability and ease in decoration. Food and general line steel containers are made from tinplate.
Electrical steels. There are three principal types of electrical steel: grain-oriented steels, non-grain oriented fully processed steels and non-grain oriented semi-processed steels.
Grain-oriented steels are 3% silicon-iron alloys developed with a grain orientation to provide very low power loss and high permeability in the rolling direction, for high efficiency transformers.
Non-grain oriented fully processed steels are iron-silicon alloys with varying silicon contents and have similar magnetic properties in all directions in the plane of the sheet. They are principally used for motors, generators, alternators, ballasts, small transformers and a variety of other electromagnetic applications. A wide range of products, including a newly developed thin gauge material for high frequency applications, are available.
Non-grain oriented semi-processed steels are largely non-silicon alloys sold in the not finally annealed condition to enhance punchability. Low power loss and good permeability properties are developed after final annealing of the laminations. These materials are sold under the Newcor and Polycor trademarks.
Long products
Billets/Blooms. Billets and blooms are semi-finished steel products. Billets generally have square cross-sections up to 180 millimeters by 180 millimeters, and blooms generally have square or rectangular cross-sections greater than 180 millimeters by 180 millimeters. These products are either continuously cast or rolled from ingots and are used for further processing by rolling to produce finished products like bars, wire rod and sections.
Bars. Bars are long steel products that are rolled from billets. Merchant bar and reinforcing bar (rebar) are two common categories of bars. Merchant bars include rounds, flats, angles, squares, and channels that are used by fabricators to manufacture a wide variety of products such as furniture, stair railings, and farm equipment. Rebar is used to strengthen concrete in highways, bridges and buildings.
Special bar quality (“SBQ”) steel. SBQ steel is the highest quality steel long product and is typically used in safety-critical applications by manufacturers of engineered products. SBQ steel must meet specific applications’ needs for strength, toughness, fatigue life and other engineering parameters. SBQ steel is the only bar product that typically requires customer qualification and is generally sold under contract to long-term customers. End-markets are principally the automotive, heavy truck and agricultural sectors, and products made with SBQ steel include axles, crankshafts, transmission gears, bearings and seamless tubes.
Wire rods. Wire rod is ring-shaped coiled steel with diameters ranging from 5.5 to 42 millimeters. Wire rod is used in the automotive, construction, welding and engineering sectors.

54


Wire products. Wire products include a broad range of products produced by cold reducing wire rod through a series of dies to improve surface finish, dimensional accuracy and physical properties. Wire products are used in a variety of applications such as fasteners, springs, concrete wire, electrical conductors and structural cables.
Structural sections. Structural sections or shapes are the general terms for rolled flanged shapes with at least one dimension of their cross-section of 80 millimeters or greater. They are produced in a rolling mill from reheated blooms or billets. Structural sections include wide-flange beams, bearing piles, channels, angles and tees. They are used mainly in the construction industry and in many other structural applications.
Rails. Rails are hot-rolled from a reheated bloom. They are used mainly for railway rails but they also have many industrial applications, including rails for construction cranes.
Seamless tubes.Seamless tubes have outer dimensions of approximately 25 millimeters to 508 millimeters. They are produced by piercing solid steel cylinders in a forging operation in which the metal is worked from both the inside and outside. The final product is a tube with uniform properties from the surface through the wall and from one end to the other.
Steel sheet piles. Steel sheet piles are hot rolled products used in civil engineering for permanent and temporary retaining structures. Main applications are the construction of quay walls, jetties, breakwaters, locks and dams, river reinforcement and channel embankments, as well as bridge abutments and underpasses. Temporary structures like river cofferdams are made with steel sheet piles. A special combination of H beams and steel sheet piles are sometimes used for the construction of large container terminals and similar port structures.  
Welded pipes and tubes. Welded pipes and tubes are manufactured from steel sheet that is bent into a cylinder and welded either longitudinally or helically.
Mining products
ArcelorMittal’s principal mining products and raw material input items for steel operations include iron ore, solid fuels (coking coal and PCI coal), metallics, alloys, base metals, energy and industrial gases.
ArcelorMittal’s mining and raw materials supply strategy consists of:
Acquiring and expanding production of certain raw materials, in particular iron ore, coal and manufacturing refractory products and developing diverse third-party customer relationships;
With respect to purchasing, pursuing the lowest unit price available based on the principles of total cost of ownership and value-in-use through aggregated purchasing, supply chain and consumption optimization;
Exploiting its global purchasing reach; and
Leveraging local and low cost advantages on a global scale.
Faced with lower and more volatile raw materials prices in recent years, ArcelorMittal’s priority has been to optimize output and production from its existing sources focused mainly on iron ore and coking coal rather than to further expand its portfolio of mining assets. Iron ore and coking coal are its two most important inputs in the steel-making process.
ArcelorMittal is a party to contracts with other mining companies that provide long-term, stable sources of raw materials. The Company's largest iron ore supply contracts with Vale were renewed in 2017. ArcelorMittal's principal international iron ore suppliers include Vale, Cliffs Natural Resources Inc. in the United States, Metinvest in Ukraine, Severstal and Metalloinvest in Russia, Luossavaara-Kirunavaara AB in Sweden, IOC (Rio Tinto Ltd.) in Canada and Sishen in South Africa. ArcelorMittal’s principal coal suppliers include the BHP Billiton Mitsubishi Alliance (“BMA”), Rio Tinto, Anglo Coal, Glencore and Peabody in Australia, Contura and Warrior in the United States, Teck Coal in Canada and Vale in Mozambique.
ArcelorMittal believes that its portfolio of long-term supply contracts can play an important role in preventing disruptions in the production process. (see “Item 5—Operating and financial review and prospects—Key factors affecting results of operations—Raw materials”).



55


In 2017, ArcelorMittal sourced a large portion of its raw materials from its own mines and facilities including finance leases. The table below sets forth information regarding ArcelorMittal’s raw material consumption in 2017.
Millions of metric tonnes
 
Consumption
 
Sourced from own mines/facilities2
 
Other sources
 
Self-sufficiency %
Iron ore
 
118.6
 
58.8
 
59.8
 
50%
PCI & coal1
 
47.8
 
6.3
 
41.5
 
13%
Coke
 
28.9
 
27.1
 
1.8
 
94%
Scrap & DRI
 
35.4
 
19.3
 
16.1
 
55%
1
Includes coal only for the steelmaking process and excludes steam coal for power generation. ArcelorMittal's consumption of PCI and coal was 9.8 million tonnes and 38.0 million tonnes, respectively for the year ended December 31, 2017.
2
Includes iron ore shipments of 0.9 million tonnes in the first quarter of 2017 through an expired strategic contract. As of December 31, 2017, the Company does not have any strategic contracts.

Iron ore
ArcelorMittal sources significant portions of its iron ore needs from its own mines in Kazakhstan, Ukraine, Bosnia, Canada, the United States, Mexico, Liberia and Brazil. In 2013, ArcelorMittal expanded the capacity of existing mines in Canada, started development of an early revenue phase through its associate in Baffinland, expanded capacity of its mines in Liberia, and completed the expansion of its mines in Brazil in the fourth quarter of 2012. Several of ArcelorMittal’s steel plants also have in place off-take arrangements with mineral suppliers located near its production facilities.
For further information on iron-ore production, see “Item 5.A—Operating and financial review and prospects—Operating results”. For further information on each of ArcelorMittal’s principal iron ore mining operations, see “Item 4.D—Information on the Company—Property, plant and equipment”.
Solid fuels
Coking coal
As with iron ore, ArcelorMittal sources a percentage of its coking coal from its own coal mines in Kazakhstan and the United States. The Company’s mines in Kazakhstan supply substantially all of its requirements for its steelmaking operations at ArcelorMittal Temirtau, while the mines in the United States supply other steel plants within the ArcelorMittal group together with external customers.
For further information on coking coal mining production, see “Item 5.A—Operating and financial review and prospects—Operating results.”
Coke
ArcelorMittal has its own coke-making facilities at most of its integrated mill sites, including in Bosnia, the United States, Canada, Mexico, Brazil, Spain, France, Germany, Belgium, Poland, Czech Republic, Kazakhstan, South Africa and Ukraine. While ArcelorMittal meets most of its own coke requirements, certain of ArcelorMittal’s operating subsidiaries buy coke from mostly domestic or regional sources to optimize cost savings from transport efficiencies, and certain of its subsidiaries sell, on occasion, excess coke at market prices to third parties. The remainder of the spot purchases of coke are made from China, Columbia and the United States.
In the United States, ArcelorMittal USA produces part of its coke requirement in its own batteries, with the bulk procured under long-term contracts from dedicated coke batteries owned by third parties.
Other raw materials and energy
Metallics (scrap)
ArcelorMittal procures the majority of its scrap requirements locally and regionally optimizing transport costs. Typically, scrap purchases are made in the spot market on a monthly/weekly basis or with short-term contracts. In Europe, ArcelorMittal has entered into certain contracts for scrap recycling.

56


Alloys
ArcelorMittal purchases its requirements of bulk and noble alloys from a number of global, regional and local suppliers on contracts that are linked to generally-accepted indices or negotiated on a quarterly basis.
Base metals
The majority of the Company’s base metal needs, including zinc, tin, aluminum and nickel are purchased under annual volume contracts. Pricing is based on the market-accepted indices. Material is sourced from both local and global producers.
Electricity
ArcelorMittal generally procures its electricity through tariff-based systems in regulated areas such as parts of the United States and South Africa, through direct access to markets in most of European mills or through bilateral contracts elsewhere. The duration of these contracts varies significantly depending on the area and type of arrangement.
For integrated steel mills, plant off-gases from various process steps are utilized to generate a significant portion of the plant’s electricity requirements and lower the purchase volumes from the grid. This is either produced by the plant itself or with a partner in the form of a co-generation contract.
Natural gas
ArcelorMittal procures much of its natural gas requirements for its U.S., Canadian and Mexican operations from the natural gas spot market or through short-term contracts entered into with local suppliers, with prices fixed either by contract or tariff-based spot market prices. For its European and Ukrainian operations, with a contractual mix of “all-in” bilateral supply and direct access to the market, ArcelorMittal sources its natural gas requirements under the prevailing mix of oil-based pricing systems and European short term/spot-indexed supply contracts. The remainder of ArcelorMittal’s natural gas consumption represents approximately 20% of ArcelorMittal’s total consumption and is generally sourced from regulated markets.
Industrial gases
Most of ArcelorMittal’s industrial gas requirements are produced and supplied under long-term contracts with various suppliers in different geographical regions.
Shipping
ArcelorMittal Shipping ("AM Shipping") provides ocean transportation solutions to ArcelorMittal’s manufacturing subsidiaries and affiliates. AM Shipping determines cost-efficient and timely approaches for the transport of raw materials, such as iron ore, coal, coke and scrap, and semi-finished and finished products. AM Shipping is also responsible for providing shipping services to the Company’s sales organizations. It provides complete logistics solutions from plants to customer locations using various modes of transport.
In 2017, AM Shipping arranged transportation for approximately 76.1 million tonnes of raw materials and about 14.26 million tonnes of finished products. The key objectives of AM Shipping are to ensure cost-effective and timely shipping services to all units. AM Shipping handles shipping of approximately 18% of the Company’s raw materials, which are transported by sea by chartering vessels on a short- to long-term basis. In its fleet are several Capesize, Panamax and Supramax vessels on a medium-to-long-term charter. AM Shipping’s strategy is to cover about 50% of the Company's cargo requirements on a medium to long-term basis, and to arrange remaining transportation requirements on a spot basis.
Purchasing
ArcelorMittal has implemented a global procurement process for its major procurement requirements, including raw materials, capital expenditure items, energy and shipping. ArcelorMittal’s centralized procurement teams also provide services such as optimization of contracts and the supply base, logistics and optimizing different qualities of materials suitable for different plants and low cost sourcing.
By engaging in these processes, ArcelorMittal seeks to benefit from economies of scale in a number of ways, including by establishing long-term relationships with suppliers that sometimes allow for advantageous input pricing, pooling its knowledge of the market fundamentals and drivers for inputs and deploying specialized technical knowledge. This enables ArcelorMittal to achieve a balanced supply portfolio in terms of diversification of sourcing risk in conjunction with the ability to benefit from a number of its own raw materials sources.

57


ArcelorMittal has institutionalized the “total cost of ownership” methodology as its way of conducting its procurement activities across the Group. This methodology focuses on the total cost of ownership for decision making, with the goal of lowering the total cost of production through minimization of waste, improved input material recovery rates and higher rates of recycling.
Sales and marketing
In 2017, ArcelorMittal sold 85.2 million tonnes of steel products.
Sales
The majority of steel sales from ArcelorMittal are destined for domestic markets. For these domestic markets, sales are usually approached as a decentralized activity that is managed either at the business unit or at the production unit level. For certain specific markets, such as automotive, there is a global approach offering similar products manufactured in different production units around the world. In instances where production facilities are in relatively close proximity to one another, and where the market requirements are similar, the sales function is aggregated to serve a number of production units. In the EU region and in South America, ArcelorMittal owns a large number of service and distribution centers. Depending on the level of complexity of the product, or the level of service required by the customer, the service center operations form an integral part of the supply chain to ArcelorMittal’s customers. Distribution centers provide access to ArcelorMittal’s products to smaller customers that cannot or do not want to buy directly from the operating facility.
The Group prefers to sell exports through its international network of sales agencies to ensure that all ArcelorMittal products are presented to the market in a cost-efficient and coordinated manner.
Sales are executed at the local level, but are conducted in accordance with the Group’s sales and marketing and code of conduct policies.
For some global industries with customers in more than one of the geographical areas that ArcelorMittal serves, the Company has established customized sales and service functions. This is particularly the case for the automotive and packaging industries. Sales through these channels are coordinated at the Group level with respect to contract, price and payment conditions.
Marketing
Marketing follows the sales activity very closely and is by preference executed at the local level. In practice, this leads to a focus on regional marketing competencies, particularly where there are similarities among regional markets in close geographical proximity. Local marketing provides guidance to sales on forecasting and pricing. At the global level, the objective is to share marketing intelligence with a view towards identifying new opportunities, either in new products or applications, new product requirements or new geographical demand. Where a new product application is involved, the in-house research and development unit of ArcelorMittal is involved in developing the appropriate products.
An important part of the marketing function at ArcelorMittal is to develop short-range outlooks that provide future perspectives on the state of market demand and supply. These outlooks are shared with the sales team in the process of finalizing the sales strategy for the immediate future and with senior management when market conditions call for production adjustments.
Globally, sales and marketing activities are coordinated to ensure a harmonized approach to the market. The objective is to provide similar service experiences to all customers of ArcelorMittal in each market.
Insurance
ArcelorMittal maintains insurance policies to cover physical loss or damage to its property and equipment on a reinstatement basis arising from a number of specified risks, including certain natural disasters, such as earthquakes, acts of terrorism, floods and windstorms, and certain consequential losses, including business interruption arising from the occurrence of an insured event under the said policies.
ArcelorMittal also purchases worldwide third-party public and product liability insurance coverage for all of its subsidiaries.

58


Various other types of insurance are also maintained, such as comprehensive construction and contractor insurance for its greenfield and major capital expenditures projects, directors and officers liability, transport, and charterers’ liability, as well as other customary policies such as car insurance, travel assistance and medical insurance.
Each of the operating subsidiaries of ArcelorMittal maintains various local insurance policies that are mandatory at the local level, such as employer liability, workers compensation and auto liability, as well as specific insurance such as public liability to comply with local regulations.
In addition, ArcelorMittal maintains trade credit insurance on receivables from selected customers, subject to limits that it believes are consistent with those in the industry, in order to protect it against the risk of non-payment due to customers’ insolvency or other causes. Not all of ArcelorMittal’s customers are or can be insured, and even when insurance is available, it may not fully cover the exposure.
ArcelorMittal believes that its insurance coverage is in line with industry practice and sufficient to cover normal risks in its operations. Notwithstanding the insurance coverage that ArcelorMittal and its subsidiaries carry, the occurrence of an event that causes losses in excess of limits specified under the relevant policy, or losses arising from events not covered by insurance policies, could materially harm ArcelorMittal’s financial condition and future operating results.
Intellectual property
ArcelorMittal owns and maintains a patent portfolio covering processes and steel products, including uses and applications that it creates, develops and implements in territories throughout the world. Such patents and inventions primarily relate to steel solutions with new or enhanced properties, as well as new technologies that generate greater cost-efficiencies.
ArcelorMittal also owns trademarks, both registered and unregistered, relating to the names and logos of its companies and the brands of its products. ArcelorMittal has policies and systems in place to monitor and protect the confidentiality of its know-how and proprietary information. The Company applies a general policy for patenting selected new inventions, and its committees organize an annual patent portfolio screening by individuals from the Company’s R&D and business sectors in order to optimize the global efficiency of the Company’s patent portfolio. The Company’s patent portfolio includes more than 5,000 patents and patent applications, mostly recent and middle-aged, for approximately 600 patent families, with 57 inventions newly-protected in 2017. Because of this constant innovation, the Company does not expect the lapse of patents that protect older technology to materially affect current revenue.
In addition to its patent portfolio, ArcelorMittal is constantly developing technical know-how and other unpatented proprietary information related to design, production process, and use of high quality steel products, leading to development of new applications or to improvement of steel solutions proposed to its customers, such as the ones aiming at weight reduction for vehicles. ArcelorMittal has also been granted licenses for technologies developed by third parties in order to allow it to propose comprehensive steel solutions to customers. ArcelorMittal is not aware of any pending lawsuits alleging infringement of others’ intellectual property rights that could materially harm its business. 
Government regulations
See “Item 3.D—Key information—Risk factors” and note 8.2 to ArcelorMittal’s consolidated financial statements.
ArcelorMittal’s operations are subject to various regulatory regimes in the regions in which it conducts its operations. The following is a discussion of the principal features of selected regulatory regimes, as of December 31, 2017, that affect or are likely to affect its operations.
Environmental laws and regulations
ArcelorMittal’s operations are subject to a broad range of laws and regulations relating to air emissions, surface and groundwater protection, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste management, treatment and disposal practices, the remediation of environmental contamination, the protection of soil, biodiversity and ecosystems or rehabilitation (including in Mining). As these laws and regulations in the United States, the EU and other jurisdictions continue to become more stringent, ArcelorMittal expects to expend substantial resources including operating and capital expenditures to achieve or maintain ongoing compliance. Further details regarding specific environmental proceedings involving ArcelorMittal, including provisions to cover environmental remedial activities and liabilities, decommissioning and asset retirement obligations are described in notes 8.1 and 8.2 to ArcelorMittal’s consolidated financial statements.

59


Some of ArcelorMittal’s most important environmental compliance initiatives are described below, as well as the main environmental laws and regulations that apply to ArcelorMittal in its principal countries of operation. It is difficult to anticipate whether additional operating or capital expenditures will be required to comply with pending or recently-enacted amendments to environmental laws and regulations or what effect they will have on the Company’s business, financial results or cash flow from operations. In 2017, ArcelorMittal approved a number of multi-year capital expenditures totaling $373 million in order to facilitate compliance with these environmental and energy laws and regulations.
Industrial emissions regulation: climate change
ArcelorMittal’s activities in the 28 member states of the EU are subject to the EU Emissions Trading Scheme (“ETS”), and it is likely that requirements relating to greenhouse gas (“GHG”) emissions will become more stringent and will continue to expand to other jurisdictions in the future. In the United States, the U.S. Environmental Protection Agency (“EPA”) currently requires reporting of GHG emissions by source and may impose permitting obligations on new sources or existing sources that seek to modify their operations that will result in an increase in certain GHG emissions.
In South Africa, a bill to tax carbon dioxide emissions is under discussion. In Mexico, Brazil and Kazakhstan new regulatory initiatives are being discussed by the different government authorities. In the United Kingdom, ArcelorMittal’s activities are subject to the Carbon Reduction Energy Efficiency Scheme (“CRC”).
In December 2015, 195 countries participating in the United Nations Framework Convention on Climate Change (“UNFCC”), at its COP21 held in Paris, adopted a new global agreement on the reduction of climate change (the “Paris Agreement”). The Paris Agreement sets a goal of limiting the increase in global average temperature to well below 2 degrees C and pursuing efforts to limit the increase to 1.5 degrees C, to be achieved by getting global GHG emissions to peak as soon as possible.  The Paris Agreement consists of two elements: a legally binding commitment by each participating country to set an emissions reduction target, referred to as “nationally determined contributions” or “NDCs”, with a review of the NDCs that could lead to updates and enhancements every five years beginning in 2023 (Article 4) and a transparency commitment requiring participating countries to disclose in full their progress (Article 13).  The majority of countries have issued their intended NDCs.
In June 2017, the U.S. announced that it would cease to participate in the 2015 Paris Agreement. Pursuant to Article 28, the earliest possible withdrawal date would be in November 2020. The U.S. has signaled that they would comply with the four-year exit process.
ArcelorMittal is closely monitoring local, national and international negotiations, regulatory and legislative developments and is endeavoring to reduce its own emissions where appropriate.
United States
ArcelorMittal’s operating subsidiaries in the United States are subject to numerous environmental laws and regulations including at the federal level, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act, also known as “Superfund”, the Safe Drinking Water Act and the Toxic Substances Control Act, as well as applicable state and local environmental requirements. Pursuant to these laws, regulations and requirements, the EPA and the states are implementing updated emission standards for certain pollutants.
Any more stringent standards could have significant financial implications on operations. ArcelorMittal USA continues to carefully monitor all developments in this area and to proactively engage with regulators as appropriate to define its regulatory obligations.
In 2013, US EPA Region V rejected the State of Minnesota’s plan for reducing regional haze, which was designed to restore visibility in pristine national park areas, and promulgated its own plan to require the taconite industry to install new low NOx technology at taconite furnaces in the region. This requires significant capital investment. In 2015, the taconite industry reached a settlement with the EPA to establish more flexible ranges for final limits and secured additional time to meet them. The EPA promulgated a final rule effectuating that settlement in April 2016.  However, the new rule raised an additional concern regarding the process for setting final limits, which was resolved in 2017. A final rule reflecting the settlement has yet to be published. The original litigation has been dismissed and efforts are underway to comply with the new regulation.
ArcelorMittal USA does not presently expect to incur significant capital expenditures relating to other environmental regulatory developments or matters in 2018.

60


European Union
Significant EU Directives and regulations that are applicable to ArcelorMittal’s production units in the EU, include the following:
Directive 2010/75/EU of November 24, 2010 on Industrial Emissions (the “IED Directive”), which applies common rules for permitting and controlling industrial installations. To receive a permit, installations covered by the IED Directive must ensure that their Emissions Limit Values (“ELV”) do not exceed those associated with the Best Available Techniques (“BAT”), as adopted in the decision (February 28, 2012) of the European Commission establishing the BAT conclusions for iron and steel production under the IED (C(2012)903). Air, soil or water, energy emissions, waste generation, as well as noise, hazards and site closure, are all considered with few possibilities to obtain derogations related to the implementation of BAT and the associated emissions limits values. The implementation of the IED Directive materially impacts ArcelorMittal’s activities in the EU to an amount not yet determined since many issues that ultimately will determine this impact are not yet fixed due to authorities’ delays in implementing decisions and reconsideration of permits. Most of the Member States were expected to update permits and have ELVs achieved by operators in March 2016. Most permits have been updated during 2017. However, negotiations and updates are still ongoing in some countries. On July 31, 2017, the European Commission adopted BAT conclusions for large combustion plants under the IED (C(2017)5225). The scope of these Best Available Techniques reference documents ("BREF") covers the combustion of solid, liquid and gaseous fuels (including iron and steel process gases) in boilers, gas engines and gas turbines with a total rated thermal input of > 50MW (or in case of several units > 15 MW that are aggregated (sharing a common stack) so that the addition of all capacities reaches 50 MW). The main difficulty for the combustion of process gases is the achievement of NOx and SO2 limits when using mixtures of gases with a high share of coke oven gas. Following the adoption of these BAT conclusions, competent authorities have four years (until August 17, 2021) to review and update the permit conditions accordingly and to ensure that the new ones are compliant. It is important to note that, according to the IED it is only mandatory to update the permit conditions when new BAT conclusions related to the main activity of the installation are published. Nevertheless, competent authorities have relative freedom to launch the review even in cases where it will not be the main activity, hence several facilities may be impacted by this new BREF.
Directive 2008/98/EC of November 19, 2008, which establishes the legislative framework for the handling and management of waste in the EU. On December 2, 2015, the Commission adopted an ambitious new Circular Economy Package to stimulate Europe's transition towards a circular economy which will boost global competitiveness. The proposed actions will contribute to "closing the loop" of product lifecycles. The plans will extract the maximum value and use from all raw materials, products and waste, fostering energy savings and reducing greenhouse gas emissions. The proposals cover the full lifecycle: from production and consumption to waste management and the market for secondary raw materials. According to the proposed actions, the Directive 2008/98/EC on waste will be amended. 
Directive 2012/27/EU of October 25, 2012, which repeals prior Directives 2004/8/EC and 2006/32/EC, and brings forward legally binding measures to step up Member States’ efforts to use energy more efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption. Measures include the legal obligation to establish energy efficiency obligations schemes or policy measures in all Member States. The final target is to achieve energy efficiency improvements of 20%. It is worth noting that most provisions of the texts do not apply to ETS industries and a lot of flexibility is given to the Member States to set up supportive schemes instead of obligatory ones. “REACH” Regulation (EC) no. 1907/2006 for Registration, Evaluation, Authorization and Restriction of Chemicals, adopted on December 18, 2006, which controls the (chemical) substances used, manufactured in or imported into the EU and “CLP” Regulation (EC) no. 1272/2008 of December 16, 2008 on the classification, labeling and packaging of substances and mixtures, which complements it. 

61


Directive 2003/87/EC of October 13, 2003 (which has been amended several times and especially by Directive 2009/29/EC) and related directives establishing the ETS in three phases for achieving Kyoto Protocol commitments relating to GHGs for Member States. The ETS works on the “cap and trade” principle. This means there is a “cap”, or limit, on the total amount of certain GHGs that can be emitted by the factories, power plants and other installations subject to the ETS. Within this cap, companies receive emission allowances which they can sell to or buy from one another as needed. The limit on the total number of allowances available ensures that they have a value. At the end of each year, each company must surrender enough allowances to cover all its emissions, otherwise heavy fines are imposed. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or sell them. Phase II of the ETS ended on December 31, 2012, and Phase III covers the period from 2013 to 2020. In Phase III, all CO2 allowances should be auctioned (as per Regulation (EC) no. 1031/2010 of November 12, 2010 on the timing, administration and other aspects of auctioning of emission allowances). The Commission is implementing Phase III of the ETS in a manner that could increase costs for the Group to obtain sufficient emission allowances for its European operations depending on steel production levels and the market price of emission allowances. Through Commission Decision 2010/2/EU of December 24, 2009, manufacturing of coke oven products, of basic iron and steel, of ferro-alloys and of cast iron tubes have been recognized as exposed to a significant risk of “carbon leakage”. In its decision of April 27, 2011, the Commission determined transitional EU-wide rules for the harmonized free allocation of emission allowances and the benchmark values for the steel industry. The values adopted result in fewer free allocations than those sought by the European steel industry and will lead to additional costs for steel companies in Europe at the point in time when companies have fully utilized their free allocations. Under Commission Decision 2013/448/EU of September 5, 2013, implementation of a so called “Cross Sectoral Correction Factor” will further negatively impact CO2 free allowances previously announced to the industry based on benchmark values. In 2014, the Commission investigated new possible schemes and mechanisms to regulate and adjust CO2 prices on the ETS market (CO2 backloading, or Market Stability Reserve). On October 6, 2015, the Commission published its decision concerning the establishment and operation of a Market Stability Reserve. The reserve is supposed to address the current surplus of allowances and improve the system's resilience to major shocks by adjusting the supply of allowances to be auctioned. In other words, it is meant to address the market imbalances. The Commission agreed (October 23, 2014) on a 2030 greenhouse gas reduction target of at least 40% compared to 1990. This is on top of the other main targets of the Commission’s 2030 policy framework calling for increasing the share of renewable energy to at least 27% and increasing energy efficiency by at least 27%.
On November 9, 2017, the European Parliament and Council announced a provisional agreement to revise and make the ETS more stringent during the Phase 4 period of 2021 to 2030. Among other changes, Phase 4 provisions would further accelerate reduction in the current oversupply of allowances in the ETS market and establish further protections against the risks of carbon leakage. A final agreement is expected to be approved and a new EU Directive published during 2018.
The following EU Directives are also significant:
Directive 2008/50/EC of May 21, 2008 on ambient air quality and cleaner air for Europe.
Directive 2004/107/EC of December 15, 2004 relating to limit values and target values for pollutants in ambient air, including thresholds on very fine particulates.
Directive 2001/81/EC of October 23, 2001 on national emission ceilings for certain pollutants that are currently being reviewed as part of The Clean Air Policy Package. The proposal would repeal and replace the current EU regime on the annual capping of national emissions of air pollutants. By doing so, it ensures that the national emission ceilings (NECs) set in the current Directive 2001/81/EC for 2010 onwards for SO2, NOx, NMVOC and NH3 shall apply until 2020 and establishes new national emission reduction commitments (“reduction commitments”) applicable from 2020 and 2030 for SO2, NOx, NMVOC, NH3, fine particulate matter (“PM”2,5) and methane (CH4).
The new Directive on the control of major accidents hazards involving dangerous substances, also known as SEVESO III 2012/18/UE (repeals Directive 96/82/EC of December 9, 1996), which has been applicable since June 1, 2015. Updates take into account changes in the EU classification of dangerous substances, strengthen provisions on public access to safety information and introduce stricter standards for inspections of installations.
Directive 2011/92/UE concerning the impact assessment of certain public and private projects on the environment. Directive 2009/31/EC of April 23, 2009 on the geological storage of carbon dioxide.
Directive 2009/28/EC of April 23, 2009 on the promotion of the use of energy from renewable sources.

62


Directive 2008/68/EC of September 24, 2008 on the inland transport of dangerous goods, by rail, road, and inland waterway.
Directive 2004/35/EC of April 21, 2004, and Directive 2008/99/EC of November 19, 2008, establishing liability (including criminal liability) for violations of the EU environmental legislation.
The new Directive 2013/59/EURATOM of December 5, 2013, establishing basic safety standards for protection from the exposure to ionizing radiation and repealing former EURATOM directives, to be complied with from February 6, 2018.
ArcelorMittal anticipates that its capital expenditure with respect to environmental matters in the EU over the next several years will relate primarily to installations of additional air emission controls, to requirements imposed in the course of renewal of permits and authorizations, including those pursuant to the IED Directive, and to address GHG issues, including reduction of emissions and purchase of allowances.
Other jurisdictions
Increasingly stringent environmental laws and regulations have also been adopted in other jurisdictions. Set out below is a summary of the principal environmental legislation applicable to ArcelorMittal in key jurisdictions where it has substantial manufacturing or mining operations.
Argentina
Law 25.675, which was enacted in 2002, required facilities engaging in potentially hazardous activities to obtain Environmental Insurance. ArcelorMittal has obtained Environmental Bonding Insurance for Villa Constitucion, Tablada and San Nicolas plants in order to meet the requirements and renews the plans annually.
Law 11.717 and Decree 101/03 for Santa Fe province regulate environmental licenses and the environmental requalification plan. The Villa Constitucion plant’s license was officially obtained in June 2013. The Villa Constitucion Plant’s committed plan was monitored by environmental authorities and completed in January 2014. This license was renewed in 2017. The Tablada and San Nicolas Plant's licenses were obtained for Tablada in November 2013 and the San Nicolas license was obtained in July 2013 and an additional license in April 2014. The renewal process for the Villa Constitucion plant has been tied to investments in water treatment for direct reduction process effluents and to the resolution of certain environmental issues relating to the steel facility. Regarding the San Nicolas and Tablada sites, there are no issues preventing approval.
Decree 2151/14 requires that industrial non-dangerous residues undergo recycle or recovery activities and avoid final disposal. The Company is already compliant but may be required to develop further projects in relation to new by-products.
In the Buenos Aires province, Decree 429/13 has imposed taxes relating to water consumption. The impact of this on the Company’s operations is minimal.
Law 27.191 was approved relating to renewable energy generation and consumption and applying fines for non-compliance. The new law and resolution 281/17, which established the framework that governs the Term Market for Renewable Energies ("MATER") and sets the rules for agreements between private companies, is fully applicable as of January 1, 2018 and thus did not have a direct impact in 2017. With respect to Acindar, this new legislation will not have a significant impact on energy costs due to the current low contribution of renewable sources to Acindar’s current energy mix and the extended timeline to build and implement renewable energy projects. The law is expected to have a more significant impact from 2020, with a reduction in costs once Acindar is able to consummate direct supply agreements with generators. This may also, however, require renewable energy capital projects to be undertaken.
Decree 3395/92 for Air Quality Standards foreseeing more stringent air quality standards including incorporating PM2.5 (particulate matter of size 2.5 microns) to the regulated parameters for Buenos Aires province is still under review. The Company does not expect that any significant capital expenditures will be required to meet these new proposed standards.

63


In 2017, the Buenos Aires environmental authority OPDS commenced review of regulations relating to polychlorinated biphenyls (“PCBs”, which are highly toxic chemical compounds present in electricity transformer oil) to allow decontaminated equipment to reach 50 ppm instead of 2 ppm. This change would align with the regulations in the rest of the country. In May 2017, the Ministry of Energy dictated Resolution 1-E/2017, the purpose of which is to consider the special situation of manufacturing companies that are affected by the process of electricity price disclosure and to promote a regime of benefits with discounts on the cost of energy in exchange for accrediting an improvement program aimed at energy efficiency. In 2016, Acindar agreed to the first version of the scheme and obtained a discount of $385,000. After fulfilling each of the stages of the project, Acindar was awarded as an electrointensive industry an estimated discount in the cost of energy of $500,000.
Other national laws are being developed, imposing further responsibility on manufacturers, including hazardous wastes disposal and remediation of contaminated sites, to standardize requirements between provinces and to align them with international requirements.
Argentina is considering the introduction of a Carbon Tax with effect from 2020. The amount of the tax will depend on the fuels’ potential CO2 emissions (current proposal being considered is $25/TnCO2-e) and a fixed-sum tax per unit of fuel in order to match the current tax pressure. At this time it appears that the draft legislation excludes fuels that are used as raw materials. However, if natural gas (used as a raw material in the direct reduction process) falls within the purview of the legislation, the impact could be about $25 million per year.
Bosnia and Herzegovina
Environmental legislation in Bosnia and Herzegovina is essentially based on the provisions of a set of federal laws and regulations that have been effective since January 2008. The following practices are particularly relevant for ArcelorMittal Zenica: adopting best available techniques and complying with limit values that achieve environmental quality standards in air and water, preventing and controlling major accidents involving hazardous substances, procedures and measures for dealing with accidents in water and coastal water land, fees on sulfur dioxide, nitrogen oxides and dust emissions the discharge of pollutants in water, waste recovery, disposal and export and limitations on noise pollution.
In April 2017, the Federal Ministry of Environment and Tourism issued an integrated environmental permit for all plants in ArcelorMittal Zenica. A water permit was issued by the relevant federal agency in July 2017. Both permits are valid until 2022.
In addition to investments already achieved and ongoing investments, several investments are expected in the coming years to continue improving the environmental footprint of the plant and thus the release of lower emissions, in the context of poor air quality in Bosnia Herzegovina and NGO concerns regarding the situation.
For ArcelorMittal Prijedor, the Omarska mine has two separate licenses, one for the surface pit, which was renewed in 2015 and remains valid through 2020, and the other for the GMS plant (Medjedja tailing dam and maintenance) which was renewed in 2013 and remains valid until 2018. ArcelorMittal Prijedor is required to renew its environmental licenses every 5 years. ArcelorMittal Prijedor also obtained an environmental license for Limestone Quarry Drenovaca in 2016, which must be renewed in 2021.
Brazil
ArcelorMittal’s operating subsidiaries in Brazil are subject to federal and state environmental laws and resolutions issued by the Brazilian National Environmental Council (“CONAMA”). The Federal Constitution established the protection of the environment as a principle, while both the government and society generally are responsible for the achievement of such purpose.
National Decree no. 7390/2010 regulates Articles 6, 11 and 12 of the National Policy on Climate Change (Federal Law No. 12187/2009). For the steel sector, a reduction target of 5% by 2020 with 2012 as the reference year has been established.
On April 4, 2012, the Brazilian Steel Institute and its associated companies launched the “Protocol for Sustainable Charcoal Production”. The Protocol’s objectives are to avoid charcoal production from illegal deforestation and to stimulate suppliers to produce charcoal from eucalyptus planted forests. In 2013, meetings were held to define actions to achieve the protocol’s objectives. In 2015, the criterion for Green Labeling in pig-iron production was established by the Brazilian Association of Technical Standards. Implementation of the new Protocol depends on the creation of new forms that were expected to be finalized in 2017, however, they are yet to be published.

64


Federal Resolution No. 436/2011 published by CONAMA, established maximum limits for air pollutants emissions from stationary sources installed or having requested its installation license before January 2, 2007. More restrictive limits can be determined by the licensing environmental agency, according to the local conditions of the area that is affected by the pollution source. Beginning in 2014, more stringent limits became effective for emissions of particulate material, SO2, NOx from coke ovens, electric arc furnaces, rolling mills, sintering, charcoal blast furnaces and blast furnaces. ArcelorMittal Brasil already complies with these new emission standards. In Minas Gerais, the Normative Deliberation 187/2013 established maximum limits for air pollutants emissions from stationary sources. Although pig iron suppliers do not currently achieve these limits, the compliance deadline is 2018. ArcelorMittal's industrial units do not expect any issues with meeting the requirements of this Normative Deliberation. The Forestry Association of Minas Gerais State is currently negotiating the deliberation framework and terms under which carbon emission limits should be applied - this could have implications for ArcelorMittal Biofloretas (Forest Segment).
A new resolution from the São Paulo State Environmental Agency (“CETESB”) establishing new soil guidance values has been enforced following São Paulo State Board Decision 045/2014. Standards for inorganic compounds (metals) have become, in general, less restrictive. However, guidance values for other compounds (PAHs, Organic Chlorides etc.) have become more restrictive. Considering that the guidance values under Federal Resolution No. 420/2009, published by CONAMA, were based on the prior CETESB values, it was expected that the federal guidance values would be changed in 2016, however, no developments have been seen on this.
São Paulo state published Decree No. 59263/2013, which established guidelines for contaminated site management. The main items are related to the publication of a State List of Contaminated Sites. The Decree requires the legally responsible person to provide bank guarantees or environmental insurance worth at least 125% of the costs estimated in such plan. The penalties for violating this Decree could consist of fines up to $30 million or embargo, demolition and suspension of loans and tax benefits.
Due to the water crisis faced in the South East of Brazil, São Paulo, Minas Gerais and Espírito Santo, where most of ArcelorMittal Brasil's industrial sites are located, laws issued in 2015 and 2016 that have imposed restrictions on water permits for industrial use are still in effect. These restrictions are only applied for the period when river flows are below pre-established levels. The restriction of 30% in ArcelorMittal Serra Azul’s water permit continues. The restriction has not affected its operations since the site also has groundwater permits that provide the necessary flow for the operational activities and action has been taken to reduce water consumption, similar to actions taken at the Tubarão and Cariacica sites.
Espírito Santo State Law No. 10179/2014 establishes Water Resources Policy. Article No. 31 states that water intake and discharge are subject to a financial charge.
Regarding industrial effluents, regulatory Deliberation CERH n° 47/2014 established new procedures for granting submissions for the release of effluents in Minas Gerais State.    
Following the 2005 World Health Organization (“WHO”) recommendations, there continues to be a trend to adopt new air quality standards at the national and state levels. National standards in force, established by Resolution CONAMA 003/1990, are considered outdated and a change of values ​​for parameters such as PM10, NOx, and O3 are envisaged, together with the incorporation of the PM2.5 parameter. The states of São Paulo and Espírito Santo, through the State Decree 59113/2013 and Decree No. 3463-R DE 12.16.2013, respectively, have reviewed the state air quality standards following the guideline values ​​suggested by WHO, and have established emission control plans for gradual adaptation to the new standards. This trend may result in more stringent air emission limits on industrial activities in these states and other states from the review of national standards.
In Vitória, a new municipal mechanism to control dust emissions and air quality has been implemented, which, among other things, creates intermediate targets to be implemented within three years, lowers emission values to new parameters, especially PM 2.5, and creates an emergency plan when air quality at Vitória falls to a critical level. The State is leading investigations on the “Black dust” saga which is followed by the press and social media due to potential health issues in the area. Emissions of several industries are scrutinized by the authorities. In November 2016, the Federal Public Prosecutor´s Office in Espírito Santo State requested to be party to the lawsuit in which ANAMA (National Association of Friends of the Environment) is claimant against ArcelorMittal in a matter involving visible emissions. There have been no orders or findings from the judge in the matter yet.
Following the Samarco accident, the state of Minas has issued State Decree No. 46993/2016 and State Resolution SEMAD / FEAM 2372/16, both requiring extraordinary audits of tailings dams, generating increased costs for compliance and a number of surveillance visits from federal and state agencies (environment, geology and police departments).

65


Minas Gerais State Law 21972/2016 proposed significant changes both in the structure and the competences of the state Environmental Agency. To be implemented, such changes must be regulated by state decrees that have not yet been issued. The Industry Federation is holding meetings with the government to oppose changes that could negatively impact the sector.
National Decree no. 7390/2010 regulates Articles 6, 11 and 12 of the National Policy on Climate Change (Federal Law No. 12187/2009). Following the ratification of the Paris Agreement, the Intended Nationally Determined Contribution ("INDC") for Brazil, that proposes absolute emission reductions targets of 37% by 2025 and 43% by 2030 in comparison to historic emissions of 2005, was ratified by Congress. Implementation of the INDC targets is currently under discussion. There are no specific targets for the industrial sector, but it is expected that new regulations will be issued to reduce GHG emissions.
Canada
ArcelorMittal’s operating subsidiaries in Canada are subject to federal environmental laws regulating matters of national interest (for example, the Fisheries Act and the Canadian Environmental Act) and provincial legislation regulating matters of more local importance such as natural resource use, local air and water quality noise and hazard waste management.
The province of Quebec and the state of California in the U.S. are currently members of the Western Climate Initiative (“WCI”), a sub-national GHG emission cap and trade program. In 2016, the government of Ontario enacted the Climate Change Mitigation and Low-Carbon Economy Act and an associated regulation (O. Reg. 144/16) which established a GHG emission cap and trade program that began in 2017. Ontario plans to link its program to the WCI in 2018. 
ArcelorMittal Dofasco is covered by the Ontario GHG regulation. In Ontario’s first compliance period (2017 to 2020), energy-intensive and trade-exposed industries including steel will receive 100% free allowances up to an annually declining cap based on benchmark GHG emissions intensities for coke making, iron making, BOF steel making, EAF steel-making and stationary combustion. ArcelorMittal Dofasco will receive the majority of allowances it requires for compliance free of charge. Reduction targets have not yet been set for 2021 to 2030.
Separate consultations by the Governments of Ontario and Quebec are underway with large emitters of GHG in each province with regard to the cap and trade program regulation for the second and subsequent compliance periods from 2021 to 2030. For Quebec, consultations were completed for the 2021 to 2023 compliance period and the financial impact of the regulation was reduced compared to what was presented at the end of 2016 for the period. For the period 2024 to 2030, negotiations will commence in 2018 in order to minimize the financial impact of regulatory changes.
In October 2016, the Government of Canada announced its intention to impose a minimum, national carbon price on provinces without a pricing system for reducing GHG emissions. The cap-and-trade programs in Ontario and Quebec where most of ArcelorMittal’s Canadian facilities are located satisfy the federal requirement.
The Department of Environment and Climate Change Canada has developed Base Level Industrial Emission Requirements (“BLIER”s) under the Air Quality Management System, the national regulation addressing Criteria Air Contaminants. For the steel sector, emissions of NOX, SO2, VOCs and fugitive particulates are covered. The SO2 BLIER requires ArcelorMittal Dofasco to install full coke oven gas desulphurization by December 31, 2025. The NOx BLIER will be managed through oxygen controls at the hot mill reheat furnaces.
BLIERS also apply to ArcelorMittal Mining Canada’s operations. The objective concerning SOx and dust are the same or less stringent than actual provincial requirements. Concerning NOx, a technical committee will have to be put in place to conduct some investigations on emissions from pellet plants. This will likely require investments to reduce emissions in the future.
In Quebec, the mining and metallurgical sectors are negotiating depollution permits that will apply to ArcelorMittal Mining and Infrastructure Canada and ArcelorMittal Long Products Canada works. In the mining sector, some objectives for dust, NOx and SO2 were also identified and a draft agreement prepared, but there has been no further progress.

66


The depollution permit for Mont Wright was issued in March and modified in July 2015. The Port-Cartier pellet plant depollution permit was issued in April 2015. The Fire Lake depollution permit was received in June 2015 and has a term of 5 years. The new permits will require ArcelorMittal Mines and Infrastructure Canada to invest in a pellet plant wastewater system and conduct studies on air emissions. Investments in drainage collection ditches and water treatment facilities are required in Mont Wright and in Fire Lake. Starting in 2014, ArcelorMittal Mining Canada is taxed on sites with depollution permits for waste rock and tailings storage with a maximum annual cost per site of CAD1 million per year per site. An environmental impact assessment is under evaluation by the government for the expansion of the existing tailings impoundment and new tailings impoundment for the current mining plan which runs through 2045. Federal and provincial permits are expected in 2018. A bank guarantee will be provided as required to cover the loss of fish habitat as a result of tailings expansion in 2017–2018.
Pursuant to the mining regulation and the restoration plans for the facilities in Mont Wright, Fire Lake and Port-Cartier ArcelorMittal Mines and Infrastructure Canada will be required to provide  a financial guarantee estimated to be in the range of CAD160 million to CAD170 million for restoration of the sites identified by Quebec Ministry of Natural Resources.
ArcelorMittal Long Products Canada expects the new depollution permits for its Contrecoeur facilities to be issued in 2018. The process for issuance of the depollution permit for Contrecoeur West is almost completed and the process for issuance of the depollution permit for Contrecoeur East is expected to be completed by end of 2018. Obtaining the new depollution permits will require increasing monitoring frequencies as well as conducting certain studies including water usage and air dispersion modeling.
Quebec adopted a Clean Air Regulation on June 30, 2011 that requires Particulate Matter (PM) testing for steel mills, (annual testing of baghouses and testing of roof fans every three years), and installation of broken bag detectors in baghouses. An investment of approximately CAD30 million will be required for ArcelorMittal Long Products Canada to comply with this regulation. A baghouse will be replaced at its Contrecoeur West steel making facility in 2018.
In the mining sector, this regulation will reduce the limit for total PM from 120 to 75 grams/tonne produced for existing pelletizing plants, including ArcelorMittal Mines and Infrastructure Canada. The limit for a new plant will be 50 grams/tonne produced. The immediate financial compliance impact is CAD2 million for installation of continuous monitoring equipment. The electrostatic precipitator refurbishment plan included in the five-year capital expenditure plan will contribute to ensuring conformity with the new emission limit on a medium-term basis. This project will be undertaken over a 10 year timeline, and its expected cost will be approximately CAD15 million. 
A one-year test with liquefied natural gas (“LNG”) will start in the spring of 2018. At ArcelorMittal Mines and Infrastructure Canada, a total of six burners on one production line were converted to LNG with the objective of reducing the cost of GHG.
Kazakhstan
In April 2016, Kazakhstan introduced a number of amendments to the environmental code in the area of GHG emissions. Among other things, the amendments suspended provisions of the environmental code which (i) prohibit GHG emissions without obtaining a quota and (ii) regulate trading of emission quotas until January 1, 2018. Previously issued quotas and trading of quotas were suspended until January 2018. Effective January 1, 2018, this part of Kazakh legislation has come into force.
Pursuant to the Paris Agreement, Kazakhstan announced that it plans to achieve an economy-wide target of 15%-25% reduction in GHG emissions by 2030 compared to 1990.
The committee of environmental control and regulations of the Ministry of Energy have put forth a proposal to cancel the procedure of obtaining special permits that allow emissions and discharges to the environment (i.e., "ecological permits"). These ecological permits are separate from the permits governing GHG emissions. As of December 31, 2017, no ecological permits had been canceled.  
The Administrative Code of Kazakhstan that came into force on January 1, 2015 increased the penalty provisions for legal entities and officials for environmental violations.  Fines were determined for exceeding the approved level of GHG emissions in the amount of five times the “monthly calculation index” for each unit of quota exceeding the permitted level.

67


Starting from January 1, 2017, one monthly calculation index is equal to 2,269 KZT ($6). The size of the monthly calculation index is approved by the state and re-considered annually. When deciding on the amount of the fine, the court or other authority considering the administrative offense will take into account the value of the index which was in effect at the time when the administrative proceeding was initiated. However, in line with the above amendments to the environmental code, the provisions of the administrative code imposing liabilities for exceeding GHG emission quotas have been suspended until January 1, 2018. Effective January 1, 2018 this part of Kazakh legislation has come into force.
Liberia
The Environmental Protection Agency Act (2002) (“EPA Act”) was the initial environmental law in Liberia. It established an Environmental Administrative Court and provided for a National Environment Action Plan, which builds on local and regional action plans.  The EPA Act requires Environmental Impact Assessments (“EIAs”) to be carried out for all activities and projects likely to have an adverse impact on the environment, as well as mechanisms to achieve restoration of degraded environments.  It also provides the means for permits, fees and fines.
Enacted at the same time, the Act Adopting the Environment Protection and Management Law of the Republic of Liberia (2002) (“EPML”) is the principal piece of legislation covering environmental protection and management in Liberia. The Liberian system incorporates a social impact assessment within the Environmental Impact Assessment.
In the absence to date of any announced environmental management regulations, ArcelorMittal has devised an Environmental and Social Standards Manual to cover its operations in Liberia. This was approved by the Liberian EPA for use as a guidance document for all site activities under the existing Liberia mining project and remains the only set of such guidelines in the country. ArcelorMittal updates this Manual periodically, according to experience and operational needs.
The Act Adopting the National Forestry Reform Law (2006), together with the National Forestry Law (2000) and the Act Creating the Forestry Development Authority (2000) that it amended, cover all aspects of commercial and community use of forests. Community management of forests was significantly enhanced by the enactment of the Community Rights Law with respect to Forest Lands (2009). Some territory gazette under this law is within ArcelorMittal’s concession, and access to these areas is leading to a series of test cases between this law and the Company’s Mineral Development Agreement. Some parts of the concession are also protected under the Act for the Establishment of a Protected Forest Areas Network (2003), and specifically by the subsidiary Act for the Establishment of the East Nimba Nature Reserve (2003).
With respect to land tenure, in rural areas there is a strong crossover between agriculture and forestry.  A moratorium on Public Land Sales banned all transactions involving public land and also voided any new Tribal Land Certificates (“TLC”). The 2010 Land Policy Review was silent on the validity of existing TLCs as ownership documents, although they are the first step in the chain of transfer of land from customary to individual title. In 2014, the Lands Commission suspended deals involving TLC, pending a review of their relationship to formal title deeds. The Ministry of Lands, Mines and Energy (“MLME”) reported allowing TLCs to be used as valid land ownership documentation in respect of land that had to be leased for development. They also produced guidelines for the process for valuing land for developmental rental purposes only, and these have been deployed in all concessions. So far, there has been no codification of these guidelines into law, but they are a requirement of concessionaires managed by MLME, of which ArcelorMittal is one.
The draft Land Rights Act is still yet to be passed. However, in October 2016, Title 12 of the Executive Law of the Liberian Codes of Law Revised was amended to create the Liberia Land Authority whose role is to control and manage the access and use of public and government land and ensure the development of land use plans and zoning schemes. The Authority is also entitled to establish county land boards and land management structures to govern and manage the land of communities.
Although ArcelorMittal suspended its proposed Project Phase 2 expansion in 2014 following the onset of Ebola in West Africa and later poor market conditions, the various environmental permits already awarded set a number of stringent conditions for ongoing operations and for future project developments.  Among other things, they have necessarily committed ArcelorMittal to a significant environmental offset program and a comprehensive mine closure plan. While most of the costs of these initiatives will be incorporated in operational expenditure over the life of the mine, the implication is that the offsets may eventually amount to at least $70 million and overall mine closure may amount to more than $100 million.
Renewal of the environmental permit at the end of June 2017 included mining activities for Gangra which were part of the Phase 2 expansion project. This permit has increased requirements in terms of sediment control, water discharge as well as biodiversity conservation. Increased requirements as identified in the 2017 Phase 1 ESIA addendum calls for more stringent sediment controls and land take management, and expansion of the offset program due to the increase in the mine footprint.

68


Mexico
In Mexico, steel and mining activities are under federal jurisdiction. Permits to operate are subject to different environmental authorizations. Complementary to the framework law on the environment of January 28, 1988 (Ley general para el equilibrio ecologico y protección ambiente or “LGEEPA”), the following specific regulations apply: prevention and control of air pollution, environmental impact study, environmental audit,  transfer of contaminants, water management, waste management, sustainable forestry development, radioactivity control, wildlife management and environmental noise pollution control.
In addition, on June 6, 2012, Mexico issued a new General Federal Law for Climate Change and on June 7, 2013, a new Federal Law of Environmental Responsibility.  These establish the “polluter pays” principle in which the person that caused the environmental breach is responsible for restoring the environment to its pre-pollution condition and for any other administrative, economic and potentially criminal liabilities.
In January 2014, ArcelorMittal Mexico’s raw water consumption costs increased 395% due to changes in the Water Federal Rights Law. In addition, for waste water discharges, any parameter above the maximum permissible limit now generates a fine according to a volume discharge and fine factor.
In September 2016, the environmental authority proposed launching a pilot scheme to establish a carbon market based on a cap and trade system, which in the future could oblige ArcelorMittal Mexico to comply with maximum CO2 emission limits to buy carbon credits and/or invest in projects to reduce emissions and obtain carbon credits. The proposal is still under review and has not yet been finalized.
As per the General Federal Law for Climate Change, starting in 2017, ArcelorMittal Mexico must verify and validate its yearly CO2 emissions report with an external authorized company every 3 years.
South Africa
The National Environmental Management Act (“NEMA”) 107 of 1998 serves as the departure point for any project in South Africa and informs the Environmental Impact Assessment (“EIA”) process that needs to be followed in order to obtain the required authorization. An environmental authorization is issued pursuant to NEMA and other related environmental legislation, for example the National Environmental Management: Waste Act, 59 of 2008 (“NEM:WA”) as well as the National Environmental Management: Air Quality Act, 39 of 2004 (“NEM:AQA”)  for any projects requiring an EIA process. Furthermore, the “duty of care” principle enshrined in the NEMA specifies that any harm caused to the environment is a criminal offense under the terms of the NEMA. A compliance notice/directive was issued on December 7, 2015 by the Department of Environmental Affairs regarding certain operations at the Newcastle Works. The compliance notice/directive required the Newcastle Works to cease its existing practices for waste disposal at a site that allegedly was operating unlawfully and to cease sales of slag to outside companies unless proof was submitted that such companies are in possession of a waste management license. Finally, the compliance notice/directive requires Newcastle Works to conduct a study of possible environmental related impacts with regard to certain identified areas of the site.  ArcelorMittal South Africa is currently challenging the compliance notice/directive. The compliance notice/directive has not been suspended and ArcelorMittal South Africa is currently in compliance with the compliance notice/directive pending finalization of the review application instituted in the High Court of South Africa.
The NEM:WA came into effect on July 1, 2009, and applies to all waste related activities and contaminated land and replaces older legislation in this regard. NEM:AQA, which took full effect on April 1, 2010, introduced strict air emission standards for new and existing plants. Existing plants or processes are granted a period of 5 years to achieve standards set for existing plants and 10 years to achieve standards set for new plants. ArcelorMittal South Africa’s coke making operations, in particular, but other operations as well, are affected by the implementation of this Act, and major capital expenditures are expected to be implemented over the next two years to meet the relatively strict 2020 standards.
South Africa has committed to reduce GHG emissions below business as usual by 34% by 2020 and 42% by 2025, as well as adaptation measures, as outlined in South Africa’s Intended NDC for purposes of the Paris Agreement. A carbon tax is envisaged to be implemented during 2018 together with complementary measures to reduce GHG emissions and effect behavioral change. In its current draft carbon tax bill, the National Treasury lists a number of allowances to mitigate the impact the tax would have on industries and the final design of the taxation structure is expected to be finalized once the final draft bill is published.  Current expectations are that AMSA could achieve an 80% tax-free threshold with the remainder of its emissions being taxed at ZAR120/tCO2. This would equate to a financial impact of up to ZAR300 million per year (depending on production levels) on South Africa’s operations and will not be deductible as an expense.  

69


Ukraine
Ukraine is gradually introducing EU environmental standards and emission standards, which will require significant capital expenditures in the near future.
On December 7, 2016, The Cabinet of Ministers of Ukraine approved the Concept of implementing the state policy in the sphere of climate change for the period until 2030. According to this Concept, an internal trading system of greenhouse gas emission quotas is to be created and implemented in accordance with the provisions of Directive 2003/87/EC.
The Ministry of Ecology and Natural Resources of Ukraine has developed a draft plan of measures to realize the Concept. Currently the project is being coordinated by interested ministries and departments. No other laws have yet been developed and passed.
Venezuela
Industrias Unicon, C.A. (“Unicon”) is subject to various Venezuelan environmental regulations, the most important being the Organic Law for the Environment (2006) and the Criminal Law of the Environment (2012). Unicon is also subject to annual inspections by environmental entities of the federal and regional government, through whom environmental permits and adherence are reviewed. Strict compliance with environmental standards by Unicon has been verified by these governmental entities, with no observations.
Health and safety laws and regulations
ArcelorMittal’s operations are subject to a broad range of laws and regulations relating to the protection of human health and safety. As these laws and regulations in the United States, the EU and other jurisdictions continue to become more stringent, ArcelorMittal expects to expend substantial amounts to achieve or maintain compliance. ArcelorMittal has established corporate health and safety guidelines requiring each of its business units and sites to comply with all applicable laws and regulations. Compliance with such laws and regulations and monitoring changes to them are addressed primarily at the business unit level. ArcelorMittal has a clear and strong health and safety policy aimed at reducing on a continuing basis the severity and frequency of accidents. The policy outlines the commitment ArcelorMittal has made to the health and safety of all employees and implements a common health and safety model across the entire organization which permits the Corporate Health and Safety department to define and track performance targets and monitor results from every business unit and site. Further, ArcelorMittal has implemented a database to record and share events and unsafe situations that have the potential for a serious injury. These situations and events are called SO/PSIFs (for “serious occurrences/potential serious injuries and fatalities”), the actual consequences of a SO/PSIF might have been minor, but as soon as the potential for a severe injury or fatality was present, it is considered as a “SO/PSIF”. At present, the database enables access to statistics for the ArcelorMittal group as a whole, and more detailed information on injuries for business units and sites. Additional information is available at plant sites. The database incorporates a company-wide used return-of-experience system for disseminating lessons learned from individual incidents. The aim is to achieve faster and more accurate feedback on the cause of accidents in order to prevent their recurrence. Another database, focusing on good practices/internal benchmarking has been deployed since 2010 and, as with any database, continues to grow in terms of content and uses over time. To monitor compliance, an auditing system has been put in place to check compliance with internal standards.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) each reporting operator of a coal or other mine is required to include certain mine safety information within its periodic reports filed with the SEC. Pursuant to Section 1503 of the Dodd-Frank Act, the Company presents information regarding certain mining safety and health matters for each of its U.S. mine locations in Item 16H of this annual report.
Foreign trade
ArcelorMittal has manufacturing operations in many countries and sells its products worldwide. In 2017, certain countries and communities, such as Australia, Brazil, Canada, Chile, Egypt, the Eurasian Economic Union, the European Union, the Gulf Cooperation Council, India, Indonesia Malaysia, Mexico, Peru, South Africa, Taiwan, Thailand, Turkey, the United States of America and Vietnam, continued or launched investigations into whether to impose/continue imposing trade remedies (usually anti-dumping or safeguard measures) against injury, or the threat thereof, caused by increasing steel imports originating from various steel producing countries.

70


Under both international agreements and the domestic trade laws of most countries, trade remedies are available to domestic industries where imports are “dumped” or “subsidized” and such imports cause injury, or a threat thereof, to a domestic industry. Although there are differences in how trade remedies are assessed, such laws have common features established in accordance with World Trade Organization (“WTO”) standards. Dumping involves exporting a product at a price lower than that at which the same or similar product is sold in the home market of the exporter, or where the export prices are lower than a value that typically must be at or above the full cost of production (including sales and marketing costs) plus a reasonable amount for profit. Subsidies from governments (including, among others, grants and loans at artificially low interest rates) are similarly actionable under certain circumstances. The trade remedies available are typically (i) an antidumping duty order or suspension agreement where injurious dumping is found and (ii) a countervailing duty order or suspension agreement where injurious subsidization is found. Normally, the duty is equal to the amount of dumping or subsidization that is generally imposed on the imported product (other than in the European Union where the lesser duty rule is applied). Accordingly, such orders and suspension agreements do not prevent the importation of a product, but rather require that either the product be priced at a non-dumped level or without the benefit of subsidies, or that the importer pay the difference between such dumped or subsidized price and the actual price to the government as a duty.
Safeguard measures are addressed more generally to a particular product, irrespective of its country of origin, to protect domestic production against increased imports of that product. The remedies available for safeguard investigations are commonly safeguard duties or quotas on the imported products.
All WTO members are required to review antidumping duty and countervailing duty orders and suspension agreements every five years to determine if they should be maintained, revised or revoked. This requires a review of whether the dumping or subsidization is likely to continue or recur if the order/suspension agreement is revoked and whether a domestic industry in the country is likely to suffer the continuation or recurrence of the injury within the reasonably foreseeable future if the orders are revoked. If the government finds dumping or subsidization and the injury is likely to continue or recur, then the orders continue. In the case of safeguard measures enduring for greater than three years, all WTO members are required to review the imposed measures in the mid-term of the relevant measure. After a review, restrictions may be extended if they continue to be required, but the total period of relief provided may not exceed eight years. These so-called "sunset" reviews affect various countries of interest, for example in May 2016 the United States initiated a sunset review of the duties imposed in December 2014 for hot rolled products from Russia. In September 2016, the US Department of Commerce, in light of this sunset review, decided to continue applying those duties stating that such products from Russia posed the same dumping risks as in 2014. No new sunset reviews, involving the Company's products were commenced in 2017.
In 2017, the European Commission’s antidumping duties on hot-rolled coil products imported from China became permanent and are to remain in place for a period of five years. It also imposed final anti-subsidy duties against the same products from China. The European Commission also imposed final anti-dumping duties on hot-rolled coil products imported from Russia, Iran, Brazil and Ukraine and initiated an anti-dumping investigation against non-auto corrosion resistant steel coming from China; additionally it implemented final measures on Quarter Plate products imported from China. In the United States, final anti-dumping duties and countervailing duties against corrosion-resistant, hot-rolled and cold-rolled steel imports from China, Brazil and certain other countries became definitive in 2017, and the US Department of Commerce applied final anti-dumping and countervailing duties against heavy steel plate imports from China, Brazil, South Africa and certain other countries.
In a number of markets in which ArcelorMittal has manufacturing operations, it may be the beneficiary of trade actions intended to address trade distortions consistent with WTO regulations, such as the examples already mentioned in Europe and USA. In other situations, certain operations of ArcelorMittal may be a respondent to antidumping and countervailing duty cases and its exported products might be subject to antidumping and countervailing duties or other trade restrictions, for example antidumping duties imposed in 2017 by the Egyptian government against rebar imports from Ukraine, Turkey and China affecting exports from ArcelorMittal operations in Ukraine.
On April 20, 2017, a national security investigation (Section 232) with respect to steel imports was initiated in the United States. The DOC report was sent to the Trump Administration on January 11, 2018, after which the administration has 90 days to decide what action to take, if any.

71


China poses unique trade policy questions as the EU, among other regions, debates whether to grant China market economy status (“MES”) under WTO rules. MES is a critical component in determining the magnitude of trade remedies that may be applied against a country engaging in unfair trade practices. Where a country has MES, this alters the comparative price selection and cost benchmarks used to calculate the margin of the alleged dumping. While China viewed the recognition of its MES as automatic and necessary from the point of expiry of certain of its WTO accession protocols on December 11, 2016, this status was not granted  by certain regions and countries, notably the EU and the U.S. Accordingly, on December 12, 2016 China notified the WTO that it was requesting dispute consultations with both the United States and the European Union in respect of the special calculation methods used by both the United States and European Union in anti-dumping proceedings. In November, 2017, the United States submitted a statement to the WTO, as a third party brief in support of the European Union in a dispute with China, formally opposing granting China market economy status; the dispute is ongoing at the WTO. On December 19, 2017, the EU published its approved amendments of the Anti-Dumping Regulation (EU) 2016/1036 (New Anti-dumping Methodology-NADM), which stipulate that if the existence of “significant distortions” has been established by the complainant, the European Commission may use an alternative methodology for calculating dumping margins for imports from third countries. This new framework notably removes the former distinction between market and non-market economies (“NMEs”) for the calculation of dumping margins in the EU anti-dumping regulation.  The alternative methodology can now be used by the EU for any WTO country.
Key currency regulations and exchange controls
As a holding company, ArcelorMittal is dependent on the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses, meet its debt service obligations, pay any cash dividends or distributions on its ordinary shares or conduct share buy-backs. Significant cash or cash equivalent balances may be held from time to time at subsidiaries where repatriation of funds may be affected by tax and foreign exchange policies, including in Argentina, Brazil, China, Kazakhstan, South Africa and Ukraine. Such policies are briefly summarized below; however, none of these are currently significant in the context of ArcelorMittal’s overall liquidity.
Argentina
In December 2015, the newly elected Argentinian government announced initiatives to significantly relax foreign exchange controls and regulations. These measures, among other things, allow the currency to float, subject to intervention by the central bank to avoid destabilizing movements. The Argentine peso is not fully convertible and is most commonly traded as a non-deliverable forward (i.e., cash settlement at maturity based on the relative movement of the designated currency rather than the physical settlement of the designated currency at maturity), both onshore and offshore. Despite the lifting of controls, rules on the repatriation of export receipts remain unchanged in respect of the conversion of 100% of foreign exchange revenue into Argentine pesos. Access to the foreign exchange markets for the payment of dividends does not require authorization from the central bank, only the completion of certain legal and administrative procedures.
Brazil
The central bank of Brazil operates a managed floating foreign exchange regime, although intervention has become more regular in recent years. The Brazilian real is fully deliverable onshore (i.e., physical settlement of the designated currency at maturity), but is non-deliverable offshore. With proper documentation, the repatriation of registered invested capital and remittance of profits do not require prior approval from the central bank of Brazil. Profits can be freely remitted as dividends or as interest on capital to foreign shareholders or portfolio investors.
China
China’s foreign exchange regime has recently undergone significant liberalization. The People’s Bank of China (“PBOC”) maintains the Chinese renminbi in a managed float with reference to a basket of currencies. The CNY, which refers to the Chinese renminbi on the onshore market, is partially convertible and has a non-deliverable offshore market. All transactions involving foreign exchange are strictly controlled by the State Administration of Foreign Exchange. The CNH, which is the Chinese renminbi traded offshore, became deliverable in Hong Kong in July 2010. The CNH can generally be transferred freely between offshore accounts and interaction with the onshore market is growing, although transfers of CNH from Hong Kong to onshore China are subject to regulations and approval by the PBOC.

72


Kazakhstan
In August 2015, the National Bank of Kazakhstan devalued the Kazakhstan tenge and introduced a free-floating exchange rate. The National Oil Fund conducts open market operations to finance economic programs, hence the current exchange rate regime may be best described as a managed float. Liquidity in foreign exchange markets is limited and mainly non-deliverable forwards are traded on offshore markets. There are no restrictions on tenge convertibility, but domestic legal entities must state their reasons for buying foreign currency and may only trade with authorized banks.
South Africa
The South African Reserve Bank operates a managed floating foreign exchange regime. The South African rand (“ZAR”) is deliverable and largely convertible and the reserve bank is gradually relaxing exchange controls. Since January 1, 2014, companies may apply for approval to establish a holding company to hold their offshore investments. Subject to certain conditions, listed companies may place ZAR 2 billion per annum on such holding companies that can be transferred offshore without exchange control approval, and unlisted companies may transfer ZAR 1 billion per year.
Ukraine
The National Bank of Ukraine is responsible for the country’s monetary policy. The exchange rate system is highly regulated and only deliverable forwards are allowed on the onshore market. On the offshore market, only non-deliverable forwards are allowed, but liquidity is very limited. Since August 2016, foreign investors are entitled to repatriate profit, income or other funds relating to investments without any restrictions, after the payment of applicable taxes. Except for payments of 2014 to 2016 dividends, which were allowed subject to certain restrictions, there is a ban on the remittance of funds to foreign investors through the payment of dividends on securities traded on the stock exchange, a decrease in share capital or the exit of foreign investors from domestic legal entities.
Venezuela
Venezuela’s foreign exchange regime has been characterized by governmental devaluation and sudden legislative change. Recently, Venezuela featured two controlled exchange systems for the bolivar, its official currency: SIMADI, which was available to public and private companies and individuals, and SICAD, which was a public “bidding” system for eligible participants purchasing certain imports. In the first quarter of 2016, the Venezuelan government announced the elimination of the SICAD rate and the free float of the SIMADI rate, before later announcing the replacement of the SIMADI rate with two new exchange systems: DIPRO, which is fixed at a rate of 10 bolivars per U.S. dollar and is used primarily for priority food and medicine sectors, and DICOM, which is allowed to float freely and applies for most other sectors. The Venezuelan government temporarily suspended the sale of U.S. dollars through its DICOM auction system during the fourth quarter of 2017. Effective January 30, 2018, the Venezuelan government eliminated the DIPRO rate and reopened the auction of the DICOM rate on February 5, 2018.
At December 31, 2017, ArcelorMittal’s net investment in Unicon was $65 million. See note 2.2.2 to the consolidated financial statements.
Disclosure pursuant to Section 219 of the Iran Threat Reduction & Syria Human Rights Act (ITRA)
ArcelorMittal’s business with customers in Iran
In 2017, ArcelorMittal sold the following products to customers in Iran: commodity-grade long and flat steel products for the consumer and construction sector, and flat steel products for packaging uses and the automotive sector. ArcelorMittal’s subsidiary ArcelorMittal International FZE in Dubai (“AMID”) sold steel products to customers in Iran, generating $334 million in revenue in 2017.
AMID sells to trading companies, most of which are based in Dubai and some of which are owned by Iranian nationals, that export and ship the products to stockists (i.e., wholesalers) and fabricators in Iran which, to the best of ArcelorMittal’s knowledge, on-sell them primarily to companies involved in the private-sector construction and consumer goods industries. Following the significant easing of UN, EU and U.S. secondary sanctions on January 16, 2016 (“Implementation Day”) in accordance with the Joint Comprehensive Plan of Action (“JCPOA”), AMID has started direct sales of commodity grade long and flat steel products to Iranian companies in Iran involved in the construction and consumer goods industries, amounting to 25% of AMID’s sales in 2017 in Iran. ArcelorMittal intends to continue the above described AMID business in compliance with applicable sanction laws in 2018.

73


In 2017, ArcelorMittal’s Europe segment sold coated flat products, alloy steel plates, sections and seamless pipes both directly and indirectly for projects in Iran. These activities generated $9.8 million in revenue with a profit of $0.5 million; ArcelorMittal’s Europe segment intends to continue this business in light of the changes to the sanctions regime on Implementation Day.
ArcelorMittal’s Europe segment has made sales of flat coated and non-coated products destined to Iranian automotive customers generating $15 million in revenue with a profit of $2 million. According to press reports and other public information, these companies may have links to the Iranian Government. ArcelorMittal Europe intends to continue this business.
To the best of the Company’s knowledge, none of the above sales have gone to any sanctionable end-uses or end users. No U.S. affiliate or persons are involved in these sales, and the sales are not conducted in U.S. dollars.
ArcelorMittal continues to monitor developments in this area, especially in the light of the JCPOA and the potential for “snap-back,” or re-imposition of sanctions as a result of an alleged breach of the JCPOA, and will determine whether and to what extent they affect its business with Iranian customers as currently conducted and intended to be conducted. ArcelorMittal intends to comply with applicable restrictions and to prevent any sales prohibited or sanctionable under U.S. or EU law, and has procedures and systems in place to ensure compliance with these restrictions and prohibitions. However, ArcelorMittal’s business is subject to an extensive, complex and evolving regulatory framework, significant direct U.S. sanctions and some U.S. secondary sanctions against Iran remain, and despite its governance, compliance policies and procedures and continuous efforts to comply with all applicable sanctions regimes, its systems and procedures may not always prevent the occurrence of violations which may lead to regulatory penalties or cause reputational harm to operating subsidiaries, joint ventures or associates. See “Item 3.D—Key information—Risk factors.”
Iran-related activities of ArcelorMittal affiliates
Pursuant to Section 13(r) of the Securities Exchange Act of 1934, ArcelorMittal is required to disclose whether any of its affiliates have engaged in certain Iran-related activities and transactions.
HPCL-Mittal Energy Limited (“HMEL”), a joint venture in which the Significant Shareholder of ArcelorMittal holds a 48.99% stake, owns and operates the Guru Gobind Singh Refinery, an oil refinery located in the Bathinda district of Punjab, India. In connection with its oil refining activities, HMEL purchased approximately 4.2 million barrels of crude oil on a CIF basis from the National Iranian Oil Company (the “NIOC”) in 2012 for an amount of $460 million. The crude oil was transported from Iran to HMEL’s operations in India in a series of three shipments that took place between August and October 2012.
HMEL made payments of $31 million during 2017 in respect of these purchases. 
HMEL resumed its purchases from the NIOC and the National Iranian Tanker Company ("NITC") in 2016 and 2017 after most sanctions on Iran were lifted pursuant to the JCPOA. HMEL entered into a term contract for purchases of crude oil from NIOC in 2017, against which it purchased about 6.3 million barrels of crude oil in 2017 on an FOB basis, for which payments of $218.5 million were made during 2017 with a balance of $125.8 million outstanding.
NITC has shipped crude steel from the Middle East including Iran to India for HMEL. In 2017, HMEL paid $8.67 million for NITC’s shipping services. To the best of the Company’s knowledge none of the transactions were conducted in U.S. dollars. HMEL made no sales of refined products to Iran.
HMEL produces a variety of petroleum and petrochemical products, which individually require different types of crude oil in different quantities. HMEL generally co-mingles crude oil purchased from various sources, making it difficult to trace the raw materials used in manufacturing a given product or to link revenues directly to such inputs. HMEL cannot determine with certainty the amount of its revenue or profit in 2017 that were related to crude oil purchased from the NIOC.
In 2017, Valin ArcelorMittal Automotive Steel Co., Ltd (“VAMA”) (a joint venture of 51:49% shareholding between Hunan Valin and ArcelorMittal) sold coated steel products (DX53D+AS) to a Chinese trading company Zhejiang Taizhou Walf generating $0.74 million in revenue with a profit of $0.01 million. Some of these produces were further sold by Zhejiang Taizhou Walf to customers in Iran.
To the best of the Company’s knowledge, none of the above sales have gone to any sanctionable end-uses or end users. The sales were not conducted in U.S. dollars.


74


C.    Organizational structure
Corporate structure
ArcelorMittal is a holding company with no business operations of its own. All of ArcelorMittal’s significant operating subsidiaries are indirectly owned by ArcelorMittal through intermediate holding companies. The following chart represents the operational structure of the Company, including ArcelorMittal’s significant operating subsidiaries and not its legal or ownership structure.
organisationchart.jpg


75


ArcelorMittal is a holding company with no business operations of its own. All of ArcelorMittal’s significant operating subsidiaries are indirectly owned by ArcelorMittal through intermediate holding companies. The following chart represents the operational structure of the Company, including ArcelorMittal’s significant operating subsidiaries and not its legal or ownership structure.
Please refer to the "Presentation of Financial and Certain Other Information" section of this Annual Report on Form 20-F for a listing of the Company’s principal subsidiaries, including country of incorporation. Please refer to note 2.2.1 of the consolidated financial statements for the ownership percentages of these subsidiaries. Unless otherwise stated, the subsidiaries as listed have share capital consisting solely of ordinary shares, which are held directly or indirectly by the Company and the proportion of ownership interests held equals to the voting rights held by the Company.
Investments accounted for under the equity method
ArcelorMittal has investments in entities accounted for under the equity method. See note 2.4 to ArcelorMittal’s consolidated financial statements.
Reportable segments
ArcelorMittal reports its business in the following five reportable segments corresponding to continuing activities: NAFTA, Brazil, Europe, ACIS and Mining.
NAFTA produces flat, long and tubular products. Flat products include slabs, hot-rolled coil, cold-rolled coil, coated steel products and plate and are sold primarily to customers in the following sectors: automotive, energy, construction packaging and appliances and via distributors and processors. Flat product facilities are located at seven integrated and mini-mill sites located in three countries. Long products include wire rod, sections, rebar, billets, blooms and wire drawing. Long production facilities are located at three integrated and mini-mill sites located in three countries. In 2017, shipments from NAFTA totaled 21.8 million tonnes.
Brazil produces flat, long and tubular products. Flat products include slabs, hot-rolled coil, cold-rolled coil and coated steel. Long products comprise sections, wire rod, bar and rebars, billets, blooms and wire drawing. In 2017, shipments from Brazil totaled 10.8 million tonnes.
Europe produces flat, long and tubular products. Flat products include hot-rolled coil, cold-rolled coil, coated products, tinplate, plate and slab. These products are sold primarily to customers in the automotive, general and packaging sectors. Flat product facilities are located at 14 integrated and mini-mill sites located in six countries. Long products include sections, wire rod, rebar, billets, blooms and wire drawing. Long product facilities are located at 12 integrated and mini-mill sites in eight countries. In addition, Europe includes downstream solutions, which provides primarily distribution of long and flat products as well as value-added and customized steel solutions through further processing to meet specific customer requirements. In 2017, shipments from Europe totaled 40.9 million tonnes.
ACIS produces a combination of flat, long and tubular products. It has five flat and long production facilities in three countries. In 2017, shipments from ACIS totaled 13.1 million tonnes, with shipments having been made worldwide.
Mining provides the Company’s steel operations with high quality and low-cost iron ore and coal reserves and also sells limited amounts of mineral products to third parties. The Company’s mines are located in North and South America, Europe, Africa and CIS. In 2017, iron ore and coal production from own mines totaled approximately 57.4 million tonnes and 6.3 million tonnes, respectively.
D.    Property, plant and equipment
ArcelorMittal has steel production facilities, as well as iron ore and coal mining operations, in North and South America, Europe, Asia and Africa.
All of its operating subsidiaries are substantially owned by ArcelorMittal through intermediate holding companies, and are grouped into the five reportable segments described above in “Item 4.C—Information on the Company—Organizational structure”. Unless otherwise stated, ArcelorMittal owns all of the assets described in this section.
For further information on environmental issues that may affect ArcelorMittal’s utilization of its assets, see “Item 4.B—Information on the Company—Business overview—Government regulations—Environmental laws and regulations” and note 8.2 to ArcelorMittal’s consolidated financial statements.

76


Steel production facilities of ArcelorMittal
The following table provides an overview by type of steel facility of the principal production units of ArcelorMittal’s operations. While all of the Group’s facilities are shown in the tables, only the facilities of significant subsidiaries are described textually for each segment. The facilities included in the tables are listed from upstream to downstream in the steel-making process.
Facility
 
Number of Facilities
 
Capacity (in million tonnes per year) 1
 
Production in 2017 (in million tonnes per year) 2
Coke Oven Battery
 
69
 
32.8
 
25.8
Sinter Plant
 
32
 
95.8
 
69.2
Blast Furnace
 
56
 
95.6
 
72.4
Basic Oxygen Furnace (including Tandem Furnace)
 
71
 
101.7
 
77.3
DRI Plant
 
13
 
9.4
 
7.3
Electric Arc Furnace
 
31
 
26.2
 
17.5
Continuous Caster—Slabs
 
46
 
91.1
 
66.4
Hot Rolling Mill
 
21
 
74.0
 
54.9
Pickling Line
 
35
 
36.3
 
18.4
Tandem Mill
 
38
 
41.5
 
28.0
Annealing Line (continuous / batch)
 
53
 
20.8
 
11.2
Skin Pass Mill
 
35
 
20.7
 
9.2
Plate Mill
 
11
 
6.7
 
2.8
Continuous Caster—Bloom / Billet
 
33
 
30.9
 
21.8
Breakdown Mill (Blooming / Slabbing Mill)
 
3
 
10.7
 
5.0
Billet Rolling Mill
 
3
 
2.6
 
1.5
Section Mill
 
25
 
13.6
 
8.5
Bar Mill
 
20
 
7.8
 
5.4
Wire Rod Mill
 
18
 
11.8
 
7.9
Hot Dip Galvanizing Line
 
58
 
20.7
 
17.2
Electro Galvanizing Line
 
13
 
2.6
 
1.1
Tinplate Mill
 
16
 
3.4
 
2.1
Tin Free Steel (TFS)
 
1
 
0.3
 
0.1
Color Coating Line
 
19
 
2.8
 
1.9
Seamless Pipes
 
7
 
0.9
 
0.3
Welded Pipes
 
58
 
3.0
 
1.0
1
Reflects design capacity and does not take into account other constraints in the production process (such as, upstream and downstream bottlenecks and product mix changes). As a result, in some cases, design capacity may be different from the current achievable capacity.
2
Production facility details include the production numbers for each step in the steel-making process. Output from one step in the process is used as input in the next step in the process. Therefore, the sum of the production numbers does not equal the quantity of sellable finished steel products.

77


NAFTA
 
 
 
 
 
Crude Steel
 
 
 
 
 
 
 
 
 
 
 
Unit
 
Country
 
Locations
 
Production in 2017 (in million tonnes per year)1
Type of plant
Products
ArcelorMittal USA
 
USA
 
Warren, OH
 
n/a
Coke-Making
Coke
ArcelorMittal USA
 
USA
 
Monessen, PA
 
n/a
Coke-Making
Coke
ArcelorMittal USA 2 3
 
USA
 
East Chicago, IN
 
5.0
Integrated
Flat
ArcelorMittal USA
 
USA
 
Burns Harbor, IN
 
4.4
Integrated
Flat
ArcelorMittal USA
 
USA
 
Cleveland, OH
 
3.2
Integrated
Flat
ArcelorMittal USA
 
USA
 
Riverdale, IL
 
0.7
Integrated
Flat
ArcelorMittal USA
 
USA
 
Coatesville, PA
 
0.4
Mini-mill
Flat
ArcelorMittal USA
 
USA
 
Columbus, OH
 
n/a
Downstream
Flat
I/N Tek
 
USA
 
New Carlisle, IN
 
n/a
Downstream
Flat
ArcelorMittal USA
 
USA
 
Conshohocken, PA
 
n/a
Downstream
Flat
ArcelorMittal USA
 
USA
 
Weirton, WV
 
n/a
Downstream
Flat
ArcelorMittal USA
 
USA
 
Gary, IN
 
n/a
Downstream
Flat
Double G
 
USA
 
Jackson, MS
 
n/a
Downstream
Flat
ArcelorMittal Dofasco
 
Canada
 
Hamilton
 
3.7
Integrated, Mini-mill
Flat
ArcelorMittal Mexico
 
Mexico
 
Lázaro Cárdenas, Celaya
 
3.8
Mini-mill, Integrated, and Downstream
Flat, Long/ Bar, Wire Rod
ArcelorMittal Long Products Canada
 
Canada
 
Contrecoeur East, West
 
2.0
Mini-mill
Long/ Wire Rod, Bars, Slabs
ArcelorMittal USA 
 
USA
 
Steelton, PA
 
0.3
Mini-mill
Long/ Rail
ArcelorMittal Tubular Products
 
Canada
 
Brampton
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
Canada
 
London
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
Canada
 
Woodstock
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
Canada
 
Hamilton
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
USA
 
Shelby
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
USA
 
Marion
 
n/a
Downstream
Pipes and Tubes
ArcelorMittal Tubular Products
 
Mexico
 
Monterrey
 
n/a
Downstream
Pipes and Tubes
1
Note: n/a = not applicable (no crude steel production).
2
Indiana Harbor (East and West).
3
ArcelorMittal USA idled its #2 basic oxygen furnace and its #2 slab caster at Indiana Harbor East (East Chicago) in June 2017.


78


ArcelorMittal Dofasco

ArcelorMittal Dofasco (“Dofasco”) is a leading North American steel solution provider and Canada’s largest manufacturer of flat rolled steels. Dofasco’s steel-making plant in Hamilton, Ontario is adjacent to water, rail and highway transportation. The plant uses both integrated and EAF-based steelmaking processes. Its products include hot-rolled, cold-rolled, galvanized and tinplate. Dofasco supplies these products to the automotive, construction, packaging, manufacturing, pipe and tube and steel distribution markets.

ArcelorMittal USA

ArcelorMittal USA mainly produces flat products at their steelmaking facilities located at Indiana Harbor, Burns Harbor, Cleveland, Riverdale and Coatesville.

Indiana Harbor (East and West) is a fully integrated steelmaker, strategically located on the southern shore of Lake Michigan in East Chicago, Indiana and benefits from Great Lakes shipping as well as highway and railroad transportation access. The two Indiana Harbor facilities produce hot-rolled sheet, cold-rolled sheet and hot dip galvanized sheet for use in automotive, appliance, service center, tubular, strip converters and contractor applications.

Burns Harbor is strategically located on Lake Michigan in northwestern Indiana approximately 50 miles southeast of Chicago, Illinois. The area allows for shipping access to the Port of Indiana-Burns Harbor, as well as highway and railroad access. Burns Harbor produces hot-rolled sheet, cold-rolled sheet, hot dip galvanized sheet and steel plate for use in automotive, appliance, service center, construction and shipbuilding applications.

The Cleveland facility is located on the Cuyahoga River in Cleveland, Ohio with access to the Port of Cleveland and Great Lakes shipping, as well as highway and railroad transportation routes. The Cleveland plant serves the automotive, service centers, converters and tubular applications markets.

The Riverdale facility is located near the Indiana border in Riverdale, Illinois, with access to Lake Michigan, and highway and railroad networks. It produces hot-rolled strip for strip converter and service center applications, and obtains supplies of hot metal for its basic oxygen furnaces from the Burns Harbor or Indiana Harbor locations.

The Coatesville facility is located in Pennsylvania and produces plate products for use in rail transportation, pipes & tubes and distribution segments.

ArcelorMittal USA has standalone finishing facilities in Weirton, West Virginia making tin products, Conshohocken, Pennsylvania making plate products, and in Columbus, Ohio making coated products. It has coke plants at Burns Harbor and Warren that supply coke to its production facilities.

ArcelorMittal USA, through various subsidiaries, owns interests in joint operations, including (i) ArcelorMittal Tek Inc. (60% interest), a cold-rolling mill near New Carlisle, Indiana;  (ii) Double G Coatings (50% interest), a coating line producing galvanized and Galvalume steel near Jackson, Mississippi, and (iii) Hibbing Taconite Company, which is described under “Mining” below.

ArcelorMittal Mexico

ArcelorMittal Mexico produces both flat and long steel products and operates an integrated route and EAF route using DRI. It produces higher quality slabs for use in specialized steel applications in the automotive, line pipe manufacturing, shipbuilding and appliance industries. It is also one of the largest single rebar and wire rod production facilities in Mexico and mainly uses the integrated route for steelmaking. The facility is located in Lazaro Cardenas in the Michoacán state by the Pacific coast and is highly accessible by ocean, rail, and other means. It also operates a rebar mill at Celaya with billets sourced from the Lazaro facility.

ArcelorMittal Long Products Canada

ArcelorMittal Long Products Canada is the largest mini-mill in Canada and has the flexibility to use either DRI or scrap, depending on their respective economics. It produces wire rods, wire products and bars, primarily sold in Canada and the United States and principally serves the automotive, appliance, transportation, machinery and construction industries. It also produces slabs that are used within ArcelorMittal.

79


BRAZIL
 
 
 
 
 
Crude Steel
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unit
 
Country
 
Locations
 
Production in 2017 (in million tonnes per year) 1
 
Type of plant
 
Products
Sol
 
Brazil
 
Vitoria
 
n/a
 
Coke-Making
 
Coke
ArcelorMittal Tubarão
 
Brazil
 
Vitoria
 
7.2
 
Integrated
 
Flat
ArcelorMittal Vega
 
Brazil
 
São Francisco do Sul
 
n/a
 
Downstream
 
Flat
ArcelorMittal Brasil
 
Brazil
 
João Monlevade
 
1.0
 
Integrated
 
Long/ Wire Rod
Acindar
 
Argentina
 
Villa Constitucion
 
1.1
 
Mini-mill
 
Long/ Wire Rod, Bar
ArcelorMittal Brasil
 
Brazil
 
Juiz de Fora, Piracicaba, Cariacica,
 
1.9
 
Mini-mill
 
Long/ Bar, Wire Rod
ArcelorMittal Costa Rica
 
Costa Rica
 
Costa Rica
 
n/a
 
Downstream
 
Long/ Wire Rod
Industrias Unicon
 
Venezuela
 
Barquisimeto, Matanzas, La Victoria
 
n/a
 
Downstream
 
Pipes and Tubes
1
Note: n/a = not applicable (no crude steel production)

ArcelorMittal Brasil

ArcelorMittal Brasil produces both flat and long steel products. Flat products are manufactured at ArcelorMittal Tubarão and ArcelorMittal Vega. Its products include slabs, hot-rolled coil, cold-rolled coil and galvanized steel, and serve customers in automotive, appliances, construction and distribution segments. The Tubarão complex uses the integrated steelmaking route to produce slabs and further rolled to hot-rolled coils and is strategically located with access to Praia Mole Marine Terminal, road and railway systems. The Vega facility has cold-rolling and coating facilities and easy access to the port of São Francisco do Sul.

ArcelorMittal Brasil’s long products include wire rod and wire, merchant bars, special bars and rebars, for use in civil construction, industrial manufacturing, agricultural and distribution sectors. It produces transformed products including, among others, welded mesh, trusses, annealed wire and nails. It also operates an extensive distribution network across the country selling to retail customers. It also owns interests in two subsidiaries, Belgo Bekaert Arames Ltda. (BBA), which manufactures wire products for agricultural and industrial end-users, and Belgo-Mineira Bekaert Artefatos de Arame Ltda., which produces steel cords used in the tire industry. In June 2017, ArcelorMittal Brasil acquired a majority interest in Bekaert Sumaré Ltda, a steel cord producer (see "Item 4.A. Information on the Company—History and development of the Company—Key transactions and events in 2017" for a description of the transaction). ArcelorMittal Bioflorestas produces charcoal from eucalyptus forestry operations that is used to fuel its furnaces in Juiz de Fora and to exchange for pig iron with local producers.

Acindar

Acindar is the largest long steel producer in Argentina. It produces and distributes products to meet the needs of the industrial, agricultural and construction sectors. It produces rebars, meshes, nails, preassembled and welded cages, square and round bars, flat bars, sections, piles, wire rod, drawn bars and barbed wire. It has an in-house distribution network that can also service end-users.

80


EUROPE
 
 
 
 
 
Crude Steel
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unit
 
Country
 
Locations
 
Production in 2017 (in million tonnes per year) 1
 
Type of plant
 
Products
ArcelorMittal Bremen
 
Germany
 
Bremen, Bottrop
 
3.2
 
Integrated
 
Flat
ArcelorMittal Eisenhüttenstadt
 
Germany
 
Eisenhüttenstadt
 
2.2
 
Integrated
 
Flat
ArcelorMittal Belgium
 
Belgium
 
Gent, Geel, Genk, Huy, Liège
 
5.5
 
Integrated and Downstream
 
Flat
ArcelorMittal Atlantique et Lorraine
 
France
 
Dunkirk,
Mardyck,
Montataire,
Desvres,
Florange, Mouzon, 
Basse- Indre
 
6.9
 
Integrated and Downstream
 
Flat
ArcelorMittal Méditerranée
 
France
 
Fos-sur-Mer,
Saint-Chély
 
3.8
 
Integrated and Downstream
 
Flat
ArcelorMittal Galati
 
Romania
 
Galati
 
2.0
 
Integrated
 
Flat
ArcelorMittal España
 
Spain
 
Avilés, Gijón, Etxebarri, Lesaka
 
4.7
 
Integrated and Downstream
 
Flat, Long, Rails, Wire Rod
ArcelorMittal Poland
 
Poland
 
Krakow, Swietochlowice, Dabrowa Gornicza,
Chorzow,
Sosnowiec,
Zdzieszowice
 
5.6
 
Integrated and Downstream
 
Flat, Long, Coke/ Sections, Wire Rod, Sheet Piles, Rails
ArcelorMittal Sestao
 
Spain
 
Bilbao
 
0.3
 
Mini-mill
 
Flat
ArcelorMittal Sagunto
 
Spain
 
Sagunto
 
n/a
 
Downstream
 
Flat
ArcelorMittal Piombino
 
Italy
 
Avellino,
Piombino
 
n/a
 
Downstream
 
Flat
ArcelorMittal Dudelange
 
Luxembourg
 
Dudelange
 
n/a
 
Downstream
 
Flat
ArcelorMittal Skopje
 
Macedonia
 
Skopje
 
n/a
 
Downstream
 
Flat
ArcelorMittal Tallinn
 
Estonia
 
Tallinn
 
n/a
 
Downstream
 
Flat
Industeel
 
France, Belgium
 
Charleroi, Le Creusot, Chateauneuf,
Saint-Chamond,
Seraing, Dunkirk
 
0.4
 
Mini-mill and Downstream
 
Flat
ArcelorMittal Ostrava
 
Czech Republic
 
Ostrava
 
1.8
 
Integrated
 
Flat, Long
ArcelorMittal Belval & Differdange
 
Luxembourg
 
Esch-Belval, Differdange, Rodange
 
2.2
 
Mini-mill
 
Long /Sheet Piles, Rails, Sections & Special Sections
ArcelorMittal Gipuzkoa
 
Spain
 
Olaberría, Bergara
 
1.0
 
Mini-mill
 
Long/ Sections
1
n/a = Not applicable (no crude steel production)

81


EUROPE (continued)
 
 
 
 
 
Crude Steel
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unit
 
Country
 
Locations
 
Production in 2017 (in million tonnes per year) 1
 
Type of plant
 
Products
ArcelorMittal Gandrange
 
France
 
Gandrange
 
n/a
 
Downstream
 
Long/ Wire Rod, Bars
ArcelorMittal Warszawa
 
Poland
 
Warsaw
 
0.6
 
Mini-mill
 
Long/ Bars
ArcelorMittal Hamburg
 
Germany
 
Hamburg